================================================================================
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): March 31, 2006
--------------
CDKNET.COM, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-27587 22-3586087
- --------------------------------------------------------------------------------
(State of Incorporation) (Commission File Number) (IRS Employer
Identification No.)
948 US Highway 22
North Plainfield, NJ 07060
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices)
(908) 769-3232
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
N/A
- --------------------------------------------------------------------------------
(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:
[_] 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 240.24d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.23e-4(c))I
================================================================================
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On March 31, 2006, we entered into a Third Additional Issuance
Agreement with Cargo Holdings LLC ("Cargo"), a New York limited liability
company owned by Renee Typaldos (the wife of Andreas Typaldos, our Chairman) and
Gennaro Vendome, one of our directors. Pursuant to the Third Additional Issuance
Agreement we sold $500,000 additional principal amount of our 6% secured
convertible debenture to Cargo on substantially the same terms as we had sold an
aggregate of $2,875,884.38 of such debentures to Bushido Capital Master Fund, LP
("Bushido") and Gamma Opportunity Capital Partners, LP (Classes A and C,
collectively "Gamma") under a securities purchase agreement dated December 28,
2005 and Additional Issuance Agreements dated February 1, 2006 and February 24,
2006. The debentures have a term of three years and mature on December 28, 2008.
The debentures pay interest at the rate of 6% per annum, payable semi-annually
on January 1 and July 1 of each year beginning July 1, 2006. We may, in our
discretion, elect to pay interest on the debentures in cash or in shares of our
common stock, subject to certain conditions related to the market for shares of
our common stock and the registration of the shares issuable upon conversion of
the debentures under the Securities Act of 1933, as amended (the "Securities
Act").
The debentures are convertible at any time at the option of the
holder into shares of our common stock at a price of $0.85 per share, subject to
adjustment as set forth therein. If, after the effective date of the
registration statement we agreed to file under the Securities Act (the
"Registration"), the closing price for our common stock for any 20 consecutive
trading days exceeds $1.70, we may, within one trading day after the end of such
period, require the holders of the debentures to immediately convert all or part
of the then outstanding principal amount of their debentures.
Pursuant to the Third Additional Issuance Agreement, Cargo received
warrants to purchase 235,294 shares of our common stock. The warrants have an
exercise price, subject to certain adjustments, of $1.00 per share and are
exercisable at any time on or prior to the fifth anniversary date of the
warrants. The warrants do not grant the holders thereof any voting or other
rights of our stockholders. We also issued short term warrants to Cargo to
purchase up to 235,294 shares of our common stock. The warrants have an exercise
price, subject to certain adjustments, of $0.85 per share and are exercisable at
any time prior to twelve months after the effective date of the registration
statement we will file with the SEC to register the shares of common stock
issuable upon conversion of the debentures and exercise of the warrants, but in
no event after December 28, 2007.
After giving effect to the issuance of the 6% secured debentures
outstanding to Cargo under the Additional Issuance Agreement, there is
$3,375,884.38 principal amount of debentures outstanding as well as 1,823,945 of
the five year and 1,823,945 of the short term warrants outstanding.
Upon the occurrence of certain events of default defined in the
debentures, including events of default under the transaction documents related
to the financing, the full principal amount of the debentures, together with
interest and other amounts owing, become immediately due and payable. In
connection with the issuance of the 6% debentures, we entered into a security
agreement granting the holders of the debentures a security interest in our
assets to
2
secure our obligations under the debentures. Obligations under the debentures
are guaranteed by Arkados, Inc., our wholly-owned subsidiary.
Concurrently with the issuance of debentures and warrants to Cargo
under the Third Additional Issuance Agreement, we entered into a letter
agreement with Bushido and Gamma under which our obligation to file a
registration statement for the shares of our common stock underlying the
debentures and warrants was extended to October 15, 2006. The letter agreement
also modifies the securities purchase agreement to permit us to issue up to
180,000 warrants per three calendar month period to Emerging Capital Markets,
LLC as part compensation for investor relations consulting services.
ITEM 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
The disclosure provided in Item 1.01 of this Form 8-K is hereby
incorporated by reference into this Item 2.03 with respect to the terms and sale
of, and the financial obligations created by, the 6% secured convertible
debentures.
ITEM 3.02. UNREGISTERED SALES OF EQUITY SECURITIES.
