-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MHUOAlcWbc2gowITcJKw+e89SgRk0yx428QfkJpsdepwb0h/VPgT7+DDy8W2JeHP oSuIxDq+FuIU459gIRb2AA== 0001019056-01-000013.txt : 20010122 0001019056-01-000013.hdr.sgml : 20010122 ACCESSION NUMBER: 0001019056-01-000013 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20010108 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: C-PHONE CORP CENTRAL INDEX KEY: 0000835585 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 061170506 STATE OF INCORPORATION: NY FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-24426 FILM NUMBER: 1503621 BUSINESS ADDRESS: STREET 1: 6714 NETHERLANDS DRIVE CITY: WILMINGTON STATE: NC ZIP: 28405 BUSINESS PHONE: 9103956100 MAIL ADDRESS: STREET 1: 6714 NETHERLANDS DR CITY: WILMINGTON STATE: NC ZIP: 28405 FORMER COMPANY: FORMER CONFORMED NAME: TARGET TECHNOLOGIES INC DATE OF NAME CHANGE: 19940615 8-K 1 0001.txt FORM 8-K 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): JANUARY 8, 2001 --------------- C-PHONE CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) New York 0-24424 06-1170506 - -------------------------------------------------------------------------------- (State or Other Jurisdiction (Commission) (IRS Employer of Incorporation) File Number) Identification No.) 6714 Netherlands Drive, Wilmington, North Carolina 28405 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (910) 395-6100 -------------- N/A - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) 1 ITEM 5. OTHER EVENTS. C-Phone Corporation has entered into a letter of intent dated as of December 29, 2000 (the "Letter of Intent" ), with Motion Media Technology, Inc. ("Motion Media") for the sale of C-Phone's videoconferencing assets for $1 million. Motion Media is a subsidiary of Motion Media PLC Group (London Stock Exchange). The transaction is subject to the execution of definitive documentation which is expected to contain customary conditions to closing, including the approval of C-Phone shareholders. Pursuant to the Letter of Intent, Motion Media purchased some of C-Phone's component inventory for $150,000 and agreed to pay an additional $150,000 for a paid up, non-exclusive license ("the License") for a recently developed POTS-only product design, which has not yet been put into production. If the transaction with Motion Media closes, such up-front payments will be subtracted from the $1 million purchase price. On January 8, 2000, C-Phone issued a press release describing the transaction with Motion Media. In the same press release, C-Phone announced that it intended to voluntarily withdraw its appeal of the delisting of its common stock from the Nasdaq SmallCap Market. After consulting with Nasdaq, C-Phone believes that its common stock will be delisted from the Nasdaq SmallCap Market later this week, at which time trading should continue on the OTC Bulletin Board. If the transaction with Motion Media is approved by C-Phone's shareholders and closes, C-Phone estimates that the funds remaining for eventual distribution to shareholders may be as much as $0.05 per share. There can be no assurance, even if the shareholders of C-Phone approve the sale of C-Phone's videoconferencing assets to Motion Media for $1 million, that the transaction with Motion Media will close, or, even if it does close, that there will be $0.05 per share available for distribution to C-Phone's shareholders. However, if the C-Phone shareholders fail to approve the transaction, the License will become exclusive and then, in all likelihood, C-Phone will cease its remaining operations, in which event it is unlikely that any funds will be available for distribution to C-Phone's shareholders. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits. 99.1 Letter of Intent with Motion Media Technology, Inc., dated as of December 29, 2000 99.2 Press Release, dated January 8, 2001 2 * * * * * * * * * * 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. C-PHONE CORPORATION By: /S/ PAUL H. ALBRITTON ------------------------------------ President and Chief Executive Date: January 8, 2001 3 EX-99.1 2 0002.txt EXHIBIT 99.1 EXHIBIT 99.1 Motion Media Technology Inc. c/o Motion Media Technology Limited Horton Hall, Horton Bristol BS37 6Qn United Kingdom Mr. Paul H Albritton President and CEO C-Phone Video Communications Systems 6714 Netherlands Drive Wilmington NC 28405 December 29, 2000 LETTER OF INTENT Dear Paul, PURCHASE OF CERTAIN ASSETS AND THE BUSINESS UNDERTAKING OF C-PHONE CORPORATION BY MOTION MEDIA Thank you for hosting our visit to C-Phone on Friday 8th December which we enjoyed and found most useful. We believe that Motion Media Technology Inc. ("Motion Media") acquiring the assets of the video conferencing business (the "Business") of C-Phone Corporation ("C-Phone") would offer the best prospects of its continuation and thereby be in the best interests of your customers and staff. We are therefore prepared to offer US $1m for the assets of the Business, subject to the detailed considerations below: 1. The purchase is of the Business, only, and does not involve the purchase of any common stock or other securities of C-Phone Corporation, the NASDAQ listed entity. 2. The purchase price includes IPR, goodwill, the inventories, property and equipment, and all other things needed to continue the Business. 