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 (Date of earliest event reported): December 2, 1996
(November 15, 1996)
GLOBAL TELEMEDIA INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Florida 0-15818 64-0708107
(State or other jurisdiction (Commission File Number) (IRS Employer ID No.)
of incorporation or organization)
1121 Alderman Drive, Suite 200, Alpharetta, GA 30202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 770-667-6088
Item 2. Acquisition of Assets
As of November 15, 1996, Global Telemedia International, Inc.
(the "Company") acquired substantially all of the assets and assumed certain
liabilities related to the business (the "Business") of Finish Line
Collectibles, Inc., West Sports Marketing, Inc., Racing Club, Inc., and Arthur
West (collectively the "Sellers") pursuant to the terms of an Asset Purchase
Agreement.
West Sports Marketing, Inc. ("WSM"), was founded in 1991 by Mr. Arthur
West to market collectibles related to various sports personalities. In 1993,
Finish Line Collectibles, Inc. ("Finish Line") was founded by Mr. Arthur West in
order to design, produce and distribute collectible trading cards and prepaid
calling cards depicting the licensed marks of the leading personalities in
NASCAR Winston Cup Racing.
Finish Line obtains the licenses from the sanctioning bodies of motor
racing, key sponsors and other leading sports personalities. As the marketing
arm, WSM holds all the trademarks and service marks for the Business.
Under the terms of the Asset Purchase Agreement, the Company acquired
the assets and assumed certain liabilities used in operating the Business. The
assets acquired included all inventories, supplies, raw materials and work in
process, office equipment, furniture, and other tangible property as well as
all books, correspondence, patents, trademarks, proprietary information, and all
federal, state and local permits, licenses and authorizations of the Sellers
related to the Business.
The Company anticipates that these acquisitions will expand the
Company's collectible prepaid calling card products, and that Finish Line cards
will feature the enhanced services available through the Company's proprietary
state-of-the-art enhanced services platform. Additionally, the Finish Line
product line will offer an added collectible feature to the Enhanced Services
Program of Vision 21, Inc., the Company's network marketing subsidiary.
The estimated value of the transferred assets in connection with this
transaction is $480,000. The assumed liabilities are agreed between the parties
not to exceed approximately $694,000. In connection with the transaction, the
Company agreed to forgive approximately $120,000 of indebtedness owed by the
Sellers to the Company, and the Company agreed to pay an obligation of $65,000
owed by the Sellers to an unaffiliated third party. The amount of consideration
paid in the transaction was determined based on management's analysis of
historical and projected sales of the Business, the estimated market value of
the Business, and the synergies anticipated to be achieved through the
transaction.
In addition to the consideration as provided above, the Company has
agreed to pay Mr. Arthur West a contingent sum equal to twenty percent (20%) of
the value of the Business after three years from the acquisition date. At the
Company's sole option, up to fifty percent (50%) of the contingent sum may be
paid in the form of shares of common stock of the Company which have certain
registration rights.
Further, Arthur West entered into a three (3) year employment
agreement with System 3, Inc. ("System 3"), a subsidiary of the Company, at
the annual base salary of $78,000, plus other benefits. Mr. West will serve
as the President of System 3. System 3 has also agreed to pay a bonus to Mr.
West equal to 1 1/2% of the gross sales of System 3 during each quarterly period
of the employment agreement. However, the annual bonus pay may not exceed
$42,000, $54,000, or $67,000 during the first, second, and third years,
respectively, of the term of the employment agreement.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Business Acquired
Combined balance sheet of Finish Line Collectibles, Inc., West
Sports Marketing, Inc. and Racing Club as of December 31, 1995
and the related combined statements of income and stockholders'
equity and cash flows for the periods ended December 31, 1994
and 1995.
(c) Exhibits
2.1 Asset Purchase Agreement by and among Global Telemedia
International, Inc., System 3, Inc. (a wholly owned
subsidiary of the Company) and Finish Line Collectibles,
Inc., West Sports Marketing, Inc., Racing Club, Inc., and
Arthur West.
10.1 Employment Agreement between System 3, Inc. and
Arthur West dated November 15, 1996.
The Company's auditors are currently preparing the financial statements
required under Item 2 and the Company will file such financial statements
related to these transactions within sixty (60) days from the last date after
which this Form 8-K must be filed. In addition, the Company intends to file the
agreements required under and listed as exhibits in Item 7 above, at such time
as the financial statements are so filed.
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.
GLOBAL TELEMEDIA INTERNATIONAL, INC.
(Registrant)
Date: December 2, 1996 /s/ Roderick A. McClain
Roderick A. McClain, President
/s/ Herbert S. Perman
Herbert S. Perman, CFO
