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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE __, 2000
REGISTRATION NO. 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
STARTEC GLOBAL COMMUNICATIONS CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 52-2099559
(State or other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No)
10411 MOTOR CITY DRIVE
BETHESDA, MARYLAND 20817
(301) 365-8959
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
---------------------------------
RAM MUKUNDA
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
STARTEC GLOBAL COMMUNICATIONS CORPORATION
10411 MOTOR CITY DRIVE
BETHESDA, MARYLAND 20817
(301) 365-8959
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
------------------------------------------------------
COPIES TO:
WM. DAVID CHALK, ESQ.
PIPER MARBURY RUDNICK & WOLFE LLP
6225 SMITH AVENUE
BALTIMORE, MARYLAND 21209-3600
410-580-4120
------------------------------
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: From time to time after
this registration statement becomes effective.
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 box. /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 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, 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
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<CAPTION>
---------------------------------------------- ----------------------- ---------------------- --------------------- ---------------
Title of each class of securities to be Amount to be Proposed maximum Aggregate offering Amount of
registered* registered** offering price per price*** registration
share*** fee**
---------------------------------------------- ---------------------- ---------------------- --------------------- ================
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 2,897,988 shares $11.13 $32,254,606 $8,515
---------------------------------------------- ---------------------- ---------------------- --------------------- ================
</TABLE>
* Includes rights to purchase Series A Junior Participating Preferred Stock of
Startec Global Communications Corporation that are associated with the Common
Stock. Such rights will not be exercisable or evidenced separately from the
Common Stock prior to the occurrence of certain events, and no separate
consideration will be received by the Company in connection with the issuance of
such rights.
** Pursuant to Rule 429 under the Securities Act, the prospectus contained in
this Registration Statement is a combined prospectus and also relates to (i)
up to 160,000 warrants to purchase common stock and up to 200,226 shares of
common stock underlying such warrants, which warrants and shares of common
stock were registered under Registration Statement No. 333-64465 previously
filed with the SEC Form S-3 and declared effective; (ii) up to 807,042 shares
of common stock registered under Registration Statement No. 333-78171
previously filed with the SEC on Form S-3 and declared effective that remain
unsold; and (iii) up to 2,065,723 shares of common stock registered under
Registration Statement No. 333-93631 previously filed with the SEC on Form
S-3 and declared effective that remain unsold. This Registration Statement
constitutes post-effective Amendment No. 2 to Registration Statements No.
333-64465 and No. 333-78171 and post-effective Amendment No. 1 to
Registration Statement No. 333-93631. All three post-effective amendments
shall hereafter become effective concurrently with the effectiveness of this
Registration Statement and in accordance with Section 8(c) of the Securities
Act. Upon the effectiveness of such post-effective amendments and this
Registration Statement, this Registration Statement will relate to an
aggregate of 160,000 warrants to acquire shares of common stock and 5,970,979
shares of common stock. The filing fee associated with the 160,000 warrants
and the 200,226 shares of common stock underlying such warrants under
Registration No. 333-64465 was $3,872.00, and was paid at the time of filing
of that Registration Statement. The filing fee associated with the 807,042
shares of common stock under Registration Statement No. 333-78171 was
$1,784.57, and was paid at the time of filing of that Registration Statement.
The filing fee associated with 2,065,723 shares of common stock under
Registration Statement No. 333-93631 was $10,432.56, and was paid at the time
of filing of that Registration Statement.
*** Estimated under Rule 457(c) solely for the purpose of calculating the
registration fee, based upon the closing price as reported on the Nasdaq
National Market on June 1, 2000 of $11.13.
---------------------
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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING UNDER SAID SECTION 8(A), MAY
DETERMINE.
<PAGE>
STARTEC GLOBAL COMMUNICATIONS CORPORATION
5,770,753 SHARES OF COMMON STOCK,
160,000 WARRANTS TO PURCHASE SHARES OF COMMON STOCK
AND
200,226 SHARES OF COMMON STOCK UNDERLYING THE WARRANTS
This prospectus relates to the public offering, which is not being
underwritten, from time to time, of up to 5,770,753 shares of common stock, par
value $.01 per share, and up to 160,000 warrants to purchase 200,226 shares
of common stock of Startec Global Communications Corporation by various
securityholders. We will not receive any of the proceeds from the sale of our
securities. The selling securityholders listed on page 12 may offer, from
time to time, those shares of our common stock and warrants under this
prospectus. The selling securityholders may offer and sell their shares of
common stock and warrants to or through broker-dealers, who may receive
compensation in the form of discounts, concessions or commissions from the
selling securityholders, the purchasers of the securities, or both.
Our common stock is traded on the Nasdaq National Market under the
symbol "STGC." On June 1, 2000, the closing price of one share of our common
stock was $11.13.
--------------------
INVESTING IN OUR COMMON STOCK AND WARRANTS INVOLVES RISKS. YOU SHOULD
CAREFULLY READ AND CONSIDER THE "RISK FACTORS" SECTION OF THIS PROSPECTUS
BEGINNING ON PAGE 2 BEFORE YOU MAKE YOUR INVESTMENT DECISION.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------------------
The date of this prospectus is June 6, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
Summary.................................................................................................. 1
Use of Proceeds.......................................................................................... 2
Risk Factors............................................................................................. 2
Selling Securityholders.................................................................................. 12
Plan of Distribution..................................................................................... 19
Legal Matters............................................................................................ 20
Experts.................................................................................................. 20
Where You Can Find More Information...................................................................... 21
Incorporation by Reference............................................................................... 21
</TABLE>
<PAGE>
SUMMARY
THIS SUMMARY HIGHLIGHTS INFORMATION ABOUT STARTEC GLOBAL COMMUNICATIONS
CORPORATION. BECAUSE THIS IS A SUMMARY, IT MAY NOT CONTAIN ALL THE INFORMATION
YOU SHOULD CONSIDER BEFORE INVESTING IN OUR COMMON STOCK OR WARRANTS. YOU SHOULD
READ THIS ENTIRE PROSPECTUS CAREFULLY.
STARTEC
We are a rapidly growing, facilities-based provider of integrated
communications services, including voice, data and Internet access services. We
were founded in 1989 and market our services to select ethnic residential
communities located in major metropolitan areas, and to leading international
long distance carriers. We provide our services through a flexible network of
owned and leased facilities, operating and termination agreements and resale
arrangements. We have recently embarked upon three Internet initiatives:
- Internet access for residential customers bundled with our long
distance service;
- Creation of global ethnic Web communities; and
- Deployment and activation of a world-class Internet Protocol (IP)
network to offer our customers toll-quality Voice over IP services, as
well as high speed transmission of data and Internet traffic.
MISSION
Our mission is to become the leading provider of voice, data and
Internet services to select ethnic communities, located in major metropolitan
areas in North America, Europe and the Asia Pacific Rim. Our targeted ethnic
markets, comprised of ethnic communities from the Asia Pacific Rim, the Middle
East and North Africa, Russia and Central Europe and Latin and South America,
have a strong demand for communication services to the emerging economies. To
achieve our mission, we have developed three core competencies:
- targeted ethnic marketing and in-language customer service;
- deployment of advanced technologies into the emerging economies; and
- deployment of IP transaction-based technology to provide voice, data
and Internet on a seamless network.
RISK FACTORS
You should carefully consider the information set forth under "Risk
Factors," in addition to the other information in this prospectus, before
purchasing any of the securities offered pursuant to this prospectus.
We are a Delaware corporation. Our headquarters are located at 10411
Motor City Drive, Bethesda, Maryland 20817. Our telephone number is (301)
365-8959.
