As filed with the Securities and Exchange Commission on _______________.
Registration No. 333-81171
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
Amendment No. 1
Registration Statement
Under
THE SECURITIES ACT OF 1933
Amiga Telephony Corporation
(Exact name of registrant as specified in charter)
Delaware 4811 98-0206052
- --------------- ------------------------- -------------
(State or other (Primary Standard Classi- (IRS Employer
jurisdiction of fication Code Number) I.D. Number)
incorporation)
2770-555 W. Hastings Street
Vancouver, British Columbia,
Canada V6B 4N5
(604) 638-0188
(Address and telephone number
of principal executive offices)
2770-555 W. Hastings Street
Vancouver, British Columbia,
Canada V6B 4N5
(Address of principal place of business or
intended principal place of business)
Ian C. Hand
2770-555 W. Hastings Street
Vancouver, British Columbia,
Canada V6B 4N5
(604) 638-0188
(Name, address and telephone number of agent for service)
Copies of all communications, including all communications sent to the agent for
service, should be sent to:
William T. Hart, Esq. William M. Prifti, Esq.
Hart & Trinen Five Market Square
1624 Washington Street Amesbury, Massachusetts 01913-0398
Denver, Colorado 80203 (978)-388-4942
(303) 839-0061
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date
of this Registration Statement
Page 1 of Pages
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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
================================================================================
Title of each Proposed Proposed
Class of Maximum Maximum
Securities Securities Offering Aggregate Amount of
to be to be Price Per Offering Registration
Registered Registered Unit (4) Price Fee
- ------------- ---------- --------- --------- ------------
Common Stock 1,150,000(1) $5.00 $ 5,750,000 $1,598
Warrants 1,150,000(1) $0.50 575,000 160
Common Stock issu-
able upon exercise of
Warrants 1,150,000(2) $8.00 9,200,000 2,558
Common Stock
issuable upon exercise
of Representative's
Warrants 100,000(3) $6.12 612,000 171
Common Stock
issuable upon exercise
of Representative's
Warrants 100,000(3) $9.60 960,000 267
Common Stock
offered by Selling
Shareholders 150,000 $5.00 750,000 209
----------- ------
Total $17,847,000 $4,963
=========== ======
(1) To be sold as Units, with each Unit consisting of one share of Common
Stock and one Common Stock Purchase Warrant.
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(2) The shares of Common Stock issuable upon the exercise of the Warrants are
subject to adjustment in accordance with the anti-dilution provisions of
such warrant.
(3) The shares of Common Stock issuable upon the exercise of the
Representative's Warrants are subject to adjustment in accordance with the
anti-dilution provisions of such warrant.
(4) Offering price computed in accordance with Rule 457(c).
Pursuant to Rule 416, this Registration Statement includes such
indeterminate number of additional securities as may be required for issuance
upon the exercise of the warrants listed above as a result of any adjustment in
the number of securities issuable by reason of the anti-dilution provisions of
the warrants.
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 l933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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PRELIMINARY PROSPECTUS DATED _______, 1999
SUBJECT TO COMPLETION
PROSPECTUS
AMIGA TELEPHONY CORPORATION
1,000,000 Units
Each Unit Consists of
One Share of Common Stock and
One Common Stock Purchase Warrant
The shares of common stock and warrants will be sold as units, with each
unit consisting of one share of common stock and one warrant. Each warrant
entitles the holder to purchase one share of common stock at a price of $8.00
during a period ending two years after the date of this Prospectus.
Amiga anticipates that the public offering price will be approximately
$5.50 per Unit. Prior to this offering, there has not been any market for
Amiga's units, common stock or warrants. Amiga plans to make an application to
have its securities listed on the NASDAQ SmallCap Market under the following
symbols: Units - _______; Common Stock - _______ Warrants - _______.
These securities are speculative and involve a high degree of risk and
should be purchased only by persons who can afford to lose their entire
investment. For a description of certain important factors that should be
considered by prospective investors see "Risk Factors" on page 10 of this
Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
- --------------------------------------------------------------------------------
Proceeds
Public Underwriting to
Offering Price Commissions Amiga
- --------------------------------------------------------------------------------
Per Unit ................. $5.50 $0.55 $4.95
Total .................... $5,500,000 $550,000 $4,950,000
- --------------------------------------------------------------------------------
The units will be offered to the public through underwriters. Westport
Resources Investment Services, Inc., subsequently referred to in this prospectus
as Westport, is acting as the managing underwriter of this offering and as the
representative of the other underwriters.
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Amiga has granted the underwriters the right to purchase up to 150,000
additional shares of common stock to cover any over-allotments.
In addition to underwriting commissions, Amiga has agreed to pay other
consideration to the underwriters in connection with this offering.
This Prospectus also relates to the offer and sale of 150,000 shares of
common stock by a selling shareholder. The common stock being sold by the
selling shareholder is not part of the underwritten offering. Amiga will not
receive any proceeds from the resale of the shares offered by the selling
shareholder.
The date of this prospectus is ______.
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[The following statement will be printed in red ink and will
appear on the left-hand margin of the outside front cover page.]
The information in this preliminary prospectus is not complete and may be
changed. Amiga may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This preliminary
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
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<PAGE>
PROSPECTUS SUMMARY
THIS SUMMARY SHOULD BE READ IN CONJUNCTION WITH, AND IS QUALIFIED IN ITS
ENTIRETY BY, THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS IN THIS
PROSPECTUS.
- --------------------------------------------------------------------------------
About Amiga Telephony Corporation
Amiga is an emerging, development stage company building an international
Internet Protocol telecommunications network. Amiga's network will be capable of
delivering multiple services including voice, fax, data and video. Amiga leases
capacity on existing private Internet Protocol or I.P. circuits from existing
carriers and installs new, carrier grade Internet Telephony Gateway equipment to
enable the reliable delivery of high quality voice, data, fax and video signals
over I.P. based networks on an international basis.
This type of service known generally as Internet Protocol Telephony, or
I.P. Telephony offers significant advantages over conventional
telecommunications systems including significantly reduced equipment costs,
improved bandwidth efficiency, direct routing of calls, lower costs and improved
ease of network administration and delivery of multi-media services over a
single network infrastructure. I.P. Telephony combines the low cost global reach
of the Internet and the high quality and security of private I.P based networks
with the public telephone system's ease of access.
Amiga has selected Lucent Technologies and Ascend Communications as its
suppliers of I.P. Telephony equipment and Amiga is presently planning the
deployment of its facilities-based I.P. network and the introduction of its
services.
According to industry sources, the global telecommunications market
generates revenues in excess of $250 billion annually and international switched
telecommunications traffic grew from 28 billion minutes of use in 1989 to 81.8
million minutes in 1997 and is projected to reach between approximately 128.7
and 158.6 billion minutes by 2001. In the United States residential long
distance callers alone represent a $67 billion dollar market. In its infancy
today, the IP services market is estimated to increase to $1.8 billion by the
year 2001. Due to competition, rates are low for both business and residential
calls placed within North America. However this is not the case when calling
internationally to certain countries where high per minute rates are common. The
international telecommunications industry is growing rapidly due to:
o deregulation
o privatization
o expansion of telecommunications infrastructure
o technological improvements
o globalization of the world's economies; and
o free trade
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Through its facilities-based Internet Telephony network, Amiga believes it can
provide existing carriers, travelers and businesses with significant cost
savings and other advantages for international communications services. For the
foreseeable future, Amiga's services will include:
o wholesale long distance services for international carriers
o prepaid long distance calling cards
o corporate long distance, fax, data and video networking
services
o e-commerce communications services for businesses selling
products and services over the Internet
o other telecommunications applications and services
Initially, Amiga plans to provide wholesale service to other carriers
seeking origination or termination in locations where Amiga establishes its
gateways and to introduce its prepaid calling card to persons traveling to
destinations such as Mexico, Central and South America, Asia, Europe, and other
locations where long distance telephone calls are substantially more expensive
than North American domestic long distance telephone calls..
To speed the deployment of its network in advance of full deregulation,
Amiga plans to establish joint venture partnerships with existing businesses in
foreign countries in which it operates to comply with any foreign ownership
regulations in effect concerning telecommunications companies. Amiga's joint
venture partners will be responsible for local marketing and operations and
Amiga will be responsible for international marketing, network management and
operations, centralized financial and business planning and expansion
initiatives.
Amiga will also evaluate investments in or the acquisition of suitable
existing telecommunications and Internet businesses to speed its growth and
network development. Amiga will also consider investing in developing software
applications designed to provide innovative new services on I.P. networks, or
consider the acquisition of companies engaged in these activities.
For further information see "Business". Amiga's executive offices are
located at 2770-555 West Hastings Street, Vancouver, British Columbia, Canada
V6B 4N5, and its telephone number is (604) 638-0188.
THE OFFERING
Securities offered
by Amiga: 1,000,000 units, at $5.50 per unit, with each unit
consisting of one share of common stock and one warrant.
Each warrant entitles the holder to purchase one share
of common stock at a price of $8.00 during a period
ending two years after the date of this Prospectus.
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Securities offered
by the selling
shareholder: 150,000 shares of common stock. Amiga will not receive
any proceeds from the sale of the shares offered by the
selling shareholder.
Common Stock
Outstanding Prior
To and After
Offering: As of the date of this Prospectus, Amiga had 10,227,000
shares of common stock issued and outstanding. Following
this offering, there will be 11,227,000 shares of common
stock issued and outstanding. If the underwriters'
over-allotment option is exercised in full, 11,377,000
shares of common stock will be issued and outstanding.
This amount does not include 1,150,000 shares of common
stock issuable upon the exercise of the warrants
included as part of the units, including the warrants
which are part of the underwriters' over-allotment
option; 200,000 shares of common stock issuable upon the
exercise of warrants to be issued to Westport, 2,250,000
shares of common stock issuable upon the conversion of
preferred stock and the exercise of warrants sold by
Amiga in a private offering, and 3,245,000 shares of
common stock reserved for issuance upon the exercise of
options granted by Amiga.
Proposed NASDAQ
Symbols: Units:
Common Stock:
Warrants:
Amiga plans to make an application to have its
securities listed on the NASDAQ SmallCap Market.
Summary Financial
Data:
Statement of Operations
Fiscal Nine Months Ended
Year Ended June 30, 1998 March 31, 1999
------------------------ --------------
Interest Income $ 802 $ 2,600
Operating Expenses (157,661) (625,715)
----------- -----------
Net Loss $ (156,859) $ (623,115)
=========== ===========
Loss per
common share $ (0.03) $ (0.07)
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Weighted average common
shares outstanding 4,946,000 9,218,000
Balance Sheets
March 31,1999 March 31,1999
June 30, 1998 Actual Adjusted
------------- ------------- -------------
Total Assets $349,808 $1,154,611 $7,639,611
Current Liabilities 10,242 75,659 75,659
Total Liabilities 10,242 75,659 75,659
Working Capital 256,348 846,256 7,331,256
Shareholders'
Equity 339,566 1,078,952 7,563,952
The March 31,1999 as adjusted balance sheet reflects the receipt of the
net proceeds from the sale of Amiga's Series A Preferred Stock and the receipt
of the proceeds from this offering assuming the net offering proceeds were
received on March 31, 1999.
RISK FACTORS
An investment in Amiga's securities involves substantial risks, some of
which are summarized below. Prospective investors should carefully consider the
following risk factors, among others, relating to Amiga and this offering prior
to making an investment.
Amiga has a limited operating history and has not earned any profits.
Amiga was incorporated in July 1997. Since that date, Amiga's operations
have been limited. From the date of its formation through March 31, 1999, Amiga
incurred cumulative net losses of approximately $(780,000). Amiga expects to
continue to incur losses until such time, if ever, as it generates substantial
revenues and earns net income.
Amiga will need more capital to finance its operations.
Even if all Units offered are sold, Amiga will need additional capital in
order to finance its operations. The failure of Amiga to obtain additional
capital on terms acceptable to it, or at all, will significantly restrict
Amiga's proposed operations. There can be no assurance that Amiga will be able
to obtain additional funding, if needed, or if available on terms satisfactory
to Amiga.
Amiga may not be able to compete effectively in the Internet Telephone Industry.
There are many companies that offer telecommunications services which will
compete with Amiga at some level. These include large telecommunications
companies and carriers such as AT&T, MCI and Sprint as well as many other
smaller providers of long distance services. These companies, as well as others,
including manufacturers of
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hardware and software used in the business communications industry, could in the
future develop products and services that may compete with those of Amiga on a
direct basis. Many of these entities are far better capitalized than Amiga and
control significant market share in their respective industry segments. There
can be no assurance that Amiga will be able to successfully compete in the
Internet Telephony Industry.
Amiga believes that its ability to compete in the Internet Telephony
industry successfully will depend upon a number of factors, including regulatory
change, the pricing policies of competitors and suppliers; the capacity,
reliability, availability and security of the Internet Telephony infrastructure;
market presence; the timing of introductions of new products and services into
the industry; Amiga's ability in the future to support existing and emerging
industry standards; Amiga's ability to balance network demand with the fixed
expenses associated with network capacity; and industry and general economic
trends.
Since Amiga depends on other companies for telecommunications products and
services, Amiga may experience delays and increased costs if these products or
services are not available to Amiga.
Amiga will rely on other telecommunications carriers to provide data
communications capacity via leased telecommunications lines. If these carriers
are unable to provide or expand their current levels of service to Amiga,
Amiga's operations could be materially adversely affected. Although leased
telecommunications lines are usually available from several alternative
suppliers, there can be no assurance that Amiga could obtain substitute services
from other providers at reasonable or comparable prices or in a timely fashion.
Amiga is also subject to risks relating to potential disruptions in such
telecommunications services. No assurance can be given that significant
interruptions of telecommunications services to Amiga will not occur in the
future. Changes in tariffs, regulations, or policies by any of Amiga's
telecommunications providers may adversely affect Amiga's ability to continue to
offer long-distance service on what it considers to be commercially reasonable
or profitable terms.
Amiga is dependent upon providers of equipment, software, and network and
telecommunication services. A failure by a supplier to deliver equipment on a
timely basis, or the inability to develop alternative sources if and as
required, could result in additional costs and or delays and have a material
adverse effect on Amiga's operations.
The Internet Telephony industry changes rapidly and Amiga may not be successful
in adapting to new technologies.
Amiga's success in the Internet Telephony industry will be dependent upon
its ability to develop new software and services to meet changing customer
requirements. The Internet Telephony industry is characterized by rapidly
changing technology, evolving industry standards, emerging competition and
frequent new software and service introductions. There can be no assurance that
Amiga can successfully identify new service opportunities and develop and bring
new services to the market in a timely manner, or that software, services or
technologies developed by others will not render Amiga's services
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uncompetitive or obsolete in the future. Amiga's pursuit of technological
advances may require substantial time and expense, and there can be no assurance
that Amiga will succeed in adapting its services to meet future customer
requirements..
Amiga may be unable to expand its Network Infrastructure.
Amiga may be required to expand and adapt its network infrastructure as
the number of users and the amount of information they wish to transfer
increases. The expansion and adaptation of Amiga's network will require
substantial financial, operational and management resources. There can be no
assurance, however, that Amiga will be able to expand or adapt its network to
meet additional demand or subscribers' changing requirements on a timely basis,
at a commercially reasonable cost, or at all, or that Amiga will be able to
deploy successfully any necessary network expansion. Any failure of Amiga to
expand its network, as needed, on a timely basis or to adapt to changing
subscriber requirements or evolving industry standards could have a material
adverse effect on Amiga's overall business, financial condition and results of
operations.
Amiga's operations would suffer if costs for use of telecommunications and data
networks increase.
