FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Date of Report (Date of earliest event reported) June 15, 1997.
DCI Telecommunications, Inc.
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(Exact name of registrant as specified in its charter)
Colorado 2-96976-D 84-1155041
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) Number)
611 Access Road, Stratford, CT 06497
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(Address of principal executive offices)
Registrant's telephone number, including area code: (203) 380-0910
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P.O. Box 320334, Fairfield, CT 06497
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(Former name or former address, if changed since last report.)
Item 2. Acquisition or Disposition of Assets
On March 31, 1997, DCI Telecommunications, Inc. made an offer to CardCall
International Holdings, Inc. ("CardCall"), a Delaware corporation, to
purchase all its outstanding common stock (8,238,125 shares) and warrants.
CardCall is the parent company of CardCaller Canada, Inc., a Canadian
corporation, and CardCall (UK) Limited incorporated under the Laws of the
United Kingdom. CardCall is in the business of designing, developing and
marketing, through distributors, prepaid phone cards which provide the
cardholder access to long distance service through switching facilities.
DCI has previously invested $1,500,000 in CardCall for which it received
$1,200,000 in notes payable 120 days after demand. The remaining $300,000
did not have any stipulated repayment terms.
In June 1997, the Board of Directors and shareholders of CardCall approved
the transaction. For each 100 shares of common stock of CardCall held by a
shareholder, DCI will issue 6 shares of its common stock and a warrant to
purchase 9 shares of common stock for $4.00 per share on or before February
28, 2001. In addition, each shareholder of CardCall may acquire 85 shares
of DCI common stock under a subscription agreement for each 100 shares of
CardCall held by such shareholder on or before July 31, 1997 at a purchase
price of $.20 per share.
The terms of the transaction were derived from arms-length negotiation, and
there was no relationships between CardCall, DCI or their Board of
Directors or officers. CardCall has sixty-six shareholders.
All physical property acquired was used in the prepaid phone card business
and related office functions, and the registrant plans to continue such
use.
Pro forma financial information was included in the registrants Form 10K
for the year ended March 31, 1997 and audited financial statements will be
filed within 60 days.
Item 7. Financial Statements and Exhibits
STOCK PURCHASE AND SALE AGREEMENT
THIS AGREEMENT made the 31st day of March, 1997.
BETWEEN:
DCI TELECOMMUNICATIONS, INC., a corporation
incorporated and existing under the laws of the State
of Colorado (the "Purchaser")
- and -
CARDCALL INTERNATIONAL HOLDINGS, INC., a
corporation incorporated and existing under the laws of
the State of Delaware (the "Company")
WHEREAS:
a. The Purchaser is desirous of acquiring all of the issued and
outstanding common stock of the Company and all of the issued and
outstanding warrants to purchase common stock of the Company, being
8,238,125 shares of common stock and 417,062 warrants, pursuant to an
Offer (as hereinafter defined);
b. The board of directors of the Company has determined that it would be
advisable and in the best interests of the Company for the board of
directors to support the Offer and to recommend in writing and
otherwise its acceptance to the shareholders of the Company and for
the Company to co-operate fully with the Purchaser and take all
reasonable action to support the Offer;
c. The board of directors of the Company has determined that it would be
advisable and in the best interests of the Company for it to enter
into this Agreement;
NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the mutual
covenants and agreements hereinafter set forth and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto covenant and agree as follows:
ARTICLE I - THE OFFER
1.1 Purchaser Offer. The Purchaser shall by no later than April 25, 1997
announce, and within ten business days after the date of such announcement
commence (the "Mailing Date"), a tender offer (the "Offer") in accordance
with Applicable Laws (as hereinafter defined) to purchase all of the issued
and outstanding common stock of the Company and all of the issued and
outstanding warrants to purchase common stock of the Company (such common
stock and the warrants to purchase common stock being collectively referred
to as the "Company Shares") in exchange for:
(a) Four Hundred and Ninety Four Thousand Two Hundred and Eighty Seven
(494,287) shares of $0.0001 common stock of the Purchaser (the
exchange ratio being six Purchaser Shares to be issued for each 100
Company Shares); and
(b) Warrants, substantially in the form attached hereto as Schedule A, to
purchase an aggregate of Seven Hundred and Forty One Thousand Four
Hundred and Thirty One (741,431) shares of $0.0001 common stock of the
Purchaser at $4.00 per share (the "Warrants"), which Warrants shall be
exercisable at any time until 5:00 pm (New York time) on February 28,
2001 (the exchange ratio being Warrants to purchase nine Purchaser
Shares to be issued for each 100 Company Shares).
