SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 to
FORM S-3
REGISTRATION STATEMENT
Under the Securities Act of 1933
UTG COMMUNICATIONS INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation or Organization)
13-3895294
(I.R.S. Employer Identification Number)
17 Cattano Avenue
Morristown, New Jersey 07960
(973) 644-3161
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
UELI ERNST
Chairman and CEO
17 Cattano Avenue
Morristown, New Jersey 07960
(973) 644-3161
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
--------------------
COPIES TO:
Daniel A. Wuersch
Wuersch & Gering LLP
11 Hanover Square - 21st Floor
New York, NY 10005
(212) 509-5050
--------------------
Approximate date of commencement of proposed sale to public: As soon
as practicable after the effective date of this Registration Statement
If the only securities being registered on this form are being
offered pursuant to dividend or interest reinvestment plans, please check the
following box: |_|
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following: |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
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following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering: |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering: |_|
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box: |_|
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Maximum Maximium
Title of Each Offering Price Aggregate Amount of
Class of Securities Amount to per Share Offering Registration
to be Registered be Registered per Share(1) Price(1) Fee(2)
- ------------------- -------------- ----------- ----------- ------------
Common Stock,
par value,
$.00001 per share 1,005,355 $ 7.00 $7,037,485.00 $1,956.42
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933.
(2) The registration fee with respect to the shares of common stock to be sold
by the selling stockholders has been computed pursuant to Rule 457(c)
using the bid and asked prices quoted on the NASDAQ Bulletin Board on
February 2, 1999.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
The information in this prospectus is not complete and may be changed. The
selling stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell securities, and the selling stockholders are
not soliciting offers to buy these securities, in any state where the offer or
sale is not permitted.
DATED JUNE 7, 1999
1,005,355 SHARES
UTG COMMUNICATIONS INTERNATIONAL, INC.
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COMMON STOCK
The selling stockholders are offering 1,005,355 shares of common stock. We
will not receive any of the proceeds from sales of shares by the selling
stockholders.
Our common stock trades on the Nasdaq Bulletin Board under the symbol "UTGC" and
on the OTC market of the Berlin Stock Exchange. On January 28, 1999, the last
reported sale price of our common stock on the Nasdaq Bulletin Board was $8.50
per share.
The selling stockholders may sell these shares from time to time through brokers
or dealers or otherwise. They may sell the shares at prevailing market prices or
at prices negotiated with buyers. The selling stockholders will be responsible
for any commissions or discounts due to brokers or dealers. The amount of those
commissions or discounts will be negotiated before the sales. We will pay all of
the other offering expenses, which we estimate will total $16,000.
--------------------
INVESTING IN THESE SHARES INVOLVES RISKS.
SEE "RISK FACTORS" BEGINNING ON PAGE 6.
--------------------
THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS
HAVE NOT APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
JUNE 7, 1999
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. NEITHER WE
NOR THE SELLING STOCKHOLDERS HAVE AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION DIFFERENT FROM THAT CONTAINED IN THIS PROSPECTUS. THE SELLING
STOCKHOLDERS ARE OFFERING TO SELL, AND SEEKING OFFERS TO BUY, SHARES OF COMMON
STOCK ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED. IN THIS
PROSPECTUS, REFERENCES TO "WE," "US" AND "OUR" REFER TO UTG COMMUNICATIONS
INTERNATIONAL, INC. AND ITS SUBSIDIARIES.
TABLE OF CONTENTS
Prospectus Summary
Risk Factors
Use of Proceeds
Selling Stockholders
Plan of Distribution
Legal Matters
Experts
Where You Can Find More Information
PROSPECTUS SUMMARY
Because this is only a summary, it does not contain all of the information that
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may be important to you. You should read the entire prospectus, including "Risk
Factors" and the information incorporated by reference, before deciding to
invest in shares offered by this prospectus.
UTG COMMUNICATIONS INTERNATIONAL, INC.
THE COMPANY: We are a Delaware corporation, incorporated in
1996. We provide quality private voice, fax and
data telecommunication ("telecom") services in
Switzerland, Belgium and the United Kingdom,
primarily to businesses and business groups at
prices which are generally below those of major
telecom carriers. In addition, we have entered
into agreements with international telecom
carriers for the exchange of telecom traffic.
Under these agreements, we resell telecom minutes
at a profit. We also offer system design and
installation as well as digital compression, fax
transmission compression, digital data services
and wideband digital data services. In
Switzerland, we have entered into an
Interconnection Agreement with Swisscom, the
national Swiss telecom carrier. This gives us
access to Swisscom's network for our national and
international telecom traffic. In the United
Kingdom, we have recently entered into a joint
venture for the distribution of telecommunication
cards.
