SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
GLOBAL TELEMEDIA INTERNATIONAL, INC.
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(Name of Registrant as Specified In Its Charter)
JONATHON BENTLEY-STEVENS, CHIEF EXECUTIVE OFFICER
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
P R O X Y
- - - - -
GLOBAL TELEMEDIA INTERNATIONAL, INC.
THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS
FOR AN ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 30, 2000
The undersigned stockholder appoints ____________________, ______________
and ____________________, or any of them, as proxy with full power of
substitution, to vote the shares of voting securities of Global TeleMedia
International, Inc. (the "Company") which the undersigned is entitled to vote at
an Annual Meeting of Stockholders to be held at the Queen Mary, Long Beach,
California, on September 30, 2000, at 10:00 a.m., local time, and at any
adjournments thereof (the "Meeting"), upon matters properly coming before the
meeting, as set forth in the Notice of Annual Meeting and Proxy Statement, both
of which have been received by the undersigned. Without otherwise limiting the
general authorization given hereby, such proxy is instructed to vote as follows:
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE PROPOSALS INDICATED ON THIS CARD AND AS
SUCH PROXIES DEEM ADVISABLE WITH DISCRETIONARY AUTHORITY ON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENT OR
ADJOURNMENTS THEREOF.
(1) To elect to the Board of Directors eight (8) directors to serve until
the next Annual Meeting of Stockholders of the Company and until their
successors are elected and qualified, subject to their prior death,
resignation or removal.
[ ] FOR all nominees listed herein (except as marked to the contrary
below).
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME LISTED BELOW)
JONATHON BENTLEY-STEVENS REGINA S. PERALTA RENATO DE VILLA
JOHN WALSH RAMON A. TIROL ROBERTO S. SEBASTIAN
JOEMARI D. GEROCHI YAM PG ANAK HJ ABDUL WADOOD BOLKIAH
(2) To approve a change in the Company's Certificate of Incorporation
eliminating the requirement for a shareholders' meeting to amend the
Certificate of Incorporation.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) To approve a reverse stock split of shares of the Company's common stock
authorized and outstanding as of the date of the meeting within and
including a range of 1 for 3 through a 1 for 12 basis pursuant to the Board
of Directors' discretion and to amend the Certificate of Incorporation to
effect the reverse stock split.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE>
(4) To approve an increase in the number of the Company's authorized shares
of common stock, par value $0.004 per share, from 75 million to 100 million
shares and to amend the Certificate of Incorporation to effect the
increase.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) To ratify the appointment of Mendoza Berger & Company, LLP, Certified
Public Accountants, as independent certified public accountants for the
Company for the year ending December 31, 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In his discretion, the proxy is authorized to vote upon such other business
as may properly come before the meeting.
DATED:________ ____________________________________
Signature
____________________________________
Signature (if held jointly)
____________________________________
Print Names
(Please sign exactly as your name appears hereon.
When signing as attorney, executor, administrator,
Trustee or guardian, please give your full title.
If shares are jointly held, each holder must sign.
If a corporation, please sign in full corporate name
by President or other authorized officer. If a
partnership, please sign in partnership name by
authorized person).
PLEASE CHECK THE BOXES ABOVE AND ON THE REVERSE SIDE, SIGN, DATE AND RETURN THIS
PROXY TO AMERICAN STOCK TRANSFER & TRUST CO., 40 WALL STREET, 46TH FLOOR, NEW
YORK, NEW YORK 10005, ATTN: PROXY SERVICES, IN THE SELF-ADDRESSED ENVELOPE
PROVIDED.
<PAGE>
GLOBAL TELEMEDIA INTERNATIONAL, INC.
A DELAWARE CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 30, 2000
TO THE STOCKHOLDERS OF GLOBAL TELEMEDIA INTERNATIONAL, INC.:
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of Global Telemedia International, Inc., a Delaware corporation (the
"Company"), will be held at the Queen Mary, Long Beach, California on September
30, 2000, at 10:00 a.m., local time, and at any adjournments thereof, to
consider and vote on the following proposals:
(1) To elect to the Board of Directors eight (8) directors to serve
until the next Annual Meeting of Stockholders of the Company
and until their successors are elected and qualified, subject to
their prior death, resignation or removal.
(2) To approve a change in the Company's Certificate of Incorporation
eliminating the requirement for a shareholders' meeting to amend
the Certificate of Incorporation.
(3) To approve a reverse stock split of shares of the Company's common
stock authorized and outstanding as of the date of the meeting
within and including a range of 1 for 3 through a 1 for 12 basis
pursuant to the Board of Directors' discretion and to amend the
Certificate of Incorporation to effect the reverse stock split.
(4) To approve an increase in the number of the Company's authorized
shares of common stock, par value $0.004 per share, from 75 million
to 100 million shares and to amend the Certificate of Incorporation
to effect the increase.
(5) To ratify the appointment of Mendoza Berger & Company, LLP,
Certified Public Accountants, as independent public accountants for
the Company for the year ending December 31, 2000.
(6) To transact such other business as may properly come before the
Meeting and any adjournments thereof.
<PAGE>
ONLY STOCKHOLDERS OF RECORD AT THE CLOSE OF BUSINESS ON AUGUST 31, 2000
(THE "RECORD DATE") ARE ENTITLED TO NOTICE OF AND TO VOTE AT THE MEETING. PLEASE
FILL IN, SIGN, DATE, AND RETURN THE ENCLOSED PROXY TO AMERICAN STOCK TRANSFER &
TRUST CO., 40 WALL STREET, 46TH FLOOR, NEW YORK, NEW YORK 10005, ATTN: PROXY
SERVICES, WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING. A RETURN ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE.
By Order of the Board of Directors
GLOBAL TELEMEDIA INTERNATIONAL, INC.
By:
---------------------------------
Jonathon Bentley-Stevens
Chief Executive Officer
Newport Beach, California
DATED: ______________, 2000
(approximate date of mailing proxy material)
<PAGE>
GLOBAL TELEMEDIA INTERNATIONAL, INC.
A DELAWARE CORPORATION
EXECUTIVE OFFICES
4675 MACARTHUR COURT
SUITE 710
NEWPORT BEACH, CA 92660
(949) 253-9588
____________________________
PROXY STATEMENT
____________________________
This proxy statement is furnished to the stockholders of Global TeleMedia
International, Inc., a Delaware corporation (the "Company" or "GTMI"), in
connection with the Annual Meeting of Stockholders (the "Meeting") to be held at
the Queen Mary, Long Beach, California, on September 30, 2000 at 10:00 a.m.,
local time, and at any adjournments thereof.
The Meeting will be held to consider and vote on the following proposals:
PURPOSE OF MEETING
(1) To elect to the Board of Directors eight (8) directors to serve
until the next Annual Meeting of Stockholders of the Company and
until their successors are elected and qualified, subject to their
prior death, resignation or removal.
(2) To approve a change in the Company's Certificate of Incorporation
eliminating the requirement for a shareholders' meeting to amend
the Certificate of Incorporation.
(3) To approve a reverse stock split of shares of the Company's common
stock authorized and outstanding as of the date of the meeting
within and including a range of 1 for 3 through a 1 for 12 basis
pursuant to the Board of Directors' discretion and to amend the
Certificate of Incorporation to effect the reverse stock split.
(4) To approve an increase in the number of the Company's authorized
shares of common stock, par value $0.004 per share, from 75 million
to 100 million shares and to amend the Certificate of Incorporation
to effect the increase.
(5) To ratify the appointment of Mendoza Berger & Company, LLP,
Certified Public Accountants, as independent public accountants for
the Company for the year ending December 31, 2000.
(6) To transact such other business as may properly come before the
Meeting and any adjournments thereof.
The list of all stockholders of record on August 31, 2000, will be
available at the Meeting and at the offices of the Company at 4675 MacArthur
Court, Suite 420, Newport Beach, California, 92660, (949) 253-9588, for the ten
(10) days preceding the Meeting.
<PAGE>
ANNUAL REPORT
The Company is delivering a copy of its Annual Report to Shareholders for
the year ended December 31, 1999, to each shareholder, together with this Proxy
Statement. Upon written request, the Company will provide, without charge a
copy of its Annual Report on Form 10-KSB, for the year ended December 31, 1999,
to any stockholder of record or any stockholder who owned Common Stock listed in
the name of a bank or broker, as nominee, at the close of business on August 31,
2000.
Requests should be addressed to the Company, to the attention of Global
TeleMedia International, Inc., Ms. Betsy Ross, Office Manager, 4675 MacArthur
Court, Suite 710, Newport Beach, California, 92660, (949) 253-9588.
RECORD DATE
Only stockholders of record at the close of business on August 31, 2000,
are entitled to vote at the Annual Meeting. The Company's voting common stock
(the "Common Stock") and its Series A Preferred Stock (the "Preferred Stock")
are its only classes of voting securities. As of August 31, 2000, the record
date (the "Record Date") fixed by the Board of Directors, the Company had issued
and outstanding 75 million shares of Common Stock of record. In addition, the
Company has outstanding 4,000 shares of Series A Preferred Stock, all of which
have voting rights. (See "Voting and Solicitation" herein.)
REVOCABILITY OF PROXIES
A PROXY FOR USE AT THE MEETING IS ENCLOSED. ANY STOCKHOLDER WHO EXECUTES
AND DELIVERS A PROXY HAS THE RIGHT TO REVOKE IT AT ANY TIME BEFORE ITS EXERCISE
BY FILING WITH THE SECRETARY OF THE COMPANY AN INSTRUMENT REVOKING IT OR A DULY
EXECUTED PROXY BEARING A LATER DATE. IN ADDITION, A STOCKHOLDER MAY REVOKE A
PROXY PREVIOUSLY EXECUTED BY ATTENDING THE MEETING AND ELECTING TO VOTE IN
PERSON.
VOTING AND SOLICITATION
Proxies are being solicited by the Board of Directors of the Company (the
"Board"). The cost of this solicitation will be borne by the Company.
Solicitation will be primarily by mail, but may also be made by telephone,
electronic or fax transmission or personal contact by certain officers and
directors of the Company, who will not receive any compensation therefor.
Shares of Common Stock or Preferred Stock represented by properly executed
proxies will, unless such proxies have been previously revoked, be voted in
accordance with the instructions indicated thereon. IN THE ABSENCE OF SPECIFIC
INSTRUCTIONS TO THE CONTRARY, PROPERLY EXECUTED PROXIES DELIVERED TO THE BOARD
WILL BE VOTED FOR EACH OF THE PROPOSALS DESCRIBED ABOVE. No business other than
that set forth in the accompanying Notice of Annual Meeting of Stockholders is
expected to come before the Meeting. Should any other matter requiring a vote
of stockholders properly arise, the persons named in the enclosed form of proxy
will vote such proxy in accordance with the recommendation of the Board of
Directors.