Amiga's business relies upon on low cost access to the Internet, private
I.P. networks and public switched telephone networks for international call
completion. Should the cost of internet access, data transport or public
switched telephone networks increase or such use otherwise become subject to
additional taxes, tariffs, user fees or other costs Amiga's cost savings for
call completion as compared to conventional long distance services may
deteriorate. This occurrence would have a material adverse effect on the Amiga's
ability to operate profitably, or at all.
Amiga's operations would suffer if charges for traditional long distance
telephone service decline.
Amiga's rates for long distance telephone calls are generally less than
the telephone charges for the same long-distance service that the customer would
pay to a primary seller of such services. Amiga's ability to undersell such
primary seller arises as a result of the use of the Internet to transmit long
distance telephone calls. Amiga believes its lower rates will be one of the most
important factors in its ability to attract and retain customers. Therefore,
narrowing of the differential between the rates charged to Amiga's customers and
the cost of long distance telecommunications services provided by competitors or
traditional long distance carrier's customers would have a significant adverse
effect on Amiga.
Amiga may experience problems from computer systems that are not ready to
process information associated with the year 2000.
The "Year 2000" issue affects Amiga's installed computer systems, network
elements, software applications, and other business systems that have
time-sensitive programs that may not properly reflect or recognize the year
2000. Because many
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computers and computer applications define dates by the last two digits of the
year, "00" may not be properly identified as the year 2000. This error could
result in miscalculations or system failures. The Year 2000 issue may also
affect the systems and applications of Amiga's suppliers.
Amiga does not expect to incur any material cost relating to the Year 2000
issue because it is of the opinion that its computer systems have been developed
so as to avoid this problem. Amiga is currently determining the extent to which
it may be impacted by third parties' failure to remedy their own Year 2000
issues. Amiga is having, and will continue to have, communications with all of
its suppliers, and other third parties to determine the extent, if any, to which
Amiga's systems could by impacted by any third party Year 2000 issues and
related remedies. Amiga believes that the Year 2000 issues could adversely
impact Amiga if systems operated by third parties providing services to Amiga
are not Year 2000 compliant.
Amiga's plan to operate in foreign countries involves numerous risks.
Amiga plans to operate in several foreign markets including Central and
South America, Asia, Europe as well as other international locations. Certain
business risks arise from operating in foreign countries including exposure to
periodically volatile foreign economic, monetary and currency conditions,
compliance with foreign law and regulations as well as issues relating to the
conduct of day-to-day business in foreign language and culture business
environments. Additional international considerations include high travel costs
as well as time and distance barriers in the management and development of the
business. Although Amiga plans to mitigate the effects of international business
risk through the development of business relationships with qualified, well
connected local partners in key market locations, there can be no assurance that
Amiga will be able to operate successfully in foreign countries.
Possible changes in government regulation may increase Amiga's costs and lower
profits.
Amiga uses the Internet and private I.P networks for the transmission of
long distance telephone, fax and data signals. Presently, the Federal
Communication Commission in the United States ("FCC") does not regulate
companies that provide Internet Telephony services as common carriers or
telecommunications service providers. Notwithstanding the current state of the
rules, the FCC's potential jurisdiction over the Internet is broad because the
Internet relies on wire and radio communications facilities and services over
which this regulatory authority has long-standing authority.
The issuance of additional shares may depress the price of Amiga's common stock
and warrants.
Between March and June 1999 Amiga sold 15,000 shares of its preferred
stock and 750,000 warrants for $3,000,000. Each preferred share is convertible
into 100 shares of Amiga's common stock. Each warrant allows the holder to
purchase one share of Amiga's common stock at a price of $5.00. Promptly after
the closing of this offering
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Amiga has agreed to register for public sale the shares issuable upon the
conversion of the preferred shares and the exercise of the warrants The
1,500,000 shares of common stock issuable upon the conversion of the preferred
shares may not be sold until three months after the date of this prospectus. The
750,000 shares issuable upon the exercise of the warrants may be sold at any
time after such shares have been registered for public sale. The public sale of
these shares may depress the price of Amiga's common stock and warrants.
FORWARD LOOKING STATEMENTS
This prospectus contains forward-looking statements. Amiga intends to
identify forward-looking statements in this prospectus using words such as
"believes," "expects," "may," "will," "should," "plan," "projected,"
"contemplates," "anticipates," or similar statements. These statements are based
on Amiga's beliefs as well as assumptions Amiga has made using information
currently available to Amiga. Because these statements reflect Amiga's current
views concerning future events, these statements involve risks, uncertainties
and assumptions. Actual future results may differ significantly from the results
discussed in the forward-looking statements. Some, but not all, of the factors
that may cause these differences, include those discussed in the Risk Factors
section beginning on page 10 of this prospectus. Potential investors should not
place undue reliance on these forward-looking statements which apply only as of
the date of this prospectus.
DILUTION AND COMPARATIVE SHARE DATA
As of May 31, 1999, the present shareholders of Amiga owned 10,227,000
shares of common stock, which had a net tangible book value of approximately
$0.26 per share. The following table illustrates the comparative stock ownership
of the present shareholders of Amiga, as compared to the investors in this
offering. The computations in the table below assume the price paid for a unit
is all attributable to the common stock included as a component of the unit.
Number of Note
Shares Reference
--------- ---------
Shares outstanding as of May 31, 1999 10,227,000
Shares offered by Amiga 1,000,000 A
----------
Shares to be outstanding upon completion of offering 11,227,000
==========
Net tangible book value per share as of
May 31, 1999 $0.26
Net tangible book value after offering $0.67
Public offering price $5.50
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Dilution to investors in this offering $4.83
Gain to existing shareholders $0.41
Equity ownership by present shareholders after this
offering 91%
Equity ownership by investors in this offering
25% (to be adjusted for selling shareholders) 9%
The shares outstanding as of May 31, 1999 excludes shares which may be
issued upon the exercise of the warrants (included as part of the units) and the
exercise and/or conversion of other options, warrants and other convertible
securities previously issued by Amiga. See table below.
The shares offered by Amiga excludes shares issuable upon exercise of the
underwriters over-allotment option.
"Net tangible book value" is the amount that results from subtracting the
total liabilities and intangible assets of Amiga from its total assets. The
purchasers of the securities offered by this prospectus will suffer an immediate
dilution if the conversion price of the Series A Preferred Stock or the warrant
exercise price is greater than the net tangible book value of Amiga's common
stock.
Other Shares Which May Be Issued:
As of May 31, 1999 Amiga had 10,227,000 shares of common stock issued and
outstanding. The following table reflects the shares of common stock which may
be issued by Amiga as a result of the exercise of warrants (included as part of
the units), the exercise of other options and warrants issued by Amiga and the
conversion of convertible securities issued by Amiga.
Number of Note
Shares Reference
--------- ---------
Shares issuable upon exercise of
Warrants (included as part of the Units) 1,000,000 A
Shares issuable upon conversion of preferred
stock and exercise of warrants 2,250,000 B
Shares issuable upon exercise of options 3,245,000 C
Shares issuable upon exercise of Westport's 200,000 D
warrants
Shares issuable upon exercise of Underwriters'
over-allotment option 300,000 E
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A. Each Unit consists of one share of common stock ("Common Stock") and one
warrant. Each Warrant entitles the holder to purchase one share of Common Stock
at a price of $8.00 during a period beginning on the date of this Prospectus and
ending two years thereafter.
B. Between March and June 1999 Amiga sold 15,000 shares of its Series A
Preferred Stock and 750,000 Warrants for gross proceeds of $3,000,000. Each
Series A Preferred Share is convertible into 100 shares of Amiga's common stock.
Each warrant allows the holder to purchase one share of Amiga's common stock at
a price of $5.00. Promptly after the closing of this offering the Company has
agreed to register for public sale the shares issuable upon the conversion of
the preferred shares and the exercise of the warrants. The 1,500,000 shares of
common stock issuable upon the exercise of the preferred shares may not be sold
until three months after the date of this prospectus. The 750,000 shares
issuable upon the exercise of the warrants may be sold at any time after such
shares have been registered for public sale.
C. See "Management - Stock Option and Bonus Plans".
D. In addition to the other compensation to be paid to the underwriters in
connection with this offering Amiga has agreed to sell to Westport for $100
warrants to purchase 100,000 shares of common stock at a price of $6.12 per
share and warrants to purchase an additional 100,000 shares of common stock at a
price of $9.60 per share.
E. For purposes of covering any over-allotments, Amiga has granted an option to
the underwriters, exercisable within 45 days from the date of this prospectus,
to purchase up to 150,000 additional units at $5.50 per unit, less the
underwriting commission and non-accountable expense allowance. Each unit
consists of one share of common stock and one common stock purchase warrant.
USE OF PROCEEDS
The net proceeds to Amiga from this offering will be approximately $4,685,000,
after deducting underwriting commissions, the underwriters' non-accountable
expense allowance and the other offering expenses. Amiga intends to use the net
offering proceeds for the following purposes:
Purchase of Computers, Network and other Equipment $1,100,000
Investment in Joint Ventures 1,500,000
Sales and Marketing Expenses 500,000
General and Administrative Expenses 1,585,000
----------
$4,685,000
==========
Offering proceeds allocated for the purchase of computers, network and
other equipment will be used to install gateways in selected locations. Each
gateway will cost approximately $125,000 and will require approximately four
days for installation.
A portion of the proceeds from this offering will be used to establish
joint venture
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partnerships with existing businesses in foreign countries so as to speed the
deployment of Amiga's network. In any joint venture, it is expected that Amiga's
joint venture partner will be responsible for local marketing and operations and
Amiga will be responsible for network management and operations, international
marketing, and centralized financial and business planning.
Amounts allocated to sales and marketing expenses will be used to
initially promote Amiga's services to the travel and tourism industry, small to
medium sized businesses, website owners and other potential customers.
Offering proceeds allocated to general and administrative expenses are
expected to satisfy Amiga's requirements in this area for a minimum of twelve
months following the completion of this offering.
Amiga will require additional capital separate and apart from that
received from this offering in order to finance its future operations. The
failure of Amiga to obtain additional capital on terms acceptable to it, or at
all, will significantly restrict Amiga's proposed operations. There can be no
assurance that Amiga will be able to obtain additional funding, if needed, or if
available on terms satisfactory to Amiga.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following selected financial data should be read in conjunction with
the more detailed financial statements, related notes and other financial
information included in this prospectus.
Statement of Operations Data:
Nine Months Ended
Year Ended June 30, 1998 March 31, 1999
------------------------- -----------------
Interest Income $ 802 $ 2,600
Operating Expenses (157,661) (625,715)
-------- ---------
Net Loss $(156,859) $(623,115)
========== ==========
Balance Sheet Data:
June 30, 1998 March 31, 1999
------------- --------------
Total Assets $349,808 $1,154,611
Current Liabilities 10,242 75,659
Total Liabilities 10,242 75,659
Working Capital 256,348 846,256
Shareholders' Equity 339,566 1,078,952
No Common Stock dividends have been declared by Amiga since its inception.
Amiga is in the development stage and as of the date of this prospectus
had not
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commenced commercial operations. Between March and June 1999 Amiga raised
$3,000,000 from the sale of its preferred stock and warrants. Amiga intends to
use the proceeds from its private offering, as well as the proceeds from this
offering, for general and administrative expenses, marketing and for the
installation of a limited number of gateways. Amiga expects that it will require
approximately $21,500,000 in capital over the next 36 months in order to install
100 gateways ($12,500,000) and to fund its operations ($9,000,000).
Amiga has signed a letter of intent with Lucent Technologies for the
purchase of $21,500,000 of Internet telephony equipment and services, including
the purchase of $2,500,000 of equipment from Ascend Communications, Inc. Amiga
is also negotiating with a financial institution to provide the financing for
the purchase of this equipment, professional services, installation and certain
other approved uses. Amiga does not have any definitive agreements concerning
any financing and there can be no assurance that any such financing will be
available on terms acceptable to Amiga. Without this financing, or some
alternative source of funding, Amiga will only be able to install a limited
number of gateways.
BUSINESS
Amiga is an emerging, development stage company building an international
Internet Protocol telecommunications network. Amiga's network will be capable of
delivering multiple services including voice, fax, data and video. Amiga leases
capacity on existing private Internet Protocol or I.P. circuits from existing
carriers and installs new, carrier grade Internet Telephony Gateway equipment to
enable the reliable delivery of high quality voice, data, fax and video signals
over I.P. based networks on an international basis.
This type of service known generally as Internet Protocol Telephony, or
I.P. Telephony offers significant advantages over conventional
telecommunications systems including significantly reduced equipment costs,
improved bandwidth efficiency, direct routing of calls, lower costs and improved
ease of network administration and delivery of multi-media services over a
single network infrastructure. I.P. Telephony combines the low cost global reach
of the Internet and the high quality and security of private I.P based networks
with the public telephone system's ease of access.
Amiga has selected Lucent Technologies and Ascend Communications as its
suppliers of I.P. Telephony equipment and is presently planning the deployment
of its facilities-based I.P. network and the introduction of its services.
According to industry sources, the global telecommunications market
generates revenues in excess of $250 billion annually and international switched
telecommunications traffic grew from 28 billion minutes of use in 1989 to 81.8
million minutes in 1997 and is projected to reach between approximately 128.7
and 158.6 billion minutes by 2001. In the United States residential long
distance callers alone represent a $67 billion dollar market. In its infancy
today, the IP services market is estimated to increase to $1.8 billion by the
year 2001. Due to competition, rates are low for both business and residential
calls placed
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within North America. However this is not the case when calling internationally
to certain countries where high per minute rates are common. The international
telecommunications industry is growing rapidly due to:
o deregulation
o privatization
o expansion of telecommunications infrastructure
o technological improvements
o globalization of the world's economies; and
o free trade
Significant improvements have occurred in the compression and transmission
of voice over the Internet over the last several years. The quality of service
of Internet Telephony is now equivalent to that of a digital cellular phone or a
quality analog cell phone connection. Internet Telephony technology is
continuously evolving and it is expected that further improvements in technology
will allow Internet Telephony to rival that of conventional telephony networks.
The gateway equipment being deployed by Amiga is standards-based and utilizes
the newest digital signal processing and error correction technologies for
improved voice sampling and compression and reduced latency. These technologies
enable Amiga to provide high quality, commercial voice services with carrier
class reliability (99.999% availability of service).
Unlike the transmission of telephone calls or facsimile messages over
traditional land based electrical wires, telephone calls or other data
transmitted over I.P. networks are first converted into digital packets and then
sent by means of high speed land based transmission lines, satellites and/or
microwave systems in packetized form. Data transmitted over the Internet is
also, prior to transmission, compressed such that much larger amounts of data
can be transmitted than over traditional circuit switched telephone lines. As a
result, the cost of telephone calls made over I.P networks are more bandwidth
efficient and each call is much less expensive to transport than calls made
through traditional long distance telephone carriers. Computer systems, known as
gateways, act as the interconnection between the Internet or I.P. networks and
the traditional public switched telephone networks..
A telephone call made using Internet telephony begins with a telephone
connected to the lines of the local public switched telephone network operator .
The caller dials a local telephone number that connects to a gateway nearest the
caller (the "originating gateway"). The caller is then asked by an automated
voice response system to enter a PIN number and the long distance telephone
number which the caller is attempting to reach (the "destination number"). The
originating gateway directs the call over the Internet to the gateway that is
located closest to the destination number (the "terminating gateway"). Once the
call reaches the terminating gateway the call is then switched to the local
telephone network and is routed to the destination numbera. The entire call
completion process takes only a few seconds.
