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)
October
15, 2008
DIGITALFX
INTERNATIONAL, INC.
(Exact
name of registrant as specified in charter)
Florida
(State
or
other Jurisdiction of Incorporation or Organization)
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001-33667
(Commission
File Number)
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65-0358792
(IRS
Employer Identification No.)
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3035
East Patrick Lane
Suite
#9
Las
Vegas, NV 89120
(Address
of Principal Executive Offices and zip code)
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702-938-9300
(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 registrant under any of the following
provisions:
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR
240.14a-12(b))
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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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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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Safe
Harbor Statement under the Private Securities Litigation Reform Act of
1995
Information
included in this Form 8-K may contain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). This information may involve known and unknown
risks, uncertainties and other factors which may cause DigitalFX International,
Inc.’s (the “Registrant,” “we,” “our” or “us”) actual results, performance or
achievements to be materially different from future results, performance or
achievements expressed or implied by any forward-looking statements.
Forward-looking statements, which involve assumptions and describe our future
plans, strategies and expectations, are generally identifiable by use of the
words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,”
“intend” or “project” or the negative of these words or other variations on
these words or comparable terminology. Forward-looking statements are based
on
assumptions that may be incorrect, and there can be no assurance that any
projections or other expectations included in any forward-looking statements
will come to pass. Our actual results could differ materially from those
expressed or implied by the forward-looking statements as a result of various
factors. Except as required by applicable laws, we undertake no obligation
to
update publicly any forward-looking statements for any reason, even if new
information becomes available or other events occur in the future.
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Item
1.01
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Entry
into a Material Definitive
Agreement.
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Item
5.01
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Changes
in Control of Registrant.
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Item
5.02
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Departure
of Directors or Certain Officers; Election of Directors; Appointment
of
Certain Officers; Compensatory Arrangements of Certain
Officers.
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On
October 15, 2008, the Registrant entered into a Framework Agreement with Richard
Kall, the Co-Manager of VM Investors, LLC (“VM Investors”), the Registrant’s
majority shareholder, Craig Ellins, VM Investor’s Co-Manager, Chairman of the
Registrant’s Board of Directors (“Board”), and the Registrant’s Chief Executive
Officer and President, and Amy Black, the President of VMdirect, L.L.C.
(“VMdirect”), one of the Registrant’s wholly-owned subsidiaries, pursuant to
which, among other matters, Richard Kall agreed to consummate the transactions
under those certain Note Purchase Agreements dated October 15, 2008 (the “Note
Purchase Agreements”), among Richard Kall, the Registrant, and each of Portside
Growth and Opportunity Fund, Highbridge International LLC and Iroquois Master
Fund, Ltd. (collectively the “Investors”), subject to (a) Craig Ellins, Amy
Black, Kevin Keating and Jerry Haleva resigning from all positions with the
Registrant and each of its subsidiaries, (b) the Registrant reducing the size
of
its Board to three directors, (c) Richard Kall’s appointment as the
Corporation’s Chief Executive Officer and election to the Board as its Chairman,
and (d) the election of Richard Kall’s designee to the Board.
On
October 13, 2008, each of Kevin Keating and Jerry Haleva resigned from the
Board. On October 15, 2008, Craig Ellins resigned as the Chairman of the Board,
the Registrant’s Chief Executive Officer and President, and from all other
officer positions held with the Registrant and each of its subsidiaries, and
Amy
Black resigned as the President of VMdirect and from all other officer positions
held with the Registrant each of its subsidiaries. Mr. Ellins also resigned
as
the Co-Manager of VM Investors, LLC. Each of Craig Ellins and Amy Black entered
into a Separation and Release Agreement dated October 15, 2008 with the
Registrant pursuant to which the Registrant paid to each of Craig Ellins and
Amy
Black deferred compensation accrued for the third quarter of fiscal 2008, and
the parties agreed to mutual releases of existing claims.
