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
Date of Report (Date of earliest event reported) June 24, 1997
PACKAGING PLUS SERVICES, INC.
(Exact name of registrant as specified in its charter)
Nevada 0-18094 11-2781803
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
formation)
20 South Terminal Drive, Plainview, New York 11803
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (516) 349-1300
(Former name or former address, if changed since last report)
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Item 9. Sale of Equity Securities Pursuant to Regulation S.
On June 24, 1997 (the "Closing Date"), the Registrant issued to
each of Austost Anstalt Schaan and UFH Endowment, Ltd., respectively
(individually, "Investor" and collectively, "Investors"), pursuant to
Regulation S ("Regulation S") under the Securities Act of 1933, as
amended (the "Act"), a convertible debenture (individually,
"Debenture", collectively, "Debentures") in the principal amount of
$156,250. Each Debenture was purchased by the respective Investor for
$125,000, which represented a discount equal to 20% of the principal
amount of the Debenture. In addition, upon the closing of the sale of
each of these Debentures, the Company incurred fees to the placement
agent in the form of (i) a $15,000 cash payment per Debenture (an
aggregate of $30,000), and (ii) the issuance of common stock purchase
warrants to purchase at any time and from time to time commencing
June 1, 1997 and ending on March 31, 2002, an aggregate of 20,261 of
shares of the Registrant's common stock, $.005 par value per share
(the "Common Stock"), at an exercise price of $1.46 per share of
Common Stock. As a consequence, after deducting the placement agent's
fees, the Company received net proceeds of $220,000 from the sale of
the Debentures.
The $156,250 principal amount of each Debenture becomes due and
payable to the respective Investor on June 30, 1998. Interest on the
principal amount of each Debenture accrues at the rate of twelve
percent (12%) per annum and is due and payable quarterly beginning on
the Closing Date, although such interest may be paid in advance,
monthly, commencing on the Closing Date. Notwithstanding the
foregoing, on the Closing Date, the Registrant was required to prepay
in shares of Common Stock, the first three months of interest by
issuing to each Investor shares of Common Stock in an amount equal to
(x) the total monthly interest accrued and due for the initial three
month period (the "Period") commencing on the Closing Date, divided
by (y) 80% of the Market Price, where such term is defined as the
average closing bid price of the Common Stock, as reported by the
National Association of Securities Dealers Electronic Bulletin Board
(the "Bulletin Board"), for the last 5 consecutive trading days prior
to the Closing Date. Such Common Stock was issued pursuant to
Regulation S. After the Period, the Registrant shall pay interest in
cash or Common Stock (based on the above formula), at the
Registrant's option.
The holder of each Debenture is entitled, at its
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option, at any time commencing 45 days after the Closing Date,
to convert all or any amount of the Debenture in increments of
$10,000, together with all accrued and unpaid interest, into shares
of Common Stock, at a conversion price per share of Common Stock
equal to the lower of (a) 80% of the average closing bid price of the
Common Stock, as reported by the Bulletin Board, for the day
immediately preceding the date of receipt by the Registrant from the
Investor of a notice of conversion, or (b) 80% of the closing bid
price of the Common Stock, as reported by the Bulletin Board, for the
five (5) days immediately preceding the date of subscription by the
Holder.
The Registrant shall have the option to redeem each Debenture at
a price equal to 120% of the full principal amount of each Debenture
then outstanding (the "Redemption Price") in the event and to the
extent that, after 90 days after the Closing Date, the Debenture has
not been converted. In addition, the Registrant is required to redeem
each Debenture at the Redemption Price in the event and to the extent
that conversion of a Debenture would require the Registrant to seek
shareholder approval of the issuance of the underlying Common Stock
and such shareholder approval is not obtained 30 days thereafter. In
either case, the Registrant shall give each Investor 5 days written
notice of such redemption and each Investor during such 5 days shall
have the option to (i) accept the Redemption Price, or (ii) convert
their respective Debenture or any part thereof into shares of Common
Stock at a conversion price equal to 80% of the average closing bid
price of the Common Stock, as reported by the Bulletin Board, for the
5 consecutive trading days prior to the date of such conversion. Any
of such shares of Common Stock shall be issued pursuant to
Regulation S.
In the event that (i) the Registrant fails to issue unlegended
certificates for shares of Common Stock issuable upon conversion of
the Debenture or as payment as interest on the Debenture after the
applicable restrictive period for any reason other than the
Registrant's reasonable good faith belief that certain
representations and warranties made by the respective Investor in
connection with this transaction were untrue when made, or (ii) if
the restrictive period under Regulation S is extended, then the
Registrant is required, at the request of the respective Investor and
at the Registrant's expense, to effect the registration of such
shares of Common Stock under the Act and relevant Blue Sky laws as
promptly as is practicable. The Company shall file such
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registration statement within thirty (30) days of the respective
Investor's demand therefor and shall use its best efforts to cause
such registration statement to become effective as soon as
practicable thereafter.
The Registrant agrees to pay liquidated damages to each Investor
for the late issuance of shares of Common Stock upon conversion of
the Debenture in accordance with the following schedule (where "No.
Business Days Late" is defined as the number of business days beyond
seven (7) business days from the date of receipt by the Registrant of
a Notice of Conversion from an Investor:
Liquidated
No. of Damages
Business per $100,000
Days Late of Debenture
1 $500
2 $1,000
3 $1,500
4 $2,000
5 $2,500
6 $3,000
7 $3,500
8 $4,000
9 $4,500
10 $5,000
10 + $5,000 + $1,000 each
Business Day Late beyond
10 days
Each Debenture is secured by a lien against the Registrant in
favor of the respective Investor in an amount not less than
$1,000,000.
In making the sale of the Debentures, the Registrant relied on
the representations and warranties of each Investor that such
Investor is not a "U.S. person," as such term is defined under
Regulation S.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly authorized and caused the undersigned
to sign this Report on the Registrant's behalf.
PACKAGING PLUS SERVICES, INC.
By: /s/ Richard Altomare
Richard Altomare, Chief
Executive Officer
Dated: July 9, 1997
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