<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
AMERICAN TELESOURCE INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement
if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed: October 25, 1999
<PAGE>
AMERICAN TELESOURCE INTERNATIONAL, INC.
12500 Network Boulevard, Suite 407
San Antonio, TX 78249
(210) 558-6090
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 9, 1999
To the Stockholders:
The Annual Meeting of Stockholders (the "Annual Meeting") of American
TeleSource International, Inc. (the "Company") will be held at the Fiesta
Americana hotel in Mexico City, Mexico at Reforma #80, Colonia Juarez, Mexico,
D.F. 06600 on December 9, 1999 at 10:00 a.m. local time, to consider and act
upon the following matters, all as more fully described in the accompanying
Proxy Statement which is incorporated herein by this reference:
Item 1. Election of two members to the Board of Directors to serve until the
2002 Annual Meeting of Stockholders and until their respective
successors shall be elected and qualify.
Item 2. Ratification of selection of Arthur Andersen LLP as independent public
accountants for the fiscal year ending July 31, 2000.
Transaction of such other business and to consider and take action upon any
and all matters that may properly come before the Annual Meeting or any
adjournment thereof.
The Board of Directors has fixed the close of business on October 12, 1999
as the record date for the determination of the stockholders entitled to notice
of and to vote at the Annual Meeting and any adjournment thereof. For ten days
prior to the Annual Meeting, a complete list of stockholders entitled to vote at
the Annual Meeting will be available for examination by any stockholder for any
purpose germane to the Annual Meeting during ordinary business hours at the
Company's executive offices, located at the address set forth above.
By Order of the Board of Directors
H. Douglas Saathoff
CORPORATE SECRETARY
San Antonio, Texas
October 25, 1999
IMPORTANT
You are cordially invited to attend the Annual Meeting in person. Whether or not
you expect to attend the Annual Meeting, please mark, sign and return the
enclosed proxy as promptly as possible in the enclosed envelope so that your
stock may be represented at the Annual Meeting. A person giving a proxy has the
power to revoke it. If you attend the Annual Meeting, your proxy will not be
counted with respect to any matter upon which you vote in person.
<PAGE>
AMERICAN TELESOURCE INTERNATIONAL, INC.
12500 Network Boulevard, Suite 407
San Antonio, TX 78249
(210) 558-6090
--------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 9, 1999
--------------
INFORMATION CONCERNING SOLICITATION AND VOTING
This Proxy Statement and the accompanying proxy are furnished to the
stockholders of American TeleSource International, Inc., a Delaware corporation
(the "Company"), in connection with the solicitation of proxies by the Board of
Directors of the Company for use at the Annual Meeting of Stockholders and any
adjournment thereof (the "Annual Meeting") to be held on December 9, 1999 in
Mexico City, Mexico at the Fiesta Americana hotel at Reforma #80, Colonia
Juarez, Mexico, D.F. 06600, at 10:00 a.m. local time. This Proxy Statement, the
accompanying proxy and the Company's Summary Annual Report to Stockholders for
the year ended July 31, 1999 (which includes a copy of the Company's Annual
Report on Form 10-K for the year ended July 31, 1999 in its back pocket) are
first being sent or given to stockholders on or about October 25, 1999.
Stockholders are requested to complete, date and sign the accompanying
proxy and return it promptly to the Company. Any proxy given may be revoked by
a stockholder at any time before it is voted at the Annual Meeting or any
adjournment thereof by filing with the Secretary of the Company a notice in
writing revoking the proxy, or by duly executing and submitting a proxy bearing
a later date. Proxies may also be revoked by any stockholder present at the
Annual Meeting who expresses a desire to vote such shares in person. Subject to
such revocation, all proxies duly executed and received prior to, or at the time
of, the Annual Meeting will be voted in accordance with the specification on the
proxy card. If no specification is made, proxies will be voted FOR the Items
set forth therein. As to other matters that may properly come before the Annual
Meeting, if any, to be voted upon, the persons designated as proxies will take
such actions as they, in their discretion, may deem advisable. The persons
named as proxies were selected by the Board of Directors of the Company and each
of them is an executive officer of the Company.
The Company will bear the cost of the solicitation of proxies, including
the charges and expenses of brokerage firms and others forwarding the
solicitation material to beneficial owners of the common stock. Directors,
officers and regular employees of the Company may solicit proxies personally, by
telephone or by telegraph but will not be separately compensated for such
solicitation services.
1
<PAGE>
STOCKHOLDERS' VOTING RIGHTS
Each share of the Company's Common Stock, $.001 par value ("Common Stock"),
outstanding at the close of business on October 12, 1999 (the "Record Date")
will be entitled to notice of, and to vote at, the Annual Meeting. Each share
of the Company's Common Stock is entitled to one vote. There were 48,685,287
shares of Common Stock outstanding on the Record Date. Additionally, each holder
of the Company's Series A Preferred Stock shall be entitled to that number of
votes equal to that number of whole shares of Common Stock into which such
holder's shares of Series A Preferred Stock could be converted as of the record
date, said number being 3,287,480.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock entitled to vote is necessary to constitute a
quorum at the Annual Meeting. If a quorum is not present, the holders of a
majority of the outstanding shares of Common Stock entitled to vote who are
present in person or by proxy at the Annual Meeting have the power to adjourn
the Annual Meeting from time to time, without notice other than an announcement
at the Annual Meeting, until a quorum is present. At any adjourned Annual
Meeting at which a quorum is present, any business may be transacted that might
have been transacted at the Annual Meeting as originally noticed. Votes cast
"for" a matter constitute affirmative votes. Votes "withheld" or abstaining
from voting are counted for quorum purposes, but since they are not cast "for" a
particular matter, they will have the same effect as negative votes or votes
"against" a particular matter. Proxies which are properly signed and returned
with no specification made will be voted FOR each particular matter. The votes
required with respect to the Items set forth in the Notice of Annual Meeting of
Stockholders are set forth in the discussion of each Item herein.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding ownership of
the Common Stock as of the Record Date by (i) each person known by the Company
to be the beneficial owner of more than 5% of the outstanding shares of Common
Stock, (ii) each director of the Company, (iii) the Chief Executive Officer and
each other executive officer of the Company named in the Summary Compensation
Table, and (iv) all executive officers and directors of the Company as a group.
