ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Nevada
(State
or Other Jurisdiction of Incorporation or Organization)
|
74-2849995
(IRS
Employer Identification No.)
|
|
3201
Cherry Ridge, Building C, Suite 300
San
Antonio, Texas
(Address
of Principal Executive Offices)
|
78230
(Zip
Code)
|
Large
accelerated filer ¨
|
Accelerated
filer
|
¨
|
|
Non-accelerated
filer ¨
|
Smaller
reporting company
|
x
|
Page
|
|||
PART
I
|
|||
Item
1.
|
Business
|
3
|
|
Item
1A.
|
Risk
Factors
|
10
|
|
Item
1B.
|
Unresolved
Staff Comments
|
12
|
|
Item
2.
|
Properties
|
12
|
|
Item
3.
|
Legal
Proceedings
|
12
|
|
Item
4.
|
(Removed
and Reserved)
|
12
|
|
PART
II
|
|||
Item
5.
|
Market
for Registrant’s Common Equity; Related Stockholder Matters and Issuer
Purchases of Equity Securities
|
13
|
|
Item
6.
|
Selected
Financial Data
|
13
|
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
14
|
|
Item
7A.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
17
|
|
Item
8.
|
Financial
Statements and Supplementary Data
|
18
|
|
Item
9.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosures
|
35
|
|
Item
9A.
|
Controls
and Procedures
|
36
|
|
Item
9B.
|
Other
Information
|
36
|
|
PART
III
|
|||
Item
10.
|
Directors,
Executive Officers and Corporate Governance
|
36
|
|
Item
11.
|
Executive
Compensation
|
38
|
|
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
42
|
|
Item
13.
|
Certain
Relationships and Related Transactions, and Director
Independence
|
43
|
|
Item
14.
|
Principal
Accountant Fees and Services
|
44
|
|
PART
IV
|
|||
Item
15.
|
Exhibits,
Financial Statement Schedules
|
44
|
|
SIGNATURES
|
ITEM
1.
|
BUSINESS.
|
|
·
|
Simplification: An
integrated infrastructure that supports all forms of communication allows
more standardization, a smaller equipment complement, and less equipment
management.
|
|
·
|
Network
Efficiency: The integration of voice and data fills up
the data communication channels efficiently, thus providing bandwidth
consolidation and reduction of the costs associated with idle
bandwidth. This combined infrastructure can support dynamic
bandwidth optimization and a fault tolerant design. The
differences between the traffic patterns of voice and data offer further
opportunities for significant efficiency
improvements.
|
|
·
|
Co-existence with traditional
communication mediums: IP telephony can be used in
conjunction with existing PSTN switches, leased and dial-up lines, PBXs
and other customer premise equipment (CPE), enterprise LANs, and Internet
connections. IP telephony applications can be implemented
through dedicated gateways, which in turn can be based on open standards
platforms for reliability and
scalability.
|
|
·
|
Cost reduction: Under
the VoIP network, the connection is directly to the Internet backbone and
as a result the telephony access charges and settlement fees are
avoided.
|
|
·
|
An
expanding global market for voice communications growing at approximately
10% per year
|
|
·
|
Deregulation
and demonopolization of government-owned telecommunication companies in
foreign countries
|
|
·
|
Global
proliferation of communications devices such as mobile and VoIP
phones
|
|
·
|
Growth
in ethnic communities in the United States; approximately 90 million
people belong to an ethnic minority
group
|
|
·
|
Increase
in global trade and travel
|
|
·
|
Declining
rates for communication services as a result of increased
competition
|
|
·
|
Demand
for a lower cost alternative to traditional telephone
service;
|
|
·
|
Improved
quality and reliability of VoIP calls due to technological advances,
increased network development and greater bandwidth capacity;
and
|
|
·
|
New
product innovations that can be provided by VoIP services providers, but
not currently offered by traditional telephone
companies.
|
|
·
|
Maintain
approximately $10 million in registered and subscribed
capital.
