SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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): July 10, 1998
Commission File Number: 000-21659
EDnet, INC.
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(Exact name of registrant as specified in its charter)
Colorado 84-1273795
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization )
One Union Street, San Francisco, California 94111
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Address of principal executive offices and zip code
(415) 274-8800
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Registrant's telephone number, including area code
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Item 1 Changes in Control of Registrant.
On July 10, 1998, EDnet, Inc., ("EDnet") executed a securities
purchase agreement (the "Agreement") with Visual Data
Corporation ("VDC") of Pompano Beach, Florida, a corporation
organized under the laws of the state of Florida, which
Agreement provided for the issuance of eight million five
hundred sixty-three thousand four hundred seventeen
(8,563,417) shares of its Common Stock (the "Shares") at a
price of $0.1635 per share. The Agreement, which contains
conditions precedent to closing, including but not limited to,
delivery of an opinion and no change in representations and
warranties, is expected to close no later than July 27, 1998.
As consideration for the Shares, VDC is paying the purchase
price to EDnet for the Shares by (i) payment of $698,004.32
immediately available funds; (ii) issuance to EDnet of five
year warrants to purchase 50,000 shares of VDC's restricted
common stock, valued at $2.74 per warrant; (iii) issuance to
EDnet of 75,000 shares of restricted common stock of VDC,
valued at $3.75 per share; and (iv) issuance to EDnet of a
secured promissory note in the aggregate principal amount of
$283,745.68. The promissory note is secured by a second
mortgage on the real property occupied by VDC at 1291 SW 29th
Avenue, Pompano Beach, FL 33069.
EDnet also has granted to VDC options to acquire, at the
exercise price of $0.10 per share, the number of shares
actually purchased upon exercise of each option, warrant and
other outstanding convertible securities (the "Outstanding
Options") of EDnet. VDC's rights to effect such exercise
accrue on the date of exercise of the corresponding
Outstanding Options and expire upon the first anniversary of
the exercise date of such Outstanding Options. Pursuant to the
Options, and subject to the exercise of the Outstanding
Options, VDC has the right to purchase up to an aggregate of
6,542,722 shares of EDnet's common stock.
EDnet will appoint four individuals designated by VDC to the
EDnet Board of Directors. Information concerning the
individuals to be appointed to the EDnet Board of Directors is
submitted in the Notice To Shareholders Pursuant to Rule 14f-1
of the Securities Exchange Act of 1934, attached hereto as the
sole Exhibit hereto and filed with the Commission concurrently
herewith.
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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.
EDnet, INC.
July 22, 1998 By: /s/Tom Kobayashi
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Tom Kobayashi
CEO
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EDNET, INC.
July 22, 1998
TO HOLDERS OF SHARES OF EDNET COMMON STOCK:
The Board of Directors of EDnet, Inc. ("EDnet") is providing this
Notice to all EDnet stockholders of record to apprise them of the transaction
the Board has approved between EDnet and Visual Data Corporation ("VDC") of
Pompano Beach, Florida, and a change of control of the Board of Directors that
will be a result of that transaction. This Notice is pursuant to Rule 14f-1
under the Securities and Exchange Act of 1934, and is being mailed to voting
security holders of record of EDnet on or about July 22, 1998.
Voting Security Holders Of Record
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Stockholders who owned shares of EDnet Common Stock, its only voting
securities issued and outstanding, at the close of business on July 10, 1998,
the date the Board of Directors authorized the Purchase Agreement, are
considered voting security holders of record for purposes of this Notice.
As of July 10, 1998, there were 8,227,591 shares of EDnet Common Stock
issued and outstanding.
Issuance Of Controlling Interest in EDnet Common Stock To VDC
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The Notice is to advise you that the EDnet Board of Directors has
authorized an agreement (the "Purchase Agreement") whereby EDnet will issue
shares of Common Stock to VDC constituting a controlling interest in EDnet.