Each share of Common Stock is entitled to one vote for each share held as of
record, and there are no preemptive rights. There are currently 75 million
common shares outstanding and entitled to vote. Additionally, there are
currently 4,000 shares of Convertible Series A Preferred Stock outstanding each
of which is entitled to 200,000 votes on any matter with respect to which
preferred shares are entitled to vote.
<PAGE>
The Company's Certificate of Incorporation (the "Certificate of
Incorporation" or "Certificate") and bylaws do not provide for cumulative voting
for the election of directors or any other purpose. However, shareholders may
nevertheless have cumulative voting rights with respect to the election of
directors. Pursuant to California law, no shareholder can cumulate votes unless
prior to the voting at the Meeting, a shareholder has given notice of the
shareholder's intention to cumulate the shareholder's votes at such Meeting. If
any shareholder has given such notice, all shareholders may cumulate their votes
for candidates in nomination. The Board of Directors does not, at this time,
intend to give such notice or to cumulate the votes it may hold pursuant to the
proxies solicited herein unless the required notice by a shareholder is given,
in which event votes represented by proxies delivered pursuant to this Proxy
Statement may be cumulated at the discretion of the proxy holders, in accordance
with the recommendation of the Board of Directors. Therefore, discretionary
authority to cumulate votes in such event is solicited in this Proxy Statement.
Cumulative voting allows a shareholder to cast a number of votes equal
to the number of directors to be elected multiplied by the number of votes held
in his or her name on the Record Date. This total number of votes may be cast
for one nominee or may be distributed among as many candidates as the
shareholder desires. The eight (8) candidates receiving the highest number of
votes are elected.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
Shares representing greater than 50% of the voting power of the 75 million
shares of Common Stock outstanding and the 4,000 shares of Series A Prefered
Stock are entitled to vote on the Record Date and which have voting rights in an
election of directors must be represented at the Meeting to constitute a quorum
for conducting business. In the absence of a quorum, the stockholders present
in person or by proxy, by majority vote of those present and without further
notice, may adjourn the meeting from time to time until a quorum is attained.
At any reconvened meeting following such adjournment at which a quorum shall be
present, any business may be transacted which might have been transacted at the
Meeting as originally notified whether or not greater than 50% of the
outstanding voting stock is represented at such reconvened meeting. Shares that
are voted "FOR" or "AGAINST" a matter are treated as being present at the
Meeting for purposes of establishing a quorum and are also treated as shares
entitled to vote at the Meeting (the "Votes Cast") with respect to such matter.
The Company will count abstentions for purposes of determining both: (i) the
presence or absence of a quorum for the transaction of business, and (ii) the
total number of Votes Cast with respect to a proposal (other than the election
of directors). Accordingly, abstentions will have the same effect as a vote
against the proposal.
Further, the Company intends to count broker non-votes for the purpose of
determining the presence or absence of a quorum for the transaction of business,
although broker non-votes will not be counted for purposes of determining the
number of Votes Cast with respect to the particular proposal on which the broker
has expressly not voted. Thus, a broker non-vote will not affect the outcome of
the voting on a proposal.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company that are intended to be presented
by such stockholders at the Company's next Annual Meeting of Stockholders in
2001, must be received by the Company no later December 31, 2000, in order to be
considered for inclusion in the proxy statement and form of proxy relating to
that meeting.
<PAGE>
MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
As of August 31, 2000, the authorized capital stock of the Company
consisted of 75,000,000 shares of common stock, par value $0.004 per share (the
"Common Stock"), and 10,000,000 shares of preferred stock, par value $0.004 per
share (the "Preferred Stock"). As of June 30, 2000, there were issued and
outstanding 74,939,500 shares of Common Stock, and options and warrants to
purchase 3,254,575 shares of Common Stock at prices ranging from $0.10 to $2.50
per share. As of June 30, 2000, there were issued and outstanding 4,000 shares
of Series A Preferred Stock.
The Company's Common Stock has been trading on the Over-the-Counter
Bulletin Board ("OTCBB") market since July, 1995, and is also quoted on the
OTCBB or in the "pink sheets" maintained by the National Quotation Bureau, Inc.
under the symbol "GTMI." The bid and asked sales prices of the Common Stock, as
traded in the OTCBB market, on June 30, 2000, were approximately $0.855 bid and
$0.875 ask, respectively. The quarterly range of high and low bid prices for
the past two calendar years and the three most recent quarterly periods were as
follows:
/ / /
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/ / /
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<PAGE>
Bid Prices Asked Prices
High Low High Low
Year Ended December 31, 1998
1st Quarter 0.290 0.070 0.380 0.080
2nd Quarter 0.720 0.300 0.730 0.310
3rd Quarter 0.455 0.125 0.465 0.130
4th Quarter 0.380 0.125 0.390 0.133
Year Ended December 31, 1999
1st Quarter 0.365 0.125 0.375 0.130
2nd Quarter 0.29 0.17 0.30 0.18
3rd Quarter 0.24 0.14 0.25 0.13
4th Quarter 0.23 0.11 0.25 0.13
Year Ended December 31, 2000
1st Quarter 3.000 0.125 3.281 0.281
2nd Quarter 1.563 0.406 1.781 0.875
These prices are based upon quotations between dealers as reported from
time to time by market sources, without adjustments for retail mark-ups,
markdowns or commissions, and therefore may not represent actual transactions.
No dividend has been declared or paid by the Company since inception. The
Company is exploring the future payments of dividends as soon as cash flow and
profits permit.
The transfer agent for the Company is American Stock Transfer and Trust
Company, 40 Wall Street, New York, New York 10005.
DIRECTORS AND EXECUTIVE OFFICERS
The directors of the Company currently have terms which will end at the
conclusion of the next Meeting of the stockholders of the Company and until
their successors are elected and qualify, subject to their prior death,
resignation or removal. Officers serve at the discretion of the Board of
Directors.
The following table sets forth certain information concerning the persons
who have been nominated by the Board of Directors to be directors of the Company
in connection with PROPOSAL ONE of this Proxy Statement and the current
executive officers of the Company:
<PAGE>
NAME POSITION AGE
-------------------- ----------------------------- ---
Jonathon Bentley- Chairman of the Board of 46
Stevens Directors and Chief Executive
Officer
Regina S. Peralta Executive Vice President and 40
Director
David Tang Chief Financial Officer 40
Renato de Villa Director 65
John Walsh Director 57
Ramon A. Tirol Director 76
Roberto S. Sebastian Director 57
Joemari D. Gerochi Director 55
Yam Pg Anak HJ Abdul Director 31
Wadood Bolkiah
JONATHON BENTLEY-STEVENS 1) effective April 2, 1999, was appointed Chairman
of the Board, Chief Executive Officer and President of the Company, posts to
which he was appointed as a result of the Company's acquisition of Bentley House
Furniture Company, Inc.House ("BHFC") in March, 1999. Mr. Bentley-Stevens is
the current Chief Executive Officer of Bentley House Furniture Company, Inc.,
which is one of the Company's chief operating subsidiaries. He is also
President of Bentley House International Corporation (Seychelles) and President
of BentleyTel.com Inc. Mr. Bentley-Stevens is the author of the Bentley-Tricap
Ancestral Land Development Plan, currently in use in the Republic of the
Philippines ("ROP") as a platform for infrastructure and technological
development.
REGINA S. PERALTA effective April 2, 1999, was appointed the Company's
Executive Vice President, and has also been a director of the Company since
March, 1999. Ms. Peralta's family founded Bentley House Furniture Company, Inc.
and she has served as its President for the past 18 years. Ms. Peralta is also
the Vice President of BHTC Sdn. BHD., a BHFC subsidiary. Ms. Peralta previously
served as a board member on the Philippine chamber of furniture industries.
1) The SEC initiated a civil action against Mr. Bentley-Stevens for alleged
violations of 10(b) of the Securities Exchange Act of 1934 ("the Act"). Mr.
Bentley-Stevens had been a director of a Nevada corporation, Global Timber
Corporation ("Global Timber"). In December, 1995, January, 1996 and November,
1996, Global Timber filed disclosure documents with the SEC pursuant to Rule
15c2-11 of the SEC and also filed a Form 10 Registration Statement in March
1996. In each of these documents, Global Timber announced the acquisition of
certain timber rights in the Philippines. The SEC claims that these statements
were false and/or misleading since as of the date of the disclosure documents
Global Timber had not obtained approval from the Philippine government to
actually harvest the timber. Mr. Bentley-Stevens is vigorously opposing the
SEC's claims on the grounds that nothing in the disclosure documents claims that
Global Timber had an immediate right to harvest timber and he played no role in
the drafting of the documents nor did he review them before they were filed.
Global Timber is in no way affiliated with GTMI or any of its subsidiaries. No
findings, orders, decrees or judgments have been made in this matter, although
the SEC has indicated that it might examine GTMI's public statements.
<PAGE>
DAVID TANG was appointed Chief Financial Officer of the Company on July 22,
1999. In November 1999, Mr. Tang was also appointed Chief Financial Officer for
BentleyTel.com, Inc. Mr. Tang is a Certified Public Accountant licensed in
California practicing in the fields of accounting and taxation. Prior to
starting his practice in 1990, Mr. Tang worked at Price Waterhouse and Ozur,
Andersen & Radder, Certified Public Accountants. Mr. Tang is a graduate of
McGill University in Montreal, Canada and has worked in public accounting since
1982.
RENATO DE VILLA has served as a director of the Company since June 1999.
General de Villa has served as a Four Star General Chief of Staff of the
Philippine Army from 1991 through 1997 and was Secretary of National Defense of
the ROP. He is currently a Director of the Bank of the Philippine Islands in
Manilla, ROP. General de Villa's principal occupation is as Chairman and
President of Independent Insight, Inc., a risk control organization firm in the
Philippines. He is also advisor to the Chairman of Ayala Corporation, a
Philippine company with annual sales of over $1 Billion. General de Villa holds
a B.S. in Economics and a M.A. in Business Management.
JOHN WALSH on December 1, 1999, succeeded R n Fruto as Chief Operating
Officer of the Company. From 1995 to 1999 Mr. Walsh served as Vice President of
The Wickford Group which is a telecommunications consultant group specializing
in the switchless re-sale, international callback and debit card industry. From
1993 to 1995, Mr. Walsh served as the Executive Vice President and Partner of US
Dialtone which specializes in international long distance and international
debit card network permitting origination in 47 countries. From 1991 to 1993,
Mr. Walsh served as the Senior Vice President of INTEX Inc., a nationwide long
distance company which produced $1,200,000 in monthly sales. From 1988 to 1991,
Mr. Walsh served as the Vice President and Partner of TelTec Inc., a company
offering debit cards, operator services and long distance. In addition, Mr.
Walsh has held positions ranging from sales engineer, regional
telecommunications manager and senior national account manager for GTE, FMC and
MCI. Mr. Walsh briefly held the position of Chief Executive Officer of GTMI in
1995, but conflict with previous management over Mr. Walsh's strict control
measures resulted in his dismissal. Unfair dismissal litigation was settled in
Mr. Walsh's favor in August 1999. Upon review of Mr. Walsh's file, new
management asked Mr. Walsh to rejoin the Company.
