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As filed with the Securities and Exchange Commission on November 12, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under the Securities Act of 1933
PICK COMMUNICATIONS CORP.
(Exact Name of Registrant as Specified in its Charter)
Nevada 36-3658792
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
8401 N.W. 53rd Terrace, Suite 119, Miami FL 33166
(Address of principal executive offices) (Zip Code)
AMENDED AND RESTATED 1996 STOCK OPTION PLAN
(Full Title of the Plan)
Diego Leiva, Chairman of the Board of Directors
PICK Communications Corp.
8401 N.W. 53rd Terrace
Suite 119
Miami, FL 33166
(305) 717-1500
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
A copy of all communications, including communications sent to the agent
for service should be sent to:
Elliot H. Lutzker, Esq.
Snow Becker Krauss P.C.
605 Third Avenue
New York, N.Y. 10158-0125
(212) 687-3860
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================================
Title of Each Class of Proposed Maximum Proposed Maximum Amount of
Securities to be Amount to be Offering Aggregate Offering Registration
Registered Registered Price Per Share Price Fee
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<S> <C> <C> <C> <C>
Stock Options 1,000,000 (1) (3) (3) (3)
314,500 (2) (3) (3) (3)
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Common Shares, 478,000 (5)(7) $1.50 (6) $717,000 $ 199.33
par value $.001 per 522,000 (5)(9) $1.81 (8) $944,820 $ 262.66
share 374,000 (4)(5) $5.50 (8) $2,057,000 $ 571.85
30,000 (4)(5) $7.70 (8) $ 231,000 $ 64.22
50,000 (4)(5) $1.81 (8) $ 90,500 $ 25.16
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Total ............................................................................................ $1,123.22
====================================================================================================================
</TABLE>
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(1) Represents options granted or to be granted pursuant to the Amended and
Restated 1996 Stock Option Plan (the "Plan") of PICK Communications Corp.
(the "Registrant"). Prior to its amendment, the Plan authorized the
Registrant to grant options to purchase up to 500,000 shares (as adjusted
for the Registrant's one-for-ten reverse stock split on July 23, 1999) of
the Registrant's Common Stock, and the Registrant filed a Registration
Statement on Form S-8, dated August 21, 1997 (File No. 333-20573), with
respect to the grant of such options and the issuance of shares of Common
Stock pursuant to the exercise of such options. The Plan was subsequently
amended by a resolution of the Board of Directors of the Registrant,
subject to the approval of the shareholders of the Registrant, to permit
the grant of options to purchase an additional 500,000 shares of Common
Stock, and this Registration Statement is being filed with respect to such
additional options and shares.
(2) Represents options granted or to be granted outside of the Plan (the
"Non-Plan Options").
(3) No registration fee is required pursuant to Rule 457(h)(3).
(4) Shares issuable upon exercise of Non-Plan Options issued and outstanding.
(5) Pursuant to Rule 416, includes an indeterminable number of shares of
Common Stock which may become issuable pursuant to the anti-dilution
provisions of the Plan or the Non-Plan Options, as the case may be. All
share data and per share data in this Registration Statement give
retroactive effect to a one-for-ten reverse split declared by the Board of
Directors of the Registrant on July 6, 1999 to shareholders of record on
July 23, 1999.
(6) Calculated solely for the purpose of determining the registration fee
pursuant to Rule 457 (h) (1) based upon the average of the high and low
sales prices of the Registrant's Common Stock on the National Association
of Securities Dealers, Inc.'s Electronic Bulletin Board on November 10,
1999.
(7) Shares issuable upon exercise of options available for grant under the
Plan.
(8) Calculated solely for the purpose of determining the registration fee
pursuant to Rule 457(h)(1) based upon the per share exercise price.
(9) Shares issuable upon exercise of options granted under the Plan.
Note
This Registration Statement includes a form of prospectus to be used by
certain persons who may be deemed to be affiliates of the Registrant in
connection with the resale of shares of Common Stock received by such persons
pursuant to the exercise of options granted under the Registrant's Amended and
Restated 1996 Stock Option Plan, 500,000 of which shares are subject to this
Registration Statement and 500,000 of which are subject to the Registrant's
Registration Statement on Form S-8, filed on August 21, 1997 (File No.
333-20573).
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PROSPECTUS
PICK COMMUNICATIONS CORP.
1,314,500 SHARES
We have prepared this prospectus so certain of our officers, directors
and employees may resell our shares of common stock. The selling stockholders
have acquired or may acquire common stock upon exercise of options granted or to
be granted under the PICK Communications Corp. Amended and Restated 1996 Stock
Option Plan (the "Plan") or outside the Plan (the "Non-Plan Options"). The
maximum number of shares which may be offered or sold under this prospectus will
be adjusted if we:
o split our common stock
o declare a dividend on our common stock
o recapitalize
o do anything else that affects our common stock
The common stock is listed on the National Association of Securities Dealers,
Inc.'s Electronic Bulletin Board under the Symbol PICK. We anticipate the
selling stockholders to offer shares of common stock for resale at prevailing
prices on the National Association of Securities Dealers, Inc. Over-the-counter
Electronic Bulletin Board on the date of sale. We will not receive any of the
proceeds from the sale of the common stock, but we will receive the exercise
price upon exercise of options.
The common stock is a speculative investment and involves a high degree
of risk. You should read the description of certain risks under the caption
"Risk Factors" commencing on page 4 before purchasing the
common stock.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined
whether this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The date of this Prospectus is November 12, 1999.
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INFORMATION ABOUT THE COMPANY
We file reports, proxy statements and other information with the SEC.
You may read and copy any document we file at the Public Reference Room of the
SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Regional Offices of the SEC at Seven World Trade Center, Suite 1300, New
York, New York 10048, and at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Please call 1-800-SEC-0330 for further information
concerning the Public Reference Room. Our filings also are available to the
public from the SEC's website at www.sec.gov. We distribute to our stockholders
annual reports containing audited financial statements.
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" the information that we
file with it, which means that we can disclose important information to you by
referring to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information we file later with the
SEC will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings that we make with
the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
until the offering is completed:
1. Annual Report on Form 10-K for the fiscal year ended December 31, 1998.
2. Quarterly Report on Form 10-Q for the quarter ended June 30, 1999
3. Quarterly Report on Form 10-Q for the quarter ended March 31, 1999
4. Proxy Statement dated September 29, 1998.
5. Current Report on Form 8-K for September 17, 1999.
6. The description of our common stock contained in our Registration Statement
on Form 10 (File No. 0-27604) under Section 12 of the Securities Exchange
Act.
You may request a copy of these filings, at no cost, by writing or calling us
at:
PICK Communications Corp.
8401 N.W. 53rd Terrace
Suite 119
Miami, FL 33166
Attention: Chief Executive Officer
Telephone: (305) 717-1500
This prospectus is part of a registration statement that we filed with
the SEC. You should rely only on the information or representations provided in
this prospectus. We have not authorized anyone to provide you with different
information. The common stock will not be offered in any state where an offer is
not permitted. You should not assume that the information in this prospectus is
accurate as of any date other than the date on the cover of this prospectus.
THE COMPANY
The Company currently has two active subsidiaries, PICK Sat, Inc. and
PICK Online.Com Inc. PICK Sat and PICK Online are both developing companies. Our
current focus is our PICK Sat subsidiary which has just begun commercial
operations. PICK Sat has developed satellite-based, broadband Internet access
and delivery services. One of these services makes it easier and more cost
efficient to send video and large multimedia files to Internet users. We
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are marketing our services to media companies, large corporations, cable
companies, Internet Service Providers ("ISPs") and end-users. We are focusing
our initial marketing efforts in certain areas of the United States and Latin
America, where PICK Sat's services have a greater cost advantage due to the
higher costs of terrestrial Internet service in those areas.
We have entered into our first contract for this service. The customer,
Cadena Latinoamericana de Television, Inc. ("CLT"), is an owner and distributor
of Spanish-language video programming. CLT will utilize PICK Sat services to
transmit video content in Internet Protocol format to cable networks and
broadcast television stations in Latin America. CLT is currently using courier
services to send more than 20,000 Betacam cassettes a year to its affiliates.
CLT, using the PICK Sat service, will now transmit video files to affiliate
stations who will receive the files via satellite dish, store them on a server,
and decode them into Betacam format as needed for local playout. The agreement
provides for up-front fees with continuing revenues thereafter. The agreement is
for three years and if successfully completed would provide us with
approximately $2.1 million in revenues.
