SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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: May 9, 2002
ADVANCED COMMUNICATIONS TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in Charter)
FLORIDA 000-30486 65-0738251
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
880 APOLLO STREET, SUITE 200
EL SEGUNDO, CALIFORNIA 90245
(Address of principal executive offices)
Registrant's telephone number, including area code: (310) 416-1270
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ITEM 5. OTHER EVENTS.
Advanced Communications Technologies, Inc. reported the resignation of
Gary Ivaska and new developments in its ongoing litigation with Advanced
Communications Technologies (Australia) Pty Ltd, Advanced Communications'
Australian affiliate ("ACT-Australia"). A description of these developments is
set forth below.
MANAGEMENT CHANGES.
Effective April 30, 2002, Gary Ivaska resigned as President and Chief
Executive Officer of Advanced Communications. At the time of his resignation,
Advanced Communications and Mr. Ivaska agreed to payment terms regarding past
due compensation. Under the agreement, Advanced Communications will pay Mr.
Ivaska four monthly installments of $10,000, commencing on May 31, 2002, and
continuing until August 31, 2002.
On May 2, 2002, Advanced Communications' Board of Directors appointed
Mr. Wayne I. Danson, Advanced Communications' Vice President and Chief Financial
Officer, as interim President effective April 30, 2002.
NEW DEVELOPMENTS IN ONGOING LITIGATION.
On April 26, 2002, the Supreme Court of Victoria at Melbourne,
Australia issued an interim order against ACT-Australia and Mr. May in
connection with the ongoing litigation between Advanced Communications and
ACT-Australia. The interim order prohibits ACT-Australia and Mr. May from
violating the terms of the License and Distribution Agreement dated as of July
5, 2000. This license agreement grants Advanced Communications the exclusive
right to market and distribute the SpectruCell technology in North, South, and
Central America. Based on a press release issued by ACT-Australia, ACT-Australia
is seeking to license the SpectruCell Technology to another entity in Advanced
Communications' territory. On April 26, 2002, the Australian court entered the
interim order. On May 7, 2002, Advanced Communications received a notice from
ACT-Australia alleging a breach of the License Agreement. Advanced
Communications believes the allegation is without merit and intends to protect
its legal rights. On May 8, 2002, the Court extended its April 26, 2002 order
through May 14, 2002, further restraining ACT-Australia from "acting upon or
taking any further steps in reliance upon" the notice of breach until May 14,
2002 when this matter will be heard by the Court.
A complete description of the litigation proceeding to date is provided
below.
On December 6, 2001, Mr. Roger May, as Chairman and Chief Executive
Officer of ACT-Australia, sent a letter to Advanced Communications demanding
full payment of all amounts due under the Stock Purchase Agreement between
Advanced Communications and ACT-Australia (the "STOCK PURCHASE AGREEMENT). This
letter was dated six days after Mr. May was removed by the Board of Directors
from all executive capacities including as President and Chief Executive
Officer. Mr. May sent additional demand letters on December 11, 2001, and
December 21, 2001. These demand letters threatened to exercise the rights
granted to ACT-Australia under its constitutional documents, which include
exercising ACT-Australia's lien over the shares registered in the name of
Advanced Communications or declaring that those shares be forfeited. Advanced
Communications believes that it has fully met its obligation under the Stock
Purchase Agreement, which states that payments are only required to be paid to
ACT-Australia from those funds remaining after deduction of reserves needed for
current operations, working capital and the development and expansion of its
operations and the operations of its subsidiaries as determined by its Board of
Directors. At this time, Advanced Communications does not have sufficient funds
available to pay to ACT-Australia. On January 23, 2002, Advanced Communications
filed suit against ACT-Australia and Roger May in the Supreme Court of Victoria
at Melbourne, Australia to protect its investment.
