<PAGE>
As filed with the Securities and Exchange Commission on April 8, 1999
Registration No. 333-
================================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM SB-2
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
----------
TELTRAN INTERNATIONAL GROUP, LTD.
(Name of small business issuer in its charter)
Delaware [4813] 11-3172507
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industria Classification Identification
organization Code Number) Number)
One Penn Plaza, Suite 4632
New York, New York 10119
(212) 643-1283
(Address and telephone number of principal executive
offices and place of business)
BYRON R. LERNER, President
One Penn Plaza, Suite 4632
New York, New York 10119
(212) 643-1283
(Name, address and telephone number of agent for service)
Copies to:
MICHAEL D. DIGIOVANNA, Esq.
PARKER DURYEE ROSOFF & HAFT
529 Fifth Avenue
New York, New York 10017
(212) 599-0500
----------
Approximate date of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement
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. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act, check the following box. [X]
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================================================================================================================================
Title of Each Class of Proposed Maximum Proposed Maximum
Securities Amount to be Offering Price Aggregate Amount of
to be Registered Registered(1) Per Security(2) Offering Price(2) Registration Fee
<S> <C> <C> <C> <C>
Common Stock, par value 8,690,000 1.97 17,119,300 4,759.17
$.001 per share(3)
Totals
===================================================================================================================================
</TABLE>
-----------------------
I
(1) Estimated solely for the purpose of calculating the
registration fee pursuant to Rule 457(c) based upon the price
of the Common Stock on the OTC Bulletin Board on March 30,
1999.
(2) Such fee was calculated using a proposed maximum offering
price of $1.97 per share which was the average of the bid and
asked prices of the Common Stock on the OTC Bulletin Board on
March 30, 1999.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
PROSPECTUS
8,690,000 SHARES
TELTRAN INTERNATIONAL GROUP, LTD.
Common Stock
-------------
This Prospectus relates to 8,690,000 shares of Common Stock, par value
$.001 per share (the "Common Stock"), of Teltran International Group, Ltd. (the
"Company"), which shares are being offered for sale by the persons named herein
under the caption "Selling Stockholders" (the "Selling Stockholders"). Such
shares of Common Stock are comprised of 6,715,000 shares which are currently
issued and outstanding and 1,975,000 shares which may be issued subsequent
hereto upon exercise of certain outstanding options. The Company will not
receive any of the proceeds from the sale of shares by the Selling Stockholders.
See "Selling Stockholders."
See "Risk Factors"
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The Company has agreed to pay all expenses of registration in
connection with this offering but will not receive any of the proceeds from the
sale of the Shares being offered hereby. All brokerage commissions and other
similar expenses incurred by the Selling Stockholders will be borne by the
Selling Stockholders. The aggregate proceeds to the Selling Stockholders from
the sale of the Shares will be the purchase price of the Shares sold, less the
aggregate brokerage commissions and underwriters' discounts, if any, and other
expenses of issuance and distribution not borne by the Company.
The Common Stock being offered hereby by the Selling Stockholders has
not been registered for sale under the securities laws of any state or
jurisdiction as of the date of this Prospectus. Brokers or dealers effecting
transactions in the Common Stock should confirm the registration thereof under
the securities law of the state in which such transactions occur, or the
existence of any exemption from registration.
The Common Stock is quoted on the OTC Electronic Bulletin Board. On
March 30,1999 the average bid and asked price of the Common Stock was $1.97
per share.
The date of this Prospectus is April __, 1999
- 1 -
<PAGE>
TABLE OF CONTENTS
Page
Available Information....................................... 2
Prospectus Summary.......................................... 3
Risk Factors................................................ 6
Use of Proceeds............................................. 7
Capitalization.............................................. 8
Selected Financial Data..................................... 9
Management Discussion and Analysis of Financial Condition
and Results of Operation................................... 10
Market Information.......................................... 10
Business.................................................... 10
Selling Stockholders........................................ 19
Plan of Distribution........................................ 21
Description of Securities................................... 21
Legal Matters............................................... 22
Experts .................................................... 22
No dealer, salesperson or other person has been authorized to give any
information or to make any representations not contained in this Prospectus or
incorporated by reference to this Prospectus, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company. This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, the securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. The delivery of this Prospectus at any time
does not imply that the information contained herein is correct as of any time
subsequent to its date.
AVAILABLE INFORMATION
[The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). In accordance
therewith, the Company files reports and other information with the Securities
and Exchange Commission (the "Commission"). Reports, proxy statements and other
information filed by the Company can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the Regional Offices of the
Commission at 7 World Trade Center, New York, New York 10048 and Northwestern
Atrium Center, 500 West Madison Street, Chicago, Illinois 60621. Copies of such
material may be obtained from the Public Reference Section of the Commission at
prescribed rates by writing to the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. In addition, the Commission maintains a Web site on the
Internet at http://www.sec.gov that contains reports, proxy and information
statements and other information of issuers that file electronically with the
Commission. The Company has filed with the Commission a Registration Statement
on Form S-3 under the Securities Act, with respect to the Common Stock offered
hereby. This Prospectus does not contain all the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information, reference
is made to the Registration Statement, copies of which can be obtained from the
Public Reference Section of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, upon payment of the fees prescribed by the Commission.]
[Assumes 12(g) registration completed]
- 2 -
<PAGE>
PROSPECTUS SUMMARY
This Prospectus contains forward-looking statements which involve risks
and uncertainties. The Company's actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including those set forth under "Risk Factors" and elsewhere in this
Prospectus. The following summary is qualified in its entirety by the more
detailed information and the Financial Statements and Notes thereto appearing
elsewhere in this Prospectus, including the information under "Risk Factors."
Unless otherwise indicated, all information in this Prospectus reflects the
20-for-one reverse stock split effected by the Company in December, 1997.
The Company
Teltran International Group, Ltd. (the "Company") through its
wholly owned subsidiary Teltran International, Inc. ("International") is
primarily engaged in the international telecommunication business. It was a
development stage company until April 1998 when it commenced services for an
internet telephony system. In October 1998 it entered into additional
arrangements which included the ability to sell internet telephony time. Thus
far the Company has entered into initial agreements for this service and
anticipates beginning this service in April 1999. The Company also commenced
operation of a internet portal in February 1999.
The Company, formerly known as Spectratek Incorporated, a Utah
corporation, acquired all of the outstanding shares of International on May 1,
1996, by issuing shares of the Company's common stock in an amount that resulted
in the original stockholders of International receiving approximately 66% of the
then outstanding shares of the Company. For financial reporting purposes, the
transaction was recorded as a recapitalization of International. International
is the continuing, surviving, entity for accounting purposes, but the Company is
the continuing entity for legal purposes.
On October 6, 1997, Spectratek was reincorporated in the State of
Delaware under the name of Teltran International Group, Ltd. References to the
"Company" unless otherwise indicated by the context refer to the Company and
International. The Company's offices are located at One Penn Plaza, New York,
New York 10119 and its telephone number is 212-643-1283.
- 3 -
<PAGE>
The Offerings
Securities Offered by
the Selling Stockholders............... 8,690,800 shares of Common Stock.(1)
Common Stock Outstanding
Before the Offering.................... 9,634,834 shares(2)
Common Stock to be
Outstanding After the
Offering.............................. 11,609,824 shares(3)
Use of Proceeds........................ Except upon exercise of options the
Company will not receive proceeds.
Any such proceeds will be used for
working capital purposes.
Risk Factors........................... An investment in the securities offered
hereby involves a high degree of risk.
Prospective investors should consider
carefully the factors set forth under
"Risk Factors."
Symbol for Common Stock................ [TLTG]
- ---------------
(1) Includes 1,975,000 shares subject to options warrants and other
rights
(2) Not including shares subject to Options Warrants and other rights
(3) Includes shares sold herein after exercise of Options
- 4 -
<PAGE>
Summary Financial Information
Year Ending December 31,
------------------------
1997 1998
---- ----
Statement of Operations:
Consolidated revenues $ -0- $535,197
Cost of sales -0- 244,832
Expenses 827,780 706,672
Income (loss) from operations (827,780) (416,307)
Net income (loss) (827,780) (446,266)
Income (loss) per share(1) ($0.90) ($0.06)
Shares used in computing
net income (loss) per share 915,637 7,697,295
========= =========
December 31, 1997 December 31, 1998
----------------- -----------------
Balance Sheet Data:
Working capital (deficit) ($82,000) ($280,000)
Total assets $159,800 44,100
Total long-term debt 250,000 -0-
Total stockholders'
equity (deficit) (302,312) (241,754)
========= =========
- ----
(1)
- 5 -
<PAGE>
RISK FACTORS
An investment in the Securities offered hereby involves a high degree of risk.
In addition to the other information contained in this Prospectus, the following
risk factors should be considered carefully in evaluating the Company and its
business before purchasing the Securities offered hereby. Prospective investors
should be in a position to risk the loss of their entire investment. This
Prospectus contains forward-looking statements which involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including those set forth in the following risk factors and elsewhere in this
Prospectus.