We have also established two beta sites for other PICK Sat services,
one with a wireless cable operator in Mexico, and another with a educational
institution in the United States. These beta tests of PICK Sat service include
testing with both the customer, and end-users.
Once PICK Sat's service are more mature, and provided we receive
substantial additional financing, we intend to begin marketing our PICK
Online.Com services, which includes multimedia portal services that host radio,
TV and Web-based events.
On June 23, 1999, our Board of Directors voted to sell or discontinue
the long distance telephone service portion of its business to focus on the
Internet services portion of its business.
We have terminated marketing and distribution of prepaid telephone
calling cards through PICK US, Inc. We have entered into a definitive agreement
to sell the stock of PICK Net Inc. and PICK Net UK PLC, both of which provide
international long distance services to other carriers and resellers, for
nominal value, and have up to approximately $10 million of their liabilities
assumed. As of October 31, 1999, approximately $1,500,000 of indebtedness of
PICK Net had been paid by a lender.
We are in need of immediate financing for working capital to finance
our PICK Sat and PICK Online subsidiaries. Neither entity has generated any
revenues to date. We have entered into an option agreement with Atlantic
Tele-Network, Inc. ("ATN") to sell them up to a majority of the common stock of
PICK Sat, however, they have advised us that they do not intend to exercise the
option. The repayment of the $1,500,000 of Pick Net debt, as well as
approximately $500,000 advanced to PICK Sat for operating expenses in connection
with the option, has been guaranteed by PICK Sat. In the event that this
transaction is not completed and we are unable to repay the loans, with third
party funding for which we have no commitments, the assets of PICK Sat may be
foreclosed upon. Should we be unable to obtain interim financing in the near
term we will be forced to cutback or suspend operations and/or seek protection
under the bankruptcy laws. Although we are in discussions with several sources
of financing, there can be no assurance we will obtain such financing.
We recently relocated our principal executive offices to 8401 N.W. 53rd
Terrace, Suite 119,Miami FL 33166, and our telephone number is (305) 717-1500.
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RISK FACTORS
This offering involves a high degree of risk. Before you invest in our
common stock, you should be aware that there are various risks, including those
described below, that may affect our business, financial condition and results
of operations. We caution you, however, that this list of risk factors may not
be all inclusive. If any of the following risks actually occur, our business,
financial condition or results of operations would likely suffer. In this case,
the trading price of our common stock could decline, and you may lose all or
part of your investment.
We have a history of significant and continuing losses and cannot
guarantee that we will be profitable.
We have experienced significant operating losses since we commenced
full operations in 1994. Our net losses for each fiscal year since 1994 were:
1998 $17.1 million
1997 $9.5 million
1995 $1.1 million
1994 $1.3 million
Although we had net income of approximately $1,636,000 in 1996, this
resulted from non-cash, non-operating income, which was offset in 1997 by
non-cash non-operating losses. Our loss from discontinued operations increased
from $2,308,451 for the six months ended June 30, 1998 to $4,364,730 for the six
months ended June 30, 1999. We also recorded an additional loss on the disposal
of the discontinued operations in the amount of $47,108,711. Of this amount,
$46,033,711 is attributable to the writing off of the deferred interest and debt
placement charges of the restructured notes which amounts are related to the
discontinued operations and therefore will provide no future benefit.
On June 23, 1999, we formalized a plan to discontinue our long distance
telephone service and prepaid calling card business consisting of PICK US, PICK
Net and PICK Net UK. Accordingly, the Old Business is accounted for as a
discontinued operation in the accompanying consolidated financial statements. We
are in the process of completing the sale of PICK Net and PICK Net UK and the
discontinuance of the operation of PICK US.
We significantly curtailed our operations during 1998, while we
installed and tested two new switches. Our total revenues, which all arose from
our discontinued operations, amounted to $9,822,903 for the twelve months ended
December 31, 1998, compared to $9,015,903 for the comparable period last year.
Of this amount, however, prepaid telephone calling card revenues were $7,844,462
for 1998, compared to $1,346,660 for 1997. However, our cost of telephone time
purchased increased by a greater amount than our sales and caused us to continue
to lose money. Therefore, we have since shifted the focus of our business away
from the prepaid calling card business, as well as from the resale of long
distance telephone services (collectively, the "Old Business"). We have only
recently started offering our new services. Therefore, we do not expect to be
able to achieve our prior level of sales in the foreseeable future.
Nevertheless, we will continue to have a high level of operating expenses. We
need to incur significant up-front expenses, including capital expenditures, in
connection with the development and marketing of our new services (collectively,
the "New Business"). This includes substantial increases in executive,
marketing, sales, finance and other personnel. We expect to incur additional
losses during the foreseeable future until we are able to generate significant
revenues to finance our operations and the costs of our new services. We cannot
guarantee that we will be able to generate such revenues and operate profitably.
We have an immediate need for additional financing
We do not have sufficient cash on hand to meet our current obligations.
We recently received interim loans of approximately $500,000 from ATN and are
seeking additional interim financing. Between March and July 1999, we issued
1,871,000 shares of Series B preferred stock convertible at $1.00 per share for
$1,871,000, and 500,000 shares of Series D preferred stock convertible at $4.20
per share for $5,000,000, subject to adjustment under certain circumstances.
However, we will not be able to sustain our operations without additional
funding. In the event we are
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unable to obtain interim financing, we will be forced to cutback or suspend our
operations. We are attempting to raise substantial additional funds. We need
additional funding immediately to:
o pay our outstanding past due payables;
o meet our immediate payroll obligations; and
o finance our New Business.
At June 30, 1999, we had a working capital deficit of approximately
$16.8 million.
As of June 30, 1999, we had approximately $17.9 million of current
liabilities, which mature or is subject to payment agreements before the end of
1999.
In April 1999, we were successful in converting all but $20,000 (which
we repaid) of the $9.9 Million of the July 1998 Bridge Loan into three-year
obligations. We have also entered into a binding contract to sell the assets of
the Old Business for nominal value and have a substantial portion of their
liabilities assumed. We are attempting to convert the majority of our trade
payables, a portion for which we will be contingently liable, into long-term
obligations, but there can be no assurance we will be successful. We may have to
seek bankruptcy protection for all or part of our "Old Business," if the sale of
the Old Business is not completed. However, unless we are able to obtain
immediate additional financing for the Company, certain of our largest creditors
can declare a default and force us to declare bankruptcy to protect ourselves.
In such event, you may lose your entire investment.
We have no firm arrangements with respect to additional financing. We
cannot guarantee that additional financing will be available to us on
commercially reasonable or acceptable terms or on terms which would not be
substantially dilutive to stockholders, if at all. If we fail to secure
necessary financing we expect it would have a material adverse impact on
business.
Our financial statements are qualified and based on obtaining financing and
attaining successful operations
We have incurred operating losses and negative cash flow from our
operations since 1995 and we have an accumulated deficit of approximately $106
million at June 30, 1999. Our operating losses and negative cash flow are
expected to continue until such time, if ever, that our New Business begins to
produce sufficient revenues to cover our expenses. In addition, substantially
all of our debts are short term. Our former accountants issued a qualified
report on the Company's financial statements as at and for the year ended
December 31, 1997. Our current auditors issued a qualified report on our
financial statements as at and for the year ended December 31, 1998. These two
reports state that if we do not:
o extend payout terms;
o obtain additional long-term financing arrangements and raise
additional funds; and
o increase revenues and/or decrease expenses,
we may be unable to continue as a going concern for a reasonable period of time.
We restated our financial statements in 1998
Our financial statements as of March 31, 1997 were restated in June
1998. We initially did not report any gains or losses on the disposition of
marketable equity securities for transactions consummated in the first quarter
of 1997. We believed that it was not appropriate to recognize losses on the
acquisition of our and our subsidiary's common stock or on the exchange of one
investment in marketable equity securities for a similar investment. While we
believed our
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initial reporting was correct when made, we subsequently determined that it
would have been preferable to record these transactions based upon the fair
value of the assets exchanged, resulting in the recognition of approximately
$9,400,000 in non-cash, non-operating losses. The effect of the restatement for
the quarter ended March 31, 1997, was to reduce net income of $948,711 to a net
loss of $7,626,903. These transactions do not have a cash or operating effect on
our results of operations, and, to date, have not adversely affected the price
of our common stock.