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USE OF PROCEEDS
All of the common stock and warrants offered by this prospectus are
being offered by our selling securityholders. We will not receive any of the
proceeds from the sale of our issued and outstanding common stock or warrants.
RISK FACTORS
YOU SHOULD CONSIDER CAREFULLY EACH OF THE FOLLOWING RISKS AND ALL OF
THE OTHER INFORMATION IN THIS PROSPECTUS AND THE DOCUMENTS WE INCORPORATE BY
REFERENCE BEFORE INVESTING IN OUR SECURITIES. IF ANY OF THE FOLLOWING RISKS AND
UNCERTAINTIES DEVELOP INTO ACTUAL EVENTS, OUR BUSINESS, FINANCIAL CONDITION OR
RESULTS OF OPERATIONS COULD BE MATERIALLY ADVERSELY AFFECTED.
BECAUSE OUR INTERNET SERVICES HAVE NO OPERATING HISTORY, WE DO NOT KNOW WHETHER
WE WILL BE ABLE TO ATTRACT SUFFICIENT NUMBERS OF REPEAT USERS TO OUR ETHNIC WEB
COMMUNITIES OR GENERATE MATERIAL REVENUES.
We have only recently begun to promote our ethnic Web communities under
the eStart brand. We cannot assure you that our targeted ethnic populations in
North America, Asia, Europe and Latin America will accept our products and
services or that we will attract sufficient numbers of repeat users to our
virtual community portals to make this service profitable. Because the market
for our products and services is new and evolving, it is difficult to predict
the future growth rate, if any, and the size of the market that we have
targeted. If the market develops more slowly than we expect or becomes saturated
with competitors, or if our products and services are not accepted by the
market, we may be unable to generate material revenues from our sale of
advertising or from electronic commerce through our portals.
BECAUSE CONTENT MAY BE ATTRIBUTED TO OUR ETHNIC WEB COMMUNITIES, WE MAY BE
SUBJECT TO MATERIAL LITIGATION.
Because materials may be downloaded from the services that we operate
or facilitate and the materials may subsequently be distributed to others, we
could face claims for errors, defamation, negligence, or copyright or trademark
infringement based on the nature and content of those materials. We also could
be exposed to liability because of the listings that we select and make
available through our ethnic Web communities, or through content and materials
posted by users in chat rooms and message board services incorporated into our
portals. Regardless of whether we are liable for a claim made against us, we may
incur substantial costs in investigating and defending such claims.
BECAUSE THE COMPETITION FOR INTERNET SERVICES IS INTENSE, WE MAY BE UNABLE TO
ESTABLISH AND MAINTAIN A SUFFICIENT CUSTOMER BASE.
The market for Internet connectivity and related services is extremely
intense and competitive. We expect that competition will continue to intensify
as the use of the Internet grows. The tremendous growth and potential size of
the Internet market has attracted many new start-ups, as well as established
businesses from different industries. Some of these competitors have longer
operating histories, significantly greater market presence, brand recognition
and financial, technical and personnel resources than we do. We may not be able
to compete effectively against these competitors, which could cause us to lose
customers and limit our ability to attract new customers.
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IF THIRD PARTIES TERMINATE THEIR RELATIONS WITH US OR FAIL TO RENEW A MATERIAL
AGREEMENT OR FAIL TO PERFORM UNDER A MATERIAL AGREEMENT, WE MAY INCUR
SIGNIFICANT COSTS IN DEVELOPING OR REPLACING THEIR TECHNOLOGY, INFRASTRUCTURE
AND CONTENT.
Our business depends upon third parties. For example, we rely upon
third parties for:
- technology, including client servers, databases, billing and reporting
systems;
- infrastructure, including long distance transmission facilities,
Internet and e-mail connections; and
- content and features for our ethnic Web portals, including news,
entertainment, weather and chat services.
Any errors, delays or failures we experience in connection with these
third-party technologies, infrastructure and services could have a negative
effect on our:
- relationship with our customers, including users, of our ethnic Web
portals;
- eStart brand; and
- business as a whole.
BECAUSE WE HAVE SUBSTANTIAL INDEBTEDNESS, OUR FINANCIAL AND OPERATING
FLEXIBILITY MAY BE LIMITED.
We have substantial indebtedness as a result of our issuing $160
million in senior notes in May 1998, a $35 million vendor financing agreement we
entered into in December 1998, our $30 million credit facility entered into in
June 1999, and approximately $25 million in additional vendor financing
agreements entered into during 1999. We anticipate that we may incur substantial
additional indebtedness in the future. Our indebtedness may limit our business
plans because:
- we must dedicate a substantial portion of our cash flow from
operations to the payment of principal and interest on our
indebtedness and other obligations and, therefore, our cash flow may
not be available for use in our business;
- we may have limited ability to obtain any necessary financing for
working capital, capital expenditures, debt service requirements and
other purposes in the future;
- we may have less flexibility in planning for, or reacting to, changes
in our business;
- we may become more highly leveraged than some of our competitors,
which may place us at a competitive disadvantage; and
- we may be less able to react appropriately to an economic downturn in
our business.
Further, we may not be able to meet our debt service obligations. If
our cash flow is inadequate to meet our obligations, we may face substantial
liquidity problems. If we are unable to generate sufficient cash flow or obtain
funds for required payments, or if we fail to comply with other covenants in our
indebtedness, we will be in default. This would permit our creditors to
accelerate the maturity of our indebtedness and have a material and adverse
effect on our business.
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BECAUSE WE ARE A HOLDING COMPANY, OUR LIQUIDITY COULD BE ADVERSELY AFFECTED IF
OUR SUBSIDIARIES ARE UNABLE TO DISTRIBUTE MONEY TO US.
We are a holding company without significant income from operations and
depend on income in the form of dividends, intercompany loans and other
permitted payments from our direct and indirect subsidiaries, as well as our own
credit arrangements, if any. However, our operating subsidiaries are legally
distinct, and have no obligation, contingent or otherwise, to pay amounts due
under our indebtedness or to make funds available for such payments. In
addition, the ability of our operating subsidiaries to pay dividends, repay
intercompany loans or make other distributions to us may be restricted by, among
other things, their availability of funds, the terms of such subsidiaries'
indebtedness, as well as statutory and other legal restrictions. If our
subsidiaries fail to pay any dividends, repay intercompany loans or make any
other similar distributions, we would be restricted in our ability to repay our
indebtedness and our ability to use cash flow from one subsidiary to cover
shortfalls in working capital at another subsidiary.
WE HAVE A HISTORY OF LOSSES AND WE MAY NOT BE PROFITABLE IN THE FUTURE.
We expect to incur significant operating losses and net losses on an
annual basis for the next several years. This will continue to occur as we
expend additional funds to develop and expand our marketing programs, enter into
new markets, introduce new telecommunications and Internet services, and incur
interest expense associated with our financing activities. Furthermore, we
expect that our operations in new target markets will experience negative cash
flows until we can establish an adequate customer base and derive related
revenues. We cannot assure you that our revenue will continue to grow or be
sustained in future periods or that we will be able to achieve and sustain
profitability or positive cash flow from operating activities in any future
period. If we cannot achieve profitability from operating activities, we may not
be able to meet our:
- capital expenditures requirements;
- debt service obligations; or
- working capital needs.
IF WE ARE NOT ABLE TO OBTAIN ADDITIONAL CAPITAL, WE MAY NOT BE ABLE TO IMPLEMENT
OUR BUSINESS PLAN.