STRATEGY: Our objective is to grow our telecommunications
customer base in Switzerland, Belgium and the
United Kingdom and to establish ourselves in other
markets in the European Union ("EU"). We believe
that with our communication network, we are well
positioned to take advantage of telecommunications
deregulation in Switzerland, Belgium, the United
Kingdom and other countries of the EU. We are
positioning ourselves between the major
full-service and high price telecommunications
carriers and the no service (or limited service)
cut rate telecommunications minute resellers.
CUSTOMERS: We primarily target customers with between $5,000
and $50,000 of monthly usage. We believe that, in
addition to being price sensitive, these customers
tend to be focused on customer service and are
more likely to rely on one or two carriers for
their telecommunications needs. The diversity of
our targeted customer base enhances the
utilization of our network by combining
business-driven workday traffic with night and
weekend off-peak traffic. We strive to be more
cost-effective, flexible, innovative and
responsive to the needs of our customers than the
major carriers, while providing more services than
cut-rate resellers.
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ADDRESS: Our principal executive offices are located at 17
Cattano Avenue, Morristown, New Jersey 07960. Our
telephone number is (973) 644-3161.
THE OFFERING
COMMON STOCK OFFERED: All of the 1,005,335 shares offered by this
prospectus are sold by the selling stockholders.
USE OF PROCEEDS: We will not receive any of the proceeds from sales
of shares by the selling stockholders.
RISK FACTORS
An investment in shares of our common stock is risky. You should consider
carefully the following risk factors in addition to the remainder of this
prospectus, including information incorporated by reference, before purchasing
shares offered by this prospectus.
Some of the information in this prospectus contains forward-looking statements
that involve substantial risks and uncertainties. You can identify these
statements by forward-looking words such as "may," "will," "expect,"
"anticipate," "believe," "estimate," "continue" and similar words. You should
read statements that contain these words carefully because they (1) discuss our
future expectations, (2) contain projections of our future operating results or
financial condition or (3) state other "forward-looking" information. We believe
it is important to communicate certain of our expectations to our investors.
There may be events in the future, however, that we are not accurately able to
predict or over which we have no control. The risk factors listed in this
section, as well as any other cautionary language in this prospectus, provide
examples of risks, uncertainties and events that may cause our actual results to
differ materially from the expectations we describe in our forward-looking
statements. Before you invest in our common stock, you should be aware that the
occurrence of any of the events described in these risk factors and elsewhere in
this prospectus could have a material adverse effect on our business, financial
condition and results of operations. In such case, the trading price of our
common stock could decline and you could lose all or part of your investment.
LIMITED OPERATING HISTORY
We have a limited operating history. Our ability to successfully market our
existing products and to develop and market new products must be considered in
light of the risks, expenses and difficulties which companies in their early
stages of development frequently encounter in new and rapidly evolving markets,
including limited capital, possible delays, uncertain markets and competition.
We cannot guarantee that we will become profitable in the future. Because we
will focus on the expansion of our service offerings and geographic markets, our
cash flow and operating performance may be adversely affected. As each of the
telecommunications markets in Switzerland, Belgium, the United Kingdom and the
other countries of the EU continue to mature, our possible revenues and customer
base in each such market is likely to decrease over time.
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FLUCTUATIONS IN OPERATING RESULTS
Our operating results are difficult to predict and may fluctuate significantly
from quarter to quarter. If our operating results fall below the expectations of
investors or public market analysts, the price of our common stock could fall
dramatically.
Our operating results are difficult to predict for a number of reasons:
o The general economic conditions or the conditions in the
telecommunications industry may fluctuate in any national or regional
market in which we are active.
o New or existing governmental regulation may make it more difficult or
impossible to market our telecom products or services.
o The demand for our products or services can fluctuate.
o Capital expenditures and other costs which we incur because of our
expansion may depress our cash flow and operating results.
o New products or services which we are introducing may not be received as
favorably as we expected.
o New products or services which our competitors introduce may make it more
difficult for us to sell our products or services.
o Competition may force us to reduce the prices for our products and
services or to find a strong partner to increase our chances to be
successful in the market.
o Large telecom carriers whose networks we are using or from which we are
purchasing minutes may increase the prices they charge for access to
their network or for the telecom minutes we are buying from them.
