<PAGE>
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 28, 1997
AMERICAN TELESOURCE INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CANADA 0-23007 74-2698095
(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
12500 NETWORK BLVD., SUITE 407
SAN ANTONIO, TEXAS 78249
(210) 558-6090
(ADDRESS, INCLUDING ZIP CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES
AND TELEPHONE NUMBER, INCLUDING AREA CODE)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 1, 1997, American TeleSource International Inc.(the Company) entered
into an agreement with Sistema de Telefonia Computarizada, S.A. de C.V.
("Computel") and the shareholders of Computel to purchase up to 100% of the
outstanding shares of Computel. Pursuant to the agreement, the Company acquired
55% of the shares effective May 1, 1997 and the remaining 45% shares on August
28, 1997. The total purchase price for the acquisition of Computel was
approximately US $3.6 million, of which US $1.1 million was paid in cash, US
$700,000 in a note receivable forgiven by the Company and the balance in the
Company's common stock. The Company recorded the net assets and liabilities of
Computel as of May 1, 1997, in exchange for 2,715,546 shares of common stock
valued at US $0.68 per share or approximately US $1,846,569. As Computel had net
liabilities at May 1, 1997 the Company recorded goodwill of US $2,279,231
related to the acquisition. Per the terms of the agreement, the remaining shares
of Computel were acquired on August 28, 1997 for a cash payment of approximately
US $1.1 million and forgiveness of the US $700,000 note receivable. The Company
recorded an additional US $2,493,602 of goodwill related to the completion of
the acquisition. The Company has accounted for the acquisition as a "purchase".
Computel provides various call services from its 134 casetas (public
calling stations) including local telephone calls, domestic long distance calls,
international long distance calls, collect, calling card and credit card calls,
voice mail and fax transmission and reception. The Company intends to continue
to utilize Computel's casetas, representing substantially all of Computel's
assets, to provide the foregoing services to Computel's customers, which
include travelers and Mexican nationals lacking personal telephone access.
The description contained herein of the acquisition is qualified in its
entirety by reference to the Primary Agreement with Computel, dated as of May
1, 1997, (previously filed and referenced as Exhibit 2.1 hereto) as modified by
the Modification Agreement with Computel dated as of July 16, 1997 (previously
filed and referenced as Exhibit 2.2 hereto) and the Press Releases, dated May
21, 1997 and September 16, 1997, which are attached hereto as Exhibits 99.1 and
99.2, respectively, and incorporated by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
<TABLE>
<CAPTION>
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
<S> <C>
Report of Independent Public Accountants.............................. F-2
Consolidated Statement of Operations for the Year Ended December 31,
1996, and the Six Months ended June 30, 1996 and 1997................ F-3
Consolidated Statement of Stockholders' Equity for the Year ended
December 31, 1996 and the Six Months ended June 30, 1997............. F-4
Consolidated Statements of Cash Flows for the Year ended December 31,
1996 and the Six Months ended June 30, 1996 and 1997................. F-5
Notes to Consolidated Financial Statements............................ F-6
(b) PRO FORMA FINANCIAL INFORMATION
Introduction to Pro Forma Consolidated Statement of Loss.............. F-10
Pro Forma Consolidated Statement of Loss for the Year ended
July 31, 1997........................................................ F-11
Notes to Pro Forma Consolidated Financial Statements.................. F-12
(c) EXHIBITS
Exhibit Description
2.1 Primary Agreement with Computel*
2.2 Modification Agreement with Computel**
99.1 Press Release dated May 21, 1997 issued by American TeleSource International Inc.***
99.2 Press Release dated September 16, 1997 issued by American TeleSource International Inc.***
* Contained in exhibits to Registration Statement on Form 10 filed August 21, 1997
** Contained in exhibits to Amendment No. 1 to the Registration Statement on Form 10 filed October 22, 1997.
*** Filed herewith.
</TABLE>
2
<PAGE>
SIGNATURE
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.
