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): DECEMBER 22, 2004
CIROND CORPORATION
(Exact name of registrant as specified in its charter)
NEVADA 0-49763 88-0469593
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification No.)
4185 STILL CREEK DRIVE #B-101, BURNABY, BRITISH COLUMBIA, CANADA V5C 6G9
(Address of principal executive offices) (Zip Code)
NOT APPLICABLE
(Former name or former address, if changed since last report)
Registrant's telephone number, including area code (604) 205-5039
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 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On December 22, 2004, Cirond Corporation ("Cirond") entered into Securities
Purchase Agreements with several accredited investors (the "Purchasers")
pursuant to which Cirond agreed to sell, and the Investors agreed to purchase,
2,000 shares of Series B 5% Convertible Preferred Stock (the "Preferred Stock"),
warrants to purchase 2,325,581 shares of common stock, and Additional Investment
Rights for a total of $2,000,000. The warrants are exercisable for five years at
$0.55 per share. The Preferred Stock may be converted in shares of common stock
at a price of $0.43 per share. The Additional Investment Rights entitle the
Purchasers to buy up to $4,000,000 of Preferred Stock and warrants on the same
terms for period of six months following the effective date of the Resale
Registration Statement (described below).
In connection with the subscription, Cirond paid Ascendiant Securities, LLC a
cash commission of $160,000 and a non-accountable expense allowance of $25,000,
and issued Ascendiant warrants for the purchase of an amount equal to 8% of the
securities issued in the transaction. The warrants are exercisable into
securities similar to those issued in the transaction and have an exercise price
and term consistent with the warrants issued to the Purchasers. The warrants
contain piggyback registration rights and a net exercise provision.
A portion of the proceeds will be used to pay the fees incurred in connection
with the transaction, including legal fees, and for the preparation and filing
of the registration statement. The remaining net proceeds will be used for
working capital purposes, including consulting, payroll, sales and marketing and
some research and development expenses, loan repayment, and marketing and public
relations.
Cirond has agreed to file a registration statement with the Securities and
Exchange Commission in order to register the resale of the shares issuable upon
conversion of the Preferred Stock and the shares issuable upon exercise of the
warrants (the "Resale Registration Statement").
Cirond granted the Purchasers a right to participate in any future financings in
which debt or equity securities are issued. This right will terminate one year
after the Resale Registration Statement has been declared effective.
Cirond's officers and directors have agreed not to sell or transfer any shares
of common stock until the expiration of 180 days from the effective date of the
Resale Registration Statement.
This summary description of the financing described by the agreements does not
purport to be complete and is qualified in its entirety by reference to the form
of the agreements and other documents that are filed as Exhibits hereto.
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ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES.
On December 22, 2004, Cirond sold 2,000 shares of Series B 5% Convertible
Preferred Stock (the "Preferred Stock"), warrants to purchase shares of common
stock, and Additional Investment Rights to several accredited investors. See
"Item 1.01 Entry Into a Material Definitive Agreement."
The Preferred Stock is convertible into shares of common stock as described in
"Item 1.01 Entry Into a Material Definitive Agreement" and "Item 5.03 Amendments
to Articles of Incorporation or Bylaws; Change in Fiscal Year."
The warrants give the holders the right to purchase, for a period of five years,
an aggregate of 2,325,581 shares of common stock for $0.55 per share. A holder
of a warrant is not permitted to exercise the warrant for a number of shares of
common stock greater than the number that would cause the aggregate beneficial
ownership of common stock of such holder and all persons affiliated with such
holder to exceed 4.99% of Cirond's then outstanding common stock. Both the
number of warrants and the exercise price of the warrants are subject to
anti-dilution adjustments in the event of certain stock splits, stock
combinations and other similar transactions.
The Additional Investment Rights entitle the Purchasers to buy up to $4,000,000
of Preferred Stock and warrants on the same terms for period of six months
following the effective date of the Resale Registration Statement.
In connection with the subscription, Cirond paid Ascendiant Securities, LLC a
cash commission of $160,000 and a non-accountable expense allowance of $25,000,
and issued Ascendiant warrants for the purchase of an amount equal to 8% of the
securities issued in the transaction. The warrants are exercisable into
securities similar to those issued in the transaction and have an exercise price
and term consistent with the warrants issued to the Purchasers. The warrants are
to contain piggyback registration rights and a net exercise provision.