4 3. C-Phone will retain the cash assets and accounts receivable of the Business, and will be responsible for the payment of all unpaid items relating to the inventories and other assets included as part of the sale. 4. Based on the information provided to Motion Media as at 30th November 2000, the $1m offer is broken down approximately as follows: Inventories - maximum of $660k Property and Equipment $75k IPR/Goodwill $265k In the event that C-Phone makes sales between now and completion of this transaction, C-Phone will be entitled to retain the proceeds from the sale but, if these sales cause the value of the inventory to decrease below the figure set out above, the purchase price to Motion Media will be adjusted accordingly. 5. It is recognised that the completion of the whole transaction will require approval of C-Phone's shareholders at a shareholders meeting called to consider the sale of the Business to Motion Media (the "C-Phone Shareholders Meeting"), which could take approximately 3 months after the final agreements contemplated by clause 12 are entered into. It is also recognised that it is in neither party's interest for the Business to close or discontinue to support its customers during this period. The following, therefore, has been agreed as a way forward: 5.1 Upon C-Phone's acceptance of this letter of intent and the agreement of members of staff as identified in clauses 5.3 and 5.4 to transfer to Motion Media employment, Motion Media will purchase a non-exclusive license to C-Phone's "Nano" design for $150,000 (the "Nano Design License"), which Motion Media considers to be a fair value and an adequate consideration. This will be subject to the following conditions: a) No other technology licenses with respect to the Business will be offered or sold by C-Phone to any third party prior to the earliest to occur of: (i) the date of completion of the transaction with Motion Media as contemplated in this letter of intent; (ii) the date on which the shareholders of C-Phone reject the sale of the Business to Motion Media; (iii) the date on which the C-Phone Shareholders Meeting is cancelled; or (iv) 4 months after the final agreements contemplated by clause 12 are entered into. b) The Nano Design License becomes exclusive to Motion Media in the event that C-Phone's shareholders at the C-Phone Shareholders Meeting do not approve the transaction as described in this letter of intent. 5 5.2 Upon C-Phone's acceptance of this letter of intent, Motion Media will purchase 3000 AVP IIIs, free of liens and encumbrances, for $150,000, which Motion Media considers to be a fair value and an adequate consideration. In the event that C-Phone requires AVP IIIs for any manufacturing, C-Phone will use the AVP IIIs sold to Motion Media before using any other AVP IIIs and financial adjustments will be made to take this into account. Upon payment, Motion Media will take possession of these devices; however, if requested by Motion Media, C-Phone will store these devices on behalf of Motion Media at C-Phone's facility at no cost to Motion Media. Motion Media may require the execution of a bailment agreement and applicable UCC filing. 5.3 Motion Media will offer employment to 5 members of C-Phone's engineering staff (Chris Bonser, Yuli Starodubtsev, Mark White, Brandon Dodge and Bob Beucker) effective January 1st on terms at least commensurate with their present terms. C-Phone will withdraw any contractual conditions it has placed which might otherwise restrict these employees when working for Motion Media. 5.4 Motion Media will offer employment agreements to Stuart Ross and David Powell on terms at least commensurate with their present terms, to become effective on the day next following the date of the C-Phone Shareholders Meeting. 5.5 Motion Media will pay C-Phone $50,000 per month during the period from January 1st 2001 until the C-Phone Shareholders Meeting, such amount to be paid on or prior to the fifteenth day of each such month. This will cover the services of Stuart Ross, David Powell and other current employees of C-Phone necessary to progress the Nano board based products and all such other reasonable engineering services required by Motion Media. It will also cover administrative support and a contribution to C-Phone's overheads allowing the support of Motion Media employees based at C-Phone. In the event this transaction is not completed as contemplated, this monthly amount shall be prorated on a daily basis. 5.6 C-Phone will use best endeavours to arrange the C-Phone Shareholders Meeting and make all appropriate SEC filings as soon as is reasonably practicable. In the event that the C-Phone Shareholders Meeting does not take place within 75 days after the execution of the final agreements contemplated by clause 12 or the C-Phone Shareholders Meeting is cancelled before such date, the provisions within this letter of intent shall apply as if the transaction was not approved by shareholders unless otherwise agreed with Motion Media. C-Phone will permit the reasonable review of its proxy materials and other SEC filings by Motion Media in this interim period, provided that such review does not unreasonably delay the proposed timetable. 