We may need significant additional investment to implement our business
plan, including development and expansion of our network facilities and our
marketing programs, and to fund our expected operating losses and working
capital needs. Our need for additional financing will depend on a variety of
factors, including, but not limited to:
- the rate and extent of our expansion in existing and new markets;
- the cost of investment in additional switching and transmission
facilities and ownership rights in fiber optic cables;
- the costs to support the introduction of additional or enhanced
services;
- increased sales and marketing expenses;
- unanticipated working capital needs;
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- unanticipated business opportunities, including acquisitions,
investments or strategic alliances;
- increased costs due to changes in competitive conditions; and
- increased costs in response to regulatory or other government actions.
You should be aware that we may conclude that certain unanticipated business
opportunities are more favorable to our long-term prospects than those in our
current capital spending plan and we may revise our plan accordingly.
We may seek to raise additional capital from public and/or private
equity and/or debt sources to fund the shortfall in our cash resources expected
to occur no later than the end of the second quarter of 2001. We cannot assure
you, however, that we will be able to obtain additional capital, or, if
obtained, that we will be able to do so on a timely basis or on terms favorable
to us. If we cannot obtain additional capital or cannot obtain additional
capital on acceptable terms we may be:
- required to reduce the scope of our planned expansion;
- unable to compete effectively in the future; or
- unable to meet our debt service obligations.
Even if we are able to raise additional funds through the incurrence of
debt, we would likely become subject to additional restrictive financial
covenants which would further limit our ability to implement our business plan.
BECAUSE WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY AGAINST OTHERS IN THE
TELECOMMUNICATIONS INDUSTRY THAT HAVE SIGNIFICANTLY GREATER RESOURCES THAN WE
DO, WE MIGHT LOSE CUSTOMERS AND OUR ABILITY TO ATTRACT NEW ONES MAY BE LIMITED.
The international telecommunications industry is intensely competitive.
We cannot predict which of many possible future product and service offerings
will be important to our customers or the costs to develop and provide them. In
addition, the industry is affected by the introduction of new services by, and
the market activities of, major industry participants including AT&T, Sprint and
MCI/WorldCom. In particular, larger competitors have certain advantages over us
that could cause us to lose customers and limit our ability to attract new
customers, including:
- long-standing relationships and brand recognition with customers;
- financial, technical, marketing, personnel and other resources
substantially greater than ours;
- more funds to deploy telecommunications services;
- potential to lower prices of competitive telecommunications services;
and
- fully-deployed networks.
We face competition from other current and potential market entrants, including:
- domestic and international long distance providers, including smaller
facilities-based long distance providers seeking to enter, re-enter or
expand entry into the international telecommunications marketplace;
and
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- other domestic and international competitive telecommunications
providers, resellers, cable television companies and electric
utilities.
A continuing trend toward combinations and strategic alliances in the
telecommunications industry has given rise to significant new competitors, such
as Global One and Concert. Global One consists of Sprint, Deutsche Telekom and
France Telecom. Concert consists of AT&T and British Telecom. These new
competitors could cause us to lose customers and limit our ability to attract
new customers.
IF WE ARE UNABLE TO COMPETE EFFECTIVELY AGAINST FOREIGN GOVERNMENT CONTROLLED
TELECOMMUNICATIONS BUSINESSES, OUR BUSINESS MAY SUFFER.
Governments of many countries exercise substantial influence over the
telecommunications market. In some cases, the government owns or controls
companies that are or may be competitors of ours, such as national telephone
companies. We may depend on these competitors for required interconnections to
local telephone networks and other services. In highly regulated countries in
which we are not dealing directly with the dominant local exchange carrier, the
dominant carrier may have the ability to route service as it sees fit and, if
this occurs, we may have limited or no recourse. In countries where competition
is not yet fully established and we are dealing with an alternative operator,
foreign laws may prohibit or limit new operators from offering services in these
markets. Accordingly, government actions could materially and adversely affect
our business, financial condition and results of operations.
BECAUSE WE HAVE RECENTLY EXPANDED INTO THE INTERNATIONAL TELECOMMUNICATIONS
BUSINESS, WE ARE VULNERABLE TO LOST REVENUE AND INCREASED COSTS ASSOCIATED WITH
DOING BUSINESS IN EMERGING MARKETS.
We currently generate substantially all of our revenues from
international long distance calls originating in the U.S. As part of our
business plan, we have expanded our operations into a number of foreign
countries, which will expose us to the risks inherent in doing business on an
international level and which could materially and adversely impact our current
and planned operations. These risks include:
- unexpected changes in regulatory requirements or administrative
practices;
- value added taxes, tariffs, customs, duties and other trade barriers;
- difficulties in staffing and managing foreign operations;
- problems in collecting accounts receivable;
- unstable political and economic environments;
- fluctuations in currency exchange rates;
- foreign exchange controls which restrict or prohibit repatriation of
funds;
- technology export and import restrictions or prohibitions;
- delays from customs brokers or government agencies;
- seasonal reductions in business activity during the summer months in
Europe and certain other parts of the world; and
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- potential adverse tax consequences resulting from operating in
multiple jurisdictions with different tax laws.
Any one of these risks could result in our loss of revenue or increases in our
operating expenses, which would materially and adversely affect our business,
financial condition and results of operations.
IF WE FAIL TO DEVELOP OR OBTAIN NEW TECHNOLOGIES, WE MAY LOSE EXISTING CUSTOMERS
AND BE UNABLE TO ATTRACT NEW ONES.
The telecommunications industry is subject to rapid and significant
changes in technology, customer requirements and preferences. Our failure to
keep up with these changes could cause us to lose existing customers and limit
our ability to attract new ones. New technologies could reduce the
competitiveness of our network. We may be required to select one technology over
another, but at a time when it would be impossible to predict with any certainty
which technology will prove to be the most economic, efficient or capable of
attracting customer usage. Subsequent technological developments may reduce the
competitiveness of our network and require unbudgeted upgrades or additional
products that could be expensive and time consuming. If we fail to adapt
successfully to technological changes, address obsolescence of existing
technologies or fail to obtain access to important technologies, we could lose
customers and our ability to attract new ones could be limited.
BECAUSE WE REQUIRE TELECOMMUNICATIONS LICENSES TO OPERATE IN FOREIGN COUNTRIES,
WE MAY EXPEND SIGNIFICANT FINANCIAL RESOURCES TO OBTAIN LICENSES OR MAY FAIL TO
OBTAIN REQUIRED LICENSES.
We may be required to commit significant financial resources to obtain
licenses in foreign countries that we have targeted for our expansion. We cannot
be sure that we will be able to obtain all or any of the permits and licenses
required for us to operate, obtain access on a timely basis to local
transmission facilities or sell and deliver competitive services in these
markets. Even if we are successful in obtaining a required license, we may not
recognize positive net returns in these markets for extended periods of time.
BECAUSE WE OPERATE IN FOREIGN COUNTRIES, WE MAY FACE SIGNIFICANT LIABILITY UNDER
THE U.S. FOREIGN CORRUPT PRACTICES ACT.
We are subject to the U.S. Foreign Corrupt Practices Act, which
generally prohibits U.S. companies and their intermediaries from bribing foreign
officials for the purpose of obtaining or maintaining business. As a result, we
may be exposed to liability under this Act as a result of past or future actions
taken with or without our knowledge by our agents, strategic partners or other
intermediaries.
BECAUSE DEREGULATION OF THE TELECOMMUNICATIONS INDUSTRY INVOLVES UNCERTAINTIES,
THE RESOLUTION OF THESE UNCERTAINTIES COULD ADVERSELY AFFECT OUR BUSINESS.
