U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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): September 30, 1999
------------------
COMMUNICATIONS WORLD INTERNATIONAL, INC.
----------------------------------------
(Exact Name of Registrant as Specified in Charter)
Commission file number: 0-30220
Colorado 84-0917382
- --------------------------------------------- -------------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer Identification
or organization) No.)
7315 South Revere Parkway, Unit 602, Englewood, Colorado 80112
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(303) 721-8200
--------------
Registrant's telephone number, including area code
Item 2. Acquisition or Disposition of Assets
Effective September 30, 1999, the Company, through its wholly owned subsidiary,
CommWorld Acquisition Corporation, acquired Willpower, Inc., a corporation
located in Arlington, Texas which conducted business under the name, RMS
Communications ("RMS"). The operations of RMS will be continued by the Company
under the name, CommWorld/RMS. The Company acquired inventory of approximately
$66,000 and fixed assets with a net book value of approximately $14,000. The
Company issued 185,000 shares of common stock, at the market price of $1.34 per
share on the date of closing; notes payable of $150,000 with interest at 7% per
annum, payable quarterly beginning December 31, 1999 and principal payments of
$50,000 payable quarterly beginning September 30, 1999; and cash of $225,000.
The Company used internal funds for the acquisition, which were derived
primarily from a private offering of notes and warrants. RMS provides
communications solutions to businesses in the Dallas/Ft. Worth metropolitan
area. Prior to the acquisition, there was no material relationship between the
Company and RMS.
Item 7. Financial Statements and Exhibits.
(b) Pro Forma Financial Information
(1) Communications World International, Inc. Pro Forma Condensed
Consolidated Balance Sheet (unaudited) April 30, 1999.
(2) Communications World International, Inc. Pro Forma Condensed
Consolidated Statement of Operations (unaudited) for the year ended
April 30, 1999.
(3) Communications World International, Inc. Notes to Pro Forma Condensed
Consolidated Financial Statements (unaudited).
(c) Exhibits
2.1 Merger Agreement by and among CommWorld Acquisition Corporation,
Willpower, Inc. D/B/A/ RMS Communications, and Pierre Miossec filed as
Exhibit 2 (f) to Registration Statement on Form 10-SB/A (File No. 0-30220)
is incorporated herein by reference.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Communications World International, Inc.
----------------------------------------
(Registrant)
Date: October 14, 1999 /s/ James M. Ciccarelli
---------------- ------------------------
James M. Ciccarelli, Chief Executive Officer
2
(b) Pro Forma Financial Information (unaudited)
The following pro forma summary financial information have been prepared giving
effect to the acquisition of Willpower, Inc. as if the transaction had taken
place at December 31, 1998 for the pro forma condensed consolidated balance
sheet and for the year then ended for the pro forma condensed consolidated
income statements.
The acquisition has been accounted for as a purchase. The carrying values of
assets acquired have been estimated to approximate fair market value.
Accordingly, no pro forma adjustments to these amounts were made to reflect an
allocation of the purchase price.
The pro forma financial information is not necessarily indicative of the results
of operations or the financial position which would have been attained had the
acquisition been consumated at the foregoing date or which may be attained in
the future. The pro forma financial information should be read in conjunction
with the historical consolidated financial statements of the Company, is
presented for informational purposes only and does not purport to be indicative
of the financial condition that actually would have resulted if the acquisition
had occurred at December 31, 1998.
3
Communications World International, Inc.