|
|
·
|
Install
and operate a network in Mexico according to an operating plan approved by
the Mexican government.
|
|
·
|
Continuously
develop and conduct training programs for its
staff.
|
|
·
|
Designate
an individual responsible for the technical functions to operate the
concession.
|
|
·
|
Provide
continuous and efficient services at all times to its
customers.
|
|
·
|
Establish
a complaint center and correction facilities center and report to the
Mexican government on a monthly basis the complaints received and the
actions taken to resolve the
problems.
|
|
·
|
Invoice
its customer only tariffs rates that have been approved by the Mexican
government.
|
|
·
|
Provide
audited financial statements on a yearly basis that include a detailed
description of the fixed assets utilized in the network and reporting by
region and location of where the services are being
provided.
|
|
·
|
Provide
quarterly reports and updates on the expansion of the network in Mexico
and a description of the training programs and research and development
programs.
|
|
·
|
Provide
statistical reports of traffic, switching capacity and other parameters in
the network.
|
|
·
|
Post
a bond/insurance policy for approximately $500,000 payable to the Mexican
Federal Treasury Department in the event the concession is revoked for
failure to perform any of the
requirements.
|
ITEM
1A.
|
RISK
FACTORS.
|
|
·
|
Many
of our customers are not obligated to route a minimum amount of traffic
over our system and the amount of traffic we handle may decline if our
customers elect to route traffic over systems they operate or systems
operated by other providers;
|
|
·
|
increased
competition from other telecommunication service providers or from service
companies in related fields that offer telecommunication services may
adversely affect the amount we can charge for traffic routed over our
system;
|
|
·
|
we
may be required to reduce our charges for routing traffic to maintain high
utilization of our equipment;
|
|
·
|
the
termination fees, connection fees and other charges from our
suppliers;
|
|
·
|
fraudulently
sent or received traffic for which we are obligated to pay but which we
are unable to bill to any customer;
|
|
·
|
changes
in call volume among the countries to which we complete
calls;
|
|
·
|
technical
difficulties or failures of our network systems or third party delays in
expansion or provisioning system components;
and
|
|
·
|
our
ability to manage our traffic on a constant basis so that routes are
profitable.
|
|
·
|
unexpected
changes in tariffs, trade barriers and regulatory requirements relating to
Internet access or VoIP;
|
|
·
|
economic
weakness, including inflation, or political instability in particular
foreign economies and markets;
|
|
·
|
difficulty
in collecting accounts receivable;
|
|
·
|
tax,
consumer protection, telecommunications, and other
laws;
|
|
·
|
foreign
currency fluctuations, which could result in increased operating expenses
and reduced revenues; and
|
|
·
|
unreliable
government power to protect our
rights.
|
|
·
|
user
privacy;
|
|
·
|
pricing
controls and termination costs;
|
|
·
|
characteristics
and quality of products and
services;
|
|
·
|
qualification
to do business;
|
|
·
|
consumer
protection;
|
|
·
|
cross-border
commerce, including laws that would impose tariffs, duties and other
import restrictions;
|
|
·
|
copyright,
trademark and patent infringement;
and
|
|
·
|
claims
based on the nature and content of Internet materials, including
defamation, negligence and the failure to meet necessary
obligations.
|
ITEM
1B.
|
UNRESOLVED
STAFF COMMENTS.
|
ITEM
2.
|
PROPERTIES.
|
ITEM
3.
|
LEGAL
PROCEEDINGS.
|
ITEM
4.
|
(REMOVED
AND RESERVED)
|
ITEM
5.
|
MARKET
FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES.
