UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF
1934 (Fee Required)
For the fiscal year ended June 30, 1995
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or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from N/A to N/A
--- ---
Commission File Number: 1-13134
AMERICAN NORTEL COMMUNICATIONS INC.
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(Name of small business issuer as specified in its charter)
WYOMING 87-0507851
- --------------------------------- -------------------------------------------
State of incorporation I.R.S. Employer Identification Number
7201 EAST CAMELBACK ROAD, SUITE 320, SCOTTSDALE, AZ 858251
(Address of principal executive offices) (Zip code)
(Issuer's telephone number) (602) 945-1266
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Securities registered pursuant to Section 12(b) of the Act
Title of each class Name of each exchange on which registered
- ----------------------------------- -----------------------------------------
Securities registered pursuant to section 12(g) of the Act:
COMMON STOCK, NO PAR VALUE
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Check whether the issuer (1) 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. [ X ] Yes
[ ] No
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B is not 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. $ 326,843
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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. (See definition of affiliate in Rule 12b-2 of the Exchange Act.)
- ----
The aggregate market value of the voting stock was:
<TABLE>
<CAPTION>
Weighted Average
Type of No. of Market Price per Aggregated No. of
Date Share Shares Share Value Votes
- ------------- --------- --------- ------------------ ----------- ---------
<S> <C> <C> <C> <C> <C>
June 30, 1995 Common 3,023,132 $ 0.02 $ 60,463 3,023,132
Preferred 3,300,000 -0- -0- 3.300,000
----------- ---------
$ 60,463 6,323,132
=========== =========
</TABLE>
*The common share price is the average trading price on the NASDAQ OTC.
<PAGE>
AMERICAN NORTEL COMMUNICATIONS INC. AND SUBSIDIARIES
FORM 10-KSB
Index
PART I
Item 1. Description of Business.
Item 2. Description of Property.
Item 3. Legal Proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
Item 6. Management's Discussion and Analysis or Plan of Operation.
Item 7. Financial Statements
Item 8. Changes In and Disagreements With Accountants
on Accounting and Financial Disclos-ure.
PART III
Item 9a. Directors and Executive Officers, Promoters, and Control Persons.
Item 9b. Compliance with Section 16(a) of the Exchange Act
Item 10. Executive Compensation.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
Item 12. Certain Relationships and Related Transactions.
PART IV
Item 13. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
SIGNATURE PAGE
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
History
The Company was originally incorporated in British Columbia, Canada on
May 17, 1979. In conjunction with a one for five consolidation, the
Company's name was changed to Coldspring Resources Ltd. on June 4, 1987.
In 1987, the Company was inactive and was classified as dormant under the
rules of the Vancouver Stock Exchange. The then current management organized
a reverse take-over by a number of limited partnerships and private companies
which were engaged in the mining development and exploration business and who,
on July 14, 1987, transferred their mining assets into the Company for
Treasury shares on July 14, 1987. The Company is no longer in the mining
business, and has written off or sold its mining assets. In conjunction with a
one for ten consolidation, the Company's name was changed to Isleshaven
Capital Corporation on July 14, 1989. In 1990, under its current management,
the Company became active in the long distance telecommunications business.
The Company changed it name to NorTel Communications Inc. on June 17,
1991. In conjunction with a one for ten consolidation, the Company's name was
changed to American NorTel Communications Inc. on May 11, 1992. The Company
filed its Certificate of Registration and Articles of Continuance with the
Secretary of State of the State of Wyoming and became a Wyoming corporation
effective February 9, 1993. The Company currently operates only in the
telecommuni-cations business, providing long distance telephone service in
combination with additional related services in the United States and a
growing number of foreign countries.
Prior to September 14, 1994, the Company conducted almost all of its
telecommunications business through NorTel Communications Inc. ("NorTel-US"),
a wholly-owned Wyoming corporation that is also headquartered in Salt Lake
City, Utah. A new subsidiary Mexitech Corporation Ltd. had no assets or
operations as at June 30, 1994. All former subsidiaries of the Company,
including NorTel-US, COOP and NorTel CCI, were not active and were sold for
nominal consideration or were dissolved.
On September 14, 1994 American NorTel Communications Inc. and NorTel
Communications Inc. filed petitions under Chapter 11 of the U.S. Bankruptcy
Code, under case numbers 948-24604 and 948-24605 respectively in the United
States Bankruptcy Court, District of Utah, Central Division. The American
NorTel Communications, Inc. bankruptcy proceeding was subsequently converted
to a Chapter 7 proceeding and was thereafter dismissed on February 7, 1995.
NorTel-US was sold June 27, 1995 for nominal consideration to an affiliate of
former directors, leaving American NorTel as the sole surviving entity.
The Company's Common Stock was approved for listing on the Boston Stock
Exchange effective June 22, 1994. However, it was delisted on January 20,
1995 for failure to meet maintenance requirements. The Common Stock had
previously been listed for trading on the Vancouver Stock Exchange from
September 18, 1980 until August 15, 1994. The Company's common stock is also
traded in the over-the-counter market and was quoted in the National
Association of Securities Dealers Inter-dealer Quotation System ("Electronic
Bulletin Board") under the NASDAQ symbol "ARTM". See "Market Information"
under "Market for Common Stock and Related Stockholder Matters."
Acquisition of Majority Interest
On June 27, 1996 Kenneth D. Rogers, William H. Rogers and John H. Picken,
as the board of directors of the Company and pursuant to discussions with
William P. Williams, Jr., president of Wilcom, Inc., a Texas corporation,
agreed to turn over management and control of the Company to Wilcom, Inc. for
the purpose of reorganizing the Company and reestablishing the Company's
business operations. In connection therewith, these directors resigned and
William P. Williams, Jr. was elected as the sole member of the board of
directors and appointed president of the Company. As part of the arrangement,
the former directors assigned all of their interest in the Amended Managers
Agreement and the Earn-out Preferred Share Agreement between NorTel CCI, Inc.,
themselves and the Company to Wilcom, Inc., thereby transferring 3,300,000
shares of the Preferred A Series One Preferred Stock, each share with one vote
on all matters submitted to the shareholders, to Wilcom, Inc. and assuring
Wilcom, Inc. voting control of the Company. NorTel CCI was controlled by the
former directors. Further, NorTel CCI, Inc. assigned approximately 500,000
shares of common stock of the Company owned by it to Wilcom, Inc. On that
same date, Wilcom, Inc. and the Company rescinded those agreements by mutual
consent and canceled the 3,300,000 shares of Preferred A Series One Preferred
Stock in consideration for the re-establishment, re-designation and
re-issuance of 3,300,000 shares of Preferred A Series One Preferred Shares
("New Preferreds") to Wilcom, Inc., each New Preferred entitled to one vote
and convertible into one share of common stock at any time after the bid price
for the Company's common stock has averages more than $1.00 for thirty
consecutive trading days on the NASD OTC Bulletin Board.
Change in Control of Management
The Company accepted the resignations of Kenneth D. Rogers, William H.
Rogers and John H. Picken as officers and directors effective June 27, 1996
with the appointment of William P. Williams, Jr. as sole director and
president. This change in control of management was effected by an
arrangement between former management and Wilcom, Inc. and its president
William P. Williams, Jr. for the purpose of trying to reestablish the
Company's business operations.
Other Matters
The Company has no employees and pays no salaries, wages, fees or similar
compensation. The Company's administrative requirements, such as they are,
were handled through June 27, 1995, without charge by Bob Stenquist, the
Company's controller.
Resignation of Officers and Directors
On June 27, 1995 the Company accepted the resignations of Kenneth D.
Rogers, William H. Rogers and John H. Picken. William P. Williams, Jr. was
elected as the sole member of the Board of Directors and appointed President,
CEO and Secretary.
Business of Issuer
The Company is a Federal Communications Commission certified long
distance carrier. The Company ceased all operations as of December 31, 1994
as a result of its bankruptcy filling and currently owns no
telecommunica-tions equipment or switches, but retained ownership and rights
to use its proprietary telecommunications software. The Company formerly
rented the networks of major carriers (at a wholesale or discounted price) to
deliver long distance telephone calls and faxes. The Call-back system
provides much lower cost U.S.-based international calling rates to
foreign-based companies as an alternative to rates provided by local
monopolies. Call-back service allows a Customer in a foreign country to use
foreign facilities to dial a telephone number in the U.S. and receive dial
tone at a switch at the Company's U.S. location, which the Customer can then
use to complete the call to any foreign country. The amount Customers pay the
Company for long distance and the value-added services, less the usage rent
paid to carriers, is the Company's gross margin to pay its sales costs,
overhead, and provide its profit.
