UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K/A
(AMENDMENT NO. 2)
(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal year ended January 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to .
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Commission File Number 0-2180
COVISTA COMMUNICATIONS, INC.
----------------------------
(Exact name of Registrant as specified in its charter)
New Jersey 22-1656895
- ---------------------------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
150 Clove Road, Little Falls, New Jersey 07424
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(Address of principal executive offices)(Zip Code)
Company's telephone number, including area code: (973) 812-1100
Securities registered pursuant to Section 12 (b) of the Act:
None
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock, $.05 par value per share
Indicate by check mark whether the Company (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Company
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Company's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
Aggregate market value (based upon a $3.00 closing price) of the voting stock
held by nonaffiliates of the Company as of April 25, 2001: $7,904,604
Number of shares of Common Stock outstanding on July 17, 2001: 11,409,405
Documents Incorporated By Reference:
None
This Form 10-K/A Amendment No. 2 (this "Amendment") amends and
supplements the Form 10-K (the "Original form 10-K") filed by Covista
Communications, Inc., a New Jersey corporation (the "Company"), on April 30,
2001, as amended by Amendment No. 1 thereto filed by the Company on May 2,
2001. The sole purpose of this Amendment is to amend and restate Items 10,
11, 12 and 13 of Part III of the Original Form 10-K to read in their entirety
as set forth below. Capitalized terms not otherwise defined herein shall have
the respective meanings ascribed thereto in the Original Form 10-K.
PART III
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ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS AND EXECUTIVE OFFICERS
The Company's directors all serve for one-year terms and until their
successors are elected and qualify. Officers serve at the pleasure of the
Board of Directors. The directors and executive officers of the Company are
as follows:
Name Age Position
- ---- --- --------
Walt Anderson 46 Chairman of the Board
Leon Genet 70 Director
A. John Leach 38 Director, President, Chief Executive
Officer
Henry G. Luken, III 40 Director
Jay J. Miller 68 Director
Thomas P. Gunning 63 Treasurer, Secretary and Chief
Financial Officer
Mr. Henry G. Luken, III was elected a Director of the Company in
February, 1999, and Chairman of the Board in February, 2001. Currently, he is
President of Mont Lake Properties, Inc., a real estate development firm; a
director of Equity Broadcasting Corp., a TV network; a director of ACNTV, a
home shopping company selling through TV; Managing Agent of Henry IV LLC, an
aircraft sales company. He is a co-founder of Telco Communications Group
Inc., of which he served as Chief Executive Officer and Treasurer from July,
1993 to April, 1996, and as Chairman from July, 1993 to October, 1997. Mr.
Luken has also served as Chairman of Tel-Labs, Inc., a telecommunications
billing firm, since 1991, and as Chairman of Telco Development Group, Inc., a
computer systems firm owned by Mr. Luken, since 1987, both of which entities
he founded.
Mr. Walt Anderson was elected a Director of the Company in February,
1999, and as Chairman of the Board in November, 1999. He stepped down as
Chairman in February, 2001. He has been Manager of Revision LLC from June
1998 to the present; President and Chairman of Entree International Ltd.
(financial consulting services) from July, 1997 to the present; Chairman of
Capsule Communications, Inc. since March 30, 2001, of which he has served as a
director since may 1998; Chairman of Teleport UK Ltd. (satellite
communications) from May, 1996 to the present; Chairman of Espirit Telecom
Group plc. (telecom services) from October, 1992 to November, 1998; and
President and Chairman of Mid Atlantic Telecom (telecom services) from May,
1984 to December, 1993. Mr. Anderson is also a director of American
Technology Labs (network equipment) and Aquarius Holdings Ltd. (water
transport systems). From June, 1998 to December, 2000, Mr. Anderson was the
Chairman of WorldxChange Communications, Inc., which filed for protection
under the bankruptcy laws in April 2001 following its acquisition by World
Access, Inc. in December, 2000.
