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XFCH > SEC Filings for XFCH > Form 8-K/A on 14-Aug-2012All Recent SEC Filings

Show all filings for X-FACTOR COMMUNICATIONS HOLDINGS, INC.

Form 8-K/A for X-FACTOR COMMUNICATIONS HOLDINGS, INC.


14-Aug-2012

Entry into a Material Definitive Agreement, Completion o


Item 1.01. Entry into a Material Definitive Agreement.

The following discussion provides only a brief description of the documents described below. The discussion is qualified in its entirety by the full text of the agreements, copies of which are included as Exhibits to this report.

Agreement and Plan of Merger

On March 5, 2012, X-Factor Communications Holdings, Inc. (formerly, Organic Spice Imports, Inc.) entered into an Agreement and Plan of Merger (the "Merger Agreement") with X-Factor Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of Organic Spice ("Acquisition Corp"), and X-Factor Communications, LLC, a New York limited liability company ("X-Factor"). On May 15, 2012, pursuant to the terms and conditions of the Merger Agreement, Acquisition Corp merged with and into X-Factor (the "Merger") and X-Factor survived the Merger and became a wholly-owned subsidiary of Organic Spice. On May 16, 2012, Organic Spice Imports, Inc. changed its name to X-Factor Communications Holdings, Inc. References herein to the "Company", the "registrant", "we", "us" or "our" refer to X-Factor Communications Holdings, Inc. References herein to "Organic Spice" refer to the registrant prior to its name change.

On May 15, 2012, at the "Effective Time", which was defined in the Merger Agreement as the satisfaction of certain conditions, in particular the receipt of subscriptions for a minimum amount of $1,500,000 (the "Minimum Amount") of our Common Stock (including the $295,000 paid by the three individuals (the "Controlling Stockholders") who acquired control of Organic Spice on February 10, 2012 as described in Item 2.01 below under the heading "History") in connection with a private placement offering (the "Offering") of up to 6,666,667 shares ($5,000,000) of our Common Stock (the "Maximum Amount"), which includes an over-allotment option in the amount of 2,666,667 share ($2,000,000) (the "Over Allotment Option"):

(a) Each holder of X-Factor Membership Interests received such number of shares of our fully paid and nonassessable Common Stock equal to one multiplied by the Exchange Ratio, defined as 5.286767 shares of our Common Stock for each X-Factor Membership Interest issued and outstanding, rounded to the nearest whole share.

(b) Each holder of X-Factor Preferred Membership Interests received the Preferred Consideration Amount, defined as 1.190229 shares of our Common Stock for each $1.00 of the purchase price paid by a holder of Preferred Membership Interests in the purchase of such Preferred Membership Interests, rounded to the nearest whole share.

(c) All shares of Acquisition Corp common stock issued and outstanding immediately prior to the Effective Time were converted into and became one validly issued, fully paid and nonassessable X-Factor Common Membership Interest.

(d) We assumed the rights and obligations under each outstanding convertible debt security (each, a "Convertible Security"), if any, issued by X-Factor that is convertible into X-Factor Membership Interests. Each Convertible Security evidences the right to receive, upon conversion, a number of shares of our Common Stock (in either event, rounded to the nearest whole share) equal to the number of X-Factor Membership Interests into which the Convertible Security was convertible immediately prior to the Effective Time multiplied by the Exchange Ratio. The new conversion price applicable to each such Convertible Security shall be determined by dividing the conversion price immediately prior to the Effective Time by the Exchange Ratio.

(e) We assumed the rights and obligations under X-Factor's outstanding warrants (the "Warrants"), if any, to purchase X-Factor Membership Interests. The Warrants were assumed in accordance with their terms and conditions. Each Warrant evidences the right to purchase a number of shares of our Common Stock . . .



Item 2.01. Completion of Acquisition or Disposition of Assets.

Information in response to this Item 2.01 below is keyed to the item numbers of Form 10 (General Form For Registration of Securities Pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934).

Part I.

Item 1. Description of Business.

We are an "emerging growth company", as defined in the Jumpstart Our Business Startups Act of 2012 ("JOBS Act"), and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" including, but not limited to, not being required to comply with the auditor attestation requirements of section 404(b) of the Sarbanes-Oxley Act, and exemptions from the requirements of Sections 14A(a) and (b) of the Securities Exchange Act of 1934 to hold a nonbinding advisory vote of shareholders on executive compensation and any golden parachute payments not previously approved.

In addition, we have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act. This election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.

We will remain an "emerging growth company" for up to five years following our initial public offering, although we will lose that status sooner if our revenues exceed $1 billion, if we issue more than $1 billion in non-convertible debt in a three year period, or if the market value of our common stock that is held by non-affiliates exceeds $700 million as of any June 30. To the extent that we continue to qualify as a "smaller reporting company", as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, after we cease to qualify as an emerging growth company, certain of the exemptions available to us as an emerging growth company may continue to be available to us as a smaller reporting company, including: (1) not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes Oxley Act; (2) scaled executive compensation disclosures; and (3) the requirement to provide only two years of audited financial statements, instead of three years.

