UNITED
STATES
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): August
15, 2008
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SMF
ENERGY CORPORATION
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(Exact
name of registrant as specified in its
charter)
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DELAWARE
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000-21825
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65-0707824
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(State
or other jurisdiction
of
incorporation)
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(Commission
File
Number)
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(I.R.S.
Employer
Identification
Number)
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200
W. Cypress Creek Rd., Suite 400
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Fort
Lauderdale, Florida
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33309
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: (954)
308-4200
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(Former
name or former address, if changed since last
report.)
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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):
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¨
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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¨
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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¨
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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Item
3.02 Unregistered Sales of Equity Securities
SMF
Energy Corporation (the “Company”) and its subsidiaries, SMF Services, Inc. and
H & W Petroleum Company, are borrowers under a Loan and Security Agreement
(the “Loan Agreement”) dated September 26, 2002. The primary lender under the
Loan Agreement, as amended, is Wachovia Bank, N.A. (the “Bank”). By a letter
dated August 15, 2008 (the “Consent Letter”), the Bank consented to (i) the
issuance of additional shares of one or more new series of convertible preferred
stock; (ii) the issuance of up to $1,000,000 in shares of the new series,
including the exchange by the Company of no more than an aggregate of $250,000
in principal amount of the Company’s August 15, 2007 Senior Secured Convertible
Promissory Notes, together with some or all of the accrued but unpaid interest
thereon, for shares of the new series.
Also
on
August 15, 2008, as permitted by the Consent Letter, the Company issued, in
a
private offering, $148,850 in equity securities (the “Offering”), consisting of
229 shares of Series C Convertible Preferred Stock, $0.01 par value, at
a
price of $650 per share (the “Series C Preferred Stock”).
Each
share of Series C Preferred Stock is convertible into
1,000 shares of the Company’s common stock at a price per share of $0.65 per
share, which is greater than the
$0.485
closing price of the Company’s common stock on August 14, 2008.
The
Company has agreed to use its best efforts to register the shares of the
Company’s common stock into which the Series C Preferred Stock may be converted
under the Securities Act of 1933, as amended (the “Act”).
The
offer
and sale of the Series C Preferred Stock and the underlying shares of the
Company’s common stock into which the Series C Preferred Stock are convertible
are exempt from registration under the Act as a private offering to “accredited
investors” under Sections 4(2) and 4(6) of the Act and Regulation D promulgated
thereunder.
The
information provided in Item 5.03 of this Current Report on Form 8-K regarding
the terms of conversion of the Series C Preferred Stock is incorporated by
reference into this Item 3.02.
Item
3.03 Material Modification to Rights of Security Holders
The
provisions of Item 5.03 are incorporated by reference in this Item
3.03.
Item
5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year
The
Company will file with the Secretary of State of Delaware a Certificate of
Designation of Series C Convertible Preferred Stock (the “Certificate”). The
Certificate authorizes the issuance of up to 2,000 shares of Series C Preferred
Stock, which has such rights, qualifications, limitations and restrictions
as
are set forth in the Certificate and described below.
Ranking.
The
Series C Preferred Stock ranks senior to the common stock, $0.01 par value
(the
“Common Stock”) of the Company and on a parity with the holders of any other
series of preferred stock as to the payment of dividends and distribution of
assets.
Liquidation
Preference.
Upon
liquidation, dissolution or winding up of the Company, holders of Series C
Preferred Stock are entitled to be paid out of the assets of the Company an
amount per share of Series C Preferred Stock equal to the greater of: (i) the
original issue price of the Series C Preferred Stock, plus all accumulated
but
unpaid dividends; or (ii) the fair market value of the Series C Preferred Stock
on an as-converted to Common Stock basis, plus all accumulated but unpaid
dividends.
Voting.
Each
holder of Series C Preferred Stock is entitled to one vote per share at each
meeting of stockholders of the Company with respect to any and all matters
presented to the stockholders of the Company.
Dividends.
Dividends will be paid on the Series C Preferred Stock when, as and if declared
by the Board of Directors, but only out of funds that are legally available
therefor, in quarterly cash dividends at the rate of eighteen percent (18%)
per
annum of the sum of the Series C Original Issue Price of $650 per share,
provided, however, that if the Company reports in an SEC filing that it has
achieved positive Earning Before Interest, Taxes, Depreciation and Amortization
for two consecutive fiscal quarters, the quarterly cash dividend shall be
changed from eighteen percent (18%) per annum to twelve percent (12%) per annum
of the sum of the Series C Original Issue Price effective two weeks after notice
of such change is transmitted to holders of the Series C Preferred Stock.
Conversion.
Each
share of Series C Preferred Stock is currently convertible, at the option of
the
holder, into 1,000 shares of Common Stock based on a conversion price equal
to
$0.65 per share of Common Stock (the “Series C Conversion Price”). The Series C
Conversion Price is subject to adjustment for stock dividends, stock splits
and
other similar recapitalization events.
In
addition, each share of Series C Preferred Stock shall automatically be
converted into shares of Common Stock, based on the then-effective Series C
Conversion Price, (A) if the closing price of the Common Stock as reported
on
the Nasdaq Capital Stock Market (or on such other public securities trading
market, such as the OTC Bulletin Board, as then constitutes the primary trading
market for the Common Stock) is equal to or greater than two times the Series
C
Conversion Price then in effect (the “Series C Automatic Conversion Price”), for
a period of twenty (20) consecutive business days, or (B) at any time upon
the
affirmative election of the holders of at least sixty-six and two-thirds percent
(66 2/3%) of the outstanding shares of the Series C Preferred Stock, or (C)
upon
the earliest to occur of (x) the closing of a firmly underwritten public
offering pursuant to an effective registration statement under the Securities
Act covering the offer and sale of Common Stock for the account of the Company
in which (i) the per share price is at least two times the Series C Automatic
Conversion Price and (ii) the cash proceeds to the Company (before underwriting
discounts, commissions and fees) are at least ten million dollars ($10,000,000).
The
foregoing summary of the terms of the Certificate is subject to, and qualified
in its entirety, by the Certificate of Designation of Series C Convertible
Preferred Stock, which is attached to this Current Report on Form 8-K as Exhibit
3.1 and is incorporated herein by reference.
Item
9.01 Financial Statements and Exhibits
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3.1
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Certificate
of Designation of Series C Convertible Preferred
Stock
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10.1
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Form
of Securities Purchase Agreement
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99.1
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Consent
Letter from Wachovia Bank, N.A.
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SIGNATURE
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.
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| Date:
August 21, 2008 |
SMF ENERGY CORPORATION |
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By: |
/s/
Richard E. Gathright |
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Richard
E. Gathright, Chief Executive Officer and
President |
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EXHIBIT
INDEX
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EXHIBIT
NO.
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DESCRIPTION
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3.1
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Certificate
of Designation of Series C Convertible Preferred Stock
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10.1
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Form
of Securities Purchase Agreement
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99.1
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Consent
Letter from Wachovia Bank, N.A.
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