<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM 8-K/A
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
_______________
Date of Report (Date of earliest event reported):
MARCH 21, 1996
_______________
CHARTER COMMUNICATIONS INTERNATIONAL, INC.
(Formerly Maui Capital Corporation, a Colorado corporation)
_______________
NEVADA
(State or other jurisdiction of incorporation or organization)
33-25129-LA 84-1097751
(Commission File No. ) (I.R.S. Employer
Identification No.)
17100 WESTHEIMER
SUITE 100
HOUSTON, TEXAS 77058
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 486-8337
_________________________________________
(Former address, if changed since last report)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INFORMATION INCLUDED IN THIS REPORT
This Amendment No. 1 on Form 8-K/A amends the Registrant's Form 8-K dated March
21, 1996, to include the financial information required pursuant to Item 7 of
Form 8-K in accordance with 310(a) of Regulation S-B.
<PAGE>
PHOENIX DATA SYSTEMS, INC.
INFORMATION INCLUDED IN THIS REPORT
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENT OF BUSINESSES ACQUIRED
Financial statements of Phoenix Data Systems, Inc. (Systems),
including (i) Report of Independent Accountants, (ii) Balance Sheet at
December 31, 1995, (iii) Statement of Operations for the years ended
December 31, 1995 and 1994, (iv) Statements of Shareholders' Equity
for the years ended December 31, 1995 and 1994, (v) Statements of Cash
Flows for the years ended December 31, 1995 and 1994, and (vi) Notes
to Financial Statements.
(b) PRO FORMA FINANCIAL INFORMATION:
On March 21, 1996 Maui Capital Corporation (Maui) and Systems entered
into an agreement to exchange all of the 500,000 issued and
outstanding shares of Systems for 1,000,000 common shares of Maui and
merge Systems with a subsidiary of Maui. This transaction was
consummated on March 25, 1996. On April 9, 1996 Maui reincorporated
in Nevada and changed its name to Charter Communications
International, Inc. (Charter).
The following Unaudited Pro Forma Combined Statements of Operations
for the year ended December 31, 1995 and the three months ended March
31, 1996 give effect to the merger of Systems and Charter on March 25,
1996 in a transaction to be accounted for as a purchase. The
Unaudited Pro Forma Combined Statements of Operations are based on the
individual historical statements of operations of Charter and Systems,
and combines the results of operations of Charter, Systems and Phoenix
DataNet, Inc. (DataNet), a subsidiary of Systems, for the year ended
December 31, 1995 as if the transaction occurred on January 1, 1995;
and the three months ended March 31, 1996 as if the transaction
occurred on January 1, 1996.
Charter filed a 10-Q for the three months ended March 31, 1996 and
included in that document is an unaudited balance sheet including the
affects of the transaction. Accordingly, no unaudited pro forma
balance sheet is included herein. In addition, Charter filed an
8-K/A reporting the acquisition of DataNet as of January 8, 1996.
The pro forma results are not necessarily indicative of the actual
results that would have occurred if the merger had been made at the
beginning of the period presented. In addition, they are not intended
to be a forecast of future results, and do not reflect any synergy's
that might be achieved from the combined operations.
(c) EXHIBITS
Previously filed
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: June 4, 1996
MAUI CAPITAL CORPORATION
By: /s/ Roan L. Scraper
----------------------------------------------
Title: President
-------------------------------------------
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Phoenix Data Systems, Inc.:
We have audited the accompanying balance sheet of Phoenix Data Systems, Inc.
(the Company) as of December 31, 1995 and the related statements of operations,
changes in stockholders' equity and cash flows for the years ended December 31,
1995 and 1994. These parent company only - special purpose financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
As discussed in note 2, the accompanying parent company only - special purpose
financial statements present only the financial condition, results of
operations, and cash flows of Phoenix Data Systems, Inc. parent company only.
We have not separately reported on the consolidated financial statements of
Phoenix Data Systems, Inc.
In our opinion, the parent company only - special purpose financial statements
referred to above present fairly, in all material respects, the financial
position of Phoenix Data Systems, Inc. as of December 31, 1995 and the results
of its operations and its cash flows for the years ended December 31, 1995 and
1994 in conformity with generally accepted accounting principles.
Houston, Texas
May 29, 1996
<PAGE>
PHOENIX DATA SYSTEMS, INC.
