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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: June 21, 2007 (June 15, 2007)
(Date of earliest event reported)
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RAPID LINK, INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 0-22636 75-2461665
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation File Number) Identification No.)
17383 Sunset Boulevard, Suite 350
Los Angeles, California 90272
(Address of principal executive offices, including zip code)
(310) 566-1700
(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:
[ ] 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))
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This Current Report on Form 8-K and other reports filed by the Registrant
from time to time with the Securities and Exchange Commission (collectively
the "Filings") contain forward looking statements and information that
are based upon beliefs of, and information currently available to, the
Registrant's management, as well as estimates and assumptions made by the
Registrant's management. When used in the Filings the words "anticipate",
"believe", "estimate", "expect", "future", "intend", "plan" or the negative
of these terms and similar expressions as they relate to the Registrant or
the Registrant's management identify forward looking statements. Such
statements reflect the current view of the Registrant with respect to
future events and are subject to risks, uncertainties, assumptions and other
factors relating to the Registrant's industry, operations and results of
operations and any businesses that may be acquired by the Registrant. Should
one or more of these risks or uncertainties materialize, or should the
underlying assumptions prove incorrect, actual results may differ
significantly from those anticipated, believed, estimated, expected,
intended or planned.
Item 1.01. Entry into a Material Definitive Agreement.
On June 15, 2007, Rapid Link Incorporated (the "Registrant" or "Company")
entered into a Common Stock Purchase Agreement (the "Agreement") with
Westside Capital, LLC (the "Investor") whereby the Company sold 357,143
shares of the Company's common stock to the Investor for a purchase price
of $25,000 and issued to the Investor Common Stock Purchase Warrants (the
"Warrants") to purchase up to an additional 50,000,000 shares of the
Registrant's common stock ("Warrant Shares") at exercise prices as follows:
20,000,000 Warrant Shares exercisable at $0.10 per share (Warrant "A");
15,000,000 Warrant Shares exercisable at $0.20 per share (Warrant "B");
and 15,000,000 Warrant Shares exercisable at $0.30 per share (Warrant "C").
Investor has agreed, however, that it shall not be entitled to beneficially
own more than 4.9% of the outstanding shares of common stock of the Company
at any time. Such beneficial ownership shall be determined in accordance
with Section 13(d) of the Securities Exchange Act of 1934, as amended, and
Regulation 13d-3 thereunder.
On June 15, 2007, (the "Closing Date"), Four Million (4,000,000) Warrant
Shares in Common Stock Purchase Warrant "A" vested immediately. The Warrant
Shares in Common Stock Purchase Warrants "A", "B", and "C" will continue to
vest in Four Million (4,000,000) Warrant Share increments and the next
4,000,000 increment of Warrant Shares will not vest until the prior
4,000,000 increment of Warrant Shares are completely exercised. The lowest
priced Warrant Shares shall vest prior to the vesting of higher-priced
Warrant Shares. However, Investor does have the option of vesting higher
priced Warrants Shares prior to lower priced Warrant Shares in any of the
4,000,000 increments.
The Company agreed to prepare and file within thirty (30) days following
the date of the Closing Date a registration statement (the "Registration
Statement") covering the resale of such number of shares of the Registrable
Securities (hereinafter defined) as the Investor shall elect by written
notice to the Company, and absent such election, covering the resale of all
of the shares of the Registrable Securities. The Company has agreed to use
its best efforts to cause the Registration Statement to be declared
effective by the Securities and Exchange Commission (the "SEC") on the
earlier of (i) 120 days following the closing date with respect to the
Registration Statement, (ii) ten days following the receipt of a "No Review"
or similar letter from the SEC or (iii) the first business day following the
day the SEC determines the Registration Statement eligible to be declared
effective. "Registrable Securities" means and includes the common stock and
Warrant Shares issued pursuant to the Agreement described in this Item 1.01.
In the Agreement, the Company also agreed, for a period of two years from
the Closing Date, not to issue any preferred stock of the Company. The
Company will also have caused the appointment of the majority of the board
of directors to be qualified independent directors, as defined by the NASD
within six months of the Closing Date. The Company will also cause the
appointment of a majority of outside directors to the audit and compensation
committees of the board of directors within six months of the Closing Date.
The Company shall also cause its insiders, including John Jenkins, as CEO
and Chris Canfield, as President and CFO of the Company, not to sell their
shares of stock for two years from the Closing Date. For two years after
the Closing Date the Company must have a current unanimous opinion from the
Compensation Committee of the Board of Directors that any awards other than
salary are usual, appropriate and reasonable for any officer, director,
employee or consultant holding a similar position in other public fully
reporting companies with independent majority boards with similar market
capitalizations in the same industry with securities listed on the OTC
Bulletin Board, American Stock Exchange, New York Stock Exchange or Nasdaq
National Market.
