UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Date of report (Date of earliest event reported) October 3, 2005
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ELECTRONIC SENSOR TECHNOLOGY, INC.
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(Exact Name of the Registrant as Specified in Charter)
Nevada 333-87224 98-0372780
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
1077 Business Center Circle, Newbury Park, California 91320
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(Address of Principal Executive Offices)
Registrant's telephone number, including area code (805) 480-1994
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Not Applicable.
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(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 240.14d-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.
Letter Agreement with James Frey
On October 3, 2005, Electronic Sensor Technology, Inc. (the "Registrant")
entered into a letter agreement (the "Letter Agreement") with James Frey,
Chairman of the Board of Directors of the Registrant, which is attached hereto
as Exhibit 10.1 and incorporated herein by reference. The Letter Agreement
memorialized an agreement between Mr. Frey and the Registrant that a prior
letter agreement dated February 21, 2005 (and an addendum thereto dated April 1,
2005) did not satisfy certain assurances made to Mr. Frey regarding equity
compensation to induce Mr. Frey to serve as Chairman of the Board of Directors
of the Registrant, and that, since there was no meeting of the minds, such
letter agreement is null and void and Mr. Frey and the Registrant shall be
restored to their respective positions prior to the execution and delivery of
the February 21, 2005 letter agreement. The February 21, 2005 letter agreement
and addendum thereto are attached hereto as Exhibits 10.2 and 10.3,
respectively. The Letter Agreement also provides that Mr. Frey will continue to
serve as Chairman of the Board of Directors of the Registrant until such time,
if any, as (i) Mr. Frey and the Registrant shall enter into a new agreement,
(ii) Mr. Frey resigns or is replaced as Chairman of the Board of Directors or
(iii) Mr. Frey ceases being a director of the Registrant.
Grant of Stock Options
On October 7, 2005, the following non-qualified stock options to acquire stock
of the Registrant were granted to Mr. Frey at an exercise price of $0.64 per
share, under the Registrant's 2005 Stock Incentive Plan. Mr. Frey's stock
options will vest as follows: one quarter of the options will vest on March 8,
2006, one quarter on September 8, 2006, one quarter on March 8, 2007 and one
quarter on September 8, 2007. The option grant was evidenced by a Notice of
Grant of Stock Options and Option Agreement substantially in the form attached
as Exhibit 10.2 to the annual report of the Registrant on Form 10-KSB for the
fiscal year ended December 31, 2004 filed with the Commission on April 15, 2005.
Number of Stock
Name of Optionee Title Type of Stock Options Options
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James Frey Chairman of the Board of
Directors Non-Statutory 250,000
Repricing of Stock Options
On October 7, 2005, pursuant to an action taken by the Board of Directors on
September 8, 2005, the Registrant entered into a new Option Agreement with
Matthew S. Collier, President and CEO of the Registrant, substantially in the
form attached as Exhibit 10.2 to the annual report of the Registrant on Form
10-KSB for the fiscal year ended December 31, 2004 filed with the Commission on
April 15, 2005, pursuant to which Mr. Collier's existing 500,000 stock options,
granted on May 26, 2005 at an exercise price of $1.50 per share were repriced at
an exercise price of $0.64 per share.
Item 1.02 Termination of a Material Definitive Agreement.
On October 3, 2005, the Registrant entered into a letter agreement (the
"Letter Agreement") with James Frey, Chairman of the Board of Directors of the
Registrant, which is attached hereto as Exhibit 10.1 and incorporated herein by
reference. The Letter Agreement memorialized an agreement between Mr. Frey and
the Registrant that a prior letter agreement dated February 21, 2005 (and an
addendum thereto dated April 1, 2005) did not satisfy certain assurances made to
Mr. Frey regarding equity compensation to induce Mr. Frey to serve as Chairman
of the Board of Directors of the Registrant, and that, since there was no
meeting of the minds, such letter agreement is null and void and Mr. Frey and
the Registrant shall be restored to their respective positions prior to the
execution and delivery of the February 21, 2005 letter agreement. The February
21, 2005 letter agreement and addendum thereto are attached hereto as Exhibits
10.2 and 10.3, respectively. The Letter Agreement also provides that Mr. Frey
will continue to serve as Chairman of the Board of Directors of the Registrant
until such time, if any, as (i) Mr. Frey and the Registrant shall enter into a
new agreement, (ii) Mr. Frey resigns or is replaced as Chairman of the Board of
Directors or (iii) Mr. Frey ceases being a director of the Registrant.
Item 9.01. Financial Statements and Exhibits.
Exhibit No. Description
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10.1 Letter agreement dated as of October 3, 2005, between the Registrant and James Frey.
10.2 Letter agreement dated as of February 21, 2005, between the Registrant and James Frey.
10.3 Addendum dated as of April 1, 2005 to letter agreement dated February 21, 2005, between the Registrant and James
Frey.
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.
ELECTRONIC SENSOR TECHNOLOGY, INC.
Date: October 7, 2005 By: /s/ Matthew S. Collier
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Name: Matthew S. Collier
Title: President and Chief
Executive Officer