|
Fiscal 2009
|
Low
|
High
|
||||||
First Quarter
|
$ | 0.13 | $ | 0.23 | ||||
Second
Quarter
|
$ | 0.07 | $ | 0.15 | ||||
Third
Quarter
|
$ | 0.04 | $ | 0.08 | ||||
Fourth
Quarter
|
$ | 0.04 | $ | 0.06 | ||||
Fiscal 2010
|
Low
|
High
|
||||||
First Quarter
|
$ | 0.03 | $ | 0.05 | ||||
Second
Quarter
|
$ | 0.03 | $ | 0.05 | ||||
Third
Quarter
|
$ | 0.03 | $ | 0.07 | ||||
Fourth
Quarter
|
$ | 0.03 | $ | 0.05 |
Number of Securities to be
Issued Upon Exercise of
Outstanding Options,
Warrants and Rights
|
Weighted-Average Exercise
Price of Outstanding
Options, Warrants and
Rights
|
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
|
||||||||||
Equity
Compensation plans approved by security holders
|
-0- | N/A | -0- | |||||||||
Equity
Compensation Plans not approved by security holders
|
7,404,000 | $ | .04 | 10,096,000 | ||||||||
Total
|
7,404,000 | $ | .04 | 10,096,000 |
ITEM
6.
|
SELECTED
FINANCIAL DATA.
|
ITEM
7.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
|
Years
ended July 31,
|
||||||||||||||||
2010
|
2009
|
Variances
|
%
|
|||||||||||||
OPERATING
REVENUES:
|
||||||||||||||||
VoIP
services
|
$ | 20,939 | $ | 19,891 | $ | 1,048 | 5 | % | ||||||||
Total
operating revenues
|
20,939 | 19,891 | 1,048 | 5 | % | |||||||||||
Cost
of services (exclusive of depreciation and amortization, shown
below)
|
19,379 | 18,533 | 846 | 5 | % | |||||||||||
GROSS
MARGIN
|
1,560 | 1,358 | 202 | 15 | % | |||||||||||
Selling,
general and administrative expense (exclusive of legal and professional
fees)
|
1,398 | 2,157 | (759 | ) | -35 | % | ||||||||||
Legal
and professional fees
|
272 | 353 | (81 | ) | -23 | % | ||||||||||
Bad
debt expense
|
- | 2 | (2 | ) | -100 | % | ||||||||||
Depreciation
and amortization expense
|
165 | 152 | 13 | 9 | % | |||||||||||
OPERATING
INCOME (LOSS)
|
(275 | ) | (1,306 | ) | 1,031 | -79 | % | |||||||||
OTHER
INCOME (EXPENSE):
|
||||||||||||||||
Gain
on early extinguishment of debt
|
- | 108 | (108 | ) | -100 | % | ||||||||||
Interest
income (expense)
|
(144 | ) | (196 | ) | 52 | -27 | % | |||||||||
Total
other income (expense), net
|
(144 | ) | (88 | ) | (56 | ) | 64 | % | ||||||||
NET
LOSS
|
$ | (419 | ) | $ | (1,394 | ) | $ | 975 | -70 | % | ||||||
NET
LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST
|
24 | (114 | ) | 138 | -121 | % | ||||||||||
NET
LOSS ATTRIBUTABLE TO ATSI COMMUNICATIONS, INC.
|
$ | (395 | ) | $ | (1,508 | ) | $ | 1,113 | -74 | % |
|
·
|
ATSI
is the primary obligor in its
arrangements,
|
|
·
|
ATSI
has latitude in establishing
pricing,
|
|
·
|
ATSI
changes the product or performs part of the service and is involved in the
determination of the product or service
specifications,
|
|
·
|
ATSI
has discretion in supplier selection;
and
|
|
·
|
ATSI
assumes credit risk for the amount billed to the
customer
|
For
the Years Ended July 31,
|
||||||||
2010
|
2009
|
|||||||
Expected
dividends yield
|
0.00 | % | 0.00 | % | ||||
Expected
stock price volatility
|
0.00 | % | 126% - 296 | % | ||||
Risk-free
interest rate
|
0.00 | % | 2.28% - 3.48 | % | ||||
Expected
life of options
|
N/A |
3.75
- 4.5 years
|
ITEM
7A.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
|
ITEM
8.
