UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported) September 2, 1998
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(May 7, 1998)
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COMTEC INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
New Mexico 0-12116 75-2456757
(State or other (Commission (IRS Employer
Jurisdiction File Number) Identification No.)
of Incorporation)
9350 East Arapahoe Road, Suite 340, Englewood, Co. 80112
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 662-8373
This Document consists of 8 pages
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Item 2:
Acquisition of Assets from Centennial Communications Corp.
As reported in the 8K filed December 26, 1998, through an agreement
executed on December 4, 1997, American Wireless Network, Inc., a
wholly owned subsidiary of ComTec International, Inc. (the
"Company"), acquired management control of the Specialized Mobile
Radio ("SMR") related assets and licenses owned by Centennial
Communications Corp. of Denver, Colorado, in the following seven
USA metropolitan trade areas: Birmingham, Alabama; Knoxville,
Memphis, and Nashville, Tennessee; Oklahoma City and Tulsa,
Oklahoma; and New Orleans, Louisiana. The transaction was an arms
length purchase and sale transaction, negotiated by the
representatives of each party to the agreement. On July 6, 1998,
the final closing and transfer of title to the acquired assets
(subject to the FCC Notes assumed by American Wireless Network,
Inc.) occurred.
The Company and Centennial Communications, Inc., a Colorado
Corporation, initially entered into a letter of intent dated as of
October 8, 1997, and a formal agreement was entered into on
December 4, 1997, between American Wireless Network, Inc., a
Colorado Corporation and Centennial Communications Corp. (the
"Agreement") whereby the American Wireless Network, Inc. acquired
management control on December 5, 1997, of all SMR assets and SMR
licenses owned by Centennial Communications Corp. together with all
SMR related business limited to and located in the following USA
metropolitan trade areas: Birmingham, Alabama; Knoxville, Memphis,
and Nashville, Tennessee; Oklahoma City and Tulsa, Oklahoma; and
New Orleans, Louisiana. The assets acquired by the agreement
include SMR licenses issued by the Federal Communications
Commission ("FCC"), radio equipment and antennas, tower site leases
and the customer base of Centennial Communications Corp. in the
seven acquired markets. American Wireless Network, Inc. will
continue to utilize the assets acquired in the transaction for the
same purposes, that of commercial sale of air time to business
users, as was utilized by Centennial Communications Corp. Transfer
of title to the assets and licenses occurred at a final closing
which occurred on July 6, 1998. The total purchase price of the
assets is $3,035,697, consisting of cash deposit of $200,000 in
October 1997, payment $1,000,843 in cash on December 4, 1997, a
promissory note from American Wireless Network, Inc. to Centennial
Communications Corp. in the amount of $444,147 (which note and all
accrued interest was paid at the July 6, 1998 closing) and the
assumption of FCC notes totaling $1,390,707 by American Wireless
Network, Inc.
Prior to this acquisition, neither the Company nor its subsidiary,
American Wireless Network, Inc., had any affiliation with
Centennial Communications Corp. nor any of its officers, directors,
affiliated companies or shareholders.
The Company obtained funding for the initial December 4, 1997
closing of the herein described asset acquisition from cash
obtained through a convertible debt financing issuance of One
Million Six Hundred Thousand Dollars ($1,600,000) of convertible
debt financing from entities organized outside of the United States
of America, whose shareholders are not residents of the United
States of America. The terms of the convertible debt financing are,
maturity date: December 31, 2000, interest at 12% per annum due on
December 31, 2000, and a conversion feature effective after January
31, 1998, allowing the holders of the debt to convert said debt
into equity at the rate of fifty units, each unit consisting of one
share of .001 par value common stock of the Company and one warrant
to purchase one share of .001 par value common stock at a price of
$.58 per share, per one dollar of debt converted. Accrued interest
would be forfeited upon conversion to equity. The Company had
thirty one days from the date of notice of intent of the debt
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<PAGE>
holder to convert in which to prepay the debt together with accrued
interest thereon; if such debt is so prepaid, the holder's
conversion right is terminated. As reported on the Company's 8K
filed on April 4, 1998, the $1,600,000 convertible debt was
converted to .001 par value common stock and warrants on March 23,
1998. The funds to complete the final closing on July 6, 1998 were
obtained by obtaining a loan of $600,000 on July 2, 1998 from
Queens Cross Group Ltd., an entity organized outside of the United
States of America, whose shareholders are not residents of the
United States of America. The $600,000 debt financing incurred to
finance the final closing of the acquisition of certain Specialized
Mobile Radio assets from Centennial Communications, Inc. also
required the issuance of 1,538,461 shares of the Company's .001 par
value common stock to Queens Cross Group Ltd. 1,538,461 shares of
the Company's .001 par value common stock were issued on August 26,
1998, to Queens Cross Group Ltd. in satisfaction of that
obligation. Please see Item 9 herein. The terms of the debt
financing are, maturity date: six months from issue, interest at
12% per annum due six months from issue, if the notes are not paid
within six months, the interest rate increases to 18% per annum.
