As filed with the Securities and Exchange Commission on October 4, 1996
Registration No. ____________
- --------------------------------------------------------------------------------
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
---------------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------
COMTEC INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
NEW MEXICO 72-2456757
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10855 E. BETHANY DRIVE, AURORA, COLORADO 80014
(Address of Principal Executive Offices) (Zip Code)
EMPLOYMENT CONTRACT WITH CLIFFORD S. PERLMAN DATED MAY 10, 1995
EMPLOYMENT AGREEMENT WITH DONALD G. MACK DATED DECEMBER 25, 1995
EMPLOYMENT AGREEMENT WITH ROBERT CLAUSON DATED MAY 10, 1996
EMPLOYMENT AGREEMENT WITH MITCHELL B. CHI DATED JUNE 14, 1996
CONSULTING AGREEMENT WITH GORDON E. BECKSTEAD ASSOCIATES, INC.
DATED OCTOBER 4, 1996
(Full title of the plan)
DONALD G. MACK, PRESIDENT
COMTEC INTERNATIONAL, INC.
10855 E. BETHANY DRIVE
AURORA, COLORADO 80014
(Name and address of agent for service)
(303) 743-7983
(Telephone number, including area code, of agent for service)
COPIES TO:
LAW OFFICES OF FAY M. MATSUKAGE
STANFORD PLACE 3, SUITE 201
4582 SOUTH ULSTER STREET PARKWAY
DENVER, COLORADO 80237
(303) 721-9495
Exhibit index on consecutive page _____ Consecutive page 1 of _____
<PAGE>
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT TO BE MAXIMUM OFFER- AGGREGATE OFFER- AMOUNT OF
TO BE REGISTERED REGISTERED ING PRICE PER UNIT ING PRICE REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares of 4,080,654 $.9375(1)<F1> $3,825,613.10 $1,159.28
Common Stock,
$.001 par value,
under
Employment and
Consulting
Agreements
- ----------------------- ----------------------- ----------------------- ----------------------- ----------------------
<FN>
<F1>
(1) Calculated based on Rule 457(h). Average of the closing bid and asked prices as of October
3, 1996.
</FN>
</TABLE>
<PAGE>
PROSPECTUS
COMTEC INTERNATIONAL, INC.
COMMON STOCK
4,080,654 SHARES OFFERED FOR RESALE
This Prospectus covers 4,080,654 shares of Common Stock owned by
certain shareholders. ComTec International, Inc., a New Mexico corporation (the
"Company") will not receive any proceeds from the sale of these shares. The
holders of these shares intend to sell their shares directly, through agents,
dealers, or underwriters, in the public market, or otherwise, on terms and
conditions determined at the time of sale by such holders or as a result of
private negotiation between buyer and seller. Expenses of any such sale will be
borne by the parties as they may agree. See "Selling Security Holders."
THESE SECURITIES ARE SPECULATIVE, INVOLVE A HIGH DEGREE OF RISK AND
IMMEDIATE SUBSTANTIAL DILUTION AND SHOULD NOT BE PURCHASED BY ANYONE WHO CANNOT
AFFORD THE LOSS OF HIS ENTIRE INVESTMENT. SEE "RISK FACTORS" AND "DILUTION."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS OCTOBER 4, 1996.
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C., a Registration Statement on Form S-8 under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
securities offered by this Prospectus. This Prospectus does not contain all the
information set forth in the Registration Statement, certain items of which are
contained in schedules and exhibits to the Registration Statement, as permitted
by the rules and regulations of the Commission.
The Company is subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the Commission.
Such reports and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549; 500 W. Madison Street, Suite 1400,
Chicago, Illinois 60661; and 7 World Trade Center, Suite 1300, New York, New
York 10048. Copies of such material can be obtained from the Public Reference
Section of the Commission, Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates.
The Commission maintains a Web site that contains reports, proxy and
information statements, and other information regarding the Company, which files
electronically with the Commission. The address of this Web site is
"http://www.sec.gov."
NO PERSON HAS BEEN AUTHORIZED BY THE COMPANY TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION
WITH THE OFFER MADE HEREBY, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY STATE IN WHICH
AN OFFER OR SOLICITATION IS NOT AUTHORIZED BY THE LAWS THEREOF. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALES MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
Statements and descriptions herein concerning agreements or other
documents filed as exhibits to the registration statement filed in connection
with this Prospectus are necessarily summaries of such documents and are
qualified in their entirety by reference to the complete text of the applicable
document filed with the Commission, which text is incorporated in this
Prospectus by references to such agreements or documents.
2
<PAGE>
TABLE OF CONTENTS
Page
INCORPORATION OF CERTAIN INFORMATION
BY REFERENCE........................................................3
RISK FACTORS..............................................................4
SELLING SECURITY HOLDERS..................................................9
PLAN OF DISTRIBUTION.....................................................10
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES...........................10
INCORPORATION OF CERTAIN INFORMATION
BY REFERENCE
There are incorporated in this Prospectus by reference the following
documents which have been filed with the Commission:
(a) Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1995, filed pursuant to Section 13(a) of the Exchange
Act; and
(b) Company's quarterly reports on Form 10-Q for the fiscal
quarters ended September 30, 1995, December 31, 1995, and
March 31, 1996; Company's Current Reports on Form 8-K dated
May 10, 1995 and August 14, 1996; and all other reports, if
any, filed by the Company pursuant to Section 13(a) of the
Exchange Act since the end of the fiscal year ended June 30,
1995.