NEED FOR ADDITIONAL CAPITAL
We need to continue to expand our operations in order to remain competitive. We
also may have to expand the services we are offering and enter new geographic
markets. We will have to meet increasing demands for quality service at
competitive prices. As a consequence, we may need to raise additional capital
from public or private sources in order to finance our anticipated growth and
working capital needs. In addition, we may need to raise additional funds in
order to take advantage of new opportunities for strategic alliances or to
develop new products or services. We may issue debt or common or preferred stock
to raise additional funds. If we issue preferred or common stock, the percentage
ownership in the Company of our existing stockholders would be reduced. There
can be no assurance that we will be able to raise new capital. If we incur debt,
we would likely become subject to restrictive financial covenants which could
restrict our ability to pay dividends, issue securities or incur additional
debt. In the event that we are unable to obtain additional capital or are unable
to obtain additional capital on acceptable terms, we may be required to reduce
the scope of our present or future activities, which could adversely affect our
business, results of operations, financial condition and ability to compete.
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DEPENDENCE ON TRANSMISSION FACILITIES-BASED CARRIERS AND SUPPLIERS
Because we do not own any telecommunications lines, we depend on access to lines
owned or leased by large telecommunication carriers. We have entered into an
Interconnection Agreement with Swisscom, the national Swiss telecom carrier,
which provides us with access to its network in Switzerland. In addition, we
have several agreements with other large telecom carriers, which provide us with
access to their lines in Europe. If the Interconnection Agreement with Swisscom
was terminated, we would no longer be able to provide Swiss customers, which
account for most of our customer base, with telephone or telefax services in
Switzerland. Also, with respect to the lines that we lease from large telecom
carriers, we are vulnerable to changes in our lease arrangements, such as price
increases and service cancellations. We often receive volume discounts when
leasing our transmission lines. If our telecommunications volume is less than
anticipated, then we will not receive as great a discount. We purchase or lease
our transmission lines for our convenience, and we believe that we could obtain
transmission lines of comparable quality from several alternative suppliers.
However, this could result in delays which could reduce our revenues or result
in the loss of customers.
POTENTIAL ADVERSE EFFECTS OF REGULATION
We currently have to comply with the telecommunications laws in Switzerland, the
United Kingdom, Belgium and the EU. Each country in which we conduct our
business has a different regulatory scheme and requirements. We believe that we
are in substantial compliance with applicable laws and regulations. To the
extent that such laws and regulations are changed or new laws or regulations are
adopted, we may be required to obtain additional licenses or renew, modify or
replace existing licenses. If we failed to be in compliance with these laws, the
regulatory authorities in these jurisdictions could impose sanctions on us. This
could result in substantial costs to us and, in the worst case, we could be
forced to cease operations in one or all of these markets.
Currently, since no calls by our customers originate in the United States, we do
not believe that we are subject to any telecommunications laws or regulations in
the United States. In the future, if our services expand, it is possible that we
may become subject to the telecommunications laws and regulations of the United
States. If this occurs, compliance with such laws would probably involve higher
costs than we currently have in Europe.
INTELLECTUAL PROPERTY
We have filed trademark applications for certain of our trade names. In general,
we rely on our own know-how and employ various methods to protect our concepts
and ideas. However, these methods may not afford complete protection and our
competitors may independently develop similar know-how, concepts or ideas or
obtain access to our know-how or ideas.
INCREASING COMPETITION
The telecommunications industry is highly competitive. The industry has
relatively insignificant barriers to entry. As a result, a large number of
competitors are competing for the same customers. Customers, on the other hand,
frequently change telecom providers in response to the offering of lower rates
or promotional incentives. As a result of the deregulation of the European
telecommunications markets, we believe that competition in Europe is
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likely to increase and become more similar to competition in the United States
markets, where prices in the long distance industry have declined in recent
years.
Many of our competitors are significantly larger, have substantially greater
financial, technical and marketing resources and larger networks than we do. Our
main competitor in Switzerland is Swisscom, which controls almost all of the
Swiss telecommunications market and had approximately $7.5 billion in revenue in
1997. In Belgium, our main competitor is Belgacom and in the United Kingdom,
British Telecom. In addition, there are several smaller competitors in each of
these countries. As we expand into other countries of the EU, there will be
additional competition from other telecommunications companies.
RISKS OF GROWTH AND EXPANSION
Since we commenced operations in 1996, we have expanded the services we offer in
Switzerland and have entered the telecommunications markets in Belgium and the
United Kingdom. In addition, we also intend to establish a presence in other
European markets when we believe that business and regulatory conditions permit
such expansion: our growth may place a significant strain on our administrative,
operational and financial resources and increase demands on our systems and
controls. As we increase our services and expand into new markets, there will be
additional demands on our customer support, sales and marketing and
administrative resources and network infrastructure. As a result, our
infrastructure may become inadequate to meet these demands and we may have to
expend significant funds to upgrade our infrastructure. If we are unable to
upgrade our infrastructure to meet these demands, we may not be able to maintain
the quality of our services. As a result, we may lose customers and our revenues
may decrease.