Recent Losses
Until April 1998 the Company was a development stage Company and
derived no revenues until such time. The Company sustained net losses of(
$828,244) and ($446,654) during 1997 and 1998 respectively and has an
accumulated deficit of $2,251,810 as at December 31, 1998. At that time the
Company had a stockholder deficiency of (241,754). Subsequent to December 31,
1998 the Company obtained an additional $500,000 convertible notes all of which
were converted into equity. There is no assurance that the Company will be
profitable.
Dependence on OzEmail - New Business
Commencing in April 1999 the Company will provide services sales of
communication time through an arrangement with OzEmail for the resale of
international internet telephony time. The Company believes its immediate future
success will be dependent upon such business. The prospects of the Company must
be considered in light of risks, expenses and difficulties frequently
encountered by comparison in entering into a new line of business. The Company
has entered into an Interconnectivity and Support Agreement (the "Affiliate
Agreement") with OzEmail Inc. a wholly owned subsidiary, pursuant to which the
Company may sell international communications over OzEmail internet networks.
The Affiliate Agreement is for three year term. It is anticipated that the
Company's revenues attributable to the affiliate arrangement will comprise a
substantial portion of its total revenues. Any termination of the Affiliate
Agreement, or any reduction or interruption of services provided thereunder,
could have a material adverse affect on the Company's business, financial
condition or results of operations.
Technological Changes and Uncertainty
There can be no assurance that research and discoveries by others
will not render the Company's operations noncompetitive or obsolete.
The Company's business strategy is subject to the risks inherent in
the development of new products using new technologies and approaches. There can
be no assurance that unforeseen problems will not develop with these
technologies or applications, that the Company will be able to address
successfully technological challenges it encounters by entering into
alternatives for generating revenues.
Competition
Currently, the Company competes with numerous other long distance
resellers and providers. The Company believes its significant competition will
be other independent resellers and providers including providers of competing
voice telephony systems including possible affiliates of OzEmail appointed in
the future other competitors include large carriers such as AT&T, MCI, Sprint,
and WorldCom; and other providers of international long distance services such
as STAR Telecommunications, Inc., as alliances that provide wholesale carrier
services, such as "Global One" other internet telephony problems. In addition,
the Company has a non exclusive affiliate arrangement with OzEmail. Therefore,
OzEmail is free to appoint another affiliate which may result the Company facing
substantial competition. Many of the Company's competitors are significantly
larger and have substantially greater market presence, as well as greater
financial, technical, operational, marketing and other resources and experience
than the Company.
Retention of Key Personnel
The Company's operations are dependent upon the services of Byron
Lerner and James Tubbs. The loss of Byron Lerner or James Tubbs could have a
material adverse effect on the Company's business. The Company's success also
depends upon its ability to attract and retain highly-skilled management and
other personnel. Competition for such personnel is intense, and the inability to
attract and retain additional qualified employees or the loss of current key
employees could materially and adversely affect the Company's business,
operating results and financial condition.
Limitation of Director Liability
The Company's Certificate of Incorporation provides that a
director of the Company will not be personally liable to the Company or its
stockholders for monetary damages for breach of the fiduciary duty of care as a
director, including breaches which constitute gross negligence, subject to
certain limitations imposed by the Delaware General Corporation Law (the
"DGCL"). Thus, under certain circumstances, neither the Company nor the
stockholders will be able to recover damages even if directors take actions
which harm the Company. See "Management - Indemnification of Directors and
Officers and Related Matters."
Volatility of Common Stock
There has been volatility in the market price of securities of
telecommunications companies. Future announcements concerning the Company or its
competitors, including variations in financial results, changes in general
market conditions, governmental regulations or other developments may have a
significant impact on the market price of the Company's Common Stock and could
cause the market price of the Company's Common Stock to fluctuate significantly.
In addition, broad market fluctuations and general economic or political
conditions may adversely affect the market price of each of the Company's
securities, regardless of the Company's actual performance.
- 6-
<PAGE>
Preferred Stock
The Company's Certificate of Incorporation authorizes the
issuance of 15,000,000 shares of Preferred Stock with designation, rights and
preferences determined from time to time by its Board of Directors. Accordingly,
the Company's Board of Directors is empowered, without stockholder approval, to
issue Preferred Stock with dividend, liquidation, conversion, voting or other
rights that could adversely affect the voting power or other rights of the
holders of the Common Stock. In the event of issuance, the Preferred Stock could
be used, under certain circumstances, as a method of discouraging, delaying or
preventing a change in control of the Company.
Risks of International Telecommunications Business
It is contemplated the Company will generate a substantial portion
of its revenues by providing international telecommunications services to its
customers on a wholesale basis. The international nature of the Company's
operations involves certain risks, such as changes in domestic and foreign
government regulations and telecommunications standards, possible dependence on
foreign partners, tariffs, taxes and other trade barriers, economic downturns
and political instability in foreign countries. In addition, the Company's
business could be adversely affected by a reversal in the current trend toward
deregulation.
Factors Influencing Operating Results, Including Revenues, Costs and Margins
The Company's revenues, costs and expenses may fluctuate in the
future as a result of numerous factors. The Company's revenues in any given
period can vary due to factors such as call volume fluctuations, particularly in
regions with relatively high per minute rates; the addition or loss of major
customers, whether through competition, merger, consolidation or otherwise; and
financial difficulties of major customers; pricing pressure resulting from
increased competition. Technical difficulties or failures of portions of the
OzEmail system may impact the Company's ability to provide service to its
customers by preventing the Company from delivering call traffic. Additionally,
technical difficulties with the network may cause loss.
Potential Adverse Effects of Government Regulation
The Company's business is subject to various U.S. and foreign laws,
regulations, agency actions and court decisions. The Company's U.S.
international telecommunications service offerings are subject to regulation by
the FCC. The FCC requires international carriers to obtain authorizations under
Section 214 of the Communications Act of 1934, as amended, prior to acquiring
international facilities by purchase or lease, or providing international
service to the public. Prior FCC approval is also providing international
service to the public. Prior FCC approval is also required to transfer control
of a certificated carrier. The Company has obtained the license.
No Dividends and None Anticipated
To date, no dividends have been declared or paid on the Common
Stock, and the Company does not anticipate declaring or paying any dividends in
the foreseeable future, but rather intends to reinvest profits, if any, in its
business. Investors should, therefore, be aware that it is unlikely that any
dividends will be paid on the Common Stock in the foreseeable future. See
"Dividend Policy."
No Assurance of Active Market
The Common Stock is quoted on the OTC Bulletin Board. There can be
no assurance that an active market in the Common Stock will develop. In the
absence of an active public trading market, an investor may be unable to
liquidate his or her investment.
Risks Associated with Forward-Looking Statements Included in this Prospectus
This Prospectus contains certain forward-looking statements
regarding the plans and objectives of management for future operations,
including plans and objectives relating to the development of the Company's
business. The forward-Looking statements included herein are based on current
expectations that involve numerous risks and uncertainties. The Company's plans
and objectives are based on the size of the U.S. produce and flower markets,
assumptions that the Company's services will be accepted by supermarkets [that
there will be no unanticipated material adverse change in the Company's
operations or business.] Assumptions relating to the foregoing involve judgments
with respect to, among other things, future economic, competitive and market
conditions and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond the control of the
Company. Although the Company believes that its assumptions underlying the
forward-looking statements are reasonable, any of the assumptions could prove
inaccurate and, therefore, there can be no assurance that the forward-looking
statements included in this Prospectus will prove to be accurate. In light of
the significant early stage operations, the inclusion of such information should
not be regarded as a representation by the Company or any other person that the
objectives and plans of the Company will be achieved.
USE OF PROCEEDS
The Company will not receive proceeds from the sale of the shares
offered hereby. Any proceeds received upon exercise of options will be utilized
as working capital.
- 7-
<PAGE>
CAPITALIZATION
The following table sets forth the (i) actual capitalization of
the Company at December 31, 1998. This section should be read in conjunction
with the Company's financial statements and related notes appearing elsewhere in
this Prospectus.
Long Term Indebtedness -0-
------
Preferred Stock, $.0001 par value; none authorized; none $ -0-
issued and outstanding...............................................
Common Stock, $.0001 par value; 50,000,000 shares, authorized; 7,697,295
shares issued and outstanding............
Additional paid-in capital...................................... $2,002,359
Accumulated deficit........................................... ($2,251,810)
Total stockholders' equity............................... ($241,754)
==========
(1) Does not include shares of Common Stock reserved for issuance upon
the exercise of Option and Warrants.
- 8-
<PAGE>
SELECTED FINANCIAL DATA
The following selected financial is derived from the audited financial
statements of the Company.
This information should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Financial Statements of the Company included elsewhere herein.