Telecommunications. The Company is certified by the Federal
------------------
Communications Commission of the United States (the "F.C.C.") and is
authorized under Section 214 of the Communications Act of 1934 to provide
international switched services by reselling the international switched
services of other carriers. On April 12, 1994, the F.C.C. upheld the legality
of granting applications to resell the public switched services of other U.S.
carriers on a "Call-back" basis.
In order to provide long distance telephone service to foreign Customers,
the Company rents network services from national, regional, and international
carriers. The choice of carriers used has varied over time. In contrast,
since the average voice call is over five minutes in length, to capture the
lowest overall price the Company used carriers, such as Sprint, that charge a
higher first minute rate and lower subsequent rate. If the Company intends to
recommence business operations, it intends to choose carriers with
least-cost-routing.
The Company has developed its own proprietary micro-computer based
switching, voice processing and voice Messaging software. The Company can
create customized telecommunications systems in response to Customer needs.
The Company intends to continue to complete the development of future products
which can contribute to short term revenues such as improved fax distribution,
international debit cards, and on-line hotel phone billing systems. Since the
Company develops its own software, the Company has all the software details or
"source/access codes" which enables the Company's programmers to adjust or
modify the software for a network system change or for a new use for a group
of Customers, when necessary. The source/access codes are not always
available when the software is purchased from an outside source, and thus the
Company's ability to adjust or modify the software provides a technological
edge in system customization, that may not be otherwise possible. The Company
is currently focusing on improvements to its international system, but has not
set any specific time tables for the introduction of any specific future
products.
The Company has the ability to do its own billing, using its own
proprietary software system. All billing and switching requirements were
handled by a networked micro-computer based system. The Company's intention
in creating a micro-based system is to reduce the cost, time and complexities
of both growth and future changes.
Formerly, the majority of the Company's volume was international-related
business based on its Call-back system.
Competition. The telecommunications business is extremely competitive,
with very large, well-financed long distance carriers and local telephone
monopolies (in the U.S. and in foreign countries) dominating. Margins for
agent-type sellers or resellers of regular long distance products in the
United States, such as 1-plus outbound and 800 lines, are slim and subject to
frequent price and service changes. The large carriers offer pricing to larger
U.S. Customers that the Company cannot currently match and at the same time
maintain acceptable margins. Accordingly, at this time, the Company does not
intend to provide regular long distance service within the USA to large
organiz-ations.
To the extent the Company can rent the networks of regional carriers at
less than from the national long distance carriers, the Company will attempt
to offer rates to small and medium size U.S. businesses for regular long
distance service in the U.S. that are approximately 25% below those of AT&T,
Sprint and MCI, and yet maintain a gross margin of approximately 25%. This
business is not likely to develop significantly due to the absence of funding
for commissions for direct selling.
AT&T and the other major long distance carriers are prevented from
providing basic phone services directly to U.S. Customers to the extent this
is reserved for the monopoly Regional Bell Operating Companies ("RBOC") and
therefore such value-added products as local voice mail. As well, RBOC's are
generally legally prevented from providing long distance and information
service, and therefore such value-added services as 800 or long distance voice
mail. Due to contracts with the telephone monopolies of most countries, the
large international carriers generally do not provide international calling
services directly to the Customers in those countries nor do the international
monopolies deliver calls outside their countries.
The value-added services the Company provides include international
Call-back and 800-redirected calling, voice mail, telephone calling cards,
automated attendants, billing services and call redirecting. These services
are available individually from other vendors. However, the Company's
targeted market niche is to provide a package or combination of its version of
these value-added services and particularly focus on business that allies
with large carriers, rather than competes directly with them. For example,
AT&T, MCI, Sprint, DB Cable & Wireless and other "carriers-carriers" are not
in the "Call-back" business; but when the Company uses Sprint to deliver
calls to certain foreign countries, the foreign phone monopoly usually grants
Sprint some reciprocal business. The Company intends to package or assemble
these value-added services along with training and long distance telephone
services to create customized telecommunications systems for its Customers.
The intent is to help the Company's Customers improve both costs and the
efficient use of the time of their key employees. The Company believes that
its package of products and services is sufficiently attractive, and therefore
the Company expects to capture a sufficient amount of business in these
segments of the market to achieve economies of scale.
Marketing Strategies and Product Description. The Company plans to
------------------------------------------------
offer two primary "value-added" services or product areas that will be the
focus of the Company's marketing strategy:
(a) International Calling, including the "Private Line" systems with
Telephone Calling Cards; and
(b) Voice Messaging, including Voice Mail, Core Services, and
Advertising and Services Systems.
Because of the uncertainty of future costs from major carriers and
current and potential competition, the Company does not intend to rely solely
on the sale of regular long distance services at prices below those of the
major carriers, or to depend on products that cannot be sold unless the
underlying long distance is at a very large discount. By providing customized
systems and value-added services, the Company can also provide many of the
regular long distance products that are tied into the system without
excessively discounting the price of the long distance. However, a discount
for the long distance will generally be used to promote the sale of the
packages of long distance services along with the value-added products and
services.
In general, the Company applies its own programming, voice processing
technologies and computer and switch technologies, to develop each of its
products or services to maximize any advantage it can create for users of its
products. Some of these services, such as a 900 Line Services System Voice
Processing Tree, cannot be used by a Customer without the Company customizing
one or more of these services into a package that is unique for that Customer
group. The Company has oriented much of its programming efforts to modularize
each service or the major components of each service, so that a custom package
of services can be assembled by simply connecting the relevant pre-built
building blocks.
After certain value added features are modularized, some services, such
as the international "Call-back" system or basic voice Messaging, do not
require customization to add Customers, and are sold directly to add Customers
one at a time. Virtually all Customers become Customers because of the
value-added services, but the monthly billing to a Customer does not
differentiate between a normal long distance call and a long distance call
that accesses a value-added service, such as voice mail, U.S. 800 calling, or
uses a value-added service such as a redirected call or international
"Call-back".
International Calling is expected to be the Company's major revenue
generator and its focus in the near future The Company proposes to market two
systems for international calling. In both systems, the Customer would dial
directly to the Company's switch on one of several dedicated lines. Depending
on his location and the difference between the cost to call locally to the
Company's switch compared with the cost to call from the switch to the
destination number, the Customer would be redirected or connected through the
Company's switches to the destination number. In the basic "Call-back"
system, the Company's software will enable the Customer in a foreign country
to cause both ends of the call to originate from the Company's switch. Aside
from cost savings, the two methods are intended to make calling more
convenient from countries and areas where operator assistance is normal or
connection via regular long distances switches is less reliable and more
expensive than via dedicated lines.
The Company can direct calls to any country having a national telephone
system - approximate-ly 180 countries. With its International 800 and
"Private-line" or "Call-back" systems and its ability to rent the networks of
at least one of the major carriers as well as a specialist carrier, the
Company can give callers direct-dialing from any country where any of its
carriers have lines. With its new micro-based switching the Company connects
calls using the least cost carrier or route not only by country, but also by
time of day, and by nature or expected length of call, such as a fax as
opposed to a voice call.
The Company has developed its own proprietary voice Messaging and voice
processing system. Almost all existing competitor systems are voice mail only
and are designed to provide a single company an insulated internal system.
These systems are very difficult to convert to a large integrated system of
users, and in that regard they have limited capacity for new concepts and
users. The Company's system was specifically designed to be a large
integrated system with diverse users, and to enable the addition of new
features over time. The Company's system allows many companies and
individuals to be combined on one large local network with full networking
capabilities amongst everyone on a network. In the future, the regional Bell
operating companies ("RBOC's") may become more aggressive in selling local
voice mail utilizing their advantage of no local access charges to the end
user and perhaps other voice mail vendors. Similarly, MCI and other major
carriers may become more aggressive in selling long distance voice mail
utilizing their own lower cost long distance access. Currently, the entry of
the RBOC's and MCI into voice mail has expanded the market by enhancing the
credibility of the product. If these giants focus more on this aspect of the
communications industry, the Company may find it more difficult to compete,
especially for larger Customers.
Compared to reselling regular long distance services in the U.S., Voice
Messaging is a very desirable product. The gross profit or margins are
approximately 85% after operating costs but before capital recovery compared
to less than 33 1/3% before capital recovery for most U.S. long distance
reselling. The key difference is that Voice Messaging box rentals do not
involve line charges to a third party carrier, such as Sprint.
Research and Development. The Company intends to continue focusing on
-------------------------
improvements to its international system, but has not set any specific time
tables for the introduction of any specific future products. The Company is
refining and finalizing the development of a Hotel Private Line system which
essentially gives non-US hotels the benefits of lower U.S.-based international
long distance rates to all over the world. This substantially reduces a
hotel's costs for International and U.S. fax and voice calls.
