SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: November 27, 2000
GLOBAL ASSET HOLDINGS, INC.
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(Exact name of Registrant as specified in charter)
Florida 011-15499 55-0722193
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(State or Other (Commission File No.) (IRS Employer
Jurisdiction of Identification No.)
Incorporation)
11900 Biscayne Blvd., Suite 262, Miami, Florida 33181
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(Address of principal executive officers)
305-981-0539
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(Telephone)
Item 2. Acquisition or Disposition of Assets
On November 14, 2000, we acquired the entire ownership interest of Transvoice
Investments, Ltd. ("Transvoice") in SavOnCalling.com, LLC., a Florida limited
liability company ("SavOn"). SavOn is engaged in the marketing of casual access
long distance services, better known as "10-10 dial around". Dial around is a
telecommunications service that allows consumers to select alternative long
distance providers by entering the particular carrier identification code (CIC)
prior to dialing a long distance telephone call. Transvoice's interest consists
of a 51% ownership interest in SavOn which increased to 80% on November 15, 2000
pursuant to an Acquisition Agreement between Teltran and Transvoice dated May 1,
2000. The interest is subject to possible increase in the minority partner's
interest to 66.67% upon terms mutually agreeable to the parties. The purchase
price of Transvoice's entire interest in SavOn was 2,000,000 shares of our
common stock. In addition, if during the period commencing January 1, 2001 and
ending June 30, 2002 ("The Earnings Period") the accumulated net after tax
income of SavOn is $1,200,000 or greater, then Transvoice shall receive
additional shares of our common stock. For each $1.00 of net after tax income of
SavOn in excess of $1,200,000 during the Earnings Period, Transvoice shall
receive additional shares of our common stock having a market value of $10.00
per share.
Item 7. Financial Statements, Pro-Forma Information and Exhibits
(a) and (b) *
(c) Exhibits
10.23 Exchange Agreement for the Purchase of Part of SavOnCalling.com, LLC
between Global Asset Holdings, Inc. and Transvoice Investments, Ltd. dated
November 14, 2000.
* Registrant's filing of financial and pro-forma information relating to the
Agreement within fifteen (15) days after the exchange is impracticable.
Registrant will file such financial information by amendment hereto no later
than sixty (60) days after the filing of this report.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Dated: November 27, 2000
GLOBAL ASSET HOLDINGS, INC.
(Registrant)
By: /s/ Irving Greenman
-----------------------------
Irving Greenman, President
GLOBAL ASSET HOLDINGS, INC. AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the year ended December 31, 1999
Historic Pro-Forma
--------------------------- ---------------------------
Global SavOn Adjustments Combined
----------- ----------- ----------- -----------
Revenues $ -- $ 2,406 $ -- $ 2,406
Cost of sales -- 70,786 -- 70,786
----------- ----------- ----------- -----------
Gross profit (loss) -- (68,380) -- (68,380)
----------- ----------- ----------- -----------
Expenses - Selling, general
and administrative 38,374 1,014,246 -- 1,052,620
----------- ----------- ----------- -----------
Loss during development stage
before interest, depreciation
and amortization (38,374) (1,082,626) -- (1,121,000)
----------- ----------- ----------- -----------
Interest expense -- 1,018 -- 1,018
Depreciation -- 9,479 -- 9,479
Amortization -- -- 2,020,810(a) 2,020,810
----------- ----------- ----------- -----------
-- 10,497 2,020,810 2,031,307
----------- ----------- ----------- -----------
Net loss during development
stage $ (38,374) $(1,093,123) $(2,020,810) $(3,152,307)
=========== =========== =========== ===========
See notes to unaudited pro forma statement
NOTES TO UNAUDITED PRO-FORMA
CONSOLIDATED FINANCIAL STATEMENT OF OPERATIONS
The following unaudited pro forma consolidated financial statement of operations
for Global Asset Holdings, Incorporated, consists of actual operating results
for the year ended December 31, 1999 for Global and the period January 11, 2000
(inception) to November 14, 2000 for SavOnCalling.com, LLC which was acquired by
Global on November 14, 2000.