If a gateway does not exist in the local calling area from which the
caller is placing the call, the call is transferred (at a charge to Amiga)
through regular telephone lines to
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the nearest originating gateway. If a gateway does not exist in the local
calling area of the destination number, the call is transferred (at a charge to
Amiga) from the terminating gateway through regular telephone lines to the
destination number. Amiga therefore is able to reduce its costs and increase its
profit for calls which originate and terminate through gateways which are in the
local calling areas of the persons originating and receiving the call.
In order to lower costs and offer extended coverage, several corporations
have formed consortiums of Internet telephony companies. Each member of the
consortium owns and operates an Internet telephony gateway that communicates
with all other gateways in the consortium to provide subscribers with the
ability to place a voice or fax call from virtually any ordinary telephone to
any other ordinary telephone (or fax machine) at a cost that is significantly
below traditional long distance carriers. Each member agrees to share revenue
generated from calls originated or terminated through their gateway on a per
call/minute basis with other gateway operators who have accessed their gateway
to route and deliver calls. A month end settlement process occurs between all
gateway operators that reflects currency exchange rates and all call traffic
volume between each gateway operator. Each gateway operator is responsible for
setting the per minute calling rates to every other gateway in the consortium.
Amiga plans to join one or more of these consortiums.
Amiga's Services
Amiga initially plans to derive its revenues from the sale of the
following services:
o wholesale long distance services for other international
carriers
o prepaid long distance calling card services
o corporate long distance, fax and data networking services
o e-commerce communications services for businesses selling
products and services over the internet
o other telecommunications applications and services
Wholesale Long Distance Services
Amiga plans to market its Internet telephony services to other
international long distance carriers and wholesale customers which have a need
for large blocks of long distance telephone time between selected locations.
Although margins at the wholesale level are lower than retail margins, the sale
of blocks of long distance time to other carriers will enable Amiga to generate
revenues with only a limited number of gateways installed. Amiga has
pre-marketed its services and identified several potential wholesale
opportunities.
Prepaid Calling Cards
Amiga plans to market prepaid calling cards to persons traveling to
destinations such as Mexico, Central, and South America, Asia, Europe and other
countries where
20
<PAGE>
long distance telephone calls are substantially more expensive than domestic
long distance telephone calls. A typical long distance telephone call from
Mexico to Vancouver, British Columbia, made from a public payphone in Mexico can
cost more than $2.00 per minute, and frequently surcharges are levied by third
party credit card call processing companies located outside of Mexico. However,
due to competition in North America, rates for calls from North America to
Central and South America are significantly less expensive than calls made from
this area to North America.
Amiga plans to market its pre-paid calling cards to travelers destined for
Mexico and other countries in which Amiga has gateways. The pre-paid calling
cards will be sold through travel agents, tourist agencies, airline ticketing
offices, tourist agencies, tour companies, car rental agencies and hotel
personnel in denominations of $10, $20, $30 and $50 and an automated voice
response system is planned to enable card holders to add time to their calling
cards by charging their credit card while on the phone.
Amiga's calling card provides instructions for the use of Amiga's system.
To place a long distance call to North America, the cardholder dials a local
access number (or an 800 number if an originating gateway does not exist in the
local calling area) and is then prompted to dial the destination number as well
as the cardholder's calling card number. The call is then routed to the nearest
originating gateway. After reaching the originating gateway the call is
transmitted over the Internet to the terminating gateway nearest the destination
number. Once the call reaches the terminating gateway the call is then switched
to the local telephone network and is routed to the destination number.
Travelers making long distance calls from a local calling areas which do
not have originating gateways will nevertheless be able to use Amiga's calling
cards. However, Amiga's operating margin will be less since these calls must be
routed via an 800 number to a distant originating gateway.
By establishing gateways in North America and select foreign countries,
Amiga believes it can service a large and identifiable market of travelers with
cost-effective prepaid calling cards to use in placing calls to North America..
Corporate Services
Amiga also plans to market its services on a selective basis to
small-to-mid sized corporate customers who need a cost-effective means of
combining long distance voice, fax and video communications between their
international offices. Amiga plans to begin marketing its corporate Internet
Telephony services to medium sized US and Canadian corporations who operate
branch offices or subsidiaries in the foreign countries in which Amiga operates
its gateways.
E- Commerce Services
Amiga's network will also support Web-to-Phone and "Call-Me" services.
Web-to-Phone connections enable the users of multimedia PCs to establish a
voice
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conversation with the owner of the website or their designated customer service
representative. Amiga will introduce this new capability to website owners and
developers in those markets in which the Amiga has gateways and demand for
e-commerce services is increasing. Amiga believes that this service will
contribute to the development of sales made through the Internet. Web-To-Phone
provides new capabilities for customers to speak directly with sales people and
reservation agents while they are online and reviewing the content of a
particular website. Web-to-phone personalizes the experience of shopping over
the Internet and provides a new level of customer service.
Call-Me services enable the personal computer user to receive a telephone
call from a merchant with a website at any telephone number and time of day the
user designates by simply filling out an onscreen form. Call-Me services offer
businesses the opportunity to provide customers with greater convenience and
more personalized service.
In addition to developing and marketing these communications applications,
Amiga will also evaluate investing in or acquiring companies engaged in the
development of innovative I.P. software and network applications.
Amiga's Network
Amiga intends to eventually install 100 gateways in seventeen countries
that it has identified as having suitable long distance opportunities, with the
first gateways to be installed in North America, Mexico, Central and South
America, Asia and Europe.
To speed the deployment of its network in advance of full deregulation,
Amiga plans to establish joint venture partnerships with existing businesses in
foreign countries in which it operates to comply with any foreign ownership
regulations in effect concerning telecommunications companies. Amiga's joint
venture partners will be responsible for local marketing and operations and
Amiga will be responsible for international marketing, network management and
operations, centralized financial and business planning and expansion
initiatives. Amiga will also evaluate investment in or the acquisition of
suitable existing telecommunications and Internet businesses to speed its growth
and network development.
Amiga is negotiating with several international groups to form joint
ventures for the installation and operation of gateways in various international
locations. By working with local partners, Amiga can secure quick entry into the
local marketplace. In addition, joint venture partners can provide key services
required for successful operations - including providing space, power,
connections to the Internet and local telephone companies as well as marketing
resources and, in many cases access to an existing customer base that can use
Internet Telephony services. Joint venture partners also bring invaluable
knowledge of local languages, cultures, regulatory processes and business
practices. It is expected that in a typical joint venture Amiga will install the
gateway equipment and provide remote network administration, centralized
billing, finance and management functions as well as global marketing of
services. There can be no assurance however that Amiga will be successful in
forming any joint venture or that any joint venture will operate profitably.
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<PAGE>
Each gateway will cost approximately $125,000, require approximately 4
days for installation and will be capable of transmitting approximately 300,000
minutes of call volume per month. With certain modifications, at an additional
cost of approximately $55,000 per gateway, each gateway will be capable of
transmitting approximately 1,000,000 minutes of call volume per month. Amiga
believes it will take approximately 36 months in order to complete the
installation of these 100 gateways. The gateways required by Amiga are available
from a variety of sources.
Amiga plans to install its gateways in secure facilities leased from third
parties. Although the gateway operates automatically, the leased facility, which
will typically house other telecommunications equipment, will be accessible to
local technicians who will be trained to correct malfunctions and repair and/or
replace Amiga's equipment as needed.
At the present time the Company has its first gateway operating in
Vancouver, British Columbia and is installing its second gateway in Los Angeles,
California. Amiga plans to install four additional gateways by November,1999.
Amiga expects that it will need approximately $12,500,000 in capital over
the next 36 months in order to install 100 gateways. Although Amiga is
negotiating with a financial institution to provide the financing for the
purchase of this equipment, Amiga does not have any definitive agreements
concerning such financing and there can be no assurance that any such financing
will be available on terms acceptable to Amiga. Without this financing, or some
alternative source of funding, Amiga will only be able to install a limited
number of gateways.
Amiga's Internet Telephony system will have multiple features for security
and billing. In order to ensure maximum security, access will be restricted to
authorized incoming or outgoing callers, specific extensions, or to users with
valid Personal Identification Numbers. Amiga's system will be able to monitor
the date, time, duration, source and destination of the call and the call
originator's name.
Competition
Two significant barriers to entry in the traditional long distance
telephone market are size (minimum efficient scale of operations) and regulatory
constraints which preclude smaller companies from gaining significant market
share. Internet telephony effectively eliminates or reduces these barriers since
it is presently unregulated and enjoys economies of scope and scale by using the
Internet and private I.P. networks as a common voice video and data network.
Internet telephony will decrease barriers to entry and increase competition in
the long distance industry.
Amiga believes that its ability to compete in the Internet Telephony
Industry successfully will depend upon a number of factors, including the
pricing policies of competitors and suppliers; the capacity, reliability,
availability and security of the Internet
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telephony infrastructure; marketing; the timing of introductions of new products
and services into the industry; Amiga's ability to support existing and emerging
industry standards; Amiga's ability to balance network demand with the fixed
expenses associated with network capacity; and industry and general economic
trends.
The market for telecommunications services is extremely competitive and
there are a growing number of competitors in the Internet Telephony Industry.
There are many companies that offer business communications services and which
will compete with Amiga at some level. These include large telecommunications
companies and carriers such as AT&T, MCI, and Sprint; smaller, regional
resellers of telephone line access; and other existing Internet telephony
companies. These companies, as well as others, including manufacturers of
hardware and software used in the business communications industry, could in the
future develop products and services that could compete with those of Amiga on a
direct basis. Many of these entities have far greater financial and
organizational resources than Amiga and control significant market share in
their respective industry segments. There is no assurance that Amiga will be
able to successfully compete in the Internet telephony Industry.
Certain large public telephone companies are positioning themselves to
enter the Internet telephony market to protect their dominant domestic market
from competition. Many of these companies are testing existing Internet
telephony gateway technology which at the present time has limited call volume
capabilities. A number of companies are waiting for gateway manufacturers to
introduce advanced gateways that will be able to handle larger call volumes and
provide better quality and service.
In North America considerable discounting has been experienced in recent
years as competition has increased. While in many countries outside of North
America local telephone companies have begun offering discounts to very large
business and government customers with high call volumes, there are few
discounts available for individuals or small and medium sized companies. It is
expected that competition in the United States will be led by carriers providing
low cost but high quality internet telephony services at rates of $0.05 to $0.09
per minute. Smaller Internet service providers and new carriers are expected to
focus primarily on international or niche markets.
International markets are attractive to smaller carriers and new entrants
while large carriers are still evaluating the technology and marketplace and
contending with competition and deregulation in their domestic markets. With
international long distance rates in many countries costing well in excess of
$0.50 per minute, Amiga believes that it can earn attractive gross profit
margins while offering service at substantial discounts to currently available
long distance rates.
Although Amiga anticipates that its primary competitors will be other
internet telephony companies which offer phone-to-phone services, none have as
of yet addressed the international hospitality market which Amiga plans to
pursue with its pre-paid calling cards, nor has any competitor introduced an
integrated product offering containing corporate and e-commerce communications
services.
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Government Regulation
Amiga uses the Internet for transmission of long distance telephone calls.
Presently, the Federal Communication Commission in the United States ("FCC")
does not regulate companies that provide Internet Telephony services as common
carriers or telecommunications service providers. Notwithstanding the current
state of the rules, the FCC's potential jurisdiction over the Internet is broad
because the Internet relies on wire and radio communications facilities and
services over which these regulatory authorities have long-standing authority.
In Canada, the Canadian Radio-Television and Telecommunication Commission
("CRTC") determined in 1998 that Internet Telephony services providers must pay
local contribution charges for calls terminating on local telephone networks,
while those calls that originate and terminate on computers are not subject to
these charges. The possibility exists that regulatory authorities may one day
make a determination to apply international call termination fees or otherwise
tariff Internet telephony.
Amiga will also be required to comply with the regulations regarding the
operation of its business in several foreign jurisdictions and will be subject
to compliance with the requirements of the authorities of these locales
regarding the establishment and operation of its business.
Access charges are assessed by local telephone companies to long distance
companies for the use of the local telephone network to originate and terminate
long distance calls generally on a per minute basis. Access charges have long
been a source of dispute; with long distance companies arguing that the access
rates are substantially in excess of cost and local telephone companies arguing
that access rates are needed to subsidize lower local rates for end user and
other purposes. The Federal Communications Commission currently is considering
whether subscriber calls to Internet service providers should be classified as
"local" or "interstate" calls. Although the Federal Communications Commission to
date has determined that Internet service providers should not be required to
pay interstate access charges to local telephone companies, this decision may be
reconsidered in the future if the Federal Communications Commission finds these
calls to be "interstate." Amiga's costs for doing business would increase if
Amiga were required to pay interstate access charges.
General Information
Amiga was incorporated in Colorado on July 25, 1997. Between July 25, 1997
and May 12, 1998 Amiga sold 10,000,100 shares of its common stock to Bona Vista
West Ltd. for $5,910 in cash.
In August 1997 Amiga issued 175,456 shares of its Common Stock in exchange
for all of the Series B Common Stock of Century International Ventures Ltd.
("Century") in a share-for-share exchange with the holders of such Series B
shares. At the time of this transaction (i) Century was not conducting any
business, and (ii) had approximately 280 holders of its Series B Common Stock.
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On May 12, 1998 Amiga purchased 10,100,000 shares of Common Stock from
Bona Vista for $1,010. The shares purchased from Bona Vista were returned to the
category of "authorized but unissued" common stock.
On May 15, 1998 Amiga sold 6,901,944 shares of common stock to
twenty-three persons for $690 in cash and issued 1,000,000 shares of common
stock for services rendered. See "Management - Transactions with Related
Parties".
On May 31, 1998 Amiga sold 1,022,500 shares of common stock to eleven
persons for $511,250.
In October 1998 Amiga issued 12,000 shares of its common stock to two
persons for services rendered. In January 1999 Amiga sold 950,000 shares of its
common stock to thirty-one persons for gross proceeds of $475,000.
Between March and June 1999 Amiga sold 15,000 shares of its preferred
stock, and warrants for the purchase of 750,000 shares of common stock, for
$3,000,000 to a group of private investors. Following the closing of this
offering, the Company has agreed to register for public sale the 2,250,000
shares of common stock issuable upon the conversion of the preferred shares and
the exercise of the warrants.
In May 1999 the Company issued 265,000 shares of its common stock to two
persons for services rendered. Up to 150,000 of these shares are being offered
to the public by means of this prospectus. See "Selling Shareholder."
In August 1997 Amiga changed its corporate domicile from Colorado to
Delaware. In May 1998 Amiga changed its name to Amiga Telephony Corporation.
Facilities and Employees
Amiga's executive offices are located in Vancouver, British Columbia and
consist of 2,700 square feet of space which are leased at an annual rent of
$72,000. This lease on this space expires in February 2002.
As of May 31, 1999 Amiga employed 6 persons on a full time basis and 4
persons on a part-time basis.
MANAGEMENT
Amiga's officers and directors are as follows:
Name Age Position
---- --- --------
Ian D. Robertson 56 Chairman and a Director
Ian C. Hand 42 President, Chief Executive Officer
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Treasurer, Secretary and a Director
Harry Galekovich 61 Senior Vice President of Business Development
Donald Morrison 50 Executive Vice President, Corporate
Development and a Director
Edward M. Clunn 42 Vice President of Operations
Roney Haboosheh 25 Principal Accounting Officer
Barry Duggan 55 Director
Philip Edwards Pearce 69 Director
Marshall Naify 79 Director
Each director holds office until his successor is duly elected by the
stockholders. Amiga's officers serve at the pleasure of the Board of Directors.
