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):
September 22, 2008
AIR INDUSTRIES GROUP, INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 000-29245 20-4458244
State of Commission IRS Employer
Incorporation File Number I.D. Number
1479 North Clinton Avenue, Bay Shore, NY 11706
Address of principal executive offices
Registrant's telephone number: (631) 968-5000
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 3.02 Unregistered Sale of Equity Securities.
From September 22, 2008 to October 6, 2008, we sold $2,280,000 principal
amount of our junior subordinated notes due 2010 ("Junior Subordinated Notes")
and 178,416 shares of our series B convertible preferred stock (the "Shares") to
41 "accredited investors," as that term is defined in Rule 501 under Regulation
D, for total consideration of $2,280,000. The Junior Subordinated Notes and
Shares were issued pursuant to exemptions from the registration requirements of
the Securities Act provided by Section 4(2) of the Securities Act and Rule 506
of Regulation D promulgated thereunder.
Taglich Brothers, Inc., placement agent for the offering, is entitled to a
fee of 10% of the Junior Subordinated Notes sold in the offering and
reimbursement of its out-of-pocket expenses. Such fee will be paid in kind with
Junior Subordinated Notes and shares of series B convertible preferred stock.
Michael N. Taglich, President and Chairman of Taglich Brothers, Inc., has been
Chairman of our company since September 22, 2008. The decision to retain Taglich
Brothers, Inc. was made prior to the appointment of Michael N. Taglich as
Chairman of our company. We believe the terms of the offering are not less
favorable than could have been obtained from an unaffiliated third party.
The proceeds from this sale of securities will be used to pay accounts
payable and as working capital.
The Junior Subordinated Notes are payable on May 31, 2010, or such earlier
date upon which we consummate a debt or equity financing in one or a series of
related transactions in an aggregate amount of at least $10,000,000. Interest on
each Junior Subordinated Note will accrue at 1% per month and will be payable
monthly commencing on November 1, 2008. Payment of the principal and accrued
interest on the Junior Subordinated Notes is junior and subordinate to the
principal of, and interest and premium, if any, on any and all, of our
indebtedness for borrowed money or obligations with respect to which we are a
guarantor, to banks, insurance companies, or other financial institutions or
entities regularly engaged in the business of lending money, in each case as in
effect as of September 22, 2008, or as may be borrowed in the future, for
working capital by us or one of our subsidiaries, including without limitation,
indebtedness under our Revolving Credit, Term Loan, Equipment Line and Security
Agreement with PNC and our Loan and Security Agreement with Steel City Capital
Funding. The foregoing summary of certain material provisions of the Junior
Subordinated Notes is qualified in its entirety by reference to the form of the
Junior Subordinated Notes filed as Exhibit 10.2.
Our series B convertible preferred stock has the powers, rights,
preferences and limitations set forth in the Certificate of Designation we filed
with the Secretary of State of the State of Delaware on April 11, 2007. A
summary of certain material provisions of that certificate is contained in Item
3.02 of our Form 8-K filed on April 16, 2007, which summary is incorporated by
reference herein and qualified in its entirety by reference to the Certificate
of Designation filed as exhibit 4.1 to that Form 8-K.
We have granted holders of the shares of series B convertible preferred
stock issued in connection with the sale of the Junior Subordinated Notes
piggy-back registration rights with respect to the shares of common stock
issuable upon conversion of those shares.
Item 5.02 Election of Directors.
On October 3, 2008, our Board of Directors appointed Robert F. Taglich and
Robert Schroeder directors of our company. Robert F. Taglich is a Managing
Director of, and Robert Schroeder is Vice President - Investment Banking of,
Taglich Brothers, Inc., a securities firm with headquarters in New York City and
an office on Long Island. Robert F. Taglich and Robert Schroeder were appointed
as two of the three nominees of Taglich Brothers, Inc., placement agent for the
offering of the Junior Subordinated Notes described in Item 3.02 above.
Taglich Brothers, Inc. acted as placement agent for the sale of our series
B convertible preferred stock in April and May of 2007 and our junior
subordinated notes in June of 2008 (the "June 2008 Junior Subordinated Notes").
For acting as placement agent of our series B convertible preferred stock, we
paid Taglich Brothers, Inc., a sales commission of $641,840, representing 8% of
the gross proceeds of that offering, plus $25,000 in reimbursement of its actual
and reasonable out-of-pocket expenses, including fees and expenses of its
counsel. We also issued to Taglich Brothers, Inc. warrants to purchase 2,900,574
shares of our common stock, representing 10% of the number of shares into which
the series B convertible preferred stock may be converted. These warrants, which
may be exercised over a period of five years, have an initial per share exercise
price of $0.305 and allow a "cashless exercise." For acting as placement agent
of our June 2008 Junior Subordinated Notes, we paid Taglich Brothers, Inc. a fee
of $20,000 in cash plus 200,000 shares of our common stock (which we valued at
approximately $40,000), as well as reimbursement of approximately $25,000 of
out-of-pocket expenses.
In connection with the offering of the Junior Subordinated Notes described
in Item 3.02 above (the "September 2008 Junior Subordinated Notes"), we have
agreed to pay Taglich Brothers, Inc. a fee of 10% of the amount of new money
raised and 8% of the amount of June 2008 Junior Subordinated Notes converted
into the September 2008 Junior Subordinated Notes and shares of series A
convertible preferred stock issued in connection therewith. Such fee will be
paid in kind with September 2008 Junior Subordinated Notes and shares of series
B convertible preferred stock. In addition, we have granted Taglich Brothers,
Inc. the right to designate a total of three nominees for election to our Board
of Directors, which nominees are Michael N. Taglich, Robert F. Taglich and
Robert Schroeder.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits.
Exhibit No. Description
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4.1 Certificate of Designation for the Series B Convertible
Preferred Stock filed with the Secretary of State of the State
of Delaware on April 11, 2007 (incorporated by reference to
exhibit 4. 1 to our Form 8-K filed on April 18, 2007).
10.1 Form of Securities Purchase Agreement
10.2 Form of Junior Subordinated Promissory Note due 2010
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: October 7, 2008
AIR INDUSTRIES GROUP, INC.
By: /s/ Peter Rettaliata
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Peter Rettaliata
President and Chief Executive Officer
Exhibit Index
Exhibit No. Description
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10.1 Form of Securities Purchase Agreement
10.2 Form of Junior Subordinated Promissory Note due 2010