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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(Mark One)
[X] Annual report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended April 30, 2000 or
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from _____ to _____
COMMISSION FILE NUMBER: 0-29290
STARNET COMMUNICATIONS INTERNATIONAL INC.
-----------------------------------------
(Exact name of registrant as specified in its charter)
Delaware E.I.N. 52-2027313
-------- -----------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
The CIBC Banking Centre
Old Parham Road
P.O. Box 3265
St. John's, Antigua, West Indies
--------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (268) 480-1650
Securities registered pursuant to section 12(b) of the Act:
None
Securities registered pursuant to section 12(g) of the Act:
Title of each class
Class A Voting Common Stock
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
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<PAGE>
The aggregate market value of the voting stock (which consists solely of shares
of Class A Voting Common Stock) held by non-affiliates of the registrant as of
July 24, 2000, computed by reference to the closing price as at July 24, 2000 of
$2.875 of the registrant's common stock as quoted on the National Association of
Securities Dealers' Over-the-Counter Bulletin Board service on such date, was
approximately $89,080,653.
As of July 24, 2000, there were 32,449,505 shares of the registrant's Class A
Voting Common Stock outstanding.
Documents incorporated by reference:
Form 10-K filed on July 31, 2000.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendments to
this Form 10-K. [ ]
Unless noted otherwise, all amounts contained in this report are in United
States dollars.
PART III
--------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
A. DIRECTORS
<TABLE><CAPTION>
<S> <C> <C> <C>
NAME AGE POSITIONS WITH THE REGISTRANT BOARD POSITION
HELD SINCE
Fred Hazell 53 Chair February 10, 2000
Meldon Ellis 38 President, Chief Executive Officer December 23, 1999
and Secretary/Treasurer
Wolf Bergelt 56 Director and Corporate Consultant March 10, 1999
Jason Bolduc 25 Director January 27, 1997
Brownell Combs II 66 Director February 24, 2000
Dean Grimm 38 Director December 14, 1999
Nicholas Jackson 58 Director April 12, 1999
</TABLE>
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<PAGE>
<TABLE><CAPTION>
<S> <C> <C> <C>
Clare Roberts 51 Director July 6, 1999
Matthew Stasior 34 Director February 24, 2000
</TABLE>
The term of office for all directors expires upon their successors' election.
Fred Hazell
-----------
Since 1994, Mr. Hazell has served as President and Chief Executive Officer of
the PCL Financial Group Inc., Toronto, Ontario, Canada, a company that provides
clients with access to offshore banking and investment services as well as the
funding required for major projects.
Meldon Ellis
------------
From 1994 to 1996, Mr. Ellis worked as a litigation practitioner in association
with Pierce, Van Loon, a law firm based in Vancouver, British Columbia, Canada.
From 1996 to 1997 he had a business and entertainment law practice in
association with Martz Shipman, another law firm based in Vancouver, British
Columbia. From 1997 to 1999, Mr. Ellis was self-employed as a legal and
management consultant for Stratemedia Consulting in Vancouver, British Columbia,
which provided management and legal advice to film and television producers and
to multimedia companies. During 1997 and 1998 he was also employed as a
Business/Corporate lawyer with the Vancouver law firm of Douglas Symes &
Brissenden. From May to October 1999, Mr. Ellis was employed as in-house Legal
Counsel and Management Consultant for Starnet Systems International Inc.
("Starnet Systems") and, in October 1999, was appointed Chief Executive Officer
of the Registrant. Mr. Ellis was appointed President of the Registrant in
November 1999 and was appointed as a director on December 23, 1999.
Wolf Bergelt
------------
Since 1995, Mr. Bergelt has been self-employed as a Corporate Consultant. Mr.
Bergelt has been involved in a number of projects including a forest products
plant in South America, a manufacturing company specializing in hydraulic drive
systems, and an entertainment company producing feature length movies and
television programs. Mr. Bergelt has served as a Corporate Consultant to the
Registrant on a part-time basis since 1999.
