8-K

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): April 5, 2011

CYBERDEFENDER CORPORATION

(Exact name of Company as specified in Charter)

Delaware	333-138430	65-1205833
(State or other jurisdiction of incorporation or organization)	(Commission File No.)	(IRS Employee Identification No.)

617 West 7th Street, Suite 1000

Los Angeles, California 90017

 (Address of Principal Executive Offices)

213-689-8631

(Issuer Telephone number)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Company under any of the following provisions (see General Instruction A.2 below).

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 CFR240.14a-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 240.13(e)-4(c))

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Item 3.01 Notice of Failure to Satisfy a Continued Listing Rule

On April 6, 2011, CyberDefender Corporation (the “Company”) received a letter dated April 6, 2011, from the Staff of the Listing Qualifications Department of the NASDAQ Stock Market (the “Staff”) referring to the 2010 Note and the 2011 Note (each as defined below) and an amendment to the 2010 Note, effective as of February 25, 2011, pursuant to which the conversion price of the note was reduced (which also is described below).  The letter stated that: (i) the Staff determined that a stockholder approval violation existed due the Company’s ability to issue more than 20% of its pre-transaction total shares outstanding at an average price less than market; (ii) the Company failed to comply with Listing Rule 5635(d)(2) (the “Rule”); (iii) subsequently, on April 5, 2011, the Company amended the 2010 Note and the 2011 Note (the amendments are described below) such that the aggregate number of shares that can be issued cannot exceed 19.99% of the pre-existing total shares outstanding; (iii) accordingly, the Staff has determined that the Company has regained compliance with the Rule; and (iv) subject to required disclosure, the matter is now closed.

Item 1.01 Entry into a Material Definitive Agreement

The following discussion provides only a brief description of the agreements and instruments described below.  The discussion is qualified in its entirety by the full texts of the agreements and instruments.

As previously disclosed in a Form 8-K filed with the Securities and Exchange Commission (“SEC”) on March 31, 2010, the Company issued to GR Match, LLC (“GRM”) a 9% Secured Convertible Promissory Note (the “2010 Note”) in the aggregate principal amount of $5,300,000, due March 31, 2012.  The Company received net proceeds of $5,000,000 after payment to GRM of an issuance fee of $300,000.

Commencing 180 days after March 31, 2010, the outstanding principal amount of the 2010 Note and accrued and unpaid interest may be converted, at GRM’s election, into shares of the Company’s common stock.  Under the terms of the 2010 Note as issued, the conversion price was $3.50 per share.  Effective as of February 25, 2011, the 2010 Note was amended to provide that the conversion price is $2.20 per share.

Effective as of April 5, 2011, the Company and GRM entered into a third amendment to the 2010 Note (the “Third Amendment”).  Pursuant to the Third Amendment, the 2010 Note was amended to provide that GRM’s total conversions of the 2010 Note and the 2011 Note are limited to conversions which in total do not exceed 5,502,963 shares, as adjusted for stock splits or combinations (the “Conversion Limitation”), which is 19.99% of the 27,528,577 shares of common stock outstanding as of February 25, 2011.  The Conversion Limitation remains effective until approval by the Company’s stockholders of the issuance of the 2010 Note and GRM’s right to convert the 2010 Note in accordance with the terms and conditions of the 2010 Note as originally issued, and exclusive of the Conversion Limitation.  Until stockholder approval is obtained, any unconverted portion of the 2010 Note will remain due and payable as non-convertible debt in accordance with the terms and conditions of the 2010 Note.  The Company is required to use commercially reasonable efforts to obtain stockholder approval at its 2011 Annual Meeting or at any subsequent special meeting of stockholders to be conducted prior to March 31, 2012, the maturity date of the 2010 Note.  In the event stockholder approval is not obtained, GRM’s right to convert the 2010 Note is subject to the Conversion Limitation, and any unconverted portion of the 2010 Note will remain due and payable as non-convertible debt in accordance with the terms and conditions of the 2010 Note.