We depend on a limited number of clients
Our prepaid telephone calling card business, which we are no longer
marketing, largely depended upon our relationship with Blackstone Calling Card,
Inc. ("Blackstone"). In 1998, approximately 72% and 10% of our revenues were
from Blackstone and IDT Corp., respectively. We have terminated the Blackstone
Agreement, which can be terminated by either party without cause after the first
year. Nevertheless, we expect to initially depend on a limited number of clients
for the New Business until these businesses become established.
Our limited history of operations may not be a reliable basis for evaluating our
prospects
Because the New Business are developing companies, we have no operating
and financial data to give to you to evaluate our future performance and
prospects concerning these entities. Our prospects must be considered in light
of the risks, expenses, delays, problems and difficulties frequently encountered
in the establishment of a new business in the Internet industry, which is an
evolving industry characterized by intense competition. You must consider the
risks, expenses and uncertainties that an early stage business like ours faces.
These risks include our ability to:
o establish awareness of our services;
o expand the content and services on our network;
o attract a larger audience to our network;
o attract a large number of advertisers from a variety of industries;
o maintain our current, strategic relationships with Microsoft,
Philips and Harmonic Data Systems and develop new relationships;
o respond effectively to competitive pressures; and
o continue to develop and upgrade our technology.
If we are unsuccessful in addressing these risks, our business,
financial condition and results of operations will be materially and adversely
affected.
Significant competition in providing Internet services could reduce the demand
for and profitability of our services
The Internet services business is highly competitive and there are few
significant barriers to entry. Currently, we compete with a number of national
and local Internet Service Providers ("ISPs"). In addition, a number of
multinational corporations, including giant communications carriers such as
AT&T, MCI/Worldcom, Sprint and some of the regional Bell operating companies,
are offering, or have announced plans to offer, Internet access or on-line
services. We also face significant competition from Internet access
consolidators and from on-line service firms such as America Online ("AOL"),
CompuServe, and Prodigy.
Our competitors also include Broadcast.com, the largest aggregator of
Internet audio and Real Networks, an audio streaming software maker. We believe
that new competitors, which may include computer software and services,
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telephone, media, publishing, cable television and other companies, are likely
to enter the on-line services market. There are many companies that provide
Internet services targeted to Latin Americans and Spanish and Portuguese
speaking people in general. Competition for visitors, advertisers and electronic
commerce partners is intense and is expected to increase significantly in the
future because there are no substantial barriers to entry in our market.
In addition, we believe that the Internet service and on-line service
businesses will further consolidate in the future. We believe this could result
in increased price and other competition in the industry and adversely impact
us. In the last year, a number of on-line services have lowered their monthly
service fees. This may cause us to lower our fees in order to compete.
Many of our Internet service competitors possess financial resources
significantly greater than what we might expect to have and, accordingly, could
initiate and support prolonged price competition to gain market share. Many
competitive products and services are marketed by companies which:
o are well established;
o have reputations for success in the development and sale of
product and services; and
o have significantly greater financial, marketing, distribution,
personnel and other resources, thereby permitting them to
implement extensive advertising and promotional campaigns,
both general and in response to efforts by additional
competitors to enter into new markets and introduce new
products and services.
We believe that the primary competitive factors among Internet access providers
are:
o price, both in prices charged and profit margins
o quality
o customer support and loyalty
o technical expertise
o speed of service provided
o local presence in a market
o ease of use
o variety of value-added services
o reliability
We believe we will be able to compete favorably in these areas. However
increased competition in any one of these areas could materially adversely
affect our business, financial condition and results of operations. Our success
in the high-speed direct market will depend heavily upon our ability to provide
high quality Internet connectivity and value-added Internet services targeted in
select target markets. Other factors that will affect our success in these
markets include our continued ability to attract additional experienced
marketing, sales and management talent, and the expansion of support, training
and field service capabilities.
We believe that we compete on the basis of price and service. Our
success will depend on our ability to anticipate and respond to rapid changes in
consumer preferences and the introduction of new services, as well as our
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ability to retain our favorable gross margins. We cannot assure you that we will
be able to compete successfully in our markets.
In addition, our competitors may develop content that is better than
ours or that achieves greater market acceptance. It is also possible that new
competitors may emerge and acquire significant market share. A loss of users to
our competitors may have a material and adverse effect on our business,
financial condition and results of operations.
The Internet industry is characterized by frequent introduction of new
products and services, and is subject to changing consumer preferences and
industry trends, which may adversely affect our ability to plan for future
design, development and marketing of our products and services. The markets for
Internet products and services are also characterized by rapidly changing
technology and evolving industry standards, often resulting in product
obsolescence or short product life cycles.
We are uncertain of our products being accepted by the market
Achieving market acceptance for our products and services requires
substantial marketing efforts and the expenditure of significant funds, which we
don't currently have, to create both awareness and demand.
Our success depends, in large part, on our ability to attract large
corporations, media companies, cable companies and ISPs to use our services, as
well as the level of acceptance and usage by end-users. Because demand by our
customers may be interrelated, any lack or lessening of demand by any one of
these parties could have a negative affect on our products and services overall
market acceptance. We can not assure you that markets will develop for our New
Business, nor can we assure you that we will be able to meet our current
marketing objectives or succeed in positioning ourselves as a key player in the
Internet industry.
If we do not effectively implement our marketing strategy and effectively manage
our operations, our business could suffer
We grew from approximately $1.6 million of net sales from the Old
Business in 1995 to approximately $9.8 million of net sales from the Old
Business in 1998 before we discontinued the Old Business. This placed demands on
our management, employees, operations and physical resources. We were forced to
curtail our unprofitable operations, terminate employees and restructure our
short-term indebtedness and seek to terminate, divest, or reorganize all or a
portion of our Old Business, all of which are currently being carried out.
Implementation of our new business plan will depend on, among other things, the
following:
o our ability to establish contractual arrangements targeting several
market segments for our New Business; and
o hire and retain skilled management, financial, marketing, sales
and other personnel.
Our marketing strategy and plans are subject to change as a result of a number
of factors, including, but not limited to, progress or delays in:
o our marketing efforts;
o changes in market conditions, including the emergence of
significant supplementary markets;
o the nature of possible strategic alliances which may become
available to us in the future; and
o competitive factors.
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We cannot assure you that we will be able to implement successfully our business
plan for our New Business or otherwise continue our operations
In order to implement our business plan for our New Business, we will
be required to:
o improve our operating systems;
o attract and retain skilled executive, management and technical
personnel; and
o successfully manage growth, including monitoring operations,
controlling costs and maintaining effective quality, and service
controls.
If we are unable to effectively manage our growth, our business, operating
results and financial condition could suffer
We depend on satellites and third-party long distance carriers
We currently depend on a limited number of satellites, domestic and
international long distance carriers and Internet Service Providers to provide
our services. Although we believe that we currently have sufficient access to
transmission facilities, satellites and long distance networks, if we fail to
obtain continued access to such facilities, satellites and networks it could
also have a negative impact on our New Business.
We may derive a portion of our revenues from reciprocal advertising agreements,
which do not generate cash revenue
We may derive a portion of our revenues from reciprocal advertising
arrangements under which we will exchange advertising space on our network
predominantly for advertising space on television and radio stations, rather
than cash payments. In the event that revenues from reciprocal advertising
arrangements account for a portion of our revenues in the foreseeable future, we
will be giving up cash revenues.
Joint ventures, acquisitions or strategic alliances may not be available
We do not know if we will be able to identify any future joint
ventures, acquisitions or strategic alliances or that we will be able to
successfully finance these transactions. A failure to identify or finance future
transactions may impair our growth. In addition, to finance these transactions,
it may be necessary for us to raise additional funds through public or private
financings. Any equity or debt financings, if available at all, may impact our
operations and, in the case of equity financings, may result in substantial
dilution to existing stockholders.
In the future we will depend on the developing market of the Internet
Our ability to derive revenues by providing online commerce and
Internet services will depend, in part, upon a developed and robust industry and
the infrastructure for providing Internet access and carrying Internet traffic.