Jason Bolduc
------------
From 1990 to 1995, Mr. Bolduc was the Managing Partner at Wiz Zone Computers.
During 1997 and 1998, Mr. Bolduc served as President and Technical Director of
the Registrant, and since 1998 he has been President and Director of Private
Messenger Inc., a private company that provides private and secure communication
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services for the offshore industry. Mr. Bolduc is also Chair of the Board of
Charterhub Inc., a company that provides a central marketplace for scheduling
charter aircraft.
Brownell Combs II
-----------------
Mr. Combs is a former Chairman of the Kentucky State Racing Commission and past
President of the National Association of State Racing Commissioners, now known
as Racing Commissioners International. Since 1995, Mr. Combs has been
self-employed. He is the owner of BConsulting, a consulting firm specializing in
the business of thoroughbred horses (farm management, stallion syndication,
breeding and racing), as well as the pari-mutuel and gaming industries. He is a
founding member of Breeders Cup Ltd. (the Super Bowl of thoroughbred horse
racing) and has been a board member of that company since 1983. Mr. Combs is
also a director of Keeneland Inc., a racetrack owner and the world's largest
thoroughbred horse sales company.
Dean Grimm
----------
Since 1990, Mr. Grimm has been the President and sole shareholder of Payson Stud
Management L.L.C. of Lexington, Kentucky (formerly Payson Stud Management Inc.),
which boards, breeds, manages, races and sells thoroughbred horses around the
world.
Nicholas Jackson
----------------
Since 1995, Mr. Jackson has been self-employed. He is involved in numerous
business ventures in South Africa, including anthracite mines and the shipments
of anthracite to Europe. He is also a consultant on coal markets for various
companies. Previously, he was a director of Jackson Fiberglass (Pty.) Ltd., a
company based in Johannesburg, South Africa, that distributed and sold
industrial fibreglass and chemicals.
Clare Roberts
-------------
From 1994 to 1997, Mr. Roberts served as the Minister of Justice and Attorney
General in the Government of Antigua and Barbuda. Since 1997, he has been a
principal of Roberts & Co., a law firm based in St. John's, Antigua,
specializing in providing business advice. Mr. Roberts is also a director of the
Antigua Commercial Bank and serves as Chair of ACB Mortgage and Trust Company
Limited. Mr. Roberts is a founding member and director of the Antigua National
Development Foundation, a private sector institution whose mission is to develop
the small business sector in Antigua by offering financial assistance in the
form of loans.
Matthew Stasior
---------------
From 1987 to 1998, Mr. Stasior was an Associate Consultant for Bain & Company, a
strategy-consulting firm. From 1988 to 1994, Mr. Stasior worked as a Corporate
Account Executive at Microsoft Corporation, and from 1994 to 1997, he was Vice
President of Sales and Marketing for PC411, Inc., a company that raised money
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for Internet companies from various sources including the Internet. During 1998
and 1999, Mr. Stasior served as President and Chief Executive Officer of
MicroCap1000.com, a company that provided information on microcap stocks over
the Internet. From 1999 to 2000, he served as Vice President of Worldwide
Distribution for MyWay.com, a wholly owned subsidiary of CMGI. He was one of
Tony Robbins top Trainers for 4 years and is the creator of the franchise and
website DrEnergy.com. Mr. Stasior graduated MAGNA CUM LAUDE from Harvard
University.
B. EXECUTIVE OFFICERS
<TABLE><CAPTION>
<S> <C> <C> <C>
NAME AGE POSITIONS WITH THE REGISTRANT OFFICE HELD SINCE
Meldon Ellis 38 President, Chief Executive Officer November 17, 1999
and Secretary/Treasurer
Winston Brown 40 Chief Operations Officer July 1, 2000
Chris Thompson 41 Vice President, Finance March 15, 2000
Martin Mullally 31 Vice President, Strategic Planning January 28, 2000
Jason King 28 Chief Executive Officer, January 1, 2000
Inphinity Interactive Inc.
(formerly Chief Executive Officer,
Starnet Communications Canada Inc.)
