SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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 23, 2005
AVITAR, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 1-15695 06-1174053
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
65 Dan Road, Canton, Massachusetts 02021
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (781) 821-2440
Not Applicable
(Former Name or Former Address, If Changed Since Last Report)
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:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
On September 23, 2005, Avitar, Inc. ("Avitar" or the "Company"), entered into a
Securities Purchase Agreement and related agreements as part of a $3 million
private placement with AJW Partners, LLC, AJW Offshore, Ltd., AJW Qualified
Partners, LLC, and New Millennium Capital Partners II, LLC (collectively, the
"Purchasers"). See the information reported in Items 3.02 and 9.01 below.
Item 3.02 Unregistered Sales of Equity Securities.
The Company entered into a $3 million private placement of convertible notes and
warrants based upon the Securities Purchase Agreement referred to in Item 1.01
above.
The securities to be issued in the private placement are $3 million of 8%
Secured Convertible Notes and Warrants to purchase 6,000,000 shares of the
Company's Common Stock in exchange for gross proceeds of $3 million, of which $1
million was paid in the first closing on September 23rd. A second tranche of $1
million is to be paid when we file a registration statement with respect to the
shares issuable upon conversion of the Notes and exercise of the Warrants (the
"Registration Statement"). The third tranche of $1 million is to be paid when
the Registration Statement is effective. The Notes are convertible into Common
Stock at 65% of the average of the three (3) lowest intraday trading prices for
the twenty (20) trading days immediately prior to the notice of conversion and
the Warrants are exercisable at $0.25 per share.
The Notes bear interest at 8%, mature three years from the date of issuance, and
are convertible into our common stock at any time, at the Purchasers' option, at
65% of the average of the three lowest intraday trading prices for the Common
Stock for the 20 trading days ending the day before the conversion date.
The full principal amount of the Notes, plus a default interest rate of 15%, is
due upon a default under the terms of the Notes. We have a right to prepay the
Notes under certain circumstances at a premium ranging from 20% to 35% depending
on the timing of such prepayment.
In addition, we granted the Purchasers a security interest in substantially all
of our assets. We are further required to file the Registration Statement with
the Securities and Exchange Commission within 45 days of closing. If the
Registration Statement is not filed on time or not declared effective within 120
days from the date of closing, we are required to pay to the Purchasers damages
in Common Stock or cash, at the election of the Company, in an amount equal to
two percent of the outstanding principal amount of the Notes per month plus
accrued and unpaid interest.
The Warrants are exercisable until five years from the date of issuance at a
purchase price of $0.25 per share. The Purchasers may exercise the Warrants on a
cashless basis if the shares of Common Stock underlying the Warrants are not
then registered pursuant to an effective registration statement. In the event
the Purchasers exercise the Warrants on a cashless basis, we will not receive
any proceeds. In addition, the Warrants are subject to standard anti-dilution
provisions.
The Purchasers have agreed to restrict their ability to convert their Notes or
exercise their Warrants and receive shares of our common stock such that the
number of shares of common stock held by them and their affiliates in the
aggregate after such conversion or exercise does not exceed 4.9% of the then
issued and outstanding shares of Common Stock.
Under the Securities Purchase Agreement, the Purchasers are entitled to
reimbursement for expenses up to $50,000, which was deducted at the first
closing.
The transactions described in this Item 3.02 are exempt from registration
requirements pursuant to Section 4(2) and/or Rule 506 of Regulation D
promulgated under the Securities Act of 1933, as amended.
Copies of the Agreements related to this private placement are attached to this
Report as Exhibits. The Company issued a Press Release in reliance on Rule 135
on September 27, 2005 announcing that it entered into a $3 million private
placement of secured convertible notes and warrants based upon the Securities
Purchase Agreement.
Item 9.01. Financial Statements and Exhibits.
(a) Not applicable
(b) Not applicable
(c) Exhibits
Exhibit Description Location
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4.1 Securities Purchase Agreement dated as of
September 22, 2005 between the Company and
the Purchasers Provided herewith
4.2 Form of Registration Rights Agreement
dated as of Provided herewith
September 22, 2005 between the Company
and the Purchasers Provided herewith
4.3 Form of 8% Secured Convertible Note Provided herewith
4.4 Form of Warrant Provided herewith
99.1 Press Release issued on September 27, 2005 Provided herewith
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.
Date: September 27, 2005 AVITAR, INC.
By: /s/ Jay Leatherman
Name: Jay Leatherman
Title: Chief Financial Officer