(c) The description of Company's Class A Common Stock contained in
the Registration Statement on Form 8-A declared effective by
the Commission on July 8, 1984 under Section 12 of the
Exchange Act, including any amendment or report filed for the
purpose of updating such description.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
and 15(d) of the Exchange Act after the date hereof and prior to the termination
of the offering of the shares offered hereby, shall be deemed to be incorporated
by reference in this Prospectus and to be a part hereof from the date of filing
of such documents.
Documents incorporated by reference herein may be obtained, without
charge, upon written or oral request to:
ComTec International, Inc.
10855 E. Bethany Drive
Aurora, Colorado 80014
(303) 743-7983
Attention: Corporate Secretary
3
<PAGE>
RISK FACTORS
The purchase of the shares offered hereby involves a high degree of
risk. Prospective investors should carefully consider the following factors,
among others set forth in this Prospectus, before making a decision to purchase
the shares.
RISK FACTORS RELATING TO THE COMPANY
LIMITED CAPITALIZATION AND LACK OF WORKING CAPITAL. The Company has
limited capitalization and is dependent upon the proceeds of private and public
offerings to continue as a going concern, implementing its business plan, and
completing its targeted acquisitions. As of June 30, 1995, the audited results
of the Company indicated assets of $2,217,370 and negative working capital of
$1,289,272. Subsequent to fiscal year end June 30, 1995 and by March 31, 1996,
the Company's assets have increased to $2,608,069 and its working capital
decreased to a negative $1,528,004. Included in the March 31, 1996 financial
statements and recorded as an offset to stockholders' equity is a media
advertising contract in the amount of $1,950,000 of which $1,300,00 has been
prepaid by the Company.
Although the Company will endeavor to finance its working capital needs
through additional debt or equity financing, there is no assurance that this
financing can be obtained on terms acceptable to the Company. In addition, any
debt financing may require the Company to mortgage, pledge, or hypothecate its
assets. Furthermore, as of June 30, 1995, the Company was in default covering
certain notes payable to related parties and short-term notes and there is no
guarantee that even if the future debt or equity financing is secured future
defaults can or will be cured. Subsequent to June 30, 1995, notes payable to
related parties in the amount of $130,973, which were in default as of June 30,
1995, have been authorized by the Board of Directors to be paid through the
issuance of the Company's Common Stock. In the case of other notes payable to
related parties in the amount of $39,500, which were in default as of June 30,
1995, the Board of Directors authorized an offset against a former officer's
breach of a non-disclosure/non-circumvention agreement. As of the date of this
Prospectus, $17,500 of short-term notes payable which were reported as in
default as of June 30, 1995 have been paid and $35,000 of short-term notes are
in dispute via a legal counterclaim against several companies and individuals.
All during 1995 and to the date of this Prospectus, the Company has had
and continues to have a substantial need for working capital to cure prior loan
defaults, close various acquisitions, and for normal operating expenses
associated with the Company continuing as a going concern. The Company is
currently in discussions with one or more companies for a private and/or public
debt and equity financing package(s).
NEW BUSINESS VENTURE. Although management of the Company has had
extensive experience in the communications industry, the Company itself has
recently been restructured and has only a limited history of operations. The
Company first began generating revenues in July 1995 as a result of the
acquisition of John Sandy Productions Inc. The Company has not yet realized any
operating profits and does not anticipate any operating profits for twelve to
eighteen months, predominantly as a result of the significant acquisition costs,
construction buildout costs of SMR, and the cost of switching and satellite
uplinking communications equipment. It can be expected that future operating
results will continue to be subject to many of the problems, expenses, delays,
and risks inherent in the establishment of a new business enterprise, many of
which the Company has no control. There can be no assurance, therefore, that the
Company will be able to achieve or sustain profitability in future periods. Even
if the Company's operations eventually prove to be marginally profitable, the
value of the Company's Common Stock, and the potential return to investors,
could be substantially diminished. Consequently, an investment in the Company is
highly speculative and no assurance can be given that
4
<PAGE>
purchasers of the shares of Common Stock offered hereby will realize any return
on their investment or that purchasers will not lose their entire investment.
The Company was restructured on May 10, 1995 as a result of an acquisition of
all of the assets of Keystone Holding Corp. And therefore has very limited
operating history and revenues. Activities to date have been limited to
acquiring John Sandy Productions Inc., a Colorado corporation engaged in film
and video production and broadcast of live and taped sporting events; an
Acquisition Agreement to acquire Commercial Communications Inc., an operating
SMR corporation located in Wyoming; four Acquisition Agreements to acquire an
interest in over 4,700 SMR channels and related technology; organizational
efforts; and obtaining initial financing. The Company must be considered in its
early phase of development embarking upon a new venture. Prospective investors
should be aware of the difficulties encountered by such enterprises, as the
Company faces all the risks inherent in any new business, including the limited
operating history and intense competition present in the telecommunications
industry. The likelihood of success of the Company must be considered in light
of such problems, expenses, and delays frequently encountered in connection with
the operation of a new business and the competitive environment in which the
Company will be operating.
GENERAL RISKS OF BUSINESS; NO INDEPENDENT MARKETING STUDIES. The
Company has formulated its business plans and strategies based on certain
assumptions of the Company's management regarding the size of the market for
wireless communications services (which the Company plans to offer in certain
key markets within the United States), the Company's anticipated share of the
market, and the estimated prices for and acceptance of the Company's services.
