<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
SEPTEMBER 5, 1997
[LOGO]
IMAGING TECHNOLOGIES CORPORATION
(Exact name of small business issuer as specified in its charter)
DELAWARE 0-12641 33-0021693
(State or other jurisdiction (Commission (IRS Employer ID No.)
of incorporation or organization) file No.)
11031 VIA FRONTERA
SAN DIEGO, CALIFORNIA 92127
(Address of principal executive offices)
Issuer's Telephone Number, Including Area Code: (619) 485-8411
<PAGE>
ITEM 5. OTHER EVENTS
On August 21, 1997, Imaging Technology Corporation (the "Company'") closed a
private placement of its newly designated Series C Redeemable Convertible
Preferred Stock ("Series C Shares") in reliance upon the exemption from
securities registration afforded by Rule 506 of Regulation D ("Regulation D")
as promulgated by the United States Securities and Exchange Commission (the
"SEC") under the Securities Act of 1933, as amended (the "1933 Act");
INITIAL CLOSING
- ---------------
Under the terms of the Placement, in consideration of $5,000,000 the Company
issued an aggregate of 500 Series C Shares and four year warrants to purchase
up to 200,000 shares of the Company's common stock at an exercise price equal
to 125% of the Closing Market Price or $7.50 per share ("Initial Closing").
"PUT" CLOSING
- -------------
Provided that the following conditions have been satisfied, the Company may
call for a second round of financing for an additional 500 Series C Shares
and warrants to purchase up to 200,000 shares in consideration of $5,000,000
("Put Preferred Shares"): (i) the Company's stockholders shall have approved
the issuance of the Securities (as defined) on or prior to the Notice Date;
(ii) the Company's revenues for the period beginning and including April 1,
1997 and ending and including September 30, 1997 are at least $12,000,000;
(iii) during the period beginning 45 days prior to the Notice Date and ending
on and including the Closing Date, a Registration Statement has been
effective and available for the sale of no less than 125% of the sum of (A)
the number of Conversion Shares then issuable upon the conversion of all
outstanding Preferred Shares and the Put Preferred Shares to be issued by the
Company, (B) the number of Warrant Shares then issuable upon exercise of all
outstanding Warrants and the Warrants to be issued in connection with the Put
Preferred Shares and (C) the number of Conversion Shares and Warrant Shares
that are then held by the Buyers, (iv) during the period beginning 45 days
prior to the Notice Date and ending on and including the Put Closing Date,
the Common Stock is designated for quotation on the Nasdaq National Market or
a national securities exchange and is not suspended from trading; (v) no
event constituting a Major Business Event (as defined below), including an
agreement to consummate a Major Business Event, or a Triggering Event, as
defined below, shall have occurred from the period beginning on the Initial
Issuance Date and ending on and including the Put Closing Date; (vi) on each
trading day during the period beginning 20 days prior to the Notice Date and
ending on and including the Put Closing Date, the Market Price of the Common
Stock is not less than $6.00 per share (subject to adjustment as a result of
any stock split, stock dividend, recapitalization, reverse stock split,
consolidation, exchange or similar event); (vii) during the period beginning
20 days prior to the Notice Date and ending on and including the Put Closing
Date, the Average Daily Trading Dollar Volume (as defined) is not less than
$250,000; (viii) during the period beginning on the Initial Issuance Date and
ending on and including the Put Closing Date, the Company shall have
delivered Conversion Shares upon conversion of the Preferred Shares and
Warrant Shares upon exercise of the Warrants to the Buyers on a timely basis;
and (ix) the Company shall not have previously delivered a Put Share Notice.
A "Major Business Event" means (x) consolidation, merger or other business
combination of the Company with another entity (other than pursuant to a
migratory merger effected solely for the purpose of changing the Company's
jurisdiction of incorporation), (y) the sale or transfer of all or
substantially
2
<PAGE>
all of the Company's assets or (z) a purchase, tender or exchange offer made
to and accepted by the holders of more than 10% of the outstanding shares of
Common Stock.
ADDITIONAL CLOSING
- ------------------
During the period beginning on and including January 1, 1998 and ending on
January 1, 2002, if the Market Price of the Common Stock is greater than
$7.50 per share (subject to adjustment as a result of any stock split, stock
dividend, recapitalization, reverse stock split, consolidation, exchange or
similar event) purchasers of the Series C Shares are entitled to purchase up
to 40% of the number of Series C Shares, along with the related warrants,
held by each investor on December 31, 1997.