We cannot assure you that the necessary infrastructure, such as a reliable
network backbone, or complementary products, such as lower cost high speed cable
modems, will be developed or that the Internet will become a viable commercial
marketplace in those segments we target. Critical issues concerning the
commercial use of the Internet, including:
o security
o ease of use and access
o reliability
o quality of service
o cost
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remain unresolved and may impact the growth of Internet use. In the event that
the necessary infrastructure or complementary products are not developed or the
Internet does not become a viable commercial marketplace, our future business,
operating results and financial condition could be negatively affected if we
were to expend significant proceeds for the development of Internet services.
The Internet radio and television market is new and rapidly evolving,
particularly in Latin America. As a result, we cannot measure its effectiveness
or long term market acceptance as compared with traditional media.
Radio and television stations must direct a portion of their budgets to
the Internet and, specifically, to our network. Many of our current or potential
customers have limited experience using the Internet.
No standards exist for the acceptance of the Internet as a medium for
broadcasting radio and television
No standards have been widely accepted for the measurement of the
effectiveness of radio and television broadcasting over the Internet. Standards
may not develop sufficiently to support the Internet as an effective broadcast
medium. If these standards do not develop, broadcast stations may choose not to
use our network. This would have a material adverse effect on our business,
financial condition and results of operations.
Latin American Risks
Our operating results may also fluctuate due to seasonal factors
If we are successful in initially marketing our services in Latin
America, the level of use on our network may be seasonal. This may cause
fluctuations in our revenues and operating results. Visitor traffic on our
network may be significantly lower during the first calendar quarter of the year
because:
o it is the summer months in much of Latin America;
o our target audience tends to take extended vacations during these
months; and
o schools and universities are generally closed.
As a result, advertisers have historically spent less in the first and
second calendar quarters. We believe that these seasonal trends will affect our
results of operations.
Social and political conditions in Latin America may cause volatility in our
operations and adversely affect our business
We hope to derive a substantial portion of our initial revenues from
the Latin American markets. Social and political conditions in Latin America are
volatile and may cause our operations to fluctuate. This volatility could make
it difficult for us to effect our business plan, which could have an adverse
effect on our business. Historically, volatility has been caused by:
o significant governmental influence over many aspects of local
economies;
o political instability; unexpected changes in regulatory
requirements;
o social unrest;
o slow or negative growth;
o imposition of trade barriers; and
-10-
<PAGE>
o wage and price controls.
We have no control over these matters. Volatility resulting from these
matters may decrease Internet availability, create uncertainty regarding our
operating climate and adversely affect our customers' budgets, all of which may
adversely impact our business.
Currency fluctuations and general economic conditions in Latin America may
adversely affect our business
The currencies of many countries in Latin America, including Brazil and
Argentina, have experienced substantial depreciation and volatility. The
currency fluctuations, as well as high interest rates, inflation and high
unemployment, have materially and adversely affected the economies of these
countries. Poor general economic conditions in Latin American countries may
cause our customers to reduce their spending on Internet services, which could
adversely impact our business.
We may suffer currency exchange losses if local Latin American currencies
depreciate relative to the U.S. dollar
Our reporting currency is the U.S. dollar. In a number of cases,
however, customers in Latin America may be billed in local currencies. Our
accounts receivable from these customers will decline in value if the local
currencies depreciate relative to the U.S. dollar. Although we may enter into
hedging transactions in the future, we may not be able to do so successfully. In
addition, our currency exchange losses may be magnified if we become subject to
exchange control regulations restricting our ability to convert local currencies
into U.S. dollars.
If Internet use in Latin America does not grow, our business will suffer
The Latin American Internet market is in an early stage of development.
Our near term prospects depends on the continued growth of the Internet in Latin
America. Our business, financial condition and results of operations will be
materially and adversely affected if Internet usage in Latin America does not
continue to grow or grows more slowly than we anticipate. Internet usage in
Latin America may be inhibited for a number of reasons, including:
o the cost of Internet access;
o concerns about security, reliability, and privacy;
o limited amount of content in Spanish or Portugese;
o ease of use; and
o quality of service.
Underdeveloped telecommunications infrastructure may limit the growth of the
Internet in Latin America and adversely affect our business
Access to the Internet requires a relatively advanced
telecommunications infrastructure for which we will be relying on a satellite
communications network. The telecommunications infrastructure in many parts of
Latin America is not as well-developed as in the United States. The quality and
continued development of the telecommunications infrastructure in Latin America
may have a substantial impact on our ability to deliver our services and on the
market acceptance of the Internet in Latin America in general. If further
improvements to the Latin American telecommunications infrastructure are not
made, the Internet will not gain broad market acceptance in Latin America. If
access to the Internet in Latin America does not continue to grow or grows more
slowly than we anticipate, our business, financial condition and results of
operations will be materially and adversely affected.
High cost of Internet access may limit the growth of the Internet in Latin
America and impede our growth
-11-
<PAGE>
Each country in Latin America has its own telephone rate structure
which, if too expensive, may cause consumers to be less likely to access and
transact business over the Internet. Although rates charged by ISPs and local
telephone companies have been reduced recently in some countries, we do not know
whether this trend will continue. Unfavorable rate developments could decrease
our visitor traffic and our ability to derive revenues from transactions over
the Internet. This could have a material adverse effect on our business,
financial condition and results of operations.
Other Business Risks
We may not be able to develop the PICK Sat and PICK Online.Com names
and attract users to our network
Maintaining the PICK Sat and PICK Online.Com names is critical to our
ability to expand our user base and our revenues. We believe that the importance
of brand recognition will increase as the number of Internet sites in Latin
America grows. In order to attract and retain Internet users, advertisers and
electronic commerce partners, we intend to increase substantially our
expenditures for creating and maintaining brand loyalty.
Our success in promoting and enhancing the PICK Sat and PICK Online.Com
names will also depend on our success in providing high quality content,
features and functionality. If we fail to promote our name successfully or if
visitors to our network or advertisers do not perceive our services to be of
high quality, the value of the names could be diminished. This could have a
material and adverse effect on the business, financial condition and results of
operations.
We will not be able to attract broadcasters if we do not continually enhance and
develop the content and features of our network
To remain competitive, we must continue to enhance and improve our
content. In addition, we must:
o continually improve the responsiveness, functionality and features
of our network; and
o develop other products and services that are attractive to users
and advertisers.
We may not succeed in developing or introducing features, functions,
products and services that users and advertisers find attractive in a timely
manner. This would likely reduce our visitor traffic and materially and
adversely affect our business, financial condition and results of operations.
If we fail to establish and maintain strategic relationships with content
providers, electronic commerce merchants and technology providers, we may not be
able to attract and retain users
Our business depends on establishing relationships with leading content
providers, electronic commerce merchants, and technology and infrastructure
providers. Because most of our agreements with these third parties including,
Microsoft and Philips, are not exclusive, our competitors may seek to use the
same partners as we do and attempt to adversely impact our relationships with
our partners. We might not be able to maintain these relationships or replace
them on financially attractive terms. If the parties with which we have these
relationships do not adequately perform their obligations, reduce their
activities with us, choose to compete with us or provide their services to a
competitor, we may have more difficulty attracting and maintaining visitors to
our network and our business, financial condition and results of operations
could be materially and adversely affected. Also, we intend to actively seek
additional relationships in the future. Our efforts in this regard may not be
successful.
Unexpected network interruptions caused by system failures may result in reduced
visitor traffic, reduced revenue and harm to our reputation
The Internet has been subject to:
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o system disruptions;
o inaccessibility of networks;
o long response times;
o impaired quality; and
o loss of important reporting data.
Although we will continue to improve our network, we may not be
successful in avoiding the above disruptions. If we experience delays and
interruptions, visitor traffic may decrease and our name could be adversely
affected.
While we have designed our new network operating center in Miami,
Florida, which is still under construction, to safeguard our systems against
damage from fire, hurricanes (which are common where we are based), power loss,
telecommunications failure, break-ins or other events, such events could have a
material adverse effect on our business, financial condition and results of
operations.
Concerns about security of electronic commerce transactions and confidentiality
of information on the Internet may reduce the use of our network and impede our
growth
A significant barrier to electronic commerce and confidential
communications over the Internet has been the need for security. Internet usage
could decline if any well-publicized compromise of security occurred. We may
incur significant costs to protect against the threat of security breaches or to
alleviate problems caused by these breaches. Unauthorized persons could attempt
to penetrate our network security. If successful, they could misappropriate
proprietary information or cause interruptions in our services. As a result, we
may be required to expend capital and resources to protect against or to
alleviate these problems. Security breaches could have a material adverse effect
on our business, financial condition and results of operations.