Although these assumptions are based on the best estimates of management, there
can be no assurance that these assessments will prove to be correct. No
independent marketing studies have been conducted on behalf of or otherwise
obtained by the Company, nor are any such studies planned.
DEPENDENCE ON KEY PERSONNEL. The Company's success depends to a
significant extent upon the continued service, efforts, and expertise of its
senior management, Messrs. Perlman, Mack, Chi, Clauson, and Moscariello. One of
the Company's subsidiaries is entirely dependent upon the management efforts and
expertise of Mr. Santucci. The Company depends heavily upon the skills and
contacts of Messrs. Mack and Chi in acquiring operating companies and related
technologies, SMR channels, and SMR operators, along with their ability to
evaluate, acquire, and maintain Company assets. The Company also depends heavily
upon the expertise of Mr. Santucci as it relates to all film and video
production, as well as live and taped broadcast services and its endeavor into
interactive games and Internet applications. The Company also depends heavily
upon the skills of Mr. Clauson and Mr. Moscariello in the administration of the
Company's business combined with their knowledge and expertise in handling all
sales and marketing efforts, project cost analysis, and coordination and
comparison of pricing to industry competitors. A loss of the services of any of
these individuals could adversely affect the conduct of the Company's business.
In such event, the Company would be required to obtain other personnel to manage
and operate the Company, and there can be no assurance that the Company would be
able to employ a suitable replacement for either of such individuals, or that a
replacement could be hired on terms which are favorable to the Company. The
Company currently maintains no key man insurance on the lives of any of its
officers or directors.
INTENSE COMPETITION. There are numerous nationally and
internationally-known corporations and entities which are engaged in the type of
business proposed to be engaged in by the Company. Competition for asset
acquisitions, management, and customer base in the telecommunications and
wireless communications industries is intense. Most of these competitors have
substantially greater financial and personnel resources than the Company.
Accordingly, the Company will be at a competitive disadvantage vis-a-vis its
competitors.
LACK OF DIVIDENDS. The Company has paid no dividends on its Common
Stock to date, and there are no plans to pay any in the foreseeable future.
Initial earnings which the Company may
5
<PAGE>
realize, if any, will be retained to finance growth of the Company. Any future
dividends, of which there can be no assurance, will be directly dependent upon
the earnings of the Company, its financial requirements, and other factors.
POSSIBLE RULE 144 SALES AND MARKET OVERHANG. A majority of the
Company's presently outstanding shares of Common Stock are "restricted
securities" within the meaning of the Securities Act and may hereafter be sold
in compliance with Rule 144 promulgated thereunder. Rule 144 provides, among
other things, and subject to certain limitations, that a person holding
restricted securities for period of two years may sell, every three months,
those securities in brokerage transactions in an amount equal to 1% of the
Company's outstanding Common Stock or the average weekly trading volume during
the four weeks preceding the sale, whichever amount is greater. Possible sales
of the Company's Common Stock pursuant to Rule 144 may, in the future, have a
depressive effect on the price of the Company's Common Stock, should a market
develop.
PREFERRED STOCK AUTHORIZED. The Articles of Incorporation of the
Company authorize the issuance of a maximum of 5,000,000 shares of Preferred
Stock of which 1,000,000 shares have been designated by the Company's Board of
Directors as Series A $1.00 Stated Value Convertible Preferred, non-voting
shares, convertible at $10.00 per share; 1,500,000 shares have been designated
as Series B $5.00 Stated Value Convertible Preferred, non-voting shares,
convertible at the rate of one share of the Company's Common Stock for each
share of Series B Preferred Stock; and 1,500,000 shares have been designated as
Series C $10.00 Stated Value Convertible Preferred, non-voting shares,
convertible at $10.00 per share. Although no Preferred Stock has been issued or
is outstanding as of the date of this Prospectus, 420,000 Series A shares are
authorized to be issued in connection with the purchase of certain real property
by the Company and the potential exists that additional shares of Preferred
Stock may be issued or designated at the option of the Company to acquire SMR
properties, satisfy corporate obligations, finance growth, and further
capitalize the Company. Other than the Company's current private offering of
Series B Preferred Stock and that which is disclosed herein, there is no current
plan to issue any additional shares of Preferred Stock in the foreseeable
future. The terms of a series of Preferred Stock could operate to the
significant disadvantage of holders of outstanding Common Stock. Such terms can
include, among others, preferences as to voting, dividends, and distributions on
liquidation. Moreover, the issuance of Preferred Stock in certain circumstances
could have the effect of delaying, deterring, or preventing a change in control
of the Company.
GOVERNMENT REGULATION. The telecommunications industry, SMR industry,
and the wireless communications industry are currently subject to government
regulations as specified by the Federal Communications Commission ("FCC") and
the Communications Act of 1934. The Company intends to comply with such
regulations as required.
RISK FACTORS RELATING TO THE OFFERING
SECURITIES OFFERED BY SELLING SECURITY HOLDERS. The Common Stock being
offered hereby are owned by the Selling Security Holders. The Company will not
receive any proceeds from the sale of Common Stock by the Selling Security
Holders.
ARBITRARY OFFERING PRICE. The Selling Security Holders have determined
the initial offering price of their shares. The offering price does not
necessarily have any relationship to the value of the Company or its underlying
assets, and should not be considered as an indication of the actual value of the
Company's Common Stock.
