U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB/A
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1998 OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ______________ to _______________
Commission file number 1-13478
GLOBAL TELECOMMUNICATION SOLUTIONS, INC.
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(Name of Small Business Issuer in Its Charter)
Delaware 13-3698386
- -------------------------------- -------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
10 Stow Road, Suite 200, Marlton, New Jersey 08053
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(Address of Principal Executive Offices) (Zip Code)
(609) 797-3434
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(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act:
Name of Each Exchange
Title of Each Class: on Which Registered:
Common Stock, par value $.01 per share Boston Stock Exchange
Common Stock Purchase Warrants Boston Stock Exchange
Securities registered under Section 12(g)
of the Exchange Act: None
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. Yes X No __
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ X ]
The Registrant hereby amends items 9, 10, 11 and 12 of its Annual Report on
Form 10-KSB for the year ended December 31, 1998 as set forth in the pages
attached hereto.
The issuer's revenues for its most recent fiscal year were $31,178,125.
As of April 1, 1999, the aggregate market value of the issuer's Common
Stock held by non-affiliates of the issuer (based on the last sale price of such
stock) was $6,296,289. At April 1, 1999, 14,429,081 shares of the issuer's
Common Stock were outstanding.
<PAGE>
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The current executive officers, key employees and directors of the
Company are as follows:
Name Age Position
- ---------------- --- -------------------------
Shelly Finkel(1) 54 Chairman of the Board
Randolph Cherkas 36 President and Director
Michael Hoppman(2) 37 Chief Financial Officer, Treasurer
and Assistant Secretary
Cory Eisner 43 Vice President of Marketing
Donald L. Ptalis(3) 56 Director of Strategic Development
and Director
Alan W. Kaufman(1)(3) 61 Director
David Lipson(1) 55 Director
Jack N. Tobin(1) 57 Director
- -----------------------------
(1) Member of Compensation Committee
(2) Commencing May 1, 1999, Mr. Hoppman will no longer be employed as the
Company's Chief Financial Officer, Treasurer and Assistant Secretary.
(3) Member of Audit Committee
Shelly Finkel has been employed by the Company as Chairman of the Board
since April 1993 and was the Chief Executive Officer of the Company from April
1993 through March 1995. Mr. Finkel has been active in the promotional field
since June 1965 and has been the President of Shelly Finkel Management, Inc., a
New York-based personal management firm, since 1980.
Randolph Cherkas has been the Company's President since September 1998 and
a director of the Company since April 1998. From February 1998 to August 1998,
Mr. Cherkas served as Chief Operating Officer of the Company. In April 1994, Mr.
Cherkas founded Networks Around the World, Inc. ("NATW") and served as its
President until February 1998, when NATW was acquired by the Company. From July
1993 to April 1994, Mr. Cherkas served as Account Executive for Network
Equipment Technologies, a company which designs and sells network solutions to
Fortune 500 companies. From July 1984 to July 1993, Mr. Cherkas served as an
account executive for IBM.
Michael Hoppman has been the Company's Chief Financial Officer, Treasurer
and Assistant Secretary since September 1997. From 1990 to August 1997, Mr.
Hoppman was employed by The Score Board, Inc., a manufacturer, wholesaler and
marketer of baseball trading cards, prepaid phone cards and sports and
entertainment memorabilia, most recently as Vice President and Chief Financial
Officer.
Cory Eisner has been the Company's Vice President of Marketing since
October 1994. From 1977 to October 1994, Mr. Eisner was employed by Phone
Programs, Inc., a telepromotions agency specializing in interactive phone
services, most recently as Executive Vice President of Sales.
Donald L. Ptalis has been a director of the Company since March 1996 and
Director of Strategic Development since December 1998. From April 1997 to
December 1998, Mr. Ptalis served as President of PCI, Inc., a computer
consulting company that he founded. From January 1995 to April 1997, Mr. Ptalis
was the President of Masque Sound & Recording Corp., a sound equipment rental
company. From June 1993 to December 1995, Mr. Ptalis managed his personal
investments. From 1987 to June 1993, Mr. Ptalis was the President and Chief
Executive Officer of Desks Inc., an office furniture supply company.
Alan W. Kaufman has been a director of the Company since November 1994. Mr.
Kaufman has been a director since August 1997 and Chairman of the Board since
May 1998 of QueryObject Systems Corporation ("QueryObject"), a developer and
marketer of business intelligence software. Mr. Kaufman served as Chief
Executive Officer of QueryObject from October 1997 to December 1998. From April
1986 to December 1996, Mr. Kaufman held various positions, including Vice
President of Marketing and Vice President of Sales and Marketing, and most
recently Executive Vice President of Sales, at Cheyenne Software, Inc. Mr.
Kaufman was the founding President of the New York Software Industry
Association.
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David Lipson has been a director of the Company since January 1999. From
October 1988 to December 1998, Mr. Lipson served as the Chairman of the Board
and Chief Executive Officer of Integrated Systems Consulting Group, Inc.
("Integrated Systems"), a publicly-traded computer services company. In December
1998, Integrated Systems merged with First Consulting Group, Inc. ("FCGI"), a
publicly-traded company that provides operations improvement and information
management services for the healthcare, pharmaceutical and life sciences
industries. Mr. Lipson currently is serving as Vice Chairman and managing
director of FCGI's pharmaceutical and life sciences practice. Mr. Lipson also
serves on the board of directors of the following non-reporting emerging growth
companies: Prescient Systems, Inc., United Messaging Inc. and K Consulting Inc.
Jack N. Tobin has been a director of the Company since March 1996. Since
March 1989, Mr. Tobin has been the President of Jack Tobin & Associates, Inc., a
marketing, public relations and lobbying firm that he founded. From November
1982 to November 1998, Mr. Tobin served as a member of the State of Florida
House of Representatives. As a member of the House of Representatives, Mr. Tobin
served as the Chairman of the Health and Rehabilitative Services, Science
Industry and Technologies and Business and Professional Regulation committees.
From November 1989 to November 1996, Mr. Tobin chaired the full committee or
subcommittee that regulates telecommunications companies operating within the
state.