Computer viruses may cause our systems to incur delays or interruptions and may
adversely affect our business
Computer viruses may cause our systems to incur delays or other service
interruptions. In addition, the inadvertent transmission of computer viruses
could expose us to a material risk of loss or litigation and possible liability.
Moreover, if a computer virus affecting our system is highly publicized, our
reputation could be materially damaged and our visitor traffic may decrease.
Year 2000 problems may disrupt our internal operations
Many currently installed computer systems and software products only
accept two digits to identify the year in any date. Therefore, the year 2000
will appear as "00", which the system might consider to be the year 1900 rather
than the year 2000. This could result in system failures, delays or
miscalculations causing disruptions to our operations. Our failure to correct a
material Year 2000 problem could have a material adverse effect on our business,
financial condition and results of operations.
We have reviewed our software and current operating systems and believe
that they are Year 2000 compliant. We are currently conducting an inventory, and
developing testing procedures, for all software and other systems that we
believe might be affected by Year 2000 issues. Since third parties developed and
currently support many of the systems that we use, a significant part of this
effort will be to ensure that these third-party systems are Year 2000 compliant.
We plan to confirm this compliance through a combination of the representation
by these third parties of their products' Year 2000 compliance, as well as
specific testing of these systems.
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We may become subject to burdensome government regulations and legal
uncertainties affecting the Internet which could adversely affect our business
To date, governmental regulations have not materially restricted use of
the Internet in our markets. However, the legal and regulatory environment that
pertains to the Internet is uncertain and may change. Uncertainty and new
regulations could increase our costs of doing business and prevent us from
delivering our products and services over the Internet. The growth of the
Internet may also be significantly slowed. This could delay growth in demand for
our network and limit the growth of our revenues.
In addition to new laws and regulations being adopted, existing laws
may be applied to the Internet. New and existing laws may cover issues which
include:
o sales and other taxes;
o user privacy;
o pricing controls;
o characteristics and quality of products and services;
o consumer protection;
o cross-border commerce;
o libel and defamation;
o copyright, trademark and patent infringement;
o pornography; and
o other claims based on the nature and content of Internet materials.
We may become subject to claims regarding foreign laws and regulations which may
be expensive, time consuming and distracting
Because we have employees, property and business operations in the
United States and eventually throughout Latin America, we are subject to the
laws and the court systems of many jurisdictions. We may become subject to
claims based on foreign jurisdictions for violations of their laws. In addition,
these laws may be changed or new laws may be enacted in the future.
International litigation is often expensive, time consuming and distracting.
Accordingly, any of the foregoing could have a material adverse effect on our
business, financial condition and results of operations.
Unauthorized use of our intellectual property by third parties may adversely
affect our business
We regard our copyrights, service marks, trademarks, trade secrets and
other intellectual property as critical to our success. Unauthorized use of our
intellectual property by third parties may adversely affect our business and our
reputation. We rely on trademark and copyright law, trade secret protection and
confidentiality and/or license agreements with our employees, customers,
partners and others to protect our intellectual property rights. Despite our
precautions, it may be possible for third parties to obtain and use our
intellectual property without authorization. Furthermore, the validity,
enforceability and scope of protection of intellectual property in
Internet-related industries is uncertain and still evolving. The laws of some
foreign countries are uncertain or do not protect intellectual property rights
to the same extent as do the laws of the United States.
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We may be subject to claims based on the content we provide over our network
The laws in the United States and in Latin American countries relating
to the liability of companies which provide online services, like ours, for
activities of their visitors are currently unsettled. Claims have been made
against online service providers and networks in the past for defamation,
negligence, copyright or trademark infringement, obscenity, personal injury or
other theories based on the nature and content of information that was posted
online by their visitors. We could be subject to similar claims and incur
significant costs in their defense.
We may be subject to claims based on products sold on our network
We expect to enter into arrangements to offer third-party products and
services on our network under which we may be entitled to receive a share of
revenues generated from these transactions. These arrangements may subject us to
additional claims including product liability or personal injury from the
products and services, even if we do not ourselves provide the products or
services. These claims may require us to incur significant expenses in their
defense or satisfaction. While our agreements with these parties often provide
that we will be indemnified against such liabilities, such indemnification may
not be adequate.
Although we carry general liability insurance, our insurance may not
cover all potential claims to which we are exposed or may not be adequate to
indemnify us for all liability that may be imposed. Any imposition of liability
that is not covered by insurance or is in excess of insurance coverage could
have a material adverse effect on our business, financial condition and results
of operations or could result in the imposition of criminal penalties. In
addition, the increased attention focused on liability issues as a result of
these lawsuits and legislative proposals could impact the overall growth of
Internet use.
Our success depends on key personnel and we may not be able to replace key
personnel who leave
The development of new Internet products and services or improvements
of our existing products depends on the efforts of our Chairman, Diego Leiva, as
well as certain other officers. If we lose any of these person's services for
any reason we expect it would have a material adverse effect on us. We have
obtained a $1 million key-man life insurance policy on Mr. Leiva's life. Our
future success is dependent on, among other factors, the successful recruitment
and retention of key personnel for sales, marketing, finance and operations.
Competition for skilled and technical talent is intense. We cannot assure you
that we will be successful in attracting and retaining such personnel. If we
fail to retain existing key employees or hire new employees when necessary we
could potentially be adversely effected.
Our need to comply with government regulations can increase our costs and slow
our growth
Long distance telecommunication services are subject to regulation by
the Federal Communications Commission (the "FCC") and by state regulatory
authorities. Among other things, these regulatory authorities impose regulations
governing the rates, terms and conditions for interstate and intrastate
telecommunication services. The federal law governing regulation of interstate
telecommunications are the Communications Acts of 1934 and 1996 (the
"Communications Acts"), which applies to all "common carriers," including AT&T,
Worldcom/MCI and Sprint, as well as ourselves, which resell the transmission
services provided through the facilities of other common carriers. In general,
under the Communications Acts, common carriers are required to charge reasonable
rates and are prohibited from engaging in unreasonable practices in the
provision of their services. Common carriers are also prohibited from engaging
in unreasonable discrimination in their rates, charges and practices.
The Communications Acts require each common carrier to file tariffs
with the FCC. A tariff is a list of services offered, the terms under which the
services are offered, and the rates, or range of rates, charged for services.
Upon filing a tariff, the service provider is required to provide the services
at the rates and under the terms and conditions specified in the tariff. Failure
to file a tariff could result in fines and penalties. We believe we have filed
all required tariffs with the FCC.
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<PAGE>
In addition to federal regulation, resellers of long distance services
may be subject to regulation by the various state regulatory authorities. The
scope of such regulation varies from state to state, with certain states
requiring the filing and regulatory approval of various certifications and state
tariffs.
We believe that we are in substantial compliance with all material
laws, rules and regulations governing our operations and have obtained or are in
the process of obtaining all licenses, tariffs and approvals necessary for the
conduct of our business. In the future, legislation enacted by Congress, court
decisions relating to the telecommunications industry, or regulatory actions
taken by the FCC or the states in which we operate could have a negative impact
on our business. Changes in existing laws and regulations, particularly
relaxation of existing regulations resulting in significantly increased price
competition, may have a significant impact on our activities and on our
operating results. Adoption of new statutes and regulations and our expansion
into new geographic markets could require us to alter our methods of operations,
at costs which could be substantial, or otherwise limit the types of services we
offer. We cannot assure you that we will be able to comply with additional
applicable laws, regulations and licensing requirements.
Risks Involving Our Stock
Investors will not be able to exert control over us
We currently have approximately 5.3 million shares of Common Stock
outstanding. The holders of our Series B and Series D Convertible Stock, which
includes directors and affiliates of the Company, are entitled to vote
approximately 3 million shares on an as converted basis, and there are
approximately 7-8 million additional shares issuable on a fully diluted basis.
We are attempting to raise additional funds at prices significantly lower than
our current fair market value. Therefore, our preferred stockholders are
expected to have the ability to elect all of our directors and to control the
outcome of all other issues submitted to our stockholders.
You may have difficulty trading and obtaining quotations for our common stock.
Our common stock is currently traded in the over-the-counter market in
the so-called "pink sheets," and is quoted on the National Association of
Securities Dealers, Inc.'s Electronic Bulletin Board under the symbol "PICK." As
a result of trading in this over-the-counter market, you will likely find it
more difficult to dispose of, or to obtain quotations as to the price of our
common stock.