POSSIBLE VOLATILITY OF STOCK PRICES; PENNY STOCK RULES. The
over-the-counter markets for securities such as the Company's Common Stock
historically have experienced extreme price and volume fluctuations during
certain periods. These broad market fluctuations and other factors, such
6
<PAGE>
as new service and product developments and trends in the Company's industry and
the investment markets generally, as well as economic conditions and quarterly
variations in the Company's results of operations, may adversely affect the
market price of the Company's Common Stock. The Company's Common Stock is quoted
on the OTC Bulletin Board. If the Company's Common Stock is not eligible to be
included on NASDAQ for quotation, the Common Stock is subject to rules adopted
by the Commission regulating broker-dealer practices in connection with
transactions in "penny stocks." Penny stocks generally are equity securities
with a price of less than $5.00 (other than securities registered on certain
national securities exchanges or quoted on NASDAQ, provided that current price
and volume information with respect to transactions in such securities is
provided by the exchange or the NASDAQ system). Unless an exemption from the
definition of a "penny stock" is available, any broker engaging in a transaction
in the Company's Common Stock is required to provide any customer with a risk
disclosure document, disclosure of market conditions, if any, disclosure of the
compensation of the broker-dealer and its salesperson in the transaction, and
monthly accounts showing the market values of the Company's Common Stock held in
the customer's account. The bid and offer quotation and compensation information
must be provided prior to effecting the transaction and must be contained on the
customer's confirmation. It may be anticipated that a number of brokers may be
unwilling to engage in transactions in the Company's Common Stock because of the
need to comply with the "penny stock" rules. Consequently, these rules may
affect the ability of broker-dealers to sell the Company's securities and also
may affect the ability of purchasers of the shares offered hereby to sell their
shares in the secondary market.
RISK FACTORS RELATING TO THE WIRELESS COMMUNICATIONS INDUSTRY
SMR ACQUISITION AND IMPLEMENTATION RISKS. The Company, in connection
with the proposed transactions discussed herein, is seeking to acquire SMR
assets in certain operating territories, and may in the future pursue
acquisition and strategic partnership opportunities in these and other
geographic markets. In light of such geographic expansion, the Company may
continuously reevaluate its build out plans in order to ensure that it applies
its resources in the areas of greatest potential. There can be no assurance that
the Company will successfully consummate any of the proposed transactions,
future acquisitions, or strategic alliances or that it will not readjust its
priorities such that the build out of certain markets may be delayed. The
successful implementation of the SMR systems will depend to a significant degree
upon the Company's ability to lease or acquire sites for the location of its
base station equipment. The site selection process will require the negotiation
of lease or acquisition terms for numerous sites, and will likely require the
Company to obtain zoning variances or other governmental or local regulatory
approvals, and may required FCC and Federal Aviation Administration approvals,
the grant of which are beyond the Company's control. Delays in the site
selection process as well as construction delays and other risk factors referred
to in this section could adversely affect the timing of the implementation of
the Company's SMR systems and SMR acquisitions.
RISKS OF IMPLEMENTATION OF DIGITAL MOBILE NETWORKS. A key component of
the Company's business strategy is to implement Digital Mobile networks. The
Company does not anticipate commencing a build out of a Digital Mobile network
in the immediate future. Completion of the build out in such markets is not
anticipated to occur for some time after the Company has obtained the necessary
capital for both the proposed transactions and Digital equipment. There can be
no assurance that the Company will be able to implement its Digital Mobile
networks in any of such markets in accordance with its current implementation
plans and financing requirements, or at all. The ability of the Company to
implement Digital Mobile networks in the proposed operating territories on terms
and on a schedule acceptable to the Company may depend upon further negotiations
with certain SMR equipment vendors and other suppliers for the delivery of
infrastructure equipment and services. If the Company is not able to implement
its Digital Mobile networks, the Company will be unable to provide services
competitive with those of other wireless service providers, which would
significantly limit future subscriber growth. There are currently several SMR
systems in commercial operation in the
7
<PAGE>
United States that utilize Digital technology for voice coding, compression, and
transmission using Motorola's Integrated Radio System technology, although to
date call quality has not generally been well received commercially. As a
result, the extent of the potential demand for mobile communications and other
services using the Company's Digital Mobile networks cannot be estimated with
any degree of certainty. In addition, there can be no assurance that existing
customers will be willing to invest in new subscriber equipment necessary to
transfer to its Digital Mobile systems. The success of the Company's Digital
Mobile service could also be affected by matters beyond its control, such as the
future cost of subscriber equipment, manufacturer delays, system technical or
implementation difficulties, marketing and pricing strategies of competitors,
general economic conditions, and changes in the regulatory environment as
governed by the FCC and other governmental agencies.
RISKS OF DEVELOPING TECHNOLOGY. In implementing and operating its
Digital Mobile networks, the Company expects to use a digital compression
transmission system that employs a technology known as Frequency and Time
Division Multiple Access ("F-TDMA") technology. F-TDMA allows the splitting and
digital encoding of a single voice channel to carry a number of voice or data
transmissions simultaneously over a channel that previously supported one
conversation at a time. To a limited extent, the cellular industry has
successfully utilized three-times Time Division Multiple Access ("TDMA").
Private Communications Network ("PCN") is an emerging technology designed to use
up to four-times F-TDMA. PCN provides for a four-fold increase in capacity that
can be implemented in four stages by employing a combination of TDMA and
frequency splitting F-TDMA. Moreover, the new subscriber units to be used in
connection with Digital Mobile networks are equipped with more features than
existing mobile communication units that have not yet been used on a commercial
basis. Complications associated with Digital Mobile technology and its
integration into the Digital Mobile networks and new subscriber units may arise
during implementation of the Company's own Digital Mobile networks. If technical
difficulties do occur, the Company cannot predict the effect this may have on
the implementation and operation of the Digital Mobile networks or on customers'
perceptions of its services.