|
FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
|
Page
|
||
Consolidated
Financial Statements of ATSI Communications, Inc. and
Subsidiaries
|
||
Report
of Independent Registered Public Accounting Firm
|
19
|
|
Consolidated
Balance Sheets as of July 31, 2010 and 2009
|
20
|
|
Consolidated
Statements of Operations for the Years Ended July 31, 2010 and
2009
|
21
|
|
Consolidated
Statement of Changes in Stockholders’ Equity (Deficit) for the Years Ended
July 31, 2009 and 2010
|
22
|
|
Consolidated
Statements of Cash Flows for the Years Ended July 31, 2010 and
2009
|
23
|
|
Notes
to Consolidated Financial Statements
|
|
24
|
July
31,
|
July
31,
|
|||||||
2010
|
2009
|
|||||||
ASSETS
|
||||||||
CURRENT
ASSETS:
|
||||||||
Cash
and cash equivalents
|
$ | 73 | $ | 637 | ||||
Certificates
of deposit
|
- | 325 | ||||||
Accounts
receivable, net of allowance for bad debt of $10 and $10,
respectively
|
526 | 337 | ||||||
Prepaid
and other current assets
|
48 | 77 | ||||||
Total
current assets
|
647 | 1,376 | ||||||
LONG-TERM
ASSETS:
|
||||||||
Intangible
Assets, net of amortization of $31 and $16, respectively
|
119 | 134 | ||||||
Property
and Equipment
|
856 | 794 | ||||||
Less
- accumulated depreciation
|
(727 | ) | (576 | ) | ||||
Net
property and equipment
|
129 | 218 | ||||||
Total
assets
|
$ | 895 | $ | 1,728 | ||||
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
||||||||
CURRENT
LIABILITIES:
|
||||||||
Accounts
payable
|
$ | 637 | $ | 585 | ||||
Accrued
liabilities
|
106 | 192 | ||||||
Notes
payable, net of unamortized discount of $1 and $33,
respectively
|
409 | 1,173 | ||||||
Derivative
liability
|
85 | - | ||||||
Total
current liabilities
|
1,237 | 1,950 | ||||||
LONG-TERM
LIABILITIES:
|
||||||||
Notes
payable
|
639 | 291 | ||||||
Derivative
liability
|
- | 85 | ||||||
Other
|
16 | 3 | ||||||
Total
long-term liabilities
|
655 | 379 | ||||||
Total
liabilities
|
1,892 | 2,329 | ||||||
STOCKHOLDERS'
DEFICIT:
|
||||||||
Preferred
stock, 16,063,000 shares authorized, none issued
and outstanding
|
- | - | ||||||
Common
stock, $0.001 par value, 150,000,000 shares authorized, 45,504,120 and
45,504,120 shares issued and outstanding,
respectively
|
46 | 46 | ||||||
Additional
paid in capital
|
73,276 | 73,253 | ||||||
Accumulated
deficit
|
(74,182 | ) | (73,787 | ) | ||||
Other
comprehensive income
|
1 | 1 | ||||||
Total
ATSI Communications, Inc. stockholders' deficit
|
(859 | ) | (487 | ) | ||||
Noncontrolling
interest
|
(138 | ) | (114 | ) | ||||
Total
stockholders' deficit
|
(997 | ) | (601 | ) | ||||
Total
liabilities and stockholders' deficit
|
$ | 895 | $ | 1,728 |
Years
ended July 31,
|
||||||||
2010
|
2009
|
|||||||
OPERATING
REVENUES:
|
||||||||
VoIP
services
|
$ | 20,939 | $ | 19,891 | ||||
Total
operating revenues
|
20,939 | 19,891 | ||||||
OPERATING
EXPENSES:
|
||||||||
Cost
of services (exclusive of depreciation and amortization)
|
19,379 | 18,533 | ||||||
Selling,
general and administrative expense (exclusive of legal and professional
fees)
|
1,398 | 2,157 | ||||||
Legal
and professional fees
|
272 | 353 | ||||||
Bad
debt expense
|
- | 2 | ||||||
Depreciation
and amortization expense
|
165 | 152 | ||||||
Total
operating expenses
|
21,214 | 21,197 | ||||||
OPERATING
INCOME (LOSS)
|
(275 | ) | (1,306 | ) | ||||
OTHER
INCOME (EXPENSE):
|
||||||||
Gain
on early extinguishment of debt
|
- | 108 | ||||||
Interest
expense
|
(144 | ) | (196 | ) | ||||
Total
other expense
|
(144 | ) | (88 | ) | ||||
NET
LOSS
|
(419 | ) | (1,394 | ) | ||||
NET
LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST
|
24 | (114 | ) | |||||
NET
LOSS ATTRIBUTABLE TO ATSI COMMUNICATIONS, INC.