5.7 For the avoidance of doubt, Motion Media is not to be regarded as a successor of C-Phone in any event. 6 5.8 All of the funding outlined in this section, with the exception of the salaries of those employees working for Motion Media, form part of the overall $1m offer and is being provided at an early stage in order to allow the continued operation of the Business. Such funding, once paid, shall be non-refundable. 6. In the event that C-Phone receives an order requiring products to be produced but for which no internal funding is available, Motion Media, at its sole discretion, may accept the order and fund the order by contracting with C-Phone for the manufacture of the product(s). In the event that the sale of the Business to Motion Media did not proceed, the order will be transferred to C-Phone, at C-Phone's option, and, in such event, C-Phone would reimburse Motion Media for any such funding not recovered by Motion Media from the sales under the order and Motion Media will transfer title to C-Phone of any remaining inventory or receivables generated pursuant to the order. In the event that C-Phone does not opt to transfer the order, Motion Media will complete the sale of the product(s) and C-Phone will use its best endeavours at Motion Media's expense to support its completion. 7. The sale will include all IPR developed by C-Phone's Business (whether or not the subject of patents, design registration and copyright), the transfer of all applicable product approvals and certifications, and, in so far as it is within C-Phone's ability to grant it without having to expend funds to defend against third parties, the right to use the C-Phone brand and the C-Phone web site. 8. Motion Media intends to develop the Business and it is therefore imperative that the Business is transferred in a condition where this is possible. C-Phone will use its commercially reasonable best endeavours, in co-operation with Motion Media, to retain its existing and potential customers during the period prior to the completion of the sale. In the event that changes occur which, in the opinion of Motion Media, significantly compromises the ability of the Business to continue as reasonably envisaged, Motion Media reserves the right to promptly withdraw from this transaction but to keep the Nano Design License on a non-exclusive basis. 9. In accepting this letter of intent, C-Phone agrees to withdraw from, and not undertake, discussions with any other party concerning the sale of its video communications business. In the event that C-Phone is required by law or regulation or through the actions of any third party to sell any or all of the assets of the Business other than to Motion Media, C-Phone agrees to reimburse Motion Media for all reasonably incurred out-of-pocket expenses and costs associated with the proposed transaction and any payments made under the provisions of clause 5.5. 10. C-Phone and Motion Media agree to provide each other, in advance, any proposed public announcements related to this transaction and agree to take into account any comments made and to co-ordinate the timing of any such announcements to the extent permitted under applicable law. In addition, C-Phone agrees to provide to Motion Media, in advance, any other proposed public announcements 7 11. Motion Media reserves the right to have the asset values appraised on a going concern basis which are subject to this transaction.. 12. The transaction will require the drawing up of suitable legal agreements which may include additional provisions and the completion of a due diligence process. C-Phone and Motion Media will, without undue delay, undertake the necessary actions to ensure a swift completion of the finalising of such documents and the sale. Motion Media has the present intent to take over the lease of C-Phone's facility, but this present intent may be changed after Motion Media completes its due diligence and negotiates with the landlord. Notwithstanding the foregoing, the monetary obligations of Motion Media set forth in clauses 5.1, 5.2 and 5.5 are binding obligations enforceable against Motion Media and not dependent on the execution of other agreements or the completion of due diligence. Motion Media agrees to pay C-Phone $150,000 pursuant to clause 5.2 by wire transfer of immediately available US funds no later than January 5, 2001, subject to inspection and the receipt of proof of ownership, a warranty from C-Phone as to the fitness of the devices, an acceptable bailment agreement and UCC filings. Motion Media agrees to pay C-Phone $200,000 pursuant to clauses 5.1 and 5.5 by wire transfer of immediately available US funds as soon as a mutually agreed Nano Design License has been signed and agreements with members of staff pursuant to clauses 5.3 and 5.4 are reached but, which both parties agree should be no later than January 16, 2001. Except as expressly assumed by Motion Media pursuant to a definitive acquisition agreement, all liabilities and obligations with respect to C-Phone's business and assets shall be retained by C-Phone and shall not become the obligations or liabilities of Motion Media or its affiliates under any circumstances. We wish to make it clear (and by