Our quarterly operating results are not an indication of our future results
because they are subject to significant fluctuations
Our future revenues and results of operations may vary significantly
due to a combination of factors, any of which are outside of our control.
Accordingly, you should not rely on quarter-to-quarter comparisons of our
results of operations as an indication of our future performance. It is possible
that in future periods our results of operations may be below the expectations
of public market analysts, if any, and investors. This could cause the trading
price of our common stock to decline.
Our stock price is likely to be highly volatile and could drop unexpectedly
Following this offering, the price at which our common stock will trade
is likely to be highly volatile and may fluctuate substantially.
In addition, the stock market has from time to time experienced
significant price and volume fluctuations that have affected the market prices
for the securities of technology companies, particularly Internet companies. As
a result, investors in our common stock may experience a decrease in the value
of their common stock regardless of our operating performance or prospects.
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If our stock price is volatile, we may become subject to securities litigation
which is expensive and could result in a diversion of resources
In the past, following periods of volatility in the market price of a
particular company's securities, securities class action litigation has often
been brought against that company. Many companies in our industry have been
subject to this type of litigation in the past. We may also become involved in
this type of litigation. Litigation is often expensive and diverts management's
attention and resources, which could have a material adverse effect upon our
business, financial condition and results of operations.
Our common stock is subject to penny stock regulation
The trading of our common stock is currently subject to SEC rules for
non-Nasdaq and non-exchange listed securities. Under such rules, brokers-dealers
who recommend such securities to persons other than established customers and
accredited investors must make a special written suitability determination for
the purchaser and receive the purchaser's written agreement to a transaction
prior to sale. Securities are exempt from these rules if the market price is at
least $5.00 per share.
The SEC has adopted regulations that generally define a "penny stock"
to be an equity security that has a market price of less than $5.00 per share or
an exercise price of less than $5.00 per share subject to certain exceptions.
Such exceptions include equity securities listed on Nasdaq and equity securities
issued by an issuer that has (i) net tangible assets of at least $2,000,000, if
such issuer has been in continuous operation for more than three years, or (ii)
net tangible assets of at least $5,000,000, if such issuer has been in
continuous operation for less than three years, or (iii) average annual revenue
of at least $6,000,000 for the preceding three years, the latter of which tests
we meet. Unless an exception is available, the regulations require the delivery,
prior to any transaction involving a penny stock, of a risk disclosure schedule
explaining the penny stock market and the risks associated with the penny stock
market.
There are outstanding shares of our common stock eligible for future sale
Of the approximately 5.5 million shares of our common stock outstanding
as of November 1, 1999, approximately 3.4 million are "restricted securities,"
as that term is defined in the Securities Act, and may be sold in compliance
with the provisions of Rule 144.
FORWARD-LOOKING STATEMENTS
Many statements made in this prospectus under the captions "Prospectus
Summary", "Risk Factors", "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business" and elsewhere are
forward-looking statements that are not based on historical facts. Because these
forward-looking statements involve risks and uncertainties, there are important
factors that could cause actual results to differ materially from those
expressed or implied by these forward-looking statements, including those
discussed under "Risk Factors".
This prospectus contains market data related to the Internet. This
market data includes projections that are based on a number of assumptions. The
assumptions include that:
o no catastrophic failure of the Internet will occur;
o the number of people online and the total number of hours spent
online will increase significantly over the next five years;
o the demand for download speed of content will increase
dramatically; and
o Internet security and privacy concerns will be adequately
addressed.
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If any one or more of the foregoing assumptions turns out to be
incorrect, actual results may differ from the projections based on these
assumptions. The Internet-related markets may not grow over the next three to
four years at the rates projected by these market data, or at all. The failure
of these markets to grow at these projected rates may have a material adverse
effect on our business, results of operations and financial condition, and the
market price of our common stock.
The forward-looking statements made in this prospectus relate only to
events as of the date on which the statements are made.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares.
However, we expect to use the proceeds from the exercise of the Options for
working capital and other general corporate purposes.
SELLING STOCKHOLDERS
The following table sets forth the name and address of each selling
stockholder, the number of shares of common stock it beneficially owned as of
November 9, 1999, the number of shares that it may offer, and the number of
shares of common stock that it will beneficially own upon completion of the
offering, assuming all of the shares offered are sold. The selling stockholders
can sell up to 1,314,500 shares of our common stock under this prospectus.
<TABLE>
<CAPTION>
Number of Shares Percentage of Number of Number of Percentage of
Owned Shares Owned Shares to Shares Owned Shares Owned
Selling Stockholders Before Sale (1) Before Sale (2) be Sold (3) After Sale After Sale(2)
-------------------- --------------- --------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Diego Leiva 1,617,578 (4)(5) 27.5% 275,000 1,342,578 22.8%
(Chairman of the
Board)
Henry Ewen 66,500 (9) 1.2% 66,500 - 0 - - 0 -
(Acting Chief
Financial Officer)
Mario Pino 270,000 (6) 4.7% 270,000 - 0 - - 0 -
(President of
PICKSat, Inc.)
Robert R. Sams 313,368 (7) 5.6% 50,000 263,368 4.7%
(Director)
John Tydeman 135,000 (8) 2.3% 75,000 60,000 1.0%
(Director)
</TABLE>
* Less than 1% of the issued and outstanding.
(1) Unless indicated, the Company believes that all persons named in the
table have sole voting and investment power with respect to all shares
of the Company Common Stock beneficially owned by them. For purposes of
this table, a person is deemed to be the beneficial owner of all Common
Stock that he has the right to acquire, regardless of whether such right
is presently exercisable. Each beneficial owner's percentage ownership
is determined by assuming that rights to acquire shares of Common Stock
that are held by such person (but not those held by any other person)
have been exercised.
(2) Based on 5,522,128 shares of Common Stock outstanding as of November 9,
1999.
(3) Does not include shares that may be acquired pursuant to the exercise of
Options to be granted under the Non-Plan Options or the Plan and
subsequently sold pursuant to this Prospectus.
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(4) Includes 429,000 shares beneficially owned by Mr. Leiva's wife.
(5) Includes an aggregate of 275,000 stock options consisting of incentive
stock options to purchase up to 15,000 shares at $4.10 per share, 6,300
shares at $6.10 per share and non-qualified options to purchase up to
3,700 shares at $6.10 per share under the Plan; and non-qualified stock
options to purchase 250,000 shares at $5.50 per share outside of the Plan.
Also includes 80,953 shares of common stock issuable upon conversion of
340,000 shares of Series D Convertible Preferred Stock at $4.20 per share
and warrants to purchase an additional 6,800 shares of Common Stock at
$6.30 per share.
(6) Includes 5,000 shares issuable upon the exercise of outstanding stock
options and 265,000 shares issuable upon the exercise of stock options not
yet exercisable.
(7) Includes 50,000 shares of common stock issuable upon exercise of
non-qualified stock options not yet exercisable and 60,000 shares of
Common Stock issuable upon conversion of 160,000 shares of Preferred
Stock. Excludes 9,600 shares owned by Vulcan Petroleum of which Mr. Sams
is a director and minority shareholder.
(8) Includes non-qualified stock options to purchase up to 12,500 shares at
$5.50 per share and an aggregate of 62,500 shares Common Stock issuable
upon exercise of non-qualified stock options which are not currently
exercisable. Includes 60,000 shares of Common Stock issuable upon
conversion of 60,000 shares of Preferred Stock.
(9) Includes 16,500 shares issuable upon exercise of outstanding stock options
at $1.81 per share and 50,000 shares issuable upon exercise of outstanding
stock options at $2.00 per share.
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PLAN OF DISTRIBUTION
The selling stockholders (or, subject to applicable law, their pledgees,
donees, distributees, transferees or other successors in interest) may sell
shares from time to time in public transactions, on or off the National
Association of Securities Dealers Inc.'s Electronic Bulletin Board, or private
transactions, at prevailing market prices or at privately negotiated prices,
including but not limited to, one or any combination of the following types of
transactions:
o ordinary brokers' transactions;
o transactions involving cross or block trades or otherwise on the
Nasdaq National Market;
o purchases by brokers, dealers or underwriters as principal and
resale by such purchasers for their own accounts pursuant to this
prospectus;
o "at the market" to or through market makers or into an existing
market for the common stock;
o in other ways not involving market makers or established trading
markets, including direct sales to purchasers or sales effected
through agents;
o through transactions in options, swaps or other derivatives
(whether exchange-listed or otherwise);
o in privately negotiated transactions; or
o to cover short sales.