In the discussion below, when we refer to "X-Factor", the "Company", "we", "us" and "our", we also mean our wholly-owned operating subsidiary, X-Factor Communications, LLC, as may be applicable.

History

Organic Spice Imports, Inc. ("Organic Spice") was incorporated in the State of Delaware on December 31, 2010 and was established as part of the Chapter 11 reorganization of Spicy Gourmet Organics, Inc., a California corporation ("SGO"). SGO was incorporated in the State of California in 2006 and was formed to import specialty organic spices from South Asia and sell them in the United States. SGO was under capitalized and sales of its spice products were slow to develop. As a result, SGO lacked sufficient cash flow to meet its current obligations and on October 1, 2010, SGO filed a voluntary petition for bankruptcy under Chapter 11 in the U.S. Bankruptcy Court for the Central District of California. SGO's Plan of Reorganization (the "Plan") was confirmed by the U.S. Bankruptcy Court for the Central District of California on November 19, 2010.


The Plan provided, among other things, for the incorporation of Organic Spice, the spin off of SGO's importing business to Organic Spice, and the distribution . . .



Item 3.02. Unregistered Sales of Equity Securities.

In connection with the consummation of the Merger, we issued a total of 11,058,643 shares of our common stock to the members of X-Factor in exchange for all of the issued and outstanding membership interests in X-Factor. In addition, we reserved an additional 4,724,083 shares of common stock for issuance upon the conversion or exercise of all outstanding warrants, options or other securities of X-Factor exercisable or convertible into membership units of X-Factor prior to the Merger. We have also reserved for issuance an additional 883,941 shares of common stock as compensation to our placement agent provided that the Maximum Amount is raised in the Offering. In the event that less than the Maximum Amount is raised, then the Company shall issue to its placement agent or its affiliates a portion of these 883,941 reserved shares based on the total amount raised in the Offering, and in such event the Exchange Ratio and Preferred Consideration Amount shall be adjusted in favor of the former members of X-Factor so that the remaining reserved shares are issued to the former members of X-Factor on a pro rata basis instead of being issued to the placement agent. We also reserved an additional 666,667 shares of common stock for warrants exercisable into shares of common stock that will be issued to our placement agent if the Maximum Amount is raised, 301,240 of which have been earned in connection with the closing of the Offering that occurred on May 15, 2012. Our placement agent will receive warrants equal to 10% of the shares issued in the Offering. We relied on Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D, promulgated thereunder, to issue the securities.

Also on May 15, 2012, in connection with initial closing of the Offering the Company issued and sold 2,619,066 shares of common stock at a price of $0.75 per share, for aggregate gross proceeds of $1,964,299 (which includes the conversion of convertible promissory notes and accrued and unpaid interest outstanding prior to the Merger, in an aggregate principal amount of $728,049). We paid a commission in the amount of $123,625 to our placement agent and issued an aggregate of 247,970 shares of the Company's common stock to the placement agent in connection with the initial closing.

The offer was made pursuant to exemptions provided by Section 4(2) of the Securities Act of 1933 and Rule 506 promulgated thereunder inasmuch as the common stock was sold solely to accredited investors and without any form of general solicitation or general advertising, and Regulation S of the Securities Act of 1933 inasmuch as a portion of the offer and sale of the common stock was made to non-U.S. persons and no directed selling efforts were made in the United States.




Item 4.01. Changes in Registrant's Certifying Accountants.

On May 21, 2012, the Company dismissed Stan J.H. Lee as its independent registered public accounting firm following the change in control of the Company at the completion of the Merger. The decision to change accountants was approved and ratified by the Company's Board of Directors. The report of Stan J.H. Lee on the financial statements of the Company for the fiscal year ended March 31, 2012 and 2011 did not contain any adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope, or accounting principle, except for an explanatory paragraph relative to the Company's ability to continue as a going concern. Additionally, during the Company's two most recent fiscal years and any subsequent interim period, there were no disagreements with Stan J.H. Lee on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.

While Stan J.H. Lee was engaged by the Company, there were no disagreements with Stan J.H. Lee on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure with respect to the Company, which disagreements if not resolved to the satisfaction of Stan J.H. Lee would have caused it to make reference to the subject matter of the disagreements in connection with its report on the Company's financial statements for the fiscal year ended March 31, 2011 and 2010.

The Company provided Stan J.H. Lee with a copy of the disclosures to be included in Item 4.01 of this Current Report on Form 8-K and requested that Stan J.H. Lee furnish the Company with a letter addressed to the Commission stating whether or not Stan J.H. Lee agrees with the foregoing statements. A copy of the letter from Stan J.H. Lee to the Commission, dated May 21, 2012, is attached as Exhibit 16.1 to this Current Report on Form 8-K.

