<PAGE>
PICK COMMUNICATIONS CORP.
Wayne Interchange Plaza II, 155 Route 46 West, 3rd Floor
Wayne, NJ 07470
(973) 812-7425
----------
INFORMATION STATEMENT
----------
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY
On February 26, 1999, the Board of Directors of PICK Communications
Corp. (the "Company") unanimously approved the amendment of the Company's
Articles of Incorporation to increase the number of shares of authorized common
stock, par value $.00l per share (the "Common Stock"), from 100,000,000 to
400,000,000 shares.
THIS INFORMATION STATEMENT IS BEING PROVIDED SOLELY FOR INFORMATIONAL
PURPOSES TO NOTIFY THE COMPANY'S STOCKHOLDERS OF ANTICIPATED EVENTS WHICH WILL
RESULT IN AN AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION ON MARCH [__],
1999 TO PROVIDE FOR AN INCREASE IN THE NUMBER OF AUTHORIZED SHARES OF COMMON
STOCK AND NOT IN CONNECTION WITH A VOTE OF THE COMPANY'S STOCKHOLDERS.
The By-laws of the Company, in accordance with Nevada law, permit
stockholder action to be taken without a meeting if consent in writing is
received from a majority of all stockholders who would be entitled to vote upon
the action if such meeting were held. Nevada law then requires prompt notice to
those stockholders who did not consent in writing. By written action taken as of
March 3, 1999, Diego Leiva, the Chief Executive Officer, President and Chairman
of the Board of Directors of the Company, and his wife who hold approximately
35.9% of the outstanding shares of the Company's Common Stock, other affiliated
stockholders, who collectively own approximately 13.8% of the outstanding shares
of the Company's Common Stock and 26 non-affiliated stockholders, who
collectively own approximately 1.3% of the 38,416,381 outstanding shares of the
Company's Common Stock consented to the foregoing corporate action as well as to
the execution and filing of all necessary documentation to evidence and
effectuate the increase in the number of shares of authorized Common Stock. The
Company had 38,416,381 shares of Common Stock outstanding as of March 3, 1999.
Each share of Common Stock has one vote. This Information Statement is provided
to stockholders of record as of March 3, 1999.
The date of this Information Statement is March __, 1999.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares of the Company's
outstanding Common Stock beneficially owned (as such term is defined in Rule
13d-3 under the Securities Exchange Act of 1934 (the "Exchange Act")) by (i)
each director of the Company, (ii) each Named Executive Officer, (iii) each
beneficial owner of more than 5% of the Company's Common Stock and (iv) all of
the Company's Executive Officers and Directors as a group:
<TABLE>
<CAPTION>
Name and Address Amount and Nature of
of Beneficial Owner Beneficial Ownership (1) Percentage (2)
- ------------------- ------------------------ --------------
<S> <C> <C> <C>
Diego Leiva (10) 13,798,247 (3)(4) 35.9%
Robert R. Sams 1,033,674 (5) 2.7%
Ricardo Maranon 1,294,674 (6) 3.4%
Raymond M. Brennan (10) 1,430,174 (7)(8) 3.7%
Karen M. Quinn (10) 1,359,924 (9) 3.5%
Niles D. Ring (10) 25,000 (11) 0.1%
Alberto Delgado 62,500 (12) 0.2%
John Tydeman 92,500 (12) 0.2%
All executive officers and directors
as a group (8 persons) 19,096,693 (13) 49.7%
</TABLE>
(1) Unless otherwise noted, all shares are beneficially owned and the sole
voting and investment power is held by the person indicated.
(2) Based on 38,416,381 shares outstanding as of March 3, 1999. Each
beneficial owner's percentage ownership is determined by assuming that
options or warrants that are held by such person and which are
convertible or exercisable within sixty (60) days of such date pursuant
to Rule l3d-3 under the Exchange Act have been converted or exercised.
(3) Includes 4,290,000 shares beneficially owned by Mr. Leiva's wife.
(4) Includes an aggregate of 1,250,000 options, including incentive stock
options to purchase up to l31,578 shares of the Company's Common Stock
at $0.19 per share, 150,000 shares at $0.41 per share, 63,000 shares at
$0.61 per share, non-qualified stock options to purchase up to 368,422
shares of the Company's Common Stock at $0.19 per share, 37,000 shares
at $.061 per share under the Plan and non-qualified stock options to
purchase 500,000 shares at $0.53 per share outside of the Plan, but
excludes non-qualified stock options to purchase 2,000,000 shares at
$0.53 per share outside of the Plan.