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS
We currently operate in Switzerland, Belgium and the United Kingdom. In the
future, we hope to expand into other European countries. We anticipate that
revenues from international customers will continue to account for a significant
portion of our revenues for the foreseeable future. Our international operations
are subject to specific risks, including the following:
o fluctuations in exchange rates may reduce our earnings, particularly where
we denominate arrangements with international customers in the currency of
the country in which our services are provided. Any hedging techniques we
implement may be expensive and may not fully eliminate the impact of
exchange rate fluctuations on our operating results;
o tariffs and other barriers may reduce our ability to sell our services or
may reduce the profitability of those services;
o political and economic instability may lead to reduced demand for our
services or make it difficult for us to offer our services;
o unexpected changes in regulatory requirements may decrease our ability to
market our services and therefore reduce the demand for those services;
o we may experience difficulties in managing and staffing foreign subsidiary
operations;
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o we may suffer potentially adverse tax consequences from operations in
several countries; and
o the adoption and use of the Euro, the single European currency introduced
in January 1999, may adversely affect our business in ways we cannot
currently predict.
DEPENDENCE ON EFFECTIVE INFORMATION SYSTEMS
To complete our billing, we will have to record and process massive amounts of
data quickly and accurately. While we believe our management information systems
are currently adequate, we believe that the successful implementation and
integration of these information systems is important to our growth and to our
ability to monitor costs, to bill customers and to achieve operating
efficiencies. There can be no assurance that we will not encounter delays or
cost-overruns or suffer adverse consequences in implementing and upgrading these
systems. In addition, as our suppliers revise and upgrade their hardware,
software and equipment technology, there can be no assurance that we will not
encounter difficulties in integrating the new technology into our business or
that the new systems will be appropriate for our business.
DEPENDENCE UPON THIRD PARTIES
We are dependent upon third party carriers and suppliers to provide a large
portion of our services and maintenance in a timely and satisfactory manner. If
these third party carriers and suppliers fail to provide such services or
maintenance in a timely or satisfactory manner, this could have an adverse
effect on us.
RISKS ASSOCIATED WITH INVESTMENTS AND STRATEGIC ALLIANCES
As part of our business strategy, we have developed and we expect to continue to
develop strategic alliances and to make investments in companies that are
complementary to our current operations. Any such future strategic alliances or
investments would be accompanied by the risks commonly encountered in strategic
alliances with, or investments in, other companies. Such risks include, among
other things:
o the difficulty of assimilating the operations and personnel of the
companies;
o the potential disruption of our ongoing business;
o the inability of our management to successfully integrate the business of
such companies into our existing business;
o the maintenance of uniform standards, controls, procedures and policies;
and
o the impairment of relationships with employees and customers of such
companies as a result of our investment or such strategic alliances.
There can be no assurance that we will be successful in overcoming these risks
or any other problems encountered with strategic alliances or investments. In
addition, if the consideration payable by us consists of shares of our common
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stock, our stockholders could suffer a significant dilution of their interests.
The financial impact of investments and strategic alliances could have a
material adverse effect on us.
TECHNOLOGICAL CHANGES MAY ADVERSELY AFFECT COMPETITIVENESS AND FINANCIAL RESULTS
The telecommunications industry is characterized by rapid and significant
technological advancements and introductions of new products and services
utilizing new technologies. There can be no assurance that we will be able to
maintain our products and services at a competitive level or that we will obtain
appropriate new technologies on a timely basis or on satisfactory terms.
DEPENDENCE ON KEY PERSONNEL
Competition for qualified employees and personnel in the telecommunications
industry is intense and, from time to time, only a limited number of persons
with experience in particular sectors of the telecommunications industry may be
available. Our success will depend on our ability to attract and retain
qualified management, marketing, technical and sales executives and personnel.
The process of locating such personnel with the combination of skills and
attributes required to carry out our strategies is often lengthy and costly. The
loss of the services of key personnel or the inability to attract additional
qualified personnel could have a material adverse effect on us.
OWNERSHIP OF SHARES BY MANAGEMENT
Companies controlled by our executive officers and directors own (directly or
indirectly) 313,041 shares of common stock, or approximately 19.6% of the
outstanding shares of common stock. Although these stockholders may or may not
agree on any particular matter that is the subject of a vote of the
stockholders, these stockholders may be effectively able to control the outcome
of any issues which may be subject to a vote of stockholders, including the
election of directors, proposals to increase the authorized capital stock, or
the approval of mergers, acquisitions, or the sale of all or substantially all
of our assets.
