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) April 1, 1997
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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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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
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The Company and its officers and directors have received a formal notice
to provide information to the Securities and Exchange Commission pursuant to an
order of investigation issued May 30, 1997. The Company is collecting the items
requested and will forward them to the Commission.
As previously reported, on December 7, 1996, the Company entered into a
convertible note agreement providing for interest at 7% and received proceeds of
$8,000,000. The note was due or convertible in 60 days from the time of issuance
into shares of common stock based on a formula which provided common shares to
be issued at 75% of the quoted market value, as defined, and having an aggregate
value of $8,000,000. On February 7, 1997, the Company was granted an extension
of time to repay the note until January 31, 1999. The new note bears interest at
7% per annum and was issued in the amount of $10,755,334 in consideration for
extending the payment term. The Company also received $2,000,000 in cash on
February 7, 1997 with the same due dates and interest rates. Both notes are
convertible with a similar formula to the December 7, 1996 note with conversion
allowable in 90 days from the date of the note and limited to conversion of 4.9%
of the outstanding shares at the date conversion is requested. Interest payments
were to commence on May 1, 1997. The Company has defaulted on such payment and
has accrued an additional 7% interest pursuant to the terms of the note. On June
5, 1997, the Company received notice from the holders of the notes declaring a
repurchase event relative to the notes and demanding repurchase thereof. The
Company is attempting to negotiate alternative terms with the holders. The note
also provided for registration rights for the common shares in a defined period,
and the Company is past due pursuant to this provision as well.
On April 8, 1997, the Board of Directors of the Company elected Donald
Booth as Chief Executive Officer of the Company. Mr. Booth remains as President
of the Company and of its chief operating subsidiary, Total World Telecom. Mr.
Joseph L. Lents remains as Chairman of the Board. C. Denning Loveridge and John
Loveridge resigned as Directors of the Company, and as a result, the Board of
Directors consists of Donald Booth, Joseph Lents and Arnold Salinas. The Company
expects to expand its Board membership by adding individuals with experience in
the telecommunications field.
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At April 1, 1997, the Company entered into an employment agreement with
Donald W. Booth, the President and Chief Executive Officer. This contract
essentially replaces his former contract with Total National Telecommunications,
Inc. and provides for a four-year term at an annual base salary of $300,000. As
additional compensation, an incentive bonus of up to 60% of his annual base
salary may be awarded if certain management objectives are met. He also
receives, under the terms of the agreement, 400,000 options to purchase Common
Stock of the Company at an exercise price of $1.50 per share, as well as a car
allowance, life insurance, and various other employee benefits.
The Company is currently reviewing its operations and has identified cost
savings of approximately $275,000 per month to be achieved beginning August 1,
1997. Included in these cost savings is a reduction in personnel along with
benefit reductions for all remaining employees.
As the Company has previously announced, discussions with Worldwide
Leisure Corporation have been terminated. The Company had requested various data
and confirmations from Worldwide Leisure Corporation as a basis for any
preliminary discussions, which has not been provided by that organization.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
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(a) None
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S.
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On April 10, 1997, the Company issued 16,665 shares of its Series B
Convertible Preferred Stock pursuant to Regulation S under the Act to nineteen
non-U.S. resident purchasers, and received gross proceeds of $1,549,820 and net
proceeds of $1,415,420 after payment of the related finder's fee and expenses.
One-third of the shares are convertible into Common Stock of the Company at 81%
of the closing bid price of such Common Stock following 50 days after completion
of the offering, one-third of the shares are convertible at 81% of the closing
bid price following 80 days after completion of the offering, and the remaining
one-third is convertible at 81% of the closing bid price 100 days after
completion of the offering.
On April 30, 1997, the Company issued 7,200 shares of its Series F
Convertible Preferred Stock pursuant to Regulation S under the Act to one
non-U.S. resident purchaser, and received gross proceeds of $719,982.50 and net
proceeds of $545,482.50 after payment of the related finder's fee and expenses.
One-third of the shares are convertible into Common Stock of the Company at 80%
of the closing bid price of such Common Stock following 60 days after completion
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of the offering, one-third of the shares are convertible at 80% of the closing
bid price following 90 days after completion of the offering, and the remaining
one-third is convertible at 75% of the closing bid price 120 days after
completion of the offering.
On May 17, 1997, the Company issued 5,000 shares of its Series E
Convertible Preferred Stock pursuant to Regulation S under the Act to one
non-U.S. resident purchaser, and received gross proceeds of $475,000 and net
proceeds of $428,500 after payment of the related finder's fee and expenses.
One-third of the shares are convertible into Common Stock of the Company at 78%
of the closing bid price of such Common Stock following 60 days after completion
of the offering, one-third of the shares are convertible at 78% of the closing
bid price following 90 days after completion of the offering, and the remaining
one-third is convertible at 78% of the closing bid price 120 days after
completion of the offering.
On May 17, 1997, the Company issued 25,000 shares of its Series G
Convertible Preferred Stock pursuant to its Regulation S under the Act to one
non-U.S. resident purchaser, and received gross proceeds of $2,499,982.50 and
net proceeds of $2,208,500 after payment of the related finder's fee and
expenses. One-half of the shares are convertible into Common Stock of the
Company at 80% of the closing bid price of such Common Stock following 60 days
after completion of the offering, and the remaining one-half is convertible at
75% of the closing bid price 90 days after completion of the offering.
Additionally, the Company is reviewing the status of the requested
conversions of its preferred shareholders into common stock of the Company. It
has received the approval of the holders of Series Z Preferred Stock to convert
their preferred stock over the next six months and calculate the number of
common shares to be issued based on the market price of the Company's common
stock during that time. The total face value of the Series Z Preferred Stock
that will be converted over the next six months is $5,500,000.
The holders of Series H Preferred Stock have also agreed in principal to
convert their preferred stock over the next nine months and calculate the number
of common shares to be issued based on the market price of the Company's common
stock during that time. The total face value of the Series H Preferred Stock
subject to this agreement is $12,500,000. In addition, the Series H investors
have agreed to loan to the Company the amount of $2,000,000 which will be repaid
over the next 14 months.
Of the convertible preferred stock offerings issued pursuant to Regulation
S, 258,544 shares remain outstanding at June 10, 1997. Since April 30, 1997, the
Company has converted 93,845 shares of convertible preferred stock issued under
Reg S into 17,676,136 shares of common stock, which includes 8,750,000 shares
held in escrow in accordance with agreements with Series Z and Series H
preferred stockholders.
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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/ Donald Booth
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Donald Booth, President and
Principal Executive Officer
Dated: June 10, 1997