The following sets forth certain information concerning Amiga's officers
and directors.
Ian D. Robertson has been the Chairman and director of Amiga since June
1998. Since July 1996 Mr. Robertson has been the president of Novus Telecom
Group Inc., a private company engaged in telecommunications investments. From
April 1994 to June 1996 Mr. Robertson was the President of Diva Systems (Canada)
Corporation, an interactive video-on-demand technology company. Between December
1991 and June 1995 Mr. Robertson was president of Norstar Capital Inc., a
merchant banking firm and from December 1991 to September 1993 Mr. Robertson was
the President of Canadian Turbo Inc./Payless Gas Co., a independent Western
Canadian petroleum refiner and marketer.
Ian C. Hand has been an officer and director of Amiga since June 1998.
Since July 1996 Mr. Hand has been the Executive Vice President and Chief
Financial Officer of Novus Telecom Group Inc, a Canadian integrated
telecommunications service provider. From April 1994 to June 1996 Mr. Hand was
Sr. Vice President of product development for Diva Systems (Canada) Corporation,
a real time video-on-demand television technology company. Since June 1995 Mr.
Hand has also been Vice President and Chief Financial Officer of NS Telecom
Group Inc., a private company engaged in the management of investments in the
technology and telecommunication sectors. Between December 1993 and May Mr. Hand
was special projects manager for Norstar Capital Inc., a private merchant
banking firm.
Harry Galekovich has been Amiga's Senior Vice President of Business
Development since January 1, 1999. From 1997 to 1998, Mr. Galekovich was
Executive Vice President of GST Global, (an international telecommunication
voice and data service provider) where he was responsible for business strategy,
business opportunities and business plan development for International wireline
and wireless operations and emerging technologies. From 1995-1997 Mr. Galekovich
was Vice President - Engineering and Operations for exchange and wireless
services for GST Telecom, where he oversaw the deployment of 14 tandem switching
platforms and a network build-out totaling over $130 million. Mr. Galekovich has
over 30 years of experience in the Telecommunications, data
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and networking industry in senior technical and management positions with
companies such as LM Erickson, United Telephone, RCA Alaska Communications,
Alascom, PTI Communications and Americomm, Inc.
Donald Morrison has been a director of Amiga since May 1998 and was
appointed an officer in June, 1999. Since January 1993, Mr. Morrison has been
the president of Braemer Capital Corp.; a company engaged in private capital
investment and management. Since April 1996 Mr. Morrison has also been the
president of Zodiac Explorations Ltd., a resource exploration company.
Edward Clunn has been an officer of the Company since January 1999.
Between May 1995 and December 1998 Mr. Clunn was an officer and part owner of
Compu-TEL Systems, Inc., a corporation which provided software and equipment to
the long distance telephone industry. Between February 1994 and May 1995 Mr.
Clunn was an officer and part owner of Dial & Save Communications, Inc., a long
distance telephone reseller.
Roney Haboosheh has been the Company's Principal Accounting Officer since
June 1998. Mr. Haboosheh has also been the manager of corporate accounting for
Novus Telecom Group since July 1997. During 1996 and 1997 Mr. Haboosheh was a
graduate student at the University of Western Ontario. Between 1995 and 1996 Mr.
Haboosheh was the assistant controller at Healthvision Corporation. Mr.
Haboosheh received his Bachelor of Arts degree in economics from the University
of Western Ontario in 1995.
Barry F. Duggan has been a director of Amiga since June 1998. Since April
1997 Mr. Duggan has been the president of Novus Telecom Inc., a subsidiary of
Novus Telecom Group. Between July 1992 and January 1997 Mr. Duggan was president
of BCTV, Check, Chan and previously ITV, subsidiaries of WIC Western
International Communications, a major Canadian television and radio broadcaster.
Philip Edwards Pearce has been a director of Amiga since February 1999.
For the past five years Mr. Pearce has been an independent business consultant.
Mr. Pearce is an investment banker by profession, with 30 years of experience in
the capital markets and brokerage industry including being a director and
officer of E.F. Hutton for 14 years. Formerly Mr. Pearce was Chairman of the
Board of Governors of the NASD, as well as serving as a member of the Board of
Governors of the New York Stock Exchange (NYSE). Mr. Pearce attended the
University of South Carolina, graduating with a B.S. degree in 1964, and
completed post-graduate studies in Investment Banking at the Wharton School,
University of Pennsylvania.
Marshall Naify has been a director of the Company since April 1999. Mr.
Naify has been the co-chairman of the board of directors of Todd AO Corporation,
a large entertainment post-production studio since 1996. Between 1990 and 1996
Mr. Naify was the chairman of the Board of Directors of Todd AO Corporation.
Since 1990 Mr. Naify has also been the owner of 505 Farms, a thoroughbred-racing
stable in Kentucky and California. Between the early 1960's and 1986 Mr. Naify
was the chairman of the board of United Artists Communications, a worldwide
theater operation with over 2,500 screens.
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The Company formed an audit committee in June 1999. The members of the
audit committee are Barry Duggan and Philip E. Pearce.
Executive Compensation
The following table sets forth in summary form the compensation received
by (i) the Chief Executive Officer of Amiga and (ii) by each other executive
officer of Amiga who received in excess of $100,000 during the fiscal year ended
June 30, 1998.
Other Re-
Annual stricted
Compen- Stock Options
Name and Fiscal Bonus sation Awards Granted
Principal Position Year Salary (2) (3) (4) (5)
- ------------------ ------ ------ ----- ------- -------- -------
Ian C. Hand 1998 (1) -- -- 1,000,000 300,000
Chief Executive
Officer
(1) The dollar value of base salary (cash and non-cash) received. During the
year ended June 30, 1998 this person was compensated for services provided
to Amiga through Novus Telecom Group. See "Transaction with Related
Parties" for further information concerning Amiga's agreement with Novus
Telecom Group.
(2) The dollar value of bonus (cash and non-cash) received.
(3) Any other annual compensation not properly categorized as salary or bonus,
including perquisites and other personal benefits, securities or property.
(4) During the year ending June 30, 1998, the shares of Amiga's common stock
issued as compensation for services to Novus Telecom Group, an affiliate
of Mr. Robertson.
The table below shows the number of shares of Amiga's Common Stock owned
by the officers listed above, and the value of such shares as of June 30, 1998.
Name Shares Value
---- ------ -----
Ian C. Hand * *
* Mr. Hand has a beneficial interest in 1,000,000 shares held by Novus
Telecom Group. See "Transactions with Related Parties" below.
(5) The shares of Common Stock to be received upon the exercise of all stock
options granted during the year ending June 30, 1998.
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Proposed Compensation
The following table shows the amount which Amiga expects to pay its executive
officers during the year ending June 30, 1999 and the time which Amiga's
executive officers plan to devote to Amiga's business.
Proposed Time to be devoted to
Name Compensation Amiga's Business
---- ------------ ---------------------
Ian D. Robertson (1) 25%
Ian C. Hand (1) 25%
Harry Galekovich $90,000 100%
Donald Morrison $90,000 100%
Edward Clunn $65,000 100%
Roney Haboosheh (1) 25%
(1) Ian Robertson, Ian Hand, and Roney Haboosheh are compensated for services
rendered through payments made by Amiga to Novus Telecom Group, Inc. See
"Transactions with Related Parties" below.
Employment Agreements
Amiga does not have any employment agreements with its executive officers,
but intends in future to enter into such agreements with its senior executives
Long Term Incentive Plans - Awards in Last Fiscal Year
None.
Employee Pension, Profit Sharing or Other Retirement Plans
Amiga does not have a defined benefit, pension plan, profit sharing or
other retirement plan, although Amiga may adopt one or more of such plans in the
future.
Compensation of Directors
At present Amiga does not pay its directors for attending meetings of the
Board of Directors, although Amiga expects to adopt a director compensation
policy in the future. Amiga has no standard arrangement pursuant to which
directors of Amiga are compensated for any services provided as a director or
for committee participation or special assignments.
See " Stock Option and Bonus Plans" below for information concerning stock
options and stock bonuses granted to Amiga's directors. Except as disclosed
elsewhere in this prospectus no director of Amiga received any form of
compensation from Amiga during the year ended June 30, 1998.
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Stock Option and Bonus Plans
Amiga has an Incentive Stock Option Plan, a Non-Qualified Stock Option
Plan and a Stock Bonus Plan. A summary description of each Plan follows. In some
cases these three Plans are collectively referred to as the "Plans".
Incentive Stock Option Plan.
The Incentive Stock Option Plan authorizes the issuance of options to
purchase up to 1,000,000 shares of Amiga's Common Stock. The Incentive Stock
Option Plan became effective on December 1, 1998 and will remain in effect until
December 1, 2008, unless terminated earlier by action of the Board of Directors.
Only officers and employees of Amiga may be granted options pursuant to the
Incentive Stock Option Plan.
In order to qualify for incentive stock option treatment under the
Internal Revenue Code, the following requirements must be complied with:
1. Options granted pursuant to the Plan must be exercised no later than:
(a) The expiration of thirty (30) days after the date on which an
option holder's employment by Amiga is terminated.
b) The expiration of one year after the date on which an option
holder's employment by Amiga is terminated, if such termination is due to the
Employee's disability or death.
2. In the event of an option holder's death while in the employ of Amiga,
his legatees or distributees may exercise (prior to the option's expiration) the
option as to any of the shares not previously exercised.
3. The total fair market value of the shares of Common Stock (determined
at the time of the grant of the option) for which any employee may be granted
options which are first exercisable in any calendar year may not exceed
$100,000.
4. Options may not be exercised until one year following the date of
grant. Options granted to an employee then owning more than 10% of the Common
Stock of Amiga may not be exercisable by its terms after five years from the
date of grant.
5. The purchase price per share of Common Stock purchasable under an
option is determined by the Committee but cannot be less than the fair market
value of the Common Stock on the date of the grant of the option (or 110% of the
fair market value in the case of a person owning Amiga's stock which represents
more than 10% of the total combined voting power of all classes of stock).
Non-Qualified Stock Option Plan.
The Non-Qualified Stock Option Plan authorizes the issuance of options to
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purchase up to 3,000,000 shares of Amiga's Common Stock. The Non-Qualified Stock
Option Plan became effective on December 1, 1998 and will remain in effect until
December 1, 2008, unless terminated earlier by the Board of Directors. Amiga's
employees, directors, officers, consultants and advisors are eligible to be
granted options pursuant to the Plan, provided however that bona fide services
must be rendered by such consultants or advisors and such services must not be
in connection with the offer or sale of securities in a capital-raising
transaction. The exercise price for each option granted pursuant to this Plan is
determined by Amiga's Board of Directors at the time of grant.
Stock Bonus Plan.
Up to 1,000,000 shares of Common Stock may be granted under the Stock
Bonus Plan. Such shares may consist, in whole or in part, of authorized but
unissued shares, or treasury shares. Under the Stock Bonus Plan, Amiga's
employees, directors, officers, consultants and advisors are eligible to receive
a grant of Amiga's shares; provided, however, that bona fide services must be
rendered by consultants or advisors and such services must not be in connection
with the offer or sale of securities in a capital-raising transaction.
Other Information Regarding the Plans.
The Plans are administered by Amiga's Board of Directors. The Board of
Directors has the authority to interpret the provisions of the Plans and
supervise the administration of the Plans. In addition, the Board of Directors
is empowered to select those persons to whom shares or options are to be
granted, to determine the number of shares subject to each grant of a stock
bonus or an option and to determine when, and upon what conditions, shares or
options granted under the Plans will vest or otherwise be subject to forfeiture
and cancellation.
In the discretion of the Board of Directors, any option granted pursuant
to the Plans may include installment exercise terms such that the option becomes
fully exercisable in a series of cumulating portions. The Board of Directors may
also accelerate the date upon which any option (or any part of any options) is
first exercisable. Any shares issued pursuant to the Stock Bonus Plan and any
options granted pursuant to the Incentive Stock Option Plan or the Non-Qualified
Stock Option Plan will be forfeited if the "vesting" schedule established by the
Board of Directors at the time of the grant is not met. For this purpose,
vesting means the period during which the employee must remain an employee of
Amiga or the period of time a non-employee must provide services to Amiga. At
the time an employee ceases working for Amiga (or at the time a non-employee
ceases to perform services for Amiga), any shares or options not fully vested
will be forfeited and cancelled. In the discretion of the Board of Directors
payment for the shares of Common Stock underlying options may be paid through
the delivery of shares of Amiga's Common Stock having an aggregate fair market
value equal to the option price, provided such shares have been owned by the
option holder for at least one year prior to such exercise. A combination of
cash and shares of Common Stock may also be permitted at the discretion of the
Board of Directors.
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Options are generally non-transferable except upon death of the option
holder. Shares issued pursuant to the Stock Bonus Plan will generally not be
transferable until the person receiving the shares satisfies the vesting
requirements imposed by the Board of Directors when the shares were issued.
The Board of Directors of Amiga may at any time, and from time to time,
amend, terminate, or suspend one or more of the Plans in any manner it deems
appropriate, provided that such amendment, termination or suspension cannot
adversely affect rights or obligations with respect to shares or options
previously granted. The Board of Directors may not, without shareholder
approval: make any amendment which would materially modify the eligibility
requirements for the Plans; increase or decrease the total number of shares of
Common Stock which may be issued pursuant to the Plans except in the case of a
reclassification of Amiga's capital stock or a consolidation or merger of Amiga;
reduce the minimum option price per share; extend the period for granting
options; or materially increase in any other way the benefits accruing to
employees who are eligible to participate in the Plans.
Any options granted under the Incentive Stock Option Plan or the
Non-Qualified Stock Option Plan must be granted before November 15, 2008. Any
shares granted pursuant to the Stock Bonus Plan must be issued prior to November
15, 2008. The Plans are not qualified under Section 401(a) of the Internal
Revenue Code, nor are they subject to any provisions of the Employee Retirement
Income Security Act of 1974.
Summary
The following sets forth certain information as of May 31, 1999,
concerning the stock options granted by Amiga. Each option represents the right
to purchase one share of Amiga's Common Stock.
Shares Issuable Upon Exercise of
Options Granted Pursuant to
----------------------------------------------
Incentive Stock Non-Qualified
Name Option Plan Stock Option Plan
---- --------------- -----------------
Ian D. Robertson 300,000
Ian C. Hand 300,000
Harry Galekovitch 200,000 --
Donald Morrison 300,000
Edward Clunn 100,000
Roney Haboosheh 40,000
Barry Dugan 200,000
Philip Edwards Pearce 150,000
Others 550,000 1,105,000
------- ---------
750,000 2,495,000
======= =========
All of the foregoing options are exercisable at $0.50 per share, expire on
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December 1, 2001, and are exercisable as follows:
- - 25% of the options will be exercisable three months after Amiga's common
stock begins trading in the public market.
- - 25% of the options will be exercisable six months after Amiga's common
stock begins trading in the public market.
- - 25% of the options will be exercisable nine months after Amiga's common
stock begins trading in the public market.
- - 25% of the options will be exercisable twelve months after Amiga's common
stock begins trading in the public market.
Notwithstanding the above, Amiga's officers, directors and certain
shareholders who collectively own 6,424,444 shares of Amiga's common stock have
agreed that they will not sell their shares of Amiga's common stock, or any
shares acquired upon the exercise of any options until certain conditions occur.
See "Underwriting" for further information regarding these resale restrictions.
