Report of unscheduled material events or corporate changes.
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): August 23, 2002 Frontline Communications Corporation (Exact name of registrant as specified in its charter) Delaware 000-24223 13-3950283 (State or other (Commission (IRS Employer jurisdiction of File Number) Identification No.) incorporation) One Blue Hill Plaza, Suite 1548, Pearl River, New York 10965 (Address of principal executive offices) (zip code) Registrant's Telephone Number, including Area Code: (845) 623-8553 N/A (Former name or former address, if changed since last report)
ITEM 9. REGULATION FD DISCLOSURE Pursuant to Regulation FD, Frontline Communications Corporation (the "Company") is furnishing the following relating to the interview given by its Chief Executive Officer, Stephen J. Cole-Hatchard, to The Mac Report first made available on the web site of The Mac Report on August 23, 2002 (the "Interview"). This information is being furnished pursuant to this Item 9 in accordance with Rule 101(e)(1) under Regulation FD and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. This Report will not be deemed an admission as to the materiality of any information required to be disclosed solely to satisfy the requirements of Regulation FD. The transcript of the Interview is attached as Exhibit 99.1 to this Current Report on Form 8-K. The Company issued 25,000 shares of its Common Stock to The Mac Report.Net Inc. as payment for publicity services rendered to the Company, including publication of the Interview. The Interview relates to the previously announced execution of a non-binding letter of intent by the Company and Shecom Corporation ("Shecom"), a privately held company, with respect to the proposed merger of a wholly-owned subsidiary of the Company with and into Shecom. Upon completion of the transaction, Shecom's stockholders would own a majority of the voting stock of the Company. A copy of the Press Release announcing the execution of the letter of intent is attached as Exhibit 99.2 to this Current Report on Form 8-K. Subject to completion of the proposed merger, it is the current intention of the Company to sell substantially all of its assets, subject to substantially all of its liabilities, immediately prior to the proposed merger to an entity to be formed for that purpose by members of management, in exchange for such members' foregoing certain payments to which they would otherwise be entitled as a result of the merger and the cancellation of certain stock options. The terms of such sale are being negotiated and would be finalized at the time a definitive merger agreement is entered into, of which there can be no assurance, and would require stockholder approval. The Company would remain a public company, operating the business of Shecom. Additional Information If a definitive agreement relating to the proposed merger is entered into, the Company will file a registration statement with the Securities and Exchange Commission containing a prospectus/proxy statement in connection with the proposed merger. Investors and security holders of the Company are invited to read the prospectus/proxy statement regarding the business combination transaction referenced in the foregoing information, when it becomes available. The Company expects to mail a prospectus/proxy statement about the transaction to its stockholders. A free copy of the prospectus/proxy statement (when available) and other documents filed by the Company may be obtained free of charge from the Securities and Exchange Commission's web site at http://www.sec.gov. The prospectus/proxy statement (when available) and other documents may also be obtained from the Company free of charge by directing such requests to the contact persons listed in Exhibit 99.2 to this Current Report on Form 8-K. 2
The Company and its officers and directors may be deemed to be participants in the solicitation of proxies from stockholders of the Company with respect to the approval of the proposed merger. Information regarding such officers and directors will be set forth in the proxy statement/prospectus. Forward Looking Statements The statements which are not historical facts contained in this Current Report on Form 8-K and Exhibits hereto are forward-looking statements that involve certain known and unknown risks and uncertainties, including but not limited to, the entering into of a definitive merger agreement with Shecom and consummation of the proposed merger, changes in the market for Internet services and computers, regulatory and technological changes, economic factors, increased competition, and the nature of supplier or customer arrangements which become available to the Company or Shecom in the future. The Company's or Shecom's actual results may differ materially from the results discussed in or implied by any forward-looking statement. The words "intend," "expect," "should," project," and "anticipate," and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date they were made. This is not an offer to buy or sell securities. The information in this Current Report on Form 8-K is presented solely for informative purposes and is not intended to be a solicitation or recommendation to purchase or sell any securities of the Company.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. Exhibits. 99.1 Transcript of Interview dated August 23, 2002 of Stephen J. Cole-Hatchard with The Mac Report. 99.2 Press Release of the Company dated July 31, 2002
SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. FRONTLINE COMMUNICATIONS CORPORATION (Registrant) Dated: September 4, 2002 By: /s/ Stephen J. Cole-Hatchard -------------------------------------- Stephen J. Cole-Hatchard Chief Executive Officer, President and Director 3
EXHIBIT INDEX Exhibit Description 99.1 Transcript of Interview dated August 23, 2002 of Stephen J. Cole-Hatchard with The Mac Report. 99.2 Press Release of the Company dated July 31, 2002
