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): November 3,
2010
CNS RESPONSE, INC.
(Exact name of Company as specified in
its charter)
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Delaware
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0-26285
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87-0419387
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(State or
other
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(Commission File
No.)
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(I.R.S.
Employer
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jurisdiction
of
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Identification
No.)
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incorporation)
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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:
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Written communications pursuant to
Rule 425 under the Securities Act (17 CFR
230.425)
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Soliciting material pursuant to
Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item 1.01
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Entry into a Material Definitive
Agreement.
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Item 2.03
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Creation of a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
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On October 1, 2010, CNS Response Inc.
(the “Company”) entered into a Note and Warrant Purchase Agreement (the
“Purchase Agreement”) with two investors. The Purchase Agreement provides
for the issuance and sale of secured convertible promissory notes (the “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 “Warrants”). 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 “Security Agreement”).
Prior to November 3, 2010, the Company had issued pursuant to the
Purchase Agreement Notes in the aggregate principal amount of $1,861,688 and warrants to purchase
up to 3,102,809 shares of common stock of the Company, receiving net proceeds of
approximately $1.35 million and cancelling previously outstanding convertible
notes in the aggregate principal amount of $500,000 plus accrued and unpaid
interest in connection therewith.
On November 3, 2010, three affiliated
entities executed the Purchase Agreement. In connection therewith,
the Company issued Notes in the aggregate principal amount of $762,250 and
Warrants to purchase up to 1,270,414 shares of common stock, as
follows: (a) The Company received $250,000 in gross
proceeds from the issuance to BGN Acquisition Ltd., LP, an entity controlled by
the Company’s director George Kallins, of Notes in the aggregate principal
amount of $250,000 and Warrants to purchase up to 416,666 shares. (b)
The Company also issued Notes in the aggregate principal amount of $512,250, and
Warrants to purchase up to 512,250 shares, to Deerwood Holdings LLC and Deerwood
Partners LLC, two entities controlled by Mr. Kallins (collectively, the
“Deerwood Investors”), in exchange for the cancellation of the notes originally
issued to the Deerwood Investors on July 5, 2010 and August 20, 2010 in the
aggregate principal amount of $500,000 (and accrued and unpaid interest on those
notes) and warrants to purchase an aggregate of up to 150,000 shares originally
issued to the Deerwood Investors on August 20, 2010. The related
guaranties and oral indemnification and security agreement that had been entered
into in connection with the notes issued on July 5, 2010 and August 25, 2010
were likewise terminated. The net proceeds to the Company of
the November 3 transaction were $250,000.
SAIL Venture Partners, LP (“SAIL”), of
which our director David Jones is a managing partner, issued four separate
unconditional guaranties (collectively, the “Guaranties”) to each of the
Deerwood Investors, guaranteeing the prompt and complete payment when due of all
principal, interest and other amounts under the Notes issued to such
investors. The obligations under each Guaranty are independent of our
obligations under the Notes and separate actions may be brought against the
guarantor. In connection with its serving as guarantor, we granted
SAIL Warrants to purchase up to an aggregate of 341,498 shares of common
stock. The warrants to purchase 100,000 shares of common stock
previously granted to SAIL on August 20, 2010 were canceled. In
connection with the November 3 transactions, SAIL and the Deerwood Investors
entered into a purchase option agreement pursuant to which SAIL has the option,
which is exercisable at any time through March 31, 2011, to purchase any or all
of the Notes issued to the Deerwood Investors in exchange for the July 5, 2010
and August 20, 2010 notes from time to time at a price equal to the aggregate
principal amount plus all accrued but unpaid interest.
A more detailed description of the
Notes, the Warrants, the Purchase Agreement and the Security Agreement is
included in Item 2.03 of the Company’s current report on Form 8-K filed on
October 7, 2010 (File No. 000-26285)(the “October 7, 2010 8-K”), the Form of
Note, Form of Warrant, Purchase Agreement and Security Agreement are filed as
exhibits to such Form 8-K, and such description and exhibits are hereby
incorporated herein by reference. The description of the Guaranties
issued by SAIL is qualified by reference to the text of the form of guaranty,
filed as Exhibit 4.2 to the Company’s current report on Form 8-K on August 24,
2010, which is substantially identical in all material respects to the
Guaranties, except as to date of execution, recitals and address for notice, and
which is hereby incorporated herein by reference.
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Item 3.02
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Unregistered Sales of Equity
Securities.
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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 as Exhibits 4.1 and 4.2 to
the October 7, 2010 8-K.
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.
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Item 9.01
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Financial Statements and
Exhibits.
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Exhibit 4.1
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Form of
Note.*
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Exhibit 4.2
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Form of
Warrant.*
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Exhibit 4.3
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Form of Placement Agent
Warrant***
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Exhibit 4.4
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Form of Guaranty by SAIL Venture
Partners, LP****
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Exhibit
10.1
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Note and Warrant Purchase
Agreement, dated as of October 1, 2010.*
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Exhibit
10.2
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Security Agreement, dated as of
October 1, 2010.*
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Exhibit
10.3
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Engagement Agreement, dated
September 30, 2010, between the Company and Monarch Capital Group,
LLC.**
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* Incorporated herein by reference to
the corresponding exhibits to the Company’s current report on Form 8-K filed on
October 7, 2010.
***Incorporated herein by reference to
the corresponding exhibit to the Company’s current report on Form 8-K filed on
October 27, 2010.
**** Incorporated herein by reference to
Exhibit 4.3 to the Company’s current report on Form 8-K filed on August 24,
2010. Such Form of Guaranty is identical to the Guaranties described
in this Current Report on Form 8-K, except as to name of beneficiary, date of
execution, recitals, and address for notice. In reliance on
Instruction 2 to Item 601 of Regulation S-K, the Company is not refiling such
Form of Guaranty herewith.
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.
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CNS Response,
Inc.
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By:
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/s/ Paul
Buck
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November 9,
2010
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Paul Buck
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Chief Financial
Officer
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