RAMON A. TIROL is a licensed attorney in the Philippines, and has served
as a director of the Company since June 1999. Mr. Tirol served as a Philippine
Ambassador to Brunei from February, 1995 through June, 1998, when he retired
from official public service. Prior to his position as Ambassador, Mr. Tirol
served as a commercial Attach to Bonn, Germany from 1956 to 1961. From 1989 to
1994, Mr. Tirol served as Chief Presidential Legislative Officer to President
F. V. Ramos in the ROP.
ROBERTO S. SEBASTIAN has been a director of the Company since June 1999.
He is currently President, Chief Executive Officer and a Director of Marsman
Drysdale Agribusiness Group of Companies, a corporate agribusiness located in
the Philippines. Mr. Sebastian is also a senior executive and director of
several affiliated agribusiness companies. From 1992 to 1996, Mr. Sebastian
served as Secretary of Agriculture of the ROP. Thereafter, from 1996 to 1997
Mr. Sebastian served as Special Envoy for Agriculture of the ROP to the World
Trade Organization.
JOEMARI D. GEROCHI has been a director of the Company since June 1999.
From July 1992 until May 1998, Mr. Gerochi served as Undersecretary of
Agriculture of the ROP. Mr. Gerochi has also served as a consultant to the
World Bank on Agriculture in the ROP, and as a representative of the ROP to the
GATT Conference. Mr. Gerochi is currently President of FairConsult Inc., an
environmental consulting company.
YAM PG ANAK HJ ABDUL WADOOD BOLKIAH has been a director of the Company
since June 1999. Prince Wadood Bolkiah is the eldest nephew of the Sultan of
Brunei. In Brunei, he is the Chairman of National Broadcast Media, Sebcom
Technology, and Communication Brunei, which are all well-known Brunei broadcast
and communications companies. Prince Wadood Bolkiah is also the Chairman of the
Entertainment Production Group of Brunei, BSB Brunei, which is a marketing and
sales promotion company in Brunei promoting the country.
<PAGE>
All of the current directors were re-appointed to the Board of Directors by
Unanimous Written Consent of the predecessor Board of Directors as of June 30,
1999, except for Renee Fruto who agreed to stand for election. The predecessor
directors had resigned their respective positions as directors and (where
applicable) as officers of the Company as of March 31, 1999, and June 30, 1999.
COMMITTEES OF THE BOARD OF DIRECTORS; DIRECTOR ATTENDANCE
The Company has, among other committees, a standing Audit Committee,
consisting of Mr. Roberto S. Sebastian, Ambassador Ramon A. Tirol and General
Renato De Villa, all who serves as Chairman. During the fiscal year ended
December 31, 1999, the Audit Committee held 2 meetings. The purpose of the
Audit Committee is to employ outside auditors of the Company in order to fulfill
the legal and technical requirements necessary to adequately protect the
directors, shareholders and employees of the Company. It is also the
responsibility of the Audit Committee to recommend to the Board of Directors the
selection of independent accountants and to make certain that the independent
accountants have the necessary freedom and independence to freely examine all
Company records.
The Company also has a Compensation Committee, consisting of Mr.
Roberto S. Sebastian, Ambassador Ramon A. Tirol and General Renato de Villa,
all who serves as Chairman. During the fiscal year ended December 31, 1999, the
Executive Committee held 2 meetings. The purpose of the Executive Committee is
to oversee the Management of the Company.
COMPENSATION OF DIRECTORS
No Directors were paid fees during 1999 for their attendance at Board
meetings or fees for attendance at Audit Committee meetings. Non-officer
directors serving on the Company's committees receive no fees either. The
Chairmen of the Audit and Committees are to be paid fees of $5,000 per meeting
when the Company becomes profitable. Officer-directors do not receive director
compensation.
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning compensation
Of certain of the Company's current and former executive officers, including the
Company's Chief Executive Officer and all executive officers whose total annual
salary and bonus exceeded $100,000, for the years ended December 31, 1999, 1998
and 1997:
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------- ----------------------
Awards Payouts
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(a) (b) (c) (d) (e) (f) (g) (h) (i)
-----------------------------------------------------------------------------------------------------
Name and Restricted Securities
Principal Year Salary Bonus Other Annual Stock Underlying LTIP All Other
Position ($) ($) Compensation Award(s) Options/SARs Payouts Compensation
($) ($) (#) ($) ($)
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jonathon 1999* 170,000 0 0 0 0 0 0
A. Bentley
-Stevens,
CEO
Regina 1999* 165,000 0 0 0 0 0 0
Peralta,
Exec. Vice
President
John Walsh, 1999* 160,000 0 0 100,000 0 0 0
Chief
Operating
Officer
David Tang, 1999* 150,000 0 0 100,000 0 0 0
Chief
Financial
Officer
Roderick A. 1999* 170,000 0 0 0 0 0 0
McClain,
Former CEO
1998 151,250 0 0 0 0 0 0
1997 137,000 0 0 0 0 0 0
Geoffrey F. 1999* 100,000 0 0 0 0 0 0
McClain,
Former
Senior Vice
President
1998 100,000
1997 98,000 0 0 0 0 0 0
<PAGE>
Herbert S. 1999* 115,000 0 0 0 0 0 0
Perman,
Former CFO
1998 105,000 0 0 0 0 0 0
1997 98,000 0 0 0 0 0 0
<FN>
* Mr. Bentley Stevens and Ms. Peralta have agreed to forego all 1999 compensation from
the Company to allow their salary to be used to reduce existing debt. Messrs. Walsh
and Tang have voluntarily agreed to delay the receipt of some of their compensation for
1999. Messrs. R. McClain, Perman and G. McClain were not compensated in 1999 prior to
the Bentley House Furniture Company change in control and their employment relationships
were canceled on August 12, 1999.
</TABLE>
OPTION GRANTS IN LAST CALENDAR YEAR
There were no grants of stock options during the 1999 calendar year.
AGGREGATED OPTION EXERCISES IN LAST CALENDAR YEAR AND FY-END OPTION VALUES
The following table sets forth, for the 1999 calendar year, each exercise
of stock options by each of the Named Executive Officers and the calendar
year-end value of unexercised options on an aggregate basis.
<TABLE>
<CAPTION>
Name Shares Value Number of Unexercised Value of Unexercised In-the-
Acquired on Realized Options at FY-End (#) Money Options at FY-End ($)
Exercise (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable (1)
------------ --------- -------------------------- ------------------------------
<S> <C> <C> <C> <C>
Geoffrey F. McClain 0 0 350,000 / 0 $ 52,500 / 0
------------------- ------------ --------- -------------------------- ------------------------------
Roderick A. McClain 0 0 350,000 / 0 $ 52,500 / 0
------------------- ------------ --------- -------------------------- ------------------------------
Herbert S. Perman 0 0 350,000 / 0 $ 52,500 / 0
------------------- ------------ --------- -------------------------- ------------------------------
<FN>
(1) Options are "in-the-money" if the fair market value of the common stock underlying the options
exceeds the exercise price of the option. The bid and asked sale prices quoted by the OTCBB
Market on June 30, 2000 were $0.855 bid and $0.875 ask.
</TABLE>
EMPLOYMENT AGREEMENTS
In 1997, the Company entered into a revised and restated employment
agreement with Roderick A. McClain, then Chief Executive Officer of the Company,
which provided for (a) a term of the employment of ten years from the effective
date, which term is automatically extended by one month at the end of each
month; (b) a base salary of $125,000 annually, increased by ten percent each
year; (c) a performance bonus equal to 7.5% of the net income before taxes of
the Company for any year, (d) a revenue bonus equal to 10,000 shares of the
Company's Common Stock for each increment of $250,000 by which the Company's
gross monthly revenues exceed those of the prior month, starting from a base of
$450,000; (e) 1,000 shares of a class of convertible preferred stock to be
authorized by the Company, subject to terms of such class of preferred stock as
are agreed to by the parties hereto; (f) any other bonus, supplemental or
incentive compensation as may be approved by the Board of Directors; (g)
nonqualified options to acquire up to 1,600,000 shares of the Company's Common
Stock at an exercise price of $0.41 per share which were repriced on March 3,
1998 at $0.10 per share; and (h) a trigger to receive all unpaid compensation,
whether or not earned, upon the occurrence of a change in control of the
Company. For purposes of the employment agreement, a change in control equals;
(i) a change in twenty-five (25%) percent of either the outstanding shares of
Common Stock or the combined voting power of the Company's then outstanding
voting securities entitled to vote generally, or (ii) the approval by the
stockholders of the Company of a reorganization, merger or consolidation, in
which persons who were stockholders of the Company immediately prior to such
reorganization, merger or consolidation did not, immediately thereafter, own or
control more than fifty percent (50%) of the combined voting power entitled to
vote generally in the election of directors of the surviving corporation of such
reorganization merger or consolidation; or (iii) a liquidation or dissolution of
the Company or of the sale of all or substantially all of the Company's assets.
<PAGE>
The change in control provisions of Mr. McClain's employment agreement
were triggered by the acquisition of Bentley House Furniture Company, Inc. by
the Company, which resulted in greater than 40% of the Company's common shares
being issued to Jonathan Bentley-Stevens and Regina S. Peralta (the "Principal
Shareholders"). Additionally, 4,000 Series A Convertible Preferred Shares were
issued to the Principal Shareholders to compensate them for the assumption of
the Company's debt. On June 15, and Stevens and Regina S. Peralta (the
"Principal Shareholders"). Additionally, 4,000 Series A Convertible Preferred
Shares were issued to the Principal Shareholders to compensate them for the
assumption of the Company's debt. On June 15, 1999, Mr. McClain waived the
change of control provision in Section 4 of his employment contract.
The Company entered into an employment agreement with Herbert S. Perman,
dated October 1, 1995, and amended February 1, 1996. Pursuant to the employment
agreement, which had a term of three years, Mr. Perman was employed as the
Company's Chief Financial Officer and was compensated with an annual salary of
$85,000 and a one-time grant of 150,000 shares of the Company's Common Stock.
In addition, Mr. Perman shared in the Company's Executive Stock Bonus Plan,
which provided for the issuance of shares of Common Stock upon an increase of
gross monthly revenues over a base of $450,000. As of July 12, 1999, Mr.
Perman's employment with the Company was terminated pursuant to the acquisition
of Bentley House Furniture Company, and the Company considers it has no further
obligation to Mr. Perman.
The Company entered into an employment agreement with Geoffrey F. McClain,
dated May 25, 1995, amended February 1, 1996, and amended February 1, 1997.
Pursuant to the employment agreement, which had a term of three years, Mr.
McClain was employed as the Company's Senior Vice President and was compensated
with an annual salary, as of February 1, 1997, of $98,000. In addition, Mr.