HOLDING COMPANY STRUCTURE; RELIANCE ON SUBSIDIARIES FOR DIVIDENDS
We are a holding company. Our principal assets are our current operating
subsidiaries in Switzerland, Belgium and the United Kingdom. As we expand, we
anticipate that we will operate through new subsidiaries located in European
countries. While there are no restrictions under Swiss law, operating
subsidiaries set up in the future in other European countries may be subject to
restrictions on their ability to pay dividends to us. There can be no assurance
that we will be able to cause our operating subsidiaries to declare and pay
dividends or make other payments to us when we request them to do so. The
failure to pay any such dividends or make any such other payments could have a
material adverse effect on us.
POTENTIAL VOLATILITY OF STOCK PRICE
The market price of our common stock following this offering may be highly
volatile. Factors such as variations in our revenue, earnings and cash flow, the
difference between our actual results and the results expected by investors and
analysts and announcements of new service offerings, marketing plans or
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price reductions by us or our competitors could cause the market price of the
common stock to fluctuate substantially. In addition, the stock markets recently
have experienced significant price and volume fluctuations that particularly
have affected telecommunications companies and resulted in changes in the market
prices of the stocks of many companies that have not been directly related to
the operating performance of those companies. These market fluctuations may have
a negative effect on the market price of the common stock.
Trading in our common stock will be conducted on the NASD Bulletin Board or on
the over-the-counter market. An investor may find it difficult to dispose of his
or her common stock or to obtain accurate quotations as to the price of the
common stock. News concerning us will most likely receive limited coverage. In
addition, our common stock may be subject to a rule that imposes additional
sales practice requirements on broker-dealers who sell our common stock to
persons other than established customers and accredited investors (accredited
investors are generally persons having net worth in excess of $1,000,000 or
annual income exceeding $200,000 or $300,000 together with a spouse). For
transactions covered by this rule, the broker-dealer must make a special
suitability determination for the purchaser and must have received the
purchaser's written consent to the transaction prior to sale, as well as
disclosing certain information concerning the risks of purchasing low-priced
securities on the market for such securities. Consequently, if our stock is not
listed on a national securities market, broker-dealers are restricted in selling
our common stock. This may affect the ability of purchasers of our common stock
in this offering to sell their common stock in the secondary market and may make
subsequent financing difficult.
As of the date of this Prospectus, several brokerage firms are engaged in market
making activities with respect to our common stock. In the event that these
market makers do not function as such, public trading in our common stock will
be adversely affected or may cease entirely.
SHARES ELIGIBLE FOR FUTURE SALE
Of our 1,598,190 shares of common stock currently outstanding on the date of
this Prospectus, the 1,005,355 shares offered by this prospectus are "restricted
securities," as defined in Rule 144 of the Securities Act. With the registration
of these shares, they become freely tradeable. We cannot predict the effect, if
any, that market sales of common stock or the availability of our common stock
for sale will have on the market price prevailing from time to time. However,
sales of shares by the selling stockholders, or even the potential of such
sales, could have an adverse effect on the market price of the common stock.
NO DIVIDENDS
Since our inception, we have not paid any dividends on our common stock. We
intend to retain future earnings, if any, to provide funds for the operation of
our business and, accordingly, do not anticipate paying any cash dividends on
our common stock in the reasonably foreseeable future.
DELAWARE ANTI-TAKEOVER LAW
We are governed by the provisions of Section 203 of the General Corporation law
of the State of Delaware. In general, this law prohibits a public Delaware
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corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which such person became an interested stockholder, unless the business
combination is approved in a prescribed manner. A "business combination" is
defined to include mergers, asset sales and other transactions resulting in a
financial benefit to the stockholder. An "interested stockholder" is defined as
a person who, together with affiliates and associates, owns (or, within the
prior three years, did own) 15 percent or more of the corporation's voting
stock.
These provisions could have the effect of delaying, deferring or preventing a
change of control of UTG which could prevent our stockholders from realizing a
premium through a non-negotiated change in control. Our stockholders, by
adopting an amendment to our Certificate of Incorporation or By-Laws, may elect
not to be governed by Section 203, effective twelve months after adoption.
Neither our Certificate of Incorporation nor our By-Laws currently excludes us
from the restrictions imposed by Section 203.