In prior years, the Company earned revenues from the mining business and
consulting fees and minor fees from tax oriented financial instruments. None
of these apply in the current fiscal year and none are expected in the future.
The Company's sole focus is telecommunications, particularly its "Call-back"
systems. Prior to mid-1992, the Company has earned management and consulting
fees for providing services to Canadian limited partnerships and joint
ventures as well as others. These entities were trying to apply technology
developed by the Company to international markets that the Company could not
afford to pursue at that time. The Company charged fees to these syndicates
for management time spent to assist them. The more successful these
syndicates are, the greater will be the international Customer base that will
contribute regular revenue each month, not only for these syndicates, but also
the Company. Virtually no consulting fees were earned since mid-1992 as
Canadian tax polices reduced the financing for these syndicates. It is
unlikely that these syndicates will devise new ways to obtain sufficient
funding that the Company will earn consulting fees from them in the future.
Subsequent Events
On September 14, 1994 American NorTel Communications Inc. and NorTel
Communications Inc. filed petitions under Chapter 11 of the U.S. Bankruptcy
Code, under case numbers 948-24604 and 948-24605 respectively in the United
States Bankruptcy Court, District of Utah, Central Division. The American
NorTel Communications, Inc. Bankruptcy proceeding was subsequently converted
to a Chapter 7 proceeding and was thereafter dismissed on February 7, 1995.
As a result of the bankruptcy filings, the Company's business operations were
effectively ceased until June, 1995. The Company subsequently reestablished
business operations and relocated its principal offices to 7201 East Camelback
Road, Suite 320, Scottsdale, AZ 858251.
ITEM 2. DESCRIPTION OF PROPERTY
Property and equipment consisted primarily of office equipment and
computer equipment owned by NorTel CCIThese assets were put into storage when
the Company ceased operations in December of 1994. The bankruptcy trustee is
currently in the process of selling the property and equipment. The estimated
value is less than $10,000 due to the age of the equipment and its condition.
NorTel-CCI was sold for a nominal cost to former directors of the Company.
The costs of internally developed telecommunication software were
capitalized upon the establishment of technological feasibility. The
capitalized costs of certain software were written off in 1994 since the
software was not completed and the technology was deemed to be outdated.
The Company is no longer in the mining business and divested its
remaining nominal mining assets as part of the Lynbrook Settlement Agreement
in June 1994.
ITEM 3. LEGAL PROCEEDINGS
On September 14, 1994 American NorTel Communications Inc. and NorTel
Communications Inc. filed petitions under Chapter 11 of the U.S. Bankruptcy
Code, under case numbers 948-24604 and 948-24605 respectively in the United
States Bankruptcy Court, District of Utah, Central Division. The American
NorTel Communications, Inc. Bankruptcy proceeding was subsequently converted
to a Chapter 7 proceeding and was thereafter dismissed on February 7, 1995.
Other than as set out above, there are no known pending or threatened
material legal proceedings to which the Company is, or is likely to be, a
party or of which any of its properties are or are likely to be subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company submitted no matters to a vote of its security holders during
the fiscal year ended June 30, 1995.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The Company's Common Shares were listed on the Boston Stock Exchange June
22, 1994 under the symbol "ANL" and are presently traded in the United States
in the over-the-counter market, and quoted in the National Association of
Securities Dealers Inter-Dealer Quotation System ("Electronic Bulletin
Board") under the NASDAQ symbol "ARTM". Additionally, the Company's Common
Stock had been previously listed on the Vancouver Stock Exchange ("VSE") under
the symbol "ANM" from September of 1980 until its delisting in August of 1994.
Trading on the VSE was temporarily suspended in early 1994 pending the
Company updating its filings. The delay in filing was due to the fact that
these were the Company's first financial statements in U.S. dollars and first
statements to be in accordance with US Generally Accepted Accounting
Principles. As well, it was the Company's first time with a U.S. auditor, and
included the 1993 Annual Report on Form 10K, and the September 30, 1993 and
December 31, 1993, Form 10Q. Due to the Chapter 11 petitions on September 14,
1994 the trading of the Company's shares on the BSE was temporarily suspended
on September 14, 1994 and thereafter the common stock was delisted on January
20, 1995.
The following table sets forth for the periods indicated, the high and
low bid quotations for the Company's Common Stock as reported by the Vancouver
Stock Exchange Review (in Canadian Dollars) with adjustments to reflect the
reverse stock splits, including the 10 for 1 Share Consolidation which
occurred on May 11, 1992. These quotations are believed to represent
inter-dealer quotations, without adjustment for retail mark-up, mark-down or
commission and may not represent actual transactions. The exchange rate used
to determine the U.S. dollar numbers are the monthly rates published in the
Federal Reserve statistical release "Foreign Exchange Rates."
<TABLE>
<CAPTION>
US $HIGH BID US $LOW BID
------------ -----------
<S> <C> <C>
1995
- -----------------------
Second Quarter .02 .02
First Quarter .12 .02
1994
- -----------------------
Fourth Quarter .25 .01
Third Quarter .33 .12
Second Quarter 1.45 0.87
First Quarter 1.61 1.32
1993
- -----------------------
Fourth Calendar Quarter 2.63 1.43
Third Calendar Quarter 2.72 1.08
</TABLE>
At June 30, 1995, there were 3,023,132 shares of Common Stock of the
Company outstanding. See "Security Ownership of Certain Beneficial Owners &
Management" which discloses significant shareholders and the shareholdings of
the directors and officers.
The Company has never paid dividends on any of its shares and does not
intend to pay Common Stock dividends. As a result of the large accumulated
deficit, no payment of dividends may be paid until profits are earned for
several (at least 2) consecutive years, in most circumstances. The terms of
debt instruments and preferred shares do and will limit the payment of
dividends on Common Stock under many circumstances.
The Transfer Agent and Registrar for the Company is Montreal Trust at 2nd
Floor, 510 Burrard Street, Vancouver, British Columbia.
ITEM 6.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following factors make period to period and trend analysis of the
Company's statements difficult without reference to these factors which create
non-comparability.
(1) Change in Currency and GAAP. The Company's audited financial
---------------------------
statements for the years ended June 30, 1994 and 1993, are prepared in U.S.
Dollars and in accordance with U.S. generally accepted accounting principles
("GAAP"). All prior audited statements were prepared in Canadian dollars and
in accordance with Canadian GAAP. Most historical numbers have been easily
converted by the Company from Canadian dollars and GAAP to U.S. dollars and
GAAP. However, with respect to some conversions, the best that can be done
without incurring unreasonable costs has been to make allocations or
estimates. Due to this cost and time difficulty, the historical numbers have
not been given by the Company to either the former Canadian auditor or the
current U.S. auditor to retroactively audit the numbers in U.S. dollars and
U.S. GAAP. Because of the other major changes in the Company's affairs, which
make the historical comparability of the Company's financial data less
meaningful, some of which are set forth below, incurring the time and expense
to reconstruct audited historical numbers in Canadian dollars and GAAP into
auditable form in U.S. dollars and U.S. GAAP is not merited. See Item 6,
"Differences Between US GAAP and Canadian GAAP".
(2) Bankruptcies & Write-downs. The TravelTel, Inc. bankruptcy on
-------------------------
January 29, 1993, and the subsequent sale of the subsidiary's for $1.00; and
the large write-offs of the Company's related assets impair comparability.
For example, all of the Company's software ($1,690,466 US) which used
TravelTel's equipment or TravelTel's software was written off along with
$740,000 of other TravelTel related assets. The Chapter 11 bankruptcies of
American NorTel Communications Inc. and its key subsidiary on September 14,
1994 caused write-downs of $3,540,446 in the year ended June 30, 1994.
(3) Mining Equipment. Mining equipment was generally leased until
---------------
1990, at which time equipment was acquired with the proceeds of a private
placement related to the Rio Tigre acquisition. In the last quarter of 1993,
this equipment was written down by $500,000 to a balance of $25,953 after 1993
amortization; because of legal uncertainties relating to the Rio Tigre
property. See Item 3, "Mining Property Title". The remaining equipment was
sold at book in early 1994.
(4) Accumulated and Current Amortization. Accumulated and current
------------------------------------
amortization lacks comparability due to the asset write-downs, and the major
additions of mining equipment and property prior to 1992 and
Telecommunications software and equipment since 1990, particularly at the end
of fiscal years.
(5) Mining Production Income. Mining production income was the
------------------------
main source of revenue in the fiscal year ended June 1988, and the first
quarter of fiscal 1989, from the Rincon mine, which then ceased production due
to a mud slide catastrophe, and for part of the fiscal year ended June 30,
1990, from the Rio Tigre mine, which then ceased production pending solution
of an easement problem, (See Item 3, "Mining Property Title") and at no other
time. Mining expenses in these periods do not exist in other periods.