On November 14, 2000, Global acquired the entire membership interest held by
Transvoice Investments Ltd. In SavOnCalling.com, LLC. The 80% interest held by
Transvoice was originally 51%; but increased to the 80% on November 14, 2000,
pursuant to an acquisition agreement dated May 1, 2000 between Transvoice and
Teltran International Group, Ltd. Teltran continues to hold a minority
membership interest in SavOn of 20%. The transaction was valued at $12,000,000
based on the Company's publicly traded stock price at the acquisition date. The
acquisition agreement with Transvoice also includes an "Earnout Provision",
whereby for the period January 1, 2001 to June 30, 2002; if SavOn earns more
than $1,200,000 in net income after taxes, the Company will transfer additional
shares of common stock to Transvoice having a market value of $10 per share for
each $1.00 in excess of the earnout base of $1,200,000. At the date of
acquisition, SavOn had negative net worth requiring the Company to record
acquisition the goodwill in excess of the purchase price of $12,124,844.
Additionally, since Teltran retained a minority interest in SavOn; that interest
being a part of SavOn's negative net worth, and it is not expected that Teltran
will contribute additional capital; the minority interest has been charged
against the Company's retained earnings deficit. Any further losses allocated to
the minority interest will not be recorded, and profits will not be recognized
until the unrecorded losses have been recovered.
The purchase price was determined as follows:
2,000,000 common shares @ $6.00 per share = 12,000,000 (fair market value)
The purchase price was allocated as follows:
Accumulated net loss $ (1,093,123)
Less: Member's contributed capital (937,068)
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(156,055)
Less: 20% minority interest in
negative net worth 31,211
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Negative net worth (124,844)
Purchase price 12,000,000
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Goodwill $ 12,124,844
===========
(a) - Amortization of Goodwill:
$12,124,844 over 5 year life = $202,081 month
Amortization expense
10.0 months @ $202,081 = $2,020,810
SavOnCalling.com, LLC
(A Development Stage Company)
FINANCIAL STATEMENTS
FOR THE PERIOD JANUARY 11, 2000 (DATE OF INCEPTION)
TO NOVEMBER 14, 2000
with
INDEPENDENT AUDITORS' REPORT
SavOnCalling.com, LLC
(A Development Stage Company)
CONTENTS
For the period January 11, 2000 (date of inception)
to November 14, 2000
PAGE #
Independent Auditors' Report 1
Financial Statements:
Balance Sheet 2
Statement of Operations 3
Statement of Members' Deficiency 4
Statement of Cash Flows 5
Notes to Consolidated Financial Statements 6 - 10
The Board of Directors
SavOnCalling.com, LLC
(A Development Stage Company)
Miami, Florida
We have audited the balance sheet of SavOnCalling.com, LLC (a Development Stage
Company), as of November 14, 2000, and the related statements of operations,
members' deficiency and cash flows for the period, January 11, 2000 (inception)
to November 14, 2000 then ended in accordance with Statements on Standards for
Accounting and Review Services issued by the American Institute of Certified
Public Accountants. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
These standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as, evaluating the overall financial statements
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects the financial position of SavOnCalling.com, LLC (a
Development Stage Company) as of November 14, 2000, and the results of its
operations and its cash flows for the period then ended in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company has suffered losses from operations and has not
established a significant amount of revenues. This raises substantial doubt
about its ability to continue as a going concern. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
Liebman Goldberg & Drogin, LLP
June 8, 2001, except for Note 7, as to which the Note is June 28, 2001
SavOnCalling.com, LLC
(A Development Stage Company)
BALANCE SHEET
November 14, 2000
ASSETS
Current Assets:
Cash and cash equivalents $ 8,053
Accounts receivable 2,406
Prepaid expenses 3,703
---------
Total current assets 14,162
Property and equipment, net of accumulated
depreciation of $9,479 104,120
Other Assets:
Security deposits 3,023
---------
Total assets $ 121,305
=========
LIABILITIES AND MEMBERS' DEFICIENCY
Current Liabilities:
Loan payable $ 11,000
Accounts payable 265,904
Accrued expenses payable 456
---------
Total current liabilities 277,360
Commitments and Contingencies
Members' Deficiency (156,055)
---------
Total liabilities and stockholders' (deficit) $ 121,305
=========
See notes to financial statements.