1.2 Company Approval of the Offer. The Company represents that its board
of directors, has determined that the Offer is fair to the holders of the
Company Shares, and is in the best interests of the Company. The board of
directors of the Company has approved the Offer and this Agreement and
recommends that holders of Company Shares accept the Offer.
The Company shall prepare and make available for mailing with the Offer, a
Directors' Circular, prepared in accordance with all Applicable Laws (as
hereinafter defined), which shall reflect the foregoing determinations and
recommendation and shall take all reasonable action to support the Offer.
1.3 Going Private Transaction. The Purchaser agrees that if less than
100% of the Company Shares are taken up and paid for under the Offer, the
Purchaser may utilize the appropriate provisions of the applicable company
statute, or such other reasonable means, to acquire all of the outstanding
Company Shares.
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company as follows (and
acknowledges that the Company is relying upon these representations and
warranties in connection with the entering into of this Agreement):
2.1 Organization and Qualification. The Purchaser has been duly
incorporated, is validly existing as a corporation under the laws of the
State of Colorado and has the requisite corporate power and authority to
carry on its business as it is now being conducted.
2.2 Compliance with Law. The Purchaser and each of its subsidiaries has
complied with and is in compliance with all laws and regulations applicable
to the operation of its respective businesses, including the Applicable
Laws, except where failure so to comply will not have a material adverse
effect and each of them has all licences, permits, orders or approvals of,
and has made all required registrations with, any governmental or
regulatory body that is material to the conduct of its business.
2.3 Capitalization. (1) As at the date hereof the issued capital of the
Purchaser consists of approximately 7,900,000 shares of Common Stock; 1,500
Class A, Series C Convertible Non-Cumulative Preferred Stock; and 30,298
9.25% Cumulative Convertible Preferred Stock, all of which shares have been
validly issued.
(2) There are 3,548,000 outstanding options to purchase Common Stock, all
of which are exercisable as at the date hereof at prices ranging from
$0.1875 to $0.60 per share.
2.4 Authority Relative to this Agreement. The Purchaser has the requisite
corporate power and authority to enter into this Agreement and to carry out
its obligations hereunder. The execution and delivery of this Agreement by
the Purchaser and the consummation by the Purchaser of the transactions
contemplated hereby have been duly authorized by its board of directors and
no other corporate proceedings on the part of the Purchaser are necessary
to authorize this Agreement and the transactions contemplated hereby. This
Agreement has been duly executed and delivered by the Purchaser and
constitutes a valid and binding obligation of the Purchaser, enforceable by
the Company against the Purchaser in accordance with its terms. The
execution and delivery by the Purchaser of this Agreement and the
performance by it of its obligations hereunder will not result in a
violation or breach of any provision of (i) its constating documents, (ii)
any agreement, contract, licence, franchise or permit to which it is a
party or by which it is bound; or (iii) any law, regulation, order,
judgement or decree to which it is subject or by which it is bound.
Other than in connection with or in compliance with the provisions of the
securities laws of the jurisdictions in which the Offer is being made, the
rules of NASDAQ, the United States Securities Exchange Act of 1934, as
amended (the "U.S. Exchange Act"), state securities or "blue-sky" laws of
the states of the United States (collectively, the "Applicable Laws"), no
authorization, consent or approval of, or filing with, any public body,
court or authority is necessary on the part of the Purchaser for the
consummation of the transactions contemplated by this Agreement.
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser as follows (and
acknowledges that the Purchaser is relying upon these representations and
warranties in connection with the entering into of this Agreement):
3.1 Organization and Qualification. The Company has been duly
incorporated, is validly existing as a corporation under the laws of the
State of Delaware and has the requisite corporate power and authority to
carry on its business as it is now being conducted.
3.2 Subsidiaries. The following are the subsidiaries of the Company, each
of which is wholly owned by the Company and each of which has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation.