MANDATORY CONVERSION
- --------------------
If any Preferred Shares remain outstanding five years after the applicable
Issuance Date then all such Preferred Shares shall be converted as of such
date.
CONVERSION OF PREFERRED SHARES
- ------------------------------
The Series C Shares have the right, at such holder's option, to convert the
Preferred Shares into shares of the Company's common stock, $.005 par value
per share (the "Common Stock"), on the following terms and conditions:
(a) CONVERSION RIGHT. At any time or times on or after the
date which is 46 days after the Issuance Date (as defined below), any
holder of Preferred Shares shall be entitled to convert any whole number
of Preferred Shares into fully paid and nonassessable shares (rounded to
the nearest whole share) of Common Stock, at the Conversion Rate (as
defined below); provided, however, that in no event shall any holder be
entitled to convert Preferred Shares in excess of that number of
Preferred Shares which, upon giving effect to such conversion, would
cause the aggregate number of shares of Common Stock beneficially owned
by the holder and its affiliates to exceed 4.9% of the outstanding
shares of the Common Stock following such conversion. For purposes of
this paragraph, beneficial ownership shall be calculated in accordance
with Section 13(d) of the Securities Exchange Act of 1934, as amended.
The holder may waive the foregoing limitations by written notice to the
Company upon not less than 61 days prior notice (with such waiver taking
effect only upon the expiration of such 61 day notice period).
(b) CONVERSION RATE. The number of shares of Common Stock
issuable upon conversion of each of the Preferred Shares shall be
determined according to the following formula (the "Conversion Rate"):
(.06)(N/365)(10,000) + 10,000
-----------------------------
Conversion Price
The following terms shall have the following meanings:
3
<PAGE>
(i) "Conversion Price" means, as of any Conversion Date
(as defined below) or other date of determination, the lower of the Fixed
Conversion Price and the Floating Conversion Price, each in effect as of such
date and subject to adjustment as provided herein;
(ii) "Fixed Conversion Price" means 150% of the Market
Price on the date of issuance of the applicable Preferred Shares, subject to
adjustment as provided herein, with the Fixed Conversion Price being $9.00 per
share on the initial closing date;
(iii) "Floating Conversion Price" means, as of any date
of determination, the amount obtained by multiplying the Conversion Percentage
in effect as of such date by the Market Price as of such date;
(iv) "Conversion Percentage" means (A) 100% for the
period beginning on the Issuance Date and ending on and including the date
which is 90 days after the Issuance Date, (B) 95% for the period beginning on
and including the date which is 91 days after the Issuance Date and ending on
and including the date which is 180 days after the Issuance Date and (C) 90%
for the period beginning on and including the date which is 181 days after
the Issuance Date and ending on and including the date which is five years
after the Issuance Date, subject in each case to adjustment as provided
herein;
(v) "Market Price" means, with respect to any
security for any date, the lowest Closing Bid Price (as defined below) for
such security during the seven consecutive trading days immediately preceding
such date;
(vi) "Closing Bid Price" means, for any security as of
any date, the last closing bid price for such security on The Nasdaq SmallCap
Market as reported by Bloomberg Financial Markets ("Bloomberg"), or, if The
Nasdaq SmallCap Market is not the principal trading market for such security,
the last closing bid price of such security on the principal securities
exchange or trading market where such security is listed or traded as
reported by Bloomberg, or if the foregoing do not apply, the last closing bid
price of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if no closing
bid price is reported for such security by Bloomberg, the last closing trade
price of such security as reported by Bloomberg, or, if no last closing trade
price is reported for such security by Bloomberg, the average of the bid
prices of any market makers for such security as reported in the "pink
sheets" by the National Quotation Bureau, Inc. If the Closing Bid Price
cannot be calculated for such security on such date on any of the foregoing
bases, the Closing Bid Price of such security on such date shall be the fair
market value as mutually determined by the Company and the holders of
Preferred Shares.
(vii) "N" means the number of days from, but excluding,
the Issuance Date through and including the Conversion Date for the Preferred
Shares for which conversion is being elected; and
(viii) "Issuance Date" means, with respect to each
Preferred Share, the date of issuance of the applicable Preferred Share.