On January 23, 2002, the Court issued an interim order effectively
enjoining and prohibiting ACT-Australia from "transferring, dealing with,
charging, diminishing, mortgaging, assigning or disposing of" Advanced
Communications' stock in ACT-Australia. Although the court order had already
been extended twice, it was again extended by the court on February 20, 2002,
until a final determination is made at trial. ACT-Australia declined to contest
the court orders sought by Advanced Communications. ACT-Australia filed its
Answer to the suit and the parties are currently conducting discovery of
material documents.
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On March 15, 2002, ACT-Australia issued a press release stating that
EntrePort Corporation ("EntrePort"), an AMEX listed company, executed
"definitive documents" whereby EntrePort would acquire a minority interest in
ACT-Australia and ACT-Australia would purchase a majority interest in EntrePort.
Further, on March 14, 2002, ACT-Australia entered into an Acquisition Agreement
with EntrePort (the "Acquisition Agreement") which stated that ACT-Australia
"now plans to locate and establish a base of operations in the United States for
the continued development, marketing and distribution of the SpectruCell product
in the USA and Canada. Such base of operations will involve the establishment of
engineering facilities, research and development, sales, marketing and
distribution." The Acquisition Agreement also stated that EntrePort's name would
be changed to "Advanced Communications USA, Inc." Mr. May resigned from Advanced
Communications' Board of Directors one day before entering into the Acquisition
Agreement.
Advanced Communications believes that the transaction with EntrePort as
described in the Acquisition Agreement is inconsistent with the rights granted
to it by ACT-Australia in the License and Distribution Agreement dated July 5,
2000 pursuant to which Advanced Communications received the exclusive rights to
market and distribute the SpectruCell technology in North, South and Central
America. Advanced Communications therefore instructed its Australian lawyers to
write to ACT-Australia requesting an undertaking that it would not appoint
EntrePort or any other person to market and distribute the SpectruCell
technology in the exclusive territory in breach of the license agreement.
ACT-Australia refused to provide the undertaking sought by Advanced
Communications and, accordingly, Advanced Communications applied to the Court
for an order restraining ACT-Australia from breaching the terms of the license
agreement. On April 26, 2002, the Court issued an interim order on the following
terms:
"Until the determination of the plaintiff's [i.e., Advanced
Communications'] summons filed on 23 April 2002 or further order, the
first defendant [i.e., ACT-Australia], whether by itself or by its
officers, employees, agents, attorneys, or any of them or otherwise, be
restrained from appointing or agreeing to appoint in any way whatsoever
EntrePort Corporation or any other person to distribute, sell, offer to
sell or supply or otherwise deal in or with the wireless or terrestrial
multi-protocols communication network technology known as SpectruCell
(`Product') (incorporating the software which enables the Product to
perform to its specifications, consisting of a set of instructions or
statements in machine readable medium, and any enhancement or
modification of that software (`Software') and related hardware
performing part of the base station controller which processes and
transmits mobile communications protocols such as AMPS, CDMA, TDMA GSM,
W-CDMA, UMTS, 3G & Voice IP) in the United States of America, the North
American and South American Continents (`Exclusive Territory') without
the prior written consent of the plaintiff."
EntrePort was added as a defendant to the proceedings.
On May 7, 2002, Advanced Communications received a notice alleging a
breach from ACT-Australia stating that Advanced Communications had breached its
obligation under the License Agreement. Advanced Communications believes that
the notice of breach is without merit and it is taking the necessary legal
actions to prevent ACT-Australia from terminating its rights under the License
Agreement.
On May 8, 2002, the Court extended its April 26, 2002 order through May
14, 2002, further restraining ACT-Australia from "acting upon or taking any
further steps in reliance upon" the notice of breach until May 14, 2002 when
this matter will be heard by the Court.
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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.
ADVANCED COMMUNICATIONS
TECHNOLOGIES, INC.
Date: May 9, 2002 By: /s/ Wayne I. Danson
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Name: Wayne I. Danson
Its: President
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