The Telecommunications Act of 1996 provides for significant
deregulation of the telecommunications industry, including the local
telecommunications and long distance industries. This federal statute and the
related regulations remain subject to judicial review and additional rulemakings
of the FCC making it difficult to predict what effect the legislation will have
on us, our operations and our competitors. Several regulatory and judicial
proceedings have recently concluded, are underway or may soon be commenced, that
address issues affecting our operations and those of our competitors, which may
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cause significant changes to our industry. We cannot predict the outcome of
these developments, nor can we assure you that these changes will not have a
material adverse effect on us.
As a multinational telecommunications company, we are subject to
varying regulation in each jurisdiction in which we provide services. We may be
affected indirectly by the laws of other jurisdictions applicable to foreign
carriers with whom we do business. In general, the FCC and the state public
service commissions throughout the U.S. have the authority to condition, modify,
cancel, terminate or revoke our operating authority for failure to comply with
federal or state law and to impose fines or other penalties for such violations.
Because regulatory frameworks in many foreign countries are relatively new, we
cannot adequately assess the potential for enforcement action in such countries.
Any regulatory enforcement action by U.S., state or federal or foreign
authorities could materially and adversely affect our business.
IF WE FAIL TO EFFECTIVELY MANAGE OUR RECENT GROWTH, OUR STRATEGY TO IMPLEMENT
AND EXPAND OUR SERVICE OFFERINGS WOULD BE ADVERSELY AFFECTED.
Our recent growth and expansion and our strategy to continue this
growth and expansion has placed, and we expect it to continue to place, a
significant strain on our management, operational and financial resources and
systems and controls. As we increase our service offerings and expand our target
markets in the U.S. and overseas, our customer service, marketing and
administrative resources will encounter additional demands. Furthermore, if our
traffic forecasting is inaccurate, we may suffer insufficient or excessive
transmission facilities and disproportionately high fixed expenses. Our failure
to successfully manage our expansion would adversely affect our ability to
implement and expand our service offerings.
IF WE EXPERIENCE A NETWORK SYSTEM FAILURE, OUR SERVICE COULD BE DELAYED OR
INTERRUPTED THAT COULD CAUSE US TO LOSE EXISTING CUSTOMERS OR LIMIT OUR ABILITY
TO ATTRACT NEW ONES.
Our operations depend on our ability to successfully integrate new
technologies and equipment into our network. As we increase our traffic,
build-out our network and integrate new technologies and equipment into our
network, we will place additional strains on our systems. We cannot assure you
that we will not experience system failures. Frequent, significant or prolonged
system failures, or difficulties experienced by customers in accessing or
maintaining connection with our network could substantially damage our
reputation, resulting in the loss of existing customers or our ability to
attract new ones.
BECAUSE WE RELY ON A FEW KEY INTERNATIONAL LONG DISTANCE CARRIER CUSTOMERS FOR A
SUBSTANTIAL PERCENTAGE OF OUR NET REVENUE, THE LOSS OF A KEY CUSTOMER, OR A
SIGNIFICANT AMOUNT OF BUSINESS FROM A KEY CUSTOMER WOULD MATERIALLY REDUCE OUR
REVENUES.
We offer wholesale telecommunications services to other international
long distance carriers, which allows us to balance our residential customer base
and efficiently use our network capacity. We depend on a few key international
long distance carrier customers for a substantial percentage of our net revenue.
Although the composition of our carrier customer base varies from period to
period, during the quarter ended March 31, 2000, our five largest carrier
customers accounted for approximately 24% of our net revenues. In addition,
mergers and alliances in the telecommunications industry may reduce the number
of customers that purchase or are available to purchase our wholesale
international long distance services.
In general, our carrier customers may terminate our agreements and
arrangements on short notice without penalty, and need not maintain their
current levels of our services. A loss of a significant amount
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of carrier business from a key customer or an overall reduction in our number of
customers would materially and adversely affect our business, financial
condition and results of operations.
BECAUSE WE DEPEND ON THE TRANSMISSION FACILITIES OF LONG DISTANCE CARRIERS, WE
MAY EXPERIENCE UNANTICIPATED PRICE INCREASES AND SERVICE CANCELLATION.
Historically, we have carried and terminated substantially all of our
customers' telephone calls through transmission lines of facilities-based long
distance carriers that provide us transmission capacity through a variety of
lease and resale arrangements. Our future profitability depends in part on our
ability to use transmission facilities cost-effectively. Currently, however,
because the prices we are charged in our transmission line agreements for
leasing and resale vary with our use and other factors, we may experience
unanticipated price increases and service cancellations by the carriers.
Therefore, our ability to maintain and expand our business is dependent, in
part, upon our ability to maintain satisfactory relationships with these
carriers, many of which are, or may in the future become, competitors. If we
fail to maintain satisfactory relationships with one or more of these carriers,
it could materially and adversely affect our business, financial conditions and
results of operations.
IF WE ARE UNABLE TO SUCCESSFULLY MANAGE OUR NEED FOR TRANSMISSION FACILITIES, WE
WILL INCUR HIGHER OPERATING COSTS.
As our traffic volume increases in particular international markets, we
intend to reduce our use of variable usage leasing arrangements. We intend to
enter into fixed, non-cancelable leasing arrangements on a longer-term basis
and/or construct or acquire additional transmission facilities of our own.
However, if we enter into fixed arrangements and/or increase our owned
transmission facilities and we incorrectly project traffic volume in particular
markets, we would experience higher fixed costs without any corresponding
increase in revenue. We have access rights in and to, a number of undersea fiber
optic cable systems. As a key element in our business plan, we intend to acquire
additional access rights to undersea fiber optic cable transmission lines
through partial ownership or through lease and other access arrangements on
negotiated terms that may vary with industry and market conditions. We cannot
assure you that we can secure undersea fiber optic cable transmission lines to
meet our current and/or projected international traffic volume, that we can
secure such lines on satisfactory terms, or that we may not over- or under-
invest in such lines due to inaccurate traffic forecasts.
BECAUSE WE DEPEND ON FOREIGN CALL TERMINATION ARRANGEMENTS, IF THESE TERMINATION
AGREEMENTS ARE CANCELED OR NOT RENEWED WE MAY LOSE CUSTOMERS.
We currently offer U.S.-originated international long distance service
globally through a series of business agreements and arrangements. These
agreements and arrangements, particularly those with national phone companies of
targeted foreign markets, permit us to provide international long distance
service to our customers using the lowest cost route. Although our operating
agreements and termination arrangements are sufficient for our current business
and traffic levels, we offer no assurance that we will be able to negotiate
additional operating agreements or termination arrangements or maintain such
existing or additional agreements or arrangements in the future. Cancellation of
certain operating agreements or other termination arrangements could materially
and adversely affect our business, financial condition and results of
operations. In addition, our failure to enter into additional operating
agreements or termination arrangements could limit our ability to increase our
services to our current target markets, gain entry into new markets, or
otherwise increase our revenues and control our costs.
9
<PAGE>
IF WE ARE UNABLE TO MANAGE OUR CURRENT INFORMATION SYSTEMS OR UPGRADE OUR
INFORMATION SYSTEMS APPROPRIATELY, OUR BUSINESS WILL SUFFER.
We greatly depend on effective information systems. For example, we
depend on our ability to:
- record and process significant amounts of data quickly and accurately
to route our calls efficiently and cost-effectively;
- bill for the services we provide to customers;
- ensure that we are properly charged by vendors for services we use;
- effectively monitor settlements for service;
- achieve operating efficiencies; and
- otherwise manage our growth.
Difficulties or delays in the acquisition, implementation, integration and
ongoing use of our management information systems resources may disrupt our
operations and materially and adversely affect our business, financial condition
and results of operations.