Year Ending December 31,
------------------------
1997 1998
---- ----
Statement of Operations:
Consolidated revenues $ -0- $535,197
Cost of sales -0- 244,832
Expenses 827,780 706,672
Income (loss) from operations (827,780) (416,307)
Net income (loss) (827,780) (446,266)
Income (loss) per share(1) ($0.90) ($0.06)
Shares used in computing
net income (loss) per share 915,637 7,697,295
======== =========
December 31, 1997 December 31, 1998
----------------- -----------------
Balance Sheet Data:
Working capital (deficit) ($82,000) ($280,000)
Total assets $159,800 44,100
Total long-term debt 250,000 ---
Total stockholders'
equity (deficit) (302,312) (241,754)
======== ========
- ----
(1)
- 9-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction
with the Financial Statements and related Notes contained elsewhere in this
Prospectus.
Introduction
Prior to April, 1998 the Company was a development stage Company and
had no significant revenues since inception.
Statement of Operations Year Ended 1998 Compared to Year Ended 1997 (unaudited)
The Company's revenues was approximately $535,000 for 1998 while
the Company received no revenues in 1997.
The Company's operating expenses during 1998 were approximately
$707,000 compared to approximately $827,780 during the prior year. The reduced
expenses were primarily attributable to decline in salary expense in 1998
resulting from a reduction in staff.
Since the Company did not commence income producing operations until
1998, the Company does not believe that either 1997 or 1998 are any indication
of the Company's future operations. The Company anticipates that the year 1999
will be the first full year of operations and that its revenues will be derived
from businesses not conducted in 1998.
The Company believes that it will have substantial increased revenues
in 1999 as it begins to derive revenues from in voice telephony operations.
Liquidity
The Company had a negative working capital of approximately $280,000
as of December 31, 1998 compared to a negative working capital or approximately
$82,000 at December 31, 1997. The increase was primarily attributable to
increased debt financing in 1998. Also during 1998 the Company financed a
portion of its receivables through a factoring arrangement. Since December 31,
1998 the Company received gross proceeds of $650,000 from the sale of
convertible notes and exercise of warrants. All the notes have been converted
into equity and the Company has been able to repay and terminate its factoring
arrangement.
The Company is required to purchase additional equipment to perform
the contracts for the resale of telephone time over OzEmail networks. This is
the only substantial capital expenditure of the Company. It has determined to
require its clients to purchase the equipment or to provide advances for this
purpose. As long as the Company obtains funds to purchase equipment to perform
its contracts it believes its present working capital is adequate for its
operations for the next twelve months.
MARKET INFORMATION
The Company's Common Stock is currently quoted on the OTC Bulletin
Board under the symbol "TLTG."
Set forth below are the high and low closing bid quotations for
Company's Common Stock for the periods indicated as reflected on the electronic
bulletin board. Such quotations reflect interdealer prices without retail
mark-up, mark-down or commissions, and may not reflect actual transactions.
- 10-
<PAGE>
<TABLE>
<CAPTION>
Period High Low
- --------------------------------------- -------------------------- --------------------------
<S> <C> <C>
March 31, 1998 3.13 .4325
June 30, 1998 2.94 1.88
September 30, 1998 1.00 .75
December 31, 1998 1.19 .4325
March 31, 1997 .65 .40
June 30, 1997 .33 .22
September 30, 1997 .18 .11
December 31, 1997 .125 .125
</TABLE>
As of December 31, 1998, there were approximately 240 recordholders
of the Company's Common Stock, although the Company believes that there are more
than five hundred beneficial owners of its Common Stock.
The Company plans to retain any future earnings for use in its
business and, accordingly, the Company does not anticipate paying dividends in
the foreseeable future. Payment of dividends is within the discretion of the
Company's Board of Directors and will depend, among other factors, upon the
Company's earnings, financial condition and capital requirements.
- 11-
<PAGE>
BUSINESS
Introduction General
Teltran International Group, Ltd. (the "Company") through its wholly
owned subsidiary Teltran International, Inc. ("International") is primarily
engaged in the international telecommunication business. It was a development
stage company until April 1998 when it commenced services for an internet
telephony system. In October 1998 it entered into additional arrangements which
included the ability to sell internet telephony time.
Industry Background
During the last fifteen years international telecommunications have
changed dramatically. Deregulation has resulted in the end of monopoly and a
proliferation of competitors. In addition, international agreements among most
industrial nations have been entered into opening telecommunication markets to
competition and foreign ownership. At the same time technology changed adding to
the overall efficiency of telecommunication services and increasing capacity
dramatically. These factors have combined to reduce costs significantly.
Additionally, the technology resulted in the development of new methods of
completing calls including refiling which is the routing of calls from country A
to B and termination in country C. The combined rates between the three
countries is less than the rate directly from country A to country B.
A resale arrangement typically involves the wholesale purchase of
termination services on a per-minute basis by one long distance provider from
another. A single international call may pass through the facilities of multiple
long distance carriers and resellers before it reaches the foreign
facilities-based carrier that ultimately terminates the call. Such resale, first
permitted with the deregulation of the United States market, enable the
emergence of alternative international providers that relied, at least in part,
on transmission services acquired on a wholesale basis from other long distance
providers. Resale arrangements set per minute prices for different routes, which
may be guaranteed for a set time period or subject to fluctuation following
notice. These international providers include entities whose business is a
reseller with no independent system to originate or terminate calls and no
equipment except the connection of the resellers source of telecommunication's
time to its customer. Presently, the Company's primary business is the latter.
It attempts to obtain the least expensive telecommunications time available for
resale to other resellers including credit phone card companies.
The Company's immediate resale operations will be conducted through
internet proto-call which is a recent phenomenon. The Internet telephony
industry begin in 1995, when experienced Internet users began to transfer voice
messages from one PC to another. Subsequently, software was introduced which
allowed PC users to place international calls via the Internet to other PC users
for the price of a local call. Initially, the growth of Internet telephony was
constrained due to the poor sound quality of the calls and because calls were
mainly limited to those placed from one PC to another.
However, as the industry has grown, substantial improvements have
been made. New software has substantially reduced delays. The use of private
networks or intranets to transmit calls as an alternative to the public Internet
has alleviated capacity problems. Developments in hardware, software and
networks are expected to continue to improve the quality and viability of
Internet telephony.
Internet telephony provides customers with substantial savings
compared to conventional long distance calls, because the total cost of an
Internet telephone call is based on the local calls to and from the gateways of
the respective internet providers, thereby bypassing the international
settlements process.
Business History
Initially the Company intended to concentrate its efforts on
establishing and operating a global messaging business. Pursuant to that
strategy the Company intended to provide its customers with a universal mailbox
and a platform that was capable of generating multimedia broadcasts of messages
and documents received by the client. That is the messages could be faxed or
otherwise delivered to various locations within the enterprise. As an adjunct to
its global messaging service the Company also provided enhanced fax services
including fax broadcasting. The Company has postponed its efforts to provide
global messaging services. It derived insignificant revenues from fax broadcast
services for clients.
The Company's principal business activity is to provide the resale
of telecommunication time to enable clients to provide competitive rates for
international communications. This involves several arrangements. The first is
to obtain the availability of favorable wholesale international rates from
carriers and other resellers. This Company then enters into arrangements for the
sale of this time and other wholesalers. This entails the connection between the
Company, customer and carrier. In the Company's case, this is accomplished
through telecommunication switches owned by a thirdparty at the third parties
location. Prior to April, 1998 the Company derived no or insignificant revenues
and was considered a development stage Company. During 1999 it derived revenues
as a refile hub for OzEmail Interline Pty, Limited "OzEmail") which operates
network for international calls through the internet. That is the Company would
receive calls for the OzEmail system and direct them through the least expensive
routing to countries which have no OzEmail internet termination. The Company
derived substantial revenues from this activity in 1998 but believes this source
will decline as OzEmail obtains a greater number of countries with affiliates
where calls can be completed entirely through the OzEmail network without the
necessity of refiling. The Company subsequently entered into an "affiliate
arrangement with OzEmail which enables the Company to sell international voice
telephone availability through the internet system utilizing OzEmail technology
and protocols.
The OzEmail System
- 12-
<PAGE>
OzEmail is a subsidiary of a major internet provider in Australia.
OzEmail has assembled a consortium of companies in various countries as
affiliates to establish internet network for the transmission and receipt of its
Voice over Internet Protocol worldwide or OzEmail's version of internet
telephony. OzEmail owns proprietary hardware and software technology utilized in
the transmission, routing and connecting of communications, including voice
telephony, fax and other transmissions, through the internet system and other
conventional systems as public switched networks. The proprietary hardware or
"VIN" Hardware is used as the gateway for the carrying and routing of calls.