-2-
SavOnCalling.com, LLC
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the period January 11, 2000 (date of inception)
to November 14, 2000
Revenues $ 2,406
Cost of sales 70,786
-----------
Gross profit (loss) (68,380)
Expenses:
Selling, general and administrative 1,014,246
-----------
Loss during development stage before
depreciation and interest expense (1,082,626)
Depreciation 9,479
Interest expense 1,018
-----------
Net (loss) during development stage $(1,093,123)
===========
See notes to financial statements.
-3-
SavOnCalling.com, LLC
(A Development Stage Company)
STATEMENT OF MEMBERS' DEFICIENCY
For the period January 11, 2000 (date of inception)
to November 14, 2000
(Deficit)
Accumulated
During
Members' Development
Total Capital Stage
----------- ----------- -------------
Balance - January 11, 2000 (inception) $ -- $ -- $ --
Capital contribution 937,068 937,068 --
Net loss for the period (1,093,123) -- (1,093,123)
----------- ----------- -----------
Balance - November 14, 2000 $ (156,055) $ 937,068 $(1,093,123)
=========== =========== ===========
See notes to financial statements.
-4-
SavOnCalling.com, LLC
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the period January 11, 2000 (date of inception)
to November 14, 2000
Cash Flows from Operating Activities:
Net (loss) $(1,093,123)
Adjustments to Reconcile Net Loss to Net Cash
(Used in) Operating Activities:
Depreciation 9,479
Changes in Assets and Liabilities:
(Increase) in accounts receivable (2,406)
(Increase) in prepaid expenses (3,703)
(Increase) in other assets (3,023)
Increase in accounts payable 265,904
Increase in accrued expenses 456
-----------
Net cash (used in) operating
operating activities (826,416)
-----------
Cash Flows from Investing Activities:
Acquisition of fixed assets (113,599)
-----------
Net cash (used in) investing activities (113,599)
-----------
Cash Flows from Financing Activities:
Increase in loans payable 11,000
Members' capital contribution 937,068
-----------
Net cash provided by financing activities 948,068
-----------
Increase in cash 8,053
Cash, beginning of period --
-----------
Cash, end of period $ 8,053
===========
Supplemental Disclosures:
Income tax $ --
===========
Interest paid $ 1,018
===========
See notes to financial statements.
-5-
SavOnCalling.com, LLC
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
November 14, 2000
Note 1 - Nature of Business:
- ----------------------------
The Company was organized as a Limited Liability Company in Florida on
January 11, 2000. Since its' formation, the Company has operated as a
development stage activity and had minimal revenues from inception to
November 14, 2000. The Company intends to market and resell domestic
and international telecommunication services. The marketing of its
"casual, long distance" service is known as "10-10 dial-around". The
Company intends to market its services via network marketing,
utilizing an independent sales agent force. This operation would be
similar to that of well known companies like Amway and Avon.
Prior to its organization and on January 5, 2000, Savon, Transvoice
Investments Ltd. and Intelisis Group, Inc. executed an agreement
whereby Transvoice became the sole member of Savon and Intelisis
transferred certain assets to Savon.
On May 1, 2000, Transvoice sold 66 2/3% of its membership interest in
Savon to Teltran International Group, Inc.
On October 6, 2000, Transvoice's membership interest increased to 80%
and Teltran dropped to 20%, when Teltran was unable to comply with all
the covenants of the May 1, 2000 acquisition agreement.
On November 14, 2000, Transvoice sold its entire 80% interest to
Global Asset Holdings, Incorporated, with Teltran retaining its 20%
ownership.
Note 2 - Summary of Significant Accounting Policies:
- ----------------------------------------------------
Revenue Recognition and Accounting Policies:
--------------------------------------------
To date, the Company has had minimal revenues and is still in the
development stage. Revenues were from the marketing of its casual
access long distance telecommunications. Revenues are recognized when
service is provided by billing to the customer from the customer's
carrier. The customer's carrier reports to a billing company who
transfers funds to Savon.
Fair Value of Financial Instruments:
------------------------------------
SFAS No. 107, "Disclosures About Fair Value of Financial Instruments",
requires disclosure of the fair value information, whether or not
recognized in the balance sheet, where it is practicable to estimate
that value. The amounts reported for cash, accounts receivable, loans
payable, accounts payable and accrued expenses approximate the fair
value because of their short maturities.
