As also referenced in the most recent Form 10-KSB report of the
Company, the Company's subsidiary, Chequemate Tele-Services, Inc., has been
named in litigation regarding a disputed lease obligation. The Chairman of
the Company has also been named as a defendant by reason of a written
guarantee given to the landlord of the subject lease. The defendants have
responded to the litigation and Chequemate Tele-Services has asserted
counterclaims against the landlord. The Dallas County Texas District Court
has ordered mediation in the matter. A date for the mediation hearing has not
been set as of the date of this amended report.
25
Item 2. Changes in Securities and Use of Proceeds
Set forth in the table below is a summary of all securities sold by
the Company between January 1, 1998 and May 31, 1999, without registering the
securities under the Securities Act of 1933. Substantially all of the
described transactions have previously been reported in the quarterly reports
of the Company filed with the SEC. This table is meant to be a complete
restatement of such transactions for the period indicated.
Date Title and amount of Consideration Class of persons to
Securities sold whom sold
---------------------------------------------------------------------------------------------------------
A 2/10/98 7,000 shares Consulting services U.S. Investor
common stock
---------------------------------------------------------------------------------------------------------
B 2/27/98 20,000 shares satisfaction of U.S. Investor
common stock payable of issuer
---------------------------------------------------------------------------------------------------------
C 2/ /98 200,000 shares consulting services U.S. Investor
common stock
---------------------------------------------------------------------------------------------------------
D 4/24/98 to 106,668 shares exercise of assigned U.S. investor
7/22/98 common stock options
---------------------------------------------------------------------------------------------------------
E 6/2/98 20,000 shares employee bonus and Corporate officer
common stock consulting services
---------------------------------------------------------------------------------------------------------
F 7/21/98 40,000 shares consulting services Consultant
common stock
---------------------------------------------------------------------------------------------------------
G 8/26/98 to 587,791 shares $422,500 U.S. investors
11/6/98 common stock
---------------------------------------------------------------------------------------------------------
H 10/26/98 9,754 shares payment of book U.S. investor
common stock royalties
---------------------------------------------------------------------------------------------------------
I 12/8/98 250,000 shares Alpha asset Selling corporation
common stock acquisition
---------------------------------------------------------------------------------------------------------
J 12/15/98 10,000 shares consulting services U.S. investor
common stock
---------------------------------------------------------------------------------------------------------
K 12/21/98 8% convertible $ 750,000 U.S. investor
debentures
---------------------------------------------------------------------------------------------------------
L 12/21/98 warrant for Unexercised with a U.S. investor
24,753 shares $3.64 strike price
---------------------------------------------------------------------------------------------------------
M 12/21/98 200,000 shares consulting services Consultant
common stock
---------------------------------------------------------------------------------------------------------
N 10/5/98 to 675,000 shares $337,500 Foreign investors
11/2/98 common stock
---------------------------------------------------------------------------------------------------------
26
---------------------------------------------------------------------------------------------------------
O 11/30/98 to 800,000 shares $400,000 Foreign investors
12/23/98 common stock
---------------------------------------------------------------------------------------------------------
P 1/25/99 to 700,000 shares $700,000 Foreign investors
3/25/99 common stock
---------------------------------------------------------------------------------------------------------
Q 2/9/99 8% convertible $2,000,000 U.S. investor
debentures
---------------------------------------------------------------------------------------------------------
R 2/9/99 warrant for Unexercised with a U.S. investor
67,800 shares $3.54 strike price
---------------------------------------------------------------------------------------------------------
S 3/31/99 333,333 shares Strata acquisition U.S. investors
common stock of secured interests
---------------------------------------------------------------------------------------------------------
T 4/15/99 55,000 shares Consulting services Foreign consultant
common stock
---------------------------------------------------------------------------------------------------------
U 4/23/99 warrant for 300,000 Unexercised with strike U.S. investor
shares prices of $3.50, $4.50
and $5.00
---------------------------------------------------------------------------------------------------------
Sales of Equity Securities Pursuant to Regulation S
The sales reflected in transactions N, O, P and T were made pursuant
to Regulation S promulgated by the Securities and Exchange Commission. The
securities were all restricted common stock, and shall remain as restricted
securities for the one-year distribution compliance period. The facts relied
upon to satisfy the exemption were as follows:
(a) The Regulation S stock purchasers (the "Purchasers") were not
U.S. persons as that term is defined under Regulation S.