OzEmail has licensed the proprietary software and VINs and other
trade secrets to provide or establish a network in the country in which the
provider or affiliate is located. OzEmail joins the providers in various
countries to provide international service. Each provider furnishes termination
service in its territory enabling providers in other countries to route the
calls to the local provider which in turn terminates their calls in the
territory over conventional public switched telephone networks. The provider
receives a termination fee. The provider is required to market the OzEmail
service in its territory offering calling service through OzEmail systems. The
local provider is required to pay a fee to OzEmail for all international
services of provider customers routed through OzEmail network. The heart of the
system is the VIN, each of which is capable of handling a fixed number of calls.
Each provider is required to purchase sufficient VINs from OzEmail to service
its customers. A VIN can only handle a finite number of calls so that additional
multiple VINS may be required for each customer. Generally, the customer of the
provider is a pre-paid calling card service calling center or other entity
seeking to provide international calling to its customers.
Basically, the client of the provider's customers originates a local
call through the internet which connects to a VIN which transmits the call over
internet protocol to a VIN of a provider located in the foreign country. The
call is then connected to the domestic local telephone network. All the calls
are processed by the control node of OzEmail which is also used for billing,
rating and verification purposes. If no provider has been appointed in the
country of destination, the call will be routed through a refile provider in a
third country for the least expensive routing.
OzEmail/Teltran
In 1998 the Company was appointed as a refile hub for OzEmail for
calls terminating in countries without OzEmail affiliates. In addition, later in
October 1998 the Company was appointed a non-exclusive OzEmail affiliate in the
United States. The Company then purchased and installed VINs at its switching
site and began to market the OzEmail service in the United States. As an
affiliate the Company provides termination services in the United States. To
date, the Company has derived little or no revenues from this service. After the
Company has purchased VINs it has successfully tested the OzEmail telephony
service. Each agreement requires sufficient number of VINs as well as a test
period of several weeks to determine the quality of service to the particular
destination. The Company has made arrangements for sales of communication time,
including sales to South Africa and Netherlands Antilles. Service is scheduled
to begin in April 1999. Several additional agreements are pending.
OzEmail Agreements
The affiliates arrangement consists of two, three-year agreements
each expiring October 12, 2001. The first agreement is the Interconnectivity and
Support Agreement. Under this agreement, Teltran as a non-exclusive affiliate
has joined an international consortium of companies established by OzEmail in
different countries. As an affiliate Teltran is authorized to operate the
OzEmail system in the United States. This entitles the Company to transmit
internet telephony calls worldwide over OzEmail's interconnected systems. The
Company is obligated to roll out the services in the United States and to
purchase the required equipment for the operation of the systems from OzEmail.
The Company further is obligated to provide termination services for a fee for
the benefit of providers or affiliates in other countries. The Agreement
contains fees payable to OzEmail by the Company for calls originating through
the Company and by OzEmail and to the Company for termination services. The
second agreement is the USA Intellectual Property License Agreement.This
agreement grants Teltran a non-exclusive license for three years to use OZI's
software, hardware, Intellectual property, advertising/promotional material,
etc. to perform services under the internet correctively and support agreement.
The refile services are performed under a Telecommunications Service Agreement
expiring October 2000 unless terminated sooner. The Agreement requires the
Company to maintain equipment for refile services. The Company further is
obligated to provide termination services for a fee for the benefit of providers
or affiliates in other countries.
Government Regulation
The Company is licensed as an international reseller pursuant to
Section 214 of the Federal Communication Act.
Marketing/Customers
The Company will market its resale service as part of the OzEmail
network to other carriers wholesalers, call centers, international phone card
providers and others. During 1998 the Company's principal customer was OzEmail
pursuant to the refile arrangement. During 1998 the Company received
approximately 79.3% of its revenues from OzEmail. The Company does not
anticipate that it will derive significant refile revenues from OzEmail in the
future. As a result of resale arrangements entered into by the Company, the
Company does not believe it is dependent upon OzEmail as a refile customer. The
Company derived 17.1% of its revenues in 1998 from Telecom 2000 for providing
domestic long distance capacity. This arrangement has terminated.
- 13-
<PAGE>
The Company markets its service through its executive officers, one
of whom is the Vice President of Sales and Marketing. The Company has also
entered into non-exclusive arrangements with agents who will receive a
commission from the revenues generated any customer of the Company introduced by
an agent.
Competition
Currently, the Company competes with numerous other long distance
resellers and providers. The Company believes its significant competition will
be other independent resellers and providers including providers of competing
voice telephony systems as well as possible affiliates of OzEmail appointed in
the future other competitors include large carriers such as AT&T, MCI, Sprint,
and WorldCom; and other providers of international long distance services such
as STAR Telecommunications, Inc., as alliances that provide wholesale carrier
services, such as "Global One" other internet telephony problems. In addition,
the Company has a non exclusive affiliate arrangement with OzEmail. Therefore,
OzEmail is free to appoint another affiliate which may result the Company facing
substantial competition. Many of the Company's competitors are significantly
larger and have substantially greater market presence, as well as greater
financial, technical, operational, marketing and other resources and experience
than the Company.
The Company competes for customers in the telecommunications markets
primarily based on price and, to a lesser extent, the type and quality of
service offered. Increased competition could force the Company to reduce its
prices and profit margins if its competitors are able to procure rates or enter
into service agreements that are comparable to or better than those the Company
obtains, or are able to offer other incentives to existing and potential
customers. Similarly, the Company has no control over the prices set by its
competitors.
Employees
The Company has five full-time employees, four of whom are engaged in
executive and technical functions and one of whom is a clerical employee. The
Company also employs a bookkeeper on a part-time basis. The Company also
utilizes consultants.
Technical Facility
The Company has an oral arrangement with an unaffiliated party
pursuant to which the Company's technical equipment is housed and maintained at
this party's facility in New York City. All equipment, connections and telephone
lines between the Company and its customers and overseas providers are located
at this facility. The Company utilizes the owner's switches to effect these
connections.
Internet Portal
The Company in February 1999 instituted a web portal. A portal is a
website which enables the user to access various other web sites without
multiple steps thereby saving the user time. The Teltran portal contains direct
links to many commerce sites, including Amazon.com the internet bookseller.
Recently, the Company provided access to brokerage firms through the portal and
anticipates receiving payment from brokerage firms utilizing this service based
on customers' business introduced to the brokerage firm through the portal. The
Company has affiliate arrangements with retailers pursuant to the Company will
receive a percentage of revenues generated by consumers accessing the site
through the Company's portal. If the Company's portal received a prescribed
number of hits to its website it will be in a position to provide advertising on
its site and receive revenues for doing so. The Company believes it will achieve
this requirement shortly. Users may also use the portal as their home page.
Additional Revenues
The Company is receiving revenues for obtaining a contract for a
third party. It receives commissions based on income derived by such third
party.
DESCRIPTION OF PROPERTY
The Company's executive offices are located at One Penn Plaza, New
York, New York 10119, where it leases approximately 2,400 square feet pursuant
to a lease that expires on February 28, 2003. The annual base rental for this
space is approximately $90,000.
The Company's telecommunication equipment is located and maintained
at a separate facility owned by a third party. See "Description of Business -
Technical Facility."
LEGAL PROCEEDINGS
- 14-
<PAGE>
II
Legal Proceedings. Management of the Company is not aware of any
legal proceedings, or pending legal proceedings, to which the Company is a party
or to which the property of the Company is subject. A claim, however, has been
made by a corporation including a claim for receivables of the Company arising
from a potential resale arrangement. The Company has denied the claim.
- 15-
<PAGE>
MANAGEMENT
Directors and Executive Officers
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
- ------------------------------ --------- --------------------------------------------------------------
<S> <C> <C>
Byron R. Lerner 54 President, Chief Executive Officer and Director
James E. Tubbs 39 Executive Vice President, Chief Operating Officer and
Director
Peter Biagioli 39 Vice president of Sales and Marketing
Martin Miller 58 Director
</TABLE>
Byron R. Lerner has been Chief Executive Officer and President of the
Company since June 1997 and a director of the Company since May 1996. Mr. Lerner
was Chief Financial Officer of the Company between May 1996 and June 1997.
Between 1993 and 1995, Mr. Lerner was president of International of GlobalCom, a
firm he founded which engaged in the resale of domestic and international long
distance phone time. From 1990 to 1993 Mr. Lerner was president of L&S
Communications, a reseller of domestic and international long distance telephone
time.
James E. Tubbs has been Executive Vice President and a director of
the Company since May 1996. Between 1994 and 1995, Mr. Tubbs was President of
OmniCom, a reseller of UniDial. From 1984 through May 1996 he was employed as an
executive in various entities controlled by Brent Musburger, the sports
broadcaster. Simultaneously Mr. Tubbs was employed in various capacities as an
executive in sports and entertainment matters by the networks which engaged Mr.
Musburger.
Peter Biagioli has been Vice President of Sales and Marketing of the
Company since 1997. From February 1988 to January 1997 Mr. Biagioli was Vice
President of Worldwide Commercial Development for the Worldwide Manifest
Division TNT Express. During the period November 1982 to January 1988 he was
employed by Avis Rent A Car System Inc. and was a Regional Sales Manager for
the New York Metropolitan market.