(13)
Amount and Nature of
Beneficial Ownership of
Name Common Stock(1) Percent of Class
---- ---------------------- ----------------
Arthur L. Smith (2)................... 3,290,283 6.66%
Charles R. Poole. (3)................. 326,666 *
H. Douglas Saathoff (4)............... 860,418 1.74%
Craig K. Clement (5).................. 656,668 1.33%
Sandra Poole-Christal (6)............. 115,000 *
Murray R. Nye (7)..................... 470,500 *
Robert B. Werner (8).................. 372,362 *
Tomas Revesz (9)...................... 122,000 *
Richard C. Benkendorf (10)............ 180,000 *
Carlos K. Kauachi (11)................ 134,123 *
All directors and executive officers
as a group (16 persons) (12)......... 7,221,188 13.78%
* Less than 1%
2
<PAGE>
(1) To the knowledge of the Company, each person named in the table has sole
voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by him. Shares of Common Stock that are not
outstanding but that may be acquired by a person upon exercise of options
or warrants within 60 days of the Record Date are deemed outstanding for
the purpose of computing the percentage of outstanding shares beneficially
owned by such person but are not deemed outstanding for the purpose of
computing the percentage of outstanding shares beneficially owned by any
other person.
(2) Includes 733,334 shares issuable upon exercise of presently exercisable
options or options exercisable within 60 days of the Record Date.
(3) Includes 266,666 shares issuable upon exercise of presently exercisable
options or options exercisable within 60 days of the Record Date.
(4) Includes 766,668 shares issuable upon exercise of presently exercisable
options or options exercisable within 60 days of the Record Date.
(5) Includes 656,668 shares issuable upon exercise of presently exercisable
options or options exercisable within 60 days of the Record Date.
(6) Includes 40,000 shares issuable upon exercise of presently exercisable
options or options exercisable within 60 days of the Record Date.
(7) Includes 205,000 shares issuable upon exercise of presently exercisable
options or options exercisable within 60 days of the Record Date.
(8) Includes 178,393 shares issuable upon exercise of presently exercisable
options and warrants or options and warrants exercisable within 60 days of
the Record Date.
(9) Includes 105,000 shares issuable upon exercise of presently exercisable
options or options exercisable within 60 days of the Record Date.
(10) Includes 85,000 shares issuable upon exercise of presently exercisable
options or options exercisable within 60 days of the Record Date.
(11) Includes 30,000 shares issuable upon exercise of presently exercisable
options or options exercisable within 60 days of the Record Date.
(12) Includes 3,708,397 shares issuable upon exercise of presently exercisable
options or options exercisable within 60 days of the Record Date.
(13) In accordance with the issuance of the Company's Series B Preferred Stock,
The Shaar Fund has the right to convert its preferred shares into common
stock at the lesser of $1.375 or seventy-eight (78%) of the average of the
five lowest closing bid prices of the common stock on the NASD Over-the-
Counter Bulletin Board during the ten trading day period preceding the date
of conversion. The Shaar Fund may convert its Preferred Stock within 60
days of the Record Date, and if the conversion price were to approximate
$0.75 the Shaar Fund may become the owner of more than 5% of the
outstanding Common Stock of the Company.
The following table sets forth certain information regarding ownership of
the Company's wholly-owned subsidiary GlobalSCAPE, Inc.'s Common Stock as of the
Record Date by (i) each person known by the Company to be the beneficial owner
of more than 5% of the outstanding shares of Common Stock, (ii) each director of
the Company or the Company's subsidiary, (iii) the Chief Executive Officer and
each other executive officer of the Company named in the Summary Compensation
Table, and (iv) all executive officers and directors of the Company as a group.
Amount and Nature of
Beneficial Ownership of
Name Common Stock(1) Percent of Class
---- ---------------------- ----------------
Arthur L. Smith (2)................... 18,190 1.05%
H. Douglas Saathoff (2)............... 18,190 1.05%
Craig K. Clement (2).................. 18,190 1.05%
Sandra Poole-Christal (3)............. 97,143 5.40%
All directors and executive officers
as a group (4 persons) (4)........... 151,713 8.19%
3
<PAGE>
(1) To the knowledge of the Company, each person named in the table has sole
voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by him. Shares of Common Stock that are not
outstanding but that may be acquired by a person upon exercise of options
or warrants within 60 days of the Record Date are deemed outstanding for
the purpose of computing the percentage of outstanding shares beneficially
owned by such person but are not deemed outstanding for the purpose of
computing the percentage of outstanding shares beneficially owned by any
other person.
(2) Includes 18,190 shares issuable upon exercise of presently exercisable
options or options exercisable within 60 days of the Record Date.
(3) Includes 97,143 shares issuable upon exercise of presently exercisable
options or options exercisable within 60 days of the Record Date.
(4) Includes 151,713 shares issuable upon exercise of presently exercisable
options or options exercisable within 60 days of the Record Date.
ITEM 1.
ELECTION OF TWO DIRECTORS
The Amended and Restated Certificate of Incorporation of the Company
provides that the number of directors shall be determined by resolution of the
Board of Directors. The Board of Directors has by resolution established the
number of directors of the Company at six, with such directors being divided
into three classes. The Board proposes that the shareholders elect two
directors to serve until the Annual Meeting of Stockholders in 2002 and until
their successors have been duly elected and qualified. Proxies cannot be voted
for more than two persons. The nominees, Murray R. Nye and Richard C.
Benkendorf, will constitute the Class B directors. The other directors of the
Company will continue in office for their existing terms. Each of the nominees
is presently serving as a director of the Company. Biographical information on
the following two nominees and continuing directors is set forth below under
"Management."
Assuming the presence of a quorum, directors shall be elected by a
plurality of the votes cast at the Annual Meeting by holders of Common Stock
entitled to vote. Votes withheld are not counted in the number of votes cast in
the election of directors. Under applicable Delaware law, in tabulating the
vote, broker nonvotes will have no effect on the vote. The enclosed proxy, if
properly signed and returned will be voted FOR the election of the two nominees
unless the vote is WITHELD. Although the Company does not anticipate that
either of such nominees will refuse or be unable to accept or serve as directors
of the Company for the term specified, the persons named in the enclosed form of
proxy intend, if either of such nominees is unable or unwilling to serve as a
director, to vote the shares represented by the proxy for the election of such
other person as may be nominated or designated by the Board of Directors.