Jurisdiction of
Company Incorporation
Cardcaller Canada Inc. Ontario
Cardcall (UK) Limited United Kingdom
3.3 Compliance with Law. The Company and each of its subsidiaries has
complied with and is in compliance with all laws and regulations applicable
to the operation of its respective businesses, including the Applicable
Laws, except where failure so to comply will not have a material adverse
effect and each of them has all licences, permits, orders or approvals of,
and has made all required registrations with, any governmental or
regulatory body that is material to the conduct of its business.
3.4 Capitalization. As at the date hereof the issued capital of the
Company consists of 8,230,625 Shares, all of which are validly issued and
registered in the holders set out in Schedule "B" hereto.
3.5 Authority Relative to this Agreement. The Company has the requisite
corporate power and authority to enter into this Agreement and to perform
its obligations hereunder. The execution and delivery of this Agreement by
the Company and the consummation by the Company of the transactions
contemplated by this Agreement have been duly authorized by the board of
directors of the Company and no other corporate proceedings on the part of
the Company are necessary to authorize this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and delivered
by the Company and constitutes a valid and binding obligation of the
Company, enforceable by the Purchaser against the Company in accordance
with its terms. The execution and delivery by the Company of this
Agreement and performance by it of its obligations hereunder will not
result in a violation or breach of any provision of (i) its constating
documents, (ii) any agreement, contract, licence, franchise or permit to
which it is a party or by which it is bound; or (iii) any law, regulation,
order, judgment or decree to which it is subject or by which it is bound.
3.6 Books and Records. The corporate records and minute books of the
Company and its subsidiaries have been maintained in accordance with all
applicable statutory requirements and are complete and accurate in all
material respects.
3.7 Litigation, etc. There is no claim, action, proceeding or
investigation pending or, to the knowledge of the Company, threatened
against or relating to the Company or any of its subsidiaries or affecting
any of their properties or assets before any court or governmental or
regulatory authority or body that, if adversely determined, is likely to
have a material adverse effect on, or prevent or materially delay
consummation of the transactions contemplated by this Agreement.
ARTICLE IV - CONDUCT OF BUSINESS
4.1 Conduct of Business by the Company. The Company covenants and agrees
that prior to the closing of the transactions contemplated by the Offer
(the "Effective Time"), the Company shall, and shall cause each of its
subsidiaries to, conduct its and their respective businesses only in, not
take any action except in, and maintain their respective facilities in, the
usual, ordinary and regular course of business and consistent with past
practice.
4.2 Conduct of Business by the Purchaser. The Purchaser covenants and
agrees that prior to the closing of the transactions contemplated by the
Offer (the "Effective Time"), the Purchaser shall, and shall cause each of
its subsidiaries to, conduct its and their respective businesses only in,
not take any action except in, and maintain their respective facilities in,
the usual, ordinary and regular course of business and consistent with past
practice.
ARTICLE V - MISCELLANEOUS
5.1 Further Assurances and Closing Matters. Subject to the conditions
herein provided, each of the parties hereto agrees to use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make
effective as promptly as is practicable the transactions contemplated by
the Offer and this Agreement; including, without limitation, the
preparation of all necessary resolutions, corporate proceedings, and
corporate legal opinions.
5.2 Notification of Certain Matters. Each party shall give prompt notice
to the other of:
(a) the occurrence or failure to occur of any event, which occurrence or
failure would cause or may cause any representation or warranty on its
part contained in this Agreement to be untrue or inaccurate in any
respect at any time from date hereof to the Effective Time; and
(b) any failure of such party, or any officer, director, employee or agent
thereof, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder.
ARTICLE VI - TERMINATION, AMENDMENT AND WAIVER
6.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time:
(a) by mutual consent of the Purchaser and the Company;
(b) by the Purchaser or the Company if the Purchaser has not purchased at
least ninety per cent (90%) of the Company Shares pursuant to the
Offer; and
(c) by the Company, if the Purchaser does not commence the Offer within
the time contemplated by section 1.1.
6.2 Amendment. This Agreement may not be amended except by an instrument
signed by each of the parties hereto.
6.3 Effect of Termination. If this Agreement is terminated as provided in
section 6.1, there shall be no liability or further obligation on the part
of any party hereto or any of their respective shareholders, officers or
directors, except for liability arising from a wilful breach of this
Agreement or common law fraud.