Board of Directors
The Board of Directors of the Company is divided into three classes, each
of which serves for a term of three years, with only one class of directors
being elected in each year. The term of the first class of directors, currently
consisting of Shelly Finkel and David Lipson, will expire at the annual meeting
of stockholders to be held in 2001; the term of the second class of directors,
currently consisting of Alan W. Kaufman and Donald L. Ptalis, will expire at the
annual meeting of stockholders to be held in 1999; and the term of the third
class of directors, currently consisting of Jack N. Tobin and Randolph Cherkas,
will expire at the annual meeting of stockholders to be held in 2000. In each
case, each director will hold office until the next annual meeting of
stockholders at which his class of directors is to be elected or until his
successor is duly qualified and appointed. Executive officers serve at the
discretion of the Board.
The members of the Company's Board of Directors receive $500 for attending
each board meeting and $250 for attending each committee meeting. In addition,
on March 31st of each calendar year, each person who is then a non-employee
director of the Company is granted immediately exercisable ten-year options to
purchase 10,000 shares of Common Stock at the fair market value thereof on the
date prior to the date of grant. See "Executive Compensation--1994 Performance
Equity Plan."
The Company has appointed a Compensation Committee and an Audit Committee
of the Board of Directors. The Compensation Committee, consisting of Shelly
Finkel, Alan W. Kaufman, David Lipson and Jack N. Tobin, reviews the salaries
and other compensation of the Company's executive officers. The role of the
Audit Committee, consisting of Alan W. Kaufman and Donald L. Ptalis, is to
review (1) the scope of Company's annual audit and other services provided by
the Company's independent auditors and (2) the audit results and the auditors'
recommendations regarding policies, systems and controls.
Indemnification and Exculpation Provisions
The Company's certificate of incorporation provides for indemnification of
officers and directors to the fullest extent permitted by Delaware law. In
addition, under the Company's certificate of incorporation, no director shall be
liable personally to the Company or its stockholders for monetary damages for
breach of fiduciary duty as a director; provided that the certificate of
incorporation does not eliminate the liability of a director for (1) any breach
of the director's duty of loyalty to the Company or its stockholders; (2) acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (3) acts or omissions in respect of certain unlawful
dividend payments or stock redemptions or repurchases; or (4) any transaction
from which such director derives improper personal benefit.
Compliance with Section 16 of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), requires the Company's directors and officers and persons who
beneficially own more than ten percent of the Company's Common Stock to file
with the Securities and Exchange Commission ("Commission") and the Boston Stock
Exchange initial reports of ownership and reports of changes in ownership of
Common Stock in the Company. Officers, directors and greater-than-ten percent
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shareholders are required by Commission regulation to furnish the Company with
copies of all Section 16(a) reports they filed. To the Company's knowledge,
based solely on review of the copies of such reports furnished to the Company
and written representation that no other reports were required, during the
fiscal year ended December 31, 1998, such persons complied with all Section
16(a) filing requirements.
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation for the
past three years ended December 31, 1998 for the Company's President, the three
other most highly compensated executive officers and two former executive
officers (collectively, the "Named Executive Officers") whose compensation
exceeded $100,000 for the year ended December 31, 1998. None of the Named
Executive Officers received noncash compensation benefits having a value
exceeding 10% of his cash compensation during 1996, 1997 or 1998.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- ----------------------------------------- --------- ------------------------ ---------------------------------------
Annual Long-Term Compensation
Compensation
- ----------------------------------------- --------- ------------ ----------- ------------------ --------------------
Awards Payouts
- ----------------------------------------- --------- ------------ ----------- ------------------ --------------------
Name and Principal Year Salary ($) Bonus Options All Other
Position During Period ($) (No. of Shares) Compensation
($)
- ----------------------------------------- --------- ------------ ----------- ------------------ --------------------
<S> <C> <C> <C> <C> <C>
Shelly Finkel 1998 121,154 -- 54,334(1) --
Chairman of the Board 1997 75,000 -- 103,334(1) --
1996 75,000 -- 3,334(1) --
- ----------------------------------------- --------- ------------ ----------- ------------------ --------------------
Randolph Cherkas 1998 145,000(2) -- 101,000 --
President and director 1997 -- -- -- --
1996 -- -- -- --
- ----------------------------------------- --------- ------------ ----------- ------------------ --------------------
Michael Hoppman 1998 125,000 18,000 55,000 --
Chief Financial Officer, Treasurer 1997 40,385 -- 25,000 --
and Assistant Secretary 1996 -- -- -- --
- ----------------------------------------- --------- ------------ ----------- ------------------ --------------------
Cory Eisner 1998 125,000 10,050 35,301 --
Vice President of Marketing 1997 122,779 -- 25,000 --
1996 155,000 -- 5,000 --
- ----------------------------------------- --------- ------------ ----------- ------------------ --------------------
Robert Bogin(3) 1998 133,377 25,000 3,334(1) 34,615
formerly President and director 1997 66,377 -- 100,000 --
1996 -- -- -- --
- ----------------------------------------- --------- ------------ ----------- ------------------ --------------------
David S. Tobin(4) 1998 109,847 7,500 60,000 28,990(5)
formerly Vice President--Business 1997 175,923 -- 75,000 --
Affairs, General Counsel and 1996 116,667 -- 29,303 --
Secretary
- ----------------------------------------- --------- ------------ ----------- ------------------ --------------------
</TABLE>
(1) Includes immediately exercisable options to purchase 3,334 shares of Common
Stock granted pursuant to the Company's 1994 Performance Equity Plan, which
provided for stock option grants of 3,334 shares to be made to each
director of the Company on March 31st of 1995 through 1998. See "--1994
Performance Equity Plan."
(2) Does not include amount paid to Mr. Cherkas in connection with the NATW
merger described in "Certain Relationships and Related Transactions--The
NATW Merger."
(3) The Company formerly employed Robert Bogin as President pursuant to an
employment agreement expiring on December 31, 1999. Mr. Bogin's annual base
compensation at the time his employment ceased was $200,000. In August
1998, the Company amended Mr. Bogin's employment agreement to provide that
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<PAGE>
effective August 31, 1998, Mr. Bogin would no longer serve as the Company's
President. The amendment provided for a severance arrangement under which
he would be paid $100,000 per annum through December 31, 1999. In addition,
the amendment provided that the options to purchase 100,000 shares of
Common Stock granted to him in connection with his employment would remain
exercisable until December 31, 2001. The Company also agreed to maintain
medical coverage for Mr. Bogin through December 31, 1999 unless he becomes
employed elsewhere and is eligible for such coverage. Mr. Bogin is
prohibited from competing with the Company through December 31, 2000.
