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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): October 7, 1998
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Home Security International, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 333-26399 98-0169495
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File number) Identification No.)
Level 7, 77 Pacific Highway
North Sydney, NSW Australia 2060
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (011) (612) 9936-2424
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____________________________________________________________
Former name or former address, if changed since last report
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Item 5. Acquisition of Assets
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As of September 30, 1998, Home Security International, Inc. ("HSI" or the
"Company") executed an amendment to the Stock Purchase Agreement, dated as of
July 17, 1998, ("Purchase Agreement") through which the Company will acquire
100% of the issued and outstanding stock (the "IIHSL Shares") of Integrated
International Home Security Limited ("IIHSL"), a British Virgin Islands company
that owns 75.04% of the issued and outstanding common stock of Ness Security
Products Pty Ltd., and Australian company, a leading designer and manufacturer
of security alarm products in Australia and the Company's sole supplier of its
SecurityGuard alarm (the "Transaction").
Pursuant to the Purchase Agreement, the Company agreed to pay aggregate
consideration consisting of: (i) 400,000 shares of the Company's common stock,
$.001 par value per share ("HSI Common Stock"); (ii) a five year convertible
warrant to purchase 360,000 shares of HSI Common Stock at an exercise price of
$13.00; (iii) cash in the amount of $2,426,000 ($126,000 paid concurrent with
the execution of the Purchase Agreement and $2,300,000 to be paid upon closing
of the Transaction); (iv) a promissory note, secured by the IIHSL Shares, in the
amount of $9,098,000, payable in installments of $400,000 on each of June 30,
1999 and December 31, 1999, respectively, with the balance of the note due on
June 30, 2000 ("Note"); and, (v) a non-refundable re-negotiation fee of
$200,000. If any portion of the principal amount of the Note is still
outstanding on October 1, 1999, the Company shall issue an additional five year
warrant to purchase 200,000 shares of HSI Common Stock at an exercise price of
$13.00 per share. Likewise, if any portion of the principal amount of the Note
is still outstanding on January 1, 2000, the Company shall issue an additional
five year warrant to purchase 200,000 shares of HSI common stock at an exercise
price of $13.00 per share.
A copy of the Purchase Agreement was previously filed as an exhibit to the
Company's Registration Statement on Form S-1 (Registration No. 333-54921), filed
with the Securities and Exchange Commission on July 20, 1998, and is hereby
incorporated by reference. A copy of the press release of the Company, dated
October 6, 1998, is attached hereto as Exhibit 99 and is hereby incorporated by
reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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(c) Exhibits. The following exhibits are filed herewith in
accordance with Item 601 of Regulation S-K:
99 Press Release of the Company dated October 7, 1998.
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HOME SECURITY INTERNATIONAL, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this 8-K report to be signed on its behalf by the undersigned,
thereunto duly authorized.
HOME SECURITY INTERNATIONAL, INC.
By:_____________________________________________
Bradley D. Cooper
Chairman and Chief Executive Officer
(Principal Executive Officer)
By:_____________________________________________
Mark Whitaker
Vice President of Finance and Treasurer
(Principal Financial and Accounting Officer)
Dated: October 7, 1998
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INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
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<S> <C>
99 Press Release of the Company Dated October 7, 1998
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Contacts: Mark Whitaker, CFO
011 61 2 9936 2543
FOR IMMEDIATE RELEASE
HOME SECURITY INTERNATIONAL, INC. COMPLETES ACQUISITION
OF 100% OF INTEGRATED INTERNATIONAL HOME SECURITY LIMITED
SYDNEY AUSTRALIA, October 7, 1998 -- Home Security International, Inc.
(AMEX-HSI) today announced the acquisition of 100 percent of the issued and
outstanding stock of Integrated International Home Security Limited ("IIHSL"), a
British Virgin Islands Holding Company which owns approximately 75% of the
issued and outstanding common stock of Ness Security Products Pty Ltd. ("Ness"),
a leading designer and manufacturer of Security alarm products based in
Australia, including HSI's SecurityGuard product. The plans to acquire IIHSL
were publicly disclosed in July 1998.
The consideration for the IIHSL common stock (i) 400,000 shares of HSI
stock, (ii) Five year warrants to purchase 360,000 shares of common stock
of HSI at an exercise price of $13.00 per share, (iii) $2.6 million in cash;
(iv) A secured note of $9.1 million due June 30, 2000. The aggregate purchase
price, based upon values attributed by HSI and the Seller to the shares and
warrants, which are part of the consideration, is approximately $16.3 million.
Brad Cooper, Chief Executive Officer of Home Security International said,
"In completing this transaction, the company confirms its strategy for growth
which includes acquiring businesses in its particular market that are highly
profitable and well managed. The company believes the acquisition will provide a
strategic opportunity in increasing gross sales margins and allow penetration
pricing strategies in developing markets."
He further added, "HSI believes the acquisition will be accretive to
earnings per share in fiscal year 1999."
Home Security International, Inc. is a leader in the residential home
security industry with more than 180,000 customers with installed alarm systems,
which are sold through an extensive independent distributor network established
in Australia/New Zealand, Europe, South Africa and North America."
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This release includes forward-looking statements concerning HSI's business and
the Acquisition's anticipated impact on future earnings. These forward-looking
statements are subject to certain risks and uncertainties, outlined in the
Annual report on (Form 10-K) issued October 6, 1998 and other filings made with
the Securities and Exchange Commission, that could cause actual results to
differ drastically from those presented. HSI expressly disclaims any
obligation to release publicly any updates or revisions to such forward-looking
statements to reflect any change in expectations.