</TABLE>
Meldon Ellis, LL.B., Chief Executive Officer, President and Secretary/Treasurer
-------------------------------------------------------------------------------
See above under "Directors".
Winston Brown, Chief Operations Officer
---------------------------------------
From 1990 to 1997, Mr. Brown served as Director, Product Development and
Manufacturing for Digital Dispatch Systems, a private company based in
Vancouver, British Columbia, Canada. The company develops and sells wireless
transportation optimization systems worldwide. From 1997 to 2000, Mr. Brown was
employed as the Business Development Manager for Avnet in San Jose, California.
The company provides materials and services to the electronic equipment
manufacturing sector.
Mr. Brown was appointed Chief Operations Officer for the Registrant on
July 1, 2000.
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<PAGE>
Chris Thompson, B.Comm., C.A., Vice President, Finance
------------------------------------------------------
From 1995 to 1996, Mr. Thompson was employed as Director, Finance and
Administration for ESSA Technologies Ltd., a private company based in Vancouver,
British Columbia that provided environment consulting services and technology to
a worldwide market. During 1996 and 1997, he was employed part-time as Chief
Financial Officer for Mountain World Entertainment Ltd. of Whistler, British
Columbia, a company that developed and operated an entertainment facility. Mr.
Thompson was employed as Vice President, Finance and Administration for Nobility
Environmental Software Systems Inc., a private company in Vancouver, British
Columbia, from 1997 to 1999, and subsequently as Vice President, Corporate
Finance for Xenex Innovations Inc., a Bermuda investment company, listed on the
Canadian Venture Exchange. Mr. Thompson has been employed as Vice President,
Finance for the Registrant since March 2000.
Martin Mullally, B.A., M.B.A., Vice President, Strategic Planning
-----------------------------------------------------------------
From 1995 to 1998, Mr. Mullally was employed as a Management Consultant for Booz
Allen Hamilton in San Francisco, California. During 1998 and 1999, he was
self-employed as a management consultant. Since January 2000, Mr. Mullally has
been employed as Vice President, Strategic Planning for the Registrant.
Jason King, Chief Executive Officer, Inphinity Interactive Inc.
---------------------------------------------------------------
From 1992 to 1996, Mr. King was employed as Vice President, Corporate
Development for Credit Generale a Vancouver based company focused on
environmental development. Mr. King was appointed Chief Executive Officer of
Starnet Communications Canada Inc. ("Starnet Canada"), which is now inactive, in
1996 and, since 1999, has been employed as Chief Executive Officer of the
Registrant's software development subsidiary, Inphinity Interactive Inc.
("Inphinity").
C. SIGNIFICANT EMPLOYEES
Eugene Nizker, Ph.D., 47, Chief Technical Officer, Inphinity Interactive Inc.
-----------------------------------------------------------------------------
From 1995 to 1998, Dr. Nizker worked as a Project Manager for Digital Dispatch
Systems of Richmond, British Columbia. During 1998 and 1999, he was employed as
the Program Manager of the Information Services Division for the Workers
Compensation Board of British Columbia. Since he joined the Registrant in 1999,
Dr. Nizker has been employed as Vice President, Technology and Development for
Starnet Canada, which is now inactive, and Chief Technical Officer, Technology
and Development, for Inphinity.
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<PAGE>
D. INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
The Registrant is not aware of any material legal proceedings related to
bankruptcy or insolvency, criminal convictions, pending criminal proceedings,
pending or concluded administrative or civil proceedings limiting participation
in the securities or banking industries, and findings of securities or
commodities law violations, involving any director or executive officer of the
Registrant.
E. FAMILY RELATIONSHIPS
The Registrant is not aware of any family relationships between any director,
executive officers or person nominated or chosen by the Registrant to become a
director or executive officer.
F. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Registrant's
officers and directors, and persons who own more than ten percent of a
registered class of the Registrant's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC"). Officers, directors and greater than ten percent shareholders are
required by SEC regulation to furnish the Registrant with copies of all section
16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, the Registrant believes
that, during the fiscal year ended April 30, 2000, all filing requirements
applicable to its officers and directors were complied with, except that the
Registrant believes that Mr. Bolduc and Mr. Mullally have either failed to file
or have filed late a Form 3 reporting initial share ownership and that Mr. Ellis
has filed late a Form 4 with respect to trades made in April and May, 2000.
The Registrant is not aware of any person that is the beneficial owner of more
than 10% of its outstanding Class A Voting Common Stock.
ITEM 11. EXECUTIVE COMPENSATION
A. EXECUTIVE OFFICERS
The following table summarizes the total compensation of the Chief Executive
Officer, the former Chief Executive Officer and the most highly compensated
executive officers other than the Chief Executive Officer (collectively referred
to as the "Named Executive Officers") as at the end of the last fiscal year, for
each of the Registrant 's last three completed fiscal years. Except as set forth
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<PAGE>
below, there were no compensation plans through which cash or non-cash
distributions, other than salaries, were made during the last fiscal year:
<TABLE><CAPTION>
-----------------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------- ------
NAME AND OTHER ANNUAL
PRINCIPAL COMPEN- SECURITIES UNDERLYING
POSITION YEAR SALARY ($) SATION ($) OPTIONS
-------- ---- ---------- ---------- -------
<S> <C> <C> <C> <C>
Meldon Ellis (CEO) (1) 2000 126,000 29,333(2) 10,000
Mark Dohlen 2000 CAD
(Former CEO) (3) 106,000
1999 92,807(4) 6,961(5) 300,000
1998 56,915(4) 350,000
John Carley 2000 162,000 40,500(7)
(former Chair and CFO) (6)
1999 CAD (8) (8)
88,500
1998 (8) (8) (8)
Paul Giles 2000 US 90,000 (10)
(former President) (9) and CAD
24,000
1999 CAD (8) (8)
93,000
1998 (8) (8) (8)
Jason King 2000 CAD CAD 12,000(11) 100,000
(CEO, Inphinity 111,823
Interactive Inc.)
1999 CAD CAD 12,000(11) 100,000
72,000
1998 CAD
52,000
--------------------------- ---------- -------------- --------------------- -------------------------------
</TABLE>
(1) Mr. Ellis was appointed CEO on October 25, 1999 and was appointed
President and Secretary/Treasurer on November 17, 1999.
(2) This amount includes a director's fee of $3,333 and a Chair's fee
of $5,000. Mr. Ellis also had the use of a vehicle in Antigua
owned by the Registrant.
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<PAGE>
(3) Mr. Dohlen resigned as an officer and director of the Registrant
on September 7, 1999.
(4) Although the compensation is stated in U.S. dollars, it was paid
in Canadian dollars.
(5) The compensation consists of a one-time director's fee of $5,966
and one quarterly payment of $995.
(6) Mr. Carley resigned as an officer and director of the Registrant
on December 23, 1999, but currently provides the Registrant with
part-time consulting services relating to finance, government
relations and operations.
(7) Mr. Carley also had the use of a vehicle in Antigua owned by the
Registrant.
(8) Information currently unavailable.
(9) Mr. Giles resigned as an officer and director of the Registrant
on November 15, 1999.
(10) Mr. Giles also had the use of a vehicle in Antigua owned by the
Registrant. In addition, the Registrant paid for Mr. Giles' hotel
accommodation in Antigua for a two-month period.
(11) Annual vehicle allowance.
Meldon Ellis, Chief Executive Officer, President and Secretary/Treasurer
------------------------------------------------------------------------
Mr. Ellis was appointed Chief Executive Officer of the Registrant on October 25,
1999 and was appointed President and Secretary/Treasurer on November 17, 1999.
Mr. Ellis is paid an annual salary of $216,000, an annual personal travel
allowance of $10,000 and an annual vehicle allowance of $24,000. Mr. Ellis was
paid an 1999 initial moving allowance of $5,000, and will be paid a final moving
allowance (provided Mr. Ellis completes the term of the agreement) of $10,000.
