U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event): May 22, 2003
Commission File Number 0-29204
HOMECOM COMMUNICATIONS, INC
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(Exact name of small business issuer as specified in its charter)
DELAWARE 58-2153309
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(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
3495 Piedmont Road
Building 12, Suite 110
Atlanta, Georgia 30305
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(Address of principal executive offices)
(404) 237-4646
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(Issuer's Telephone Number)
Item 2. Acquisition or Disposition of Assets
On May 22, 2003, HomeCom Communications, Inc. ("HomeCom," the "Company,"
"we" or "us") completed a transaction with Eurotech, Ltd. ("Eurotech"). The
Company had entered into a License and Exchange Agreement with Eurotech and,
with respect to Articles V and VI thereof, Polymate, Ltd. and Greenfield Capital
Partners LLC, on March 27, 2003 (the "Exchange Agreement"). In connection with
the completion of the transaction, the Company entered into a License Agreement,
dated May 22, 2003 with Eurotech (the "License Agreement"). Pursuant to the
Exchange Agreement and the License Agreement, Eurotech has licensed to the
Company its rights to the EKOR, HNIPU and Electro Magnetic Radiography/Acoustic
Core (EMR/AC) technologies, which are more fully described herein. In exchange
for the license of these technologies, the Company (i) has issued to Eurotech
11,250 shares of Series F Preferred Stock and 1,069 shares of Series G Preferred
Stock, both of which are new series of the Company's preferred stock, and (ii)
will pay Eurotech a royalty of seven percent (7%) on net sales generated by the
licensed technologies and a royalty of four percent (4%) on net sales generated
by products and services that are improvements on the licensed technologies.
This consideration was determined through the arms' length negotiations of the
parties. The License Agreement provides that the licenses granted to the Company
thereunder will become terminable at the option of Eurotech (i) after December
31, 2003 if at any time the Company does not have available a sufficient number
of authorized but unissued shares of common stock to support the conversion of
the then outstanding shares of Series F Convertible Preferred Stock and Series G
Convertible Preferred Stock issued in connection with this transaction, (ii) if
the Company has not effected a commercial sale of any licensed technology or
improved licensed technology by April 1, 2006, or (iii) in certain other
circumstances.
In connection with the closing of this transaction, the holders of the
Company's Series C, Series D and Series E Preferred Stock and certain holders of
the Company's Series B Preferred Stock (i) have agreed to extend the mandatory
conversion dates of their respective shares of Preferred Stock until March 31,
2004, and (ii) have agreed to refrain from converting their shares of Preferred
Stock into shares of common stock until the Company has amended its Certificate
of Incorporation to authorize at least 150,000,000 shares of common stock. In
addition, the holder of the outstanding shares of the Company's Series C, Series
D and Series E Preferred Stock has agreed to accept payment for approximately
$1.6 million of penalties that may be owed to it in shares of common stock
instead of cash. The Exchange Agreement provides that, during the period prior
to closing of the Asset Sale, the financial needs of the hosting and web site
maintenance business will be funded by the operations of that business, while
the finances relating to the new licensed technologies will be kept separate. On
May 22, 2003, we executed a note in favor of one of our preferred shareholders
that provides that we may borrow up to $150,000 for use solely in connection
with the technologies that we have licensed from Eurotech. Advances under this
agreement, which advances are secured by a security agreement, bear interest at
a rate of 10% per annum and mature on December 31, 2003. We have borrowed
$100,000 under this agreement to date.
EMR/AC is a technology intended for the imaging of subterranean nuclear and
hazardous wastes in ground and marine settings, and for oil exploration. HNIPU
is a technology intended to improve upon conventional monolithic polyurethanes
through a non-toxic process. EKOR is a family of non-toxic advanced composite
polymer materials used in the containment of nuclear and hazardous materials.
According to publicly-available information about Eurotech, Eurotech is a
development stage company and has spent approximately $31 million in connection
with the development of these technologies, including costs of manufacturing,
materials, testing, salaries, consulting fees and other expenses. According to
publicly-available information, Eurotech had revenues of approximately $66,000
relating to the EKOR technology during 2002 and did not have any revenues
relating to the HNIPU or EMR/AC technologies during 2002.
