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: May 12, 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)
77 Spruce Street, Cedarhurst, New York 11516
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 374-6700
1
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Item 5. Other Events.
On May 12, 1999, Compu-DAWN, Inc.(the "Corporation") issued a press release
(the "Press Release") announcing that Mark Honigsfeld had stepped down as Chief
Executive Officer and a Director of the Corporation, that he will continue as a
consultant to the Corporation, and that other key executives had voluntarily
reduced their compensation and agreed to purchase shares of Common Stock of the
Corporation. The details of Mr. Honigsfeld's termination and consulting
agreements, and of the reduction of salaries of, and purchase of shares by,
other executives, are more particularly described in the Press Release, which is
attached hereto as Exhibit 99.1
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
99.1 Press Release, dated May 12, 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: May 13, 1999 By: /s/David Greenspan
David Greenspan
Chief Financial Officer
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Exhibit 99.1
MARK HONIGSFELD STEPS DOWN AS CEO AND DIRECTOR OF COMPU-DAWN, INC.
AND SUBSIDIARIES. HE WILL CONTINUE AS A CONSULTANT. OTHER KEY
EXECUTIVES VOLUNTARILY REDUCE COMPENSATION, AND AGREE TO PURCHASE
SHARES IN COMPANY
Cedarhurst, New York, May 12, 1999 - Compu-DAWN, Inc. (NASDAQ:ETVC) announced
today that Mark Honigsfeld is stepping down as Compu-DAWN's CEO and Director and
from all other offices and directorships of Compu-DAWN and its subsidiaries.
Compu-DAWN and Mr. Honigsfeld have mutually agreed to terminate Mr. Honigsfeld's
$250,000 a year employment agreement, which was set to expire in December 2002.
Mr. Honigsfeld stated that "my desire as CEO and principal shareholder has been
to guide Compu- DAWN into a dynamic and exciting industry and to put the company
on a path to substantially increase our stockholders' value. I, with my fellow
directors have over the last year pursued opportunities with this view. I feel
we brought Compu-DAWN such an opportunity with e.TV. Over the past five months,
the bulk of Compu-DAWN's day-to-day operations have been operating out of
Jacksonville, Florida, while an executive office with customer support staff of
the public safety division has been maintained in Cedarhurst, New York. With the
anticipated divestiture of the public safety division [discussed below] all of
Compu-DAWN's executive management other than myself and Louis Libin will be
based in Jacksonville, including Teddy Turner and Rudy Theale. Teddy Turner has
expressed his excitement about e.TV's future potential and has given his
commitment to the Board to build and support Compu-DAWN with his management
team. I have decided that it is in the best interest of Compu-DAWN and its
stockholders to give Teddy Turner, Rudy Theale and the rest of his management
team the reins to pursue the opportunities open to Compu-DAWN in the Internet,
e-commerce and telecommunications industries. As a consultant I will continue to
provide advice and guidance to management in the future."
Teddy Turner stated that "Mark had guided Compu-DAWN from the public safety
business - which although steady, demonstrated slow growth for both Compu-DAWN
and our stockholders - into the e-commerce and telecommunications industries
which has enormous potential. I am excited about Compu-DAWN's future, and the
management team and I will continue to strive to maximize stockholder value as
we build and grow the company. We are at a threshold point and I expect that as
our independent representative network and infrastructure continue to develop we
will turn the corner to profitability by end of this calendar year. As of March
31, 1999 Compu-DAWN had approximately $2,600,000 in cash with virtually no
long-term debt and working capital of approximately $2,400,000. Among other
things, we are currently implementing Visual-Flex, a
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software system which will allow greater financial and operating controls and
enhanced applications for our business and independent representatives."
In consideration for the termination of Mr. Honigsfeld's Employment Agreement,
Compu-DAWN will pay Mr. Honigsfeld $500,000, which will be paid out over
approximately six months or will be delivered from the proceeds of the sale of
Compu-DAWN's public safety division. Compu-DAWN recently entered into a letter
of intent to sell the public safety division to an unrelated private company
involved in a similar type of business. Additionally, Mr. Honigsfeld will
receive an amount equal to 80% of any royalty payment which Compu-DAWN receives
from the buyer of the public safety division for a period of approximately five
years from closing of the sale of the public safety division. Compu-DAWN is
currently negotiating the agreement for the sale of the public safety division,
and no assurance can be given that a contract will be entered into or that the
sale will ultimately close.
Mr. Honigsfeld has agreed to stay on as a consultant to the Company to provide
guidance and advice in the areas of management, administration, business
strategy and sales and marketing as well as in connection with the negotiation
and sale of Compu-DAWN's public safety division. As a consultant, Mr. Honigsfeld
will receive $1,500 per month and benefits similar to those which he had under
his employment agreement. He will also be issued 62,500 Common Shares as part of
the consideration for his consulting services, which Compu-DAWN has agreed to
register. The value of these shares are at market. The consulting arrangement
will run for up to approximately four years subject to earlier termination at
Mr. Honigsfeld's option at any time, or by Compu-DAWN in certain instances.
In order to free up working capital for the development of e.TV's business,
Teddy Turner, Rudy Theale and Louis Libin have each agreed to cut his annual
salary by approximately 50%, 25% and 56%, respectively. Additionally, with the
salary reduction of Louis Libin, Compu-DAWN agreed to adjust the exercise price
of his stock options to $3.25 per share, the market price at the time of the
agreement. As a result of these reductions and the agreement with Mark
Honigsfeld, the Company expects to save approximately $500,000 a year.
Mark Honigsfeld has contemporaneously informally agreed to sell a substantial
portion of his Common Shares in the Company of which Teddy Turner and Rudy
Theale have indicated they will buy a portion. Mr. Honigsfeld stated "as part of
passing the torch to Teddy Turner, Rudy Theale and their management team, and
the scaling back of my involvement in the company, I am reducing my holdings in
Compu-DAWN as part of a personal diversification. I am heartened in Teddy's and
Rudy's confidence in the future of Compu-DAWN, which has been demonstrated by
their decision to purchase some of my shares."
Compu-DAWN, through its wholly owned subsidiary e.TV Commerce, Inc., is in the
business of Internet services, e-commerce, and telecommunications services.
Sales of its products and services are sold primarily through a referral network
marketing organization of approximately 18,000 representatives.
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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 risks and uncertainties
associated with multi-level network marketing, 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 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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Contact: Teddy Turner, Chairman of the Board: (904) 680-6680
