SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported) October 29, 1996
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TOTAL WORLD TELECOMMUNICATIONS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-20922 75-2274730
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
3200 North Military Trail, Suite 300, Boca Raton, Fl 33431
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (407) 997-5880
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INTERNATIONAL STANDARDS GROUP, LIMITED
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(Former name or former address, if changed since last report)
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ITEM 1. LEGAL PROCEEDINGS
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On October 29, 1996, the litigation styled INTERNATIONAL STANDARDS GROUP,
LIMITED AND JOSEPH L. LENTS VS. MORGAN STANLEY & COMPANY, INCORPORATED, VIRGINIA
D. CRISTOFORO, ROBERT ISBITTS, ADMINISTRACION DE SEGUROS, S.A., CONSORCIO DE
SEGUROS POLARIS, S.A. AND MICHAEL E. ZAPETIS was settled to the mutual
satisfaction of the parties. The terms of the settlement are not expected to
affect the Company's operating results for any fiscal year. Pursuant to the
agreement among the parties, the terms of the settlement are deemed to be
confidential.
ITEM 5. OTHER EVENTS
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On November 5, 1996, the Company acquired 100 percent of the outstanding
stock of Southwestern Telecom, Inc., San Antonio, Texas, a "casual-user"
direct-dial long distance company. The purchase price for the acquisition was
$1,023,765 in cash. Southwestern Telecom is expected to expand on a geographic
basis where TWT already has an existing network to better utilize TWT's
origination and termination facilities. Mr. David Anderson, founder of
Southwestern Telecom, will stay on as President of the new subsidiary.
Southwestern Telecom currently maintains over 50 percent of its casual
users as active accounts when measured at six-month intervals. This length of
subscribership is believed to be one of the highest in the casual-user market.
Southwestern Telecom projects that average weekly mail outs over the next twelve
months will exceed 480,000, and automated weekly telemarketing contracts will
average 200,000 calls. Southwestern Telecom had revenues of approximately $3.1
million for its year ended December 31, 1995 and approximately $1.7 million for
the six months ended June 30, 1996.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
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(a) Exhibits.
(2) Stock Purchase Agreement between Total World Telecommunications,
Inc. and Southwestern Telecom, Inc.
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TOTAL WORLD TELECOMMUNICATIONS, INC.
By:/s/ Joseph L. Lents
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Joseph L. Lents
President and
Principal Executive Officer
Dated: November 14, 1996
EXHIBIT (2)
STOCK PURCHASE AGREEMENT
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The parties to this "Stock Purchase Agreement", hereinafter referred to as
the "Agreement" are David and Mary Anderson, hereinafter referred to in the
singular as "Seller", residents of Kendall County, Texas, and Total World
Telecom, Inc., a Texas corporation, hereinafter referred to as "Purchaser",
whose address is 1001 Fannin, Suite 300, Houston, Texas. Seller desires to sell,
and Purchaser desires to purchase, all of the shares of the common stock of
Southwestern Telecom, Inc., a New Mexico corporation, hereinafter referred to as
"SOW", under the terms and conditions as set forth herein:
In consideration of the mutual representations, warranties, covenants and
agreements hereinafter contained, Seller and Purchaser, each including to be
legally bound hereby agree as follows:
1. PARTIES: Purchaser hereby agrees to purchase from Seller and Seller
agrees to sell to Purchaser all of the shares, being 10,000 of common stock of
SOW owned by Seller which represents 100% of the issued and outstanding shares
of stock of SOW.
2. PRICE: The purchase price of the stock is One Million Twenty-Three
Thousand Seven-Hundred Sixty-Five Dollars and no/100 cents ($1,023,765.00). The
Purchaser shall pay $1,023,765.00 in cash, by delivery of a cashier's check
payable to Seller, at the time of closing. Seller shall repay to SOW $76,347.00
by April 30, 1997, which represents the principal and interest on Seller's
shareholder loan. In addition, Seller shall also receive certain personal
corporate assets from the corporation as listed on Exhibit B attached hereon, in
the amount of approximately $8,500, which is excepted from the assets that will
be a part of SOW at closing upon this stock purchase. Both parties agree to
reimburse Seller 50% of Seller's attorney's fee associated with preparation of
this Agreement, with Seller's reimbursement not to exceed $4,000.00.
