As filed with the Securities and Exchange Commission on August , 2000
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
---------------
AFFORDABLE TELECOMMUNICATIONS TECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Texas 23-2582701
------ ----------
( State of Incorporation) (IRS Employer Identification No.)
6227 Southwest Freeway
Houston, Texas 77074
(713) 988-8884
----------------------
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
STEVEN H. BETHKE
Chief Executive Officer
AFFORDABLE TELECOMMUNICATIONS TECHNOLOGY CORPORATION
6227 Southwest Freeway
Houston, Texas 77074
(713) 988-8884
----------------------
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
Charles A. Cleveland
Charles A. Cleveland, P.S.
Suite 304, 1212 North Washington
Spokane, Washington 99201-2401
----------------------
Approximate date of commencement of proposed sale to the public: From time to
time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. |_|
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
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If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_| ______ If this Form is a
post-effective amendment filed pursuant to Rule 462(c) under the Securities Act,
check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering.
|_| ______
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=======================================================================================
Proposed Proposed
maximum maximum
offering price aggregate offering
Title of Securities Amount to be price per price per share Amount of
to be registered registered share [1] price[1] registration fee
------------------- ------------ -------------- ------------------ ----------------
<S> <C> <C> <C>
Common Stock,
$.01 par value 3,711,100 $0.25 $927,775 $244.93
shares
=======================================================================================
</TABLE>
[1] Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) based upon the average of the high and low prices of the
Company's Common Stock on the OTC Electronic Bulletin Board (Symbol: ATTP) on
July 26, 2000.
[2] Pursuant to Rule 457(g) under the Securities Act of 1933, the
registration fee is based on the common stock issuable upon the exercise of the
Options and no separate fee is payable in respect of the Options.
[3] 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 Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
[4] Estimated solely for the purpose of calculating the registration fee.
Pursuant to Rule 457(g) under the Securities Act, the proposed maximum offering
price with respect to the warrants being registered is based upon $. per share,
the price at which the warrants may be exercised.
[5] This number represents the shares of our common stock that we may issue
from time to time upon conversion of the debenture.
[6] No registration fee is required pursuant to Rule 457(g) under the
Securities Act.
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AFFORDABLE TELECOMMUNICATIONS TECHNOLOGY CORPORATION
Cross Reference Sheet Required by Item 501(b) of Regulation S-K
Form S-3 Item Number and Caption Caption in Prospectus
1. Forepart of Registration Statement Facing Page of Registration
and Outside Front Cover Page Statement and Cover Page of
of Prospectus Prospectus
2. Inside Front and Outside Back Inside Cover Page of Prospectus
Cover Pages of Prospectus and Outside Cover Page of
Prospectus
3. Summary Information, Risk Not Applicable
Factors and Ratio of Earnings to
Fixed Charges
4. Use of Proceeds Not Applicable
5. Determination of Offering Price Not Applicable
6. Dilution Not Applicable
7. Selling Security Holders Sales by Selling Shareholders
8. Plan of Distribution Cover Page of Prospectus and
Sales by Selling Shareholders
9. Description of Securities to Grant of Stock Bonus; and
be Registered Sales by Selling Shareholders
10. Interest of Named Experts Not Applicable
and Counsel
11. Material Changes Not Applicable
12. Incorporation of Certain Information Incorporation of Certain
by Reference Information by Reference
13. Disclosure of Commission Position Indemnification
on Indemnification or Securities
Act Liabilities
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The information in this prospectus is not complete and may be changed. The
selling security holders identified in this prospectus may not sell these
securities until the registration statement filed with the Securities and
Exchange Commission is effective. This prospectus is not an offer to sell these
securities and is not soliciting an offer to buy these securities in any state
where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED AUGUST ___, 2000
PROSPECTUS
AFFORDABLE TELECOMMUNICATIONS TECHNOLOGY CORPORATION
3,011,100 Shares of Common Stock
($0.01 par value per share)
The shareholders named in the table included in the "Selling Shareholders"
section of this prospectus, which begins on page 10, are offering all of the
shares of common stock covered by this prospectus. Those people are called
selling shareholders and will be referred to throughout this document as the
"Selling Shareholders". We will not receive any of the proceeds from such sales.
We will pay all expenses in connection with this offering, other than
commissions and discounts of underwriters, dealers or agents.
The Selling Shareholders may sell all or a portion of their options or stock at
any time whether through a broker, or otherwise. The stock will generally be
sold at the market price or whatever price is negotiated. Our common stock is
quoted on the OTC Electronic Bulletin Board (Symbol: ATTP). On August 8, 2000,
the closing price of the common stock was $0.25 per share.
See "Risk Factors" beginning on page 8 for a description of certain factors that
should be considered by purchasers of the common stock and options.
We have not, nor has any individual named in this prospectus, authorized any
person to give any information or to make any representation other than those
contained in, or incorporated by reference into, this prospectus. This
prospectus does not constitute an offer to sell or solicitation of an offer to
buy.
