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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): January 30, 1998
SIMS Communications, Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-25474 65-0-287558
(State or other jurisdiction of Commmission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
3333 S. Congress Avenue, Suite 401
Delray Beach, Florida 33445
(Address of principal executive offices)
(Zip Code)
(561) 265-3601
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets
Effective January 30, 1998 the Company issued 2,200,000 shares of its
common stock to the shareholders of Moviebar, Incorporated and Vectorvision,
Incorporated in consideration for the acquisition of a business known as "Movie
Vision." Movie Vision rents video cassettes, primarily containing motion
pictures, through automated dispensing units in hotels. Movie Vision currently
has video cassette dispensing machines in approximately 140 hotels in the United
States. For financial statement purposes, the acquisition of Movie Vision was
valued at $1,100,000.
Item 5. Other Events
In November 1997 the Company issued 671,249 shares of its common stock
to certain former officers and directors of the Company in payment of
approximately $369,000 owed to such persons for accrued salaries and loans. In
January 1998 the Company issued 250,000 shares of its common stock to certain
former officers and directors in payment of $50,000 owed to such persons.
Between February and October 1997 the Company sold convertible notes in
the principal amount of $1,017,500 to various private investors. The notes bear
interest at 8% per annum and are due and payable between August 1997 and May
1998. During December 1997 notes in the principal amount of $459,000 were
converted into 1,147,500 shares of the Company's common stock. During January
1998 notes in the principal amount of $25,000 were converted into 83,333 shares
of the Company's common stock.
In October and November 1997 the Company sold $1,100,000 in convertible
notes to four foreign investors. The notes bear interest at 8% per year and are
due and payable in November 1999. All or any part of the notes were convertible
into shares of the Company's stock at any time beginning forty-one days after
the date the notes were issued. The number of shares issuable upon the
conversion of the notes is determined by dividing the principal amount of the
note to be converted by an amount equal to 72% of the average closing bid price
of the Company's common stock on the five trading days preceeding the conversion
date. As of December 31, 1997 convertible notes in the principal amount of
$1,000,000 had been converted into 2,945,762 shares of the Company's common
stock. During January 1998 the remaining convertible notes in the principal
amount of $100,000 were converted into 450,075 shares of the Company's common
stock.
In March 1997 the Company entered into a License Agreement with Cancall
Cellular Communications, Inc. ("Cancall") whereby the Company provided Cancall
with a license to operate and/or distribute the Company's ACDC units, prepaid
calling card machines and POS terminals (collectively the "Products"). The
License Agreement granted Cancall the exclusive right to operate and distribute
the Products in Canada and Europe and in the United States on a non-exclusive
basis. The Licensing Agreement also required Cancall to purchase a certain
number of ACDC units and POS terminals from the Company. Between March and
September 1997 the Company sold 30 ACDC units to Cancall for $705,000. In
payment of the $500,000 licensing fee and the thirty ACDC units, Cancall issued
1,807,800 shares of it's Class B Preferred Stock to the Company. As of September
30, 1997 the Company had valued the Cancall Preferred Stock at $1,310,000.
Subsequent to September 30, 1997 the Company
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and Cancall (i) agreed to rescind the licensing agreement and the sale of the
ACDL units, (ii) the equipment previously sold to Cancall were returned to the
Company and (iii) the profit previously recognized by the Company on these
transactions ($764,000) was reversed.
In January 1998 the Company acquired Movie Vision. See Item 2 of
this Report.
In January 1998 the Company sold 2,380,000 shares of its common stock
to seven investors for $525,000 in cash.