3. EMPLOYMENT AGREEMENT: It is agreed that David Anderson will enter into
an employment contract with Purchaser, if this sale is consummated, upon such
terms as are mutually agreed between Seller and Purchaser, prior to execution of
this Agreement.
4. SELLER WARRANTIES:
a. ORGANIZATION AND GOOD STANDING. That SOW is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New Mexico, and is entitled to own or lease its properties and to carry on its
business as and in the places where such properties are now owned, leased or
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operated. SOW is duly licensed or qualified and in good standing as a foreign
corporation where the character of the properties owned by it or the nature of
the business transacted by it make such licenses or qualifications necessary.
SOW does not have any subsidiaries. There are no outstanding subscriptions,
rights, options, warrants or other agreements obligating SOW to issue, sell or
transfer any stock or other securities of SOW.
b. OWNERSHIP OF SHARES. Sellers are the owner of record and beneficially
of all of the shares of capital stock of SOW free and clear of all rights,
claims, liens and encumbrances, and which shares have not been sold, pledged,
assigned or otherwise transferred or subject to an option to purchase except
pursuant to this Agreement.
c. FINANCIAL STATEMENTS, BOOKS AND RECORDS. Exhibit A consists of the
unaudited balance sheet of SOW as of June 30, 1996 ("The Balance Sheet") and the
related statement of operations for the period then ended (collectively the
"Financial Statements"). Exhibit "A" fairly represents the financial position of
SOW as of such date and the results of its operations for the period then ended.
The Financial Statements were prepared in accordance with general accepted
accounting principles applied on a consistent basis with prior periods except as
otherwise stated therein. The books of account and other financial records of
SOW, financial, or other corporate books or records, are in all material
respects complete and correct and are maintained in accordance with good
business and accounting practices.
d. NO MATERIAL ADVERSE CHANGES. Except as set forth on Exhibit A, since
the date of the Balance Sheet there has not been any material adverse change in
the assets, operations, liabilities, condition (financial of otherwise) or
prospective business of SOW.
e. COMPLIANCE WITH LAWS. SOW has complied in all material respects with
all federal, state, county and local laws, ordinances, regulations, inspections,
orders, judgments, injunctions, awards or decrees applicable to it or its
business, which if not complied with, would materially and adversely affect the
business of SOW.
f. ACTIONS AND PROCEEDINGS. There is no outstanding order, judgment,
injunction, award or decree of any court, governmental or regulatory body or
arbitration tribunal against or involving SOW. There is no action, suit or claim
or legal, administrative or arbitral proceeding or investigation (whether or not
the defense thereof or liabilities in respect thereof are covered by insurance)
pending to, or to the best knowledge of SOW and the shareholders, threatened
against or involving SOW, or any of its properties or assets.
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g. FULL DISCLOSURE. No representation or warranty by SOW or the
shareholders in this Agreement or in any document or schedule to be delivered by
it pursuant hereto, and no written statement, certificate or instrument
furnished or to be furnished to Purchaser pursuant hereto or in connection with
the negotiation, execution or performance of this Agreement contains or will
contain any untrue statement of a material fact or omits or will omit to state
any fact necessary to make any statement herein or therein not materially
misleading or necessary to make a complete and correct presentation of all
material aspects of the business of SOW. To the best knowledge of SOW and the
Shareholders, there is no fact, development or threatened development (except
for general economic conditions affecting business generally) which SOW and the
Shareholders have not disclosed to Purchaser in writing and which materially
affects the business of SOW.
Seller warrants that to the best of their knowledge that SOW is current
with payment of all applicable state, local and federal taxes and has timely
filed all state, local and federal tax returns as required by the business of
SOW and that there are no tax liens against SOW associated with these, or any
other tax obligations.
Seller represents that from the date of the balance sheet until closing on
November 1, 1996, except in the ordinary conduct of its business, that SOW will
not make any material transfer of assets, enter into any material contractual
obligations, or engage in any activity outside the ordinary course of business
which would adversely affect the June 30, 1996 balance sheet.
