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): December 29, 2005
FTS GROUP, INC.
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(Exact name of registrant as specified in its charter)
Nevada 000-24829 84-1416864
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(State or other jurisdiction (Commission File (IRS Employer of
incorporation) Number) Identification No.)
7610 West Hillsborough Ave., Tampa, Florida 33615
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(Address of principal executive offices) (Zip Code)
(215) 688-2355
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(Registrant's telephone number)
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.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION
UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
On December 29, 2005, we entered into a transaction in which we agreed to
issue up to $1,896,551 of secured, convertible promissory notes with an original
discount of 21%. We actually raised $1,820,690 in the transaction. The Notes can
convert into shares of our common stock, subject to certain conditions, at a per
share conversion price set forth in the Notes. On December 29, 2005, we received
proceeds of $1,000,000 after the 21% discount but before expenses. On January 4,
2005 we received an additional $440,000 after the 21% discount but before
expenses.
We also agreed to issue warrants to purchase shares of our common stock. We
agreed to issue 100 Class A Warrants for each 100 shares which would be issued
on the closing date assuming the complete conversion of the Notes on the closing
date at the conversion price then in effect. The exercise price of the Class A
Warrants is $0.02868. The Class A Warrants shall be exercisable until the date
that the Registration Statement (as defined in the Subscription Agreement) has
been effective for the unrestricted public resale of the Warrant Shares for 4
years.
We agreed to issue 50 Class B Warrants for each 100 shares which would be
issued on the closing date assuming the complete conversion of the Notes on the
closing date at the conversion price then in effect. The exercise price of the
Class B Warrants is $0.0239. The Class B Warrants are exercisable until the
later of four months after the actual effective date of Registration Statement
(as defined in the Subscription Agreement), or ninety days after the actual
effective date of a Second Registration Statement (as defined in the
Subscription Agreement).
We also agreed to issue 35,520,424 shares of our common stock to be
distributed pro rata among the purchasers of the Notes.
The description of the transaction contained herein is qualified in its
entirety by reference to the Form of Class A Common Stock Purchase Warrant, Form
of Class B Common Stock Purchase Warrant, Form of Secured Convertible Promissory
Note, Subscription Agreement between the Company and the Subscribers dated
December 29, 2005, Guaranty Agreement between FTS Wireless, Inc. and Barbara
Mittman dated December 29, 2005, Security Agreement between the Company and
Barbara Mittman dated December 29, 2005, the Security and Pledge Agreement
between FTS Wireless, Inc. and Barbara Mittman dated December 29, 2005 and the
Collateral Agent Agreement among Barbara R. Mittman and the parties identified
on Schedule A of the Collateral Agent Agreement dated December 29, 2005. Each of
these documents is filed as an Exhibit to this report and each is incorporated
herein by reference.
This report contains forward-looking statements that involve risks
and uncertainties including statements regarding our expectations regarding
future fund raising. We generally use words such as "believe," "may,"
"could," "will," "intend," "expect," "anticipate," "plan," and similar
expressions to identify forward-looking statements. You should not place
undue reliance on these forward-looking statements. Our actual results could
differ materially from those anticipated in the forward-looking
statements. Although we believe the expectations reflected in the
forward-looking statements are reasonable, they relate only to events as of
the date on which the statements are made, and our future results, levels
of activity, performance or achievements may not meet these expectations. We
do not intend to update any of the forward-looking statements after the date of
this document to conform these statements to actual results or to changes
in our expectations, except as required by law.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
Exhibit Number Description
4.1 Form of Class A Common Stock Purchase Warrant
4.2 Form of Class B Common Stock Purchase Warrant
10.1 Form of Secured Convertible Promissory Note
10.2 Subscription Agreement between the Company and the
Subscribers dated December 29, 2005
10.3 Guaranty Agreement between FTS Wireless, Inc. and Barbara
Mittman, as collateral agent acting in the manner and to
the extent described in the Collateral Agent Agreement for the
benefit of the parties identified on Schedule A of the
Guaranty Agreement dated December 29, 2005
10.4 Security Agreement between the Company and Barbara Mittman, as
collateral agent acting in the manner and to the extent
described in the Collateral Agent Agreement for the benefit of
the parties identified on Schedule A of the Security
Agreeement dated December 29, 2005.
10.5 Security and Pledge Agreement between FTS Wireless, Inc. and
Barbara Mittman, as collateral agent acting in the manner
and to the extent described in the Collateral Agent
Agreement for the benefit of the parties identified on
Schedule A of the Security and Pledge Agreement dated December
29, 2005
10.6 Collateral Agent Agreement among Barbara R. Mittman and the
parties identified on Schedule A of the Collateral Agent
Agreement dated December 29, 2005
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FTS GROUP, INC.
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Registrant
Date: January 5, 2006 By: /s/ Scott Gallagher
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Scott Gallagher
Chief Executive Officer