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.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
JONATHON BENTLEY-STEVENS, CHIEF EXECUTIVE OFFICER
- --------------------------------------------------------------------------------
(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 MARCH 17, 2000
The undersigned stockholder appoints ____________________ and
____________________, or either 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 Waldorf Astoria Hotel, New York,
New York March 17, 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 up 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 corporate name change from Global TeleMedia International,
Inc. to Bentley House International Group, Inc. by an Amendment of the
Certificate of Incorporation to effect the name change.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE>
(4) 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
(5) To approve authorization of the issuance of additional shares of the
Company's common stock, warrants and options through a private placement of
convertible debt.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(6) To approve an increase in the number of the Company's authorized shares of
common stock, per share from 75 million to 400 million shares and to amend
the Certificate of Incorporation to effect the increase.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(7) To ratify the appointment of Tauber & Balser, P.C., 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 MARCH 17, 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 Waldorf Astoria Hotel, New York, New York on
March 17, 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 change in the name of the Company from Global TeleMedia
International, Inc. to Bentley House International Group, Inc. by an
Amendment of the Certificate of Incorporation to effect the name
change.
(4) 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.
(5) To approve authorization of the issuance of additional shares of the
Company's common stock, warrants and options through a private
placement of convertible debt.
(6) To approve an increase in the number of the Company's authorized
shares of common stock, per share from 75 million to 400 million
shares and to amend the Certificate of Incorporation to effect the
increase.
(7) To ratify the appointment of Tauber & Balser, P.C., Certified Public
Accountants, as independent public accountants for the Company for the
year ending December 31, 2000.
(8) To transact such other business as may properly come before the
Meeting and any adjournments thereof.
<PAGE>
ONLY STOCKOWNERS OF RECORD AT THE CLOSE OF BUSINESS ON JANUARY 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: February 7, 2000
(approximate date of mailing proxy material)
<PAGE>
GLOBAL TELEMEDIA INTERNATIONAL, INC.
A DELAWARE CORPORATION
EXECUTIVE OFFICES
4675 MACARTHUR COURT
SUITE 420
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 Waldorf Astoria Hotel, New York, New York, on March 17, 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 change in the name of the Company from Global TeleMedia
International, Inc. to Bentley House International Group, Inc. by an
Amendment of the Certificate of Incorporation to effect the name
change.
(4) 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.
(5) To approve authorization of the issuance of additional shares of the
Company's common stock, warrants and options through a private
placement of convertible debt.
(6) To approve an increase in the number of the Company's authorized
shares of common stock, per share from 75 million to 400 million
shares and to amend the Certificate of Incorporation to effect the
increase.
(7) To ratify the appointment of Tauber & Balser, P.C., Certified Public
Accountants, as independent public accountants for the Company for the
year ending December 31, 2000.
1
<PAGE>
(8) To transact such other business as may properly come before the
Meeting and any adjournments thereof.
The list of all stockholders of record on January 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.
ANNUAL REPORT
The Company is delivering a copy of its Annual Report to Shareholders for
the year ended December 31, 1998, to each shareholder, together with this Proxy
Statement. Upon written request, the Company will provide, without charge: (i)
a copy of the exhibits to this Proxy Statement, and (ii) a copy of its Annual
Report on Form 10-KSB, for the year ended December 31, 1998, 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 January 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 420, Newport Beach, California, 92660, (949) 253-9588.
RECORD DATE
Only stockholders of record at the close of business on January 31, 2000,
are entitled to vote at the Annual Meeting. The Company's voting common stock
(the "Common Stock") and its Preferred Stock (the "Preferred Stock") are its
only classes of voting securities. On January 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 had outstanding 4,328 shares of Series A Preferred Stock, all of which
have voting rights.
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, 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.
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<PAGE>
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 4,328 shares of Convertible Series A Preferred Stock outstanding each
of which is entitled to 208,274 votes on any matter with respect to which
preferred shares are entitled to vote.
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.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
Shares representing greater than 50% of the voting power of the 75 million
shares of Common Stock outstanding and 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.
MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
As of January 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 the Company's preferred shares, par
value $0.004 per share (the "Preferred Stock"). As of January 31, 2000, there
were issued and outstanding 75,000,000 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 January 31, 2000, there were issued and
outstanding 4,328 shares of Series A Preferred Stock.