(b) At the time the buy orders were originated, the Purchasers were
outside the U.S. and were outside the U.S. as of the date of the execution
and delivery of any subscription agreements.
(c) Purchasers purchased the shares for their own account and not on
behalf of any U.S. person; the sales had not been pre-arranged with a
purchaser in the U.S.; and all offers and resales of the securities are to be
made only made in compliance with the provisions of Regulation S.
(d) The Purchasers were not entities organized under foreign law by
a U.S. person, as defined in Regulation S Rule 902(k), for the purpose of
investing in unregistered securities, unless the Purchasers were organized
and owned by accredited investors, as defined in Regulation D, Rule 501(a),
who are not natural persons, estates or trusts.
27
(e) The transactions were not purchases pursuant to a fiduciary
account where a U.S. person, as defined in Regulation S Rule 902(o), had
discretion to make investment decisions for the account.
(f) To the knowledge of the Company , all offers and sales of the
Regulation S shares by Purchasers prior to the expiration of a one-year
distribution compliance period have only been made in compliance with the
safe harbor contained in Regulation S, or pursuant to an exemption from
registration.
(g) All offering documents received by Purchasers included
statements to the effect that the shares had not been registered under the
1933 Act and may not be offered or sold in the United States or to U.S.
persons unless the shares are registered under the 1933 Act or an exemption
from the registration requirements was available.
(h) The Purchasers acknowledged that the purchase of the shares
involved a high degree of risk and further acknowledged that they could bear
the economic risk of the purchase of the shares, including the total loss of
their investment.
(i) The Purchasers understood that the shares were being offered and
sold to them in reliance on specific exemptions from the registration
requirements of United States Federal and State securities laws and that the
Registrant was relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of the Purchasers.
All Regulation S sales were to non-U.S. persons, including private investment
firms. Stock certificates for a portion of the shares purchased in the
Regulation S transactions have not, as yet, been issued to the purchasers of
the stock. However, full cash payment for the shares has been received by the
Company on or before the dates indicated in the table.
Sales of Equity Securities Pursuant to Regulation D
Transactions A and B, F through I, K through M, Q through S, and U
constitute private placement transactions under Regulation D. The private
placement transactions were variously made for the asset acquisition
transactions described below, for services rendered to the Company, for the
cancellation of debt of the Company, or for cash.
Prior to the date of this report, the Company issued its 8%
Convertible Debentures due December 21, 2001 in the face amount of $750,000,
and its 8% Convertible Debentures due February 9, 2002 in the face amount of
$2,000,000 (transactions L and R). These debentures were issued in private
placements on December 21, 1998 and February 9, 1999 respectively. Both
private placements were made to a single accredited investor. An aggregate of
$165,000 was paid as a finders fee for the combined transactions.
On December 8, 1998(transaction J), the Company entered into an
Asset Purchase Agreement to purchase certain assets of Coast Communications,
Inc., a Nevada corporation doing business as Alpha Broadcasting
Communications. Pursuant to the Asset Purchase Agreement, the Company has
issued 250,000 shares of its restricted
28
common stock to the selling entity, which is an accredited investor.. Further
details of the described transaction, including a discussion of the balance
of the consideration to be paid for the assets, are included in the Form 8-K
report of the Company dated December 23, 1998 and filed with the SEC.
Shares issued pursuant to transactions C, D, E and J were believed
by management of the Company to be registered transactions or were believed
to qualify for registration on Form S-8, and were not sold as restricted
securities pursuant to an exemption from registration. The Form S-8
registration statements which were filed by the Company at the time of the
issuance of these shares may not have been applicable to the shares issued or
the transaction pursuant to which the shares were issued.
All U.S. investors are believed to be accredited investors, as
defined in Rule 501(a) of Regulation D.
SIGNATURES
Pursuant to the requirements 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.
CHEQUEMATE INTERNATIONAL, INC.
/s/ J. MICHAEL HEIL
-----------------------------------
J. MICHAEL HEIL DATE JULY 2, 1999
CHIEF EXECUTIVE OFFICER -----------------
/s/ STEVE ANDERSON
-----------------------------------
STEVE ANDERSON DATE JULY 2, 1999
CHIEF FINANCIAL OFFICER ----------------
|