PARENT COMPANY ONLY - SPECIAL PURPOSE
BALANCE SHEET
December 31, 1995
Assets
------
Current assets:
Cash $ 171,184
Accounts receivable trade, net of allowance
for doubtful accounts of $30,531 633,143
Receivables from employees and shareholders 67,270
Receivable from subsidiary 454,247
Supplies inventory 265,712
-------------
Total current assets 1,591,556
Property and equipment (note 3) 327,890
Accumulated depreciation and amortization (116,335)
-------------
Net property and equipment 211,555
Other assets, net 17,652
-------------
$ 1,820,763
-------------
-------------
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Trade accounts payable 1,140,939
Accrued expenses and other liabilities 97,680
Short-term note payable (note 8) 140,000
Note payable in default (note 8) 397,945
Notes payable, current portion 27,832
-------------
Total current liabilities 1,804,396
Long-term notes payable (note 8) 12,870
-------------
Total liabilities 1,817,266
-------------
Commitments and contingencies (notes 6 and 7)
Stockholders' equity:
Common stock, no par value; 500,000 shares authorized,
496,000 issued and outstanding 1,000
Additional paid-in capital 19,704
Accumulated deficit (17,207)
-------------
3,497
-------------
Total liabilities and stockholders' equity $ 1,820,763
-------------
-------------
See accompanying notes to financial statements.
<PAGE>
PHOENIX DATA SYSTEMS, INC.
PARENT COMPANY ONLY - SPECIAL PURPOSE
STATEMENTS OF OPERATIONS
For the years ended December 31, 1995 and 1994
1995 1994
---- ----
Revenues:
Sales $ 5,033,098 7,490,121
Interest income 1,979 1,915
------------- -------------
Total revenues 5,035,077 7,492,036
------------- -------------
Costs and expenses:
Cost of sales 3,393,262 6,245,331
Selling, general and administrative 1,460,483 1,328,369
Depreciation and amortization 32,774 16,298
Interest expense 41,866 14,566
------------- -------------
Total costs and expenses 4,928,385 7,604,564
------------- -------------
Income (loss) before income taxes 106,692 (112,528)
Federal income tax provision (benefit) (note 4) 26,420 (34,753)
------------- -------------
Net income (loss) $ 80,272 (77,775)
------------- -------------
------------- -------------
See accompanying notes to financial statements.
<PAGE>
PHOENIX DATA SYSTEMS, INC.
PARENT COMPANY ONLY - SPECIAL PURPOSE
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
Common stock Additional
Total
------------ paid-in
Accumulated stockholder's
Shares Amount capital
deficit equity
------ ------ -------
- ------- ------
<S> <C> <C> <C>
<C> <C>
Balance at December 31, 1993 492,000 $ 1,000 15,704
(19,704) (3,000)
Net loss for year ended
December 31, 1994 -- -- --
(77,775) (77,775)
--------- --------- ---------
- --------- ---------
Balance at December 31, 1994 492,000 1,000 15,704
(97,479) (80,775)
Issuance of common stock 4,000 -- 4,000
-- 4,000
Net income for year ended
December 31, 1995 -- -- --
80,272 80,272
--------- --------- ---------
- --------- ---------
Balance at December 31, 1995 496,000 $ 1,000 19,704
(17,207) 3,497
--------- --------- ---------
- --------- ---------
--------- --------- ---------
- --------- ---------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
PHOENIX DATA SYSTEMS, INC.
PARENT COMPANY ONLY - SPECIAL PURPOSE
STATEMENTS OF CASH FLOWS
For the years ended December 31, 1995 and 1994
1995 1994
---- ----
Cash flows from operating activities:
Net income (loss) $ 80,272 (77,775)
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization 32,774 16,298
Increase (decrease) in operating
assets and liabilities:
Accounts receivable trade 43,513 (324,880)
Receivables for employees and shareholders (1,465) (44,036)
Receivable from subsidiary (454,247) --
Supplies inventory 161,043 (230,861)
Other assets 12,360 17,677
Trade accounts payable (289,049) 747,521
Accrued expenses and other liabilities 26,773 50,018
----------- ----------
Net cash provided by (used in)
operating activities (388,026) 153,962
----------- ----------
Cash flows from investing activities - purchase of
property and equipment (90,326) (133,784)
----------- ----------
Cash flows from investing and financing activities:
Advances on notes payable 681,502 62,993
Payments on notes payable (155,156) (87,477)
Issuance of common shares 4,000 --
----------- ----------
Net cash provided by (used in) 530,346 (24,484)
investing and financing activities
Net increase (decrease) in cash 51,994 (4,306)
Cash at beginning of year 119,190 123,496
----------- ----------
Cash at end of year $ 171,184 119,190
----------- ----------
----------- ----------
Supplemental disclosure of cash flow information:
Interest paid 34,866 14,566
Income taxes paid $ 8,329 --
----------- ----------
----------- ----------
See accompanying notes to financial statements.
