GSE Preferred Registration 8-K 031207
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) March 7, 2007
GSE
SYSTEMS, INC.
----------------------
(Exact
name of registrant as specified in its charter)
Delaware 0-26494 52-1868008
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(State
or
other jurisdiction (Commission
File Number) (I.R.S.
Employer
of
incorporation) Identification
No.)
7133
Rutherford Rd., Suite 200, Baltimore, MD 21244
--------------------------------------------------------
(Address
of principal executive office and zip code)
(410)
277-3740
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Registrant's
telephone number, including area code
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation or the registrant under any of the following
provisions (see General Instructions 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
8.01 Other Events.
Contingent
Conversion of the Company’s Equity Securities
Shares
of
Series A Convertible Preferred Stock (the “Convertible Preferred Stock”) were
issued by GSE Systems, Inc. (the “Company”) pursuant to the terms of the
Company’s February 2006 offering of units consisting of up to $4.25 million of
preferred shares and warrants (the “Offering”) as further described in the
Company’s Form 8-K and registration statement on Form S-3, as amended, filed
with the Commission on March 6, 2006 and May 30, 2006, respectively. The minimum
investment was $50,000 and the price per share at which the Convertible
Preferred Stock was offered was $100 (or 500 shares per the minimum
investment).
As
provided in Section 7(c) of the Certificate of Designation (previously filed
as
an Exhibit to the Company’s March 6, 2006 Form 8-K), at any time after March 1,
2007, the
date
corresponding to the 366th day from the Closing Date, the
Company had the right to convert all shares of the Convertible Preferred Stock
into shares of Company Common Stock (the “Common Stock”) when the average of the
current stock price during the twenty (20) trading days immediately prior to
the
conversion date exceeded two hundred percent (200%) of the conversion price
($1.77 per share).
On
March
7, 2007, the Company exercised its contingent conversion right pursuant to
Section 7(c) of the Certificate of Designation and converted the remaining
20,000 outstanding shares of its Convertible Preferred Stock into 1,129,946
shares of Company Common Stock. After conversion, the Company had 13,098,415
shares of Common Stock outstanding and no shares of Convertible Preferred Stock
outstanding.
As
of
March 7, 2007, all 42,500 preferred shares had been converted into 2,401,133
common shares either by the holder or by the Company as provided in Section
7 of
the Certificate of Designation.
The
average closing price on the American Stock Exchange over the last twenty (20)
trading days exceeded 200% of the conversion price or $3.54 per share. The
number of shares of Common Stock to which a holder of Convertible Preferred
Stock was entitled upon conversion under Section 7(c) of the Certificate of
Designation was approximately 56.497 shares of Common Stock for each share
of
Convertible Preferred Stock.
Dividends:
The
holders of Convertible Preferred Stock were entitled to receive cumulative
dividends on a semiannual basis every June 30 and December 30 (as further
described in the Company’s Form 8-K and Form S-3, as amended, filed with the
Commission on March 6, 2006 and May 30, 2006, respectively). In 2006, the
Company paid dividends totaling $279,000 to the preferred shareholders. At
March
7, 2007 the Company has accrued dividends payable of $49,000. Dividends on
the
Convertible Preferred Stock accrued on a daily basis from and including the
date
of issuance at the rate of eight percent (8%) per annum.
The
foregoing is a brief description of the terms of the various agreements and
documents described herein and by its nature is incomplete. It is qualified
in
its entirety by the text of the respective agreements and documents, copies
of
which are included herewith as Exhibits to this Current Report. All readers
of
this Current Report are encouraged to read the entire text of the documents
referred to in the text.
Item
9.01 Financial Statements and Exhibits.
(c)
Exhibits.
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3(i)
1
|
Third
Amended and Restated Certificate of Incorporation of the Company.
Previously filed in connection with the GSE Systems, Inc. Form 8-K
as
filed with the Securities and Exchange Commission on October 24,
2001 and
incorporated herein by reference.
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|
3(ii)1
|
Form
of Amended and Restated Bylaws of the Company. Previously filed in
connection with Amendment No.1 to the GSE Systems, Inc. Form S-1
Registration Statement as filed with the Securities and Exchange
Commission on June 14, 1995 and incorporated herein by
reference.
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|
4.1
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Certificate
of Designation, Preferences and Rights of Series A Cumulative Preferred
Stock dated as of February 28, 2006 providing
for the issuance of a series of 42,500 shares of Series A Cumulative
Convertible Preferred Stock, par value $0.01 per share,
filed as an Exhibit to the Registration Statement on Form S-3 filed
with the SEC on May 30, 2006 (File No. 333-134569), as amended by
a
Form S-3/A filed with the SEC on July 25, 2006 (File
No. 333-126472), and as further amended by a Form S-3/A filed
with the SEC on July 26, 2006 (File No. 333-134569), August 31, 2006
(333-134569), September 28, 2006 (333-134569) and October 20, 2006
(333-134569).
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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.
GSE
SYSTEMS,
INC.
Date:
March 12, 2007 /s/
Jeffery G. Hough
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Jeffery
G. Hough
Senior
Vice President and CFO