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
April 8, 2002
Date of Report (date of earliest event reported)
Converge Global, Inc.
(Exact Name of Registrant as Specified in its Charter)
Utah 000-27039 87-0406858
(State or Other (Commission File (IRS Employer
Jurisdiction of Number) Identification
Incorporation) Number)
29 Southeast 5th Street, Boca Raton, Florida 33432
(Address of Principal Executive Offices, Including Zip Code)
(888) 999-3929
(Registrant's Telephone Number, Including Area Code)
233 Wilshire Boulevard, Suite 930, Santa Monica, CA 90410
(Former Name or Former Address, if Changed Since Last Report)
Item 1. CHANGES IN CONTROL OF REGISTRANT.
(a) As of the date hereof, giving effect to the 31,900,000
shares of our common stock issued to the shareholders of TeleWrx
Marketing, Inc., a Florida corporation ("TeleWrx") in order to
conclude a share exchange transaction (See Item 2. "Acquisition and
Disposition of Assets" below), but without giving effect to the
potential issuance of up to 7,000,000 shares of our common stock
pursuant to certain offerings (the "Proposed Offerings") that we
expect to undertake under the provisions of Regulation D under the
Securities Act of 1933, as amended (the "Securities Act") (See "Item
5. Other Events - Recent Offering of Securities") and without giving
effect to the potential issuance of up to 3,000,000 shares of our
common stock in the event of the exercise of certain warrants to
purchase our common stock (the "Warrants") recently offered and sold
by us without registration under the Securities Act pursuant to the
exemption provided by Section 4(2) thereunder (See "Item 5. Other
Events - Recent Offering of Securities"), we have 39,940,430 shares
of our common stock outstanding. The 31,900,000 shares of our
common stock issued by us in connection with the share exchange
transaction between us and TeleWrx represent approximately 80
percent of our issued and outstanding common stock. Accordingly,
the holders of the 31,900,000 shares of our common stock issued in
connection with the share exchange transaction between us and
TeleWrx own, in the aggregate, more than a majority of our issued
and outstanding common stock and possess significant influence over
us, giving them the ability, among other things, to elect a majority
of our Board of Directors and approve significant corporate
transactions. Such share ownership and control may also have the
effect of delaying or preventing any further change in control,
impeding a merger, consolidation, takeover or other business
combination or discourage a potential acquirer from making a tender
offer or otherwise attempting to obtain control of us which could
have a material adverse effect on the market price of our common
stock.
(b) On the date hereof, giving effect to the 31,900,000 shares
of our common stock issued to the shareholders of TeleWrx, but
without giving effect to the potential issuance of up to 7,000,000
shares of our common stock pursuant to the Proposed Offerings and
without giving effect to the potential issuance of up to 3,000,000
shares of our common stock in the event of the exercise of the
Warrants we have 39,940,430 shares of our common stock issued and
outstanding. The following table sets forth certain information
regarding the beneficial ownership of our common stock as of April
8, 2002 of (1) each person who is know to us to own beneficially
more than 5% of our common stock, (2) each of our directors and
officers and (3) all of our directors and officers as a group:
Name and Address of Beneficial Amount of Approximate
Owner Beneficial Percent of
Ownership (1) Class (1)
Michael P. Brown (2) 8,200,000 20.5
17252 Balboa Point Way
Boca Raton, Florida 33487
Robert E. Brown (3) 8,200,000 20.5
5350 Northwest 26th Circle
Boca Raton, Florida 33496
Donald A. Smiley (4) 1,500,000 3.8
1200 Weston Road Penthouse
Weston, Florida 33326
Melvin Beychok(5) 58,000 .2
1925 Century Park East
5th Floor
Los Angeles, California 90067
John J. Matteis 750,000 1.9
3864 Northwest 4th Avenue
Boca Raton, Florida 33431(6)
Jerry D. Duling 0 0.0
17252 Balboa Point Way
Boca Raton, Florida 33487 (7)
LKL Family Partnership(8) 5,500,000 13.8
10900 Wilshire Boulevard
Los Angeles, California 90024
All directors and officers as a 18,650,000 46.7
group (7)
(1) Unless otherwise noted below, we believe that all persons named
in the table have sole voting and investment power with respect to
all shares of our common stock beneficially owned by them. For
purposes hereof, a person is deemed to be the beneficial owner of
securities that can be acquired by such person within 60 days from
the date hereof upon the exercise of warrants or options or the
conversion of convertible. Each beneficial owner's percentage
ownership is determined by assuming that any such warrants, options
or convertible securities that are held by such person (but not
those held by any other person) and which are exercisable within 60
days from the date hereof, have been exercised.