<PAGE>
PHOENIX DATA SYSTEMS, INC.
PARENT COMPANY ONLY - SPECIAL PURPOSE
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
(1) ORGANIZATION AND DESCRIPTION OF BUSINESS
Phoenix Data Systems, Inc., (the Company) is a Texas corporation
incorporated in 1991 with a fiscal year end of July 31. The
shareholders entered into an agreement on March 21, 1996 to exchange
all of the authorized, issued, and outstanding shares of common stock
of the Company for common stock of Maui Capital Corporation (Maui) and
to merge the Company with a subsidiary of Maui, with the Company as the
surviving corporation which thereby became a wholly owned subsidiary of
Maui. In April 1996 Maui reincorporated in Nevada and simultaneously
changed its name to Charter Communications International, Inc. (Charter).
The Company engages in the business of providing computer inter-networking
products and services to businesses and individuals.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
These parent company only - special purpose financial statements present
only the financial condition, results of operations, and cash flows of
Phoenix Data Systems, Inc. which was acquired by Maui (now Charter) in
a transaction consummated on March 25, 1996. As the financial
statements are a reflection of the business acquired in that specific
transaction, they do not include the financial activity of Phoenix
DataNet, Inc. formerly a majority owned subsidiary of the Company,
which was acquired by Maui (now Charter).
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those
estimates. Management believes that the estimates are reasonable.
REVENUE RECOGNITION
Service revenues are recognized when services are provided. Sales of
hardware are recognized when installation has occurred and no further
performance obligations remain. Sales of pre-packaged software are
recognized upon delivery of the product. Service contract revenue is
recognized over the contract term.
SUPPLIES INVENTORY
Supplies inventory consists of modems and routers as well as pre-packaged
software. All inventory is recorded as finished goods and is available for
sale. Inventories are stated at the lower of cost or market. Cost is
determined on the first-in, first-out method.
(Continued)
<PAGE>
PHOENIX DATA SYSTEMS, INC.
PARENT COMPANY ONLY-SPECIAL PURPOSE
NOTES TO FINANCIAL STATEMENTS
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Major renewals and improvements
are capitalized; minor replacements, maintenance and repairs are charged to
current operations. Depreciation is computed by applying the straight-line
method over the estimated useful lives of the related assets, which are 7
years for furniture and fixtures and 5 years for automobiles and equipment.
Leasehold improvements are amortized over the useful life or remaining
lease term, whichever is less.
INCOME TAXES
Income taxes are calculated using the asset and liability method required
by Statement of Financial Accounting Standards (SFAS) No. 109. Deferred
income taxes are recognized for the tax consequences resulting from
"temporary differences" by applying enacted statutory tax rates applicable
to future years. These "temporary differences" are associated with
differences between the financial statement amounts and the tax bases of
existing assets and liabilities. Under SFAS No. 109, a statutory change in
tax rates will be recognized immediately in deferred taxes.
FINANCIAL INSTRUMENTS
The fair value of cash, accounts receivable, accounts payable, and other
liabilities reflected in the December 31, 1995 balance sheet approximate
carrying value at that date.
CONCENTRATIONS OF CREDIT RISK
REVENUE SOURCE - The Company's primary revenue source is derived from
customizing, installing and servicing computer network products
designed for Internet use. Fluctuations in trends and tendencies in
this new and emerging market will necessarily affect future revenues.
ACCOUNTS RECEIVABLE - The Company extends credit to its customers in
the regular course of business. The customers are concentrated
primarily in the southwest United States.
(3) PROPERTY AND EQUIPMENT
As of December 31, 1995, the Company's property and equipment consist of:
Leasehold improvements $ 104,660
Furniture and fixtures 20,179
Machines and equipment 69,939
Automobiles 51,463
Office equipment 81,649
------------
327,890
Less accumulated depreciation and amortization (116,335)
------------
$ 211,555
------------
------------
(Continued)
<PAGE>
PHOENIX DATA SYSTEMS, INC.
