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): February 9, 2005
Conspiracy Entertainment Holdings, Inc.
(Exact name of registrant as specified in its charter)
UTAH 000-32427 87-0386790
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
612 SANTA MONICA BOULEVARD, SANTA MONICA, CA 90401
(Address of principal executive offices) (zip code)
(310) 260-6150
(Registrant's telephone number, includingarea code)
Copies to:
Marc J. Ross, Esq.
Sichenzia Ross Friedman Ference LLP
1065 Avenue of the Americas
New York, New York 10018
Phone: (212) 930-9700
Fax: (212) 930-9725
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 February 9, 2005, Conspiracy Entertainment Holdings, Inc. (the
"Company") entered into a Securities Purchase Agreement for the sale of an
aggregate of $650,000 principal amount of 5% Secured Convertible Debentures,
13,000,000 Class A Common Stock Purchase Warrants, and 13,000,000 Class B Common
Stock Purchase Warrants, to four accredited institutional investors. The Company
received gross proceeds totaling $650,000 from the sale of the Secured
Convertible Debentures and the Class A and Class B Common Stock Purchase
Warrants in the foregoing transactions.
Interest is payable on the earlier of a conversion of the Debentures (as
described below) or on the maturity date of February 9, 2007. At the Company's
election, accrued interest on the Debentures may be paid by the Company in
shares of common stock at the conversion price then in effect. The conversion
price is $0.05 per share, subject to adjustment for subsequent lower price
issuances by the Company, as well as customary adjustment provisions for stock
splits, combinations, dividends and the like. Payment of all amounts due
pursuant to the Debentures, as well as the Company's other obligations to the
investors, is secured by a lien on all of the Company's assets.
Each Class A Warrant is exercisable at a price of $0.20 per share from the
earlier of 65 days after its original issuance or the date on which the shares
of common stock issuable upon exercise of the Class A Warrants are registered
under the Securities Act of 1933. The Class A Warrants are exercisable until
expiration on February 28, 2010. Each Class B Warrant is exercisable at a price
of $0.05 per share from the earlier of 65 days after its original issuance or
the date on which the shares of common stock issuable upon exercise of the Class
B Warrants are registered under the Securities Act of 1933. The Class B Warrants
are exercisable until expiration 18 months after effectiveness of a registration
statement covering the resale of the shares issuable upon exercise of the Class
B Warrants (subject to extension under certain circumstances). The exercise
price of each of the Warrants is subject to adjustment for subsequent lower
price issuances by the Company, as well as customary adjustment provisions for
stock splits, combinations, dividends and the like.
The Debentures and the Warrants were issued in a private placement
transaction pursuant to Section 4(2) and Regulation D under the Securities Act
of 1933. Pursuant to the terms of a registration rights agreement, the Company
agreed to include the shares of common stock issuable upon conversion of the
Debentures and upon exercise of the Warrants in a registration statement under
the Securities Act of 1933 to be filed not later than 30 days after the
effective date of the registration statement, as amended, originally filed by
the Company on November 24, 2004 (the "Required Filing Date") and to use its
best efforts to cause such registration statement to be declared effective no
later than 60 days after the Required Filing Date. In the event the Company does
not meet these deadlines, it may be required to issue additional shares of
common stock to the investors under the terms of the registration rights
agreement.
Palladium Capital Advisors, LLC acted as placement agent in connection
with the sale of Debentures, Class A Common Stock Purchase Warrants and Class B
Common Stock Purchase Warrants. In consideration for its services, the Company
agreed to (i) pay Palladium Capital Advisors, LLC a cash amount equal to 5.5% of
the total purchase price of the Debentures and Warrants; (ii) issue Palladium
Capital Advisors, LLC or its designees 300,000 shares of the Company's common
stock with piggy-back registration rights; and (iii) pay Palladium Capital
Advisors, LLC a cash fee equal to 10% of the cash exercise price of any Warrants
that are exercised for cash.
The sale of the Class A Common Stock Purchase Warrants and Class B Common
Stock Purchase Warrants caused an adjustment to the expiration date of the
Company's outstanding Class 2004-B Common Stock Purchase Warrants. Each Class
2004-B Common Stock Purchase Warrants will now expire 18 months after the
effective date of the Company's registration statement, as amended, originally
filed by the Company on November 24, 2004.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
See Item 1.01.
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ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES.
See Item 1.01.
Item 9.01 Financial Statements and Exhibits.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
Not applicable.
(b) PRO FORMA FINANCIAL INFORMATION.
Not applicable.
(c) EXHIBITS
Exhibit Number
Description
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4.01 Securities Purchase Agreement, dated as of January 31, 2005
4.02 Form of Convertible Debenture, dated as of February 9, 2005
4.03 Form of Warrant, dated as of February 9, 2005
4.04 Form of Registration Rights Agreement, dated as of January 31, 2005
4.05 Form of Security Interest Agreement, dated as of January 31, 2005
4.06 Joint Escrow Instructions
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Conspiracy Entertainment Holdings, Inc.
Dated: February 15, 2005 By: /s/ Keith Tanaka
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Name: Keith Tanaka
Title: Chief Financial Officer