Based upon the sophistication and financial condition of the purchasers, Cirond
relied upon the exemptions from registration under the Securities Act of 1933
contained in Section 4(2) of the Securities and/or Rule 506 of Regulation D
promulgated under the Securities Act for the offer and sale of the Preferred
Stock, warrants, and Additional Investment Rights.
ITEM 3.03 MATERIAL MODIFICATION TO RIGHTS OF SECURITY HOLDERS.
On December 22, 2004, in connection with the private placement described above,
Cirond filed a Certificate of Designation with the Secretary of State of the
State of Nevada authorizing the creation and establishing the terms of the
Series B 5% Convertible Preferred Stock. Holders of the Series B 5% Convertible
Preferred Stock are entitled to a liquidation preference over the holders of
Cirond's common shares as described in "Item 5.03 Amendments to Articles of
Incorporation or Bylaws; Change in Fiscal Year."
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ITEM 5.03 AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS; CHANGE IN FISCAL
YEAR.
On December 22, 2004, in connection with the private placement described above,
Cirond filed a Certificate of Designation with the Secretary of State of the
State of Nevada authorizing the creation and establishing the terms of the
Series B 5% Convertible Preferred Stock. The following is a description of the
principal terms, rights and obligations of the Series B Preferred Stock.
DIVIDENDS. A holder of the Series B Preferred Stock shall be entitled to receive
cumulative dividends of 5% per annum, based on the stated value of $1,000 per
share, payable quarterly beginning January 1, 2005.
VOTING RIGHTS. Except as otherwise required by law, a holder of shares of Series
B Preferred Stock does not have the right to vote on matters that come before
Cirond's shareholders.
LIQUIDATION PREFERENCE. In the event of a dissolution or winding up of Cirond,
each holder of the Series B Preferred Stock is entitled to a liquidation
preference of $1,000 per share of Series B Preferred Stock held plus any
declared but unpaid dividends on such share, prior to any payment to the holders
of Cirond's common stock or any other stock of Cirond ranking junior to the
Series B Preferred Stock with regard to any distribution of assets upon
liquidation, dissolution or winding up of Cirond.
CONVERSION. Shares of Series B Preferred Stock may, at the option of the holder,
be converted at any time or from time to time into shares of common stock at the
initial conversion price of $0.43 per share, subject to adjustment; provided,
that a holder of Series B Preferred Stock may at any given time convert only up
to that number of shares of Series B Preferred Stock so that, upon conversion,
the aggregate beneficial ownership of Cirond common stock of such holder and all
persons affiliated with such holder is does not exceed 4.99% of the then
outstanding common stock. The number of shares into which one share of Series A
Stock shall be convertible shall be determined by dividing $1,000 by the then
existing conversion price.
The conversion price may be reduced if Cirond sells common stock or other
securities convertible into or exercisable for common stock at a per share
price, exercise price or conversion price lower than the conversion price then
in effect (other than in connection with an acquisition of the securities,
assets or business of another company, joint ventures and employee stock
options).
REDEMPTION. Cirond is to redeem all of the then outstanding shares of Series B
Preferred Stock on December 22, 2009. At its option, Cirond may redeem the
Series B Preferred Stock at 120% of the stated value, plus accrued and unpaid
dividends, if certain conditions have been met. Holders may require Cirond to
redeem the Series B Preferred Stock at 120% of the stated value, plus accrued
and unpaid dividends, should certain events occur, such as Cirond's failure to
have the Resale Registration Statement effective by June 20, 2005, lapse of
effectiveness of the Resale Registration Statement, Cirond's failure to deliver
stock certificates upon conversion of the Series B Preferred Stock on a timely
basis, breach of any of the terms or covenants of the
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Securities Purchase Agreement, a change of control transaction, bankruptcy, or
failure of the common stock to be quoted on the OTC Bulletin Board for more than
five trading days.
This summary description of the Series B Preferred Stock does not purport to be
complete and is qualified in its entirety by reference to the Certificate of
Designation filed as an exhibit hereto.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
Exhibits:
REGULATION
S-B NUMBER DOCUMENT
4.1 Certificate of Designation of Series B 5% Convertible Preferred
Stock
10.1 Form of Securities Purchase Agreement dated as of December 22,
2004 between Cirond Corporation and the Purchaser named therein
10.2 Registration Rights Agreement dated December 22, 2004 between
Cirond Corporation and the Purchasers named therein
10.3 Form of Common Stock Purchase Warrant
10.4 Form of Additional Investment Right
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.
CIROND CORPORATION
December 22, 2004 By: /s/ NICHOLAS MILLER
-----------------------------------------
Nicholas Miller
President and Chief Executive Officer
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