(4) The Company formerly employed David Tobin as Vice President--Business
Affairs and General Counsel pursuant to an employment agreement expiring
December 31, 2000. Mr. Tobin's annual base compensation at the time his
employment ceased was $175,000. In September 1998, the Company amended Mr.
Tobin's employment agreement to provide that effective September 30, 1998,
Mr. Tobin would no longer serve as the Company's Vice President--Business
Affairs and General Counsel. The amendment provided for a severance
arrangement under which he would be paid $87,500 per annum through December
31, 2000. In addition, the amendment provided that all of Mr. Tobin's
outstanding options would remain exercisable until December 31, 2001. The
Company also agreed to maintain medical coverage for Mr. Tobin through
December 31, 2000 unless he becomes employed elsewhere and is eligible for
such coverage. The Company also granted him options to purchase 30,000
shares of Common Stock which became exercisable in March 1999 and will
remain exercisable until September 2003 at an exercise price of $1.75 per
share.
(5) Includes $20,865 in severance payments. Also includes $8,125 in legal fees
paid to David S. Tobin, P.A. in connection with Mr. Tobin's provision of
legal services to the Company after the termination of his employment.
5
<PAGE>
The following table summarizes the number of shares and the terms of
stock options granted to the Named Executive Officers in 1998:
<TABLE>
<CAPTION>
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OPTION/SHARE GRANTS DURING YEAR ENDED DECEMBER 31, 1998
---------------------------------------- --------------------------------------- --------------------------------
Individual Grants
---------------------------------------- ------------------ -------------------- -------------- -----------------
Name and Position Options/ % of Total Exercise Expiration
During Period Shares Options/Shares Price Date
Granted Granted to ($/Share)
Employees in
Fiscal Year
---------------------------------------- ------------------ -------------------- -------------- -----------------
<S> <C> <C> <C> <C> <C>
Shelly Finkel 3,334(1) 5.7% 7.3125 1/3 3/30/08
Chairman of the Board 30,000 2.25 1/3 - 2/6/04
1/3 - 1/1/05
1/3 - 1/1/06
21,000 1.00 1/3 - 6/15/04
1/3 - 12/15/04
1/3 - 12/15/05
---------------------------------------- ------------------ -------------------- -------------- -----------------
Randolph Cherkas 50,000 10.5% 6.375 1/2 - 2/6/04
President and director 1/2 - 2/6/05
30,000 2.25 1/3 - 2/6/04
1/3 - 1/1/05
1/3 - 1/1/06
21,000 1.00 1/3 - 6/15/04
1/3 - 12/15/04
1/3 - 12/15/05
---------------------------------------- ------------------ -------------------- -------------- -----------------
Michael Hoppman 25,000 5.7% 6.125 1/2 - 5/5/03
Chief Financial Officer, Treasurer 1/2 - 5/5/04
and Assistant Secretary 21,000 2.25 1/3 - 2/6/04
1/3 - 1/1/05
1/3 - 1/1/06
9,000 1.00 1/3 - 6/15/04
1/3 - 12/15/04
1/3 - 12/15/05
---------------------------------------- ------------------ -------------------- -------------- -----------------
Cory Eisner 1,100 3.7% 2.25 8/6/03
Vice President of Marketing 21,000 2.25 1/3 - 2/6/04
1/3 - 1/1/05
1/3 - 1/1/06
1,201 2.06 9/16/03
12,000 1.00 1/3 - 6/15/04
1/3 - 12/15/04
1/3 - 12/15/05
---------------------------------------- ------------------ -------------------- -------------- -----------------
Robert Bogin 3,334(1) 0.3% 7.3125 3/30/08
formerly President and director
---------------------------------------- ------------------ -------------------- -------------- -----------------
David S. Tobin 30,000 6.3% 2.25 12/31/01
formerly Vice President--Business 30,000 1.75 9/30/03
Affairs, General Counsel
and Secretary
---------------------------------------- ------------------ -------------------- -------------- -----------------
</TABLE>
(1) Represents immediately exercisable options to purchase 3,334 shares of
Common Stock granted pursuant to the terms of the 1994 Plan, which provided
for stock option grants of 3,334 shares to be made to each director of the
Company on March 31st of 1995 through 1998. See "--1994 Performance Equity
Plan."
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The following table summarizes the number of exercisable and unexercisable
options held by the Named Executive Officers at December 31, 1998, and their
value at that date if such options were in-the-money.
<TABLE>
<CAPTION>
AGGREGATE YEAR-END OPTION VALUES AT DECEMBER 31, 1998
- ------------------------------------------------------------------------------------------------------------------------
Name and Position During Period Number of Unexercised Options Value of Unexercised In-the-Money
at December 31, 1998 Options at December 31, 1998 ($)(1)
- ----------------------------------------- ------------------------------------- ----------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------------------- ------------------ ------------------ ----------------- ----------------------
<S> <C> <C> <C> <C>
Shelly Finkel 123,336 24,000 -- 23,625.00
Chairman of the Board
- ----------------------------------------- ------------------ ------------------ ----------------- ----------------------
Randolph Cherkas 0 101,000 -- 23,625.00
President and director
- ----------------------------------------- ------------------ ------------------ ----------------- ----------------------
Michael Hoppman 22,500 57,500 -- 10,125.00
Chief Financial Officer, Treasurer
Assistant Secretary
- ----------------------------------------- ------------------ ------------------ ----------------- ----------------------
Cory Eisner 25,002 51,967 -- 13,578.07
Vice President of Marketing
- ----------------------------------------- ------------------ ------------------ ----------------- ----------------------
Robert Bogin 103,334 0 -- --
formerly President and director
- ----------------------------------------- ------------------ ------------------ ----------------- ----------------------
David S. Tobin 61,247 103,055 -- 11,250.00
formerly Vice President--Business
Affairs, General Counsel and
Secretary
- ----------------------------------------- ------------------ ------------------ ----------------- ----------------------
</TABLE>
(1) Represents the difference between the aggregate market value at December
31, 1998 of the Common Stock underlying the options (based on a last sale
price of $2.125 on that date) and the options' aggregate exercise price.
