UNITED STATES
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 23, 2005
CIRCLE GROUP HOLDINGS, INC.
(Exact name of registrant as specified in charter)
Illinois 000-27841 22-3768777
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
1011 Campus Drive, Mundelein, Illinois 60060
(Address of principal executive offices)
Registrant's telephone number, including area code: (847) 549-6002
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Items 1.01. Entry into a Material Definitive Agreement.
On November 23, 2005, the Company entered into a binding Letter Agreement
(the "Agreement") with George Foreman Enterprises, Inc. ("GFME") pursuant to
which both parties will form a new limited liability company ("Newco") for the
purpose of promoting the Company's zero calorie fat replacement food ingredient,
Z-Trim(R) (the "Joint Venture"). Under the terms of the Agreement, GFME will
contribute to Newco $150,000 cash and certain rights to George Foreman's name
and likeness in exchange for a 50.1% membership interest, and the Company will
contribute to Newco $150,000 cash and up to 5 million shares of common stock in
exchange for a 49.9% membership interest. GFME will also be entitled to two
seats on the Company's board of directors and the Company has agreed not to use
any spokesperson for Z-Trim(R) other than George Foreman or the Company's
current spokespersons without GFME's consent.
During the term of the Agreement, if the Company's sales of Z-Trim(R)
produce revenues of $30 million or gross profits of $10 million in any one year,
GFME shall receive a cash bonus of $100,000; if the Company's sales of Z-Trim(R)
produce revenues of $50 million or gross profits of $15 million in any one year,
GFME shall receive a cash bonus of $200,000; if the Company's sales of Z-Trim(R)
produce revenues of $70 million or gross profits of $20 million in any one year,
GFME shall receive a cash bonus of $300,000; if the Company's sales of Z-Trim(R)
produce revenues of $90 million or gross profits of $25 million in any one year,
GFME shall receive a cash bonus of $400,000; and if the Company's sales of
Z-Trim(R) produce revenues of $110 million or gross profits of $30 million in
any one year, GFME shall receive a cash bonus of $500,000.
In addition, whether or not the Company achieves increased sales of
Z-Trim(R), GFME has the right under the Agreement to convert its interest in
Newco to up to 50% of the then-outstanding common stock and other equity (if
any) of the Company upon achieving certain milestones including the creation of
Newco, launching a national public relations campaign, and George Foreman's
promotion of Z-Trim(R) via national media. The Company is obligated to register
with the Securities Exchange Commission and list with the American Stock
Exchange any shares of common stock of the Company into which GFME converts its
Newco interests.
The Joint Venture is subject to GFME's limited due diligence cancellation
condition in the event that third-party analysis of Z-Trim(R) shows results
inconsistent with the Company's claims of benefits and safety, or based upon
GFME's determination after meeting with food manufacturers regarding the
prospects of securing contracts utilizing Z-Trim(R) and George Foreman in future
product campaigns. GFME has 60 days from the date of the Agreement to exercise
this right. Furthermore, the Company is required by American Stock Exchange
regulations to obtain shareholder approval prior to issuing 20% or more of the
Company's common stock pursuant to the Joint Venture.
In connection with forming Newco, the parties will enter into more
definitive detailed documentation that will contain more detailed terms of the
Joint Venture consistent with the Agreement.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
No. Description
- ------ --------------------------------------------------------------
10.1 Letter Agreement between Circle Group Holdings, Inc. and George
Foreman Enterprises, Inc. dated November 23, 2005 (portions of
which have been redacted pursuant to a confidential treatment
request).
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.
CIRCLE GROUP HOLDINGS, INC.
By: /s/ Gregory J. Halpern
-----------------------
Gregory J. Halpern
President and Chief Executive Officer
Dated: November 29, 2005
EXHIBIT INDEX
No. Description
- ------ --------------------------------------------------------------
10.1 Letter Agreement between Circle Group Holdings, Inc. and George
Foreman Enterprises, Inc. dated November 23, 2005 (portions of
which have been redacted pursuant to a confidential treatment
request).