In addition, Mr. Ellis receives an annual housing allowance of $48,000. Mr.
Ellis is also entitled to an interest free loan of up to $50,000, to be used to
secure a credit card in Antigua, but has not exercised this right to date. The
loan is re-payable upon termination of his employment agreement. Stock options
are expected to be awarded at the senior executive level. Comprehensive medical
and dental benefits and life insurance and accidental death coverage are also
provided.
The employment agreement will terminate on the third anniversary of the
commencement date, subject to earlier termination as provided for below, and may
be extended annually thereafter by mutual agreement of the parties in writing,
to be signed by the parties at least 60 days prior to the third year anniversary
of the commencement date. The employment agreement will be deemed to be
immediately terminated upon the end of the term, when an acquisition of more
than 50% of the issued capital (having full voting rights under all
circumstances) of the Registrant by another corporation, business entity or
person or the death or disability of Mr. Ellis. In the event of termination of
the agreement resulting from a change of control, Mr. Ellis will be entitled to
receive upon the effective date of the termination of the employment the
following compensation: twelve months' salary, housing accommodation (or cash
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settlement in lieu thereof) and medical and dental coverage, or all salary and
benefits payable under the term of the agreement, whichever is greater, and a
final moving allowance as indicated above.
Mr. Ellis' employment agreement was executed by John Carley, the then-Chair of
the Board, on behalf of the Registrant. The Compensation Committee of the Board
of Directors is presently reviewing the terms of the agreement.
Mark Dohlen, former Chief Executive Officer
-------------------------------------------
Mr. Dohlen was employed as Chief Executive Officer of the Registrant prior to
Mr. Ellis. Pursuant to his employment agreement, Mr. Dohlen was paid an annual
salary of $216,000, an annual personal travel allowance of $10,000 and an annual
vehicle allowance of $24,000. Mr. Dohlen was entitled to an initial moving
allowance of $5,000, and a final moving allowance (provided he completed the
term of the agreement) of $10,000. In addition, Mr. Dohlen was entitled to
receive an annual housing allowance of $48,000 and an interest free loan of up
to $50,000, to be used to secure a credit card in Antigua, re-payable upon
termination of his employment agreement. Mr. Dohlen resigned as an officer and
director of the Registrant on September 7, 1999.
John Carley, former Chief Financial Officer
-------------------------------------------
Mr. Carley was employed as Chief Financial Officer of the Registrant, but
resigned as both an officer and director of the Registrant on December 23, 1999.
Pursuant to his employment agreement, Mr. Carley was paid an annual salary of
$216,000, an annual personal travel allowance of $10,000 and an annual vehicle
allowance of $24,000. Mr. Carley was entitled to an initial moving allowance of
$5,000, and a final moving allowance (provided he completed the term of the
agreement) of $10,000. In addition, Mr. Carley was entitled to receive an annual
housing allowance of $48,000 and an interest free loan of up to $50,000, to be
used to secure a credit card in Antigua, re-payable upon termination of his
employment agreement. Mr. Carley currently provides the Registrant with
part-time consulting services relating to finance, government relations and
operations.
Paul Giles, former President
----------------------------
Mr. Giles was employed as President of the Registrant prior to Mr. Ellis.
Pursuant to his employment agreement, Mr. Giles was paid an annual salary of
$216,000, an annual personal travel allowance of $10,000 and an annual vehicle
allowance of $24,000. Mr. Giles was entitled to an initial moving allowance of
$5,000, and a final moving allowance (provided he completed the term of the
agreement) of $10,000. In addition, Mr. Giles was entitled to receive an annual
housing allowance of $54,000 and an interest free loan of up to $50,000, to be
used to secure a credit card in Antigua, re-payable upon termination of his
employment agreement. Mr. Giles resigned as an officer and director of the
Registrant on November 15, 1999.
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Jason King, Chief Executive Officer, Inphinity Interactive Inc.
---------------------------------------------------------------
Mr. King was appointed Chief Executive Officer of Inphinity on January 1, 2000.
