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): October 1,
2010
CNS RESPONSE, INC.
(Exact name of Company as specified in
its charter)
|
Delaware
|
|
0-26285
|
|
87-0419387
|
|
(State or
other
|
|
(Commission File
No.)
|
|
(I.R.S.
Employer
|
|
jurisdiction
of
|
|
|
|
Identification
No.)
|
|
incorporation)
|
|
|
|
|
85 Enterprise, Suite 410
Aliso Viejo, CA 92656
(Address of principal executive
offices)
(714) 545-3288
(Registrant’s telephone number,
including area code)
Not Applicable
(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:
|
o
|
Written communications pursuant to
Rule 425 under the Securities Act (17 CFR
230.425)
|
|
o
|
Soliciting material pursuant to
Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
o
|
Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
|
|
o
|
Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
|
|
Item 2.03
|
Creation of a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet Arrangement of
a Registrant.
|
On October 1, 2010, CNS Response Inc.
(the “Company”) entered into a Note and Warrant Purchase Agreement (the
“Purchase Agreement”) with two investors (“Investors”), pursuant to which it
issued to the Investors secured convertible promissory notes (“Notes”) in the
aggregate principal amount of $1,011,688 and warrants (“Warrants”) to purchase
up to 1,686,144 shares of common stock of the Company. The
Investors were John Pappajohn, a director of the Company, and SAIL Venture
Partners LP, of which David Jones, a director of the Company, is a managing
partner.
The Company received $500,000 in gross
proceeds from the issuance to the Investors of Notes in the aggregate principal
amount of $500,000 and Warrants to purchase up to 833,332 shares. The
Company also issued Notes in the aggregate principal amount of $511,688, and
Warrants to purchase up to 852,812 shares, to Mr. Pappajohn in exchange for the
cancellation of two convertible promissory notes originally issued to him on
June 3, 2010 and July 25, 2010 in the aggregate principal amount of $500,000
(and accrued and unpaid interest on those notes) and a warrant to purchase up to
250,000 shares originally issued to him on July 25, 2010. The
transaction closed on October 1, 2010.
The Purchase Agreement provides for the
issuance and sale of Notes, for cash or in exchange for outstanding convertible
notes, in the aggregate principal amount of up to $3,000,000 plus an amount
corresponding to accrued and unpaid interest on any exchanged notes, and
Warrants to purchase a number of shares corresponding to 50% of the number of
shares issuable on conversion of the Notes. The agreement provides
for the possible investment by additional investors and for multiple closings in
addition to the October 1, 2010 closing, but mandates that no closings may occur
after January 31, 2011. The Purchase Agreement also provides that the
Company and the holders of the Notes will enter into a registration rights
agreement covering the registration of the resale of the shares underlying the
Notes and the Warrants.
The Notes mature on October 1, 2011
(subject to earlier conversion or prepayment), earn interest equal to 9% per
year with interest payable at maturity, and are convertible into shares of
common stock of the Company at a conversion price of $0.30. The
conversion price is subject to adjustment upon (1) the subdivision or
combination of, or stock dividends paid on, the common stock; (2) the issuance
of cash dividends and distributions on the common stock; (3) the distribution of
other capital stock, indebtedness or other non-cash assets; and (4) the
completion of a financing at a price below the conversion price then in
effect. The Notes can be declared due and payable upon an event of
default, defined in the Notes to occur, among other things, if the Company fails
to pay principal and interest when due, in the case of voluntary or involuntary
bankruptcy or if the Company fails to perform any covenant or agreement as
required by the Note.
The obligations of the Company under
the terms of the Notes are secured by a security interest in the tangible and
intangible assets of the Company, pursuant to a Security Agreement, dated as of
October 1, 2010, by and between the Company and John Pappajohn, as
administrative agent for the holders of the Notes. The agreement and
corresponding security interest terminate if and when holders of a majority of
the aggregate principal amount of Notes issued have converted their Notes into
shares of common stock.
The Warrants expire on September 20,
2017 and are exercisable for shares of common stock of the Company at an
exercise price of $0.30. Exercise price and number of shares issuable
upon exercise are subject to adjustment (1) upon the subdivision or
combination of, or stock dividends paid on, the common stock; (2) in case of any
reclassification, capital reorganization or change in capital stock and (3) upon
the completion of a financing at a price below the exercise price then in
effect.
The form of Note, form of Warrant,
Purchase Agreement and Security Agreement are attached as Exhibits 4.1, 4.2,
10.1 and 10.2 hereto and are incorporated by reference herein. The foregoing
description of the Notes, the Warrants, the Purchase Agreement and the Security
Agreement does not purport to be complete and is qualified in its entirety by
reference to the full text of the aforementioned exhibits.
|
Item 3.02
|
Unregistered Sales of Equity
Securities.
|
The description of the Notes and the
Warrants is incorporated herein by reference to Item 2.03 hereof and the full
text of the form of Note and form of Warrant attached hereto as Exhibits 4.1 and
4.2.
The Notes and Warrants were issued by
the Company under the exemption from registration afforded by Section 4(2) of
the Securities Act of 1933, as amended, and Regulation D promulgated thereunder,
as they were issued to accredited investors, without a view to distribution, and
were not issued through any general solicitation or
advertisement.
|
Item 9.01
|
Financial Statements and
Exhibits.
|
|
Exhibit 4.1
|
|
Form of
Note.
|
|
|
|
|
|
Exhibit 4.2
|
|
Form of
Warrant.
|
|
|
|
|
|
Exhibit
10.1
|
|
Note and Warrant Purchase
Agreement, dated as of October 1, 2010.
|
| |
|
|
|
Exhibit
10.2
|
|
Security Agreement, dated as of
October 1, 2010.
|
SIGNATURES
Pursuant to the Securities Exchange Act
of 1934, as amended, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
|
|
CNS Response,
Inc.
|
|
|
|
|
|
|
|
By:
|
/s/ Paul
Buck
|
|
|
October 7,
2010
|
|
Paul Buck
|
|
|
|
|
Chief
FinancialOfficer
|
|