BECAUSE OUR SUCCESS DEPENDS UPON THE CONTINUED CONTRIBUTION OF OUR MANAGEMENT
TEAM, THE LOSS OF ANY OF OUR EXECUTIVE OFFICERS, KEY EMPLOYEES OR OTHER SKILLED
PERSONNEL COULD ADVERSELY AFFECT OUR BUSINESS.
To a significant degree, our success depends upon the continued
contributions of our management team including, Ram Mukunda, our Chairman,
President, Chief Executive Officer and Treasurer; and Prabhav V. Maniyar, our
Corporate Vice President and Chief Financial Officer. Although we have
employment agreements with Messrs. Mukunda and Maniyar and maintain "key man"
life insurance on Mr. Mukunda, loss of one or both of their services could
materially and adversely affect our business, financial condition and results of
operations.
Our success also depends on the continued contributions of our current
personnel and on our ability to attract and retain additional qualified
management and technical, marketing and customer service personnel. Competition
for qualified personnel in the telecommunications industry is intense and, from
time to time, there are a limited number of persons with knowledge of and
experience in particular sectors of the industry who may be available to us. We
often undertake a lengthy process in locating personnel with the combination of
skills and attributes required to implement our strategies, and we can offer you
no assurance that we will be successful in attracting and retaining such
personnel, especially management personnel and personnel for foreign offices.
The loss of the services of key personnel, or our inability to attract
additional qualified personnel, could materially and adversely affect our
operations and our ability to implement our business plan.
BECAUSE OUR EXECUTIVE OFFICERS, DIRECTORS AND SIGNIFICANT STOCKHOLDERS ARE ABLE
TO EXERCISE SIGNIFICANT INFLUENCE OVER OUR COMPANY, OUR BUSINESS AND STOCK PRICE
COULD BE ADVERSELY AFFECTED.
As of June 6, 2000, our executive officers and directors beneficially
owned approximately 3,782,291 shares of our common stock representing
approximately 26.5% of the outstanding shares. Of these amounts, Mr. Mukunda
beneficially owns approximately 3,584,675 shares. Our executive officers and
directors as a group, or Mr. Mukunda, acting individually, will be able to
exercise significant influence over such matters as the election of our
directors and other fundamental corporate transactions
10
<PAGE>
such as mergers, asset sales and the sale of our company, which limits the
influence of our new stockholders and may depress our stock price.
BECAUSE THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS, IT MAY NOT PROVE TO
BE ACCURATE.
This prospectus, including the documents we incorporate by reference,
contains forward-looking statements and information relating to our company. We
generally identify forward-looking statements using words like "believe,"
"intend," "expect," "may," "should," "plan," "project," "contemplate,"
"anticipate," or similar statements. We base these statements on our beliefs as
well as assumptions we made using information currently available to us. Because
these statements reflect our current views concerning future events, these
statements involve risks, uncertainties and assumptions. Actual results may
differ significantly from the results discussed in these forward-looking
statements. We do not undertake to update our forward-looking statements or risk
factors to reflect future events or circumstances.
11
<PAGE>
SELLING SECURITYHOLDERS
COMMON STOCK
The following table sets forth information regarding the beneficial
ownership of our common stock held by the selling securityholders as of June 5,
2000, the number of shares being registered to permit sales from time to time by
such selling securityholders and the total beneficial ownership of shares of our
common stock if all shares so registered should be sold by the selling
securityholders. Beneficial ownership is determined by the rules of the SEC. To
our knowledge, all shares are beneficially owned, and sole voting and investment
power is held by the person or entity named, unless otherwise noted. This
information assumes the sale of all shares listed under "Common Stock to be
Offered." It also assumes that none of the selling securityholders will sell
securities which are beneficially owned by them and are not listed in such
column or purchase or otherwise acquire additional shares of our common stock or
securities convertible into or exchangeable for our common stock. The selling
securityholders also are not under any obligation to sell all or any portion of
their common shares, nor are the selling securityholders obligated to sell any
of their common stock immediately under this prospectus. This information may
change from time to time, and, if required, such information will be set forth
in a supplement of supplements to this prospectus.
Unless otherwise set forth below, none of the selling securityholders
has, or within the past three years has had, any position, office or material
relationship with us or our predecessors.
<TABLE>
<CAPTION>
Common Stock to
Common Stock Common Stock to be Owned After
Owned Prior to be Offered (1) the Offering (2)
Name the Offering
------------------------------------------------ -------------------- ------------------- ------------------
<S> <C> <C> <C>
Acorn Fund.................................. 200,000 200,000 --
Rageev Aggarwal............................. 2,629 2,629 --
Acorn Investment Trust, Series
Designated Acorn Fund.................... 230,400 32,000 198,400(1.36%)
John J. Allen, Jr........................... 2,000 2,000 --
The Jenifer Altman Foundation (3)........... 7,000 7,000 --
Alza Corporate Retirement Plan (3).......... 6,000 6,000 --
Mary C. Anderson............................ 3,500 3,500 --
Apogee Fund, L.P............................ 100,000 100,000 --
Asphalt Green, Inc. (3)..................... 2,000 2,000 --
Ballyshannon Partners, LP................... 18,000 18,000 --
Bear Stearns Sec Corp FBO L. Keith
Fretz, IRA............................... 2,500 2,500 --
Bear Stearns Securities Corp FBO William B.
Fretz, SEP IRA........................... 1,000 1,000 --
Bear Stearns Securities Corp FBO Constance
Fretz, IRA............................... 2,500 2,500 --
Bear Stearns Securities Corp FBO Jill S.
Meyer, IRA............................... 350 350 --
Bear Sterns Security Corp. Cust. For
Gerald P. Gaines, IRA Rollover........... 2,000 2,000 --
Bear Stearns Security Corp.
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Common Stock to
Common Stock Common Stock to be Owned After
Owned Prior to be Offered (1) the Offering (2)
Name the Offering
------------------------------------------------ -------------------- ------------------- ------------------
<S> <C> <C> <C>
Cust. For David S. Callan, IRA........... 1,000 1,000 --
Bear Stearns Securities Corp FBO Barry
Morrison................................. 1,000 1,000 --
Ben Joseph Partners......................... 25,000 25,000 --
Gregory J. Berlacher........................ 7,000 7,000 --
Robert Berlacher............................ 5,000 5,000 --
Robert A. Berlacher and Julie T. Berlacher.. 20,000 20,000 --
Sayan Bhattacharjee......................... 1,238 1,238 --
Alain Bigio................................. 149,629 149,629 --
Yves Bigio.................................. 40,742 40,742 --
Boenning & Scattergood...................... 20,000 20,000 --
Joseph O. Bound............................. 3,000 3,000 --
Butler Family LLC (3)....................... 3,000 3,000 --
Calabria Limited............................ 110,142 110,142 --
Capstone Equities L.P....................... 52,500 7,500 45,000
Kien H. Chen and Yung San Chen.............. 8,500 5,000 3,500
William Chen................................ 132,478 132,478 --
City of Milford Pension & Retirement Fund... 16,000 16,000 --
City of Milford Pension & Retirement
Fund (3)................................. 27,000 27,000 --
City of Stamford Firemen's Pension Fund..... 9,000 9,000 --
City of Stamford Firemen's Pension
Fund (3)................................. 13,000 13,000 --
William C. Clement Trustee UTA dts
2/8/91................................... 3,000 3,000 --
Sheryl Cohen................................ 96,532 96,532 --
Stanley Cohen............................... 124,112 124,112 --
John M. Cooney.............................. 3,000 2,000 1,000
DataLink Telecommunications Limited......... 190,000 190,000 --
Dean Witter Foundation (3).................. 8,000 8,000 --
Trevor Dearman.............................. 1,238 1,238 --
Holger Dietze............................... 1,238 1,238 --
Richard H. Edson............................ 10,000 10,000 --
James J. Feeney............................. 2,000 2,000 --
Ferris, Baker Watts......................... 39,600 39,600 --
First Union................................. 7,000 7,000 --
Jean Flax................................... 4,500 4,500 --
Lance Flax.................................. 1,000 1,000 --
Peter Frorer................................ 10,000 10,000 --
Yimin Fu.................................... 33,644 33,644 --
Daniel Gardner.............................. 5,000 5,000 --
Geary Partners.............................. 25,000 25,000 --
Gem Global Yield Fund Ltd................... 41,466 41,466 --
Georgetown University (James R.