OUR SERVICES AND SYSTEMS MAY NOT BE YEAR 2000 COMPLIANT
We are in the process of reviewing our computer systems to insure they will not
suffer catastrophic failures in connection with the change in the calendar on
January 1, 2000, but have not expended material amounts in this respect. We do
not believe that we have material exposure with respect to the year 2000 issue
concerning our computer applications and equipment. We license most of the
software we use. Although this practice has minimized our efforts and cost
needed to make us year 2000 compliant, it does place greater reliance on the
outside firms that provide the software. Because most of our software is
licensed, our main internal compliance tasks are auditing hardware and software,
reviewing internal and external applications, prioritizing applications by risk,
creating a communications program to raise awareness levels and enable
correction of all existing application solutions, and installation of
vendor-provided year 2000 software fixes. At this time, our assessment of
potential year 2000 problems is not complete. Currently, we are not aware of any
material year 2000 issues. In the event that year 2000 issues were to disrupt
our operations, such disruption may have a material impact on us and our results
of operations. Since to date we have not become aware of any material year 2000
issues, we do not have a contingency plan to address any such issues. Such
contingency plan, if required, will be developed immediately upon completion of
our year 2000 risk assessment.
USE OF PROCEEDS
All of the shares of common stock offered by this prospectus are being
offered by the selling stockholders. For information about the selling
stockholders, see "Selling Stockholders." We will not receive any proceeds from
sales of these shares.
SELLING STOCKHOLDERS
The following table sets forth as of January 22, 1999, certain information
with respect to the selling stockholders, including the maximum number of shares
that may be offered by them. The number of shares which may actually be sold by
the selling stockholders will be determined from time to time by them and will
depend upon a number of factors, including the price of our common stock from
time to time. Because the selling stockholders may offer all or
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none of the common stock that they hold and because the offering contemplated by
this prospectus is not being underwritten, no estimate can be given as to the
number of shares of common stock that selling stockholders will hold upon
termination of this offering. See "Plan of Distribution."
Number of shares of
Common Stock owned by
Selling Stockholders
Name of Selling Stockholder Shares % of Class
- --------------------------- ------ ----------
Interfinance Inv. Co. Ltd. 197,656 shares 12.36% of 1,598,190 shares
Postbox 13 outstanding on January 22,
CH - 8954 Geroldswil 1999
Switzerland
Fritz Wolff 7,693 shares 0.48%
Escher Wyssstr. 23
CH - 8001 Zurich
Switzerland
Dowel Management Corp. 7,693 shares 0.48%
c/o Guyerzeller Bank AG
Genferstr.
CH - 8027 Zurich
Switzerland
Tele Invest Ltd. 30,770 shares 1.93%
c/o Jessup & Co.
2 Mount Pleasant
Douglas
Isle of Man IMI 2PU
Andrea Egger 7,693 shares 0.48%
5 Chemin des Chavanus
CH - 1297 Founex
Switzerland
Alain Dettling 3,847 shares 0.24%
Winzerhalde 36A
CH - 8049 Zurich
Switzerland
Medfield Investment SA 550,000 shares 34.41%
Sonnenbergweg 12
CH - 5608 Stetten
Switzerland
VCM Investment SA 38,462 shares 2.41%
c/o UTG Communications Int. Inc.
18 Cattano Avenue
Morristown, NJ 07960, USA
Andreas Popovici 34,617 shares 2.17%
Alte Landstr. 104
CH - 8803 Ruschlikon
Switzerland
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Jean-Pierre Conrad 11,539 shares 0.72%
Chateau Perigord II
MC - 98000 Monte Carlo
Monaco
Prozal Investments S.A. 115,385 shares 7.22%
c/o Am Milchbrunnen 4
D - 56566 Neuwied
Germany
TOTAL 1,005,355 shares to be registered
- --------------------------------------------------------
PLAN OF DISTRIBUTION
The shares offered by this prospectus may be sold from time to time by selling
stockholders, who consist of the persons named under "Selling Stockholders"
above and those persons' pledgees, donees, transferees or other successors in
interest. The selling shareholders may sell the shares on the NASD Bulletin
Board or otherwise, at market prices or at negotiated prices. They may sell
shares by one or a combination of the following:
- a block trade in which a broker or dealer so engaged will attempt to
sell the shares as agent, but may position and resell a portion of
the block as principal to facilitate the transaction;
- purchases by a broker or dealer as principal and resale by the
broker or dealer for its account pursuant to this prospectus; and
- ordinary brokerage transactions and transactions in which a broker
solicits purchasers.