Mr. Leon Genet has served as a Director since October, 1996. For more
than the past five years, he has been a partner in Genet Realty, a commercial
and industrial real estate brokerage firm. He serves as a member of the
National Commerce and Industry Board for the State of Israel Bonds
Organization and is a shareholder, director and officer of LPJ Communications,
Inc., which has earned commissions from the Company on the same basis as other
independent sales representatives. See "Certain Relationships and Related
Transactions."
Mr. A. John Leach, Jr. was appointed President and Chief Executive
Officer and a Director of the Company on May 18,2000. He had been Senior Vice
President of Sales at BTI Telecomm, Inc., from December, 1999 to May, 2000;
Senior Vice President of Teleglobe, Inc. from June, 1996 to December, 1999,
where he assumed responsibility for US and Canadian commercial sales markets.
He was promoted to this position from Senior Vice President of Wholesale and
Agent Markets, Telco Communications (a subsidiary of Teleglobe, Inc.) June,
1996 to February, 1999. Prior to that, Mr. Leach was Vice President of Agent
Services at BTI Telecomm, from December, 1989 to June, 1996. Regional Sales
Manager of Mobilecomm (a Bell South Company) where he started in sales and
rose to a Regional Sales Manager position May, 1985 to December, 1989.
Mr. Jay J. Miller, Esq. has served as a Director since 1983. He has
been a practicing attorney for more than 35 years in New York. He is Chairman
of the Board of AmTrust Pacific Ltd., a New Zealand real estate company. He
is also a director of Technology Insurance Company, Inc., a provider of
various insurance products to the technology industry, and certain of its
affiliates. Mr. Miller has performed legal services on behalf of the Company.
See "Certain Relationships and Related Transactions."
Mr. Thomas P. Gunning was appointed Vice President, Secretary and
Treasurer of the Company in May 1999. He was appointed Chief Financial Officer
in September, 1994 and served in that capacity until May, 1999. He was again
appointed Chief Financial Officer in May, 2000. He was appointed Secretary of
the Company in January of 1995. He has served as Controller of the Company
since September, 1992. He is a Certified Public Accountant licensed by the
States of New York and New Jersey. From 1989 until joining the Company, Mr.
Gunning was the Senior Audit Manager at Rosenberg Selsman & Company, a
certified public accounting firm. From 1976 to 1989, he was Chief Financial
Officer of Flyfaire, Incorporated, a travel wholesale operator. Prior to such
time, Mr. Gunning held various positions in both public and private accounting
firms.
SECTION 16(A) COMPLIANCE
Section 16(a) of the Securities Exchange Act requires the Company's
executive officers and directors, and persons that own more than ten percent
of the Company's common stock, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Executive officers,
directors and greater than ten percent stockholders are required by Securities
and Exchange Commission regulations to furnish the Company with all copies of
the forms they file pursuant to Section 16(a).
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that during the fiscal year
ended January 31, 2001 all filing requirements were complied with in a timely
fashion.
ITEM 11. EXECUTIVE COMPENSATION
OFFICER COMPENSATION
The following table sets forth the compensation which the Company paid
during the fiscal years ended January 31, 2001, 2000 and 1999 to its Chief
Executive Officer and to each executive officer of the Company or person
performing similar functions whose aggregate remuneration exceeded $100,000,
during the Company's fiscal year ended January 31, 2001 (the "Named
Executives").
SUMMARY COMPENSATION TABLE
Name and Fiscal Year Annual Compensation Other Compensation All
Principal Ended ------------------- Annual Awards Other
Position January 31 Salary($) Bonus($) Compensation Options(1) Compensation($)
- ----------- ------------- ------------------- ------------ ----------- ---------------
A. John Leach 2001 $210,000 $ 0 $ 0 $ 15,346 (3)
President and
Chief Executive
Officer (2)
Thomas P. 2001 $147,360 $ 0 $ 0 $ 11,427 (4)
Gunning 2000 $140,000 $ 0 $ 0 $ 11,179 (5)
Vice President, 1999 $124,230 $2,000 $ 0 $ 10,161 (6)
Treasurer
and Secretary
Dennis Spina 2001 $ 57,692 $ 0 $ 0
President and 2000 $305,769 $ 0 $ 0 $ 2,857 (8)
Chief Executive
Officer (7)
Sal Quadrino 2001 $ 72,019 $ 0 $ 0 $ 2,160 (10)
Vice President 2000 $137,307 $ 0 $ 0
and Chief Finan-
cial Officer (9)
- -------------------------------------------------------------------------------------------------
(1) See the Option Grants and Option Repricing tables below.
