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) July 6, 2006
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 July 6, 2006, Avitar, Inc. ("Avitar" or the "Company"), entered into a
Securities Purchase Agreement and related agreements as part of a $750,000
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 $750,000 private placement of convertible notes and
warrants based upon the Securities Purchase Agreement referred to in Item 1.01
above.
The securities issued in the private placement are $750,000 of Secured
Convertible Notes (the "Notes") and 1,500,000 seven-year warrants (the
"Warrants").
The Notes bear interest at 8%, mature three years from the date of issuance, and
are convertible into the Company's 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 date that the
investors elect to convert.
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. The Company has 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, the Company granted the Purchasers a security interest in
substantially all of our assets. The Company is further required to file the
Registration Statement with the Securities and Exchange Commission within 30
days of receipt of demand from the Purchasers. If the Registration Statement is
not filed on time or not declared effective within 120 days from the date of
receipt of such demand, the Company is 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 seven years from the date of issuance at a
purchase price of $0.22 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 $20,000, which was deducted at the 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 July 10, 2006 announcing that it entered into the $750,000 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) Not applicable
(d) Exhibits
4.1 Securities Purchase Agreement dated as of July 5, 2006 between the Company
and the Purchasers
4.2 Form of Registration Rights Agreement dated as of July 5, 2006 between the
Company and the Purchasers
4.3 Form of 8% Secured Convertible Note
4.4 Form of Warrant
99.1 Press Release issued on July 10, 2006
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: July 11, 2006 AVITAR, INC.
By: /s/ Jay Leatherman
Name: Jay Leatherman
Title: Chief Financial Officer