<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE FISCAL YEAR ENDED MARCH 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
COMMISSION FILE NUMBER
MSI HOLDINGS, INC. (HEREIN REFERRED TO AS "REGISTRANT", "COMPANY", "APERIAN",
"MSI", "WE", "US", AND "OUR") (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
UTAH 87-0280886
(STATE OF INCORPORATION OR ORGANIZATION) (IRS EMPLOYER I.D. NO.)
1121 EAST 7TH AUSTIN, TEXAS 78702
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE) 512-476-6925
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
COMMON STOCK, PAR VALUE $.10
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Check whether the Issuer: (1) filed all reports required to be filed by section
13 or 15(d) of the Exchange Act during the past 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. (1) Yes [X] No [ ] (2)
Yes [X] No [ ]
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will 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-KSB or any amendment to
this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year: $1,752,012
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days.
Based on the closing price for the Company's Common Stock at June 22, 2000 of
$9.13 per share, the market value of shares held by non-affiliates would be
approximately $331,019,106.
As of June 22, 2000 the Registrant had 36,631,604 shares of Common Stock issued
and outstanding.
Transitional Small Business Disclosure Format Yes [ ] No [X]
<PAGE> 2
PART III
ITEM 9. EXECUTIVE OFFICERS AND DIRECTORS
DIRECTORS AND EXECUTIVE OFFICERS
The following table summarizes information concerning each of our
directors, director nominees and officers as of the date of this proxy
statement.
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Robert J. Gibbs (1)(2) 45 President, Chief Executive Officer and Director
Christopher Brickler (1) 28 Executive Vice President - Marketing and Business
Development and Director
Marsha Cameron 45 Executive Vice President - Administration
Wayne A. Irwin 38 Executive Vice President - Sales and Business
Operations
Douglas W. Banister 38 Chief Financial Officer and Vice President -
Finance
James P. Bates 53 Chief Information Officer
Blandina Cardenas 43 Director
Ernesto M. Chavarria 43 Director
Daniel Dornier (1)(3)(4) 36 Director
Stephen J. Metzger (1)(2)(3)(4) 47 Director
Humbert B. Powell, III 61 Director
Davinder Sethi (1)(2)(3)(4) 52 Director
Jack C. Baum 43 Director Nominee
Dr. Donald H. Brush 53 Director Nominee
Raymond Wicki 56 Director Nominee
</TABLE>
----------
(1) Member of the executive committee
(2) Member of the nominating committee
(3) Member of the audit committee
(4) Member of the compensation committee
Robert J. Gibbs joined us in June 1999 as president and chief executive
officer. From 1997 to 1999, Mr. Gibbs founded and served as a consultant with
Sigma Solutions Group, which provides executive management services for high
tech startup companies. From 1990 to 1997, Mr. Gibbs served as president,
executive vice president and chief financial officer of Uniden America
Corporation, a wireless products and services company. He received a bachelor of
science in finance from the University of Colorado and received a master of
business administration from Southern Methodist University.
Christopher Brickler joined us in June 2000 as executive vice president
of marketing and business development. Mr. Brickler has been a director of our
company since October 1999. From December 1998 to October 1999, he served as
vice president of BT Global Business Markets, a communications services provider
based in London. Previously, he was employed for five years with GTE, most
recently in the development of GTE's Internet technology. He received a bachelor
of business administration degree from the University of Texas.
Marsha Cameron joined us in May 2000 as executive vice president of
administration. From 1995 to 2000, Ms. Cameron served as vice president of
workforce effectiveness for GTE Corporation. From 1991 to 1995, she served in
several capacities for Watson Wyatt, most recently as Worldwide Practice
Director of Compensation Consulting. She received a bachelor of science from
University of California at Riverside and a master of science from Columbia
University in New York.