McClain shared in the Company's Executive Stock Bonus Plan, which provided for
the issuance of shares of Common Stock upon an increase of gross monthly
revenues over a base of $450,000. As of July 12, 1999, Mr. McClain's
employment with the Company was terminated pursuant to the acquisition of
Bentley House Furniture Company, and the Company believes it has no further
obligation to Mr. McClain.
The Company entered into an employment agreement with Melissa D. Hart, a
former Company secretary, dated May 25, 1995, which was amended November 1,
1995, February 1, 1996, and February 1, 1997. Pursuant to the employment
agreement, which had a term of three years, Ms. Hart was employed as the
Company's Regulatory Affairs Director and compensated with an annual salary of
$52,000, and the granting of 50,000 shares of the Company's Common Stock. In
addition, Ms. Hart shared in the Company's Executive Stock Bonus Plan, which
provided for the issuance of shares of Common Stock upon increase of gross
monthly revenues over a base of $450,000. Ms. Hart's employment with the
Company was ended by mutual agreement as of March 1998.
As of November 15, 1996, the Company had a subsidiary company called Finish
Line Collectibles Inc., which entered into a three-year employment agreement
with Arthur West as its sales manager. Finish Line was declared bankrupt in
July 1997. Mr. West had an annual base salary of $78,000, plus other benefits.
The Company had also agreed to pay a bonus to Mr. West equal to 1.5% of the
gross sales of the Company's collectible calling cards business during each
quarterly period of his employment agreement. However, the annual bonus pay
could not exceed $42,000, $54,000 or $67,000 during the first, second and third
years, respectively, of the term of the employment agreement. Mr. West's
employment agreement with the Company terminated when Finish Line declared
bankruptcy.
<PAGE>
As of January 2, 1997, the Company purchased a subsidiary called Log On
America, which entered into a three-year employment agreement with David Paolo
at an annual base salary of $75,000, plus other benefits. In addition, the
Company agreed to pay Mr. Paolo a contingent sum equal to either fifteen percent
(15%) or twenty percent (20%) (such percentage being based on the gross profit,
if any, of the Company's Internet Services Business for the year ended December
31, 1997) of the value of the Internet Services Business after three years from
the acquisition date. At the Company's sole option, up to fifty percent (50%)
of the contingent sum could be paid in the form of shares of Common Stock of the
Company which have certain registration rights. The Company sold Log On America
in January 1998 to Log On America's management, thereby terminating the
employment agreement with Mr. Paolo.
The Company entered into an employment agreement with Jonathon
Bentley-Stevens on April 2, 1999 for a ten year term. Pursuant to the
employment agreement, Mr. Bentley-Stevens is employed as the Company's
President and Chief Executive Officer. Mr. Bentley-Stevens' annual salary is
$170,000.
The Company entered into an employment agreement with Regina S. Peralta on
April 2, 1999. Pursuant to the employment agreement, which has a term of ten
years, Ms. Peralta is employed as BHFC's and the Company's Executive Vice
President. Ms. Peralta's annual salary is $165,000.
The Company entered into an employment agreement with John Walsh on
December 1, 1999. Pursuant to the employment agreement, which has a term of
three years, Mr. Walsh is employed as the Company's Chief Operating Officer.
Mr. Walsh's annual salary is $160,000 and he received a one-time grant of
100,000 shares of the Company's Common Stock.
The Company entered into an employment agreement with David Tang on August
1, 1999. Pursuant to the employment agreement, which has a term of five years,
Mr. Tang is employed as the Company's Chief Financial Officer. Mr. Tang's
annual salary is $150,000 and he received a one-time grant of 100,000 shares of
the Company's Common Stock. In November 1999, Mr. Tang was also appointed Chief
Financial Officer for BentleyTel.com, Inc.
The Company entered into an oral employment agreement with Kenneth Heffner
on March 28, 2000. Mr. Heffner accepted the position of Chief Technical
Officer of GTMI. Mr. Heffner is the President of Data Exchange, Inc. ("DEI"),
which has a software co-development agreement and marketing agreement with
BentleyTel.com, Inc. Mr. Heffner's salary and employment term is to be
established at a later date. Presently, Mr. Heffner is being compensated by
DEI.
TERMINATION OF CERTAIN EMPLOYMENT AND STOCK OPTION RIGHTS
On June 15, 1999, the Company agreed to modify the existing employment
agreements of Roderick A. McClain, Herbert S. Perman, Geoffrey F. McClain, and
Paul C. Graham. The employment agreements were modified as follows.
Roderick A. McClain waived the "Change in Control" provision in Section 4
of his employment agreement with respect to transactions contemplated by the
March 18, 1999 Stock Purchase Agreement between the Company and Bentley House
Furniture Company, Inc. In addition, Mr. McClain's annual base compensation
increased to $170,000, subject to a 10% annual increase in accordance with
Section 4.1(1) of the employment agreement. Mr. McClain waived the bonus
compensation provisions of Section 4.2(2) and 4.3 of his employment agreement,
and further waived a club membership allowance set forth in Section 4.1(6)(b) of
his employment agreement.
<PAGE>
Herbert S. Perman agreed to waive the bonus compensation provisions of
Section 2.4 of his employment agreement. In addition, the Company and Mr.
Perman agreed that the choice of law and forum provisions of Section 6.6 of his
employment agreement would be changed from Atlanta, Georgia to Los Angeles,
California.
Geoffrey F. McClain agreed to waive the bonus compensation provisions of
Section 2.4 of his employment agreement, but retained the commission
compensation provisions of Section 2.1 of the same agreement. In addition, the
Company and Mr. McClain agreed that the choice of law and forum provisions of
Section 7.6 of his employment agreement would be changed from Atlanta, Georgia
to Los Angeles, California.
Paul C. Graham and the Company changed the choice of law and forum
provisions of Section 7.6 of Mr. Graham's employment agreement from Atlanta,
Georgia to Los Angeles, California. Mr. Graham has no performed any services
for the Company for the last twelve months. Mr. Graham's employment agreement,
which stipulates mandatory full time work for the Company, is deemed void.
On August 12, 1999, following the June 15, 1999 modifications, the Company
terminated the employment of Roderick A. McClain, Herbert S. Perman, and
Geoffrey F. McClain. Pursuant to the 1996 Company Stock Option Plan (the
"Plan"), unexercised stock options provided for in the employment agreements at
issue were canceled.
In some instances, the circumstances governing the right to exercise stock
options specified in the employment agreements conflict with the circumstances
under which such options may be exercised in connection with the Plan. Given
the conflict, the Company relied upon the Plan to justify cancellation of
certain purported stock option rights. In the event of certain terminations,
the Plan permits a party to exercise stock option rights within thirty (30) days
after the date of termination. The Company terminated the parties' employment
rights and benefits on August 12, 1999. The right to exercise stock options
pursuant to the employment agreements and the Plan expired on September 12,
1999. No party exercised stock options within the specified period.
On March 3, 1998, the Company granted to each of Roderick A. McClain,
Herbert S. Perman, and Geoffrey F. McClain options to purchase up to 350,000
shares of Common Stock, at an exercise price of $0.10 per share, in
consideration of bona fide services rendered. Such services were not in
connection with the offer or sale of securities in a capital-raising transaction
or services otherwise excluded from being the subject of a Registration
Statement on Form S-8 under the Securities Act of 1933, as amended. The option
contracts expressly provided an expiration date of December 31, 1999, and
prevented either party from canceling the option rights, even if the Company
terminated the employee party for cause.
By December 31, 1999, the options granted to each of Roderick A. McClain,
Herbert S. Perman and Geoffrey F. McClain expired.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Company's Certificate of Incorporation and bylaws designate the
relative duties and responsibilities of the Company's officers, establish
procedures for actions by directors and stockholders and other items. The
Company's Certificate of Incorporation and bylaws also contain extensive
indemnification provisions, which will permit the Company to indemnify its
officers and directors to the maximum extent provided by Delaware law.
TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS
<PAGE>
Except as set forth in employment agreements of certain employees of the
Company and its subsidiaries, the Company has no compensatory plans or
arrangements which relate to the resignation, retirement or any other
termination of an executive officer or key employee with the Company or a change
in control of the Company or a change in such executive officer's or key
employee's responsibilities following a change in control.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors has established compensation and audit committees,
which consist of Mr. Roberto S. Sebastian, Ambassador Ramon A. Tiroll and
General Renato de Villa, who are non-employee directors, and were appointed to
the Board of Directors on June 30, 1999. See DIRECTORS AND EXECUTIVE OFFICERS.
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors, executive officers, and beneficial holders of
more than 10% of the Company's Common Stock to file with the Commission initial
reports of ownership, current reports of changes in ownership and annual reports
of changes in ownership of such equity securities of the Company. Based solely
upon a review of such forms, or on written representations from certain
reporting persons that no other reports were required for such persons, except
for those reports discussed below, the Company believes that all reports
required pursuant to Section 16(a) with respect to its executive officers,
directors and 10% beneficial stockholders for the year ended December 31, 1999
and for the first two quarters of 2000 were timely filed.
Jonathan Bentley-Stevens failed to file a Form 3 or Form 4 in a timely
manner for the 17,757,083 shares of Common Stock and 2,400 shares of Series A
Preferred Stock acquired on April 2, 1999 through the acquisition of Bentley
House Furniture Company, Inc. Mr. Bentley-Stevens reported such information on
Form 5 which was filed timely on February 8, 2000. Mr. Bentley-Stevens did not
file a Form 4 in a timely manner for the 7,407,583 shares sold or surrendered at
various times from January 1, 2000 to July 31, 2000. Mr. Bentley-Stevens
reported such information on Form 4 which was filed on August 28, 2000.
Regina Peralta failed to file a Form 3 or Form 4 in a timely manner for the
11,838,056 shares of Common Stock and 1,600 shares of Series A Preferred Stock
acquired on April 2, 1999 through the acquisition of Bentley House Furniture
Company, Inc. Ms. Peralta reported such information on Form 5 which was filed
timely on February 8, 2000. Ms. Peralta did not file a Form 4 in a timely manner
for the 4,657,447 shares sold or surrendered at various times from January 1,
2000 to July 31, 2000. Ms. Peralta reported such information on Form 4 which
was filed on August 28, 2000.
David Tang failed to file a Form 3 or Form 4 in a timely manner for shares
of Common Stock received pursuant to his employment agreement with the Company.
Mr. Tang reported such information on Form 5 which was filed timely on February
8, 2000.
John Walsh failed to file a Form 3 or Form 4 in a timely manner for shares
of Common Stock received pursuant to his employment agreement with the Company.
Mr. Walsh reported such information on Form 5 which was filed timely on February
8, 2000.