4
<PAGE>
Should a registration statement covering the resale of the shares of Common
Stock issuable upon conversion or exercise of the Preferred Shares and the
Warrants not be (i) filed within 45 days of the first Issuance Date of any
Preferred Shares (the "Scheduled Filing Date"), (ii) declared effective by
the SEC on or before 150 days after the first Issuance Date for any Preferred
Shares (the "Scheduled Effective Date"), or (iii) if after the Registration
Statement has been declared effective by the SEC, sales cannot be made
pursuant to the Registration Statement (whether because of a failure to keep
the Registration Statement effective, to disclose such information as is
necessary for sales to be made pursuant to the Registration Statement, to
register sufficient shares of Common Stock or otherwise), then, as partial
relief for the damages to any holder by reason of any such delay in or
reduction of its ability to sell the underlying shares of Common Stock (i)
the Conversion Percentage in effect at such time shall be reduced by a number
of percentage points equal to the product of (I) .06 and (II) the sum of (x)
the number of days after the Scheduled Filing Date that the relevant
Registration Statement is filed with the SEC, (y) the number of days after
the Scheduled Effective Date and prior to the date that the relevant
Registration Statement is declared effective by the SEC (without
double-counting any number of days after the Scheduled Filing Date that the
relevant Registration Statement is filed, if applicable) and (z) the number
of days that sales cannot be made pursuant to the Registration Statement
after the Registration Statement has been declared effective and (ii) the
Fixed Conversion Price in effect at such time shall be reduced by an amount
equal to the product of (I) the Fixed Conversion Price in effect as of the
Issuance Date and (II) .0006 multiplied by (III) the sum of (x) the number of
days after the Scheduled Filing Date that the relevant Registration Statement
is filed with the SEC, (y) the number of days after the Scheduled Effective
Date and prior to the date that the relevant Registration Statement is
declared effective by the SEC (without double-counting any number of days
after the Scheduled Filing Date that the relevant Registration Statement is
filed, if applicable) and (z) the number of days that sales cannot be made
pursuant to the Registration Statement after the Registration Statement has
been declared effective.
CONVERSION AT THE OPTION OF THE COMPANY.
- ----------------------------------------
At any time or times on or after the Issuance Date, the Company shall have
the right, in its sole discretion, to require that any or all of the
outstanding Preferred Shares be converted at the Conversion Rate; provided
that the Conditions to Conversion at the Option of the Company (as set forth
below) are satisfied. The Company shall exercise its right to Conversion at
Company's Election by providing each holder of Preferred Shares written
notice ("Notice of Conversion at Company's Election") at least 30 days prior
to the date selected by the Company for conversion ("Company's Election
Conversion Date"). If the Company elects to require conversion of some, but
not all, of the Preferred Shares, the Company shall convert an amount from
each holder of Preferred Shares equal to such holder's pro rata amount (based
on the number of Preferred Shares held by such holder relative to the number
of Preferred Shares outstanding on Company's Election Conversion Date) of all
Preferred Shares the Company is requiring to be converted. The Notice of
Conversion at Company's Election shall indicate (x) the number of Preferred
Shares the Company has selected for conversion, (y) the Company's Election
Conversion Date, which date shall be not less than 30 or more than 40 days
after each holder's receipt of such notice, and (z) each holder's pro rata
share of outstanding Preferred Shares. All Preferred Shares selected for
conversion in accordance with this provision shall be converted as of the
Company's Election Conversion Date as if the holders of such Preferred Shares
selected by the Company to be converted had given the Conversion Notice on
the Company's Election Conversion Date. All holders of Preferred Shares
shall thereupon and within two business days the Company's Election
5
<PAGE>
Conversion Date surrender all Preferred Stock Certificates selected for
conversion, duly endorsed for cancellation, to the Company or the Transfer
Agent. "Conditions to Conversion at the Company's Election" means the
following conditions: (i) on each day during the 20 consecutive trading days
immediately preceding the date of the Company's Notice of Conversion at the
Company's Election, the last reported sale price (as reported by Bloomberg)
of the Common Stock is at least 200% of the last reported sale price (as
reported by Bloomberg) as of the applicable Issuance Date of the Preferred
Shares being converted; (ii) on each day during the period beginning on the
date of the Notice of Conversion at the Company's Election and ending on and
including the Company's Election Conversion Date, the last reported sale
price (as reported by Bloomberg) of the Common Stock is at least 170% of the
last reported sale price (as reported by Bloomberg) as of the applicable