CHANGING TECHNOLOGIES. Cellular and SMR operators, including the
Company, are currently evaluating or implementing new Digital Mobile technology.
Although Digital Mobile technology is more expensive than analog technology,
Digital Mobile technology will increase the capacity of existing analog channels
and SMR systems and may have certain performance advantages (e.g., audio quality
and security) over the analog technology currently used by the Company. If the
Company's competitors in any market implement Digital Mobile technology, they
may be able to offer better quality transmissions and have more customer
capacity than the Company in that market at that time. While the Company intends
to implement Digital Mobile technology in the future and as it deems necessary,
there can be no assurance that this technology will be successfully implemented.
In addition, there can be no assurance that the Company's existing customers
will be willing to purchase new subscriber equipment necessary to utilize
Digital Mobile technology even if implemented. The Company may also face
competition from providers of technologies and services introduced in the
future, such a personal communications services and satellite SMR systems.
UNASCERTAINABLE MEDICAL RISKS. Recent news reports have speculated on
possible medical risks associated with the use of hand-held cellular mobile
telephones. The Company anticipates that initially a majority of the mobile
radios leased and sold by the Company will not be hand-held, but will be
installed in customers' vehicles and operate through an external antenna. To the
Company's knowledge, mobile telephones installed in vehicles have not been
associated with any health risks to users. Like many SMR operators, the Company
also will sell and lease hand-held "push-to-talk" portable radios. Because of
their "push-to-talk" or "simplex" configuration, these radios do not have
constant power emissions like hand-held cellular telephones. Although it is not
aware of any evidence of health risks related to installed radio equipment or
simplex hand-held portable models, the Company
8
<PAGE>
recognizes that the perception that health risks exists may adversely affect the
Company's ability to sell, rent, or service its hand-held portable models.
REGULATION. The licensing, operation, and purchase of SMR systems are
regulated by the FCC. The Company currently holds FCC licenses as a commercial
mobile service provider carrier to use SMR radio channels and has entered into
management agreements with respect to other SMR stations. Each of the Company's
licenses is subject to renewal, and there can be no assurance that licenses will
be renewed upon the expiration of their five-year term. Each license may also be
revoked for cause. In addition, there can be no assurance that management
arrangements, such as those by which the Company intends to operate a large part
of its planned system, will continue to be consistent with FCC rules,
regulations, and policies, or that the Company's management agreements will
continue in force. Future changes in regulation or legislation affecting SMR
service or the allocation by the FCC or Congress of additional spectrum for
services that compete with SMR service could adversely affect the Company's
business.
SELLING SECURITY HOLDERS
The shares of Common Stock are not being offered for the account of the
Company, but rather on behalf of the following Selling Security Holders:
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
SHARES OF COMMON STOCK
COMMON STOCK TO BE OWNED
RELATIONSHIP TO OWNED PRIOR TO NUMBER OF AFTER COMPLETION
NAME COMPANY OFFERING SHARES OFFERED OF OFFERING (1)<F1>
<S> <C> <C> <C> <C>
Donald G. Mack President, Chief 2,545,440 2,200,000 (2)<F2> 0.8%
Executive
Officer, Acting
Chief Financial
Officer, Director,
and principal
shareholder
Clifford Perlman Chairman of the 1,986,449 1,300,000 (2)<F2> 1.5%
Board of
Directors
Robert Clauson Secretary and 369,821 333,333 0.1%
Director
Mitchell Chi Chief Operating 184,821 184,821 --
Officer and
Director
Gordon E. Consultant 62,500 62,500 --
Beckstead
Associates, Inc.
<FN>
<F1>
(1) Based on 45,871,513 shares outstanding as of October 4, 1996.
9
<PAGE>
<F2>
(2) During any three-month period, sales by Messrs. Mack and Perlman
individually shall not exceed the greater of (i) one percent (1%) of
the outstanding shares of Common Stock or (ii) the average weekly
reported volume of trading in the Common Stock reported through the OTC
Bulletin Board during the four calendar weeks preceding the sale.
</FN>
</TABLE>
PLAN OF DISTRIBUTION
The Company is paying certain of the expenses of registering the shares
of Common Stock under the Securities Act, estimated to be $10,000 in the
aggregate, consisting of all costs incurred in connection with the preparation
of the registration statement. In addition, the Selling Security Holders will
pay or assume accounting expenses, brokerage commissions, or underwriting
discounts incurred in the sale of their securities, which expenses, commissions,
or discounts are not being paid or assumed by the Company.
The Selling Security Holders intend to sell their shares of Common
Stock directly, through agents, dealers, or underwriters, in the
over-the-counter market, or otherwise, on terms and conditions and at prices
determined at the time of sale by the Selling Security Holders or as a result of
private negotiations between buyer and seller. Expenses of any such sale will be
borne by the parties as they may agree.