In effecting sales, brokers or dealers engaged by the selling stockholders may
arrange for other brokers or dealers to participate. Brokers or dealers will
receive commissions or discounts from the selling stockholders in amounts to be
negotiated prior to the sale. The selling stockholders and any broker-dealers
that participate in the distribution may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act of 1933, and any proceeds or
commissions received by them, and any profits on the resale of shares sold by
broker-dealers, may be deemed to be underwriting discounts and commissions.
If any selling stockholder notifies us that a material arrangement has been
entered into with a broker-dealer for the sale of shares through a block trade,
special offering, exchange distribution or secondary distribution or a purchase
by a broker or dealer, we will file, a prospectus supplement, if required
pursuant to Rule 424(c) under the Securities Act of 1933, setting forth:
- the name of each of the participating broker-dealers,
- the number of shares involved,
- the price at which the shares were sold,
- the commissions paid or discounts or concessions allowed to the
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broker-dealers, where applicable,
- a statement to the effect that the broker-dealers did not conduct
any investigation to verify the information set out or incorporated
by reference in this prospectus, and
- any other facts material to the transaction.
LEGAL MATTERS
The law firm of Wuersch & Gering LLP, New York, New York, has advised us
with respect to the validity of the shares of common stock offered by this
prospectus.
EXPERTS
The financial statements and the related financial statement schedule
incorporated in this prospectus by reference from our Annual Report on Form
10-KSB for the year ended March 31, 1998 have been audited by Merdinger,
Fruchter, Rosen & Corso, P.C., independent auditors, as stated in their reports,
which are incorporated herein by reference, and have been so incorporated in
reliance upon the authority of Merdinger, Fruchter, Rosen & Corso, P.C. as
experts in giving those reports.
WHERE YOU CAN FIND MORE INFORMATION
We file annual reports, quarterly reports, current reports, proxy statements and
other information with the Securities and Exchange Commission (the "SEC"). You
may read and copy our SEC filings at the SEC's public reference room at 450
Fifth Street, N.W., Washington D.C. 20549. You may call the SEC at
1-800-SEC-0330 for further information about the public reference room. Our SEC
filings also are available on the SEC's website at http://www.sec.gov.
The SEC allows us to "incorporate by reference" information from certain of our
other SEC filings. This means that we can disclose information to you by
referring you to those other filings, and the information incorporated by
reference is considered to be part of this prospectus. In addition, certain
information that we file with the SEC after the date of this prospectus will
automatically update, and in some cases supersede, the information contained or
otherwise incorporated by reference in this prospectus. We are incorporating by
reference the information contained in the following SEC filings:
UTG's Annual Report on Form 10-KSB, for the fiscal year ended March
31, 1998, (filed with the SEC on July 14,1998); and
UTG's Quarterly Reports on Form 10-QSB, for the quarters ended March
31, 1998, June 30, 1998, September 30, 1998, as amended by Form
10-QSB/A filed with the SEC on January 20, 1999, and December 31,
1998.
You may request copies of these filings, at no cost, by contacting Ueli Ernst,
UTG Communications International, Inc., 17 Cattano Avenue, Morristown, New
Jersey 07960 (Telephone: 973-644-3161).
This prospectus is part of a Registration Statement on Form S-3 we filed with
the SEC under the Securities Act of 1933. This prospectus does not contain all
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of the information contained in the Registration Statement.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Filing Fee -- Securities and Exchange Commission $ 1,956.42
Accounting Fees and Expenses $ 1,000.00
Legal Fees and Expenses $10,000.00
Printing, EDGAR formatting and mailing expenses $ 2,000.00
Miscellaneous Expenses $ 1,043.58
----------
Total $16,000.00
==========
All expenses other than the Securities and Exchange Commission filing fee are
estimated. We will bear all expenses.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Certificate of Incorporation and the By-Laws of the Registrant provide that
the Registrant shall indemnify its officers, directors and certain others to the
fullest extent permitted by the Delaware General Corporation Law. Section 145 of
the Delaware General Corporation Law (the "DGCL") provides in pertinent part as
follows:
(a) A corporation shall have power to 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 (other than 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
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 the person in connection with such action, suit or proceeding if the
person acted in good faith and in a manner the person reasonably believed to be
in or not opposed to the best interest of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe the
person's 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, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which the person 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 reasonable cause to believe that the
person's conduct was unlawful.
(b) A corporation shall have power to 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
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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) actually and reasonably incurred by the
person in connection with the defense or settlement of such action or suit if
the person acted in good faith and in a manner the person reasonably believed to
be in or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other Court shall deem proper.
(c) To the extent that a present or former director or officer of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsection (a) and (b) of this
section, or in defense of any claim, issue or matter therein, such person shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith.
