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
AUGUST 18, 2005
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
VASO ACTIVE PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 02-0670926
(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
001-31925
(Commission File No.)
99 ROSEWOOD DRIVE, SUITE 260, DANVERS, MA 01923
(Address of principal executive offices including zip code)
(978) 750-1991
(Registrant's telephone number, including area code)
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))
SECTION 1 - REGISTRANT'S BUSINESS AND OPERATIONS
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On August 16, 2005, Vaso Active Pharmaceuticals, Inc. (the "Company")
completed a private financing in which, pursuant to a Security Purchase
Agreement (the "Purchase Agreement") it sold $2,500,000 in aggregate principal
amount of Senior Secured Convertible Notes due May 1, 2007, (the "Notes") to
four independent institutional investors. The Company also issued to these
investors warrants to purchase shares of the Company's Class A Common Stock, par
value $.0001 per share and additional investment rights ("Additional Investment
Rights") to purchase additional Notes and additional Warrants, as described
below.
The Company will receive net proceeds of approximately $1,700,000 from
the private financing (after the establishment of an escrow for interest
payments on the Notes). The Company intends to use the net proceeds for working
capital to continue to execute management's product rollout strategy for its
existing products and to continue to develop and commercialize additional
products.
THE NOTES. The Notes have a term of 21 months and the principal of the
Notes is due and payable in a single payment on May 1, 2007. The Notes accrue
interest at 10% per annum. Interest is payable quarterly, in arrears, beginning
October 31, 2005, on each July 31, October 31, January 30 and April 30, until
the earlier of the Notes' maturity or conversion date. Under the terms of the
Notes, the quarterly interest payments can be paid, at the Company's option, in
cash or registered shares of Class A Common Stock, subject to certain
limitations set forth in the Notes. Pursuant to the Purchase Agreement the
Company has deposited into an escrow account the total amount of the interest to
be paid under the Notes, i.e., $437,000.
Amounts scheduled to be paid by the Company under the Notes may be
accelerated upon the occurrence of certain events, including any default in the
payment of interest when due and payable; the default by the Company under other
notes, mortgage, or credit facility; the failure of the Company to perform
certain obligations to deliver certificates for Underlying Shares or to timely
register the Underlying Shares for resale as required under the Purchase
Agreement; and in the event of bankruptcy.
The Notes are secured by all of the assets of the Company. The Notes
are convertible at any time into shares of the Company's Class A common stock at
a price of $0.70 per share (subject to adjustment under certain circumstances,
e.g., anti-dilution adjustments).
THE WARRANTS. The investors also received five-year warrants
("Warrants.") The Warrants entitle the Purchasers to purchase a total of
1,298,701 shares of the Company's Class A common stock at an exercise price of
$0.77 per share. The number of shares which may be purchased upon exercise of
the Warrants and the exercise price per share of the Warrants are subject to
adjustment under certain circumstances, e.g., anti-dilution adjustments.
THE ADDITIONAL INVESTORS RIGHTS. In addition, the investors received
Additional Investment Rights to purchase up to $1,875,000 in aggregate principal
amount of additional Notes at any time through the maturity date of the Notes,
together with additional Warrants to purchase a total of 974,026 shares of Class
A common stock. The additional Notes are convertible and the additional Warrants
are exercisable at the same respective initial prices per share as the Notes and
Warrants issued on August 16, 2005.
Under the Purchase Agreement, the Company is required to reserve for
issuance a total of 8,522,727 shares of Class A Common Stock, in connection with
the possible conversion of Notes (including the additional Notes) and the
possible exercise of the Warrants (including the additional Warrants). The
Company has a sufficient number of shares of Class A Common Stock authorized to
permit the Company to issue the underlying shares issuable upon conversion of
the Notes and Warrants which the Company issued and sold on August 16, 2005.
However, the Company does not presently have a sufficient number of shares of
its Class A Common Stock authorized to be issued under its Amended and Restated
Certificate of Incorporation to reserve the full amount of Underlying Shares.
The Company intends to amend its Certificate of Incorporation to increase the
number of authorized shares of its Class A Common Stock to more than the number
of shares which would be required to enable the Company to issue the full amount
of the underlying shares which may be issued under the Notes and Warrants. Under
the Purchase Agreement, the Company is required to use its best efforts to
effect such increase not later than October 15, 2005.
SECTION 2 - FINANCIAL INFORMATION
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION
UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT
As described in Item 1.01, above, the Company issued $2,500,000 in
aggregate principal amount of Senior Secured Convertible Notes due May 1, 2007.
The principal terms of the Notes are described in Item 1.01.
SECTION 3 - SECURITIES AND TRADING MARKETS
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES
As described in Item 1.01, above, on August 16, 2005, the Company
issued and sold Notes, Warrants and Additional Investment Rights to a total of
four independent institutional investors in a privately negotiated transaction.
The Notes, Warrants, Additional Investment Rights and the Underlying Shares have
not been registered for sale under the Securities Act of 1933, as amended (the
"Securities Act") in reliance on Section 4(2) of the Securities Act and
Regulation D thereunder. The Purchase Agreement imposes certain restrictions on
the resale or other transfer of the securities necessary for the availability of
the Section 4(2) exemption. The Company has agreed to file with the Securities
and Exchange Commission not later that October 15, 2005, a registration
statement on an appropriate form under the Securities Act to register the
Underlying Shares for resale.
No underwriter was involved in connection with the transaction. The
Company utilized a registered broker-dealer to act as financial advisor and
exclusive financing agent ("Financing Agent") in connection with the
transaction. The Company paid to the Financing Agent a cash fee in an amount
equal to 9% of the principal amount of the Notes issued by the Company on August
16, 2005, and a seven-year warrant to purchase a total of 64,935 shares of Class
A Common Stock. The Financing Agent will be entitled to receive an additional 9%
cash fee (based on the amount of the Additional Investment Rights exercised) and
warrant to purchase up to an additional 48,701 shares of Class A Common Stock in
connection with the exercise of the Additional Investment Rights, if and when
such exercise shall occur.
The conversion terms of the Notes, the exercise terms of the Warrants
and the exercise terms of the Additional Investment Rights are described in Item
1.01, above.
SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
*(c) Exhibit 99.1 Securities Purchase Agreement dated August 16,
2005 (including exhibits and schedules thereto).
____________________________________
*[To be filed by amendment.]
SIGNATURE
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 thereunto duly authorized.
VASO ACTIVE PHARMACEUTICALS, INC.
DATE: AUGUST 18, 2005 BY: /S/ JOSEPH FRATTAROLI
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NAME: JOSEPH FRATTAROLI
TITLE: ACTING CEO AND PRESIDENT
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