Wayne A. Irwin joined us in May 2000 as executive vice president of
sales, marketing, and operations. From 1997 to 2000, Mr. Irwin served as
assistant vice president - Web Commerce, and assistant vice president of channel
strategy at GTE Corporation. From 1993 to 1997, he served as director -
wholesale markets for GTE Network Services. He received a bachelor of science in
business administration from Central Michigan University and received a master
of business administration from Xavier University in Cincinnati.
Douglas W. Banister joined us in August 1999 as chief financial officer
and vice president of finance. From 1990 to 1999, Mr. Banister served as
accounting manager, vice president and chief financial officer of Uniden America
19
<PAGE> 3
Corporation. From 1987 to 1990, Mr. Banister served as controller for D.R.
Horton Custom Homes. From 1983 to 1987, he served as a senior auditor with Ernst
& Young, L.L.P. He received a bachelor of business administration in accounting
from Texas Wesleyan University. He has been a certified public accountant since
1986.
James P. Bates joined us in May 2000 as chief information officer and
vice president. From 1998 to 2000, Mr. Bates served as a consulting practice
director, e-Business and Internet applications, with Oracle Corporation. From
1996 to 1998, he served as chief information officer and vice president,
Information Services with Vari*Lite, Inc. From 1989 to 1996, he served as a
manager in the software engineering and information technology groups at DSC
Communications, Inc. He received a bachelor of business administration from the
University of Texas at Austin and received a master of business administration
from the University of Utah. He has been a certified public accountant since
1985.
Blandina Cardenas has been a director of our company since November
1997. Since 1995, Dr. Cardenas has been an associate professor of education
leadership at the University of Texas at San Antonio. From 1992 to 1995, she was
a Professor at Southwest Texas State University. She received a doctorate in
educational leadership from the University of Massachusetts at Amherst and a
bachelor in journalism from the University of Texas at Austin.
Ernesto M. Chavarria has been a director of our company since November
1997. Mr. Chavarria has been employed by ITBR, Inc., an international
consulting company, since 1978 and has served as its president since 1990.
Daniel Dornier has been a director of our company since July 1998. From
August 1991 to June 1993, Mr. Dornier was an investment banker with SBC-Warburg
Dillon Reed. From 1993 to 1995, Mr. Dornier was a private investment manager for
various family-owned companies. From 1995 to 1998, Mr. Dornier served as
president of Dornier Capital Advisors, where he managed investments for high net
worth individuals in Europe. In 1998, he co-founded Greenwich AG, Hamburg, which
focuses on early stage investments in high-growth companies in Germany and the
U.S. Mr. Dornier studied business at the University of Nuertingen, Germany and
received an MBA from the Zurich campus of the City University, Bellevue,
Washington.
Stephen J. Metzger has been a director of our company since August
1999. Currently, Mr. Metzger is Managing Director of AngelWorks, a philanthropic
foundation. From 1998 to 1999, he was the chief executive officer of Waller
Creek Communications, an Austin, Texas based competitive local exchange carrier.
From 1994 to present, Mr. Metzger has managed Manchester International
Incorporated, a company which provides interim management, strategy, business
development, specialized training and investment consulting to
telecommunications carriers, computer companies and network equipment providers.
From 1991 to 1993, Mr. Metzger was president and chief executive officer of
NetCommand, a consulting firm specializing in the development of internet
services, electronic data interchange and electronic commerce strategy, products
and organizations for global corporations, international carriers and value
added networks.
Humbert Powell, III has been a director of our company since August
1999. Since 1997, he has been a managing director of Sanders Morris Mundy, an
NASD-member investment banking firm. From 1995 to 1997, Mr. Powell was vice
chairman and director of Marleau, Lemire, Securities, Inc. and chairman of the
board of Marleau, Lemire USA. From 1988 through February 1995, Mr. Powell served
as a senior managing director in the Corporate Finance Department of Bear
Stearns & Co. Mr. Powell currently serves as a director for Bikers Dream Inc.,
Evolve, Lawman Corp., Millennium Vue Inc. and Osicom Technologies Inc., and as a
trustee of Salem-Teikyo University. Mr. Powell received degrees in business and
economics from the University of Florida and Salem University.
