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): June 9, 2008
Phantom
Fiber Corporation
(Exact
name of registrant as specified in its charter)
|
Delaware
(State
or Other Jurisdiction
of
Incorporation)
|
001-15627
(Commission
File
Number)
|
042451506
(I.R.S.
Employer
Identification
Number)
|
144
Front
Street, Suite 580, Toronto, Ontario, Canada M5J 2L7
(Address
of principal executive offices) (zip code)
(416)
703-4007
(Registrant's
telephone number, including area code)
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 Material Definitive
Agreement.
|
On
May 31, 2008, Phantom Fiber Corporation and its subsidiaries (collectively
the “Company”) entered into a Forbearance Agreement (the “Agreement”) with
Victory Park Master Fund, Ltd. (“Victory Park”), the holder of the Company’s
$2,642,000 Senior Secured Convertible Note due May 31, 2008 (“Senior Convertible
Note”).
Pursuant
to the terms of the Agreement, Victory Park has agreed that unless there is
a
default under the Forbearance Agreement or the Senior Convertible Note, during
the Forbearance Period (as defined below), it will not take, or cause another
person to take, any action, to accelerate (or cause the acceleration of) the
maturity of the Senior Convertible Note or to otherwise enforce payment of
the
overdue principal on the Senior Convertible Note, or to exercise any other
potential default-related rights and remedies available to Victory Park against
the Company under the Note, Note Amendment Agreement and Security Agreement
(collectively the “Transaction Documents”), executed as of January 31, 2008 or
applicable law with respect to the Senior Convertible Note. The “Forbearance
Period” means the period commencing from May 31, 2008 through the earliest to
occur of (i) May 31, 2010 or (ii) such earlier date arising from the
occurrence of a Forbearance Termination Event, for which there shall be no
cure
period.
Under
the
terms of the Agreement, the Company shall cause certain creditors with
indebtedness of approximately $1.4 million to execute a subordination agreement
in favor of Victory Park no later than June 13, 2008. Until the termination
of
the Forbearance Period, the Company shall make cash payments to Victory Park
to
be applied against principal, interest and expenses under the Senior Convertible
Note as follows: (i) an immediate lump-sum payment of $250,000; (ii) commencing
August 29, 2008, monthly payments of $55,000; and (iii) commencing July 10,
2008, monthly revenue participation payments equal to 10% of the prior months
gross revenue in excess of $60,000. The Company will pay for certain fees and
expenses incurred by Victory Park and will engage an external consultant
acceptable to Victory Park to assist the Company to satisfy specified reporting
and other undertakings under the Agreement.
In
accordance with the Agreement, Victory Park will return for cancellation
2,642,000 Class B warrants with an exercise price of $0.56 per share and
expiring January 6, 2009. Further, and providing the Company is not in default
under the Agreement, Victory Park agrees that prior to May 31, 2009 it will
not:
(i) sell any portion of the 900,000 common shares previously received in
conjunction with the Note Amendment Agreement, or (ii) convert any portion
of
the Senior Convertible Note into common shares of the Company.
A
copy of
the Agreement is attached to this Current Report on Form 8-K as Exhibits 10.1
and is incorporated by reference as though fully set forth herein. The foregoing
summary description of the Agreement is not intended to be complete and is
qualified in its entirety by the complete text of the Agreement. The Agreement
is filed in this Form 8-K to provide information regarding its terms and is
not
intended to provide any other factual information about the Company.
|
|
|
Financial
Statements and
Exhibits.
|
|
Exhibit
|
|
|
|
Number
|
|
Description
|
|
|
|
|
|
Exhibit 10.1
|
|
Forbearance
Agreement, dated May 28, 2008
|
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.
| |
Phantom Fiber
Corporation |
| |
|
| Dated: June 9, 2008 |
By: /s/Jeff
Halloran |
| |
Name: Jeffrey
Halloran |
| |
Title: President,
Chief Executive Officer, and
Director |