Mr. King is paid an annual salary of $156,000 Canadian dollars. He is reimbursed
for any and all reasonable and documented expenses actually and necessarily
incurred in the performance of his duties. Mr. King is entitled to participate
in all rights and benefits under any life insurance, disability, medical,
dental, health and accident plans maintained by Inphinity for its employees
generally. In addition, Mr. King shall be entitled to participate in all rights
and benefits under other employee plan or plans as may be implemented by
Inphinity during the term of his agreement.
Mr. King's employment agreement is for an indefinite period unless terminated in
accordance with the following provisions: (a) an acquisition of more than 50% of
the issued capital (having full voting rights under all circumstances) of
Inphinity by another corporation, business entity or person; (b) an acquisition
of more than 50% of the issued capital of the Registrant by another corporation,
business entity or person; (c) the resignation, termination, death or disability
of the Chief Executive Officer of the Registrant [(a), (b) and (c) are referred
to as a "Change of Control"] or (d) the death or inability to perform due to
disability of Mr. King. In the event of a termination of the agreement because
of a Change of Control, Mr. King will be entitled to twelve months' salary and
medical and dental coverage. The Compensation Committee of the Board of
Directors is presently reviewing the terms of the agreement.
Prior to January 1, 2000, Mr. King was employed as Chief Executive Officer of
Starnet Canada. Pursuant to his employment agreement with Starnet Canada, Mr.
King was paid an annual salary of $96,000 Canadian dollars.
The following table sets out the total number of option grants in the last
fiscal year to the Named Executive Officers:
<TABLE><CAPTION>
-----------------------------------------------------------------------------------------------------------
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
-----------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS EMPLOYEES IN PRICE
NAME GRANTED(#) FISCAL YEAR ($/SH) EXPIRATION DATE
---- ---------- ----------- ------ ---------------
<S> <C> <C> <C> <C>
Meldon Ellis 10,000 2.8% 8.72 December 31, 2008
--------------------- ------------------ ------------------ -------------- --------------------------------
</TABLE>
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The following table sets out information as at April 30, 2000 with respect to
the exercise of options under the Registrant's Non-Qualified Stock Option Plan
in the last fiscal year by the Named Executive Officers:
<TABLE><CAPTION>
-----------------------------------------------------------------------------------------------------------
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION/SAR VALUES
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED IN-
UNEXERCISED THE-MONEY
OPTIONS/SARS OPTIONS/SARS AT
AT FY-END FY-END ($)
--------- ----------
SHARES
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
---- ------------ ----------- ------------- -------------
<S> <C> <C> <C> <C>
Mark Dohlen 150,000 251,997 Nil Nil
275,000 918,500 Nil Nil
John Carley 70,000 1,204,360 Nil Nil
50,000 704,300 150,000/ 238,500/
25,000 39,750
Paul Giles 200,000 1,024,000 25,000/ 39,750/
25,000 39,750
Jason King 65,000 532,950 Nil Nil
55,000 259,050 11,667/ 18,550/
33,333 52,999
-----------------------------------------------------------------------------------------------------------
</TABLE>
B. COMPENSATION OF DIRECTORS
Standard Arrangements
---------------------
For the fiscal year ending April 30, 2000, members of the Registrant's Board of
Directors received a fee of $10,000 for the calendar year 1999 and a prorated
amount for the period January 1, 2000 to April 30, 2000, as set out in the table
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below. Directors also received $500 per meeting, to a maximum of $2,000 for the
fiscal year. Mr. Ellis also received $5,000 as a fee for serving as Chair of the
Board from November 17, 1999 until April 19, 2000.
NAME DIRECTOR'S FEE DUE OR PAID
Fred Hazell $2,083
Meldon Ellis $8,333 (includes $5,000 Chair's fee)
Wolf Bergelt $13,333
Jason Bolduc $13,333
Brownell Combs II $1,667
Dean Grimm $3,333
Nicholas Jackson $13,333
Clare Roberts $13,333
Matthew Stasior $1,667
For the fiscal year commencing May 1, 2000, each Director will receive an annual
fee of $12,000, and $1,000 per meeting. The Chair of the Board is paid an
additional $24,000 per annum. The Registrant has a number of sub-committees on
which different members serve. These sub-committees meet on a regular basis and
no compensation is paid to the sub-committee Chair or its members.