(2) Mr. Leach joined the Company on May 18, 2000.
(3) The amount shown represents the Company's contribution under its 401(K)
Deferred Compensation and Retirement Savings Plan of $346 and $15,000 in
reimbursement for certain relocation expenses.
(4) The amount shown represents the Company's contribution under its 401(K)
Deferred Compensation and Retirement Savings Plan of $4,460, $2,167 for
the use of a Company vehicle for non-business purposes and $4,800 for
term life insurance premiums.
(5) The amount shown represents the Company's contribution under its 401(K)
Deferred Compensation and Retirement Savings Plan of $4,200, $2,179 for
the use of a Company vehicle for non-business purposes and $4,800 for
term life insurance premiums.
(6) The amount shown represents the Company's contribution under its 401(K)
Deferred Compensation and Retirement Savings Plan of $3,837, $1,524 for
the use of a Company vehicle for non-business purposes and $4,800 for
term life insurance premiums.
(7) Mr. Spina resigned from his position on March 17, 2000.
(8) The amount shown represents $2,857 for the use of a Company vehicle for
non-business purposes.
(9) Mr. Quadrino resigned from his position on June 16, 2000.
(10) The amount shown represents the Company's contribution under its 401(K)
Deferred Compensation and Retirement Savings Plan of $2,160.
The following table provides information on option grants during the
Company's fiscal year ended January 31, 2001 to the Named Executives.
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realiz-
able Value at
% of Total Assumed Rates of
Number of Securities Options/SARs Granted Stock Appreciation
Underlying Options/ to Employees in Exercise Expiration for Option Term
Name SARs Granted(#) Fiscal Year Price Date 5% 10%
- ---- -------------------- ------------------- ------ ---------- ---------- --------
A. John Leach 288,000 (1) 61.92% $14.25 May 18,2003 $646,893 $1,358,424
- ------------------------------------------------------------------------------
(1) Stock options granted under the 1996 Stock Option Plan. Vesting in
six equal semi-annual installments, commencing six months from the
date of grant. The market price on the date of grant was less than
the exercise price of $14.25 per share.
The following table sets forth information concerning each exercise of a
stock option during the Company's fiscal year ended January 31, 2001 by each
of the Named Executives, and the number and value of unexercised options
granted by the Company held by each of the Named Executives on January 31,
2001.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number of Securities
Underlying Unexer- Value of Unexercised
cised Options/SARS In-the-Money Options/SARs
Shares Acquired Value at Fiscal Year End at Fiscal Year End
Name on Exercise(#) Realized($) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ------------- ----------- ------------------------- -------------------------
Thomas P. Gunning 16,500 $58,078 20,000/8,500 $8,325/$0
COMPENSATION OF DIRECTORS
For the fiscal year ended January 31, 2001, each director who was not an
employee of the Company was entitled to receive a director's fee of $15,000
per year, and to be reimbursed for out-of-pocket expenses incurred in
connection with his attendance at meetings. However, Messrs. Anderson and
Luken waived the right to receive such compensation.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS
As the Company's Chief Executive Officer, Mr. Leach has a three-year
employment agreement with the Company effective as of May 18, 2000, pursuant
to which Mr. Leach is paid an annual base salary of $300,000. Pursuant to
this agreement, Mr. Leach was also to receive a signing bonus in the amount of
$25,000 to cover relocation and other expenses; however, as of this date Mr.
