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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
VIRTUAL TELECOM, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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VIRTUAL TELECOM, INC.
12 Av. des Morgines
1213 Petit-Lancy 1
Switzerland
____________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 23, 1998
3:00 p.m.
____________________
Notice is hereby given that the Annual Meeting of Shareholders of Virtual
Telecom, Inc. will be held at 12 Av. des Morgines, 1213 Petit-Lancy 1,
Switzerland on Tuesday, June 23, 1998, at 3:00 p.m. to consider and vote upon:
1. The election of four directors to hold office until the next annual
meeting of stockholders or until their successors are duly elected and
qualified;
2. The ratification of the appointment of Arthur Andersen S.A. as
independent public accountants of the Company; and
3. Such other business as may properly come before the Annual Meeting
other than the matters listed above.
The Board of Directors has fixed the close of business on April 24, 1998 as
the record date for determination of shareholders entitled to notice of, and to
vote, at the Annual Meeting. To assure that your shares will be represented at
the Annual Meeting, please mark, sign, date and promptly return the accompanying
proxy card in the enclosed envelope. You may revoke your proxy at any time
before it is voted.
Shareholders are cordially invited to attend the meeting in person. Please
indicate on the enclosed proxy whether you plan to attend the meeting.
Shareholders may vote in person if they attend the meeting even though they have
executed and returned a proxy.
By Order of the Board of Directors,
Daniel Huber,
Secretary
Dated: May 29, 1998
<PAGE>
VIRTUAL TELECOM, INC.
____________________
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
____________________
INTRODUCTION
This Proxy Statement is furnished by the Board of Directors of Virtual
Telecom, Inc., a Delaware corporation (the "Company"), in connection with the
solicitation of proxies for use at the Annual Meeting of Shareholders to be held
on June 23, 1998 and at any adjournments thereof. The Annual Meeting has been
called to consider and vote upon the election of four (4) directors, the
approval of Arthur Andersen S.A. as the Company's independent public accountants
and to consider such other business as may properly come before the Annual
Meeting. This Proxy Statement and the accompanying Proxy are being sent to
shareholders on or about May 29, 1998.
Persons Making the Solicitation
The Proxy is solicited on behalf of the Board of Directors of the Company.
The original solicitation will be by mail. Following the original solicitation,
the Board of Directors expects that certain individual shareholders will be
further solicited through telephone or other oral communications from the Board
of Directors. The Board of Directors does not intend to use specially engaged
employees or paid solicitors. The Board of Directors intends to solicit proxies
for shares which are held of record by brokers, dealers, banks or voting
trustees, or their nominees, and may pay the reasonable expenses of such record
holders for completing the mailing of solicitation materials to persons for whom
they hold shares. All solicitation expenses will be borne by the Company.
Terms of the Proxy
The enclosed Proxy indicates the matters to be acted upon at the Annual
Meeting and provides boxes to be marked to indicate the manner in which the
shareholder's shares are to be voted with respect to such matters. By
appropriately marking the boxes, a shareholder may specify whether the proxies
shall vote for or against or shall be without authority to vote the shares
represented by the Proxy. The Proxy also confers upon the proxies discretionary
voting authority with respect to such other business as may properly come before
the Annual Meeting.
If the Proxy is executed properly and is received by the proxy prior to the
Annual Meeting, the shares represented by the Proxy will be voted. Where a
shareholder specifies a choice with respect to the matter to be acted upon, the
shares will be voted in accordance with such specification. Any Proxy which is
executed in such a manner as not to withhold authority to vote for the election
of the specified nominees as Directors (see "Matters To Be Acted Upon -- Item 1:
Election of Directors") shall be deemed to confer such authority. A Proxy may
be revoked at any time prior to its exercise by giving written notice of the
revocation thereof to Daniel Huber, Secretary, Virtual Telecom, Inc., 12, Av.
des Morgines, 1213 Petit-Lancy 1, Switzerland, by attending the meeting and
electing to vote in person, or by a duly executed Proxy bearing a later date.