For the fiscal year commencing May 1, 2000, each Director, other than a Director
who serves as an employee of the Registrant, is entitled to receive an option to
acquire 100,000 Class A Voting Common Stock for each 12-month period, prorated
where required, the member serves on the Board.
Other Arrangements
------------------
WOLF BERGELT
Mr. Bergelt entered into a Consulting Services Agreement with the Registrant,
effective April 1, 1999, pursuant to which Mr. Bergelt was engaged to perform
consulting services and advice to the Registrant, based in the Caribbean and
other locations in the following areas: international taxation, international
banking and financial arrangements, the Internet gaming industry, and such other
services and advice as determined from time to time by the Chair of the Board.
Pursuant to the agreement, Mr. Bergelt agreed to be domiciled in the Caribbean
and to devote up to 50% of his working time to the consulting services noted
above. Under the agreement, Mr. Bergelt is paid an annual consulting fee of
$96,000. In addition, Mr. Bergelt is provided with a vehicle and is reimbursed
for all reasonable travel, entertainment and other expenses incurred in the
course of the performance of his functions and duties under the agreement. Mr.
Bergelt was granted 50,000 stock options under the 1999 Stock Option Plan and is
entitled to receive additional options based upon the terms and conditions
comparable to those offered to executive officers of the Registrant at the
Executive Vice President level.
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The agreement will expire on the third anniversary of the commencement date,
subject to earlier termination as provided for below, and may be extended
annually thereafter by mutual agreement of the parties in writing. The agreement
will be deemed to be immediately terminated (a) upon an acquisition of more than
50% of the issued capital (having full voting rights under all circumstances) of
the Registrant by another corporation, business entity or person, (b) if the
existing Board of Directors is no longer in the majority [(a) and (b) referred
to as a "Change of Control"], (c) upon the death or disability of Mr. Bergelt,
or (d) for cause. In the event of termination of the agreement resulting from a
Change of Control, Mr. Bergelt will be entitled to receive upon the effective
date of the termination of the agreement the aggregate retainer that would have
been payable during the period from the date of termination to the date of
expiry of the agreement, computed as if a Change of Control had not taken place,
and up to an additional 100,000 stock options, exercisable for a period of up to
24 months following the Change of Control.
FRED HAZELL
Effective May 1, 2000, Mr. Hazell was engaged by the Registrant as a Management
Consultant for a term of six months or until the next Annual General Meeting of
Shareholders of the Registrant if held after the expiry of the six-month term.
Pursuant to the agreement, Mr. Hazell will provide full-time services to the
Registrant and will receive a consulting fee of $10,000 per month plus approved
expenses.
JASON BOLDUC
Mr. Bolduc filed a claim against the Registrant and Starnet Canada on August 6,
1998 in the British Columbia Supreme Court. In that claim, Mr. Bolduc alleged
that he was the Registrant's President and Technical Director commencing May
1995 and was wrongfully dismissed from his position on June 23, 1998. The
Registrant agreed to settle Mr. Bolduc's claim for $75,000.
C. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
The following persons served as members of the Compensation Committee (or Board
committee performing equivalent functions) of the Registrant's Board of
Directors during the last fiscal year: Nicholas Jackson; Fred Hazell; Clare
Roberts; and Wolf Bergelt.
No member of the Compensation Committee was, during the fiscal year or
previously, an officer or employee of the Registrant or any of its subsidiaries.
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<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT (AS AT JULY 24, 2000)
The table below sets forth information, as of July 24, 2000, with respect to
beneficial ownership of the Registrant's Class A Voting Common Stock by each
Director of the Registrant, by each Named Executive Officer and by all Directors
and Named Executive Officers of the Registrant as a group. Unless otherwise
noted, each shareholder has sole investment and voting power over the shares
owned. The Registrant is not aware of any person that is the beneficial owner of
more than 5% of its outstanding Class A Voting Common Stock.
