Current Report Filing (8-k)
March 16 2020 - 5:28PM
Edgar (US Regulatory)
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): March 10, 2020
FTE
NETWORKS, INC.
(Exact
name of registrant as specified in its charter)
Nevada
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001-38322
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81-0438093
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(State
or Other Jurisdiction
of
Incorporation)
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(Commission
File
Number)
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(IRS
Employer
Identification
No.)
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237
West 35th Street, Suite 806
New
York, NY
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10001
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Registrant’s
Telephone Number, Including Area Code: 877-878-8136
(Former
Name or Former Address, if Changed Since Last Report): Not Applicable
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:
[ ]
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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[ ]
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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[ ]
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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[ ]
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class
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Trading
Symbol(s)
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Name
of each exchange on which registered
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Common
Stock, $0.001 par value
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FTNW
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NYSE
American
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Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter)
Emerging
Growth Company [ ]
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item
1.01
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Entry
into a Material Definitive Agreement.
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On March 10, 2020, FTE Networks, Inc. (the “Company”)
entered a Securities Purchase Agreement (the “Securities Purchase Agreement”) with GS Capital Partners, LLC
(“GS Capital”), whereby GS Capital agreed to purchase an aggregate of $1,800,000 principal amount of 6% Convertible
Redeemable Note (the “Note”) The Note contained a $125,000 original issue discount (“OID”) such
that the purchase price was $1,675,000.
Below
is a description of the material terms of the transaction (all capitalized terms not otherwise defined herein shall have that
definition assigned to it in the Securities Purchase Agreement or Note).
The
Note is secured by a mortgage covering certain real property described in that certain Mortgage, Assignment of Leases, Security
Agreement and Fixture Filing by SCFTE SPV LLC, a South Carolina limited liability company (“Property Owner”),
an affiliate of the Company, in favor of GS Capital on or about March 13, 2020 (as amended, restated or otherwise modified from
time to time, the “Mortgage”). The Mortgage encumbers certain real properties located in Cook County, Illinois,
as further described in the Mortgage (collectively, the “Mortgaged Properties”).
Interest on any unpaid principal balance of the Note shall be paid
at the rate of 6% per annum. Interest shall be paid by the Company in shares of the Company's common stock (the “Common
Stock”) or in cash at the option of the Company. GS Capital is entitled, at its option, to convert all or any amount
of the principal face amount of the Note then outstanding into shares of the Common Stock at a price (“Conversion Price”)
for each share of Common Stock equal to 66% of the average of the two lowest daily volume weighted average trading prices of the
Common Stock as reported on the NYSE American exchange, the OTC Markets, OTCQB exchange or any other exchange upon which the Common
Stock may be traded in the future (“Exchange”), during the period of twelve consecutive trading days ending
with (and including) the day upon which a Notice of Conversion is received by the Company or its transfer agent.
The
Company will issue GS Capital 185,000 shares of its restricted Common Stock as debt commitment shares. In connection with the
Note, the Company issued irrevocable transfer agent instructions reserving 4,545,455 shares of its Common Stock for conversions
under the Note (the “Share Reserve”) and shall maintain a 2.5 times reserve for the amount then outstanding. Upon
full conversion or repayment of this Note, any shares remaining in the Share Reserve shall be cancelled.
The
Note may be prepaid or assigned with the following penalties/premiums:
PREPAYMENT
DATE
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PREPAYMENT
AMOUNT
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≤
30 days
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100%
of principal plus accrued interest
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31-
60 days
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106%
of principal plus accrued interest
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61-120
days
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112%
of principal plus accrued interest
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121-189
days
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118%
of principal plus accrued interest
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The
foregoing description of the Securities Purchase Agreement and the Note do not purport to be complete and are qualified in their
entirety by reference to the respective agreements which are filed as exhibits 4.1 and 10.1 to this Current Report on Form 8-K,
and are incorporated by reference herein.
Item
2.03
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Creation
of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
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The
information set forth in Item 1.01 of this Current Report on Form 8-K is hereby incorporated by reference into this Item 2.03.
Item
3.02
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Unregistered
Sales of Equity Securities
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The information set forth in Item 1.01 of this Current Report on
Form 8-K is hereby incorporated by reference into this Item 3.02. The Note, and the shares issuable upon conversion of the Note
or as payment of interest under the Note were not registered under the Securities Act of 1933. The Note was issued, and if any
shares of Common Stock are issued in payment of interest or upon conversion of the Notes, such shares will be issued, in each case
upon reliance upon the exemption from the registration requirements of the Securities Act set forth in Sectiom 4(a)(2) and Regulation
D thereof.
Item
9.01
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Financial
Statements and Exhibits
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(d)
Exhibits
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, thereunto duly authorized.
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FTE
NETWORKS, INC.
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(Registrant)
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Date:
March 16, 2020
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/s/
Michael P. Beys
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Name:
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Michael
P. Beys
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Title:
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Interim
Chief Executive Officer
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