New York, May 9 - MSO Holdings, Inc. said it closed on the first tranche of a potential $2,218,244 private placement of convertible promissory notes.
The first closing is for $791,250. If conditions are met by Dec. 31, 2006, a second closing for $1,426,944 will take place. The investors may also ask for interim closings to take place, according to an 8-K filing with the Securities and Exchange Commission.
The notes pay interest at 10% and mature on Jan. 1, 2008 unless MSO carried out a financing to raise at least $2 million before that.
If a $2 million or more financing is carried out, the notes can be converted into stock at a price equal to 80% of that paid by buyers in the new financing.
The notes are also convertible into MSO's series A-1 convertible preferred stock at a price of $0.25 per share. If a majority of the notes are converted into preferreds, then the remainder will automatically convert.
Investors also received warrants which are exercisable into either the same number of shares that the notes convert into or the same number of preferreds.
The buyers were all existing holders of the company's series A convertible preferred stock.
MSO Holdings is a Bannockburn, Ill., obesity management company offering both a surgical and non-interventional weight loss treatment option to members of health plans, employees of self insured corporations and the general public.
| Issuer: | MSO Holdings, Inc.
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| Issue: | Convertible promissory notes
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| Amount: | $791,250 (first closing), $2,218,244 (potential total)
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| Maturity: | Jan. 1, 2008, unless $2 million financing is carried out first
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| Coupon: | 10%
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| Conversion price: | 80% of price for $2 million financing if converted into stock, $0.25 if converted into series A-1 convertible preferred stock
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| Warrants: | Exercisable for same amount and type of stock or preferreds that would be issued on conversion of notes
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| Settlement date: | May 9
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| Announcement date: | May 15
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| Stock symbol: | OTC Bulletin Board: MSOD
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| Stock price: | $0.15 on May 2 (last trade)
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