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table reflects for the period ended August 31, 2000, the
beneficial Common Stock ownership of: (a) each director of the Company, (b) each
executive officer named in the Summary Compensation Table in this Proxy
Statement (See "Executive Compensation"), (c) each person known by the Company
to be a beneficial holder of five percent (5%) or more of its Common Stock, and
(d) all executive officers and directors of the Company as a group:
Name and Address No. of
of Beneficial Owners 1) Shares Percent#
---------------------- ------ --------
Jonathon A. Bentley-Stevens 2) 10,349,500 13.8
Regina S. Peralta 3) 7,180,613 9.6
Roderick A. McClain 4) 0 0
Geoffrey F. McClain 5) 280,820 0.4
Herbert S. Perman 6) 150,000 0.1
David Tang 505,000 0.7
John Walsh 350,000 0.5
All Executive Officers and 31,316,527 40.2
Directors as a Group
# Pursuant to the rules of the Commission, shares of Common Stock which an
individual or group has a right to acquire within 60 days pursuant to the
exercise of options or warrants are deemed to be outstanding for the purpose of
computing the percentage ownership of such individual or group, but are not
deemed to be outstanding for the purpose of computing the percentage ownership
of any other person shown in the table.
1) The address for each of these persons is the Company's principal executive
office, located at 4675 MacArthur Court, Suite 420, Newport Beach, California
92660.
2) In addition to the shares held directly by him, Jonathon Bentley-Stevens
has been issued 2,400 shares of Series A Preferred Stock which are convertible
into 200,000 shares of Common Stock for each share of Preferred.
3) Regina S. Peralta holds 1,600 shares of Series A Preferred Stock which are
convertible into 200,000 shares of Common Stock for each share of Preferred.
4) Roderick A. McClain was the registered owner of options to acquire up to
1,600,000 shares of Common Stock pursuant his employment agreement with the
Company which was canceled on August 12, 1999.
5) Geoffrey F. McClain was the registered owner of options to acquire 280,820
shares of Common Stock pursuant to his employment agreement with the Company
which was cancelled on August 12, 1999.
6) Herbert S. Perman was the registered owner of options to acquire 150,000
shares of Common Stock pursuant to his employment agreement with the Company
which was cancelled on August 12, 1999.
<PAGE>
CHANGE IN CONTROL: ACQUISITION OF BENTLEY HOUSE FURNITURE CORPORATION BY THE
COMPANY
On March 18, 1999, following several months of discussions and mutual due
diligence on the financial and legal aspects of the transaction, the Company
entered into an "Agreement to Purchase Stock" (the "Agreement") with Bentley
House Furniture Corporation, Inc., a Philippine corporation ("BHFC"), and the
shareholders of BHFC. The Agreement provided for the Company to acquire 100% of
the issued and outstanding capital stock of BHFC (the "Exchanged BHFC Stock") in
exchange for Common Stock and Series A Preferred Stock of the Company
(collectively, the "Exchanged GTMI Stock") which represented a 90% ownership
interest in the Company. The Agreement included various financial and legal
representations, covenants and obligations of the parties typical in similar
agreements, including provisions to protect the parties' respective interests.
At the closing of the Agreement, 100% of BHFC's capital stock was exchanged by
BHFC shareholders for (i) 29,595,139 shares of GTMI Common Stock and (ii) 4,000
shares of GTMI Series A Preferred Stock. Each share of Series A Preferred Stock
is convertible into 200,000 GTMI Common Shares for a total of 800,000,000 GTMI
Common Shares, or 90% of GTMI Common Shares on a fully diluted basis.
As provided by the Agreement, 99.8% of BHFC stock was delivered into escrow
on March 20, 1999. At that time, shares of GTMI stock were exchanged for the
BHFC stock pending the occurrence of certain conditions precedent to closing,
including the filing with the Securities and Exchange Commission of the
Company's 1998 Annual Report on Form 10-KSB and its Form 10-QSB for the quarter
ended March 31, 1999 and resolution of certain lawsuits involving GTMI.
Substantially all the conditions were considered to have been met upon the
presentation of these filings in March 1999. The stock held in escrow was
accordingly released to the respective parties on April 2, 1999 subject to
additional conditions subsequent to such exchange.
Previous management resigned on June 30, 1999, but had failed to file a
comple 10KSB as required under the merge agreement. Due to this and other
mandatory items that also remain uncured, an escrow was created on June 30, 1999
to hold the exchanged shares for a period of one year since the mandatory items
remained uncured as of June 30, 1999. The Board of Directors has extended the
escrow until December 31, 2000.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
BentleyTel.com ("BentleyTel"), a subsidiary of GTMI, was incorporated in
Nevada on September 30, 1999. It was organized by Jonathan Bentley-Stevens and
Regina Peralta for the purpose of centralizing all of the Company's
telecommunications, electronics and internet activities in the United States and
other jurisdictions. The Board of Directors consists of Mr. Bentley-Stevens,
Ms. Peralta, Mr. Tang, Mr. Felino Molina, and Mr. Terry Lillis. Mr.
Bentley-Stevens is the Chief Executive Officer, Ms. Peralta is the Executive
Vice President, and Mr. Tang is the Chief Financial Officer.
On October 11, 1999, GTMI exchanged 97 of its Series A Preferred Shares for
55% of the shares of common stock of BentleyTel, subject to an escrow and
certain conditions precedent. The other BentleyTel shareholders are Mr.
Bentley-Stevens (22%), Ms. Peralta (14.6%) and companies which are now
subsidiaries of BentleyTel, equaling 8.4% of the outstanding shares of common
stock. Mr. Bentley-Stevens' and Ms. Peralta's shareholdings were acquired by a
share exchange of their personal GTMI stock for BentleyTel stock. In connection
with the share exchange, Mr. Bentley-Stevens and Ms. Peralta received no
consideration or compensation of any kind. The transaction has been approved by
the Boards of Directors of the Company and the Board of Directors of BentleyTel.
<PAGE>
In January, 2000 GTMI entered into negotiations with Data Exchange
International ("DEI"), a Texas corporation, to acquire one hundred percent of
the outstanding shares of DEI. Such negotiations resulted in the preparation of
an acquisition agreement in June 2000, by and among DEI, GTMI, GTMI Merger
Subsidiary, Jonathon Bentley-Stevens and Regina S. Peralta pursuant to which
GTMI would acquire 100% of the outstanding shares of DEI using Mr.
Bentley-Stevens' and Ms. Peralta's shares of GTMI Common and Series A Preferred
Stock for the acquisition consideration. To date, no agreement has been executed
nor has the transaction been closed.
DEI, which would become a subsidiary of GTMI, has pending an application
for a patent for The Message Pilot System. The Message Pilot System centralizes
electronic communication by streamlining points of contact. Using
telecommunications technology, The Message Pilot System combines all contact
information (including e-mail addresses and telephone numbers) into one
subscriber telephone number to facilitate faster and easier communication.
Pursuant to the acquisition agreement, Ken Heffner, the current Chief
Executive Officer of DEI, would join the Board of Directors of GTMI and Mr.
Bentley-Stevens would join the Board of Directors of DEI following the proposed
merger of the companies. Ken Heffner and his wife, Ellen Heffner, together, own
425,000 of the 915,750 shares of DEI Common Stock issued and outstanding, 40,000
options granted pursuant to DEI's stock option plan and 20,000 of the 90,000
shares of DEI Preferred Stock issued and outstanding but planned, at the option
of the holder, to be converted to Common prior to the merging of the companies.
In addition, Michael Heffner, the son of Ken and Ellen Heffner holds 185,000
shares of DEI Common Stock and 60,000 stock options.
The proposed acquisition of DEI by GTMI was approved by the Board of
Directors of GTMI at its February 18, 2000 meeting, subject to negotiations by
management of an acceptable acquisition agreement. Mr. Heffner's appointment as
Chief Technical Officer of GTMI was approved at the same meeting. Mr. Heffner
accepted the appointment on March 28, 2000.
Under the terms of the acquisition agreement, at closing, Mr.
Bentley-Stevens and Ms. Peralta would provide 93.56322 GTMI shares of Series A
Preferred Stock and 9,287,356 shares of common stock to be used as consideration
to be paid to the DEI shareholders to effect the acquisition. Mr.
Bentley-Stevens also would lend $600,000 to DEI for an immediate cash infusion.
If the acquisition closes, this amount would be cancelled and be deemed as paid
in full. In addition, at closing GTMI would pay $1,200,000 in cash to the DEI
shareholders and $1,800,000 to DEI for working capital. The closing date has
not been set and is subject to a number of conditions precedent, including but
not limited to, corporate approvals of DEI, no material adverse changes, receipt
of certain lock-up agreements of DEI option holders. No assurance can be given
that the transaction will close. To date, Mr. Bentley-Stevens has advanced
$550,000 of his personal funds as working capital to DEI for the development of
MessagePilot and software engineering expenses incurred by BentleyTel Australia
under the co-development agreement.
LOCKUP MEMORANDUM OF MAJORITY SHAREHOLDERS. On December 28, 1999, the
majority shareholders, Jonathon Bentley-Stevens and Regina S. Peralta, entered
into a 5-year lockup memorandum of agreement pursuant to which they agreed to
limit the conversion of Series "A" Preferred Stock held by them into Common
Stock unless and until unspecified growth of the Company occurs at which time
<PAGE>
they shall "progressively release" some shares for conversion. In a March 29,
2000 press release, it is stated that if a certain level of earnings is realized
the shareholders can convert 5% of their Series A Preferred Stock per quarter,
however, none, will be convertible in the year 2000. The conversion
restrictions commenced on March 30, 2000 and the conversion of a maximum of 5%
per quarter may occur only if GTMI shows increased revenue, earnings per share
and net income. The conversion calculations start with a value per share for
GTMI Stock at $1.00 and graduate upwards with final conversion when GTMI stock
reaches $60.00 per share. The benchmark GTMI stock values are calculated
assuming a 30 to 1 price earning ratio. If increased quarterly earnings results
are not achieved, no conversion may occur.
<PAGE>
MATTERS FOR CONSIDERATION BY STOCKHOLDERS
PROPOSAL ONE: ELECTION OF DIRECTORS
-------------
Eight (8) directors will be elected at the Meeting, each to hold office
until the next Meeting of the Stockholders of the Company or until their
successors are elected and qualify, subject to their prior death, resignation or
removal. Officers serve at the discretion of the Board of Directors. There are
no family relationships among any of the Company's directors and executive
officers. In the absence of instructions to the contrary, shares of Common
Stock represented by properly executed proxies will be voted for the eight (8)
nominees listed herein below, all of whom are recommended by management of the
Company and who have consented to be named and to serve if elected.
In the event that any management nominee is unable or declines to serve as
a director at the time of the Meeting, the proxies will be voted for any nominee
who is designated by the present Board of Directors to fill the vacancy. It is
not expected that any nominee will be unable or will decline to serve as a
director.