The Company's Common Stock has been trading on the Over-the-Counter
Bulletin Board ("OTCB") market since July, 1995, and is also quoted on the OTCB
3
<PAGE>
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 OTCB market, on December 31, 1999, were approximately $0.15 bid
and $0.155 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:
4
<PAGE>
<TABLE>
<CAPTION>
Bid Prices Asked Prices
High Low High Low
<S> <C> <C> <C> <C>
Year Ended December 31, 1997
1st Quarter 0.938 0.625 0.969 0.453
2nd Quarter 1.156 0.469 1.219 0.500
3rd Quarter 0.750 0.370 0.781 0.400
4th Quarter 0.625 0.380 0.656 0.410
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
</TABLE>
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:
5
<PAGE>
<TABLE>
<CAPTION>
NAME POSITION AGE
- -------------------- ----------------------------- ---
<S> <C> <C>
Jonathon Bentley- Chairman of the Board of 45
Stevens Directors and Chief Executive
Officer
Regina S. Peralta Executive Vice President and 39
Director
David Tang Chief Financial Officer 40
Renato de Villa Director 64
John Walsh Director 56
Ramon A. Tirol Director 75
Roberto S. Sebastian Director 56
Joemari D. Gerochi Director 54
Yam Pg Anak HJ Abdul Director 30
Wadood Bolkiah
</TABLE>
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.
6
<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 Rene 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.
7
<PAGE>
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.
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. 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.
8
<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 $100,000, for the years ended December 31, 1999, 1998
and 1997:
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
- --------------------------------------------------------------------------------------------------------------------
Awards Payouts
- --------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- --------------------------------------------------------------------------------------------------------------------
Name and Restricted Securities
Principal Year Salary Bonus Other Annual Stock Underlying LTIP All Other
Position ($) ($) Compensation Award(s) Options/SARs Payouts Compensation
($) ($) ($) (#) ($) ($)
- --------------------------------------------------------------------------------------------------------------------
<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
Roderick A. 1999* 170,000 0 0 0 0 0 0
McClain,
Former CEO
1998 151,250 0 0 0 0 0
1997 137,000 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
Herbert S. 1999* 115,000 0 0 0 0 0 0
Perman,
Former CFO
1998 105,000 0 0 0 0 0
1997 98,000 0 0 0 0 0
<FN>
*Mr. Bentley Stevens has agreed to forego all 1999 compensation from the Company
due to a lack of earnings. Messrs. McClain, Perman and 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>
9
<PAGE>
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>
- --------------------------------------------------------------------------------------------------------
Shares Value Number of Unexercised Value of Unexercised In-the-
Acquired on Realized Options at FY-End (#) Money Options at FY-End ($)
Name Exercise (#) ($) 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 OTCB Market on December 31, 1999 was
approximately $0.15.
</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.
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.
10
<PAGE>
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.
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.
11
<PAGE>
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 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 David Tang on July
22, 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.
The Company entered into an employment agreement with John Walsh on
December 31, 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.
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.
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.
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.
12
<PAGE>
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.
STOCK OPTIONS GRANTED TO NEW DIRECTORS
No stock options were granted in 1999.
COMPENSATION OF DIRECTORS
The Company issued options to purchase up to 25,000 shares of Common Stock
to each of Don L. Thone and Ron Berkowitz, who were outside and non-employee
directors during 1998. Otherwise, the Company has not and does not currently
compensate directors for services rendered in their capacity as directors. The
Company does not compensate any employee-directors in their capacities as
directors of the Company. See VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF.
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
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.
13
<PAGE>
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. Tirol 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 in the next paragraph, 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 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.
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.
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.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table reflects for the year ended December 31, 1999, 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 for the fiscal year ended December 31, 1999 (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:
14
<PAGE>
<TABLE>
<CAPTION>
Name and Address No. of
of Beneficial Owners(1) Shares Percent#
- ----------------------------- ---------- --------
<S> <C> <C>
Jonathon A. Bentley-Stevens(2) 17,757,083 23.7
Regina S. Peralta(3) 11,838,056 15.8
Roderick A. McClain(4) 0 0
Geoffrey F. McClain(5) 280,820 0.4
Herbert S. Perman(6) 150,000 0.1
David Tang 100,000 0.1
John Walsh 350,000 0.5
All Executive Officers and 31,316,527 40.2
Directors as a Group
<FN>
CHANGE IN CONTROL: ACQUISITION OF BENTLEY HOUSE FURNITURE CORPORATION BY THE
COMPANY
The proposal for a name change of the Company's corporate name from Global
TeleMedia International, Inc. to Bentley House International Group, Inc. arises
out of the
- ------------------------
# 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, respectively, Jonathon
Bentley-Stevens has been issued 2,400 shares of Series A Preferred Stock which
are convertible into 208,274 shares of Common Stock for each share of Preferred.