Total Shares Remaining
Shares Reserved for Shares Options/
Reserved Outstanding Issued As Shares
Name of Plan Under Plan Options Stock Bonus Under Plan
- ------------ ---------- ------------ ----------- ----------
Incentive Stock
Option Plan 1,000,000 750,000 N/A 250,000
Non-Qualified
Stock Option
Plan 3,000,000 2,495,000 N/A 505,000
Stock Bonus Plan 1,000,000 N/A 15,000 985,000
Transactions with Related Parties
On May 15, 1998 Amiga sold 6,901,944 shares of common stock to
twenty-three persons for $690 in cash and issued 1,000,000 shares of common
stock for services rendered. As part of these transactions Amiga issued shares
of its common stock to the following officers, directors and affiliated parties.
Name Number of Shares Consideration
- ---- ---------------- -------------
Novus Telecom Group, Inc. 1,000,000(1) Services Rendered
Donald Morrison 400,000(2) $40
(1) Novus Telecom Group, Inc. is controlled by a number of persons, including
Ian Robertson, Ian Hand and Barry Duggan, who are officers and directors
of Amiga, and such persons are deemed to be the beneficial owners of these
shares. See "Agreement with Novus Telecom Group" below
(2) Shares are registered in the name of Bojangles Enterprises Ltd., a company
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controlled by Mr. Morrison.
Agreement with Novus Telecom Group: Effective April 15, 1998 Amiga entered into
a management agreement with Canadian Digital Network, Inc., d/b/a Novus Telecom
Group, Inc. whereby Novus agreed to manage the day-to-day operations of Amiga
and to pay for the services of Ian Hand, Ian Robertson, , Barry Duggan, Roney
Haboosheh, , and certain other support personnel. In consideration for these
services Amiga agreed to issue 1,000,000 shares of its common stock to Novus,
pay Novus $20,000 per month, and grant persons designated by Novus options to
purchase 1,000,000 shares of Amiga's common stock. Of the 2,500,000 options
which have been issued pursuant to Amiga's Non-Qualified Stock Option Plan,
1,000,000 options were granted by virtue of the assignment of Novus' rights to
these options. The management agreement between Amiga and Novus expires on April
15, 2000.
The officers, directors and controlling shareholders of Novus are:
Percentage ownership
Name Position in Novus
---- -------- --------------------
Ian Robertson President and a Director 27%
Ian Hand Executive Vice President and a Director 11%
Barry Duggan Vice President and a Director 6%
Donato Iannucci Vice President and a Director 14%
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of May 31,1999, information with
respect to the only persons owning beneficially 5% or more of the outstanding
Common Stock and the number and percentage of outstanding shares owned by each
director and officer and by the officers and directors as a group both before
and after this Offering. Unless otherwise indicated, each owner has sole voting
and investment powers over his shares of Common Stock.
Percent of Class
----------------
Shares Before After
Name and Address Owned(1) Offering Offering(2)
- ---------------- -------- -------- -----------
Ian Robertson (3) -- --
750 Anderson Cres
West Vancouver, B.C
Canada V7T 1S5
Ian Hand (3) -- --
3633 W. 7th Ave
Vancouver, B.C
Canada V6R 1W5
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Harry Galekovich -- -- --
5511 SouthEast 15th Street
Vancouver, WA 98683
Edward M. Clunn -- -- --
2770-555 W. Hastings Street
Vancouver, British Columbia
Canada V6B 4N5
Donald Morrison 400,000(4) 3.9% 3.6%
4036 W. 12th Ave
Vancouver, B.C
Canada V6R 2P3
Roney Haboosheh -- -- --
1177 W. Hastings Street
Suite 2350
Vancouver, B.C
Canada V6E 2K3
Barry F. Duggan (3) -- --
5450 Cypress Street
Vancouver, B.C
Canada V6M 3R4
Philip Edwards Pearce -- -- --
6624 Glenleaf Court
Charlotte, N.C. 28270
Marshall Naify (5) -- --
72 Golden Gate Avenue
San Francisco, CA 94102
Novus Telecom Group, Inc. 1,000,000(3) 9.8% 8.9%
1177 W. Hastings Street
Suite 2350
Vancouver, B.C
Canada V6E 2K3
Acadia Capital Corp. 1,812,444 17.7% 16.1%
McLean Building
P.O. Box 62
2001 Leeward Highway
Provendiciales
Turks & Caicos Islands, BWI
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327 Teak Enterprises 840,000 8.2% 7.5%
23 Regent St., P.O. Box 63
Belize City, Belize
All officers and directors 1,400,000 13.7% 12.5%
as a group (8 persons)
(1) Excludes shares issuable upon the exercise of options granted to the
following persons:
Name Shares Subject to Option
---- ------------------------
Ian D. Robertson 300,000
Ian Hand 300,000
Harry Galekovich 200,000
Donald Morrison 300,000
Edward Clunn 100,000
Roney Haboosheh 40,000
Barry Duggan 200,000
Philip Edwards Pearce 150,000
(2) Excludes any shares issuable upon (i) the exercise of the Underwriters'
over-allotment option (ii) the exercise of the Warrants (including as part
of the Units) or (iii) upon the exercise of any other warrants or options
granted by Amiga. See "Dilution and Comparative Share Data".
(3) Ian Robertson, Ian Hand and Barry Duggan are affiliates of Novus Telecom
Group, Inc. and may be deemed the beneficial owners of the 1,000,000
shares owned by Novus.
(4) Shares are registered in the name of Bojangles Enterprises Ltd., a company
controlled by Mr. Morrison.
(5) Marshall Naify owns shares of Amiga's preferred shock and warrants which
collectively entitle Mr. Naify to receive 1,425,000 shares of Amiga's
common stock. See "Selling Shareholders."
Officers, directors and certain shareholders who collectively own 6,424,444
shares of Amiga's common stock have agreed not to sell their shares of Amiga's
common stock, or any shares they may acquire upon the exercise of any options,
until certain conditions occur. See "Underwriting" for further information
concerning these resale restrictions.
UNDERWRITING
General
The units will be offered to the public through underwriters. Westport
Resources Investment Services, Inc. is acting as the managing underwriter and as
the representative of the other underwriters.
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Amiga has entered into an underwriting agreement with Westport and the
underwriters listed below with respect to this offering. Amiga has agreed to
sell to the underwriters, less the underwriting commission of 10%, the units
offered by this prospectus.
The underwriters named below, have severally agreed, subject to the terms
and conditions of the underwriting agreement, to purchase from Amiga, on a "firm
commitment basis", the respective number of units set forth opposite their names
below. The underwriters are committed to take and pay for all the units
underwritten by them and offered hereby if any are taken.
Underwriter Number of Units
----------- ---------------
Westport Resources Investment Services, Inc.
TOTAL
The underwriters have advised Amiga that they propose to offer the units
to the public initially at the price set forth on the cover page of the
Prospectus.
The shares of common stock and warrants comprising the units may be
separated from the units and may trade as separate securities immediately.
There has been no previous market for any of Amiga's securities. The major
factors considered by Amiga and Westport in determining the public offering
price of the Units, in addition to prevailing market conditions, were Amiga's
operating history, estimates of the business potential and earnings prospects of
Amiga, the present state of Amiga's development and an assessment of Amiga's
management, as well as consideration of the above factors in relation to market
valuations of comparable companies.
Amiga has granted an option to the Underwriters, exercisable within 45
days from the date of this Prospectus, to purchase up to 150,000 additional
Units at the public offering price set forth on the cover page of this
Prospectus, less the underwriting discounts and commissions. The Underwriters
may exercise this right only for the purpose of covering over-allotments, if
any, made in connection with the sale of the 1,000,000 Units offered. To the
extent that the Underwriters exercise such option, the Underwriters will have a
firm commitment to purchase the optioned Units.
To the extent this over-allotment option is exercised in full the total
amount of the offering will be $6,325,000, the underwriting commissions will be
$632,500 and the proceeds to Amiga, after payment of the underwriters'
non-accountable expense allowance and the estimated expenses of this offering,
will be $5,402,750.
Amiga also has agreed to pay Westport a non-accountable expense allowance
in the amount of 3% of the gross proceeds from the sale of the Units, including
the Units sold to the Underwriters pursuant to the over-allotment option. The
Underwriters will
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<PAGE>
bear all expenses in excess of that amount. To the extent the actual expenses of
the Underwriters are less than the non-accountable expense allowance, the
difference may constitute additional compensation to the Underwriters. As of the
date of this Prospectus, Amiga had advanced the Representative $25,000 toward
the non-accountable expense allowance.
Upon the completion of this offering, Westport will be issued, for a
nominal sum, warrants to purchase up to 200,000 shares of Amiga's Common Stock.
The Underwriters may offer the Units through other dealers (the "Selected
Dealers") who are members of the National Association of Securities Dealers,
Inc. at the initial public offering price less a concession of $ per Unit. The
Underwriters may allow and such dealers may re-allow a concession not in excess
of $ per Unit to other brokers and dealers. The Underwriters and the Selected
Dealers will not sell any of the Units to any account over which they have
discretionary authority, without the express consent of the account holder.
In connection with this offering, some underwriters may engage in passive
market making transactions in Amiga's common stock in accordance with Rule 103
of Regulation M. Further, the underwriters' selling group members and their
respective affiliates may engage in transaction that stabilize, maintain or
otherwise affect the market price of Amiga's common stock. These transactions
may include stabilization transactions permitted by Rule 104 of Regulation M,
under which persons may bid for or purchase shares to stabilize the market
price. The underwriters may also create a "short position" for their own account
by selling more shares in the offering than they are committed to purchase, and
in that case they may purchase shares in the open market after this offering is
completed to cover all or a part of their short position. The underwriters may
also cover all or a portion of their short position, up to 150,000 shares, by
exercising their over-allotment option described above.
The underwriters also may impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the underwriting
discount received by it because the representatives have repurchased shares sold
by or for the account of such underwriter in stabilizing or short covering
transactions.
These activities by the underwriters may stabilize, maintain or otherwise
affect the market price of Amiga's common stock. As a result, the price of the
common stock may be higher than the price that otherwise might exist in the open
market. If these activities are commenced, they may be discontinued by the
underwriters at any time.
Amiga's officers, directors and certain shareholders, who collectively own
6,424,444 shares of Amiga's common stock, have agreed that they will not sell
their shares of Amiga's common stock, or any shares they may acquire upon the
exercise of any options, without the consent of Westport until the first to
occur of the following:
(i) the date the bid price of Amiga's common stock, adjusted for any splits,
trades at or above $10.00 for 20 consecutive trading days
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<PAGE>
(ii) after 18 months from the date of closing of this Offering, the date the bid
price the price of Amiga's common stock, adjusted for any splits, trades at or
above $7.50 for 20 consecutive days or
(iii) 24 months from the date of the closing of this Offering.
Although it has no legal obligation to do so, the Representative has
indicated that from time to time it may become a market-maker and otherwise
effect transactions in Amiga's securities.
The Agreement further provides for indemnification by Amiga of and
contribution by Amiga to each of the Underwriters, and persons who may be deemed
to control each of the Underwriters, with respect to certain liabilities,
including civil liabilities under the Act.
Amiga has agreed that the Representative shall have the right, immediately
after the completion of this offering and during the one year period thereafter,
to select a member to Amiga's Board of Directors. The Representative has not
selected its nominee to the Board of Directors.
Westport Warrants
Amiga has agreed to sell to Westport, for $100, warrants to purchase up to
100,000 shares of common stock at a price of $6.12 per share and warrants to
purchase 100,000 shares of common stock at a price of $9.60 per share.
Westport's warrants are exercisable for a period of four years commencing one
year after the date of this Prospectus.
The Representative's Warrants contain provisions for adjustment of the
exercise price to prevent dilution upon the occurrence of certain events. The
Representative's Warrants will be non-transferable for a period of one year from
the date of this Prospectus except to officers of the Representative, other
underwriters, selected dealers, or their respective officers or partners. The
holders of the Representative's Warrants will have no voting, dividend or other
rights of shareholders of Amiga until such time as the Representative's Warrants
are exercised. Any gain from the sale of the Representative's Warrants or the
securities issuable upon exercise thereof may be deemed to be additional
underwriting compensation.
At the request of a majority of the holders of the Representative's
Warrants and/or underlying securities during the four year period commencing one
year after the date of this Prospectus, Amiga has agreed to file, at its expense
and on one occasion, and to use its best efforts to cause to become effective, a
new registration statement or prospectus required to permit the public sale of
the securities underlying the Representative's Warrants. In addition, if at any
time during the four year period commencing one year after the date of this
Prospectus, Amiga registers any of its securities, the holders of the
Representative's Warrants will have the right, subject to certain conditions, to
include in such registration statement at Amiga's expense, all or any part of
the securities underlying the Representative's Warrants.
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<PAGE>
A new registration statement will be required to be filed and declared
effective before distribution to the public of the securities underlying the
Representative's Warrants. Amiga will be responsible for the cost of preparing
such a registration statement.
For the life of the Representative's Warrants, the holders are given the
opportunity to profit from a rise in the market price of Amiga's securities,
with a resultant dilution in the interest of existing shareholders. In addition,
the terms on which Amiga could obtain additional capital may be adversely
affected, and the Representative's Warrants may be exercised at a time when
Amiga would, in all likelihood, be able to obtain any needed capital by a new
offering of securities on terms more favorable than those provided for by the
Representative's Warrants. The Representative and its transferees may be deemed
to be "underwriters" under the Securities Act with respect to the sale of Units,
Common Shares and Warrants to be received upon exercise of the Warrants, and any
profit realized upon such sale may be deemed to be additional underwriting
compensation.
The foregoing is a summary, which does not purport to be complete, of the
principal terms of the Agreement. Reference is made to copies of the Agreement
and form of Representative's Warrant which are on file with the Securities and
Exchange Commission as exhibits to the Registration Statement of which this
Prospectus forms a part. See "Additional Information".
SELLING SHAREHOLDER
In May 1999 Amiga issued 250,000 shares of its common stock to Steven
Heard for services rendered. By means of this prospectus Mr. Heard is offering
to sell 150,000 of these shares.
Mr. Heard is sometimes referred to in this prospectus as the selling
shareholder. Amiga will not receive any proceeds from the sale of the shares by
the Mr. Heard. If all 150,000 shares offered my Mr. Heard are sold, Mr. Heard
will own 100,000 shares (or less that 1%) of the Company's outstanding common
stock.
Mr. Heard's shares of common stock may be offered and sold by means of
this prospectus from time to time as market conditions permit in the
over-the-counter market, or otherwise, at prices and terms then prevailing or at
prices related to the then-current market price, or in negotiated transactions.
These shares may be sold by one or more of the following methods, without
limitation: (a) a block trade in which a broker or dealer so engaged will
attempt to sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction; (b) purchases by a broker or
dealer as principal and resale by such broker or dealer for its account pursuant
to this prospectus; (c) ordinary brokerage transactions and transactions in
which the broker solicits purchasers; and (d) face-to-face transactions between
sellers and purchasers without a broker/dealer. Brokers or dealers may receive
commissions or discounts from the Mr. Heard in amounts to be negotiated. Brokers
or dealers engaged by the Mr. Heard may arrange for other brokers or dealers to
participate, in sales of the common stock offered by Mr. Heard.
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<PAGE>
The costs of registering the shares offered by Mr. Heard are being paid by
Amiga. Mr. Heard will pay all other costs of the sale of the shares offered by
them.
Mr. Heard and any broker/dealers who act in connection with the sale of
the shares offered by Mr. Heard may be deemed to be "underwriters" within the
meaning of ss.2(11) of the Securities Acts of 1933, and any commissions received
by them and profit on any resale of the shares as principal might be deemed to
be underwriting discounts and commissions under the Securities Act.