1994 Performance Equity Plan
In October 1994, the Board of Directors adopted, and the stockholders
approved, the 1994 Plan. In July 1998, the stockholders approved an amendment to
the 1994 Plan to (1) increase the number of shares of Common Stock available for
issuance under the 1994 Plan from 500,000 shares to 1,500,000 shares and (2)
revise the section of the 1994 Plan that provided for an annual automatic grant
of options to purchase 3,334 shares of Common Stock to each director to (a)
apply to only non-employee directors and (b) increase the number of options
granted annually to each non-employee director from 3,334 shares to 10,000
shares. The 1994 Plan currently authorizes the granting of awards to the
Company's key employees, officers, directors and consultants. Awards consist of
stock options (both nonqualified options and options intended to qualify as
incentive stock options under Section 422 of the Internal Revenue Code of 1986,
as amended), restricted stock awards, deferred stock awards, stock appreciation
rights and other stock-based awards, as described in the 1994 Plan. The 1994
Plan is administered by the Board of Directors, which determines the persons to
whom awards will be granted, the number of awards to be granted and the specific
terms of each grant, including the vesting thereof, subject to the provisions of
the 1994 Plan.
On March 31st of each calendar year during the term of the 1994 Plan,
assuming there are enough shares then available for grant under the 1994 Plan,
each person who is then a non-employee director of the Company is awarded stock
options to purchase 10,000 shares of the Company's Common Stock at the fair
market value thereof (as determined in accordance with the 1994 Plan), all of
which options are immediately exercisable as of the date of grant and have a
term of ten years. These are the only awards which may be granted to a director
of the Company under the 1994 Plan.
Each stock option may be granted at a price determined by the Board of
Directors, not to be less than 100% of the fair market value of the Common Stock
on the date prior to the date of grant (or 110% of the fair market value in the
case of qualified stock options granted to a holder of more than 10% of the
outstanding stock of the Company). The aggregate fair market value of shares for
which qualified stock options are exercisable for the first time by such
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<PAGE>
employee during any calendar year may not exceed $100,000. The 1994 Plan also
contains certain change in control provisions, which could cause options and
other awards to become immediately exercisable and restrictions and deferral
limitations applicable to other awards to lapse in the event any person
(excluding certain stockholders of the Company) acquires beneficial ownership of
more than 25% of the Company's outstanding shares of Common Stock.
As of December 31, 1998, options to purchase 1,247,829 shares of Common
Stock were outstanding under the 1994 Plan. At December 31, 1998, options
outstanding under the 1994 Plan include options to purchase 283,969 shares
currently held by executive officers, at exercise prices ranging from $1.00 to
$6.563 per share. In addition, pursuant to the terms of the 1994 Plan, on March
31, 1995, 1996, 1997 and 1998, the Company granted to each director of the
Company immediately exercisable ten-year options to purchase 3,334 shares for
$17.625, $15.75, $11.125 and $7.3125 per share, respectively. In March 1999, the
Company granted to each non-employee director immediately exercisable ten-year
options to purchase 10,000 shares for $0.9375 per share. The exercise prices of
all of the foregoing options are equal to the fair market value of the Common
Stock on the date prior to the date of grant.
In December 1998, the Company entered into a consulting agreement with
Steven Chapman, pursuant to which Mr. Chapman agreed to provide
telecommunications consulting services to the Company. The agreement is
terminable by either party upon 30 days' prior written notice. In consideration
for providing such services, the Company agreed to pay Mr. Chapman $25,000 per
quarter plus commission and to grant him options under the 1994 Plan to purchase
up to 150,000 shares of Common Stock for $1.00 per share, 2,500 of which vest in
June 1999, 5,000 of which vest upon the Company's commencement of a direct
relationship with an international carrier, and 2,500 vest at the end of each
calendar quarter that the direct relationship remains in place up to a maximum
of five quarters. This option expires five years from the date of vesting.
Other Options and Warrants
In April 1997, Wheatley Partners, L.P. ("Wheatley") and Wheatley Foreign
Partners, L.P. ("Wheatley Foreign") exercised an aggregate of 333,334 warrants
sold in December 1996 at an exercise price of $7.50 per share, resulting in
$2,500,000 of gross proceeds to the Company. In consideration for exercising the
warrants, the Company issued to Wheatley and Wheatley Foreign warrants to
purchase an aggregate of 250,000 shares of Common Stock. These warrants are
identical to the warrants issued in the Company's initial public offering in
December 1994. See "Certain Relationships and Related Transactions--General."
In July 1997, in connection with the Company's public stock offering, the
Company granted to the representative of the underwriters an option to purchase
250,000 shares of common stock at an exercise price of $9.08 per share. The
option became exercisable in July 1998 and will remain exercisable until July
2002.
In July 1997, in connection with his employment with the Company, Robert
Bogin, the Company's former President, was granted options to purchase 100,000
shares of Common Stock at an exercise price of $6.563 per share, all of which
are currently exercisable. In connection with Mr. Bogin's departure from the
Company in August 1998, the Company agreed to allow these options to remain
exercisable until December 31, 2001. See footnote 3 to the Summary Compensation
Table for a discussion of Mr. Bogin's severance arrangement.
Also in July 1997, the Company issued warrants to Pennsylvania Merchant
Group ("Penn Merchant") to purchase 100,000 shares of Common Stock at an
exercise price of $7.00 per share in consideration of Penn Merchant rendering
consulting services to the Company. In lieu of paying cash compensation to Penn
Merchant for acting as placement agent of the Company's private placement
consummated in October 1998, the Company reduced the exercise price of these
warrants to $1.625 per share.
In November 1997, the Company granted options to purchase an aggregate of
165,000 shares of Common Stock to certain of its employees, including (1)
options to purchase 100,000 shares of Common Stock at an exercise price of
$6.4375 per share to Shelly Finkel, the Company's Chairman of the Board, all of
which are currently exercisable and (2) options to purchase 25,000 shares of
Common Stock at an exercise price of $6.4375 per share to Michael Hoppman, the
Company's Chief Financial Officer, 10,000 of which are currently exercisable,
10,000 of which vest in August 1999, and 5,000 of which vest in August 2000.
In January 1998, the Company granted options to JEB Partners to purchase
60,000 shares of Common Stock at an exercise price of $6.125 per share in
consideration of JEB Partners rendering consulting services to the Company. Such
options are currently exercisable and will remain exercisable until January
2003.
