SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A AMENDMENT NO. 1 CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) October 23, 1996 ----------------- AvTel Communications, Inc. -------------------------- (Exact name of registrant as specified in its charter) Commission File No. 0-27580 --------- Utah 87-0378021 - -------------------------------- ------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 130 Cremona Drive, Santa Barbara, California 93117 - ---------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 805-685-0355 ------------ ============================================================== (Former Name or Former Address, if changed since last report) 1 INFORMATION TO BE INCLUDED IN THE REPORT This Form 8-K/A amends Item 7 of that certain Form 8-K filed with the Securities and Exchange Commission on November 7, 1996 by including the financial information referred to below. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS ------------------------------------------------------- The following financial statements, pro forma financial information and exhibits are filed as part of this Report. (a)Financial Statements of Business Acquired. Registrant hereby files the audited financial statements of AvTel Holdings, Inc., a California corporation ("AHI"), for the year ending September 30, 1996, including the following: (i) Independent auditors' report. (ii) Balance Sheet at September 30, 1996. (iii) Statement of Operations and Accumulated Deficit for the Period from Inception to September 30, 1996. (iv) Statement of Changes in Stockholders' Equity for the Period from Inception to September 30, 1996. (v) Statement of Cash Flows for Period from Inception to September 30, 1996. (vi) Notes to Financial Statements - September 30, 1996. (b) Pro Forma Financial Information. (1) Unaudited Pro Forma Condensed Combined Balance Sheet as of September 30, 1996, reflecting the acquisition of AHI by the Registrant. This item is incorporated by reference to Note 7 of the Notes to Consolidated Financial Statements of the Registrant (formerly Hi, Tiger International, Inc.) contained in the Registrant's Annual Report on Form 10-KSB for the year ended September 30, 1996, which was filed with the Commission on January 7, 1997. (2) Unaudited Pro Forma Condensed Combined Statement of Operations for the year ending September 30, 1996 reflecting the acquisition of AHI by the Registrant. This item is incorporated by reference to Note 7 of the Notes to Consolidated Financial Statements of the Registrant (formerly Hi, Tiger International, Inc.) contained in the Registrant's Annual Report on Form 10-KSB for the year ended September 30, 1996, which was filed with the Commission on January 7, 1997. 2 (c) Exhibits. Page Number In Sequential Numbering System (23.1) Consent of MacFarlane, Faletti & Co. LLP 13 3 FINANCIAL STATEMENTS OF BUSINESS ACQUIRED INDEPENDENT AUDITORS' REPORT Board of Directors AvTel Holdings, Inc. (Formerly AvTel Communications, Inc.) We have audited the Balance Sheet of AvTel Holdings, Inc. (Formerly AvTel Communications, Inc.) (a California corporation) as of September 30, 1996 and the related Statements of Operations and Accumulated Deficit, Changes in Shareholders' Equity and Cash Flows from inception to September 30, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of AvTel Holdings, Inc. (Formerly AvTel Communications, Inc.) as of September 30, 1996, and the results of its operations and its cash flows for the period then ended, in conformity with generally accepted accounting principles. /s/ MACFARLANE, FALETTI & CO. LLP MACFARLANE, FALETTI & CO. LLP Santa Barbara, California October 14, 1997 4 AVTEL HOLDINGS INC. (Formerly AvTel Communications Inc.) A Development Stage Company BALANCE SHEET SEPTEMBER 30, 1996 ASSETS Cash and cash equivalents $ 985,237 -------- Total Assets $ 985,237 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Accounts payable $ 51,381 Accounts payable - officers 40,683 Payroll taxes payable 6,024 -------- Total Liabilities 98,088 -------- Shareholders' Equity Preferred Stock (5,000,000 shares 1,000,000 authorized, 1,000,000 8% cumulative preferred shares issued and outstanding, $1 par value)Common Stock (10,000,000 shares authorized, 3,000 4,000,000 shares issued and outstanding, no par value)Deficit accumulated during development stage (115,851) --------- Total Shareholders' Equity 887,149 --------- Total Liabilities and Shareholders' Equity $ 985,237 --------- See accompanying notes 5 AVTEL HOLDINGS INC. (Formerly AvTel Communications Inc.) A Development Stage Company STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT FOR THE PERIOD FROM INCEPTION TO SEPTEMBER 30, 1996 Income Interest $ 4,813 Operating Expenses Payroll $ 31,250 Employee benefits 1,316 Consultants 10,491 Telephone 3,902 Legal 55,095 Insurance 116 Rent 650 Travel and meals 13,410 Computer supplies 2,488 Office supplies 1,591 Other expenses 355 ------------ Total expenses 120,664 ------------ Accumulated deficit during development stage $ (115,851) ------------ See accompanying notes 6 AVTEL HOLDINGS INC. (Formerly AvTel Communications Inc.) A Development Stage Company STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE PERIOD FROM INCEPTION TO SEPTEMBER 30, 1996 Preferred Stock Common Stock Amount Amount Retained Shares Received Shares Received Deficit -------- --------- ------- --------- --------- Balance at July 1, 1996 -- $ -- -- $ -- $ -- July 31, 1996: shares of Series A preferred stock issued to two individuals for cash at 1.00 per share 1,000,000 1,000,000 July 31, 1996: shares of common stock issued to an individual for cash and labor performed 1,499,950 1,000 July 31, 1996: shares of common stock issued to an individual for cash and labor performed 1,499,950 1,000 July 31, 1996: shares of common stock issued to an individual for cash and labor performed 1,000,100 1,000 Accumulated deficit