PARENT COMPANY ONLY - SPECIAL PURPOSE
NOTES TO FINANCIAL STATEMENTS
(4) FEDERAL INCOME TAXES
The Company is included in the filing of a consolidated federal income
tax return with Phoenix DataNet, Inc. (a majority-owned subsidiary
acquired by Maui (now Charter) in January, 1996)on a fiscal year end of
July 31. The differences between income taxes computed at the Federal
statutory rate of 34% and the amount of income taxes provided for
financial reporting purposes are due to graduated rates and nominal
nondeductible expenses.
There are no significant deferred tax assets or liabilities as of December
31, 1995. Net operating loss carryforwards of the Company of $29,730 are
reduced by a valuation allowance until utilized in the consolidated income
tax return.
(5) RELATED PARTY TRANSACTION
The Company has entered into a lease for office space with a company
wholly owned by the President of the Company. The term of the lease is for
five years and began on May 1, 1994, with monthly rent of $5,200.
Additionally, the lease provides for rental escalation if the actual
operating expenses in any lease year exceeds the base operating expense
factor per square foot. Rent expense for this office space amounted to
$62,400 for the year ended December 31, 1995.
(6) OPERATING LEASE
As of December 31, 1995, the Company is obligated under lease for office
space through May 1999. Future minimum annual lease payments are as
follows:
Year ended
December 31, Amount
------------ ------
1996 $ 62,400
1997 62,400
1998 62,400
1999 20,800
Lease expense relating to noncancelable operating leases amounted to
$75,712 and $63,635 in 1995 and 1994.
(7) CONTINGENT LIABILITIES
The Company is a defendant in a legal action relating to its business and
the alleged default of the Company on its note payable to a supplier.
While the outcome of this matter cannot be predicted with certainty, in
the opinion of management of the Company, based on advice from legal
counsel, this action is expected to be resolved without significant
adverse effect on the Company's financial position.
(8) NOTES PAYABLE
The Company has entered into five note payable agreements.
(Continued)
<PAGE>
PHOENIX DATA SYSTEMS, INC.
PARENT COMPANY ONLY - SPECIAL PURPOSE
NOTES TO FINANCIAL STATEMENTS
The first note payable is a revolving credit line agreement with a bank for an
available principal sum of $150,000 and is due January 25, 1996 with interest
only payments due monthly based on a bank's Prime Rate plus 3%.
The second note payable is with a bank for an original principal sum of $50,000
and is due June 29, 1996 with monthly principal and interest payments. Interest
is variable and is based on the bank's Base Rate plus 2%.
The third note payable is with a bank for an original principal sum of $23,000
and is due December 19, 1998 with monthly principal and interest payments.
Interest is stated at 12%.
The fourth note payable is with a bank for an original principal sum of $15,277
and is due June 30, 1997 with monthly principal and interest payments. Interest
is stated at 7%.
The fifth note payable is with a supplier for an original principal sum of
$541,502 and was originally due September 13, 1996 with monthly principal
and interest payments. Interest is stated at 9%. The supplier has alleged
that the Company defaulted on this note payable in September 1995 and the
Company is in litigation with the supplier as previously discussed in note 7.
Due to this alleged default and related litigation, the Company cannot make a
reasonable determination of the fair value of this note.
All bank notes are secured by the Company's contract rights, inventory, accounts
receivable, property and equipment, personal guaranty of the President of the
Company, key-man life insurance assignment, corporate guarantee and real
property of a related company wholly owned by the President of the Company.
At December 31, 1995, the Company's future aggregate amount of maturities, is as
follows:
Year ended
December 31, Amount
------------ ------
1996 $ 425,777
1997 6,408
1998 6,822
(9) SUBSEQUENT EVENTS
The shareholders entered into an agreement on March 21, 1996 to
exchange all of the authorized, issued and outstanding shares of common
stock of the Company for 1,000,000 common shares of Charter and to
merge the Company with a subsidiary of Maui (now Charter). This
transaction was consummated on March 25, 1996.