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<PAGE>
In April 1998, the Company completed a private placement, pursuant to which
it derived net proceeds of approximately $1,135,000 through the sale of
$1,250,000 promissory notes and warrants to purchase 178,573 shares of Common
Stock. The warrants are exercisable through April 2001 at an initial exercise
price of $7.00 per share.
In April 1998, the Company issued to an investor, who agreed to purchase up
to $2,000,000 of Common Stock or other securities at a discount to the market
price of such securities, warrants to purchase 100,000 shares of Common Stock at
an exercise price of $7.50 per share. The warrants are immediately exercisable
and will remain exercisable until April 13, 2001. In connection with introducing
this investor to the Company, the Company granted to each of Messrs. Barry
Rubenstein, a principal stockholder of the Company, and Eli Oxenhorn options to
purchase 50,000 shares of Common Stock at an exercise price of $7.125 per share.
The options are currently exercisable and will remain exercisable until April 1,
2003.
In October 1998, the Company issued to Penn Merchant warrants to purchase
30,000 shares of Common Stock until October 2003 at an exercise price of $1.625
per share in lieu of payment for the balance of monthly consulting fees owed to
Penn Merchant, which aggregated approximately $78,000.
Option Repricing
In January 1998, the Company reduced the exercise prices of 196,683
outstanding options to purchase Common Stock from exercise prices ranging from
$7.88 to $18.38, to $6.563, the fair market value of the Common Stock on the
date of such repricing. 10,000 of the repriced options are held by Shelly
Finkel, Chairman of the Board. The exercise price of these options was reduced
from $9.99 per share. 29,303 of the repriced options are held by David Tobin,
former Vice President--Business Affairs and General Counsel. The exercise price
of 16,667 options was reduced from $18.375 per share and the exercise price of
12,636 options was reduced from $7.92 per share. 16,668 of the repriced options
are owned by Cory Eisner, Vice President of Marketing. The exercise price of
8,334 options was reduced from $15.00 per share, the exercise price of 3,334
options was reduced from $17.25 per share and the exercise price of 5,000
options was reduced from $7.875 per share.
Employment Agreements
The Company has entered into employment agreements with each of Shelly
Finkel, its Chairman of the Board, Randolph Cherkas, its President, and Cory
Eisner, its Vice President of Marketing.
Mr. Finkel's employment agreement, as amended, provides for a term through
December 31, 2000, and requires him to devote at least 50% of his business time
to the management and operations of the Company. The agreement provides for a
base salary of $150,000 per annum, plus an annual cash bonus at the discretion
of the Board of Directors. If Mr. Finkel is terminated without cause, he will
continue to receive his salary through the remainder of his term of employment,
and will be paid a cash bonus equal to the last cash bonus paid to him. If Mr.
Finkel is terminated without cause after (1) the Company is sold or otherwise
acquired, or (2) a party that owns no more than 5% of the voting securities of
the Company acquires in one or more transactions beneficial ownership of more
than 35% of such securities (a "Change of Control"), Mr. Finkel will receive all
salary and bonus payments in a single lump sum payment. The agreement prohibits
Mr. Finkel from competing with the Company during the term of his employment and
for two years thereafter. In August 1998, Mr. Finkel voluntarily agreed to
reduce his salary from $150,000 to $75,000 per annum.
Mr. Cherkas' employment agreement provides for a term through December 31,
2000 and for an annual base salary of $180,000 per annum, subject to annual
increases and bonuses as the Board of Directors may, in its discretion,
determine. In connection with his employment with the Company, Mr. Cherkas was
granted options to purchase 50,000 shares of Common Stock at an exercise price
of $6.375 per share, 25,000 of which became exercisable in February 1999 and
25,000 of which become exercisable in February 2000. In August 1998, Mr. Cherkas
voluntarily agreed to reduce his salary from $180,000 to $125,000 per annum.
Mr. Eisner's employment agreement provides for a term through December 31,
1999 and for a base salary of $125,000 per annum, plus a cash or stock bonus at
the discretion of the Board of Directors. If Mr. Eisner is terminated without
cause, he will receive his salary through the later of December 31, 1999 or the
one-year anniversary date of the termination (the "Compensation Period"). The
agreement prohibits Mr. Eisner from competing with the Company during the
Compensation Period.
9
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of April 1, 1999,
with respect to (1) those persons or groups known to the Company to beneficially
own more than 5% of the outstanding shares of Common Stock, (2) each director of
the Company, (3) each Named Executive Officer and (4) all directors and
executive officers as a group. The information is determined in accordance with
Rule 13d-3 promulgated under the Exchange Act based upon information furnished
by the persons listed or contained in filings made by them with the Commission.
Under this rule, a person is deemed to own beneficially the number of shares
issuable upon exercise of options, warrants or convertible securities it holds
that are exercisable within 60 days from April 1, 1999. Each beneficial owner's
percentage ownership is determined by assuming that convertible securities,
options or warrants that are held by such person (but not those held by any
other person) and which are exercisable within 60 days of April 1, 1999 have
been exercised.
<TABLE>
<CAPTION>
Shares
Beneficially
Name and Address of Beneficial Owner Owned Percent
- --------------------------------------- ------------- --------
<S> <C> <C>
Shelly Finkel 679,746(1) 4.7%
c/o Shelly Finkel Management, Inc.
60 East 42nd Street, Suite 464
New York, New York 10165
Randolph Cherkas 450,721(2) 3.1%
c/o Global Telecommunication Solutions, Inc.
10 Stow Road, Suite 200
Marlton, New Jersey 08053
Donald L. Ptalis 92,741(3) *
16 Ross Avenue
Emerson, New Jersey 07630
Alan W. Kaufman 26,670(4) *
1150 Park Avenue #9A
New York, New York 10177
David Lipson 10,000(5) *
c/o Integrated Systems Consulting Group, Inc.
575 E. Swedesford Road
Wayne, Pennsylvania 19087
Jack N. Tobin 20,001(6) *
7759 Highlands Circle
Margate, Florida 33063
Michael Hoppman 62,285(7) *
c/o Global Telecommunication Solutions, Inc.
10 Stow Road, Suite 200
Marlton, New Jersey 08053
Cory Eisner 46,970(8) *
c/o Global Telecommunication Solutions, Inc.