AMERICAN TELESOURCE INTERNATIONAL INC.
(Registrant)
Date: November 10, 1997 By: /s/ H. DOUGLAS SAATHOFF
--------------------------------
Name: H. Douglas Saathoff
Title: Chief Financial Officer
3
<PAGE>
EXHIBIT INDEX
Exhibit Description
2.1 Primary Agreement with Computel*
2.2 Modification Agreement with Computel**
99.1 Press Release dated May 21, 1997 issued by American TeleSource
International Inc.***
99.2 Press Release dated September 16, 1997 issued by American TeleSource
International Inc.***
- ---------------------------------------
* Contained in exhibits to Registration Statement on Form 10 filed August 21,
1997
** Contained in exhibits to Amendment No. 1 to the Registration Statement on
Form 10 filed October 22, 1997.
*** Filed herewith.
4
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION> Page
----
CONSOLIDATED FINANCIAL STATEMENTS OF SISTEMA DE TELEFONIA COMPUTARIZADA, S.A. DE
C.V.
<S> <C>
Report of Independent Public Accountants................................................... F-2
Consolidated Statements of Operations for the Year ended December 31, 1996 and the Six Months
ended June 30, 1996 and 1997............................................................. F-3
Consolidated Statements of Stockholders' Equity for the Year ended December 31, 1996
and the Six Months ended June 30, 1997................................................... F-4
Consolidated Statements of Cash Flows for the Year ended December 31, 1996 and
the Six Months ended June 30, 1996 and 1997.............................................. F-5
Notes to Consolidated Financial Statements................................................. F-6
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Introduction to Pro Forma Consolidated Statement of Loss................................... F-10
Pro Forma Consolidated Statement of Loss for the Year ended July 31, 1997.................. F-11
Notes to Pro Forma Consolidated Financial Statements....................................... F-12
</TABLE>
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
Sistema de Telefonia Computarizada, S.A. de C.V.:
We have audited the accompanying consolidated statement of operations,
stockholders' equity and cash flows of Sistema de Telefonia Computarizada, S.A.
de C.V. ( a Mexican corporation) and subsidiaries for the year ended December
31, 1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those 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 statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the results of operations of Sistema de
Telefonia Computarizada, S.A. de C.V. and subsidiaries for the year ended
December 31, 1996 and their cash flows for the year ended December 31, 1996 , in
conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to
the consolidated financial statements, the Company has suffered recurring losses
from operations since inception and has limited capital resources available to
support further development of its operations. These matters raise substantial
doubt about the Company's ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 2. The consolidated
financial statements do not include any adjustments relating to the
recoverability and classification of asset carrying amounts or the amount and
classification of liabilities that might result should the Company be unable to
continue as a going concern.
ARTHUR ANDERSEN LLP
San Antonio, Texas
October 24, 1997
F-2
<PAGE>
SISTEMA DE TELEFONIA COMPUTARIZADA, S.A. DE C.V.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Presented in Mexican pesos)
<TABLE>
<CAPTION>
For the
Year ended For the six months ended
December 31, June 30, June 30,
1996 1996 1997
------------ ------------ ------------
(unaudited)
<S> <C> <C> <C>
OPERATING REVENUES:
Long distance services $46,627,009 $22,423,658 $27,813,778
------------ ------------ ------------
Total operating revenues 46,627,009 22,423,658 27,813,778
------------ ------------ ------------
OPERATING EXPENSES:
Cost of services 26,677,524 10,921,409 11,872,312
Selling, general and administrative 25,793,348 14,604,640 14,814,993
Depreciation and amortization 1,072,101 654,104 299,529
------------ ------------ ------------
Total operating expenses 53,542,973 26,180,153 26,986,834