Issuance Date of the Preferred Shares being converted; (iii) the Company
shall not have previously given Notice of Conversion at Company's Election;
(iv) the Company's stockholders shall have approved the issuance of the
Securities (as defined below) on or prior to the date of the Company's Notice
of Conversion at Company's Election; (v) on each day during the period
beginning 20 days prior to the Notice of Conversion at the Company's Election
and ending on and including the Company's Election Conversion Date, the
Registration Statement shall be effective and available for the sale of no
less than 125% of the sum of (A) the number of Conversion Shares then
issuable upon the conversion of all outstanding Preferred Shares, including
the Conversion Shares to be issued pursuant to this Conversion at the
Company's Election, (B) the number of Warrant Shares (as defined in the
Securities Purchase Agreement) then issuable upon exercise of all outstanding
Warrants and (C) the number of Conversion Shares and Warrant Shares that are
then held by the holders of the Preferred Shares, (vi) on each day during the
period beginning 20 days prior to the date of the Company's Notice of
Conversion at Company's Election and ending on and including the Company's
Election Conversion Date, the Common Stock is designated for quotation on The
Nasdaq SmallCap Market or the Nasdaq National Market or a national securities
exchange and is not suspended from trading; (vii) during the period beginning
20 days prior to the date of the Company's Notice of Conversion at Company's
Election and ending on and including the Company's Election Conversion Date,
the Average Daily Trading Dollar Volume (as defined below) is not less than
$250,000; (viii) during the period beginning on the Initial Issuance Date and
ending on and including the Company's Election Conversion Date, the Company
shall have delivered Conversion Shares upon conversion of the Preferred
Shares and Warrant Shares upon exercise of the Warrants to the Buyers on a
timely basis; and (ix) the Company otherwise has satisfied its obligations
and is not in default under the Securities Purchase Agreement.
CONVERSION RESTRICTIONS.
- ------------------------
Other than a mandatory conversion or a conversion at the option of the
Company, the right of a holder of Preferred Shares to convert Preferred
Shares shall be limited as set forth below. Without the prior consent of the
Company, a holder of Preferred Shares shall not be entitled convert an
aggregate number of Preferred Shares from the Issuance Date of such Preferred
Shares through the date of this determination in excess of the number of
Preferred Shares which when divided by the number of Preferred Shares
purchased by such holder on such Issuance Date would exceed (i) 0.20 for the
period beginning on the date which is 46 days after the Issuance Date and
ending on and including the date which is 90 days after the Issuance Date,
(ii) 0.40 for the period beginning on and including the date which is 91 days
after the Issuance Date and ending on and including the date which is 135
days after the Issuance Date, (iii) 0.60 for the period beginning on the date
which is 136 days after the Issuance Date and ending on and
6
<PAGE>
including the date which is 180 days after the Issuance Date, (iv) 0.80 for
the period beginning on and including the date which is 181 days after the
Issuance Date and ending on and including the date which is 225 days after
the Issuance Date and (v) 1.00 for the period beginning on and including the
date which is 226 days after the Issuance Date and ending on and including
the date which is five years after the Issuance Date. Notwithstanding the
foregoing, the conversion restriction set forth shall not apply (x) if there
shall have occurred a Material Adverse Change, (y) with respect to any
conversion of Preferred Shares at a Conversion Price which is equal to the
Fixed Conversion Price then in effect or (z) the Company has delivered a Put
Notice. A "Material Adverse Change" means any change, event, result or
happening involving, directly or indirectly, the Company or any of its
subsidiaries resulting in a material adverse effect on the business,
prospects, financial condition or results or operations of the Company and
its subsidiaries, taken as a whole, including, without limitation, an event
constituting a Major Business Event or a Triggering Event shall have occurred.
REDEMPTION
- ----------
On the date which is two years after the Issuance Date, but only on such
date, the Company shall have the right, in its sole discretion, to redeem
from time to time, any or all of the Preferred Shares at the Redemption Price
at the Company's Election (as defined below). If the Company elects to redeem
some, but not all, of the Preferred Shares, the Company shall redeem an
amount from each holder of Preferred Shares equal to such holder's pro-rata
amount (based on the number of Preferred Shares held by such holder relative
to the number of Preferred Shares outstanding) of all Preferred Shares being
redeemed. The redemption price shall be an amount per Preferred Share equal
to the product of (i) 1.1 multiplied by (ii) the sum of (A)
(.06)(P/365)(10,000) plus (B) 10,000; where "P" means the number of days
from, but excluding, the Issuance Date through and including the date of
redemption.