Martin Miller has been a director of the Company since November 1995.
Mr. Miller , for the past five years, has been a manager of corporate finance
for Millport Ltd., presently a Bahamian based advisor of foreign investors.
- 16-
<PAGE>
Executive Compensation
The following table sets forth information concerning compensation
paid or accrued by the Company or its subsidiaries for services rendered during
the fiscal year ended December 31, 1998 to the Company's Chief Executive Officer
no executive officer whose compensation exceeded $100,000 during its fiscal year
ended December 31, 1998.
Summary Compensation Table
<TABLE>
<CAPTION>
Name and Principal Position Year Salary
- -------------------------------------------------- ------------ ------------------------
<S> <C> <C>
Byron E. Lerner President and Chief 1998 $ 88,000
Executive Officer
1997 37,500
</TABLE>
All directors hold office until the next annual meeting of
stockholders and the election and qualification of their successors. Executive
officers are elected annually by the Board of Directors to hold office until the
first meeting of the Board following the next annual meeting of stockholders and
until their successors are chosen and qualified.
Option Plan
The Company has adopted a 1998 Stock Option Plan (the "Option Plan")
for officers, employees and consultants of the Company and any of its
subsidiaries authorizing the grant of options to purchase 3,000,000 shares of
the Company's common stock. As of February 28, 1999 options to purchase
1,975,000 shares of common stock were outstanding and options to purchase
1,025,000 shares of common stock were available for grant.
The Employee Plan is administered by the board of directors. In
general, the Committee will select the persons to whom options will be granted
and will determine, subject to the terms of the Employee Plan, the number, the
exercise period and other provisions of such options. The options granted under
the Employee Plan will be exercisable in such installments as may be provided in
the grant.
Options granted to employees may be either incentive stock options
under the Internal Revenue Code ("ISOs") or non ISOs. The board may determine
the exercise price provided that, in the case of ISOs, such price may not be
less than 100% (110% in the case of ISOs granted to holders of 10% of the voting
power of the Company's stock) of the fair market value (as defined in the
Employment Plan) of the Company's common stock at the date of grant. The
aggregate fair market value (determined at time of option grant) of stock with
respect to which ISOs become exercisable for the first time in any year cannot
exceed $100,000.
The options are evidenced by a written agreement containing the above
terms and such other terms and conditions consistent with the Plan as the
Committee may impose. Each option, unless sooner terminated, shall expire no
later than ten (10) years (five years in the case o ISOs granted to holders of
10% of the voting power of the Company's stock) from the date of the grant, as
the Committee may determine. The Committee has the right to amend, suspend or
terminate the Employee Plan at any time, provided, however, that unless ratified
by the Company's stockholders no amendment or change in the Plan will be
effective for certain maters including increase in the total number of shares
which may be issued under the Plan or extending the term of the Employee Plan.
- 17-
<PAGE>
Options Granted in Last Fiscal Year
-----------------------------------
Number of Shares
Underlying Option Granted Exercise Price
Byron Lerner 200,000 $.37
83,334 1.75
83,333 3.000
83,333 5.00
James Tubbs 200,000 $.37
83,334 1.75
83,333 3.000
83,333 5.00
In addition, on January 31, 1999 the Company issued Plan Options to
purchase an additional 795,000 shares of common stock at $.59 per share
exercisable immediately. Of these options 250,000 were issued to each of Messrs.
Lerner and Tubbs and Martin Miller, a director of the Company.
Employment Agreements
The Company has entered into an employment agreement with Byron
Lerner, president and chief executive officer of the Company. The agreement is
for a term of 37 months commencing March 1, 1999 and unless notice of non
renewal is given at the end of first thirteen months or any year thereafter, the
term of the agreement is extended for an additional year period. Mr. Lerner is
to receive a base annual salary of $150,000 until August 1999 when the salary
increases to $180,000. Starting in the second year of the agreement on April 1,
2000 the salary increases to $189,000 or $200,000 if the net income as defined
in the agreement is at least $200,000. The salary increases thereafter at the
rate of ten percent per annum. The agreement provides for a bonus pool which
shall be equal to 15% of net income as defined in the agreement of which Mr.
Lerner will receive a maximum of six (6%) of such pool. Mr. James Tubbs, a vice
president, and chief operating officer has entered into an identical agreement
with the Company.
Certain Relationships and Related Transactions
During and prior to 1998 an affiliate of Byron Lerner and James Tubbs
each advanced the Company $50,000 each. In 1998 all these advances were
converted into 500,000 shares of the Company's Common Stock. Mr. Lerner has
advanced approximately an additional $13,000 to the Company in 1998 and 1999.
The latter account was converted into 65,000 shares of Common Stock in March
1999.
- 18-
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth, as of March 15, 1999,
certain transactions with respect to the beneficial ownership of the Company's
Common Stock by (i) each person who beneficially owns more than five percent of
the Company's outstanding Common Stock, (ii) each director of the Company, (iii)
each of the executive officers named in the Summary Compensation Table, (iv) all
directors and executive officers of the Company as a group and (v) each Selling
Stockholder:
<TABLE>
<CAPTION>
Before the Offering(1) After the Offering
Shares Percent of Shares Percent of
Identity of Stockholder Beneficially Shares Shares Beneficially Shares
or Group Owned Outstanding Offered Owned (3) Outstanding (3)
-------- ------------ ----------- ------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Byron Lerner 790,000 7.32543669 1,025,000(2) ---- -----
James Tubbs 725,000 7.22483 1,025,000(2) ---- -----
Martin Miller 250,000 2.52912 250,000 ---- -----
Peter Biagioli 100,000 1.02723 140,000(2) ---- -----
Mitchell Hershkowitz 30,000 0.31 60,000(2) ---- -----
Michael Neville 50,000 0.52 100,000(2) ---- -----
Darrell Lerner 25,000 0.26 25,000 ---- -----
Broadford Limited 325,000 3.37% 325,000 ---- -----
Staffin Limited 325,000 3.37% 325,000 ---- -----
Southern Provinces, Ltd. 325,000 3.37% 325,000 ---- -----
Fir Enterprises Limited 325,000 3.37% 325,000 ---- -----
Percival Investments 325,000 3.37% 325,000 ---- -----
Ltd.
Birch Enterprises 325,000 3.37% 325,000 ---- -----
Limited
World Telecom Ltd. 325,000 3.37% 325,000 ---- -----
Calgary Limited 300,000 3.11% 300,000 ---- -----
Montaque Securities 330,000 3.43% 330,000 ---- -----
International Ltd.
Sumburgh Limited 325,000 3.37% 325,000 ---- -----
Salen Limited 275,000 2.85% 275,000 ---- -----
Coastal Provinces Ltd. 250,000 2.59% 250,000 ---- -----
Aran Limited 275,000 2.85% 275,000 ---- -----
Callanish Limited 300,000 3.11% 300,000 ---- -----
Carbost Limited 325,000 3.37% 325,000 ---- -----
Carlowey Limited 325,000 3.37% 325,000 ---- -----
</TABLE>
- 19-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Craignure Limited 200,000 2.08% 200,000 ---- -----
Sleat Limited 195,000 2.02% 195,000 ---- -----
Newco Management 300,000 3.11% 300,000 ---- -----
Services Ltd.
Brodick Limited 325,000 3.37% 325,000 ---- -----
All Officers and 1,844,333 17.1 % 2,444,000 ---- -----
Directors as a
Group
(4 persons)
</TABLE>
* Less than one percent.
(1) Represents those shares of Common Stock held by the Selling
Stockholders, if any, together with those shares that such
Selling Stockholders have the right to acquire within 60
days from the date of this Prospectus.
(2) Includes shares subject to Options not exercisable within
sixty days and therefore not reflected in prior columns.
(3) Assumes all of the Shares being offered will be sold.
Because the Selling Stockholders may sell all, some or none
of the Shares that he, she or it holds, and because the
offering contemplated by this Prospectus is not now a "firm
commitment" underwritten offering, the actual number of
Shares that will be held by the Selling Stockholders upon or
prior to termination of this offering may vary. See "Plan of
Distribution."
(4) Does not include unrestricted shares held by unaffiliated
shareholders, the amount of such shares varies from time to
time as the holders purchase and sell such shares
periodically.
The Selling Stockholders may have sold, transferred or
otherwise disposed of all or a portion of their Shares since the date on which
they provided the information regarding their Common Stock in transactions
exempt from the registration requirements of the Securities Act. Additional
information concerning the Selling Stockholders may be set forth from time to
time in prospectus supplements to this Prospectus. See "Plan of Distribution."