|
$ | (395 | ) | $ | (1,508 | ) | ||
LOSS
PER SHARE - BASIC AND DILUTED
|
$ | (0.01 | ) | $ | (0.04 | ) | ||
WEIGHTED
AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED
|
45,504,120 | 40,043,303 |
Additional
|
||||||||||||||||||||||||||||
Common
|
Paid-in
|
Noncontrolling
|
Accumulated
|
Other
Comp.
|
||||||||||||||||||||||||
Shares
|
Par
|
Capital
|
interest
|
Deficit
|
Income/Loss
|
Totals
|
||||||||||||||||||||||
BALANCE,
July 31, 2008
|
39,550,415 | 39 | $ | 72,747 | $ | - | $ | (72,393 | ) | $ | 1 | $ | 394 | |||||||||||||||
Repurchase
of common shares
|
(295,981 | ) | - | (48 | ) | - | - | - | (48 | ) | ||||||||||||||||||
Stock
issued for services to employees
|
5,611,963 | 6 | 219 | - | - | - | 225 | |||||||||||||||||||||
Stock
option expense
|
- | - | 164 | - | - | - | 164 | |||||||||||||||||||||
Shares
issued for conversion of notes payable
|
637,723 | 1 | 171 | - | - | - | 172 | |||||||||||||||||||||
Net
loss
|
- | - | - | (114 | ) | (1,394 | ) | - | (1,508 | ) | ||||||||||||||||||
BALANCE,
July 31, 2009
|
45,504,120 | $ | 46 | $ | 73,253 | $ | (114 | ) | $ | (73,787 | ) | $ | 1 | $ | (601 | ) | ||||||||||||
Stock
option expense
|
- | - | 22 | - | - | - | 22 | |||||||||||||||||||||
Net
loss
|
- | - | - | (24 | ) | (395 | ) | - | (419 | ) | ||||||||||||||||||
BALANCE,
July 31, 2010
|
45,504,120 | $ | 46 | $ | 73,276 | $ | (138 | ) | $ | (74,182 | ) | 1 | $ | (997 | ) |
Years
ended July 31,
|
||||||||
2010
|
2009
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
NET
LOSS
|
$ | (419 | ) | $ | (1,394 | ) | ||
Adjustments
to reconcile net loss to cash used in operating
activities:
|
||||||||
Gain
on early extinguishment of debt
|
- | (108 | ) | |||||
Depreciation
and amortization
|
165 | 152 | ||||||
Issuance
of stock grants and options, for services
|
22 | 389 | ||||||
Provisions
for losses on accounts receivables
|
- | 2 | ||||||
Amortization
of debt discount
|
32 | 60 | ||||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
(189 | ) | 609 | |||||
Prepaid
expenses and other
|
29 | (21 | ) | |||||
Accounts
payable
|
52 | (1,041 | ) | |||||
Wells
Fargo Factoring Collateral
|
- | (18 | ) | |||||
Accrued
liabilities
|
7 | 109 | ||||||
Net
cash used in operating activities
|
(301 | ) | (1,261 | ) | ||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Investment
in certificates of deposit
|
325 | (7 | ) | |||||
Purchases
of property & equipment
|
(62 | ) | (115 | ) | ||||
Net
cash provided by / ( used in) investing activities
|
263 | (122 | ) | |||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Payments
on notes payable
|
(775 | ) | (542 | ) | ||||
Acquisition
of common stock
|
- | (48 | ) | |||||
Proceeds
from Notes payables
|
250 | 1,275 | ||||||
Principal
payments on capital lease obligation
|
(1 | ) | (3 | ) | ||||
Net
cash (used in) / provided by financing activities
|
(526 | ) | 682 | |||||
DECREASE
IN CASH AND CASH EQUIVALENTS
|
(564 | ) | (701 | ) | ||||
CASH
AND CASH EQUIVALENTS, beginning of period
|
