SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
April 30, 1996
DIGITAL RECORDERS, INC.
(Exact name of registrant as specified in its charter)
North Carolina 1-13408 56-1362926
(State of Incorporation) (Commission File No.) (I.R.S. Employer
Identification No.)
Post Office Box 14068
Research Triangle Park, North Carolina 27709-4068
(Address of principal executive offices)
(919) 361-2155
(Registrant's telephone number, including area code)
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ITEM 1. Changes in Control of Registrant
Not applicable.
ITEM 2. Acquisition or Disposal of Assets
On April 30, 1996, Digital Recorders, Inc. (the "Registrant") closed on
its purchase of all of the outstanding shares of capital stock of Transit-Media
GmbH ("Transit Media"). The acquisition was completed pursuant to the terms of
an agreement among the Registrant; Transit-Media; Robert Huber, Hans Damm and
Anita Damm, the shareholders of Transit-Media (the "Shareholders"); and Elmako
Damm GmbH, a company affiliated with Hans Damm ("Elmako"). The Registrant
acquired all of the outstanding stock of Transit-Media for $385,000 in cash and
the assumption of Transit-Media's obligations of approximately $140,000 under a
bank line of credit. The Registrant also paid a $100,000 finder's fee as
described below. The cash payments were made out of working capital of the
Registrant.
The Agreement further provides that the Registrant will purchase a
minimum of 50 controller boards from Elmako at a specified price delivery of
which is expected to occur in the second quarter of 1996. Elmako has agreed
that it will not sell or deliver controller boards, displays or related
software to any competitor of the Registrant.
Transit-Media, a company headquartered in Baden-Baden, Germany,
assembles and markets on-board electronic destination signs for mass-transit
systems in Europe. Transit-Media markets its signs under the TwinVision
trademark and patents on TwinVision are pending in both the United States and
Europe. The Registrant intends to operate Transit-Media as a wholly-owned
subsidiary and to continue such business operations. Management of the
Registrant believes that the European market for mass transit products is
substantially larger than the United States market and that the acquisition of
Transit-Media will enhance the Registrant's ability to sell Talking Bus(R)
passenger announcement systems in Europe.
Transit-Media was founded in 1995 by Mr. Robert Huber, who was chief
executive officer and co-owner. Mr. Huber will remain in charge of
Transit-Media's operations and the Registrant anticipates entering into an
employment agreement with Mr. Huber in the near future.
Except as described below, prior to this transaction there was no
material relationship among Transit-Media, the Registrant or any of their
affiliates, directors, officers or associates. In January 1996, a consulting
firm controlled by David L. Turney, a director nominee of the Registrant,
entered into a financial consulting agreement with Transit-Media. Pursuant to
the consulting agreement, and upon the closing of the sale described herein,
Transit-Media became obligated to pay a $100,000 fee to the consulting firm, a
liability which the Registrant assumed.
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ITEM 3. Bankruptcy or Receivership
Not applicable.
ITEM 4. Changes in Registrant's Certifying Accountant
Not applicable.
ITEM 5. Other Events
Not applicable.
ITEM 6. Resignations of Registrant's Directors
Not applicable.
ITEM 7. Financial Statements and Exhibits
(a) & (b) It is impracticable to provide the required financial
statements and the proforma financial information
relative to Seller at this time. In accordance with Item
7(a)1 and 7(b)(2), the Registrant will file the required
financial statements and proforma financial information
as an amendment to this Form 8-K as soon as practicable,
but not later than 60 days after this report on Form 8-K
must be filed.
(c) The following exhibits are furnished herewith in
accordance with the provisions of Item 601 of Regulation
S-K:
Reg. S-K
Exhibit No. Description Item No.
1 Stock Acquisition Agreement 2
(translated from original German version)
2 Notary Public Closing Document 2
(translated from original German version)
ITEM 8. Change of Fiscal Year
Not applicable.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DIGITAL RECORDERS, INC.
Date: May 15, 1996 By: /s/ J. Phillips L. Johnston
-----------------------------
J. Phillips L. Johnston, President
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Exhibit 1
Agreement
between
1. Elmako Damm GmbH, vertr.d.d. GF Hand Aamm, IndustriestraBe 8, 76473 Iffezheim
2. Herrn Hand Damm Und Frau Anita Damm, IndustriestraBe 8, 76473 Iffezheim
3. Transit-Media GmbH, vertr.d.d. GF Robert Huber, IndustriestraBe 8, 76473
Iffezheim
4. Digital Recorders Inc. 4900 Prospectus Drive Suite 1000, P.O. Box 14068
vertr.d.d. Prasidenten J. Phillips L. Johnston
5. Robert Huber, Pforzheim
(Section Mark) 1
Digital Buys the shares of TRANSIT MEDIA GmbH held by Mr. Hans Damm and Mr.
Robert Huber. The purchasing price is 25.000,00 DM each.
The shareholders of TRANSIT MEDIA (Mr. Damm and Mr. Huber and Mrs. Damm) have
stood surety for the TRANSIT MEDIA towards the Stadtsparkasse Baden-Baden. The
suretyship runs up to 62.500,00 DM for Mr. and Mrs. Damm and 125.000,00 DM for
Mr. Huber.
Digital is obliged to bring a certificate of release.
The purchasing price has to be payed at the time of notarization. The obligation
of bringing a release will be valid at the same time.
(Section Mark) 2
Elmako is obliged to make no competition on the field of selling displays for
buses and trains towards TRANSIT MEDIA. That implies the prohibition of selling
or delivering controllingboards and displays and the pertaining software to
third parties. For each single violation of this competition class Elmako has to
pay a contract penalty of 50.000,00 DM. The eventual surpassing damage can be
claimed in addition to that.
