SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Pursuant to Section 13 or 15(d) of
the Securities and Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
March 28, 2000
U.S. Wireless Data, Inc.
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(Exact Name of Registrant as Specified in its Charter)
Colorado 0-22848 84-1178691
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(State or other (Commission (IRS Employer
jurisdiction File Number) Identification No.)
of incorporation)
805 Third Avenue, 8th Floor
New York, NY 10022
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(Address of principal executive offices)
Registrant's Telephone Number, including
area code (212) 750-7766
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(Former Address, if changed since last report)
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Item 1: Change of Control
All references to "we" or "us" contained in this Form 8-K refer to U.S.
Wireless Data, Inc. The following descriptions of agreements we have entered
into are summaries and are qualified by reference to the agreements we are
filing as exhibits to this report.
We have entered into a series of transactions which may be deemed to
constitute a change of control. The transactions are outlined below:
1. As previously reported, we issued warrants, exercisable at $.01 per
share, to purchase an aggregate of 15,000,000 shares of our Common Stock
(13,636,364 shares to ComVest Capital Management, LLC, an affiliate of
Commonwealth Associates, L.P., and 1,363,636 shares to Dean M. Leavitt, our
Chairman and Chief Executive Officer). ComVest exercised its warrant with
respect to 7,920,000 shares, representing 25% of our outstanding Common Stock,
and Mr. Leavitt exercised his warrant with respect to 792,000 shares in March
2000. The remaining warrants owned by ComVest (which are not fully exercisable
until our shareholders approve an amendment to our Articles of Incorporation to
increase the number of authorized shares of our Common Stock) would represent an
additional 18% of our Common Stock if they are exercised.
2. Commonwealth acted as placement agent in a private placement pursuant to
which 506.16 Units have been sold at $100,000 per Unit for aggregate proceeds of
$50,616,000 as of March 28, 2000. Each Unit consists of 10,000 shares of our
Series C Convertible Preferred Stock (which is initially convertible into 66,667
shares of our Common Stock) and warrants to purchase Common Stock equal to 25%
of the number of shares into which the Series C Convertible Preferred is
convertible.
Description of Series C Convertible Preferred Stock
The Series C Convertible Preferred has a liquidation preference of $10
per share, plus accrued and unpaid dividends. The holders of Series C
Convertible Preferred are entitled to vote their shares of Series C Convertible
Preferred on an as-converted basis with the holders of Common Stock as a single
class on all matters submitted to a vote of the shareholders, except as
otherwise required by applicable law and except that the holders of Series C
Convertible Preferred voting separately as a class have the right to elect two
directors to our Board of Directors.
Each share of Series C Convertible Preferred is convertible at any
time, subject to the approval by our shareholders of an amendment to our
Articles of Incorporation to increase our number of authorized shares of Common
Stock, at the option of the holder, into a number of shares of Common Stock
determined by dividing the liquidation value by the conversion price, initially
$1.50 per share, which is subject to adjustment for stock splits,
recapitalizations and other similar events. If we issue shares of Common Stock
at a price per share less than the then current conversion price, then, subject
to certain exceptions, the conversion price will be automatically reduced to
such lower price and the number of shares issuable upon conversion of the Series
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C Convertible Preferred shall be increased proportionately. The Series C
Convertible Preferred automatically converts into Common Stock (a) if, at any
time commencing three months after June 17, 2000, the average closing bid price
of our Common Stock exceeds 300% of the conversion price for 20 consecutive
trading days or (b) upon a public offering of our securities that raises gross
proceeds in excess of $30,000,000, provided the shareholders have approved an
increase in our authorized capital to allow for the conversion of the Series C
Convertible Preferred.
The terms of the Series C Convertible Preferred may be amended,
modified or waived by an agreement among us, Commonwealth and a committee to be
designated by Commonwealth whose members hold in the aggregate not less than 20%
of the outstanding Series C Convertible Preferred. Currently, on an as converted
basis, the Series C Convertible Preferred represents approximately 51% of our
outstanding voting capital stock, assuming the shareholders have approved an
increase in our authorized capital to allow for the conversion of the Series C
Convertible Preferred.
Description of Warrants
Each warrant sold with a Series C Preferred Unit is exercisable for a
period of seven years for an aggregate number of shares of Common Stock equal to
25% of the number of shares into which the Series C Convertible Preferred are
convertible at an exercise price equal to the then conversion price. The initial
exercise price is $1.50 per share, subject to adjustment under the same
circumstances as the Series C Convertible Preferred. The warrants are callable
for a nominal price at our option on 30 days' notice to the holders of the
warrants if (a) the average closing bid price of our Common Stock for 20
consecutive trading days exceeds 300% of the exercise price, as adjusted, (b)
our Common Stock is trading on a national securities exchange or Nasdaq SmallCap
or National Market Systems, or (c) a registration statement covering the warrant
shares has been declared effective and the warrant shares are not otherwise
subject to any lock-up restrictions.
The terms of the warrants may be amended, modified or waived by an
agreement among us, Commonwealth and a committee to be designated by
Commonwealth whose members hold in the aggregate not less than 20% of the
outstanding warrants. Currently, on an as exercised basis, the warrants
represent approximately 11% of our outstanding voting capital stock, assuming
the shareholders have approved an increase in our authorized capital to allow
for the exercise of the Series C Convertible Preferred.