- 1 -
<PAGE>
VOTING RIGHTS AND REQUIREMENTS
Voting Securities
Generally. The securities entitled to vote at the Annual Meeting consist
of all of the issued and outstanding shares of the Company's common stock, $.001
par value per share ("Common Stock"), Series A Preferred Stock, $.001 par value
per share (Series A Preferred Stock") and Series B Preferred Stock, $.001 par
value per share (Series B Preferred Stock). The Common Stock, Series A
Preferred Stock and Series B Preferred Stock vote together as a group on all
matters to be put to a vote of the shareholders of the Company, except as is set
forth below regarding the election of directors. The shares of both the Series
A Preferred Stock and the Series B Preferred Stock are convertible, at the
option of the holders, into shares of Common Stock. Each share of Series A
Preferred Stock and Series B Preferred Stock entitles its holder to cast the
number of votes that such holder would be entitled to cast assuming that such
shares of Preferred Stock had been converted, on the record date, into the
maximum number of shares of Common Stock into which the Preferred Stock is then
convertible.
The close of business on April 24, 1998 has been fixed by the Board of
Directors of the Company as the record date. Only shareholders of record as of
the record date may vote at the Annual Meeting. As of the record date, there
were 5,534,148 issued and outstanding shares of the Company's Common Stock
entitled to vote at the Annual Meeting. In addition, as of the record date,
there were 68,500 issued and outstanding shares of the Company's Series A
Preferred Stock, which are convertible into a maximum of 137,000 shares of
Common Stock, and 1,923,716 shares of Series B Preferred Stock which are
convertible into a maximum of 1,923,716 shares of Common Stock. Assuming the
conversion of the Preferred Stock into the maximum number of shares of Common
Stock, as of the record date, there were 7,594,864 issued and outstanding shares
of Common Stock and approximately 341 holders of record of the Company's Common
Stock.
Election of Directors. In connection with the election of directors, the
Amended Certificate of Designation of the Company relating to the Series A and
Series B Preferred Stock provides that the holders of the Series B Preferred
Stock are entitled to elect two (2) of the six (6) authorized directors of the
Company. The holders of the Common Stock and Series A Preferred Stock, voting
as a group, are entitled to elect four (4) of the six (6) authorized directors.
Quorum
The presence at the Annual Meeting of the holders of a number of shares of
the Common Stock, including the shares of Common Stock issuable upon conversion
of the Series A Preferred Stock and Series B Preferred Stock (collectively
"Voting Securities"), and Proxies representing the right to vote shares of the
Company's Voting Securities in excess of one-half of the number of shares of the
Company's Voting Securities outstanding as of the record date will constitute a
quorum for transacting business.
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<PAGE>
COMMON STOCK OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the shares of Common Stock as of April 24, 1998 by (i) each person
who is known by the Company to be the beneficial owner of more than five percent
(5%) of the issued and outstanding shares of Common Stock, (ii) each of the
Company's directors and executive officers and (iii) all directors and executive
officers as a group.
<TABLE>
<CAPTION>
Name and Address Number of Shares Percentage Owned
---------------- ----------------
<S> <C> <C>
Neil Gibbons (1) 1,446,770 25.9%
Daniel Huber (1) 1,146,770 20.5%
William Cordeiro (3) 10,000(4) (5)
Stuart Townsend (6) 25,000(7) (5)
Bryan Wood (8) 1,923,716(9) 25.8%
Alta Berkeley V, C.V. (8) 1,923,716(9) 25.8%
All officers and directors as a group 4,552,256 60.0%
</TABLE>
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(1) Address is 12, Av. des Morgines, 1213 Petit-Lancy 1, Geneva, Switzerland.
(2) Includes 50,000 shares of Common Stock underlying presently exercisable
options.
(3) Address is 23852 Pacific Coast Highway, Suite 283, Malibu, California
90265.
(4) Represents shares held by Bartik, Cordeiro Associates, Inc., of which Mr.
Cordeiro is a shareholder.
(5) Less than one percent.
(6) Address is Townsend Analytics, Ltd., 100 South Wacker Drive, Suite 1500,
Chicago, Illinois.
(7) Represents shares of Common Stock underlying immediately exercisable
options.
(8) Mr. Wood has been nominated to the Board of Directors by the holders of the
Series B Preferred Stock. See, "Voting Rights and Requirements." Mr. Wood's
address is Alta Berkeley Associates, 6 Rue d'Italie, 1211 Geneva 3,
Switzerland.
