SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities and Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
September 23, 1999
CDBEAT.COM, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 333-70663
06-1529524
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) No.)
444 Bedford Street, Suite 8s
Stamford, CT 06901
(Address of principal executive offices)
Registrant's Telephone Number, including
area code: (203) 602-9994
(Former Address, if changed since last report)
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Item 1. Changes in Control of Registrant
On September 23, 1999, Atlantis Equities, Inc., a New York corporation
("Atlantis"), entered into a warrant agreement (the "Warrant") with CDbeat.com,
Inc., a Delaware corporation (the "Company"). The Warrant entitles Atlantis, or
its registered assignee ("Holder"), to purchase from the Company, (a) 7,819,092
shares of the Common Stock of the Company ("Common Stock"), representing 80% of
the fully diluted Common Stock of the Company after giving effect to the
exercise of the Warrant, except for options to purchase 190,516 shares of Common
Stock at $2.50 per share (the "Outstanding Options"), and (b) options
exercisable for 762,064 shares of Common Stock at $2.50 per share and expiring
December 31, 2000, representing 80% of the shares of Common Stock underlying the
Outstanding Options. The Warrant is exercisable, in whole or in part, during the
period commencing on September 23, 1999 and ending on September 29, 1999,
provided, however, that if the Company receives a $50,000 loan from Holder or a
source arranged by Holder on or before September 29, 1999 such exercise period
shall be extended to October 30, 1999 and provided, further, that if the Company
enters into an agreement for a merger or acquisition (the "Acquisition") on or
prior to October 30, 1999, the period during which this Warrant may be exercised
shall be extended to the earlier of the closing or termination of the
Acquisition, and provided, further, that if the Company has not closed a merger
or acquisition by October 30, 1999, the Warrant shall expire unless the Company
receives, by November 1, 1999, an additional $50,000 loan from Holder or a
source arranged by Holder. The exercise price of the Warrant is an aggregate of
$1,000,000. The $50,000 loan made by Cakewalk LLC, as described below, met the
requirement for extending the expiration date of the Warrant to at least October
30, 1999.
Atlantis is solely owned by Nancy J. Ellin. If Atlantis were to
exercise the Warrant, Atlantis would control the Company.
The above description of the Warrant is incomplete and is qualified in its
entirety by reference to the copy of such agreement filed as Exhibit 1.1 annexed
hereto.
Subsequent to the acquisition of the Warrant, Atlantis introduced to the
Company an entity, Cakewalk LLC ("Cakewalk"), which Atlantis proposed as a
potential acquisition candidate. On September 28, 1999, the Company entered into
a letter of intent (the "Letter of Intent") with Cakewalk contemplating the
acquisition of Cakewalk in a transaction in which the stockholders of Cakewalk
would receive approximately 50% of the Company. The Letter of Intent
contemplates certain changes to the management and capital structure of the
Company. After the contemplated acquisition, the Company will be managed by
Robert Miller as President and Chief Executive Officer, together with such other
officers, including a chief operating officer and a chief financial officer, as
shall be selected by Robert Miller with the consent of the Company's board of
directors. Joel Arberman will become the Company's Internet Officer. The initial
board of directors will consist of the following seven members plus one
observer: Joel Arberman, Adam Blumenkranz, Robert Ellin, Peter Ezersky, Jonathan
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Foster, David Goddard, Robert Miller (as Chairman), and Thomas Cyrana (as
observer). Upon the closing of the contemplated acquisition the Letter of Intent
contemplates that the Company's and Cakewalk's equity owners will each own
9,773,865 shares of Common Stock, constituting 50% each of the post-acquisition
common shares. The shares owned by the Company's current equity owners assuming
the exercise by Atlantis of the Warrant, the cancellation of 2,227,450 shares
and 321,974 shares owned by Joel Arberman and Bryan Eggers, respectively, and
the conversion of all outstanding preferred stock to Common Stock, will be
substantially as follows:
CDbeat Common Shares
Public shareholders 561,600
Consultants 42,597
Bryan Eggers 178,026
Joel Arberman 1,172,550
Atlantis Equities, Inc. 7,819,092
Total 9,773,865
In addition, the Company will issue 2,932,159 management stock options, at
an exercise price per share to be agreed upon prior to closing of such
acquisition, 1,955,750 will be issued to Robert Miller, with the balance
reserved to other officers of the Company and to be awarded by the Company's
board of directors. The proposed acquisition is subject to numerous conditions
including, among other things: approval by Cakewalk's supervisory board and the
Company's board of directors; satisfactory mutual legal and financial due
diligence; all necessary approvals; completion of the acquisition on a tax-free
basis to Cakewalk's owners; and execution of definitive documentation, including
representations and warranties, covenants, conditions and other customary terms.
There can be no assurance that the contemplated acquisition will be consummated
on the terms set forth in the Letter of Intent or at all.
The above description of the Letter of Intent is incomplete and is
qualified in its entirety by reference to the copy of such letter filed as
Exhibit 1.2 annexed hereto.
In connection with the Letter of Intent, Cakewalk loaned the Company the
principal amount of $50,000. In connection with such loan, Cakewalk and the
Company entered into a note and security agreement dated September 28, 1999 (the
"Note"). The loan bears interest at 10% per annum and is due on December 28,
1999 (the "Maturity Date"); The loan is secured by substantially all assets of
the Company.
The above description of the Note and Security Agreement is incomplete and
is qualified in its entirety by reference to the copy of such agreement filed as
Exhibit 1.3 annexed hereto.
In addition, the Company and Joel Arberman, the principal stockholder of
the Company entered into an agreement dated September 28, 1999 whereby he
pledged 3,390,000 shares of Common Stock to Cakewalk to secure the Company's
obligations to Cakewalk under the Note (the "Share Pledge Agreement").
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The above description of the Share Pledge Agreement is incomplete and is
qualified in its entirety by reference to the copy of such agreement filed as
Exhibit 1.4 annexed hereto.
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Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(a) Not applicable
(b) Not applicable
(c) Exhibits
10.1 Warrant Agreement dated September 23, 1999 between the Company
and Atlantis Equities, Inc.
10.2 Letter of Intent dated September 28, 1999 between the Company
and Cakewalk LLC.
10.3 Note and Security Agreement dated September 28, 1999 between
the Company and Cakewalk LLC.
10.4 Share Pledge Agreement dated September 28, 1999 between
Joel Arberman and Cakewalk LLC
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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.
Dated: October 7, 1999
CDBEAT.COM, INC.
By: /s/ Joel Arberman
Name: Joel Arberman
Title: President and CEO
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Index to Exhibits
Exhibit No. Description
10.1 Warrant Agreement dated September 23, 1999 between
the Company and Atlantis Equities, Inc.
10.2 Letter of Intent dated September 28, 1999 between
the Company and Cakewalk LLC.
10.3 Note and Security Agreement dated September 28,
1999 between the Company and Cakewalk LLC.
10.4 Share Pledge Agreement dated September 28, 1999
between Joel Arberman and Cakewalk LLC.
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