From the change in control of March 18, 1999 (see VOTING SECURITIES AND
PRINCIPAL HOLDERS THEREOF--Change In Control: Acquisition of Bentley House
Furniture Corporation by the Company), until December 31, 1999, the Board of
Directors met twice. The Board does not have any standing, other than the
compensation and audit committees, or other Board committees presently
performing equivalent functions, nor did it have any such committees during the
year ended December 31, 1999. Certain of such committees are intended to be
formed in 2000.
The information presented below is as of August 31, 2000, and is based in
part on information furnished by the nominees and, in part, from the records of
the Company.
The affirmative vote of a plurality of the combined Votes Cast at the
Meeting is required to elect the directors nominated below.
NOMINEES FOR ELECTION AS DIRECTOR
The following persons have been recommended by management of the Company
and have consented to be named and to serve as members of the Company's Board of
Directors if elected. Jonathon Bentley-Stevens has been nominated to be the
Chairman of the Board of Directors. Biographies of such persons may be reviewed
in the section entitled DIRECTORS AND EXECUTIVE OFFICERS.
Name Director Since
---- ---------------
Jonathon Bentley-Stevens June 30, 1999
Regina S. Peralta June 30, 1999
Renato de Villa June 30, 1999
Ramon A. Tirol June 30, 1999
Roberto S. Sebastian June 30, 1999
Joemari D. Gerochi June 30, 1999
Yam Pg Anak HJ Abdul Wadood Bolkiah June 30, 1999
John Walsh December 3, 1999
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR"
THE ELECTION OF THE NOMINEES LISTED ABOVE
PROPOSAL TWO: APPROVE A CHANGE IN THE CERTIFICATE OF INCORPORATION
------------- ELIMINATING THE REQUIREMENT FOR A SHAREHOLDERS' MEETING TO
AMEND THE CERTIFICATE OF INCORPORATION
GENERAL
The Board of Directors of the Company has proposed that the Certificate of
Incorporation (the "Certificate") be changed to eliminate the requirement for
shareholder meetings to amend the Certificate of Incorporation. Article
"ELEVENTH" of the Certificate presently states that "Any action required or
permitted to be taken by the stockholders must be effected at a duly called
Annual Meeting or at a special meeting of the stockholders of the Corporation."
This provision is similar to certain traditional and restrictive statutory
provisions of the Delaware General Corporation Law (the "GCL") which had
similarly so provided up until 1967. In 1967, in order to streamline corporate
procedures and reduce the costs of corporate governance, the Delaware
legislature enacted Section 228 of the GCL, which authorizes stockholder action
by written consent, in lieu of convening a stockholders' meeting, provided
written consents to the corporate action are given by stockholders representing
the number of shares that would be required to consent to the action at a
stockholders' meeting. (Prior to 1967, the GCL provided that stockholder
approval of corporate action without a meeting had to be effected by unanimous
written consent of stockholders.)
Under Section 242(b) of the GCL, the Certificate of Incorporation of a
Delaware corporation can be amended only by the consent of the majority of the
stockholders entitled to vote thereon, and the majority of shares of stock of
any class of stock entitled to vote upon such amendment as a class. While
Section 242 also provides that the approval of shareholders to amend the
Certificate must be obtained at a duly called annual or special meeting of the
corporation's stockholders, Section 228, as described above, provides that any
shareholder action that could be taken at a meeting of shareholders can also be
taken and given effect through the execution of written consents of the required
majority of shares necessary to approve such action, unless the Certificate
prevents the use of such written consents in lieu of votes taken at a
shareholders' meeting. The purpose of Section 228 is to eliminate the necessity
and expense of convening a shareholders' meeting in order to take corporate
action requiring shareholders' approval. The Company's Certificate presently
does not permit the Board of Directors (or any other interested party) to
solicit shareholders' written consents to corporate actions requiring
shareholder approval, including amendments of the Certificate itself. By
approving PROPOSAL TWO, shareholders would enlarge the ability of the Board (or
others) to amend the Certificate and take other corporate actions by written
consent of shareholders where required without convening a shareholders'
meeting, thereby potentially saving undue administrative burden and expense.
The convening of a shareholders' meeting requires the preparation of a
Proxy Statement in compliance with somewhat complex rules of the Securities and
Exchange Commission, which can be costly and burdensome to a corporation. On
the other hand, the Proxy Statement would necessarily include disclosures with
respect to the matters being voted upon, and other corporate matters, which
would not necessarily have to be disclosed in the case of a consent solicitation
to shareholders. Therefore, in general, by approving PROPOSAL TWO, shareholders
would be streamlining corporate procedures and potentially reducing some
corporate reporting expenses, while lessening the disclosure requirements
applicable in the case of a consent solicitation for shareholder approval of an
amendment to the Certificate.
<PAGE>
REASONS FOR AND ADVANTAGES OF ELIMINATING SHAREHOLDER MEETING REQUIREMENT
The proposal to amend the Certificate of Incorporation eliminating the
requirement for shareholder meetings to amend corporate charter documents is
made for several reasons. The Board of Directors believes the convening of a
shareholders' meeting serves no greater purpose in connection with an amendment
of the Certificate than in connection with obtaining shareholders' approval of
any other corporate action for which such approval is required. Certain actions
for which shareholders' approval can be obtained by written consent solicitation
and without the convening of a meeting, such as approval of a merger, reverse
split or acquisition of a majority in interest of the corporation's shares by a
third party, are often more significant than an amendment of the Certificate.
Moreover, if PROPOSAL TWO is approved, any amendment of the Certificate approved
by written shareholder consent would require the same majority in interest of
voting shares as would be required in the case of shareholder approval obtained
at a meeting. Therefore, the Board is of the view that no substantive
shareholder rights would be adversely affected by approval of PROPOSAL TWO, but
that such approval would yield potentially significant benefits by streamlining
corporate procedures.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THIS PROPOSAL TWO
PROPOSAL THREE: APPROVE A REVERSE STOCK SPLIT OF SHARES OF THE COMPANY'S
--------------- COMMON STOCK AUTHORIZED AND OUTSTANDING AS OF THE DATE OF
THE MEETING WITHIN AND INCLUDING A RANGE OF 1 FOR 3 THROUGH
A 1 FOR 12 BASIS PURSUANT TO THE BOARD OF DIRECTORS'
DISCRETION AND AMEND THE CERTIFICATE OF INCORPORATION TO
EFFECT THE REVERSE STOCK SPLIT
GENERAL
The Board of Directors of the Company has unanimously adopted a resolution
that submits for stockholder approval at the Meeting an amendment (the
"Amendment") to the Company's Certificate of Incorporation that would effect a
reverse stock split of the Common Stock within a range of one for three to one
for twelve and thereby decrease the existing authorized number of shares of the
Company's Common Stock to a number within a range of 25,000,000 to 6,250,000,
respectively (the "Reverse Split"). A vote in favor of PROPOSAL FOUR will
constitute a vote in favor of the proposed Amendment.
If the Amendment is approved by the stockholders of the Company, the Board
of Directors will then vote upon the Amendment and, based upon the advice of
financial consultants and advisers, determine whether to effect and at what
ratio, the Reverse Split. Management of the Company anticipates that the
Amendment will be approved by the Board of Directors if PROPOSALS THREE AND FOUR
are approved by the stockholders of the Company. If PROPOSAL THREE is not
approved by the stockholders of the Company, the Board of Directors will not
approve the Reverse Split. If the Board of Directors approves the Amendment,
then, pursuant to the Amendment, shares of Common Stock outstanding at the
effective date of the Reverse Split (the "Effective Date") will be converted
into the appropriate post-Reverse Split share ratio of the Company's Common
Stock (the "New Common Stock"). The Effective Date will be the date on which
the Amendment is filed with the Secretary of State of the State of Delaware. No
fractional shares will be issued; rather, stockholders who would otherwise be
entitled to a fractional share as a result of the Reverse Split will receive
cash in the amount described below.
<PAGE>
SERIES A PREFERRED STOCK
There are 4,328 shares of Series A outstanding. In order to equitably
reflect the conversion rights of the Series A Preferred Stock in light of the
Reverse Split, the Company proposes that, pursuant to PROPOSAL FOUR, additional
shares of Common Stock be authorized. Accordingly, as a result of the
conversion adjustment provisions of the Series A Preferred Stock, following the
Reverse Split, each share of Series A Preferred Stock will be convertible into a
number within a range of one-twelfth to one-third of one share of Common Stock
or 16,667 to 66,667 shares rather than 200,000 shares of Common Stock. This
conversion is not deemed by the Company to alter or change any of the relative
powers, preferences or special rights of the holders of Series A Preferred Stock
since in all respects the shares of Preferred Stock of Series A are equivalent.
At present, the holders of Series A Preferred Stock, which has a conversion
ratio of one share of Preferred Stock for 200,000 shares of Common Stock, have
agreed not to convert their shares of Series A Preferred Stock in the year 2000
and thereafter only pursuant to the 5-year lockup agreement. (See "CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS," "Lockup Memorandum of Majority
Shareholders.")
REASONS FOR APPROVING THE REVERSE SPLIT
The Company proposes to consolidate the number of its shares of Common
Stock by means of a Reverse Split (or Reverse Stock Split) at a ratio of 1 share
for every 12 or 1 share for every 3. This means that after the consolidation,
each shareholder will own 1/12 or 1/3 of the number of shares of Common Stock
previously owned by such shareholder.
The Company proposes to consolidate the number of its shares of Common
Stock by means of a reverse split of its Common Stock and of the number of
common shares to which its outstanding Convertible Preferred Stock may be
converted at a ratio of between 1 share for 12 or 3 shares in each case. This
means that after the Reverse Split, each common shareholder will own 1/12 or 1/3
of the number of shares owned prior to the Reverse Split, but the number of
authorized shares of Common Stock, as well as the outstanding number of such
shares, shall be correspondingly reduced to 1/12 or 1/3 of the number previously
outstanding. Thus, if PROPOSAL THREE is approved and effectuated, the
authorized shares of Common Stock outstanding will be reduced from 75 million to
between 6,250,000 or 25,000,000 common shares. Moreover, stock options,
warrants and stock purchase rights outstanding would similarly and
proportionately undergo a reduction by the same factor and their respective
exercise or conversion prices would be increased by the same factor. The
---
Reverse Split would not result in a change in the relative equity positions
--------------------------------------------------------------------------------
among common and convertible preferred stockholders nor the contingent equity
--------------------------------------------------------------------------------
positions of the holders of convertible debentures or stock options, warrants or
--------------------------------------------------------------------------------
purchase rights.
----------------
<PAGE>
Assuming that all of the currently outstanding shares of Series A Preferred
Stock are converted into shares of Common Stock, the Company would have
outstanding a total of 878,194,075 on a pre-split basis of Common Stock
including all subscriptions, Options or Warrants to purchase 3,254,575 shares of
Common Stock. The Principal Stockholders, Jonathon Bentley-Stevens and Regina
Peralta, have agreed to waive anti-dilution rights entitling them to purchase
any new shares of Common Stock after January 1, 2000.