ARTICLE VII - GENERAL PROVISIONS
7.1 Notices. All notices, requests, demands and other communications
hereunder shall be deemed to have duly given and made, if writing and if
served by personal delivery upon the party for whom it is intended or
delivered, by registered or certified mail, return receipt requested, or if
sent by telecopier, upon receipt of oral confirmation that such
transmission has been received, to the person at the address set forth
below, or such other address as may be designated in writing hereafter, in
the same manner, by such person:
if to the Purchaser, at:
611 Access Road
Stratford, Connecticut
06497
Fax (203) 380-0915
Attention: Joseph J. Murphy
if to the Company, at:
5075 Yonge Street
Suite 302
Toronto, Ontario
M2N 6C6
Fax (416) 733-2165
Attention: Charles Zwebner
7.2 Interpretation. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. References to sections and Articles
refer to sections and articles of this Agreement unless otherwise stated.
Unless the context otherwise requires, words used herein importing the
singular include the plural and vice versa.
7.3 Severability. If any term, provision, covenant or restriction of this
Agreement is held to be invalid, void or unenforceable, the reminder of the
terms, provisions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected, impaired
or invalidated and the parties shall negotiate in good faith to modify the
Agreement to preserve each party's anticipated benefits under the
Agreement.
IN WITNESS WHEREOF, the Purchaser and the Company have caused this
Agreement to be executed and delivered on the date first above by their
respective officers thereunder duly authorized.
DCI TELECOMMUNICATIONS, INC.
Per:
CARDCALL INTERNATIONAL HOLDINGS, INC.
Per:
SCHEDULE "A"
Form of Warrant
SCHEDULE "B"
List of Company Shareholders
CORE GROUP
Timber Participations Ltd. (Whyteburg SA) 2,710,000
1231912 Ontario Inc. 1,532,500
Overseas Communications 1,201,500
Johnathan Greenwood 375,000
Total Core Group: 5,819,000
(70.64 %)
FOUNDERS
Anthony Heller, in trust 368,500
David Heller 331,500
Hart Properties Ltd. 330,000
David Richman 250,000
Admiral Investments Limited 180,000
Charles Trovato 20,000
Mendy Goldberg 5,000
Total Founders: 1,485,000
(18.03 %)
MINORITY
Nobuyuki Oda 30,000
Shinichi Otawara 10,000
Yuichi Ozaki 10,000
Maurice Brenig, in trust 150,000
Elaine Salter 30,000
Betty Frieberg 20,000
Vivian Mermelstein 20,000
Greengro Corporate Services, in trust 20,000
Barry Sutton 10,000
J. Barnett, in trust 10,000
Price International Inc. 10,000
Barry and Marlene Cohen 10,000
Irving Mergel 10,000
Jerome Goldman 10,000
Kenneth and Franca Rubin 10,000
Marvin Goldman 10,000
Norman Stollman 10,000
Richard and Nola Baris 10,000
Jared Goldman 5,000
Firm Capital Mortgage Corp. 5,000
Richard Litsiger 5,000
Robert and Anita Marino 5,000
Cullen Trading Ltd. 120,000
Proteus Investments Limited 50,000
Elmrise International Limited 50,000
Kenny Tibber 50,000
Tadworth Property 25,000
Balchan Trustees Ltd. 20,000
Ray Conway 17,500
Raymond Rohrbach 15,000
Union Baincaire Privee 15,000
William George 15,000
G&G Wholesale Ltd. 12,500
L.S. Tish 12,500
Silver Pine Holdings Ltd. 12,500
Stevenson Brothers 12,500
Biata Bray 10,000
J. Raven 10,000
Maurice Alberge 10,000
Minton Holdings Limited 7,500
N. Crowley 7,500
M. Rodin 7,500
L.H. Crawford 5,000
M.J. Harroway 5,000
P. Wolf 5,000
S. Leigh 5,000
S. Stewart 5,000
Tessa Drummond 5,000
Andrew Millard 2,500
David Redmile 2,500
Jane Jordan 2,500
Mr. and Mrs. Harvey 2,500
Sally Wolchover 1,875
Vince Waterman 1,250
Monte Schaffer 1,000
Total Minority: 934,125
(11.33 %)
TOTAL ALL SHAREHOLDERS: 8,238,125
SIGNATURES
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.
DCI Telecommunications, Inc.
Joseph J. Murphy
__________________________
Joseph J. Murphy
President
Date: September 23, 1997