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 31, 2004
Commission File Number 0-29204
GLOBAL MATRECHS, 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)
90 Grove Street
Suite 202
Ridgefield, Connecticut 06877
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(Address of principal executive offices)
(203) 431-8120
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(Issuer's Telephone Number)
HOMECOM COMMUNICATIONS, INC.
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(Former Name, if changed since last report)
3495 Piedmont Road
Building 12, Suite 110
Atlanta, Georgia 30305
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(Former Address, if changed since last report)
Item 2. Acquisition or Disposition of Assets
Global Matrechs, Inc., a Delaware corporation formerly known as HomeCom
Communications, Inc. (the "Company," "we," or "us"), has completed the sale of
substantially all of the assets of its hosting and website maintenance business
to Tulix Systems, Inc., a Georgia corporation ("Tulix"), effective as of May 31,
2004 (the "Asset Sale"). Gia Bokuchava, Nino Doijashvili and Timothy R.
Robinson, who were officers, directors and stockholders of the Company
immediately prior to the closing of the Asset Sale, each had a material interest
in the Asset Sale. Mr. Bokuchava is the President and Chief Executive Officer of
Tulix, Ms. Doijashvili is the Vice President, Secretary, and Treasurer of Tulix,
and Mr. Bokuchava, Ms. Doijshvili and Mr. Robinson are the directors of Tulix
and own all of the outstanding stock of Tulix (other than the Tulix stock issued
to the Company in the Asset Sale).
The assets transferred to Tulix consist of intellectual property,
equipment, contracts, certain accounts receivable in an aggregate amount of
approximately $256,000 and cash of $37,000. As consideration for these assets,
Tulix:
o issued to us shares of Tulix common stock that represent 15% of the
outstanding shares of Tulix; and,
o issued to us a secured promissory note (the "Note") for a principal
amount of $70,000 that bears interest at an annual rate of 7% and will
mature on May 31, 2005.
The assets to be included in the Asset Sale and the consideration to be
paid by Tulix were determined by negotiations between the parties. Because Mr.
Bokuchava, Ms. Doijashvili and Mr. Robinson were officers and directors of the
Company during the negotiations, the transaction was negotiated on behalf of the
Company by the Company's independent directors, including Michael Sheppard, who
is also a vice president of our Licensed Technologies Division. Generally
speaking, the Company valued the assets being transferred: (i) with respect to
the equipment, at the Company's estimate of its fair value, which the Company
determined to be approximately $75,000 to $100,000, and (ii) with respect to the
cash and accounts receivable, at face value. In addition to the transferred
assets, Mr. Bokuchava and Mr. Robinson agreed to cancel their employment
agreements, which would have required the Company to pay them $146,250
collectively if the Company terminated them. The Company used these values to
determine the adequacy of the consideration received from Tulix.
The amount of accounts receivable assigned to Tulix was increased at
closing from $70,000 to $256,000 in accordance with the formula provided in the
Asset Purchase Agreement, dated March 27, 2003, between the Company and Tulix
(the "Sale Agreement"). The formula provided that, if the sum of the cash and
accounts receivable of the Company (as determined in accordance with GAAP in a
manner consistent with the Company's past practices) on the closing date was
more than $325,053 (as adjusted), the excess would be divided evenly between the
Company and Tulix. This $325,053 benchmark amount was adjusted, in accordance
with the Sale Agreement, by the actual amount of certain agreed upon
expenditures made by the Company between the signing date and the closing date,
including accounting fees, legal fees, vendor bills, local taxes and other
expenditures. The total amount of these agreed-upon expenditures was
approximately $328,000, leaving the Company with an adjusted benchmark amount of
approximately ($3,000). As of the closing date, the aggregate amount of the
Company's cash and accounts receivable was $347,000, so the Company and Tulix
divided between them the $350,000 excess of the actual amount over the adjusted
benchmark amount. In addition, given that the Company had less than $50,000 in
cash available on the closing date even though the Sale Agreement provided that
the Company would transfer $50,000 to Tulix, the parties agreed that the Company
would transfer $37,000 to Tulix in cash and would assign an additional $13,000
worth of accounts receivable to Tulix.
The Note is secured by the intellectual property, contracts, accounts
receivable and equipment (including computer hardware, computer software, office
furniture and fixtures) transferred to Tulix in the Asset Sale. The aggregate
value of the assets that secure the Note is estimated to be approximately
$356,000. Of course, the protection that this security affords the Company could
be lessened over time if the value of the collateral decreases.
In connection with the closing, Mr. Bokuchava and Ms. Doijashvili resigned
from their positions as officers and directors of the Company as of the closing
date, and Mr. Robinson resigned from his position as an officer of the Company
as of the closing date, although he remains on the Board of Directors. Mr.
Bokuchava, Ms. Doijashvili and Mr. Robinson, on one hand, and the Company, on
the other hand, have agreed to release one another from certain
employment-related claims in connection with the closing.
In connection with the Asset Sale, we entered into a Shareholders'
Agreement with Tulix, Mr. Robinson, Mr. Bokuchava and Ms. Doijashvili. The
Shareholders' Agreement gives the Company certain rights as a holder of Tulix
stock for a period of five years. These rights include rights of co-sale, rights
of first refusal, anti-dilution rights and rights to inspect the books and
records of Tulix. The co-sale rights will give us (and the other Tulix
shareholders) the right to participate in any sales, subject to certain
exclusions, of Tulix stock by other Tulix shareholders. The rights of first
refusal granted to us in the Shareholders' Agreement will require that Tulix
give us (and the other Tulix shareholders) the right to purchase any securities,
subject to certain exclusions, that it intends to offer to third parties before
it offers those securities to third parties. The anti-dilution rights contained
in the Shareholders' Agreement require Tulix to grant us additional shares of
common stock any time, subject to certain exclusions, it issues shares of common
stock to other persons so that our aggregate ownership interest in Tulix is
generally not diluted. Finally, the Shareholders' Agreement gives us the right
to inspect the books and records of Tulix, subject to the specific terms of the
Shareholders' Agreement.
