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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
(Amendment No. 1)
(Mark One)
/X/ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1996
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (NO FEE REQUIRED)
For the transition period from _____________ to ____________
Commission file number 33-25129-LA
CHARTER COMMUNICATIONS
INTERNATIONAL, INC.
(Name of Small Business Issuer in Its Charter)
NEVADA 84-1097751
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
17100 EL CAMINO REAL
HOUSTON, TEXAS 77058
(Address of Principal Executive Offices) (Zip Code)
713-486-8337
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act: None
Name of Each Exchange
Title of Each Class on Which Registered
------------------- -------------------
Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK, $.00001 PAR VALUE
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes X No .
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Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB .
---
State issuer's revenues for its most recent fiscal year: $8,231,602
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days.
The aggregate market value of such stock on March 31, 1997, based on the
average of the bid and asked prices on that date was $57,715,159.
The number of shares of the issuer's common stock outstanding on March 31,
1997 was 30,187,191.
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This Form 10-KSB/A amends the Form 10-KSB filed with the Commission on April 2,
1997, to add the information required in Items 9-12 of Part III thereof.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
The following table lists the name and age of each director and executive
officer of the Company, as well as those persons expected to make a significant
contribution to the Company during 1997. Each director has been elected to
serve until the next annual meeting of stockholders.
Name Age Position
- ---- --- --------
David G. Olson 45 Director, Chief Executive Officer, President
Patrick E. Delaney 43 Director, Chief Financial Officer
Stephen L. Schilling 33 Chief Operating Officer
Anna Sterling 42 Corporate Secretary, Vice President of Operations
William C. Comee 57 Vice President International Markets and Former
Director
William P. O'Reilly 51 Director
Stephen E. Raville 49 Chairman of the Board
Robert E. Conn 70 Director
F. Scott Yeager 45 Director
Gerald F. Schmidt 56 Director
DAVID G. OLSON. Mr. Olson has been a director and Chief Executive Officer
since September 21, 1995 and President since March 27, 1997. Mr. Olson has
an extensive background in the telecommunications industry. During 1993 and
1994, he served as a consultant to IDB Communications Group, Inc. ("IDB"), a
full service provider of international telecommunication services and
specialized broadcasting services. Prior to that time, Mr. Olson was Chief
Executive Officer of WorldCom, an international telecommunication company that
subsequently became part of IDB. Previous to that relationship, he was the
founder, Chairman of the Board, President, and Chief Executive Officer of STARS
Satellite Transmission and Reception Specialists ("STARS"), STARS de Mexico, and
the Houston International Teleport. STARS provided a full range of worldwide
satellite telecommunication services with offices in Houston, New York, Los
Angeles, and Mexico City.
PATRICK E. DELANEY. Mr. Delaney has been a director since September 12,
1996. Mr. Delaney has over twenty years of diverse business management
experience in such industries as chemical engineering, insurance and
telecommunications. As chief financial officer of Advanced Telecommunications
Corporation ("ATC"), Mr. Delaney was instrumental in growing ATC's annual
revenues from $50,000,000 to $500,000,000 in less than six years. Mr. Delaney's
other key responsibilities at ATC included directing mergers and acquisitions
activities which resulted in over fifteen transactions, as well as placing
financing in excess of $250,000,000 in debt and equity. During 1993-
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1994, Mr. Delaney served as a board member and chief financial officer for
RealCom, Inc., the second largest shared tenant services company in the
country until its acquisition by MFS Communications.
STEPHEN L. SCHILLING. Mr. Schilling joined the Company as Chief Operating
Officer on December 1, 1996. Mr. Schilling has over 11 years of experience in
the telecommunications industry. Most recently, Mr. Schilling was Senior Vice
President of Business Development and Operations for GE Capital-ResCom (GECR)
where, in addition to general operating responsibilities, he oversaw strategic
development in the areas of product development, technology direction, and
internal process engineering. While at GECR Mr. Schilling also established
several strategic business relationships with various Bell organizations.
Previously, Mr. Schilling had been with MFS/RealCom, where he held several
positions, most recently as Division Vice President/General Manager. In that
position, he was responsible for overall growth and direction of MFS/RealCom's
South Division including sales, marketing, operations and business development.
Prior to MFS/RealCom Mr. Schilling held various positions at National Data
Corporation and US Sprint Communications, Inc.
ANNA STERLING. Anna Sterling is Vice President of Operations and Corporate
Secretary. Ms. Sterling has served as Corporate Secretary of Charter since
February 1995. From October 1986 through September 1992, Ms. Sterling held a
number of sales and marketing positions with STARS and served as Director of
Corporate Relations for both WorldCom and STARS. From October 1992 to March
1993, Ms. Sterling was Corporate Customer Relations Manager for Kent Electronics
at its Houston, Texas corporate headquarters. In 1993 she joined Potere
Management, Inc. managing private investments concentrating in the high
technology arena.