(2) Michael P. Brown is one of our directors and is our President
and Secretary. Michael P. Brown is the son of Robert E. Brown.
Michael P. Brown disclaims any beneficial ownership of the shares of
our common stock owned, beneficially or otherwise, by Robert E. Brown.
(3) Robert E. Brown is one of our directors and is our Executive
Vice President. Robert E. Brown is the father of Michael P. Brown.
Robert E. Brown disclaims any beneficial ownership of the shares of
our common stock owned, beneficially or otherwise, by Michael P. Brown.
(4) Donald A. Smiley is one of our directors.
(5) Melvin Beychok was appointed as a director on March 25, 2002
and resigned on March 31, 2002. At the time of the resignation by
Mr. Beychok there was no disagreement between Mr. Beychok and us in
connection with any matter.
(6) John J. Matteis is our Chief Financial Officer.
(7) Jerry D. Duling is our Chief Operating Officer.
(8) LKL Family Partnership is the beneficial owner of more than
five percent (5%) of our common stock.
(9) Does not include the shares of our common stock owned by Melvin
Beychok.
Item 2. ACQUISITION AND DISPOSITION OF ASSETS.
On March 25, 2002, we acquired all of the issued and
outstanding shares of TeleWrx, Inc., a Florida corporation
("Telewrx"), a formerly unaffiliated development stage entity that
intends to specialize in the sale and marketing of
telecommunications products and services through the utilization of
network marketing. TeleWrx hopes to become a significant force in
the telecommunications industry, however no assurance can be
provided that TeleWrx will be successful in such undertaking.
TeleWrx plan of operation combines the power of network marketing
with technologically advanced telecommunications services, thus
enabling direct sales agents engaged by TeleWrx to sell its services
and from a home-based business and earn commission and residual
income. Telewrx believes that this powerful sales strategy will
allow it to position itself as a leader the market, however no
assurance can be provided that such strategy will prove successful.
TeleWrx expects to offer residential and small business services
that include long-distance, wireless long-distance, internet dialup
(56K), calling card, toll-free service, wireless services including
WAP (wireless application protocol) devises and enhanced services
such as "follow me" and nationwide "one number" services. TeleWrx
believes that home-based businesses have enjoyed explosive growth
and that its strategy to utilize such businesses will fuel it
ability to service the expanding markets within the
telecommunications industry.
Our acquisition of TeleWrx was accomplished pursuant to a Stock
Exchange Agreement dated March 21, 2002 (the "Stock Exchange
Agreement") between us and the owners of all of the issued and
outstanding common stock of TeleWrx (the "TeleWrx Shareholders"),
and as a result of the conclusion of the transaction contemplated by
the Stock Exchange Agreement (the "Stock Exchange Transaction"),
Telewrx is now our wholly owned subsidiary. We exchanged 31,900,000
shares of our $.001 par value common stock for all of the issued and
outstanding shares of TeleWrx. We and the TeleWrx Shareholders
engaged in arms length negotiations to determine the relative value
of the consideration associated with the Stock Exchange Transaction.
Since the Stock Exchange Agreement provided solely for the issuance
of our common shares from our authorized but unissued capital in
exchange for all of the issued and outstanding common stock of
TeleWrx held by the TeleWrx Shareholders, no funds, other than the
funds necessary to pay the costs incurred by us in connection with
undertaking the Stock Exchange Transaction, were required by us. We
intend to conduct the operations of TeleWrx in the same manner as
operations were conducted prior to our acquisition of TeleWrx.
