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FILE # 333-89769
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 3
FORM SB-2
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
GOLDENACCESS.COM, INC.
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(Exact name of Registrant as specified in its charter)
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FLORIDA 7372 65-0769954
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(State of Incorporation) (Primary Standard Industrial (IRS Employer Identification Number)
Classification Code Number)
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6161 BLUE LAGOON DRIVE, SUITE 190
MIAMI, FLORIDA, 33126
(305) 264-2401
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(Address and telephone number of
Registrant's principal executive offices
and principal place of business)
MR. CLIFFORD Y. PIERCE, PRESIDENT
GOLDENACCESS.COM, INC.
1440 KENNEDY CAUSEWAY, SUITE 301
NORTH BAY VILLAGE, FL 33141
(305) 861-2766
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(Name, address and telephone number
of agent for service)
Copies to:
MR. GARY APPELBLATT, ESQ.
LAW OFFICES OF GARY M. APPELBLATT
3610 AMERICAN RIVER DRIVE, SUITE 112
SACRAMENTO, CA 95864
(916) 486-4200
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Approximate date of commencement of proposed distribution to public: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on the Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box: [XX]
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 this form is a post effective amendment filed pursuant to Rule 462(d) 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,
check the following box. [ ]
THE REGISTRANT SHALL AMEND THIS REGISTRATION STATEMENT ON THAT 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
SHALL BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8 (a) OF THE SECURITIES ACT
OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON THAT DATE
AS THE COMMISSIONER, ACTING PURSUANT TO SECTION 8 (a), MAY DETERMINE.
CALCULATION OF REGISTRATION FEE
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Title of each class Number of shares Proposed maximum price Proposed maximum Amount of
of securities to be to be registered per share aggregate price for Registration fee
registered this registration
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Common Shares 500,000(1) $8.50(2) $4,250,000(2) $1211.25(1)
================================================================================================================
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(1) Dollar amounts of shares to be registered and registration fee computations
based upon the estimated market value asking price of $ 8.50 per share for
the 500,000 common shares registered . Additional fees, should the price
rise, will be paid by amendment.
(2) There is currently no offering price. Of the securities registered ,
129,300 shares will be distributed to the shareholders and agent of Cardiac
Control services, Inc., a Delaware corporation, as a stock dividend. The
remaining 370,700 shares are registered for future sale by their holders .
These sales, if sold, shall be made through NASD members at normal mark
ups, mark downs, or brokerage commissions. See "SELLING SECURITYHOLDERS".
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GOLDENACCESS.COM, INC.
CROSS REFERENCE SHEET
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Page
Items in Form SB-2 Location Number
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1. Front of Registration Statement Same 1& 5
and Outside Front Cover of
Prospectus
2. Inside Front and Inside Back Cover Page 6&82
Outside Back Cover Pages of Prospectus 83
3. Summary Information Summary; 8
Risk Factors Risk Factors 11
4. Use of Proceeds Not Applicable
5. Determination of Offering Not Applicable
Price
6. Dilution Not Applicable
7. Selling Securityholders Risk Factors; 25
Selling Securityholders 49
8. Plan of Distribution The Distribution 28
9. Legal Proceedings Same 59
10. Directors, Executive Management and Board of 51
Officers, Promoters Directors;
and Control Persons Principal Shareholders 50
Management
11. Security Ownership Principal Sharehoders 50
Of Certain Beneficial
Owners and Management
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12. Description of Securities Same 59
13. Interests of Named Not Applicable
Experts and Counsel
14. Disclosure of Commission Limitation of Liability of 56
Position on Indemnification Directors and Officers
for Securities Act Liabilities
15. Organization within
Last Five Years Business-The Company 36
16. Description of Business Same 33
17. Plan and Results of
Operations Same 29
18. Certain Relationships Not Applicable
19. Market for Common Equity Risk Factors - No Prior 25
and Related Stockholder Matters Trading Market
20. Executive Compensation Same 54
21. Financial Statements Same F1
22. Changes in and Disagreement Not Applicable
with Accountants on Accounting
and Financial Disclosure
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Security and Exchange Commission is effective. This prospectus is not an
offer to sell these securities, and it is not soliciting an offer to buy these
securities in any state in which the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED JANUARY 7, 2000
PROSPECTUS
[LOGO] GOLDENACCESS.COM, INC.
500,000 SHARES OF COMMON STOCK
Anticipated Price Range $8.50-$11.50 per share
No Public Market Currently Exists for the Shares
Several of our founding shareholders are registering 385,100 shares for future
sale. Some of these shares are a portion of 129,300 shares that will be
distributed to the shareholders of Cardiac Control Systems, Inc., and agents,
as a stock dividend following the effective date of the registration statement
of which this prospectus is a part. All of the shares that are being registered
will be sold by the selling shareholders at their discretion.
We will have no control over the timing of any sales and are not receiving any
of the proceeds of the sales of these shares.
We anticipate that the Shares will be quoted on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ) Small Capitalization
Market under the symbol "GLDA", or the Pacific Stock Exchange under the symbol
"GAC".
THE SECURITIES OFFERED ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" COMMENCING ON PAGE 9.
The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
NASD Broker/Dealers will sell these shares in the open market in regular
transactions and receive a normal commission, mark-up, or mark-down on their
sales.
No underwriting discounts or commissions will be allowed or paid on the shares
distributed as a stock dividend to the shareholders of Cardiac Control Systems,
Inc. The amount of discounts or commissions, if any, which may be paid by the
selling security holders on future resale of the shares registered is not now
known.
The date of this Prospectus is __________, 2000.
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Left Blank for color page insertion
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[LOGO]GOLDENACCESS
TABLE OF CONTENTS
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Summary........................................................................ 4
Our Company.................................................................... 5
Risk Factors................................................................... 7
Distribution................................................................... 24
Plan and Results of Operations................................................. 25
Year 2000 Readiness Disclosure................................................. 27
Capitalization................................................................. 28
Business....................................................................... 29
Recent Acquisitions............................................................ 43
Selling Securityholders........................................................ 45
Principal Shareholders......................................................... 46
Management .................................................................... 47
Description of Securities ..................................................... 55
Shares Eligible ............................................................... 56
Dividend Policy............................................................... 59
Stock Transfer Agent........................................................... 59
Experts........................................................................ 59
Legal Matters.................................................................. 59
Available Information.......................................................... 59
Index to Financial Statements.................................................. F1
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SUMMARY
The following summary is qualified in its entirety by reference to the full
text of this prospectus, is intended only for quick reference, and is not
intended to be complete.The accompanying financial statements and assumptions
referred to in this prospectus, should be read in their entirety.
THE DISTRIBUTION
DISTRIBUTED COMPANY GoldenAccess.Com, Inc. a Florida corporation, was
merged with CathTech Group, Inc., a Florida corporation
and the surviving legal entity is CathTech Group, Inc.,
which succeeded to the name GoldenAccess.Com, Inc. (See
"SUMMARY -- Corporate History".)
DISTRIBUTING COMPANY Potter Financial Inc., a Florida corporation , as an
agent of Cardiac Control Systems, Inc. ("CCS") will
assist our transfer agent in distributing the 129,300
shares owned byCCS, to the shareholders of record on
August 26, 1999, of CCS, and agents, as a stock
dividend and CCS will retain undistributed shares for
future sale. (See "THE DISTRIBUTION".)
DISTRIBUTION RATIO Each of Cardiac Control Systems, Inc., shareholders
will receive one (1) of our common shares, par value
$0.001 per share, for each 51 shares of Cardiac Control
Systems, Inc., common stock. (See "THE DISTRIBUTION".)
TRANSFER AGENT Sun Trust Bank will act as our transfer agent. (See
"Stock Transfer Agent".)
SHARES TO BE
DISTRIBUTED The 129,300 common shares to be distributed of Cardiac
Control Systems, Inc., constitutes four and one half
percent (4.5%) of our issued and outstanding common
shares. (See "THE DISTRIBUTION".)
RECORD DATE Close of business on August 26, 1999.
DISTRIBUTION DATE Upon the effective date of the registration statement
of which this prospectus is a part or as soon
thereafter as practical. (See "THE DISTRIBUTION".)
SHARES OF SELLING
SECURITYHOLDERS 500,000 shares of common stock being registered,
representing 17.4% of securityholder's respective
holdings, will be available for resale by shareholders
subject to specific limitations. The remaining 82.6% of
their shares are restricted. (See "SELLING
SECURITYHOLDERS".) These shares constitute 17.4% of our
issued and outstanding common stock.
TRADING MARKET We are applying for admission to quotation of the
shares on the Nasdaq Stock Market; however, there can
be no assurance that our shares will be so listed. (See
"RISK FACTORS No Prior Trading Markets" and
"Description of Securities--Exchange Listing".
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OUR COMPANY
GOLDENACCESS.COM, INC., was incorporated on June 13, 1997 under the laws of the
State of Florida. WE SPECIALIZE IN INVENTIVE AND SUPERIOR APPROACHES TO
INTERNET PROTOCOL ("IP") TELEPHONY, OFFERING A COMPLETE, FULLY INTEGRATED
SOLUTION TO IP TELEPHONY SYSTEMS THAT INCLUDES THE IP TELEPHONY GATEWAY,
NETWORK MANAGEMENT AND BILLING SOFTWARE, AS WELL AS ACCESS TO A GLOBAL NETWORK
FOR CALL TERMINATION. THIS "ONE-STOP" SOLUTION ALLOWS ITS CUSTOMERS AND SERVICE
PROVIDERS OF ANY SIZE TO ESTABLISH A SERVICE OR RAPIDLY LAUNCH A REVENUE
SERVICE WITH MINIMAL INVESTMENT OR INFRASTRUCTURE, WITHOUT THE NEED TO PURCHASE
ADDITIONAL SUPPORTING SOFTWARE, HARDWARE AND NETWORK DELIVERY CONTRACTS. THIS
IS THE GOLDEN ACCESS BREAKTHROUGH.
PARTIAL COMMERCIAL SERVICE WAS RECENTLY LAUNCHED IN OCTOBER, 1999, with a
marketing promotion aimed at expanding our FSP network.
Over the next 120 days, we will deploy the IP Telephony GATEWAYS in Japan,
Singapore, Korea, Germany, Netherlands, Belgium, Spain, Italy, France, and
Mexico, and establish appropriate distribution channels to service each
country.
Our current offices are located at 6161 Blue Lagoon Drive, Suite 190, Miami, FL
33126, and the telephone number is (305) 264-2401. We also have offices in
Cordoba, Argentina, and maintain Gateways.....
Information contained on our World Wide Web site, http://www.GoldenAccess.com,
does not constitute a part of this prospectus.
Unless otherwise indicated, the information in this prospectus, irrespective of
the date referenced, assumes that there is no exercise of outstanding options or
warrants to purchase additional shares. All references in this prospectus to
"us", "we", or the issuer include GoldenAccess.com, Inc. and its predecessors.
Neither GoldenAccess.Com, Inc., nor any of its officers, directors or employees
had any prior or subsequent affiliation with Cardiac Control Systems, Inc. For
accounting purposes the financial statements of GoldenAccess.Com, Inc. and its
predecessor are considered to be the financial statements of the post-merger
surviving corporation.
SELECTED FINANCIAL DATA
The selected financial data below is for the years ended June 30,1998 and 1999,
and for the quarter ending September 30, 1999 and 1998 have been derived from
our financial statements. We have never declared or paid any cash dividends on
our shares of capital stock. The selected financial data should be read in
conjunction with the financial statements and related notes and other financial
information appearing elsewhere in this prospectus and the discussion under the
caption "PLAN OF OPERATIONS."
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SELECTED FINANCIAL DATA
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Years Ended Three Months Ended
June 30, June 30, 1999 September 30,1999
1998
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STATEMENT OF OPERATIONS
Sales 0 6,386 14,343
Research and development 11,385 28,902 1,397
Consulting 0 1,050 194,827
Depreciation 0 948 39,484
Other 363 6,729 99,277
Net losses (11,748) (31,243) (320,642)
Net loss per share .03 .09 (0.11)
Weighted average shares 345,800 345,800 2,872,500
Outstanding (2)
BALANCE SHEET DATA
Working capital (deficit) (48,043)
Total assets 17,601
Liabilities 54,592
Stockholder's deficit 36,991
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1) The statement of earnings date and the balance sheet data for 1999 and 1998
are a part of our financial statements prior to our merger with CathTec Group,
Inc., which are included in their entirety elsewhere in this prospectus.
2) June 30, 1999 and 1998 reflects the effects of the merger on August 26,
1999.
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RISK FACTORS
These securities are highly speculative and involve substantial risks. You
should carefully consider the following risk factors before making an
investment decision. If any of the following risks actually occur, our
business, financial condition or results of operations could be materially
adversely affected. In that event, the trading price of our shares could
decline, and you may lose part or all of your investment.
RISKS RELATED TO OUR FINANCIAL CONDITION AND OUR BUSINESS
1. WE HAVE A LIMITED OPERATING HISTORY, WHICH MAKES EVALUATING OUR BUSINESS
DIFFICULT.
GoldenAccess.Com, Inc was incorporated in Florida in 1997 to provide innovative
software solutions to meet the growing demands of the nascent Internet Protocol
(IP) telecom industry. Because of this, we have only a limited operating
history with which you may evaluate our business. You must consider the
numerous risks and uncertainties an early stage company like ours faces in the
new and rapidly evolving market for Internet-related services or in forecasting
our future operating results.
If we are unsuccessful in addressing these risks, sales of our products and
services, as well as our ability to maintain or increase our customer base,
will be substantially diminished.
2. BECAUSE WE HAVE NO OPERATING HISTORY, WE MAY NOT BE ABLE TO SUCCESSFULLY
CONDUCT OUR BUSINESS OR ACHIEVE PROFITABILITY.
We first recorded revenue in June of 1999, but did not begin shipping our
principal product, VIP, until July of
1999.
In addition, we cannot forecast operating expenses based on our historical
results because they are limited, and we are required to forecast expenses in
part on future revenue projections. We may not successfully address any of
these risks.
3. WE HAVE A PRESENCE IN A NEW AND RAPIDLY EVOLVING INTERNET INDUSTRY.
Our Internet telephony markets are characterized by rapid technological change
which may cause us to incur significant development costs and prevent us from
attracting new customers The market for our products is characterized by rapid
technological change, frequent new product introductions and enhancements,
uncertain product life cycles and changing end-user customer demands. The
introduction of products embodying new technologies and the emergence of new
industry standards could render existing products obsolete or unmarketable and
cause us to incur significant development costs.
4. WE HAVE NEVER BEEN PROFITABLE AND EXPECT OUR LOSSES TO CONTINUE FOR THE
FORESEEABLE FUTURE.
We have never been profitable on an annual or quarterly basis. We had an
accumulated deficit of approximately $131,668 as of September 30, 1999. We
expect to continue to incur operating losses for the foreseeable future. Our
operating and marketing expenses have continuously increased since inception
and we expect them to continue to increase significantly during the next
several years.
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Accordingly, we will need to generate significant revenue to achieve
profitability. We may not be able to do so. Even if we do achieve
profitability, we cannot assure you that we will be able to sustain or increase
profitability on a quarterly or annual basis in the future.
We intend to continue to make significant investments in our research and
development, marketing, services and sales operations. We anticipate that these
expenses could significantly precede any revenues generated by the increased
spending.
Our operating results have varied significantly from quarter to quarter and may
continue to do so in the future depending upon a number of factors affecting us
or our industry described below and elsewhere in this prospectus, including
many that are beyond our control. As a result, we believe that period-to-period
comparisons of our operating results are not necessarily meaningful, and you
should not rely on them as an indication of our future performance. In
addition, our operating results in a future quarter or quarters may fall below
expectations of securities analysts or investors and, as a result, the price of
our common stock may fluctuate. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
5. WE CAN NOT FORECAST OUR REVENUES ACCURATELY BECAUSE OUR PRODUCTS HAVE
VARIABLE SALES CYCLES AND BECAUSE WE DO NOT KNOW WHEN OUR POTENTIAL END-USER
CUSTOMERS WILL PLACE ORDERS AND FINALIZE CONTRACTS.
The sales cycle for our products may cause license revenue and operating
results to vary significantly from period to period. To date, the sales cycle
for our products to our Corporate and ISP customers has taken up to three
months in foreign countries, while our Telco customers inherently will take
longer to evaluate/decide and could take up to 6-9 months for a final decision.
Our sales cycle has required pre-purchase evaluation by a significant number of
individuals in our customers' organizations. Since distributors and resellers
will have more direct exposure to many of our customers initially, and third
parties jointly market our software with us, we invest significant amounts of
time and resources educating and providing information to our prospective
customers regarding the use and benefits of our products. These channels will
determine the overall length of our sales cycles.
We recognize revenues upon satisfaction of the requirements of AICPA STATEMENT
OF POSITION 97-2, which generally occurs in the same quarter that the order is
received. As a result, our quarterly revenues and operating results depend
primarily on the size, quantity and timing of orders received for our products
during each quarter.
6. WE MAY HAVE DIFFICULTIES MANAGING OUR EXPANDING OPERATIONS, MULTIPLE
TECHNOLOGIES AND TECHNOLOGICAL CHANGE, WHICH COULD HARM OUR FUTURE PRODUCT
DEMAND AND MAY REDUCE OUR CHANCES OF ACHIEVING PROFITABILITY
Our future performance will depend, in part, on our ability to manage our
growth effectively. To that end, we will have to succeed indevelopingour
operating, administrative, and financial and accounting systems and controls.
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To improve coordination among our engineering, accounting, finance, marketing
and operations personnel,we mustenhance our management personnel and
information system's capabilities.
If we cannot accomplish these tasks, we will diminish our chances of achieving
profitability.
Future versions of hardware and software platforms based upon new technologies
and the emergence of new industry standards could render our products obsolete.
The market for communication software is characterized byrapid and frequent
technological change to accommodate changes in customer requirements.
Our products are designed to work on a variety of hardware and software
platforms used by our customers. However, our software may not operate
correctly on evolving versions of hardware and software platforms, programming
languages, database environments and other systems that our customers use. For
example, the server component of the current version of our products runs on
the Windows NT operating system from Microsoft. If we cannot successfully
develop products in response to a change in customer demands, our business
could suffer.
If we fail to modify or improve our products in response to evolving industry
standards, our products could rapidly become obsolete, which would harm our
business.
7. OUR PROSPECTS FOR OBTAINING ADDITIONAL FINANCING, IF REQUIRED, ARE UNCERTAIN
AND FAILURE TO OBTAIN NEEDED FINANCING COULD AFFECT OUR ABILITY TO PURSUE
FUTURE GROWTH.
We may need to raise additional funds to develop or enhance our products,
services or strategic alliances, to fund expansion, to successfully implement
our growth strategy, to respond to changing business conditions and competitive
pressures or to acquire complementary products, opportunities, businesses or
technologies.
We do not have a long enough operating history to know with certainty whether
our existing cash, or if cash generated from operations, or cash from the sale
of licenses or received from strategic partners, or from royalties will be
sufficient to finance our anticipated growth. Additional financing may not be
available on terms that are acceptable to us. If we raise additional funds
through the issuance of equity or convertible debt securities, the percentage
ownership of our stockholders would be reduced and these securities might have
rights, preferences and privileges senior to those of our current stockholders.
If adequate funds are not available on acceptable terms, our ability to fund
our expansion, take advantage of unanticipated opportunities, develop or
enhance our products and services would be impaired.
Obtaining additional financing will be subject to a number of factors,
including market conditions, our operating performance and investor sentiment.
These factors may make the timing, amount, terms and conditions of additional
financing unattractive to us. If we are unable to raise additional capital, our
growth could be impeded.
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8. COMPETITION COULD REDUCE OUR MARKET SHARE, DECREASE OUR REVENUE AND CAUSE
PRICING PRESSURES WHICH MAY LESSEN OUR COMPETITIVE PRICING ADVANTAGE.
The market for our services has been extremely competitive. The market that we
are competing in falls into several categories:
VoIP ("Voice over Internet Protocol") Gateway products,
VoIP Gatekeeper products,
VoIP Billing products,
Enhanced IP Services, and
Transmission Services.
Since we are offering a totally integrated solution that encompasses all of
these markets, it creates a highly competitive environment for us as we must
differentiate our product against those that specialize in either one or more
of the above mentioned areas.
Many companies offer products and services like ours, and many of these
companies have a substantial presence in this market. Future competition could
come from a variety of companies in the Internet equipment and service arena,
traditional network equipment providers and the telecommunications service
industry. These industries include companies who have greater resources and
larger subscriber bases than we have and which have been in operation for many
years.
Existing internet companies; currently offer particular portions of the
complete communications solution provided by us and through ongoing
consolidation and partnerships, may be able to provide the total solution
within a relatively short period of time.
Major competitors may be able to bundle their services and products that are
not offered by us, which could place us at a significant competitive
disadvantage. Many of our competitors enjoy economies of scale that can result
in lower cost structure for transmission and related costs, which could cause
significant pricing pressure within the industry. When compounded with
decreasing rates for international termination and the subsequent increased
price competition, this may result in a further reduction of prices, profit
margins and market share.