We have filed a registration statement on Form S-3 in respect of the common
stock offered by this prospectus with the Securities and Exchange Commission
under the Securities Act. This prospectus does not contain all of the
information contained in the registration statement. You should read this entire
prospectus carefully as well as the registration statement for additional
information.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------
This Prospectus does not constitute an offer to sell securities in any state to
any person to whom it is unlawful to make such offer in such state.
The date of the Prospectus is ____________________, 2000.
You should rely only on the information contained in this prospectus. We have
not authorized anyone to provide you with information different from that
contained in this prospectus. This prospectus may be used only where it is legal
to sell these securities. The information contained in this prospectus is
accurate only as of the date of this prospectus, regardless of the time of
delivery of this prospectus or of any sale of the securities.
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TABLE OF CONTENTS
Where You Can Find More Information................................... 6
Forward-Looking Statements............................................ 7
About Us.............................................................. 7
Risk Factors.......................................................... 7
Use of Proceeds....................................................... 12
Selling Stockholders.................................................. 12
Plan of Distribution.................................................. 13
Our Common Stock...................................................... 14
Indemnification....................................................... 15
Legal Matters......................................................... 16
Experts............................................................... 16
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WHERE YOU CAN FIND MORE INFORMATION
We must file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any documents we file at the
SEC's public reference rooms in Washington, DC, New York, NY and Chicago, IL.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. Our SEC filings are also available to the public from the SEC's
web site at http://www.sec.gov. Our file number is File No. 33-19584. In
addition, our proxy and information statements and other information about us
can be inspected at the offices of the National Association of Securities
Dealers, Inc., 1735 R Street, N.W., Washington, D.C. 20006.
The SEC allows us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is considered to be part of this prospectus.
Information in this prospectus may update documents previously filed with the
SEC, and later information that we file with the SEC will automatically update
this prospectus. We incorporate by reference the documents listed below and any
future filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 prior to the termination of the offering:
(1) The Company's Annual Report on Form 10-KSB for the year ended December
31, 1999;
(2) The Company's Quarterly Report on Form 10-QSB for the period ended March
31, 2000;
(3) The Company's Quarterly Report on Form 10SB-12g Registration Statement,
as filed November 18, 1999;
(4) The Company's Report on Form 8-K for June 13, 2000, as filed June 14,
2000; and,
(5) All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the Company's
Annual Report referred to above.
All reports and documents filed by the Company pursuant to Section 13, 14 or
15(d) of the Exchange Act, prior to the filing of a post-effective amendment
which indicate that all securities offered hereby have been sold or which
de-registers all securities then remaining unsold, shall be deemed to be
incorporated by reference herein and to be a part hereof from the respective
date of filing of each such document. Any statement incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document, which also is or is deemed to be incorporated by
reference herein, modified or supersedes such statement. Any statement modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute part of this Prospectus.
You may request a copy of these filings at no cost, by writing or telephoning us
at the following address:
Corporate Secretary,
AFFORDABLE TELECOMMUNICATIONS TECHNOLOGY CORPORATION
6227 Southwest Freeway
Houston, Texas 77074
Telephone (713) 988-8884
Information on our website is not part of this prospectus.
FORWARD LOOKING STATEMENTS
Some of the information in this prospectus contains forward-looking
statements that involve substantial risks and uncertainties. You can identify
these statements by forward-looking words such as "may," "will," "expect,"
"anticipate," "believe," "intend," "estimate" and "continue" or similar words.
You should read statements that contain these words carefully for the following
reasons:
- the statements discuss our future expectations;
- the statements contain projections of our future earnings or of
our financial condition; and
- the statements state other "forward-looking" information.
We believe it is important to communicate our expectations to our
investors. There may be events in the future, however, that we are not
accurately able to predict or over which we have no control. The risk factors
listed above, as
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well as any cautionary language in or incorporated by reference into this
prospectus, provide examples of risks, uncertainties and events that may cause
our actual results to differ materially from the expectations we describe in our
forward-looking statements. The SEC allows us to "incorporate by reference" the
information we file with them, which means we can disclose important information
to you by referring you to those documents. Before you invest in our common
stock, you should be aware that the occurrence of any of the events described in
the above risk factors, elsewhere in or incorporated by reference into this
prospectus and other events that we have not predicted or assessed could have a
material adverse effect on our earnings, financial condition and business. If
the events described above or other unpredicted events occur, then the trading
price of our common stock could decline and you may lose all or part of your
investment.
ABOUT US
We were formed on July 7, 1997 in the State of Texas. We are known as a
"marketer" of cellular services. As a marketer, we provide cellular service to
customers. We do not hold any Federal Communications Commission licenses or own
facilities to provide such services. Instead, we market blocks of cellular
telephone numbers from a licensed carrier to the public. We market and sell
prepaid cellular telephone products and services, primarily in the Texas Gulf
Coast area. Our main store is in Houston, Texas.
