<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 30, 2000
CHEQUEMATE INTERNATIONAL, INC.
------------------------------
(Exact name of Registrant as specified in its Charter)
Utah 01-15043 76-0279816
------------------------------- ----------- -------------------
(State or other Jurisdiction of (Commission (I.R.S. Employer
Incorporation or Organization) File No.) Identification No.)
124 Ferry Street S.W., Albany, Oregon 97321
--------------------------------------------
(Address of Principal Executive Offices)
Registrant's Telephone Number including Area Code: (541) 791-4813
330 Washington Blvd., Marina Del Rey, California 90292
------------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report.
<PAGE>
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
On December 30, 2000, Chequemate International, Inc. (the "Company")
substantially completed the terms of a Plan of Exchange (the "Plan of
Exchange"), and an Amended Stock Purchase and Sales Agreement (the "Stock
Purchase Agreement") with VisionComm, Inc. ("VCI"), a closely-held Delaware
corporation, and the shareholders of VCI (the "VCI shareholders"), dated
December 19, 2000, under the terms of which the Company acquired all of the
issued and outstanding shares of common stock of VCI, in exchange for the
initial issuance of 2,500,000 shares of the restricted common stock of the
Company to the VCI shareholders, subject to adjustment as described below, and
the issuance to the VCI shareholders, of promissory notes in the aggregate
principal amount of $2,800,000 (the "Notes"). VCI has been engaged since its
organization in 1995, in providing telecommunications and cable television
services to residents of multiple dwelling units, hotels and hospitals. As a
result of this transaction, VCI is now a wholly-owned subsidiary of the Company.
(See "ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS").
Giving effect to the issuance of the initial 2,500,000 shares of common
stock in this transaction (which is subject to adjustment, as described
below), and without giving effect to the possible exercise of Warrants,
described below, the VCI shareholders will initially hold a total of
2,500,000 shares of the Company's common stock, or approximately 15.3% of the
16,337,141 shares of common stock of the Company to be issued and
outstanding. The Stock Purchase Agreement additionally provides for the grant
to the VCI shareholders, pro rata, of warrants to purchase a total of
2,800,000 shares of the Company's common stock (the "Warrants"), at a price
of $1.00 per share, exercisable at any time prior to April 30, 2002. If all
of the outstanding Warrants were exercised, and without giving effect to any
other events, the VCI shareholders would than hold a total of 5,300,000
shares of the Company's common stock, or approximately 27.7% of the then
issued and outstanding shares of common stock of the Company. The two largest
VCI shareholders, William J. Brinkmeier, President and a director of VCI, and
Stanley H. Rojeski, a director of VCI, will initially be issued 869,406
shares and 797,632 shares, respectively, of the Company's common stock in
connection with the transaction, which will constitute approximately 5.3% and
4.8%, respectively, of the issued and outstanding common stock of the Company
(giving effect to the issuance of the initial 2,500,000 shares in the
transaction), without giving effect to the exercise of Warrants held by
Messrs. Brinkmeier and Rojeski. If Messrs. Brinkmeier and Rojeski were to
exercise all of the Warrants granted to each of them in the transaction
(973,736 shares, and 893,348 shares, respectively), and without giving effect
to any other events, they would hold approximately 10.6% and 9.8%,
respectively of the then issued and outstanding common stock of the Company.
There are no other VCI shareholders who will hold, or could hold, after
exercise of Warrants, in excess of 5% of the issued and outstanding common
stock of the Company.
Under the terms of the Stock Purchase Agreement, the number of shares of
common stock issued to the VCI shareholders is based on a value of $2.00 per
share, and is subject to a subsequent "repricing" on the "repricing date," as
defined in the Stock Purchase Agreement. If, on the "repricing date," the market
value of the Company's common stock during the five (5) business days preceding
the "repricing date," is less than $2.00 per share, the Company is required to
issue additional shares of restricted common stock to the VCI shareholders, pro
rata, in an amount necessary for the VCI shareholders to receive a total value
of $5,000,000, based on the average closing bid price(s) of the Company's common
stock during such five (5) day period.