Leach has only received $15,000 of this amount. Mr. Leach is also entitled to
receive an annual bonus in an amount not to exceed 100 percent of his then
effective base salary, based upon Mr. Leach's attainment of annual revenue and
earning targets as well as management goals set by the Board of Directors.
Mr. Leach is guaranteed a minimum bonus payment of $150,000 during the first
year of this agreement.
In connection with his appointment as Chief Executive Officer of the
Company, Mr. Leach was granted an option under the Company's 1996 Stock Option
Plan to purchase 288,000 shares of Common Stock. The option granted to Mr.
Leach is scheduled to vest over a period of three years, in six equal
semi-annual installments, the first of which commenced on November 18, 2000.
The exercise price for the option is $14.25 and is based on the fair market
value of the Common Stock on the date of the grant, and the options expire
after a term of five years.
In the event of a "change of control" of the Company, as defined in his
employment agreement, Mr. Leach's stock option, and similar benefits, if any,
shall be deemed to vest in full on the effective date of such change of
control.
REPORT ON REPRICING OF OPTIONS
On February 23, 2000, the Board of Directors approved the repricing of
all options with an exercise price varying between $14.625 and $21.50 to
$14.25. The market price on the date of repricing was less than $14.25.
The following Option Repricing Table shows options repriced in the
February repricing program for the Named Executives. The Company did not
reprice any options prior to February 2000.
OPTION REPRICING TABLE
Length of
Number of Market Price Exercise Original Option
Securities of Stock Price at New Term Remaining
Underlying at time of Time of Exercise at Date of
Name Date Options Repriced Repricing (1) Repricing Price Repricing
- ----- ---- ----------------- ------------ ---------- -------- -----------------
Thomas P. Gunning 2/23/00 2,000 $13.50 $21.50 $14.25 41 months
Vice President, 2/23/00 2,500 $13.50 $16.00 $14.25 49 months
Treasurer and 2/23/00 2,500 $13.50 $16.96 $14.25 49 months
Secretary 2/23/00 2,500 $13.50 $17.98 $14.25 49 months
2/23/00 2,500 $13.50 $19.06 $14.25 49 months
- ------------------------------------------------------------------------------
(1) Represents the closing price of the Common Stock on the NASDAQ Stock
Market on February 23, 2000.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Jay J. Miller, a director of the Company, provided various legal services
for the Company during fiscal 2001. In fiscal 2001, the Company paid $284,295
to Mr. Miller for services rendered and accrued during fiscal 2000. As of
February 22, 2001, the Company had invoices payable to Mr. Miller totaling
$181,489. The Company believes that Mr. Miller's fees were reasonable for the
services performed and were no less favorable to the Company than could have
been obtained from an unrelated third party.
REPORT ON EXECUTIVE COMPENSATION
The following report describes the policies pursuant to which
compensation was paid to executive officers of the Company for performance
during the fiscal year ended January 31, 2001.
COMPENSATION PHILOSOPHY AND APPROACH
Generally, the Company seeks to attract, retain and motivate its
executive officers through a combination of base salary, incentive awards
based upon individual performance and stock option awards under the Company's
1996 Stock Option Plan and otherwise. The Board of Directors believes that a
substantial portion of the aggregate annual compensation of each executive
officer should be influenced by the performance of the Company and the
individual contribution of the executive officer.
BASE SALARIES
The Board of Directors believes that the base salaries of the Company's
executive officers for fiscal 2001 were generally below those for other
comparable positions within the telecommunications service industry and
similar industries. However, the Company places significant emphasis on
incentive awards and stock option grants as a means of motivating and
rewarding its management. The Board of Directors believes that this strategy
provides optimal incentives for management to create long-term shareholder
value.
INCENTIVE COMPENSATION PAYMENTS
In addition to base pay, some of the Company's senior executives
(including its Chief Executive Officer) are eligible to receive bonuses and
stock option awards. Bonuses and stock options may be awarded, based upon the
individual performance of each executive officer at the sole discretion of the
Board of Directors. No cash bonuses were paid to the Company's Named
Executive Officers for their performance during fiscal 2001. Stock option
grants made to the Named Executive Officers during fiscal 2001 are described
in "Option/SAR Grants in Last Fiscal Year."