Name Age Position(s) with the Company
- ---- --- ----------------------------
CLASS B - NOMINEES FOR TERMS EXPIRING AT THE ANNUAL MEETING OF STOCKHOLDERS IN
1999
Murray R. Nye 47 Director
Richard C. Benkendorf 60 Director
================================================================================
4
<PAGE>
CLASS C - DIRECTORS WITH TERMS EXPIRING AT THE ANNUAL MEETING OF STOCKHOLDERS IN
2000
Arthur L. Smith 34 Director and Chief Executive Officer
Robert B. Werner 42 Director
CLASS A - DIRECTORS WITH TERMS EXPIRING AT THE ANNUAL MEETING OF STOCKHOLDERS IN
2001
Carlos K. Kuauchi 59 Director and Chief Executive Officer
Tomas Revesz 62 Director
THE BOARD OF DIRECTORS RECOMMENDS THAT EACH HOLDER OF COMMON STOCK VOTE
"FOR" THE ELECTION OF EACH OF THE TWO INDIVIDUALS NOMINATED ABOVE FOR ELECTION
AS DIRECTORS
MANAGEMENT
The following table sets forth certain information concerning the current
directors and executive officers of the Company:
Name Age Position Held
- ---- --- -------------
Arthur L. Smith 34 Chief Executive Officer and Chairman of
the Board of Directors
Charles R. Poole 56 President
H. Douglas Saathoff 37 Secretary, Treasurer, Senior Vice
President and Chief Financial Officer
Craig K. Clement 41 Senior Vice President, Corporate
Development
Everett L. Waller 48 Senior Vice President, Operations
Jeffrey J. Gehring 43 Senior Vice President, Sales and
Marketing
H. Steve Kennedy 44 Senior Vice President, Engineering and
Chief Technical Officer
Charles E. Bagby, Jr. 45 Senior Vice President, Operations and
Engineering
Glenn Dower 49 Senior Vice President, Chief Information
Officer
Sandra Poole-Christal 33 President of GlobalSCAPE, Inc.
Jesus Enriquez 47 Senior Vice President
Murray R. Nye 47 Director
Tomas Revesz 62 Director
Richard C. Benkendorf 60 Director
Carlos K. Kauachi 59 Director
Robert B. Werner 42 Director
Arthur L. Smith has served as Chief Executive Officer and a director of the
Company since its formation in June 1996 and served as President of the Company
since its formation in June 1996 to July 1998. Mr. Smith also served as
President, Chief Operating Officer and a director of ATSI-Canada since its
formation in May 1994. From December 1993 until May 1994, Mr. Smith served in
the same
5
<PAGE>
positions with Latcomm International Inc., which company amalgamated with
Willingdon Resources Ltd. to form ATSI-Canada in May 1994. Mr. Smith has also
served as President and Chief Executive Officer of American TeleSource
International, Inc., a Texas corporation ("ATSI-Texas"), one of the Company's
principal operating subsidiaries, since December 1993. From June 1989 to
December 1993, Mr. Smith was employed as director of international sales by
GeoComm Partners, a satellite-based telecommunications company located in San
Antonio, providing telecommunications services to Latin America. Mr. Smith has
over nine years experience in the telecommunications industry.
Charles R. Poole has served as President of the Company since July 1998 and
served as Chief Operating Officer of the Company from December 1997, to July
1998. Mr. Poole served as Vice President of the Company from February 1997 to
December 1997. Mr. Poole has also served as Senior Vice President-Sales and
Marketing of ATSI-Texas since February 1997. From February 1995 to January
1997, Mr. Poole served as Senior Vice President for A+ Communications,
responsible for paging, cellular and telemessaging sales. From April 1994 to
February 1995, Mr. Poole served as Senior Vice President of American Paging, a
communications company. From 1992 to 1994, Mr. Poole served as Division
Manager, Data Documents, Inc. of Chicago, Illinois. From 1989 to 1992, Mr.
Poole served as President of GeoComm Partners, a satellite-based
telecommunications company located in San Antonio, providing telecommunication
services to Latin America. Prior to that time, Mr. Poole was Senior Vice
President of Mobilecomm, a Bell South company, for approximately five years.
Mr. Poole has over fifteen years experience in the telecommunications industry.
Mr. Poole is the father of Sandra Poole-Christal, President of the Company's
subsidiary, GlobalSCAPE, Inc.
H. Douglas Saathoff, C.P.A., has served as Secretary, Treasurer, Senior
Vice President and Chief Financial Officer of the Company since its formation in
June 1996. Mr. Saathoff also served as Vice President, Chief Financial Officer
and Treasurer of ATSI-Canada since February 1996 and Secretary since June 1996.
Mr. Saathoff has served as Vice President-Finance of ATSI-Texas since June 1994,
and as Secretary and Treasurer of ATSI-Texas since October 1994. From May 1993
to May 1994, Mr. Saathoff served in the position of Chief Accountant for Santa
Rosa Healthcare Corporation, a San Antonio-based healthcare corporation. From
January 1990 to February 1993, Mr. Saathoff served as Financial Reporting
Manager for U.S. Long Distance Corp., a San Antonio-based, publicly traded long
distance telecommunications company. Prior to that time, Mr. Saathoff served as
an accountant with Arthur Andersen LLP for approximately five years.
Craig K. Clement has served as Senior Vice President, Corporate Development
of the Company since its formation in June 1996. Mr. Clement has also served as
Vice President-Corporate Development for ATSI-Texas since August 1994. From
April 1993 to July 1994, Mr. Clement served as Vice President of Corporate
Development for LATelco, a wireless communications company. From February 1992
until March 1993, Mr. Clement served as Vice President of Operations for CSI
Environmental, an environmental cleanup company. From August 1983 until July
1993, Mr. Clement served as President of Yucca Oil Company, an oil and gas
exploration company. Mr. Clement served as a director of Geocommunications,
Inc., a satellite networks company, from November 1987 to November 1991. Mr.
Clement also served as a director of PANACO, a Nasdaq-traded company, from 1988
to 1993, and was a member of the compensation committee.
Everett L. Waller has served as Vice President, Operations of the Company
since its formation in June 1996. Mr. Waller has also served as Senior Vice
President-Operations and Technical Services of ATSI-Texas since January 1997.
Mr. Waller served as Senior Vice President-Operations and Sales of ATSI-Texas
from August 1993 to January 1997. From May 1994 to August 1995, Mr. Waller
served as Vice President-Operations of ATSI-Texas. Prior to that time, Mr.
Waller served as Vice President of
6
<PAGE>
Technical Services of U.S. Long Distance Corp., a San Antonio-based, publicly
traded long distance telecommunications company, for a period of seven years.