(6) Consulting Fee Revenue. The majority of gross revenues in 1991
----------------------
and 1992, and all gross revenue, other than from mining production in prior
years, was from consulting fees and related expense recoveries. These fees
were earned in the mining business prior to 1992 and in the telecommunications
business since 1990. These revenues were earned from Canadian tax-oriented
partnerships and others. In the years ended June 30, 1993 and 1994, no such
fees and overhead recoveries were earned and none are expected in the future.
Expenses of these consulting operations have occurred in the periods when
revenues were earned and not otherwise.
(7) Telecommunications Operations. Telecommunications operations
-----------------------------
started in 1990. Under Canadian GAAP production telecommunications expenses
net of related revenues were capitalized in 1991 and 1992. A significant but
gradually decreasing percentage of the Company's telecommunications activities
have been in the development stage; with costs being capitalized, particularly
to software and distributorships.
(8) Share Consolidations. Share consolidations disrupt per share
--------------------
numbers that were not reconstructed.
(9) Exchange Rate Fluctuations. Exchange rate fluctuations were a
--------------------------
meaningful factor in historical (prior to 1992) statements prepared in
Canadian dollars, but will not be in the future.
(10) Financing Costs. In the fiscal year ended June 30, 1993, the
---------------
Company arranged a $5.0 million best efforts underwriting of Secured Notes and
then arranged high-cost bridge loans of $250,000, and $200,593 from a
corporate lender and the families of the directors, respectively. These were
made in order to greatly increase the Company's activities as required by the
underwriting. Given the inability of the surety company, (which guaranteed
the Secured Notes) to obtain an audit, only $675,000 was raised. Accordingly,
most of these costs were written off and related interest for the period is an
expense that is new and not comparable to other periods.
(11) Mining Property. Mining property was the largest asset in
---------------
prior years. The Company is no longer in the mining business and has sold its
remaining mining property and equipment. On June 30, 1993, the Company
wrote-down its mining property by $6,017,005 to $100 due to legal
uncertainties, See Item 3, "Legal Proceeding".
Differences Between US GAAP and Canadian GAAP
- ---------------------------------------------------
The Company's financial statements prepared in accordance with United
Sates Generally Accepted Accounting Principles ("GAAP") are more conservative
than was the case under Canadian GAAP in 1992 and prior years. See Form 10K
for June 30, 1993 for an explanation of the differences.
Results of Operations
Competitive Environment and General Uncertainties. The Company operates
in highly competitive markets. The business of the Company is subject to
national and worldwide economic and political influences such as recession,
political instability, the economic strength of governments, changes in
government regulations, changes in the policies of major carriers, and rapid
changes in technology. The Company will continue to attempt to mitigate these
factors by expanding its markets, building sales distributorships and
alliances both domestically and internationally, and providing better and
lower-priced value added services and long distance. Costs are being
controlled through regular budgetary reviews, efficient and effective
purchasing, cost-effective software and product design, and more efficient
utilization of resources. The Company's ability to adjust to meet significant
changes in its markets or suppliers has been greatly enhanced with its change
to using micro-computers for its telephone switching, voice processing and
billing. In particular, software changes can be completed more easily and
quickly than when a large switch and main frame computer was used.
Subsequent Bankruptcies -- Effect on Operations. The September 14, 1994
bankruptcy filings of American NorTel Communications Inc. and NorTel
Communications Inc. adversely affected net income in the year ended June 30,
1994. The bankruptcy proceedings were the result of the Company's inability
to meet current operating requirements from revenues, including an inability
to pay its principal carrier. The inability to meet current operating
expenses was the result of initial lack of liquidity, loss of its South
American customer base, and failure to close a financing. The majority of
write downs or non recurring expenses occurred due to the combination of
bankruptcies and the underlying loss of the customer base which caused the
bankruptcies. As a consequence. The Company ceased business operations in
December, 1994.
Liquidity
Working Capital:
<TABLE>
<CAPTION>
AUDITED UNAUDITED
-------------------------------- ------------------------------
June 30, 1995 June 30, 1994 June 30, 1993 June 30, 1992
--------------- --------------- -------------- --------------
<S> <C> <C> <C> <C>
Current Assets $ 65 $ 26,930 $ 1,100,451 $ 714,612
Current Liabilities $ 941,308 $ 1,929,100 $ 918,481 $ 654,555
Working Capital $ (941,243) $ (1,902,170) $ 181,970 $ 60,057
Current Ratio 0.01 times 0.01 times 1.20 times 1.09 times
</TABLE>
The Company made little progress to improve its working capital in the
year ended June 30, 1995. The Company continued its efforts to raise working
capital to recommence operations.
As a generalization, by the end of 1995, the Company's cash flow from
operations was non-existent. Accordingly, for the Company to recommence
business operations, it will be required to raise additional capital.
Equity sales of common shares has been the Company's main source of
funding in the past and will probably be required in the near future.
Secured Notes and Future Guaranteed Debt. In late 1992, the Company
entered into an underwriting agreement to issue up to $5.0 million of its 9%
four year convertible secured notes with warrants to buy common shares (the
"Notes"). A surety company's guarantee was the security. The intention was
that with the Company common stock becoming listed on the Boston Stock
Exchange that the price would rise sufficiently so that the issued notes
($675,000) would be converted to common shares.
ITEM 7. FINANCIAL STATEMENTS
The financial statements are filed pursuant to Item 13(a).
ITEM 8.
<PAGE>
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURES.
There were no disagreements on accounting and financial disclosures with
either of the former auditors or the current auditors. For the audit for the
year ended June 30, 1994, the previous auditor, KPMG Peat Marwick resigned
because it was a creditor in the bankruptcy of the Company.
KPMG Peat Marwick replaced the firm of BDO Dunwoody Ward effective
December 30, 1993, and audited the year ended June 30, 1993 statements. The
major reason for the change was that BDO Dunwoody Ward Mallette did not have a
Utah office and the Company had moved its incorporation to Wyoming from
British Columbia, its headquarters to Salt Lake City from Vancouver, and the
Company had to change its accounting to U.S. dollars (from Canadian dollars)
and in accordance with U.S. Generally Accepted Accounting Principles ("GAAP")
(from Canadian GAAP.)
The reports of KPMG Peat Marwick for the year ended June 30, 1993 and
those of BDO Dunwoody Ward Mallette on the Company's financial statements for
the previous two fiscal years did not contain an adverse opinion or a
disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope, accounting principles or practices, financial statement
disclosure, or auditing scope and procedures which, if not resolved to the
satisfaction of the auditors, would have caused the auditors to make reference
to the matter in their reports.
These changes were filed with the SEC on Form 8-K.
Effective June 7, 1996, the Board of Directors of the Company engaged the
accounting firm of Crouch, Bierwold & Call as independent accountants.
PART III
ITEM 9.A. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
Directors and Executive Officers. The Directors and Executive Officers
--------------------------------
of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
- ------------------- --- ----------------------------------------------------------------
<S> <C> <C>
W. P. Williams, Jr. 43 President, Director and Chairman of the Board, CEO and Secretary
</TABLE>
The Directors of the Company hold office until their successors are duly
elected and qualified.
The background and principal occupations of each director and officer of
the Company are as follows:
W. P. Williams, Jr. has been the Chairman, President and a Director of
the Company since June, 1995. He has twenty years of diversified, senior
level business experience.
The Company's Director, through his beneficial interest in and control of
Wilcom, and its ownership of 3,300,000 shares of New Preferreds, and ownership
of approximately 500,000 shares of common stock, each with one vote, has
control of the Company for an indefinite period of time. In addition, if the
existing management is not leading the Company as other shareholders might
wish, the existing management will be very difficult to remove. These
contract were not entered into in arm's length negotiations. See "Certain
Relationships and Related Transactions" and "Executive Compensation."
ITEM: 9.B COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The Company is aware that all filings relating to insider trading or
otherwise required of Directors, Officers or holders of 10% of the Company's
shares have not been made but has instituted procedures to ensure compliance
will be effected in the future.
ITEM 10. EXECUTIVE COMPENSATION
General. No executive officer or other officer of the Company received
cash compensation, paid or during its fiscal year ended June 30, 1995. The
Directors have not been compensated for any previous meetings of the Board of
Directors.
