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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) January 25, 2006
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
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))
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ITEM 1.02 TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT.
Effective as of January 25, 2006 (the "Effective Date"), Electronic Sensor
Technology, Inc. (the "Registrant") accepted Matthew S. Collier's resignation as
President and Chief Executive Officer and a director of the Registrant. In
connection with Mr. Collier's resignation, as of the Effective Date, Mr. Collier
and the Registrant mutually agreed to terminate the letter agreement entered
into on May 16, 2005 between the Registrant and Mr. Collier (the "Letter
Agreement") (other than that portion of the Letter Agreement relating to
indemnification of Mr. Collier for liability incurred within the scope of his
employment with the Registrant, embodied in Section 7 of the Letter Agreement),
which outlined the terms of Mr. Collier's employment and which is attached as
Exhibit 10.1 to the current report on Form 8-K/A filed with the Securities and
Exchange Commission (the "Commission") on October 6, 2005, amending the current
report on Form 8-K filed with the Commission on July 22, 2005. The terms of Mr.
Collier's resignation are described in the Settlement Agreement, Mutual Release
and Amendment of Option Agreement attached hereto as Exhibit 10.1, and
incorporated herein by reference, entered into between the Registrant and Mr.
Collier, effective as of the Effective Date (the "Settlement Agreement"). The
Settlement Agreement provides for (i) payment of six months' salary to Mr.
Collier (totaling $110,000) by the Registrant, in accordance with Section 6 of
the Letter Agreement, (ii) payment of a discretionary bonus to Mr. Collier by
the Registrant in the amount of $18,334, in accordance with Section 2 of the
Letter Agreement, (iii) the grant of 75,000 shares of common stock of the
Registrant, par value $.001 (the "Common Stock") to Mr. Collier, in accordance
with Section 3 of the Letter Agreement, (iv) an amendment to the terms of the
Option Agreement entered into between the Registrant and Mr. Collier, effective
as of October 7, 2005 (the terms of such Option Agreement are described more
fully in the current report on Form 8-K/A filed with the Commission on October
6, 2005, amending the current report on Form 8-K filed with the Commission on
July 22, 2005, and the current report on Form 8-K filed with the Commission on
October 7, 2005), reflecting a six-month acceleration of the vesting dates of
Mr. Collier's options to purchase a total 500,000 shares of Common Stock, in
accordance with Section 6 of the Letter Agreement, such that (a) the option to
purchase 200,000 shares of Common Stock vested on November 26, 2005, (b) the
option to purchase 150,000 shares of Common Stock will vest on November 26, 2006
and (c) the option to purchase to purchase 150,000 shares of Common Stock will
vest on November 26, 2007, and (v) a mutual release of claims by the Registrant
and Mr. Collier.
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES.
Effective as of the Effective Date, the Registrant issued to Mr. Collier 75,000
shares of Common Stock in accordance with Section 3 of the Letter Agreement and
in consideration of Mr. Collier's services in the employ of the Registrant. The
terms of the issuance of the 75,000 shares of Common Stock, including a right of
first refusal granted by Mr. Collier to the Registrant, are more fully described
in the Restricted Stock Award Agreement attached hereto as Exhibit 99.1, and
incorporated herein by reference. The Registrant relied upon Section 4(2) of the
Securities Act of 1933, as amended, in claiming exemption from registration of
the shares of Common Stock issued to Mr. Collier due to Mr. Collier's position
as President and Chief Executive Officer of the Registrant and because there was
no public offering of such shares, there was no general solicitation or
advertising involved in the offer or sale of such shares, and the issuance
otherwise met the requirements for exemption from registration pursuant to
Section 4(2).
ITEM 5.02 DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF
DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS.
Effective as of the Effective Date, Matthew S. Collier resigned as President and
Chief Executive Officer and a director of the Registrant. The terms of Mr.
Collier's resignation are more fully described in Item 1.02 hereto, which such
description is hereby incorporated by reference in this Item 5.02.
Effective as of the Effective Date, Teong C. Lim, currently serving as Vice
President of Corporate Development and a director of the Registrant, has been
appointed to act as interim President and Chief Executive Officer of the
Registrant. Dr. Lim has served as a director of the Registrant since January 31,
2005 and has served as Vice President of Corporate Development since February 1,
2005. Dr. Lim was the director of corporate development of Electronic Sensor
Technology, L.P., a predecessor of the business of the Registrant, from March
1995 through
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August 2000 and was the Manager of Corporate Development of Electronic Sensor
Technology, L.P. from August 2000 through February 2005. Dr. Lim has been the
President of Amerasia Technology, Inc., a subsidiary of the Registrant, since
1984. Since 1997, Dr. Lim has been a director of Crystal Clear Technology,
Sdn.Bhd., a privately-owned Malaysian company that manufactures and markets a
high-contras liquid crystal display (LCD) product line. Dr. Lim received a Ph.D.
in Electrical Engineering from McGill University in 1968 and an M.B.A. from
Pepperdine University in 1982. Dr. Lim does not serve as a director of any other
publicly reporting company. Dr. Lim does not have any family relationships with
the other directors or executive officers of the Registrant, nor are there any
family relationships among the directors or executive officers of the
Registrant.
The Registrant has not been a party to any transactions during the last two
years nor is it a party to any proposed transactions, in which any of the
following persons had or is to have a direct or indirect material interest: (i)
any director or executive officer of the Registrant; (ii) any nominee for
election as a director; (iii) any security holder that is a beneficial owner of
more than five percent of any class of the Registrant's voting securities; or
(iv) any member of the immediate family of any of the foregoing persons.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
Exhibit No. Description
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10.1 Settlement Agreement, Mutual Release and Amendment of Option
Agreement, effective as of January 25, 2006, between the
Registrant and Matthew S. Collier.
99.1 Restricted Stock Award Agreement, effective as of January 25,
2006, between the Registrant and Matthew S. Collier.
99.2 Press Release dated January 26, 2006.
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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.
ELECTRONIC SENSOR TECHNOLOGY, INC.
Date: January 31, 2006 By: /s/ Francis Chang
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Name: Francis Chang
Title: Secretary and Vice President of
Finance and Administration