------------ ------------ ------------
OPERATING INCOME (LOSS) (6,915,964) (3,756,495) 826,944
OTHER INCOME (EXPENSE):
Interest expense (1,075,360) (254,408) (652,542)
Other expense (44,771) - -
------------ ------------ ------------
Total other expense (1,120,131) (254,408) (652,542)
------------ ------------ ------------
NET INCOME (LOSS) ($8,036,095) ($4,010,903) $174,402
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
F-3
<PAGE>
SISTEMA DE TELEFONIA COMPUTARIZADA, S.A. DE C.V.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Presented in Mexican pesos)
<TABLE>
<CAPTION>
Common Shares Total
--------------------- Accumulated Stockholders'
Shares Amount Deficit Equity
------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1995 3,396 3,396,862 ($4,902,678) ($1,505,816)
Net loss - - (8,036,095) (8,036,095)
------ ----------- ------------ ------------
BALANCE, December 31, 1996 3,396 3,396,862 (12,938,773) (9,541,911)
Net income (unaudited) - - 174,402 174,402
====== =========== ============= ============
BALANCE, June 30, 1997 (unaudited) 3,396 3,396,862 ($12,764,371) ($9,367,509)
====== =========== ============= ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
F-4
<PAGE>
SISTEMA DE TELEFONIA COMPUTARIZADA, S.A. DE C.V.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(Presented in Mexican pesos)
<TABLE>
<CAPTION>
For the
Year ended For the six months ended
December 31, June 30, June 30,
1996 1996 1997
----------- ----------- ----------
(unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($8,036,095) ($4,010,903) $174,402
Adjustments to reconcile net income (loss) to net
cash provided by operating activities-
Depreciation and amortization 1,072,101 654,104 299,529
Changes in operating assets and liabilities
Increase in accounts receivable (947,229) (11,012) (2,215,978)
Increase in accounts payable 3,667,056 2,420,381 1,208,992
Increase in accrued liabilities 952,186 1,744,817 689,949
Increase in deferred revenue - 107,051 778,165
Increase in other long-term liabilities 4,536,407 - 251,698
------------ ------------ ----------
Net cash provided by operating activities 1,244,426 904,438 1,186,757
------------ ------------ ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (1,142,746) (382,132) (317,282)
------------ ------------ ----------
Net cash used in investing activities (1,142,746) (382,132) (317,282)
------------ ------------ ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt 432,600 138,696 -
Payments on debt (80,153) - (270,207)
------------ ------------ ----------
Net cash provided by (used in) financing activities 352,447 138,696 (270,207)
------------ ------------ ----------
NET INCREASE IN CASH 454,127 661,002 599,268
CASH, beginning of period 140,691 140,691 594,818
------------ ------------ ----------
CASH, end of period $594,818 $801,693 $1,194,086
============ ============ ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
F-5
<PAGE>
SISTEMA DE TELEFONIA COMPUTARIZADA, S.A. DE C.V.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND JUNE 30, 1997
The information utilized in the following Notes is presented in Mexican pesos
unless otherwise noted.
1. BUSINESS ACTIVITY
The company was originally incorporated under the laws of Guadalajara, Mexico
on March 9, 1994, under the name Sistema de Telefonia Computarizada, S.A. de
C.V. (Sistema). Collectively, Sistema and its related subsidiaries are referred
to as "Computel" or the "Company".
Computel conducts its primary operations through Sistema. Sistema provides
various call services from its 134 casetas (public calling stations) located in
approximately 72 cities throughout Mexico. Casetas are calling facilities
strategically located in Mexico to serve telephone needs of travelers and
Mexican nationals lacking personal telephone access. Casetas feature comfort
and privacy not available on street side telephone locations. A caseta
typically includes three-to-four telephones serviced by three-to-four phone
lines. Casetas offer multiple services including local telephone calls,
domestic long distance calls, international long distance calls, collect,
calling card, and credit card calls, voice mail and fax transmission and
reception.