(5) Includes non-qualified stock options to purchase up to 750,000 shares
of the Company's Common Stock, including 500,000 shares at $0.17 per
share, 150,000 shares at $0.37 per share and 100,000 shares at $0.55
per share pursuant to the Plan. Excludes 96,000 shares owned by Vulcan
Petroleum of which Mr. Sams is a director and minority shareholder.
-2-
<PAGE>
(6) Includes non-qualified stock options to purchase up to 750,000 shares
of the Company's Common Stock, including 500,000 shares at $0.17 per
share, 150,000 shares at $0.37 per share and 100,000 shares at $0.55
per share pursuant to the Plan. Includes 37,250 shares of the Company's
Common Stock beneficially owned by Mr. Maranon's daughter.
(7) Includes 250,000 shares beneficially owned by Mr. Brennan's wife.
(8) Includes an aggregate of 750,000 options, including incentive stock
options to purchase up to 191,176 shares at $0.17 per share, 150,000
shares at $0.37 per share, 80,000 shares at $0.55 per share,
non-qualified stock options to purchase up to 308,824 shares at $0.17
per share and 20,000 shares at $0.55 per share pursuant to the Plan.
(9) Includes an aggregate of 800,000 options, including incentive stock
options to purchase 191,176 shares at $0.17 per share, 150,000 shares
at $0.37 per share, 80,000 shares at $0.55 per share and non-qualified
stock options to purchase up to 308,824 shares at $0.17 per share and
70,000 shares at $0.55 per share pursuant to the Plan.
(10) The address of this person is c/o the Company, 155 Route 46 West, 3rd
Floor, Wayne, New Jersey 07470.
(11) Includes incentive stock options to purchase up to 25,000 shares at
$0.53 per share. Excludes incentive stock options to purchase up to
75,000 at $0.53 per share, vesting in three equal portions on November
2, 1999, 2000 and 2001.
(12) Includes nonqualified stock options to purchase up to 62,500 shares at
$0.55 per share. Excludes nonqualified stock options to purchase up to
187,500 shares at $0.55 per share, vesting on November 2, 1999.
(13) Includes non-qualified stock options and incentive stock options to
purchase up to 4,387,500 shares by the parties named above and at the
prices per share stated in footnotes (4), (5), (6) (8), (9), (11) and
(12).
-3-
<PAGE>
AMENDMENT TO THE CERTIFICATE OF INCORPORATION
INCREASE OF THE AUTHORIZED SHARES OF COMMON STOCK FROM 100 MILLION TO 400
MILLION SHARES OF COMMON STOCK
The Company's authorized capital stock currently consists of
100,000,000 shares of Common Stock and 10,000,000 shares of preferred stock, par
value $.00l per share (the "Preferred Stock"), none of which was outstanding as
of the date hereof. As of March 3, 1999, an aggregate of 105,256,240 shares of
Common Stock were issued or reserved for issuance, as follows: 38,416,381 shares
of Common Stock were outstanding; 39,600,000 shares of Common Stock were
reserved for issuance upon conversion of $9,900,000 of 18% Senior Secured Notes
(the "Notes"), issued pursuant to a bridge loan and convertible at the lower of
50% of the closing bid price or $.25 per share in the event the Company defaults
in payment of the Notes, or following the effective date of a registration
statement concerning the underlying shares of Common Stock; 7,500,000 shares of
Common Stock were reserved for issuance under the 1996 Employee Stock Option
Plan (of which 7,295,000 options were outstanding); 3,955,000 shares issuable
under other options granted; and 15,784,859 shares issuable under outstanding
warrants.
Although not all of the Company's convertible or exercisable securities
are currently convertible or exercisable, no Common Stock is available for
issuance. The Company entered into an agreement with Commonwealth Associates
L.P. ("Commonwealth") and/or its permitted designees to purchase $1 million of
Preferred Stock, convertible into Common Stock at $.10 per share, subject to
adjustment; and is seeking to have its largest vendors convert 75% of their
receivables from the Company, or about $4.5 million, into Preferred Stock of the
Company at a conversion rate of not less than $1.00 per share. These issuances
of Preferred Stock would result in at least 14.5 million additional shares of
Common Stock reserved for issuance, or a total capitalization of approximately
120 million shares. The Company will also attempt to effect an equity Regulation
D private placement in the near-term to repay the Notes and to finance the
Company's operations. Accordingly, until such time as the Company's Articles of
Incorporation are amended to increase the number of shares of Common Stock from
100 million to 400 million, or a reverse split is effected, Diego Leiva, the
Company's Chairman of the Board, and other members of management have agreed not
to exercise or dispose of any options or Common Stock issuable upon exercise of
employee options. Mr. Leiva has also agreed to escrow seven million of his
shares for the benefit of Commonwealth and/or the Noteholders until the number
of authorized shares is amended if they are unable to obtain Common Stock upon
conversion of their Preferred Stock and/or Notes. The vendors who obtain
Preferred Stock will be unable to convert their Preferred Stock until the
authorized capital is amended. The Common Stock has no preemptive or other
subscription rights, and there are no conversion rights or redemption or sinking
fund provisions with respect to such shares.