- 20-
<PAGE>
PLAN OF DISTRIBUTION
Sales of the Shares may be made from time to time by the
Selling Stockholders, or, subject to applicable law, by pledgees, donees,
distributees, transferees or other successors in interest. Such sales may be
made on the over-the-counter market or foreign securities exchange (any of which
may involve crosses and block transactions), in privately negotiated
transactions or otherwise or in a combination of such transactions at prices and
at terms then prevailing or at prices related to the then current market price,
or at privately negotiated prices. In addition, any Shares covered by this
Prospectus which qualify for sale pursuant to Section 4(1) of the Securities Act
or Rule 144 promulgated thereunder may be sold under such provisions rather than
pursuant to this Prospectus. Without limiting the generality of the foregoing,
the Shares may be sold in one or more of the following types of transactions:
(a) a block trade in which the broker-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) an exchange distribution in accordance with the rules of such exchange; (d)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers; and (e) face-to-face transactions between sellers and purchasers
without a broker-dealer. In effecting sales, brokers or dealers engaged by the
Selling Stockholders may arrange for other brokers or dealers to participate in
the resales.
In connection with distributions of the Shares or otherwise,
the Selling Stockholders may enter into hedging transactions with
broker-dealers. In connection with such transactions, broker-dealers may engage
in short sales of the Shares registered hereunder in the course of hedging the
positions they assume with the Selling Stockholders. The Selling Stockholders
may also sell Shares short and deliver the Shares to close out such short
positions. The Selling Stockholders may also enter into option or other
transactions with broker-dealers which require the delivery to the broker-dealer
of the Shares registered hereunder, which the broker-dealer may resell pursuant
to this Prospectus. The Selling Stockholders may also pledge the Shares
registered hereunder to a broker or dealer and upon a default, the broker or
dealer may effect sales of the pledged Shares pursuant to this Prospectus.
Brokers, dealers or agents may receive compensation in the
form of commissions, discounts or concessions from the Selling Stockholders in
amounts to be negotiated in connection with the sale. Such brokers or dealers
and any other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with such
sales and any such commission, discount or concession may be deemed to be
underwriting discounts or commissions under the Securities Act.
Information as to whether underwriters who may be selected
by the Selling Stockholders, or any other broker-dealer, is acting as principal
or agent for the Selling Stockholders, the compensation to be received by
underwriters who may be selected by the Selling Stockholders, or any
broker-dealer, acting as principal or agent for the Selling Stockholders and the
compensation to be received by other broker-dealers, in the event the
compensation of such other broker-dealers is in excess of usual and customary
commissions, will, to the extent required, be set forth in a supplement to this
Prospectus (the "Prospectus Supplement"). Any dealer or broker participating in
any distribution of the Shares may be required to deliver a copy of this
Prospectus, including the Prospectus Supplement, if any, to any person who
purchases any of the Shares from or through such dealer or broker.
Each of the Selling Shareholder have executed an agreement
("Selling Shareholder/Agreement") pursuant to which they confirm the method of
distribution set forth herein, agree not to sell the shares if the registration
statement is not current.
The Company has advised the Selling Stockholders that during
such time as they may be engaged in a distribution of the Shares included herein
they are required to comply with Regulation M promulgated under the Exchange
Act. The Shareholders have acknowledged such advice in the selling Shareholder
Agreement and agree therein to comply with such regulation. In general,
Regulation M precludes the Selling Stockholders, any affiliated purchasers and
any broker-dealer or other person who participates in such distribution from
bidding for or purchasing, or attempting to induce any person to bid for or
purchase any security which is the subject of the distribution until the entire
distribution is complete. A "distribution" is defined in the rules as an
offering of securities that is distinguished from ordinary trading activities
and depends on the "magnitude of the offering and the presence of special
selling efforts and selling methods." Regulation M also prohibits any bids or
purchases made in order to stabilize the price of a security in connection with
the distribution of that security.
It is anticipated that the Selling Stockholders will offer
all of the Shares for sale. Further, because it is possible that a significant
number of Shares could be sold at the same time hereunder, such sales, or the
possibility thereof, may have a depressive effect on the market price of the
Common Stock.
DESCRIPTION OF SECURITIES
General
The Company is authorized to issue 50,000,000 shares of its common
stock, par value $0.0001 per share (the "Common Stock"), and 5,000,000 shares of
preferred stock, par value $0.0001 per share (the "Preferred Stock"). As of
March 31, 1998 9,634,834 shares of the Common Stock were outstanding. No
shares of Preferred Stock are currently outstanding.
Common Stock
- 21-
<PAGE>
The holders of Common Stock are entitled to one vote for each share
held of record on all matters to be voted on by stockholders. There is no
cumulative voting with respect to the election of directors, with the result
that the holders of more than 50% of the shares voted for the election of
directors can elect all of the directors. The holders of Common Stock are
entitled to receive dividends when, as and if declared by the Board of Directors
out of funds legally available therefor.
In the event of liquidation, dissolution or winding up of the
Company, the holders of Common Stock are entitled to share ratably in all assets
remaining available for distribution to them after payment of liabilities and
after provision has been made for each class of stock, if any, having preference
over the Common Stock. Holders of shares of Common Stock, as such, have no
conversion, preemptive or other subscription rights. There are no redemption
provisions applicable to the Common Stock. All of the outstanding shares of
Common Stock are fully paid and nonassessable.
Preferred Stock
The Company's Certificate of Incorporation authorizes the issuance of
"blank check" Preferred Stock with such designation, rights and preferences as
may be determined from time to time by the Company's Board of Directors.
Accordingly, the Company's Board is empowered, without stockholder approval, to
issue Preferred Stock with dividend, liquidation, conversion, voting or other
rights which could adversely affect the voting power or other rights of the
holders of Common Stock. The Preferred Stock could be utilized, under certain
circumstances, as a method of discouraging, delaying or preventing a change in
control of the Company. Although the Company does not currently intend to issue
any shares of Preferred Stock, there can be no assurance that the Company will
not do so.
Transfer Agent
The transfer agent for the Common Stock is North American Transfer
Co., 147 Merrick Road, Freeport, New York 11520.
LEGAL MATTERS
The validity of the securities being offered hereby will be
passed upon for the Company by Parker Duryee Rosoff & Haft, A Professional
Corporation, New York, New York.
EXPERTS
The financial statements of the Company as at December 31,
1997 and December 31, 1998 included in this Prospectus, have been audited by
Leibman, Goldberg & Drogin, independent certified public accountants as set
forth in their report thereon appearing elsewhere herein. Such financial
statements are included herein and in the Registration Statement in reliance
upon such report and upon the authority of said firm as experts in auditing and
accounting.
- 22-
<PAGE>
TELTRAN INTERNATIONAL GROUP, LTD.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
with
INDEPENDENT AUDITORS' REPORT
<PAGE>
TELTRAN INTERNATIONAL GROUP, LTD. AND SUBSIDIARIES
For the years ended December 31, 1998 and 1997
CONTENTS
<TABLE>
<CAPTION>
PAGE #
<S> <C>
Independent Auditors' Report F-2
Financial Statements:
Consolidated Balance Sheet F-3
Consolidated Statements of Operations F-4
Consolidated Statement of Stockholders' Deficit F-5
Consolidated Statements of Cash Flows F-6
Notes to Consolidated Financial Statements F-7 - 11
</TABLE>
F-1
<PAGE>
The Board of Directors
Teltran International Group, Ltd. and Subsidiaries
We have audited the consolidated balance sheet of Teltran International Group,
Ltd. and Subsidiaries as of December 31, 1998 and 1997 and the related
consolidated statements of operations, shareholders' deficit and cash flows for
the years then ended, in accordance with Statements on Standards for Accounting
and Review Services issued by the American Institute of Certified Public
Accountants. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
These 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 statements
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Teltran
International Group, Ltd. and Subsidiaries as of December 31, 1998 and 1997 and
the results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
February 22, 1999
F-2
<PAGE>
TELTRAN INTERNATIONAL GROUP, LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 31, 1998 and 1997
ASSETS
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Current Assets:
Cash $ 5,389 $ 3,646
Accounts receivable 94,296 --
Deferred financing costs - net of amortization 19,797 --
----------- -----------
Total current assets 119,482 3,646
----------- -----------
Other Assets:
Goodwill 40,273 40,273
Organization expense - net of amortization 98 218
----------- -----------
Total other assets 40,371 40,491
----------- -----------
Total assets $ 159,853 $ 44,137
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities:
Convertible debentures payable $ 180,488 $ --
Loan payable 50,000 50,000
Due to factor 65,193 --
Accounts payable, accrued expenses and taxes 104,581 35,081
Corporation taxes payable 100 488
----------- -----------
Total current liabilities 400,362 85,569
----------- -----------
Long-Term Liabilities:
Notes payable -- 250,000
Loans payable - stockholders' 1,245 10,880
----------- -----------
Total long-term liabilities 1,245 260,880
----------- -----------
Total liabilities 401,607 346,449
----------- -----------
Commitments and Contingencies
Stockholders' Deficiency:
Preferred stock, $.001 par value per share, 5,000,000
shares authorized and -0- issued and outstanding
Common stock, $.001 par value per share, 50,000,000
shares authorized and 7,697,295 and 915,637 shares
issued in 1998 and 1997 respectively 7,697 916
Additional paid in capital in excess of par value 2,002,359 1,501,928
Deficit (2,251,810) (1,805,156)
----------- -----------
Total stockholders' deficiency (241,754) (302,312)
----------- -----------
Total liabilities and stockholders' deficiency $ 159,853 $ 44,137
=========== ===========
</TABLE>
See notes to financial statements.