WILLIAM C. COMEE. Mr. Comee served as a director from September 21, 1995,
until his resignation on February 28, 1997. Prior to his election as Vice
President of International Markets on March 27, 1997, Mr. Comee served the
Company in a consulting capacity. Mr. Comee was primarily responsible for
obtaining the Company's agreement with INTEL, the Panamanian telephone company.
Additionally, Mr. Comee is the founder and President of Charter Trading
Corporation ("CTC"), which has extensive experience in operating U.S.
Government and commercial communication systems overseas. Mr. Comee retired
from the U.S. Army as a Colonel in May 1987. He was Director of Operations,
U.S. SouthCom, and responsible for all U.S. Military activities in Latin
America. He also served as Commander of all U.S. Operational Forces in
Central America. CTC currently provides operation and maintenance services
for the U.S. Government Central American Regional Communications Systems.
Additionally, CTC is employed by the U.S. Government in several classified
contracts.
WILLIAM P. O'REILLY. Mr. O'Reilly has been a director since December 14,
1995. Mr. O'Reilly has over 20 years experience in the telecommunication
industry and has initiated several successful business ventures. In 1981, he
was the founder and Chief Executive Officer of Lexitel Corporation which is
currently part of ALC Communications, Inc. Mr. O'Reilly was also a founder and
Chief Executive Officer of Digital Signal, a leading provider of low-cost fiber
optic capacity to long distance carriers. In 1989, he acquired Military
Communications Corporation ("MCC"). MCC provides international public switched
network services via phone centers to the U.S. military worldwide. Mr. O'Reilly
recently sold MCC to LDDS.
STEPHEN E. RAVILLE. Mr. Raville has been a director of the Company since
December 14, 1995, and has been Chairman since January 28, 1997. Mr. Raville is
President of First Southeastern Corp., a private investment company. First
Southeastern Corp. was formed shortly after Mr. Raville's departure from
Advanced Telecommunications Corporation ("ATC") where he served as Chairman of
the Board and Chief Executive Officer. Prior to the merger of ATC and Atlanta
based TA Communications, Mr. Raville served as president of TA Communications.
Additionally, he was a partner in the Atlanta law firm of
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Hurt, Richardson, Garner Todd & Cadenhead. Mr. Raville currently serves on
the board of World Access, Inc., and numerous private concerns.
ROBERT E. CONN. Mr. Conn has been a director since December 14, 1995. Mr.
Conn has been the Senior Telecommunications Counsel at Shaw, Pittman, Potts and
Trowbridge in Washington, D.C. since 1984. Formerly, he held senior level legal
and business executive positions with MCI, and with WUI before it became an MCI
subsidiary. Mr. Conn's principal activities at Shaw Pittman have been in
international communications. He has represented major U.S. international
carriers, as well as the corporate users of their services, before the FCC and
other Federal and State administrative, executive, legislative, and judicial
agencies. He has also advised clients in their relations with major
telecommunications organizations, including the I.T.U., Intelsat, Inmarsat, and
foreign telecommunications regulatory and service-providing bodies. Mr. Conn
was a member of the Board of Directors of STARS, of WorldCom before it became
part of IDB and later LDDS WorldCom, and of WUI.
F. SCOTT YEAGER. Mr. Yeager has been a director since February 26, 1996.
Mr. Yeager has extensive experience in the communications industry and has
founded both Network Communications Inc., a company created to install, own and
operate a fiber optic network in Houston, Texas to compete with Southwestern
Bell Telephone Company, and YSA Inc., a systems integrator of fiber optic
components, including cable connectors, test equipment and multiplexers. In
1989, following the purchase of Network Communications Inc., by MFS, Mr. Yeager
became City Director of MFS of Houston, Inc. In 1991, he developed the concept
of high speed Data-networking over the MFS fiber infrastructure. In 1992, he
became Vice President of Sales and Distribution of MFS Datanet, Inc., where he
developed the sales organization and marketing approach of MFS Datanet. Mr.
Yeager currently serves as Vice President of Business Development of MFS Global
Services, Inc.