5. NON COMPETE CLAUSE: Seller will not compete with Purchaser, in the
same business, within the States of Texas and Oklahoma for a period of 12 months
from the date of the termination of any employment agreement, or in the event
there is no employment agreement, then for a period of 12 months from the date
of closing.
6. PURCHASER WARRANTIES: Purchaser warrants to Seller that it is a duly
organized, validly existing and in good standing under the laws of the State of
Texas. That it has all requisite corporate power to own and operate its
businesses and such businesses are currently conducted. That it also warrants to
Seller that it has all the requisite corporate power and authority to execute
and deliver this Agreement, to consummate the transactions contemplated herein,
and to perform all the terms of and conditions herein as may be required by
Purchaser.
Purchaser warrants to Seller that it has been afforded the opportunity to
review the records of SOW and has asked and has had answered all questions which
it deemed appropriate; provided however, that such opportunity shall not
represent a defense to any material breach by the Shareholders on any
representation or warranty provided in this Agreement.
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Purchaser understands and acknowledges that all corporate accounts
payable, cash, and any other corporate assets and liabilities, become the
assets, liabilities, and responsibility and obligation of Purchaser upon and at
the date of closing.
7. TAXES, OTHER AUTHORIZATIONS: Purchaser authorizes Seller to prepare
and file the federal income tax return Form 1120S for SOW that is required to be
filed due to the termination of SOW as an S corporation and closing of SOW's
books as of the termination date, for the period that SOW is an S corporation,
which will be January 1, 1996 to the date of termination, October 31, 1996.
Seller will deposit with the IRS within 30 days of closing, any personal federal
income taxes that are due as a result of the income allocated to Seller as a
result of the pass through of S corporate items to Seller upon the sale.
Purchaser will seek and obtain all approvals as necessary to allow Seller to
have prepared and file such return, allow access to these tax and financial
records, and agrees that all items of SOW up to the termination date of the S
status as an S corporation shall be made on the cash basis of accounting as per
SOW's cash books, with the termination date being October 31, 1996. In the event
that due to the termination of the S status and SOW's status as a C corporation
upon acquisition, there are any tax consequences to Seller due to the accrual
method of accounting being required by SOW after the date of closing, that these
items under section 481, section 448, or other sections of the Internal Revenue
Code, will not be allocated to the S corporation (SOW) or Seller, prior to
October 31, 1996, and thereto to the Sellers. All recapture tax items to be the
responsibility of Purchaser in any disposition of any assets.
Purchaser shall not make any election under section 338 of the Internal
Revenue Code, or any other section of the Code, to treat this stock purchase as
an asset acquisition or asset purchase.
Purchaser agrees and authorizes Seller to have Seller removed as agent for
service, or in any other corporate capacity on behalf of SOW and will assist
Seller, if necessary in this function.
8. CLOSING: Subject to the terms and conditions herein contained, the
parties agree to close this transaction (the "Closing") at the offices of the
Purchaser in Houston, Texas on November 1, 1996 (the "Closing Date"). Should
closing not take place on November 1, 1996, then this Agreement is null and void
and both parties may renegotiate their respective positions.
Seller shall deliver to Purchaser on closing the following: (a) all of the
duly executed share stock certificates of Seller of SOW; (b) duly executed
copies of instruments and agreements between Purchaser and Seller as provided
for herein; (c) duly executed copies of minutes, contracts, and other agreements
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between Seller and Purchaser as provided for in this Agreement; (d) tax records,
financial records, corporate by-laws, corporate charter, and all corporate
records; (e) an updated state corporate officer information forms for the States
of New Mexico, Texas and Oklahoma for SOW and appointment of resident agent, and
all other documents to have Seller removed in the capacity of an officer,
director or otherwise on behalf of SOW.
Purchaser shall deliver to Seller at closing the following: (a) duly
executed copies of instruments and agreements between Purchaser and Seller as
provided for herein; (b) a certified cashier's check payable to Seller in the
amount of $1,023,765.00.
9. OTHER DOCUMENTS: Seller and Purchaser agree to execute and deliver to
each party those documents and agreements necessary to complete this agreement
by, or no later than closing.
10. BINDING ARBITRATION: The parties agree that any and all disputes
between the parties shall be resolved by binding arbitration.