Amiga has advised the Mr. Heard that he and any securities broker/dealers
or others who may be deemed to be statutory underwriters will be subject to the
Prospectus delivery requirements under the Securities Act of 1933. Amiga has
also advised the Mr. Heard that in the event of a "distribution" of the shares
owned by the Mr. Heard, Mr. Heard, any "affiliated purchasers", and any
broker/dealer or other person who participates in such distribution may be
subject to Rule 102 under the Securities Exchange Act of 1934 ("1934 Act") until
their participation in that distribution is completed. A "distribution" is
defined in Rule 102 as an offering of securities "that is distinguished from
ordinary trading transactions by the magnitude of the offering and the presence
of special selling efforts and selling methods". Amiga has also advised the Mr.
Heard that Rule 102 under the 1934 Act prohibits any "stabilizing bid" or
"stabilizing purchase" for the purpose of pegging, fixing or stabilizing the
price of the Common Stock in connection with this offering. Rule 101 makes it
unlawful for any person who is participating in a distribution to bid for or
purchase stock of the same class as is the subject of the distribution.
DESCRIPTION OF SECURITIES
Units
Each Unit consists of one share of Common Stock and one Warrant. The
shares of Common Stock and the Warrants comprising the Units will be immediately
detachable and separately transferable commencing on the date of this
Prospectus.
Common Stock
Amiga is authorized to issue 30,000,000 shares of Common Stock, (the
"Common Stock"). Holders of Common Stock are each entitled to cast one vote for
each share held of record on all matters presented to shareholders. Cumulative
voting is not allowed; hence, the holders of a majority of the outstanding
Common Stock can elect all directors.
Holders of Common Stock are entitled to receive such dividends as may be
declared by the Board of Directors out of funds legally available therefore and,
in the event of liquidation, to share pro rata in any distribution of Amiga's
assets after payment of liabilities. The board is not obligated to declare a
dividend. It is not anticipated that dividends will be paid in the foreseeable
future.
Holders of Common Stock do not have preemptive rights to subscribe to
additional shares if issued by Amiga. There are no conversion, redemption,
sinking fund
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or similar provisions regarding the Common Stock. All of the outstanding shares
of Common Stock are fully paid and non-assessable and all of the shares of
Common Stock offered as a component of the Units will be, upon issuance, fully
paid and non-assessable.
Preferred Stock
Amiga is authorized to issue up to 5,000,000 shares of Preferred Stock.
Amiga's Articles of Incorporation provide that the Board of Directors has the
authority to divide the Preferred Stock into series and, within the limitations
provided by Delaware statute, to fix by resolution the voting power,
designations, preferences, and relative participation, special rights, and the
qualifications, limitations or restrictions of the shares of any series so
established. As the Board of Directors has authority to establish the terms of,
and to issue, the Preferred Stock without shareholder approval, the Preferred
Stock could be issued to defend against any attempted takeover of Amiga.
In April and May, 1999 Amiga raised $3,000,000 from the sale of 15,000
shares of Amiga's Series A Preferred Stock and 750,000 warrants. Each Preferred
Share is convertible into 100 shares of Amiga's Common Stock. Each warrant
allows the holder to purchase one additional share of Amiga's Common Stock for
$5.00 at any time during the period six months after the date of this
prospectus. Promptly after the completion of this offering Amiga has agreed to
register for public sale the shares issuable upon the conversion of the
preferred stock and/or the exercise of the warrants.
Warrants
The warrants (included as a component of the units) will be issued in
registered form under, and subject to the terms of, a warrant agreement dated as
of the effective date of this offering between Amiga and Oxford Transfer and
Registrar, Inc. as warrant agent. The following statements are brief summaries
of certain provisions of the warrant agreement and are subject to the provisions
the warrant agreement , to which reference is made for a complete statement of
such provisions. Amiga has authorized the issuance of 1,150,000 Warrants,
including 150,000 Warrants representing the Underwriters' over-allotment option.
Amiga has reserved an equivalent number of shares of Common Stock for issuance
upon exercise of the Warrants. The Warrants will be detachable and separately
transferable from the Common Stock included in the Units commencing on the date
of this Prospectus.
Each Warrant entitles the holder to purchase one additional share of
Amiga's Common Stock at a price of $8.00 during a period ending two years after
the date of this prospectus.
Notwithstanding the exercise period applicable to the Warrants, no Warrant
may be exercised unless Amiga has in effect a current registration statement
covering the shares underlying the Warrants. Although Amiga has registered the
shares of Common Stock issuable upon the exercise of the Warrants, no assurance
can be given that Amiga will in fact maintain a current registration statement
covering the shares underlying the Warrants, in which case the Warrants will
expire and be of no value. It should also be
43
<PAGE>
noted that even if Amiga maintains a current registration statement covering the
shares of Common Stock underlying the Warrants, Amiga may not, or may be unable
to, register such Common Stock in each state in which a Warrant holder resides,
in which case the Warrant may not be exercised by such Warrant holder. At the
time the Warrants are available for exercise, Warrant holders may contact Amiga
to determine the states in which the Warrants may be exercised.
The Warrants will be immediately transferable. Holders of the Warrants may
sell the Warrants if a market exists, rather than exercise them. However, there
can be no assurance that a market will develop or continue as to the Warrants.
The exercise price of the Warrants may not be increased during the term of
the Warrants, but the exercise price may be decreased at the discretion of
Amiga's Board of Directors by giving each Warrant holder at least thirty (30)
days notice of such decrease. Unless exercised within the time provided for
exercise, the Warrants will automatically expire. The exercise period for the
Warrants may be extended by Amiga's Board of Directors giving at least thirty
(30) days notice of such extension to each Warrant holder of record.
There is no minimum number of shares which must be purchased upon exercise
of the Warrants.
The holders of the Warrants in certain instances are protected against
dilution of their interests represented by the underlying shares of Common Stock
upon the occurrence of stock dividends, stock splits, reclassifications,
reorganizations, mergers, consolidations, and for issuances of Common Stock at a
price below the exercise price of Warrants.
The holders of the Warrants have no voting power and are not entitled to
dividends. In the event of a liquidation, dissolution, or winding up of Amiga,
holders of the Warrants will not be entitled to participate in the distribution
of Amiga's assets.
There are no present arrangements for payment to the Underwriters or any
other person of any warrant solicitation fee in connection with the exercise of
the Warrants. In no event will any compensation for the exercise of Warrants be
paid within 12 months following the date of this Prospectus. If any warrant
solicitation fees are to be paid thereafter, in no event will compensation be
paid as a result of any transaction where the market price of the underlying
security is lower than the exercise price of the Warrant, where the Warrant to
be exercised is held in any discretionary account, where the exercise of a
Warrant is in connection with an unsolicited transaction, or where disclosure of
the compensation arrangements has not been made in documents provided to the
Warrant holder at the time of exercise.
No fractional shares will be issuable upon exercise of the Warrants. Amiga
will pay to a Warrant holder, in lieu of any fractional share which is otherwise
issuable, an amount in cash based on the market value of the share of Amiga's
Common Stock on the last trading day prior to the exercise date.
44
<PAGE>
Warrants are generally more speculative than the Common Stock which is
issuable upon the exercise of the Warrants. The percentage increase or decrease
in the market price of a Warrant may to be greater than the percentage increase
or decrease in the market price of the underlying common shares. A Warrant may
become worthless, or of reduced value, if the market price of the Common Stock
decreases, or increases only modestly, over the term of the Warrant.
The Warrants may be exercised upon surrender of the Warrant certificate on
or prior to the expiration date at the offices of the Warrant Agent, with the
exercise form on the reverse side of the Warrant certificate completed and
executed as indicated, accompanied by full payment of the exercise price (by
check payable to Amiga) to the Warrant Agent for the number of Warrants being
exercised.
Transfer Agent
Oxford Transfer and Registrar, Inc. is the transfer agent for Amiga's
Common Stock and Warrants.
EXPERTS
The financial statements as of June 30, 1998 and for the period from July
25, 1997 to June 30, 1998 included in this prospectus have been audited by Ernst
& Young LLP, independent auditors, in reliance upon the report of such firm
given upon their authority as experts in accounting and auditing.
LITIGATION
The Company is not involved in any legal proceedings.
LEGAL MATTERS
Hart & Trinen has acted as counsel to Amiga and has provided Amiga with
its opinion that the securities offered by this Prospectus have been validly
authorized and when sold in accordance with the terms described in this
Prospectus will represent fully paid and non-assessable securities of Amiga.
Certain legal matters will be passed upon for the Underwriters by William
M. Prifty, Esq.
INDEMNIFICATION
Amiga's Bylaws authorize indemnification of a director, officer, employee
or agent of Amiga against expenses incurred by him in connection with any
action, suit, or proceeding to which he is named a party by reason of his having
acted or served in such capacity, except for liabilities arising from his own
misconduct or negligence in performance of his duty. In addition, even a
director, officer, employee, or agent of
45
<PAGE>
Amiga who was found liable for misconduct or negligence in the performance of
his duty may obtain such indemnification if, in view of all the circumstances in
the case, a court of competent jurisdiction determines such person is fairly and
reasonably entitled to indemnification. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be permitted to
directors, officers, or persons controlling Amiga pursuant to the foregoing
provisions, Amiga has been informed that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Act and is therefore unenforceable.
ADDITIONAL INFORMATION
Amiga has filed with the Securities and Exchange Commission, 450 5th
Street, N.W., Washington, D.C. 20001, a Registration Statement under the
Securities Act of l933, as amended, with respect to the securities offered by
this prospectus. This prospectus does not contain all of the information in the
Registration Statement. For further information with respect to reference is
made to the Registration Statement and to the exhibits filed with the
registration statement. Statements contained in this prospectus as to the
contents of any contract or other documents are summaries which are not
necessarily complete, and in each instance reference is made to the copy of such
contract or other document filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference. This
Registration Statement and the related exhibits may also be inspected at the
Internet Web Site maintained by the Securities and Exchange Commission at
www.sec.gov. Copies may be obtained at the Washington, D.C. office upon payment
of the charges prescribed by the Commission.
Amiga does not file reports required by the Securities Exchange Act of
1934 with the Securities and Exchange Commission, although it will be required
to file these reports following this Offering. Amiga plans to furnish annual
reports to its shareholders, which will include audited financial statements.
Amiga may also issue quarterly or other interim reports to its shareholders as
it deems appropriate.
46
<PAGE>
FINANCIAL STATEMENTS
AMIGA TELEPHONY
CORPORATION
(a development stage enterprise)
June 30, 1998
47
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Directors of
Amiga Telephony Corporation
We have audited the accompanying balance sheet of Amiga Telephony Corporation (a
development stage enterprise) as of June 30, 1998, and the related statements of
operations, stockholders' equity and cash flows from July 25, 1997 (date of
incorporation) to June 30, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with United States generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Amiga Telephony Corporation (a
development stage enterprise) at June 30, 1998, and the results of its
operations and its cash flows from July 25, 1997 (date of incorporation) to June
30, 1998, in conformity with accounting principles generally accepted in the
United States.
/s/ ERNST & YOUNG LLP
Vancouver, Canada,
July 20, 1998. Chartered Accountants
48
<PAGE>
Amiga Telephony Corporation
(a development stage enterprise)
BALANCE SHEET
(expressed in U.S. dollars)
As of June 30
1998
$
- --------------------------------------------------------------------------------
ASSETS
Current
Cash 242,614
Other receivable 6,476
Prepaid expenses 17,500
- --------------------------------------------------------------------------------
Total current assets 266,590
- --------------------------------------------------------------------------------
Investment [note 3] 175
Deposit [note 6] 83,043
- --------------------------------------------------------------------------------
349,808
================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Accounts payable 10,242
- --------------------------------------------------------------------------------
Total current liabilities 10,242
- --------------------------------------------------------------------------------
Commitments [note 6]
Stockholders' equity
Share capital [note 3]
Common stock - $0.0001 par value
30,000,000 authorized, 8,970,000 issued and outstanding 897
Preferred stock - $0.0001 par value
5,000,000 authorized --
Additional paid in capital 495,528
Deficit accumulated in the development stage (156,859)
- --------------------------------------------------------------------------------
Total stockholders' equity 339,566
- --------------------------------------------------------------------------------
349,808
================================================================================
See accompanying notes
On behalf of the Board:
Director Director
49
<PAGE>
Amiga Telephony Corporation
(a development stage enterprise)
STATEMENT OF OPERATIONS
(expressed in U.S. dollars)
Period from
July 25, 1997
(date of
incorporation) to
June 30,
1998
$
- -------------------------------------------------------------------------
INCOME
Interest 802
- -------------------------------------------------------------------------
EXPENSES
Legal and audit 30,121
Management and administration [note 5] 110,200
Marketing 986
Office expenses 194
Bank charges 208
Travel 15,952
- -------------------------------------------------------------------------
157,661
- -------------------------------------------------------------------------
Loss for period and deficit, end of period (156,859)
=========================================================================
See accompanying notes
50
<PAGE>
Amiga Telephony Corporation
(a development stage enterprise)
STATEMENT OF STOCKHOLDERS' EQUITY
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
Common stock
------------ Additional
Number Paid in Accumulated
of shares Amount capital deficit Total
# $ $ $ $
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Issuance of common shares 19,070,000 1,907 495,528 -- 497,435
Repurchase of common shares (10,100,000) (1,010) -- -- (1,010)
Loss -- -- -- (156,859) (156,859)
- ----------------------------------------------------------------------------------------------------
Balance, June 30, 1998 8,970,000 897 495,528 (156,859) 339,566
====================================================================================================
</TABLE>
See accompanying notes
51
<PAGE>
Amiga Telephony Corporation
(a development stage enterprise)
STATEMENT OF CASH FLOWS
(expressed in U.S. dollars)
Period from
July 25, 1997
(date of
incorporation) to
June 30,
1998
$
- ----------------------------------------------------------------------------
OPERATING ACTIVITIES
Loss for period (156,859)
Changes in non-cash working capital (13,734)
- ----------------------------------------------------------------------------
Net cash used in operating activities (170,593)
- ----------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from share issuances 496,425
- ----------------------------------------------------------------------------
Net cash provided by financing activities 496,425
- ----------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchase of investment [note 3] (175)
Deposit (83,043)
- ----------------------------------------------------------------------------
Net cash used in investing activities (83,218)
- ----------------------------------------------------------------------------
Net change in cash during the period and cash,
end of period 242,614
- ----------------------------------------------------------------------------
See accompanying notes
52
<PAGE>
Amiga Telephony Corporation
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS
(expressed in U.S. dollars)
June 30, 1998
1. DESCRIPTION OF BUSINESS
Amiga Telephony Corporation (the "Company") was incorporated under the laws of
the State of Delaware, USA on July 25, 1997 with nominal share capital under the
name of PRR Inc. On August 25, 1997 PRR Inc. merged with Power Research
Incorporated, a company with negligible net assets, and changed its name to
Power Research Incorporated. On January 15, 1998, the Company's name was changed
to Fortunet Technologies Inc. and then changed to Amiga Telephony Corporation on
May 11, 1998. The Company is developing an internet telephony network.
Activities through June 30, 1998 include the organization of the Company and the
raising of equity capital.
2. ACCOUNTING POLICIES
These financial statements have been prepared in accordance with accounting
principles generally accepted in the United States. Because a precise
determination of many assets and liabilities depends on future events, the
preparation of financial statements necessarily involves the use of management's
estimates and approximations. Actual results could differ from those estimates.
Investment
The Company's investment in Century International Ventures, Ltd., a company
incorporated under the laws of the State of Colorado, is recorded at cost.