signing this letter below, you acknowledge) that Motion Media is not an affiliate of C-Phone and that Motion Media has negotiated the terms of this letter with C-Phone at arms length. Under no circumstances shall the purchase by Motion Media of the assets referred to in clauses 5.1 and 5.2 of this letter be construed as an implicit or explicit assumption by Motion Media of all of the obligations and liabilities of the business as conducted by C-Phone and its affiliates. I trust the above accurately reflects our mutual intentions and will enable rapid progress. Please sign this document signalling your agreement to proceed on the above basis. /s/ K Burgin Ken Burgin - on behalf of Motion Media Technology Inc. /s/ Paul Albritton Paul Albritton - on behalf of C-Phone Corporation 8 EX-99.2 3 0003.txt EXHIBIT 99.2 [GRAPHIC OMITTED] EXHIBIT 99.2 C-PHONE CORPORATION ENTERS INTO LETTER OF INTENT TO SELL VIDEOCONFERENCING ASSETS TO MOTION MEDIA FOR $1 MILLION - - - - - UNLESS SHAREHOLDER APPROVAL IS OBTAINED, IT IS LIKELY THAT NO FUNDS WILL BE AVAILABLE FOR DISTRIBUTION TO SHAREHOLDERS ON SHUT DOWN OF COMPANY - - - - - THE COMPANY ALSO INTENDS TO WITHDRAW ITS APPEAL OF THE DELISTING OF ITS COMMON STOCK ON THE NASDAQ SMALLCAP MARKET WILMINGTON, NC - JANUARY 8, 2001 -- C-PHONE CORPORATION (NASDAQ: "CFON") today announced that it has entered into a Letter of Intent with Motion Media Technology Inc. ("Motion Media") for the sale of C-Phone's videoconferencing assets for $1 million. Motion Media is a subsidiary of Motion Media PLC Group (London Stock Exchange). As the transaction must be approved by C-Phone shareholders, the earliest the transaction could close would be in several months. Until the closing, C-Phone must maintain operations, which will result in continuing operating deficits. Motion Media initially will purchase some of C-Phone's component inventory and acquire a non-exclusive license for a recently developed POTS-only product design, which has not yet been put into production. This initial transaction will provide C-Phone with funds which should enable it to continue its operations until the closing; however, the total purchase price of the videoconferencing assets will be reduced by these advance payments. Paul Albritton, President and CEO, stated "We have attempted to find a purchaser for our Company and/or our business for the past several months and the proposed transaction with Motion Media has been the best that we have been able to obtain. Shareholder approval of the transaction will be required under applicable law. The cost of maintaining our business while seeking such approval, along with the associated cost of preparing proxy materials and holding a shareholders' meeting, will significantly reduce the net proceeds to be received. 9 While we are still seeking a possible business combination for the remainder of our Company without its videoconferencing business, the likelihood of success in this endeavor is remote. Therefore, we intend to voluntarily withdraw our appeal of the delisting of our common stock on the Nasdaq SmallCap Market. In the event our proposed transaction with Motion Media is approved by our shareholders, the funds remaining for eventual distribution to our shareholders may be as much as $0.05 per share. If the Motion Media transaction is not approved by our shareholders, then, in all likelihood, C-Phone will cease its operations, in which event it is unlikely that any funds will available for distribution to our shareholders." Mr. Albritton further stated "We are pleased that Motion Media will be taking over our videoconferencing business. They have the technical expertise, background and financial wherewithal to provide the right products to service our customers." C-Phone Corporation has been a provider of video communications products for general business and the security, education and healthcare markets. Information on the Company and its products can be found at www.cphone.com. Statements made in this press release, other than those concerning historical information, should be considered forward-looking and subject to various risks and uncertainties. Such forward-looking statements are made based on management's belief as well as assumptions made by, and information currently available to, management pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including among others those identified in C-Phone's Annual Report on Form 10-KSB for the fiscal year ended February 29, 2000, C-Phone's Quarterly Report on Form 10-QSB for the fiscal quarter ended August 31, 2000 and C-Phone's Current Report on Form 8-K dated November 20, 2000, as well as factors such as future economic conditions, the willingness of customers to continue to purchase C-Phone's products, the ability of C-Phone to sell or license its technology, the ability of C-Phone to sell its remaining inventory and assets and the absence of any unforeseen contingent liabilities. C-Phone undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date of this press release or to reflect the occurrence of other unanticipated events. This release and prior releases are available on the KCSA Public Relations Worldwide website at www.kcsa.com. # # # 10 -----END PRIVACY-ENHANCED MESSAGE-----