233 7th Street
Garden City, New York
Robert Bogin 103,334(9) *
8221 Windsor View Terrace
Potomac, Maryland 20854
David S. Tobin 144,302(10) 1.0%
3300 University Drive
Coral Springs, Florida 33065
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Shares
Beneficially
Name and Address of Beneficial Owner Owned Percent
- --------------------------------------- ------------- --------
<S> <C> <C>
Barry Rubenstein 4,589,387(11) 31.0%
68 Wheatley Road
Brookville, New York 11545
Wheatley Partners LLC 3,322,621(12) 22.6%
80 Cuttermill Road
Great Neck, New York 11021
All executive officers and directors as a group 1,389,134(13) 9.4%
(8 persons)
</TABLE>
- -----------------------------------
* Less than 1%.
(1) Includes 140,336 shares underlying currently exercisable options and 30,873
shares underlying warrants. Excludes 34,000 shares underlying options,
7,000 of which become exercisable in each of December 1999 and 2000 and
10,000 of which become exercisable in each of January 2000 and 2001.
(2) Includes 42,000 shares underlying currently exercisable options. Excludes
59,000 shares underlying options, 25,000 of which become exercisable in
February 2000, 7,000 of which become exercisable in each of December 1999
and 2000 and 10,000 of which become exercisable in each of January 2000 and
2001.
(3) Includes 127 shares underlying warrants and 30,001 shares underlying
currently exercisable options.
(4) Includes 1,667 shares underlying warrants and 23,334 shares underlying
currently exercisable options.
(5) Represents shares underlying currently exercisable options.
(6) Represents shares underlying currently exercisable options.
(7) Includes 45,000 shares underlying currently exercisable options. Excludes
35,000 shares underlying options, 10,000 of which vest in August 1999,
3,000 of which vest in each of December 1999 and 2000, 7,000 of which vest
in January 2000, 5,000 of which vest in August 2000 and 7,000 of which vest
in January 2001.
(8) Includes 334 shares underlying warrants and 46,636 shares underlying
currently exercisable options. Excludes 30,333 shares underlying options,
15,333 of which become exercisable in January 2000, 7,000 of which become
exercisable in January 2001 and 4,000 of which become exercisable in each
of December 1999 and 2000.
(9) Represents shares underlying currently exercisable options.
(10) Represents shares underlying currently exercisable options. Excludes 20,000
shares underlying options, 10,000 of which become exercisable in each of
January 2000 and 2001.
(11) Includes 10,334 shares owned by The Marilyn and Barry Rubenstein Family
Foundation, a tax exempt organization of which Mr. Rubenstein is a trustee,
and 26,667 shares owned by Marilyn Rubenstein, Mr. Rubenstein's spouse. Mr.
Rubenstein disclaims beneficial ownership over all of such shares. Also
includes 110,623 shares owned by Seneca Ventures, a New York limited
partnership of which Mr. Rubenstein is a general partner. Also includes
292,912 shares owned and 13,334 shares underlying warrants owned by
Woodland Partners, a New York general partnership of which Mr. Rubenstein
is a partner. Also includes 185,623 shares owned by the Woodland Venture
Fund, a New York limited partnership of which Mr. Rubenstein is a general
partner. Also includes 2,877,402 shares owned and 235,000 shares underlying
warrants owned by Wheatley. Also includes 195,219 shares owned and 15,000
shares underlying warrants owned by Wheatley Foreign. Mr. Rubenstein is a
member and officer of Wheatley Partners LLC, a Delaware limited liability
company which is the general partner of Wheatley, and also a general
partner of Wheatley Foreign. Mr. Rubenstein disclaims beneficial ownership
11
<PAGE>
of the securities owned by Seneca Ventures, Woodland Partners, Woodland
Venture Fund, Wheatley and Wheatley Foreign except to the extent of his
equity interest therein. Also includes 10,000 shares owned by the
Rubenstein Family LP, a New York limited partnership of which Mr.
Rubenstein is a general partner. Also includes 68,057 shares owned
individually by Barry Rubenstein, 103,333 shares held in his IRA Rollover
account, 18,057 shares underlying warrants and 108,334 shares underlying
currently exercisable options.
(12) Includes 235,000 and 15,000 shares underlying warrants owned by Wheatley
and Wheatley Foreign, respectively. Such entities are controlled by
Wheatley Partners LLC, a Delaware limited liability company which is the
general partner of Wheatley and a general partner of Wheatley Foreign. The
members and officers of Wheatley Partners LLC are Barry Rubenstein, Irwin
Lieber, Barry Fingerhut, Seth Lieber, Jonathan Lieber and Matthew Smith.
(13) Includes those shares deemed to be included in the respective beneficial
ownership of Messrs. Finkel, Cherkas, Ptalis, Kaufman, Lipson, Jack Tobin,
Hoppman and Eisner as described in notes 1 through 8 above.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
General
In February 1995, the Company entered into two-year consulting agreements
with each of Barry Rubenstein, a principal stockholder of the Company, and Eli
Oxenhorn. In January 1997, such agreements were extended through February 1999.
In February 1995, the Company granted to each of Messrs. Rubenstein and
Oxenhorn, in consideration for the consulting services, options to purchase
33,334 shares of Common Stock at an exercise price $14.25 per share, which
options became exercisable in February 1996 and remain exercisable until
February 2001. In January 1997, in connection with the extension of their
respective consulting agreements, each of Messrs. Rubenstein and Oxenhorn were
granted options to purchase 25,000 shares of Common Stock at an exercise price
of $9.00 per share. These options became exercisable in February 1997 and remain
exercisable until February 2002. In January 1998, the Company reduced the
exercise prices of all of the options granted to Messrs. Rubenstein and Oxenhorn
to $6.563 per share. See "--Option Repricing."
In March 1997, the Company entered into an agreement with Wheatley,
pursuant to which Wheatley agreed that if the Company did not consummate a
financing resulting in gross proceeds to the Company of at least $2,500,000 by
June 1, 1997, then Wheatley and Wheatley Foreign would exercise an aggregate of
at least 333,334 of the warrants that they received in the private placement
consummated by the Company in December 1996, which would result in the Company's
receipt of gross proceeds of at least $2,500,000. In April 1997, the Company
requested that Wheatley and Wheatley Foreign exercise 333,334 warrants prior to
June 1, 1997 and, in consideration of such exercise, the Company issued to
Wheatley and Wheatley Foreign warrants to purchase an aggregate of 250,000
shares of Common Stock. The new warrants are identical to the warrants issued by
the Company in its initial public offering in December 1994.