<PAGE>
In no event, however, will the Company be required to issue in excess of
10,000,000 shares to the VCI shareholders. The most recent trade in the
Company's common stock, as of January 8, 2001, was at a price of $.3125 per
share. Therefore, unless the value of the Company's common stock increases
significantly prior to the "repricing date," it may be anticipated that the
Company will be obligated to issue a substantial number of additional shares,
and up to a total of 10,000,000 shares, to the VCI shareholders. To the extent
additional shares are issued to the VCI shareholders under this "repricing"
provision of the Stock Purchase Agreement, there would be a shift in ownership
of the Company. The "repricing date" is defined in the Stock Purchase Agreement,
as the date which is the earlier of: (a) one year from the Closing Date of the
Stock Purchase Agreement (or December 30, 2000), or (b) the date the Company
initially files a registration statement which includes the initial 2,500,000
shares issued to the VCI shareholders.
Under the terms of the Stock Purchase Agreement, the Company has agreed to
appoint two designees of VCI to the Company's board of directors, prior to
January 31, 2001, and to allow VCI to designate two individuals for election to
the board of directors for a period of five (5) years thereafter. It is
anticipated that this will be accomplished at a duly called meeting of the board
of directors scheduled in the end of January, 2001.
Under the terms of the Plan of Exchange and the Stock Purchase Agreement,
the VCI shareholders have been, or will be issued, pro rata in proportion to
their ownership interest in VCI, promissory note(s) in the aggregate principal
amount of $2,800,000 (the "Notes"). The Notes bear interest at a rate of 8% per
annum, and are due and payable in full on or before April 30, 2002 (the "due
date"). The Notes are convertible at any time on or before the due date, in
whole or in part, into shares of common stock of the Company, at a price of
$3.50 per share (the "conversion price"). In addition, the Company has the right
to convert all principal and accrued interest under the Notes into common stock
of the Company at any time prior to April 30, 2002, if the Company's common
stock is trading at a price of $7.00 or greater for any period of sixty (60)
trading days. It is also anticipated that outstanding Warrants may be exercised
(at the Warrant exercise price of $1.00 per share), through the cancellation of
all or a portion of the principal and accrued interest under the Notes. The
issuance of shares of common stock upon conversion of all or any portion of the
Notes, could also result in a shift in control in the Company.
Under the terms of the Stock Purchase Agreement, the Company has granted to
each of the VCI shareholders, certain registration rights with respect to the
initial shares and shares underlying the Warrants (hereinafter the "Shares" and
"Warrant Shares," respectively). If the Company, at any time after April 30,
2001, is eligible to use a Form S-3 registration statement, or any successor
form for registration of secondary sales of stock, any VCI shareholder may
request in writing that the Company register his or her Shares and Warrant
Shares, on such registration statement. Upon receipt of any such request, the
Company is required to notify the other VCI shareholders in writing of such
request, and each VCI shareholder may elect in writing within thirty (30) days
of such notice, to include his or her Shares and Warrant Shares in the
registration statement. The Company is required to exercise its best efforts to
effect the registration of such Shares and Warrant Shares as soon as practicable
thereafter.
As described above, the acquisition of the shares of VCI has been
substantially completed, and is subject only to the completion of a number of
ministerial acts, including the formal issuance of stock certificates and Notes
to the VCI shareholders, the obtaining of necessary consents from third parties;
filing of the Plan of Exchange with the Utah Division of
<PAGE>
Corporations, and other related events.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
GENERAL
As described in "ITEM 1. CHANGES IN CONTROL OF REGISTRANT," on or about
December 26, the Company substantially completed the acquisition of all of the
issued and outstanding shares of common stock of VisionComm, Inc. ("VCI"), a
closely-held Delaware corporation, under the terms of a Stock Purchase Agreement
between the Company, VCI and the VCI shareholders. The purchase price for the
purchase of the VCI stock, is a total of $7,800,000, payable as follows: (a)
pursuant to promissory notes issued pro rata to the VCI shareholders (the
"Notes"), totaling $2,800,000, with interest at 8% per annum, due and payable in
full on or before April 30, 2002; and (b) the issuance of a total of 2,500,000
shares of restricted common stock of the Company to the VCI shareholders,
subject to subsequent adjustment as described under "ITEM 1. CHANGES IN CONTROL
OF REGISTRANT." The Company does not currently have sufficient funds to pay the
principal and interest on the Notes.