GERALD F. SCHMIDT. Mr. Schmidt joined the Company as a director on
February 28, 1997. Mr. Schmidt is Chairman, a director and a shareholder of
Cordova Technologies, Inc. As Chairman, he is responsible for the major policy
decisions of the General Partner and the Partnership. Mr. Schmidt is a co-
founder of Cordova Capital and also President of Cordova Capital Inc. and
Cordova Capital II, Inc., and is a shareholder and member of the Board of
Directors of each. A major portion of his career was spent with Jostens, Inc.,
a publicly-traded NYSE company on the Standard & Poor's 500, based in
Minneapolis and involved in the manufacturing and sale of motivation and
recognition products to educational institutions and companies. While there, he
was responsible for $170 million in sales through more than 500 independent
sales representatives and led a sales and design team that won the opportunity
to produce the gold, silver and bronze medals for the games of the XXIII
Olympiad held in Los Angeles. Upon leaving Jostens in 1984, he spent five years
as senior vice president of O'Neill Developments, Inc., a privately-held
merchant developer of real estate properties headquartered in Atlanta, Mr.
Schmidt left in 1988 to join Manderson & Associates, where Cordova Capital was
founded. Mr. Schmidt serves on the Board of Directors of USBA Holdings, Ltd., a
financial services company providing products and services to banks, Investors
Financial Group, Inc., a full service broker-dealer, and Premis Corporation, a
publicly traded NASDAQ company that designs, develops and markets software
systems for point of sale.
SECTION 16 COMPLIANCE.
The Company filed to register its Common Stock under Section 12(g) of the
Exchange Act on June 11, 1996 which registration became effective 60 days after
such filing. To the knowledge of the Company, the following persons have filed
late reports pursuant to Section 16 relating to their beneficial ownership of
securities of the Company:
On February 11, 1997, The Aurum Group Limited Partnership ("AURUM") and
David G. Olson (who may be deemed the beneficial owner of the Common Stock of
the Company held by Aurum) filed
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Forms 4 relating to the contribution to the Company for no consideration of
210,692 shares of Common Stock on January 28, 1997. Forms 4 were filed by Olson
and Aurum on March 17, 1997, reporting a gift of 20,000 shares of Common Stock
by Aurum which had occurred on January 3, 1997.
On November 12, 1996, Patrick E. Delaney filed a Form 4 reporting the
acquisition of 109,251 shares of Common Stock of the Company which had occurred
on October 1, 1996. Mr. Delaney also filed a Form 4 on February 11, 1997, which
reported his contribution to the Company for no consideration of 754,276 shares
of Common Stock on January 28, 1997.
On February 11, 1997, William C. Comee filed a Form 4 reporting his
contribution to the Company for no consideration of 454,265 shares of Common
Stock of the Company on January 28, 1997.
On February 13, 1997, Stephen E. Raville filed a Form 4 reporting his
contribution to the Company for no consideration of 649,205 shares of Common
Stock of the Company and the acquisition of a total of 674,000 shares of Common
Stock on January 28, 1997. On November 12, 1996, Mr. Raville filed a Form 4
reporting the acquisition of 218,503 shares of Common Stock of the Company
on October 1, 1996.
On March 27, 1997, a Form 4 was filed by William P. O'Reilly in connection
with his exercise of a derivative security pursuant to which he acquired 80,000
shares of Common Stock of the Company. The exercise occurred on September 10,
1996.
On February 28, 1997, Gerald F. Schmidt was elected to the Board of
Directors of the Company. To the Company's knowledge, Mr. Schmidt has not
yet filed a Form 3.
ITEM 10. EXECUTIVE COMPENSATION.
The following table summarizes the compensation paid by the Company to its
Chief Executive Officer and all the executive officers of the Company whose
salary and bonus from the Company for services rendered during 1996 exceeded
$100,000. Information is not included for any persons not serving as an
executive officer of the Company as of December 31, 1996. Prior year
information is included only for 1995, as for the year prior to such time
executive officers and directors of the Company did not receive compensation.
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SUMMARY COMPENSATION TABLE
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Annual Compensation Long-Term Compensation
----------------------------- -----------------------------------
Awards Payouts
----------------------- -------
Restricted Securities
Name and Principal Other Annual Stock Underlying LTIP
Position Year Salary Bonus Compensation Awards(s) Options/SARs Payouts
-------- --- ------ ----- ------------ --------- ------------ -------
<S> <C> <C> <C>
David G. Olson 1996 $100,000(4) --
Chief Executive 1995 $100,000(4) --
Officer
Roan L. Scraper 1995 $ 96,154 --
President(1) 1996 $ 75,000 $25,000 20,000(5) --
Billie C. Holbert, Jr.(2) 1995 -- --
Vice President 1996 $100,000(3) --
Operations
</TABLE>
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(1) Resigned March 27, 1997.
(2) Resigned January 17, 1997.
(3) During 1996 Mr. Holbert also received compensation from Phoenix Data
Systems, Inc., prior to its acquisition by the Company.