In September 1997, the Company amended the employment agreement of Gary
Wasserson, the Company's former Chief Executive Officer, pursuant to which Mr.
Wasserson agreed to serve as the Company's Chief Executive Officer only until
December 31, 1997 and then to be engaged as a consultant until December 31,
1998. In consideration thereof, the Company agreed to (1) pay Mr. Wasserson
$50,000 in severance payments, $25,000 of which was paid in each of September
1997 and January 1998, (2) pay Mr. Wasserson $150,000 in equal monthly
installments during the consulting period, (3) forgive $100,000 of debt owed by
Mr. Wasserson so long as Mr. Wasserson did not violate the terms of the
agreement and (4) grant him immediately exercisable options to purchase 50,000
shares of Common Stock until November 2002 at an exercise price of $6.4375 per
share. In addition, the Company currently leases space from JilJac Realty
Company, a general partnership owned by Gary Wasserson which, until August 1998,
housed the Company's principal executive offices. The lease expires in December
1999 and provides for an annual rent of $58,344 during 1999.
In April 1998, limited partnerships in which Mr. Barry Rubenstein is either
a general partner or an officer and member of a limited liability company that
is a general partner agreed to allow the Company to defer repayment of an
aggregate of $2,400,000 of promissory notes issued by the Company in December
1996 from November 1998 to January 1999. In December 1998, these notes were
converted into Common Stock as described below.
12
<PAGE>
In April 1998, in connection with introducing to the Company an investor
that agreed to acquire up to $2,000,000 of Common Stock or other securities, the
Company granted to each of Messrs. Barry Rubenstein and Eli Oxenhorn options to
purchase 50,000 shares of Common Stock at an exercise price of $7.125 per share.
The options became exercisable in September 1998 and will remain exercisable
until April 2003.
In December 1998, the Company offered holders of $3,050,000 aggregate
principal amount of promissory notes acquired from the Company in December 1996
the opportunity to convert their notes into shares of Common Stock at a
conversion rate of $0.968 per share and to exchange an aggregate of 683,333
common stock purchase warrants for shares of Common Stock at an exchange rate of
4.5555 warrants per share. $3,000,000 of the notes and 666,667 of the warrants
were converted into an aggregate of 3,245,518 shares of Common Stock. In
addition, holders that accepted this conversion offer forgave interest of
approximately $14,000 due on these notes. Among these holders were Shelly
Finkel, Chairman of the Board, and limited partnerships in which Barry
Rubenstein, a principal stockholder, is either a general partner or an officer
and member of a limited liability company that is a general partner. The
remaining $50,000 of notes plus interest accrued were converted pursuant to the
terms of the notes into an aggregate of 71,736 shares of Common Stock at a
conversion rate of $.7025 per share.
In December 1998, the Company offered holders of $2,599,750 aggregate
principal amount of debentures acquired from the Company in June and September
1994 the opportunity to convert their debentures into shares of Common Stock at
a conversion rate of $0.80 per share. In January 1999, holders of $2,524,750
aggregate principal amount of debentures converted their debentures into
3,155,938 shares of Common Stock. Donald Ptalis, an officer and director of the
Company, converted $50,000 of debentures into 62,500 shares of Common Stock. The
Company offered the debenture holders the opportunity to convert their
debentures into shares because the Company anticipated that it would not be able
to pay off the principal amount of the debentures when due in June and September
1999.
In December 1998, the Company entered into an agreement with Shelly Finkel
Management ("SFM"), a company owned by Shelly Finkel, the Company's Chairman of
the Board, pursuant to which, in consideration of the Company's $48,000 payment
to SFM, SFM agreed to assume all of the obligations under the Company's lease
for its sales office in New York and to indemnify and hold the Company harmless
from all losses, costs and expenses associated with the lease arising after
December 31, 1998. To date, the Company has paid SFM $24,000.
The terms of the foregoing transactions were determined without arms'
length negotiations and could create, or appear to create, potential conflicts
of interest which may not necessarily be resolved in the Company's favor. All
future transactions and loans between the Company and its officers, directors
and principal stockholders or their affiliates will be on terms no less
favorable than could be obtained from unaffiliated third parties and will be
approved by a majority of the then disinterested directors of the Company.
The NATW Merger
In February 1998, the Company acquired, through a merger, all of the
outstanding capital stock of NATW for a purchase price comprised of (1)
$2,000,000 in cash, (2) an aggregate of 505,618 shares of Common Stock and (3)
$1,000,000 aggregate principal amount of promissory notes ("NATW Notes"),
secured by substantially all of the assets of NATW. The NATW Notes accrue
interest at the rate of 6% per annum and were originally payable as follows: (1)
one-half of principal and interest accrued thereon on November 1, 1998 and (2)
four equal payments of $125,000, plus interest accrued thereon, on April 1,
1999, July 1, 1999, October 1, 1999 and January 1, 2000. In addition, the
Company is required to pay up to $2,000,000 ("Earn Out") to Randolph Cherkas
(the Company's President and one of the former shareholders of NATW) if certain
sales and financial objectives are achieved. In April 1998, the former
shareholders of NATW agreed to defer payment of an aggregate of $1,000,000 of
NATW Notes from 1998 to January 1999. In December 1998, the former shareholders
of NATW preliminarily agreed to convert the NATW Notes into Common Stock as
described below. From the consummation of the NATW merger in February 1998
through March 31, 1999, the Company has paid Mr. Cherkas $341,355 of the
aggregate amount of $838,900 owed to him during that period under the Earn Out.
To date, Mr. Cherkas has the opportunity to earn up to an additional $1,161,100
under the Earn Out. The Company currently is negotiating with Mr. Cherkas the
payment terms of amounts owed and to be owed to him under the Earn Out.
In connection with the merger, the Company entered into an employment
agreement with Randolph Cherkas, the President of NATW, who was appointed Chief
13
<PAGE>
Operating Officer of the Company and currently is President and a director of
the Company. For a description of the terms of Mr. Cherkas' employment
agreement, see "Executive Compensation--Employment Agreements."
The Company also entered into an employment agreement with Gary Liguori,
the Vice President of NATW, who was appointed the Director of Wholesale Sales of
the Company. Mr. Liguori's employment agreement provides for a term through
December 31, 2000. The agreement provides for a base salary of $80,000 per
annum, subject to annual increases as the Board of Directors in its discretion
may determine. Mr. Liguori also is entitled to receive bonuses upon the
achievement of certain sales objectives.
