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) December 1, 2004
----------------------------
Rapidtron, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 000-31713 88-0455472
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation File Number) Identification No.)
3151 Airway Avenue, Costa Mesa, California 92626-4627
- -------------------------------------------------------- ----------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (949) 798-0652
----------------------
- --------------------------------------------------------------------------------
(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 December 1, 2004, we entered into a Securities Purchase 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 Securities Purchase 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 March 31, 2005, or if we become insolvent or bankrupt prior to
repayment in full.
Also in connection with the Securities Purchase Agreement, the company is
required to register the common stock that would be issued upon the exercise of
the 800,000 warrants that were issued as part of the terms of the $400,000 note.
ITEM 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION
On December 1, 2004, we became obligated for repayment of $400,000 pursuant
to a loan agreement and a Secured Convertible Promissory Note, dated December 1,
2004, in the principal amount of $400,000.
The material terms of the loan agreement and promissory note are as
follows:
- The principal amount of the note is $400,000
- The interest rate is fifteen percent (15%) per annum
- All principal and interest is due on March 31, 2005
- If the note is not paid by the maturity date creating a default
of the terms of the note, the holder shall be entitled at its
option at anytime prior to the payment default being cured, to
convert all or a portion of the outstanding principal amount of
the note and any accrued interest into shares of the Company's
common stock at a conversion price for each share of common stock
equal to the lesser of $0.33 per share or eighty percent of the
lowest closing bid price for the common stock in any of the five
trading days immediately preceding the conversion date.
- Finder's fee of twenty thousand dollars paid to affiliate of
lender from the loan proceeds
- Origination fee of twelve thousand dollars paid to lender from
the loan proceeds
- The loan is secured by all of the assets of the Company
Additional, material terms of the loan regarding conversion into common
stock and warrants are described in Item 3.02 below, which is hereby
incorporated by reference.
2
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 December 1, 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.
The Company issued warrants for the right to purchase 800,000 shares of the
common stock of the Company at any time after December 1, 2004 (date of
issuance), but not after five years from the date of the warrant. The purchase
price (the warrant exercise price) is equal to $0.33 per share.
The issuance and sale of the shares was exempt from the registration and
prospectus delivery requirements of the Securities Act of 1933 by virtue of
Section 4(2). The sale did not involve a public offering or general
solicitation. A twenty thousand dollars finder's fee was paid to a registered
broker-dealer on the issuance and sale of the shares. No other broker or
underwriter discounts or commission were paid or will be owed as a result of
this transaction or the conversion of the note or exercise of the warrant. The
note and the warrant certificates issued to the purchaser contained a
restrictive legend in accordance with Rule 144.
3
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: By:
---------------- ---------------------------------
John Creel,
Chief Executive Officer
4