The disclosure provided in Item 1.01 of this Form 8-K is hereby
incorporated by reference into this Item 3.02 with respect to the terms and sale
of the 6% secured convertible debentures and the warrants. Each of the
purchasers represented that they were accredited investors and we did not engage
a broker or make any general solicitation in connection with the sale of the
securities. The sale of the debentures and issuance of the warrants were made
pursuant to Section 4(2) of the Securities Act of 1933, as amended. The closing
of the sale of the debentures and issuance of the warrants occurred on March 31,
2006.
On March 20, 2006, we issued warrants to purchase up to 180,000
shares of our common stock for $0.85 per share to Emerging Capital Markets LLC
as part compensation for investor relations consulting services. The warrants
vest in equal thirds on the first day of April, May and June 2006, provided
there is no material breach of the related consulting agreement. Based, in part
on representations made by Emerging Capital Markets LLC, the issuance of the
warrants was made pursuant to Section 4(2) of the Securities Act of 1933, as
amended.
3
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
- ----------- --------------------------------------------------------------------
Exhibit
Number
- ----------- --------------------------------------------------------------------
4.1 Form of 6% Secured Convertible Debenture due December 28, 2008 (1)
- ----------- --------------------------------------------------------------------
- ----------- --------------------------------------------------------------------
4.2 Form of Common Stock Purchase Warrant (long term and short term
warrants differ as to price and expiration date as set forth in
footnotes to the form filed) (1)
- ----------- --------------------------------------------------------------------
- ----------- --------------------------------------------------------------------
4.3 Registration Rights Agreement, dated as of December 28, 2005, by and
among the Registrant, Bushido Capital Master Fund, L.P., Gamma
Opportunity Capital Partners, L.P. Class A, and Gamma Opportunity
Capital Partners, L.P. Class C (1)
- ----------- --------------------------------------------------------------------
- ----------- --------------------------------------------------------------------
99.1 Securities Purchase Agreement, dated as of December 28, 2005, by and
among the Registrant, Bushido Capital Master Fund, L.P., Gamma
Opportunity Capital Partners, L.P. Class A, and Gamma Opportunity
Capital Partners, L.P. Class C (1)
- ----------- --------------------------------------------------------------------
- ----------- --------------------------------------------------------------------
99.2 Security Agreement, dated as of December 28, 2005, by and among the
Registrant, Gamma Opportunity Capital Partners, L.P. Class A, and
Gamma Opportunity Capital Partners, L.P. Class C (1)
- ----------- --------------------------------------------------------------------
- ----------- --------------------------------------------------------------------
99.3 Subsidiary Guarantee dated as of December 28, 2005 executed by
Arkados, Inc. (1)
- ----------- --------------------------------------------------------------------
- ----------- --------------------------------------------------------------------
99.4 Additional Issuance Agreement dated February 1, 2006 between the
Registrant and Bushido Capital Master Fund, L.P. (2)
- ----------- --------------------------------------------------------------------
- ----------- --------------------------------------------------------------------
99.5 Second Additional Issuance Agreement dated February 24, 2006 between
the Registrant and Bushido Capital Master Fund, L.P., Gamma
Opportunity Capital Partners, L.P. Class A, and Gamma Opportunity
Capital Partners, L.P. Class C (3)
- ----------- --------------------------------------------------------------------
- ----------- --------------------------------------------------------------------
99.6 Third Additional Issuance Agreement dated March 31, 2006 between the
Registrant and Cargo Holdings LLC (4)
- ----------- --------------------------------------------------------------------
- ----------- --------------------------------------------------------------------
99.7 Letter Agreement dated march 31, 2006 between the Registrant and
Bushido Capital Master Fund, L.P., Gamma Opportunity Capital
Partners, L.P. Class A, and Gamma Opportunity Capital Partners, L.P.
Class C (4)
- ----------- --------------------------------------------------------------------
- ----------- --------------------------------------------------------------------
99.8 Warrant agreement dated March 20, 2006 issued to Emerging Capital
Markets LLC (4)
- ----------- --------------------------------------------------------------------
_______________
(1) Incorporated by reference to our Form 8-K report dated December 28, 2005.
(2) Incorporated by reference to our Form 8-K report dated February 1, 2006.
(3) Incorporated by reference to our Form 8-K report dated February 24, 2006.
(4) Filed herewith.
4
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 hereunto duly authorized.
CDKNET.COM, INC.
Date: April 6, 2006 By: /s/ Oleg Logvinov
-----------------------
Oleg Logvinov
Chief Executive Officer
5