The additional Common Stock would also provide needed flexibility to
meet future capital requirements and to take advantage of propitious market
conditions and acquisition opportunities. Additional shares would be available
for issuance for these and other purposes, which include employee benefit
programs, at the discretion of the Board of Directors of the Company without the
delays and expenses ordinarily attendant upon obtaining further shareholder
approval. To the extent required by Nevada law or under any exchange
regulations, shareholder approval will be solicited in connection with certain
issuances of stock. The Board of Directors has no present plans to authorize a
stock split or to enter into any acquisition agreement or any other transaction
involving the issuance of Common Stock. However, in order to meet the listing
requirements for the Nasdaq Stock Market, the Company may be required to effect
a reverse stock split of the Common Stock. Under Nevada law, a reverse stock
split may be effected by the Board of Directors without shareholder approval.
Certain Effects of Authorization of Increase of Authorized Shares of Common
Stock on Holders of Outstanding Common Stock
The general effect of the authorization and issuance of additional
Common Stock, to the extent that dividends may be paid thereon, would be to
reduce the amount otherwise available for payment of dividends on the Common
Stock currently issued and outstanding, although no dividends have been paid by
the Company to date on the Common Stock and there is no present intention to do
so in the near future. In the event that any additional Common Stock having
limited voting rights are issued, the voting power of the Common Stock would be
diluted. To the extent that additional Common Stock may be issued, a dilution of
the equity of the outstanding Common Stock could result. Holders of capital
stock of the Company have no preemptive rights, and
-4-
<PAGE>
accordingly have no preferential rights to purchase any Common Stock in order to
maintain their percentage ownership.
Although the proposed Amendment to the Articles of Incorporation
authorizing an increase in the number of authorized Common Stock is not designed
to deter or prevent a change in control, under certain circumstances, the
Company could, nevertheless, use unissued Common Stock to create impediments or
frustrate persons seeking to effect a takeover or otherwise gain control of the
Company and thereby protect the continuity of the Company's Management. In
addition, the issuance of additional Common Stock at below market value would
dilute the value of the Company's then outstanding securities.
The Company could also place such shares privately with purchasers who
might support the Company's existing Board of Directors in opposing a hostile
takeover bid, although the Company has no present intention to do so. The
Company does not currently have any plans, agreements, commitments or
understandings with respect to the implementation of the issuance of additional
Common Stock, with the exception of outstanding derivative securities and the
Preferred Stock Offering.
A copy of the proposed Amendment to the Articles of Incorporation is
attached as attached Appendix A to this Information Statement and should be read
by stockholders in its entirety.
By order of the
Board of Directors
/s/ Raymond Brennan
----------------------------
Raymond Brennan, Secretary
Wayne, New Jersey
March __, 1999
-5-
<PAGE>
APPENDIX A
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
PICK COMMUNICATIONS CORP.
Pursuant to the provisions of the Nevada Revised Statutes, Title 7,
Chapter 78, the undersigned officer of PICK Communications Corp., a Nevada
corporation (the "Corporation") does hereby certify that:
FIRST: The name of the corporation (hereinafter called the
"Corporation") is PICK Communications Corp.
SECOND: The Articles of Incorporation of the Corporation are hereby
amended by striking out paragraph (a) of Article FOURTH thereof and by
substituting in lieu of said paragraph (a) of Article FOURTH the following new
paragraph (a) of Article FOURTH:
(a) The Corporation is authorized to issue up to four hundred ten
million (410,000,000) shares, consisting of four hundred million (400,000,000)
shares of Common Stock, $.001 par value ("Common Stock"), and ten million
(10,000,000) shares of Preferred Stock, $.001 par value ("Preferred Stock").
-6-
<PAGE>
The holders of a majority of the outstanding shares of Common Stock
adopted the Amendments herein certified by a written consent of a majority of
the stockholders in accordance with the provisions of Nevada Revised Statutes,
Title 7, Section 78.320.
Signed on March , 1999
______________________________ President
Attest: ______________________ Secretary
STATE OF NEW JERSEY )
) ss.
COUNTY OF PASSAIC )
The foregoing instrument was subscribed before me, a notary public for
the State of New Jersey, this ___ day of March, 1999, by Diego Leiva and Raymond
M. Brennan, who are personally known to me.
------------------------------
Notary Public
My commission expires:
-7-