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Section 53-11-4.1 of the New Mexico Business Corporation Act and
Article 7.05 of the Company's Bylaws permit the Company to indemnify any
director, officer, former director or officer, and certain other persons against
expenses in defense of a suit to which they are parties by reason of such
office, unless they are adjudged in such suit negligent or guilty of misconduct
in the performance of their duties. By statute, indemnification is permitted so
long as the officer or director acted in good faith, reasonably believed that
his or her conduct was in the corporation's best interests or at least not
opposed to the corporation's best interests, and had no reasonable cause to
believe that his or her conduct was unlawful. Indemnification is not permitted
by statute in connection with a proceeding charging that the officer or director
derived an improper personal benefit, whether or not involving action in an
official capacity, in which proceeding the officer or director was adjudged
liable on the basis that he or she derived an improper personal benefit.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
10
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents are incorporated by reference in this
registration statement:
(a) Registrant's Annual Report on Form 10-K for the fiscal year
ended June 30, 1995, filed pursuant to Section 13(a) of the
Securities Exchange Act of 1934, as amended; and
(b) Registrant's quarterly reports on Form 10-Q for the fiscal
quarters ended September 30, 1995, December 31, 1995, and
March 31, 1996; Registrant's Current Reports on Form 8-K dated
May 10, 1995, August 25, 1995, December 15, 1995, and August
14, 1996; and all other reports, if any, filed by the
Registrant pursuant to Section 13(a) of the Securities
Exchange Act of 1934 since the end of the fiscal year ended
June 30, 1995.
(c) The description of Registrant's Class A Common Stock contained
in the Registration Statement on Form 8-A declared effective
by the Commission on July 8, 1984 under Section 12 of the
Securities Exchange Act of 1934, including any amendment or
report filed for the purpose of updating such description.
All documents filed by the registrant pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934 after the date of
this registration statement and prior to the filing of a post-effective
amendment to this registration statement which indicates that all securities
offered hereunder have been sold, or which deregisters all securities then
remaining unsold under this registration statement, shall be deemed to be
incorporated by reference in this registration statement and to be a part hereof
from the date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable; the class of securities to be offered is registered
under Section 12 of the Securities Exchange Act of 1934.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
New Mexico corporate law and Article 7.05 of the Registrant's Bylaws
permit the Registrant to indemnify any director, officer, former director or
officer, and certain other persons against expenses in defense of a suit to
which they are parties by reason of such office, unless they are adjudged in
such suit negligent or guilty of misconduct in the performance of their duties.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
The Company issued a total of 4,080,654 shares of Common Stock in lieu
of cash compensation to certain of its officers, directors, and consultants.
With respect to the issuance of these shares, the Company relied on the
provisions of Section 4(2) of the Securities Act of 1933, as
II-1
<PAGE>
amended, in that such transactions did not involve any public offering and the
officers, directors, and consultants had sufficient information about the
Company.
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT CONSECUTIVE
NUMBER EXHIBIT PAGE NUMBER
<S> <C> <C>
4.1 Articles of Incorporation, as amended (filed as an exhibit to the N/A
Registrant's Registration Statement on Form S-1, No. 82-88530,
dated December 20, 1983, and incorporated herein by refer-
ence)
4.2 Bylaws (filed as an exhibit to the Registrant's Registration N/A
Statement on Form S-1, No. 82-88530, dated December 20,
1983, and incorporated herein by reference)
4.3 Employment Contract by and between Nattem USA, Inc. And N/A
Clifford S. Perlman dated May 10, 1995 (filed as an exhibit to
the Registrant's Annual Report on Form 10-KSB for the fiscal
year ended June 30, 1995, and incorporated herein by
reference)
4.4 Employment Agreement with Donald G. Mack dated December N/A
25, 1995 (filed as an exhibit to the Registrant's Annual Report
on Form 10-KSB for the fiscal year ended June 30, 1995, and
incorporated herein by reference)
4.5 Employment Agreement with Robert Clauson dated May 10, N/A
1996 (filed as an exhibit to the Registrant's Annual Report on
Form 10-KSB for the fiscal year ended June 30, 1995, and
incorporated herein by reference)
4.6 Employment Agreement with Mitchell B. Chi dated June 14, N/A
1996 (filed as an exhibit to the Registrant's Annual Report on
Form 10-KSB for the fiscal year ended June 30, 1995, and
incorporated herein by reference)
4.7 Consulting Agreement with Gordon E. Beckstead Associates, ___
Inc. dated October 4, 1996
5.1 Opinion Regarding Legality ___
23.1 Consent of Causey Demgen & Moore Inc. ___
23.2 Consent of Fay M. Matsukage (included in Exhibit 5.1) N/A
</TABLE>
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
II-2
<PAGE>
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3, Form S-8 or Form F-3, and
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Aurora, State of Colorado, on October 4,1996.
COMTEC INTERNATIONAL, INC.
By:/s/Donald G. Mack
Donald G. Mack, President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Chairman of the Board of
/s/ Clifford S. Perlman Directors October 4, 1996
Clifford S. Perlman Date
President, Chief Executive
Officer, Acting Chief Financial
/s/ Donald G. Mack Officer, and Director October 4, 1996
Donald G. Mack Date
/s/ Robert Clauson Secretary and Director October 4, 1996
Robert Clauson Date
/s/ Thomas Moscariello Director October 4, 1996
Thomas Moscariello Date
/s/ Mitchell B. Chi Director October 4, 1996
Mitchell B. Chi Date
1:forms-8
II-4
<PAGE>
CONSULTING AGREEMENT
AGREEMENT, made as of this 4th day of October, 1996, by and between
ComTec International, Inc. (and or its successor), (the "Company"), and Gordon
E. Beckstead Associates, Inc. ("Consultant").
WHEREAS, the Company desires professional guidance and advice regarding
financial matters of all types and particularly in business plan development,
and management services( more specifically, settling debts, reorganizing
company, negotiating contracts, etc.) with regard to its wholly owned
subsidiary, GPS Communications, Inc. ("GPS"); and
WHEREAS, Consultant has expertise in the area of corporate finance and
is willing to act as a consultant to the Company upon the terms and conditions
set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises herein contained, the parties hereto agree as follows:
1. Duties, Scope of Agreement, and Relationship of the Parties.
(a) The Company hereby agrees to retain Consultant as an advisor
and consultant on financial matters, consistent with
Consultant's expertise and ability, and Consultant agrees to
consult with the Company during the term of this Agreement.