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The compensation policies applicable to the Company's Chief Executive
Officer are similar to those applicable to the Company's other executive
officers. Mr. Leach has a three year employment agreement with the Company
effective as of May 18, 2000, pursuant to which Mr. Leach was paid an annual
base salary of $300,000 during fiscal 2001. Pursuant to this agreement, Mr.
Leach is also entitled to receive a signing bonus in the amount of $25,000 to
cover relocation and other expenses, however, as of this date Mr. Leach has
accessed $15,000 of this amount. Mr. Leach is also entitled to receive an
annual bonus in an amount not to exceed 100 percent of his then effective base
salary, based upon Mr. Leach's attainment of annual revenue and earning
targets, as well as management goals set by the Board of Directors. Mr. Leach
is guaranteed a minimum bonus payment of $150,000 during the first year of
this agreement.
In connection with his appointment as Chief Executive Officer of the
Company, Mr. Leach was granted stock options under the Company's 1996 Stock
Option Plan to purchase 288,000 shares of Common Stock. The options granted
to Mr. Leach are scheduled to vest over a period of three years, in six equal
semi-annual installments commencing on November 18, 2000. The exercise price
for the option is $14.25 and is based on the fair market value of the Common
Stock on the date of the grant, and the options expire after a term of ten
years. According to the agreement, in the event that the Common Stock does
not close at or above $14.25 for at least 20 consecutive trading days between
May 18, 2000 and May 18, 2001, a new exercise price will be calculated based
on the average closing price of the Common Stock for the 40 trading days prior
to May 18, 2001.
In the event of a "change of control" of the Company, all of Mr. Leach's
stock options, stock appreciation rights, restricted stock grants or stock
bonuses and similar benefits , if any, shall be deemed to vest in full on the
effective date of such change of control. Pursuant to the agreement, a
"change of control" shall be deemed to occur if: (i) any "person" or "group"
(as such terms are used in Sections 3, 3(a), 9 and 13(d) of the Securities
Exchange Act of 1934, as amended (the "Act")) other than Walt Anderson,
Revision LLC or any of their respective affiliates becomes a beneficial owner
(as such term is used in the rules promulgated under the Act), directly or
indirectly, of securities of the Company representing 50 percent or more of
the combined voting power of the Company's then outstanding securities; (ii) a
change in "control" of the Company (as such term is defined in Rule 12b-2)
shall have occurred; (iii) the majority of the Board of Directors, as such
entire Board of Directors is composed as of May 18, 2000, no longer serve as
directors of the Company, except that there shall not be counted toward such
majority who no longer serve as directors Mr. Leach or any director who ceased
to serve either prior to the date of the change in control, for any reason, or
at any other time due to voluntary resignation (other than in connection with
an event described in (iv) or (v) below), death, disability or termination for
cause; (iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets; or (v) the
shareholders of the Company approve a merger or consolidation of the Company
with any other company, other than a merger or consolidation which would
result in the combined voting power of the Company's voting securities
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50 percent of the combined voting power of the
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; provided, however, that no
change in control shall be deemed to have occurred in any plan of liquidation,
sale of assets, merger or consolidation provided in (iv) and (v) above is not
consummated. In addition, any transaction involving a leveraged buyout or
other acquisition of the Company which would otherwise constitute a change in
control, in which Mr. Leach participates in the surviving or successor entity
(other than solely as an employee or consultant) will not constitute a change
in control.
The Board of Directors believes that the overall compensation packages
provided to the Company's Chief Executive Officer have been at the lower end
of the range for similar positions in the telecommunications service industry
and similar industries. However, stock option grants provide a mechanism for
the Chief Executive Officer, along with other senior executive officers of the
Company, to benefit directly from strong management performance. Thus, a
substantial portion of the Chief Executive Officer's total compensation is
tied directly to the creation of shareholder value.