F-3
<PAGE>
TELTRAN INTERNATIONAL GROUP, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31, 1998 and 1997
1998 1997
--------- ---------
Revenues:
Sales $ 535,197 $ --
Cost of Sales:
Purchases 244,832 --
--------- ---------
Gross profit 290,365 --
Expenses:
Salaries 143,356 371,379
Outside services 271,850 112,032
Professional fees 49,531 21,274
Fees - other 9,384 1,003
Payroll taxes 14,878 28,386
Leasing expense 11,446 --
Travel 93,701 21,219
Insurance 28,863 33,573
Rent 48,834 36,532
Office 3,435 170,618
Miscellaneous 3,908 4,395
Telephone 6,088 27,369
Amortization expenses 21398 0
--------- ---------
Total expenses 706,672 827,780
--------- ---------
Loss from operations (416,307) (827,780)
Interest expense 29,959 --
--------- ---------
Net loss before income taxes (446,266) (827,780)
Provision for income taxes 388 464
--------- ---------
Net loss $(446,654) $(828,244)
========= =========
Net loss per share of common stock based upon
7,697,295 and 915,637 (weighted average)
shares issued respectively $ (0.06) $ (0.90)
========= =========
See notes to financial statements.
F-4
<PAGE>
TELTRAN INTERNATIONAL GROUP, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
For the years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
Common Stock Capital
------------------------------- in Excess
Shares Amount Par Value Deficit
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance - March 1, 1996 5,145,491 $ 5,145 $ 588,550 $ (550,478)
March, 1996 Teltran Merger 10,000,000 10,000
July, 1996 issuance of
3,166,667 shares 3,166,667 3,167 946,833
Adjustment re: merger
elimination entries 31,273
Net loss for the year (457,707)
--------- ----------- ----------- -----------
Balance - January 1, 1997 18,312,158 18,312 1,535,383 (976,912)
Adjustment re: promissory note (50,851)
Reverse stock split 1:20 -
December 1, 1997 (17,396,521) (17,396) 17,396
For the year ended
December 31, 1997
Net loss for the year (828,244)
--------- ----------- ----------- -----------
Balance - December 31, 1997 915,637 916 1,501,928 (1,805,156)
Issuance of share as full
payment of outstanding debt 6,000,000 6,000 284,000 --
Issuance of shares re:
conversion of debt 281,658 281 116,931 --
Issuance of shares re: payment
of stockholder's loans 500,000 500 99,500 --
Net loss for the year -- -- -- (446,654)
--------- ----------- ----------- -----------
Balance - December 31, 1998 7,697,295 $ 7,697 $ 2,002,359 $(2,251,810)
========= =========== =========== ===========
</TABLE>
See notes to financial statements.
F-5
<PAGE>
TELTRAN INTERNATIONAL GROUP, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $(446,654) $(828,244)
Adjustment to reconcile net loss to net cash
provided by operating activities:
Amortization expense 21,398 120
Increase in accounts receivable (94,296) --
Increase in deferred financing costs (55,875) --
Cash advances from factor (net of repayments) 65,193 --
Increase in accounts payable and accrued expenses 69,112 5,613
--------- ---------
Net cash used in operating activities (441,122) (822,511)
--------- ---------
Cash Flows from Investing Activities:
Cash received from issuance of common stock -- 602,300
--------- ---------
Net cash provided by operating activities -- 602,300
--------- ---------
Cash Flows from Financing Activities:
Issuance of convertible debentures 180,488 --
Conversion of convertible debenture - stock issued 119,512 --
Decrease in notes payable (250,000) --
Decrease in loans payable - stockholders' 102,865 --
Issuance of stock for notes payable 290,000 --
Cash received as advances from investors -- 199,149
--------- ---------
Net cash provided by financing activities 442,865 199,149
--------- ---------
Net decrease in cash 1,743 (21,062)
Cash - January 1, 3,646 24,708
--------- ---------
Cash - December 31, $ 5,389 $ 3,646
========= =========
Supplemental Disclosures:
Income tax $ 625 $ 464
========= =========
Interest paid $ 29,959 $ --
========= =========
</TABLE>
See notes to financial statements.
F-6
<PAGE>
TELTRAN INTERNATIONAL GROUP, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 1998
Note 1 - Operations:
Nature of Business:
Teltran International Group, Ltd. through its wholly owned Subsidiary
Teltran International, Inc. (the "Company") provides services for state
of the art telecommunications.
Effective May 1, 1996, the shareholders of Teltran International Inc.
("the Subsidiary"), a Delaware corporation, completed a stock exchange
with Spectratek Inc., a Utah corporation, whereby all the common shares
of the subsidiary, were exchanged for 10,000,000 common shares of
Spectratek, par value $.001. The 10,000,000 shares represented
approximately 67% of the then total issued and outstanding 15,145,491
shares of Spectratek Inc.
On October 6, 1997, Spectratek merged with Teltran International Group,
Ltd., a newly formed Delaware corporation with the surviving entity.
Except as otherwise indicated by the context, references to "the
Company" refer to Teltran International Group, Ltd. and the subsidiary.
Note 2 - Summary of Significant Accounting Policies:
Principles of Consolidation:
The consolidated financial statements include the accounts of the
company and its wholly-owned subsidiary. Intercompany balances and
transactions have been eliminated.
Development Stage Activities and Operations:
Prior to April 1998, the Company was a development stage activity.
Since the Company now has continuing business revenues, comparative
financial information does not include losses accumulated during the
development stage period not part of the financial statement period.
At December 31, 1998, the Company has a net operating loss carryforward
of approximately $2,252,000 after limitations based on changes in
ownership.
F-7
<PAGE>
TELTRAN INTERNATIONAL GROUP, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the year ended December 31, 1998
Note 2 - Summary of Significant Accounting Policies:
Basic loss per share was computed by dividing the Company's net loss by
the weighted average number of common shares outstanding during the
period. There is no presentation of diluted loss per share as the
effect of common stock options, warrants and convertible debt amounts
are antidilutive. The weighted average number of common shares used to
calculate loss per common share during 1998 and 1997 was 7,697,295 and
915,637 respectively.
The Company adopted Financial Accounting Standards Board (FASB)
Statement No. 128, "Earnings per Share". The Statement established
standards for computing and presenting earnings per share (EPS). It
replaced the presentation of primary EPS with a presentation of basic
EPS and also requires dual presentation of basic and diluted EPS on the
fact of the income statement. The Statement was retroactively applied
to the 1997 loss per share but did not have any effect.
Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those amounts.
Fair Value of Financial Instruments:
SFAS No. 107, "Disclosures About Fair Value of Financial Instruments",
requires disclosure of the fair value information, whether or not
recognized in the balance sheet, where it is practicable to estimate
that value. The carrying value of cash, cash equivalents, accounts
receivable and notes payable approximates fair value.
Impairment of Long-Lived Assets:
The Company has not completed it's evaluation of the adoption of SFAS
121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of." However, management believes any
such effect will not be material.
Major Customer:
During the year ended December 31, 1998, approximately 70% of the
company's revenue was from one customer. Also, 65% of accounts
receivable are from this customer who also was factored.
F-8
<PAGE>
TELTRAN INTERNATIONAL GROUP, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the year ended December 31, 1998
Note 3 - Notes Receivable:
In July 1996, the Company issued 3,166,667 shares of common stock to
investors for the sum of $950,000. During the year ended December 31,
1996, the Company received $347,700 and the balance of $602,300 was
received during the year ended December 31, 1997.
Note 4 - Due to Factor:
In June 1998, the Company entered into a factoring agreement; financing
the accounts receivable of their major customers. At December 31, 1998,
the outstanding balance due to the factor, represents approximately 70%
of the customers' open balance. Advances from the factor totaled
$509,036 (before customer repayments) from June, 1998 to December, 1998
and were used to pay operating expenses as well as vendor purchases. In
February 1999, the Company terminated the factoring agreement and paid
the outstanding balance in full.
Note 5 - Notes Payable:
In August 1998, the Company issued $300,000 of convertible debentures
due August 14, 1999 to non-related parties. The debentures accrued
interest at 10%. The debentures are convertible into the Company's
stock at $1.25 or 70% of the lowest closing bid price of the common
stock, 30 trading days preceding the conversion date. During the period
August through December 1998, $119,512 of debentures were converted to
269,158 shares of common stock. In connection with the transaction, the
Company issued 30,000 warrants to purchase 30,000 shares of common
stock at $1.25 per share. Financing costs of this transaction were
deferred, and are being amortized to the convertible debentures
maturity date.
