================================================================================
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): August 11, 1997
GROUP LONG DISTANCE, INC.
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Florida 0-21913 65-0213198
- ---------------------------- --------------------- -------------------
(State or Other Jurisdiction (Commission File No.) (I.R.S. Employer
of Incorporation) Identification No.)
1451 West Cypress Road, Suite 200,
Fort Lauderdale, FL 33309
- ---------------------------------------- ------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (954) 771-9696
N/A
-------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On August 11, 1997, Group Long Distance, Inc. (the "Company") acquired all
the issued and outstanding capital stock of Eastern Telecommunications
Incorporated ("ETI"), a New York-based long-distance reseller, from the selling
shareholders of ETI, Avrohom Oustatcher and Menachem Goldstone. The purchase
price aggregated $8.313 million and consisted of two $3.5 million notes (the
"ETI Notes") and the assumption of $1.2 million of certain ETI's liabilities and
the payment of closing costs in the amount of $113,000. ETI's assets consist of
two warrants to purchase 1,347,000 shares of the common stock of Tel-Save
Holdings, Inc. ("Tel-Save")(the "ETI Tel-Save Warrants"), a customer base of
7,000 customers and receivables. A substantial portion of ETI's revenues are
derived through Tel-Save. On August 11, 1997 the Company exercised one of the
ETI Tel-Save Warrants to purchase 600,000 common stock shares of Tel-Save.
The ETI Notes bear interest at 10% per annum payable monthly and are due on
August 11, 1998, although the net proceeds from the sale of the securities
underlying the ETI Tel-Save Warrants shall be used to prepay the principal of
the ETI Notes. Upon the event of default, interest under the ETI Notes increases
to 21% per annum until the default is cured. The ETI Notes also provide penalty
payment of $500,000 for failure to make timely payments of principal and
interest when due after giving effect to certain grace periods should such
uncured default occur prior to August 11, 1998 and $1,000,000 should such
uncured default occur on or after August 8, 1998. Events of default under the
ETI Notes include failure to make payments when due, modification or disposition
of assets pledged as collateral (described below), bankruptcy and material
misrepresentation in the ETI Notes or any related security agreement.
Under the terms of the ETI stock purchase agreement (the "ETI Agreement"),
the ETI Tel-Save Warrants have been pledged to guarantee the Company's
obligations under the ETI Notes. In addition, all other assets of ETI have been
pledged as collateral and the Company has pledged a subordinated interest in all
its assets as collateral.
The ETI Agreement also provides that the Company will indemnify the selling
shareholders for a period of 5 years the date of sale from and against any and
all losses up to $3.5 million arising from the transaction and releases the
selling shareholders from certain liabilities to ETI. The indemnification
excludes any tax liability the selling shareholders may incur in connection with
the transaction.
Of the $8.313 million acquisition cost of ETI, $7.713 million has been
allocated to the ETI Tel-Save Warrants and the balance of $600,000 has been
allocated to the customer base. No value was assigned to the receivables
purchased due to the uncertainty surrounding their collectibility.
The ETI acquisition was reported as a subsequent event in the Company's
Form 10-KSB for the fiscal year ended April 30, 1997 as filed with the
Securities and Exchange Commission on August 13, 1997.
2
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Business Acquired
Information required by this paragraph shall be filed by an amendment to
this report on or before October 27, 1997.
(b) Pro Forma Financial Information
Information required by this paragraph shall be filed by an amendment to
this report on or before October 27, 1997.
(c) Exhibits
10.30 Stock Purchase Agreement, dated as of August 11, 1997, by and among
the selling shareholders of Eastern Telecommunications Incorporated
and the Company, together with all exhibits thereto (incorporated
herein by reference to Exhibit 10.30 to the Company's Form 10-KSB
for the year ended April 30, 1997).
3
<PAGE>
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 hereunto duly authorized.
GROUP LONG DISTANCE, INC.
Date: August 22, 1997 By: /s/ Gerald M. Dunne, Jr.
------------------------
Gerald M. Dunne, Jr.
Chief Executive Officer and President
4