(9) Represents shares of Common Stock issuable upon conversion of Series B
Preferred Stock held by Alta Berkeley V, C.V. and two affiliated funds. Mr.
Bryan Wood is a partner of Alta Berkeley Associates which serves as a
manager of the three funds.
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<PAGE>
MATTERS TO BE ACTED UPON
ITEM 1: ELECTION OF DIRECTORS
Directors
The Company's Bylaws give the Board the power to set the number of
directors at no less than three nor more than seven. The size of the Company's
Board is currently set at six. In connection with the election of directors,
the Amended Certificate of Designation of the Company relating to the Series A
and Series B Preferred Stock provides that the holders of the Series B Preferred
Stock are entitled to elect two (2) of the six (6) authorized directors of the
Company. The holders of the Common Stock and Series A Preferred Stock, voting
as a group, are entitled to elect four (4) of the six (6) authorized directors.
The directors so elected will serve until the next Annual Meeting of
Shareholders.
The Board of Directors of the Company has nominated four (4) directors to
be elected at the Annual Meeting to be held on June 23, 1998 by the holders of
the Common Stock and the Series A Preferred Stock. These nominees are Neil
Gibbons, Daniel Huber, William Cordeiro and Stuart Townsend. All of the
nominees are currently directors of the Company. The Board knows of no reason
why any nominee for director would be unable to serve as a director. In the
event that any of them should become unavailable prior to the Annual Meeting,
the Proxy will be voted for a substitute nominee or nominees designated by the
Board of Directors, or the number of directors may be reduced accordingly. The
holders of the Series B Preferred Stock have nominated for director Mr. Bryan
Wood.
The following table sets forth the name and age of each nominee for
director, the year he was first elected a director and his position(s) with the
Company.
<TABLE>
<CAPTION>
Director
Name Age Since Positions Held
---- --- -------- --------------
<S> <C> <C> <C>
Neil Gibbons 48 1996 Chairman of the Board, Chief
Executive Officer and President
Daniel Huber 30 1996 Vice President, Secretary and
Director
William Cordeiro 52 1996 Director
Stuart Townsend 51 1997 Director
Bryan Wood 52 1997 Director
</TABLE>
Mr. Gibbons co-founded Virtual Telecom SA in 1994 and has served as Chief
Executive Officer, President and director of the Company since its inception in
July 1996. From 1991 to 1994, Mr. Gibbons was engaged as a consultant and
independent investment manager.
Mr. Huber co-founded Virtual Telecom SA in 1994 and has served as Vice
President, Secretary and director of the Company since its inception in July
1996. Mr. Huber also served as the Chief Financial Officer of the Company from
its inception until April, 1998. Since 1992, Mr. Huber has also served as Chief
Executive Officer of Profilinvest SA, an investment management firm founded by
Mr. Huber.
Mr. Cordeiro has served as director of the Company since July 1996. Since
1990, Mr. Cordeiro has served as Professor of Management at California State
University, Los Angeles. Mr. Cordeiro holds a Ph.D. in Executive Management
from the Peter F. Drucker Graduate Management Center of the Claremont Graduate
School. Mr. Cordeiro also serves as a director of Harrier, Inc.
Mr. Townsend has served as a director of the Company since April 1997. Mr.
Townsend is the founder of Townsend Analytics, Ltd., a developer of financial
data software, and for the past five years has served as its President.
- 4 -
<PAGE>
Mr. Wood has served as a director of the Company since December 1997. Mr.
Wood is a founder of Alta Berkeley Associates, a privately held venture capital
group, which was formed in 1982. Mr. Wood holds an MBA from Harvard Business
School and BSc in Industrial Engineering from Virginia Polytechnic Institute.