Jeffrey J. Gehring has served as Senior Vice President, Sales and Marketing
of the Company since February 1998 and Vice President of Sales of ATSI-Texas
since February 1998. From August 1996 to January 1998, Mr. Gehring served as
Regional Vice President at A+ Communications, a communications company. From
March 1995 to July 1996, Mr. Gehring was Vice President of Premier Paging
Corporation, a communications company. From March 1994 to March 1995 Mr.
Gehring was General Manager of American Paging, a communications company. From
October, 1991 to March 1994, Mr. Gehring was Vice President of Sales for GeoComm
Partners, a satellite-based telecommunications company.
H. Steve Kennedy has served as Senior Vice President, Engineering and Chief
Technical Officer of the Company since January 1998 and Vice President of
Engineering of ATSI-Texas since July 1998 and Chief Technical Officer since
April 1998. From July 1996 to January 1998, Mr. Kennedy served as President
and was a principal of HSK INC, a telecommunications service provider. From
August 1995 to July 1996, Mr. Kennedy served as Director of Technical Services
for Wireless Resources, Inc., a wireless telecommunications company. From July
1994 to August 1995, Mr. Kennedy served as Regional Technical Manager of
American Paging, a communications company. From November 1993 to July 1994, Mr.
Kennedy served as Vice President of Technical Services for Zycom Corporation, a
communications company.
Glenn Dower has served as Senior Vice President and Chief Information
Officer of the Company since January 1999. Mr. Dower was employed from 1989
until 1998 as the Director of Information Resources with DSC Communications,
Inc. (Alcatel), a digital switching manufacturer headquartered in Plano, Texas,
where he was responsible for directing the deployment of the Internet/Intranet,
Executive Information Systems, Information Warehousing and Document Management
applications.
Charles E. Bagby, Jr. has served as Senior Vice President, Operations and
Engineering of the Company since May 1999. Prior to joining the Company, Mr.
Bagby served for eleven years in various capacities with AT&T, most recently as
the Global Customer-Service Satisfaction Team Manager (November, 1997-July,
1998) and then the System Planning and Support Manager (August 1998-May 1999) in
the Consumer Markets Division, Global Sales and Service Organization. From
August 1996 to November 1997, Mr. Bagby served as a Consultant for AT&T's
Quality & Process Improvement (ISO 9000) in its Business Markets Division. From
May 1995 to August 1996, he served as the Operations Manager: Latin American
Data Communication Services in the Business Communications Services division,
and from August 1993 to May 1995 as a Manager: Network Performance & Assets in
the Business Communications Services division.
Sandra Poole-Christal has served as President of GlobalSCAPE, Inc. since
January 1, 1998. Ms. Poole-Christal founded GlobalSCAPE, Inc. in 1996 at the
request of the Company. Ms. Poole-Christal was one of the founding employees of
the Company, serving as its Director of International Sales and Marketing from
January 1994 until April 1996. Prior to joining the Company, Ms. Poole-Christal
served as an account executive with GeoComm Partners. Ms. Poole-Christal holds
a BA in Communications from Baylor University. Ms. Poole-Christal is the
daughter of Charles R. Poole, President of the Company.
Jesus Enriquez has served as Senior Vice President of the Company since
February 1998, and as Director General of American TeleSource International de
Mexico, S.A. de C.V. (ATSI-Mexico), one of
7
<PAGE>
the Company's principal operating subsidiaries, since August 1996. From March
1995 to July 1996 Mr. Enriquez served as Commercial Director of ATSI-Mexico.
From January 1989 to February 1995, Mr. Enriquez was the Director General of
Servicios Espectro Radioelectricos ("SERSA"), an international communications
company in Mexico City.
Murray R. Nye has served as a director of the Company since its formation
in June 1996. Mr. Nye also served as Chief Executive Officer and a director of
ATSI-Canada from its formation in May 1994. From December 1993 until May 1994,
Mr. Nye served in the same positions with Latcomm International Inc., which
company amalgamated with Willingdon Resources Ltd. to form ATSI-Canada in May
1994. From 1992 to 1995, Mr. Nye served as President of Kirriemuir Oil & Gas
Ltd. From 1989 until 1992, Mr. Nye was self-employed as a consultant and Mr.
Nye is again currently self-employed as a consultant. Mr. Nye serves as a
director of D.M.I. Technologies, Inc., an Alberta Stock Exchange-traded company.
Tomas Revesz has served as a director of the Company since its formation in
June 1996. Mr. Revesz has served as President of Long Distance International,
Inc., a long distance reseller, since October 1993. From 1983 to June 1993, Mr.
Revesz served as President of Star Long Distance, Inc., also a long distance
reseller. From January 1990 until August 1993, Mr. Revesz served as Vice
President of Operations of AAA Telephone & Communications, Inc., a telephone
interconnection company.
Richard C. Benkendorf has served as a director of the Company since October
1996. From 1991 to present, Mr. Benkendorf has been a principal of Technology
Impact Partners, which provides advisory and investment services. From 1989-
1991, Mr. Benkendorf served as Senior Vice President Investment, Planning,
Mergers & Acquisitions and Venture Capital for Ameritech, a communications
services company.
Carlos K. Kauachi has served as a director of the Company since October
1996. From 1996 to present, Mr. Kauachi has been self-employed as a consultant.
From 1962 until 1996, Mr. Kauachi served in various positions with Telefonos de
Mexico, the then privately owned telecommunications monopoly in Mexico,
including Vice President-Telephone Business Development, Vice President-
Marketing and Sales and, most recently, Vice President-International Business
Development.
Robert B. Werner has served as a director of the Company since September
1998. From 1990 to present, Mr. Werner has been a stockholder and practicing
attorney with the law firm of Jeffers and Banack, Incorporated, located in San
Antonio, Texas.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
AND COMMITTEES
The business affairs of the Company are managed under the direction of the
Board of Directors. The Board of Directors of the Company held a total of six
meetings during the fiscal year ended July 31, 1999. The Compensation Committee,
composed of Messrs. Nye, Benkendorf and Kauachi, reviews and makes
recommendations to the Board of Directors regarding executive compensation
matters and administers the Company's stock option plans. The Audit Committee,
composed of Messrs. Werner, Benkendorf and Revesz, is responsible for reviewing
the Company's financial statements and overseeing the Company's accounting
practices and audit procedures. The Compensation Committee and the Audit
Committee held four meetings each during the fiscal year ended July 31, 1999.
No incumbent director of the Company during the fiscal year ended July 31, 1999
attended fewer than 75% of the aggregate number of meetings of the Board on
which the director served.