Under the Purchase Agreement the Company will issue to VDC a total of eight
million five hundred sixty-three thousand four hundred seventeen (8,563,417)
shares of its Common Stock (the "Shares") at the price of $0.16435 per share.
The shares will constitute approximately 51% of the total outstanding Common
Stock, and VDC will also have an option to purchase additional shares of Common
Stock in order to ensure it has the right to maintain its controlling interest.
As consideration for the Shares, VDC is paying the purchase price to
EDnet for the Shares by (i) payment of $698,004.32 of immediately available
funds; (ii) issuance to EDnet of five year warrants to purchase 50,000 shares of
VDC's restricted Common Stock, valued at $2.74 per warrant; (iii) issuance to
EDnet of 75,000 shares of restricted Common Stock of VDC, valued at $3.75 per
share; and (iv) issuance to EDnet of a secured promissory note of VDC in the
aggregate principal amount of $283,745.68. The promissory note is secured by a
second mortgage on the real property occupied by VDC at 1291 SW 29th Avenue,
Pompano Beach, FL 33069.
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EDnet also has granted to VDC options (the "VDC Option") to acquire, at
the exercise price of $0.10 per share, the number of shares actually purchased
upon exercise of each option, warrant and other convertible securities (the
"Outstanding Options") of EDnet outstanding as of July 10, 1998. VDC's rights to
exercise its options will accrue on the date of exercise of each corresponding
Outstanding Option and expire upon the first anniversary of the exercise date of
such Outstanding Option. Pursuant to the VDC Option, and subject to the exercise
of the Outstanding Options, VDC has the right to purchase up to an aggregate of
6,542,722 shares of EDnet's common stock.
Appointment of New EDnet Directors
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Pursuant to the terms of the Purchase Agreement, EDnet shall appoint
four individuals designated by VDC to the EDnet Board of Directors. EDnet's
bylaws provide that its Board of Directors consist of a total of seven
directors. Thus, VDC has the right to designate the majority of the directors
comprising the EDnet Board of Directors.
The following four individuals have been selected to be appointed, upon
closing, to the EDnet Board of Directors:
1. Randy S. Selman. (Chairman of the Board Designate)
Mr. Selman has served as the Chief Executive Officer, President, and
the Chairman of the Board of Directors of VDC since its inception in May 1993,
and since September 1996, as VDC's acting Chief Financial Officer. From March
1985 through May 1993, Mr. Selman was Chairman of the Board, President and Chief
Executive Officer of SK Technologies Corporation (SKTC-Nasdaq SmallCap Market),
a publicly-traded software development company. SKTC develops and markets
software for point-of-sale with complete back office functions such as
inventory, sales analysis and communications. Mr. Selman founded SKTC in 1985
and was involved in the company's initial public offering in 1989. Mr. Selman's
responsibilities included management of SKTC, public and investor relations,
finance, high level sales and general overall administration.
2. Brian K. Service. (Designated EDnet Executive Director)
Mr. Service is an international business consultant with clients in
North and South America, the United Kingdom, Asia, Australia and New Zealand.
From October 1992 to October 1994 Mr. Service was CEO and Managing Director of
Salmon Smith Biolad, a New Zealand publicly-traded company. From October 1986 to
October 1992 he was CEO and Executive Chairman of Milk Products Holding (North
America) Inc., a wholly-owned subsidiary of the New Zealand Dairy Board in Santa
Rosa California, which was the sole marketer of New Zealand dairy products in
North America. Mr. Service has served as a member of the Board of Directors and
of the audit committee of VDC since July 1997.
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3. Alan M. Saperstein. (Designated EDnet Director)
Mr. Saperstein has served as the Senior Vice President, Executive
Producer, Secretary and a director of VDC since its inception in May 1993. From
March 1989 until May 1993, Mr. Saperstein was a free-lance producer of video
film projects. Mr. Saperstein has provided consulting services for corporations
which have set up their own sales and training video departments. From 1983
through 1989, Mr. Saperstein was the Executive Director/Entertainment Division
of NFL Films where he was responsible for supervision of all projects, budgets,
screenings and staffing.