On
October 15, 2008, the Registrant’s Board also adopted resolutions reducing the
size of the Board to three directors, appointing Richard Kall as the
Registrant’s Chief Executive Officer and electing Richard Kall as the Chairman
of the Board. Prior to the transactions contemplated under the Framework
Agreement, Craig Ellins, as the Registrant’s Chairman of the Board, Chief
Executive officer and President, and as the Co-Manager of VM Investors,
exercised, with the Board and other executive officers, operational control
over
the Registrant, and with the consent of Richard Kall, voting control. As a
result of the transactions consummated under the Framework Agreement, Richard
Kall, as the sole Manager of VM Investors and the beneficial owner of 64.6%
of
the Registrant’s outstanding shares of Common Stock, will exercise voting
control over the Registrant. In addition, as the Registrant’s Chairman and Chief
Executive Officer, Richard Kall will exercise, with the Board and other
executive officers, operational control over the Registrant.
Based
on
the foregoing, on October 15, 2008, the Registrant, Richard Kall and the
Investors entered into the Note Purchase Agreements pursuant to which Richard
Kall agreed to purchase an aggregate of $350,000 of the unpaid principal amount
of the Amended and Restated Senior Secured Convertible Notes, Warrants to
purchase an aggregate of 90,517 shares of the Registrant’s common stock, and an
aggregate of 120,000 shares of common stock (collectively the “Investor
Securities”) previously issued to the Investors. Pursuant to the terms of the
Note Purchase Agreements, as additional consideration of Richard Kall’s purchase
of the Investor Securities, the Investors and Richard Kall agreed to forbear
for
a period of 30 days from taking any action to enforce their rights as a result
of the event of default that occurred with respect to the Registrant’s failure
to satisfy one or more financial covenants under the Amended and Restated Senior
Secured Convertible Notes for the fiscal quarter ended June 30, 2008. Such
forbearance period shall extend for up to 90 days if Registrant or other parties
make periodic payments to the Investors in the aggregate amount of $500,000
as
further provided in the Note Purchase Agreements. Under the terms of the Note
Purchase Agreements, the Registrant also agreed to either file a post-effective
amendment to the Registration Statement on Form S-3 (File No. 333-150191) or
file a new registration statement on an appropriate form to reflect the changes
made as a result of the transactions occurring under the Note Purchase
Agreements.
The
foregoing descriptions do not purport to be a complete description of the terms
of the documents, and this description is qualified in its entirety by the
terms
of the transaction documents, including the Framework Agreement and the form
of
the Note Purchase Agreement, which are attached hereto as Exhibits 10.1 and
10.2, respectively, and incorporated herein by reference.
Richard
Kall has been an affiliate of Nu Skin Enterprises, a skin care and nutraceutical
company since October 1985, and an affiliate of Amway previously. Mr. Kall
has
significant experience in the network marketing industry and is the author
of
“The First Million is the Easiest” and “The Book on Network Marketing.” Mr. Kall
is 68 years old.
There
are
no arrangements or understandings between Richard Kall and Craig Ellins with
respect to the election of directors or other matters. In addition, the
Registrant is not aware of any arrangements the operation of which may at a
subsequent date result in a change in control of the Registrant. Since the
beginning of the Registrant’s last fiscal year, Jennifer Kall, Richard Kall’s
daughter, Mitchell Felton, Mr. Kall’s son-in-law, and Lizanne Kall, Mr. Kall’s
spouse have received approximately $1,074,592 in commissions as affiliates
of
VMdirect. In addition, Vayan Marketing, a company for which Laura Kall, Mr.
Kall’s daughter, serves as Chief Executive Officer, received approximately
$260,000 for autoresponder services rendered to the Registrant.
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Item
9.01
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Financial
Statements and Exhibits.
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10.1
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Framework
Agreement dated October 15, 2008, among the Registrant, Richard Kall,
Craig Ellins and Amy Black
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10.2
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Form
of Note Purchase Agreement
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, DigitalFX
International, Inc. has duly caused this report to be signed on its behalf
by
the undersigned hereunto duly authorized.
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DigitalFX
International, Inc.
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Date:
October 17, 2008
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By:
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/s/
Richard Kall
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Richard
Kall
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Chief
Executive Officer
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EXHIBIT
INDEX
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Exhibit
Number
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Description
of Exhibit
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10.1
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Framework
Agreement dated October 15, 2008, among the Registrant, Richard Kall,
Craig Ellins and Amy Black
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10.2
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Form
of Note Purchase Agreement
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