All parties understand that Consultant has many other business
interests and will devote as much time as in its discretion is
necessary to perform its duties under this Agreement. In
addition, the Company understands that Consultant's efforts on
behalf of its other interests are the sole and separate
property of Consultant.
(b) The services rendered by Consultant to the Company pursuant to
this Agreement shall be as an independent contractor, and this
Agreement does not make Consultant the employee, agent, or
legal representative of the Company for any purpose
whatsoever, including without limitation, participation in any
benefits or privileges given or extended by the Company to its
employees. No right or authority is granted to Consultant to
assume or to create any obligation or responsibility, express
or implied, on behalf of or in the name of the Company. The
Company shall not withhold for Consultant any federal or state
taxes from the amounts to be paid to Consultant hereunder, and
Consultant agrees that it will pay all taxes due on such
amounts.
2. Compensation.
(a) For its faithful performance of the undertakings and
obligations to be performed by it hereunder, the Company shall
pay Consultant a fee of $100,000 for services to be performed
over the next twelve (12) month period for the Company.
Included in the above fee is $25,000 for services rendered to
date for past GPS projects and activities. Such compensation
shall be paid in the form of the Company's common stock at 70%
of the closing bid price on date of issuance. The stock shall
be registered by the Company on a Form S- 8 registration
statement with the SEC, making such stock freely tradable.
Such stock shall be issued as follows:
Share price = $.70
[initialed by
parties]
To be issued on date of signing this agreement:
(1) $25,000 for the obligation owed by GPS.
[Donald G. Mack's initials]
<PAGE>
(2) $18,750 for the first 90 days of services to be
performed hereunder, and
(3) $6,250 per month thereafter as long as this agreement
is in force or until the expiration of the 12-month
period ending from the date of this agreement,
whichever occurs first.
(b) In addition, Company agrees to give Consultant stock options
on an additional 100,000 shares of the Company's of common
stock. The shares of stock acquired with such options shall
have piggyback rights and be registered in the event the
Company files a registration statement with the SEC for the
public sale of its securities. The options shall be
exercisable at 70% of the offering price of the public
offering of stock.
(c) All stock issued and registered under any Form S-8
registration shall be held by the Company and liquidated as
deemed appropriate as not to adversely effect the market value
of the stock.
3. Expenses. The Company shall reimburse Consultant for all reasonable and
necessary expenses incurred by it in carrying out its duties under this
Agreement, provided Consultant submits related receipts and documentation with
its request for reimbursement and obtains approval from the Company.
4. Renewal; Termination.
(a) This Agreement shall continue in effect for a period of at
least one(1) year from the date hereof.
(b) Subject to the continuing obligations of Consultant under
Section 5 below, either party may terminate this Agreement at
any time if the other party shall fail to fulfill any material
obligation under this Agreement and shall not have cured the
breach within 10 days after having received written notice
thereof by registered mail.
(c) Termination or expiration of this Agreement shall not
extinguish any rights of compensation that shall accrue prior
to the termination.
5. Confidential Information.
(a) "Confidential Information," as used in this Section 5, means
information that is not generally known and that is
proprietary to the Company or that the Company is obligated to
treat as proprietary. This information includes, without
limitation:
(i) trade secret information about the Company and its
products;
(ii) information concerning the Company's business as the
Company has conducted it since the Company's
incorporation or as it may conduct it in the future;
and
(iii) information concerning any of the Company's past,
current, or possible future products, including
(without limitation) information about the Company's
research, development, engineering, purchasing,
manufacturing, accounting, marketing, selling, or
leasing.
[Donald G. Mack's initials]
<PAGE>
(b) Any information that Consultant reasonably considers
Confidential Information, or that the Company treats as
Confidential Information, will be presumed to be Confidential
Information (whether Consultant or others originated it and
regardless of how it obtained it).
(c) Except as required in its duties to the Company, Consultant
will never, either during or after the term of this Agreement,
use or disclose Confidential Information to any person not
authorized by the Company to receive it.
(d) If this Agreement is terminated, Consultant will, after being
paid all amounts due it, promptly turn over to the Company all
records and any compositions, articles, devices, apparatus and
other items that disclose, describe, or embody Confidential
Information, including all copies, reproductions, and
specimens of the Confidential Information in its possession,
regardless of who prepared them. The rights of the Company set
forth in this Section 5 are in addition to any rights of the
Company with respect to protection of trade secrets or
confidential information arising out of the common or
statutory laws of the State of Colorado or any other state or
any country wherein Consultant may from time to time perform
services pursuant to this Agreement. This Section 5 shall
survive the termination or expiration of this Agreement.