637 | 1,338 | ||||||
CASH
AND CASH EQUIVALENTS, end of period
|
$ | 73 | $ | 637 | ||||
SUPPLEMENTAL
DISCLOSURES:
|
||||||||
Cash
paid for interest
|
$ | 86 | $ | 117 | ||||
Cash
paid for income tax
|
- | - | ||||||
NON-CASH INVESTING
AND FINANCING TRANSACTIONS
|
||||||||
Issuance
of common stock for conversion of debt
|
$ | - | $ | 172 | ||||
Put
option classified as derivative liability
|
- | 85 | ||||||
Acquisition
of fixed assets, conversion of prepaid and accounts receivable,
respectively
|
- | 64 |
|
·
|
ATSI
is the primary obligor in its
arrangements,
|
|
·
|
ATSI
has latitude in establishing
pricing,
|
|
·
|
ATSI
changes the product or performs part of the service and is involved in the
determination of the product or service
specifications,
|
|
·
|
ATSI
has discretion in supplier selection
and
|
|
·
|
ATSI
assumes credit risk for the amount billed to the
customer.
|
Useful lives
|
2010
|
2009
|
||||||||
Telecom
equipment & software
|
1-5
years
|
$ | 856 | $ | 794 | |||||
Less:
accumulated depreciation
|
(727 | ) | (576 | ) | ||||||
Net–property
and equipment
|
$ | 129 | $ | 218 |
July 31,
|
July 31,
|
|||||||
2010
|
2009
|
|||||||
Note
payable to Alfonso Torres, payable upon maturity, bearing interest of
6.00% per annum,
|
||||||||
maturing
October 31, 2011, unsecured.
|
$ | 537 | $ | 460 | ||||
Note
payable to Wells Fargo Bank payable in monthly installments, bearing
interest at 7.25%
|
||||||||
per
annum, maturing July 25, 2010, collateralized by ATSI's certificates of
deposit.
|
- | 72 | ||||||
Note
payable to ATVF, Scott Crist, Roderick Ciaccio & Vencore Solutions,
payable in monthly
|
||||||||
installments,
bearing interest at 10.00% per annum, maturing September 10, 2010,
collateralized
|
||||||||
by
ATSI's accounts receivables (other than accounts factored with Wells
Fargo), $100,000
|
||||||||
certificate
of deposit with Wells Fargo and ATSI's ownership in ATSICOM. Additionally,
we
|
||||||||
issued
425,000 warrants to the note holders, at an exercise price per warrant of
$0.19.
|
||||||||
The
warrants have the following “Put” and “Call” rights: Put
right. From and after the
|
||||||||
second
anniversary of the notes payable, the holder shall have the right to
request from ATSI,
|
||||||||
upon
five (5) Business days prior notice, to acquire from the holders the
warrants at a price
|
||||||||
$0.39
per warrant. Call
right. At any time any warrants are outstanding, if the
last sale price of ATSI’s
|
||||||||
common
stock is greater than $.80 per share for ten (10) consecutive trading
days, ATSI shall
|
||||||||
be
entitled to require the purchaser to exercise the warrants and pay the
exercise price therefore
|
||||||||
upon
five (5) business days written notice. Net of unamortized discount of $1
and $33, respectively
|
133 | 604 | ||||||
Note
payable to San Antonio National Bank payable in monthly installments,
bearing interest
|
||||||||
at
8.00% per annum, maturing October 25, 2011, collateralized by ATSI's
assets.
