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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
March 31, 1999
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Date of Report (date of earliest event reported)
TERRA TELECOMMUNICATIONS CORP.
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Exact name of Registrant as Specified in its Charter
Nevada 0-21381 84-1349551
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State or Other Jurisdiction Commission File IRS Employer
of Incorporation Number Identification Number
160 NW 159th Drive, Miami, Florida 33169
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Address of Principal Executive Offices, Including Zip Code
(305) 577-9700
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Registrant's Telephone Number, Including Area Code
N/A
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Former Name or Former Address, if Changed Since Last Report
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ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
(a) On March 31, 1999, PriceWaterhouseCoopers LLP informed Terra
Telecommunications Corp. (the "Registrant" or "Company") that they were
terminating their relationship as the auditor of World Access Communications
Corp. ("WAC") and its affiliates. WAC and its affiliates became wholly owned
subsidiaries of the Company. PriceWaterhouseCoopers's report on WAC's
financial statements for the years ended December 31, 1996 and 1997 contained
no adverse opinion or disclaimer of opinion nor were they qualified as to
uncertainty. audit scope or accounting principles.
(b) On April 7, 1999, the Registrant engaged the accounting firm of
Lopez, Levi & Associates, LLC as its independent accountants to conduct its
audit for the year ended December 31, 1998. The Registrant's Board of
Directors approved the decision to engage Lopez, Levi & Associates. The
Registrant has no audit or similar committee. The Registrant did not consult
with Lopez, Levi & Associates with regard to any matter concerning the
application of accounting principles to and, specific transactions, either
completed or proposed, or the type of audit opinion that might be rendered
with respect to the Registrant's financial statements.
(c) On September 28, 1998, WAC and its affiliates were acquired by
Cypress Capital Inc. ("Cypress"), a nonoperating public shell corporation
through a share exchange. Cypress's legal name was changed to Terra
Telecommunications Corp. Cypress' accountants were Schumacher & Associates,
Inc., whose report on the financial statements of Cypress for the period from
June 14, 1996 (date of inception) through December 31, 1997 contained no
adverse opinion or disclaimer of opinion nor were they qualified as to audit
scope or accounting principles. However, such report did contain a
qualification as to the uncertainty of Cypress' ability to continue as a going
concern.
(d) In connection with the prior audits of Cypress for the period from
June 14, 1996 (date of inception) through December 31, 1997 and of WAC for the
years ended December 31, 1996 and 1997 and during the interim period from
December 31, 1997 to March 31, 1999 there have been no disagreements with
either PriceWaterhouseCoopers or Schumacher & Associates on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure.
(f) PriceWaterhouseCoopers and Schumacher & Associates have reviewed
this disclosure and have provided the Registrant the letters filed as exhibits
to this report. Such letters do not contain any disagreements with the
Registrant's statements made herein.
ITEM 5. OTHER EVENTS
Based on a preliminary review of results for the fourth quarter ended
December 31, 1998, Terra Telecommunications Corp. (the "Company") expects to
announce annual consolidated revenues of approximately $1,200,000 and an
estimated net loss of approximately $200,000. The estimated net loss for 1998
includes two non-recurring gains resulting from the sale of certain of the
Company's assets in an approximate amount of $3,900,000, as further described
in the Company's Form 10-QSB for the quarter ended September 30, 1998. This
compares to annual consolidated revenues of $1,371,568 and a net loss of
$1,519,343 for the same period of the previous fiscal year. The Company also
expects to announce basic loss per share of $.02 for the year ended December
31, 1998, compared to a loss of $0.15 per share for the same period of the
previous fiscal year.
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The development and expansion of the Company's network facilities during
the third and fourth quarter of 1998, including the construction of the
Company's international telecommunications network, together with the cost of
entering into new joint ventures and new markets or expand into existing
markets, and unexpected delays in equipment deployment and installations, had
placed considerable strain on the Company's cash resources. As a result of
the Company's need for additional financing, the Company has borrowed an
aggregate of approximately $400,000.00 from its President and Executive Vice
President to fund its immediate operational needs and to continue its
expansion.