Prior to the consummation of the Stock Exchange Transaction,
there was no material relationship between TeleWrx or any of the
TeleWrx Shareholders and us or any of our affiliate, directors or
officers, or any associate of any of our directors or officers.
Item 5. OTHER EVENTS.
(a) Recent Sale of Warrants. On March 25, 2002, we offered
and sold warrants (the "Warrants") to purchase an aggregate of
3,000,000 shares of our common stock to a limited number of
investors without registration under the Securities Act in reliance
upon the exemption provided by Section 4(2) thereunder (the "Recent
Offering").
(1) As of the date hereof, we sold certain Warrants (the
"A Warrants")for aggregate consideration of $5,000. The A Warrants
are dated March 25, 2002 and permit the holders thereof to acquire,
on or before April 30, 2005, 1,000,000 shares our common stock at
an exercise price of $1.00 per share. In connection with the A
Warrants we executed registration rights agreements (the "A Warrants
Registration Agreements") with the purchasers of the A Warrants, and
the A Warrants Registration Agreements obligate us to file a
registration statement, within 90 days after March 25, 2002, as to
our shares of common stock that underlie the A Warrants.
Accordingly, we expect to file a registration statement under the
Securities Act with respect to all of our shares of our common stock
that underlie the A Warrants.
(2) As of the date hereof, we sold certain Warrants (the
"B Warrants")for aggregate consideration of $5,000. The B Warrants
are dated March 25, 2002 and permit the holders thereof to acquire,
on or before April 30, 2005, 1,000,000 shares our common stock at
an exercise price of $1.50 per share. In connection with the B
Warrants we executed registration rights agreements (the "B Warrants
Registration Agreements") with the purchasers of the B Warrants, and
the B Warrants Registration Agreements obligate us to file a
registration statement, within 90 days after March 25, 2002, as to
our shares of common stock that underlie the B Warrants.
Accordingly, we expect to file a registration statement under the
Securities Act with respect to all of our shares of our common stock
that underlie the B Warrants.
(3) As of the date hereof, we sold certain Warrants (the
"C Warrants")for aggregate consideration of $5,000. The C Warrants
are dated March 25, 2002 and permit the holders thereof to acquire,
on or before April 30, 2005, 1,000,000 shares our common stock at
an exercise price of $2.00 per share. In connection with the C
Warrants we executed registration rights agreements (the "C Warrants
Registration Agreements") with the purchasers of the C Warrants, and
the C Warrants Registration Agreements obligate us to file a
registration statement, within 90 days after March 25, 2002, as to
our shares of common stock that underlie the C Warrants.
Accordingly, we expect to file a registration statement under the
Securities Act with respect to all of our shares of our common stock
that underlie the C Warrants.
(b) Proposed Offering of our common stock. On March 25, 2002,
our board of directors has authorized us to offer and sell up to
7,000,000 shares of our common stock (the "Proposed
Offerings")pursuant to the provisions of Regulation D under the
Securities Act solely to Accredited Investors (as such term is
defined under the Act). We expect to offer and sell 3,500,000
shares of our common stock at a price of $0.85 per share, 2,500,000
shares of our common stock at a price of $1.00 per share and
1,000,000 shares of our common stock at a price of $1.25 per share.
As part of the Proposed Offerings, we expect to provide the
purchasers of our common stock with certain registration rights. We
expect that we will agree to file a registration statement covering
the shares sold in the Proposed Offering within 150 days of the last
sale of any of our common stock as a result of any such Proposed
Offering. We expect to use the proceeds of any such Proposed
Offering to pay the costs and expenses thereof, to fund payment of
accounts payable, to fund costs of marketing and acquisition of
information technology and for working capital and general corporate
purposes. As of the date hereof we have not yet commenced any such
Proposed Offering.
(c) Executive Officers and Directors. Simultaneously with the
conclusion of the Share Exchange Transaction (See Item 2.
Acquisition and Disposition of Assets" above) our existing directors
and officers resigned and were replaced by Melvin Beychok. Mr.