In addition, a number of large telecommunications providers and equipment have
announced that they intend to offer similar products. We expect these products
to allow live voice communications over the Internet between parties using a
personal computer and a telephone and between two parties using telephones.
9. OUR INITIAL SUCCESS DEPENDS ON OUR PROVIDING DISCOUNTED LONG DISTANCE
SERVICES.
Our success is based on our ability to provide discounted domestic and
international long distance services by taking advantage of cost savings
achieved by carrying voice traffic over the Internet, as compared to carrying
calls over long distance networks, similar to those owned by AT&T, Sprint and
MCI. In recent years, the price of long distance calls has fallen. In response,
we have lowered the price of our service offerings. The price of long distance
calls may decline to a point where we
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no longer have a price advantage over these traditional long distance services.
We would then have to rely on factors other than price to differentiate our
product and service offerings, which we may not be able to do.
We expect competition for our software products to increase significantly in
the future due to the relatively low barriers to entry in this market. In
addition, because our industry is new and evolving and characterized by rapid
technological change, it is difficult for us to predict whether, when and by
whom new competing technologies or new competitors may be introduced into our
markets. Currently, our competition comes from several different market
segments, including computer telephony platform developers, computer telephony
applications software developers and telecommunications equipment vendors. We
cannot assure you that we will be able to compete effectively against current
and future competitors.
Further, increased competition or other competitive pressures may result in
price reductions, reduced margins or loss of market share, any of which could
have a material adverse effect on our business, financial condition or results
of operations.
Many of our current and potential competitors have longer operating histories,
significantly greater financial, technical, marketing, customer service and
other resources, greater name recognition and a larger installed base of
customers than we do. As a result, these competitors may be able to respond to
new or emerging technologies and changes in customer requirements faster and
more effectively than we can, or to devote greater resources to the
development, promotion and sale of products than we can. Current and potential
competitors have established, and may in the future establish, cooperative
relationships among themselves or with third parties, including mergers or
acquisitions, to increase the ability of their products to address the needs of
our current or prospective end-user customers. If these competitors were to
acquire a significant market share, it could have a material adverse effect on
our business, financial condition or results of operations. See
"Business--Competitive Analysis".
10. WE DEPEND ON OUR INTERNATIONAL OPERATIONS, WHICH SUBJECT US TO
UNPREDICTABLE RISKS FROM REGULATORY, FINANCIAL, OPERATIONAL AND POLITICAL
SITUATIONS, AS WELL AS FLUCTUATIONS IN THE VALUE OF FOREIGN CURRENCIES, WHICH
IN ITSELF COULD RESULT IN LOSSES.
As of September 30, 1999, 100% of our customers were based outside of the
United States, generating 100% of our revenues during the twelve months ended
on that date. A significant component of our strategy is to continue to expand
internationally. We cannot assure you that we will be successful in expanding
into additional international markets. In addition to the uncertainty regarding
our ability to generate revenue from foreign operations and expand our
international presence, there are particular risks inherent in doing business
on an international basis.Changing regulatory requirement including changing
tax consequences and legal uncertainty regarding liability, tariffs and other
trade barriers will effect the success of our company. International markets
and the success of our company will also be effected by political and
economical instability, language barriers and the adoption of our software
products to their local alphabet.
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11. WE WILL REQUIRE SIGNIFICANT MANAGEMENT ATTENTION AND FINANCIAL RESOURCES.
The expansion of our international operations will require significant
management attention and financial resources to establish foreign
distribution/sales channels, and hire additional personnel. TO DATE, OUR
PRODUCTS HAVE BEEN LICENSED OUTSIDE NORTH AMERICA PRIMARILY IN LATIN AMERICA,
THE MIDDLE EAST AND ASIA. THE UNITED STATES INSTALLATIONS ARE FOR THE SUPPORT
OF OTHER COUNTRIES AT THIS TIME. OUR LOS ANGELES GATEWAY WILL INITIATE A
REVENUE STREAM WITHIN THREE MONTHS. We are currently expanding our marketing
efforts into Europe and intend to continue to expand our international
operations and enter additional international markets. Revenues from
international expansion may be inadequate to cover the expenses of
international expansion.
Our international revenues are generally denominated in U.S. Dollars, but our
international expenses are generally denominated in local foreign currencies.
Although foreign currency translation gains and losses have been immaterial to
date, fluctuations in exchange rates between the U.S. Dollar and other
currencies could have a material adverse effect on our business, financial
condition or results of operations, and particularly on our operating margins.
To date, we have not sought to hedge the risks associated with fluctuations in
exchange rates, but we may undertake to do so in the future. Any hedging
techniques we implement in the future may not be successful. Exchange rate
fluctuations could also make our products more expensive than competitive
products not subject to these fluctuations, which could adversely affect our
revenues and profitability in international markets.
12. ALL OF THE TELEPHONE CALLS MADE BY OUR CUSTOMERS ARE CONNECTED THROUGH
LOCAL TELEPHONE COMPANIES AND, AT LEAST IN PART, THROUGH LEASED NETWORKS THAT
MAY BECOME UNAVAILABLE.
We are not a local telephone company or a registered local exchange carrier.
Accordingly, we must route parts of some domestic and international calls made
by our customers over leased transmission facilities. Further, because our
network does not extend to homes or businesses, we must route calls through a
local telephone company to reach our network and, ultimately, to reach their
final destinations.
In many of the foreign jurisdictions in which we conduct or plan to conduct
business, the primary provider of significant intra-national transmission
facilities is the national telephone company. Accordingly, our partners or
customers in those foreign jurisdictions may have to lease transmission
capacity at artificially high rates from a monopolistic provider and,
consequently, they may not be able to generate a profit on those calls. In
addition, national telephone companies may not be required by law to lease
necessary transmission lines to them or, if applicable law requires national
telephone companies to lease transmission facilities to them, they may
encounter delays in negotiating leases and interconnection agreements and
commencing operations. Additionally, disputes may result with respect to
pricing terms and billing.
In the United States, the providers of local telephone service are generally
the incumbent local telephone companies, including the regional Bell operating
companies. The permitted pricing of local transmission facilities that we lease
in the United States is subject to uncertainties. The Federal Communications
Commission has issued an order requiring incumbent local telephone companies to
price those facilities at total element long-run incremental cost, and the
United States
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Supreme Court recently upheld the FCC's jurisdiction to set a pricing standard
for local transmission facilities provided to competitors.
However, the incumbent local telephone companies can be expected to bring
further legal challenges to the FCC's total element long-run incremental cost
standard and, if they succeed, the result may be to increase the cost of
incumbent local transmission facilities obtained by us.
13. WE MAY NOT BE ABLE TO HIRE AND RETAIN THE PERSONNEL WE NEED TO SUSTAIN OUR
BUSINESS, AND THE LOSS OF OUR CHIEF EXECUTIVE OFFICER AND PRESIDENT COULD HARM
OUR BUSINESS.
We depend on the continued services of our executive officers and other key
personnel. We need to attract and retain other highly-skilled technical and
managerial personnel for whom there is intense competition. If we are unable to
attract and retain qualified technical and managerial personnel, we may never
achieve profitability. We have applied for key man life insurance policies on
the current and prospective officers stated above in the amount of $1.0 million
each, which policies should be effective shortly after the effective date of
this prospectus.
The integration of our new management personnel as we expand, including our
hiring of a new CEO, a new CFO (Mr. Pierce will relinquish that position), a
new COO (Mr. Callihoo may concentrate on International Marketing), a new
Director of Technical Development, and a new Director of Sales, as well as new
Executive Vice Presidents and Vice Presidents, as needed, into our management
team may interfere with our operations.
We have recently entered into agreements with a number of new officers,
including our Executive Vice President of International Marketing and Chief
Operating Officer, Paul Callihoo, who joined us in June of 1999 on a part time
basis. Our future success depends to a significant degree on the skills,
experience and efforts of our senior management. In particular, we depend upon
the continued services Clifford Pierce, our President and founder. The loss of
the services of any of these individuals could harm our business and
operations. If any of our key employees left or was seriously injured and
unable to work and we were unable to find a qualified replacement, our business
could be harmed.
We intend to at least triple our sales, marketing, engineering, professional
services and product management personnel over the next 12 months. Competition
for qualified individuals is intense, and we may not be able to attract,
assimilate or retain highly qualified personnel in the future. Our business
cannot continue to grow if we cannot attract qualified personnel. Our failure
to attract and retain the highly trained may limit the rate at which we can
develop and install new products or product enhancements, which would harm our
business. We will need to increase our staff to support new customers and the
expanding needs of our existing customers, without compromising the quality of
our customer service. Since our inception, no full time employees have left or
have been terminated, although we expect to lose employees in the future.
Hiring qualified professional services personnel, as well as sales, marketing,
administrative and research and development personnel, is very competitive in
our industry, particularly in Miami and Argentina, where we are headquartered,
due to the limited number of people available with the necessary technical
skills.
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Our financial success depends to a large degree on the ability of our resellers
and our direct sales force to increase sales to a level required to adequately
fund marketing and product development activities. Because of this, our ability
to increase revenues in the future depends considerably upon our success in
recruiting, training and retaining additional resellers direct sales personnel
and the success of the resellers and direct sales force.
14. OUR BUSINESS DEPENDS ON THE ACCEPTANCE OF OUR PRODUCTS AND SERVICES, AND IN
PART ON OUR ABILITY TO MAINTAIN AND IMPROVE OUR CURRENT PRODUCTS AND DEVELOP
NEW PRODUCTS, AND IT IS UNCERTAIN WHETHER THE MARKET WILL ACCEPT OUR PRODUCTS
AND SERVICES.
Our total revenue is $6,386 for the twelve months ended June 30, 1999. We are
not assured that our target customers will widely adopt and deploy our products
and services. Our future financial performance will depend on the successful
development, introduction and customer acceptance of new and enhanced versions
of our products and services. In the future, we may not be successful in
marketing our products and services or any new or enhanced products.
To be competitive, we must develop and introduce on a timely basis new products
and product enhancements. Any failure to do so could harm our business. Product
delays may result in cancellation of orders, loss of revenue, negative
publicity and customer lawsuits.
We believe that our future business prospects depend in large part on our
ability to maintain and improve our current products and to develop new
products on a timely basis. We are continuing to update the VIP software as we
deploy more gateways. At this time, there are no identified new releases
scheduled.
Significant delays in the general availability of new releases of our products
or significant problems in the installation or implementation of new releases
of our products could have a material adverse effect on our business, financial
condition or results of operations.
15. OUR GOLDEN ACCESS NETWORK CONTROL CENTER COULD FAIL AND THE INTERNET
CONNECTIONS COULD BE INADEQUATE.
Should the Golden Access Network Control Center system fail, a temporary
disruption to services would result. The network's design is redundant to
ensure that the outage of any one system does not disrupt the overall operation
of the network and its users. We are establishing a multi-node Network Control
Center with facilities in Miami, Los Angeles and New York, which offers
redundant operations to keep the network operational.
If any of the individual VIP Gateways experience an outage, the Network Control
Center will automatically re-route traffic destined for that location to an
alternate Gateway for termination, thus providing a seamless transition,
totally invisible to the customer.
However, since the inherent nature of the public Internet relies on sufficient
bandwidth and capacity to support a viable Voice over IP service, which exists
in North America, Western Europe and some parts of Asia, the quality of service
that will be offered by Golden Access in locations where the infrastructure for
Internet is quite poor, as in many developing countries, may result in
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serious quality and access issues, and reduce our chances of successfully
deploying the VIP Gateway system in those markets as rapidly as we would
otherwise plan.
16. A DECLINE IN MARKET ACCEPTANCE FOR MICROSOFT CORPORATION TECHNOLOGIES ON
WHICH OUR PRODUCTS RELY COULD HAVE A MATERIAL ADVERSE EFFECT ON US.
VIP currently runs only on Microsoft Windows NT-Registered Trademark-servers
and does not operate, in a dos environment. In addition, our products use other
Microsoft Corporation technologies, including Microsoft Exchange
Server-Registered Trademark- and Microsoft SQLServer-Registered Trademark-. A
decline in market acceptance for Microsoft technologies or the increased
acceptance of other server technologies could cause us to incur significant
development costs and could have a material adverse effect on our ability to
market our current products. Although we believe that Microsoft technologies
will continue to be widely used by businesses, we cannot assure you that
businesses will adopt these technologies as anticipated or will not in the
future migrate to other computing technologies that we do not currently
support. In addition, our products and technologies must continue to be
compatible with new developments in Microsoft technologies.
17. TECHNICAL PROBLEMS, DAMAGE TO OR FAILURE OF EITHER OUR INTERNAL OR OUR
OUTSOURCE COMPUTER AND COMMUNICATIONS SYSTEMS COULD INTERRUPT OUR SERVICE,
WHICH COULD RESULT IN REDUCTIONS IN, OR TERMINATIONS OF, OUR SERVICES.
The success of our internet telephony service depends on the efficient and
uninterrupted operation of our own and outsource computer and communications
hardware and software systems. These systems and operations are vulnerable to
damage or interruption from human error, natural disasters, telecommunications
failures, power loss, break-ins, sabotage, computer viruses, intentional acts
of vandalism and similar adverse events. We will be entering into an
Internet-hosting agreement with UUNET to maintain our Internet connections to
the Company's operation center. Our operations depend on their ability to
maintain the Internet connectivity to our operations center free of
interruption. UUNET does not guarantee that our Internet access will be
uninterrupted, error-free or secure. We have no formal disaster recovery plan
in the event of damage or interruption, and our insurance policies may not
adequately compensate us for any losses that we may incur. Any system failure
that causes an interruption in our service or a decrease in responsiveness
could harm our relationships with our customers and result in reduced revenues.
Our success depends on our ability to provide efficient and uninterrupted,
high-quality services. The occurrence of any or all of these events could hurt
our reputation and cause us to lose customers. See "Business--Products and
Services ".
18. IF THIRD PARTIES COPY OR OTHERWISE OBTAIN AND USE OUR TECHNOLOGY WITHOUT
AUTHORIZATION, WE MAY NOT BE ABLE TO PROTECT OUR PROPRIETY RIGHTS OR FROM
UNAUTHORIZED TRANSACTIONS.
We regard our software products as proprietary. To protect our proprietary
rights, we rely primarily on a combination of copyright, trademark and trade
secret laws, as well as licensing and other
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agreements with strategic partners, resellers, consultants, suppliers, end-user
customers, and employee and third-party non-disclosure agreements. Laws and
agreements provide only limited protection of our proprietary rights. We have
not signed agreements containing protective provisions in every case, and the
contractual provisions that are in place and the protection they provide vary
and may not provide us with adequate protection in all circumstances. Although
we have recently filed trademarks on our "In and Out" software, a time
management (for service businesses) and billing package, we currently have no
patents or registered copyrights. It may be possible for a third party to copy
or otherwise obtain and use our technology without authorization.
A third party could also develop similar technology independently. In addition,
the laws of some countries in which we sell our products do not protect our
software and intellectual property rights to the same extent as the laws of the
United States. Unauthorized copying, use or reverse engineering of our products
could materially adversely affect our business, results of operations or
financial condition. Furthermore, the validity, enforceability and scope of
protection of intellectual property in Internet-related industries is uncertain
and still evolving. The laws of some foreign countries are uncertain or do not
protect intellectual property rights to the same extent as do the laws of the
United States.
We currently have a registered trademark, VIP, and pending trademark
applications for our "GOLDENACCESS.COM" logo and design". However, none of our
trademarks on application is registered outside of the United States, nor do we
have any trademark applications pending outside of the United States. Despite
precautions that we have taken we may run into software pirates, ineffective
protection in foreign countries, and common law trademarks rights of our
competitors. All of which will effect the profitability of our company.
19. DEFENDING AGAINST INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS COULD BE
EXPENSIVE AND COULD DISRUPT OUR BUSINESS.
We cannot be assured that our internet telephony products do not or will not
infringe upon valid patents, trademarks, copyrights or other intellectual
property rights held by third parties. We may be subject to legal proceedings
and claims from time to time relating to the intellectual property of others in
the ordinary course of our business. We may incur substantial expenses in
defending against these third-party infringement claims, regardless of their
merit. Successful infringement claims against us may result in substantial
monetary liability or may materially disrupt the conduct of our business. A
third party could claim that our internet telephony technology infringes its
proprietary rights. As the number of software products in our target markets
increases and the functionality of these products overlap, we believe that
software developers may face infringement claims. For example, various patent
rights have been asserted against interfaces between PBX hardware and computer
network systems.
Although we believe that our products do not infringe any of these patents
because, among other reasons, they are based on open standards published by the
International Telecommunciations Union (ITU), however, if these patents were
interpreted broadly, claims of infringement of these patents could have a
material adverse affect on us.
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Infringement claims, even if without merit, can be time consuming and expensive
to defend. A third party asserting infringement claims against us or our
customers with respect to our current or future products may require us to
enter into costly royalty arrangements or litigation, or otherwise materially
adversely affect us. See "Business--Product - Trademark - Patent."
20. WE MAY PURSUE ACQUISITIONS THAT BY THEIR NATURE PRESENT RISKS AND THAT MAY
NOT BE SUCCESSFUL.
In the future we may pursue other internet or software acquisitions to
diversify our product offerings and customer base or for other strategic
purposes. We have no prior history of making acquisitions and we cannot assure
you that any future acquisitions will be successful. The following are some of
the risks associated with acquisitions that could have a material adverse
effect on our business, financial condition or results of operations.
We cannot ensure that any acquired businesses will achieve anticipated
revenues, earnings or cash flow.
We may be unable to integrate acquired businesses successfully and realize
anticipated economic, operational and other benefits in a timely manner,
particularly if we acquire a business in a market in which we have limited or
no current expertise, or with a corporate culture different from our own. If we
are unable to integrate acquired businesses successfully, we could incur
substantial costs and delays or other operational, technical or financial
problems.
Acquisitions could disrupt our ongoing business, distract management, divert
resources and make it difficult to maintain our current business standards,
controls and procedures.
We may finance future acquisitions by issuing common stock for some or all of
the purchase price. This could dilute the ownership interests of our
stockholders. We may also incur additional debt or be required to recognize
amortization expense related to goodwill and other intangible assets purchased
in future acquisitions.
We would be competing with other firms, many of which have greater financial
and other resources, to acquire attractive companies. We believe this
competition will increase, making it more difficult to acquire suitable
companies on acceptable terms.
21. IF WE FAIL TO BUILD SKILLS NECESSARY TO SELL OUR SERVICES, WE WILL LOSE
REVENUE OPPORTUNITIES AND OUR SALES WILL SUFFER.
The skills necessary to market and sell our services are different than those
relating to our software products. We license our software products for a fixed
fee based on the number of concurrent users and the optional applications
purchased. We license VIP based on a per port basis. Our sales force sells both
our software products and VIP. Because different skills are necessary to sell
VIP versus our software products, our sales and marketing groups may not be
able to maintain or increase the level of sales of either VIP or our software
products.
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22. OUR PRODUCTS COULD HAVE DEFECTS FOR WHICH WE ARE POTENTIALLY LIABLE AND
WHICH COULD RESULT IN LOSS OF REVENUE, INCREASED COSTS OR LOSS OF OUR
CREDIBILITY OR DELAY IN ACCEPTANCE OF OUR PRODUCTS IN THE MARKET.
Our license agreements with our end-user customers typically contain provisions
designed to limit our exposure to potential product liability and some contract
claims. There could be claims relating to damages to our customers' internal
systems. A product liability, warranty, or other claim, whether or not
successful, could harm our business by increasing our costs, damaging our
reputation and distracting our management.
Our products may contain errors or defects, especially when first introduced or
when new versions are released. Despite internal product testing, we have in
the past discovered software errors in some of our products after their
introduction. Errors in new products or releases could be found after
commencement of commercial shipments. Any errors could adversely impact our
company's profitability.
Because our solution consists of our software running on a Windows
NT-Registered Trademark- server and Dialogic digital signal/telephony
processing boards, it is inherently more prone to performance interruptions for
our end-user customers than traditional non-software based products.
Performance interruptions at our end-user customer sites, most of which
currently do not have back-up systems, could affect demand for our products or
give rise to claims against us.
23. IF WE HIRE A RESELLER WHO FAILS TO MARKET OUR PRODUCTS AND SERVICES
EFFECTIVELY OR WHO PROVIDES POOR CUSTOMER SERVICE, OUR REPUTATION WILL SUFFER
AND WE COULD LOSE CUSTOMERS.
If we hire a reseller who fails to market our products and services
effectively, we could lose market share. Additionally, if a reseller provides
poor customer service, we could lose brand equity. We must maintain and hire
additional resellers throughout the world that are capable of providing
high-quality sales and service efforts to assure brand equity. If we lose a
reseller in a key market, or if a current or future reseller fails to
adequately provide customer support, our reputation will suffer and sales of
our products and services and our customer base will be substantially
diminished.