The Report on Executive Compensation shall not be deemed to be
incorporated by reference by any general statement incorporating by reference
this Annual Report on Form 10-K into any filing under the Securities Act of
1933, as amended (the "Securities Act") or the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and shall not otherwise be deemed filed
under such Acts.
Respectfully Submitted
THE COMPENSATION COMMITTEE
Henry G. Luken, III
Jay J. Miller
STOCK PERFORMANCE CHART
The following chart graphs the performance of the cumulative total return
to the Company's shareholders (stock price appreciation), assuming the
reinvestment of dividends, during the previous five years in comparison to
returns of the NASDAQ Stock Market (U.S.) Index and a peer group index. The
chart assumes $100 was invested at the close of trading on the last trading
day preceding the first day of the fifth preceding fiscal year in Covista
Common Stock, the NASDAQ Stock Market (U.S.) Index and the peer group. The
peer group index used is the NASDAQ Telecommunications Stock Index (the "Peer
Group").
COVISTA COMMUNICATIONS, INC.
[Graph]
COVISTA NASDAQ PEERS
---------- ---------- ----------
1996 100 100 100
1997 105.802 131.10888 102.233
1998 327.2691 154.69039 155.4043
1999 402.7927 242.14151 278.5768
2000 330.0662 378.4294 426.5282
2001 33.56606 205.45813 231.666
The stock price performance depicted in the above graph is not
necessarily indicative of future price performance. This graph will not be
deemed incorporated by reference in any filing by the Company under the
Securities Act or the Exchange Act, except to the extent the Company
specifically incorporates the graph by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth the beneficial ownership of the Company's
Common Stock as of April 15, 2001 by each person known by the Company to be
the beneficial owner of more than five percent of the issued and outstanding
shares of Common Stock. Unless otherwise indicated, each such person (alone
or with family members) has sole voting and dispositive power with respect to
the shares listed opposite such person's name.
Name and Address Number of Shares Percentage
of Beneficial Owner Owned (1) of Class (2)
- -------------------- ----------------- -----------
Kevin Alward
182 Powell Road
Allendale, NJ 07401 1,230,779 10.46%
Walt Anderson 1,353,896 (3) 11.50%
c/o Entree International
1023 31st Street NW
Suite 300
Washington, DC 20007
Donald A. Burns 1,883,261 (4) 16.00%
1021 North Ocean Boulevard
Palm Beach, FL 33480
Covista Communications, Inc. 600,000 5.10%
Employee Stock Ownership Plan
150 Clove Road
Little Falls, NJ 07424
Warren Feldman 1,119,578 9.51%
45A Samworth Road
Clifton, NJ 07012
Foundation for the International 723,529 (5) 6.16%
Non-Governmental Development of
Space
1023 31st Street NW
Suite 300
Washington, DC 20007
Henry G. Luken, III 3,466,708 29.45%
400 Fairway Lane
Soddy Daisy, TN 37379
- -----------------------------------------------------------------------------
(1) Except as otherwise set forth in the footnotes to this table, all shares
are beneficially owned and sole investment and voting power is held by
the persons named above, to the best of the Company's knowledge.
(2) Based on 11,769,405 shares outstanding.
(3) Includes 1,353,896 shares owned of record by Revision LLC, a wholly owned
subsidiary of Gold & Appel Transfer, S.A., as to all of which shares Mr.
Walt Anderson exercises sole voting and dispositive power. Of the
1,353,896 shares owned of record by Revision LLC, 1,179,732 are pledged
to Donald A. Burns to secure a loan. Excludes 725,329 shares owned by
Foundation for International Non-Governmental Development of Space
("FINDS"), of which Mr. Anderson is the President and a director, and to
which Mr. Anderson disclaims beneficial ownership.
(4) Includes 1,179,732 shares owned of record by Revision LLC, and 703,529
shares owned of record by FINDS, which shares are pledged to Donald A.
Burns to secure a loan.
(5) Of the 725,329 shares owned by FINDS, 703,529 are pledged to Donald A.