Beychok served as our sole director and sole officer for a period of
6 days. On March 31, 2002, Mr. Beychok appointed Michael P. Brown,
Robert E. Brown and Donald A. Smiley to fill vacancies on our board
of directors and, thereafter, Mr. Beychok resigned. At the time of
the resignation of Mr. Beychok there was no disagreement between Mr.
Beychok and us in connection with any matter.
The following table sets forth certain information with
respect to our current executive officers and directors. Each
director holds such position until our next annual meeting of
shareholders and until such party's respective successor has been
elected and qualifies. Any of our directors may be removed with or
without cause at any time by the vote of the holders of not less
than a majority of our then outstanding common stock. Other than as
otherwise provided in an employment agreement, officers are elected
annually by our board of directors. Any of our officers may be
removed with or without cause at any time by our board of directors
although, in such event, we may incur certain liabilities under an
applicable employment agreement.
Name and Address Age Positions with the Company
Michael P. Brown 35 Director, President, Secretary
and Chief Executive Officer
Robert E. Brown 74 Director and Executive Vice
President
Donald A. Smiley 47 Director
John J. Matteis 52 Chief Financial Officer
Jerry D. Duling 51 Chief Operating Officer
Michael P. Brown has been one of our directors, our president,
secretary and chief executive officer since March 31, 2002. Michael
P. Brown has over eight years experience in emerging
telecommunications markets. From 1994 to 1997, he served as
President and CEO of ICG, a nationwide long distance carrier, where
he oversaw the implementation of a shared nationwide long distance
network with Frontier Communications and MCI. In 1997, Michael P.
Brown resigned from ICG and since that time has been involved in
consulting for the telecommunications and Internet industries. He
holds an undergraduate degree from the University of Michigan and a
juris doctor degree from the University of Detroit School of Law.
Robert E. Brown has been one of our directors and our executive
vice president since March 31, 2002. For over 33 years, Mr. R.
Brown was synonymous with the Petersen Publishing Company. Having
served in many capacities, he is best recognized as the Publisher of
Motor Trend Magazine. Prior to leaving Petersen Publishing in 1992,
Mr. R. Brown served as Sr. Vice President in charge of Corporate
Development. When he left Petersen, it was to enjoy a successful
consulting career. Since 1992, he has compiled a "who's who" list
of clients. These include automotive manufacturers as well as
advertising agencies. Some of his larger clients include Ford Motor
Company and their agency, J. Walter Thompson; General Motors; Dodge
Dealers including their agency BBD&O; and Pepsi. Recent projects
have included online sales and marketing for several of these
corporations.
Donald A. Smiley has been one of our directors since March 31,
, 2002. Mr. Smiley has a diversified and successful background in
the executive management of major enterprises. From 1985 to 1987 Mr.
Smiley served as Marketing Director for Huizenga Holdings, Inc.
From 1987 to 1991 he served in several executive positions,
including marketing director, director of franchise operations and
director of real estate for Blockbuster Entertainment Corp. He also
served as head of Internet development and assistant to Blockbuster
chairman, Wayne Huizenga. In 1991 Mr. Huizenga assigned Mr. Smiley
to spearhead a committee to bring a Major League Baseball team to
South Florida. Upon acquisition of the Major League Baseball
franchise, Mr. Smiley served in various positions with the
organization, and in 1994 became the president of the Florida
Marlins. In his various capacities with the Florida Marlins, Mr.
Smiley was instrumental in the implementation of the Marlin's
inaugural season, the building and marketing of the team and finally
his greatest accomplishment, the Florida Marlins winning the 1997
Major League Baseball World Series. Most recently, Mr. Smiley has
served as president and CEO for Automotive Risk Management, an
online automotive insurance company. Mr. Smiley is a graduate of
the University of Wisconsin.