Davinder Sethi has been a director of our company since August 1999.
Since 1996, he has been an independent advisor and investor in the fields of
information technologies and finance. From 1990 to 1996, he served as director
and senior advisor to Barclays de Zoete Wedd. Dr. Sethi currently serves as a
director of Pamet Systems, Inc., where he also serves on the audit and
compensation committees. Dr. Sethi received a doctorate and a masters degree in
operations research, economics and statistics from the University of California
at Berkeley and is a graduate of the executive management program of
Pennsylvania State University.
Jack C. Baum has been the president of Sagebrook Technology since 1998.
From 1997 to 1998, he was a principal of Engles Urso Foomer Capital Corporation.
Prior to 1997, he founded and owned Canyon Cafe. Mr. Baum serves on the board of
directors of Furr's Bishop's, Inc., BridgePoint Technical Manufacturing
Corporation, WiseCity.com, FuGEN Technologies, Isochron Data Corporation, Vital
Careers, Emplawyernet.com, SkillsVillage.com, New Network, Ltd. and Fuel
Marketing Solutions. Mr. Baum received his bachelor's degree in business
administration from the University of Texas in 1977.
20
<PAGE> 4
Dr. Donald H. Brush is co-founder and has been president of The Renova
Corporation since 1985. Dr. Brush was formerly on the tenured faculty of
Rensselaer Polytechnic Institute, where he taught the management of science and
technology, and The University of Texas at Dallas, where he was director of the
undergraduate management program. Dr. Brush is a director of the Hogan Quality
Institute and the Texas Quality Consortium and is on the editorial board of the
Journal for Corporate Education. Mr. Brush received his doctorate and masters
degrees in psychology from the University of Georgia and his bachelor's degree
in psychology from Denison University.
Raymond Wicki is a co-founder and chairman of M2, a Swiss investment
company, and Bern Venture, a Berne based venture capital fund. From 1990 to
2000, he was the chief executive officer of Ban von Graffenried, a family owned
private bank in Bern. Mr. Wicki serves on the boards of several industrial,
finance and service companies in Switzerland, Germany and the United States. Mr.
Wicki received a degree in business administration and a doctorate in finance
and taxation from the University of Berne. Mr. Wicki also received a masters
degree in business administration from Kent State University.
We have no knowledge of any arrangement or understanding in existence
between any executive officer named above and any other person pursuant to which
any such executive officer was or is to be elected to such office or offices.
All of our officers serve at the pleasure of our board of directors. All
officers will hold office until the next annual meeting of our shareholders.
RELATIONSHIPS AMONG BOARD MEMBERS AND EXECUTIVE OFFICERS
Christopher Brickler, executive vice president - marketing and business
development and one of our directors, is the step-son of Robert J. Gibbs, our
president and chief executive officer.
21
<PAGE> 5
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The following table sets forth each of our directors, officers and