-6-
SavOnCalling.com, LLC
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
November 14, 2000
Note 2 - Summary of Significant Accounting Policies (Continued):
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Cash and Cash Equivalents:
--------------------------
For purposes of the statement of cash flows, the Company considers all
short-term debt securities purchased with a maturity of three months
or less to be cash equivalents.
Development Stage Activities and Operations:
--------------------------------------------
The Company has been in its initial stages of formation and for the
period January 11, 2000 to November 14, 2000, had insignificant
revenues. FASB #7 defines a development stage activity as one in which
all efforts are devoted substantially to establishing a new business
and even if planned principal operations have commenced, revenues are
insignificant.
Property and Equipment:
-----------------------
Property and equipment are stated at cost, less accumulated
depreciation. Depreciation is computed on a straight-line basis over
the estimated useful lives of the related assets, which range from
five to seven years. Depreciation expense for the period ended
November 14, 2000 is $9,479.
Impairment of Long-Lived Assets:
--------------------------------
At November 14, 2000, the Company had not completed its evaluation of
the Adoption of SFAS # 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of".
Long-lived assets should be reviewed whenever indicators of impairment
are present and the undiscounted cash flows are not sufficient to
recover the related asset carrying amount.
Advertising:
------------
The Company expenses advertising as incurred. Advertising expense for
the period ended November 14, 2000 was $35,535.
Concentration of Credit Risk:
-----------------------------
Financial instruments that potentially subject the Company to
significant concentrations of credit risk consist primarily of cash
and cash equivalents. The Company's investment policy is to invest in
low risk, highly liquid investments.
-7-
SavOnCalling.com, LLC
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
November 14, 2000
Note 2 - Summary of Significant Accounting Policies (Continued):
- ----------------------------------------------------------------
Income Taxes:
-------------
The Company by virtue of being organized as a limited liability
company is taxed as a partnership for federal and state income tax
purposes. Therefore, no income tax expense (benefit) has been
recorded. Income or loss of the Company is passed on to the members
based upon their proportionate ownership interest and allocated as
well for the time period of ownership.
Use of Estimates:
-----------------
The preparation of financial statements in conformity with generally
accepted principles requires management to make estimates and
assumptions that affect the amounts reported in the consolidated
financial statements and accompanying notes. Actual results could
differ from those estimates and such differences could be material to
the financial statements.
Going Concern:
--------------
The Company is a development stage company having insignificant
revenues to date. Additionally, the Company has suffered significant
losses and has limited working capital. This raises substantial doubt
about its ability to continue as a going concern. The financial
statements do not include any adjustments relating to the
recoverability of assets that might be necessary should the Company
be unable to continue as a going concern.
Note 3 - Loans Payable:
- -----------------------
During the period ended November 14, 2000, the Company received a
loan of $11,000 from Transvoice Ltd. The loan is unsecured, payable
on demand and bears interest at 7% per annum. Transvoice as
previously described is the majority member of the Company.
Note 4 - Property and Equipment:
- --------------------------------
Property and equipment are summarized by major classifications as
follows:
Machinery and equipment $ 78,822
Furniture and fixtures 2,229
Computer equipment 29,075
Leasehold improvements 3,473
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113,599
Less: accumulated depreciation 9,479
---------
$104,120
=========
-8-
SavOnCalling.com, LLC
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
November 14, 2000
Note 5 - Members Capital:
- -------------------------
Prior to its organization on January 11, 2000, the Company entered
into an agreement with Transvoice Investments Ltd. (a non-related
entity) who became the sole LLC member. Transvoice agreed to
contribute $500 to become the member. Additionally, the agreement
provided that Intelisis Group, Inc. transfer certain assets to the
Company. Intelisis also transferred assets to Transvoice that became
assets of Savon. These assets included a lease for office space,
domain name registrations and contracts all having no or minimal
values. Transvoice also transferred 40,000 shares of common stock it
received from Teltran International Group, Ltd., which was their
initial down payment for their member investment in Savon. Also as
part of the agreement, Transvoice agreed to advance $50,000 to Savon
for operating capital. During the period ended November 14, 2000,
Transvoice contributed $438,024 as members' capital. Transvoice and
Teltran are non-related parties, however, Intelisis is related since
its shareholders have management contracts with Savon and Savon was a
wholly owned subsidiary of Intelisis before being sold to Transvoice.