In May 1997, the Company and its shareholders entered into an agreement to
sell up to 100% of its outstanding shares to American TeleSource International
Inc., a long distance call service provider in the United States. Under the
terms of the agreement, the Company's shareholders relinquished 55% of their
shares effective May 1, 1997, and the remaining 45% on August 28, 1997, when
the transaction was completed.
2. FUTURE OPERATIONS
The accompanying consolidated financial statements of the Company have been
prepared on the basis of accounting principles applicable to a going concern.
For the periods through December 31, 1996 and June 30, 1997, respectively, the
Company has incurred cumulative net losses of $12,938,773 and $12,764,371,
respectively. Further, the Company had working capital deficits of $21,178,887
at December 31, 1996 and $20,643,733 at June 30, 1997. There is no assurance
the Company will be able to achieve future revenue levels sufficient to support
operations or recover its investment in property and equipment. These matters
raise substantial doubt about the Company's ability to continue as a going
concern. The ability of the Company to continue as a going concern is dependent
upon the ongoing support of its stockholder and customers, its ability to obtain
capital resources to support operations, and its ability to successfully market
its services.
The Company is likely to require additional financial resources in the near
term and could require additional financial resources in the long-term to
support its ongoing operations. If the Company is not successful in obtaining
additional financial resources, the Company has limited additional sources of
debt or equity capital and would likely be unable to continue operating as a
going concern.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Basis of Presentation
-----------------------------------------------------
The consolidated financial statements were originally prepared in accordance
with the generally accepted accounting principles of Mexico. All adjustments
necessary to present the consolidated financial statements in accordance with
U.S. generally accepted accounting principles have been recorded. All
significant intercompany balances and transactions have been eliminated in
consolidation.
In the opinion of management, the unaudited financial statements for the six
month periods ended June 30, 1996 and June 30, 1997 are presented on a basis
consistent with the audited financial statements and contain all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation. The results of operations for interim periods are not necessarily
indicative of results of operations for the full year.
F-6
<PAGE>
Estimates in Financial Statements
---------------------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results may differ from those estimates.
Revenue Recognition Policies
----------------------------
The Company recognizes revenue from its casetas as such services are
performed.
Property and Equipment
----------------------
Property and equipment are stated at cost. Depreciation and amortization are
computed on a straight-line basis over the estimated useful lives of the related
assets, which range from three to twenty years. Expenditures for maintenance
and repairs are charged to expense as incurred. Direct installation costs and
major improvements are capitalized.
Income Taxes
------------
The Company has incurred losses since its incorporation for both book and tax
purposes as of December 31, 1996. Accordingly, no income taxes have been
provided for in the accompanying consolidated financial statements for the year
ended December 31, 1996.
Statements of Cash Flows
------------------------
Cash payments and non-cash activities during the periods indicated were as
follows:
<TABLE>
<CAPTION>
For the year ended For the six months For the six months
December 31, 1996 ended June 30, 1996 ended June 30, 1997
----------------- ------------------- -------------------
<S> <C> <C> <C>
Cash payments
for interest $165,086 $74,633 $259,568
</TABLE>
For purposes of determining cash flows, the Company considers all temporary
cash investments with an original maturity of three months or less to be cash
equivalents.