We sell our products primarily to those persons or businesses who have poor
credit but desire a cellular telephone. We market cellular telephone plans of
such companies as Nextel, Sprint PCS, Bell South Wireless, Houston Cellular
Telephone Company, Page-Mart, Comsat Mobile Communications and Globalstar
Telecommunications Co. We also offer paging services. In the future we plan to
provide an Automatic Meter Reading service.
Recently, we started working with AirTouch Cellular Corporation to offer the
Globalstar Telecommunications satellite telephones, accessories and service
throughout Texas. The Globalstar service provides customers with satellite
telephone service world-wide and is distributed and marketed throughout North
America.
Our principal executive offices are located at 6227 Southwest Freeway, Houston,
Texas, 77074, and our telephone number is (713) 988-8884.
You can find more information about us and our products through the Internet at
www.thewirelessstore.net. The information provided on our website is not
incorporated into this prospectus.
RISK FACTORS
You should carefully consider the risks described below before making an
investment decision. The risks and uncertainties described below are not the
only ones facing us. Additional risks and uncertainties not presently known to
us or that we currently deem immaterial may also impair our business operations.
If any of the following risks actually occur, our business, financial condition
or results of operations could be materially and adversely affected. In such
case, the trading price of our common stock could decline, and you may lose all
or part of your investment.
We may be adversely affected by our competitors, many of whom have greater
financial resources than we do.
Our principal business, a reseller of cellular telephone plans, is
highly competitive. We compete with cellular licensees, such as AT&T
Wireless Service, Nextel, Sprint PCS, VoiceStream, GTE MobilNet,
Houston Cellular Telephone Company. All of these competitors are
larger, have greater financial resources than we do and may be less
leveraged than we are. We also face competition from paging companies,
traditional telephone companies and other resellers. The Federal
Communications Commission, known as the FCC, requires all cellular and
personal communication system operators to provide service on a
nondiscriminatory basis to resellers. We provide service to customers
but do not hold an FCC license or own facilities to provide such
services. Instead, we buy blocks of cellular telephone numbers from a
licensed carrier, usually at a discounted rate, and resell them to the
public. Thus, we may be both a customer of a cellular or personal
communications services provider and also a competitor.
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<PAGE>
We face increased competition from entities using communications technologies
comparable to cellular service.
Competing technologies or any new technologies may provide significant
competition for us. We cannot assure you that one or more of the
technologies that we currently sell will not become inferior or
obsolete at some time in the future.
New technologies that are comparable to cellular service include:
.personal communications services, .
.ESMR and
.satellite-based services.
Personal communications services refer to the series of two-way
communication licenses recently awarded by the FCC which are expected
to use digital wireless technologies. Many personal communication
services licensees who will compete with us have access to substantial
capital resources. We do not. In addition, many of these companies, or
their affiliates, already operate large cellular telephone systems and
thus bring significant wireless experience to this new marketplace.
ESMR is a two-way wireless communications service that incorporates
characteristics of cellular technology, including many low-power
transmitters and connection with the network that provides traditional
telephone services. ESMR service may compete with cellular service by
providing digital communication technology, lower rates, enhanced
privacy and additional features such as electronic mail and built-in
paging. Nextel Communications, Inc. is the primary provider of such
services today. The FCC has issued a number of licenses for
satellite-based services that would enable subscribers to access mobile
communications systems throughout the world. Additional proposals for
the provision of satellite services remain pending with the FCC and
foreign regulatory bodies must approve certain aspects of some
satellite systems.
Competition from other wireless and traditional telephone and paging service
providers in Texas may reduce our market share and adversely affect prices.
The market for wireless services is highly competitive in Texas.
Competition from these of telecommunications providers may reduce our
market share and have an adverse effect on our prices and
profitability. Our main competitors for wireless services in the Texas
market are AT&T Wireless Service, Nextel, Sprint PCS, VoiceStream, GTE
MobilNet, Houston Cellular Telephone Company. These competitors were
earlier entrants into the Texas wireless market, have greater resources
than we do. They currently hold subscriber market shares of
approximately respectively. AT&T Wireless Service, GTE MobilNet and
Houston Cellular Telephone Company offer cellular service based on both
analog and digital technology and offer greater cellular capability
than we do to their customers traveling outside Texas. We only offer
digital service in Texas. Additionally our main competitors for paging
services in the Texas market are Paging Network, Arch Communications,
Metrocall and Skytel. One of their main advantages is they offer
national paging services to their subscribers. We also compete with
local, regional and national paging companies.
The FCC has issued licenses for personal communication services that
can carry large amounts of data in the Texas market. These systems
present additional competition to our personal communication services
operations that can carry large amounts of data in Texas. The
Southwestern Bell Telephone Company is also our primary competitor for
traditional telephone service. Any increase in our market presence will
depend upon our ability to obtain customers that are under served by
the local or alternative telephone Company or looking for an
alternative.
Rapid and significant technological changes in the telecommunications industry
may adversely affect us.
We face rapid and significant changes in technology. New technologies
maybe protected by patents or other intellectual property laws and
therefore may not be available.