11. TEXAS LAW: This agreement is to be construed and enforced under the
laws of the State of Texas. Each party hereto agrees to execute such further
instruments or agreements and to take such other actions as may be necessary to
effect the purposes of this Agreement and carry out its provisions, including
without limitation, such documents and actions as shall insure the orderly
transfer of ownership to the Purchaser.
12. ENTIRE AGREEMENT: This Agreement, together with Exhibit A and Exhibit
B, attached hereto and made a part of this Agreement for all purposes, embodies
the entire agreement between the parties hereto and supersedes any and all prior
agreements and understandings between the parties. This Agreement may only be
changed by written instrument signed by both parties.
Date of Agreement: November 1, 1996
/s/ David Anderson /s/ Mary Anderson
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David Anderson, Seller Mary Anderson, Seller
/s/ Donald W. Booth
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Total World Telecom, Inc., a
Texas Corporation, Purchaser,
By: Donald W. Booth
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Exhibit "A"
Southwestern Telecom, Inc.
Unaudited Balance Sheet
June 30, 1996
ASSETS
Current Assets
Cash $ 116,648.59
Accounts Receivable 242,200.05
Loans to Stockholders 73,765.51
Prepaid Expenses 1,287.22
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Total Current Assets $ 433,901.37
Property & Equipment
Autos & Trailers 669.00
Furniture & Fixtures 11,746.81
Equipment 73,765.51
Accum. Depreciation (12,005.39)
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Total Property & Equipment 74,043.61
Other Assets 0.00
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Total Assets $ 507,944.98
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LIABILITIES & CAPITAL
Current Liabilities
Accounts Payable $ 330,882.12
FUTA Payable 475.99
Sales/Excise Tax Payable 21,919.53
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Total Current Liabilities $ 353,277.64
Long Term Liabilities 0.00
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Total Liabilities $ 353,277.64
Capital
Beginning Equity 148,158.97
Net Income 6,508.37
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Total Capital 154,667,34
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Total Liabilities & Capital $ 507,944.98
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NOTES TO BALANCE SHEET:
1. The above unaudited statement is based on the accrual method of accounting
which tends to project the company more favorably than the 'cash' method.
The company converts its statement to the 'cash' method, however, for tax
purposes.
2. The above unaudited statement is NOT a recast statement. Figures included
in the above statement include ALL expenses of a closely/privately held
company even those that might not be incurred in a non-privately held
company.
3. Included in the above statement are approximately $8,500 worth of assets
personal in nature to the owners that will remain with the owners and are
not part of the sale (see Exhibit B).
4. While the company has no long term debt it does finance its receivables on
a specific tape obligation by obligation basis with Cash Flor Management
(CFM), Duncanville, TX. CFM may have related liens on those specific
obligations.
5. The company does have some contractual long term leases and other
financial obligations:
(a) Woodstone Oaks Business Park, San Antonio; 3-year office lease
expiring 06/30/98; $1,401 per month.
(b) Southwestern Bell Tel.; 5-year Billing & Collection contract
expiring 10/98 (TX) and 12/99 (OK), with minimum combined yearly
service charges of $52,500.
(c) 806 Main Building, Inc., Houston; 1 year office lease expiring
10/31/96; $152 per month. (d) Fibrcom, Inc.; 3-year fiber cable T1 lease
expiring 06/30/98; $486 per month. (e) Pitney Bowes; 39-month mailing &
meter lease expiring 05/98; $314 per month.
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Exhibit "B"
ASSETS NOT PART OF SALE
REMAINING WITH SELLER
Purchase Original
Description Date Cost
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One 5'X10' Open Flatbed Trailer 1/9/95 $ 669.00
Misc. office desk w/credenza and
chairs, glass conference table &
chairs, antique wood bench, small
refrigerator, and art deco lamp. 6/93-7/95 1,580.00
Two Phylis Knap Paintings from
Waxlander/Khadour Gallery 6/96 3,600.00
One COMPAQ computer with Canon
bubble jet color printer 9/94 & 1/96 1,681.00
One Misc. RCA peripheral receiver
from Kerrville Tel. 2/15/95 1,046.00
TOTAL $8,576.00
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EX-7
