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):
AUGUST 14, 2006 (AUGUST 8, 2006)
SYSVIEW TECHNOLOGY, INC.
(Exact name of Registrant as Specified in its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation)
000-27773 59-3134518
(Commission File Number) (I.R.S. Employer Identification Number)
1772 TECHNOLOGY DRIVE
SAN JOSE, CALIFORNIA 95110
(Address of Principal Executive Offices, including Zip Code)
(408) 436-9888
(Registrant's Telephone Number, including Area Code)
(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 (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 August 8, 2006, Sysview Technology, Inc. (the "COMPANY") sold $1,150,000 of
its Series B Convertible Preferred Stock ("PREFERRED STOCK") to one
institutional investor and two accredited retail investors ("INVESTORS") in a
private offering pursuant to exemption from registration under Section 4(2) of
the Securities Act of 1933, as amended (the "SECURITIES ACT"). The Company
intends to use the net proceeds from the financing for sales, marketing,
research and development and for working capital and general corporate purposes.
Starboard Capital Markets, LLC, an NASD member firm, acted as placement agent in
the sale of the Preferred Stock, for which it received $80,000 in commissions
and 100,000 warrants to purchase shares of the Company's common stock, par value
$.001 per share ("COMMON STOCK") at an exercise price equal $1.50 per share. The
net proceeds of this offering to the Company after the payment of commissions,
fees and other expenses of the offering were approximately $1,060,000.
In connection with the financing, the Company also issued to the Investors
common stock purchase warrants (the "WARRANTS") to purchase up to an aggregate
of 575,000 shares of the Company's Common Stock at an exercise price of $1.50
per share. The Warrants are exercisable for a period of three years from the
date of issuance. The Company has agreed, pursuant to a registration rights
agreement, to register the shares of Common Stock issuable upon conversion of
the Preferred Stock and upon exercise of the Warrants with the Securities and
Exchange Commission ("REGISTRATION RIGHTS AGREEMENT").
The following describes certain of the material terms of the financing
transaction with the Investors. The description below is not a complete
description of the material terms of the financing transaction and is qualified
in its entirety by reference to the agreements entered into in connection with
the financing which are included as exhibits to this Current Report on Form 8-K:
PREFERRED STOCK CONVERSION RIGHTS. All or any portion of the stated value of
Preferred Stock outstanding may be converted into Common Stock at anytime by the
Investors. The initial fixed conversion price of the Preferred Stock is $1.00
per share ("CONVERSION Price"). The Conversion Price is subject to anti-dilution
protection adjustments, on a full ratchet basis, until the date that is twelve
months from the effective date of the Registration Statement required to be
filed pursuant to the Registration Rights Agreement, upon the Company's issuance
of additional shares of Common Stock, or securities convertible into Common
Stock, at a price that is less than the then Conversion Price.
REDEMPTION. On August 7, 2009 (the "REDEMPTION DATE"), all of the outstanding
Preferred Stock shall be redeemed for a per share redemption price equal to the
stated value on the Redemption Date (the "REDEMPTION PRICE"). The Redemption
Price is payable by the Company in cash or in shares of Common Stock at the
Company's discretion and shall be paid within five trading days after the
Redemption Date. In the event the Company elects to pay all or some of the
Redemption Price in shares of Common Stock, the shares of Common Stock to be
delivered to the Investors shall be valued at 85% of the fifteen-day volume
weighted average price of the Common Stock on the Redemption Date.
RIGHT TO COMPEL CONVERSION. If, on any date after August 7, 2007, (A) the
closing market price for a share of Common Stock for ten (10) consecutive
trading days equals at least $4.00 (subject to adjustment for certain events),
and (B) the average reported daily trading volume during such ten-day period
equals or exceeds 100,000 shares, then the Company shall have the right, at its
option, to convert, all, but not less than all, of the outstanding shares of
Preferred Stock at the Conversion Price; provided that the Registration
Statement shall be effective at all times during such 10-day period and during
the 30-day notice period to the Investors.
WARRANT TERMS. The Warrants grant Investors the right to purchase up to an
aggregate of 575,000 shares of common stock of the Company at an exercise price
of $1.50 per share. The Warrants expire on August 7, 2009 and must be exercised
by the payment of cash, except if there is no effective registration statement
covering the resale of the shares of Common Stock underlying the Warrants, at
which time an investor may exercise their Warrants on a cashless basis.
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RESTRICTIONS ON CONVERSION OF PREFERRED STOCK AND EXERCISE OF WARRANT. No
individual Investor is entitled to receive shares upon conversion of the
Preferred Stock held by such Investor if such receipt would cause such Investor
to be deemed to beneficially own in excess of 4.999% of the outstanding shares
of our Common Stock on the date of issuance of such shares (such provision may
be waived by such Investor upon 61 days prior written notice to the Company). In
addition, no individual Investor is entitled to receive shares upon conversion
of the Preferred Stock held by such Investor if such receipt would cause such
Investor to be deemed to beneficially own in excess of 9.999% of the outstanding
shares of our Common Stock on the date of issuance of such shares (such
provision may be waived by such Investor upon 61 days prior written notice to
the Company).