The purchase price of VCI was negotiated between the Company and VCI, and
represents management's estimation of the value of VCI, taking into
consideration the operating results and financial condition of VCI; the current
customer base and business of VCI and its potential for growth; the perceived
synergy of VCI with the business of the Company, and other relevant factors. The
Company has not obtained an independent business appraisal or business valuation
of VCI.
BUSINESS OF VISIONCOMM
VisionComm, Inc. ("VCI") was founded in 1995 for the purpose of becoming a
provider of telecommunications and cable television services to residents of
multiple dwelling units (MDUs), hotels and hospitals. VCI's corporate
headquarters are located in St. Charles, Missouri.
VCI operates through two divisions--the CABLE DIVISION and the PAYPHONE
DIVISION.
THE CABLE DIVISION is headquartered in Clinton Township, Michigan, a suburb
of Detroit. Cable Division Operations is headed by Larry Wilk and Cable Division
Sales and Marketing is headed by Tom Nix. Mr. Wilk and Mr. Nix have over 45
years of combined experience in the private cable business. The Cable Division
manages a nationwide network of contractors, provides engineering and planning
for new installations and customer service for VCI's cable subscribers and
oversees all other aspects of the Company's cable business. Subscriber billing
and collection are handled at the St. Charles office.
<PAGE>
VCI's initial cable systems were acquired from United Satellite/USA, Inc.,
in June of 1996. Today, VCI operates private cable systems in three states
(Texas, California and Michigan) and manages two franchise cable systems in
Missouri, in total covering 6,000 passings.
VCI's PAYPHONE DIVISION is headquartered in St. Charles, Missouri. The
Payphone Division is headed by William Brinkmeier, President and a director, who
has worked in the private payphone business since 1989, when he and Stan
Rojeski, a director of VCI, founded Payphones of America, Inc. From 1989 to 1995
Payphones of America increased its operating payphones to 3,300. In 1996
Payphones of America was sold to PhoneTel Technologies, Inc. Proceeds from the
sale were used in the initial funding of VisionComm.
In 1995, VisionComm entered into a ten year contract to provide payphone
services to a major healthcare corporation's hospitals and healthcare facilities
throughout the United States, on an exclusive basis. Pursuant to this contract,
as of August 2000, VisionComm had installed 1,000 phones in 18 states.
VCI is focusing on the continued growth efforts in the private cable
division. The growth, as planned, will encompass both acquisitions and the
construction of new cable locations, with VCI's initial concentration on
acquisitions. VCI plans to target areas of the country where it has a current
presence, as it is believed this will allow for economies of scale. VCI will
also seek growth by exploring "Add On" possibilities at its existing properties,
such as cable modem services.
VCI is currently attempting to sell the Payphone Division, so it may devote
its full energies to growing the Cable Division. There can be no assurance VCI
will be successful in finding a suitable buyer, or, if a suitable prospective
buyer is found, that VCI will be able to negotiate acceptable terms.
CABLE DIVISION OVERVIEW
A private cable system servicing a multiple dwelling unit (MDU) physically
operates in a fashion identical to that of a franchise system, but on a
relatively smaller scale. It also distributes its signals to subscribers through
a network of coaxial and fiber optic strands. The private cable industry
developed in the early 1980's by application of technology from the franchised
cable television and related industries to individually owned and operated
master antenna television (MATV) systems. An MATV system is designed to provide
television reception to residents of multi-unit complexes, where individual
antennas either are not feasible or are restricted by aesthetic or other
requirements. The expansion of programming carried by satellites induces owners
of multi-unit complexes to install satellite-receiving stations at the headend
of their MATV systems to allow residents to receive both satellite and off-air
programming. The private cable industry emerged when the owners and developers
of multi-unit complexes sought independent operators to construct, develop and
operate MATV and private cable systems.
VCI's private cable television services compete with incumbent franchise
cable television operators as well as wireless cable television operators, other
private cable television operators,
<PAGE>
DBS operators and stand alone satellite service providers. VCI continues as a
matter of course to investigate new sources of programming and technologies that
may increase its range of services.
In the United States the MDU portion of the residential real estate market
is estimated to be 20 million rental units.
OPERATIONS SUMMARY
The following table is an operational summary of VCI as of December 1,
2000.