24. WE MAY NOT BE ABLE TO GROW OUR BUSINESS AS PLANNED IF WE DO NOT MAINTAIN
SUCCESSFUL RELATIONSHIPS WITH OUR RESELLERS AND CONTINUE TO RECRUIT AND TRAIN
ADDITIONAL RESELLERS
Our ability to achieve revenue growth in the future will depend in part on our
success in maintaining successful relationships with our existing and future
resellers and in recruiting and training additional resellers. We rely
primarily on resellers to market and support our products. We are still
developing and refining our reseller distribution network and may be unable to
attract additional resellers with both voice and data expertise that will be
able to market our products effectively and that will be qualified to provide
timely and cost-effective customer support and service. We generally do not
have long-term or exclusive agreements with our resellers, and the loss of
specific larger resellers or a significant number of resellers could materially
adversely affect our business, financial condition or results of operations.
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25. OUR SUCCESS DEPENDS ON OUR ABILITY TO HANDLE A LARGE NUMBER OF SIMULTANEOUS
CALLS THROUGH OUR GATEWAYS, WHICH OUR SYSTEMS MAY NOT BE ABLE TO ACCOMMODATE.
We expect the volume of simultaneous calls to increase significantly as we
expand our operations. Our network hardware and software may not be able to
accommodate this additional volume. If we fail to maintain an appropriate level
of operating performance, or if our service is disrupted, our reputation could
be hurt and we could lose customers.
26. THERE IS A RISK THAT WE MAY HAVE A LIABILITY THAT IS NOT COVERED BY
INSURANCE.
Although we carry general liability insurance, our insurance may not cover
specific potential claims from use of our software or may not be adequate to
indemnify us for all liability that may be imposed. Any imposition of liability
that is not covered by insurance or is in excess of insurance coverage could
have a material adverse effect on our business, operating results and financial
condition.
RISKS RELATED TO OUR INDUSTRY
27. IF THE USE OF THE INTERNET AND DEMAND FOR INTERNET TELEPHONY DOES NOT
CONTINUE TO GROW AS A MEDIUM FOR VOICE COMMUNICATIONS, OUR BUSINESS WILL SUFFER
AND DEMAND FOR OUR PRODUCTS AND SERVICES WILL DECLINE.
The technology that allows voice communications over the Internet is still in
its early stages of development. Historically, the sound quality of Internet
calls was poor. As the industry has grown, sound quality has improved, but the
technology requires further refinement. The Internet's capacity constraints may
impede the acceptance of Internet telephony. Callers could experience delays,
errors in transmissions or other interruptions in service. Because the Internet
telephony market is new and evolving, predicting the size of this market and
its growth rate is difficult.
Our products and services are primarily sold to organizations that transmit and
receive large volumes of telephone calls, especially international calls.
Consequently, our future revenues and profits, if any, substantially depend
upon the continued acceptance and use of the Internet, which is evolving as a
medium of communication.
Moreover, companies that have already invested significant resources in other
methods of communications with customers, such as call centers, may be
reluctant to adopt a new strategy that may limit or compete with their existing
investments. If businesses do not continue to accept the Internet as a medium
of communication, our business would suffer.
28. GOVERNMENTAL REGULATIONS REGARDING THE INTERNET MAY BE PASSED, WHICH COULD
IMPEDE OUR BUSINESS.
At present there is little government regulation of the Internet industry. If
governmental regulations are passed it may slow its growth, resulting in
decreased demand for our products and services and increased costs of doing
business.
To date, governmental regulations have not materially restricted use of the
Internet in our market. However, there is ample regulations pertaining to
telephones and the legal and regulatory environment that pertains to the
Internet is uncertain and may change. New regulations could
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increase our costs of doing business and prevent us from delivering our
products and services over the Internet. This could delay growth in demand for
our products and services and limit the growth of our revenue.
In addition to new regulations being adopted, existing laws may be applied to
the Internet. See "Business--Government Regulation."
In September 1998, two regional Bell operating companies advised Internet
telephony providers that these companies would impose access charges on
Internet telephony traffic. One of these operating companies also petitioned
the FCC for a declaratory ruling that providers of interstate Internet
telephony must pay federal access charges, and has petitioned the public
utilities commissions of Nebraska and Colorado for similar rulings concerning
payment of access charges for intrastate Internet telephone calls. The outcome
of these proceedings is uncertain but should the regional Bell operating
companies be successful it will have an adverse effect on our company.
Future regulation of the Internet may slow its growth, resulting in decreased
demand for our products and services and increased costs of doing business.
Due to the increasing popularity and use of the Internet, it is possible that
state, federal and foreign regulators could adopt laws and regulations that
impose additional burdens on those companies that conduct business online.
These laws and regulations could discourage communication by IP or other
Web-based communications, which could inhibit the use of Internet-based
communication and reduce demand for our products and services.
The adoption of any additional laws or regulations may decrease the expansion
of the Internet. A decline in the growth of the Internet, particularly as it
relates to online communication, could decrease demand for our products and
services and increase our costs of doing business, or otherwise harm our
business. Our costs could increase and our growth could be harmed by any new
legislation or regulation, the application of laws and regulations from
jurisdictions whose laws do not currently apply to our business, or the
application of existing laws and regulations to the Internet and other online
services.
29. IF WE FAIL TO ESTABLISH AND MAINTAIN STRATEGIC RELATIONSHIPS OUR ABILITY TO
INCREASE OUR SALES WOULD SUFFER.
We currently have strategic relationships with Dialogic, Cisco Systems, Inc.,
Nortel, Inc., Joss Maru Ltd, the Golden Access Group, Inc., Microsoft, and
others. We depend on relationships with these companies to distribute products
to customers increase usage of our services and market our products and
services.
We believe that our success in the software and internet telephony industry
depends, in part, on our ability to develop and maintain strategic
relationships with leading Internet companies and computer hardware and
software companies, as well as key marketing distribution partners. If any
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of our strategic relationships are discontinued, sales of our products and
services and our ability to maintain or increase our customer base may be
substantially diminished.
RISKS RELATED TO THIS REGISTRATION
30. NO PRIOR PUBLIC MARKET HAS EXISTED FOR OUR SHARES AND AN ACTIVE TRADING
MARKET MAY NOT DEVELOP OR BE SUSTAINED.
Before this registration, there has been no public market for our common stock.
We cannot assure you that an active trading market will develop or be sustained
after the effective date of this registration. You may not be able to resell
your shares at or above the price at which the shares initiate trading. The
initial trading price will be determined through negotiations between the
market makers who initiate the trading, and the placement agents and
underwriters, to the extent there are agents or underwriters, and us. See
"Distribution".
31. OUR STOCK PRICE IS LIKELY TO BE HIGHLY VOLATILE AND COULD DROP
UNEXPECTEDLY. IF OUR STOCK PRICE IS VOLATILE, WE MAY BECOME SUBJECT TO
SECURITIES LITIGATION, WHICH IS EXPENSIVE AND COULD DIVERT OUR RESOURCES.
In the past, following periods of markets volatility in the price of a
company's securities, some security holders have instituted class action
litigation. Many companies in our industry have been subject to this type of
litigation. If the market value of our stock experiences adverse fluctuations,
and we become involved in this type of litigation, regardless of the outcome,
we could incur substancial legal costs and our management's attention could be
diverted, causing our business to suffer.
We have operated as a research and development company, have just recently
generated revenues, have not been profitable, and may not be profitable in the
future, which may reduce the trading price of our common stock. Moreover, if an
active market develops, the trading price of our common stock may fluctuate
widely as a result of a number of factors, many of which are outside our
control. In addition, the stock market has experienced extreme price and volume
fluctuations that have affected the market prices of many technology and
computer software companies, particularly Internet-related companies, and which
have often been unrelated or disproportionate to the operating performance of
these companies.
Declines in the market price of our common stock could also materially
adversely affect employee morale and retention, our access to capital and other
aspects of our business.
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32. AVAILABILITY OF SIGNIFICANT AMOUNTS OF COMMON STOCK FOR SALE IN THE FUTURE
COULD ADVERSELY AFFECT OUR STOCK PRICE.
The availability for future sale, or sales, of a substantial number of shares
of our common stock in the public market or otherwise following the effective
date of this registration could adversely affect the market price for our
common stock. See "Shares Eligible for Future Sale" for information regarding
the number of shares of common stock eligible for public sale after the
effective date.
These sales also might make it difficult for us to sell equity securities in
the future at a time and at a price that we deem appropriate.
Moreover, the perception in the public market that our existing stockholders
might sell shares of common stock could depress the market price of the common
stock. These sales, or the perception of these sales, could make it more
difficult for us to sell equity or equity-related securities in the future at a
time and price that we deem appropriate.
All of the option holders for the future exercise of shares of our common stock
have the right to require us to register their shares of common stock with the
Securities and Exchange Commission. In addition, in the future we intend to
register all shares of our common stock that we may issue under our stock
option plans and employee stock purchase plan. Once we register these shares,
they can be freely sold in the public market upon issuance, in some instances
subject to lock-up agreements. See "Stock Options".
If these holders cause a large number of securities to be sold in the public
market, the sales could materially and adversely affect the market price of our
common stock. In addition, any of these sales could impede our ability to raise
needed capital. See "Shares Eligible for Future Sale" and "Distribution".
34. OUR EXECUTIVE OFFICERS AND DIRECTORS CONTROL US AND MAY MAKE DECISIONS THAT
YOU DO NOT CONSIDER TO BE IN YOUR BEST INTEREST.
After the effective date, our executive officers, directors, and their
affiliates will together control approximately 75.6% of the outstanding common
stock, and on a fully diluted basis, 66.6%, not inclusive of options reserved
but not granted. If all reserved options are granted, 54.2%. As a result, these
stockholders, if they act together, will be able to control all matters
requiring approval of a majority of our stockholders, including the election of
directors and significant corporate transactions. This concentration of
ownership may delay, prevent or deter a change in control of GOLDENACCESS.COM
INC, which could deprive our stockholders of an opportunity to receive a
premium for their common stock as part of a sale of its assets and might affect
the market price of our common stock.
34. THE PRICE OF OUR COMMON STOCK AFTER THE EFFECTIVE DATE MAY BE LOWER THAN
THE PRICE YOU PAY.
The price of our common stock that will prevail in the market after the
effective date will fluctuate, and may be lower than the price at which the
stock initiates trading on the effective date. See "Distribution".
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FORWARD-LOOKING STATEMENTS
This prospectus contains "forward-looking statements." These forward-looking
statements include any and all statements about our market opportunity,
strategies, competition, expected activities and expenditures as we pursue our
business plan, and the adequacy of our available cash resources. These
forward-looking statements are not historical facts but rather are based on
current expectations, estimates and projections about our industry, our
beliefs, and our assumptions. Our actual results could differ materially from
those expressed or implied by these forward-looking statements as a result of
various factors, including the risk factors described above and elsewhere in
this prospectus.
The following words; "anticipates", "expects", "intends", "plans", "believes",
"seeks" and "estimates", and variations of these words and similar expressions,
are intended to identify forward-looking statements. These statements are not
guarantees of future performance and are subject to risks, uncertainties and
other factors, some of which are beyond our control, are difficult to predict
and could cause actual results to differ materially from those expressed or
forecasted in the forward-looking statements. These risks and uncertainties
include those described in "Risk Factors" and elsewhere in this prospectus.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which reflect our management's view only as of the date of this
prospectus. Except as required by law, we undertake no obligation to update any
forward-looking statement, whether as a result of new information, future
events or otherwise.
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THE DISTRIBUTION
CATHTECH GROUP, Inc., a new Florida corporation, ("CTG"), was formed as a
subsidiary of Cardiac Control Systems, Inc., ("CCS") a publicly held Delaware
Corporation, to acquire GoldenAccess.Com, Inc., a Florida corporation ("GAC"),
which was incorporated in June of 1997, and has been in business continuously
since that time. Subsequent to filing an Agreement of Merger with the Secretary
of State of Florida on August 26, 1999, and Articles of Merger filed with the
Florida Corporation Commission on August 26, 1999, GAC was merged into CTG in a
transaction in which Cardiac Control Systems, Inc, issued 87.5% of the issued
and outstanding common stock of CTG to the shareholders of GAC issued and
outstanding common stock.
All shares, except as provided by applicable laws, will be registered in book
entry format by the transfer agent and registrar, and shareholders shall be
credited their respective shares on the effective date of the registration
statement of which this prospectus is a part or as soon thereafter as is
possible. Potter Financial, Inc., as an agent of CCS, is acting in an
administrative capacity to assist the transfer agent in distributing,
subsequent to the effective date of this prospectus, the 129,300 shares
retained by CCS to its shareholders of record as of August 26, 1999, and CCS
retains undistributed shares for future sale. These sales, if sold, shall be
made through NASD members at normal mark ups, mark downs, or brokerage
commissions. As a result of the Distribution, we will become a public company
with approximately 700 shareholders and will file and report under the
Securities Exchange Act of 1934. As a reporting company, we intend to have our
shares traded in the public marketplace so as to facilitate and enhance
potential future acquisitions and the valuation for potential future offerings.
Shareholders of Cardiac Control Systems, Inc., that receive shares will receive
these shares as a stock dividend. No holder of Cardiac Control Systems, Inc.,
stock will be required to pay cash or other consideration for the shares
received in the Distribution or surrender or exchange Cardiac Control Systems,
Inc., stock in order to receive shares. We are paying the expenses of the
Distribution which include legal, accounting, consulting, transfer agent and
filing fees.
We are applying for admission to quotation of the shares on the Nasdaq SmallCap
Stock Market; however, there can be no assurance that the shares will be so
listed. See "RISK FACTORS - No Prior Trading Market and "DESCRIPTION OF
SECURITIES - Exchange Listing".
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PLAN AND RESULTS OF OPERATIONS
We have experienced substantial changes to, and expansion of, our business and
operations since we began our operations in June of 1997. We expect to continue
to expand our business and user base, which will require us to increase our
personnel, develop software, purchase equipment and license content, which will
result in increasing expenses.
The following discussion is based on and should be read in conjunction with the
supplement consolidated financial statements included elsewhere in this
prospectus.
OVERVIEW OF RESULTS
We were incorporated June 13, 1997, in the State of Florida. Until June 1999,
we were a development stage company. Our operations consisted primarily of
research and development. In May 1999, we began receiving design and consulting
income relating to radio re-broadcasting via the Internet. In June 1999, we
received our first Internet Telephony income. To date, we have received most of
our revenue from Internet Telephony sales. There was no revenue in 1997 and
1998. Total sales through September 30, 1999 were $13,612.
We had a net loss of $11,748 for the year ending June 30th, 1998 and a loss of
$31,243 for the year ending June 30th, 1999. The loss in 1999 primarily
resulted from expenditures related to R&D and consulting expenses. Our
operations and R&D expenditures have been primarily funded by our partners and
shareholders. We expect our strategic partners and shareholders to continue to
fund our operations. We may require additional financing from outside sources
or from a public offering.
BETWEEN MAY 1999 AND SEPTEMBER 1999, THE FOLLOWING EVENTS OCCURRED:
1. Established a functioning gateway in Beirut, Lebanon
2. Established a functioning gateway in Cali, Columbia
3. Established a functioning gateway in Buenos Aires, Argentina
4. Established a functioning gateway in Cordoba, Argentina
5. Established a functioning gateway in Miami, Fl.
6. Signed agreements in China, Honk Kong, and Los Angeles, Ca.
7. Began to recruit and interview to expand our sales, marketing and
engineering.
9. Completed testing and ran commercial trials of software
10. Ended limited commercialization and initiated full
commercialization
11. Rollouts in target countries
12. Purchased assets, trademarks, software, contracts and agreements
13. Merged with CathTech Group, Inc., retained our name.
14. Expanded board of directors and management team
15. Initiated Hiring of additional key personnel and expanded
reselling network and distributors.
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PLAN OF OPERATION
We believe our investments in Research and Development, and our upcoming
investments in Sales, Marketing and Engineering will be the basis for our
growth. We have plans to increase our efforts in these areas. We anticipate our
operating expenses will increase substantially for the foreseeable future.
Accordingly, we anticipate our revenue to increase. We cannot assure when and
if we will achieve profitability, or that we will be able to sustain
profitability. We believe our operating results are not necessarily meaningful,
and you should not rely on them as an indication of our future performance.
BETWEEN OCTOBER, 1999, AND SEPTEMBER, 2000, WE EXPECT THE FOLLOWING TO OCCUR:
1. To expand the management team and other personal to accommodate our
growth.
2. Sign distributors in Asia, Europe, Eastern Europe, Scandinavia and
Africa.
3. Increase Distributors in South America
4. Develop strategic alliances with partners who have existing
networks utilizing complimentary technology products.
5. Create a global Internet Telephony Network including Asia, US,
Europe and South America.
6. Expand engineering staff in both Miami and Argentina.
7. Roll out software products through the distribution network.
8. Create an image of GoldenAccess.com as a creative, innovative
Internet and Software Company, as well as an Internet Telephony
Company.
9. Create a separate sales staff to market software applications
already developed or being developed
10. Develop a software program for specific Cisco hardware as
requested by Cisco on a non-exclusive basis.
We expect our cash requirements necessary to successfully initiate or complete
these actions over the next year will primarily be generated from customer
revenues, vendor and customer expense sharing, shareholders paid in capital,
and to the extent available, short term contract and/or equipment financing. At
this time, we have no plans to accelerate our plan of operation, however,
competitive pressures or acquisition opportunities could force us to modify our
plans. A modification could require us to seek additional outside funding from
vendors, strategic partners, institutions that regularly invest in Internet
related companies, or seek public financing. Since we have not identified any
sources, there is no assurance that we would be successful in obtaining
financing when we needed it.
RESEARCH AND DEVELOPMENT
Enhancements to our products in the voice/video sector are scheduled within the
next six months. Costs to complete these projects are estimated at $250,000.
In connection with our other products, although we have budgeted applications
and any additional equipment required at a cost estimate of $2,750,000, we
currently expect all of these costs to be born directly or indirectly by our
clients, strategic partners, or shareholders.
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From inception to September, 30, 1999, virtually all of our expenditures of
$363,633 were directly or indirectly related to research and development.
NEED FOR ADDITIONAL PERSONNEL
It is anticipated that the number of employees will triple during the next
twelve months, even with our outsourcing many tasks.
YEAR 2000 READINESS DISCLOSURE
YEAR 2000 COMPLIANCE. The Year 2000 issue involves the potential for system and
processing failures of date-related data resulting from computer-controlled
systems using two digits rather than four to define the applicable year. For
example, computer programs that contain time-sensitive software may recognize a
date using two digits of "00" as the year 1900 rather than the year 2000. This
could result in system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to process
transactions, send invoices or engage in similar ordinary business activities.
OUR STATE OF READINESS. We have defined Year 2000 compliance as follows:
Information technology time and date data processes, including, but not limited
to, calculating, comparing and sequencing data from, into and between the 20th
and 21st centuries contained in our software and services offered through the
U.S., will function accurately, continuously and without degradation in
performance and without requiring intervention or modification in any manner
that will or could adversely affect the performance of these products or the
delivery of software and services as applicable at any time.
Our internal systems include both information technology systems and
non-information technology systems. All of our material information technology
system vendors have replied to inquiry letters sent by us stating that they are
Year 2000 compliant. Our internal software and hardware systems functioned
properly with respect to dates in the Year 2000 and thereafter. Nonetheless,
there can be no assurance in this regard that these systems will continue to be
operational in the Year 2000 without any unanticipated problems. We are in the
process of contacting all of our significant suppliers to determine the extent
to which our interface systems are vulnerable to those third parties' failure to
make their own systems continue to be Year 2000 compliant.
Accordingly, to the extent the systems of our suppliers are not fully Year 2000
compliant, there can be no assurance that potential system interruptions or the
cost necessary to update software will not have a material adverse affect on our
business, results of operation or financial condition.
THE COSTS TO ADDRESS YEAR 2000 ISSUES. We have incurred no expenses in
connection with Year 2000 compliance since our formation through September 30,
1999. The additional costs to make any other software or services Year 2000
compliant by December 31, 1999 will be expensed as incurred, but are not
expected to be material.
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We may experience material unexpected costs caused by undetected errors or
defects in the technology used in our systems or because of the failure of a
material supplier to be Year 2000 compliant.
We are also subject to external Year 2000-related failures or disruptions that
might generally affect industry and commerce, that being utility or
transportation company Year 2000 compliance failures and related service
interruptions. Moreover, participating vendors in our services might experience
substantial slow-downs in business if consumers avoid products and services
such as air travel after January 1, 2000 arising from concerns about
reliability and safety because of the Year 2000 issue. All of these factors
could have a material adverse effect on our business, financial condition and
results of operations.
CONTINGENCY PLANS. We have identified our worst-case scenario as the
interruption of our business resulting from Year 2000 failure of the electric
company or our Internet service providers to provide services.
CAPITALIZATION
This table represents the capitalization of the GOLDENACCESS.COM INC as of
September 30, 1999 as adjusted for the merger, and June 30, 1999 proforma as
adjusted for the merger.