8
<PAGE>
EXECUTIVE COMPENSATION AND OTHER MATTERS
Summary Compensation Table
The following table sets forth information concerning the compensation
earned during the Company's last three fiscal years by the Company's Chief
Executive Officer and each of the Company's other four most highly compensated
executive officers whose total cash compensation exceeded $100,000 for services
rendered in all capacities for the fiscal year ended July 31, 1999
(collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
-------------------------------------------------------------------------
Awards Payouts
-----------------------------------
Securities
Other Annual Restricted Underlying LTIP All Other
Fiscal Compensa- Stock Options/ Payout Compen-
Name And Principal Position Year Salary ($) Bonus ($) tion ($)(1) Awards ($) SARs (#) ($) sation ($)
--------------------------- ---- ---------- --------- ------------ ---------- ----------- --- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Arthur L. Smith(2)............... 1999 $129,519 - - - 200,000 - -
Chief Executive Officer 1998 96,731 $10,634 - - - -
1997 91,538 10,000 - - 800,000 - -
Charles R. Poole(3).............. 1999 126,442 - - - 150,000 - -
President 1998 95,808 2,474 - - 50,000 - -
1997 46,000 (4) - - - 300,000 - -
H. Douglas Saathoff(5)........... 1999 102,244 - - - 100,000 - -
Chief Financial Officer, Senior 1998 91,394 13,631 - - - - -
Vice President , Treasurer and 1997 87,769 10,000 - - 900,000 - -
Secretary
Craig K. Clement(6).............. 1999 99,015 - - - 100,000 - -
Senior Vice President, Corporate 1998 88,192 15,662 - - - - -
Development 1997 93,448 10,000 - - 900,000 - -
Sandra Poole-Christal............ 1999 80,000 40,000 - - 75,000 - -
President, GlobalSCAPE 1998 73,423 31,000 - - - -
1997 55,385 - - - 15,000 - -
</TABLE>
_______________
(1) Certain of the Company's executive officers receive personal benefits in
addition to salary; however, the Company has concluded that the aggregate
amount of such personal benefits do not exceed the lesser of $50,000 or 10%
of annual salary and bonus for any Named Executive Officer.
(2) Also serves as Chief Executive Officer of American TeleSource
International, Inc., a Texas corporation ("ATSI-Texas"), the Company's
principal operating subsidiary. Mr. Smith's compensation is paid by ATSI-
Texas.
(3) Also serves as President of ATSI-Texas. Mr. Poole's compensation is paid
by ATSI-Texas.
(4) Amount shown reflects Mr. Poole's salary from February 1, 1997, the
beginning date of his employment with the Company, through July 31, 1997,
the end of fiscal 1997.
(5) Also serves as Vice President-Finance and Secretary and Treasurer of ATSI-
Texas. Mr. Saathoff's compensation is paid by ATSI-Texas.
(6) Also serves as Vice President-Corporate Development of ATSI-Texas. Mr.
Clement's compensation is paid by ATSI-Texas.
9
<PAGE>
Employment Agreements
The Company has entered into employment agreements with certain of its
executive officers as follows:
<TABLE>
<CAPTION>
Name Term Minimum
Annual Salary
<S> <C> <C>
Craig K. Clement January 1, 1997 - December 31, 1999(4)(5) $ 92,000(1)
Craig K. Clement January 1, 2000 - December 31, 2000 $101,424 (2)
Sandra Poole-Christal(7) January 1, 1998-December 31, 2001(4) 80,000 (3)
Charles R. Poole August 1, 1998 - July 31, 2001(4) $127,000(6)
Arthur L. Smith August 1, 1998 - July 31, 2001(4) $130,000(6)
H. Douglas Saathoff January 1, 2000 - December 31, 2000 $104,738 (2)
H. Douglas Saathoff January 1, 1997 - December 31, 1999(4)(5) $ 95,000(2)
</TABLE>
(1) agreement provides for lump sum payment equal to 6 months of salary in the
event of executive's disability or termination without cause; if executive
resigns within two months following a change in control of company, or is
terminated within 24 months following a change in control of company, executive
is entitled to lump sum payment equal to six months of salary.
(2) agreement provides for 6 months of continuing payments in the event of
executive's death or disability; if executive is terminated without cause,
executive is entitled to continuing payments until the third anniversary of the
start date or for 12 months from termination, whichever is longer; if executive
resigns following a change in control of Company, executive is entitled to
continuing payments until the third anniversary of the start date, or if
agreement has been renewed, until 1 year following anniversary date.
(3) agreement provides for 6 months of continuing payments in the event of
executive's death or disability; if executive is terminated without cause,
executive is entitled to continuing payments until the third anniversary of the
start date or for 12 months from termination, whichever is longer; if executive
resigns following a change in control of GlobalSCAPE, executive is entitled to
continuing payments until the third anniversary of the start date, or if
agreement has been renewed, until 1 year following anniversary date.
(4) agreement provides for an automatic renewal for an additional one year term
unless notice of termination is given 120 days prior to end of initial term.
(5) notice of non-renewal has been given.
(6) agreement provides for 6 months of continuing payments in the event of
executive's death or disability; if executive is terminated without cause or
resigns following a change in control in company, executive is entitled to
continuing payments until third anniversary of start date or end of 24 months
from termination, whichever comes first.
(7) agreement is between Sandra Poole-Christal and the Company's subsidiary
GlobalSCAPE, Inc.
The Board may increase each officer's salary, and may pay a bonus to each
of them from time to time. Each of the employment agreements provides for early
termination under certain conditions, and restricts each executive from various
competing and other potentially damaging activities during employment and for a
specified time after termination of employment.
Pursuant to each of Messrs. Smith's and Poole's employment agreement, the
Company granted to them, under the Company's 1998 Stock Option Plan, incentive
stock options to purchase 200,000 and 150,000 shares, respectively, of the
Company's Common Stock, at an exercise price of $0.55 per share, representing
the fair market value of a share of Common Stock on the date of grant.
Additionally, pursuant to and on the date each of Messrs. Saathoff's and
Clement's employment agreement was entered into, and pursuant to each of Messrs.
Smith's and Poole's prior employment agreements, the Company granted to them,
under the Company's 1997 Stock Option Plan, nonqualified options to purchase
900,000, 900,000, 800,000 and 300,000 shares, respectively, of the Company's
Common Stock,
10
<PAGE>
at an exercise price of $0.58 per share, representing the fair market value of a
share of Common Stock on the date of grant. In fiscal 1999, Messrs. Saathoff and
Clement and Ms.Poole-Christal were issued incentive stock options to purchase
100,000, 100,000 and 75,000 shares, respectively, of the Company's Common Stock,
at an exercise price of $0.55 per share representing the fair market value of a
share of Common Stock on the date of grant. Upon the occurrence of a change in
control, as defined in the respective governing option agreements, the
exercisability of all such options, to the extent unexercisable, will be
accelerated.