None of the individual holders of the Warrants are entitled to exercise any such
Warrant held by them, if such exercise would cause such Investor to be deemed to
beneficially own in excess of 4.999% of the outstanding shares of our Common
Stock on the date of issuance of such shares REGISTRATION RIGHTS. Pursuant to
the terms of a Registration Rights Agreement between the Investors and the
Company, the Company is obligated to file a registration statement on Form SB-2
(or if Form SB-2 is not available another appropriate form) registering the
resale of shares of the Company's Common Stock issuable upon conversion of the
Preferred Stock and exercise of the Warrants. The Company is required to file
the registration statement within 60 days of August 8, 2006 and have the
registration statement declared effective within 120 days of August 8, 2006. If
the registration statement is not timely filed, or declared effective within the
timeframe described, or if the registration is suspended other than as
permitted, in the Registration Rights Agreement, the Company will be obligated
to pay each Investor a fee equal to 1.0% of such Investor's purchase price of
the Preferred Stock for each 30 day period thereafter (pro rated for partial
periods), that such registration conditions are not satisfied, up to a maximum
of 12 months. RIGHT OF FIRST REFUSAL. Subject to certain conditions, the Company
has granted the Investors a right of first refusal, for a period of one (1) year
from the effective date of the registration statement required to be filed in
connection with this transaction, to participate in any subsequent financing
that the Company conducts. VOTING RIGHTS. Holders of the Preferred Stock shall
have no voting rights. However, so long as any shares of Preferred Stock are
outstanding, the Company shall not, without the affirmative vote of the holders
of a majority of the shares of the Preferred Stock then outstanding, (a) alter
or change adversely the powers, preferences or rights given to the Preferred
Stock or alter or amend the Series B Certificate of Designation, (b) authorize
or create any class of stock ranking as to dividends or distribution of assets
upon a liquidation senior to or otherwise PARI PASSU with the Preferred Stock,
(c) amend its certificate or articles of incorporation or other charter
documents so as to affect adversely any rights of the holders of the Preferred
Stock, (d) increase the authorized number of shares of Preferred Stock, or (e)
enter into any agreement with respect to the foregoing.
LIQUIDATION PREFERENCE. Upon any liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary (a "LIQUIDATION"), the holders of the
Preferred Stock shall be entitled to receive out of the assets of the Company,
whether such assets are capital or surplus, for each share of Preferred Stock an
amount equal to the stated value per share before any distribution or payment
shall be made to the holders of any securities of the Company with rights junior
to the Preferred Stock, and if the assets of the Company shall be insufficient
to pay in full such amounts, then the entire assets to be distributed to the
holders of the Preferred Stock shall be distributed among such holders ratably
in accordance with the respective amounts that would be payable on such shares
if all amounts payable thereon were paid in full.
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ITEM 3.02. UNREGISTERED SALES OF EQUITY SECURITIES
See Item 1.01 of this Current Report on Form 8-K, which Item is incorporated
herein by this reference, for a description of the terms of the financing
transaction that included the issuance of Preferred Stock and Warrants, each of
which are convertible into shares of the Company's common stock.
ITEM 3.03. MATERIAL MODIFICATION TO RIGHTS OF SECURITY HOLDERS
On August 10, 2006, the Company filed a certificate of designation, dated as of
August 8, 2006, authorizing the Preferred Stock. See Item 1.01 of this Current
Report on Form 8-K, which Item is incorporated herein by this reference, for a
more detailed description of the terms of the Preferred Stock.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
Set forth below is a list of Exhibits included as part of this Current Report.
10.1 Form of Convertible Preferred Stock and Common Stock Warrant Purchase
Agreement entered into by and between the Company and the purchasers
10.2 Form of Common Stock Purchase Warrant
10.3 Form of Registration Rights Agreement
10.4 Certificate of Designation of Preferences, Rights and Limitations of
Series B Preferred Stock dated as of August 8, 2006
This Current Report on Form 8-K may contain, among other things, certain
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, including, without limitation, (i) statements
with respect to the Company's plans, objectives, expectations and intentions;
and (ii) other statements identified by words such as "may", "could", "would",
"should", "believes", "expects", "anticipates", "estimates", "intends", "plans"
or similar expressions. These statements are based upon the current beliefs and
expectations of the Company's management and are subject to significant risks
and uncertainties. Actual results may differ from those set forth in the
forward-looking statements. These forward-looking statements involve certain
risks and uncertainties that are subject to change based on various factors
(many of which are beyond the Company's control).
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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.
SYSVIEW TECHNOLOGY, INC.
Date: August 14, 2006 By: /s/ Darwin Hu
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Darwin Hu, Chief Executive Officer
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