Schlesinger Fund)........................ 25,000 25,000 --
Global Data Communications, LLC............. 23,474 23,474 --
Patrick Grande.............................. 2,000 2,000 --
Gruber & McBaine International.............. 45,400 32,000 13,400
Jon D. Gruber............................... 15,500 10,000 5,500
Salvador O. Gutierrez....................... 3,500 3,500 --
HBL Charitable Unitrust (3)................. 3,000 3,000 --
Susan Uris Halpern (3)...................... 6,000 6,000 --
David C. Halpert............................ 500 500 --
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Common Stock to
Common Stock Common Stock to be Owned After
Owned Prior to be Offered (1) the Offering (2)
Name the Offering
------------------------------------------------ -------------------- ------------------- ------------------
<S> <C> <C> <C>
Hare & Co................................... 14,000 14,000 --
John J. Harrison and Belinda A. Harrison.... 10,000 10,000 --
Heil & Co.-Ferris Hamilton Family Trust..... 6,000 6,000 --
Heil & Co.-Mary Ann Hamilton Trust.......... 6,000 6,000 --
Andrew Heiskell (3)......................... 5,000 5,000 --
Thomas S. Howland........................... 4,000 4,000 --
Xaiopo Huang................................ 23,934 23,934 --
Helen Hunt (3).............................. 3,000 3,000 --
JMG Triton Offshore Fund, Ltd............... 14,000 14,000 --
Richard Johnson............................. 2,000 2,000 --
Michael C. Kane............................. 2,500 2,500 --
Joseph E. Kellog............................ 3,000 3,000 --
Leonard Kingsley............................ 6,000 6,000 --
Michael J. Kuntz............................ 3,000 2,000 1,000
Lagunitas Partners, L.P..................... 109,000 78,000 31,000
Lancaster Investment Partners, L.P.......... 200,000 200,000 --
Lazar Foundation (3)........................ 2,000 2,000 --
William B. Lazar (3)........................ 2,000 2,000 --
Ya Li....................................... 294,681 294,681 --
Victor Liu.................................. 33,644 33,644 --
Peter Looram (3)............................ 1,500 1,500 --
E. Peter Malekian........................... 1,000 1,000 --
Losty Capital Management.................... 31,500 31,500 --
Mary M. Losty............................... 12,500 12,500 --
James Mantil................................ 27,581 27,581 --
Lois S. Marcus.............................. 2,000 2,000 --
Stephen Marcus.............................. 15,000 15,000 --
David May................................... 10,000 10,000 --
Mellon Bank NA Custodian For PERSI-Zesiger
Capital.................................. 100,000 100,000 --
Domenic J. Mizio (3)........................ 6,000 6,000 --
Jeanne L. Morency (3)....................... 2,000 2,000 --
Morgan Trust of the Bahamas Ltd./as
Trustee u/a/d 11/30/93 (3)............... 7,000 7,000 --
Murray Capital LLC (3)...................... 3,000 3,000 --
Risi Na..................................... 33,644 33,644 --
National Federation of Independent
Business (NFIB) - Corporate
Account (3).............................. 6,000 6,000 --
NFIB Employee Pension Trust (3)............. 9,000 9,000 --
Lijun Niu................................... 1,238 1,238 --
Norwalk Employees' Pension Plan (3)......... 14,000 14,000 --
Oppenheimer Enterprise Fund................. 187,500 187,500 --
Oregon State Treasury....................... 278,000 38,000 240,000(1.64%)
The Paisley Fund, L.P....................... 55,000 55,000 --
The Paisley Pacific Fund, L.P............... 65,000 65,000 --
The Paisley Pacific Fund.................... 40,000 40,000 --
Pequot Scout Fund, L.P...................... 257,000 257,000 --
Charles Place............................... 9,000 9,000 --
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Common Stock to
Common Stock Common Stock to be Owned After
Owned Prior to be Offered (1) the Offering (2)
Name the Offering
------------------------------------------------ -------------------- ------------------- ------------------
<S> <C> <C> <C>
Leonid Polishuk............................. 6,500 4,000 2,500
Porter Partners, L.P........................ 180,000 180,000 --
Presidio Partners........................... 50,000 50,000 --
Richard Prins (4)........................... 33,000 33,000 --
Psychology Associates (3)................... 1,000 1,000 --
Public Employee Retirement System
of Idaho (3)............................. 70,000 70,000 --
Roanoke College (3)......................... 7,000 7,000 --
RS Diversified Growth Fund.................. 140,000 140,000 --
RS MicroCap Growth Fund..................... 50,000 50,000 --
Robert J. Rich.............................. 5,000 5,000 --
Rockham Capital Ventures, LLC............... 10,000 10,000 --
Mark Rust................................... 4,400 4,400 --
Eric Saiz................................... 174,629 174,629 --
Sandra G. Samkavitz......................... 4,000 4,000 --
Sandler Associates.......................... 100,000 100,000 --
Sandler Communications Offshore
Fund, Inc................................ 5,000 5,000 --
Janet M. Santkulis.......................... 3,000 2,000 1,000
Ashok Saxena................................ 188,094 188,094 --
John Schilling.............................. 96,532 96,532 --
Alexander T. Shang.......................... 912 912 --
Steve Shea.................................. 23,000 23,000 --
John J.F. Sherrerd.......................... 20,000 20,000 --
Howard Silverman............................ 2,000 2,000 --
Jack Singer................................. 556 556 --
Judy Reed Smith............................. 1,000 1,000 --
Terrance W. Snyder.......................... 2,500 2,500 --
Societe Generale............................ 25,000 5,000 20,000
Ronald Spengler............................. 5,000 5,000 --
Keith A. Storti............................. 3,000 2,000 1,000
Sossina Tafari.............................. 1,238 1,238 --
Tazmanic Corporation........................ 4,607 4,607 --
Edward O. Thorp............................. 42,000 15,000 27,000
TTEES Emerging Growth Equities.............. 1,450 1,450 --
Turner Micro Cap Growth Fund................ 50,000 50,000 --
Richard C. Walling Jr....................... 15,000 15,000 --
Susan L. Walling............................ 4,000 4,000 --
Carroll A. Weinberg, M.D.................... 7,000 2,000 5,000
Wells Family LLC (3)........................ 9,000 9,000 --
Raymond Welsh............................... 8,000 8,000 --
Harold & Grace Willens JTWROS (3)........... 3,000 3,000 --
Wolfson Investment Partners L.P. (3)........ 6,000 6,000 --
Jackson Wong................................ 198,719 198,719 --
Worthington Growth L.P...................... 12,000 12,000 --
Tracy Xu.................................... 33,644 33,644
Albert Zesiger (3).......................... 10,000 10,000 --
Barrie R. Zesiger (3)....................... 7,000 7,000 --
Hanining Zhang.............................. 3,696 3,696 --
</TABLE>
(1) One or more supplements or post-effective amendments to this prospectus may
be filed pursuant to Rule 424, or otherwise, under the Securities Act to
describe any material arrangements for sale of the shares, if such
arrangements are entered into by any selling securityholders.