<TABLE>
<CAPTION>
<S> <C>
4. NOTES PAYABLE
</TABLE>
Maturities of notes payable as of December 31, 1996 are as follows:
<TABLE>
<S> <C>
1997 $ 959,575
1998 $ 446,167
1999 $ 204,804
2000 $ 118,286
2001 $ 118,286
Thereafter $ 1,773,989
-----------
Total $ 3,621,107
===========
F-7
</TABLE>
<PAGE>
5. LEASES
The Company leases office space under certain noncancelable operating
leases and certain month-to-month leases. Rental expense under the operating
leases for the year ended December 31, 1996 was $ 3,151,873. Future minimum
lease payments under the noncancelable operating leases at December 31, 1996,
are as follows:
<TABLE>
<S> <C>
1997 $ 986,340
1998 $ 200,292
1999 $ 104,904
Thereafter $ -
----------
Total minimum lease payments $1,291,536
==========
</TABLE>
Capital Leases
--------------
Future minimum lease payments under the capital leases as of December 31,
1996, are as follows:
<TABLE>
<CAPTION>
Year ending December 31,
<S> <C>
1997 $ 328,417
1998 $ 346,764
1999 $ 346,764
2000 $ 346,764
2001 $ 346,764
Thereafter $4,507,932
----------
Total Minimum lease payments $6,223,405
==========
</TABLE>
6. SALE OF COMPUTEL
In May 1997, the Company and its shareholders entered into an agreement to
sell up to 100% of its outstanding shares to American TeleSource International
Inc., (ATSI) a long distance call services provider located in the United
States. Under the terms of the agreement, the Company's shareholders
relinquished 55% of the shares of Computel effective May 1, 1997, and the
remaining shares in late August 1997. The total sale price was approximately
US$3.6 million, of which US$1.1 million was to be received in cash, US$700,000
in a note payable forgiven by ATSI and the balance in common stock of ATSI. The
Company's shareholders received 2,715,546 shares of ATSI common stock in
exchange for 55% of their shares and the remaining shares were acquired on
August 28, 1997 for a cash payment of approximately US$1.1 million and
forgiveness of the US$700,000 note payable.
7. INCOME TAXES
As of December 31, 1996, the Company had net operating loss carryforwards of
approximately $3,455,050 for Mexican federal income tax purposes which are
available to reduce future taxable income of which $840,526 will expire in 2004,
$307,809 will expire in 2005 and $2,306,715 will expire in 2006.
F-8
<PAGE>
The Company's income tax benefit at the statutory federal income tax rate for
the year ended December 31, 1996 differs from the actual income tax benefit of
$0 for those periods, as the Company has provided a valuation reserve equal to
the income tax benefit amount computed at the statutory federal tax rate.
The Company is subject to asset tax, which is computed at an annual rate of
1.8% of the average of certain assets less certain liabilities, and the tax is
paid only to the extent that it exceeds the income taxes of the period. The
Company must compute asset taxes beginning in 1998.
F-9
<PAGE>
AMERICAN TELESOURCE INTERNATIONAL INC. AND SUBSIDIARIES
INTRODUCTION TO
PRO FORMA CONSOLIDATED STATEMENT OF LOSS
FOR THE YEAR ENDED JULY 31, 1997
(UNAUDITED)
The following unaudited pro forma consolidated statement of loss for the year
ended July 31, 1997, gives effect to the following:
- The acquisition of Sistema de Telefonia Computarizada, S.A. de C.V. and
subsidiaries (Computel), which was effective as of August 28, 1997, is assumed
to have occurred as of August 1, 1996.
The unaudited pro forma consolidated statement of loss for the year ended July
31, 1997, reflects the audited historical income statement of the Company for
the year ended July 31, 1997, and the unaudited historical income statement of
Computel for the twelve-month period ended June 30, 1997.
The pro forma financial information does not reflect the effects of any of the
anticipated changes to be made by the Company in Computel operations.
The pro forma statements are provided for informational purposes only and
should not be construed to be indicative of the Company's results of operations
had the transactions actually been consummated on the date assumed and do not
project the Company's results of operations for any future period. The
significant assumptions and adjustments are disclosed in the accompanying notes
to the unaudited pro forma consolidated statement of loss.
The following unaudited pro forma consolidated statement of loss and
accompanying notes should be read in conjunction with the audited financial
statements and other financial information pertaining to the Company and
Computel.
F-10
<PAGE>
AMERICAN TELESOURCE INTERNATIONAL INC.
AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF LOSS
(Presented in U.S. dollars)
<TABLE>
<CAPTION>
ATSI Computel
Year Ending Year Ending Pro Forma Pro Forma
July 31, 1997 June 30, 1997 Adjustments Consolidated
------------- ------------- ----------- ------------
(audited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Long distance services $13,965,981 $6,675,710 ($1,929,348)(a)(b) $18,712,343
Network management services 2,262,406 - - 2,262,406
----------- ---------- ----------- -----------
Total operating revenues 16,228,387 6,675,710 (1,929,348) 20,974,749
----------- ---------- ----------- -----------
OPERATING EXPENSES:
Cost of services 12,792,338 3,439,867 (847,583)(a)(b) 15,384,622
Selling, general and administrative 7,047,020 3,437,143 (889,102)(a) 9,595,061
Depreciation and amortization 590,746 98,048 77,109 (a)(c) 765,903
----------- ---------- ----------- -----------
Total operating expenses 20,430,104 6,975,058 (1,659,576) 25,745,586
----------- ---------- ----------- -----------
OPERATING LOSS (4,201,717) (299,348) (269,772) (4,770,837)
OTHER INCOME (EXPENSE):
Interest expense (512,838) (189,103) 66,108 (a) (635,833)
Interest income 26,839 - (7,996)(a) 18,843
Other income (expense) 40,800 (5,746) - 35,054
----------- ---------- ----------- -----------
Total other income (expense) (445,199) (194,849) 58,112 (581,936)
----------- ---------- ----------- -----------
MINORITY INTEREST (48,213) - 48,213 (d) -
NET LOSS ($4,695,129) ($494,197) ($163,447) ($5,352,773)
=========== ========= ========== ===========
NET LOSS PER SHARE ($0.18) ($0.19)
AVERAGE COMMON SHARES OUTSTANDING 26,807 2,031 (e) 28,838
=========== ========= ========== ===========
</TABLE>
The accompanying notes are an integral part of these
pro forma consolidated financial statements.
F-11
<PAGE>
AMERICAN TELESOURCE INTERNATIONAL INC.
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The information utilized in the following Notes is presented in U.S. dollars.
1. PRO FORMA ADJUSTMENTS
The following pro forma adjustments have been made to the financial statements
of ATSI and Computel to reflect the acquisition as of the beginning of the year
ended July 31, 1997 for the pro forma consolidated statements of loss:
a) To eliminate Computel's operations for May, June and July - which are
already consolidated in ATSI's results as of July 31, 1997.
b) To eliminate intercompany revenues and cost of sales between ATSI and
Computel on long distance call services for the periods January 1997 through
April 1997, in the amount of $143,527.
c) To record amortization of goodwill for the period August 1996 through April
1997 in the amount of $104,519. Amortization of $14,245 has already been
reflected in ATSI's consolidated operations for the year ended July 31, 1997.
Goodwill is being amortized over its estimated useful life of 40 years.
d) To eliminate the minority interest reflected in ATSI's statement of loss
for the year ending July 31, 1997, in the amount of $48,213, assuming that ATSI
acquired 100% of the outstanding shares of Computel as of August 1, 1996.
e) To record the increase in average common shares outstanding for the
2,715,546 shares issued to Computel's shareholders, as if the acquisition had
occured as of August 1, 1996. The incremental difference is 2,031,00 shares as
ATSI has already included the 2,715,546 shares in its shares outstanding
beginning May 1, 1997.
The pro forma results of operations for the twelve months ended July 31, 1997
are not necessarily indicative of the results of operations that would have been
achieved had the acquisition occurred prior to the periods indicated.
F-12
<PAGE>
EXHIBIT 99.1
AMERICAN TELESOURCE INTERNATIONAL INC.
12500 NETWORK BLVD., SUITE 407, SAN ANTONIO, TEXAS 78249
FOR IMMEDIATE RELEASE
CONTACT: DON L. MERRILL, JR.
PHONE: (210) 558-6090
FAX: (210) 558-6095
INTERNET: HTTP://WWW.ATSI.NET STOCK SYMBOL: ATIL.CDN
AMERICAN TELESOURCE INTERNATIONAL INC. ACQUIRES MEXICO'S
LARGEST PRIVATE CASETA OPERATOR
San Antonio, Texas, May 21, 1997 American TeleSource International Inc.