The Company's consolidated condensed financial statements as of
December 31, 1997 are presented below:
December 31, December 31,
1997 (1) Adjustments (2) 1997 (as adjusted)
------------ --------------- ------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents
($250,000 restricted) $370,432 $525,000 $895,432
Accounts receivables, less
allowance for doubtful
accounts 137,460 137,460
Inventory 1,484,489 1,484,489
Prepaid expenses and other
current assets 21,787 21,787
Notes receivable 221,667 221,667
-------
Total Current Assets 2,235,835 2,760,835
Property & Equipment, net of
accumulated depreciation 633,368 1,100,000 1,733,368
OTHER ASSETS
Notes Receivable 551,223 551,223
Patents, net of accumulated
amortization 450,731 450,731
Investments 200,000 200,000
Other 81,021 81,021
------ ------
Total Other Assets 1,282,975 1,282,975
--------- -------- ---------
Total Assets $4,152,178 $1,625,000 $5,777,178
========== ---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and
Accrued Expenses $954,537 $954,537
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December 31, December 31,
1997 (1) Adjustments (2) 1997 (as adjusted)
------------ --------------- ------------------
Bank Line of credit 250,000 250,000
Current obligations under
capital lease 8,377 8,377
Current maturities of
long term debt 1,129,738 (175,000) 954,738
Franchise deposits and
deferred revenue 818,019 818,019
------- ---------- -------
Total Current Liabilities 3,160,671 (175,000) 2,985,671
LONG TERM LIABILITIES
Long term debt 40,000 40,000
Obligations under capital
leases 30,898 30,898
------ ------
Total long term liabilities 70,898 70,898
Total Liabilities 3,231,569 (175,000) 3,056,569
STOCKHOLDERS' EQUITY
Preferred stock, Series
A, $.001 par value 25 25
Preferred stock, Series
B, $.001 par value 100 100
Common Stock $.0001 par
value 1,417 536 1,953
Additional Paid In Capital 17,536,088 1,799,464 19,235,577
Accumulated Deficit (16,517,046) (16,517,046)
------------ ---------- ------------
Total Stockholders Equity 1,020,609 1,800,000 2,720,609
--------- --------- ---------
Total Liabilities and
Stockholders' Equity $4,152,178 $1,625,000 $5,777,178
========== =========== ==========
(1) The Company's balance sheet as of December 31, 1997 reflects the
following:
1. Recission of the the transactions with Cancall Cellular
2. Conversion of $369,000 owed to former officers and directors into
shares of common stock
3. Conversion of $459,000 of notes sold between February and October
1997 into shares of common stock
4. Conversion of $1,000,000 of notes sold between October and November
1997 into shares of common stock
(2) Adjustments to the Company's December 31, 1997 balance sheet
reflect the following:
1. Acquisition of Movie Vision
2. Conversion of $50,000 owed to former officers and directors into
shares of common stock
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3. Conversion of $25,000 of notes sold between February and October
1997 into shares of common stock
4. Conversion of $100,000 of notes sold between October and November
1997 into shares of common stock
5. Sale of 2,380,000 shares of common stock for $525,000.
Item 7. Financial Statements and Exhibits
(a) Financial Statements:
Statements of Operations for period ending December 31, 1997
(c) Exhibits:
Exhibit No. 2. Agreement relating to Acquisition of
(Plan of Acquisition) Movie Vision (to be filed by amendment)
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.
DATE: January 30, 1998 SIMS COMMUNICATIONS, INC.
By /s/ Mark Bennett
Mark Bennett, President
<PAGE>
SIMS COMMUNICATIONS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Six Months Ended December 31, 1997
(Unaudited)
Six Three
Months Ended Months Ended
December 31, December 31,
1997 1997
------------ --------
Revenues
Equipment & Other $81,247 $55,013
Activations 569,281 201,104
Rental 198,891 62,881
Calling Card & Long Distance 160,909 73,846
-------- --------
Total Revenues 1,010,328 392,844
Cost of Sales 647,956 242,853
--------- --------
Gross Profit 362,372 149,991
Operating Expenses
General & Administrative 913,170 413,022
Depreciation and Amortization 127,920 66,031
Interest - net 81,617 56,325
Selling & Marketing 748,384 462,868
Equity Based Compensation/Services 768,131 85,230
Provision for Bad Debts and Contract
Termination 933,000 933,000
--------- --------
Total Expenses 3,572,222 2,016,476
--------- ---------
Income/(Loss) Before Income Taxes ($3,209,850) ($1,866,485)
Income taxes -- --
----------- -----------
Net Income/(Loss) ($3,209,850) ($1,866,485)