Registration Rights and Lock-Up Agreement
We have agreed to file a registration statement with respect to the
shares of Common Stock issuable upon conversion of the Series C Convertible
Preferred and exercise of the warrants under the Securities Act of 1933, as
amended, within nine months of the closing of the private placement transaction.
We have also agreed to certain "piggyback" registration rights with respect to
the shares of Common Stock issuable upon conversion of the Series C Convertible
Preferred and the exercise of the warrants.
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Each investor who purchased Units in the private placement agreed that
it will not sell, transfer or otherwise dispose of any of our securities sold in
the private placement for a period of one year following the closing of the
transaction. Thereafter, investors may not sell, transfer or dispose of more
than 25% of such securities during each of the following four 90-day periods.
The lock-up period may be extended by Commonwealth for up to an additional six
months from the closing of any public offering that is consummated prior to the
end of the initial lock-up period, in which event there shall be no further
lock-up at the end of such period. Our officers, directors and certain other
existing shareholders agreed to substantially the same lock-up provisions on
shares of Common Stock owned or acquired by them.
Affiliated Purchases
Several of our officers and directors purchased Units in the private
placement. Dean M. Leavitt, our Chief Executive Officer and Chairman purchased
2.5 Units, Charles I. Leone, our Chief Financial Officer and Chief Operating
Officer purchased 1 Unit and Robert E. Robichaud, our former Chief Financial and
Accounting Officer, Treasurer and Secretary purchased .75 of a Unit. Edwin
Cooperman, one of our directors, purchased 1 Unit and each of Michael S. Falk
and Amy Newmark, both also directors, purchased 2.5 Units. Barry Kaplan, also
one of our directors, purchased 25 Units. Mr. Kaplan also received from
Commonwealth at no charge a warrant to purchase 1.5 Units exercisable at
$100,000 per Unit.
3. As part of its compensation, Commonwealth received warrants to
purchase 126.5 Units, exercisable at $100,000 per Unit , a commission of 7% of
the gross proceeds raised in the Private Placement, which is equal to
$3,543,120, and a structuring fee of 3% of the gross proceeds raised in the
Private Placement, which is equal to $1,518,480. Pursuant to a prior agreement
with Peter J. Solomon Securities Company Limited relating to financing
transactions entered into by us, we issued to Peter J. Solomon Securities
Company warrants to purchase 25.3 Units exercisable at $100,000 per Unit and
paid a fee equal to $400,000.
4. Commonwealth has the right under an Agency Agreement to designate
two directors of our Board of Directors and the following individuals gave
proxies to Commonwealth to vote for the election of such designees: Dean M.
Leavitt, our Chairman, Chief Executive Officer and a member of our Board of
Directors, Charles I. Leone, our Chief Financial Officer and Chief Operating
Officer, John H. Perveiler, our Vice President/National Sales Manager, Marc R.
Shultz, our Vice President of Business Development, and Barry Kaplan, Alvin Rice
and Chester Winter, each members of our Board of Directors, and John M.
Liviakis.
5. As previously disclosed, four new directors joined our Board of
Directors on March 29, 2000, including Michael S. Falk, a designee of
Commonwealth and the co-founder and Chief Executive Officer of Commonwealth.
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As a result of the foregoing, Commonwealth Associates may be deemed to
control us.
Item 5. Other Items.
A portion of the proceeds from the private placement described above were
used as follows:
We redeemed 1,500,000 shares of our Series B Convertible Preferred Stock
from Bold Street, LLC, for a price equal to 125% of the liquidation value of the
Series B Convertible Preferred, plus accrued dividends, and a warrant, expiring
April 30, 2004, to purchase 150,000 shares of Common Stock at $2.28 per share.
In connection with such redemption, Bold Street waived certain accrued
penalties. Bold Street received certain "piggyback" registration rights as to
the shares of Common Stock underlying the warrant.
We redeemed 227,353 shares of our Series B Convertible Preferred and
$1,000,000 of our outstanding 6% Convertible Debentures from RBB Bank
Aktiengesellschaft for a price equal to 125% of the liquidation value or
principal amount, as applicable, of the Series B Convertible Preferred and
Debentures. In connection with such redemption, RBB Bank also waived certain
accrued penalties.
The balance of the 6% Convertible Debentures have been converted into
Common Stock and 227,352 shares of Series B Convertible Preferred remain
outstanding.
In addition, as a result of the financing transactions described above,
anti-dilution provisions of certain outstanding warrants were triggered and we
were required to adjust the exercise prices and the number of shares of our
Common Stock issuable upon the exercise of such warrants. Upon the exercise of
these warrants, we will be required to issue an additional 823,801 shares of our
Common Stock.
Item 7: Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
3. Certificate of Amendment to Articles of Incorporation filed March
10, 2000 (including Certificate of Correction filed March 16,
2000).*
4.1 Form of Unit Warrant*
4.2 Form of Subscription Agreement*
4.3 Form of Placement Agent Warrant*
4.4 Form of Peter J. Solomon Securities Company Limited Warrant*
4.5 Form of Bold Street, LLC Warrant*
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* To be filed by amendment.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: April 12, 2000
U.S. WIRELESS DATA, INC.
By: /s/ Dean M. Leavitt
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Dean M. Leavitt
Chief Executive Officer
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