6. False or Misleading Information. The Company warrants that it will provide
Consultant with accurate financial, personal, corporate, and other data required
by Consultant and necessary for full disclosure of all facts relevant to any
efforts toward the preparation of the Business Plan and any offering. Such
information shall be furnished promptly upon request. If the Company fails to
provide such information, or if any information provided by the Company to
Consultant shall be false or misleading, or if the Company omits or fails to
provide or withholds relevant material information to Consultant or to any
professionals engaged pursuant to paragraph 3 above, then, in such event, any
and all fees paid hereunder will be retained by Consultant as liquidated damages
and this Agreement shall be null and void and Consultant shall have no further
obligation hereunder. Further, by execution of this Agreement, the Company
hereby indemnifies Consultant from any and all costs for expenses or damages
incurred and holds Consultant harmless from any and all claims and/or actions
that may arise out of providing false or misleading information or by omitting
relevant information in connection with the private offering and/or public
offering outlined herein.
7. Miscellaneous.
(a) Successors and Assigns. This Agreement is binding on and
inures to the benefit of the Company, its successors and
assigns, all of which are included in the term the "Company"
as it is used in this Agreement and upon Consultant, its
successors and assigns. Neither this Agreement nor any duty or
right hereunder will be assignable or otherwise transferable
by either party without the written consent of the other
party, except that the Company shall assign this Agreement in
connection with a merger, consolidation, assignment, sale or
other disposition of substantially all of its assets or
business. This Agreement will be deemed materially breached by
the Company if its successor or assign does not assume
substantially all of the Company's obligations under this
Agreement.
(b) Modification. This Agreement may be modified or amended only
by a writing signed by both the Company and Consultant.
(c) Governing Law. The laws of Colorado will govern the validity,
construction, and performance of this Agreement. Any legal
proceeding related to this
[Donald G. Mack's initials]
<PAGE>
Agreement will be brought in an appropriate Colorado court,
and both the Company and Consultant hereby consent to the
exclusive jurisdiction of that court for this purpose.
(d) Construction. Wherever possible, each provision of this
Agreement will be interpreted so that it is valid under the
applicable law. If any provision of this Agreement is to any
extent invalid under the applicable law, that provision will
still be effective to the extent it remains valid. The
remainder of this Agreement also will continue to be valid,
and the entire Agreement will continue to be valid in other
jurisdictions.
(e) Waivers. No failure or delay by either the Company or
Consultant in exercising any right or remedy under this
Agreement will waive any provision of the Agreement, nor will
any single or partial exercise by either the Company or
Consultant of any right or remedy under this Agreement
preclude either of them from otherwise or further exercising
these rights or remedies, or any other rights or remedies
granted by any law or any related document.
(f) Captions. The headings in this Agreement are for convenience
only and do not affect this Agreement's interpretation.
(g) Entire Agreement. This Agreement supersedes all previous and
contemporaneous oral negotiations, commitments, writings, and
understandings between the parties concerning the matters in
this Agreement.
(h) Notices. All notices and other communications required or
permitted under this Agreement shall be in writing and sent by
registered first-class mail, postage prepaid, and shall be
effective five days after mailing to the addresses stated
below. These addresses may be changed at any time by like
notice.
In the case of the the Company: In the case of Consultant:
ComTec International, Inc. Gordon E. Beckstead Associates,
Inc.
10855 E. Bethany Drive Stanford Place 3, Suite 201
Aurora, CO 80014 4582 South Ulster Street Parkway
Denver, CO 80237
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
"The Company" "Consultant"
ComTec International, Inc. Gordon E. Beckstead Associates, Inc.
By:/s/Donald G. Mack By:/s/Gordon E. Beckstead
<PAGE>
October 4, 1996
ComTec International, Inc.
10855 E. Bethany Drive
Aurora, Colorado 80014
Gentlemen:
You have requested my opinion as special counsel for ComTec
International, Inc., a New Mexico corporation (the "Company"), in connection
with the registration under the Securities Act of 1933, as amended, and the
Rules and Regulations promulgated thereunder, and the issuance by the Company of
up to 4,018,154 shares of Common Stock, issuable pursuant to the terms of a
Employment Contracts or Agreements between the Company and Clifford S. Perlman,
Donald G. Mack, Robert Clauson, and Mitchell B. Chi, and the Consulting
Agreement with Gordon E. Beckstead Associates, Inc. (the "Agreements").
I have examined the Company's Registration Statement on Form S-8 in the
form to be filed with the Securities and Exchange Commission on or about October
4, 1996 (the "Registration Statement"). I further have examined the Articles of
Incorporation, as amended, of the Company as certified by the Secretary of State
of the State of New Mexico, the Bylaws, and the minute book of the Company as a
basis for the opinion hereafter expressed.
Based on the foregoing examination, I am of the opinion that, upon
issuance in the manner described in the Registration Statement, the shares of
Common Stock covered by the Registration Statement are legally issued, fully
paid and nonassessable shares of the capital stock of the Company.
I consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/Fay M. Matsukage
Fay M. Matsukage
1:opinion.s-8
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
In connection with the foregoing Registration Statement on Form S-8 to be filed
with the Washington, D.C. Office of the U.S. Securities and Exchange Commission,
we hereby consent to the incorporation by reference herein to our report dated
June 14, 1996, except for Note 11 as to which the date is August 6, 1996 which
appears in the annual report on Form 10-KSB of Comtec International, Inc. for
the year ended June 30, 1995.
/s/Causey Demgen & Moore Inc.
Causey Demgen & Moore Inc.
Denver, Colorado
October 1, 1996