In connection with the closing, the Company's landlord for its principal
offices as 3495 Piedmont Road canceled its lease with the Company and entered
into a new lease for the same space with Tulix. In addition, the largest client
of our hosting and website maintenance business, Roadrunner, agreed to transfer
its business from the Company to Tulix in connection with the closing.
The Asset Sale was approved by the Company's stockholders at a special
meeting held on March 22, 2004.
Item 5. Other Events
On June 14, 2004, the Company filed the following amendments to its
Certificate of Incorporation:
o To change the name of the Company to "Global Matrechs, Inc."
o To increase the number of shares of common stock that the Company is
authorized to issue from 15,000,000 to 300,000,000.
o To permit stockholder action to be taken without a meeting by the
holders of not less than the number of shares that would be required
to take such action at a meeting of the stockholders at which all the
stockholders entitled to vote on a matter were present and voted
(previously, stockholder action could be taken without a meeting only
if the consent of all of the stockholders entitled to vote was
obtained).
The Company has also filed amendments to the Certificates of Designations,
Preferences and Rights of its Series B, Series C, Series D and Series E
Preferred Stock to delete the mandatory conversion provisions of those series.
These amendments were also approved by the Company's stockholders at the
March 22, 2004 special meeting.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
a. Not applicable.
b. The Company intends to file the pro forma financial information required by
Item 7(b) of Form 8-K within the required time periods.
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c. Exhibits
Exhibit Number Description
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2.1 Asset Purchase Agreement, dated March 27, 2003, by and between
HomeCom Communications, Inc. and Tulix Systems, Inc. and, for
purposes of Section 9(b) thereof, Gia Bokuchava, Nino
Doijashvili and Timothy R. Robinson. (Incorporated by
reference to Exhibit 2.3 of the Company'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 Amendment of Amended and Restated Certificate
of Incorporation of HomeCom Communications, Inc., as filed
with the Secretary of State of Delaware on June 14, 2004.
3.2 Certificate of Amendment of Certificate of Designations,
Preferences and Rights of Series B Convertible Preferred Stock
of HomeCom Communications, Inc.
3.3 Certificate of Amendment of Certificate of Designations,
Preferences and Rights of Series C Convertible Preferred Stock
of HomeCom Communications, Inc.
3.4 Certificate of Amendment of Certificate of Designations,
Preferences and Rights of Series D Convertible Preferred Stock
of HomeCom Communications, Inc.
3.5 Certificate of Amendment of Certificate of Designations,
Preferences and Rights of Series E Convertible Preferred Stock
of HomeCom Communications, Inc.
10.1 Secured Promissory Note, dated May 31, 2004, by Tulix Systems,
Inc. in favor of HomeCom Communications, Inc.
10.2 Security Agreement, dated May 31, 2004, by and between HomeCom
Communications, Inc. and Tulix Systems, Inc.
10.3 Shareholders' Agreement, dated May 31, 2004, by and among
HomeCom Communications, Inc., Tulix Systems, Inc., Gia
Bokuchava, Nino Doijashvili and Timothy R. Robinson.
10.4 Indemnification Agreement, dated May 31, 2004, by and between
HomeCom Communications, Inc. and Tulix Systems, Inc.
99.1 Press release, dated June 15, 2004.
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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.
GLOBAL MATRECHS, INC.
By: /s/ Michael Sheppard
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Name: Michael Sheppard
Title: Vice President, Licensed
Technologies Division
Date: June 15, 2004
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EXHIBIT INDEX
Exhibit
Number Description
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2.1 Asset Purchase Agreement, dated March 27, 2003, by and
between HomeCom Communications, Inc. and Tulix Systems, Inc.
and, for purposes of Section 9(b) thereof, Gia Bokuchava,
Nino Doijashvili and Timothy R. Robinson. (Incorporated by
reference to Exhibit 2.3 of the Company'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 Amendment of Amended and Restated Certificate
of Incorporation of HomeCom Communications, Inc., as filed
with the Secretary of State of Delaware on June 14, 2004.
3.2 Certificate of Amendment of Certificate of Designations,
Preferences and Rights of Series B Convertible Preferred
Stock of HomeCom Communications, Inc.
3.3 Certificate of Amendment of Certificate of Designations,
Preferences and Rights of Series C Convertible Preferred
Stock of HomeCom Communications, Inc.
3.4 Certificate of Amendment of Certificate of Designations,
Preferences and Rights of Series D Convertible Preferred
Stock of HomeCom Communications, Inc.
3.5 Certificate of Amendment of Certificate of Designations,
Preferences and Rights of Series E Convertible Preferred
Stock of HomeCom Communications, Inc.
10.1 Secured Promissory Note, dated May 31, 2004, by Tulix
Systems, Inc. in favor of HomeCom Communications, Inc.
10.2 Security Agreement, dated May 31, 2004, by and between
HomeCom Communications, Inc. and Tulix Systems, Inc.
10.3 Shareholders' Agreement, dated May 31, 2004, by and among
HomeCom Communications, Inc., Tulix Systems, Inc., Gia
Bokuchava, Nino Doijashvili and Timothy R. Robinson.
10.4 Indemnification Agreement, dated May 31, 2004, by and
between HomeCom Communications, Inc. and Tulix Systems, Inc.
99.1 Press release, dated June 15, 2004.