holders of 10% or more of our outstanding stock at any time during the fiscal
year ended March 31, 2000 who we know to have failed to file on a timely basis
the described forms required to be filed under the Securities Exchange Act of
1934. Each late transaction was reported on a Form 5 in May 2000.
<TABLE>
<CAPTION>
NUMBER OF FAILURES TO
FILE REPORTS
NUMBER OF NUMBER OF TRANSACTIONS
NAME AND PRINCIPAL POSITION FORM 3 FORM 4 FORM 5 LATE REPORTS NOT REPORTED A TIMELY BASIS
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert J. Gibbs 0 1 0 0 1
President, Chief Executive Officer and
Director
Douglas W. Banister 1 0 0 0 0
Chief Financial Officer
Cliff Luckey 1 1 0 0 4
Chief Technology Officer
Glenn Birk 0 3 1 0 4
Vice President of Sales
Russell Birk 1 0 0 0 0
Vice President of Corporate Finance
Gary Fortin 0 1 0 0 1
Vice President of Marketing
Patricia V. Hrabina 1 1 0 0 2
Vice President of Human Resources
Mark R. Slosson 1 0 0 0 0
Vice President of Wholesale Markets
Shawn Wiora 1 0 0 0 0
Vice President of Strategic Markets
Bruce Cummings 1 0 0 0 0
Vice President of New Markets
Christopher Brickler 1 2 0 0 3
Executive Vice President - Marketing and
Business Development and
Director
Blandira Cardenas 0 1 1 0 1
Director
Ernesto M. Chavarria 0 2 1 0 9
Director
Daniel Dornier 0 3 1 0 61
Director
Stephen J. Metzger 1 3 0 0 4
Director
Humbert B. Powell, III 1 2 0 0 2
Director
Davinder Sethi 1 1 0 0 1
Director
Robert Frank 1 0 0 0 0
former Chief Operating Officer
Robert Hersch 1 2 1 0 4
former Vice President of Corporate Finance
Stephen Joseph Hoelscher 0 4 0 0 5
former Controller
</TABLE>
22
<PAGE> 6
ITEM 10. EXECUTIVE COMPENSATION
MANAGEMENT COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE. The following table summarizes the
compensation earned during each of the last three fiscal years by (i) our chief
executive officers who served during the fiscal year ended March 31, 2000, (ii)
two most highly compensated other executive officers whose salary and bonus for
the fiscal year ended March 31, 2000 was $100,000 or greater and (iii) two
executive officers whose salary and bonus for the fiscal year ended March 31,
2000 was $100,000 or greater and who were not serving as an executive officer at
the end of the fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
----------------------------------------------------------------------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ROBERT J. GIBBS........... 2000 $144,690 -- 1,362,950 --
CHAIRMAN AND $170,000
CHIEF EXECUTIVE OFFICER
GLENN BIRK................ 2000 $106,282 -- 155,000 --
VICE PRESIDENT OF SALES $ 83,335
DOUGLAS W. BANISTER....... 2000 $123,116 -- $ 781 100,000 --
CHIEF FINANCIAL OFFICER
JOSE G. CHAVEZ............ 2000 $ 19,162 -- 62,500 --
FORMER PRESIDENT AND 1999 $ 95,000
CHIEF EXECUTIVE OFFICER 1998 $105,500 $7,800
ROGER LANE................ 2000 $115,785 -- -- -- --
FORMER CHIEF OPERATING
OFFICER
</TABLE>
23
<PAGE> 7
OPTION GRANTS IN LAST FISCAL YEAR. The following table sets forth
information regarding the stock options granted to and exercised by the named
executive officers during the fiscal year ending March 31, 2000.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED DATE OF
UNDERLYING TO GRANT
OPTIONS EMPLOYEES EXERCISE MARKET EXPIRATION
GRANTED IN FISCAL 2000 PRICE PRICE DATE
------- -------------- ----- ----- ----
<S> <C> <C> <C> <C> <C>
ROBERT J. GIBBS.................... 1,362,950 40.94% $5.56 $5.56 June 2009
CHAIRMAN AND CHIEF EXECUTIVE
OFFICER
GLENN BIRK.......................... 55,000 1.65% $6.63 $6.63 August 2009
VICE PRESIDENT OF SALES
GLENN BIRK.......................... 100,000 3.00% $4.56 $4.56 August 2009
VICE PRESIDENT OF SALES
DOUGLAS W. BANISTER................. 100,000 3.00% $4.50 $4.50 August 2009
CHIEF FINANCIAL OFFICER
JOSE G. CHAVEZ...................... -- -- -- -- --
FORMER PRESIDENT AND
CHIEF EXECUTIVE OFFICER
ROGER LANE.......................... -- -- -- -- --
FORMER CHIEF OPERATING OFFICER
</TABLE>
OPTION EXERCISES AND FISCAL YEAR END VALUES. The following table
provides information about the number of shares issued upon option exercises by
the named executive officers during fiscal year ended March 31, 2000, and the
value realized by the named executive officers. The table also provides