Pro-forma Condensed Consolidated Balance Sheet (un-audited)
April 30, 1999
Historical Financial
Statements
----------------------------------
April 30, December 31, Pro Forma
1999 1998 Consolidated
---- ---- Pro Forma Financial
CommWorld RMS Adjustments Statement
--------- --- ----------- ---------
ASSETS
- ------
Current assets:
Cash $ 57,118 $ 40,119 ($40,119) (B) $ 57,118
Trade accounts and current portion of
notes receivable 1,353,223 184,336 (184,336) (B) 1,353,223
Inventories 331,696 66,514 398,210
Other current assets 46,228 - 46,228
---------- -------- ----------
Total current assets 1,788,265 290,969 1,854,779
Property and equipment, net 263,775 13,803 277,578
Deposits and other assets 73,875 2,442 (2,442) (B) 73,875
Notes receivable 1,006,037 1,006,037
Intangible assets, net 1,687,328 622,900 (A) 2,202,782
(80,317) (B)
- - (27,129) (C) -
---------- -------- ----------
Total $4,819,280 $307,214 $5,415,051
========== ======== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Trade accounts payable $1,817,103 $ 89,545 ($89,545) (B) $ 1,817,103
Revolving line of credit 496,753 496,753
Current portion of notes payable 766,219 766,219
Accrued expenses and other 374,916 61,654 (61,654) (B) 404,916
- - 30,000 (D) -
----------- -------- -----------
Total current liabilities 3,454,991 151,199 4,287,816
Notes payable and other 427,825 116,227 (116,227) (B) 802,825
- - 375,000 (A) -
----------- -------- -----------
Total liabilities 3,882,816 267,426 4,287,816
----------- -------- -----------
Stockholders' equity:
Convertible preferred stock 586,363 586,363
Common stock 7,120,812 1,000 (1,000) (B) 7,120,812
Additional paid-in capital 551,429 247,900 (A) 799,329
Accumulated deficit (7,322,140) 38,788 (38,788) (B) (7,379,269)
- - (57,129) (C&D) -
----------- -------- -----------
Total stockholders' equity 936,464 39,788 1,127,235
----------- -------- -----------
$ 4,819,280 $307,214 $ 5,415,051
=========== ======== ===========
The accompanying notes are an integral part of the financial statements.
4
Communications World International, Inc.
Pro Forma Condensed Consolidated Statement of Operations (unaudited)
For the Year Ended April, 30 1999
Historical Financial
Statements
----------------------------------- Pro Forma
April 30, December 31, Consolidated
1999 1998 Pro forma Financial
CommWorld RMS Adjustments Statements
--------- --- ----------- ----------
Revenue:
Franchise equipment sales $ 5,361,569 $ 5,361,569
Direct equipment and service sales 3,505,436 $2,349,485 5,854,921
Other revenue 282,676 - 282,676
------------ ---------- ------------
Total revenue 9,149681 2,349,485 11,499,166
------------ ---------- ------------
Costs and expenses:
Cost of franchise equipment sales 4,759,150 4,759,150
Cost of direct equipment and service sales 2,325,227 1,165,748 3,490,975
Selling, general and administrative 2,991,600 1,061,429 4,053,029
Interest Expense 253,883 $30,000 (D) 283,883
Other expense 170,747 - 27,129 (C) 197,876
------------ ---------- ------------
10,500,607 2,227,177 12,784,913
------------ ---------- ------------
Income (loss) from continuing operations (1,350,926) 122,307 (1,285,748)
Loss from discontinued operations (429,333) - (429,333)
------------ ---------- ------------
Net income (loss) (1,780,259) 122,307 (1,715,081)
------------ ----------
Cumulative dividend on preferred stock 47,709 - 47,709
------------ ---------- ------------
Net income (loss) applicable to common stock
($1,827,968) $ 122,307 ($1,762,748)
========== ============
Loss per share:
Basic:
Loss from continuing operations $ (.56) $ (.53)
============ ============
Net Loss $ (.76) $ (.71)
============ ============
Diluted:
Loss from continuing operations $ (.56) $ (.53)
============ ============
Net Loss $ (.76) $ (.71)
============ ============
Weighted average number of common shares
outstanding
Basic: 2,409,816 2,409,816
------------ ------------
Diluted: 4,184,593 4,184,593
------------ ------------
The accompanying notes are an integral part of the financial statements.
5
Communications World International, Inc.
Notes to Pro Forma Condensed Financial Statements (unaudited)
April, 30 1999
(A) On September 30, 1999 Communications World International, Inc. (the
Company) acquired Willpower, Inc. D/B/A/ RMS Communications, Inc (RMS) for
approximately $622,900. The purchase price was comprised of cash of
$225,000, notes from purchaser of $150,000 and 185,000 shares of Common
Stock.
(B) All of the assets of RMS except inventory and fixed assets will be
liquidated and the proceeds net of all liabilities will be paid to the
sellers.
(C) Amortization of goodwill over 20 years.
(D) Accrued interest on acquisition debt at 8% per annum.
6