In effecting sales, brokers or dealers engaged by the selling
stockholders may arrange for other brokers or dealers to participate in the
resales. The selling stockholders may enter into hedging transactions with
broker-dealers, and in connection with those transactions, broker-dealers may
engage in short sales of the shares. The selling stockholders also may sell
shares short and deliver the shares to close out such short positions. The
selling stockholders also may enter into option or other transactions with
broker-dealers that require the delivery to the broker-dealer of the shares,
which the broker-dealer may resell pursuant to this prospectus. The selling
stockholders also may pledge the shares to a broker or dealer, and upon a
default, the broker or dealer may effect sales of the pledged shares pursuant to
this prospectus.
Brokers, dealers or agents may receive compensation in the form of
commissions, discounts or concessions from selling stockholders in amounts to be
negotiated in connection with the sale. The selling stockholders and any
participating brokers or dealers may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales and any such
commission, discount or concession may be deemed to be underwriting
compensation.
Information as to whether underwriters who the selling stockholders may
select, or any other broker-dealer, is acting as principal or agent for the
selling stockholders, the compensation to be received by underwriters that the
selling stockholders may select or by any broker-dealer acting as principal or
agent for the selling stockholders, and the compensation to be paid to other
broker-dealers, in the event the compensation of such other broker-dealers is in
excess of usual and customary commissions, will, to the extent required, be set
forth in a supplement to this prospectus. Any dealer or broker participating in
any distribution of the shares may be required to deliver a copy of this
prospectus, including a prospectus supplement, if any, to any person who
purchases any of the shares from or through such dealer or broker.
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We have advised the selling stockholders that during such time as they
may be engaged in a distribution of the shares they are required to comply with
Regulation M promulgated under the Securities Exchange Act. With certain
exceptions, Regulation M precludes any selling stockholder, any affiliated
purchasers and any broker-dealer or other person who participates in such
distribution from bidding for or purchasing, or attempting to induce any person
to bid for or purchase any security that is the subject of the distribution
until the entire distribution is complete. Regulation M also prohibits any bids
or purchases made in order to stabilize the price of a security in connection
with the distribution of that security. All of the foregoing may affect the
marketability of the common stock.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby has been
passed upon for the Company by Snow Becker Krauss P.C., 605 Third Avenue, New
York, New York 10158. Snow Becker Krauss P.C. owns options to purchase 300,000
shares of common stock of the Company. SBK Investment Partners, a partnership
consisting of members of Snow Becker Krauss P.C., owns 5,000 shares of common
stock and an option to purchase 50,000 shares of common stock of the Company.
EXPERTS
The financial statements incorporated in this prospectus by
reference to the Annual Report on Form 10-K of PICK Communications Corp. for the
three years ended December 31, 1998, have been so incorporated in reliance upon
the reports of Durland and Company, CPAs, P.A. and Goldstein Golub Kessler LLP,
independent public accountants, given upon the authority of such firm as experts
in accounting and auditing for the year.
COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons controlling
the Company pursuant to the foregoing provisions, the Company has been informed
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
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<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents By Reference.
The following documents filed with the Securities and Exchange
Commission (the "Commission") by PICK Communications Corp., a Nevada corporation
(the "Registrant"), pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), are incorporated by reference in this registration
statement.
(1) The Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998.
(2) The Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1999.
(3) The Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1999.
(4) The Registrant's Current Report on Form 8-K for September 17, 1999.
(5) The Registrant's Proxy Statement dated September 29, 1998.
(6) The description of the Registrant's common stock, par value $.01
per share (the "Common Stock"), contained in the Registrant's
Registration Statement on Form 10 pursuant to Section 12(g) of the
Exchange Act, including any amendment or report filed for the
purpose of updating such information.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference herein and to be a part hereof from the date of
filing of such documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this registration statement to the extent that a
statement contained herein or in any other subsequently filed document which
also is incorporated or deemed to be incorporated by reference herein modifies
or supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
registration statement.
Item 4. Description of Securities
Not applicable.
Item 5. Interest of Named Experts and Counsel
Certain legal matters in connection with the sale of the shares of the
common stock offered hereby will be passed upon for the Company by Snow Becker
Krauss P.C., New York, New York. Snow Becker Krauss P.C. owns an option to
purchase 300,000 shares of common stock of the Company. SBK Investment Partners,
a partnership consisting of members of Snow Becker Krauss P.C. owns 5,000 shares
of common stock and an option to purchase 50,000 shares of common stock of the
Company.
Item 6. Indemnification of Directors and Officers.
(a) The Nevada General Corporation Law ("GCL") provides in relevant part
as follows:
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Section 78.751:
1. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses, including attorneys' fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with the action, suit or proceeding if he acted in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and that, with respect to any criminal action or
proceeding, he had reasonable cause to believe that his conduct was unlawful.
2. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses, including amounts paid in
settlement and attorneys' fees actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit if he acted in
good faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the corporation. Indemnification may not be made for
any claim, issue or matter as to which such a person has been adjudged by a
court of competent jurisdiction, after exhaustion of all appeals therefrom, to
be liable to the corporation or for amounts paid in settlement to the
corporation, unless and only to the extent that the court in which the action or
suit was brought or other court of competent jurisdiction determines upon
application that in view of all the circumstances of the case, the person is
fairly and reasonably entitled to indemnity for such expenses as the court deems
proper.
3. To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections 1 and 2, or in defense of
any claim, issue or matter therein, he must be indemnified by the corporation
against expenses, including attorneys' fees, actually and reasonably incurred by
him in connection with the defense.
4. Any indemnification under subsections 1 and 2, unless ordered by a
court or advanced pursuant to subsection 5, must be made by the corporation only
as authorized in the specific case upon a determination that indemnification of
the director, officer, employee or agent is proper in the circumstances. The
determination must be made:
(a) By the stockholders;
(b) By the board of directors by majority vote of a quorum
consisting of directors who were not parties to the act, suit or proceeding;
(c) If a majority vote of a quorum consisting of directors who
were not parties to the act, suit or proceeding so orders, by independent legal
counsel in a written opinion; or
(d) If a quorum consisting of directors who were not parties
to the act, suit or proceeding cannot be obtained, by independent legal counsel
in a written opinion.
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<PAGE>
5. The articles of incorporation, the bylaws or an agreement made by the
corporation may provide that the expenses of officers and directors incurred in
defending a civil or criminal action, suit or proceeding must be paid by the
corporation as they are incurred and in advance of the final disposition of the
action, suit or proceeding, upon receipt of an undertaking by or on behalf of
the director or officer to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he is not entitled to be indemnified by the
corporation. The provisions of this subsection do not affect any rights to
advancement of expenses to which corporate personnel other than directors or
officers may be entitled under any contract or otherwise by law.
6. The indemnification and advancement of expenses authorized in or
ordered by a court pursuant to this section:
(a) Does not exclude any other rights to which a person
seeking indemnification or advancement of expenses may be entitled under the
articles of incorporation or any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, for either an action in his official
capacity or an action in another capacity while holding his office, except that
indemnification, unless ordered by a court pursuant to subsection 2 or for the
advancement of expenses made pursuant to subsection 5, may not be made to or on
behalf of any director or officer if a final adjudication establishes that his
acts or omissions involved intentional misconduct, fraud or a knowing violation
of the law and was material to the cause of action.
(b) Continues for a person who has ceased to be a director,
officer, employee or agent and inures to the benefit of the heirs, executors and
administrators of such a person.
Section 78.752:
1. A corporation may purchase and maintain insurance or make other
financial arrangements on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise for any
liability asserted against him and liability and expenses incurred by him in his
capacity as a director, officer, employee or agent, or arising out of his status
as such, whether or not the corporation has the authority to indemnify him
against such liability and expenses.
2. The other financial arrangements made by the corporation pursuant to
subsection 1 may include the following:
(a) The creation of a trust fund.
(b) The establishment of a program of self-insurance.
(c) The securing of its obligation of indemnification by
granting a security interest or other lien on any assets of the corporation.