information about the number and value of options held by the named executive
officers at March 31, 2000.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL
YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS AT
SHARES OPTIONS AT YEAR-END YEAR-END(1)
ACQUIRED ON -----------------------------------------------------------
NAME EXERCISE VALUE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
REALIZED
<S> <C> <C> <C> <C> <C> <C>
ROBERT J. GIBBS................. -- -- 545,180 817,770 $12,059,382 $18,089,072
CHAIRMAN AND CHIEF EXECUTIVE
OFFICER
GLENN BIRK...................... -- -- 80,000 75,000 1,669,600 1,565,250
VICE PRESIDENT OF SALES
DOUGLAS W. BANISTER............. -- -- 25,000 75,000 587,500 1,762,500
CHIEF FINANCIAL OFFICER
JOSE G. CHAVEZ.................. -- -- -- -- -- --
FORMER PRESIDENT AND CHIEF
EXECUTIVE OFFICER
ROGER LANE...................... -- -- -- -- -- --
FORMER CHIEF OPERATING
OFFICER
</TABLE>
----------
(1) Value based on the March 31, 2000 closing price of the common stock of
$28.50 per share.
COMPENSATION OF DIRECTORS
We pay each director who is not an employee of ours $1,000 for
attending each meeting of the board of directors and $500 for attending each
committee meeting. Each director also receives options to purchase 25,000 shares
24
<PAGE> 8
of common stock upon becoming a director and 25,000 options annually for each
subsequent year. Additionally, we reimburse each director for expenses incurred
in attending meetings of the board of directors and committees of the board of
directors.
COMPENSATION OF CHIEF EXECUTIVE OFFICER AND OTHER EXECUTIVES
In June 1999, we entered into an employment agreement with Robert J.
Gibbs, our president and chief executive officer. Mr. Gibbs' agreement provides
for a two-year term with a two-year extension and a base salary of $150,000 for
the first year and $240,000 during the second year and each subsequent term, if
the agreement is extended. In addition, Mr. Gibbs' agreement provides for
options to purchase up to 1,362,950 shares of common stock at $5.56 per share
having the following terms: (i) options to purchase 272,590 shares of common
stock vested immediately upon grant on June 30, 1999, (ii) options to purchase
272,590 shares of common stock to vest 91 days after the grant date, (iii)
options to purchase 545,180 shares of common stock to vest on the first
anniversary of the grant date and (iv) options to purchase 272,590 shares of
common stock to vest on the second anniversary of the grant date. Mr. Gibbs'
agreement also entitles him to receive a bonus equal to 1.5% of each equity
offering consummated by us during his first year of employment. The bonus is
capped at $170,000 and has already been paid in full. Mr. Gibbs' agreement also
provides for a discretionary bonus to be decided by the board of directors of up
to $50,000 during the first year. Additional bonus opportunities are available
in the second year. Upon termination of Mr. Gibbs' employment for death,
disability or without cause, Mr. Gibbs is entitled to payments over a two-year
period equal to $240,000. Mr. Gibbs' agreement also provides for a $800 monthly
transportation allowance. Mr. Gibbs' agreement is terminable by either party at
any time.
As of March 24, 1999, we entered into an employment agreement with
Roger M. Lane, Chief Operating Officer. The agreement provided for an annual
base salary of $120,000 and reimbursement of ordinary, necessary and documented
business expenses. In addition, the agreement provided for stock options to
purchase up to 450,000 shares of common stock vesting as follows: (i) options to
purchase 100,000 shares of common stock will vest at six months after the grant
date of March 24, 1999; (ii) options to purchase an additional 110,000 shares of
common stock will vest on the first anniversary of the grant date; and (iii)
options to purchase 120,000 shares of common stock will vest on each of the
second and third anniversary of the grant date. The agreement is terminable by
either party. In July 1999, the agreement and Mr. Lane's employment with us were
terminated. As severance, Mr. Lane received 40,000 common stock warrants, with a
$3.75 strike price, one year's annual salary, a $400 per month car allowance,
health insurance and all other employee benefits.