8
<PAGE>
In particular, the wireless telecommunications industry is experiencing
significant technological change, including:
. the increasing pace of digital upgrades in existing analog
wireless systems,
. evolving industry standards,
. the allocation of new radio frequency spectrum in which
to license and operate wireless services,
. ongoing improvements in the capacity and quality of digital
technology,
. shorter development cycles for new products and
enhancements, and
. changes in end-user requirements and preferences.
Like others in the industry, we are uncertain about the extent of
customer demand as well as the extent to which airtime and monthly
access rates may continue to decline. We cannot predict the effect of
technological changes on our business, and it is possible that
technological developments will have a material adverse effect on us.
We may not be able to modify our business to comply with regulatory changes.
The telecommunications industry is subject to federal and state
regulation that is continually evolving. As new telecommunications laws
and regulations are issued, we may be required to modify our business
plans or operations. There can be no assurance that we can do so in a
cost-effective manner. Further, we cannot assure you that federal or
state governments or the state of Texas will not make regulations or
take other actions that might have a material adverse effect on our
business. If the FCC allocates radio spectrum for services that compete
with our business thereby introducing additional competitors, these
changes could materially and adversely affect our business prospects,
operating results or our ability to service our indebtedness.
Our results of operations may decline because of a market decline in cellular
telephone rates and our strategy of aggressively pricing cellular plan rates.
We earn much of our revenue from customers who buy our various cellular
telephone calling plans. The use of wireless phones outside a
subscriber's local area is commonly referred to as roaming. Cellular
telephone rates per minute have declined over the last several years.
We expect that such declines will continue for the foreseeable future.
We have also implemented a strategy of aggressively pricing plan rates
to encourage use of cellular and personal communications services. Our
results of operations may decline because the decline in cellular
telephone rates may not be offset by the volume increase in cellular
telephone plans sold.
We depend upon proprietary information.
Our success is dependent upon our proprietary information and
technology. We rely on a combination of patent, contract, copyright,
trademark and trade secret laws and other measures to protect our
proprietary information and technology. We have federal trademark
registrations for the names "Beeper Boutique." As part of our
confidentiality procedures, we generally enter into nondisclosure
agreements with our employees, distributors and customers, and limit
access to and distribution of our proprietary information. Although we
believe that our patent rights and trademark protection should prevent
another party from manufacturing and selling competing products, there
can be no assurance that the steps we have taken to protect our
technology will be successful.
Although we believe our products and technology do not infringe on any
proprietary rights of others, as the number of competing products
available in the market increases and the functions of those products
further overlap, infringement claims may increase. Any such claims,
with or without merit, could result in costly litigation or might
require us to enter into royalty or licensing agreements. Such royalty
or licensing agreements, if required, may not be available on terms
acceptable to us or at all. Any successful infringement claim could
have a material adverse effect upon our business, results of operations
and financial condition.
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We currently have indemnification obligations to others.
Certain of our agreements, including the agreements pursuant to which
we bought the cellular products from Houston Cellular Telephone
Company, Sprint PCS, Nextel, GlobalStar, Bell South Wireless Data,
WebLink Wireless require us to indemnify them for any damages they may
suffer if third party claims give rise to losses. While, to date, we
have not received indemnification claims, we cannot guarantee that
there will not be future claims. Any such claim may require us to pay
substantial damages, which could cause our business, financial
condition and results of operations to suffer.
We expect to incur losses for the foreseeable future and may not be able to
generate enough cash to repay the notes.
We cannot assure you that our business will generate cash flow or
that we will be able to obtain funding sufficient to satisfy our debt
service requirements. Our business operations have incurred net losses
for each of the past two fiscal years. Our losses in 1998 were $206,044
and our losses in 1999 were $473,477. We expect to report net losses
for the foreseeable future due to increased interest payments and
non-cash charges such as depreciation and amortization. In addition,
prevailing economic conditions and financial, business and other
factors in the markets we serve, many of which are beyond our control,
will affect our ability to pay interest on and satisfy our other debt
obligations.
Payment of our debt obligations reduces the cash available to use in
our business.
Our large amount of debt could adversely affect our business and
you because we must use a substantial portion of our cash to pay our
debt obligations. As a result, we have less cash to use in other areas
of our business. In addition, our debt service obligations increase our
vulnerabilities to:
. adverse economic and industry conditions;
. interest rate increases because borrowings under our credit
facility are at variable interest rates; and
. competitive pressures, as many of our competitors will be less
leveraged than we are.
In addition, we may incur significantly more debt. This may
further reduce the cash we have available to invest in our operations.
If we cannot generate sufficient cash from operations to make scheduled
payments on the notes or to meet our other obligations, we will need to
refinance, obtain additional financing or sell assets.
We may encounter difficulties obtaining future financing on favorable terms.
We cannot assure you that we will be able to borrow sufficient funds in
the future to satisfy our debt service and working capital requirements
or to finance our acquisition strategy. Even if we were to obtain
additional financing, such financing may be on terms unfavorable to us.
We may encounter difficulties obtaining future financing on favorable terms.