Agreement terminating DCL SMR License Options and DCL Litigation
As reported on Form 8K filed August 14, 1997, on August 7, 1997,
the Company filed a suit in United States District Court for the
District of Colorado, Denver, Colorado, Case No. 97-1685, seeking
a court ruling that option agreements entered into by and between
the Company and the Defendants, consisting of DCL Associates, Inc.
and thirty three additional Defendants, were legal, valid and
enforceable agreements. The suit involved a dispute concerning the
continuing validity of an agreement by the Company executed August
6, 1996 wherein the Company obtained options to purchase 1389 EIW
channels and 1046 non-EIW channels from DCL Associates, Inc. and
the thirty three additional Defendants. The August 6, 1996
agreement was recorded as a purchase of license rights by the
Company at a purchase price of $1,991,000. The DCL option
transaction was terminated by legal settlement on June 22, 1998.
As a part of the settlement agreement, the Company was granted the
option to purchase the DCL licenses for cash. The opportunity to
purchase the licenses for cash as provided by that agreement
expired on July 1, 1998. In the same settlement, all of the stock
previously issued to DCL Associates by ComTec in payment of such
options was returned to the Company. The net result of the entire
transaction in retrospect is the loss of the actual cash paid to
DCL Associates on August 6, 1996 in the approximate amount of
$150,000. ComTec has no further interest or claim to the DCL
options or assets associated therewith. All shares of common and
preferred stock of the Company issued in conjunction with the DCL
Option agreement have been returned to the Company and cancelled.
Item 5: Other Items
Results of Special meeting of Shareholders to Remove Directors and
Elect Directors until the next annual meeting
The Company has undergone an extensive change in management over
the past year. Since October 1997, the Company has undergone
management restructure to the extent that no Director, Officer or
Management Executive associated with the Company as of the 6/30/96
1OKSB is still associated with the Company.
On August 26, 1998, pursuant to a call for a special shareholders
meeting by shareholders owning more than 10% of the Company's
common stock and presented to the shareholders by a notice and
proxy
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<PAGE>
mailed by the Company's independent transfer agent on August 11,
1998, a special election of the shareholders of the Company was
held with the following proposed purposes:
1. Remove Donald G. Mack from the Board of Directors for cause
2. Remove Daniel Melnick from the Board of Directors
3. Elect James J. Krejci to the Board of Directors
4. Elect Gordon D. Dihle to the Board of Directors
The necessary quorum of shares were voted at the special meeting.
On the date of the election there were 39,626,718 shares of .001
par value common stock outstanding. The results of the election
were as follows:
Remove Donald G. Mack from the Board of Directors for cause:
Votes for: 30,762,644 Votes against: 10,317 Abstain: 700
Remove Daniel Melnick from the Board of Directors:
Votes for: 30,803,034 Votes against: 100 Abstain: 700
Elect James J. Krejci to the Board of Directors:
Votes for: 30,803,034 Votes against: 0 Abstain: 800
Elect Gordon D. Dihle to the Board of Directors:
Votes for: 30,753,364 Votes against: 53,571 Abstain: 4,899
As a result of the Special Meeting of Shareholders held August 26,
1998, Donald G. Mack and Daniel Melnick were removed as Directors
of the Company. James J. Krejci and Gordon D. Dihle were elected
to the Company's Board of Directors until the next annual meeting
of the Shareholders.
Changes in Management
As a result of the Special Meeting of Shareholders held August 26,
1998, Donald G. Mack and Daniel Melnick were removed as Directors
of the Company. In the same special shareholders meeting, James J.
Krejci and Gordon D. Dihle were elected to the Company's Board of
Directors until the next annual meeting of the Shareholders. As of
August 26, 1998, the Company's Board of Directors consists of J.