("ATSI") has entered into an agreement to purchase up to 100% of the outstanding
shares of Mexico's largest private caseta operator, Sistema de Telefonia
Computarizada, S.A. de C.V. ("Computel"). Under the terms of the agreement, ATSI
initially acquired 55% of the shares of Computel effective May 1, 1997, and has
the right to acquire the remaining 45% through a series of subsequent
transactions. ATSI expects to complete the entire acquisition on or before July
31, 1997.
Based in Guadalajara, Mexico, the 12 year old company owns and operates 147
casetas (public calling stations) in 70 cities throughout Mexico, with
annualized revenues of approximately U.S. $6 million. Computel has positioned
itself as a leader in public calling stations in Mexico providing local calls,
domestic Mexico and international long distance, calling and credit card calls,
voice mail, fax transmission and reception. Through its standardization of
logos, fixtures and furniture, Computel has established a highly recognized,
positive corporate image at a nationwide level.
Arthur L. Smith, President of ATSI states "Strategic synergies exist
between the two companies with Computel's retail distribution channels highly
complimenting ATSI's network and facilities based operation. Computel provides
ATSI with an existing management and operations team within Mexico to assist it
in the implementation of its public phone and calling card strategies. This
team, combined with ATSI's 20 year long distance resale license recently granted
by the Mexican government, further solidifies ATSI's position in the
marketplace. Deeper volume discounts and network efficiencies are created by
combining the call volumes generated by the two companies and utilizing ATSI's
infrastructure, allowing for increased improvements to our bottom line."
American TeleSource International, Inc. is the owner of The San Antonio
International Teleport, and is a provider of international networks for voice,
data, fax, and Internet, as well as call services for domestic and international
long distance. ATSI, with corporate headquarters in San Antonio, Texas,
currently trades under the symbol "ATIL.CDN" on the Canadian Dealing Network
(CDN) in Toronto.
<PAGE>
EXHIBIT 99.2
AMERICAN TELESOURCE INTERNATIONAL, INC.
12500 Network Blvd., Suite 407, San Antonio, Texas 78249
FOR IMMEDIATE RELEASE
Contact: Don L. Merrill, Jr.
Phone: (210) 558-6090
Fax: (210) 558-6095
Internet: http://www.atsi.net Stock Symbol: ATIL.CDN
CUSIP: 029911104
AMERICAN TELESOURCE INTERNATIONAL INC. COMPLETES ACQUISITION OF COMPUTEL
San Antonio, Texas, September 16, 1997 -- American TeleSource International
Inc. ("ATSI") completes its acquisition of 100% of the stock of Mexico's largest
private caseta operator, Sistema de Telefonia Computarizada, S.A. de C.V.
("Computel"). Through its acquisition of Computel, ATSI now operates 134 casetas
(public calling stations) in 72 cities throughout Mexico.
Arthur L. Smith, president of ATSI states "these point-of-sale distribution
channels are important to ATSI's marketing strategy for Mexico. These locations
provide local telephone calls, domestic and international long distance,
collect, calling and credit card calls, voice mail, fax transmission and
reception."
H. Douglas Saathoff, ATSI's chief financial officer states, "ATSI benefits
by balancing its international long distance traffic, with Computel's intra-
Mexico long distance traffic. The result is increased revenue and lower
transmission rates to ATSI. The Company's consolidated annualized revenues have
grown to in excess of U.S. $20 million with this acquisition."
American TeleSource International, Inc. is the owner of The San Antonio
International Teleport, and is a provider of international networks for voice,
data, fax, and Internet, as well as call services for domestic and international
long distance. ATSI, with corporate headquarters in San Antonio, Texas,
currently trades under the symbol "ATIL.CDN" on the Canadian Dealing Network
(CDN) in Toronto.