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(Section Mark) 3
Transit is obliged to give Elmako an order of at least 50 controllerboards with
Ibis-Function. The single-price is 650,00 DM plus surplas tax, payable within a
week after invoicing. The testation of EMI and RFI is not necessary. Elmako is
obliged to accept the order.
Competition clause will stay valid even if TRANSIT will not order more than 50
boards.
(Section Mark) 4
The first 3 of the boards mentioned in (Section Mark) 3 have to be delivered at
the latest till 30.04.1996. The following 15 boards has to be delivered till
10.05.1996 and the remaining 32 boards at the latest till 30.05.96. Elmako will
do best efforts to prepone time of delivery.
(Section Mark) 5
Mr. and Mrs. Damm and Elmako are obliged to treat strictly confidential all
information they have gained as shareholders or managers of TRANSIT MEDIA and to
hand back all material of the TRANSIT MEDIA, especially all drawings,
descriptions and or other amterials concerning the Lite Vision Diswplay, except
the material publicly known.
(Section Mark) 6
Mr. and Mrs. Damm are obliged to hand forward the material and documents to Mr.
Huber, which have been asked for at the Due Diligence of 19.03.1996. The
transfering of the shares has to take place till 30.04.1996.
All parties of this agreement agree that the closing of the books will take
place at 22.03.1996.
(Section Mark) 7
Mr. and Mrs. Damm do consent that they have in their function as shareholders or
managers no claims whatsoever against the TRANSIT MEDIA.
(Section Mark) 8
The parties of this agreement know that the notarization of the transfering of
the shares is necessary for the final validity of this paper. The purchasing -
and order obligation according to (Section Mark) 3 and 4 of this agreement are
valid in any case.
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Iffezheim, den 20.03.1996
/s/ Anita Damm & /s/ Hans Damm
....................................................................
Anita Damm und Hans Damm
/s/ Robert Huber
....................................................................
fur die TRANSIT MEDIA GmbH Herrn Robert Huber
/s/ J. Phillips L. Johnston
....................................................................
fur Digital Recorders Mr. J. Phillips L. Johnston
/s/ Hans Damm
....................................................................
fur Elmako Herrn Hans Damm
/s/ Robert Huber
....................................................................
Herrn Robert Huber
Exhibit 2
Notarized at Karlsrune in the office of the public notary for at April 30th,
1996.
In front of me, authorized public notary Justiarat Klaus-Peter Ruckert
Appeared, the identification has been proved by official Id-Cards.
1. Herr Hans Damm, IndustriestraBe 8, 76473 Iffezheim, geb. am 29.12.43
2. Herr Rechtsanwalt Arno Stengel, BachstraBe 22, 76185 Karlsruhe, geb. am
23.11.1947, handelnd aufgrund vorgelegter Vollmacht vom 20.30.1996 fur
die Digital Recorders, Inc. 4900 Prospectus Drive Suite 1000, P.O. Box
14068, Research Triangle Park, NC 27709-4068 USA
3. Herr Robert W. Huber, LisztstraBe 18, 75171 Pforzheim, geb. am 23.10.39
4. Anita Damm, geb. 17.05.1946, IndustriestraBe 8, 76473 Iffezheim
The appeared declare following
Purchase and Transfer of shares
(Section Mark) 1
Mr. Hans Damm und Mr. Robert Huber are owners of the shares of the
Transit-Media Systemtechnik Inc.
registered in Rastatt registration number HRB 1618, located in Iffezheim holding
a share of 25.000,00 DM each.
The nominal value of the shares have been paid to the company, which is
confirmed expressly by Mr. Damm and Mr. Huber.
Mr. Damm and Mr. Huber guarantee:
that the shares have been paid by cash
that the shares do not present their total property
that the shares are free of rights or claims of thirds
that they are entitled to dispose of the shares
(Section Mark) 2
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Mr. Damm and Mr. Huber sell the above mentioned shares to Digital Recorders,
Inc. The purchasing price is 25.000,00 DM each. The price has to be paid right
away. Mr. Damm and Mr. Huber receive a cheque of 25.000,00 DM each.
(Section Mark) 3
Mr. Damm and Mr. Huber cede the above mentioned shares to Digital Recorders,
Inc. Digital Recorders accepts the cession.
(Section Mark) 4
The profit of the current business year stays with Digital Recorders.
(Section Mark) 5
Mr. Huber and Mr. Damm do agree the cession of the shares in their function as
managers of the Transit-Media, Inc.
(Section Mark) 6
All appeared declare - Mr. Damm also acting in the function as manager of the
Elmako Inc. -, that the undersigned agreement of March 20th, 1996 will be fully
valid herewith.
(Section Mark) 7
The costs of notarization of this document will be carried by Digital Recorders.
(Section Mark) 8
Information:
The public notary informed
1. that the purchaser of the shares is liable besides the sellers for paying the
nominal value of the shares to the Transit-Media Inc. according to (Section
Mark)(Section Mark) 16, 22 and 28 GmbHG (Law of regulating the limited
companies).
2. that real estate tax has to be paid if the Transit-Media Inc. would own real
estate.
3. that there is no bona fide purchase in respect to shares which means that the
transfer of the shares will only take place if the sellers are the actual
owners of the shares.
(Section Mark) 9
One certified copy for each of the appeared.
The above text has been read aloud by the notary and agreed to by the
undersigned.