Income taxes
The Company uses the liability method of accounting for income taxes. Under this
method, deferred tax assets and liabilities are determined based on the
difference between financial statement and tax bases of assets and liabilities
and are measured using the enacted tax rates and laws that are expected to be in
effect when the differences are expected to reverse. Deferred tax assets are
reduced by a valuation allowance in respect of amounts considered by management
to be less likely than not of realization in future periods.
Foreign currency translation
The Company follows the temporal method of accounting for the translation of
foreign currency amounts into U.S. dollars. Under this method all monetary
assets and liabilities, expressed in foreign currencies, are translated at the
rate of exchange prevailing at year end. Non-monetary assets and liabilities are
translated at the rate of exchange prevailing on the date of the translation.
Gains and losses arising on foreign currency translation are included in income.
53
<PAGE>
Amiga Telephony Corporation
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS
(expressed in U.S. dollars)
June 30, 1998
3. SHARE STOCK
[i] Authorized
The authorized capital of the Company consists of 30,000,000 common shares with
$.0001 par value, and 5,000,000 Class A preferred shares with $.0001 par value.
[ii] Issued
<TABLE>
<CAPTION>
Number
of Shares Amount
# $
- -------------------------------------------------------------------------------------------
<S> <C> <C>
For cash consideration:
Issuance of common shares at $.10 per share on incorporation 100 1
Issuance of common shares at $.0001 per share 11,001,944 1,100
Issuance of common shares at $.00012 per share 4,600,000 460
Issuance of common shares at $.50 per share 992,500 99
Repurchase of common shares at $.0001 per share (10,100,000) (1,010)
Issuance of common shares on merger with PRR, Inc. 1,475,456 147
Issuance of common shares pursuant to management
services agreement with Novus Telecom Group Inc. [note 5] 1,000,000 100
- -------------------------------------------------------------------------------------------
Balance at June 30, 1998 8,970,000 897
===========================================================================================
</TABLE>
During the period ended June 30, 1998, the Company issued common shares for
consideration greater than the par value of $.0001 per share. The excess of the
consideration received over the par value of the shares issued in the amount of
$495,528 has been allocated to additional paid in capital.
On August 25, 1997, the Company issued 1,475,456 common shares in exchange for
the issued and outstanding common shares of PRR, Inc. which was merged into the
Company. At the date of merger, PRR, Inc.'s net assets comprised cash of $5,000
and a $175 investment in Century International Ventures, Ltd.
54
<PAGE>
Amiga Telephony Corporation
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS
(expressed in U.S. dollars)
June 30, 1998
3. SHARE STOCK (cont'd.)
[iii] Commitments to issue options
[a] Pursuant to the management services agreement with Novus Telecom Group
Inc. ("Novus"), a company related through common directors, dated April
15, 1998 [see note 5], the Company is committed to grant 1,000,000 options
to purchase 1,000,000 common shares at an exercise price to be determined
at a later date, to officers, employees, consultants or service providers
of Novus as determined by its board of directors.
[b] Pursuant to a consulting agreement dated May 11, 1998, the Company is
committed to grant 50,000 options to acquire 50,000 common shares at an
exercise price to be determined at a later date upon the creation of a
stock option plan.
4. INCOME TAXES
The Company has non-capital loss carryforwards of approximately $150,000 which
will expire in 2005.
A valuation allowance has been recognized to offset deferred tax assets totaling
approximately $68,000 arising from non-capital loss carryforwards for which
realization is uncertain.
5. RELATED PARTY TRANSACTIONS
Management services fees totaling $72,500 were paid to companies, including
Novus, related through common directors.
55
<PAGE>
Amiga Telephony Corporation
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS
(expressed in U.S. dollars)
June 30, 1998
6. COMMITMENTS
[i] The Company is obligated to make payments for management services [see
note 5] under management and consulting agreements as follows:
$
--------------------------------------------------------------------------
1999 272,000
2000 190,000
--------------------------------------------------------------------------
362,000
==========================================================================
[ii] On May 15, 1998, the Company agreed to purchase $332,171 of equipment and
software. Complete delivery and installation is expected in September,
1998. The Company has paid a deposit of $83,043 in respect of this
purchase.
7. SUBSEQUENT EVENTS
Subsequent to June 30, 1998, the Company received a subscription for 30,000 of
the Company's common shares for gross proceeds of $15,000.
56
<PAGE>
AMIGA TELEPHONY CORPORATION
(a development stage enterprise)
BALANCE SHEET
As of March 31, 1999
STATED IN US $ (Prepared by Management)
================================================================================
<TABLE>
<CAPTION>
31-Mar-99 30-Jun-98
-----------------------------
(Unaudited)
<S> <C> <C>
ASSETS
Current
Cash $ 891,638 $ 242,614
Other receivables 28,010 6,476
Prepaid expenses 2,267 17,500
- --------------------------------------------------------------------------------------------------
921,915 266,590
Investment -- 175
Deposits 15,331 83,043
Deferred share issue costs 25,000 --
Capital assets (Note 3) 192,365 --
- --------------------------------------------------------------------------------------------------
$ 1,154,611 $ 349,808
==================================================================================================
LIABILITIES
Current
Accounts payable $ 75,659 $ 10,242
- --------------------------------------------------------------------------------------------------
Commitments (Note 7)
Stockholders' equity Share capital (Note 4)
Common Shares - $0.0001 par value
30,000,000 authorized; 9,962,000 issued and outstanding 996 897
Preferred shares - non-voting, non-cumulative, convertible
with $0.0001 par value
5,000,000 authorized; 5,000 issued and outstanding 1 --
Additional paid-in capital 1,842,929 495,528
Stock based compensation 15,000 --
Deficit accumulated in the development stage (779,974) (156,859)
- --------------------------------------------------------------------------------------------------
1,078,952 339,566
- --------------------------------------------------------------------------------------------------
$ 1,154,611 $ 349,808
==================================================================================================
</TABLE>
57
<PAGE>
AMIGA TELEPHONY CORPORATION
(a development stage enterprise)
Statement of Operations
For 9 months ended March 31, 1999
STATED IN US $ (Prepared by Management)
================================================================================
<TABLE>
<CAPTION>
Period from 25-
Jul-97 (date of
Nine Months Nine Months incorporation)
Ending 31-Mar-99 Ending 31-Mar-98 to 31-Mar-99
-----------------------------------------------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
INCOME
Interest Income $ 2,600 $ -- $ 3,402
EXPENSES
Depreciation $ 38,061 $ -- $ 38,061
Legal & Audit 51,378 -- 81,499
Management & Administration 346,724 -- 456,924
Marketing 37,794 -- 38,780
Bank charges 2,735 -- 2,943
Office Expenses 39,716 -- 39,910
Stock based compensation 15,000 -- 15,000
Travel 32,621 -- 48,573
Write-down of vendor deposits (Note 8) 61,511 -- 61,511
Write-off investment 175 -- 175
- ------------------------------------------------------------------------------------------------
625,715 -- 783,376
- ------------------------------------------------------------------------------------------------
LOSS FOR PERIOD (623,115) -- (779,974)
DEFICIT, BEGINNING OF PERIOD (156,859) -- --
- ------------------------------------------------------------------------------------------------
DEFICIT, END OF PERIOD $(779,974) $ -- $(779,974)
================================================================================================
</TABLE>
58
<PAGE>
AMIGA TELEPHONY CORPORATION
(a development stage enterprise)
STATEMENT OF CASH FLOWS
For 9 months ended March 31, 1999
STATED IN US $ (Prepared by Management)
================================================================================
<TABLE>
<CAPTION>
Period from 25-
Jul-97 (date of
Nine Months Nine Months incorporation)
Ending 31-Mar-99 Ending 31-Mar-98 to 31-Mar-99
-----------------------------------------------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Loss for period $ (623,115) $ -- $ (779,974)
Items not involving cash
Amortization 38,061 -- 38,061
Stock based compensation 15,000 -- 15,000
Write-off investment 175 -- 175
Changes in non-cash operating
working capital 59,116 -- 45,382
- --------------------------------------------------------------------------------------------------
Net cash used in operations (510,763) -- (681,356)
- --------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchases of capital assets (230,426) -- (230,426)
Deposit 42,712 -- (40,331)
- --------------------------------------------------------------------------------------------------
Net cash used in investing activities (187,714) -- (270,757)
- --------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from issuance of share capital 1,347,501 -- 1,843,751
- --------------------------------------------------------------------------------------------------
Net cash provided by financing activities 1,347,501 -- 1,843,751
- --------------------------------------------------------------------------------------------------
NET CASH INFLOW 649,024 -- 891,638
CASH, BEGINNING OF THE PERIOD 242,614 -- --
- --------------------------------------------------------------------------------------------------
CASH, END OF THE PERIOD $ 891,638 $ -- $ 891,638
==================================================================================================
</TABLE>
59
<PAGE>
AMIGA TELEPHONY CORPORATION
(a development stage enterprise)
STATEMENT OF STOCKHOLDERS' EQUITY
STATED IN US $ (Prepared by Management)
================================================================================
<TABLE>
<CAPTION>
Common Stock
Number of Paid in Stock based Accumulated
shares Amount capital compensation deficit Total
# $ $ $ $ $
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Issuance of common stock 19,070,000 1,907 495,528 -- -- $ 497,435
Repurchase of common stock (10,100,000) (1,010) -- -- -- $ (1,010)
Loss -- -- -- -- (156,859) $ (156,859)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, June 30, 1998 8,970,000 $ 897 $ 495,528 -- $ (156,859) $ 339,566
- ------------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
Issuance of common stock 992,000 99 447,402 -- -- $ 447,501
Stock based compensation -- -- -- 15,000 -- $ 15,000
Loss -- -- -- -- (608,115) $ (608,115)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, March 31, 1999 9,962,000 $ 996 $ 942,930 $ 15,000 $ (764,974) $ 193,952
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Preferred Shares
Number of Paid in Stock based Accumulated
shares Amount capital compensation deficit Total
# $ $ $ $ $
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Issuance of preferred shares -- -- -- -- -- $ --
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, June 30, 1998 -- $ -- $ -- $-- $-- $ --
- ------------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
Issuance of Class
A preferred shares 5,000 1 899,999 -- -- $900,000
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, March 31, 1999 5,000 $ 1 $899,999 $-- $-- $900,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
60
<PAGE>
- --------------------------------------------------------------------------------
Amiga Telephony Corporation
(a development stage corporation)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
================================================================================
March 31, 1999 (in US dollars)
1. DESCRIPTION OF BUSINESS
Amiga Telephony Corporation (the "Company") was incorporated under the laws of
the State of Delaware, USA on July 25, 1997 with nominal share capital under the
name of PRR Inc. On August 25, 1997 PRR Inc. merged with Power Research
Incorporated, a company with negligible net assets, and changed its name to
Power Research Incorporated. On January 15, 1998, the Company changed its name
to Fortunet Technologies Inc. and then changed to Amiga Telephony Corporation on
May 11, 1998. The Company is developing a facilities-based internet telephony
network consisting of computerized IP telephone gateways and other IP network
equipment. Activities through March 31, 1999, include the organization of the
Company, the raising of seed equity capital, and the development of the
Company's business plan.
2. ACCOUNTING POLICIES
These financial statements have been prepared in accordance with accounting
principles that are generally accepted in the United States. Because a precise
determination of many assets and liabilities depends on future events, the
preparation of financial statements necessarily involves the use of management's
estimates and approximations. Actual results could differ from those estimates.
Capital assets
Capital assets are recorded at cost and amortized over their useful lives on a
straight-line basis on the following basis;
Computer equipment 3 years
Furniture and fixtures 5 years
Foreign currency translation
The US dollar is used as the reporting currency in these financial statements.
Assets and liabilities of the Company are translated into US dollars using
current exchange rates in effect at the balance sheet date and income and
expense accounts are translated using the weighted average exchange rate during
the period. Exchange gains and losses are included in the determination of net
income in the period incurred.
61
<PAGE>
- --------------------------------------------------------------------------------
Amiga Telephony Corporation
(a development stage corporation)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
================================================================================
March 31, 1999 (in US dollars)
2. ACCOUNTING POLICIES (cont'd)
Income taxes
The Company uses the liability method of accounting for income taxes. Under this
method, deferred tax assets and liabilities are determined based on the
difference between financial statement and tax bases of assets and liabilities
and are measured using the enacted tax rates and laws that are expected to be in
effect when the differences are expected to reverse. Deferred tax assets are
reduced by a valuation allowance in respect of amounts considered by management
to be less likely than not of realization in future periods.
Stock-based compensation
The Company accounts for stock-based compensation based on the provision of
Accounting Principles Board Opinion #25 whereby the intrinsic value of options
granted is recorded at the measurement date. The Company has elected to only
disclose the effects of the fair value method of accounting for stock options
prescribed by Statement of Financial Accounting Standards ("SFAS") No. 123.
3. CAPITAL ASSETS
----------------------------------------------------------------------
Accumulated Net Book
Cost Amortization Value
----------------------------------------------------------------------
Computer equipment $217,469 $37,670 $179,799
Furniture & fixtures 12,957 391 12,566
----------------------------------------------------------------------
Total 230,246 38,061 192,365
----------------------------------------------------------------------
4. SHARE CAPITAL
[i] Authorized
The authorized capital of the Company consists of 30,000,000 common shares with
$.0001 par value, and 5,000,000 Class A preferred shares with $.0001 par value.
62
<PAGE>
- --------------------------------------------------------------------------------
Amiga Telephony Corporation
(a development stage corporation)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
================================================================================
March 31, 1999 (in US dollars)
4. SHARE CAPITAL (cont'd)
Each Class A preferred share is non-voting and entitles the holder to a
non-cumulative dividend of $15 per year. Additionally, each Class A preferred
share is convertible into the number of common shares determined by dividing
$200 by the lower of (1) $2.00 or (2) the offering price of the common shares
which the Company plans to sell in its proposed public offering. The Class A
preferred shares may be converted into common shares at any time after the first
to occur of (1) three months after the effective date of the Company's proposed
public offering or (2) if the effective date of the proposed public offering is
not before August 31, 1999, at any time after August 31, 1999.
[ii] Issued
<TABLE>
<CAPTION>
Common Shares Number Amount
of Shares $
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
For cash consideration:
Issuance of common shares at $.01 per share on organization 100 1
Issuance of common shares at $.0001 per share 11,001,944 1,100
Issuance of common shares at $.00012 per share 4,600,000 460
Issuance of common shares at $.50 per share 992,500 99
Repurchase of common shares at $.0001 per share (10,100,000) (1,010)
Issuance of common shares on merger with PRR, Inc. 1,475,456 147
Issuance of common shares pursuant to management
services agreement with Novus Telecom Group Inc. [note 6] 1,000,000 100
- ----------------------------------------------------------------------------------------------
Balance at June 30, 1998 8,970,000 897
For cash consideration:
Issuance of common shares at $.50 per share 980,000 98
Issuance of common shares pursuant to management
services agreement 12,000 1
- ----------------------------------------------------------------------------------------------
Balance at March 31, 1999 9,962,000 996
==============================================================================================
Class A Preferred Shares
For cash consideration:
Issuance of preferred shares at $200 per share 5,000 1
- ----------------------------------------------------------------------------------------------
Balance at March 31, 1999 5,000 1
==============================================================================================
</TABLE>
63
<PAGE>
- --------------------------------------------------------------------------------
Amiga Telephony Corporation
(a development stage corporation)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
================================================================================
March 31, 1999 (in US dollars)
4. SHARE CAPITAL (cont'd)
During the period to June 30, 1998, the Company issued 8,970,000 common shares
for consideration greater than the par value of $.0001 per share. The excess of
the consideration received over the par value of the shares issued in the amount
of $495,528 has been allocated to additional paid in capital. During the nine
months ended March 31, 1999, the Company issued 980,000 common shares for
consideration greater than the par value of $.0001 per share. The excess of the
consideration received over the par value of the shares issued in the amount of
$447,402 has been allocated to additional paid in capital.