While management of the Company believes that the actual issuance of Series
A Preferred Stock has been in the best interests of the Company and its
stockholders, it also believes that upon conversion of the Series A Preferred
Stock, there will be too many shares of Common Stock issued and outstanding for
a corporation of the Company's size. Even if the Company returns to
profitability, it will likely report very low earnings per share given the
number of outstanding Common Stock shares. This could have an adverse effect on
the marketability and trading price of the Common Stock.
There are various reasons for the proposed Reverse Split, the foremost of
which is to increase the price of the Company's traded Common Stock, which the
Board believes would foster confidence in the Company and assist it in obtaining
financing on more favorable terms than otherwise might be available. There are
many reasons for this opinion of the Board, among the most important of which
are the hesitancy of many institutional investors to commit investment funds to
a Company perceived to have a "cheap" or "beaten down" stock price, reflecting
poor operating performance over a multi-year period. (Voting shareholders
should bear in mind, however, that the market price of the Common Stock is based
on many other factors as well as Company operating performance, and that this
may affect the marketplace results of the Reverse Split).
Another projected benefit of the Reverse Split would be a very substantial
reduction in the transaction costs associated with trading in the Company's
Common Stock. In most cases, trading costs include both "brokers" trading
commissions and the "indirect cost" of "dealer markup," that is, the difference
between the buying and selling prices of dealers in a given stock (the "bid-ask
spread"). Such dealers would be OTC Bulletin Board or "Pink Sheet" market
makers, as opposed to retail brokerage firms such as Charles Schwab & Co. or
Merrill Lynch. The economic costs of dealer markup are disproportionately high
with respect to low-priced stocks as a proportion of such stocks' market price,
adversely affecting investors. Trading commissions also tend to exact a larger
proportion of the investment made in such stocks, because such commissions are
calculated by and large as a function of the number of shares traded more so
than in accordance with the relative price per share. The result, again, is
that persons transacting in stocks which are disproportionately low-priced in
relation to the economic value underlying the shares tend to be, in effect,
penalized, which reduces investor acceptance of such stocks.
The Board of Directors believes that the reduction in the number of common
shares outstanding, without any corresponding material alteration in the
economic composition of the Company or the relative interests of the securities
holders would thus likely enhance the public and institutional perception of the
Company's Common Stock and thus increase investor interest. However, no
assurance can be given that the market price of the Common Stock will increase
in direct proportion to the ratio of the Reverse Split. A failure of the
stock's trading price to completely reflect the mathematics of the Reverse Split
would result in a reduction in the market value of the Company's securities,
but, on the other hand, it is no less likely that the Reverse Split may result
in a disproportionately increased value of the market value of the Company's
Common Stock.
<PAGE>
Many brokerage firms are reluctant to recommend lower priced stocks for
their clients, and the policies and practices of a number of brokerage houses
tend to discourage individual brokers within those firms from dealing in lower
priced stocks. Management of the Company also believes that certain
institutional investors are reluctant to invest in lower priced stocks. In
addition, the brokerage commission on the purchase or sale of a stock with a
relatively low price per share generally tends to represent a higher percentage
of the sales price than the brokerage commission charged on a stock with a
relatively high price per share, to the detriment of the holders of the Common
Stock and the market for the Common Stock. Finally, the Board of Directors
believes that the raising of new capital may be facilitated if the book value
per share of the Common Stock can be increased. The Board of Directors believes
that these issues are best addressed by an increase in the price per share of
the Common Stock that is anticipated as a result of the proposed Reverse Split,
although no assurances can be given that such an increase will occur if the
Reverse Split is implemented, or that such price per share, if it does rise,
will rise in proportion to the Reverse Split or that any such rise will be
sustained for a significant period.
In addition, even if the Reverse Split is implemented, there can be no
assurance that brokerage firms will be more inclined to recommend the Common
Stock or that institutional investors will be more inclined to invest in the
Common Stock or that an increased price will facilitate any possible raising of
additional capital. If the market value of the Common Stock does not adjust
proportionately, a significant loss of stockholder value could result. In
addition, a Reverse Split reduces the number of shares of Common Stock
outstanding, thereby adversely affecting liquidity and possibly depressing the
price of the Common Stock. For the reasons set forth above, the Board of
Directors believes that stockholder approval of the Amendment to effect the
Reverse Split is advisable at this time.
VESTING DISCRETION IN THE BOARD OF DIRECTORS
At present, the Board of Directors expects to direct management to file the
Amendment if necessary to increase the price per share in order to qualify for
listing on the American Stock Exchange assuming approval by stockholders of the
Company. However, the Board would not be obligated to direct management to file
the Amendment, and would direct management not to file the portion of the
Amendment related to the Reverse Split if this PROPOSAL THREE is not approved by
the stockholders. In addition, the decision with respect to the ratio of the
Reverse Split shall be made by the Board of Directors based upon market
conditions after the shareholders' meeting as advised by financial consultants
and advisers.
GENERAL EFFECT OF REVERSE SPLIT
The New Common Stock will not be different from the existing Common Stock,
and the holders of the New Common Stock or options or warrants to purchase the
New Common Stock will have the same relative rights following the Effective Date
as they had prior thereto. The Reverse Split will not affect the number of
shares of Series A Preferred Stock that are issued and outstanding at the
Effective Date and the voting rights of the Series A Preferred Stock will not
be adjusted as a result of the Reverse Split. The ratio at which such Series A
Preferred Stock can be converted will be adjusted proportionately for the
Reverse Split. The post-split conversion ratio will fall within the range of
one share of Series A Preferred Stock into 16,667 shares of Common Stock if a 1
for 12 split occurs or 66,667 if a 1 for 3 split occurs rather than 200,000
shares of Common Stock as further described in detail below.
<PAGE>
The following table shows the effect of the Reverse Split on the aggregate
number of shares of the Company's Common Stock, Series A Preferred Stock, and on
the stockholders' equity section of the Company's balance sheet, on a pro forma
basis, as of December 31, 1999, assuming that PROPOSALS THREE and FOUR have been
adopted as proposed in this Proxy Statement.
<PAGE>
<TABLE>
<CAPTION>
PRIOR TO AFTER
PROPOSED REVERSE PROPOSED REVERSE
SPLIT 1) SPLIT 1)
COMMON STOCK 1 FOR 12 1 FOR 3
<S> <C> <C> <C>
Number of Shares
Authorized 2) 100,000,000 100,000,000 100,000,000
Issued and Outstanding 3) 4) 878,194,075 73,182,840 292,731,358
Available for Issuance (778,194,075) 26,817,160 (192,731,358)
PREFERRED STOCK
Authorized 10,000,000 10,000,000 10,000,000
SERIES A PREFERRED
STOCK
Designated 5,000 5,000 5,000
Issued and Outstanding 0 0 0
Available for Issuance 1,000 1,000 1,000
Undesignated Series A Preferred 9,995,000 9,995,000 9,995,000
Stock Available For Issuance
SERIES B PREFERRED
STOCK
Designated 4,000 4,000 4,000
Issued and Outstanding -0- -0- -0-
Available for Issuance 4,000 4,000 4,000
STOCKHOLDERS'
EQUITY
Series A Convertible Preferred 16 16 16
Stock
Series B Convertible Preferred
Stock
Series B Convertible Preferred 485,400 485,400 485,400
Stock subscribed
Common stock 299,758 299,758 299,758
Common Stock held in Treasury, at (87,600) (87,600) (87,600)
cost
Additional Paid in Capital 18,942,589 18,942,589 18,942,589
Accumulated Other (1,870,137) (1,870,137) (1,870,137)
Comprehensive Income
Accumulated Deficit (8,400,650) (8,400,650) (8,400,650)
Total Stockholders Equity 9,411,876 9,411,876 9,411,876
Stockholders equity per common $ 0.011 $ 0.129 $ 0.032
share outstanding
<PAGE>
<FN>
1) Assumes that all of the shares of Series A Preferred Stock outstanding as of
December 31, 1999 had been converted into shares of Common Stock.
2) The numbers of shares shown above as being outstanding after the Reverse
Split do not reflect any adjustments that may result from the repurchase of
fractional shares.
3) The pro forma number of shares outstanding and stockholders' equity as of
December 31, 1999 reflects the assumed conversion of 4,000 shares of Series A
Preferred Stock into 800,000,000 shares of Common Stock which were then split 1
for 12 into 66,666,667 and 1 for 3 into 266,666,667.
4) Assumes all of Series A Preferred Shares are converted into common shares.
For restrictions on such conversion, see "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS" herein.
</TABLE>
EFFECT ON REGISTRATION
The Common Stock is currently registered under Section 12(g) of the
Securities Exchange Act of 1934 as amended (the "1934 Act"), and as a result,
the Company is subject to the periodic reporting and other requirements of the
1934 Act. The Reverse Split will not affect the registration of the Common
Stock under the 1934 Act.
EFFECT ON THE MARKET FOR THE COMMON STOCK
The Company intends to seek the listing of its Common Stock on the American
Stock Exchange under the symbol "GTMI." (See Market for Common Stock and
Related Stockholder Matters herein for information setting forth the bid and ask
prices for the last one-half years by quarter.)
The shares of Series A Preferred Stock have not been listed on any exchange
since the time of their issuance in April 2, 1999 and there is no public market
for the Series A Preferred Stock. However, the Company has established
procedures to assist stockholders of the Series A Preferred Stock in the event
they wish to transfer their shares.
Management anticipates that after the Effective Date, the market price of
shares of Common Stock will increase as a result of the decrease in the number
of shares outstanding. However, there is no assurance that such an increase
will occur and, if so, it cannot be predicted whether any such increase will be
in proportion to the Reverse Split.
EFFECT ON PREFERRED STOCK, OPTIONS, WARRANTS AND CONVERTIBLE SECURITIES
Assuming that none, or less than all of the warrants discussed in PROPOSAL
FIVE herein will be exercised upon conversion of the Series A Preferred Stock,
the remaining warrants would be affected by the Reverse Split. The Principal
Stockholders also have outstanding anti-dilution rights to maintain their 90% of
the outstanding shares of Common Stock, which were issued to the Principal
Stockholders in connection with the Agreement to Purchase Stock of Bentley House
Furniture Company, Inc. Under the anti-dilution provisions of the warrants, the
number of shares issuable upon the exercise of the warrants will decrease in
proportion to the Reverse Split, and the exercise price of such warrants will
increase proportionately. For example, each warrant would entitle the holder to
purchase five (instead of 60) shares of Common Stock, at $2.40 (rather than
$0.20) per share if the reverse split occurs at a ratio of 1 for 12.
For restrictions upon the conversion of such preferred stock by the
controlling shareholders, see "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS"
herein.
Effective August 12, 1999, the board of directors revoked all prior stock
option grants.