<TABLE>
<CAPTION>
CABLE TOTAL
----- -----
<S> <C>
PROPERTIES (INCLUDING FRANCHISES) 23
Homes/Doors Passed 6,605
SUBSCRIBERS 2,656
Penetration 40.21%
PAY UNITS 1,776
Penetration 66.87%
UNDER CONSTRUCTION
Properties 2
Homes/Doors Passed 800
BACKLOG(1)
Properties 7
Homes/Doors Passed 4,000
PAYPHONES
Total Installed 994
</TABLE>
(1) The Company has obtained the ROE / Franchise Agreement but the
building of the infrastructure has not been completed.
RECENT DEVELOPMENTS
MULTIPLE DWELLING UNITS (MDUS)
VCI is currently building out complexes that pass a total of 800 units in
the New Orleans and the Tulsa areas for a national REIT as shown in the under
construction section Operations Summary. This REIT passes approximately 15,000
doors in all of the properties it manages nationally. In the Dallas Metroplex
area (another VCI footprint) they have 15 complexes passing approximately 4,000
doors.
Discussions have begun with a national private cable company regarding
their MDUs in the St. Louis and Detroit regions (both VCI footprints). The St.
Louis market passes 5,769 doors and services approximately 2,616 subscribers and
the Detroit market passes 6,660 doors and services approximately 3,778
subscribers.
<PAGE>
VCI has remained in contact with the court regarding the Optel bankruptcy
proceedings. Management of VCI anticipates the opportunity to bid for complexes
in the Dallas Metroplex market along with Chicago, Southern Florida, Atlanta and
Indianapolis. The Company believes it could potentially acquire up to 50,000
doors.
In addition, numerous opportunities are continuously being brought to VCI
via personal contacts in the industry, networking, REITs, brokers and current
customers. Management plans to carefully review each opportunity to determine if
it should be pursued to supplement the Company's expansion in its existing
footprints, and expand into new markets across the country.
FRANCHISES
VCI is currently in the process of establishing a franchise footprint in
rural Northern Michigan. It is doing this through a combination of acquisitions
of existing providers and build- outs of recently acquired new franchise
agreements that need to be built.
VCI has recently negotiated an asset purchase agreement with an small
private cable company that currently provides service to 10 townships, passing a
total of 1,424 homes and currently servicing 605 subscribers. VCI is currently
in the process of securing new franchise agreements with these townships,
providing for 15-year terms. Seven (7) of the ten (10) agreements with townships
have been obtained. It is presently anticipated that the asset purchase
agreement will be finalized when the remaining three (3) agreements with
townships, have been obtained. One of the head-ends that is part of the purchase
will then be used to provide the signal for part of the build out of the seven
(7) new franchises, as shown in the backlog section of the Operations Summary,
above.
VCI has also recently entered into a letter of intent with another provider
in the same area, providing for the purchase of its system, which currently
provides service to 14 townships, passing a total of 5,110 homes and currently
servicing 2,135 subscribers.
Once these acquisitions are finalized, and VCI establishes its footprint,
it plans to approach other small providers within and around the footprint to
further solidify its position in the area. There can be no assurance these
acquisitions will be consummated, or on the terms planned by VCI, or that VCI
will be successful in negotiating acquisition terms with respect to other
providers.
MARKET OVERVIEW
MULTIPLE DWELLING UNITS
Multiple Dwelling Units (MDU's) are comprised of apartment buildings,
condominiums, trailer parks, cooperatives and townhouses. The MDU marketplace is
an attractive market for offering cable services in addition to future "add on"
possibilities, because of the population
<PAGE>
densities at the complexes.
VCI management believes VCI is able to capitalize on its long-term
relationships with MDU owners through its Right of Entry (ROE) Agreements. These
ROEs grant VCI the exclusive rights to provide cable television services to the
complex, ownership and control of the cable distribution plant and wiring to the
residential units. ROE agreements allow MDU owners to enhance the value of their
property by providing quality service to its customers, while allowing the
owners to focus on managing their properties.
Generally the ROE agreements are for a term of 10 to 15 years. The current
ROEs have an average remaining term of 6.7 years, with 35% of the agreements
having automatic renewal clauses. These renewals are at the discretion of VCI,
and not the owner. The majority of the renewal lengths are for 5 years. The
remaining ROEs have negotiated renewal clauses.