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Historical Pro Forma
--------------------------------------------------------------------------------------
Charter
Communications Phoenix
International, Phoenix Data Systems,
Inc. (1) DataNet, Inc.(2) Inc. (3) Adjustments Combined
-------- ----------------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Revenues:
Communications services $ 112,819 441,175 -- -- 553,994
Hardware and software -- 210,466 5,033,098 -- 5,243,564
------------ ------------ ------------ ------------ ------------
Total revenues 112,819 651,641 5,033,098 -- 5,797,558
------------ ------------ ------------ ------------ ------------
Cost and expenses:
Communications services 31,438 325,412 -- 356,850
Hardware and software costs -- 143,034 3,393,262 3,536,296
Selling, general and administrative 1,361,204 321,813 1,460,483 -- 3,143,500
Bad debt expense 3,762 83,049 -- -- 86,811
Depreciation and amortization 146,681 55,475 32,774 396,981(5) 631,911
Interest expense 98,394 -- 41,866 54,024(6) 194,284
Other, net (4,736) -- (1,979) -- (6,715)
------------ ------------ ------------ ------------ ------------
Total cost and expenses 1,636,743 928,783 4,926,406 451,005 7,942,937
Income (loss) before income
taxes and minority
interest in consolidated
subsidiary (1,523,924) (277,142) 106,692 (451,005) (2,145,379)
Income tax provision (benefit) -- -- 26,420 -- 26,420
------------ ------------ ------------ ------------ ------------
Net income (loss) $(1,523,924) (277,142) 80,272 (451,005) (2,171,799)
------------ ------------ ------------
------------ ------------ ------------
Loss per common share (0.26) (0.32)
------------ ------------
------------ ------------
Weighted average shares outstanding $ 5,799,735 6,799,735
------------ ------------
------------ ------------
</TABLE>
See notes to Unaudited Pro Forma Financial Information.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
Three months ended March 31, 1996
<TABLE>
<CAPTION>
Historical Pro forma
-------------------------------------------------------------------------
Charter
Communications PhoenixData
International, Inc. (1) System,Inc. (4) Adjustments Combined
----------------------- ------------ ----------- --------
<S> <C> <C> <C> <C>
Revenues:
Communications services $ 57,843 -- 57,843
Hardware and software 50,030 1,204,890 1,254,920
Internet connection services 323,849 -- 323,849
System services -- 161,001 161,001
-------------- -------------- -------------- --------------
Total revenues 431,722 1,365,891 1,797,613
-------------- -------------- -------------- --------------
Cost and expenses:
Communications services 219,685 104,702 324,387
Hardware and software cost 37,205 1,015,753 1,052,958
Selling, general and administrative 757,735 272,264 1,029,999
Bad debt expense -- -- --
Depreciation and amortization 93,952 15,061 158,667 (5) 267,680
Interest expense 44,518 (3,346) 41,172
Other, net (938) (2,271) (3,209)
-------------- -------------- -------------- --------------
Total cost and expenses 1,152,157 1,402,163 158,667 2,712,987
-------------- -------------- -------------- --------------
Loss before income taxes
and minority interest in
consolidated subsidiary (720,435) (36,272) (158,667) (915,374)
Income tax provision (benefit) -- -- -- --
Minority interest in consolidated subsidiary 12,783 -- (12,783) (7) --
-------------- -------------- -------------- --------------
Net loss $ (707,652) (36,272) (171,450) (915,374)
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Loss per common share 0.09 0.10
-------------- --------------
-------------- --------------
Weighted average shares outstanding $ 8,282,932 9,140,075
-------------- --------------
-------------- --------------
</TABLE>
See notes to Unaudited Pro Forma.
<PAGE>
PHOENIX DATA SYSTEMS, INC.
INFORMATION INCLUDED IN THIS REPORT
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
The merger of a subsidiary of Maui (now Charter) and Systems was accounted
for as a purchase. The purchase price paid for DataNet by Charter aggregated
$525,000 and was paid using the proceeds received by Charter from the
issuance of $425,000 of 12% senior subordinated notes and a $100,000 cash
advance made to Systems in 1995.
1. Column includes historical financial information for Charter
(formerly Maui) and was obtained from unaudited financial data for
March 31, 1996 and the audited financial statements for December 31,
1995.
2. Column includes historical information for Data Net and was
obtained from the entity's audited financial statements.
3. Column includes historical financial information for Systems and
was obtained from the entity's unaudited financial data.
4. Column includes historical financial information for Systems and
was obtained from the entity's unaudited financial data.
5. Adjustment to amortize goodwill acquired over five years.
6. Adjustment to record interest expense on senior subordinated
notes.
7. Adjustment to eliminate minority interest in consolidated
subsidiary, DataNet, as minority interest was acquired by Charter
in conjunction with Systems acquisition.