The Company engaged WithumSmith + Brown, PC as the Company's independent registered public accounting firm as of May 21, 2012. WithumSmith + Brown, PC is, and has been, X-Factor's independent registered public accounting firm since 2009.



Item 5.01. Changes in Control of Registrant.

Other than the transactions and agreements disclosed in Item 2.01 of this Current Report on Form 8-K, which resulted in a change in control of the Company we know of no arrangements which may result in a change in control.

Item
5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Reference is made to Item 5 of Item 2.01 above for certain information relating to our executive officers and directors, which is incorporated herein by reference.

Item
5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

In conjunction with the completion of the Merger, Organic Spice changed its corporate name from "Organic Spice Imports, Inc." to "X-Factor Communications Holdings, Inc." by filing the Certificate of Ownership and Merger with the Delaware Secretary of State's Office on May 15, 2012. Organic Spice effected the name change to reflect the nature of its new business operations following the Merger. The Certificate of Ownership and Merger is attached hereto as Exhibit 3.3.


The consummation of the Merger is accounted for as a reverse merger with X-Factor as the accounting acquirer. X-Factor has a fiscal year ending December 31 and the Company had a fiscal year ending March 31. Upon the closing of the Reverse Merger the Company adopted the fiscal year end of X-Factor.



Item 5.06. Change in Shell Company Status.

As the result of the completion of the transactions effectuated pursuant to the Merger Agreement, we are no longer a shell company. The information set forth above in Items 1.01 and 2.01 of this Current Report on Form 8-K is incorporated herein by reference in its entirety.



Item 9.01. Financial Statements and Exhibits.

The following financial statements and exhibits are filed as part of this report:

(a) Financial Statements of Businesses Acquired.

The audited financial statements of X-Factor for the fiscal years ended December 31, 2011 and 2010.

The unaudited financial statements of X-Factor for the three months ended March 31, 2012 and 2011.

(b) Pro Forma Financial Information

The unaudited Pro Forma Consolidated Balance Sheet as of March 31, 2012 and unaudited Pro Forma Consolidated Statements of Operations for the Year Ended December 31, 2011 and three months ended March 31, 2012.

(d) Exhibits .

The exhibits listed in the following Exhibit Index are filed as part of this current report.

Exhibit No. Description

2.1* Agreement and Plan of Merger, dated as of March 5, 2012 by and among X-Factor Communications, LLC, Organic Spice Imports, Inc. and X-Factor Acquisition Corp. (incorporated by reference from Exhibit 10.1 to the registrant's Form 8-K filed with the Securities and Exchange Commission on March 9, 2012).

3.1* Certificate of Incorporation (incorporated by reference from Exhibit 3.1 to the registrant's Form 10 filed with the Securities and Exchange Commission on April 8, 2011).

3.2* Bylaws (incorporated by reference from Exhibit 3.2 to the registrant's Form 10 filed with the Securities and Exchange Commission on April 8, 2011).

3.3* Certificate of Ownership and Merger filed with the Office of Secretary of State of Delaware on May16, 2012.

4.1* Convertible Promissory Note, dated March 22, 2012, issued to Charles Saracino.

4.2* Convertible Promissory Note, dated March 22, 2012, issued to Ken Makow.

4.3* Secured Convertible Promissory Note, dated July 31, 2009, issued to NJEDA.


4.4*     Convertible Promissory Note, dated March 22, 2012, issued to Frank
         Casatelli.

4.5*     Convertible Promissory Note, dated March 22, 2012, issued to Robert
         Slingsby.

4.6*     Convertible Promissory Note, dated March 22, 2012, issued to Michelle
         Wallace.

4.7*     Promissory Note, dated March 30, 2012, issued to Charles Saracino.

4.8*     Promissory Note, dated March 30, 2012, issued to John Bloomer.

10.1*    Form of Subscription Agreement.

10.2*    Cancellation Agreement, dated May 15, 2012.

10.3*    General Assignment and Assumption Agreement, dated February 10, 2012
         (incorporated by reference from Exhibit 10.1 to the registrant's Form 8-K
         filed with the Securities and Exchange Commission on February 16, 2012).

10.4*    Convertible Loan Agreement, dated July 31, 2009 by and between X-Factor
         and NJEDA.

10.5*    First Modification of Convertible Loan Agreement, dated January 19,
         2011, by and between X-Factor and NJEDA.

10.6*    Second Modification of Convertible Loan Agreement, dated September 14,
         2011, by and between X-Factor and NJEDA.

10.7*    Patent, Trademark and Copyright Security Agreement, dated July 31, 2009,
         by and between X-Factor and NJEDA.

10.8*    Security Agreement, dated July 31, 2009, by and between X-Factor and
         NJEDA.

16.1*    Letter dated May 21, 2012 from Stan J.H. Lee.

21.1*    List of Subsidiaries.

* Filed as an exhibit to the Company's Form 8-K filed on May 21, 2012.


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