UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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) July 19, 2004
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Rapidtron, Inc.
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(Exact name of registrant as specified in its charter)
Nevada 000-31713 88-0455472
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(State or other jurisdiction (Commission (IRS Employer
of incorporation File Number) Identification No.)
3151 Airway Avenue, Costa Mesa, California 92626-4627
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (949) 798-0652
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(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 (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 October 8, 2004, we entered into a Loan Agreement and related loan
documents more fully described in Item 2.03 and Item 3.02 below, which
information is hereby incorporated by reference.
In connection with the Loan Agreement, we entered into a Security
Agreement, pursuant to which we granted a security interest in all of our
assets, securing payment and performance of the loan. The lender has the right
to foreclose on our assets if we default in the payment of principal and
interest on November 8, 2004, or if we become insolvent or bankrupt prior to
November 8, 2004.
ITEM 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION
On October 8, 2004, we became obligated for repayment of $250,000 pursuant
to a loan agreement and a Secured Convertible Promissory Note, dated October 8,
2004, in the principal amount of up to $350,000.
The material terms of the loan agreement and promissory note are as
follows:
- We may borrow up to $350,000
- The interest rate is ten percent (10%) per annum, unless we are in
default of the note, in which event the interest rate is 14% per
annum until the default is cured
- All principal and interest is due on the earlier of (a) the receipt
of an investment or loan from a third-party investor or lender, or
(b) November 8, 2004
- If we are late making payment, then we must pay a late fee equal to
5% of the amount past due
- Proceeds of the loan must be used as follows: (a) the first $250,000
to SCI as a loan as required by the Memorandum of Understanding with
Smart Card Integrators, Inc. ("SCI") filed as an exhibit to our Form
8-K filed with the SEC on August 3, 2004, and (b) the last $100,000
for legal fees owed by the company
- The loan is secured by all of the assets of the company
- Payment and performance under the loan is personally guaranteed by
John Creel
On October 8, 2004, we accepted loan proceeds of $250,000, which were
subsequently loaned to SCI pursuant to the terms of the loan agreement. An
additional $100,000 is available to the company at our election prior to the
maturity date, for the sole purpose of paying the company's outstanding legal
fees.
Additional, material terms of the loan regarding conversion into common
stock are described in Item 3.02 below, which is hereby incorporated by
reference.
ITEM 3.02 UNREGISTERED SALE OF SECURITIES
The information in this report should not be deemed an offer of securities.
The unregistered sale of securities reported in this Item 3.02 has been closed.
The company made and delivered the Secured Convertible Promissory Note,
dated October 8, 2004. The information presented in Item 2.03 above is hereby
incorporated by reference. If the company defaults by failing to make full
payment of principal and interest on the maturity date of the note, then the
holder of the note may, in its sole discretion, convert all or any portion of
the balance of the note into common stock of the company, at a conversion rate
of the lesser of (a) $0.33 per share, or (b) the average lowest closing bid
price during the five (5) trading days immediately prior to the conversion.
If the company defaults and the note is converted into common stock, then
we have the obligation to register the resale of the common stock by the holder
within 6 months following conversion.
No broker or underwriter discounts or commission were paid or will be owed
as a result of this transaction or the conversion.
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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.
RAPIDTRON, INC., a Nevada corporation
Date: October 12, 2004 By: John A. Creel
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John Creel,
Chief Executive Officer
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