We cannot assure you that we will be able to borrow sufficient funds in
the future to satisfy our debt service and working capital requirements
or to finance our acquisition strategy. Even if we were to obtain
additional financing, such financing may be on terms unfavorable to us.
We are dependent Upon Key Employees.
If we lose any of our executive officers, or are unable to attract and
retain qualified management personnel and directors, our ability to run
our business could be adversely affected and our revenue and earnings
could decline.
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We are dependent upon the services and management skills of our
executive officers, Steven H. Bethke, President/Chief Executive
Officer, and Norman George, Chief Financial Officer. Mr. Bethke has
been with us since October, 1996. Mr. Norman has been with us since
1998. We have not entered into employment agreements with Bethke or
Norman. We do not maintain key man life insurance any officer. Further,
our growth strategy will depend, in part, on our ability to attract and
retain additional key management, marketing and operating personnel.
Possible health effects of radio frequency emission may adversely affect the
demand for cellular telephone services.
Media reports have suggested that certain radio frequency emissions
from portable cellular telephones may be linked to cancer and interfere
with heart pacemakers and other medical devices. Concerns over radio
frequency emissions and interference may have the effect of
discouraging the use of cellular telephones, which could have an
adverse effect upon our business. There is no assurance that government
authorities would not increase regulation of cellular telephones
resulting from these concerns or that cellular telephone companies may
be liable for costs or damages associated with these concerns.
Existing Management owns and controls a significant portion of our outstanding
common stock.
Our Board of Directors, officers and their respective affiliates
beneficially own 23.925% of our outstanding common stock. Although
these persons do not have any agreements or understandings to act or
vote in concert, any such agreement, understanding or acting in
concert would make it difficult for others to elect the entire Board
of Directors, or to control the disposition of any matter submitted to
a vote of shareholders.
The Value Of Our Stock Has In The Past And May In The Future Change Suddenly And
Significantly.
Our stock is traded on the Electronic Bulletin Board. Stocks that trade
on the Bulletin Board tend to experience dramatic price increases or
decreases. The trading price of our common stock has been subject to
significant fluctuations to date and could be subject to wide
fluctuations in the future, in response to many factors, including the
following:
. Quarter-to-quarter variations in our operating results,
. New Licensing requirements,
. General conditions in the markets for our products or the cellular
telephone industry,
. The price and availability of advertising revenue,
. General financial market conditions, or
. Other events or factors.
In this regard, we do not endorse or accept responsibility for the
estimates or recommendations issued by stock research analysts from
time to time. The volatility of public stock markets, and media stocks
specifically, have frequently been unrelated to the operating
performance of the specific companies. These market fluctuations may
adversely affect the market price of our common stock.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares of our
common stock or the options by the Selling Shareholders.
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SELLING SHAREHOLDERS
The following table lists (a) the name of the Selling Shareholders (b) the
number of shares of common stock beneficially owned by each Selling Shareholder
prior to the offering (c) the number of shares being offered under this
prospectus by such Selling Shareholders; and (d) the number of shares of common
stock beneficially owned by each Selling Shareholder after the completion of the
offering. The table assumes that the Selling Shareholders will sell all shares
they are offering under this prospectus, and that the Selling Shareholders will
not acquire additional shares of our common stock prior to completion of this
offering. The shares are being registered to permit secondary trading of the
Shares, and the Selling Shareholders may offer such shares for resale from time
to time. See "Plan of Distribution.".
<TABLE>
<CAPTION>
Number of Shares to Percentage
Name of Shares Shares to Be Owned To Be Owned
Selling Shareholder Owned Be Offered After Offering After Offering
<S> <C> <C> <C> <C>
LEIBMAN & ASSOCIATES 30,000 30,000 -0- -0-
FRANKLIN J. HARBERG, JR. 15,000 15,000 -0- -0-
JANMARK VENTURES 14,000 14,000 -0- -0-
HLH McALLEN VENTURE 15,000 15,000 -0- -0-
A & J PARTNERSHIP 10,000 10,000 -0- -0-
FRANKLIN J. HARBERG, MD 10,000 10,000 -0- -0-
LARRY E. WADLER 10,000 10,000 -0- -0-
KIM T. PETERSON 500,000 500,000 -0- -0-
MICHAEL GRAHAM 325,600 325,600 -0- -0-
DAVID LEVA 60,000 60,000 -0- -0-
THE STOCK ADVISOR 100,000 100,000 -0- -0-
CDI HOLDINGS 400,000 400,000 -0- -0-
PRINCESSA CAPITAL 350,000 350,000 -0- -0-
OTC/FN 300,000 300,000 -0- -0-
FRANKLIN J. HARBERG 28,000 28,000 -0- -0-
Trustee for Michael Harberg
FRANKLIN J. HARBERG 28,000 28,000 -0- -0-
Trustee for Kimberly Harberg
FRANKLIN J. HARBERG 28,000 28,000 -0- -0-
Trustee for Jamie Harberg
FUTURE NOW 37,500 37,500 -0- -0-
D/b/a Foresight Security
ALBERT J. LAROSE 200,000 200,000 -0- -0-
WATERFORD ENTERPRISE, INC. 1,250,000 1,250,000 -0- -0-
</TABLE>
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[1] Except as set forth herein, all securities are directly owned and the
sole investment and voting power are held by the person named. A person
is deemed to be the beneficial owner of securities that can be acquired
by such person within 60 days of July 31, 2000.
