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: July 27, 1999
(Date of earliest event reported)
COMPU-DAWN, INC.
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(Exact name of Registrant as specified in charter)
Delaware 000-22611 11-3344575
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(State or other jurisdiction (Commission File No.) (IRS Employer Identification
of incorporation) Number)
12735 Gran Bay Parkway West, Building 200, Jacksonville, Florida 32258
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (904) 680-6680
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Item 5. Other Events.
Divestiture of Long Distance Telephone Service Division and Database
of Independent Representatives to The Free Network, Inc.
On July 27, 1999, Compu-DAWN, Inc. ("Compu-DAWN") issued a press release
(the "Free Net Press Release") announcing that e.TV Commerce, Inc. ("e.TV"),
Compu-DAWN's wholly owned subsidiary, sold its UniDial long distance service
division and its independent network marketing representative database to The
Free Network, Inc. ("Free Net"), a network marketer of telecommunications
services. Compu-DAWN received $250,000 in cash for those assets. The transaction
was part of Compu-DAWN's strategy to focus its business solely on
Internet-related technologies.
Compu-DAWN enters into Asset Purchase Agreement with Global PC, Inc.
On August 4, 1999, Compu-DAWN issued a press release (the "Global PC Press
Release) announcing that it has entered into an Asset Purchase Agreement with
Global PC, Inc. ("Global PC") to acquire substantially all of the assets of
Global PC.
In consideration for the assets and the assumption of certain liabilities,
Compu-DAWN has agreed to issue a number of Common Shares ranging from 624,284 to
699,284 Shares, and Class A Warrants to purchase up to 2,269,284 Common Shares,
Class B Warrants to purchase up to 1,901,400 Common Shares and Class C Warrants
to purchase up to 385,000 Common Shares. All the warrants are exercisable at
$4.875 per share, the closing price of Compu-DAWN's common stock on July 29,
1999.
The Class A Warrants are exercisable from July 1, 2001 to June 30, 2006 to
the extent of 50%, 75% or 100% of the underlying Common Shares provided
Compu-DAWN reaches certain performance milestones by June 30, 2001. The
milestones require that there are 150,000 to 200,000, 200,001 to 250,000, or
250,001 more subscribers to Compu-DAWN's Internet services who access the
Internet through the Global PC Internet / computing appliance by June 30, 2001
respectively. If there are less than 150,000 of such subscribers by June 30,
2001, the Class A Warrants will not be exercisable and shall be automatically
canceled.
The Class B Warrants are exercisable:
- to the extent of 30% of the underlying Common Shares during
the period commencing 90 days after the issuance of the Class
B Warrant and ending on the day before the fifth anniversary
of the issuance date (the "Expiration Date"),
- to the extent of 23 1/3% of the underlying Common Shares from
each of the first, second and third anniversary of the
issuance date and ending on the Expiration Date.
The Class C Warrants are exercisable from the first anniversary of the date
of issuance to the Expiration Date.
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With respect to the number of securities issued in consideration for the
assets, 4,555,684 Common Shares are issuable upon the exercise of Warrants which
would generate an aggregate of $22,208,959.50 to Compu-DAWN.
No assurance can be given that if the Asset Purchase Agreement closes and
the Warrants are issued, that any or all of the Warrants will be exercised, and
if any of them are exercised, when that will happen.
The exercise of the Warrants are also conditioned upon the stockholders of
Compu-DAWN approving the issuance of the underlying common shares to the extent
such issuance would be more than 20% of the outstanding common shares of
Compu-DAWN.
The closing of the Asset Purchase Agreement is subject to numerous
conditions. No assurance can be given that these conditions will be met and that
the Asset Purchase will be successfully consummated.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
99.1 Free Net Press Release dated June 9, 1999
99.2 Global PC Press Release dated August 4, 1999
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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.
COMPU-DAWN, INC.
Dated: August 11, 1999 By: /s/ David Greenspan
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David Greenspan,
Chief Financial Officer
::ODMA\MHODMA\IMANAGE;357380;4
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Exhibit 99.1
FOR IMMEDIATE RELEASE CONTACT:
Allison McGuigan
The Weber Group
(617) 520-7245
[email protected]
COMPU-DAWN FINALIZES CONSOLIDATION OF BUSINESS
PRACTICE; PREPS FOR ACQUISITION OF GLOBAL PC
Divestiture of Long Distance Telephone Service Division and
Database of Independent Representatives to FreeNet
Marks Next Move in Corporate Strategy to Focus on the Internet
JACKSONVILLE, FL - July 27, 1999 - Compu-DAWN (Nasdaq:ETVC), a provider of
Internet-related technologies, products and services, today announced it has
completed the sale of its UniDial long distance service division, as well as its
Independent representative database, to Troy, Michigan-based The Free Network
("FreeNet"), a network marketer of telecommunications services. Compu-DAWN
received $250,000 in cash for the transaction. This move is the latest within
Compu-DAWN's strategy to focus its business solely on Internet-related
technologies. The company plans to move toward finalizing its strategy within
the coming week when it expects to sign the asset purchase agreement relating to
its previously announced purchase of Global PC, Inc., co-developer and worldwide
licensor of the GEOS operating system. A closing is anticipated shortly after
signing, once pre-closing conditions have been fulfilled.