In November 1997, the Company entered into a joint venture agreement
with a group of unrelated foreign investors which provided for their
participation of future profits of the Company in return for
cancellation of indebtedness. In June 1998, the Company issued on
aggregate of 6,000,000 shares to these investors in consideration of
the termination of the joint venture.
Note 6 - Stockholders' Deficit:
During the period August 1998 to December 31, 1998, the Company issued
269,158 shares of its common stock upon the conversion of $119,512 of
the debentures referred to in Note 5.
The Company also issued 500,000 shares of its common stock to related
parties of an officer and an officer as repayment of $100,000 advanced
to the Company during the year.
F-9
<PAGE>
TELTRAN INTERNATIONAL GROUP, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the year ended December 31, 1998
Note 6 - Stockholders' Deficit (Continued):
Upon completion of the reincorporation on October 6, 1997, the
Company's capitalization consisted of 50,000,000 shares of common stock
and 5,000,000 shares of preferred stock. On December 1, 1997, the
shareholders approved a reverse one for twenty common stock split.
Note 7 - Commitments and Contingencies:
The accompanying consolidated financial statements have been prepared
in conformity with generally accepted accounting principles which
contemplates continuation of the Company as a going concern. The
Company was a development stage company and had no significant revenues
and limited financing during the first three months of 1998.
Additionally, the Company, as shown in the accompanying consolidated
financial statements, has an accumulated deficit of $2,251,810 December
31, 1998 and incurred a net loss of $446,654 during the year ended
December 31, 1998. Subsequent to June 30, 1998, the Company is no
longer a development stage company since revenues are continuing.
The Company rents its facility under a lease agreement through August
31, 2003.
Future minimum lease payments under these agreements for the years
ended December are as follows:
1999 $ 90,500
2000 90,500
2001 90,500
2002 98,644
2003 98,644
--------
$468,788
Rent expense for the years ended December 31, 1998 and 1997 was $48,834
and $36,532, respectively.
F-10
<PAGE>
TELTRAN INTERNATIONAL GROUP, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the year ended December 31, 1998
Note 8 - Stock Compensation Plan:
During the year December 31, 1998, the company granted 1,180,000 stock
options to certain officers/directors, employees and non-employees that
may be exercised at prices ranging from 37.5 to $5.00 per share.
Subsequent to December 31, 1998, the Company pursuant to the plan,
granted 795,000 additional stock options to certain employees and
non-employees that may be exercised at a price of .59 per share. These
options vested immediately upon the date of issuance.
The following table summarizes certain information relative to stock
options:
Weighted Average
Incentive Stock Options Shares Exercise Price
----------------------- ------ ----------------
Granted 1,180,000 $1.69
Exercised 0 --
---------
Outstanding-December 31, 1997 0 1.69
Expired/cancelled 0 1.69
Granted 0 --
----------
Outstanding-December 31, 1998 1,180,000
==========
Exercisable-December 31, 1998 497,500
==========
Note 9 - Subsequent Event:
In January 1999, the Company issued $550,000 principal amount of
convertible debentures due to non-related parties. The debentures
accrue interest at 10%, and are convertible into the Company's common
stock at prices related to market. Subsequent to the issuance of the
debentures, all the debentures were converted into shares.
F-11
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Indemnification of Directors and Officers
Article Sixth of the Certificate of Incorporation of the Company
provides with respect to the indemnification of directors and officers that the
Company shall indemnify to the fullest extent permitted by Sections 102(b)(7)
and 145 of the Delaware General Corporation Law, as amended from time to time,
each person that such Sections grant the Company the power to indemnify. Article
Sixth of the Certificate of Incorporation of the Company also provides that no
director shall be liable to the corporation or any of its stockholders for
monetary damages for breach of fiduciary duty as a director, except with respect
to (1) a breach of the director's duty of loyalty to the corporation or its
stockholders, (2) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (3) liability under
Section 174 of the Delaware General Corporation Law or (4) a transaction from
which the director derived an improper personal benefit, it being the intention
of the foregoing provision to eliminate the liability of the corporation's
directors to the corporation or its stockholders to the fullest extent permitted
by Section 102(b)(7) of Delaware General Corporation Law, as amended from time
to time.
Item 25. Other Expenses of Issuance and Distribution
The following table sets forth various expenses, other than
underwriting discounts, which will be incurred in connection with this offering.
Other than the SEC registration fee amounts set forth below are estimates:
<TABLE>
<CAPTION>
<S> <C>
SEC registration fee...................................................................................... 4,759.17
Blue sky legal fees ......................................................................................
Printing and engraving expenses...........................................................................
Legal fees......................................................................................... 1,000
Accounting fees....................................................................................
Miscellaneous expenses...........................................................................
-----
$======
</TABLE>
Item 26. Recent Sales of Unregistered Securities
The following sets forth information relating to all unregistered securities of
the Company sold by it since December 31, 1995. All share numbers have been
adjusted retroactively to reflect a 1 for 20 reverse stock split on December 31,
1997.
On May 1, 1996, the Company issued an aggregate of 500,000 shares of
Common Stock to the stockholders of International in exchange for all of the
outstanding capital stock of International.
In June 1996 the Company issued 158,333 shares of its common stock in
accordance with Regulation 504 of the Securities Act of 1933 for approximately
$950,000.
In September, 1998 the Company issued 500,000 to an affiliate of
Byron Lerner and an officer and directors in satisfaction of indebtedness of
$100,000. The Company believes the issuance of such shares is exempt from the
registration requirements pursuant to Section 4(2) of the Securities Act.
II-1
<PAGE>
In June 1998 the Company issued 6,000,000 shares of its common stock
to entities which collectively had the right to participate in the Company's
future earnings. These investors acquired the shares for investment. The Company
believes the issuance of such shares is exempt from the registration
requirements pursuant to Section 4(2) of the Securities Act.
In July and January the Company issued its convertible notes in the
aggregate principal amount of $850,000 to several foreign investors in a
transaction exempt pursuant to Rule 504. In connection with the transaction the
Company issued warrants to purchase an aggregate of 167,500 shares of its Common
Stock various persons. All of the notes have been converted and 2,069,197
shares issued. All the Warrants were also exercised pursuant to Rule 504 to
acquire 137,500 shares of the Company have been exercised.
Item 27. Exhibits
Exhibit No. Description*
3.1 Certificate of Incorporation*
3.2 Certificate of Ownership and Merger of Spectratek
Incorporation by Teltran International Group, Ltd.*
3.3 Amendment to Certificate of Incorporation*
5.1 Opinion of Parker Duryee Rosoff & Haft**
10.1 1998 Stock Option Plan*
10.2 Employment Agreement between Byron Lerner and
Registrant*
10.3 USA Interconnectivity and Support Agreement dated
October 12, 1999*
10.4 USA Intellectual Property License Agreement dated
October 12, 1999 between OzEmail and Registrant*
10.5 Telecommunication Services Agreement dated October
15, 1998 between OzEmail and Registrant*
21.1 Subsidiary List*
23 Consent of Leibman Goldberg & Drogin LLP
23.1 Consent of Parker Duryee Rosoff & Haft
27 Selected Financial Data Schedule*
* Previously filed with the Company's Form 10-SB on March 24, 1999 and
incorporated herein by reference.
** To be filed by amendment.
Item 28. Undertakings
Registrant hereby undertakes:
(1) That for purposes of determining any liability under the
Securities Act, the information omitted from the form of Prospectus filed as
part of this Registration Statement in reliance upon Rule
II-2
<PAGE>
430A and contained in a form of Prospectus filed by Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part
of this Registration Statement as of the time it was declared effective.
(2) That for the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
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
(3) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(a) To include any Prospectus required by Section 10(a)(3)
of the Securities Act;
(b) 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;
(c) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement.
(4) 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.
(5) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of Registrant pursuant to Item 24 of this Part II to the Registration Statement,
or otherwise, Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act, and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by Registrant of expenses incurred or paid by a director, officer or
controlling person of 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, Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against the public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-3
<PAGE>
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 New
York, State of New York, on April 6, 1999.
TELTRAN INTERNATIONAL, INC.
By: /s/ Byron Lerner
-----------------------
Byron Lerner, Chairman
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates stated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Byron Lerner Chairman (principal executive April 6, 1999
- ------------------------- officer), Chief Financial Officer
Byron Lerner (Principal financial and accounting
Officer) and Director
/s/ James Tubbs Director April 6, 1999
- -------------------------
James Tubbs
/s/ Martin Miller Director April 6, 1999
- -------------------------
Martin Miller
</TABLE>
II-4
<PAGE>
Consent of Accountants. We hereby consent to the use of our certified financial
statement and to all references to our firm included in or made part of this
Form SB-2 Registration Statement.
II-5