On May 1, 2000, Transvoice agreed to sell 66 2/3% of its interest in
Savon to Teltran International Group, Ltd. Teltran acquired its 66
2/3% interest in exchange for 150,000 shares of common stock. The
agreement also called for additional shares to be issued equal to
having a market price of three times earnings before income taxes,
depreciation and amortization for the period commencing May 1, 2000
and ending September 30, 2002. Additionally, Teltran committed to
contributing up to $800,000 of capital to Savon.
On October 6, 2000 the May 1, 2000 agreement between Transvoice and
Teltran was amended, whereby Teltran's membership interest changed
from 66 2/3% to 20%. Teltran had the right to retain up to 49%
interest in Savon, if it provided certain additional fundings to the
Company which did not occur. The earnout period was also changed from
November 1, 2000 to April 30, 2002 and the earnout value to 150% of
earnings before income taxes, depreciation and amortization.
On November 14, 2000, Transvoice sold its 80% membership interest to
Global Asset Holdings, Inc. for 2,000,000 shares of Global's common
stock having a value of $12,000,000, based upon Global's publicly
traded stock price. As previously discussed, Transvoice sold part of
its interest to Teltran which was then taken back. The agreement with
Global includes on "Earnout Provision" whereby for the period January
1, 2001 to June 30, 2002; if Savon earns more than $1,200,000 in net
income after taxes, the company will transfer additional shares of
common stock to Transvoice having a market value of $10 per share for
each $1.00 in excess of the earnout base of $1,200,000. Teltran
retained its 20% membership interest.
-9-
SavOnCalling.com, LLC
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
November 14, 2000
Note 6 - Related Parties:
- -------------------------
The Company has a management agreement with Savon Management Group at
$25,000 per month which expires May, 2002. The agreement provides for
financial and telecommunications consulting and may also be extended
up to an additional thirty months. Some of the members of Savon
Management Group were previously officers of the Company and
shareholders of Intelisis as well as previously discussed, Savon was
a subsidiary of Intelisis Group Inc.
Note 7 - Lawsuit:
- -----------------
On or about February 7, 2001; the Company and Teltran (the minority
interest owner) were named as defendants in a lawsuit instituted by
Savon's wholesale telecommunications carrier. The lawsuit alleges
breach of contract and other related theories and seeks damages in
excess of $3,000,000. The Company has filed an answer and affirmative
defenses; and also a counterclaim seeking $10,000,000 against the
wholesale carrier based on breach of contract, misappropriation of
confidential and trade secret information, unfair competition,
tortuous interference with business relationships and expectancies;
and also requested an accounting. While the lawsuit is in its initial
stages and the ultimate outcome cannot be ascertained at this time,
management believes the lawsuit should not have a material adverse
effect on the Company's financial position, results of operations or
cash flows.
Note 8 Commitments and Contingencies:
- -------------------------------------
The company leases approximately 2000 square feet of office space
until February, 2004. Rent expense for the period ended November 14,
2000 was $32,193. Annual rental commitments for the years ended
December 31, are as follows:
2001 $32,130
2002 33,020
2003 33,918
2004 5,678
Note 9- Subsequent Events:
- --------------------------
For the period January 1, 2000 to March 31, 2001, the Company ceased
being a development stage activity as revenues became significant.
During this period, sales were $967,447. However, subsequent to March
31, 2001, the Company has not had any sales and ceased most
operations. As previously discussed, the Company is a defendant in a
lawsuit instituted by its wholesale telecommunications carrier and
did not secure any other carrier to continue its sales operations.
On March 31, 2001, Global Asset Holdings, Inc. (the 80% member)
acquired all of the outstanding stock of National Online Services,
Inc. National is a non-related entity except that its 80% shareholder
prior to Global's acquisition was Transvoice Investments, Ltd.; the
former majority member of Savon. Additionally, since certain
contracts and leases are in Savon's corporate name and National is
utilizing the premises of Savon to conduct its operations, Savon
continues to operate receiving reimbursement for these contracts and
leases from National.
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