4. David E. Goodman. (Designated EDnet Director)
Mr. Goodman has been Executive Vice President and Chief Operating
Officer of VDC since August 1997. From March 1988 until joining VDC, Mr. Goodman
was with LaSalle Partners and as a partner in the firm he held various senior
line positions including Managing Director of the firm's McCoy Group joint
venture and Equity Vice President/Group Manager of Florida and Latin America for
the firm's Management Services Group. From 1985 until 1988, Mr. Goodman was
Manager of New Product Development for the Beecham Cosmetics subsidiary of
Beecham plc. where he managed the marketing and advertising strategies for
consumer products in 36 countries. From 1981 until 1985 Mr. Goodman was an
Account Executive with the Leo Burnett and J. Walter Thompson advertising
agencies and developed advertising and marketing strategies for clients such as
Green Giant, Keebler, Kimberly-Clark, Kraft and Pillsbury.
Security Ownership and Compensation of Directors
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None of the four individuals to be appointed to the EDnet Board of
Directors owns any EDnet securities, to the knowledge of EDnet's management.
There are no plans to provide any compensation to the four individuals
to be appointed to the EDnet Board of Directors for their service as directors.
Security Ownership of Management and Principal Stockholders
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The following table sets forth information, as of July 10, 1998,
regarding shares of Common Stock (a) held of record and (b) that the named owner
has the right to acquire within sixty days from options, warrants, rights,
conversion privileges or similar obligations, by (i) officers or directors of
the Company; (ii) all officers and directors as a group; (iii) and each
shareholder who owns more than 5% of any class of the Company's securities,
including those shares subject to outstanding options and warrants. Unless
expressly indicated, each shareholder exercises sole voting and investment power
with respect to the shares owned.
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AMOUNT OWNED OR
TITLE NAME AND ADDRESS RIGHT TO ACQUIRE %
OF CLASS OF OWNER WITHIN 60 DAYS OF CLASS(1)
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Common VDC 8,563,417(2) 50.85
1291 Southwest 29th Ave. ---------
Pompano Beach, FL 33069 10,024,683
Common Tom Kobayashi 637,473(3) 3.23
One Union Street
San Francisco, CA 94111
Common David Gustafson 388,684(4) 1.97
One Union Street
San Francisco, CA 94111
Common Tom Scott 322,802(5) 1.64
One Union Street
San Francisco, CA 94111
Common Robert Wussler 100,000(6) 0.51
One Union Street
San Francisco, CA 94111
Common Officers and Directors 1,448,959(7) 7.35
As a group
Common Liviakis Financial 780,000 3.96
Communications, Inc.
2118 "P" Street, Suite C
Sacramento, CA 95816
Common T-Bar W Ranch Invest. 1,476,000(8) 7.49
101 E Brand
Mineola, TX 75773
(1) Based upon 16,791,014 share of common stock issued and outstanding on July
14, 1998, plus an additional 2,922,532 shares issuable upon exercise of warrants
and options exercisable within sixty days, for a total, for purposes of this
analysis, of 19,713,546.
(2) VDC has received options to purchase up to an aggregate of 6,542,722 shares
of common stock, but these options are only exercisable following the exercise
of a corresponding number of options by other options holders. The VDC option
has been designed to ensure VDC will always has the right to own over 50% of the
outstanding EDnet Common Stock. (3) Includes right to acquire 212,426 shares
within 60 days from options.
(4) Includes right to acquire 252,923 shares within 60 days from options.
(5) Includes right to acquire 157,917 shares within 60 days from options
(6) Includes right to acquire 100,000 shares within 60 days from options
(7) Includes right to acquire 723,266 shares within 60 days from options
(8) Includes right to acquire 738,000 shares within 60 days from options
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Notice to be signed on its behalf by the
duly authorized undersigned officer.
EDnet, INC.
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By: Tom Kobayashi,
Chairman and CEO
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