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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): January 31, 1999
MICROTEL INTERNATIONAL, INC.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 1-10346 77-0226211
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(State or other jurisdiction of (Commission File (IRS Employer)
incorporation or organization) Number) Identification No.)
4290 East Brickell Street, Ontario, California 91761
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (909) 456-4321
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER.
ACQUISITION OF SHARES OF DIGITAL TRANSMISSION SYSTEMS, INC.
MicroTel International, Inc. (the "Company") announced that on January 31,
1999 the Company acquired approximately 1.7 million shares (the "Digital
Shares") of the then outstanding common stock of Digital Transmission Systems,
Inc ("DTS"), which shares represent approximately 43% of the outstanding shares
of DTS, from the single shareholder thereof (the "Digital Shareholder") in
exchange for 1 million shares of the Company's restricted common stock. The
Digital Shares were acquired pursuant to the exercise by the Company of a stock
option granted to it by the Digital Shareholder. The Company's Press Release
announcing the acquisition is attached as Exhibit A.
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EXHIBIT A
(BW)(MICROTEL)(MCTL)
Business Editors & High Tech Writers
MICROTEL (MCTL) ACQUIRES 43% OF DIGITAL TRANSMISSION SYSTEMS, INC. (DTSX)
Acquisition Expands MicroTel's Presence into Wireless Telecommunications Market
ONTARIO, CALIFORNIA February 2, 1999 - MicroTel International Inc. (NASDAQ Small
Cap: MCTL) today announced it has acquired 43% of the outstanding common stock
of Digital Transmission Systems, Inc. (OTC-BB DTSX) ("DTS") in a private
transaction in exchange for one million restricted shares of MicroTel common
stock. In conjunction with the MicroTel acquisition, DTS is finalizing the sale
of its wholly-owned SouthTech, Inc. subsidiary, which has accounted for DTS'
operating losses in recent periods. Following the disposal of its loss
operation, DTS is expected to operate profitably and its earnings are
anticipated to be accretive to MicroTel's per share earnings in 1999. DTS
projects calendar 1999 revenues to be approximately $12 million.
The acquisition by MicroTel and the SouthTech, Inc. sale will enable DTS to
restructure its existing $4 million subordinated debt in three steps: (1) the
purchaser of SouthTech, Inc. will assume $1 million of existing subordinated
debt; (2) $1 million of subordinated debt, plus accrued interest thereon, will
be converted into convertible preferred stock with no dividend requirement; and,
(3) the terms of the remaining $2 million of subordinated debt will be altered
to include both a lower interest rate and more favorable repayment terms over
the next five years.
Founded in 1990 and headquartered near Atlanta, Ga., DTS designs, manufactures
and markets electronic products used to build, access and monitor high-speed
telecommunications networks worldwide. The company's primary customers include
domestic and international wireless service providers, telephone service
providers and private wireless network users. DTS's products include the
FLEXT1-Registered Trademark- (domestic) and FLEXE1-TM- (international)
integrated network access product lines, the microFLEX cross connect switch
product line and FLEXSentry-TM- network control and management systems.
The existing management of DTS is expected to remain in place and Andres C.
Salazar will continue as President and Chief Executive Officer. Carmine T.
Oliva, Chairman and CEO of MircoTel is expected to become Chairman of DTS.
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Commenting on the transaction, Carmine T. Oliva stated "The opportunity to
become a significant shareholder in DTS and to participate with them in joint
sales and marketing, production and engineering programs is what drew us to this
opportunity." Andy Salazar commented "We believe this new relationship with
MicroTel will result in their substantial and continued support for our efforts
to improve operating results."
MicroTel International, Inc. is a holding company for its three wholly owned
subsidiaries - CXR Telcom Corporation in Fremont, CA; CXR, S.A. in Paris, France
and XIT Corporation in Ontario, CA. CXR Telcom Corporation and CXR, S.A.
design, manufacture and market electronic telecommunication test instruments,
voice and data transmission and networking equipment. XIT Corporation designs,
manufactures and markets information technology products, including input and
display components, subsystem assemblies, power supplies, hybrid microelectronic
and other circuits. MicroTel operates out of facilities in the U.S., France,
England and Japan.
For further information please consult MicroTel's investor Website at
http://www.microtelinternational.com.
For more information about DTS and its products, call 1-800-FLEX-DTS
(1-800-353-9387) or visit the corporate Web site at http://www.dtsx.com.
THE STATEMENTS IN THIS PRESS RELEASE RELATING TO MATTERS THAT ARE NOT HISTORICAL
ARE FORWARD-LOOKING STATEMENTS WHICH INVOLVE RISKS AND UNCERTAINTIES INCLUDING,
WITHOUT LIMITATION, ECONOMIC AND COMPETITIVE CONDITIONS IN THE MARKETS SERVED BY
THE COMPANY AFFECTING THE DEMAND FOR THE COMPANY'S PRODUCTS, PRODUCT PRICING,
MARKET ACCEPTANCE, ACCESS TO DISTRIBUTION CHANNELS AND OTHER RISKS DETAILED FROM
TIME TO TIME IN THE COMPANY'S SECURITIES AND EXCHANGE COMMISSION FILINGS. THESE
RISKS COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE ANTICIPATED OR
DESCRIBED HEREIN.
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CONTACT:
MicroTel International, Inc. - James P. Butler, 909/391-4321 (VP Finance,
CFO)
H. L. Lanzet, Inc. - Herbert or Dee Dee Lanzet, 212/687-0061
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
MICROTEL INTERNATIONAL, INC.
By: /s/ James P. Butler
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James P. Butler
Chief Financial Officer
Date: February 11, 1999