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As previously disclosed in a Form 8-K filed with the SEC on December 13, 2010, effective as of December 3, 2010, GRM made available to the Company a secured revolving credit facility in the principal amount not to exceed $5,000,000.  The revolving credit facility was subject to the terms and conditions set forth in certain agreements and a Revolving Credit Note, dated December 3, 2010, payable by the Company to the order of GRM in the principal amount of $5,000,000 (the “Revolving Credit Note”).  Under the revolving credit facility, GRM advanced funds to the Company.

As previously disclosed in a Form 8-K filed with the SEC on March 1, 2011, effective as of February 25, 2011, the Company and GRM entered into a Loan Modification Agreement (the “Loan Modification Agreement”) pursuant to which the Company and GRM agreed to convert the existing indebtedness evidenced by the Revolving Credit Note to indebtedness that is convertible into shares of the Company’s common stock.  Pursuant to the Loan Modification Agreement, the Company and GRM agreed, among other things, to amend and restate the Revolving Credit Note on the terms and conditions of an Amended and Restated Nine Percent (9%) Secured Convertible Promissory Note made as of February 25, 2011, and due March 31, 2012 (the “2011 Note”).

The principal amount of the 2011 Note is $5,700,734.  Until it is paid in full, the 2011 Note may be converted by GRM into shares of the Company’s common stock, in whole or in part and from time to time.   The original conversion price was $2.20 per share.  Pursuant to the conversion price adjustment provisions in the 2011 Note, the conversion price was reduced to $1.86 per share as of March 31, 2011, which is equal to the lowest Volume Weighted Average Price (as that term is defined in the 2011 Note) for any five consecutive Trading Day (as that term is defined in the 2011 Note) period ending on or prior to March 31, 2011. The conversion price remains subject to adjustment in accordance with the terms and conditions of the 2011 Note.

Effective as of April 5, 2011, the Company and GRM entered into a first amendment to the 2011 Note (the “First Amendment”).  Pursuant to the First Amendment, the 2011 Note is subject to the same Conversion Limitation and stockholder approval requirements as the 2010 Note.  Until stockholder approval is obtained, any unconverted portion of the 2011 Note will remain due and payable as non-convertible debt in accordance with the terms and conditions of the 2011 Note.  In the event stockholder approval is not obtained, GRM’s right to convert the 2011 Note is subject to the Conversion Limitation, and any unconverted portion of the 2011 Note will remain due and payable as non-convertible debt in accordance with the terms and conditions of the 2011 Note.

Item 9.01  Financial Statements and Exhibits

Exhibit 99.1 Third Amendment to 9% Secured Convertible Promissory Note

Exhibit 99.2 First Amendment to Amended and Restated 9% Secured Convertible Promissory Note

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Company has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.

Dated:  April 8, 2011

CYBERDEFENDER CORPORATION
By:	/s/ Kevin Harris
	Kevin Harris, Chief Financial Officer

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EX-99.1

Exhibit 99.1

THIRD AMENDMENT TO 9% SECURED CONVERTIBLE PROMISSORY NOTE

This THIRD AMENDMENT TO 9% SECURED CONVERTIBLE PROMISSORY NOTE (this “Third Amendment”) is made and entered into on the 4th day of April, 2011 by and between GR MATCH, LLC,a Delaware limited liability company (“Lender”), CYBERDEFENDER CORPORATION,a Delaware corporation (“Borrower”).  Lender and Borrower may each be referred to herein as a “Party” and, collectively, as the “Parties.”

RECITALS

WHEREAS, Lender loaned funds to CyberDefender Corporation,a California corporation (as predecessor in interest to Borrower) (“CyberDefender California”), pursuant to the terms and conditions of that certain Loan and Securities Purchase Agreement, dated as of March 31, 2010, by and between Lender and CyberDefender California, which loan is evidenced by that certain 9% Secured Convertible Promissory Note, dated March 31, 2010, issued by CyberDefender California in favor of Lender in the original principal amount of Five Million Three Hundred Thousand Dollars ($5,300,000), as amended by that certain First Amendment to 9% Secured Convertible Promissory Note, dated December 7, 2010 to be effective as of December 3, 2010, and that certain Second Amendment to 9% Secured Convertible Promissory Note, dated February 25, 2011 (collectively, the “Promissory Note”); and

WHEREAS, the Parties desire to further amend the Promissory Note as set forth herein.