|
189 | 328 | ||||||
Note
payable to ATV Texas Ventures payable in monthly installments, bearing
interest
|
||||||||
at
12.00% per annum, maturing November 10, 2011, collateralized by ATSI's
assets.
|
69 | - | ||||||
Note
payable to ATV Texas Ventures payable in monthly installments, bearing
interest
|
||||||||
at
12.00% per annum, maturing January 10, 2012, collateralized by ATSI's
assets.
|
77 | - | ||||||
Note
payable to ATV Texas Ventures payable in monthly installments, bearing
interest
|
||||||||
at
12.00% per annum, maturing March 10, 2012, collateralized by ATSI's
assets.
|
43 | - | ||||||
Total
outstanding debt long-term debt
|
1,048 | 1,464 | ||||||
Current
portion of long-term debt
|
(409 | ) | (1,173 | ) | ||||
Long-term
debt, net of current portion
|
$ | 639 | $ | 291 | ||||
Payments
on long-term debt of ATSI are due as follows:
|
||||||||
(in
thousands)
|
||||||||
Fiscal
2011
|
$ | 409 | ||||||
Fiscal
2012
|
639 | |||||||
Total
payments
|
$ | 1,048 |
2010
|
2009
|
|||||||
Net
operating loss carryover
|
$ | 6,479,000 | $ | 6,183,000 | ||||
Valuation
allowance
|
(6,479,000 | ) | (6,183,000 | ) | ||||
Total
deferred tax asset, net
|
$ | - | $ | - |
FY2011
|
52,404 | |||
FY2012
|
13,101 |
|
-
|
637,723
common shares to the holders of the Convertible Debentures in lieu of the
conversion of notes payable in the principal amount of $166,400 and
accrued interest of $5,785 at a conversion price of $0.27, in accordance
with the original terms of the notes which allowed for voluntary
conversion by the company at a conversion price at the higher of (a) $0.27
per share or (b) the average closing price of ATSI’s common stock for the
10 days immediately preceding the date of
conversion.
|
|
-
|
5,611,963
common shares to its employees and Directors for services
rendered. ATSI recorded the fair value of $225,000 as the
compensation expense in its statement of
operations
|
|
-
|
ATSI
forfeited 720,000 options to purchase common shares to various employees
that were terminated during fiscal 2009. None of the options had
vested.
|
|
-
|
ATSI forfeited 780,000 options to
purchase common shares to various employees that were terminated or
departed during fiscal 2010, 260,000 had vested at an exercise price of
$0.04, which was higher than the market price at the time of termination
or departure.
|
July 31,
|
||||
2009
|
||||
Expected
dividends yield
|
0.00 | % | ||
Expected
stock price volatility
|
126% - 296 | % | ||
Risk-free
interest rate
|
2.28% - 3.48 | % | ||
Expected
life of options
|
3.75
- 4.5 years
|
Weighted-average
|
||||||||||||
Weighted-average
|
remaining contractual
|
|||||||||||
2005 Stock Compensation Plan
|
Options
|
exercise price
|
term (years)
|
|||||||||
Outstanding
at July 31, 2008
|
8,239,000 | 0.19 | 6 | |||||||||
Granted
|
16,613,000 | 0.06 | 7 | |||||||||
Forfeited
|
(16,578,000 | ) | 0.14 | 4 | ||||||||
Outstanding
at July 31, 2009
|
8,274,000 | 0.04 | 7 | |||||||||
Granted
|
- | - | - | |||||||||
Forfeited
|
(780,000 | ) | 0.04 | 4 | ||||||||
Outstanding
at July 31, 2010
|
7,494,000 | 0.04 | 4 | |||||||||
Exercisable
at July 31, 2010
|
7,404,000 | $ | 0.04 | 4 |
Expected
dividend yield
|
0.00 | % | ||
Expected
stock price volatility
|
131.4 | % | ||
Risk-free
interest rate
|
3.37 | % | ||
Contractual
life of warrants
|
7
years
|
Weighted-average
|
||||||||||||
Weighted-average
|
remaining contractual
|
|||||||||||
Warrants
|
exercise price
|
term (years)
|
||||||||||
Outstanding
at July 31, 2008
|
375,000 | $ | 0.18 | 4 | ||||||||
Granted
|
425,000 | 0.19 | 7 | |||||||||
Exercised
|
- | - | - | |||||||||
Forfeited
|
- | - | - | |||||||||
Outstanding
at July 31, 2009
|
800,000 | $ | 0.19 | 5.5 | ||||||||
Granted
|
- | - | - | |||||||||
Exercised
|
- | - | - | |||||||||
Forfeited
|
- | - | - | |||||||||
Outstanding
at July 31, 2010
|
800,000 | $ | 0.19 | 4.5 | ||||||||
Exercisable
at July 31, 2010
|
800,000 | $ | 0.19 | 4.5 |
ITEM
9.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
|
ITEM
9A.