[2] Based upon 14,483,738 shares of Common Stock issued and outstanding.
Each beneficial owner's percentage is determined by assuming that all
such exercisable options or warrants that are held by such person (but
not those held by any other person) have been exercised.
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Shareholders that they intend to
sell all or a portion of their Shares offered by this prospectus from time to
time. These sales may be made:
- on the over-the-counter market;
- to purchasers directly;
- in ordinary brokerage transactions in which the broker solicits
purchasers;
- through underwriters, dealers and agents who may receive compensation in
the form of underwriting discounts, concessions or commissions from a seller
and/or the purchasers of the shares for whom they may act as agent;
- through the pledge of shares as security for any loan or obligation,
including pledges to brokers or dealers who may from time to time effect
distributions of the shares or other interests in the shares;
- through purchases by a broker or dealer as principal and resale by such
broker or dealer for its own account pursuant to this prospectus;
- through block trades in which the broker or dealer so engaged will
attempt to sell the shares as agent or as riskless principal but may position
and resell a portion of the block as principal to facilitate the transaction;
- in any combination of one or more of these methods; or
- in any other lawful manner.
The Selling Shareholders may also make private sales directly or through a
broker or brokers, who may act as agent or as principal. In connection with any
sales, such Selling Shareholders and any brokers participating in such sales may
be deemed to be underwriters within the meaning of the Securities Act and any
compensation received by them might be deemed to be underwriting discounts and
commissions under the Securities Act.
Any broker-dealer participating in such transactions as agent may receive
commissions from the Selling Shareholders (and, if they act as agent for the
purchaser of such Shares, from such purchaser). Brokerage fees may be paid by
the Selling Shareholder, which may be in excess of usual and customary brokerage
fees. Broker-dealers may agree with the Selling Shareholders to sell a specified
number of Shares at a stipulated price, and, to the extent such a broker-dealer
is unable to do so acting as agent for any Selling Shareholder, to purchase as
principal any unsold Shares at the price required to fulfill the broker-dealer's
commitment to such Selling Shareholder. Broker-dealers who acquire Shares as
principal may thereafter resell such Shares from time to time in transactions
(which may involve crosses and block transactions and which may involve sales to
and through other broker-dealers, including transactions of the nature described
above) on the over-the-counter Bulletin Board, in negotiated transactions or
otherwise at market prices prevailing at the time of sale or at negotiated
prices, and in connection with such resales may pay to or receive from the
purchasers of such Shares commissions computed as described above.
Any Shares covered by this Prospectus which qualify for sale pursuant
to Rule 144 under the Securities Act may be sold under that Rule rather than
pursuant to this Prospectus.
The Selling Shareholders will be subject to the applicable provisions
of the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder, including without limitation Regulation M, which
provisions may
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limit the timing of purchases and sales of any of the Common
Stock by the Selling Shareholders. All of the foregoing may affect the
marketability of the Common Stock.
We will pay substantially all the expenses incident to this offering
of Shares by the Selling Shareholders, other than brokerage and selling fees.
The Selling Shareholders will pay all applicable stock transfer taxes, transfer
fees and brokerage commissions or underwriting or other discounts. We have
agreed to indemnify the selling shareholders against certain liabilities,
including liabilities under the Securities Act.
In order to comply with certain states' securities laws, if applicable,
the common stock and options will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
common stock and options may not be sold unless the stock have been registered
or qualified for sale in such state or an exemption from registration or
qualification is available and we or Selling Shareholders comply with the
applicable requirements.
We may be required to file a supplemental prospectus in connection with
any activities involving a seller which may be deemed to be an "underwriting."
In that case, a supplement to this prospectus would contain
(1) information as to whether an underwriter selected by a seller, or any
other broker-dealer, is acting as principal or agent for the seller,
(2) the compensation to be received by an underwriter selected by a
seller or any broker-dealer, for acting as principal or agent for a seller and
(3) the compensation to be received by any other broker-dealer, in the
event the compensation of such other broker-dealers is in excess of usual and
customary commissions.
Any broker or dealer participating in any distribution of the shares may be
required to deliver a copy of this prospectus, including any prospectus
supplement, to any individual who purchases any shares from or through such a
broker-dealer.
OUR STOCK
Common Stock
We can issue up to 20,000,000 shares of Common Stock, $0.01 par value per share.
Our stockholders are entitled to one vote per share on each matter submitted to
a vote at any meeting of shareholders. A majority of our outstanding Common
Stock can elect the entire Board of Directors of the Company. Our bylaws say
that a majority of the outstanding shares is a quorum for shareholders'
meetings, except if the bylaws or a law say otherwise.