3) Regina S. Peralta holds 1,600 shares of Series A Preferred Stock.
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.
</TABLE>
15
<PAGE>
acquisition of Bentley House Furniture Company, a Philippine corporation, by the
Company in 1999. The transaction is described immediately below so that
shareholders may understand the changes in corporate structure which have
occurred in 1999.
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 208,274 GTMI Common Shares for a total of 833,096,000 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. Shares of GTMI stock were exchanged for the BHFC stock
pending the occurrence of certain conditions precedent, 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.
Substantially all the conditions were considered to have been met upon the
presentation of these filings on March 30, 1999. The stock held in escrow was
accordingly released to the respective parties on April 2, 1999.
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 creating a telecommunications company to
identify and provide international connectivity and to produce development and
marketing opportunities in the areas of telecommunications, electronics and
internet activities in the United States and other jurisdictions. The Board of
Directors consists of Mr. Bentley-Stevens, Ms. Peralta and Mr. David Tang. 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 110 of its Series A Preferred Shares
for 55% of the shares of common stock of BentleyTel. 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. 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.
16
<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 December 24, 1999, 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 JH Abdul Wadood Bolkiah June 30, 1999
John Walsh December 3, 1999
17
<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.
18
<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 CORPORATE NAME CHANGE FROM GLOBAL TELEMEDIA
- --------------- INTERNATIONAL, INC. TO BENTLEY HOUSE INTERNATIONAL GROUP,
INC. BY AN AMENDMENT OF THE CERTIFICATE OF INCORPORATION
TO EFFECT THE NAME CHANGE
GENERAL
The Board of Directors believes that the proposed name change is desirable
so that the Company's name will reflect the expanded segments of its businesses
internationally. For example, the Company acquired BentleyTel.com, Inc., a
Nevada corporation, on October 11, 1999. BentleyTel has developed a proprietary
"International Smart Card" through which telecommunications products can be
marketed internationally. The Board further believes, and has been advised by
corporate communications specialists, that such a corporate name change will
assist the Company in establishing and enhancing a unified name recognition for
the Company's businesses, which the Board believes will enhance the value of the
Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THIS PROPOSAL THREE
19
<PAGE>
PROPOSAL FOUR: 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 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 the ratio of the Reverse Split.
Management of the Company anticipates that the Amendment will be approved by the
Board of Directors if PROPOSALS FOUR AND SIX are approved by the stockholders
of the Company. If PROPOSAL FOUR 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.
SERIES A PREFERRED STOCK
At present, the holders of Series A Preferred Stock are entitled at any
time to convert their shares of Series A Preferred Stock into Common Stock of
the Company at the conversion ratio of one share of Preferred Stock for 208,274
shares of Common Stock, subject to adjustment under certain conditions.
There are 4,328 shares of each 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 SIX,
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 17,356 to 69,424 shares rather than 208,274 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.
20
<PAGE>
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 that 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 FOUR 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.
- ---------------------------------------------------------------
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 994,888,780 shares (assuming a 1 for 12 Reverse Split) 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
21
<PAGE>
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.
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 as promptly as practicable if approved by stockholders of the Company.
However, the Board would not be obligated to direct management to file the
22
<PAGE>
Amendment, and would direct management not to file the portion of the Amendment
related to the Reverse Split if this PROPOSAL FOUR 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 17,356 shares of Common Stock if a 1
for 12 split occurs or 69,424 if a 1 for 3 split occurs rather than 208,274
shares of Common Stock as further described in detail below.
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 FOUR and SIX have been
adopted as proposed in this Proxy Statement.
23
<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) 994,888,780 82,907,398 331,629,593
Available for Issuance (894,888,780) 74,574,065 298,296,260
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 5,000 5,000 5,000
Undesignated Series A Preferred
Stock Available For Issuance 9,995,000 9,995,000 9,995,000
STOCKHOLDERS'
EQUITY
Series A Preferred Stock -0- -0- -0-
Common Stock 3,979,555 3,979,555 3,979,555
Additional Paid-In Capital 18,312,464 18,312,464 18,312,464
Stock Subscription 222,500 222,500 222,500
Deficit (5,700,000) (5,700,000) (5,700,000)
Cumulative Translation
Adjustment (1,846,000) (1,846,000) (1,846,000)
Total Stockholders' Equity 14,968,519 14,968,519 14,968,519
Stockholders' Equity Per Common
Share Outstanding $.004 $0.048 $0.012
<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 conversion of 4,328 shares of Series A Preferred
Stock into 901,409,872 shares of Common Stock which were then split 1 for 12
into 75,117,489 and 1 for 3 into 300,469,957.