NOW THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agrees as follows:

1.           Amendment to Section 4 of the Promissory Note.  The following Section 4(d) shall be added to the Promissory Note:

(d)            Conversion  Limitation.  The Company shall use its commercially reasonable efforts to obtain, and the Company’s Board of Directors shall recommend, stockholder approval of the Company’s issuance of this Note and Holder’s rights to convert this Note, in accordance with the terms and conditions of this Note as originally issued and exclusive of the limitations on conversion set forth in this Section 4(d), at the Company’s annual meeting of stockholders to be conducted on May 26, 2011, and, if not approved then, at any subsequent special meeting conducted prior to the Maturity Date of this Note. Notwithstanding anything in Section 4(a) of this Note to the contrary, unless and until such stockholder approval is obtained, Holder’s rights to voluntarily convert all or a portion of this Note pursuant to Section 4(a) of this Note and Holder’s rights to voluntarily convert all or a portion of that certain Amended and Restated 9% Secured Convertible Promissory Note made as of the 25th day of February, 2011 by and between the Company and Holder (the “2011 Note”) pursuant to the terms and conditions thereof shall be limited to conversions resulting in a total number of shares of Common Stock which shall not exceed Five Million, Five Hundred Two Thousand, Nine Hundred Sixty-three (5,502,963). Unless and until such stockholder approval is obtained, any unconverted portion of this Note that would convert to a number of shares in excess of the total conversion limit shall remain due and payable as non-convertible debt in accordance with the terms and conditions of this Note.  In the event that the conversion limitations set forth in this Section 4(a) and any corresponding conversion limitations set forth in the 2011 Note limit the total number of shares of Common Stock issuable to Holder upon the conversion of this Note and the 2011 Note, the total number of shares of Common Stock converted under this Note and the 2011 Note, respectively, shall be allocated between this Note and the 2011 Note in the manner determined by Holder in its sole discretion.

2.           Conflict; Full Force and Effect.  In the event of any conflict between this Third Amendment and the Promissory Note, this Third Amendment shall control.  The Parties acknowledge and agree that, except as expressly provided herein, the provisions of the Promissory Note shall remain unmodified and in full force and effect.

3.           Successors and Assigns.  This Third Amendment is and shall be binding upon each of the Parties and their respective successors and assigns.

4.           Recitals.  The recitals to this Third Amendment are hereby incorporated by reference herein.

5.           Governing Law.  This Third Amendment shall be governed by the laws of the State of California, without regard to its principles of conflict of laws.

6.           Entire Agreement.  This Third Amendment contains the complete understanding and agreement of the Parties relating to the subject matter hereof and supersedes any prior understanding or agreement related thereto, whether written or oral.

7.           Counterparts.  This Third Amendment may be executed in multiple counterparts, each of which will be deemed an original, but together they will constitute one and the same instrument.

[signatures on following page]

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IN WITNESS WHEREOF, this Third Amendment has been duly executed by the Parties as of the date first above written.

GR Match, LLC,
a Delaware limited liability company
By:	/s/ Ben Van de Bunt
	Name:
	Title:

CyberDefender Corporation,
a Delaware corporation
By:	/s/ Gary Guseinov
	Name: Gary Guseinov
	Title: Chief Executive Officer

EX-99.2

Exhibit 99.1

FIRST AMENDMENT TO AMENDED AND RESTATED 9% SECURED CONVERTIBLE PROMISSORY NOTE

This FIRST AMENDMENT TO AMENDED AND RESTATED 9% SECURED CONVERTIBLE PROMISSORY NOTE (this “First Amendment”) is made and entered into on the 4th day of April, 2011 by and between GR MATCH, LLC,a Delaware limited liability company (“Lender”), CYBERDEFENDER CORPORATION,a Delaware corporation (“Borrower”).  Lender and Borrower may each be referred to herein as a “Party” and, collectively, as the “Parties.”