On March 30, 1999, the Company entered into a Master Lease Agreement (the
"Equipment Financing Agreement") with a major equipment vendor to lease a
substantial amount of Voice over Internet Protocol ("VoIP") telecommunications
equipment that the Company requires to continue the development of its network
and to establish new networks. The Equipment Financing Agreement provides
that the Company may lease up to $20,000,000 of VoIP equipment from the vendor
over a period of the next eighteen months. In connection with the Equipment
Financing Agreement, the Company is also entitled to borrow from the vendor an
amount equal to twenty-five percent of the value of the equipment leased up to
$5,000,000. This loan facility is secured by a Secured Promissory Note (the
"Note") which is secured by substantially all of the Company's assets. In
addition, the Company has agreed to issue to the vendor warrants in proportion
to the amount borrowed under the Note. The Company has issued a purchase
order under the Equipment Financing Agreement in the amount of approximately
$5,000,000 and has borrowed approximately $1,250,000 under the Note.
In addition to the Equipment Financing Agreement, to meet its ongoing
needs for financing, the Company has engaged an investment banker to assist
the Company and is presently engaged in discussions with third parties
regarding the infusion of capital in debt and/or equity financing. There can
be no assurance that the Company will be successful in obtaining additional
financing or that such financing, if available, can be obtained on terms
favorable to the Company's security holders or creditors. Failure by the
Company to obtain additional financing could have a material adverse effect on
the Company's results of operations and financial condition
This public statements by Company representatives may contain forward
looking information that is subject to certain risks and uncertainties that
could cause actual results to vary from those projected. Statements that are
not historical facts, including statements about confidence and strategies,
plans and expectations about new and existing products and their market
acceptance, expectations about future revenues and earnings, industry growth
and demand, and returns on investments in products and markets are forward
looking statements that involve risks and uncertainties that could materially
impact the Company and its results from operations. For a discussion of other
risks and uncertainties that could materially impact the Company and its
results from operations, please see the Company's Forms 10-K and Forms 10-Q,
and other filings, filed with the Securities and Exchange Commission.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Exhibits.
Exhibit 16.1 Letter from Schumacher & Filed herewith
Associates, Inc. electronically
Exhibit 16.2 Letter from Filed herewith
PriceWaterhouseCoopers LLP electronically
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, hereunto duly authorized.
TERRA TELECOMMUNICATIONS CORP.
Dated: April 13, 1999 By:/s/ David C. Langle
David C. Langle, Vice President and
Chief Financial Officer
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SCHUMACHER & ASSOCIATES, INC.
Certified Public Accountants
12835 East Arapahoe Road, Tower 11, Suite 110-B
Englewood, CO 80112
(303)-792-2466 FAX (303)-792-2467
April 9, 1999
United States Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N. W.
Washington D.C. 20549
Re: Terra Communications Corp. (formerly Cypress Capital, Inc.)
Ladies and Gentlemen:
The undersigned Schumacher & Associates, Inc. previously acted as independent
accountants to audit the financial statements of Terra Telecommunications
Corp. (formerly Cypress Capital, Inc.) We are no longer acting as independent
accountants to the Company.
This letter will confirm that we have reviewed Item 4 of the Company's Form S-
K dated March, 1999 captioned "Changes in Registrant's Certifying Accountant"
and that we agree with the statements made therein as they relate to us.
We hereby consent to the filing of this letter as an exhibit to the foregoing
report on Form 8-K.
Dated this 9th day of April, 1999.
Sincerely,
/s/ Schumacher & Associates, Inc.
Schumacher & Associates, Inc.
PriceWaterhouseCoopers LLP
200 South Biscayne Boulevard
Suite 1900
Miami FL 33131
Telephone (305) 375 7400
Facsimilie (305)375 6221
March 31, 1999
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Commissioners:
We have read the statements made by World Access Communications Corp. (copy
attached), which we understand will be filed with the Commission, pursuant to
Item 4 of Form 8-K, as part of the Company's Form 8-K report for the month of
April 1999. We agree with the statements concerning our Firm in such Form 8-K
Very truly yours,
/s/ PriceWaterhouseCoopers LLP
PriceWaterhouseCoopers LLP