Benefit Plans. The Company does not have a pension plan, retirement
--------------
plan, profit sharing plan or similar existing benefits for its Directors,
officers, or employees. The Company has a stock option plan which provides
options to purchase the Common Stock of the Company to its Directors,
executive officers, and the other employees. In that regard, as of June 30,
1995, there were outstanding stock options and warrants to purchase the Common
Stock of the Company that were held as described below:
<TABLE>
<CAPTION>
Security Number Exercise
of of Price Expiration
Name the Company Shares (Cdn $) Date
- ------------------------- ----------- ------ ---------- -------------
<S> <C> <C> <C> <C>
Gary Jensen (2) Options 6,500 $ 4.90 March 1, 1996
John H. Picken (2) Options 37,889 $ 6.10 June 29, 1997
Dr. Kenneth D. Rogers (2) Options 13,872 $ 5.60 June 29, 1995
William H. Rogers (2) Options 37,888 $ 6.10 June 29, 1997
Bob Stenquist (2) Options 2,000 $ 4.90 March 1, 1996
------
Total Group of 6 98,149
- ------------------------- ======
<FN>
(1) The number of shares and exercise price of options and warrants have been
adjusted to reflect the one-for-ten reverse split of the Common Stock of the
Company on May 11, 1992.
(2) See "Directors, Executive Officers, Promoters & Control Persons" for a
description of the role of these persons in the Company. The balance of the
group of six persons referred to above under "Cash Compensation" hold no
Options or Warrants except as set forth under "COOP Customers List." Other
employees have options under the same plan.
</TABLE>
Amended Managers Agreement. This agreement was rescinded by mutual
----------------------------
consent after it was assigned to Wilcom as a result of the change in control
of the Company.
Earn-Out Preferred Share Agreement. This agreement was rescinded by
------------------------------------
mutual consent after it was assigned to Wilcom as a result of the change in
control of the Company.
New Preferred Share Agreement. As part of the arrangement for the
--------------------------------
change in control of the Company, the former directors assigned all of their
interest in the Amended Managers Agreement and the Earn-out Preferred Share
Agreement between NorTel CCI, Inc., themselves and the Company to Wilcom,
Inc., thereby transferring 3,300,000 shares of the Preferred A Series One
Preferred Stock, each share with one vote on all matters submitted to the
shareholders, to Wilcom, Inc. and assuring Wilcom, Inc. voting control of the
Company. NorTel CCI was controlled by the former directors. Further, NorTel
CCI, Inc. assigned approximately 500,000 shares of common stock of the Company
owned by it to Wilcom, Inc. On that same date, Wilcom, Inc. and the Company
rescinded those agreements by mutual consent and canceled the 3,300,000 shares
of Preferred A Series One Preferred Stock in consideration for the
re-establishment, re-designation and re-issuance of 3,300,000 shares of
Preferred A Series One Preferred Shares ("New Preferreds") to Wilcom, Inc.,
each New Preferred entitled to one vote and convertible into one share of
common stock at any time after the bid price for the Company's common stock
has averages more than $1.00 for thirty consecutive trading days on the NASD
OTC Bulletin Board. The New Preferreds participate in any dividends on a pro
rata basis with common stock.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Principal Shareholders of Common Shares. The following table sets
---------------------------------------
forth each shareholder owning 10% or more of the Company's Common Stock, and
the aggregate ownership of the Company's Common Stock by the group of nine
officers and Directors set forth above as a group, as of June 30, 1995. No
shareholder owns 10% or more of the shares. See Note (2) to table below.
None of these persons other than the three Directors own shares.
<TABLE>
<CAPTION>
Percentage of
Number of Outstanding
Name Shares Owned Common Stock
------------ --------------
<S> <C> <C>
John H. Picken, Salt Lake City, UT (1) 64,317 2.1%
Kenneth D. Rogers, Bountiful, UT (1) 15,406 0.5%
William H. Rogers, Salt Lake City, UT (1) 15,407 0.5%
WilCom, Inc. 516,951 17.1%
- ----------------------------------------- ------------ --------------
612,081 20.2%
------------ --------------
Total
</TABLE>
Voting - Common and Preferred Shares . The Company's 3.3 million
outstanding Preferred A Series One Preferred Shares (the "New Preferreds") are
convertible into up to 3.3 million Common Shares at any time after the bid
price for the Company's Common Stock has averaged more than $1.00 for thirty
consecutive trading days on the NASD OTC Bulletin Board, and are entitled to
3.3 million votes until then. Including the New Preferreds, and the 3,023,132
outstanding shares, significant share holdings in terms of voting authority
are as follows:
<TABLE>
<CAPTION>
OWNER TYPE OF SHARE VOTES (4) % OF VOTES
- --------------------------------------------- ------------- ------------- -----------
<S> <C> <C> <C>
3 Directors as a Group (see table above) common 95,130 1.5%
WilCom, Inc. (1) (2) new preferred 3,300,000 51.5%
WilCom, Inc. (4) common 516,951 8.1%
------------- -----------
Total of above Preferred and Common Votes (5) 3,912,081 or 61.1%
- --------------------------------------------- ------------- -----------
7,824,15
8.00
<FN>
(1) WilCom, Inc., is a Texas corporation which is wholly owned by the wife of the Director of
the Company and is therefore related to the Company. WilCom is the current holder of the New
Preferreds which include Warrants to buy 440,000 Common Shares at $1.00 per share.
(2) See "Certain Relationships and Related Transactions" for disclosure of indirect interest of
the sole Director in WilCom, Inc.
(3) See "New Preferred Share Agreement" under "Executive Compensation" above for disclosure of
the control of the Company by the existing Director and certain others. To the extent the
conversion of the New Preferreds is achieved, a major portion, and possibly all of the
resulting Common Shares will become beneficially owned by management. At this time, the only
management is the Company's sole Director.
(4) The New Preferreds have these votes at this time and are convertible to this same number of
shares of Common Stock. See "New Preferred Share Agreement" in the preceding section.
(5) 3,912,081 voting rights of the listed parties is 61.9% of 6,323,132 total voting rights.
</TABLE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
New Preferred Share Agreement. The ownership of all 3.3 million of the
-----------------------------
New Preferreds by WilCom, Inc., makes WilCom, Inc. "related" to the Company in
that it owns more than 10% of the voting control of the Company. The
Company's sole Director has a beneficial interest in WilCom, Inc. through his
wife's 100% ownership thereof, and is a successor beneficiary and party to,
and expects to benefit from, this agreement as were the prior beneficiaries,
former officers and directors of the Company expecting to benefit from the
"Earn-out Preferred Share Agreement".
WilCom, Inc. WilCom, Inc. ("CCI") is a Texas corporation. As part of
-----------
the change of control of management of the Company, NorTel CCI transferred to
WilCom of its right, title and interest in the Earn-out Preferred Share
Agreement, the Amended Management Agreement, Warrants to buy 440,000 Common
Shares at $1.00 (US) per share at anytime prior to June 28, 1999, and 516, 961
shares of the Company's common stock. Although subsequently the Earn-out
Preferred Shares Agreement and Amended Management Agreement were rescinded,
WilCom was issued 3.3 million New Preferreds in consideration therefor.
Because of the interests of the Director in WilCom, WilCom is related to the
Company.
By virtue of the above and related agreements, NorTel CCI and its
affiliates , including former officers and directors of the Company, are no
longer either creditors or debtors of the Company, and own little, if any,
Common Stock of the Company and therefore will not be relevant related
parties. Reference is hereby made to the 1993 and 1994 Annual Reports in Form
10K for past transactions with these entities.
<PAGE>
PART IV
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
The following documents are filed as a part of this Annual Report:
(a) Financial Statements Page
----
(1) Independent Auditors' Report relating to:
Consolidated Balance sheets - June 30, 1994 and 1995
Consolidated Statements of Operations - Years ended June 30, 1994 and
1995
Consolidated Statements of Stockholders' Equity - Years ended June 30,
1994 and 1995
Consolidated Statement of Cash Flows - Years ended June 30, 1994 and 1995
Notes to Consolidated Financial Statements
(2) Independent Auditors' Report relating to:
Consolidated Balance Sheet - June 30, 1993.
Consolidated Statement of Operations - Year ended June 30, 1993.
Consolidated Statement of Stockholder's Equity - Year ended June 30,
1993.
Consolidated Statement of Cash Flows - Year ended June 30, 1993.
Notes to Consolidated Financial Statements - Year ended June 30, 1993.
(b) Financial Statement Schedules
Financial statement schedules have been omitted for the reason that they
are not required or are not applicable, or the required information is shown
in the financial statement notes thereto.
(c) Exhibits
The exhibits filed as part of this report are as follows:
(1) Underwriting Agreement: Agreement dated October 20, 1993, between
----------------------
the Company and American Trading & Investment, Inc. to underwrite up to $5.0
million of 9.0%, four year convertible Secured Notes (guaranteed by a surety
company) with Warrants, to buy common shares. Filed with the Securities and
Exchange Commission as an exhibit, numbered (1), to the annual report of
Registrant on Form 10-K for the year ended June 30, 1993, which exhibit is
incorporated herein by reference.