Under the agreement with FreeNet, Compu-DAWN's long distance business will be
reassigned by UniDial to FreeNet, thereby ensuring a smooth transition for
existing customers. The transaction also provides Compu-DAWN's former
Independent Representatives the chance to enroll in FreeNet's network marketing
program, where they can sustain momentum in their independently-owned businesses
through the sale of UniDial's telecommunications services. Under this
arrangement, all prior Compu-DAWN Independent Representatives will continue to
receive residual commissions from their established UniDial customer account
base. (Compu- DAWN's Referral Network Marketing operations were discontinued on
June 29, as previously announced.)
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"Compu-DAWN is consolidating into Internet-based products and services, and
discontinuing all divisions of the company that don't support this vision," R.E.
"Teddy" Turner explained. "We discontinued our relationship marketing arm, and
are thrilled to have found a placement for each of our roughly 23,000
representatives with FreeNet. We also sold our public safety software division.
Now, with the divestiture of our long distance services, we're ready to focus
solely on executing our Internet technology strategy. Our next step will be the
planned acquisition of GlobalPC, which is expected to be a key component in
Compu-DAWN's new technology, as well as a significant revenue generator for the
company."
About Compu-DAWN
Compu-DAWN provides Internet services, e-commerce, and telecommunications
services to customers throughout North America. Compu-DAWN is based in
Jacksonville, Florida, and can be accessed via the Web at www.compudawn.com.
About The Free Network (FreeNet)
FreeNet is a provider of telecommunications products and services. FreeNet is
based in Troy, Michigan, and can be accessed via the Web at
www.thefreenetwork.com.
Forward Looking Statements
Certain information contained in this announcement are "forward-looking
statements." Compu-DAWN cautions readers that certain important factors may
affect actual results and could cause such results to differ materially from any
forward-looking statements which may be deemed to have been made in this
announcement or which are otherwise made by or on behalf of Compu-DAWN. For this
purpose, any statements contained in this announcement that are not statements
of historical fact may be deemed to be forward- looking statements. Factors
which may affect results include, but are not limited to, the Internet and
Internet related technology and products, new technology developments,
developments and regulation in the telecommunications industry, the risk of loss
of management and personnel, the competitive environment within the Internet and
telecommunications industries, the ability of Compu-DAWN to develop its
infrastructure, the ability of Compu-DAWN to consummate the Global PC
acquisition, the ability of Compu- DAWN to partner with a hardware manufacturer
to produce the Global PC personal computer, the ability to enter into
arrangements to sell products through the retail mass market channels, the
ability of Compu-DAWN to raise additional capital which will be required in the
near term to continue to develop and sustain business at current levels, the
competence required and experience of management and economic conditions.
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Exhibit 99.2
FOR IMMEDIATE RELEASE CONTACT:
Allison McGuigan
The Weber Group
(617) 520-7245
[email protected]
COMPU-DAWN TO USHER IN ERA OF SUB-$300 PCs -
SIGNS GLOBAL PC(R) ACQUISITION DOCUMENTS
GlobalPC Product to Target "Unconnected" Population Shopping at
Kmart, Mass Merchant Retailers
JACKSONVILLE, FL - August 4, 1999 - Compu-DAWN (Nasdaq:ETVC), a provider of
Internet-based e-commerce and communications products and services, today
announced that it has entered into an agreement to acquire all tangible and
intangible assets of Alameda, CA-based GlobalPC, Inc. for shares of common stock
and common stock purchase warrants of Compu-DAWN. GlobalPC is co-developer and
worldwide licensee of GEOS, a simplified, low cost operating system and
integrated applications software suite. Upon closing, Compu-DAWN plans to offer
licensing arrangements for both its operating system and hardware reference
designs to national brand name consumer PC and consumer electronics
manufacturers as early as the fourth quarter 1999.