Our Shareholders have no preemptive rights to acquire additional shares of
Common Stock or other securities. Our Common Stock is subject to redemption and
will carry no subscription or conversion rights. If we liquidate, our Common
Stock will be entitled to share equally in corporate assets after satisfaction
of our bills. The shares of Common Stock, once issued, is fully paid and
non-assessable.
Our stockholders can receive dividends if the Board of Directors decides to do
so and if we have the funds legally available. We intends to expand our business
through reinvesting our profits, if we have any, and don't expect to pay
dividends.
Our Directors have the authority to issue shares without action by the
shareholders.
Debentures
In connection with a recent private sale of securities, we issued $500,000
Convertible Debentures. These debentures are convertible into 1,000,000 shares
of common stock. The investors also received special warrants which they may
exercise to purchase an additional shares of common stock. All of the common
stock warrants entitle the holder to purchase common stock for $2.20 per share
(subject to possible anti-dilution adjustments). The debentures and warrants are
not covered by this prospectus.
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Transfer Agent
The transfer agent for the shares of Common Stock of the Company is Corporate
Stock Transfer 3200 Cherry Creek Drive South, Suite 430 Denver, CO 80209
INDEMNIFICATION
Our Articles of Incorporation, as amended, limit, to the maximum extent
permitted by law, the personal liability of our directors and officers for
monetary damages for breach of their fiduciary duties as directors and officers,
except in certain circumstances involving certain wrongful acts, such as a
breach of the director's duty of loyalty or acts of omission which involve
intentional misconduct or a knowing violation of law. Texas law provides that
Texas corporations may include within their articles of incorporation provisions
eliminating or limiting the personal liability of their directors and officers
in shareholder actions brought to obtain damages for alleged breaches of
fiduciary duties, as long as the alleged acts or omissions did not involve
intentional misconduct, fraud, a knowing violation of law or payment of
dividends in violation of the Texas statutes. Texas law also allows Texas
corporations to include in their articles of incorporation or bylaws provisions
to the effect that expenses of officers and directors incurred in defending a
civil or criminal action must be paid by the corporation as they are incurred,
subject to an undertaking on behalf of the officer or director that he or she
will repay such expenses if it is ultimately determined by a court of competent
jurisdiction that such officer or director is not entitled to be indemnified by
the corporation because such officer or director did not act in good faith and
in a manner reasonably believed to be in or not opposed to the best interests of
the corporation. Texas law provides that Texas corporations may eliminate or
limit the personal liability of its directors and officers. This means that the
articles of incorporation could state a dollar maximum for which directors would
be liable, either individually or collectively, rather than eliminating total
liability to the full extent permitted by the law.
Our Charter provides that a director or officer is not be personally liable to
us or our shareholders for damages for any breach of fiduciary duty as a
director or officer, except for liability for (i) acts or omissions which
involve intentional misconduct, fraud or a knowing violation of law, or (ii) the
payment of distribution in violation of Article 2.02-1 et seq., of the Business
Corporations Act of the State of Texas . In addition, Article 2.02-1 of the
Business Corporation Act of the State of Texas, ss. and Article V of our Bylaws,
under certain circumstances, provided for the indemnification of the officers
and directors of the Company against liabilities which they may incur in such
capacities. A summary of the circumstances in which such indemnification is
provided for is set forth in the following paragraph, but such summary is
qualified in its entirety by reference to Article V of our Bylaws.In general,
any director of officer (an "Indemnitee") who was or is a party to, or is
threatened to be made a party to, or is otherwise involved in any threatened,
pending or completed action or suit (including, without limitation, an action,
suit or proceeding by or in the right of us), whether civil, criminal,
administrative or investigative (a "Proceeding") by reason of the fact that the
Indemnitee is or was a director or officer of us or is or was serving in any
capacity for us as a director, officer, employee, agent, partner or fiduciary
of, or in any other capacity for, another corporation or any partnership, joint
venture, trust or other enterprise shall be indemnified and held harmless by us
for actions taken by the Indemnitee and for all omissions to the full extent
permitted by Texas law against all expense, liability and loss (including,
without limitation, attorneys' fees, judgments, fines, taxes, penalties and
amounts paid or to be paid in settlement) reasonably incurred or suffered by the
Indemnitee in connection with any Proceeding. The rights to indemnification
specifically include the right to reimbursement by us for all reasonable costs
and expenses incurred in connection with the Proceeding and indemnification
continues as to an Indemnitee who has ceased to be a director or officer. The
Board of Directors may include employees and other persons as though they were
Indemnitees. The rights to indemnification are not exclusive of any other rights
that any person may have by law, agreement or otherwise. The Bylaws also provide
that we can purchase and maintain insurance or make other financial arrangements
on behalf of any person who otherwise qualifies as an Indemnitee under the
foregoing provisions. Other financial arrangements to assist the Indemnitee are
also permitted, such as the creation of a
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trust fund, the establishment of a program of self-insurance, the securing of
our obligation of indemnification by granting a security interest or other lien
on any of our assets (including cash) and the establishment of a letter of
credit, guaranty or surety.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers or persons controlling us pursuant to the
foregoing provisions, we have been informed 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.