(3) Articles of Incorporation and By-Laws: Articles of Incorporation
-------------------------------------
and By-Laws, filed as Item 19B Rev. 1 in Form 8 Securities and Exchange
Commission Report - Amendment No. 2 and 3, and incorporated herein by this
reference. Filed with the Securities and Exchange Commission as an exhibit,
numbered (2), to the annual report of Registrant on Form 10-K for the year
ended June 30, 1993, which exhibit is incorporated herein by reference.
(4) Instruments Defining the Rights of Security Holders, Including
--------------------------------------------------------------------
Indentures:
- ----------
4.1 Agreement dated October 28, 1992, between Shelton Financial, Inc.
and the Company for Secured Promissory Note and related Security Agreement and
warrants to buy common shares with amendment letter dated April 26, 1993, with
additional warrants. Filed with the Securities and Exchange Commission as an
exhibit, numbered 4.1, to the annual report of Registrant on Form 10-K for the
year ended June 30, 1993, which exhibit is incorporated herein by reference.
4.2 Secured Note of the Company dated March 5, 1993 in favor of Herman
Meinders, in the amount of $100,000, due December 31, 1996, as amended to
December 31, 1993, and related Guarantee Bond, issued by Certified Surety
Group, Ltd. The note includes warrants to buy 12,500 common shares of the
Company at $4.00 U.S. per share until December 31, 1994. Additional Secured
Notes on essentially the same terms as the foregoing are as follows:
<TABLE>
<CAPTION>
Current Secured Noteholder Amount Original Note Date Warrants in Shares
- ----------------------------------- -------- ------------------ ------------------
<S> <C> <C> <C>
BancOklahoma Trust Company, Trustee $450,000 December 31, 1992 56,250
Southwest Securities, Inc. $ 50,000 January 30, 1993 6,250
Marguerite Colton $ 25,000 March 16, 1993 3,125
==================
Total including Meinders 78,125
------------------
</TABLE>
Additional Secured Noes on very similar terms are as follows:
<TABLE>
<CAPTION>
Current Secured Noteholder Amount Original Note Date Warrants in Shares
- ------------------------------------------------ ------- ------------------ ------------------
<S> <C> <C> <C>
Earle F. Waters, Trust #25002570 (1) $25,000 September 17, 1992 3,000
Earle F. Waters and Eleanor M. Waters, Trust (1) $25,000 September 17, 1992 3,000
==================
Total 6,000
------------------
<FN>
(1) These warrants are at $5.00(CDN) per share and expire on September 7, 1997
</TABLE>
Filed with the Securities and Exchange Commission as an exhibit, numbered 4.2,
to the annual report of Registrant on Form 10-K for the year ended June 30,
1993, which exhibit is incorporated herein by reference.
4.3 General Indemnity Agreement dated December 20, 1993 between the
Company and Certified Surety Group Ltd. the surety company which guaranteed
the $675,000 of Secured Notes that are outstanding. Filed with the Securities
and Exchange Commission as an exhibit, numbered 4.3, to the annual report of
Registrant on Form 10-K for the year ended June 30, 1993, which exhibit is
incorporated herein by reference.
4.4. Preferred Share Agreement dated June 14, 1993 between the Company
and 97704 Canada Ltd and Barbara J. Rogers, William H. Rogers, Kenneth D.
Rogers, John H. Picken, Lynbrook Corporation N.V., Yorkdale Financial
Corporation, and Espinar Ltd. Filed with the Securities and Exchange
Commission as an exhibit, numbered 4.4, to the annual report of Registrant on
Form 10-K for the year ended June 30, 1993, which exhibit is incorporated
herein by reference.
4.5 Employee Options Agreement dated May 11, 1990, between the Company
and in favor of Leonard MacMillan, in the amount of 30,000 Optioned Shares at
a price of $1.55 CDN and exercisable on or before January 26, 1995, (which
after the May 11, 1992, consolidation and the price change noted below is for
3,000 shares at $5.60 filed with Form 8, Item 19 (1) (b) (5) and along with
the following Option Subscription Agreements on the same terms as the
foregoing and outstanding on June 30, 1993:
<TABLE>
<CAPTION>
Date of Number of Purchase Price Per
Employee Name Agreement Shares(2) Unit CDN
- ----------------------------------------- ------------ ---------- -------------------
<S> <C> <C> <C>
Kenneth D. Rogers May 11, 1990 13,872 $ 5.60
Curt Huber May 11, 1990 3,000 $ 5.60
Marv Livingston (1) May 11, 1990 3,000 $ 5.60
Sandy Valckx May 11, 1990 3,000 $ 5.60
- ----------------------------------------- ----------
Total June 30, 1993 (including MacMillan) 25,872
==========
Total (not canceled) including MacMillan 22,872
----------
<FN>
(1) Subsequently canceled as these persons are no longer employees or directors. (2)
Options originally granted on the same terms as the forgoing to Sue Gallagher (3,000
shares), John Merko (3,000 shares), and Sam Winrob (3,000 shares at $15.50 CDN), Ron
Livingston (3,000 shares), Kevin Gowland (3,000 shares), and Jerry Walliser (3,000
shares) were canceled prior to June 30, 1993 as these persons were no longer employees
or directors.
</TABLE>
4.6 VSE approval to reduce to price of options from $1.55 to $0.56 for
all persons in number 4.5 except Sam Winrob who remains at $1.55. Filed with
the Securities and Exchange Commission as an exhibit, numbered 4.6, to the
annual report of Registrant on Form 10-K for the year ended June 30, 1993,
which exhibit is incorporated herein by reference.
4.7. Option Subscription Agreements dated March 1, 1991, between the
Company in favor of Bob Stenquist for 20,000 Optioned Shares at $0.49 CDN on
or before March 1, 1996, (which after the 10 for 1, the May 11, 1992,
consolidation became 2,000 shares at $4.90, along with the following Option
Subscription Agreements on the same terms as the foregoing are filed with Form
8, Item 9 (1) (b) (8):
<TABLE>
<CAPTION>
Date of Number of Price Per
Employee Name Agreement S-hares(3) Un-it CDN
- ----------------------------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Mike Root (1) March 1, 1991 2,000 $ 4.90
Russ Sorensen March 1, 1991 5,000 $ 4.90
Gary Jensen March 1, 1991 6,500 $ 4.90
Lucky Janda March 1, 1991 10,000 $ 4.90
David Marshall (1) March 1, 1991 2,000 $ 4.90
Alan Cornwall (1) March 1, 1991 10,146 $ 4.90
Richard Buchli March 1, 1991 500 $ 4.90
- ----------------------------------------- ----------
Total June 30, 1993 (including Stenquist) 38,146
==========
Total not canceled (including Stenquist) 24,000
----------
<FN>
(1) Subsequently canceled as these persons are no longer employees or
directors. (2) Reflects consolidations. (3) Options originally granted on the
same terms as the foregoing to Perry Porter (500 shares), Debbie Lucero
(Williams)(500 shares), Marvin Nielson (3,000 shares), Jim Ormsbee (3,000
shares), Rick Bennett (2,000 shares) were canceled prior to June 30, 1993, as
these persons were no longer employees or directors.
</TABLE>
4.8 Stock Option Agreements dated June 29, 1992, between the Company,
Williams H. Rogers and John H. Picken for 37,888 and 37,889 (after
consolidation) options for shares respectively at $6.10 CDN, filed with Form
8, Item 19 (1) (b) (19) and are incorporated herein by this reference.
Options for 10,000 shares granted as above for George E. Davis was canceled on
after June 30, 1993, as he was no longer a director.
4,8 Resolution of Board of Directors dated June 27, 1996 Re-establishing,
Re-designating and Re-issuing Preferred A Series One Preferred Shares.
(9) Voting Trust Agreement: No specific Voting Trust Agreement
------------------------
exists, but the Preferred Share Agreement includes features obtain to a Voting
Trust Agreement. See Preferred Share Agreement, this Item, Exhibit 4.4 as
referenced above in "Instruments Defining the Rights of Security Holders,
Including Indentures".
(10) Material Contracts:
-------------------
10.1 NorTel Managers Agreement dated June 14, 1993, as amended to
November 26, 1993, between the Company and William H. Rogers, Kenneth D.
Rogers, and John H. Picken, and filed as part of Form 8, Item 19 (b) (1) (20).
10.2 Agreement Service Agreement dated April 10, 1991 and March 30,
1993, between the Company and Sprint for the purchasing of long distance
services, and filed as part of Form 8, Item 19 (b) (1) (20).
10.3 Wholesale Marketing Agreement dated February 5, 1992, between the
Company and One-2-One Communications, Inc. for the purchasing of long distance
services, and filed as part of Form 8, Item 19 (b) (1) (20).