Stockholder' Equity: 2,872,500 shares issued: common stock: [[$0.001]] par
value
<TABLE>
<CAPTION>
September 30, 1999 June 30, 1999
<S> <C> <C>
ADDITIONAL PAID-IN CAPITAL 1,566,069 5,996
ACCUMULATED DEFICIT (363,633) (42,991)
TOTAL STOCKHOLDER'S EQUITY 1,205,309 (36,991)
SHARES ISSUED AND OUTSTANDING 2,872,500 4,000
SHARES ISSUED AND OUTSTANDING a/o
AUGUST 26, 1999, THE DATE OF THE MERGER 2,872,500 345,800
</TABLE>
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BUSINESS
THE INDUSTRY
The rapid progress of digital communications technology, specifically the
Internet, and the continued liberalization of global telecom markets have
created exciting new opportunities, which Golden Access intends to exploit. As
witnessed recently with the explosive growth of the World Wide Web (WWW) and
Internet based technologies in general, the telecommunications industry is
ready for a change in how voice, data and video services are transported and
offered around the world.
Traditionally, service providers have used switched central offices and
dedicated International Private Leased Circuits (IPLCs) to carry voice, data
and video traffic, however, with new computer technology and the emergence of
the public Internet as a viable transport medium, an opportunity exists to
by-pass the current high-overhead, government regulated telecommunications
networks in use around the world today.
IP TELEPHONY
Voice over the Internet has significant appeal, especially to markets where
long distance rates are comparatively high, and due to this, expanded markets
should develop rapidly. IDC (International Data Corp.) forecasted revenues for
IP Telephony in 1999 to be $1.89 billion on 5.84 billion minutes of use,
expanding to $24.39 billion and 151.7 billion minutes in 2002, which would
represent 11% of total call volume worldwide. Some forecasts estimate that IP
Telephony could grow to represent over 20% of the total call volume during this
same period. Telephone companies, big and small, have undertaken their own
Internet Telephony initiatives and will be offering them to consumers. Internet
communication takes advantage of a key economic principle that shared resources
are more efficient and less expensive than dedicated resources. This provides a
strong business model for all service providers and has resulted in an
explosion of hardware and software solutions to meet the demands of this
growing market.
DEMOGRAPHICS AND DEMAND
The forecasted size of the global international long distance market for a
recent 12-month period was approximately 62 billion minutes and will continue
to grow to over 100 billion minutes in 1999.
The top 15 traffic producing countries by the end of 1999 represent
approximately 70% of the world's total traffic.
The top 15 countries (outside US/Canada) based on traffic volumes from
TeleGeography are : Germany, U.K., France, Italy, Switzerland, Hong Kong,
China, Netherlands, Belgium, Japan, Spain, Mexico, Austria, Singapore, and
Sweden. Some of these are not necessarily good targets for us since the
international rates for countries like the UK and Sweden are so low that there
is no margin opportunity. These can be replaced by other markets in Indonesia,
Philippines, Thailand, India, Portugal, and the larger Latin American
countries, where the traffic volumes may be lower, but the margins are
significantly higher.
...............................................................................
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MARKET TRENDS
The Internet is a collection of computer networks connecting millions of public
and private computers around the world. In its formative stages, the Internet
was used by government agencies and academic institutions to exchange
information, publish research and transfer e-mail. A number of factors,
including the proliferation of communication enabled personal computers, the
availability of intuitive graphical user interface software and the wide
accessibility of an increasingly robust network infrastructure, have combined
to allow users to easily access the Internet and, in turn, have produced rapid
growth in the number of Internet users.
THE EMERGENCE OF THE WEB. The graphical multimedia environment of the Internet,
has resulted in the development of the Internet as a new mass communications
medium. The case and speed of publishing, distributing and communicating text,
graphics, audio and video over the Internet has led to a proliferation of
Internet-based services, including chat rooms, online magazines, news feeds,
interactive games and a wealth of educational and entertainment information, as
well as the development of online communities. In addition, by eliminating many
of the costs involved in executing routine commercial transactions, such as
simple banking services and retail purchases, the Internet is rapidly providing
individuals and organizations with a new medium for conducting business.
GROWTH OF THE INTERNET MARKET. The consumer online and Internet services
industry is now in an early stage of an evolution that is embracing both
consumers and businesses. It is estimated that the today's number of Internet
users exceeds 240 million and could double in the year 2000. This growth is
created by the Internet's ability to provide, in a more appealing, cost and
time effective manner, many of the functions now provided by mail, telephone
and television. It is widely recognized that the evolution of the Internet
industry will have enormous implications for the way individuals communicate,
work learn, and entertain themselves.
Morgan Stanley Research estimates the demand for online and Internet services
to closely follow personal computer ("PC") penetration within the home and
office. PC penetration recently reached a rate of nearly one-third of all
United States households. This penetration rate is similar to the household TV
penetration level in the early 1960s and is expected to increase to a level
close to the current TV household penetration level of 98% within the next 10
to 20 years.
Today, the world is populated by some 200 million computers. It is estimated
that by the year 2002 this figure will increase to 500 million. Combining these
figures with the dramatically expanding use of the Internet, it becomes clear
that we are experiencing a never-before-seen phenomenon: the development of a
pervasive worldwide communication network which transcends borders and which
fundamentally changes the way the world communicates.
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TARGET MARKET
Our target customers in these markets will include Internet Service Providers
(ISP), large corporate networks and telecom service providers that presently or
plan to carry international telecom traffic.
On an average basis, our price will be at least 50% of the lowest
off-peak rate currently offered in most foreign countries. This should
attract significant market share and as rates continue to decrease, we
will be positioned to aggressively compete with these lower rates and
ensure continued growth in market share. Each market will be addressed on
an individual basis due to their unique rate and regulatory structures,
but it is expected that gross margins will range from 30%-55%.
GOLDEN ACCESS PERCEIVES THE FOLLOWING MARKET SECTORS FOR IP TELEPHONY:
1. Internet Service Providers (ISPs) who wish to move from a narrow
margin dial-up market which averages $20/month per subscriber or the
corporate leased-circuit provider to the expansive international
telephone market with minimal investment while using their existing IP
and Telephony infrastructure.
THE BENEFIT TO THE INTERNET SERVICE PROVIDER IS THAT THEY ARE ABLE TO
ENTER AN ENTIRELY NEW BUSINESS, WITH SUBSCRIBER'S MONTHLY BILLINGS RAISED
EXPONENTIALLY OVER THEIR EXISTING ISP REVENUE BY BECOMING AN INTERNET
TELEPHONY SERVICE PROVIDER (ITSP).
2. Telecommunications Service provider, either a facilities-based carrier
or re-seller, who wish to reduce their cost of international transport
by migrating their voice traffic from PSTN to data networks, thus
increasing the efficiency of their network utilization. In markets
where telecommunication services are de-regulated, Golden Access
allows carriers to offer low-priced international long distance
service to counter a competitive environment and offer new value added
services to increase customer satisfaction.
THE BENEFIT TO THE TELECOMMUNICATIONS SERVICE PROVIDER IS THAT THEY ARE
ABLE TO REDUCE THEIR INTERNATIONAL TERMINATION COST SIGNIFICANTLY PER
REVENUE MINUTE, THUS INCREASING MARGINS OR PROVIDING RATE FLEXIBILITY TO
COUNTER COMPETITIVE FORCES. IN ADDITION, THEY CAN PROVIDE AN ENTIRE SUITE
OF NEW PRODUCTS AND APPLICATIONS TO COMPLIMENT THEIR EXISTING SERVICE
OFFERING.
3. The Corporate Service customer with operations in multiple countries
will appreciate the cost savings and reliability offered by combining
voice and data on an existing network. By linking remote PBXs over
corporate Wide Area Networks (WANS), inter-office communications can
be sent using Golden Access. In addition, video conferencing and other
value added services become viable tools in the corporate market.
THE BENEFIT TO THE CORPORATE SERVICE CUSTOMER IS THE REDUCED LONG HAUL
INTER-OFFICE COSTS AND ACCESS TO A COST-EFFECTIVE GLOBAL NETWORK FOR
INTERNATIONAL LONG DISTANCE. ALSO, GOLDEN ACCESS'S SUITE OF VALUE ADDED
PRODUCTS, CAN BE SUITED TO MEET SPECIFIC REQUIREMENTS OF INDIVIDUAL
CORPORATIONS.
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OUR COMPANY
CORPORATE HISTORY
We were incorporated on June 13, 1997 in the State of Florida. On July 30, 1999
we purchased particular assets of various foreign entities, including a
distributor base, contracts and agreements, software, hardware, and other
equipment. On August 26, 1999, we merged with CathTech Group, Inc., and
retained our name and business. CATHTECH, INC., a Florida Corporation, was
formed on August 20th, 1999, to acquire GoldenAccess.com, Inc. Subsequent to
filing an Agreement of Merger with the Secretary of State of Florida on August
26, 1999, and Articles of Merger filed with the Florida Corporation Commission
on August 26,, 1999, GoldenAccess.com, Inc. was merged into CATHTECH, INC., in
a transaction in which Cardiac Control Systems, Inc., issued 87.5% of the
issued and outstanding common stock of CATHTECH, INC., to the shareholders of
GoldenAccess.com, Inc. issued and outstanding common stock. GoldenAccess.com,
Inc. was incorporated on June 13, 1997 by Clifford Y. Pierce as the corporate
successor to several non-incorporated and foreign ventures. In July, 1999, we
acquired the assets, software and business contracts and agreements of several
entities predominantly controlled by Mr. Pierce, which make up the bulk of our
ongoing services and products. We were incorporated in Florida on August 20,
1999, as CathTech Group, Inc., a Florida Corporation. Upon the effective date
of its merger with GoldenAccess.Com, Inc., the name of CathTech Group, Inc. was
changed to GoldenAccess.Com, Inc.
CURRENT OPERATIONS
We are based in Miami, Florida with offices in Argentina and our organization
is structured into three functional groups: Sales & Marketing, Operations and
Technical Support, and Engineering. Since November of 1999, we have been
leasing an office facility of 4500 square feet on a year to year basis for
$5,488 per month, plus applicable sales tax, for administration, technical
support, and customer service. Our offices are located 6161 Blue Lagoon Drive,
Suite 190, Miami, Florida 33126, and the telephone number is (305) 264-2401.
The facilities are adequate for our current needs and suitable additional
space, should it be needed, is expected to be available to accommodate
expansion of our operations on commercially reasonable terms. Our offices in
Argentina are in Cordoba, where we occupy 2000 sq. ft. and pay $700 per month.
PRESENT STATUS
We have been operating a commercial IP telecom service using a third party
product, and recently deployed our new proprietary IP telephony product which
has been placed into existing markets. Our global carrier partners, currently
International Telephone Co., ("ITC") and Easton Telecom of Cleveland, a
reseller for Frontier Communications, jointly market services to our respective
network of customers. OUR 1ST PHASE WAS SUCCESSFULLY COMPLETED IN EARLY 1999,
when Golden Access demonstrated the product between the U.S. and Argentina.
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OUR 2ND PHASE OF MARKET ENTRY consisted of establishing a limited number of
international Commercial Service Agreements (CSA) in Argentina, Lebanon,
Columbia, and Uruguay and commenced a market trial period of 90 days which
confirmed the results of the first phase, and new product enhancements that
resulted. Load testing of the full functionality of the IP Telephony system,
the Gateway software and GateKeeper Network Management software under revenue
service conditions provided a window of opportunity for Golden Access to
fine-tune the network during this period.
PARTIAL COMMERCIAL SERVICE WAS LAUNCHED IN JULY, 1999. Over the next 120 days,
we will deploy the IP Telephony GATEWAYS in Japan, Singapore, Korea, Germany,
Netherlands, Belgium, Spain, Italy, France, and Mexico, and establish
appropriate distribution channels to service each country. Following deployment
in these countries, we intend to proceed into Argentina, Columbia, Taiwan, Hong
Kong, China, Lebanon, and Austria.
Golden Access's product development philosophy has been to bundle the key
functionality of the IP Telephony system into two proprietary software
packages, Gateway and GateKeeper, which are designed to reside on a Windows NT
operating system under the product name VIP.
Gateway is the application software that performs the actual IP Telephony
function and GateKeeper is the application software that performs the Network
Management functions such as user authentication, routing, billing,
administration, and subscriber management for the service provider. The
hardware platform is based on the latest industrial grade PC technology
available and integrated with the industry leading Dialogic DM3/IPLink
telephony and IP interfaces. Dialogic Inc., who is a wholly owned subsidiary of
Intel, with 5% owned by MicroSoft, is a strategic marketing and engineering
partner to Golden Access.
WHAT DO WE DO?
We provide;:
o an integrated IP Telephony hardware product;
o software products;
o a global telecommunications network.
We are unique in offering a total solution to the service provider that will
enable them to deploy a fully operational system quickly and cost-effectively.
Combining this with our inherent capability to rapidly develop leading-edge
applications that are complimentary to the core IP Telephony product will
result in a continual advantage for our customers within the marketplace.
To complement the core IP Telephone system, we are offering other proprietary
software products such as VIDEO/AUDIO BROADCAST, "IN AND OUT" and INTERACTIVE
VOICEMAIL. We may have to update customer servers to incorporate these software
products for them to utilize our services. These products and services are
profitable and the cost of the sale is low. Because of the nature of the
products and services, marketing is targeted to different markets, and
distributed through varying channels.
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INTERNATIONAL SERVICES
We will be focusing on establishing a global network of VIP Gateways to carry
international voice traffic at rates lower than currently being offered by the
traditional telecom carriers. This International Service will be built upon the
deployment of VIP Gateways into countries outside the U.S. through our network
of Distributors and Resellers where we will offer global termination for the
voice traffic of each VIP Gateway. For destinations where we have a Gateway
deployed, the calls will be delivered entirely via the Internet ata significant
cost-savings to the customer. This type of traffic will be referred to as
"On-Net" traffic. For destinations where we do not have a Gateway deployed, the
calls will be routed via the Internet to the Network Control Center(s) in the
U.S. and then delivered over the regular IDD network at competitive rates. This
type of traffic will be referred to as "Off-Net" traffic. In addition to the
basic Voice over Internet service, we will be bundling fax, voice mail and
other value added services through our network.
BILLING SERVICES
We will provide Billing Services to the operators of the VIP Gateways in the
form of a monthly reconciliation or settlement which will require that we
generate a Call Detail Record (CDR) report and invoice based on the calls and
charges that were originated by each VIP Gateway operator for that period.
Additionally, each VIP Gateway operator will generate a CDR report and invoice
based on the calls and charges that were terminated by their respective systems
for that period. A subsequent settlement will take place where the amounts for
originating and terminating traffic are calculated and a single invoice amount
will result for that period.
PRODUCTS AND SERVICES
HOW OUR PRODUCTS WORK
The Golden Access VIP product is an IP Telephony system that provides quality
voice communication over the public Internet. Its flexible architecture allows
for configurations ranging from 4 port analog systems which can support 48,000
minutes/month of traffic ( older key systems for a limited number of phones and
users of the phone system, for very small businesses) up to a 60 port digital
(2 x E1) system which can support 720,000 minutes/month(newer, sophisticated
digital phone systems with tie ins to specialized or dedicated phone lines).
Additional systems can be added to expand the total capacity of the service
provider as traffic volumes increase.
There are several applications that can be supported with VIP:
a) PHONE TO PHONE
The subscriber makes a local phone call to the Service Provider's VIP
system and enters their PIN and destination phone number. The
originating VIP system routes the call over the Internet to the VIP
system (remote) that is closest to the destination telephone. This
routing is determined by the originating system on the basis of lowest
cost, load and quality of service. The remote system then sends the
call over the local telephone lines to the destination phone. This is
just like making a regular phone call and it all takes place in a
matter of seconds.
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b) PHONE TO PC
The subscriber can call a multimedia equipped PC from a regular
telephone by making a local phone call to the Service Provider's VIP
system and enters their PIN and the destination Internet address using
their telephone keyboard. The routing and termination of the call to
the destination computer is the same as above.
c) PC TO PHONE
Subscribers with a multimedia equipped PC can make a call to a regular
phone by contacting the Service Provider's VIP system and entering
their PIN and destination telephone number via their computer screen.
The routing and termination of the call to the destination telephone
is the same as above.
d) WEB BROWSER TO PHONE
Subscribers surfing the Web with a multimedia equipped PC and
MicroSoft NetMeeting can connect to a company's call center by
clicking a call button located on the organization's web site. This
allows subscribers to talk to a customer service group, order
department or help desk by using their web browser. The application
this feature supports will increase the effectiveness of an
organization's web site and call center and will improve the way that
customers can receive information and conduct business with the
company.
The Golden Access GateKeeper software is a network management package that is
offered with the VIP product and is necessary to operate the service.
GateKeeper allows the Service Provider the capability to administer their
subscribers, route their calls, perform billing and accounting and monitor the
status of the system, subscriber activity and network connections. The
GateKeeper is graphics based and offers the Service Provider easy-to-use
screens from which they can operate their service. In addition, GateKeeper
provides the interface to Golden Access's Network Control Center, which manages
the entire network of Service Provider systems. The software-intensive
architecture is characterized by very low incremental cost, both for repeat
systems and for expansion of systems already installed.
To ensure authorized use of the product, continued operation will be dependent
upon a hard-lock that is specific to each licensed system and a
challenge-response exchange over IP every 5 minutes. In the event that someone
attempts to make unauthorized copies of the Golden Access software or
reverse-engineer, these processes will ensure that it is impossible to do so.
GOLDEN ACCESS PRODUCT
The VIP product is an IP Telephony Gateway platform running proprietary
Golden Access software using a standard type of driver known as an Open
DataBase Connectivity (ODBC) on an MS Windows NT operating system. An
ODBC acts as an interface to allow data to be moved into or out of the
database. The user specifies what information is needed, and the system
automatically retrieves it.
The VIP hardware platform is based on standard PC hardware to ensure
serviceability worldwide and the Dialogic DM3/IPLink (brand name) family
of IP/Telephony modules. The Digital Signal Processing (DSP) by hardware
ensures high scalability, meaning it can expand very easily, without the
requirement for larger and more powerful hardware and supports from 2 to
hundreds of analog or digital (E1/T1) telephone lines on a single VIP
Gateway. Internet telephony standards are set by the International
Telecommunications Union (ITU), and VIP is
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section H.323 compatible with industry standard coders from G.723.1 with
silence compression to GSM and G.711 A/Mu Law. GSM is a protocol applied
to all international cellulars.
THE GATEWAY SOFTWARE OFFERS:
o Support for Phone to Phone, PC to Phone, Phone to PC and Web to Phone
applications
o Bandwidth management adapted to internet/WAN quality and negotiated to meet
the limitations of the weaker party.
o Flexible call termination and destination blocking for Customers and Gateways
THE GATEKEEPER SOFTWARE OFFERS:
o Integrated Authorization, Authentication and Accounting
o Integrated Debit/Credit Billing System for Customers and Gateway Network
o Calling Card Support
o Manages Customers and Gateways by Groups including multiple price lists
o Comprehensive Network Monitoring and Management system that measures and
continuously reports the status of the internet links, remote sites and
telephone calls and provides alternate routing/backup in the event of an
outage.
HARDWARE PLATFORM AVAILABILITY.
The hardware platform we utilize is based on the latest industrial grade PC
technology available and integrated with the industry leading Dialogic
DM3/IPLink telephony and IP interfaces. Dialogic Inc., who is a subsidiary of
Intel, with 5% owned by MicroSoft, is one of our strategic marketing and
engineering partners. Dialogic's Partner Program is used to mutually increase
product sales through joint marketing and development areas. As we sell more
VIP gateways, Dialogic sells more product. Substitution of their hardware could
adversely affect our competitiveness until similar functioning equipment were
available.
PRODUCTS - TRADEMARK AND PATENTS
Standards for IP Telephony, as recently adopted H.323 are published by the ITU,
and the protocol is available to anyone. Because these standards are published
in the public domain, no patent protection is believed to be available, nor can
it be obtained by anyone else.
We have recently filed trademarks on our "IN AND OUT" software, and we have
registered a trademark for "VIP", and have pending trademark applications for
our "GOLDENACCESS.COM" logo and design. We do not have any trademark
applications pending outside the United States.
The Golden Access product is mainly software and physical replication is easy.
A software license agreement and hard-lock will be part of any sale, but the
ultimate protection will be the fact that all the IP gateways will be connected
to the Internet and the Golden Access Network Control Center. A
challenge/response exchange will be embedded in the software at the Golden
Access Network
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Control Center, which will give an appropriate authorization for continued
operation. Effectively, the software "key" will be in Miami. If this hard-lock
comes off, the software stops working.
PRODUCT DEVELOPMENT PLAN
OTHER PRODUCTS
Golden Access will continue to develop and offer internet-related products and
applications that will be marketed in conjunction with the main product line.
We intend to use the VIP product as a market entry tool for the sale of
"value-added" software applications developed by us. These include:
o Internet Video Broadcast - which allows the subscriber to receive live
television broadcasts or taped video transmissions over the internet via
their multimedia PC from anywhere in the world
o Internet Audio Broadcast - which allows the subscriber to receive live or
taped audio broadcasts over the internet via their multimedia PC from
anywhere in the world
o Video Conferencing - allows the subscriber to conduct face to face meetings
over the internet via their multimedia PC
o Interactive Voice Mail - allows the subscriber to have a "virtual" mailbox,
where they can send and retrieve messages from anywhere in the world
o Internet Follow Me - allows calls to be forwarded "real-time" to the
subscriber anywhere in the world
o In and Out - an employee activity tracking application specifically suited
for the service industry. "In and Out" software combines a time management
(for service businesses) and billing package, with telephone call in features
and applications.
o WebSurvey - a security system using webcams and the Internet to transmit
images to a central monitoring location. Multiple locations can be
simultaneously monitored from anywhere in the world.