The cable services are provided through a cost-effective mix of headend,
franchise feed and DBS signals. This allows VCI to build a channel lineup suited
to the demographics of the apartment complex for the least amount of cost to the
Company.
The Company analyzes its acquisitions and upgrades the plants as necessary
to meet its engineering standards, and to provide a competitive service offering
to the complex residents.
FRANCHISES
Franchises agreements are entered into with cities, towns, townships,
municipalities and other governing bodies for the purpose of providing cable
services to its residents. Generally the agreements are non-exclusive and for a
period of 15 to 20 years.
The cable services are provided through a headend that generally supplies
signal to a multiple number of franchises.
VCI currently manages two small franchises in the St. Louis market. In
addition, it has seven (7) agreements with townships in rural Northern Michigan
that have not yet been built. VCI management believes that there is great
opportunity in building out and acquiring rural franchises in the same area,
thereby creating a large footprint in a given market.
<PAGE>
TECHNICAL SERVICES
VCI utilizes various design architectures tailored to each property when
determining the method of delivery of its video product. The Company's goal is
to maintain consistency in the construction of its cable systems and by
upgrading the systems it acquires to meet the "VisionComm" standards.
SIGNAL DELIVERY METHOD
VCI delivers its cable services through a combination of both private cable
(headend at each MDU) and franchise feeds. The following table summarizes the
number of complexes and homes /doors passed serviced by each method.
CABLE SIGNAL DELIVERY METHOD SUMMARY
<TABLE>
<CAPTION>
NO. OF TOTAL PASSINGS/
DELIVERY METHOD PROPERTIES % OF TOTAL DOORS % OF TOTAL
--------------- ---------- ---------- --------------- ----------
<S> <C> <C> <C> <C>
Private Cable
Franchise Feed 10 47.62% 3,263 52.19%
Headend 11 52.38% 2,989 47.81%
---- ------ ------ ------
Total 21 100.00% 6,252 100.00%
Franchise 2 353
Under Construction 2 800
Backlog 7 4,000
</TABLE>
BANDWITH
All new cable systems are designed to a minimum of 550 MHZ bandwith with
optional two-way plant capability thus allowing the integration of other revenue
generating services such as high speed internet and various other video
products.
CABLE BANDWIDTH SUMMARY
<TABLE>
<CAPTION>
NO. OF TOTAL PASSINGS/
BANDWITH PROPERTIES % OF TOTAL DOORS % OF TOTAL
--------------- ---------- ---------- --------------- ----------
<S> <C> <C> <C> <C>
Private Cable
Less than 450 MHZ 1 5.00% 216 3.45%
450 - 500 MHZ 4 19.00% 896 14.33%
550 MHZ and Greater 16 76.00% 5,140 82.22%
---- ------ ------ ------
Total 21 100.00% 6,252 100.00%
Franchise 2 353
Under Construction 2 800
Backlog 7 4,000
</TABLE>
PROGRAMMING
Cable programming is supplied by a variety of sources. The following table
lists the Company's major programming providers.
<PAGE>
PROGRAMMING PROVIDER SUMMARY
<TABLE>
<CAPTION>
% of Total
Programming Expenses
Programming Provider Jan-Aug 2000
-------------------- --------------------
<S> <C>
Franchise Feed 48.32%
4 Com, Inc. 24.78%
WSNet Programming 10.00%
Home Box Office 8.80%
Others (16 vendors) 8.10%
Total 100.00%
</TABLE>
SALES & MARKETING
A critical aspect of VCI's sales and marketing efforts are the development
of strategic contractual relationships with the MDU owners. These relationships
encourage the owners to promote and sell VCI's cable television services to the
MDU residents. A variety of materials are used, including but not limited to,
direct mail pieces, fliers, brochures, sales incentive gifts, resident
introduction parties, sign up packets for new lessees and sales follow up.
VCI will attempt to implement growth in its business in multiple ways.
1. By negotiating new Right of Entry and/or Franchise agreements
(Agreements) with property owners and government bodies currently being served
by other providers.