If the Investor does not exercise warrants in the amount of $1,000,000
or more within six months after the Registration Statement has become
effective, then all the remaining Common Stock Purchase Warrants ("A",
"B" and "C") expire immediately upon six months after such registration
statement has become effective. Further, should the Company not receive
cumulative gross proceeds of at least three million dollars ($3,000,000) in
the form of equity, debt, any other injection of capital into the Company,
or any combination thereof from Investor or from sources introduced by
Investor, within six (6) months after the Registration Statement has become
effective, then all remaining outstanding Warrants (including series "A",
"B" and "C") shall expire.
There are no material relationships between the Registrant, its affiliates
and any of the parties to this Agreement, other than in respect of this
Agreement.
The foregoing description of the transaction is only a summary and is
qualified in its entirety by reference to the aforementioned documents
contained in Exhibits 4.1 through 4.5 which are incorporated herein by
reference.
Item 3.02. Unregistered Sales of Equity Securities.
The disclosure set forth in Item 1.01 is incorporated in its entirety by
reference in this Item 3.02.
Investor represented that it was an "accredited" investor as defined under
Rule 144 of the Securities Act of 1933, as amended. We relied upon the
exemption from registration as set forth in Section 4(2) of the Securities
Act and/or Rule 506 of Regulation D for the issuance of these securities.
The recipient represented that it took such securities for investment
purposes without a view to distribution and had access to information
concerning us and our business prospects, as required by the Securities Act.
In addition, there was no general solicitation or advertising for the sale
of these securities. Certain filings and registrations may be required under
state securities "blue sky" laws depending upon the residency of the
Investor.
Item 5.02. Departure, Election, or Appointment of Directors or Officers.
On June 15, 2007, Robert M. Fidler submitted his resignation as a member of
the Board of Directors of the Registrant effective immediately. Mr. Fidler
has served as one of the Company's directors since November 1994. At the
time of his resignation, Mr. Fidler was a member of both the Audit and
Compensation Committees of the Board of Directors. Mr. Fidler indicated
that he was resigning because time constraints did not allow him to continue
serving as an active board member. Mr. Fidler did not resign as a result of
any circumstances representing a disagreement with the Registrant.
Pursuant to the requirements of this Item 5.02, the Registrant shall:
(i) provide Mr. Fidler with a copy of this disclosure no later than the
day Registrant files the disclosures with the SEC;
(ii) provide Mr. Fidler the opportunity to furnish the Registrant with a
letter stating whether he agrees or disagrees with the statements made
in this Item 5.02 and, if not, stating the respects in which he does
not agree;
(iii) and file any letter received from Mr. Fidler with the SEC as an
exhibit by amendment to the previously filed Form 8-K within two
business days after receipt by the Registrant.
Item 9.01. Financial Statements and Exhibits.
Exbibits
Exhibit
Number Description
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4.1 Common Stock Purchase Agreement dated June 15, 2007
between Rapid Link, Inc. and Westside Capital LLC
4.2 Registration Rights Agreement dated June 15, 2007 between
Rapid Link, Inc. and Westside Capital LLC
4.3 Common Stock Purchase Warrant "A" dated June 15, 2007
between Rapid Link, Incorporated and Westside Capital LLC
4.4 Common Stock Purchase Warrant "B" dated June 15, 2007
between Rapid Link, Incorporated and Westside Capital LLC
4.5 Common Stock Purchase Warrant "C" dated June 15, 2007
between Rapid Link, Incorporated and Westside Capital LLC
99.1 Press Release dated June 21, 2007 announcing sale of common
stock and warrants
SIGNATURE
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.
RAPID LINK, INCORPORATED
Date: June 21, 2007 By: /s/ Christopher J. Canfield
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Christopher J. Canfield
President, Chief Financial Officer
and Director
EXHIBIT INDEX
Exhibit
Number Description
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4.1 Common Stock Purchase Agreement dated June 15, 2007
between Rapid Link, Inc. and Westside Capital LLC
4.2 Registration Rights Agreement dated June 15, 2007 between
Rapid Link, Inc. and Westside Capital LLC
4.3 Common Stock Purchase Warrant "A" dated June 15, 2007
between Rapid Link, Incorporated and Westside Capital LLC
4.4 Common Stock Purchase Warrant "B" dated June 15, 2007
between Rapid Link, Incorporated and Westside Capital LLC
4.5 Common Stock Purchase Warrant "C" dated June 15, 2007
between Rapid Link, Incorporated and Westside Capital LLC
99.1 Press Release dated June 21, 2007 announcing sale of common
stock and warrants