DISTRIBUTION METHODS
Our objective is to provide a complete suite of IP telephony products and
services that will be marketed to internet service providers, telecom service
providers and corporate network providers, who in turn, can resell the service
to their respective retail/corporate markets.
Golden Access has several channels to market, which are not mutually exclusive:
1) Direct Wholesale Traffic Carrier (FSP).
To establish a global network of gateways through direct Commercial
Service Agreements with service providers in countries outside the United
States. Golden Access will sell the IP Telephony Gateway(s) in addition
to providing access to our global network at rates billed on per minute
usage that will allow the foreign service provider (FSP) to offer a low
cost international telephone service to its customers. This global
network will provide service to
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anywhere in the world either via IP through our FSP network or via PSTN
from our international gateway facilities in the U.S. Each FSP will also
provide a rate table to Golden Access for termination into their
respective territories, which will allow us to terminate traffic from the
other FSPs on the network direct via IP at a reduced cost. A monthly
reconciliation based on traffic volumes and rate tables will be conducted
between Golden Access and each FSP, in which we will act as a clearing
and settlement house. The FSPs will deal only with Golden Access and not
directly with each other.
2) Regional Marketing Partnerships (RMP) & Distribution
To establish a global network of Distributors/ Regional Marketing
Partners to license the VIP software from Golden Access and integrate
into a total system solution for their customers, who would include
ISP's, telecom service providers and corporations. This is by far the
most attractive channel since the RMP will be responsible for the
frontline sales and technical support of the VIP Gateway customers as
well as for the marketing and promotional costs in their respective
markets. We will only be responsible to provide the software licenses and
higher level technical/sales support as required. The VIP customers from
this channel will have access to our global network and billing
reconciliation, with the advantage in that the RMP would be entitled to a
commission on the total revenue generated by the traffic of its customers
over our network. This will provide added incentive to the RMP's to
continue the promotion of Golden Access after the initial sales since
they will be beneficiaries of a recurring revenue stream from the
resultant traffic volumes.
In instances where an ISP, telecom service provider or corporation wishes
to establish a domestic network or VPN (Virtual Private Network) based on
Golden Access's technology and not access our global network, a Purchase
Agreement, including software license, will be established. However, the
cost of the software license will be higher than if they were using our
network since we will not be collecting the same level of revenues from
the traffic. The software license may include a formula based on
performance that will provide us with royalties for the first year of
traffic that is carried over the private network.
3.) Marketing in regions outside of North America
This will be accomplished through licensing agreements with strongly
capitalized parties capable of financing initial orders. Licensing
agreements for several markets are already in place.
COMPETITIVE ANALYSIS
While all our competitors have products grouped by their status as an End-User,
Equipment Provider and/or Network Provider, we have integrated all these
components into one solution.
Due to the comprehensive nature of the Golden Access VIP product, in which a
fully integrated solution consolidates the following functionality into a
single product offering at a very low price
o IP Telephony Gateway
o IP Telephony GateKeeper
o Global Network
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There are numerous companies offering only the Gateway functionality, (Cisco
Systems, Nuera and Array Telecom), however it is necessary to obtain 3rd party
GateKeeper software to deploy these products in a managed network
configuration. Secondly, without the Global Network connectivity,
communications is limited to those locations where the actual nodes would be
located.
There are others that offer both the Gateway and GateKeeper capability
(Vocaltec Communications, Ascend Communications, Ericsson, Siemens, Inter-Tel
and Nortel), however, they lack the Global Network connectivity and are priced
at least 50% higher than Golden Access.
There are a few companies that offer Global Network connectivity similar to
Golden Access (Lucent, Franklin Telecom, ITXC, Delta Three and VIP Calling),
however, it is only Lucent and Franklin that use their own platforms to offer
this service, while the others use 3rd party platforms.
The key competitive factors that will allow Golden Access to establish itself
within a market dominated by large companies (Lucent, Cisco, Nortel and
Siemens) will be price and our ability to adapt quicker to the dynamic nature
of this nascent technology.
IP Telephony products currently offered do not have the full capabilities of
Golden Access. This represents a tremendous potential in terms of traffic and
market share with relatively few solutions identified at this stage, let alone
in commercial service. Golden Access is well positioned to lead the market
direction through its "first-in-the-door" approach to the markets as well as
its partnership with Dialogic (Intel/Microsoft).
COMPETITIVE ISSUES
The market that we are competing in falls into several categories:
o VOIP GATEWAY PRODUCTS
o VOIP GATEKEEPER PRODUCTS
o VOIP BILLING PRODUCTS
o ENHANCED IP SERVICES
o TRANSMISSION SERVICES
Since we are offering a totally integrated solution that encompasses all of
these markets, it creates a highly competitive environment for us as we must
differentiate our product against those that specialize in either one or more
of the above mentioned areas.
The primary competitive factors that will determine success in these markets
are:
o QUALITY OF SERVICE
o THE ABILITY TO MEET AND ANTICIPATE CUSTOMER NEEDS THROUGH MULTIPLE SERVICE
OFFERINGS
o RESPONSIVE CUSTOMER SUPPORT SERVICES
o PRICE
Future competition could come from a variety of companies in the Internet
equipment and service arena, traditional network equipment providers and the
telecommunications service industry. These industries include companies who
have greater resources and larger subscriber bases than we have and which have
been in operation for many years.
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Internet companies such as Net2Phone, NetSpeak, Vocaltec, Clarent and Lucent
all currently offer individual portions of the complete communications solution
provided by us and through ongoing consolidation and partnerships that is
becoming prevalent in this industry, will be able to provide the total solution
within a relatively short period of time.
Many Internet service companies (ITXC, VIP Calling, RSL Communications, USA
Global Link, iPASS and GRIC) have all established global IP-based networks
which are rapidly expanding in terms of traffic volumes and coverage. By
partnering with some of the larger equipment providers (Vocaltec, Clarent and
Cisco), they are positioned to become dominant influences on the Internet
services landscape.
Networking companies such as Cisco, Motorola, Nortel, Siemens, Ericsson and
Nokia are able to build upon their existing large base of customers,
traditionally in the PTT/Telco market by offering products that can be easily
added to existing infrastructures and switching networks in the forms of IP
upgrades. Additionally, Motorola, Ericsson, Qualcomm and Nokia are focusing on
the emergence of wireless IP applications, which is projected to be a
significant part of the 3G (3rd generation) IP services.
Traditional telecommunications carriers (AT&T, Sprint, MCI, Frontier and USA
West) are all in the process of implementing strategies to offer enhanced
Internet services including VoIP and Unified Messaging. Due to their extensive
network infrastructure, specifically in the area of IP bandwidth, and their
large traffic base, they are extremely well positioned to obtain the
technologies they need either through acquisition or partnering. These carriers
will be the driving force behind the growing trend towards consolidation within
the industry since they represent a major portion of the telecommunications
market and have substantially greater financial, technical and marketing
resources.
These and other competitors may be able to bundle their services and products
that are not offered by us, which could place us at a significant competitive
disadvantage. Many of our competitors enjoy economies of scale that can result
in lower cost structure for transmission and related costs, which could cause
significant pricing pressure within the industry. When compounded with
decreasing rates for international termination and the subsequent increased
price competition, this may result in a further reduction of prices, profit
margins and market share.
STRATEGIC PARTNERS
We have recently entered into contract discussions with Cisco to become a Cisco
Value Added Partner (CVAP). Cisco's interest in Golden Access is directly
linked to the Gatekeeper/Billing software that is integrated onto the VIP
product, which, they would like to have integrated to work with their standard
Router Product line. Eventually, they would like it to be integrated to work
with their VOIP Router product. This represents a unique opportunity for Golden
Access to develop an interface for our existing software so that it works with
the Cisco products. Cisco's intent would be to provide their Router customers
with a list of CVAPs that can be contacted to provide them with the network
level software package for management and billing. This potentially creates
another revenue stream from the sales of software licenses to Cisco Router
customers; allows us to carry their international traffic over our global
termination network once they have installed our software
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onto their Cisco networks; and provides enhanced visibility and credibility
through our association with Cisco.
We have similar agreement with Dialogic, where we are also a member of their
"Partner Program" which is used to mutually increase product sales through
joint development and marketing.
We also have strategic relationships with Nortel, Inc., Joss Maru, Inc., the
GoldenAccess Group and Microsoft (from whom we licensed a number of software
programs upon which our platform is utilized), and others. We utilize these
relationships to distribute our products, to pay some of our development costs,
to increase our product awareness acceptance in the marketplace and to build
cooperative joint efforts which would potentially give us a competitive
advantage to our existing and potential customers.
We believe that this is a significant benefit and gives us a leveraged position
competitively.
GOVERNMENT REGULATION
FEDERAL
We provide Internet services, in part, through data transmissions over public
telephone lines. These transmissions are governed by regulatory policies
establishing charges and terms for wire line communications. We currently are
not subject to direct regulation by the FCC or any other governmental agency,
other than regulations applicable to businesses generally. However, in the
future we could become subject to regulation by the FCC or another regulatory
agency as a provider of basic telecommunication services. For example, a number
of long distance telephone carriers recently filed a petition with the FCC
seeking a declaration that Internet telephone service is a "telecommunication
service" subject to common carrier regulation. If a declaration were enacted it
would create substantial barriers to our entry into the Internet telephone
market. The FCC has requested comments on this position, but has not set a
deadline for issuing a final decision. Also, a number of local telephone
carriers have asked the FCC to levy access charges on "enhanced service
providers," which may be deemed to include ISPs. Although the Chairman of the
FCC has indicated his opposition to levying service charges against ISPs, local
interconnection charges could be levied in the future. Moreover, the public
service commissions of individual states are exploring the adoption of
regulations that might subject ISPs to state regulation.
The FCC regulates the licensing construction, operation and acquisition of
wireless telecommunications systems in the U.S. under the 1934 Act, as amended
and the roles, regulations and policies promulgated by the FCC. Included in the
regulations is the use of the electromagnetic spectrum in the United States,
including the frequency band currently used by our radio products. Part 15 of
the FCC regulations defines frequency bands in which unlicensed operation of
radio equipment that meets specific technical and operational requirements is
permitted. We utilize CDPD for the majority of our wireless transmissions which
is currently under FCC regulations.
In the international markets, there are various categories of government
regulations. In those countries that have accepted specified worldwide
standards, similar to the FCC rulings or those from the European
Telecommunications Standards Institute, we are not expected to experience
significant regulatory issues in bringing our products to market. Approval in
these markets involves retaining local testing agencies to verify specific
product compliance. However, many developing
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countries, including the large markets in India and China, have not fully
developed or have no frequency allocation, equipment certification or
telecommunications regulatory standards. In these types of markets, we will
actively work both directly and with industry standard bodies, to conform
regulations to worldwide standards.
STATE AND LOCAL
The scope of the regulatory authority covers many matters as the terms and
conditions of interconnection between Local Exchange Carriers ("LECs") and
wireless carriers with respect to intrastate services, customer billing
information and practices, billing disputes, other consumer protection matters,
facilities construction issues, transfers of control, the bundling of services
and equipment and requirements relating to the availability of capacity on a
wholesale basis. In these areas, particularly, the terms and conditions of
interconnection between LECs and wireless providers, the FCC and state
regulatory authorities share regulatory responsibilities with respect to
interstate and intrastate issues, respectively.
The FCC and a number of state regulatory authorities have initiated proceedings
or indicated their intention to examine access charge obligations, mutual
compensation arrangements for interconnections between local exchange carriers
and wireless providers, the pricing of transport and switching facilities
provided by LECs to wireless providers, the implementation of number
portability to permit customers to retain their telephone numbers when they
change service providers, and alterations in the structure of universal service
funding among other matters.
We may become an active participant in proceedings before the FCC and before
state regulatory authorities. Proceedings with respect to the previously stated
policy issues before the FCC and state regulatory authorities could have
significant impacts on the competitive market structure among wireless
providers and the relationships between wireless providers and other carriers.
We are unable at this point to predict the scope, pace, or financial impact of
policy changes which could be adopted in these proceedings. To keep it apprised
of developments in this area, we will retain special FCC counsel in the event
we deem it necessary.
RECENT EVENTS
The 1996 Act mandates significant changes in existing regulation of the
telecommunications industry to promote competitive development of new service
offerings, to expand public availability of telecommunications services and to
streamline regulation of the industry. The 1996 Act provides that implementing
its legislative objectives will be the task of the FCC, the state public
utilities commissions and a federal-state joint board. The FCC released a
tentative implementation schedule on February 12, 1996. Much of this
implementation must be completed in numerous virtually simultaneous proceedings
with short, 6 to 18 month, deadlines. These proceedings are expected to address
issues and proposals already before the FCC in pending rule making proceedings
affecting the wireless industry as well as additional areas of
telecommunications regulation not previously addressed by the FCC and the
states.
The primary purpose and effect of the new law is to open all telecommunications
markets to competition including the local wireline loop. The 1996 Act makes
all state and local barriers to competition unlawful, whether they are direct
or indirect. It directs the FCC to hold notice and
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comment proceedings and to preempt all inconsistent state and local laws and
regulations. Only narrow powers are left to state and local authorities. Each
state retains the power to impose competitively neutral requirements that are
both consistent with the 1996 Act's universal service provision and necessary
for universal service, public safety and welfare, continued service quality and
consumer rights. While a state may not impose requirements that effectively
function as barriers to entry or create a competitive disadvantage, the scope
of state authority to maintain existing or adopt new requirements under this
section is not clearly spelled out. Before it preempts a state or local
requirements as violating the entry barrier prohibition, the FCC must hold a
notice and comment proceeding.
The recently enacted Telecommunications Act contains specific provisions that
lift, or establish procedures for lifting specific restrictions relating to the
RBOCs' ability to engage directly in the Internet access business. The
Telecommunications Act also makes it easier for national long distance carriers
such as AT&T to offer local telephone service. In addition, the
Telecommunications Act allows the RBOCs to provide electronic publishing of
information and databases. Competition from these companies could have an
adverse effect on our business.
Due to the increasing use of the Internet, it is possible that additional laws
and regulations may be adopted with respect to the Internet, covering issues
such as content, user privacy, pricing, libel, intellectual property protection
and infringement and technology export and other controls. Changes in the
regulatory environment relating to the Internet access industry, Including
regulatory changes that directly or indirectly affect telecommunications costs
or increase the likelihood or scope of competition from regional telephone
companies or others, could have a material adverse effect on us. See "Risk
Factors -- Competition."
RECENT ACQUISITION OF ASSETS
On July 30th 1999, we purchased, without restriction and unconditionally,
certain non operating business equipment, from our majority shareholder,
Clifford Pierce, non operating developed software, various customer contracts
and agreements, as well as applicable pending trademarks, which constitute the
majority of the resources upon which we are building our distribution network.
These contracts and agreements were dependent upon our ability to integrate the
software and hardware systems into full commercial utilization. At the time of
our purchase, this had not yet been accomplished. We purchased the equipment
for $ 877,000, our historical cost basis less depreciation; the software and
related intellectual property for $ 540,100, our historical cost basis less
depreciation and any ancillary research and development expenses; and the
discounted present value of the customers' contracts and agreements for
$9,154,000, for a total purchase price of $10,571,100. See the sections
entitled "Products-Trademarks and Patents", and "Proprietary Information" for
a more detailed explanation of what can be protected. We paid for this purchase
with 2,166,700 shares of our common stock. We may make adjustments to the value
of the purchase as a result of the final valuations we are receiving concerning
these assets.
Because the majority of the assets were under the common control of our
majority share holder, Clifford Pierce, we are not able to book the true market
value of the purchase price of the software and intellectual property
components within the overall purchase, but are forced to book the lower cost
basis for the development of software and intellectual property. Due to these
constraints, our
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balance sheet will not reflect several million dollars of market value that
could be realized if we sold our software and intellectual property to a
disinterested, arms length third party, or if we liquidated our assets. A
valuation of the fair market value and liquidation values, respectively, of the
discounted cash flows emanating from our contracts, licenses, and agreements
that were acquired have no value on our balance sheets, but have liquidation
value if we were to sell them to a third party or liquidate our assets.
The software encompassing our proprietary technology was developed in segments,
which were originally subcontracted and written by numerous parties in various
components. It was subsequently integrated prior to our acquisition, but
remained untested in full commercial operation until July 1999, and further
modified in October 1999. A description of our proprietary software and
hardware products, as well as our "linked " services, is further described in
the section entitled "Business", under the sub headings entitled "Present
Status", " What we do", "Products and Services", "GoldenAccess.Com products",
and "Other Products".
We also assumed two leases, one in Miami and one in Cordoba, Argentina. We
assumed no other liabilities as part of the asset purchase
PROPRIETARY INFORMATION
We have developed custom designed software for use with Internet access, and
rely on a combination of copyright, trademark, and trade secrets and
contractual restrictions to establish and protect our licensed and trademarked
technology.
It is our policy to execute agreements with employees and consultants upon the
commencement of their relationships with us. These agreements provide that
confidential information developed or made known during the course of a
relationship with us is to be owned by the GOLDENACCESS.COM INC or its
respective subsidiaries and kept confidential and not disclosed to third
parties except in specific circumstances. There can be no assurance that the
steps taken by us will be adequate to prevent misappropriation of our
technology or that our competitors will not independently develop technologies
that are substantially equivalent or superior to our technology.
EMPLOYEES
As of January 1, 2000, we employed a staff of 21 of whom 19 are employees, 4 of
whom are in Argentina, 5 of whom are in management, 3 in administration, 2 in
marketing, 2 in customer service, 2 on the technical staff, and 2 outside
consultants.
None of our employees are represented by a labor union. We have not experienced
any work stoppage and consider relations with our employees to be good.
FACILITIES
We are currently leasing an office facility of 4500 square feet on a year to
year basis for $5,488 per month, plus applicable sales tax, for administration,
technical support, and customer service. Our offices are located at 6161 Blue
Lagoon Drive, Suite 190, Miami, Florida 33126 and the telephone number is (305)
264-2401. The facilities are adequate for our current needs and suitable
additional
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space, should it be needed, is expected to be available to accommodate
expansion of our operations on commercially reasonable terms.
Our offices in Argentina are in Cordoba, where we occupy 2000 sq. ft. and pay
$700 per month.
SELLING SECURITYHOLDERS
We have agreed to register shares of some of our current stockholders for
resale at the same time as the stock dividend distribution in this prospectus
and to pay all offering expenses. These shareholders are selling 385,100
shares.
We will not receive any of the proceeds of their sales. Although our shares
will initiate trading at a price set by our market makers in deference to
market demand and other factors, the shares will trade at various prices in
open market transactions, and selling stockholders are free to sell at any
price they desire. Sales by selling stockholders at a price lower than
indicated in this prospectus could adversely impact our ability to sell our
stock in the future.
The following table sets forth the name of each selling shareholder and the
number of their shares being sold in connection with this prospectus. None of
the selling shareholders has held any position with, or has maintained any
material relationship with us or any of our officers.
<TABLE>
<CAPTION>
NUMBER OF RESTRICTE
NUMBER OF SHARES BEING SHARES HELD IN TOTAL SHARES OWNED &
NAME REGISTERED ADDITION TO SHARES PERCENTAGE AFTER THE
BEING REGISTERED OFFERING
<S> <C> <C> <C>
Potter Financial, Inc. 143,000 0 0
Dorf Financial, Inc 97,000 46,000 46,000/// 1.6 %
Barry Potter 118,200 0 0
The Tory Trust 26,900 24,800 24,800
The CCS Group of Shareholders 114,900 0 0
Receiving Stock Dividend
Total 500,000 70,800 70,800 /// 2. 5 %
</TABLE>
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PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding
beneficial ownership of our common stock as of October, 1999, by (i) each
person (including any "group" as that term is used in Section 13(d)(3) of the
Securities Act of 1934 (the "Exchange Act") who is known by us to own
beneficially 5% or more of the common sStock, (ii)our directors, and (iii) all
directors and executive officers as a group. Unless otherwise indicated, all
persons listed below have sole voting power and investment power with respect
to these shares. The total number of shares authorized is 10,000,000 shares of
common stock, each of which is $.001 per share par value. 2,872,500 shares of
common stock have been issued and are outstanding as follows:
5%OR MORE
CLIFFORD PIERCE (1)= 2,170,700 shares (representing 75.6% of the outstanding
shares) plus 120,000 options (See "Stock Options") (representing 61.2% of the
fully diluted shares, not inclusive of options reserved but not yet granted).