(d) Any indemnification under subsection (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the present or
former director, officer, employee or agent is proper in the circumstances
because the person has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section. Such determination shall be made, with
respect to a person who is a director or officer at the time of such
determination (1) by a majority vote of the directors who are not parties to
such action, suit or proceeding, even though less than a quorum, or (2) by a
committee of such directors designated by majority vote of such directors, even
though less than a quorum, or (3) if there are no such directors, or if such
directors so direct, by independent legal counsel in a written opinion, or (4)
by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that such person is not entitled to be
indemnified by the corporation as authorized in this section. Such expenses
(including attorneys' fees) incurred by former directors and officers or other
employees and agents may be so paid upon such terms and conditions, if any, as
the corporation deems appropriate.
(f) The indemnification and advancement of expense provided by, or granted
pursuant to, the subsections of this section shall not be deemed exclusive of
any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors of otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office.
(g) A corporation shall have power to purchase and maintain insurance 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
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venture, trust or other enterprise against any liability asserted against such
person and incurred by such person in any such capacity, or arising out of his
status as such, whether or not the corporation would have the power to indemnify
such person against such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporations as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as such person would have with respect to such constituent
corporation if its separate existence had continued.
(i) For purposes of this section, references to "other enterprises" shall
include employee benefit plans' references to "fines" shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and
reference to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation, which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction to
hear and determine all actions for advancement of expenses or indemnification
brought under this section or under any bylaw, agreement, vote of stockholders
or disinterested directors, or otherwise. The Court of Chancery may summarily
determine a corporation's obligation to advance expenses (including attorneys'
fees).
In accordance with Section 102(b)(7) of the DGCL, Article Seven of the
Certificate of Incorporation of the Registrant eliminates the personal liability
of the Company's directors to the Company or its stockholders for monetary
damages for breach of their fiduciary duties as a director, with certain
exceptions set forth in said Section 102(b)(7).
ITEM 16. EXHIBITS.
Exhibit No. Description
5 * Opinion of Wuersch & Gering LLP, counsel for UTG.
10.1 * Shareholders Agreement, dated as of November 16, 1998.
23.1 * Consent of Merdinger, Fruchter, Rosen & Corso, P.C.
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23.2 * Consent of Wuersch & Gering LLP (included as part of Exhibit
5).
- --------------------
* Filed Herewith
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(a) (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;
(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, represent a
fundamental change in the information set forth in the
registration statement; Notwithstanding the foregoing,
any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would
not exceed that which was registered) and any deviation
from the low or high and of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the SEC pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price
represents no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective 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;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is continued in periodic reports filed
with or furnished to the SEC by the registrant pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each 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.
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(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.
(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 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.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the
foregoing provisions, 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 Act and is, therefore, unenforceable. In the
event that a 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 Act and will be
governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Amendment No. 1 to Form S-3 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Zurich, Country of
Switzerland on the 7th day of June, 1999.
UTG COMMUNICATIONS INTERNATIONAL, INC.
By: /s/ Ueli Ernst
Dated: June 7, 1999 -------------------------------------------
Ueli Ernst, Chairman, CEO and a Director
Principal Executive Officer
By: /s/ Klaus Brenner
Dated: June 7, 1999 -------------------------------------------
Klaus Brenner, Director
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UTG COMMUNICATIONS INTERNATIONAL, INC.
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
5* Opinion of Wuersch & Gering LLP, counsel for UTG.
10.1* Shareholders Agreement, dated as of November 16, 1998.
23.1 Consent of Merdinger, Fruchter, Rosen & Corso, P.C.
23.2* Consent of Wuersch & Gering LLP (included as part of Exhibit 5).
- --------------------
* Previously Filed
22
Exhibit 23.1
CONSENT OF MERDINGER, FRUCHTER, ROSEN & CORSO, P.C., INDEPENDENT AUDITORS
We hereby consent to the reference to our firm under the caption "Experts" in
Amendment No. 1 to the Registration Statement on Form S-3 and related prospectus
of UTG Communications International, Inc. for the registration of 1,005,355
shares of its common stock and to the incorporation by reference therein of our
report dated June 22, 1998, with respect to the consolidated financial
statements of UTG Communications International, Inc. included in its Annual
Report on Form 10-KSB for the year ended March 31, 1998, filed with the
Securities and Exchange Commission.
/s/ MERDINGER, FRUCHTER, ROSEN & CORSO, P.C.
--------------------------------------------------------
MERDINGER, FRUCHTER, ROSEN & CORSO, P.C.
Certified Public Accountants
New York, New York
June 7, 1999