EXHIBIT 99.1 Hello, my name is Stephen Cole-Hatchard. I am the CEO of Frontline Communications Corp. A little bit about my background first. I am a corporate and commercial litigation attorney. I've practiced since the middle of the 1980's. In 1993 I became the CFO of a publicly traded company called Hudson Technologies. I was the CFO there from about 1993 to about 1995. I took Hudson public in 1994. While at Hudson I raised about $30M for Hudson in public and private transactions and negotiated and closed about six acquisitions. In 1996 I left Hudson and came over to Frontline Communications. I've been the CEO of Frontline Communications since about 1997. In 1998 I took Frontline Communications public. We are currently traded on the American Stock Exchange. With Frontline over the past few years I've raised about $30M for the company and we've negotiated and closed about twenty acquisitions here. A little bit about Frontline Communications. Frontline was founded as an internet service provider, a small ISP in 1995. It's headquartered in Pearl River, New York which is about 15 miles north of New York City and we're currently traded on the American Stock Exchange under the symbol "FNT." I'd like to give a little background
about Frontline and what we're planning and where we're headed. Frontline is currently now a full service internet company. We started out as just an internet service provider with dial-up accounts. We now have basically three primary revenue lines. We do provide internet access - everything from dial-up and DSL to satellite, lease line and dedicated lines. Any way someone resells bandwidth we sell it. We also have a substantial website development group. We do everything from single page and self-
serve websites to full-service and ecommerce enabled sites and we also do web hosting and that ranges everywhere from self-serve to dedicated and collocated solutions. We cover mostly the Northeast region from about Virginia out to New England. Over the past four years since going public we've grown primarily through acquisitions. Frontline is currently running at about $6 to $6.5M in annual revenue and we've been EBITDA positive since about the third quarter of 2001. Over the past few years Frontline has actually had two primary advantages addressing both our competition and the industry. As far as growth goes we've tried to avoid larger companies such as America Online and Mindspring by positioning our organic growth projects in suburban areas and then slowly expanding into the major cities and more importantly, as a public company since 1998, we have utilized our publicly traded stock and accessed the capital for acquisitions; so primarily what we've been doing is mergers and acquisitions. More recently, in the past year or so, with the financial markets and internet sector getting soft we started to restructure the company and head ourselves towards profitability and look at other ways to grow. So although in the past we've done about twenty acquisitions, in the past year we haven't done any acquisitions, rather we've been looking for the next growth strategy and recently we announced an execution of a letter of intent to acquire all of the outstanding and issued shares of a company called Shecom Corporation. The deal is structured as an all stock exchange and Frontline is going to be the acquiring company. Now let me tell you a little bit about Shecom and then a little bit about how the pending transaction is structured. Shecom is a private company and was founded in about 1984. It's headquartered in Yorba Linda, California and currently Shecom is one
of the leading providers, private companies, of computers, computer components, DVDs, processors and all types of computer peripherals. They currently have two primary revenue lines. They distribute computers, components, processors, all those kinds of products both domestically and internationally and they're a manufacturer and distributor of certain branded - proprietary branded products including memory modules and other items such as that. The company distributes about seventy percent domestically and about thirty percent internationally. I think what's most impressive about Shecom is the growth that they've experienced over the past few years and the fact of course that they were profitable for the entire time. Just to give an example in 1997 they had revenues of $70M revenue. In 1998 they jumped to $101M; in 1999 they did about $138M; in 2000 they did about $178M; and last year which is 2001 calendar year they did about $309M. The average growth though in that period has been about 45% per year. Every year they have been profitable. The unaudited results for the first four months of this year, of 2002, have shown revenue at about $130M and just about $1M in profits for the period. The margins have been showing an increase as well. So Shecom is a very formidable company they're on a run rate of somewhere around $400M this year with a $1M in profit already for the first few months. A little bit about the transaction now, the pending transaction, what we've put together with Shecom. Although Frontline will be the surviving company Shecom shareholders will actually control a majority of the stock of the combined company they're so much larger than Frontline, it will be in essence a reverse merger. Of course the transaction is subject to a number of regulatory and shareholder approvals, however, the growth and the profit that Shecom has shown over the past five years we think is great enough and strong
enough of a transaction for our shareholders as well as Shecom's to approve it; so we're pretty confident that we'll get the appropriate approvals over the next six to eight weeks. Our goal is to close the Shecom transaction sometime in the fourth quarter possibly in October or maybe November. That's Shecom that's Frontline, that is what are current goals are; we've grown by acquisition and now we're about ready to take a large step again by acquisition, though in essence it's a reverse merger. That's it. I would like to thank everyone for listening to this brief presentation. I think it's probably obvious that we here at Frontline and at Shecom are very excited about the future and I hope that I've relayed at least enough information to each of you to feel that energy and excitement. For further information you can certainly contact me directly or the company. I can be reached at (845) 623-8553 my extension is 1108 or you can email me directly at email@example.com - again it's Stephen Cole-Hatchard - firstname.lastname@example.org - or you can visit our site at and get mostly any information that you'd like at www.frontline.net Again, thank you for listening and I hope that you've enjoyed this presentation.