Burns to secure a loan.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of April 15, 2001, information
concerning the beneficial ownership of Common Stock by each director and Named
Executive, and for all directors and Named Executives as a group:
Name of Number of Shares Percentage
Beneficial Owner Owned (1) of Class (2)
- -------------------- ----------------- -----------
Kevin Alward 1,230,779 10.46%
Walt Anderson 1,353,896 (3) 11.50%
Leon Genet 41,120 *
Thomas P. Gunning 54,200 (4) *
A. John Leach 554,000 (5) 4.71%
Henry G. Luken, III 3,466,708 29.45%
Jay J. Miller 400 *
All directors and officers
as a group (7 in number) 6,701,103 (4)(5) 56.94%
- -----------------------------------------------------------------------------
* Less than 1%.
(1) Except as otherwise set forth in the footnotes to this table, all shares
are beneficially owned and sole investment and voting power is held by
the persons named above, to the best of the Company's knowledge.
(2) Based on 11,769,405 shares outstanding.
(3) Includes 1,353,896 shares owned of record by Revision LLC, a wholly owned
subsidiary of Gold & Appel Trnasfer, S.A., as to all of which shares Mr.
Walt Anderson exercises sole voting and dispositive power. Of the
1,353,896 shares owned of record by Revision LLC, 1,179,732 shares are
pledged to Donald A. Burns to secure a loan. Excludes 725,329 shares
owned by FINDS, of which Mr. Anderson is the President and a director,
and as to which Mr. Anderson disclaims beneficial ownership.
(4) Includes 20,000 shares issuable to Mr. Gunning under presently
exercisable options.
(5) Includes 48,000 shares issuable to Mr. Leach under presently exercisable
options.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On February 1, 2001, the Board of Directors of the Company authorized a
transaction (the "Stock Issuance Transaction") involving the issuance and sale
of a total of 3,500,000 shares of Common Stock at a purchase price of $2.00
per share to the following three persons (the "Purchasers") in the amounts
indicated: Kevin Alward, 1,000,000 shares; A. John Leach, 500,000 shares; and
Henry G. Luken, III, 2,000,000 shares. When the Stock Issuance Transaction
was authorized, Messrs. Leach and Luken were officers and directors of the
Company. The Stock Issuance Transaction was approved at a special meeting of
the Company's stockholders on March 29, 2001, and was completed in April,
2001.
During fiscal 2001, Walt Anderson, a director of the Company, also served
as a director of Capsule Communications, Inc. During fiscal 2001, Mr.
Anderson also was the beneficial owner of more than ten percent of the common
stock of Capsule Communications, Inc. The Company both purchases and sells
services from Capsule Communications, Inc. During fiscal 2001, the Company's
sales to Capsule were approximately $532,000, and its purchases from Capsule
were approximately $544,000. All transactions between the Company and Capsule
were based on competitive terms obtained at an arm's length basis. It is
expected that the relationship between the Company and Capsule will continue
during fiscal 2002.
During fiscal 2001, Jay J. Miller, a director of the Company, provided
various legal services to the Company for which the Company paid his law firm
$284,295. As of January 31, 2001, the Company owed Mr. Miller's law firm
$181,489. The Company believes that Mr. Miller's fees were reasonable for the
services performed and were no less favorable to the Company than could have
been obtained from an unrelated third party. It is expected that the
relationship between the Company and Mr. Miller will continue during fiscal
2002.
During fiscal 2001, LPJ, Inc., which is wholly owned by Leon Genet, a
director of the Company, provided agent services to the Company for which the
Company paid commissions of $96,359. The commissions paid to LPJ, Inc. were
computed on the same basis as the commissions paid to other independent agents
retained by the Company. It is expected that the agency relationship between
the Company and Mr. Genet will continue during fiscal 2002.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Company has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized, on July 17, 2001.
COVISTA COMMUNICATIONS, INC.
By: /s/ Thomas P. Gunning
-----------------------------
Thomas P. Gunning
Chief Financial Officer