</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
24
<PAGE>
The Company intends to seek the listing of its Common Stock on the American
Stock Exchange under the symbol "BHIG." (See Market for Common Stock and
Related Stockholder Matters herein for information setting forth the bid and ask
prices for the last three 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 Class A Common Stock, at $2.40 (rather
than $0.20) per share if the reverse split occurs at a ratio of 1 for 12.
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
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).
25
<PAGE>
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.
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.
26
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THIS PROPOSAL FOUR
PROPOSAL FIVE: AUTHORIZATION OF THE ISSUANCE OF ADDITIONAL SHARES OF COMMON
- -------------- STOCK, WARRANTS AND OPTIONS THROUGH A PRIVATE PLACEMENT
OF CONVERTIBLE DEBT
GENERAL
As discussed above, the Company is attempting to raise additional capital
in order to obtain working funds for the Company and its subsidiaries to enable
them to meet existing obligations on an on-going basis in the coming months.
Specifically, the Company is seeking to raise capital through the issuance of
debt and equity in order to carryout out its new strategic focus and permit
management to pursue perceived opportunities both domestically and in the
BIMP-EAGA MARKETS. THE COMPANY IS WORKING WITH PLACEMENT AGENTS TO ASSIST AND
ADVISE THE COMPANY WITH RESPECT TO THE COMPANY'S CAPITAL RAISING EFFORTS. THE
COMPANY IS THE PROCESS OF ENTERING INTO A BINDING AGREEMENT IN CONNECTION WITH A
PRIVATE PLACEMENT.
The Company is seeking to raise net proceeds of $5 million of debt
financing in the form of a redeemable two year Convertible Debenture. Because
of the considerations discussed above, the Board of Directors of the Company
believes it is necessary for the Company to raise a substantial portion of this
additional capital as soon as possible.
DESCRIPTION OF POTENTIAL SUBORDINATE DEBENTURE ISSUANCE
On December 20, 1999, the Company entered into a preliminary agreement (the
"Agreement") with the Malachi Group, Inc., an investment company with offices in
Atlanta, Georgia, and New York, New York, to issue $5 million in subordinated
debentures to investors identified by the Malachi Group, Inc. The debentures
would be funded only after execution of definitive documentation.
The debentures are for a two-year term and would likely contain the
following provisions.
Proposed Structure. Each debenture is a Convertible Debenture,
-------------------
convertible into common shares of GTMI at $10.00 per share. If the common
shares of the Company trade under $10.00 per share for any consecutive five-day
period following the four month anniversary of the closing date of the
Agreement, then the debenture would be convertible at 85% of the market price.
The market price would be defined as the average of the lowest three consecutive
bid prices for the twenty day period preceding the conversion.
Conversion Limitation. Conversions would take place as follows. First, none
----------------------
until 180 days from the closing date and up to 5% per month thereafter. Second,
conversion of any remaining shares would be mandatory after two years from the
closing date. The investors would agree not to short the underlying Common
Stock at any time during the term of the debenture. At no time would the holder
convert a number of shares that would represent the ownership of the equivalent
of more than 10% of the common shares outstanding.
Redemption. The Company would reserve the right to redeem at any time any
----------
or all unconverted portion(s) of the debentures at a premium of 11.5% of the
remaining principal.
27
<PAGE>
Warrants. Upon closing, the Company would issue 3 year warrants to the
--------
investors to purchase 35,000 shares of GTMI per $1,000,000 raised. The warrants
will be exercisable at a price equal to 120% of the closing bid price of GTMI on
the day preceding the closing.
Interest. The interest would be 7 % annually payable in stock or payable in
--------
cash upon full conversion at the option of the Company.
Registration Rights. The Company would agree to register an adequate number
-------------------
of shares for conversion of all transactions within 60 days from the closing
date. The Company would also agree to pay late registration penalties of 2% per
month (pro rata) for the period beginning 180 days from the closing date.
Legal Fees. All legal fees to produce the subscription documents would be
----------
paid by the Company.
Compensation. The Malachi Group, Inc. would receive 4.5% of the total funds
------------
raised at each closing. In addition, the Company will issue 3 year warrants to
purchase 15,000 shares of GTMI.