(2) Represents less than 1%, unless otherwise indicated.
(3) Securityholders purchased common stock sold in this offering through the
Zesiger Capital Group, LLC.
(4) Member of our Board of Directors.
15
<PAGE>
WARRANT AND WARRANT SHARES
The following table sets forth certain information as of May 31,
2000 with respect to those selling securityholders holding warrants to
purchase shares of our common stock and the shares of our common stock
underlying those warrants. Because the selling securityholders may sell some
or all of their warrants or the shares of common stock underlying those
warrants, we cannot estimate the aggregate amount of warrants and/or the
underlying shares of common stock that may be owned by each selling
securityholder in the future. The selling securityholders are not under any
obligation to sell all or any portion of their warrants and/or the underlying
shares of common stock, nor are the selling securityholders obligated to sell
any of their warrants and/or the underlying shares of common stock
immediately under this prospectus. The information included in the table was
obtained from First Union National Bank as the Warrant Agent under the
Warrant Agreement dated May 21, 1998 between us and First Union National
Bank. This information may change from time to time, and, if required, such
changes will be set forth in a supplement or supplements to this prospectus.
Unless otherwise set forth below, none of the selling securityholders
has, or within the past three years has had, any position, office or material
relationship with us or our predecessors.
<TABLE>
<CAPTION>
Number of Number of Warrants
Name (1) Warrants Shares (2)
<S> <C> <C>
Bank of New York (The)............................................... 21,850 27,343
Bankers Trust Company................................................ 32,330 40,458
Boston Safe Deposit and Trust Company................................ 1,250 1,564
Brown Brothers Harriman & Co......................................... 17,500 21,900
Chase Manhattan Bank................................................. 12,835 16,062
Citibank, N.A........................................................ 7,000 8,759
Donaldson, Lufkin and Jenrette Securities Corporation................ 5,900 7,383
First Union National Bank (Main)(3).................................. 500 625
First Union National Bank (3)........................................ 1,300 1,626
Investors Bank & Trust/M.F. Custody.................................. 3,400 4,254
Lehman Brothers, Inc................................................. 14,630 18,308
Northern Trust Company (The)......................................... 310 387
Paine Webber Incorporated............................................ 190 238
PNC Bank, National Association....................................... 170 213
State Street Bank and Trust Company.................................. 40,585 50,788
Swiss American Securities, Inc....................................... 50 62
U.S. Bank National Association....................................... 200 250
---------- ----------
TOTAL: 160,000 200,220
========== ==========
</TABLE>
-----------------------------
(1) One or more supplements or post-effective amendments to this prospectus may
be filed pursuant to Rule 424, or otherwise, under the Securities Act to
describe any material arrangements for sale of the shares, if such arrangements
are entered into by any selling securityholder.
(2) Represents the number of whole shares of our common stock which may be
acquired upon the exercise of the warrants assuming that all of the warrants
held by such beneficial owner are exercised. Each warrant is exercisable for
1.25141 shares of Common Stock at an exercise price of $24.20 per share.
(3) Serves as Trustee under the Indenture between us and the Trustee dated May
21, 1998 and as Warrant Agent under the Warrant Agreement between us and the
Warrant Agent dated May 21, 1998.
16
<PAGE>
PLAN OF DISTRIBUTION
We are registering our securities on behalf of the selling
securityholders. Selling securityholders, as used in this prospectus, includes
donees, pledgees, transferees or other successors in interest who may receive
securities received from a named selling securityholder as a gift, partnership,
distribution or other non-sale related transfer after the date of this
prospectus. The selling securityholders will act independently of Startec in
making decisions with respect to the timing, manner and size of each sale. The
selling securityholders may offer their common stock and their warrants,
including the shares of common stock issuable upon the exercise of the warrants,
in various amounts and at various times in one or more of the following
transactions;
- in ordinary broker's transactions on the Nasdaq National Market or any
national securities exchange on which our common stock may be listed
at the time of sale;
- in the over-the-counter market;
- in privately negotiated transactions other than in the over-the
counter market;
- in connection with short sales of other shares of our common stock in
which the securities are redelivered to close out positioning;
- by pledge to secure debts and other obligations;
- in connection with the writing of non-traded and exchange-traded call
options, in hedge transactions and in settlement of other transactions
in standardized or over-the-counter options;
- pursuant to Rule 144; or
- in a combination of any of the above transactions.
The selling securityholders may sell their securities at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices or at fixed prices. The selling securityholders may
use broker-dealers to sell their securities. If this happens, broker-dealers
will either receive discounts or commissions from the selling securityholders,
or they will receive commissions from purchasers of the securities for whom they
acted as agents. This compensation may exceed customary commissions.
The selling securityholders and the broker-dealers to or through whom
sale of the securities may be made could be deemed to be "underwriters" within
the meaning of the Securities Exchange Act of 1934, as amended, and their
commissions or discounts and other compensation received in connection with such
sales may be regarded as underwriters' compensation.
The anti-manipulation provisions of Rules 101 through 104 under
Regulation M of the Securities Exchange Act of 1934, as amended, may apply to
purchases and sales of common stock by the selling securityholders. In addition,
there are restrictions on market-making activities by persons engaged in the
distribution of the common stock.
None of the selling securityholders have advised us of any specific
plans for the distribution of the securities covered by this prospectus. When
and if we are notified by any of the selling securityholders that any material
arrangement has been entered into with a broker dealer or underwriter for the
sale of a material portion of the securities covered by this prospectus, a
prospectus supplement or post-effective amendment to the registration statement
will be filed setting forth:
17
<PAGE>
- the name of the participating broker-dealer(s) or underwriters;
- the number of securities involved;
- the price or prices at which such securities were sold by the selling
securityholders;
- the commissions paid or discounts or concessions allowed by the
selling securityholders to such broker-dealers or underwriters; and
- other material information.
We have agreed to pay all costs relating to the registration of the
securities (other than fees and expenses, if any, of counsel or other advisors
to the selling securityholders). Any commissions or other fees payable to
broker-dealers in connection with any sale of the securities will be borne by
the selling securityholders or other party selling such security.
LEGAL MATTERS
The validity of the securities offered will be passed upon for us by
Piper Marbury Rudnick & Wolfe LLP, Baltimore, Maryland.
EXPERTS
The consolidated financial statements and schedules incorporated by
reference in this registration statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with respect
thereto, and are incorporated by reference herein in reliance upon the authority
of said firm as experts in giving said reports.
18
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities
Exchange Act of 1934 as amended, and file annual, quarterly and special reports,
proxy statements and other information with the SEC. You may read and copy any
document we file, including the Registration Statement on Form S-3 of which this
prospectus is a part, at the SEC's public reference rooms:
450 Fifth Street, N.W. 7 World Trade Center 500 West Madison Street
Room 1024 New York, New York Suite 1400
Washington, D.C. 20549 Chicago, Illinois 60661
Our SEC filings are also available to the public from the SEC's Web
site at "http://www.sec.gov". The SEC's phone number is 1-800-SEC-0330. In
addition, any of our SEC filings may also be inspected and copied at the offices
of The Nasdaq Stock Market, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
INCORPORATION BY REFERENCE
We have filed with the SEC a Registration Statement on Form S-3 under
the Securities Act of 1933, as amended, with respect to the securities offered
hereby. This prospectus, which constitutes a part of the Registration Statement,
does not contain all of the information set forth in the Registration Statement.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by referring
to those documents. The information incorporated by reference is considered to
be part of this prospectus, and the information that we file at a later date
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below as well as any future
filings we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934, as amended:
- Our Annual Report, including all amendments thereto, on Form 10-K for
the year ended December 31, 1999.