LEGAL MATTERS
Our attorney, Charles A. Cleveland, P.S., Spokane, Washington will pass upon the
validity of the issuance of the shares of common stock offered hereby and
certain other legal matters. Charles A. Cleveland is the sole shareholder of the
law firm.
EXPERTS
The consolidated financial statements and the related financial statement
schedules incorporated in this prospectus by reference from the Company's Annual
Report on Form 10-KSB for the Year ended December 31, 1999 have been audited by
Liebman, Goldberg & Drogin Certified Public Accountants, independent auditors,
as stated in their report which is incorporated herein by reference, and have
been so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing as stated in their report.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 14. Other Expenses Of Insurance And Distribution.
--------------------------------------------
The following sets forth the estimated expenses and costs in connection
with the issuance and distribution of securities being registered hereby. All
such expenses will be borne by the Company.
Securities and Exchange Commission Registration Fee...... $ 244.93
Accounting Fees and Expenses............................. *
Legal Fees and Expenses..................................
Printing expenses........................................
Miscellaneous............................................ *
----------
Total.................................................... $ [1]
==========
---------------------
* Estimated
Item 15. Indemnification Of Directors And Officers.
-----------------------------------------
Texas Revised Statutes is incorporated herein by this reference.
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended, the Securities Exchange Act of 1934 or the Rules and
Regulations of the Securities and Exchange Commission thereunder may be
permitted under said indemnification provisions of the law, or otherwise, the
Company has been advised that, in the opinion of the Securities and Exchange
Commission, any such indemnification is against public policy and is, therefore,
unenforceable.
BYLAWS. The Company's Bylaws provide that the Company shall, to the fullest
extent permitted by law, indemnify all directors of the Company, as well as any
officers or employees of the Company to whom the Company has agreed to grant
indemnification.
Item 16. Exhibits And Financial Statement Schedules.
------------------------------------------
Certain of the following exhibits are filed as part of this
registration statement.
The following are filed as exhibits to this Registration Statement:
Sequentially
Numbered
Exhibit No. Description Page
--------------------------------------------------------------------------------
4.1 Instruments defining the rights of security holders
including indentures.
4.2 Articles of Incorporation, dated July 15, 1997 of
the Company. Incorporated by reference to the
Company's Registration Statement on Form 10SB/12g,
as Exhibit 3.1
4.3 By-laws of the Company, dated July 15, 1997.
Incorporated by reference to the Company's
Registration Statement on Form 10SB/12g, as Exhibit
3.1
4.4 Form of common stock Certificate of the Registrant
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4.5 (Reserved)
4.6 Agreement dated January 9, 2000, between Registrant
and Leibman and Associates, P.C.
4.7 Agreement dated February 1, 2000, between
Registrant and National Financial Communications
Corporation
4.8 Form of Subscription Agreement used by the Selling Shareholders
(Page 12) to acquire their stock.
4.9 Agreement dated June 7, 2000, between Registrant
and The Stock Advisor
5 Opinion of Charles A. Cleveland, re: Legality
24.1 Consent of Liebman, Goldberg & Drogin P.C.,
Certified Public Accountants
24.2 Consent of Charles A. Cleveland, Attorney At Law
25.1 Powers of Attorney (contained on Sequential page __
of this Registration Statement)
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Item 17. Undertakings.
(a) The Registrant hereby undertakes
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the
registration statement (or the most recent
post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth
in the registration statement; and
(iii)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;
Provided, however, that Paragraphs (a)(1)(i) and (a)(1)(ii)
above do not apply if the information required to the included
in a post-effective amendment by those Paragraphs is contained
in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities and Exchange Act
of 1934, as amended (the "Exchange Act"), that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability
under the Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Act, each
filing of the Registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Act may be permitted to directors, officers and controlling
persons of the registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
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SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing of Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, on the day of July, 2000.
AFFORDABLE TELECOMMUNICATIONS TECHNOLOGY CORPORATION
By:
-------------------------------------------
Steven H. Bethke
Title: President, Chief Executive Officer,
By:
--------------------------------------------
Norman George
Title: Secretary
Date:
--------------------------------
KNOW ALL MEN BY THESE PRESENT, that each person whose signature appears below
constitutes and appoints Steven H. Bethke, as his true and lawful
attorney-in-fact and agent, with full power of substitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, therewith, with the Securities and Exchange Commission, and to
make any and all state securities law or Blue Sky filings, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in about the premises, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying the confirming all that said attorney-in-fact and agent, or any
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated:
Signature Title Date
--------- ----- ----
President and Director August , 2000.
--------------------------------
Steven H. Bethke
Director, Secretary and August , 2000.
-------------------------------- Treasurer
Norman George
Director August , 2000.
--------------------------------
Jane Ellen Karp
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