<TABLE>
<CAPTION>
NUMBER OF REGISTERED NUMBER OF SHARES
SHARES WITH THIS THAT REMAIN
SHAREHOLDER REGISTRATION RESTRICTED TOTAL SHARES
----------- -------------------- ---------------- ------------
<S> <C> <C> <C>
Clifford Y. Pierce (1) 0 2,170,700 2,170,700(2)
Paul Callihoo (1) 0 0 0(3)
Nigel Gray (1) 0 0 0(4)
David Heath (1) 0 0 0(5)
Seymour Kantor (1) 0 0 0(5)
All Management and Directors as a Group 0 2,170,700 2,170,000(6)
======= ========= ============
All other small shareholders as a group 500,000 201,800 701,800(7)
</TABLE>
(1) DIRECTORS AND OFFICERS
(2) HAS OPTIONS FOR 120,000 SHARES (SEE "STOCK OPTIONS" AND "CERTAIN
TRANSACTIONS")
(3) HAS OPTIONS FOR 150,000 SHARES (SEE "STOCK OPTIONS" AND "CERTAIN
TRANSACTIONS")
(4) HAS OPTIONS FOR 50,000 SHARES (SEE "STOCK OPTIONS" AND "CERTAIN
TRANSACTIONS")
(5) HAS OPTIONS RESERVED WITHIN THE RESERVED BLOCK OF OPTIONS, BUT NOT YET
ALLOCATED, IN AN UNDETERMINED AMOUNT.
(6) AS FOOTNOTED ABOVE.
(7) HAVE OPTIONS FOR 550,000 SHARES (SEE "STOCK OPTIONS" AND "CERTAIN
TRANSACTIONS")
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MANAGEMENT AND BOARD OF DIRECTORS
There are currently five (5) authorized and occupied seats on the board of
directors. The following tables set forth information with respect to the
directors and executive officers.
All directors will hold office until the expiration of their respective terms,
and until their successors have been elected or qualified or until their death,
resignation, retirement, removal, or disqualification. Vacancies on the board
will be filled by a majority vote of the remaining directors. Officers of
GOLDENACCESS.COM INC serve at the discretion of the board of directors. Mr.
Heath and Mr. Kantor, as outside directors, serve on the audit committee.
<TABLE>
<CAPTION>
BOARD OF DIRECTORS
NAME AGE COMMENCED TERM
---- -- --------- ----
<S> <C> <C> <C>
Clifford Pierce 60 June 1997 Sept 2002
Paul Callihoo 42 August 1999 Sept 2001
Nigel Gray 45 August 1999 Sept 2001
David Heath 43 August 1999 Sept 2000
Seymour Kantor 48 August 1999 Sept 2000
</TABLE>
MANAGEMENT
The senior management team has excellent credentials and a proven performance
record in product development, telecommunications networking and global
marketing.
<TABLE>
<CAPTION>
NAME AGE OFFICE COMMENCED
---- --- ------ ---------
<S> <C> <C> <C>
Clifford Pierce 60 Chairman, President & Chief Financial June 1997
Officer
Paul Calihoo 42 Executive VP of International Marketing June 1999
& Chief Operating Officer
Nigel Gray 45 Vice President December 1998
</TABLE>
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THE OFFICERS AND DIRECTORS OF GOLDENACCESS.COM INCARE SET FORTH BELOW.
CLIFFORD Y. PIERCE, 60. Mr. Pierce is President, CFO, and Chairman of the board
of directors of Goldenaccess.com. As GOLDENACCESS.COM INCfounder, he integrated
the resources and technology into the platform that supports our products'
rollout to its distributor base. Mr. Pierce's business background includes over
35 years of related experience in establishing and maintaining start-up
businesses involved in manufacturing, sales and marketing, network marketing,
and finance. He is a Certified Public Accountant, licensed in the State of
Florida. Receiving his certification on September 23, 1973. He received his
Bachelor of Science from Long Island University in 1962, and completed most of
his pre-doctoral studies. Mr. Pierce was elected to the National Honor Society
- - Pi Gamma Mu.
He worked for major accounting firms and developed a wide area of expertise ,
before forming his own firm in 1975. Mr. Pierce is a founder and director of
several companies and is President of a computer component import-export firm
which has sales volume of over $10,000,000 annually. Mr. Pierce currently acts
to coordinate our research and development team with the needs of the
marketplace.
PAUL CALLIHOO, EXECUTIVE VICE PRESIDENT, DIRECTOR, 42. Paul joined Golden
Access to establish the business development and sales & marketing programs,
while developing a global distribution and sales channel network by partnering
with key system integration companies within Asia, North America, Latin America
and Europe. He developed the business model that defines our line of products
and services. Paul directed the market trial and commercial launch phases of
VIP. Prior to joining us, he served as Executive VP, Sales & Marketing, for
CYBERFAX INC/TELSTAR COMMUNICATIONS, in Montreal, Canada; as VP, for
International Business Development for ALPHANET TELECOM INC., of Toronto,
Ontario, Canada, where he launched a next generation telecommunications service
using Voice over IP (VoIP) and developed strategic acquisitions, joint ventures
and partnerships; as Director, Business Development, for CANADIAN MARCONI
COMPANY (CMC) of Kanata, Ontario, Canada, where he had P/L responsibility for
the Commercial Communications Division with annual revenues of over $30M.
Previously, he Implemented and supported online operations of AIR CANADA's
reservations system in Winnipeg, Manitoba, Canada; and served over 5 years in
the Department of Defense, in Ottawa, Ontario, Canada, as a systems engineer
maintaining various levels of communications equipment.
He received his degree in Electrical Engineering from Ryerson Polytechnical
University, Toronto, Ontario. He intends to devote full time to
GOLDDENACCESS.COM INC acting in an executive capacity.
NIGEL J. GRAY, MARKETING DIRECTOR, 45. Nigel Gray is presently the marketing
director but worked part time during the development stage of Golden
Access.Com. His background in the computer industry dates from 1974. He started
as a general manager of one of the first Apple Distributors in the country and
worked for many successful firms (Miami Micro Distributors, Ameritech Exports,
Jair Electronics Corporation, and U.S, Computers). After graduating from
Colorado State University, Mr. Gray completed his master's at Florida
International University. His twenty-five years experience in the computer
software and hardware industry has pioneered network development and new state
of the art products.
DAVID W. HEATH, DIRECTOR, 43. David Heath, through Heath & Company, provides
operational and development consulting services for the real estate industry.
Mr. Heath has an extensive hospitality management background having worked for
more than ten years in various management capacities in hotel and restaurant
operations. He managed the Florida hospitality consulting practice of Arthur
Andersen LLP, and directed numerous consulting engagements in Florida and the
Caribbean. Mr. Heath 's areas of
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specialization and expertise include the analysis of operational effectiveness;
the design, development and implementation of automated labor productivity
management systems; and strategic planning, market repositioning and workouts
for distressed companies. For the BOCA RATON RESORT & CLUB in Boca Raton, FL, a
963-room resort, he implemented a new automated productivity management system.
For the FOUR SEASONS RESORT & CLUB, in Irving, Texas, he developed a plan for
the resort's $10million expansion.
Mr. Heath graduated from University of Massachusetts and completed his MBA at
North Eastern University.
SEYMOUR KANTOR, DIRECTOR, 48. Mr. Kantor is the president of Advance Tec, a
hi-tech engineering firm serving the cellular and two way radio industry for
the last eight years. He previously owned Joy Silkscreen, Inc, for three years.
Mr. Kantor is originally from Johannesburg, South Africa. He graduated from the
University of Witwatersrand Law School and practiced law in South Africa for 12
years. He emigrated to the United States in 1987.
DIRECTORS' COMPENSATION
Our employee directors receive no compensation for their services as directors.
Our outside directors shall receive compensation for their services as
prescribed by our board of directors. As of the date of this filing, no Board
member has received compensation for his role on the Board. Members of the
Executive Advisory Board will receive payment for their services, as well as
reimbursement for travel and other expenses incurred in connection with
attendance at each meeting.
EXECUTIVE ADVISORY BOARD
We will establish an informal Executive Advisory Board, appointed by Mr. Pierce
and Mr. Callihoo. The role of the Executive Advisory Board is to be available
to assist our management with general business and strategic planning advice
upon request from time to time. Accordingly, the Executive Advisory Board
Members intend to devote themselves part-time to our affairs as needed. To
date, we have asked Barry Potter and Ross, Forster, Scillia & Brooks, Inc.,
respectively, to act in these capacities.
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EXECUTIVE COMPENSATION
Through June 30, 1999, no officer or director received any remuneration because
an insignificant amount of services were provided by any member of management
during the year ended 6/30/99.
<TABLE>
<CAPTION>
NAME AND OTHER ANNUAL
POSITION YEAR SALARY BONUS COMPENSATION
-------- ---- ------ ----- ------------
<S> <C> <C> <C> <C>
Clifford Pierce 2000 96,000 None in 2000(2) (1)(4)
President
Paul Callihoo 2000 60,000 None in 2000(2)(3) (1)(3)(4)
Vice President
Nigel Gray
Vice President of 2000 48,000 None in 2000(2)( (1)(3)(4)
Marketing
</TABLE>
FOOTNOTES:
1. ALSO INCLUDED IN THE YEAR 2000 COMPENSATION PACKAGE IS UP TO $18,000 PER
ANNUM FOR REIMBURSEMENTS OF AUTOMOBILE EXPENSES AND APPROXIMATELY $12,000
PER ANNUM FOR PREMIUM PAYMENTS ON THE GOLDEN ACCESS.COM INC'S GROUP HEALTH
AND DENTAL POLICY. OTHER EMPLOYEES RECEIVE AUTOMOBILE REIMBURSEMENTS TO
THIS EXTENT ALTHOUGH MOST EMPLOYEES ARE REIMBURSED FOR ONLY SOME
AUTOMOBILE RELATED EXPENSES. NO OTHER EMPLOYEES AT THIS TIME HAVE ANY
PORTION OF THEIR PERSONAL OR FAMILY COVERAGE PAID FOR BY US AND THEY
CONTRIBUTE TO THE FULL COST OF THE PLAN THEY SELECT.
2. FUTURE BONUSES WILL BE COMPRISED OF SUBJECTIVE AND PROFITABILITY BONUSES.
THE SUBJECTIVE BONUS IS GENERALLY COMPOSED OF QUALITATIVE PERFORMANCE
OBJECTIVES RESET BY THE BOARD OF DIRECTORS ON AN ANNUAL BASIS, AND WOULD
VARY FROM YEAR TO YEAR BOTH IN NATURE AND AMOUNT TO BE EARNED. FISCAL 2000
IS THE FIRST YEAR FOR WHICH MR. PIERCE WILL BE ELIGIBLE FOR THIS KIND OF
BONUS FEATURE. THE PROFITABILITY BONUS IS EARNED BY THE ATTAINMENT OF
BOARD OF DIRECTOR PRESCRIBED REVENUES AND PROFITS, AND CAN BE MODIFIED ON
AN ANNUAL BASIS BOTH IN NATURE AND AMOUNT.
3. ALSO COMPRISED OF COMMISSIONS AND COMMISSION OVERRIDES.
4. AS OF THE DATE OF THIS FILING, NO BOARD MEMBER HAS RECEIVED COMPENSATION
FOR HIS ROLE ON THE BOARD.
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EMPLOYMENT AGREEMENTS
We plan to enter into employment agreements with each of Messrs. Pierce,
Callihoo, and Gray which provide for an annual base compensation of $96,000,
$60,000, and $48,000, respectively, and other bonuses as the board of irectors
may from time to time determine. When we hire our new CFO, Director of Sales,
and any other Key executives, we will execute appropriate agreements for each
upon their employment, however they will be in effect subsequent to the
effective date of this prospectus.
<TABLE>
<CAPTION>
CLIFFORD PIERCE PAUL CALLIHOO NIGEL GREY
--------------- ------------- ----------
<S> <C> <C> <C>
Term 3 3 3
Annual Compensation $96,000 $60,000 $48,000
CPI Adjustments No No No
Deferred Compensation Yes Yes Yes
Subjective Bonus Up to $100,000 Up to $100,000 Up to $50,000
Profitability Bonus $50,000 plus a $50,000 plus a $10,000 plus a
percentage percentage percentage
Benefits Yes Yes Yes
Automobile Yes Yes Yes
Health and Dental Coverage Yes Yes Yes
Health/Dental Premium
Paid By Employee None None None
</TABLE>
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STOCK OPTIONS
We have not adopted any formal stock options plans to reward and provide
incentives to our officers, directors, employees, consultants and other
eligible participants, but we anticipate doing so as follows: (a) the Executive
Stock Incentive Plan, (b) the 1999 Incentive Stock Option Plan, and (c) the
1999 Stock incentive Plan. We have reserved 1,720,000 shares for issuance under
the plans. Awards under each plan may be in the form of incentive stock options
or non-qualified stock options. The plans will be administered by our board of
directors, which is authorized to select the plan recipients, the time or times
at which awards may be granted and the number of shares to be subject to each
option awarded. We have granted some of these already, despite not having a
fully documented plan at this time.
The Company will record compensation expense for any difference, if any,
between the exercise price of the options and the estimated fair market value
of the shares purchased at the time of the approval of the grant, as determined
by the Company's Board of Directors.
Five Year Options to purchase stock @ $0.25, exercisable 180 days subsequent to
the effective date of our first registration statement, granted July 30, 1999.
Clifford Pierce 120,000 shares
Reserved for other Executives 630,000 shares
Five Year Options to purchase stock @ $0.25, 20% of which may be exercised
August 1, 2000, and 80% may be exercised August 1, 2001,but not earlier than
180 days subsequent to the effective date of our first registration statement,
granted July 30, 1999.
Paul Callihoo 150,000 shares
Nigel Gray 50,000 shares
500,000 Five Year Options to purchase stock @ $5.00, exercisable 90 days
subsequent to the effective date of our first registration statement, granted
July 30, 1999 to Barry Potter.
50,000 Five Year Options to purchase stock @ $0.25, exercisable 90 days
subsequent to the effective date of our first registration statement, granted
July 30, 1999 to Southeastern Venture Corporation.
Reserved for Non-Key and Technical employees 220,000 shares
INDEMNIFICATION OF OFFICERS AND DIRECTORS
At present we have not entered into individual indemnity agreements with our
officers or directors. However, we shall indemnify, to the fullest extent under
Florida law, our directors and officers against liabilities incurred with
respect to their service in these capacities.
Indemnification for liabilities arising under the Securities Act may be
permitted to our directors, officers and controlling persons under the
previously stated provisions, or otherwise, we have been advised that in the
opinion of the Securities and Exchange Commission, that indemnification is
against public policy as expressed in the Securities Act of 1933, as amended,
and because of this, is unenforceable. In the event that a claim for
indemnification against liabilities (other than the
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payment by us of expenses incurred or paid by a director, officer or
controlling person in the successful defense of any action, suit or proceeding)
is asserted by a director, officer or controlling person in connection with the
securities being registered, we will, unless in the opinion of our counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether indemnification by it is
against public policy as expressed in the Securities Act of 1933, as amended,
and we will be governed by the final adjudication of these cases.
DIRECTORS AND OFFICERS INSURANCE
We are exploring the possibility of obtaining directors and officers ("D&O")
liability insurance. We have obtained several premium quotations but have not
entered into any contract with any insurance company to provide said coverage
as of the date of this prospectus. There is no assurance that we will be able
to obtain this kind of insurance.
KEYMAN LIFE INSURANCE
Keyman Life Insurance is expected to be purchased after the effective date of
this prospectus in amounts up to $1 million, 50% payable to GOLDENACCESS.COM
INCand 50% payable to family beneficiaries. We are planning to purchase
insurance towards the cross purchase of shares from the estate of an officer or
director and to provide us with the capital to replace the executive loss
(executive search for successor, etc.).
CERTAIN TRANSACTIONS
On June 13,1997, the board of directors authorized the issuance of an aggregate
of 4,000 shares of common sStock as founder's stock at a price of $.001 per
share, to Clifford Pierce.
On August 20, 1999, the board of directors of CathTech, Group, Inc., authorized
the issuance of an aggregate of 2,872,500 shares of common stock as founder's
stock to its founders, employees, and advisors at a price of $.001 per share
(par value), to approximately 8 individuals or other entities, of which,
2,166,700 shares were exchanged for the assets acquired by us, from our
president, in July of 1999. .See "Recent Acquisition of Assets".
This group consists of the following eight individuals or entities, all of whom
received their shares as founders in August, 1999, as that term is defined
under section 230.405 of the General Rules and Regulations of the Securities
Act of 1933.: Dorf Financial - 143,000 shares in August, 1999, purchased for
par value; Alan Rabin-1,000 shares in August, 1999, purchased for par value;
Barry Potter - 57,000 shares in August, 1999, purchased for par value and
86,000 shares purchased for $0.25 per share; The Tory Trust - 26,900 shares in
August, 1999, purchased for par value; Potter Financial Corporation - 143,000
shares in August, 1999, purchased for $0.25 per share; Lindsey A. Gertner -
131,000 shares in August, 1999, purchased for $0.25 per share; Clifford Pierce
- - 2,166,700 shares in August, 1999, exchanged for assets, as well as Cardiac
Control Services, Inc., who retained 113,900 shares on behalf of their
shareholders as a group, prior to distribution of the stock dividend. The stock
dividend distribution cannot be made until this prospectus is effective.
These shareholders have indicated a willingness to provide us with additional
capital for
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developmental requirements in the near future if we must pay for such
expenditures prior to the receipt of sufficient revenues or other funds to pay
them. These contributions will either be made as additional paid-in capital or
may be unsecured shareholder loans to us. We do not plan to issue any
additional stock or options to these shareholders for any such contributions
contemplated at this time, other than their future purchase of additional stock
should we ever make a new offer of securities in the future.
On August 26, 1999, we merged with CathTech, Inc., and retained our name and
business. On the effective date of this prospectus, 129,300 shares of our stock
will be distributed as a stock dividend to the shareholders of Cardiac Control
Systems, Inc., and their agent, of record of August 26, 1999.
We have adopted a policy that all future transactions between the
GOLDENACCESS.COM INC and officers, directors and 5% shareholders will be on
terms no less favorable that could be obtained from unaffiliated third parties
and will be approved by a majority of our independent, disinterested directors.
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<PAGE> 59
DESCRIPTION OF SECURITIES
All material provisions of our capital stock are summarized in this prospectus.
However the following description is not complete and is subject to applicable
Florida law and to the provisions of our articles of incorporation and bylaws.
We have filed copies of these documents as exhibits to the registration
statement related to this prospectus.
COMMON STOCK
We are authorized to issue 10,000,000 shares of common stock, at a par value
$.001 per share. As of the date of this prospectus, there are 2,872,500 shares
of common stock outstanding. After giving effect to the exercise of all
outstanding options and warrants (1,720,000 shares), our issued and outstanding
capital stock would consist of 4,592,500 shares of common stock.
YOU HAVE THE VOTING RIGHTS FOR YOUR SHARES. You and all other holders
of common stock are entitled to one vote for each share held of record on all
matters to be voted on by stockholders. You have no cumulative voting rights
with respect to the election of directors, with the result that the holders of
more than 50% of the shares voting for the election of directors can elect all
of the directors then up for election.
YOU HAVE DIVIDEND RIGHTS FOR YOUR SHARES. You and all other holders of
common stock are entitled to receive dividends and other distributions when, as
and if declared by the board of directors out of funds legally available, based
upon the percentage of our common stock you own. We will not pay dividends. You
should not expect to receive any dividends on shares in the near future. This
investment may be inappropriate for you if you need dividend income from an
investment in shares.
YOU HAVE RIGHTS IF WE ARE LIQUIDATED. Upon our liquidation,
dissolution or winding up of affairs, you and all other holders of our common
stock will be entitled to share in the distribution of all assets remaining
after payment of all debts, liabilities and expenses, and after provision has
been made for each class of stock, if any, having preference over our common
stock. Holders of shares of common stock, have no conversion, preemptive or
other subscription rights, and there are no redemption provisions applicable to
the cCommon stock. All of the outstanding shares of common stock are, and the
shares of common stock being , when issued in exchange for the consideration
paid as set forth in this prospectus, will be, fully paid and non-assessable.
Our directors, at their discretion, may borrow funds without your prior
approval, which potentially further reduces the liquidation value of your
shares.
YOU HAVE NO RIGHT TO ACQUIRE SHARES OF STOCK BASED UPON THE PERCENTAGE
OF OUR COMMON STOCK YOU OWN WHEN WE SELL MORE SHARES OF OUR STOCK TO OTHER
PEOPLE. This is because we do not provide our stockholders with preemptive
rights to subscribe for or to purchase any additional shares offered by us in
the future. The absence of these rights could, upon our sale of additional
shares of common stock, result in a dilution of our percentage ownership that
you hold.
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YOU HAVE NO RIGHT TO ELECT AN ENTIRE NEW BOARD OF DIRECTORS IN ANY
GIVEN YEAR. Provisions of our certificate of incorporation, our bylaws and
Florida law could make it more difficult for a third party to acquire us, even
if doing so would be beneficial to our stockholders. For example, our articles
of incorporation provide for a classified board of directors, meaning that only
approximately one-third of our directors will be subject to re-election at each
annual stockholder meeting.
SHARES ELIGIBLE FOR FUTURE SALE
We have 2,872,500 shares of common stock issued and outstanding. The shares of
common stock registered in this prospectus will be freely transferable without
restrictions or further registration under the Securities Act, except for any
of our shares purchased by an "affiliate" (as that term is defined under the
Act) who will be subject to the resale limitations of Rule 144 promulgated
under the Act.