10.4 Digital Switched Service Agreement dated October 23, 1991, between
the Company and U.S. West Communications, Inc. to supply the use of digital
exchange telecommunications service, and filed as part of Form 8, Item 19 (b)
(1) (20).
10.5 Master Agreement dated August 27, 1991, between the Company and
Intertoll Communications Network as a distributor of the Company's services in
Argentina, Brazil, and other South American countries, and filed as part of
Form 8, Item 19 (b) (1) (23).
(11) Statement Re Computation of Per Share Earnings:
----------------------------------------------------
(13) Annual Report to Security Holders, Form 10-Q or Quarterly Report to
--------------------------------------------------------------------
Security Holders: Company Quarterly Reports dated September 30, 1992,
- -----------------
December 31, 1992, March 31, 1992, and Form 10-Q dated March 31, 1993.
(20) Other Documents or Statements to Security Holders:
-------------------------------------------------------
20.1 Private Placement Offering Memorandum for 9% Convertible Secured
Notes with Warrants dated December 24, 1992, between the Company and American
Trading & Investment, Inc. Filed with the Securities and Exchange Commission
as an exhibit, numbered 21.1, to the annual report of Registrant on Form 10-K
for the year ended June 30, 1993, which exhibit is incorporated herein by
reference.
20.2 Notice of Annual General Meeting of Members dated November 27,
1992. Filed with the Securities and Exchange Commission as an exhibit,
numbered 21.2, to the annual report of Registrant on Form 10-K for the year
ended June 30, 1993, which exhibit is incorporated herein by reference.
(21) Subsidiaries of the Registrant: List of current and former
---------------------------------
subsidiaries.
(27) Financial Data Sheet
----------------------
(99) Additional Exhibits:
--------------------
99.1 Republic of Costa Rica Mining Code, dated October 4, 1982, for the
granting and administration of exploration and exploitation permits for ore
deposits, filed with Form 18 as Item 19 (1) (b) (17) and incorporated herein
by this reference.
Reports on Form 8-K
No reports on Form 8-K were filed during the fourth quarter of the year
ended June 30, 1994.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
AMERICAN NORTEL COMMUNICATIONS INC.
By: /S/ W. P. Williams, Jr. Date: November 18, 1996
---------------------------------------- -----------------
W.P. Williams
Director and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: /S/ W. P. Williams, Jr. Date: November 18, 1996
---------------------------------------- -----------------
W.P. Williams
Director and Chief Executive Officer
<PAGE>
CROUCH, BIERWOLF & CALL
Certified Public Accountants
50 West Broadway, Suite 1130
Salt Lake City, Utah 84101
[Letterhead]
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Board of Directors of
American Nortel Communications, Inc.
and Subsidiary
We have audited the accompanying consolidated balance sheets of American
Nortel Communications, Inc. and subsidiary as of June 30, 1995 and 1994 and
the related consolidated statements of operations, cash flows and
stockholders' equity for the years then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of American
Nortel Communications, Inc. and subsidiary as of June 30, 1995 and 1994 and
the results of their operations and their cash flows for the years then ended
in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 8, the
Company's lack of operations and lack of operating capital raise substantial
doubt about its ability to continue as a going concern. Management's plans in
regard to those matters are also described in Note 8. The financial
statements do not include any adjustments that might result from the outcome
of this uncertainty.
October 9, 1996
Salt Lake City, Utah
<PAGE>
AMERICAN NORTEL COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995 AND 1994
<PAGE>
<TABLE>
<CAPTION>
C O N T E N T S
<S> <C>
Independent Auditors' Report 3
Consolidated Balance Sheets 4
Consolidated Statements of Operations 5
Consolidated Statements of Stockholders' Equity 6
Consolidated Statements of Cash Flows 7
Notes to the Consolidated Financial Statements. 8
</TABLE>
<PAGE>
AMERICAN NORTEL COMMUNICATIONS, INC. AND SUBSIDIARY
Consolidated Balance Sheets
ASSETS
------
<TABLE>
<CAPTION>
June 30,
----------------------------
1995 1994
------------- -------------
<S> <C> <C>
CURRENT ASSETS
Cash (Note 1) $ 65 $ 26,930
------------- -------------
TOTAL ASSETS $ 65 $ 26,930
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable $ 77,819 $ 719,488
Note payable-related party (Note 6) - 365,444
Notes payable (Note 6) 675,000 734,000
Accrued interest 188,489 110,168
------------- -------------
Total Current Liabilities 941,308 1,929,100
------------- -------------
STOCKHOLDERS' EQUITY
Series A convertible preferred stock;
no par value; 50,000,000 shares
authorized; 3,300,000 shares
issued and outstanding 33,000 -
Common stock; authorized 30,000,000
common shares, no par value;
3,023,132 shares issued and
outstanding 20,143,157 20,143,157
Retained deficit (21,117,400) (22,045,327)
------------- -------------
Total Stockholders' Equity (941,243) (1,902,170)
------------- -------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 65 $ 26,930
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
AMERICAN NORTEL COMMUNICATIONS, INC. AND SUBSIDIARY
Consolidated Statements of Operations
<TABLE>
<CAPTION>
For the Years Ended
June 30,
--------------------------
1995 1994
------------ ------------
<S> <C> <C>
Revenue $ 326,843 $ 2,404,083
Cost of sales 235,892 1,645,356
------------ ------------
Gross Profit 90,951 758,727
General and administrative expenses 470,178 1,153,479
------------ ------------
Operating income before reorganization items
and tax benefit (379,227) (394,752)
------------ ------------
Reorganization Items
Loss on abandonment and disposal of equipment (Note 2) - (2,697,281)
Loss on accounts and notes receivable (Note 5) - (865,491)
Loss of deposits (Note 3) - (36,679 )
Loss on note from subsidiary (Note 7) (4,517,717) -
-
------------ ------------
Total reorganization items (4,517,717) (3,599,451)
------------ ------------
Income/(Loss) before income tax (4,896,944) (3,994,203)
Income tax (Note 1)
NET LOSS $(4,896,944) $(3,994,203)
============ ============
WEIGHTED AVERAGE LOSS PER SHARE -
assuming full dilution $ (1.61) $ (1.41)
============ ============
AVERAGE SHARES OUTSTANDING 3,050,255 2,834,294
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
AMERICAN NORTEL COMMUNICATIONS, INC. AND SUBSIDIARY
Consolidated Statement of Stockholder's Equity
The accompanying notes are an integral part of these financial statements.
<TABLE>
<CAPTION>
Common Stock Preferred Stock Subscriptions Retained
Shares Amount Shares Amount Receivable Deficit
--------- ----------- --------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1993 2,645,455 $19,654,964 400,000 $ 4,000,000 $(4,212,967) $(18,051,124)
Payments received on notes
receivable 212,967
Cancellation of preferred stock and
subscriptions receivable (400,000) (4,000,000) 4,000,000
Issuance of common stock for cash 377,677 488,193
Net Loss for year ended
June 30, 1994 (3,994,203)
--------- ----------- --------- ------------ ------------ -------------
Balance at June 30, 1994 3,023,132 20,143,157 - - - (22,045,327)
Remove investment in subsidiary 5,824,871
Issuance of preferred stock for services 3,300,000 33,000
Net Loss for year ended
June 30, 1995 (4,896,944)
--------- ----------- --------- ------------ ------------ -------------
Balance at June 30, 1995 3,023,132 $20,143,157 3,300,000 $ 3,300 $ - $(21,117,400)
========= =========== ========= ============ ============ =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
AMERICAN NORTEL COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Years Ended
June 30,
--------------------------
1995 1994
------------ ------------
<S> <C> <C>
Cash Flows From Operating Activities
Net Income/(Loss) $(4,896,944) $(3,994,203)
Less non-cash items:
Depreciation and amortization - -
(Gain)/Loss on reorganization items 5,824,871 3,301,489
Issuance of stock for services 33,000 -
Adjust cash for changes:
Increase (decrease) in payables (1,066,113) 44,428
Increase (decrease) in accrued expenses 78,321 (65,466)
------------ ------------
Net Cash from Operating Activities (26,865) (713,752)
------------ ------------
Net Cash from Investing Activities - -
------------ ------------
Cash Flows From Financing Activities
Issuance of common stock 488,193
Principal payments on long-term debt 212,967
------------ ------------
Net Cash from Financing Activities 701,160
------------ ------------
Net Increase (Decrease) in Cash (26,865) (12,592)
Cash at Beginning of Period 26,930 39,522
------------ ------------
Cash at End of Period $ 65 $ 26,93
============ ============
Supplemental cash flow information:
Cash Paid For:
Interest - $ 25,970
Income Taxes $ - $ -
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
AMERICAN NORTEL COMMUNICATIONS, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
June 30, 1995 and 1994
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
------------
American Nortel Communications, Inc. (American Nortel) was originally
incorporated in Briti sh Columbia, Canada in May, 1992 and was
reincorporated in the state of Wyoming in February, 1993. American Nortel is
engaged in the telecommunications business as a value-added reseller and
rebiller in the long distance telephone business.