Board of Directors Meetings and Committees
During the fiscal year ended December 31, 1997, there were three meetings
of the Board of Directors as well as numerous actions taken with the unanimous
written consent of the directors. The Board of Directors does not have standing
audit, nominating or compensation committees.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Executive Compensation
Cash Compensation of Executive Officers. The following table sets forth
the cash compensation paid by the Company to its executive officers for services
rendered during the fiscal years ended December 31, 1997, 1996 and 1995.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
--------------------------------------- --------------------------------------
Common
Shares
Restricted Underlying
Other Stock Options All Other
Annual Awards Granted Compensation
Name and Position Year Salary Bonus Compensation ($) (# Shares) (1)
- ----------------- ---- ------ ----- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Neil Gibbons, CEO 1997 CHF96,000 -0- -0- -0- 50,000 CHF7,200
1996 CHF62,000 -0- -0- -0- -0- -0-
1995 -0- -0- -0- -0- -0- -0-
Daniel Huber, CFO 1997 CHF96,000 -0- -0- -0- 50,000 CHF7,200
1996 CHF64,000 -0- -0- -0- -0- -0-
1995 -0- -0- -0- -0- -0- -0-
</TABLE>
(1) Represents an allowance of CHF600 per month.
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
Individual Grants
- -------------------------------------------------------------------------------------------
Number of Securities % of Total
Underlying Options/SARs Granted Exercise
Options/SARs Granted to Employees in or Base Expiration
Name (#) Fiscal Year Price ($/Sh) Date
---- -------------------- -------------------- ------------ ----------
<S> <C> <C> <C> <C>
Neil Gibbons, CEO 50,000 21% 2.00 12/31/00
Daniel Huber, CFO 50,000 21% 2.00 12/31/00
</TABLE>
Director Compensation
Mr. Cordeiro receives a $500 per month director's fee. All directors
receive reimbursement for out-of-pocket expenses in attending Board of Directors
meetings. From time to time the Company may engage certain members of the Board
of Directors to perform services on behalf of the Company. The Company will
compensate the members for their services at rates no more favorable than could
be obtained from unaffiliated parties.
- 5 -
<PAGE>
Employment Agreement
The Company entered into Employment Agreements dated May 31, 1996 (the
"Employment Agreements") with Neil Gibbons and Daniel Huber, its Chief Executive
Officer and Vice President, respectively. Each of the Employment Agreements
provides for an initial term of five years, with up to three successive three-
year renewals subject to the election by the Company not to renew the Employment
Agreements. The Employment Agreements both provide for a base salary of CHF
96,000 (approximately US$65,000, as of May 12, 1998) per annum commencing May
31, 1996 and continuing for the remainder of the term of employment. The base
salaries of both officers are to be increased annually based on increases in the
Consumer Price Index for Switzerland (Geneva). Both Mr. Gibbons and Mr. Huber
are also entitled to incentive bonuses for each fiscal year in an amount to be
determined by performance standards established by the Company's Board of
Directors. In the event either officer's employment is terminated by the
Company without cause, the Company is obligated to pay to the terminated officer
the balance remaining on his respective Employment Agreement. Prior to May 31,
1996, the Company did not have an employment agreement with either Mr. Gibbons
or Mr. Huber.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers, directors and persons who beneficially own more than 10%
of a registered class of the Company's equity securities to file reports of
securities ownership and changes in such ownership with the Securities and
Exchange Commission (the "SEC"). Officers, directors and greater than 10%
beneficial owners are also required by rules promulgated by the SEC to furnish
the Company with copies of all Section 16(a) forms they file.
Based solely upon a review of the copies of such forms furnished to the
Company, or written representations that no Form 5 filings were required, the
Company believes that during the period from April 4, 1997 (the inception of
Section 16(a) reporting obligations for the Company's officers, directors and
greater than 10% beneficial owners) through December 31, 1997, all Section 16(a)
filing requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with.
Certain Relationships and Related Transactions
The Company's Vice President and director, Daniel Huber, is also Chief
Executive Officer of Profilinvest SA, an investment management firm in Geneva,
Switzerland. At the present time and for the foreseeable future, Mr. Huber
intends to devote substantially all of his business time to the Company.
However, Mr. Huber's association with Profilinvest SA presents a potential
conflict between his provision of his services to the Company and to
Profilinvest.
- 6 -
<PAGE>
ITEM 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors recommends the ratification of the appointment of
Arthur Andersen S.A. as independent public accountants, to audit the
consolidated financial statements of the Company for the year ending December
31, 1998 and to perform other appropriate services as directed by the Company's
management and Board of Directors.
A proposal will be presented at the meeting to appoint Arthur Andersen S.A.
as independent public accountants. It is expected that a representative of
Arthur Andersen S.A. will be present at the Annual Meeting to respond to
appropriate questions or to make a statement if he or she so desires. If the
shareholders do not ratify Arthur Andersen S.A. by the affirmative vote of a
majority of the shares represented in person or by proxy at the meeting, other
independent public accountants will be considered by the Board of Directors.