On June 15, 1997, we entered into employment agreements with Jose
Chavez, director, president and chief executive officer, and Mitchell Kettrick,
director, secretary and vice president. On April 20, 1999 their agreements and
employment with us was terminated.
25
<PAGE> 9
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
STOCK OWNERSHIP OF PRINCIPAL OWNERS AND MANAGEMENT
The following table provides as of June 22, 2000, the number and
percentage of outstanding shares of common stock beneficially owned by (A) each
person who beneficially owns more than five percent of the outstanding shares of
our common stock; (B) each of our executive officers; (C) each of our directors;
and (D) all of our officers and directors as a group.
<TABLE>
<CAPTION>
Name and Address of Number of Shares Percentage of
Beneficial Owner Beneficially Owned(1)(2) Outstanding Shares
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Entrepreneurial Investors, Ltd. (3) 6,379,167 17.2%
P.O. Box 40643
Freeport, G.B., Bahamas
Jose G. Chavez (4) 2,663,000 7.2%
8021 Bottle Brush
Austin, Texas 78750
Andrew Ramirez 2,873,750 7.8%
40 North IH 35, TH-6
Austin, Texas 78701
Douglas W. Banister (5) 50,000 *
James P. Bates -- --
Christopher Brickler (6) 70,945 *
Marsha Cameron -- *
Blandina Cardenas 5,000 *
Ernesto M. Chavarria 67,500 *
Daniel Dornier 243,620 .7%
Robert J. Gibbs (7) 1,090,360 2.9%
Wayne Irwin -- --
Stephen J. Metzger (8) 117,016 *
Humbert B. Powell, III (9) 26,323 *
Davinder Sethi (9) 25,000 *
All directors and officers as a group (10) 2,029,514 5.54%
</TABLE>
* Denotes less than 1% ownership.
26
<PAGE> 10
(1) The rules of the SEC provide that, for the purposes hereof, a
person is considered the "beneficial owner" of shares with respect to which the
person, directly or indirectly, has or shares the voting or investment power,
irrespective of his economic interest in the shares. Unless otherwise noted,
each person identified possesses sole voting and investment power over the
shares listed, subject to community property laws.
(2) Calculations are based on 36,631,604 outstanding shares of common
stock as of June 22, 2000. Shares of common stock subject to options that are
exercisable within 60 days of June 22, 2000, are deemed beneficially owned by
the person holding such options for the purposes of calculating the percentage
of ownership of such person but are not treated as outstanding for the purpose
of computing the percentage of any other person.
(3) Includes 500,000 shares of common stock issuable upon the exercise
of warrants.
(4) Includes 100,000 shares of common stock issuable upon the exercise
of stock options.
(5) Includes 50,000 shares of common stock issuable upon the exercise
of stock options.
(6) Includes 55,000 shares of common stock issuable upon the exercise
of stock options and warrants to purchase common stock.
(7) Includes 1,090,360 shares of common stock issuable upon the
exercise of stock options.
(8) Includes 85,000 shares of common stock issuable upon the exercise
of stock options and warrants to purchase common stock.
(9) Includes 25,000 shares of common stock issuable upon the exercise
of stock options.
(10) Includes information in the notes above and, in addition, 10,000
shares of common stock held by other officers of our company and 323,750 shares
of common stock issuable upon the exercise of stock options held by other
officers of our company.
27
<PAGE> 11
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RELATED PARTY TRANSACTIONS
On December 20, 1999, we settled a previously disclosed business
obligation regarding a consulting agreement with Dr. Davinder Sethi, a director,
and MMH Investments, Inc., a company that is principally owned and controlled by
Robert Hersch, our former vice president of corporate finance. Pursuant to the
settlement, we issued 150,000 shares of common stock to MMH Investments, Inc.,
and agreed to immediately register the shares for resale on Form S-3. We
understand that MMH Investments, Inc. will pay each of Mr. Sethi and Humbert B.