Pursuant to the merger agreement, the Company granted piggyback
registration rights to Messrs. Cherkas and Liguori. Each of them also executed a
lock-up agreement (1) prohibiting the sale of such shares for one year after the
closing date and (2) limiting the number of shares that can be sold by each to
25% of the shares acquired in connection with the NATW merger during any
calendar quarter during the one year period thereafter.
The CCI Merger
In February 1998, the Company acquired, through a merger, all of the
outstanding capital stock of Centerpiece Communications, Inc. ("CCI") for a
purchase price comprised of (1) $1,500,000 in cash, (2) 401,284 shares of Common
Stock, of which 47,891 shares were subsequently contributed back to the Company
(see below) and (3) a $1,000,000 aggregate principal amount promissory note
("CCI Note"), secured by substantially all of the assets of CCI. The CCI Note
accrued interest at a rate of 8% per annum and was originally payable as
follows: (1) $250,000 plus interest accrued thereon on October 31, 1998, (2)
$250,000 plus interest accrued thereon on January 1, 1999 and (3) four equal
payments of $125,000, plus interest accrued thereon, on April 1, 1999, July 1,
1999, October 1, 1999 and January 1, 2000. In April 1998, the former shareholder
of CCI agreed to defer payment of $250,000 of the CCI Note, plus interest, from
October 31, 1998 to January 1999. In November 1998, the CCI Note was converted
into Common Stock as described below.
In connection with the merger, the Company entered into an employment
agreement with Mr. Rubenstein, the President of CCI, who was appointed the Vice
President--Wholesale Sales and a director of the Company. In November 1998, the
Company terminated Mr. Rubenstein's employment agreement, which was to expire on
December 31, 2000. Mr. Rubenstein's annual base compensation at the time his
employment ceased was$150,000. Pursuant to a termination agreement, Mr.
Rubenstein received a $175,000 severance payment, payable in equal bi-monthly
installments through January 31, 2000. Upon a Change of Control, Mr. Rubenstein
is to receive all payments in a single lump sum payment. The agreement prohibits
Mr. Rubenstein from competing with the Company until November 1, 1999.
In connection with Mr. Rubenstein's departure and in full satisfaction of
his and the Company's obligations to each other, Mr. Rubenstein sold an
aggregate of 353,393 shares of Common Stock and the CCI Note for an aggregate
purchase price of $575,000. Among the purchasers were Shelly Finkel, Chairman of
the Board of the Company, Michael Hoppman, Chief Financial Officer of the
Company, and Barry Rubenstein, a principal stockholder (no relation to J. Mark
Rubenstein). Mr. Rubenstein also contributed back to the Company 47,891 shares
of Common Stock with a fair market value of $69,867 in consideration of $298,364
that he owed to the Company relating to Access Telecom as described below. The
reserve for the loss on the settlement of $229,497 was recorded in the Company's
financial statements for the year ended December 31, 1998. After the group of
investors purchased the CCI Note and shares from Mr. Rubenstein, they accepted
the Company's offer to convert the principal amount of the CCI Note into 813,008
shares of Common Stock at a conversion rate of $1.23 per share. The purchasers
forgave interest of $60,000 due on the CCI Note. There was no gain or loss
recognized on the conversion of the CCI Note.
Agreements Relating to Access Telecom
Pursuant to the respective merger agreements, the Company and the former
shareholders of NATW and CCI agreed to share certain costs related to any
underlying carrier's failure to provide telecommunications services to phone
cards purchased by NATW and CCI prior to the mergers. In February 1998, Access
Telecom, a primary provider of telecommunications services to NATW and CCI prior
to and after the respective mergers, ceased providing such services to the
prepaid phone cards that it had sold to each of NATW and CCI, despite receiving
payment for substantially all of the phone cards. The cost to provide
telecommunications services related to such cards aggregated $1,761,097 during
the year ended December 31, 1998. For purposes of the Company's consolidated
financial statements for the year ended December 31, 1998, $451,185 and $298,364
of the estimated costs have been allocated to the former shareholders pursuant
to indemnification arrangements.
14
<PAGE>
In November 1998, the Company and J. Mark Rubenstein, former officer and
director of the Company and the former shareholder of CCI, reached a settlement
on the amount due to the Company related to Access Telecom. Pursuant to the
terms of an amendment to the merger agreement, Mr. Rubenstein contributed back
to the Company 47,891 shares of Common Stock issued as part of the merger
consideration with a fair market value of $69,867 in consideration of $298,364
that he owed to the Company. The reserve for the loss on the settlement of
$229,497 was recorded in the financial statements for the year ended December
31, 1998.
In December 1998, Randolph Cherkas and Gary Liguori, the former
shareholders of NATW, agreed to offset the amounts due to the Company related to
Access Telecom against the $1,000,000 of NATW Notes payable to Messrs. Cherkas
and Liguori, and to subsequently convert the net amount due under the NATW Notes
into Common Stock at a conversion rate of $0.80 per share. The Company and
Messrs. Cherkas and Liguori have not reached a final settlement on the amount
due to the Company related to Access Telecom. It is possible that the actual
settlement could materially differ from the $451,185 currently reflected in the
Company's financial statements as a reduction in the $1,000,000 NATW Note.
15
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: April 29, 1999 GLOBAL TELECOMMUNICATION SOLUTIONS, INC.
By: /s/ Shelly Finkel
--------------------------------------
Shelly Finkel, Chairman of the Board of Directors
In accordance with Section 13 or 15(d) of the Exchange Act, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
/s/ Shelly Finkel
- ------------------ Chairman of the Board of Directors April 29, 1999
Shelly Finkel
/s/ Randolph Cherkas
- -------------------- President and Director April 29, 1999
Randolph Cherkas
/s/ Alan W. Kaufman
- -------------------- Director April 29, 1999
Alan W. Kaufman
/s/ David Lipson
- -------------------- Director April 29, 1999
David Lipson
/s/ Donald L. Ptalis
- -------------------- Director of Strategic April 29, 1999
Donald L. Ptalis Development and Director
/s/ Jack N. Tobin
- ------------------ Director April 29, 1999
Jack N. Tobin
/s/ Michael Hoppman
- ---------------------- Chief Financial Officer (and April 29, 1999
Michael Hoppman principal accounting officer)
