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): February 7, 2006
NCT Group, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-18267 59-2501025
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
20 Ketchum Street, Westport, CT 06880
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (203) 226-4447
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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.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
Item 3.02. Unregistered Sales of Equity Securities.
On February 7, 2006, NCT issued Carole Salkind an 8% convertible note in the
principal amount of $15,653,600.49 to cure NCT's default under notes dated July
26, 2005 and August 1, 2005. The principal amount of this note represents the
aggregate principal rolled over ($13,699,878.22), default penalty (10% of the
principal in default) and accrued interest. The note matures six months from the
date of issuance. The note is secured by substantially all of the assets of NCT.
The note bears interest at the stated rate until the due date of the note and
bears interest at a default rate equal to the stated rate of interest plus 5% on
any amount of principal or interest that is not paid when due. Interest is
payable upon maturity of the note. At the election of Ms. Salkind, the note may
be converted into shares of NCT common stock at a conversion price per share
equal to the greater of (i) $0.0021 or (ii) the par value of NCT common stock on
the date of conversion. At the election of Ms. Salkind, the note may be
exchanged for shares of common stock of any subsidiary of NCT (except Pro Tech
Communications, Inc.) that makes a public offering of its common stock (at the
public offering price). The note contains events of default, any one of which
(if not cured) triggers a default penalty of 10% of the then outstanding
principal. If triggered, the default penalty, along with the outstanding
principal and accrued interest, becomes immediately due and payable. Events of
default include the failure to pay principal and interest when due and the
failure to issue shares of common stock upon exercise of conversion rights.
In conjunction with the issuance of the note, NCT issued Ms. Salkind a five-year
warrant to acquire 257,750,000 shares of NCT common stock at an exercise price
per share equal to the greater of (i) $0.0021 or (ii) the par value of NCT
common stock on the date of exercise.
The issuance of the note and warrant was not registered under the Securities Act
of 1933, as amended, in reliance upon the exemption set forth in Section 4(2) of
the Securities Act relating to transactions by an issuer not involving a public
offering.
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Item 9.01. Financial Statements and Exhibits.
(c) Exhibits
10.1(a) Form of Secured Convertible Note (refinancings after October 31,
2005) issued by NCT Group, Inc. to Carole Salkind (incorporated
by reference to Exhibit No. 10.2(a) to Form 8-K filed by NCT
Group, Inc. on December 12, 2005).
10.1(b) Schedule of Secured Convertible Note (refinancings after October
31, 2005) issued by NCT Group, Inc. to Carole Salkind on February
7, 2006.
10.2(a) Form of Warrant (refinancings after October 31, 2005) issued by
NCT Group, Inc. to Carole Salkind (incorporated by reference to
Exhibit No. 10.4(a) to Form 8-K filed by NCT Group, Inc. on
December 12, 2005).
10.2(b) Schedule of Warrant (refinancings after October 31, 2005) issued
by NCT Group, Inc. to Carole Salkind on February 7, 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.
NCT GROUP, INC.
By: /s/ Cy E. Hammond
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Cy E. Hammond
Senior Vice President and
Chief Financial Officer
Date: February 13, 2006
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