Powell, III, a director, 37,500 of these shares.
On December 1, 1997, we entered into a consulting agreement with an
entity whose president is Ernesto Chavarria, a director of our company. The
terms and consulting agreement include the following: $10,000 fee per month plus
reasonable business expenses, 75,000 shares of Common Stock (issued on January
13, 1998), an option to purchase 75,000 shares of Common Stock, and various fees
and commissions for acquisitions or sales secured by the entity. During the year
ended March 31, 2000 we recognized expenses totaling $94,282 related to this
consulting agreement. This agreement was terminated on December 31, 1999, and we
are currently discussing matters related to the termination with Mr. Chavarria.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibit Index
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT DESCRIPTION LOCATION
----------- ------------------- --------
<S> <C> <C>
3.1 Revised Articles of Incorporation, as Incorporated by reference to Exhibit 3.2
amended on September 26, 1997 (1) of Registrant's Form SB-2/A filed
December 15, 1998 (File No. 333-60051)
3.2 Article of Amendment, dated October 13, Incorporated by reference to Exhibit 3.1
1998 (1) of Registrant's Form 10-QSB/A filed
November 12, 1998 (File No. 0-8164)
3.3 Amended and Restated Bylaws of MSI Incorporated by reference to Exhibit 3.3 of
Holdings, Inc. (1) Registrant's Form 10-KSB filed June 29,200
(File No. 0-8164)
4.0 Specimen of Securities (1) Incorporated by reference to Exhibits
Nos. 1A and 1B of Registrant's Form 8-A
Registration Statement (File No. 0-8146)
4.1 MSI Holdings, Inc. 2000 Stock Option Incorporated by reference to Exhibit 4.1
Plan (1) of Registrant's Form S-8/A filed June
19, 2000 (File No. 333-31700)
10.1 MMH Investments, Inc. settlement and Incorporated by reference to Exhibit
release agreement, dated October 15, 10.1 of Registrant's Form 10-QSB filed
1999 (1) February 14, 2000 (File No. 0-8164)
10.2 Entrepreneurial Investors, Ltd. and Incorporated by reference to Exhibit
Equity Services, LTD settlement 10.2 of Registrant's Form 10-QSB filed
agreement, dated February 1, 2000 (1) February 14, 2000 (File No. 0-8164)
10.3 Cisco Systems Capital Corporation master Incorporated by reference to Exhibit
agreement to lease equipment, dated 10.3 of Registrant's Form 10-QSB filed
January 24, 2000 (1) February 14, 2000 (File No. 0-8164)
10.4 Robert Hersch employment agreement, Incorporated by reference to Exhibit
dated October 1, 1999 (1) 10.4 of Registrant's Form 10-QSB filed
February 14, 2000 (File No. 0-8164)
10.5 Robert Gibbs employment agreement, dated Incorporated by reference to Exhibit
June 29, 1999 (1) 10.5 of Registrant's Form 10-QSB filed
February 14, 2000 (File No. 0-8164)
10.6 Form of GTE Internetworking direct Incorporated by reference to Exhibit
connect agreement (1) 10.6 of Registrant's Form 10-QSB filed
February 14, 2000 (File No. 0-8164)
</TABLE>
28
<PAGE> 12
<TABLE>
<S> <C> <C>
10.27 Addendum to Lease Agreement on 501 Incorporated by reference to Exhibit
Waller Austin, Texas dated June 6, 1998 10.8 of Registrant's Form 10-QSB/A filed
Between WBH, Ltd And MSI (1) November 12, 1998 (File No. 0-8164)
10.28 Value Added Reseller's Agreement between Incorporated by reference to Exhibit
MSI and Hewlett-Packard, Inc. dated, 10.9 of Registrant's Form 10-QSB/A filed
June 1, 1995 (1) November 12, 1998 (File No. 0-8164)
10.29 Placement Agreement dated November 11, Incorporated by reference to Exhibit
1997, by and between Equity Services, 10.10 of Registrant's Form 10-QSB/A
Ltd and MSI (1) filed November 12, 1998 (File No.