(4) Potere Management, Inc., a corporation affiliated with Mr. Olson,
entered into a consulting agreement with the Company in January 1994
under which the Company is obligated to pay $100,000 per annum. The
agreement runs through December 31, 1997.
(5) Mr. Scraper elected to purchase in December 1995, a promissory note in the
amount of $25,000, with associated warrant for 20,000 shares at an
exercise price of $0.70 in the offering that was then being engaged in by
the Company. The Company agreed that a portion of Mr. Scraper's salary
could be used to purchase the note and warrant, as reflected in the above
table.
No options were granted to the named executives as compensation, however, Aurum
and Potere (entities affiliated with Mr. Olson) received options as disclosed
in Item 12 hereof. Aurum and Potere exercised options/warrants for 160,000
shares during 1996 at an exercise price of $.70 per share. The aggregate value
of such shares was $260,000 as of December 31, 1996. Aurum and Potere continued
to hold options/warrants for 308,721 shares at an exercise price ranging from
$.70 to $2.00 per share and an aggregate value at December 31, 1996 of $501,671.
The Company has adopted a 1996 Nonemployee Director Stock Option Plan
pursuant to which 500,000 shares of the Company's Common Stock have been
reserved for issuance to Nonemployee directors of the Company. Options are
granted with an exercise price at fair market value on the date of grant, are
exercisable upon the one year anniversary of the date of grant and expire upon
the earliest to occur of (i) ten years after the date of grant, (ii) one year
after the recipient ceases to be a director of the Company by reason of death or
disability, or (iii) three months after the recipient ceases to be a director of
the Company for any reason other than death or disability. To date, the Company
has granted options to purchase 100,000 shares under the plan to each of the
following persons: Robert E. Conn, Stephen E. Raville, William P. O'Reilly, F.
Scott Yeager and Jerry Schmidt. The options vest in 25,000 share increments on
each one year anniversary date of election to the board of directors. The first
installment on options granted to Messrs. Conn, Raville and O'Reilly vested on
December 14, 1996; the first installment for Mr. Yeager vested on March 18,
1997; and the first to Mr. Schmidt will vest on February 28, 1998.
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ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of March 31, 1997, information regarding
the ownership of Common Stock of the Company owned by (i) each person (or
"group" within the meaning of Section 13(d)(3) of the Security Exchange Act of
1934) known by the Company to own beneficially more than 5% of the Common Stock;
(ii) each director of the Company, (iii) each of the named executive officers
and (iv) all officers and directors of the Company as a group.
March 25, 1996
--------------
Beneficial Owners Number % of Total
- ----------------- ------ ----------
DIRECTORS AND EXECUTIVE OFFICERS
William C. Comee 1,275,835(1) 4.2%
Robert E. Conn 118,188(2) *
Patrick E. Delaney 2,824,073(3) 9.3%
William P. O'Reilly 645,056(4) 2.1%
David G. Olson (5) (5)
F. Scott Yeager 205,000(6) *
Stephen E. Raville 3,083,430(7) 10.2%
Gerald F. Schmidt 0 *
5% STOCKHOLDERS
The Aurum Group
Limited Partnership 1,535,535(8) 5.1%
EXECUTIVE OFFICERS AND
DIRECTORS AS A GROUP: 9,687,117 32.1%
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(1) Includes 400,000 shares owned by spouse and 10,000 owned by child, the
ownership of which is disclaimed, and warrants to purchase 20,709 shares
at $0.70 per share and 32,000 shares at $0.70-$2.50 per share.
(2) Includes the vested portion of Nonemployee Director option of 25,000 shares
at $0.70 per share, and warrants to purchase 20,709 shares at $0.70 per
share.
(3) Includes 151,933 shares owned by Taracon, Inc., a corporation affiliated
with Mr. Delaney; 45,423 shares owned by family members, the ownership
which is disclaimed; and warrants to purchase 30,000 shares at $1.00 per
share.
(4) Includes the vested portion of Nonemployee Director option shares at $0.70,
and warrants to purchase 103,543 shares at $0.70 per share.
(5) Mr. Olson may be deemed the beneficial owner of the shares owned by The
Aurum Group Limited Partnership and Potere Management, Inc., which holds an
option to purchase 50,000 shares at $2.00 per share.
(6) Includes shares owned by minor children, the ownership of which is
disclaimed, and the vested portion of Nonemployee Director option of 25,000
shares at $0.70 per share.
(7) Includes 218,503 shares owned by First Southeastern, Inc., a corporation
affiliated with Mr. Raville; warrants to purchase 103,543 shares at $0.70
per share; the vested portion Nonemployee Director option of 25,000 shares
at $0.70 per share; and warrants to purchase 30,000 shares at $1.00 per
share.