2. By negotiating new agreements for new construction.
3. By acquiring existing operators that serve MDU's and Franchises.
4. By expanding its current offering of cable television with additional
services.
CUSTOMER MANAGEMENT AND SERVICE
All customer service calls are handled by the Company's cable office
located in Detroit, Michigan. Service and repair is handled by VCI's national
network of professional providers. These trained technicians handle all routine
diagnostics and maintenance during normal business hours, and are ready to
respond to major emergency repairs at all times. VCI's Customer Service Center
is reached via an 800 number for emergency service, 24 hours a day, seven days a
week.
BILLING / CREDIT & Collections
Residents are billed directly by VCI from its corporate office located in
St. Charles, Missouri. VCI's trained staff handles billing questions, along with
credit and collection. The billing department is reached by calling an 800
number during normal business hours.
Both offices have access to customer files, billing and payment records,
customer notes and have the ability to create work orders on the Company's
proprietary software.
<PAGE>
OFFICES AND EMPLOYEES
VCI has offices in St. Charles, Missouri, Clinton Township, Michigan, and
Grand Prairie, Texas. VCI's corporate offices, located in St. Charles, Missouri,
a suburb of St. Louis, is a 9600 square foot, which is approximately 70% office
space and and 30% warehouse space. VCI has approximately five years remaining on
the current lease covering this space. VCI's President, Chief Financial Officer
and accounting manager, are located at VCI's St. Charles offices, which is also
the location of its payphone division. VCI's cable division is located in
Clinton Township, a suburb of Detroit, where VCI has offices under lease, with a
remaining term of approximately 2 years, consisting of approximately 1,800
square. VCI also maintains approximately 900 square feet of office space in
Grand Prairie, Texas, a suburb of Dallas, which houses VCI's 2 cable technicians
for the Dallas market.
VCI currently has approximately fifteen (15), consisting of its officers,
two customer service representatives, cable billing and collection employees,
and clerical personnel and technicians.
VISIONCOMM MANAGEMENT
The executive officers and directors of VCI are as follows:
William J. Brinkmeier, II President & Director
Thomas A. Nix Executive V.P. - Cable
Division & Director
Lawrence J. Wilk V.P.- Cable Operations
& Director
Charles Miller Director
Stanley Rojeski Director
James D. Thorp Director
Frank Friedlein, Jr. Vice President, Chief Financial Officer
Set forth below are biographical summaries of each of the current members
of VCI management.
WILLIAM J. BRINKMEIER, II. Mr. Brinkmeier is the President and Chairman of
the Board of VCI, and was a co- founder of VCI, along with Mr. Rojeski, Mr. Nix
and Mr. Wilk. Mr. Brinkmeier acquired the initial funding for VCI. from Berthel
Fisher Trust, which was later refinanced by AMRESCO. Mr. Brinkmeier is the
former President of Payphones of America, Inc. ("PAI"), a nationwide provider of
pay telephone service founded by Mr. Brinkmeier and Mr. Rojeski in 1989. From
1989 to 1996, PAI increased its' installed base to over 3300 payphones. In 1996,
Mr. Brinkmeier and Mr. Rojeski sold PAI to the largest private provider of pay
telephones in the United States. From 1969 to 1984, General Electric Company
("GE") employed
<PAGE>
Mr. Brinkmeier. At GE, he managed facilities in Springfield, Missouri; St.
Louis, Missouri; Davenport, Iowa; Peoria, Illinois; and Los Angeles, California.
The management positions held at GE were in customer relations and full
operational functions of a regional sales and service facility.
THOMAS A. NIX. Mr. Nix is the Executive Vice President - Cable Division,
and a director of VCI. In his position with VCI, Mr. Nix is responsible for all
of the Cable Division's sales and marketing activities. Mr. Nix has been
involved in the private cable industry for over sixteen years. Mr. Nix was a
co-founder of Datavision, Inc. ("Datavision"), in 1982. Datavision was one of
the first publicly held companies to provide security systems for multi-dwelling
units. While with Datavision, Mr. Nix and his sales team secured contracts for
over 150,000 units. In 1985, Mr. Nix founded Data Cablevision, which was one of
the first providers of private cable television equipment and services in the
United States. As President of Data Cablevision, Mr. Nix secured private cable
contracts for in excess of 22,000 passings. In addition, he secured contracts to
provide pay-per-view and free to guest cable services to over 16,000 hotel
rooms. From 1988 to 1995, Mr. Nix provided consulting, advisory and brokerage
services to the private cable industry. Mr. Nix has acquired and operated
private cable systems throughout the United States.