NAME OF AMOUNT AND NATURE PERCENT OF
BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP CLASS
Meldon Ellis 144,623(1) Less than 1%
Record and Beneficial
Jason Bolduc 1,429,960(2) 4.407 %
Record and Beneficial
Wolf Bergelt 121,500 (3) Less than 1%
Record and Beneficial
Nicholas Jackson 85,798 (4) Less than 1%
Record and Beneficial
Clare Roberts 83,333 (5) Less than 1%
Record and Beneficial
Dean Grimm 89,972 (6) Less than 1%
Record and Beneficial
Fred Hazell 43,852 (7) Less than 1%
Record and Beneficial
Brownell Combs II 42,622 (8) Less than 1%
Record and Beneficial
Matthew Stasior 51,222 (9) Less than 1%
Record and Beneficial
Jason King 85,167(10) Less than 1%
Record and Beneficial
John Carley 351,000(11) 1.082 %
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<PAGE>
All Directors and
Named Executive
Officers as a group 2,529,049 (12) 7.794 %
(11 individuals) Record and Beneficial
Notes:
(1) Includes 2,000 Class A Voting Common Stock and 142,623 options that Mr.
Ellis has the right to acquire within the next 60 days.
(2) Includes 1,383,750 Class A Voting Common Stock held by Pearl Holdings Ltd.
of which Mr. Bolduc is one of the beneficial owners and 46,210 options that
Mr. Bolduc has the right to acquire within the next 60 days.
(3) Includes 11,200 Class A Voting Common Stock and 110,300 options that Mr.
Bergelt has the right to acquire within the next 60 days.
(4) Includes 85,798 options that Mr. Jackson has the right to acquire within
the next 60 days.
(5) Includes 83,333 options that Mr. Roberts has the right to acquire within
the next 60 days.
(6) Includes 36,967 Class A Voting Common Stock and 53,005 options that Mr.
Grimm has the right to acquire within the next 60 days.
(7) Includes 43,852 options that Mr. Hazell has the right to acquire within the
next 60 days.
(8) Includes 42,622 options that Mr. Combs has the right to acquire within the
next 60 days.
(9) Includes 8,600 Class A Voting Common Stock and 42,622 options that Mr.
Stasior has the right to acquire within the next 60 days.
(10) Includes 11,000 Class A Voting Common Stock and 74,167 options that Mr.
King has the right to acquire within the next 60 days.
(11) Includes 150,000 options that Mr. Carley has the right to acquire within
the next 60 days.
(12) The amount shown includes 874,532 options to which individuals in the group
have the right to acquire within the next 60 days.
The Registrant has been unable to obtain any information with respect to current
beneficial ownership of the Registrant's Class A Voting Common Stock by Mark
Dohlen and Paul Giles.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In March 1998, the Registrant retained the law firm of Roberts & Co. in St.
John's, Antigua to provide legal services on behalf of the Registrant. In
addition, Roberts & Co. provides legal services to many licensees of Starnet
Systems. Clare Roberts, a member of the Board of the Registrant, is the
principal owner and director of Roberts & Co.
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<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Starnet Communications International Inc.
(Registrant)
Date: August 25, 2000 By: /s/ Meldon Ellis
-----------------------------------
President, Chief Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Date: August 25, 2000 By: /s/ Meldon Ellis
-----------------------------------
President, Chief Executive Officer
and Director
Date: August 25, 2000 By: /s/ Chris Thompson
-----------------------------------
Vice-President, Finance
Date: August 25, 2000 By: /s/ Fred Hazell
-----------------------------------
Chair of the Board
Date: August 25, 2000 By: /s/ Wolf Bergelt
-----------------------------------
Director
Date: August 25, 2000 By: /s/ Jason Bolduc
-----------------------------------
Director
Date: August 25, 2000 By: /s/ Brownell Combs II
-----------------------------------
Director
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