during development stage (115,851) -------- --------- --------- --------- --------- Balance at September 30, 1996 1,000,000 $1,000,000 4,000,000 $3,000 $(115,851) ---------- --------- --------- --------- --------- See accompanying notes 7 AVTEL HOLDINGS INC. (Formerly AvTel Communications Inc.) A Development Stage Company STATEMENT OF CASH FLOWS FOR THE PERIOD FROM INCEPTION TO SEPTEMBER 30, 1996 Cash flows from operating activities: Net Loss $ (115,851) Adjustments to reconcile net loss to net cash provided by operating activities: Increase/(decrease) in: Accounts payable 51,381 Accounts payable - officers 40,683 Accrued expenses 6,024 -------------- Net cash used by operating activities (17,763) -------------- Cash flows from financing activities: Issuance of preferred stock 1,000,000 Issuance of common stock 3,000 -------------- Net cash provided by financing activities 1,003,000 -------------- Increase in cash 985,237 Cash at beginning of period -- -------------- Cash at end of period $ 985,237 -------------- See accompanying notes 8 AVTEL HOLDINGS, INC. (Formerly AvTel Communications, Inc.) A Development Stage Company NOTES TO FINANCIAL STATEMENTS NOTE 1:ORGANIZATION AvTel Communications, Inc., (the Company) was formed July 16, 1996 under the laws of the State of California. After September 30, 1996, the Company changed its name to AvTel Holdings, Inc.. The Company is in its development stages. The Company is intended to be a holding company of non-facilities based telecommunications carriers, providing a comprehensive array of broadband network services, focused primarily on the business customer. The Company's current management consists of key executives from the telecommunications industry who are developing and implementing a business strategy to integrate voice, data and video internetworking solutions for small and mid-size offices and select vertical markets. NOTE 2:SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash and cash equivalents All cash on hand and in bank checking accounts and certificates of deposits with maturities of 90 days or less are considered to be cash and cash equivalents. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. NOTE 3: CASH AND CASH EQUIVALENTS Cash and cash equivalents consists of the following: Demand deposit accounts $ 181,555 30 day certificate of deposit 203,682 60 day certificate of deposit 400,000 90 day certificate of deposit 200,000 --------- Total $ 985,237 9 AVTEL HOLDINGS, INC. (Formerly AvTel Communications, Inc.) A Development Stage Company NOTES TO FINANCIAL STATEMENTS NOTE 4:AUDIT PERIOD This audit covers the time period from inception (July 16, 1996) to September 30, 1996. NOTE 5:PREFERRED STOCK The preferred shareholders are entitled to receive preferred and cumulative annual dividends at a rate of $.08 per share and are entitled to a preference, in liquidation, in the amount of $1 per share plus accrued and unpaid dividends declared. As of September 30, 1996 there were no cumulative preferred stock dividends in arrears. NOTE 6:INCOME TAXES The Company has a net operating loss carryforward of approximately $118,000 which will expire in 15 years. Income tax benefit / expense consists of the following: Deferred tax benefit arising from net operating loss carryforward $18,400 Less valuation allowance (18,400) -------- $ 0 -------- NOTE 7:RELATED PARTY TRANSACTIONS The Company is indebted to two shareholder/officers of the Company for the reimbursement of operating expenses and accrued wages totaling $40,683. Another shareholder in the Company paid for operating expenses for the company for which the Company owes the shareholder $1,858. 10 AVTEL HOLDINGS, INC. (Formerly AvTel Communications, Inc.) A Development Stage Company NOTES TO FINANCIAL STATEMENTS NOTE 8:CONCENTRATION OF CREDIT RISK During the current period, the Company had more than $100,000 on deposit with one financial institution. The Federal Deposit Insurance Corporation (FDIC) insures only the first $100,000 on deposit at any one financial institution. NOTE 9:CONTRACTS The Company has executed employment agreements with its two executive officers. The term of employment is from August 1, 1996 to July 31, 1999 and may be extended at that time. The agreements set forth the executives' compensation packages and incentive packages. NOTE 10:SUBSEQUENT EVENTS On October 23, 1996, the Company completed a merger transaction (the "Merger") in which it was acquired by Hi,Tiger International, Inc., a Utah Corporation. (Hi, Tiger was then renamed AvTel Communications Inc..) The transaction included the cancellation of the 4,000,000 outstanding shares of common stock and 1,000,000 Series A preferred shares. The shares were exchanged for 4,252,508 shares of the Hi, Tiger (AvTel Communications Inc.) $.001 par value common stock, comprising approximately 61% of the issued and outstanding common stock after giving effect to the Merger, and 1,000,000 shares of newly authorized shares of the AvTel Communications' Inc. Series A Convertible Preferred Stock. 11 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, hereunto duly authorized. AVTEL COMMUNICATIONS, INC. By: /s/ ANTHONY E. PAPA Date: October 17, 1997 ------------------------- ---------------- Anthony E. Papa President and Chief Executive Officer By: /s/ JAMES P. PISANI Date: October 17, 1997 ------------------------- ---------------- James P. Pisani Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 12 EXHIBIT 23.1 CONSENT OF INDEPENDENT AUDITORS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (Registration No. 333-30725) filed by AvTel Communications, Inc. of our report dated October 14, 1997, with respect to the financial statements of AvTel Holdings, Inc. at and for the period from inception (July 16, 1996) to September 30, 1996. /s/ MACFARLANE, FALETTI & CO. LLP MACFARLANE, FALETTI & CO. LLP Santa Barbara, California October 16, 1997 13