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): August 11, 2006
Conspiracy Entertainment Holdings, Inc.
(Exact name of registrant as specified in its charter)
Utah 000-32427 87-0386790
(State or Other (Commission (IRS Employer
Jurisdiction File Number) Identification No.)
of Incorporation)
612 Santa Monica Boulevard, Santa Monica, CA 90401
(Address of principal executive offices) (zip code)
(310) 260-6150
(Registrant's telephone number, including area code)
Copies to:
Marc J. Ross, Esq.
Sichenzia Ross Friedman Ference LLP
1065 Avenue of the Americas
New York, New York 10018
Phone: (212) 930-9700
Fax: (212) 930-9725
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):
|_| 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.
Conspiracy Entertainment has entered into a Second Amendment, Modification
and Consent to Transaction Document Agreement, dated August 11, 2006 (the
"Second Amendment Agreement"). Pursuant to the Second Amendment Agreement, the
Company sold an aggregate of $247,000 principal amount of 15% secured
convertible notes (the "Notes") and received $247,000 in payment for the sale of
the Notes, less expenses of $4,000.
Principal and accrued interest on the Notes is due and payable on February
1, 2007. At the election of the Note holder, principal and accrued interest on
the Note may be paid by the Company in shares of its common stock. The
conversion price is the lesser of $0.02 per share or seventy percent (70%) of
the average of the five lowest closing bid prices for the Company's common stock
as reported by Bloomberg L.P. for the thirty trading days preceding the date the
Note holders gives the Company notice of its conversion. The conversion price is
subject to adjustment for subsequent lower price issuances by the Company, as
well as customary adjustments provisions for stock splits, combinations,
dividends and the like. Payment of all amounts due pursuant to the Notes is
secured by a lien on the assets of the Company.
The notes were issued in a private placement transaction exempt from
registration requirements pursuant to Section 4(2) of the Securities Act of
1933, as amended, and Rule 506 promulgated thereunder.
The Second Amendment Agreement amended the terms of the terms of the
Securities Purchase Agreements (the "Purchase Agreements") dated as of August
31, 2004 and January 31, 2005, which are described in the Company's Forms 8-K
filed with the SEC on September 3, 2004 and February 15, 2005. Pursuant to the
Second Amendment Agreement, the Company re-affirmed all representations and
warranties contained in the Purchase Agreements and all covenants and conditions
in the Purchase Agreements were adopted and renewed. In addition, the Security
Interest Agreements executed in connection with the Purchase Agreements also
relate to the sale of the Notes pursuant to the Second Amendment Agreement. The
conversion price of the debentures issued in connection with the Purchase
Agreements was amended to be the lesser of $0.02 or 70% of the average of the
five lowest closing bid prices for the Company's common stock for the 30 trading
days prior to a conversion date.
Pursuant to the Second Amendment Agreement, the Company has delivered signed
resignations of its officers and directors in which they have agreed to appoint
an individual named in the resignation letter to the board of directors (the
"Resignations"). In the event that the Company does not timely file a Form
10-QSB or Form 10-KSB reflecting that: gross revenues from sales in the ordinary
course of business net of returns for the following quarters are at least:
2nd quarter of 2006 $343,000
3rd quarter of 2006 $351,000
4th quarter of 2006 $450,000
then the Lenders will not be required to purchase the Additional Notes, and the
Lenders will be permitted to immediately accept the Resignations on behalf of
the board of directors and officers of the Company.
Pursuant to the Second Amendment Agreement, and provided an event of
default has not occurred, then on each of the thirtieth and sixtieth days after
the August 2006 Closing Date, the two Lenders will each purchase a note in the
amount of $20,000 (the "Additional Notes"), which notes will be identical to the
Notes, except for the principal amount of the note and will also have a maturity
date of February 1, 2007.
If an Event of Default (as defined in the Notes), occurs and the Lenders
seek to enforce their rights in the Notes or the Debentures issued on or about
the First Closing Date and the Second Closing Date (the "Debentures") then the
Lenders will be permitted to immediately accept the Resignations on behalf of
the board of directors and officers of the Company. In the event that the
Projections are timely achieved and the Notes and the Debentures are paid in
full or cancelled, the Resignations shall immediately thereafter be deemed to be
void.
Pursuant to the Second Amendment Agreement, the Company is issuing to the
placement agent for this transaction, or its designees a commission of 500,000
restricted shares of the Company's Common Stock.
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The description of the transaction in this Item is qualified in its
entirety by reference to the full text of the Second Amendment Agreement and the
form of Secured Convertible Note, which are filed as exhibits to this Current
Form.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
See Item 1.01.
Itme 3.02 Unregistered Sale of Equity Securities.
See Item 1.01.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits
Exhibit
Number Description
- --------------------------------------------------------------------------------
4.1 Form of Secured Convertible Note
4.2 Second Amendment, Modification and Consent to Transaction
Documents Agreement, dated August 11, 2006
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Conspiracy Entertainment Holdings, Inc.
Dated: August 17, 2006 By: /s/ Keith Tanaka
----------------------------
Name: Keith Tanaka
Title: Chief Financial Officer
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