Kmart, At Least One Other Mass Merchant Retailer to Sell Low-cost "GlobalPC" In
the fourth quarter 1999 - the holiday buying season - Compu-DAWN plans to
introduce a GlobalPC(R)-branded $299 retail price personal computer to be
sold initially through interactive end-cap displays at mass merchant retail
stores in Minneapolis, MN, Indianapolis, IN and Tampa, FL. To date, Kmart and an
one other national name brand retailer have tentatively committed to offering
the product during the roll out period in these markets; Compu-DAWN executives
are currently in talks with additional mass merchant retailers to involve them
in the fourth quarter 1999 introduction of the GlobalPC. An extensive broadcast
and print advertising and public relations campaign is expected to promote the
product in the roll out market areas. In the event of a successful rollout, the
product is expected to be introduced nationally by the aforementioned retailers,
as well as several additional retailers, in the first quarter of 2000.
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The Rise of the Low Cost PC and the Internet Appliance
"The fastest growing segment of the PC market is the sub-$1,000 division,"
Compu-DAWN Chairman R. E. "Teddy" Turner explained. "And average unit prices are
falling because consumers realize that there is no longer a need to buy an
expensive cutting-edge machine. Today's less expensive PCs and appliances are
sufficient for most tasks, especially connecting to the 'Net' - the top reason
consumers buy PCs."
Though Compu-DAWN is joining such operating system licensors as Microworkz.com,
BE Incorporated(R) (licensor of BeOS) and Linux(R) in the "Windowless"
trend, GEOS has a strong history - having been chosen in the past as the
operating system for such manufacturers as Brother(R) and Nokia(R).
"We're entering an era where Microsoft compatibility is needed, but Microsoft
itself is not," added Rudy Theale, Vice Chairman of Compu-DAWN. "GlobalPC and
GEOS have a history of innovation and have paved the way for other operating
systems to make their mark in the low-priced PC and Internet appliance arena. We
plan to make the GlobalPC the computer that everyone can use and afford, and we
intend to make it available through the stores where America shops."
The GlobalPC- Simple, Inexpensive, Microsoft Word(R)- and Excel(R)-
file compatible Through its purchase of GlobalPC Inc., Compu-DAWN would inherit
an experienced team of both hardware and software engineers to further enhance
the GEOS operating system and its integrated suite of software applications. The
development team will focus on four areas: ease- of-use, online service and
Internet access, performance, and portal functionality.
Product Benefits:
- Expected street price: $299 for the GlobalPC system, $19.95 per month for
full-service ISP; no minimum ISP commitment required
- Ease of use: four levels of usability, enabling the user to improve
skills at their own pace (a beginner user interface as well as an
interface with a common look and feel with which experienced PC users
are comfortable)
- Microsoft Word and Excel file compatibility
- Internet browser, email and chat capabilities
- Word processor, database, graphics program and personal finance
application
The standard Compu-DAWN GlobalPC personal computer will feature:
- 86 compatible processor
- 1.44MB floppy
- 1.2 - 2.0GB hard drive
- v.90 modem
- Integrated keyboard, speakers and mouse
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The closing of the acquisition, which is scheduled to occur by the end of the
third quarter 1999, is subject to a number of conditions. Final pricing and
interactive end-cap display designs are currently being finalized.
About Compu-DAWN
Compu-DAWN provides Internet-based e-commerce and communications products and
services to customers throughout North America. Compu-DAWN is based in
Jacksonville, Florida, and can be accessed via the Web at www.compudawn.com.
About GlobalPC
GlobalPC, Inc., founded in April 1998, is the co-developer and worldwide
licensee of GEOS, a user-friendly, powerful operating system and software suite.
GlobalPC is based in Alameda, California.
Forward Looking Statements
Certain information contained in this announcement are "forward-looking
statements." Compu-DAWN cautions readers that certain important factors may
affect actual results and could cause such results to differ materially from any
forward-looking statements which may be deemed to have been made in this
announcement or which are otherwise made by or on behalf of Compu-DAWN. For this
purpose, any statements contained in this announcement that are not statements
of historical fact may be deemed to be forward- looking statements. Factors
which may affect results include, but are not limited to, the Internet and
Internet related technology and products, new technology developments,
developments and regulation in the telecommunications industry, the risk of loss
of management and personnel, the competitive environment within the Internet and
telecommunications industries, the ability of Compu-DAWN to develop its
infrastructure, the ability of Compu-DAWN to consummate the GlobalPC
acquisition, the ability of Compu- DAWN to partner with a hardware manufacturer
to produce the GlobalPC personal computer, the ability to enter into
arrangements to sell products through the retail mass market channels, the
ability of Compu-DAWN to raise additional capital which will be required in the
near term to continue to develop and sustain business at current levels, the
competence required and experience of management and economic conditions.
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