(d) The establishment of a letter of credit, guaranty or
surety.
No financial arrangement made pursuant to this subsection nay provide protection
for a person adjudged by a court of competent jurisdiction, after exhaustion of
all appeals therefrom, to be liable for intentional misconduct, fraud or a
knowing violation of law, except with respect to the advancement of expenses or
indemnification ordered by a court.
3. Any insurance or other financial arrangement made on behalf of a
person pursuant to this section may be provided by the corporation or any other
person approved by the board of directors, even if all or part of the other
person's stock or other securities is owned by the corporation.
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<PAGE>
4. In the absence of fraud:
(a) The decision of the board of directors as to the propriety
of the terms and conditions of any insurance or other financial arrangement made
pursuant to this section and the choice of the person to provide the insurance
or other financial arrangement is conclusive; and
(b) The insurance or other financial arrangement:
(1) Is not void or voidable; and
(2) Does not subject any director approving it
to personal liability for his action, even
if a director approving the insurance or
other financial arrangement is a beneficiary
of the insurance or other financial
arrangement.
5. A corporation or its subsidiary which provides self-insurance for
itself or for another affiliated corporation pursuant to this section is not
subject to the provisions of Title 57 of NRS [The Nevada Revised Statutes].
Article VI of the Registrant's Bylaws provides as follows:
Indemnification
On the terms, to the extent, and subject to the condition prescribed by
statute and by such rules and regulations, not inconsistent with statute, as the
Board of Directors may in its discretion impose in general or particular cases
or classes of cases, (a) the Corporation shall indemnify any person made, or
threatened to be made, a party to an action or proceeding, civil or criminal,
including an action by or in the right of any other corporation of any type or
kind, domestic or foreign, or any partnership, joint venture, trust, employee
benefit plan or other enterprise which any director or officer of the
Corporation served in any capacity at the request of the Corporation, by reason
of the fact that he, his testator or intestate, was a director or officer of the
Corporation, or served such other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise in any capacity, against
judgments, fines, amounts paid in settlement and reasonable expenses, including
attorneys' fees, actually and necessarily incurred as a result of such action or
proceeding, or any appeal therein, and (b) the Corporation may pay, in advance
of final disposition of any such action or proceeding, expenses incurred by such
person in defending such action or proceeding.
On the terms, to the extent, and subject to the conditions prescribed by
statute and by such rules and regulations, not inconsistent with statute, as the
Board of Directors may in its discretion impose in general or particular cases
or classes of cases, (a) the Corporation shall indemnify any person made a party
to an action by or in the right of the Corporation to procure a judgment in its
favor, by reason of the fact that he, his testator or intestate, is or was a
director or officer of the Corporation, against the reasonable expenses,
including attorneys' fees, actually and necessarily incurred by him in
connection with the defense of such action, or in connection with an appeal
therein, and (b) the Corporation may pay, in advance of final disposition of any
such action, expenses incurred by such person in defending such action or
proceeding.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13 (a) or Section 15 (d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15 (d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
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<PAGE>
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or controlling
persons of the Registrant pursuant to any arrangement, provision or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities act of 1933 and will be governed by the final adjudication of such
issue.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
Exhibit No. Description of Exhibit
4.1 Amended and Restated 1996 Stock Option Plan (the
"Plan").(1)
4.2 Form of Stock Option Agreement under the Plan between
the Registrant and the holders of stock options.(1)
4.3 Form of Stock Option Agreement outside the Plan between
the Registrant and the holders of stock options.(1)
5.1 Opinion of Snow Becker Krauss P.C.
23.1 Consent of Snow Becker Krauss P.C. (included in Exhibit
5.1 hereto).
23.2 Consent of Goldstein Golub Kessler LLP.
23.3 Consent of Durland & Company C.P.A.
- ----------------
(1) Incorporated by reference from the Registrant's Registration Statement on
Form S-8 filed on August 21, 1997 (No. 333-20573).
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10
(a) (3) of the Securities Act of 1933;
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<PAGE>
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represents a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement;
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
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<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds the believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Wayne, State of New Jersey, on this 11th day of
November 1999.
PICK COMMUNICATIONS CORP.
By: /s/ Diego Leiva
-------------------------------------
Diego Leiva, Chairman of the Board of
Directors
POWERS OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Diego Leiva as his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) and supplements to this
Registration Statement, and to file the same with the Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933 this
registration statement has been signed below by the following persons, in the
capacities indicated, on November 11, 1999:
/s/ Diego Leiva
- -----------------------------------------------
Diego Leiva, Chairman of the Board of Directors
/s/ Henry Ewen
- -----------------------------------------------
Henry Ewen, Acting Chief Financial Officer
/s/ Robert R. Sams
- -----------------------------------------------
Robert R. Sams, Director
/s/ John Tydeman
- -----------------------------------------------
John Tydeman, Director
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<PAGE>
EXHIBIT 5.1
SNOW BECKER KRAUSS P.C.
605 Third Avenue
New York, NY 10158
(212) 687-3860
November 12, 1999
PICK Communications Corp.
8401 Northwest 53rd Terrace
Suite 119
Miami, FL 33166
RE: REGISTRATION STATEMENT ON FORM S-8
----------------------------------
Gentlemen:
We have acted as counsel to PICK Communications Corp., a Nevada
corporation (the "Company"), in connection with the Company's Registration
Statement on Form S-8 (the "Registration Statement") filed with the Securities
and Exchange Commission pursuant to the Securities Act of 1933, as amended. The
Registration Statement includes an aggregate of 1,314,500 options and 1,314,500
shares of common stock, par value $.01 per share ("Common Stock") issued and/or
issuable upon the exercise of stock options.
As counsel to the Company, we have examined the Company's Restated
Certificate of Incorporation, as amended, By-laws, records of corporate
proceedings, and such other documents as we have deemed necessary or appropriate
as a basis for the opinions set forth below. In such examination, we have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the accuracy and completeness of all documents
submitted to us as copies and the authenticity of the originals of such latter
documents. As to any facts material to such opinions which we did not
independently establish or verify, we have relied upon statements or
representations of officers and other representatives of the Company, public
officials or others.
Based on the foregoing, we are of the opinion that:
1. The Company has been duly organized, is validly existing and in good
standing under the laws of the State of Nevada.
2. The stock options have been duly authorized by the Board of Directors
of the Company.
3. The shares of Common Stock issuable upon exercise of the stock
options have been duly authorized and reserved for issuance, and when
duly issued and paid for in accordance with the agreements between the
Company and the individuals granted options will be legally issued,
fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the resale prospectus filed with the Registration Statement.
Very truly yours,
/s/ Snow Becker Krauss P.C.
--------------------------------
SNOW BECKER KRAUSS P.C.
<PAGE>
Exhibit 23.1
INDEPENDENT AUDITOR'S CONSENT
To the Board of Directors PICK Communications Corp.
We hereby consent to the use in the Prospectus constituting part of the
Registration Statement on Form S-8 of our report dated March 5, 1999, except for
portions of Notes 13 and 17, as to which the date is March 26, 1999; Notes 6 and
16, as to which the date is April 28, 1999; and except for the last two
paragraphs of Note 17, as to which the dates are June 23, 1999 and July 23, 1999
on the financial statements of PICK Communications Corp. as of December 31,
1998, which appear in such Prospectus. We also consent to the reference to our
Firm under the caption "Experts" in such Prospectus.
GOLDSTEIN GOLUB KESSLER LLP
New York, New York
November 12, 1999
<PAGE>
Exhibit 23.2
DURLAND & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
A PROFESSIONAL ASSOCIATION
340 ROYAL PALM WAY, 3RD FLOOR
PALM BEACH, FL 33480
(561) 822-9595 FAX 822-0942
PICK Communications Corp.
8401 N.W. 53rd Terrace
Miami, Florida 33166
INDEPENDENT AUDITOR'S CONSENT
Ladies and Gentlemen:
We hereby consent to the inclusion in the Registration Statement of PICK
Communications Corp. on Form S-8 Prospectus constituting part of the report,
dated April 29, 1998, on the financial statements of the company, as of December
31, 1997 and 1996 and for the years then ended. We also consent to the reference
to our firm under the caption "Experts" in such prospectus.
Palm Beach, Florida
November 12, 1999
/s/ Durland & Company, CPAs, P.A.
----------------------------------
Durland & Company, CPAS, P.A.