Stock Option Plans
1997 Option Plan
The American TeleSource International Inc. 1997 Stock Option Plan (the
"1997 Option Plan") was adopted in February 1997 by the Board of Directors of
the Company and approved in May 1997 by the Company's shareholders.
The 1997 Option Plan terminated on February 10, 1998. No further options
will be granted under the 1997 Option Plan. All options outstanding under the
1997 Option Plan on the date of termination will remain outstanding under the
1997 Option Plan in accordance with their respective terms and conditions.
As of July 31, 1999, options for 4,222,667 shares were outstanding under
the 1997 Option Plan at a weighted average exercise price of $.75 and options
for 3,271,333 shares were exercisable. As of July 31, 1999, 543,000 options had
been exercised.
1998 Option Plan
The American TeleSource International, Inc. 1998 Stock Option Plan (the
"1998 Option Plan") was adopted in September 1998 by the Board of Directors of
the Company and approved December 1998 by the Company's shareholders.
The 1998 Option Plan authorizes the grant of up to two million incentive
stock options and non-qualified stock options to employees, directors and
certain other persons. As of July 31, 1999, the Board had granted options to
purchase 1,843,300 shares of Common Stock under the 1998 Option Plan at exercise
prices as follows: (i) 1,541,000 at $0.55 per share, (ii) 302,300 at $0.78 per
share. As of July 31, 1999, options for 1,785,800 shares were outstanding
under the 1998 Option Plan at a weighted average exercise price of $0.60. As of
July 31, 1999 no options were exercisable, however, 57,500 options had been
forfeited.
11
<PAGE>
Stock Option Grant Table
The following table sets forth certain information concerning options
granted to the Named Executive Officers during the Company's fiscal year ended
July 31, 1999.
<TABLE>
<CAPTION>
Potential Realizable Value At Assumed
Annual Rates of Stock Price
Individual Grants Appreciation For Option Term
----------------------------------------------------------------------------------------------
Percent of
Total
Number of Options
Securities Granted to Exercise
Underlying Employees or Base
Options in Fiscal Price Expiration
Name Granted (#) Year ($/share) Date 5% ($)(1) 10% ($)(1)
- ---- ----------- ---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Arthur L. Smith........... 200,000(2) 10.9 $0.55 09/09/08 $180,000 $286,000
Charles R. Poole.......... 150,000(2) 8.1 $0.55 09/09/08 $135,000 $214,500
H. Douglas Saathoff....... 100,000(2) 5.4 $0.55 09/09/08 $ 90,000 $143,000
Craig K. Clement.......... 100,000(2) 5.4 $0.55 09/09/08 $ 90,000 $143,000
Sandra Poole-Christal..... 75,000(2) 0.4 $0.55 09/09/08 $ 67,500 $107,250
</TABLE>
_______________
(1) The 5% and 10% assumed annual compound rates of stock appreciation are
mandated by the rules of the Securities and Exchange Commission and do not
represent the Company' estimate or projection of future Common Stock
prices. The actual value realized may be greater or less than the
potential realizable value set forth in the table.
(2) None of such options are presently exercisable. The options become
exercisable in three equal annual installments commencing on September 9,
1999. The exercise price represented the market price of a share of Common
Stock on September 9, 1998, the effective date of the grant.
Aggregate Option Exercises in Fiscal 1999 and Fiscal Year-End Option Values
Table
The following table shows stock options exercised by the Named Executive
Officers during the fiscal year ended July 31, 1999, including the aggregate
value of gains on the date of exercise. In addition, the table includes the
number of shares covered by both exercisable and unexercisable stock options as
of July 31, 1999. Also reported are the values of "in-the-money" options which
represent the positive spread between the exercise price of any such existing
stock options and the Common Stock price as of July 31, 1999.
<TABLE>
<CAPTION>
Shares Value of Unexercised
Acquired Number of Securities Underlying In-the-Money
On Value Unexercised Options at
Name Exercise(#) Realized($) Options at Fiscal Year End(#) Fiscal Year End($)(1)
- ---- ----------- ----------- ------------------------------- --------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Arthur L. Smith - - 666,667 333,333 $480,000 $246,000
Charles R. Poole - - 216,666 283,334 144,000 184,500
H. Douglas Saathoff - - 733,334 266,666 528,000 195,000
Craig K. Clement - - 623,334 266,666 448,800 195,000
Sandra Poole-Christal - - 15,000 75,000 10,800 56,250
</TABLE>
____________________
12
<PAGE>
(1) Values stated are based upon the $1.30 closing price per share on July 30,
1999, as reported on the Electronic Bulletin Board, and represent the
difference between the fair market value of the shares underlying the
options and the exercise price of the options at fiscal year end.
Compensation Committee Interlocks and Insider Participation
Messrs. Benkendorf, Kauachi and Nye serve on the Compensation Committee.
The Compensation Committee met four times in fiscal 1999.
In January 1997, the Company entered into an agreement with KAWA
Consultores, S.A. de C.V., an international consulting firm of which Company
director Carlos K. Kauachi is president, for international business development
support. Under the terms of the agreement, the Company paid the consulting firm
$8,000 per month for a period of twelve months. In January 1998, the agreement
was renewed at $10,000 per month (payable in a combination of cash and Common
Stock) for a period of twelve months. In March 1999, the agreement was renewed
at $6,000 per month for a period of twelve months.
The Company has entered into a month-to-month agreement with Technology
Impact Partners, a consulting firm of which Company director Richard C.
Benkendorf, is principal and owner. Under the agreement, Technology Impact
Partners provides the Company with various services that include strategic
planning, business development and financial advisory services. Under the terms
of the agreement, the Company pays the consulting firm $3,750 per month plus
expenses. At July 31, 1999, the Company has a payable to Technology Impact
Partners of approximately $74,000.
Director Compensation
Directors are reimbursed their reasonable out-of-pocket expenses in
connection with their travel to and attendance at meetings of the Board of
Directors. Each director other than Arthur L. Smith receives $1,000 for each
meeting of the Board attended excluding telephonic meetings for which each
director other than Arthur L. Smith receives $250.