Vote Required
The ratification of Arthur Andersen S.A. as the Company's independent
public accountants will require the affirmative vote of the holders of at least
a majority of the outstanding shares of the Company's Voting Securities present
or represented at the meeting. The Board of Directors recommends a vote "FOR"
ratification of the appointment of Arthur Andersen S.A. as the Company's
independent public accountants.
ITEM 3: OTHER MATTERS
Except for the matters referred to in the accompanying Notice of Annual
Meeting, management does not intend to present any matter for action at the
Annual Meeting and knows of no matter to be presented at the meeting that is a
proper subject for action by the shareholders. However, if any other matters
should properly come before the meeting, it is intended that votes will be cast
pursuant to the authority granted by the enclosed Proxy in accordance with the
best judgment of the person or persons acting under the Proxy.
ANNUAL REPORT
The Company's annual report on Form 10-KSB under the Securities Exchange
Act of 1934 for the year ended December 31, 1997, including the financial
statements and schedules thereto, which the Company has filed with the
Securities and Exchange Commission, was mailed to stockholders on or about May
29, 1998.
SHAREHOLDER PROPOSALS
All shareholder proposals that are intended to be presented at the 1998
Annual Meeting of shareholders and to be included in the proxy materials for
that meeting must be received by the Company's Secretary not later than January
1, 1999.
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<PAGE>
REQUEST TO RETURN PROXIES PROMPTLY
A Proxy is enclosed for your use. Please mark, date, sign and return the
Proxy at your earliest convenience in the envelope provided. A prompt return of
your Proxy will be appreciated.
By Order of the Board of Directors,
Daniel Huber,
Secretary
Geneva, Switzerland
May 29, 1998
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<PAGE>
PROXY
VIRTUAL TELECOM, INC. PROXY--1997 ANNUAL MEETING
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING JUNE 23, 1998
The undersigned, a shareholder of Virtual Telecom, Inc., a Delaware
corporation, appoints Mark Benn his, her or its true and lawful agent and proxy,
with full power of substitution, to vote all the shares of stock that the
undersigned would be entitled to vote if personally present at the Annual
Meeting of Shareholders of Virtual Telecom, Inc. to be held at 12 Av. des
Morgines, 1213 Petit-Lancy 1, Switzerland, on Tuesday, June 23, 1998, at 3:00
p.m., and any adjournment thereof, with respect to the following matters which
are more fully explained in the Proxy Statement of the Company dated May 29,
1998 receipt of which is acknowledged by the undersigned:
ITEM 1: ELECTION OF DIRECTORS.
FOR all nominees WITHHOLD AUTHORITY
(except as listed below). [_] (As to all nominees.) [_]
NOMINEES: NEIL GIBBONS, DANIEL HUBER, WILLIAM CORDEIRO AND STUART TOWNSEND.
INSTRUCTION: To withhold authority to vote for any individual nominee(s),
write that nominee's name in the space provided below.
________________________________________
ITEM 2. RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS.
[_] FOR [_] AGAINST [_] ABSTAIN
ITEM 3. OTHER MATTERS. The Board of Directors at present knows of no other
matters to be brought before the Annual Meeting.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN. IF NO
DIRECTION IS MADE, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED "FOR" THE
ELECTION OF THE DIRECTORS NOMINATED BY THE BOARD OF DIRECTORS AND WILL BE VOTED
IN ACCORDANCE WITH THE DISCRETION OF THE PROXIES UPON ALL OTHER MATTERS WHICH
MAY COME BEFORE THE ANNUAL MEETING.
Dated: _________________, 1998 ___________________________________
Signature of Shareholder
___________________________________
Signature of Shareholder
PLEASE SIGN AS YOUR NAME APPEARS ON
THE PROXY. TRUSTEES, GUARDIANS,
PERSONAL AND OTHER REPRESENTATIVES,
PLEASE INDICATE FULL TITLES.
IMPORTANT: PLEASE VOTE, DATE, SIGN
AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
[_] PLEASE CHECK IF YOU ARE
PLANNING TO ATTEND THE MEETING
