By Laura Lutz
Des Moines, Jan. 10 - MSGI Security Solutions, Inc. sold $1.25 million of warrants in a private placement, according to an 8-K filing with the Securities and Exchange Commission.
The company sold a total of 5 million five-year warrants. Half are series A warrants, exercisable at $0.50 per share, and half are series B warrants, exercisable at $2.50 per share.
Hudson Bay Fund, LP bought 2.15 million warrants for $537,500, and Hudson Bay Overseas Fund, Ltd. bought 2.85 million warrants for $712,500.
Under a put option, the investors may require MSGI to buy back up to 250,000 shares or warrants, beginning six months after closing of the placement.
Hudson Bay Fund may put up to 107,500 shares or warrants, and Hudson Bay Overseas may put up to 142,500 shares or warrants.
The put option will expire 10 days after the company notifies the holders that the market price of its stock is at least five-thirds of the applicable put price.
If the put option is exercised, the price per share will be equal to $1.20 from six months to one year after closing, $1.40 in the second year, $1.60 in the third year, $1.80 in the fourth year and $2.00 in the fifth year.
Of the proceeds, $750,000 was deposited with a bank as collateral for $1.5 million of letters of credit that MSGI is required to obtain for the investors. The investors may draw upon the letters of credit by exercising the put option.
The letters of credit must be obtained within 10 days of the closing of the placement, Jan. 4.
MSGI is a New York-based security products and services company.
| Issuer: | MSGI Security Solutions, Inc.
|
| Issue: | Series A and series B warrants
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| Amount: | $1.25 million
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| Warrants: | 2.5 million series A; 2.5 million series B
|
| Warrant expiration: | Five years
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| Warrant strike price: | $0.50 (for series A); $2.50 (for series B)
|
| Put: | Of up to 250,000 shares or warrants, from six months after issuance until stock trades at or above five-thirds of put price; at $1.20 in first year, $1.40 in second year, $1.60 in third year, $1.80 in fourth year and $2.00 in fifth year
|
| Investors: | Hudson Bay Fund, LP (for $537,500); Hudson Bay Overseas Fund, Ltd. (for $712,500)
|
| Settlement date: | Jan. 4
|
| Stock symbol: | OTCBB: MSGI
|
| Stock price: | $1.01 at close Jan. 4
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