Nortel Communications, Inc. (Nortel) was incorporated in the state of Wyoming
on March 10, 1992.
The Company was concentrated in international markets, specifically South
America. During the summer of 1994, the Company was boycotted by a major
customer. Revenue declined abruptly and the Company was no longer able to
meet it's current obligations. The Company was unable to pay its primary
carrier and other creditors. This sequence of events led the Company to
petition for protection under Chapter 11.
On September 14, 1994, American Nortel and Nortel Communications, Inc. (a
wholly owned subsidiary of American Nortel) filed a petition under Chapter 11
of the Bankruptcy Code. The two companies originally filed a consolidated
petition, but American Nortel's bankruptcy petition was denied without
prejudice in February, 1995.
Nortel CCI, Inc. and COOP Communications, Inc. were wholly owned subsidiaries
for the period ended June 30, 1993. These subsidiaries were transferred to
former directors of the Company on July 1, 1994.
Nortel was acquired by Nortel CCI (a former subsidiary of American Nortel) on
June 27, 1995.
b. Basis of Presentation
-----------------------
The consolidated statements of operations include the accounts of American
Nortel Communications, Inc. and its wholly owned subsidiary, Nortel
Communications, Inc. The consolidated balance sheet as of June 30, 1994
includes the accounts of American Nortel Communications and its wholly owned
subsidiary Nortel Communications. The balance sheet as of June 30, 1995
includes the accounts of American Nortel. These entities are collectively
referred to as the Company. All significant intercompany balances have been
eliminated in consolidation.
c. Accounting Method
------------------
The Company's financial statements are prepared using the accrual method of
accounting. The Company has a June 30 year end for financial reporting
purposes.
d. Earnings (Loss) Per Share
----------------------------
The computations of earnings (loss) per share of common stock are based on the
weighted average number of shares outstanding at the date of the financial
statements. Preferred shares convertible into common shares are included in
the calculation.
AMERICAN NORTEL COMMUNICATIONS, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
June 30, 1995 and 1994
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
e. Income Taxes
-------------
Deferred income taxes result from temporary differences in the recognition of
accounting transactions for tax and financial reporting purposes. There were
no temporary differences at June 30, 1995 or 1994, accordingly, no deferred
tax liabilities or assets have been recognized for temporary differences.
No provision has been made in the consolidated financial statements for income
taxes because the Company has incurred losses since beginning operations in
the United States. At June 30 1995 and 1994 the Company has a domestic net
operating loss carryforward of approximately $9,800,000 and $4,800,000
respectively, which is available to offset future federal taxable income
through 2010. These carryforwards begin to expire beginning in 2008. The
Company no longer operates in Canada and does no expect any benefit from its
prior years net operating losses that were available to offset future taxable
income in Canada.
f. Cash and Cash Equivalents
----------------------------
The Company considers all highly liquid investments with a maturity of three
months or less when
purchased to be cash equivalents.
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment consisted of office equipment and computer equipment.
These assets were put into storage when the Company ceased operations in
December of 1994. The bankruptcy trustee is currently in the process of
selling the property and equipment. The estimated value is less than $10,000
due to the age of the equipment and its condition.
The costs of internally developed telecommunication software were capitalized
upon the establishment of technological feasibility. The capitalized costs
were written off in 1994 since the software was not completed and the
technology was deemed to be outdated.
NOTE 3 - DEPOSITS
Deposits consisted of vendor deposits, security deposits and credit card
deposits which were not returned to the Company. The Company was indebted to
these vendors more than the deposit amounts, consequently, the deposits were
offset against the payables.
<PAGE>
AMERICAN NORTEL COMMUNICATIONS, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995 AND 1994
NOTE 4 - BANKRUPTCY
On September 14, 1994, Nortel Communications, Inc. (the "Debtor") filed a
voluntary petition for relief under Chapter 11 of the federal bankruptcy laws
in the United States Bankruptcy Court for the Central District of Utah. The
case was converted to a Chapter 7 proceeding on March 3, 1995 and a trustee
was appointed on April 3, 1995. Since his appointment, the trustee has been
investigating the Debtor's financial affairs and transfers made by the Debtor
prior to its bankruptcy filing. The trustee has made demand on several
creditors for return of preferential payments pursuant to the United States
Code, Section 547. At the date of this audit, the proceedings were still
active and the bankruptcy trustee was in the process of determining and
collecting on fraudulent and preferential transfers.
NOTE 5 - NOTES RECEIVABLE
The Company wrote off $624,495 of notes receivable in fiscal year 1994 due to
uncollectibility. Approximately $424,495 of the notes were from Lynbrook
Corporation, N.V. (Lynbrook), a Netherlands Antilles company which is
currently out of business. The balance of the notes, $200,000 were from
Nortel CCI, a previously wholly owned subsidiary which is currently inactive.
The note was considered uncollectible and written off.
NOTE 6 - NOTES PAYABLE
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Promissory notes to directors and
officers; 12% interest per annum;
due July 31, 1995. $ - $365,444
-------- --------
Total notes payable to related parties $ - $365,444
======== ========
Promissory note, 12% interest per
annum; unsecured; due July 31, 1995. - $ 35,000
Promissory note to employee; no
interest rate; unsecured; due on demand. - 24,000
Convertible secured notes; 9% interest
per year in first year, 18.2% thereafter;
interest payable quarterly; secured by
guarantee bond. 675,000 675,000
-------- --------
Total Notes Payable $675,000 $734,000
======== ========
</TABLE>
The notes to related parties bear interest at 1% per month or, if higher, the
interest rate the Company pays to third party lenders. The notes require
that, after certain priority payments, 50 percent of the proceeds of any
underwriting or private placement on securities to be used to pay the notes.
AMERICAN NORTEL COMMUNICATIONS, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
June 30, 1995 and 1994
NOTE 7 - LOSS ON NOTES RECEIVABLE FROM SUBSIDIARY
American Nortel had an intercompany receivable from Nortel during fiscal year
1995. This amount is uncollectible since Nortel is in bankruptcy.
NOTE 8 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has had substantial
operating losses for the past years mostly attributable to the loss of major
customers and the subsequent bankruptcy of its operating subsidiary.
Management plans to return to the telecommunications business by selling
prepaid long-distance telephone cards
NOTE 9 - COMMITMENTS AND CONTINGENCIES
Claims have been asserted and threatened against the Company by note holders
claiming the Company is in default on payments. The total amount of the notes
is $575,000 plus interest. The Company is in the process of negotiating
settlements.
Shareholders have asserted claims that stock they paid for was never issued.
The Company's records indicate that payments were received, however, there is
some dispute regarding the issuance of the shares. The total amount paid for
the stock was $101,007. and the number of shares in question are 65,100.
These shareholders came forward on their own, no attorneys are involved and no
legal action has yet been taken.
Several claims have arisen over the non-payment of notes. Certified Surety
Group, Ltd. (Certified) issued guarantee bonds as security for these notes. A
claim has been made for payment totaling $50,000 plus interest accruing at
$562.50 per quarter. A second claim for the remainder of the notes has been
made.
NOTE 10 - EQUITY
Preferred Stock
- ----------------
On June 27, 1995, 3,300,000 shares of series A convertible preferred stock was
issued to an officer/shareholder of the Company for services rendered.
The shares have no preference as to dividends or liquidation over common
shares. Each share is entitled to one vote. Each share is convertible to one
share of common stock after the common stock has averaged more than $1.00 for
thirty consecutive trading days on the NASD OTC bulletin board.
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from a Form 10-KSB and Balance Sheet Statements and is qualified
in its entirety by reference to such Form N-KSB and Financial
Statements.
</LEGEND>
<MULTIPLIER> 1
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 6,500
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,500
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,500
<CURRENT-LIABILITIES> 941,308
<BONDS> 0
0
0
<COMMON> 20,143,157
<OTHER-SE> (21,084,400)
<TOTAL-LIABILITY-AND-EQUITY> 650
<SALES> 326,843
<TOTAL-REVENUES> 326,843
<CGS> 235,892
<TOTAL-COSTS> 5,190,787
<OTHER-EXPENSES> 4,517,717
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4,863,944)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> (4,517,717)
<CHANGES> 0
<NET-INCOME> (4,863,944)
<EPS-PRIMARY> (1.61)
<EPS-DILUTED> (0.77)
</TABLE>