(8) Includes options to purchase 50,000 shares at $0.70 per share and warrants
to purchase 108,721 shares at $0.70 per share.
* Less than 1%.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company has a Consulting Agreement with Charter Trading Corporation
("CTC"), a company of which William C. Comee is President and principal
stockholder, pursuant to which the Company pays CTC the sum of $100,000 annually
for consulting services, including the services of Mr. Comee. Mr. Comee is an
officer of the Company. The Company has a similar agreement with Potere
Management, Inc. ("POTERE") of which David G. Olson, the Chief Executive
Officer, President and a director of the Company, is President. Each agreement
runs through December 31, 1997. During 1996, CTC was paid $60,000 under such
agreement and received a $40,000 promissory note and warrants to purchase
32,000 shares of Common Stock at $.70 as part of the Company's private
placement of notes and warrants. Potere's compensation is described in
note 4 of the Summary Compensation Table set forth in Item 10.
CTC performs certain accounting, administrative and on-site operating
services for Charter Panama for which it received $145,000 during 1996,
pursuant to a month-to-month agreement. During 1996, the Company also sublet
approximately 2,000 square feet of office space at 11200 Westheimer, Suite 615,
Houston, Texas 77042, from CTC pursuant to a month-to-month lease arrangement
for $2,000 per month.
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The sublease terminated on March 31, 1996, and a total of $6,011 was paid to
CTC in rent.
The Company leases approximately 10,000 square feet of office space at
17100 El Camino Real, Houston, Texas 77058, from Fentress Investments, Inc., a
company of which Mr. Holbert, a former director and officer of the Company, is
the sole shareholder. SEE ITEM 2 FOR MORE INFORMATION.
In consideration for personal guaranties issued by Aurum, Stephen E.
Raville and Patrick E. Delaney for certain of the Company's bank debt, each
received options to purchase Common Stock of the Company. Aurum received an
option to purchase 100,000 shares of Common Stock at an exercise price of $1.00
per share. Messrs. Raville and Delaney each received an option to purchase
30,000 shares of Common Stock at an exercise price of $1.00 per share. Each
option is exercisable for five years from the date of grant (February 28,
1997) and contains other customary terms and provisions.
At the time of the acquisition of PDS by the Company, Mr. Holbert owned in
excess of ninety percent (90%) of the stock of PDS and was a member of the board
of directors and was an officer of the Company. The Company purchased PDS for
1,000,000 shares of the Common Stock. In addition, Mr. Holbert owned ten
percent (10%) of the stock of PDN, which was purchased by the Company for
150,000 shares of the Company's Common Stock. In connection with the
acquisition of PDS, the Company granted piggyback registration rights to the
former stockholders of PDS covering 1,000,000 shares of Common Stock in the
aggregate, including shares owned by Mr. Holbert as a result of the acquisition
of PDS and PDN.
At the time of the acquisition of OCI by the Company, Stephen E. Raville
was a member of the board of directors of the Company and, with Patrick E.
Delaney, a significant stockholder, executive officer and director of OCI.
Messrs. Raville and Delaney were both serving as directors of the Company at the
time the Company acquired WorldLink, of which they were also significant
stockholders. The consideration paid to the former stockholders of OCI
consisted of 8,999,960 shares of Common Stock of the Company, while that paid to
the former stockholders of WorldLink consisted of 1,850,000 shares of Common
Stock of the Company. Of the shares issued in the OCI and WorldLink
transactions, Mr. Raville (or entities affiliated with Mr. Raville) received
2,509,987 shares and 218,503 shares respectively. Of the shares issued in the
WorldLink transaction, Mr. Delaney (or entities affiliated with Mr. Delaney)
received 109,251 shares.
In connection with the acquisition of OCI and WorldLink, the Company
granted demand registration rights covering shares of Common Stock held by
Messrs. Raville and Delaney and shares of Common Stock owned by Aurum. The
agreement provides that the Company will register such Common Stock upon demand,
which may be made at any time after Rule 144 becomes available for the sale of
shares acquired in September 1995.
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SIGNATURES
IN ACCORDANCE WITH SECTION 13 OR 15(d) OF THE EXCHANGE ACT, THE REGISTRANT
CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY
AUTHORIZED.
CHARTER COMMUNICATIONS INTERNATIONAL, INC.
/s/ DAVID G. OLSON
By: ------------------------------------------------- Date: April 30, 1997
DAVID G. OLSON, CHIEF EXECUTIVE OFFICER/PRESIDENT