LAWRENCE J. WILK. Mr. Wilk is the Vice President of VCI's cable operations,
and a director of VCI. In his position with VCI, Mr. Wilk is responsible for all
aspects of VCI's cable operations. Mr. Wilk has been involved in the private
cable industry for over sixteen years. Among his many accomplishments, Mr. Wilk
participated in the engineering and implementation of the first digital
compression technology utilized in connection with Viacom's and
ScientificAtlanta's network groups. From 1979 to 1982, Mr. Wilk directed the
operations of a 100+ person field installation group for Datavision. From 1982
to1990, Mr. Wilk was an officer and director of Telecast, Inc. ("Telecast"), a
publicly held corporation providing private cable equipment and services to the
multi-family and hospitality industries. At Telecast, Mr. Wilk created and
organized national installation offices in seven states, and engineered plant
designs, prepared budgets and bills of materials for all field installation
projects. Mr. Wilk also developed and implemented systems for the technically
sound operation of "C" band services to 14,000 hotel rooms and 12,000 SMATV
passings in 21 states. From 1990 to 1995, Mr. Wilk was Vice President of
Engineering at United Satellite / America, Inc. ("USA"). At USA, Mr. Wilk
implemented a variety of operational restructuring programs encompassing
engineering, maintenance and personnel requirements for the company's 31 cable
systems located throughout the United States. From 1993 to 1995, Mr. Wilk was
director of engineering for Telecable Communications Corp. ("Telecable"), a
privately held company providing cable services to the hospitality industry. At
Telecable, Mr. Wilk developed engineering specifications and standards for the
construction of the company's pay-per-view television systems. Mr. Wilk also
ensured consistent quality construction of the company's cable systems by
engineering individual R.F. designs and bill of materials for each system prior
to construction. He also qualified, hired and trained technical field personnel
and developed a nationwide maintenance program for the servicing of Telecable's
cable systems.
CHARLES P. MILLER. Mr. Miller serves on the Board of Directors of VCI, and
previously served as the acting Chief Financial Officer. Mr. Miller is also a
partner in the law firm of Patton
<PAGE>
Boggs, L.L.P. in Dallas, Texas primarily providing legal, financial and
consulting services to the telecommunications and cable industries and to other
technology companies. Mr. Miller's clients include payphone companies, private
cable companies, long distance resellers, telecommunications equipment
manufacturers, inter-exchange carriers, operator service companies,
inter-connect companies and software development companies. In addition, Mr.
Miller serves on the Board of Directors of Great Hills Information Systems,
Inc.; Core Solutions, Inc.; and RGHC Holdings, Ltd. Mr. Miller was General
Counsel and Executive Vice President of Value- Added Communications, Inc.
("VAC"), a public telecommunications company, from April 1990 to June 1994. Mr.
Miller has also been associated with the Texas law firms of Hughes & Luce;
Jenkens & Gilchrist; and Freytag, LaForce, Rubenstein, Teofan & Falik. Mr.
Miller is a graduate of West Virginia University College of Law ( Ranked 2nd in
graduating class) and a member of the Order of the Coif.
STANLEY ROJESKI. Mr. Rojeski, a co-founder of VCI, serves as a member of
the board of directors. Mr. Rojeski co-founded, with Mr. Brinkmeier, Payphones
of America, Inc. Mr. Rojeski resides in Memphis, Tennessee.
JAMES D. THORP. Mr. Thorp is an outside director of VCI. Mr. Thorp was the
fund manager for Berthel Growth Income Trust I, a Delaware Investment Trust
which provided some of the early stage financing for VCI. Mr. Thorp is currently
a principal of Aavin, L.L.C. Venture Capital, a venture fund based in Cedar
Rapids, Iowa.
FRANK FRIEDLEIN, JR. Mr. Friedlein joined VCI in July 1998, as its' Vice
President and Chief Financial Officer. In this capacity, Mr. Friedlein is
responsible for all accounting, budgeting, bank relations and M.I.S. activities.