RECITALS

WHEREAS, Lender loaned funds to Borrower pursuant to the terms and conditions of that certain Loan and Modification Agreement, dated February 25, 2011, which loan is evidenced by that certain Amended and Restated 9% Secured Convertible Promissory Note, dated February 25, 2011, issued by Borrower in favor of Lender in the original principal amount of Five Million Seven Hundred Thousand Seven Hundred Seventy Three and 94/100 Dollars ($5,700,773.94) (the “Promissory Note”); and

WHEREAS, the Parties desire to amend the Promissory Note as set forth herein.

NOW THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agrees as follows:

1.           Amendment to Section 4 of the Promissory Note.  The following Section 4(d) shall be added to the Promissory Note:

(d)           Conversion  Limitation.  The Company shall use its commercially reasonable efforts to obtain, and the Company’s Board of Directors shall recommend, stockholder approval of the Company’s issuance of this Note and Holder’s rights to convert this Note, in accordance with the terms and conditions of this Note as originally issued and exclusive of the limitations on conversion set forth in this Section 4(d), at the Company’s annual meeting of stockholders to be conducted on May 26, 2011, and, if not approved then, at any subsequent special meeting conducted prior to the Maturity Date of this Note. Notwithstanding anything in Section 4(a) of this Note to the contrary, unless and until such stockholder approval is obtained, Holder’s rights to voluntarily convert all or a portion of this Note pursuant to Section 4(a) of this Note and Holder’s rights to voluntarily convert all or a portion of that certain 9% Secured Convertible Promissory Note issued March 31, 2010 by the Company to Holder, as amended (the “2010 Note”) pursuant to the terms and conditions thereof shall be limited to conversions resulting in a total number of shares of Common Stock which shall not exceed Five Million, Five Hundred Two Thousand, Nine Hundred Sixty-three (5,502,963). Unless and until such stockholder approval is obtained, any unconverted portion of this Note that would convert to a number of shares in excess of the total conversion limit shall remain due and payable as non-convertible debt in accordance with the terms and conditions of this Note.  In the event that the conversion limitations set forth in this Section 4(a) and any corresponding conversion limitations set forth in the 2010 Note limit the total number of shares of Common Stock issuable to Holder upon the conversion of this Note and the 2010 Note, the total number of shares of Common Stock converted under this Note and the 2010 Note, respectively, shall be allocated between this Note and the 2010 Note in the manner determined by Holder in its sole discretion.

2.           Conflict; Full Force and Effect.  In the event of any conflict between this First Amendment and the Promissory Note, this First Amendment shall control.  The Parties acknowledge and agree that, except as expressly provided herein, the provisions of the Promissory Note shall remain unmodified and in full force and effect.

3.           Successors and Assigns.  This First Amendment is and shall be binding upon each of the Parties and their respective successors and assigns.

4.           Recitals.  The recitals to this First Amendment are hereby incorporated by reference herein.

5.           Governing Law.  This First Amendment shall be governed by the laws of the State of California, without regard to its principles of conflict of laws.

6.           Entire Agreement.  This First Amendment contains the complete understanding and agreement of the Parties relating to the subject matter hereof and supersedes any prior understanding or agreement related thereto, whether written or oral.

7.           Counterparts.  This First Amendment may be executed in multiple counterparts, each of which will be deemed an original, but together they will constitute one and the same instrument.

[signatures on following page]

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IN WITNESS WHEREOF, this First Amendment has been duly executed by the Parties as of the date first above written.

GR Match, LLC,
a Delaware limited liability company
By:	/s/ Ben Van de Bunt
	Name:
	Title:

CyberDefender Corporation,
a Delaware corporation
By:	/s/ Gary Guseinov
	Name: Gary Guseinov
	Title: Chief Executive Officer