In February 1999, the Company initiated a private offering of a maximum of
15,000 units at a price of $200 per unit. Each unit is comprised of one Class A
preferred share and fifty warrants to purchase common shares. Each warrant
allows the holder to purchase 1 common share at a price equal to (1) the
offering price of the common stock to be sold in the Company's proposed public
offering or (2) if the effective date of the Company's proposed public offering
is not before August 31, 1999, $2.00 per share. The warrants may be exercised
(1) at any time during the six month period beginning on the effective date of
the Company's proposed public offering or (2) if the effective date of the
Company's proposed public offering is not before August 31, 1999, at any time
during the twelve month period beginning August 31, 1999. If by May 31, 2000 the
Company's common shares have not been included in a Registration Statement which
has been filed with the Securities and Exchange Commission then in lieu of
exercising this warrant by paying the exercise price in cash, the holder may
from time to time convert the warrant, in whole or in part, into a number of
common shares determined by dividing the aggregate fair market value of the
common shares minus the aggregate exercise price of the warrant by the fair
market value of one common share.
At March 31, 1999, 5,000 units were issued for net proceeds of $900,000. The
excess of the consideration over par value of $899,999 has been allocated to
additional paid in capital.
On August 25, 1997, the Company issued 1,475,456 common shares in exchange for
the issued and outstanding common shares of PRR, Inc. which was merged into the
Company. At the date of merger, PRR, Inc.'s net assets comprised cash of $5,000
and a $175 investment in Century International Ventures, Ltd.
64
<PAGE>
- --------------------------------------------------------------------------------
Amiga Telephony Corporation
(a development stage corporation)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
================================================================================
March 31, 1999 (in US dollars)
4. SHARE CAPITAL (cont'd)
[iii] Stock option plans
On December 1, 1998, the Board of Directors approved the adoption of an
incentive stock option plan and a non-qualified stock option plan whereby
1,000,000 common shares and 3,000,000 common shares have been reserved for
issuance pursuant to the incentive and non-qualified stock option plans,
respectively. Pursuant to the plans 750,000 incentive stock options and
2,495,000 non-qualified stock options have been granted and remain outstanding
at March 31, 1999. Each stock option allows the holder to acquire one common
share at an exercise price of $0.50 per share expiring December 1, 2001. The
stock options vest quarterly over a twelve month period pursuant to the date of
an initial public offering.
[iv] Stock bonus plan
On December 1, 1998, the Board of Directors approved the adoption of a stock
bonus plan whereby 1,000,000 common shares have been reserved for issuance.
Under the stock bonus plan, the Company may issue common shares to employees,
directors, officers, consultants and advisors for services rendered. Pursuant to
the plan, the Company has issued 15,000 common shares in the period subsequent
to March 31, 1999 [see note 10].
[v] Stock based compensation
Had compensation cost been determined based on the fair value at the grant dates
for those options issued to employees and consultants, consistent with the
method described in SFAS No. 123, the Company's loss for the period would have
been increased to the pro forma amounts indicated below:
1998 1997
$ $
----------------------------------------------------------------------
Loss for period As reported (623,115) --
Pro forma (645,115) --
======================================================================
The fair value of each option granted in 1998 was estimated on the date of the
grant using the Minimum Value option-pricing model with the following
assumptions: no dividend yield; no volatility as the Company's stock was not
trading at the grant date; risk-free interest rate of 5% and an expected life of
2.7 years.
The weighted-average fair value of options granted during the year was $0.50.
5. INCOME TAXES
As at June 30, 1998, the Company has non-capital loss carry-forwards of
approximately $150,000 which will expire in 2005.
A valuation allowance has been recognized to offset deferred tax assets totaling
approximately $68,000 arising from non-capital loss carryforwards for which
realization is uncertain.
65
<PAGE>
- --------------------------------------------------------------------------------
Amiga Telephony Corporation
(a development stage corporation)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
================================================================================
March 31, 1999 (in US dollars)
6. RELATED PARTY TRANSACTIONS
Management fees totaling $232,500 (1998 - $ 72,500) were paid to companies,
including Novus, related through common directors.
7. COMMITMENTS
The Company is obligated to make minimum annual lease payments for office
premises and for management services [note 6] under management and consulting
agreements as follows:
$
-------------------------------------------------------------------
1999 (three months) 72,000
2000 238,000
2001 48,000
2002 48,000
-------------------------------------------------------------------
390,000
-------------------------------------------------------------------
8. WRITE-DOWN OF VENDOR DEPOSITS
In May, 1998, the Company entered into an agreement to purchase $332,171 in
computer equipment and software. In February, 1999, the Company decided to
terminate the supply agreement and incurred a loss of $61,511 which represents
the non-refundable deposits paid to vendor.
9. STOCK BASED COMPENSATION
During the period ended March 31, 1999, the Company recorded stock based
compensation expense of $15,000 relating to stock option issued to consultants.
66
<PAGE>
- --------------------------------------------------------------------------------
Amiga Telephony Corporation
(a development stage corporation)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
================================================================================
March 31, 1999 (in US dollars)
10. SUBSEQUENT EVENTS
The following events occurred subsequent to March 31, 1999.
(i) The Company issued 265,000 common shares for services rendered. Of the
total 15,000 common shares were issued as part of the stock bonus plan
[see note 4].
(ii) In May, 1999, the Company obtained cash subscriptions for an additional
7,500 units (note 4) for net proceeds of $1,350,000. The balance of 2,500
units of the February, 1999 offering has been subscribed for by Ascend
Communications Inc. ("Ascend"), one of the Company's technology partners,
and the proceeds have been placed into trust to be released upon the
finalization of the business relationship agreement with Ascend.
(iii) On April 19, 1999, the Company entered into a non-binding letter of intent
with Lucent Technologies Canada and Ascend, its primary technology
partners, to finalize the structure of the business relationship between
the Company and its partners for the deployment of its IP telephone
gateways. In May, 1999, the Company paid a refundable deposit of $100,000
as a guarantee to its technology and financing partners.
(iv) The Company intends to enter into an underwriting agreement pursuant to
which the Company expects to offer up to 1,000,000 shares of common stock
and 1,000,000 common share purchase warrants. Net proceeds are anticipated
to be $4,685,000, net of the underwriter commission and anticipated costs
of the offering. In addition, the Company has agreed to sell to the
underwriter, for considerations of $100, warrants to purchase up to
100,000 common shares at a price of $6.12 per share and warrants to
purchase 100,000 common shares at a price of $9.60 per share. The
underwriter's warrants are exercisable for four years commencing one year
after the date of the Company's proposed public offering.
67
<PAGE>
TABLE OF CONTENTS
Page
----
PROSPECTUS SUMMARY ..............................................
RISK FACTORS.....................................................
FORWARD LOOKING STATEMENTS.......................................
DILUTION AND COMPARATIVE SHARE DATA .............................
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS ......
BUSINESS ........................................................
MANAGEMENT ......................................................
PRINCIPAL SHAREHOLDERS ..........................................
UNDERWRITING.....................................................
SELLING SHAREHOLDER .............................................
DESCRIPTION OF SECURITIES .......................................
EXPERTS .........................................................
LITIGATION ......................................................
LEGAL MATTERS....................................................
INDEMNIFICATION .................................................
ADDITIONAL INFORMATION...........................................
FINANCIAL STATEMENTS ............................................
In this prospectus, references to "dollars" and "$" are to U.S. dollars.
Throughout this prospectus Amiga has used industry data obtained from market
research, publicly available information and industry publications. Industry
publications generally state that the information they contain has been obtained
from sources believed to be reliable but that the accuracy and completeness of
this information is not guaranteed. Although these data have been correctly
reproduced in this prospectus from the market research, publicly available
information and industry publications, Amiga has not independently verified the
data.
No dealer, salesperson or other person has been authorized to give any
information or to make any representation not contained in this prospectus, and
if given or made, such information or representations must not be relied upon as
having been authorized by Amiga. This prospectus does not constitute an offer to
sell, or a solicitation of an offer to buy, any of the securities offered in any
jurisdiction to any person to whom it is unlawful to make such an offer in such
jurisdiction. Neither the delivery of this prospectus or any sale made by this
Prospectus shall, under any circumstances, create any implication that the
information in this prospectus is correct as of any time subsequent to the date
of this prospectus or that there has not been any change in the affairs of Amiga
since such date.
Until _____, 1999 all dealers effecting transactions in the registered
securities, whether or not participating in this distribution, may be required
to deliver a prospectus. This in addition to the obligation of dealers to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
68
<PAGE>
PART II
Information Not Required in Prospectus
Item 24. Indemnification of Officers and Directors.
The Delaware Business Corporation Act and the Company's Bylaws provide
that the Company may indemnify any and all of its officers, directors, employees
or agents or former officers, directors, employees or agents, against expenses
actually and necessarily incurred by them, in connection with the defense of any
legal proceeding or threatened legal proceeding, except as to matters in which
such persons shall be determined to not have acted in good faith and in the best
interest of the Company.
Item 25. Other Expenses of Issuance and Distribution.
SEC Filing Fee $4,963
NASD Filing Fee 2,284
Blue Sky Fees and Expenses 10,000
Printing and Engraving Expenses 20,000
Legal Fees and Expenses 40,000
Accounting Fees and Expenses 10,000
Miscellaneous Expenses 12,753
--------
TOTAL $100,000
========
All expenses other than the S.E.C. and NASD filing fees are estimated.
Item 26. Recent Sales of Unregistered Securities.
The following information sets forth all securities of the Company which
have been sold and which were not registered under the Securities Act of 1933.
Between July 25, 1997 and May 12, 1998 Amiga sold 10,000,100 shares of its
common stock to Bona Vista Ltd. for $5,910 in cash.
In August 1997 Amiga issued 175,456 shares of its common stock in exchange
for all of the Series B Preferred Stock of Century International Ventures Ltd.
("Century") in a share-for-share exchange with the holders of such Series B
Preferred Stock.
On May 12, 1998 Amiga purchased 10,100,000 shares of common stock from
Bona Vista for $1,010. The shares purchased from Bona Vista were returned to the
category of "authorized but unissued" common stock.
On May 15, 1998 Amiga sold 6,901,944 shared of common stock to twenty
three persons for $690 in cash and issued 1,000,000 shares of common stock for
services rendered.
69
<PAGE>
On May 31, 1998 Amiga sold 1,022,500 shares of common stock to eleven
persons for $511,250.
In October 1998 Amiga issued 12,000 shares of its common stock to two
persons for services rendered. Between October 1998 and January 1999 Amiga sold
950,000 shares of its common stock to thirty-one persons for $475,000.
All of the foregoing sales of the Company's common stock were exempt from
registration pursuant to Rule 504 of the Securities and Exchange Commission.
Although no underwriters were used in connection with the sale of these
securities, the Company paid sales commissions of $43,500 to two persons for
their assistance in selling these shares.
Between March and June 1999 Amiga sold 15,000 shares of its Series A
Preferred Stock, plus warrants for the purchase of 750,000 shares of common
stock, for $3,000,000 to a group of private investors.
The sales of the Company's Series A Preferred Stock and warrants were
exempt from registration pursuant to Rule 506 of the Securities and Exchange
Commission. All shares of the Series A Preferred Stock were acquired for
investment purposes only and without a view to distribution. All of the persons
who acquired the Company's Preferred Shares were fully informed and advised
about matters concerning the Company, including its business, financial affairs
and other matters. The purchasers of the Company's Preferred Stock acquired the
securities for their own accounts. All the Preferred Shares are "restricted"
securities as defined in Rule 144 of the Rules and Regulations of the Securities
and Exchange Commission. Although no underwriters were used in connection with
the sale of these securities, the Company paid sales commissions of $250,000 and
issued shares of common stock to one person for his assistance in selling these
securities.
In May 1999 the Company issued 250,000 shares of its common stock to one
person as partial compensation for his assistance in the sale of the Company's
Series A Preferred Stock (and warrants) and for other services rendered. In May
1999 the Company issued 15,000 shares of its common stock to another person for
services rendered. The issuance of these shares was exempt from registration
pursuant to Section 4(2) of the Securities Act of 1933. All of these shares were
acquired for investment purposes only and without a view to distribution. The
persons who received these shares were fully informed about matters concerning
the Company, including its business, financial affairs and other matters and
acquired the securities for their own accounts. The 265,000 shares are
"restricted" securities as defined in Rule 144 of the Rules and Regulations of
the Securities and Exchange Commission. No underwriters were used and no
commissions were paid in connection with the issuance of these shares.
Item 27. Exhibits
1.1 Underwriting Agreement*
1.2 Underwriters' Warrant*
70
<PAGE>
1.3 Agreement Among Underwriters*
1.4 Selected Dealer Agreement*
3.1 Certificate of Incorporation and Amendments*
3.2 Certificate of Designation of Series A Preferred Stock*
3.3 Bylaws*
4.1 Incentive Stock Option Plan*
4.2 Non-Qualified Stock Option Plan*
4.3 Stock Bonus Plan*
5 Opinion of Counsel*
10 Management Services Agreement between Canadian Digital Network Inc. (d/b/a
Novus Telecom Group) and the Company.*
23.1 Consent of Hart and Trinen*
23.2 Consent of Accountants*
24 Power of Attorney-- Included as part of the Signature Page
27 Financial Data Schedules*
- ----------
* Previously Filed
Item 28. 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 l0(a)(3) of the
Securities Act of l933;
(ii) To reflect in the Prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement or any
material change
71
<PAGE>
to such information in the Registration Statement, including (but not limited
to) any addition or deletion of a managing underwriter.
(2) That, for the purpose of determining any liability under the
Securities Act of l933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) To provide to the Underwriter at the closing specified in the
underwriting agreement certificates in such denominations and registered in such
names as required by the Underwriter to permit prompt delivery to each
purchaser.
(5) Insofar as indemnification for liabilities arising under the
Securities Act of l933 may be permitted to directors, officers and controlling
persons of the Registrant, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
72
<PAGE>
POWER OF ATTORNEY
The registrant and each person whose signature appears below hereby
authorizes the agent for service named in this Registration Statement, with full
power to act alone, to file one or more amendments (including post-effective
amendments) to this Registration Statement, which amendments may make such
changes in this Registration Statement as such agent for service deems
appropriate, and the Registrant and each such person hereby appoints such agent
for service as attorney-in-fact, with full power to act alone, to execute in the
name and in behalf of the Registrant and any such person, individually and in
each capacity stated below, any such amendments to this Registration Statement.
SIGNATURES
In accordance with 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 of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of
Vancouver, Province of British Columbia on June 24, 1999.
AMIGA TELEPHONY, INC.
By /s/ Ian C. Hand
---------------------------------------
Ian C. Hand, President, Chief Executive
Officer and Principal Financial Officer
By /s/ Roney Haboosheh
---------------------------------------
Roney Haboosheh,
Principal Accounting Officer
Pursuant to the requirements of the Securities Act of l933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated.
Title Date
----- ----
/s/ Ian D. Robertson Director June 24, 1999
- ------------------------------
Ian D. Robertson
/s/ Ian C. Hand Director June 24, 1999
- ------------------------------
Ian C. Hand
73
<PAGE>
/s/ Donald Morrison Director June 24, 1999
- ------------------------------
Donald Morrison
/s/ Barry Duggan Director June 24, 1999
- ------------------------------
Barry Duggan
Director June __, 1999
- ------------------------------
Philip Edwards Pearce
Director June __, 1999
- ------------------------------
Marshall Naify
74