Kent Millington (appointed May 7, 1998), James J. Krejci and Gordon
D. Dihle.
J. Kent Millington who was appointed May 7, 1998, resigned from the
board of directors effective September 2, 1998.
At a Special Board of Directors meeting held September 2, 1998,
following the Special Meeting of Shareholders, the following
officers were appointed by the Board of Directors:
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<PAGE>
James J. Krejci - President, CEO and Chairman of the
Board of Directors
Gordon D. Dihle - Secretary and Treasurer
Prior to the special meeting of shareholders held August 26, 1998,
by a letter dated August 21, 1998, Donald G. Mack tendered his
resignation as a Director of the Company and as an officer and
director of any of its subsidiaries. Mr. Mack's letter stated that
his resignation was not a waiver of any rights or claims to any
compensation, stock, options, bonuses or accrued amounts of cash,
loans or guarantees made on behalf of the Company under the terms
and conditions of his employment contract. Previously, on June 23,
1998, Mr. Mack had tendered his resignation as an officer of the
Company and as an officer and director of each of the Company's
Subsidiaries. Mr. Mack was officially removed as a Director of the
Company by the special meeting of shareholders held August 26,
1998.
Since October 1997, several new management executives have joined
the ComTec International, Inc. organization. James J. Krejci, MBA,
formerly a top executive with Jones Intercable, Inc./Jones
International, Ltd. associated companies, was named CEO of AWN and
COO of the Company in February, 1998. On September 2, 1998, Mr.
Krejci was appointed as CEO and President of the Company. Clarence
Leist, a former OneComm Manager, was appointed Chief Network
Operations Engineer in November, 1997. Michael Bunch, a CPA and
MBA, became the organization's controller in tandem with the
appointment of Gordon Dihle as CFO and as a Company Director in the
initial management restructure which took place in October 1997
following the resignation of Clifford S. Perlman.
On May 7, 1998, J. Kent Millington and Clarence Leist were
appointed to the Board of Directors by action of the Board of
Directors.
On May 7, 1998, Gordon Dihle, in conjunction with the appointment
of J. Kent Millington and Clarence Leist as new members of the
Board of Directors, resigned as Chief Financial Officer and in all
capacities as an officer and member of the Board of Directors of
the Company and all subsidiaries thereof. At the special meeting
of shareholders held August 26, 1998, Mr. Dihle was elected as a
member of the Board of Directors. At the special meeting of the
Board of Directors held September 2, 1998, Mr. Dihle was appointed
as Secretary and Treasurer of the Company.
On May 11, 1998, Clarence Leist resigned as a member of the Board
of Directors of the Company. On July 1, 1998, Clarence Leist
resigned as Chief Network Operations Engineer and all capacities
with the Company.
On October 8, 1997, Clifford S. Perlman resigned as a Director and
Chairman of the Board of the Company and in all capacities as a
Director and Officer of the Company's subsidiaries.
On May 6, 1997, Thomas Moscariello resigned as Secretary and member
of the Board of Directors of the Company and terminated all
agreements with the Company.
Daniel Melnick was appointed as a Director of the Company by the
Board of Directors at the annual meeting of the Board of Directors
of the Company held on March 28, 1997. Mr. Melnick had no previous
affiliation with the Company. Since appointment as a Director, Mr.
Melnick had not actively participated in the affairs of the
Company. Mr. Melnick was removed as a Director by the special
meeting of shareholders held August 26, 1998.
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<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information related to assets
purchased from Centennial Communications Corp.
Financial statements, and pro forma financial information required
by Item 7 with respect to the purchase of assets by the Company
from Centennial Communications Corp. described in Item 2 herein
will be filed by amendment.
Item 9: Issuance of Securities Pursuant to Regulation S Exemption
Debt Obligation and Issuance of Common Stock as Loan Origination
Fees for Debt Obligation on May 20, 1998
On May 20, 1998, the Company issued a total of 1,538,461 shares of
its .001 par value common stock to Cayman Offshore International,
Ltd., a corporation organized outside of the United States of
America, whose shareholders are not residents of the United States
of America. The shares were issued as incentive and fees for a
loan of $100,000 on May 20, 1998 from Cayman Offshore
International, Ltd. The $100,000 debt financing was obtained to
pay current operating costs. The terms of the debt financing are,
maturity date: six months from issue, interest at 12% per annum due
six months from issue, if the notes are not paid within six months,
the interest rate increases to 18% per annum. The transaction took
place outside of the United States of America on Grand Cayman,
British West Indies, with entities that are not residents of the
United States of America pursuant to exemption from registration
provided by Regulation S. No underwriter was involved in the
transaction and no cash commissions or discounts other than as
described herein were paid by the Company.