There will be approximately 2,372,500 shares of common stock outstanding that
are "restricted securities" as that term is defined in Rule 144 promulgated
under the Securities Act, of which 2,170,700 are owned by our President.
201,800 restricted shares are owned by shareholders who could sell their shares
under Rule 144 after a one year holding period has elapsed.
The shares of common stock owned by insiders, officers and directors are deemed
"restricted securities" as that term is defined under the Securities Act and in
the future may be sold under Rule 144, which provides, in essence, that a
person holding restricted securities for a period of one (1) year may sell
every three (3) months, in brokerage transactions and/or market maker
transactions, an amount equal to the greater of (a) one percent (1%) of our
issued and outstanding common stock or (b) the average weekly trading volume of
the common stock during the four (4) calendar weeks prior to its sale. Rule 144
also permits, under specific circumstances, the sale of shares without any
quantity limitation by a person who is not an affiliate of GOLDENACCESS.COM INC
and who has satisfied a two (2) year holding period. Additionally, shares
underlying employee stock options granted, to the extent vested and exercised,
may be resold beginning on the ninety-first day after the Effective Date of a
prospectus, or Offering Memorandum under Rule 701 promulgated under the
Securities Act.
As of this date and upon effectiveness of this prospectus, none of our shares
of common stock (other than those which are qualified by the SEC in connection
with this registration) are available for sale under Rule 144. Future sales
under Rule 144 may have an adverse effect on the market price of the shares of
common stock. Our officers, directors and some of our security holders have
agreed not to sell, transfer or otherwise dispose of their shares of our common
stock or any securities convertible into common stock for a period of 12 months
from this date.
Under Rule 701 of the Securities Act, persons who purchase shares upon exercise
of options granted prior to the date of this prospectus are entitled to sell
these shares after the 90th day following the date of this pProspectus in
reliance on Rule 144, without having to comply with the holding period
requirements of Rule 144 and, in the case of non-affiliates, without having to
comply with the public information, volume limitation or notice provisions of
Rule 144. Affiliates are subject to all Rule 144 restrictions after this 90-day
period, but without a holding period.
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There has been no public market for our common stock. With a relatively minimal
public float and without a professional underwriter, there is little or no
likelihood that an active and liquid public trading market, as that term is
commonly understood, will develop, or if developed that it will be sustained,
and accordingly, an investment in our common stock should be considered highly
illiquid. Although we believe a public market will be established in the
future, there can be no assurance that a public market for the common stock
will develop. If a public market for the common stock does develop at a future
time, sales of shares by shareholders of substantial amounts of our common
stock in the public market could adversely affect the prevailing market price
and could impair our future ability to raise capital through the sale of our
equity securities.
ANTITAKEOVER PROVISIONS
Antitakeover provisions in our organizational documents and Florida law make
any change in control of us more difficult, may discourage bids at a premium
over the market price and may adversely affect the market price of our stock.
Our certificate of incorporation, our bylaws and Florida law make it difficult
for a third party to acquire us, despite the possible benefit to our
stockholders.
Provisions of our certificate of incorporation, our bylaws and Florida law
could make it more difficult for a third party to acquire us, even if doing so
would be beneficial to our stockholders. For example, our articles of
incorporation provides for a classified board of directors, meaning that only
approximately one-third of our directors will be subject to re-election at each
annual stockholder meeting. These provisions could discourage takeover attempts
and could materially adversely affect the price of our stock.
After the effective date, the board of directors will have the authority to
issue up to 1,000,000 shares of preferred stock. Moreover, without any further
vote or action on the part of the stockholders, the board of directors will
have the authority to determine the price, rights, preferences, privileges and
restrictions of the preferred stock. This preferred stock, if issued, might
have preference over and harm the rights of the holders of common stock.
Although the issuance of this preferred stock will provide us with flexibility
in connection with possible acquisitions and other corporate purposes, this
issuance may make it more difficult for a third party to acquire a majority of
our outstanding voting stock. We currently have no plans to issue preferred
stock.
Our certificate of incorporation, bylaws and equity compensation plans include
provisions that may deter an unsolicited offer to purchase us. These
provisions, coupled with the provisions of the Florida General Corporation Law,
may delay or impede a merger, tender offer or proxy contest. These factors may
further delay or prevent a change of control of GOLDENACCESS.COM INC.
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EXCHANGE LISTING
It is currently anticipated that our common stock will be eligible for listing
on Nasdaq coincident with or within 90 days of the effective date of this
prospectus. We are also filing applications for listing on at least one
regional stock exchange. To continue to be listed on Nasdaq, however, we must
maintain $2,000,000 in net assets, or a $35,000,000 market capitalization or
$500,000 net income in the latest year or 2 of the last three fiscal years. In
addition, continued inclusion requires two market makers, a minimum bid price
of $1.00 per share, 500,000 shares in the public float with a market value of
$1,000,000, and 300 round lot shareholders. The failure to meet these
maintenance criteria in the future may result in the delisting of our
securities from Nasdaq, and trading, if any, in our securities would thereafter
be conducted on the OTC Bulletin Board, which is owned by Nasdaq. As a result
of delisting, an investor could find it more difficult to dispose of our
securities, and our market value may fluctuate widely, as is the case with many
OTCBB securities.
If our common stock were to become delisted from trading on Nasdaq, and any
other regional exchange, and the trading price of the common stock were to fall
below $5.00 per share on the date our securities were delisted, trading in
these securities would also be subject to the requirements of specificrules
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), which require additional disclosure by broker-dealers in
connection with any trades involving a stock defined as a penny stock
(generally, any non-Nasdaq, non-exchange listed equity security that has a
market price of less than $5.00 per share, subject to specific exceptions).
Rules require the delivery, prior to any penny stock transaction, of a
disclosure schedule explaining the penny stock market and the risks associated
therewith, and impose various sales practice requirements on broker-dealers who
sell penny stocks to persons other than established customers and accredited
investors (generally institutions). For these types of transactions, the
broker-dealer must make a special suitability determination for the purchaser
and have received the purchaser's written consent to the transaction prior to
sale. The additional burdens imposed upon broker-dealers by requirements may
discourage broker-dealers from effecting transactions in our securities, which
could severely limit the market price and liquidity of these securities and the
ability of purchasers in this offering to sell their securities in the
secondary market. Disclosure is also required to be made about commissions
payable to both the Broker/Dealer and the registered representative and current
quotations for the securities. Finally, monthly statements are required to be
sent disclosing recent price information for the penny stock held in the
account and information on the limited market in penny stocks.
The penny stock restrictions described above will not apply to our securities
if these securities are listed on a regional exchange and have specific price
and buying information provided on a current and continuing basis or meet
specific minimum net tangible assets or average revenue criteria. Otherwise we
will remain subject to Section 15(b)(6) of the Exchange Act governing these
penny stock restrictions.
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DIVIDEND POLICY
We have never declared or paid cash dividends on our common stock and
anticipate that all future earnings will be retained for development of our
business. The payment of any future dividends will be at the discretion of our
board of directors and will depend upon, among other things, future earnings,
capital requirements, our financial condition and general business conditions.
STOCK TRANSFER AGENT
Our transfer agent and registrar of the common stock is Sun Trust Bank, Mail
Code 258, PO box 4625, Atlanta, Georgia 30302.
EXPERTS
Our financial statements (development stage companies) as of and for the years
ending June 30, 1998 and 1999, have been audited by Kingery, Crouse & Hohl,
P.A., CPAs, Tampa, our independent auditors, as set forth in their report
included in this prospectus is incorporated by reference. These financial
statements have been included based on reliance upon the reports given upon
their authority as experts in accounting and auditing.
LEGAL MATTERS
There is no past, pending or, to our knowledge, threatened litigation or
administrative action which has or is expected by our management to have a
material effect upon our business, financial condition or operations, including
any litigation or action involving our officers, directors, or other key
personnel.
The Law Offices of Gary M Appelblatt, Esq., 3610 American River Dr., Suite 112,
Sacramento, Ca. 95864 [E-mail Address: [email protected]], will pass upon
specific legal matters relating to this prospectus.
AVAILABLE INFORMATION
WE HAVE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") A
REGISTRATION STATEMENT ON FORM SB-2 RELATING TO THE COMMON STOCK BEING
REGISTERED. THIS PROSPECTUS, WHICH IS PART OF THE REGISTRATION STATEMENT, DOES
NOT CONTAIN ALL OF THE INFORMATION INCLUDED IN THE REGISTRATION STATEMENT AND
THE EXHIBITS AND SCHEDULES. FOR FURTHER INFORMATION WITH RESPECT TO US, OR THE
COMMON STOCK BEING REGISTERED, REFERENCE IS MADE TO THE REGISTRATION STATEMENT,
INCLUDING THE EXHIBITS AND SCHEDULES. STATEMENTS CONTAINED IN THIS PROSPECTUS
CONCERNING THE PROVISIONS OR CONTENTS OF ANY CONTRACT, AGREEMENT OR ANY OTHER
DOCUMENT REFERRED TO WITH IN THIS PROSPECTUS ARE NOT NECESSARILY COMPLETE. WITH
RESPECT TO EACH CONTRACT, AGREEMENT OR DOCUMENT FILED AS AN EXHIBIT TO THE
REGISTRATION STATEMENT, REFERENCE IS MADE TO THE EXHIBITS FOR A MORE COMPLETE
DESCRIPTION OF THE MATTERS INVOLVED.
THE REGISTRATION STATEMENT, INCLUDING THE EXHIBITS AND SCHEDULES, MAY BE
INSPECTED AND COPIED AT PRESCRIBED RATES AT THE PUBLIC REFERENCE FACILITIES
MAINTAINED BY THE COMMISSION AT 450
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FIFTH STREET, N.W., WASHINGTON, DC 20549 AND AT THE COMMISSION'S REGIONAL
OFFICES AT 7 WORLD TRADE CENTER, 13TH FLOOR, NEW YORK, NEW YORK 10048 AND 500
WEST MADISON STREET, SUITE 1400, CHICAGO, ILLINOIS 60661. YOU MAY OBTAIN
INFORMATION ON THE OPERATION OF PUBLIC REFERENCE ROOM BY CALLING THE SEC AT
1-800-SEC-0330. THE COMMISSION ALSO MAINTAINS A WEB SITE THAT CONTAINS REPORTS,
PROXY AND INFORMATION STATEMENTS AND OTHER INFORMATION REGARDING REGISTRANTS
THAT FILE ELECTRONICALLY WITH THE COMMISSION, INCLUDING GOLDENACCESS.COM INC.
THE ADDRESS OF THE SITE IS [HTTP://WWW.SEC.GOV].
WE INTEND TO FURNISH TO OUR SHAREOWNERS ANNUAL REPORTS CONTAINING AUDITED
CONSOLIDATED FINANCIAL STATEMENTS CERTIFIED BY INDEPENDENT PUBLIC ACCOUNTANTS
FOR EACH FISCAL YEAR AND QUARTERLY REPORTS CONTAINING UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS FOR THE FIRST THREE QUARTERS OF EACH FISCAL YEAR. FOR A
PERIOD OF AT LEAST ONE YEAR FOLLOWING THE EFFECTIVE DATE OF THIS PROSPECTUS, WE
WILL BE REQUIRED BY THE SECURITIES EXCHANGE ACT OF 1934 TO FILE PERIODIC
REPORTS AND OTHER INFORMATION WITH THE SECURITIES AND EXCHANGE COMMISSION. ALL
MATERIALS MAY BE INSPECTED AT THE COMMISSION'S PRINCIPAL OFFICERS AT 450 FIFTH
STREET N.W., WASHINGTON, D.C. 20459 AND COPIES OBTAINED ON PAYMENT OF SPECIFIC
FEES PRESCRIBED BY THE COMMISSION.
WE WILL PROVIDE WITHOUT CHARGE TO EACH PERSON WHO RECEIVES A PROSPECTUS, UPON
WRITTEN OR ORAL REQUEST, A COPY OF ANY OF THE INFORMATION THAT WAS
INCORPORATED BY REFERENCE IN THE PROSPECTUS (NOT INCLUDING EXHIBITS TO THE
INFORMATION THAT IS INCORPORATED BY REFERENCE UNLESS THE EXHIBITS ARE
THEMSELVES SPECIFICALLY INCORPORATED BY REFERENCE). REQUESTS SHOULD BE DIRECTED
TO OUR CHIEF FINANCIAL OFFICER AT OUR OFFICES IN MIAMI.
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GOLDENACCESS.COM, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
PAGE
----
<S> <C>
Financial Statements as of and for the three months ended
September 30, 1999 and Statement of Operations for the
period June 13, 1997 (date of incorporation) to June
30, 1999 (Unaudited):
Balance Sheet F-2
Statements of Operations F-3
Statements of Stockholders' (Deficit) Equity F-4
Statements of Cash Flows F-5
Notes to Financial Statements F-6
</TABLE>
- -------------------------------------------------------------------------------
F-1
<PAGE> 66
GOLDENACCESS.COM
BALANCE SHEET AS OF SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 4,029
Accounts receivable (net of doubtful
accounts of $0.00) 12,000
-----------
Total current assets 16,029
Equipment and software (net of accumulated
depreciation and amortization of $40,432) 1,388,668
-----------
TOTAL $ 1,404,697
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accrued expenses $ 65,000
Stockholder advances 134,388
-----------
Total current liabilities 199,388
-----------
Stockholders' Equity:
Common stock - $.001 par value 100,000,000 shares
authorized; 2,872,500 shares issued and outstanding 2,873
Additional paid-in capital 1,566,069
Deficit (363,633)
-----------
Total Stockholders' Equity 1,205,309
-----------
TOTAL $ 1,404,697
===========
</TABLE>
See notes to financial statements.
F-2
<PAGE> 67
GOLDENACCESS.COM, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For the period
June 13, 1997
(date of
For the three incorporation) to
months ended June 30, 1999
September 30, (Development
1999 Stage)
------------------ -----------------
<S> <C> <C>
REVENUES:
Telephone service $ 2,343 $ 2,857
Sale of Gateway Products 12,000
Consulting - related party 3,000
Design 529
---------- ----------
Total revenues 14,343 6,386
---------- ----------
OPERATING EXPENSES:
Consulting fees - related party 193,577
Other consulting fees 1,250
Cost of services 51,478
Research and development - related party 1,397 40,287
Travel 30,786 1,167
Office and administration 9,213 1,744
Occupancy and equipment 47,284 948
Organization costs 3,394
Professional fees 1,050
Advertising 787
---------- ----------
Total operating expenses 334,985 49,377
---------- ----------
NET LOSS $ 320,642 $ 42,991
========== ==========
NET LOSS PER SHARE:
Basic $ 0.11 $ 0.12
========== ==========
Weighted average number of shares - basic and dilutive 2,872,500 345,800
========== ==========
</TABLE>
See notes to financial statements.
F-3
<PAGE> 68
GOLDENACCESS.COM, INC.
STATEMENT OF STOCKHOLDERS' (DEFICIT) EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in
Shares Amount Capital Deficit Total
--------- ------ ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
Balances at June 30, 1999 345,800 $ 346 $ 5,654 $ (42,991) $ (36,991)
Issuance of common stock
for equipment and software 2,166,700 2,167 1,414,933 1,417,100
Issuance of common stock
at $0.25 per share 360,000 360 89,640 90,000
Forgiveness of stockholder
advances 54,592 54,592
Contributed capital 1,250 1,250
Net loss for the three months
ended September 30, 1999 (320,642) (320,642)
--------- ------ ---------- --------- ----------
Balances at September 30, 1999 2,872,500 $2,873 $1,566,069 $(363,633) $1,205,309
========= ====== ========== ========= ==========
</TABLE>
See notes to financial statements.
F-4
<PAGE> 69
GOLDENACCESS.COM, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Period June
13, 1997 (date of
For the three incorporation) to
months ended June 30, 1999
September 30, (Development
1999 Stage)
--------------- -------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(320,642) $ (42,991)
Adjustment to reconcile net loss to net cash used by
Operating activities:
Non-cash consulting expense 91,250
Depreciation and amortization 948
39,484
Increase in accounts receivable (9,600) (2,400)
Increase in accrued expenses 65,000
--------- ---------
NET CASH USED BY OPERATING ACTIVITIES (134,508) (44,443)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES -
Purchases of equipment (12,000)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 6,000
Advances from stockholder 134,388 54,592
---------
CASH PROVIDED BY FINANCING ACTIVITIES 134,388 60,592
--------- ---------
NET INCREASE (DECREASE ) IN CASH AND CASH EQUIVALENTS (120) 4,149
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 4,149 0
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 4,029 $ 4,149
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION - Interest and taxes paid $ 0 $ 0
========= =========
</TABLE>
See notes to financial statements.
F-5
<PAGE> 70
GOLDENACCESS.COM, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A - FORMATION AND OPERATIONS OF THE COMPANY
GoldenAccess.Com, Inc. (the "Company") was incorporated under the laws of the
state of Florida on June 13, 1997. The Company, which was in the development
stage as defined in Financial Accounting Standards Board Statement No. 7, from
June 13, 1997 through June 30, 1999, provides a complete, fully integrated
solution to IP Telephony systems. The Company is based in Miami, Florida and
has an office in Argentina. On August 26, 1999, the Company merged with another
Florida entity, CathTech Group, Inc. ("CathTech"). CathTech became the
surviving legal entity, which succeeded to the name GoldenAccess.Com, Inc.
The Company is not currently required to prepare its financial statements
pursuant to the rules and regulations of the SEC; however, it is the intent of
the Company to become a qualified SEC filer and therefore the financial
statements included herein have been prepared by the Company pursuant to the
rules and regulations of the Securities and Exchange Commission ("SEC").
Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. These condensed financial statements should be read in conjunction
with the financial statements and the notes thereto included in the Company's
registration statement on Form SB-2 as of and for the year ended June 30, 1999.
In the opinion of management, all adjustments (consisting of normal and
recurring adjustments) considered necessary to present fairly the financial
position of the Company as of September 30, 1999 and the results of its
operations and its cash flows for the three months then ended have been
included. Operating results for the three-months ended September 30, 1999 are
not necessarily indicative of the results that may be expected for the fiscal
year ending June 30, 2000.
NOTE B - GOING CONCERN
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company has generated net
losses of $363,633 through September 30, 1999 and is anticipating that it will
incur a net loss for the fiscal year ending June 30, 2000. In addition, the
Company will require a significant amount of capital to implement its business
plan. The Company's ability to continue as a going concern is dependent upon
its ability to secure an adequate amount of capital to finance its anticipated
losses and implement its business plan. However, there is no assurance they
will be successful in these efforts. These factors, among others, may indicate
that the Company will be unable to continue as a going concern for a reasonable
period of time.
The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amounts and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.
F-6
<PAGE> 71
NOTE C - NET LOSS PER SHARE
The Company computes net loss per share in accordance with SFAS No. 128
"Earnings per Share" ("SFAS No. 128") and SEC Staff Accounting Bulletin No. 98
("SAB 98"). Under the provisions of SFAS No. 128 and SAB 98, basic net loss per
share is computed by dividing the net loss available to common stockholders for
the period by the weighted-average number of common shares outstanding during
the period. Diluted net loss per share is computed by dividing the net loss for
the period by the number of common and common equivalent shares outstanding
during the period. As of September 30, 1999 there are no dilutive shares.
NOTE D - SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
During the three months ended September 30, 1999, stockholder advances of
$54,592 were forgiven and reclassified to additional paid-in capital.
On July 30, 1999, the Company issued 2,166,700 shares of its common stock to
its President and majority stockholder as consideration for certain equipment,
software, customer contracts and related agreements, and the rights to pending
trademarks. The Company has recorded the value of these assets at such
stockholders approximate historical cost of $1,417,000.
NOTE D - OTHER RELATED PARTY TRANSACTIONS
During the three months ended September 30, 1999, the Company's President and
majority stockholder advanced approximately $134,300 to the Company. The
advances are unsecured, non-interest bearing and due on demand.
NOTE F - SUBSEQUENT EVENTS
Leases
On October 15, 1999, the Company entered into a lease agreement with an
affiliate for certain office space. The lease term, which commences on November
1, 1999 and terminates on February 14, 2001, requires monthly payments of
$5,488 plus applicable sales tax.
Proposed Registration of Common Stock
The Company plans to register 500,000 shares of its common stock. 129,300 of
these shares will be distributed, subsequent to the effective date of the
registration statement, to stockholders of the previous parent of CathTech as a
stock dividend. The remaining 370,700 shares will be registered for future sale
by the holders thereof. Accordingly, the Company will not receive any proceeds
from the offering.
F-7
<PAGE> 72
GOLDENACCESS.COM, INC.