EFFECT OF REGISTRATION RIGHTS FOR THE PRIVATE PLACEMENT
Holders of (i) Common Stock issued pursuant to the Private Placement and
(ii) Common Stock acquired by exercise of the Warrants (collectively,
"Registerable Securities") will be entitled to certain registration rights in
respect of such Registerable Securities. The Company anticipates that it may
file a registration statement for the purpose of registering a secondary
offering by the holders of the Registerable Securities and certain other
persons, including the Principal Stockholder, as referred to in PROPOSAL FOUR
above.
There can be no assurance that any such registration statement will become
effective or that it will be effective at any particular time. If such a
registration statement does become and remains effective, the holders of such
shares of Common Stock would be able to sell them from time to time as they deem
appropriate, in the open market or otherwise, which would increase the "float"
of the Common Stock (i.e., the number of shares that can trade without
restriction in the public capital markets). Sales pursuant to such a secondary
offering would not increase the Company's capital.
POTENTIAL DILUTIVE IMPACT OF THE PRIVATE PLACEMENT
THE PRIVATE PLACEMENT COULD HAVE A DILUTIVE IMPACT ON THE PERCENTAGE OF
OWNERSHIP OF THE CURRENT HOLDERS OF THE COMPANY'S EQUITY SECURITIES. ASSUMING
THE APPROVAL OF THE REVERSE STOCK SPLIT DESCRIBED IN PROPOSAL FOUR AND FOLLOWING
THE CONVERSION OF ALL THE CURRENTLY OUTSTANDING SHARES OF SERIES A PREFERRED
STOCK INTO COMMON STOCK AND EXERCISE OF WARRANTS, AND ASSUMING THE ISSUANCE AND
CONVERSION OF THE SUBORDINATED DEBENTURES IN THE DEBT PRIVATE PLACEMENT, THE
SHARES ISSUED IN THE PRIVATE PLACEMENT COULD REPRESENT 0.6% OF THE TOTAL NUMBER
OF OUTSTANDING SHARES OF COMMON STOCK AFTER THE PRIVATE PLACEMENT IS
CONSUMMATED.
The following table sets forth the relative percentage ownership of the
Company's Common Stock following (a) the Reverse Split and (b) the issuance and
conversion of subordinated debentures.
28
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF COMMON STOCK
- -------------------------------------------------------------------------------------
Dilution Event Dollar Value/Percent Existing Holders of Common Stock
- -------------------------------------------------------------------------------------
<S> <C> <C>
Convertible Subordinated 5 million 1/12=0.6% 1/12=99.4%
Debentures 1/3=0.2% 1/3=99.8%
-------------------------------------------------------------------------------------
</TABLE>
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 FIVE: AUTHORIZATION OF THE ISSUANCE OF ADDITIONAL
SHARES OF COMMON STOCK, WARRANTS AND OPTIONS THROUGH A PRIVATE PLACEMENT OF
CONVERTIBLE DEBT.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THIS PROPOSAL FIVE
29
<PAGE>
PROPOSAL SIX: APPROVE AN INCREASE IN THE NUMBER OF AUTHORIZED SHARES OF
- ------------- COMMON STOCK PER SHARE FROM 75 MILLION TO 400 MILLION
SHARES AND TO 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 the
aggregate amount of approximately $200,000 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 convertible debentures which the Company judges to
be available only on significantly less favorable terms than the issuance of
common stock.
The Company seeks approval to increase the number of authorized common
shares from 75 million to 400 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
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 FOUR. Increasing
the number of authorized common shares to 400 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 FOUR herein. The Company has decided not to conduct a registered
30
<PAGE>
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
SIX would increase the Company's authorized common shares from 75 million to
400 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 authorizing shares is
approved and accomplished, however, the Company will be able to satisfy it
contractual obligation concerning its Series A Preferred Stock and any stock
option agreements.
Although the approval of this PROPOSAL SIX 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
Under the Company's Certificate of Incorporation and the Delaware General
Corporation Law, PROPOSAL SIX must be approved by the affirmative vote of a
majority of the votes cast.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THIS PROPOSAL SIX
PROPOSAL SEVEN: RATIFY APPOINTMENT OF INDEPENDENT CERTIFIED
- --------------- PUBLIC ACCOUNTANTS
The Board of Directors of the Company has appointed the firm of Tauber &
Balser, P.C. 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 Tauber & Balser, P.C. 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 Tauber & Balser, P.C. 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
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stockholders disapprove the appointment of Tauber & Balser, P.C. 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 Tauber & Balser, P.C. 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 SEVEN
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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
February 7, 2000
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