The following table sets forth the issuance of shares pursuant to
Regulation S exemption from registration as described above:
5/20/98 issue of .001 par value common stock in exchange for Loan
Origination Fees:
<TABLE>
<CAPTION>
CASH
PER SHARE NUMBER PAID TO OTHER NONCASH
DATE SHAREHOLDER NAME OFFER PRICE OF SHARES COMPANY CONSIDERATION
---- ---------------- ----------- --------- ------- ----------------------
<S> <S> <C> <C> <C> <C>
5/20/98 Cayman Offshore
International, Ltd. $0.025 1,538,461 $0 Loan origination fees
</TABLE>
The following table sets forth the issuance of debt instruments
pursuant to Regulation S exemption from registration as described
above:
<TABLE>
<CAPTION>
INITIAL CASH
NOTE INTEREST PAID TO OTHER NONCASH
DATE SHAREHOLDER NAME AMOUNT RATE COMPANY CONSIDERATION
---- ---------------- -------- -------- -------- ---------------------
<S> <S> <C> <C> <C> <C>
5/20/98 Cayman Offshore
International, Ltd. $100,000 12% $100,000
</TABLE>
6
<PAGE>
Debt Obligation and Issuance of Common Stock as Loan Origination
Fees for Debt Obligation on September 2, 1998.
On September 2, 1998, the company issued a total of 3,076,922
shares of its .001 par value common stock to Queens Cross Group
Ltd. and Overseas Foreign Holdings Ltd., both corporations
organized outside of the United States of America, whose
shareholders are not resident of the United States of America. The
shares were issued as incentive and fees for loans of $600,000 on
July 2, 1998 from Queens Cross Group Ltd. and $250,000 on July 20,
1998 from Overseas Foreign Holdings, Ltd. The $600,000 debt
financing was incurred to finance the final closing of the
acquisition of certain Specialized Mobile Radio assets from
Centennial Communications, Inc. The $250,000 debt financing was
obtained to pay current operating costs. The terms of the debt
financing are, maturity date: six months from issue, interest at
12% per annum due six months from issue, if the notes are not paid
within six months the interest rate increases to 18% per annum.
The transaction took place outside of the United States of America
on Grand Cayman, British West Indies, with entities that are not
residents of the United States of America pursuant to an exemption
from registration provided by Regulation S. No underwriter was
involved in the transaction and no cash commissions or discounts
other than as described herein were paid by the Company.
The following table sets forth the issuance of shares pursuant to
Regulation S exemption from registration as described above:
9/2/98 issue of .001 par value common stock in exchange for Loan
Origination Fees:
<TABLE>
<CAPTION>
CASH
PER SHARE NUMBER PAID TO OTHER NONCASH
DATE SHAREHOLDER NAME OFFER PRICE OF SHARES COMPANY CONSIDERATION
---- ---------------- ----------- --------- ------- ----------------------
<S> <S> <C> <C> <C> <C>
9/2/98 Overseas Foreign
Holdings, Ltd. $0.025 1,538,461 $0 Loan origination fees
9/2/98 Queens Cross
Group Ltd. $0.04 1,538,461 $0 Loan origination fees
---------
TOTAL ISSUE OF .001
PAR VALUE COMMON
STOCK 3,076,922
</TABLE>
The following table sets forth the issuance of debt instruments
pursuant to Regulation S exemption from registration as described
above:
<TABLE>
<CAPTION>
INITIAL CASH
NOTE INTEREST PAID TO OTHER NONCASH
DATE SHAREHOLDER NAME AMOUNT RATE COMPANY CONSIDERATION
---- ---------------- -------- -------- -------- ---------------------
<S> <S> <C> <C> <C> <C>
9/2/98 Overseas Foreign
Holdings, Ltd. $250,000 12% $250,000
9/2/98 Queens Cross
Group Ltd. $600,000 12% $600,000
</TABLE>
Exhibits
None
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<PAGE>
SIGNATURES
ComTec International, Inc.
(Registrant)
Date: September 2, 1998
s/ James Krejci
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James Krejci - Authorized
Officer, CEO and President.
8