The shares of Series A Preferred Stock are convertible into shares of
Common Stock. Under the Certificate of Designation of Rights, Preferences and
Privileges related to the Series A Preferred Stock, the number of shares of
Common Stock issuable upon the conversion of the Series A Preferred Stock will
decrease in proportion to the Reverse Split.
EXCHANGE OF STOCK CERTIFICATES AND LIQUIDATION OF FRACTIONAL SHARES
<PAGE>
As soon as practicable after the Effective Date, the stockholders will be
notified and requested to surrender their certificates representing shares of
Common Stock to the Company's transfer agent so that certificates representing
the appropriate number of shares of New Common Stock, together with a cash
payment in lieu of any fractional share, may be issued in exchange therefor. As
a result of the "cash-out" of fractional shares, stockholders holding fewer than
12 shares, if a 1 for 12 Reverse Split is consummated, will receive only cash
and will no longer hold any Common Stock. Based on the number of stockholders
of record of the Common Stock as of the Record Date, the Reverse Split would
cause a reduction in the number of stockholders of record from 6,500 to 3,000
(this number is an estimate).
No scrip or fractional certificates will be issued in connection with the
proposed Reverse Split. Rather, the Company will pay cash in lieu of any
fraction of a share that any stockholder would otherwise receive. The price for
such fractional share will be based upon the average of the closing prices per
share on the Bulletin Board for the Common Stock for the ten trading days
immediately preceding the Effective Date of the Reverse Split.
FEDERAL INCOME TAX CONSEQUENCES
A summary of the material federal income tax consequences of the proposed
Reverse Split is set forth below. The following discussion is based upon
present federal tax law and does not purport to be a complete discussion of such
consequences for all stockholders in all circumstances, nor does it address
state, local or foreign tax consequences or considerations. ACCORDINGLY,
STOCKHOLDERS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS FOR MORE DETAILED
INFORMATION REGARDING THE EFFECTS OF THE PROPOSED REVERSE SPLIT UPON THEIR
INDIVIDUAL TAX STATUS.
1. The proposed Reverse Split will not be a taxable transaction to the
Company.
2. A stockholder will not recognize any gain or loss as a result of the
Reverse Split unless the stockholder receives cash in lieu of a fractional
share. Although it is impossible to predict with certainty the tax consequences
to any stockholder who receives cash in lieu of a fractional share, such
stockholder, depending on the circumstances, will either (i) recognize gain or
loss as a result of the Company's purchase of a fractional share based upon the
amount realized for the fractional share less the holder's proportionate
adjusted basis in such fractional share, or (ii) recognize dividend income in an
amount not in excess of the amount of proceeds received from the sale of the
fractional share.
3. The aggregate tax basis of the New Common Stock received by a
stockholder pursuant to the Reverse Split will equal the aggregate tax basis of
the stockholder's Common Stock prior to the Effective Date (except that such
basis will be reduced by any basis allocated to a fractional share redeemed by
the Company with respect to which the stockholder recognizes gain or loss as
described in clause (i) of paragraph 2 above). The holding period of the New
Common Stock received by the stockholder will include the holding period of the
stockholder's Common Stock before the Reverse Split, provided the shares of
Common Stock were a capital asset in the hands of such stockholder.
Special taxation and withholding rules may apply to any stockholder that is
a nonresident alien or a foreign corporation. Those rules are beyond the scope
of this discussion and should be discussed with a personal tax advisor.
Stockholders will be required to provide their social security or other taxpayer
identification numbers (or, in some instances, certain other information) to the
transfer agent in connection with the Reverse Split to avoid backup withholding
requirements that might otherwise apply. See "Exchange of Stock Certificates
and Liquidation of Fractional Shares" herein. The letter of transmittal will
require each stockholder to deliver such information when the Common Stock
certificates are surrendered following the Effective Date of the Amendment.
Failure to provide such information may result in backup withholding.
<PAGE>
RIGHTS OF DISSENTING STOCKHOLDERS
UNDER THE DELAWARE GENERAL CORPORATION LAW, STOCKHOLDERS OF THE COMPANY ARE
NOT ENTITLED TO ANY RIGHTS OF APPRAISAL OR DISSENTERS' RIGHTS IN CONNECTION WITH
THE ADOPTION OF PROPOSAL FOUR.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THIS PROPOSAL FOUR
PROPOSAL FOUR: APPROVE AN INCREASE IN THE NUMBER OF AUTHORIZED SHARES OF
-------------- COMMON STOCK PER SHARE FROM 75 MILLION TO 100 MILLION
SHARES AND AMEND THE CERTIFICATE OF INCORPORATION TO EFFECT
THE INCREASE
GENERAL
At present, all of the Company's authorized common shares have been issued
and are outstanding, except for nine hundred and fifty thousand shares which
were issued in anticipation of a litigation settlement and recently reacquired
by the Company when the settlement occurred by other means. As a result, the
Company has only nine hundred and fifty thousand shares of authorized common
stock available for issuance. In the opinion of the Board of Directors, the
Company urgently requires additional common shares to be available for issuance
for several purposes. First, the Company is urgently in need of additional
financing to fund its ongoing operations and the operations of certain of its
subsidiaries, including BentleyTel.com, Inc. and Bentley House Furniture
Company. In addition to the funding requirements of these ongoing operations,
the Company has outstanding bills for legal and accounting services in
connection with various essential responsibilities of the Company, including the
legally-required filing of required reports with the SEC under the Securities
Exchange Act of 1934, as amended (the "1934 Act") as well as $500,000 for legal
fees incurred by previous management. Compliance with the 1934 Act is essential
in order for the Company's common stock to remain eligible for public trading
and for the Company to have continued access to the capital markets for
additional financing. Due to the lack of authorized common stock following the
Bentley Acquisition, the Company's financing choices have been limited and it
has been forced to pursue financing via the issuance of debt or preferred equity
on terms which the Company judges to be significantly less favorable than the
issuance of common stock.
The Company seeks approval to increase the number of authorized common
shares from 75 million to 100 million shares of common stock, $.004 par value.
If the Reverse Split is approved and accomplished, both the Company's authorized
and its issued common shares would be reduced from 75 million shares of Common
<PAGE>
Stock to (i) 6,250,000 common shares if one for twelve shares is adopted or (ii)
25,000,000 common shares if one for three shares is adopted, subject to
adjustment for fractional shares as described under PROPOSAL THREE. Increasing
the number of authorized common shares to 100 million shares would, in such
case, provide more additional common shares than necessary for the Company's
immediate requirements, but would not impair the capital of existing
shareholders in any way. Any number of such newly authorized shares would be
subject to issuance upon approval of the Board of Directors for any valid
corporate purpose, including additional equity capitalization, any acquisition
which the Company might wish to undertake, issuance pursuant to the terms of
stock option agreements either now existing or hereafter adopted, or for
issuance as consideration in other contractual arrangements which the Company
might wish to undertake.
The Board of Directors has no immediate plans for any such transaction
outside the ordinary course of business, although it is pursuing additional
equity financing on an ongoing basis and may have need and an opportunity to
issue substantial numbers of new Common Shares at any time or times in the
future, subject to the market acceptance of the Company's common stock, and at
prices and on terms to be negotiated from time to time. See discussion of
PROPOSAL THREE herein. The Company has decided not to conduct a registered
public offering of its shares at this time, and the Board has no intention of
issuing shares on undesirable terms. However, the Board is subject to supply
and demand factors for the Company's shares, and any issuance would be likely to
have some dilutive effect on existing shareholders.
The Board of Directors believes that the proposed increase in the Company's
common shares is equally necessary whether the Reverse Split is or is not
approved. If the Reverse Split is not approved, the Company's authorized and
outstanding common shares would remain at 75 million, and approval of PROPOSAL
FOUR would increase the Company's authorized common shares from 75 million to
100 million common shares. In such case, the additional authorized common
shares would be necessary and desirable for and would be subject to issuance
pursuant to the terms of employee and non-employee stock option agreements,
convertible debentures or convertible preferred stock, or as consideration in
corporate acquisition transactions or other contractual arrangements which the
Company might wish to undertake. All such issuances would be subject to the
approval of the Company's Board of Directors, which believes that the
availability of additional common stock for issuance will significantly increase
the Company's operating flexibility, greatly reduce its need to rely on cash
from ongoing operations to fund expansion, compensation arrangements and other
corporate purposes. The Board's issuance of any additional shares would be
subject to the Directors' fiduciary duties and to all applicable corporate laws,
securities laws, and other laws and regulations.
Failure to approve the increase in the Company's authorized common shares
would render the Company incapable of complying with the terms of various
existing contractual arrangements, including stock option agreements and the
terms of its Series A Preferred Stock. Such failure would place the Company at
risk of costly litigation and would potentially damage its opportunities to
procure additional equity financing. If the increase in authorized shares is
approved and accomplished, however, the Company will be able to satisfy its
contractual obligation concerning its Series A Preferred Stock and any stock
option agreements.
Although the approval of this PROPOSAL FOUR would increase the number of
shares of authorized capital stock, it would not result in any change in the
relative voting power among shareholders nor their percentage ownership of the
Company.
VOTE REQUIRED; RECOMMENDATION OF BOARD OF DIRECTORS
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Under the Company's Certificate of Incorporation and the Delaware General
Corporation Law, PROPOSAL FOUR must be approved by the affirmative vote of a
majority of the votes cast.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THIS PROPOSAL FOUR
PROPOSAL FIVE: RATIFY APPOINTMENT OF INDEPENDENT CERTIFIED
-------------- PUBLIC ACCOUNTANTS
The Board of Directors of the Company has appointed the firm of Mendoza
Berger & Company, LLP as independent certified public accountants for the
Company for the year ending December 31, 2000, subject to stockholder approval.
The Company has been advised by Mendoza Berger & Company, LLP that neither the
firm nor any of its partners has any material relationship with the Company or
any affiliate of the Company.
A representative of Mendoza Berger & Company, LLP is expected to be present
at the Meeting to make a statement, if he or she desires to do so, and to be
available to respond to appropriate questions at the Meeting. In the event that
the stockholders disapprove the appointment of Mendoza Berger & Company, LLP as
independent public accountants for the Company, the Board of Directors will
review its selection
RECOMMENDATION OF THE BOARD OF DIRECTORS
Approval of the appointment of Mendoza Berger & Company, LLP as independent
certified public accountants for the Company for the year ending December 31,
2000 requires the affirmative vote of a majority of the combined Votes Cast.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THIS PROPOSAL FIVE
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OTHER MATTERS
The Company knows of no other matters to be submitted at the Meeting. If
any other matters properly come before the Meeting, it is the intention of the
persons named in the enclosed proxy card to vote the shares they represent as
the Board of Directors may recommend.
By Order of the Board of Directors of
GLOBAL TELEMEDIA
INTERNATIONAL, INC.
By: /s/ Jonathon Bentley-Stevens
--------------------------------
Jonathon Bentley-Stevens
Chief Executive Officer
Newport Beach, California
August 28, 2000
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