0-8164)
10.30 Placement Agreement dated January 31, Incorporated by reference to Exhibit
1998 by and between Equity Services, Ltd 10.11 of Registrant's Form 10-QSB/A
and MSI (1) filed November 12, 1998 (File No.
0-8164)
10.31 Placement Agreement dated April 30, 1998 Incorporated by reference to Exhibit
by and Between Equity Services, Ltd and 10.11 of Registrant's Form 10-QSB/A
MSI (1) filed November 12, 1998 (File No.
0-8164)
10.32 First Amendment to the Placement Incorporated by reference to Exhibit
Agreement dated April 30, 1998, by and 10.12 of Registrant's Form 10-QSB/A
between Equity Services, Ltd And MSI (1) filed November 12, 1998 (File No.
0-8164)
10.33 Placement Agreement dated October 13, Incorporated by reference to Exhibit
1998, by and between Equity Services, 10.13 of Registrant's Form 10-QSB/A
Ltd and MSI (1) filed November 12, 1998 (File No.
0-8164)
10.34 MCI WorldCom On-Net Voice Agreement, Incorporated by reference to Exhibit 10.34
dated April 19, 2000 (1) 10.34 of Registrant's Form 10-KSB filed
June 29, 2000 (File No. 0-8164).
10.35 Purchase Agreement, dated February 15, Incorporated by reference to Exhibit 10.35
2000 (1) of Registrant's Form 10-KSB filed June
29, 2000 (File No. 0-8164)
16.1 Letter on change in certifying Incorporated by reference to
accountant by Brown, Graham & Company, Registrant's Form 8-K, filed August 10,
PC, dated August 4, 1999 (1) 1999 (File No. 0-8164)
23.1 Consent of Ernst & Young LLP (1) Incorporated by reference to Exhibit 23.1
of Registrant's Form 10-KSB filed
June 29, 2000 (File No. 0-8164)
27.1 Financial Data Schedule(1) Incorporated by reference to Exhibit 27.1
of Registrant's Form 10-KSB filed June 29,
2000 (File No. 0-8164)
</TABLE>
(1) Previously filed with the Securities and Exchange Commission and
incorporated by reference pursuant to Rule 12b-32 of the Securities
Exchange Act of 1934.
b. Reports on Form 8-K
1. Form 8-K filed with the Commission on January 10, 2000 with reference to the
announcement of a proposed private placement of Common Stock.
2. Form 8-K filed with the Commission on February 17, 2000 with reference to the
announcement of the consummation of a private placement of Common Stock and
certain other matters.
29
<PAGE> 13
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.
MSI HOLDINGS, INC.
Date: July 28, 2000 BY: /s/ Robert J. Gibbs Robert J. Gibbs,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of this Registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Stephen J. Metzger Director July 28, 2000
-----------------------------
Stephen J. Metzger
/s/ Davinder Sethi Director July 28, 2000
-----------------------------
Davinder Sethi
Director July __, 2000
-----------------------------
Ernesto Chavarria
Director July __, 2000
-----------------------------
Blandina Cardenas
/s/ Daniel Dornier Director July 28, 2000
-----------------------------
Daniel Dornier
Director July __, 2000
-----------------------------
Humbert Powell, III
/s/ Christopher Brickler EVP - Marketing & Business July 28, 2000
----------------------------- Development, and Director
Christopher Brickler
/s/ Robert J. Gibbs President, Chief Executive July 28, 2000
----------------------------- Officer, and Director
Robert J. Gibbs
/s/ Douglas W. Banister Secretary & Chief July 28, 2000
----------------------------- Financial Officer
Douglas W. Banister
/s/ Elizabeth Montoya Controller July 28, 2000
-----------------------------
Elizabeth Montoya
</TABLE>
30