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Shares of Series F Convertible Preferred Stock are convertible into shares
of common stock at a conversion rate of 10,000 shares of common stock per share
of Series F Preferred Stock, subject to adjustment as set forth in the
Certificate of Designations governing the Series F Preferred Stock. As such, the
11,250 shares of Series F Preferred Stock that have been issued to Eurotech will
be convertible into 112,500,000 shares of common stock. In addition, in
connection with the closing of the transactions contemplated by the Exchange
Agreement, we have issued 1,500 shares of Series F Preferred Stock to Polymate
and 750 shares of Series F Preferred Stock to Greenfield. As such, we have
issued a total of 13,500 shares of Series F Preferred Stock that will be
convertible into 135,000,000 shares of common stock. The Certificate of
Designations, however, provides that the shares of Series F Preferred Stock will
only be convertible if the Company has a sufficient number of authorized but
unissued shares of common stock available to support the conversion of the
outstanding shares of all series of preferred stock (although the Certificate of
Designations states that the shares of Series F Preferred Stock will become
convertible on December 31, 2003 regardless of whether a sufficient number of
shares of common stock have been authorized by such date). Currently, however,
the Company has only 15,000,000 shares of authorized common stock, of which
14,999,156 shares have been issued and are outstanding. As such, our Board of
Directors has approved, and has directed us to submit to our stockholders, a
proposal to amend our Certificate of Incorporation to, among other things,
increase the number of shares of common stock that we are authorized to issue to
300,000,000 shares. If this amendment is approved, and if Eurotech converts its
shares of Series F Preferred Stock into shares of common stock, a change in
control of the Company could occur. For example, if Eurotech were to convert all
of its shares of Series F Preferred Stock, and if Polymate and Greenfield were
to convert their shares of Series F Preferred Stock into shares of common stock,
and if none of our other preferred shareholders were to convert their shares of
preferred stock into shares of common stock, Eurotech would hold approximately
112,500,000 of the approximately 150,000,000 shares of common stock
then-outstanding, or roughly 75% of the then-outstanding shares of common stock,
and Polymate and Greenfield would hold, in the aggregate, approximately
22,500,000 shares of common stock, representing roughly 15% of the
then-outstanding shares. Shares of Series F Preferred Stock have the right to
vote on all matters with the common stock to the extent that such shares of
Series F Preferred Stock are then convertible into shares of common stock.
Pursuant to the License Agreement, the Company has issued 1,069 shares of
Series G Convertible Preferred Stock to Eurotech. Each share of Series G
Convertible Preferred Stock is convertible into a number of shares of common
stock determined by dividing $1,000 by a number equal to 82.5% of the average
closing price of the common stock over the preceding five business days. Shares
of Series G Preferred Stock have no voting rights.
The Company has agreed to enter into a commercially reasonable registration
rights agreement with Eurotech, Polymate and Greenfield pursuant to which the
Company would grant both demand and piggyback registration rights to those
entities.
In anticipation of the transaction, Lawrence Shatsoff and David Danovitch
resigned from the Company's Board of Directors, and Don V. Hahnfeldt, a
director, the President and Chief Executive Officer of Eurotech, and Randolph A.
Graves, Jr., a director and the Chief Financial Officer and Vice President of
Eurotech, have been elected to fill these vacancies on the Company's Board of
Directors. The Board of Directors has also appointed Mr. Hahnfeldt and Mr.
Graves to serve as officers of the new division that we created in connection
with the license of the above-referenced technologies from Eurotech.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
c. Exhibits
Exhibit Number Description
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2.1 License and Exchange Agreement, dated March 27, 2003, by and
among HomeCom Communications, Inc., Eurotech, Ltd. and, with
respect to Articles V and VI thereof, Polymate, Ltd. and
Greenfield Capital Partners LLC. (Incorporated by reference to
Exhibit 2.4 of the Registrant's Annual Report on Form 10-K for
the year ended December 31, 2002, as filed with the Commission
on April 15, 2003.)
3.1 Certificate of Designation of Series F Convertible Preferred
Stock. (Incorporated by reference to Exhibit 3.8 of the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 2002, as filed with the Commission on April 15,
2003.)
3.2 Certificate of Designation of Series G Convertible Preferred
Stock. (Incorporated by reference to Exhibit 3.9 of the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 2002, as filed with the Commission on April 15,
2003.)
10.1 License Agreement, dated May 22, 2003, by and between HomeCom
Communications, Inc. and Eurotech, Ltd.
10.2 Secured Promissory Note, dated May 22, 2003, by HomeCom
Communications, Inc. in favor of MacNab LLC.
10.3 Security Agreement, dated May 22, 2003, by and between HomeCom
Communications, Inc. and MacNab LLC.
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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, thereunto duly authorized.
HOMECOM COMMUNICATIONS, INC.
By: /s/ Timothy R. Robinson
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Name: Timothy R. Robinson
Title: Executive Vice President,
Chief Financial Officer
Date: June 6, 2003
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EXHIBIT INDEX
Exhibit Number Description
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2.1 License and Exchange Agreement, dated March 27, 2003, by and
among HomeCom Communications, Inc., Eurotech, Ltd. and, with
respect to Articles V and VI thereof, Polymate, Ltd. and
Greenfield Capital Partners LLC. (Incorporated by reference to
Exhibit 2.4 of the Registrant's Annual Report on Form 10-K for
the year ended December 31, 2002, as filed with the Commission
on April 15, 2003.)
3.1 Certificate of Designation of Series F Convertible Preferred
Stock. (Incorporated by reference to Exhibit 3.8 of the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 2002, as filed with the Commission on April 15,
2003.)
3.2 Certificate of Designation of Series G Convertible Preferred
Stock. (Incorporated by reference to Exhibit 3.9 of the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 2002, as filed with the Commission on April 15,
2003.)
10.1 License Agreement, dated May 22, 2003, by and between HomeCom
Communications, Inc. and Eurotech, Ltd.
10.2 Secured Promissory Note, dated May 22, 2003, by HomeCom
Communications, Inc. in favor of MacNab LLC.
10.3 Security Agreement, dated May 22, 2003, by and between HomeCom
Communications, Inc. and MacNab LLC.
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