EXHIBIT 99.2 FRONTLINE COMMUNICATIONS TO MERGE WITH SHECOM CORP. Frontline Communications Corp. One Blue Hill Plaza PO Box 1548 Pearl River, New York 10965 FRONTLINE COMMUNICATIONS TO MERGE WITH SHECOM CORP. $300 Million Manufacturer and Distributor of Computers, Peripherals and Memory Products Has Shown Strong Growth in Recent Years Pearl River, New York - July 31st, 2002 - Frontline Communications Corp. (AMEX: FNT), www.fcc.net, is pleased to announce that it has entered into a letter of intent to merge with Shecom Corp., www.shecom.com, a leading provider of DVD, CDRW, computers, components, processors and peripherals, as well as, a major manufacturer, seller and distributor of memory modules. Under the terms of the letter of intent, the Company will acquire all of the issued and outstanding shares of Shecom in an all stock exchange. The Company intends to take the steps it believes necessary for the common stock to continue to trade on the American Stock Exchange. The transaction is subject to, among other things, satisfactory completion of due diligence by both parties, and execution of a definitive agreement with customary closing conditions, including regulatory and shareholder approval, and is expected
to close early in the fourth quarter of 2002. Pursuant to the terms of the letter of intent, the shareholders of Shecom will own a majority of the Company's common stock. Shecom, based in Yorba Linda, California, has been profitable since at least 1995, and has informed the Company that it had revenue of $138 million, $178 million, and $309 million for the years 1999, 2000 and 2001 respectively, and that it anticipates continued revenue growth. Unaudited results for the first four months of 2002 indicate revenue of $128 million, with a net profit of about $1 million. Commenting on the proposed transaction, Frontline CEO Stephen J. Cole-Hatchard stated, "We believe this merger will increase shareholder value on both sides of the transaction. Frontline's shareholders will benefit from the revenue and profitability that Shecom brings to the table, while Shecom's shareholders will gain increased access to the public capital markets." "Although we are always looking at various merger and acquisition opportunities", he added, "this particular transaction exceeds our most optimistic expectations". Shecom President Phillip Trad said, "We are extremely pleased with the various benefits this merger is expected to provide to our Company and to the shareholders of both Shecom and Frontline. Although we have reviewed and considered various merger opportunities, it is clear that Frontline will provide us with the solid foundation and broadest range of opportunities to further grow our combined businesses", Mr. Trad added.
About Frontline Founded in 1995, Frontline Communications Corporation provides high-quality Internet access and Web hosting services to homes and businesses nationwide. Frontline offers Ecommerce, programming, and Web development services through its PlanetMedia group, www.pnetmedia.com. Frontline is headquartered in Pearl River, New York, and is traded on the American Stock Exchange. About Shecom Founded in 1984, Shecom's mission is to provide the industry with the latest innovations in optical multimedia, computer parts, commodities, and software applications. Shecom manufacturers and distributes DVD-R & DVD-RW, CDRW-RW, as well as, it's own external fireWire and USB 2.0 products, DDR, SDRAM, and EDO memory modules, and is a premier reseller of Seagate, IBM and Maxtor products. Shecom's business philosophy focuses on creating value for its customers by developing high-performance, cost-effective products that are rapidly brought to market and which in turn add value to the products of its strategic partners and their customers. The statements which are not historical facts contained in this press release are forward looking statements that involve certain known and unknown risks and uncertainties, including but not limited to, changes in the market for Internet services, regulatory and technological changes, economic factors, increased competition, and the nature of supplier or customer arrangements which become available to the Company in the future. The Company's actual results may differ materially from the results discussed in or implied by any forward-looking statement. The words "intend," "expect," "should," "project," and "anticipate," and similar expressions identify forward looking statements. Readers are cautioned not to place undue reliance on these forward looking statements which speak only as of the date they were made. ### Contact: Contact: Stephen J. Cole-Hatchard Investor Relations Phone: (845) 623-8553 X2200 Phone: (845) 623-8553 X2200 Fax: (845) 623-8669 Fax: (845) 623-8669 email@example.com firstname.lastname@example.org