FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
VoIP,
Inc.
(Exact
name of registrant as specified in its charter)
Texas
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000-28985
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75-2785941
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(Commission
File No.)
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(IRS
Employer Identification
No.)
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151
So. Wymore Rd., Suite 3000 Altamonte Springs, Suite 32714
(Address
of principal execute offices, including zip code)
(407)
389-3232
(Registrant's
telephone number, including area code)
N/A
(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):
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 CFR 240.14a-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 240.13e-4(c))
ITEM
1.01 |
ENTRY
INTO A MATERIAL DEFINITIVE AGREEMENT
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On
February 16, 2007, VoIP, Inc. (the “Company”) issued and sold $3,462,719
in secured convertible notes (the “Convertible Notes”) to a group
of institutional
investors, for a net purchase price of $2,770,175 (after a 20% original issue
discount) in a private placement. $900,000 of the proceeds (before closing costs
of $67,512) were paid in cash to the Company at closing, and $1,870,175 of the
proceeds were used to repay fourteen outstanding promissory notes (including
related accrued interest and a 10% premium on the promissory notes’ total
principal of $1,666,667) held by five of the investors in the private placement.
The investors also received five-year warrants to purchase a total of 19,237,328
shares of the Company’s common stock at an exercise price of $0.30 per
share (the “Class D Warrants”). The convertible note shares and underlying warrant shares are not registered.
The
Convertible Notes are secured by a subordinated lien on the Company’s assets,
are not interest bearing, and are due on February 16, 2008. The note holders
may
at their election convert all or part of the Convertible Notes into shares
of
the Company’s common stock at the conversion rate of $0.18 per share, subject to
adjustment as provided in the notes. The investors also received “favored
nations” rights such that for future securities offerings by the Company at a
price per share less than the above conversion rate or warrant exercise price,
the investors’ conversion rate and warrant exercise price would be adjusted to
the lower offering price.
Pursuant
to the Subscription Agreement, two of the investors are to receive due diligence
fees totaling $346,272, in the form of convertible notes (“Due Diligence Notes”)
having the same terms and conversion features as the Convertible
Notes.
Also
pursuant to the Subscription Agreement, the Company agreed to issue a total
of
4,000,000 common shares to the former holders of the above-referenced promissory
notes, in lieu of and in payment for accrued damages associated with these
promissory notes. Said common share issuance is required no later than April
15,
2007, which in turn requires shareholder approval of increased authorized common
shares.
Also
pursuant to the Subscription Agreement, the Company must obtain the
authorization and reservation of its common stock on behalf of the investors
of
not less than 200% of the common shares issuable upon the conversion of the
Convertible Notes and Due Diligence Notes, and 100% of the common shares
issuable upon the exercise of the warrants by April 15, 2007. Failing this
authorization and reservation (the authorization of which requires approval
by
the Company’s shareholders), the holders of the Convertible Notes and Due
Diligence Notes will be entitled to liquidated damages that will accrue at
the
rate of two percent of the amount of the purchase price of the outstanding
Convertible Notes and Due Diligence Notes for each thirty days or pro rata
portion thereof during such default.
As
previously disclosed, on February 1, 2007 Cedar Boulevard Lease Funding LLC
(“Cedar”) assigned its rights under a subordinated loan and security agreement,
as amended (the “Loan Agreement”), including the note payable (the “Note”)
with a current principal balance of $1,917,581 and the related security
interest, to a group of institutional investors. Also on February 1, 2007 the
Note’s terms were amended to allow conversion of any unpaid principal balance
into the Company’s restricted common stock at $0.26 per share, subject to
sufficient increased authorized common shares being approved by the Company’s
shareholders. In conjunction with the Company’s financing above, on February 16,
2006 the Note’s common stock conversion rate was reduced to $0.18 per share. The
Company has also not made scheduled payments of $1,120,000 under the Loan
Agreement. However, the Note holders have not demanded payment or declared
the
Note in default.
A
number of the Company's other existing financing agreements also contain
“favored nations” pricing provisions. As such, their applicable common stock
conversion rates and warrant exercise prices were effectively reduced to
$0.18
per share as a result of the February 16, 2007 transactions described above.
The Company incorporates by reference its prior 8-K filings and Schedule 14A proxy concerning the price ratchet effect on the derivative securities previously issued that have favored nations provisions. The issuance of the common stock is subject to the Companys obtaining shareholder approval to authorize the increase of the number of its authorized shares of common stock to enable the Company to issue the shares of common stock upon conversion and exercise by the holders.
We
claim
an exemption from the registration requirements of the Act for the private
placement of these securities pursuant to Section 4(2) of the Act and/or
Regulation D promulgated thereunder since, among other things, the transaction
did not involve a public offering, the investors were accredited investors
and/or qualified institutional buyers, the investors had access to information
about us and their investment, the investors took the securities for investment
and not resale, and we took appropriate measures to restrict the transfer of
the
securities.
ITEM
2.03 |
CREATION
OF A DIRECT FINANCIAL
OBLIGATION
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See
Item
1.01 above.
ITEM
2.04 |
TRIGGERING EVENTS THAT
ACCELERATE OR
INCREASE A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BLANCE SHEET
ARRANGEMENT
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See
Item 1.01 above.
ITEM
3.02 |
UNREGISTERED
SALES OF EQUITY SECURITIES
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See
Item
1.01 above.
(c)
Exhibits
10.1
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Form of Subscription Agreement dated February 16, 2007
10.2
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Form of Convertible Note dated February 16, 2007
10.3
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Form of Class D Common Stock Purchase Warrant dated February 16, 2007
10.4
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Form of Cedar Reallocation and Assignment Agreement dated February 16,
2007
10.5
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Form of Reallocation and Assignment Agreement dated February 16,
2007
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.
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Date:
February 23, 2007 |
VoIP,
INC.
(Registrant)
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By: |
/s/ Robert
Staats |
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Robert
Staats
Chief
Accounting Officer
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Exhibit
#
10.1
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Form of Subscription Agreement dated February 16, 2007
10.2
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Form of Convertible Note dated February 16, 2007
10.3
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Form of Class D Common Stock Purchase Warrant dated February 16, 2007
10.4
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Form of Cedar Reallocation and Assignment Agreement dated February 16,
2007
10.5
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Form of Reallocation and Assignment Agreement dated February 16,
2007