- Our Quarterly Report on Form 10-Q for the quarter ending March 31,
2000.
- The description of our Common Stock which is contained in the
Company's Registration Statement on Form S-4 (SEC File No. 333-58247)
originally filed on July 1, 1998.
We will provide a copy of the documents we incorporate by reference, at
no cost, to any person who receives this prospectus. You may request a copy of
these filings, by writing or telephoning us at the following address:
Startec Global Communications Corporation
10411 Motor City Drive
Bethesda, MD 20817
Attention: Chief Financial Officer
(301) 365-8959
-------------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR
PROVIDED IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT. WE HAVE NOT AUTHORIZED
ANYONE ELSE TO PROVIDE YOU WITH DIFFERENT INFORMATION. THE SELLING
SECURITYHOLDERS ARE NOT MAKING AN OFFER OF THESE SECURITIES IN ANY STATE WHERE
THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS
PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN
THE DATE ON THE FRONT OF THE DOCUMENT.
19
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*
<TABLE>
<CAPTION>
<S> <C>
SEC Registration fee........................................................ $ 8,515
Printing fee................................................................ 25,000
Accounting fees and expenses................................................ 20,000
Legal fees and expenses..................................................... 25,000
Miscellaneous............................................................... --
-------
Total.............................................................. $78,512
=======
</TABLE>
* Estimated, except for SEC registration fee. No portion of these
expenses will be borne by the selling securityholders.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Reference is made to Section 102(b)(7) of the Delaware General
Corporation Law (the "DGCL"), which permits a corporation in its certificate of
incorporation or an amendment thereto to eliminate or limit the personal
liability of a director for violations of the director's fiduciary duty of
loyalty to the corporation or its securityholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) pursuant to Section 174 of the DGCL (providing for liability of
directors for unlawful payment of dividends or unlawful stock purchases or
redemptions), or (iv) for any transactions from which the director derived an
improper personal benefit. The Registrant's Restated Certificate of
Incorporation contains provisions permitted by Section 102(b)(7) of the DGCL.
Reference is made to Section 145 of the DGCL which provides that a
corporation may indemnify any persons, including directors and officers, who
are, or are threatened to be made, parties to any threatened, pending or
completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person is or was a director,
officer, employee or agent of such corporation, or is or was serving at the
request of such corporation as a director, officer, employee or agent of another
corporation or enterprise. The indemnity may include expenses (including
attorney's fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding, provided such director, officer, employee or agent acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
corporation's best interests and, with respect to any criminal actions or
proceedings, had no reasonable cause to believe that his conduct was unlawful. A
Delaware corporation may indemnify directors and/or officers in an action or
suit by or in the right of the corporation under the same conditions, except
that no indemnification is permitted without judicial approval if the director
or officer is adjudged to be liable to the corporation. Where a director or
officer is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him or her against the
expenses which such director or officer actually and reasonably incurred.
The Registrant's Restated Certificate of Incorporation and Bylaws
provide indemnification of directors and officers of the Registrant to the
fullest extent permitted by the DGCL. Pursuant to the respective registration
rights agreements entered into with the Registrant, the selling securityholders
have agreed to indemnify directors and officers of the Registrant against
certain liabilities, including liabilities under the Securities Act.
II-1
<PAGE>
The Registrant maintains liability insurance for each director and
officer for certain losses arising from claims or charges made against them
while acting in their capacities as directors or officers of the Registrant.
ITEM 16. EXHIBITS.
NUMBER DESCRIPTION
------ -----------
3.1* Restated Certificate of Incorporation
3.2* Bylaws
4.1** Warrant Agreement, dated as of May 21,
1998 by and between the Company and
First Union National Bank, a Warrant
Agent
5.1*** Opinion of Piper Marbury Rudnick & Wolfe
LLP
23.1*** Consent of Arthur Andersen LLP
23.2*** Consent of Piper Marbury Rudnick & Wolfe
LLP (included in Exhibit 5.1)
24.1*** Power of Attorney (contained on
signature page).
--------------
* Incorporated by reference from the Company's Registration Statement on Form
S-4 (SEC File No. 333-58247) filed on July 1, 1998.
** Incorporated by reference from the Company's Quarterly Report on Form 10-Q
for the quarter ending June 30, 1998.
*** Filed herewith.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement: (i) to
include any prospectus required by Section 10(a)(3) of the Securities Act of
1933; (ii) to reflect in the prospectus any facts or events arising after the
effective date of this 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 this
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 end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price represent
no more than 20 percent change in the maximum aggregate offering price set
forth in "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 this
Registration Statement or any material change to such information in the
Registration Statement; provided, however, that the undertakings set forth in
paragraphs (i) and (ii) above do not apply if the information required to be
included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to Section 13 or Section
15(d)of the 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 such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered hereby which remain unsold at the
termination of the offering.
II-2
<PAGE>
(4) That, for the purpose of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report pursuant
to Section 13(a) or Section 15(d) of the 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.
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
Securities Act of 1933 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
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-3
<PAGE>
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 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 Bethesda, State of Maryland, on June 6, 2000.
STARTEC GLOBAL COMMUNICATIONS
CORPORATION
By: /s/ Prabhav V. Maniyar
----------------------------
Prabhav V. Maniyar
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE
/s/ Prabhav V. Maniyar
----------------------------------- Chief Financial Officer
Prabhav V. Maniyar
June 6, 2000
II-4
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Ram
Mukunda and Prabhav V. Maniyar and each of them acting alone, as his lawful
attorney-in-fact and agent, each with full power of substitution and
resubstitution for him and in his name, place and stead in any and all
capacities to execute in the name of each such person who is then an officer or
director of the registrant any and all amendments (including post-effective
amendments) to this registration statement and to file the same with all
exhibits thereto and other documents in connection therewith with the Securities
and Exchange Commission, granting unto said attorney-in-fact and agent full
power and authority to do and perform each and every act and thing required or
necessary to be done in and about the premises as fully as he might or could do
in person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do or cause to be done by
virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates stated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ Ram Mukunda President, Chief Executive Officer, June 6, 2000
----------------------- Treasurer and Chairman (Principal
Ram Mukunda Executive Officer)
/s/ Prabhav V. Maniyar Chief Financial Officer and Director June 6, 2000
----------------------- (Principal Financial and Accounting
Prabhav V. Maniyar Officer)
/s/ Sudhakar V. Shenoy
----------------------- Director June 6, 2000
Sudhakar V. Shenoy
/s/ Nazir G. Dossani
----------------------- Director June 6, 2000
Nazir G. Dossani
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
NUMBER DESCRIPTION
------ -----------
3.1* Restated Certificate of Incorporation
3.2* Bylaws
4.1** Warrant Agreement dated as of May 21, 1998 by and between
the Company and First Union National Bank, a Warrant Agent
5.1*** Opinion of Piper Marbury Rudnick & Wolfe LLP
23.1*** Consent of Arthur Andersen LLP
23.2*** Consent of Piper Marbury Rudnick & Wolfe LLP (included in
Exhibit 5.1)
24.1*** Power of Attorney (contained on signature page).
------------------
* Incorporated by reference from the Company's Registration Statement on Form
S-4 (SEC File No. 333-58247) originally filed on July 1, 1998.
** Incorporated by reference from the Company's Quarterly Report on Form 10-Q
for the quarter ending June 30, 1998.
*** Filed herewith.
II-6