Mr. Friedlein implemented VCI's cable billing system and worked with programmers
in developing a work order module, which was integrated with the billing
package, allowing the program to be utilized online by the company's billing
department, collections and CSRs simultaneously. From 1993 to 1998, Mr.
Friedlein was employed by the Vernon L. Goedecke Companies. In 1998, Mr.
Friedlein was Vice-President and chief financial officer of the parent company,
Vernon L. Goedecke. 1996 to 1997, Mr. Friedlein was Vice-President and
Controller of New Buffalo Corporation, an importer of consumer (Do it Yourself)
hand tools. 1993 to 1996, Mr. Friedlein was manager of operations for Spirit of
St. Louis Software Company. Spirit developed both instructional sport and custom
multimedia CD-ROMs. From 1985 to 1993, Mr. Friedlein was self-employed providing
accounting services in addition to installing computer systems for his clients.
From 1984 to 1985, Mr. Friedlein was employed as controller of Gross Engineering
Company. From 1975 to 1984, Mr. Friedlein was Vice-President and Controller of
Brooks Erection & Construction Company. Mr. Friedlein graduated from St. Louis
University with a degree in accounting.
Under the terms of the Stock Purchase Agreement, the Company has agreed
that the VCI shareholders, may designate, for a period of five (5) years from
Closing, two (2) individuals for election to serve on the Company's six (6)
member board of directors, which would increase to three (3) designees if the
Company expands its board to seven (7) members. The VCI shareholders have not
designated the two individuals who will initially be appointed to serve on the
Company's board of directors. However, it is anticipated that these individuals
will be officers of VCI, and will be appointed at a meeting of the board of
directors of the Company before the end of January, 2001.
<PAGE>
EMPLOYMENT AGREEMENTS
Under the terms of the Stock Purchase Agreement, the Company has entered
into employment agreements with William J. Brinkmeier, Thomas A. Nix, Lawrence
J. Wilk, and Frank Freidlein, Jr. Each of the employment agreements are for a
term of four (4) years, and may be terminated by the Company due to death,
disability for a period of thirty (30) days, or for "cause," as defined in the
employment agreements. Each of the employment agreements provide that the
employee may terminate the agreement upon sixty (60) days written notice. Each
of the employees have been granted non-qualified options under his employment
agreement, entitling him to purchase up to 125,000 shares of the Company's
common stock, at any time after six months from the employment date, subject to
shareholder approval, in five separate blocks of 25,000 shares, exercisable at
prices of $2.00, $4.00, $8.00, $16.00 and $28.00, respectively. The employment
agreements for Messrs. Brinkmeier, Nix and Wilk, provide for an annual salary of
$100,000, and the employment agreement for Mr. Freidlein provides for an annual
salary of $90,000. Each of the employees are entitled to participate in all
bonus, incentive, stock option, savings and retirement plans, policies and
programs made available by the Company to peer employees.
ITEM 5. OTHER EVENTS
In November, 2000, in an effort to consolidate operations and reduce costs,
the Company moved its corporate offices to 124 Ferry Street, S.W., Albany,
Oregon, and closed its corporate offices at 330 Washington Boulevard, Marina Del
Rey, California. In October and November, 2000, the Company closed its
production facility and other offices, and is currently conducting all of its
operations from its Albany corporate offices, together with a warehouse facility
in Chatsworth, California.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
Pursuant to subparagraphs (a)(4) and (b)(4) of Item 7 of Form 8-K, the
financial statements of VCI and the pro forma financial information required
under Item 7, shall be provided by amendment to this Form 8-K no later than
sixty (60) days after the date of filing of this initial Form 8-K.
b) EXHIBITS.
The following exhibits are filed as part of this report:
<TABLE>
<CAPTION>
Exhibit No. SEC Ref. No. Description/ Title of Document
----------- ------------ ------------------------------
<S> <C> <C>
1 2 Stock Purchase Agreement, as
amended, dated December 19, 2000
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has caused this report to be
signed on its behalf by the undersigned, hereunto duly authorized.
REGISTRANT:
CHEQUEMATE INTERNATIONAL, INC.
Date: January 8, 2001 By: /s/ Michael Heil
-------------------------------------
Michael Heil, Chief Executive Officer