John J. Matteis has been our chief financial officer since
March 31, 2002. Mr. Matteis has been the Managing Partner of the
Certified Public Accounting Firm of Matteis & Christopher for the
past 21 years. Mr. Matteis specializes in corporate, small business
and individual taxation. He is also a Certified Fraud Examiner and
is certified as an Expert Witness in accounting and tax matters
relating to bankruptcy, fraud, marital law, business disputes, and
business transactions. He a graduate of the University of South
Florida, and is a member of the Florida Institute of Certified
Public Accounts, the American Institute of Certified Public
Accountants, Tax Division, and the National Association of Certified
Fraud Examiners. He has assisted several of his clients in managing
and start-up of various businesses and has served as CFO for several
companies on an interim basis.
Jerry D. Duling has been our chief operating officer since
March 31, 2002. Mr. Duling is a charismatic leader of people with
an exceptional presence for sales, marketing and effective
management skills. Most recently, he served as the Chief Operating
Officer for Contentriq, Inc., a fulfillment entity. He was
responsible for day-to-day operations and oversaw strategic
relations, managed funding and acquisitions as well as prepared for
an IPO. For approximately 10 years prior to joining Contentriq, he
served as President and CEO of Quest Group International, Inc., a
holding company comprised of 3 public telecommunications
subsidiaries. With managed revenue over $25 million, he helped
introduce the first prepaid calling card in the United States. He
helped develop sales and marketing strategies and managed the legal
and regulatory filings for all 50 states.
Executive Compensation
We expect to enter into employment agreements with Michael P.
Brown, Robert E. Brown, Donald A. Smiley, John J. Matteis and Jerry
D. Duling. As of the date hereof, we have not concluded
negotiations with any of the foregoing individuals as to any such
employment agreement. Accordingly, we are not presently certain of
the term of employment, the level of compensation or the other
benefits that may be provided by us to such individuals. We expect
to institute an incentive plan and to provide benefits to our
officers and directors thereunder. We are not presently certain of
the nature of any such incentive plan or the benefits, if any, that
may be provided to the foregoing individuals under any such
incentive plan.
We expect to enter into additional employment and consulting
agreements with numerous other individuals and entities to provide
us with such services we deem appropriate. We are not presently
able to determine the term of employment, the level of compensation
or the other benefits that we may provide in connection with such
additional employment and consulting agreements or the resulting
total annual dollar cost to us associated with such additional
employment and consulting agreements. Likewise, we expect that as a
part of such additional employment and consulting agreements, and in
order to attract such parties, we will, after implementation of our
incentive plan provide such parties with certain benefits
thereunder. We are not presently certain of the nature of any such
incentive plan or the benefits, if any, that may be provided to any
such party under any such incentive plan.
(d) This report may include "Forward Looking Statements" as
that term is defined in the Private Securities Litigation Reform Act
of 1995. Any statements that express or involve discussions with
respect to predictions, expectations, beliefs, plans, projections,
objectives, assumptions or future events or performance (often, but
not always, using words or phrases such as "expects" or "does not
expect", "is expected", "anticipates" or "does not anticipate",
"plans", "estimates" or "intends", or stating that certain actions,
events or results "may", "could", "would", "might" or "will" be
taken, occur or be achieved) are not statements of historical fact
and may be "forward looking statements". Forward Looking Statements
are based on expectations, estimates and projections at the time the
statements are being made that involve a number of risks and
uncertainties which could cause actual results or events to differ
materially from those presently anticipated.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(a) Financial Statements of Business Acquired. To be filed by
amendment to this Form 8-K within sixty (60) days.
(b) Pro Forma Financial Information. To be filed by amendment
to this Form 8-K within sixty (60) days.
(c) Exhibits. The following exhibits are filed herewith.
Description Location
Exhibit
Number
2.1 Share Exchange Agreement dated Filed electronically
March 25, 2002 (without the herewith
counterpart signature pages,
schedules and exhibits attached
thereto)
10.1 Master Network Marketing Agreement Filed electronically
herewith
10.2 Shareholders Agreement Filed electronically
herewith
21.1 Articles of Incorporation of Filed electronically
TeleWrx, Inc. herewith
21.2 Bylaws of TeleWrx, Inc. Filed electronically
herewith
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 thereunder duly authorized.
Converge Global, Inc.
April 8, 2002 By:/s/ Michael P. Brown
Michael P. Brown, President