UNITED STATES
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): October 25, 2005
Dial Thru International Corporation
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(Exact name of Registrant as specified in its charter)
Delaware 0-22636 75-2461665
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation File Number) Identification No.)
17383 Sunset Boulevard, Suite 350
Los Angeles, California 90272
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(Address of principal executive offices, including Zip Code)
Registrant's telephone number, including area code (310) 566-1700
Not Applicable
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 230.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
On October 25, 2005, Dial Thru International, Corporation (the "Company")
entered into an Asset Purchase Agreement to acquire certain assets,
including but not limited to the customer base, and certain specified
contracts and items of equipment (collectively, the "Assets"), of Integrated
Communications, Inc., a New York corporation that is an international long
distance carrier providing Voice over Internet Protocol services to retail
customers in the United States, and wholesale services to customers
worldwide ("Integrated"). The closing date for the acquisition is October
31, 2005 (the "Closing Date"). In consideration for the acquisition of the
Assets, the Company has agreed to issue to Integrated:
(a) up to an aggregate of 1,900,000 shares of the Company's common
stock to be issued as follows: (i) 950,000 shares of common stock
on the Closing Date, provided that Integrated's total monthly
gross profit from its retail and wholesale customer base prior to
the Closing Date is in excess of $40,000. In the event that
Integrated's gross profit on the Closing Date is not in excess of
$40,000 per month (the "Closing Threshold"), the Company shall
instead issue to Integrated the number of shares of common stock
determined by reducing the total number of the shares by the same
percentage reduction in the gross profit at the Closing Date as
compared to the Closing Threshold and (ii) 950,000 shares of
common stock immediately following the 12-month anniversary of the
Closing Date (the "Earn-Out Shares") if the aggregate gross profit
for the 12-month period following the Closing Date from the
Company's Integrated division (the "Division") is in excess of
$480,000 (the "Earn-Out Threshold"); provided, however, that if
the gross profit targets are not achieved by the Division, the
Company shall instead issue to Integrated that number of Earn-Out
Shares determined by reducing the total number thereof by the same
percentage reduction in gross profit as compared to the Earn-Out
Threshold. The percentage shortfall will be based on the entire
1,900,000 million shares; and
(b) warrants to purchase up to 600,000 shares of the Company's common
stock as follows: 300,000 warrants to be issued on each of the six
and 12-month anniversary of the Closing Date, the exercise price
to be determined on the grant date, provided that gross profit
increases by a minimum of 50% for each six month period, beginning
on the Closing Date and ending on October 31, 2006. The gross
profit increase for the initial six month period will be measured
against the Closing Threshold, with the second six month period
measured against the preceding six month period, provided,
however, that if the gross profit targets are not achieved by the
Division, the Company shall instead issue that number of warrants
determined by reducing the total number thereof by the same
percentage shortfall in gross profit as compared to the required
50% increase. In each of the six month periods, if the growth in
gross profit is less than 50% of the targeted growth, then no
warrants will be earned.
The Company has agreed to file a registration statement to register the
common stock (including the shares of common stock underlying the warrants)
issued in connection with the acquisition on or prior to May 1, 2006,
subject to customary conditions and limitations.
The number of shares and warrants to be issued to Integrated was determined
considering the value of the assets and a review of the financial statements
of Integrated, an in depth review specifically of the fixed assets and
network deployment, and arms-length negotiations with Integrated's executive
management.
At the time of the acquisition, there was no material relationship between
Integrated (including their officers, directors and shareholders) and the
Company or any of its affiliates, any officer or director of the Company, or
any associate of any such officer or director.
Item 2.01. Completion of Acquisition or Disposition of Assets.
The information provided under Item 1.01 of this Current Report is
incorporated herein by reference.
Item 3.02. Unregistered Sales of Equity Securities.
On September 29, 2005, the Company agreed to issue 200,000 shares to
CEOCast, Inc., the Company's investor relations firm, in consideration for
professional services rendered to the Company. The price per share was
$0.13. The shares of common stock to be issued in connection with the
professional services will be issued by the registrant in reliance upon the
exemption from registration provided by Section 4(2) of the Securities Act
of 1933, as amended (the "Securities Act"), for this non-public offering
because the securities were issued to a single purchaser with financial
experience who had a pre-existing relationship with the registrant.
On September 29, 2005, the Company agreed to issue 125,000 shares to one of
its outside legal representatives as final payment for legal services
performed for the Company in August 2005. The price per share was $0.16.
The shares of common stock to be issued in connection with the legal
services will be issued by the registrant in reliance upon the exemption
from registration provided by Section 4(2) of the Securities Act for this
non-public offering because the securities were issued to a single purchaser
with financial experience who had a pre-existing relationship with the
registrant.
On October 28, 2005, as set forth in Item 1.01 above, the Company issued
950,000 shares of common stock as a portion of the consideration to acquire
the Assets at a price of $0.11 per share. The shares were issued in
reliance on the exemption from registration provided by Section 4(2) under
the Securities Act.
With respect to each of the issuances of common stock described above, the
Company did not engage in any public advertising or general solicitation and
no placement agent or underwriter fees were paid in connection with such
issuances.
Item 9.01 Financial Statements and Exhibits
a) Financial Statements of Businesses Acquired.
The Company has determined that the filing of financial statements of
Integrated are not required.
b) Pro Forma Financial Information.
The Company has determined that the filing of pro forma financial
information is not required.
c) Exhibits
Exhibit Number Description
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99.1 Asset Purchase Agreement, dated as of October 25, 2005, by
and between Integrated Communications, Inc. and Dial Thru
International Corporation
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 hereunto duly authorized.
Dial Thru International Corporation
Date: October 31, 2005 By: /s/ Allen Sciarillo
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Allen Sciarillo
Chief Financial Officer, Secretary,
(Principal Accounting Officer and
Principal Financial Officer) and Director