Simultaneous with the occurrence of a Major Transaction (as defined below),
each holder of Preferred Shares shall have the right, at such holder's
option, to require the Company to redeem all or a portion of such holder's
Preferred Shares at a price per Preferred Share equal to greater of (i)
Liquidation Value (as defined below) and (ii) the product of (A) the
Conversion Rate at such time and (B) the Closing Bid Price on the date of the
public announcement of such Major Transaction or the next date on which the
exchange or market on which the Common Stock is traded is open if such public
announcement is made (X) after 12:00 p.m., Central Time, time on such date or
(Y) on a date on which the exchange or market on which the Common Stock is
traded is closed ("Major Transaction Redemption Price").
After a Triggering Event (as defined below), each holder of Preferred Shares
shall have the right, at such holder's option, to require the Company to
redeem all or a portion of such holder's Preferred Shares at a price per
Preferred Share equal to the greater of (i) $12,500 and (ii) the product of
(A) the Conversion Rate at such time and (B) the Closing Bid Price calculated
as of the date immediately preceding such Triggering Event on which the
exchange or market on which the Common Stock is traded is open ("Triggering
Event Redemption Price" and, collectively with "Major Transaction Redemption
Price," the "Redemption Price"); provided, however, that in the case of
Triggering Event described below, the Triggering Event Redemption Price shall
equal the greater of (i) the Liquidation Value and (ii) the product of (A)
the Conversion Rate at such time and (B) the Closing Bid Price calculated as
of the date immediately preceding such Triggering Event on which the exchange
or market on which the Common Stock is traded is open. The Company
7
<PAGE>
hereby warrants and agrees that the Fixed Conversion Price for any Preferred
Shares that are not redeemed after the occurrence of a Triggering Event
described below shall be reset to equal the lesser of (x) 150% of the Market
Price on the date of issuance of the applicable Preferred Shares, subject to
adjustment, and (y) 150% of the Market Price on the date immediately
following such Triggering Event on which the exchange or market on which the
Common Stock is traded is open.
A "Major Transaction" shall be deemed to have occurred at such time as any of
the following events: (ix) the consolidation, merger or other business
combination of the Company with or into another Person (other than pursuant
to a migratory merger effected solely for the purpose of changing the
jurisdiction of incorporation of the Company) pursuant to which either (x)
the continuing or surviving entity is not a public company or (y) the
stockholders of the Company existing at the time of such consolidation,
merger or other business combination cannot elect a majority of the directors
of the continuing or surviving entity immediately following such
consolidation, merger or business combination; (x) the sale or transfer of
all or substantially all of the Company's assets pursuant to which either (x)
the purchasing entity is not a public company or (y) the stockholders of the
Company existing at the time of such sale cannot elect a majority of the
directors of the purchasing entity immediately following such sale; or (xi) a
purchase, tender or exchange offer made to and accepted by the holders of
more than 10% of the outstanding shares of Common Stock which requires or
receives the consent of the Company's Board of Directors.
A "Triggering Event" shall be deemed to have occurred at such time as any of
the following events: (xii) the failure of the Registration Statement to be
declared effective by the SEC on or prior to the date that is 240 days after
the Initial Issuance Date; (xiii) while the Registration Statement is
required to be maintained effective the effectiveness of the Registration
Statement lapses for any reason (including, without limitation, the issuance
of a stop order) or is unavailable to the holder of the Preferred Shares for
sale of the Registrable Securities and such lapse or unavailability continues
for a period of ten consecutive trading days, provided that the cause of such
lapse or unavailability is not due to factors solely within the control of
such holder of Preferred Shares; (xiv) the failure of the Common Stock to be
listed on the Nasdaq National Market, The Nasdaq SmallCap Market, The New
York Stock Exchange, Inc. or The American Stock Exchange, Inc. for a period
of seven consecutive days (provided that such failure shall not constitute a
Triggering Event if the Company delists the Common Stock at the election of
the holders of Preferred Shares); or (xv) the Company's notice to any holder
of Preferred Shares, including by way of public announcement, at any time, of
its intention not to comply with proper requests for conversion of any
Preferred Shares into shares of Common Stock.
8
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
IMAGING TECHNOLOGIES CORPORATION
By: RALPH R. BARRY
----------------------------
DATE: September 2, 1997 Ralph R. Barry
Vice President and
Chief Financial Officer
9