|
CONTROLS
AND PROCEDURES.
|
ITEM
9B.
|
OTHER
INFORMATION.
|
ITEM
10.
|
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE.
|
Name
|
Age
|
Position Held
|
Held Office Since
|
|||
Arthur
L. Smith
|
45
|
President,
Chief Executive Officer and Director
|
2003
|
|||
Ruben
R. Caraveo
|
42
|
Sr.
Vice President, Operations and Technology
|
2006
|
|||
Antonio
Estrada Jr.
|
35
|
Sr.
Vice President, Finance & Corporate Controller
|
2007
|
|||
John
R. Fleming
|
56
|
Director,
Interim Executive Chairman of the Board
|
2002
|
|||
Murray
R. Nye
|
56
|
Director
|
1996
|
|
·
|
The
name of the stockholder and evidence of ownership of our shares, including
the number of shares owned and the length of time of ownership;
and
|
|
·
|
The
name of the candidate, the candidate’s resume or a listing of her or his
qualifications to be one of our Directors and the person’s consent to be
named as a Director if nominated by the
Directors.
|
ITEM
11.
|
EXECUTIVE
COMPENSATION.
|
|
·
|
Offer
compensation opportunities that attract highly qualified executives,
reward outstanding initiative and achievement, and retain the leadership
and skills necessary to build long-term stockholder
value;
|
|
·
|
Emphasize
pay-for-performance by maintaining a portion of executives’ total
compensation at risk, tied to both our annual and long-term financial
performance and the creation of stockholder value;
and
|
|
·
|
Further
our short and long-term strategic goals and values by aligning executive
officer compensation with business objectives and individual
performance.
|
|
·
|
Base
salary;
|
|
·
|
Annual
performance-based cash bonus;
|
|
·
|
Long-term
incentives in the form of stock options;
and
|
|
·
|
Benefits
that are offered to executives on the same basis as our non-executive
employees.
|
|
·
|
Existing
salary levels;
|
|
·
|
Competitive
pay practices;
|
|
·
|
Individual
and corporate performance; and
|
|
·
|
Internal
equity among our executives, taking into consideration their relative
contributions to our success.
|
Name
|
Title
|
Bonus
|
||||
Arthur
L. Smith
|
President,
Chief Executive Officer and Director
|
$ | 82,500 | |||
Ruben
R. Caraveo
|
Sr.
Vice President, Operations and Technology
|
$ | 74,250 | |||
Antonio
Estrada Jr.
|
Sr.
Vice President & Corporate Controller
|
$ | 60,500 |
Name and Principal
Position
|
Year
|
Salary
($)
|
Bonus (1)
($)
|
Stock
Awards (2)
($)
|
Option
Awards
Awards (2)
($)
|
All Other
Compensation (3)
($)
|
Total
($)
|
|||||||||||||||||||