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) November 15, 1996
United Payphone Services, Inc.
(Exact name of registrant as specified in its charter)
Nevada 0-24138 88-0232816
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
105 East Ellis, Tempe, Arizona 85282
(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code (602)839-9968
N/A
(Former name or former address, if changed since last report.)
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Item 2. Acquisition or Disposition of Assets
(a) Pursuant to an Asset Purchase Agreement dated November 15, 1996,
("Closing Date"), the Company sold substantially all of its fixed assets to
Tru-Tel Communications, L.L.C., a Nevada limited liability company ("Tru-Tel").
All of the Company's right, title and interest in all of its' fixed assets
(which constitutes 49% of total assets) have been transferred to Tru-Tel as of
the Closing Date. In return the Company received a cash payment in the amount
of $1,711,250 and a secured promissory note from Tru-Tel in the original
principal amount of $811,250 (the "Tru-Tel Note"). The amount of consideration
received by the Company was determined using the cash-flow method of valuation.
The Tru-Tel Note will accrue interest at the rate of 8% per annum. Under the
terms of the Tru-Tel Note, monthly principal and interest payments, in the
aggregate amount of $14,000 per month, are payable to the Company commencing
on February 15, 1997, with the final payment of all accrued and unpaid interest
and outstanding principal due on or before January 15, 2002. The Tru-Tel Note
is secured by a lien on all of the purchased assets and is personally
guaranteed by the principals of Tru-Tel. A cash payment in the amount of
$1,711,250 was received by the Company on November 15, 1996.
The Asset Purchase Agreement prohibits the Company from engaging in,
either directly or indirectly, in any business of any kind or nature
whatsoever which operates public or private payphones within the State of
Arizona. In addition, the Company may not install or maintain any phone
equipment, or provide related services, for any party to its existing
contracts, which were sold to Tru-Tel. As a result, the Company has no
business operations at this time. The Company currently plans to conduct a
search for possible merger or acquisition candidates in another line of
business or explore other business opportunities. However, at this time the
Company does not have any plans for any particular business activity and has
not identified any potential merger of acquisition candidates or business
opportunities.
There is no other material relationship between Tru-Tel, its directors and
officers and any associates of its officers and directors, and the Company, its
directors and officers and any associates of its officers and directors.
Item 5. Other Events
On November 6, 1996, a true bill was returned by the Grand Jury in the
United States District Court in Nevada against Michael G. Swan and Claudia
Higgins. By indictment number CR-S-96-288, Mr. Swan and Ms. Higgins were
accused of racketeering, RICO violations, securities fraud and wire fraud.
All of the charges arise out of alleged activities of Mr. Swan and Ms. Higgins
while serving as directors and officers of the Company. Also named in the
indictment was Kevin Orton, the Company's former accountant. Mr. Swan and Ms.
Higgins were also named as "other relevant persons and entities" but were not
charged, in two other indictments, alleging among other things, securities and
fraud violations, filed respectively on October 20, 1996 and November 6, 1996.
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Mr. Swan served as president and director of the Company from February
1992 through April 1995. From April 1995 through September 1996, Mr. Swan
served as consultant to the Company. From November 1991 through April 1995,
Ms. Higgins served as a director and secretary/treasurer of the Company.
The Company was not named as a defendant in the indictments. However,
given that the indictments relate to activities alleged to have perpetrated
by then officers and directors of the Company, there can be no assurance that
the indictments will not have material adverse effect on the Company.
Item 7. Financial Statements and Exhibits
Financial Statements
It is impracticable to provide financial statements reflecting the sale
of the Company's assets at this time. A quarterly report for the period ended
September 30, 1996 on Form 10-QSB was filed with the Commission on November 19,
1996 pursuant to an extension in accordance with Rule 12b-25, but does not
reflect the sale of the Company's assets. Financial statements which reflect
the sale of the assets are currently being prepared and will be filed within
60 days of the filing of this 8-KSB.
Exhibits:
Exhibit Description
2.1 Asset Purchase Agreement
2.2 Promissory note from Tru-Tel Communications, L.L.C. to
United Payphone Services, Inc.
2.3 Personal Guaranty of the principals of Tru-Tel
Communications, L.L.C.
2.4 Security Agreement covering all assets subject to the Asset
Purchase Agreement from Tru-Tel Communications, L.L.C.
2.5 Bill of Sale for the assets covered in the Asset Purchase
Agreement
2.6 Subordination and Intercreditor Agreement between Finova
Capital Corporation, United Payphone Services, Inc., and
Tru-Tel Communications, L.L.C.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report on its behalf by the undersigned
hereunto duly authorized.
UNITED PAYHPONES SERVICES, INC.
Date: November 15, 1996 By: /s/ David Westfere
David Westfere, CEO and
Principal Financial Officer