On September 9, 1998, each of the directors of the Company were granted
options to purchase 75,000 shares of Common Stock of the Company, with the
exception of Murray R. Nye, who was granted options to purchase 150,000 shares
of Common Stock of the Company. In addition, each of the directors serving on a
committee of the Board were granted options to purchase an additional 15,000
shares of Common Stock for each committee served on, at an exercise price of
$0.55 per share under the 1998 Option Plan.
CERTAIN TRANSACTIONS
In April 1998, the Company engaged two companies for billing and
administrative services related to network management services it provides. The
companies, which are owned by Tomas Revesz, a director of the Company, were paid
approximately $140,000 for their services during fiscal 1998. Subsequent to
year-end, the Company entered into an agreement with the two companies capping
their combined monthly fees at $18,500 per month. For fiscal 1999, the
companies were paid approximately $180,000 for their services. Additionally,
the Company has a payable to Mr. Revesz of $90,000.
13
<PAGE>
In January 1997, the Company issued 90,000 shares of Common Stock, and in
February 1997 the Company issued warrants for the purchase of 250,000 shares of
common stock at $0.85 for three years to J&W, a joint venture ("J&W") upon
cancellation of a contract with J&W for pay telephone equipment financing. One
third of J&W was owned by Robert B. Werner , a director of the Company. Upon
dissolution of J&W, Mr. Werner received 30,000 shares of the Common Stock and
83,300 of the warrants. Also in connection with the cancellation of the
contract, the Company issued warrants in February 1997 for the purchase of
58,824 shares of Common Stock at $0.85 to Jeffers & Banack, Incorporated, a law
firm in which Mr. Werner is a partner. In addition, the Company is represented
by the law firm of Jeffers & Banack , Incorporated with respect to one
litigation matter.
See "Compensation Committee Interlocks and Insider Participation" for
certain additional relationships and related party transactions.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers and persons who own more than 10%
of a registered class of the Company's equity securities to file various reports
with the Securities and Exchange Commission concerning their holdings of, and
transactions in, securities of the Company. Copies of these filings must be
furnished to the Company.
Based on a review of the copies of such forms furnished to the Company and
other information, the Company believes that, during the fiscal year ended July
31, 1999, all of its directors and executive officers were in compliance with
the applicable filing requirements.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Set forth below is a report submitted by the Compensation Committee of the
Board of Directors addressing the Company's compensation policies for fiscal
1999 as they affected Arthur L. Smith as Chief Executive Officer and the other
Named Executive Officers.
Compensation Philosophy
The Board's executive compensation plan for fiscal 1999 was designed to
provide significant incentive compensation opportunities in addition to market
competitive salaries, and to aid in the retention of the Named Executive
Officers. The plan was intended to link individual employee objectives with
overall Company strategies for fiscal 1999, and to reward the Named Executive
Officers for their individual contributions to those strategies. The committee
uses compensation and performance data from a peer group of comparable companies
to help it establish market competitive compensation and performance standards
for the Company's employees.
Compensation paid to the Named Executive Officers during fiscal 1999
consisted primarily of three elements: base salaries, cash bonuses and stock
option grants. The Board's emphasis on linking compensation to performance
criteria and levels of responsibility is reflected in the components of
compensation received by the Named Executive Officers during fiscal 1999, as
presented in the summary compensation table which precedes this report.
14
<PAGE>
Base salaries. Minimum base salaries paid to the Named Executive Officers
were set according to existing contractual arrangements. Adjustments to those
minimum salary levels were determined by evaluating the competitive marketplace,
the scope of each individual's responsibilities, the planned and past
performance of the Company, and, to a certain extent, subjective measures of
each individual's performance.
Cash Bonuses. Annual cash bonuses to the Named Executive Officers are
linked to corporate, individual and product line objectives. In determining the
actual cash bonuses paid to the Named Executive Officers, the actual financial
performance relative to the Company's 1999 operating plan, market factors and
the accomplishments of individual performance objectives are considered. Cash
bonuses may be awarded on the basis of the Company's financial performance
relative to its plan and individual performance. No cash bonuses were awarded to
the named Executive Officers for 1999, except Sandra Poole-Christal.
Stock Option Grants. Stock options are granted from time to time in order
to promote the interest of the Company and its shareholders by providing an
effective means to attract, retain and increase the commitment of certain
individuals and to provide such individuals with additional incentive to
contribute to the success of the Company.
Chief Executive Officer Compensation. The compensation paid to the Chief
Executive Officer differed from the other Named Executive Officers only in base
salary. Arthur L. Smith's base salary was higher than the other Named Executive
Officers of the Company, and considered to be in line with other early stage
companies of a similar nature. Cash bonuses paid to Arthur L. Smith were
calculated based upon the same criteria used to calculate cash bonuses to the
other Named Executive Officers. The differences in the Chief Executive
Officer's compensation compared with that of the other Named Executive Officers
was attributable to the additional responsibilities associated with that
position.
This Report on Executive Compensation is made by and on behalf of the Board
of Directors of the Company.
Respectfully submitted,
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Murray R. Nye, Richard C. Benkendorf and Carlos K. Kauachi
15
<PAGE>
PERFORMANCE GRAPH
The Company's Common Stock has been registered under Section 12 of the
Securities Exchange Act of 1934, as amended, since October 20, 1997. The
following Performance Graph compares the Company's cumulative total stockholder
return on its Common Stock from October 20, 1997 through July 31, 1998 and July
31, 1999 with the cumulative total return of the NASDAQ Market Value Index and
the Company's peer group over the same period. The peer group is comprised of
nine telecommunications companies operating in similar markets, offering
comparable products and services as the Company. The nine companies included in
the peer group are Firstcom Corporation, IDT Corporation, Pacific Gateway
Exchange, Primus Telecom Group, Star Telecomm Inc., Startec Global
Communications Corporation, Teleglobe Inc., Telscape International Inc., Viatel
Inc. The graph assumes that the value of the investments in the Company's Common
Stock and each index was $100 at October 20, 1997 and that all dividends were
reinvested.
Comparison of Cumulative Total Return
Among the Company, S&P 500 Index and Peer Group
- --------------------------------------------------------------------------------
Index for: Oct. 20, July 31, July 31,
- ---------- -------- -------- --------
1997 1998 1999
- --------------------------------------------------------------------------------
The Company 100.0 27.41 37.90
- --------------------------------------------------------------------------------
NASDAQ Market Value Index 100.0 117.57 166.10
- --------------------------------------------------------------------------------
Peer Group 100.0 136.53 121.11
- --------------------------------------------------------------------------------
The foregoing graph is based on historical data and is not necessarily
indicative of future performance. This graph shall not be deemed to be
"soliciting material" or to be "filed" with the Commission or subject to
Regulations 14A and 14C under the Securities Exchange Act of 1934, as amended,
or to the liabilities of Section 18 under the Exchange Act.
