UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) July 3, 2003
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TeraForce Technology Corporation
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(Exact name of registrant as specified in its charter)
Delaware 0-11630 76-0471342
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1240 East Campbell Road, Richardson, Texas 75081
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (469) 330-4960
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ITEM 5. OTHER EVENTS.
This Current Report on Form 8-K/A amends the Current Report on Form 8-K
dated July 3, 2003 and filed by the Company on July 30, 2003.
On August 4, 2003 (the "Final Closing") we completed a private
placement of $2,160,000 principal amount of 12% Subordinated Convertible Notes
due 2005 (the "Notes") to accredited investors (the "Noteholders") pursuant to a
Note Agreement by and among the Company and the Noteholders (the "Note
Agreement"). On July 3, 2003 (the "Initial Closing") we issued $750,000
principal amount of Notes. We have issued a total of $3,010,000 principal amount
of Notes. After payment of sales commissions and other costs associated with the
issuance of the Notes we have received net proceeds of approximately $2,809,000.
We intend to use $400,000 of this amount to repay outstanding indebtedness and
the balance for working capital.
In connection with the Offering, the Company paid Odyssey Capital, LLC
("Odyssey") a fee consisting of (a) a cash payment equal to 5% of the gross
proceeds from the sale of the Notes, which amount totals $150,500 and (b) a
four-year warrant to purchase 1,881,250 shares of the Company's common stock
(the "Common Stock"). The warrant has an exercise price of $0.16 per share. The
Company has also agreed to reimburse Odyssey for its reasonable costs and
expenses incurred in connection with this offering.
The Notes are convertible into an aggregate of 18,812,500 shares of
Common Stock. The Company also issued to each purchaser of the Notes a four-year
warrant for the purchase of Common Stock (the "Warrants"). The Warrants entitle
the Noteholders to purchase shares of Common Stock equal to 10% of the number of
shares of Common Stock, not including any conversion shares resulting from
accrued interest. Warrants to purchase an aggregate of 1,881,250 shares of our
Common Stock were issued to the Noteholders. The number of shares to be issued
upon exercise of the Warrants will be subject to anti-dilution provisions and
therefore may be adjusted from time to time. The exercise price will be subject
to anti-dilution provisions and therefore may be adjusted from time to time upon
the occurrence of certain events. The Warrants may be exercised at the option of
the holder at any time prior to their expiration. The Warrants will expire four
years after their issuance. The shares of Common Stock to be issued upon the
exercise of the Warrants will be included in the registration statement covering
shares of Common Stock underlying the Notes.
The Company entered into a registration rights agreement with each
Noteholder, and has agreed to file a registration statement with the SEC under
the Securities Act of 1933, as amended (the "Securities Act"), registering the
shares of Common Stock underlying the Notes and the Warrants within 90 days of
the Final Closing, which is October 31, 2003. The Company will use its best
efforts to have the registration statement declared effective by the SEC as soon
as practicable thereafter. The Company and Noteholders each agreed with the
other to indemnify the other for certain liabilities arising under the
Securities Act.
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The Notes, Warrants and the Common Stock to be issued upon conversion
of the Notes and the Warrants are subject to certain restrictions on
transferability and resale and may not be transferred or resold except as
permitted under the Act and applicable state laws pursuant to registration or
exemption therefrom.
The Company's sales of common stock were exempt from registration
pursuant to Section 4(2) of the Securities Act, and pursuant to Rule 506 of
Regulation D of the Securities Act. A Rule 506 exemption was available for these
sales because the Company sold only to accredited investors; the Company did not
solicit or advertise the sales; a restrictive legend was placed on each
certificate issued describing the restrictions against resale; and a Form D was
filed with the Securities and Exchange Commission and in each state where the
individual investors reside.
These statements in "Other Events" regarding our future financial performance
and results, and other statements that are not historical facts, are
forward-looking statements as defined in Section 27A of the Securities Act of
1933. We use the words "may," "will," "expect," "anticipate," "estimate,"
"believe," "continue," "intend," "plan," "budget," or other similar words to
identify forward-looking statements. You should read statements that contain
these words carefully because they discuss future expectations, contain
projections of our financial condition, and/or state other "forward-looking"
information. Events may occur in the future that we are unable to accurately
predict, or over which we have no control. If one or more of these uncertainties
materialize, or if underlying assumptions prove incorrect, actual outcomes may
vary materially from those forward-looking statements included in this Form 8-K.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business to Be Acquired: N/A
(b) Pro Forma Financial Information: N/A
(c) Exhibits:
Exhibit Description of Exhibit
4.1 Warrant for purchase of 1,881,250 shares of Common Stock
issued to Odyssey
4.2 Note Agreement dated July 3, 2003 filed as an exhibit to the
Form 8-K filed by TeraForce Technology Corporation on July 30,
2003 and incorporated by reference herein
4.3 Form of 12% Convertible Subordinated Note filed as an exhibit
to the Form 8-K filed by TeraForce Technology Corporation on
July 30, 2003 and incorporated by reference herein
4.4 Form of Warrant Agreement filed as an exhibit to the Form 8-K
filed by TeraForce Technology Corporation on July 30, 2003 and
incorporated by reference herein
4.5 Registration Rights Agreement dated July 3, 2003 filed as an
exhibit to the Form 8-K filed by TeraForce Technology
Corporation on July 30, 2003 and incorporated by reference
herein
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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.
TeraForce Technology Corporation
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(Registrant)
Date: August 8, 2003 By: /s/ Herman M. Frietsch
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(Signature)
Herman M. Frietsch
Chairman of the Board and CEO
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INDEX TO EXHIBITS
EXHIBIT DESCRIPTION OF EXHIBIT
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4.1 Warrant for purchase of 1,881,250 shares of Common Stock
issued to Odyssey
4.2 Note Agreement dated July 3, 2003 filed as an exhibit to the
Form 8-K filed by TeraForce Technology Corporation on July 30,
2003 and incorporated by reference herein
4.3 Form of 12% Convertible Subordinated Note filed as an exhibit
to the Form 8-K filed by TeraForce Technology Corporation on
July 30, 2003 and incorporated by reference herein
4.4 Form of Warrant Agreement filed as an exhibit to the Form 8-K
filed by TeraForce Technology Corporation on July 30, 2003 and
incorporated by reference herein
4.5 Registration Rights Agreement dated July 3, 2003 filed as an
exhibit to the Form 8-K filed by TeraForce Technology
Corporation on July 30, 2003 and incorporated by reference
herein