16
<PAGE>
ITEM 2.
RATIFICATION OF SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Arthur Andersen LLP to serve as
independent public accountants of the Company for the fiscal year ending July
31, 2000. Although stockholder ratification is not required, the Board of
Directors has directed that such appointment be submitted to the stockholders of
the Company for ratification at the Annual Meeting. Arthur Andersen LLP has
served as the independent accountants of the Company since July 1994. A
representative of Arthur Andersen LLP will be present at the Annual Meeting,
will have an opportunity to make a statement if he or she desires to do so and
will be available to respond to appropriate questions.
Assuming the presence of a quorum, the affirmative vote of a majority of
the shares of Common Stock present in person or by proxy and entitled to vote on
this item at the Annual Meeting is necessary to ratify the selection of the
Company's independent public accountants. The enclosed form of proxy provides a
means for stockholders to vote for the ratification of selection of independent
public accountants, to vote against it or to abstain from voting with respect to
it. If a stockholder executes and returns a proxy, but does not specify how the
shares represented by such stockholder's proxy are to be voted, such shares will
be voted FOR the ratification of selection of independent public accountants.
Under applicable Delaware law, in determining whether this item has received the
requisite number of affirmative votes, abstentions will be counted and will have
the same effect as a vote against this item. Broker nonvotes will not be
counted and will have no effect.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
SELECTION OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS OF THE
COMPANY FOR THE FISCAL YEAR ENDING JULY 31, 2000.
STOCKHOLDER PROPOSALS
Stockholders who wish to submit proposals for inclusion in the Company's
proxy statement for its next annual meeting must do so no later than August 11,
2000.
The Company's Bylaws provide that any stockholder intending to present a
proposal or nomination for election of one or more directors or other proposal
at an annual stockholder meeting must deliver a written notice to the Company's
Corporate Secretary at the Company's principal executive offices not later than
the close of business on the tenth day following the date the Company first
makes public disclosure (whether by press release reported by a major national
news service or in a document publicly filed by the Company with the Securities
and Exchange Commission) of the date of the Annual Meeting.
Any such notice from a stockholder to the Company's Corporate Secretary
must contain (i) the name and address of that stockholder and (ii) a
representation that the stockholder is a holder of record of the Company's stock
entitled to vote at the meeting and intends to appear in person or by proxy at
such meeting to propose the business desired to be brought before the meeting or
to nominate the person(s) specified in the notice, as the case may be. If the
stockholder's notice to the Company's Corporate Secretary proposes to nominate
one or more individuals for election as a director, that notice must also
include (i) the name and address of the person(s) to be nominated, (ii) all
information relating to each such person that is required to be disclosed in
solicitations of proxies for election of directors, or is
17
<PAGE>
otherwise required, in each case pursuant to Regulation 14A under the Securities
Exchange Act of 1934 (including that individual's written consent to being named
in the proxy statement as a nominee and to serve as a director if elected) and
(iii) a description of all arrangements or understandings between that
stockholder and each nominee and any other person(s) pursuant to which the
nomination(s) is to be made by the stockholder. If the stockholder's notice to
the Corporate Secretary proposes to bring other business before the Annual
Meeting, that notice must include (i) a brief description of the business
desired to be brought before the Annual Meeting and the reasons for conducting
that business at the Annual Meeting, and (ii) any material interest of the
stockholder in that business. If a stockholder proposal or nomination is not
made in accordance with the procedure set forth above, the Chairman of the
Annual Meeting may refuse to transact the proposed business or acknowledge the
proposed nomination(s) at such meeting.
In order for a stockholder proposal to be included in the Board of
Directors' Proxy Statement for the next Annual Meeting of Stockholders, such
proposal must be submitted in writing and must be received at 12500 Network
Blvd., Suite 407, San Antonio, Texas 78249, Attention: Corporate Secretary.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not
know of any other matter which will be brought before the Annual Meeting.
However, if any other matter properly comes before the Annual Meeting, or any
adjournment thereof, the person or persons voting the proxies will vote on such
matters in accordance with their best judgment and discretion.
By Order of the Board of Directors
H. Douglas Saathoff
Corporate Secretary
San Antonio, Texas
October 25, 1999
18
<PAGE>
AMERICAN TELESOURCE INTERNATIONAL, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR AN ANNUAL MEETING OF STOCKHOLDERS ON DECEMBER 9, 1999
The undersigned hereby appoints Arthur L. Smith and H. Douglas Saathoff, and
each of them, proxies, with the powers the undersigned would possess if
personally present, and with full power of substitution, to vote at the annual
meeting and at any adjournment thereof, all shares of Common Stock of American
TeleSource International, Inc. held of record by the undersigned on the record
date, upon all subjects that may properly come before the meeting, including the
matters described in the proxy statement furnished herewith, subject to any
directions indicated on this proxy ballot. If no directions are given and the
signed proxy ballot is returned, the proxies will vote FOR Items 1 and 2, and,
at their discretion, on any other matter that may properly come before the
meeting or any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE FOLLOWING ITEMS, AS
MORE FULLY DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT:
<PAGE>
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote "FOR" each Please mark
of the following items, as more fully described in your vote as [ X ]
the proxy statement: indicated in
this example
1. Election of Directors. NOMINEES: Richard C. Benkendorf, Murray R. Nye
FOR all nominees WITHHOLD all nominees
listed above listed above
[ ] [ ]
Place an "X" in this box to withhold authority to vote for any individual
nominee and write that name from the list above on the line below. [ ]
------------------------------------------------------------------------
2. Ratification of selection of Arthur Andersen LLP as Independent Public
Accountants for the fiscal year ending July 31, 2000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Note such other business that may properly come before the meeting or any
adjournment thereof.
The undersigned acknowledges receipt of the formal notice of Such meeting
and the accompanying Proxy Statement.
_____
| Please sign exactly as name appears on the certificate. When shares
| are held by joint tenants, both should sign. If a corporation, please
sign in full corporate name by president or other authorized officer.
If a partnership, please sign in partnership name by authorized,
person. When signing as attorney, executor, administrator, trustee,
guardian, officer or partner, please give full title as such.
DATE__________________________________________ 1999
___________________________________________________
___________________________________________________
___________________________________________________
SIGNATURE(S)
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY BALLOT PROMPTLY USING THE
ENCLOSED ENVELOPE.
- -------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