(A Development Stage Enterprise)
TABLE OF CONTENTS
===============================================================================
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report F-2
Financial Statements as of and for the year ended June 30, 1999
and for the respective periods June 13, 1997 (date of incorporation)
to June 30, 1998 and 1999:
Balance Sheet F-3
Statements of Operations F-4
Statements of Stockholder's Deficit F-5
Statements of Cash Flows F-6
Notes to Financial Statements F-7
</TABLE>
===============================================================================
F-1
<PAGE> 73
[Letterhead of Kingery, Crouse & Hohl, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of GoldenAccess.Com, Inc.:
We have audited the accompanying balance sheet of GoldenAccess.Com, Inc., a
development stage enterprise (the "Company"), as of June 30, 1999 and the
related statements of operations, stockholder's deficit and cash flows for the
year then ended, and for the respective periods June 13, 1997 (date of
incorporation) to June 30, 1998 and 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 the disclosures in the financial statements. An
audit also includes assessing the accounting principles used and the
significant estimates made by management, as well as the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above, present fairly, in
all material respects, the financial position of the Company, as of June 30,
1999 and the results of its operations and its cash flows for the year then
ended, and for the respective periods June 13, 1997 (date of incorporation) to
June 30, 1998 and 1999, in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note B to the
financial statements, the Company has generated recurring losses from
operations and has a stockholder's deficit as of June 30, 1999. In addition,
the Company will require a significant amount of capital to proceed with its
business plan. These factors, among others, raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note B. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Kingery, Crouse & Hohl P.A.
November 12, 1999
F-2
<PAGE> 74
GOLDENACCESS.COM
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET AS OF JUNE 30, 1999
===============================================================================
<TABLE>
<S> <C>
ASSETS
Cash and cash equivalents $4,149
Receivables 2,400
Equipment (net of accumulated
depreciation of $948) 11,052
--------
TOTAL $17,601
========
LIABILITIES AND STOCKHOLDER'S DEFICIT
LIABILITIES -
Stockholder advances $54,592
--------
STOCKHOLDER'S DEFICIT:
Common stock - $.001 par value 100,000,000 shares
authorized; 2,872,500 shares issued and outstanding
4
Additional paid-in capital
5,996
Deficit accumulated during the development stage (42,991)
--------
Total stockholder's deficit (36,991)
--------
TOTAL $ 17,601
========
</TABLE>
===============================================================================
See notes to financial statements.
F-3
<PAGE> 75
GOLDENACCESS.COM, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
===============================================================================
<TABLE>
<CAPTION>
For the period For the period
For the June 13, 1997 (date of June 13, 1997 (date of
year ended incorporation) to incorporation) to
June 30, 1999 June 30, 1998 June 30, 1999
------- ---------------------- ----------------------
<S> <C> <C> <C>
REVENUES:
Telephone service $ 2,857 $ 2,857
Consulting - related party 3,000 3,000
Design 529 529
------- -------
Total revenues 6,386 6,386
------- -------
OPERATING EXPENSES:
Research and development - related party 28,902 $11,385 40,287
Organization costs 3,235 159 3,394
Depreciation 948 948
Professional fees 1,050 1,050
Advertising 787 787
Office and administration 1,540 204 1,744
Travel 1,167 1,167
------- ------- -------
Total operating expenses 37,629 11,748 49,377
------- ------- -------
NET LOSS $31,243 $11,748 $42,991
======= ======= =======
NET LOSS PER SHARE:
Basic $ 0.09 $ 0.03 $ 0.12
======= ======= =======
</TABLE>
===============================================================================
See notes to financial statements.
F-4
<PAGE> 76
GOLDENACCESS.COM, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF STOCKHOLDERS' DEFICIT
===============================================================================
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development
Shares Amount Capital Total
Stage
-------- ---------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Balances at June 13, 1997
(date of incorporation) 0 $ 0 $ 0 $ 0 $ 0
Issuance of common stock 4,000 4 5,996 6,000
Net loss for the period June 13,
1997 (date of incorporation)
to June 30, 1998 (11,748) (11,748)
----- ----- ------- --------- --------
Balances at June 30, 1998 4,000 4 5,996 (11,748) (5,748)
Net loss for the year ended
June 30, 1999 (31,243)
(31,243)
----- ----- ------- --------- --------
Balances at June 30, 1999 4,000 $ 4 $ 5,996 $ (42,991) $(36,991)
===== ===== ======= ========= ========
</TABLE>
===============================================================================
See notes to financial statements.
F-5
<PAGE> 77
GOLDENACCESS.COM, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
===============================================================================
<TABLE>
<CAPTION>
For the For the
Period June Period June
13, 1997 13, 1997
For the (date of (date of
Year Ended incorporation) incorporation)
June 30, to June 30, to June 30,
1999 1998 1999
------------- -------------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (31,243) $ (11,748) $ (42,991)
Adjustment to reconcile net loss to net
cash used by operating activities:
Depreciation 948 948
Increase in receivables (2,400) (2,400)
------------- -------------- --------------
NET CASH USED BY OPERATING ACTIVITIES (32,695) (11,748) (44,443)
------------- -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES -
Purchases of equipment (10,162) (1,838) (12,000)
------------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 6,000 6,000
Advances from stockholder 43,352 11,240 54,592
------------- -------------- --------------
CASH PROVIDED BY FINANCING ACTIVITIES 43,352 17,240 60,592
------------- -------------- --------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 495 3,654 4,149
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,654 0 0
------------- -------------- --------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 4,149 $ 3,654 $ 4,149
============= ============== ==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION - Interest and taxes paid $ 0 $ 0 $ 0
============= ============== ==============
</TABLE>
===============================================================================
See notes to financial statements.
F-6
<PAGE> 78
GOLDENACCESS.COM, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
===============================================================================
NOTE A - FORMATION AND OPERATIONS OF THE COMPANY
GoldenAccess.Com, Inc. (the "Company") was incorporated under the laws of the
state of Florida on June 13, 1997. The Company, which is considered to be in
the development stage as defined in Financial Accounting Standards Board
Statement No. 7, intends to provide a complete, fully integrated solution to IP
Telephony systems. The Company is based in Miami, Florida and has an office in
Argentina. On August 26, 1999, the Company merged with another Florida entity,
CathTech Group, Inc. ("CathTech"). CathTech became the surviving legal entity,
which succeeded to the name GoldenAccess.Com, Inc. (see NOTE G).
NOTE B - GOING CONCERN
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company generated net losses
of $31,243 and $11,748 for the respective periods ended June 30, 1999 and 1998,
and is anticipating that it will incur a net loss for the fiscal year ending
June 30, 2000. In addition, the Company will require a significant amount of
capital to implement its business plan. The Company's ability to continue as a
going concern is dependent upon its ability to secure an adequate amount of
capital from its stockholder and/or certain strategic partners to finance its
anticipated losses and planned principal operations. However, there is no
assurance they will be successful in these efforts. These factors, among
others, may indicate that the Company will be unable to continue as a going
concern for a reasonable period of time.
The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amounts and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.
NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements.
The reported amounts of revenues and expenses during the reporting period may
be affected by the estimates and assumptions management is required to make.
Actual results could differ from those estimates.
Equipment
Equipment is stated at cost. Major additions are capitalized, while minor
additions and maintenance and repairs, which do not extend the useful life of
an asset, are expensed as incurred. Depreciation is computed using the
straight-line method over the assets estimated useful lives of five years.
F-7
<PAGE> 79
Income Taxes
Income taxes are computed in accordance with Financial Accounting Standards
Statement No. 109 "Accounting for Income Taxes" ("SFAS 109"). Under SFAS 109,
deferred taxes are recognized for the tax consequences of temporary differences
by applying enacted statutory rates applicable to future years to differences
between the financial statement carrying amounts and the tax basis of existing
assets and liabilities. Also, the effect on deferred taxes of a change in tax
rates is recognized in income in the period that included the enactment date.
Statement of Cash Flows
For purposes of the statement of cash flows, the Company considers all highly
liquid investments purchased with an original maturity of three months or less
to be cash equivalents.
Net Loss Per Share
The Company computes net loss per share in accordance with SFAS No. 128
"Earnings per Share" ("SFAS No. 128") and SEC Staff Accounting Bulletin No. 98
("SAB 98"). Under the provisions of SFAS No. 128 and SAB 98, basic net loss per
share is computed by dividing the net loss available to common stockholders for
the period by the weighted-average number of common shares outstanding during
the period. For calculation of loss per share, the Company has used 345,800
shares which reflects the shares outstanding as if the merger, discussed in
NOTE A, had occurred at inception. The diluted net loss per share is computed
by dividing the net loss for the period by the number of common and common
equivalent shares outstanding during the period. As of June 30, 1999 there are
no dilutive shares.
NOTE D - COMMITMENTS
At June 30, 1999, the Company had obligated itself under a three-year operating
lease agreement for office space in Argentina. The lease, which expires in May
2002, requires monthly rental payments of approximately $700. Future minimum
lease payments under this lease, and a lease entered in October 1999 (see NOTE
G), are approximately as follows:
<TABLE>
<CAPTION>
Years Ending
June 30, Amounts
-------- -------
<S> <C>
2000 $ 54,800
2001 54,800
2002 7,700
---------
Total $ 117,300
=========
</TABLE>
Management anticipates that the Company will enter three-year employment
agreements with its President and stockholder, as well as two other officers.
The employment agreements, which are expected to require total base salaries of
approximately $204,000 for each of the three years ending June 30, 2000 through
2002, are also expected to contain provisions for bonuses, other incentives and
fringe benefits.
On July 2, 1999, the Company engaged a stockholder of CathTech to provide
certain consulting services under a one-year consulting agreement. As
consideration for such consulting services, the Company granted such entity
options to purchase 500,000 shares of its common stock for $5.00 per share (see
NOTE G). The options expire on December 31, 2002.
F-8
<PAGE> 80
NOTE E - INCOME TAXES
During the year ended June 30, 1999, the Company recognized losses for both
financial and tax reporting purposes. Accordingly, no deferred taxes have been
provided for in the accompanying statement of operations. The significant
components of the deferred tax asset as of June 30, 1999, assuming an effective
income tax rate of 34%, are approximately as follows:
<TABLE>
<S> <C>
Deferred Income Tax Asset -
Net operating loss carryforwards $ 14,000
--------
Deferred income tax asset 14,000
Less valuation allowance (14,000)
Total deferred income tax asset $ 0
========
</TABLE>
The Company established a valuation allowance to fully reserve the deferred
income tax asset as of June 30, 1999 as the realization of the asset did not
meet the required asset recognition standard established by Financial
Accounting Standards Statement No. 109 "Accounting for Income Taxes."
Accordingly, the Company has not recorded any benefits for deferred income
taxes in the accompanying statements of operations.
At June 30, 1999, the Company had net operating loss carryforwards of
approximately $40,000 for income tax purposes. These carryforwards will be
available to offset future taxable income through the year 2019.
NOTE F - OTHER RELATED PARTY TRANSACTIONS
During the year ended June 30, 1999 and the period June 13, 1997 (date of
incorporation) to June 30, 1998, the Company's President and stockholder
provided various equipment, services and a portion of his home in Florida for
office space for no consideration. The value of this equipment and office
space, as well as the services rendered are considered to be insignificant and
as such no expense has been recorded in the accompanying statements of
operations.
During the year ended June 30, 1999 and the period June 13, 1997 (date of
incorporation) to June 30, 1998, the Company paid research and development
costs of approximately $28,000 and $11,000, to an individual that subsequent to
June 30, 1999 became an optionholder.
During the year ended June 30, 1999 and the period June 13, 1997 (date of
incorporation) to June 30, 1998, the Company's President and stockholder
advanced various funds to the Company. These advances, which were unsecured and
non-interest bearing, were converted to equity in July 1999.
During the year ended June 30, 1999, the Company earned $3,000 in consulting
revenues from an entity affiliated through common ownership.
F-9
<PAGE> 81
NOTE G - SUBSEQUENT EVENTS
Stock Option Plan
The Company has reserved 1,720,000 shares of its common stock for issuance
under certain stock option plans it anticipates adopting. In addition to the
options discussed at NOTE D, subsequent to June 30, 1999, the Company has
granted certain key employees and a consultant, five-year options to purchase
370,000 shares of its common stock for $0.25 per share. The Company will record
compensation expense for the difference between the exercise price of the
options and the estimated fair market value of the shares purchased as
determined by the Company's Board of Directors.
Acquisition of Assets
On July 30, 1999, the Company issued 2,166,700 shares of its common stock to
its President and majority stockholder as consideration for certain equipment,
software, customer contracts and related agreements, and the rights to pending
trademarks. The Company has recorded the value of these assets at such
stockholders' approximate historical cost basis.
Merger
On August 26, 1999, the Company merged with CathTech, which became the
surviving entity but retained the name of GoldenAccess.Com, Inc. Upon the
effective date of the merger, the issued and outstanding shares of the
surviving corporation were owned 87.5% by the then existing common stockholders
of the Company and 12.5% by the stockholders of CathTech. In connection with
this merger, the Company paid $90,000 to the public parent of CathTech.
Leases
On October 15, 1999, the Company entered into a lease agreement with an
affiliate for certain office space. The lease term, which commences on November
1, 1999 and terminates on February 14, 2001, requires monthly payments of
$5,488 plus applicable sales tax.
Proposed Registration of Common Stock
The Company plans to register 500,000 shares of its common stock. 129,300 of
these shares will be distributed, subsequent to the effective date of the
registration statement, to stockholders of the previous parent of CathTech as a
stock dividend. The remaining 370,700 shares will be registered for future sale
by the holders thereof. Accordingly, the Company will not receive any proceeds
from the offering.
===============================================================================
F-10
<PAGE> 82
LEFT BLANK FOR COLOR PAGE INSERTION
<PAGE> 83
NO DEALER, SALESPERSON OR ANY OTHER PERSON IS AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS PROSPECTUS
AND, IF GIVEN OR MADE, THE INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY US. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE
SECURITIES OFFERED BY THIS PROSPECTUS, OR AN OFFER TO SELL OR SOLICITATION OF
AN OFFER TO BUY ANY SECURITIES BY ANYONE IN ANY JURISDICTION IN WHICH THE OFFER
OR SOLICITATION IS NOT AUTHORIZED OR IS UNLAWFUL. THE DELIVERY OF THIS
PROSPECTUS SHALL NOT, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION PROVIDED IS CORRECT SUBSEQUENT TO THE DATE OF THE PROSPECTUS. THIS
PROSPECTUS MAY BE USED BY US OR BY ANY BROKER-DEALER WHO MAY PARTICIPATE IN
SALES OF THE SHARES.
UNTIL ________________, 2000 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS) ALL
BROKER-DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS
WITH RESPECT TO SALES EFFECTED BY THEM.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
GOLDENACCESS.COM, INC.
500,000 SHARES COMMON STOCK
(PAR VALUE $.001 PER SHARE)
SUMMARY .............................. 4
OUR COMPANY .......................... 5 [LOGO]GOLDEN ACCESS.COM
RISK FACTORS ......................... 7
DISTRIBUTION ......................... 24
PLAN AND RESULTS OF OPERATIONS ....... 25
YEAR 2000 READINESS DISCLOSURE ....... 27
CAPITALIZATION ....................... 28
BUSINESS ............................. 29
RECENT ASSETS ACQUISITION............. 43
SELLING SECURITYHOLDERS .............. 45
PRINCIPAL SHAREHOLDERS ............... 46
MANAGEMENT ........................... 47
DESCRIPTION OF SECURITIES ............ 55
SHARES ELIGIBLE FOR FUTURE SALE ...... 56
DIVIDEND POLICY ...................... 59 GOLDENACCESS.COM, INC.
STOCK TRANSFER AGENT ................. 59 6161 BLUE LAGOON DRIVE, SUITE 190
EXPERTS .............................. 59 MIAMI, FL. 33126
LEGAL MATTERS ........................ 59 305-264-2401
AVAILABLE INFORMATION ............... 59
INDEX TO FINANCIAL STATEMENTS ........ F1
</TABLE>
<PAGE> 84
PART II-INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF OFFICERS AND DIRECTORS
THE INFORMATION REQUIRED BY THIS ITEM IS INCORPORATED BY REFERENCE TO
"INDEMNIFICATION" IN THIS PROSPECTUS HEREIN.
Section 607.0850 of the Florida Business Corporation Act empowers a corporation
to indemnify its directors and officers and to purchase insurance with respect
to liability arising out of their capacity or status as directors and officers
provided that this provision shall not eliminate or limit the liability of a
director (1) for any breach of the director's duty to loyalty to the
corporation or its stockholders (2) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (3) arising
under Section 607.0850 of the Florida Business Corporation Act, or (4) for any
transaction from which the director derived an improper personal benefit.
The Florida Business Corporation Act provides further that the indemnification
permitted shall not be deemed exclusive of any other rights to which the
directors and officers may be entitled under the corporation's by-laws, any
agreement, vote of shareholders or otherwise.
At the time of this filing, we have not entered into individual indemnity
agreements with our officers and directors. However, this is anticipated and
its effect will be to require us to indemnify our officers and directors for
any claim arising against them in their official capacities if they acted in
good faith and in a manner that they reasonably believed to be in, or not
opposed to, the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe their conduct
was unlawful.
Indemnification for liabilities arising under the securities act of 1933, as
amended, may be permitted to our directors, officers, or persons under these
provisions, but we have been informed that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as
expressed in the Act and is unenforceable.
In the event that a claim for indemnification against such liabilities, other
than the payment by us of expenses incurred or paid by a director, officer or
controlling person in the successful defense of any action, suit or proceeding,
is asserted by any of our directors, officers or controlling persons in
connection with the securities being registered, we will, unless in the opinion
of our counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question of whether such
indemnification by us is against public policy as expressed in the Securities
Act of 1933, as amended, and we will be governed by the final adjudication of
such case.
II-1
<PAGE> 85
ITEM 25. OTHER EXPENSES OF ISSURANCE AND DISTRIBUTION
The following table sets forth the estimated expenses we will pay in connection
with the issuance and distribution of the securities being registered by this
registration statement.
<TABLE>
<S> <C>
SEC Registration Fee $1211.25
NASD Registration Fee $925.00
Printing Expenses, including stock certificates $11,200.00(1)
Accounting Fees and Expenses $10,400.00(1)
Legal Fees and Expenses $35,000.00
Blue Sky Fees and Expenses $7,300.00(1)
Miscellaneous $5,300.00(1)
Travel and Due Diligence Meeting Expenses $23,000.00(1)
Total Estimated Expenses $94,336.25(1)
- ----------------------------------------------------------------------------
</TABLE>
1. These expenses, except for the SEC and NASD fees, are estimated.
II-2
<PAGE> 86
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
(a) UNREGISTERED SECURITIES SOLD
The following table sets out, for all sales of our securities within the three
years last preceding this Registration statement without registration, under
the Securities Act of 1933, (1) the date, title and amount of securities sold
(2) names of underwriters, if any (3) the persons to whom the securities were
sold (4) the consideration paid for the securities, whether cash or non-cash
and 5) the exemption under the Securities Act of 1933 relief on:
<TABLE>
<CAPTION>
Name of Option Cardiac Control Other Purchasers By Stock
Purchaser Holders(1) Services, Inc. for Cash(2) Exchange Other Founders(3)
--------- ---------- --------------- ---------------- -------- -----------------
<S> <C> <C> <C> <C> <C>
Securities
Class of Stock Common Common Common Common Common
Dates Acquired 7/99-8/99 8/26/99 8/97 - 11/97 8/99
Amount 1,720,000 129,300 4,000 2,166,700 719,100
Consideration Founder Shares(5) $60,592 Founder Shares(4)
Exemption Section 4(2) Section 4(2) Section 4(2) Section 4(2) Section 4(2)
Claimed
</TABLE>
All investors had the opportunity to ask questions and receive answers from all
of our officers, directors and employees. In addition, they had access to
review all of our corporate records and material contracts and agreements.
1. Option holders consist of the following five individuals: Clifford Pierce,
(President, Chief Financial Officer and Chairman of the Board) 120,000 -
shares granted in July, 1999, however, these option shares may not be
exercised until 180 days subsequent to the effective date of our first
registration statement. The exercise price of the stock is twenty-five
cents per share. There are another 420,000 option shares, twenty percent
of which shares can not be exercised until one year after the effective
date of our first registration statement at an option price of twenty-five
cents per share. The remaining eighty percent of the shares may not be
exercised until two years after the effective date of our first
registration statement. Paul Callihoo (Executive Vice President of
International marketing and current Chief Operating Officer and director)
has been granted 150,000 of these options and Nigel Gray (Vice President
of Technical and Business Development and director) 50,000 options. There
are 220,000 remaining of these option shares designated for various key
and non-key employees who each earn less than one hundred thousand dollars
per annum. Southeastern Venture Corporation was granted 50,000 options at
twenty-five cents per share, in August, 1999, exercisable 90 days after
the effective date of this registration statement. There are 630,000
option shares remaining designated and reserved for the new Chief
Executive Officer, the new Chief Operating Officer and the new Chief
Financial Officer. Barry Potter was granted 500,000 option shares in July,
1999, at an exercise price of $5.00 per share, which may be exercised 90
days after the effective date of this registration statement.
2. Clifford Pierce, President.
3. This group consists of the following six individuals or entities, all of
whom received their shares as founders in August, 1999, as that term is
defined under section 230.405 of the General Rules and Regulations of the
Securities Act of 1933.: Dorf Financial - 143,000 shares in August, 1999,
purchased for par value; Alan Rabin - 1,000 shares in August, 1999,
purchased for par value; Barry Potter - 57,000 shares in August, 1999,
purchased for par value and 86,000 shares purchased for $0.25 per share;
The Tory Trust - 26,900 shares in August, 1999, purchased for par value;
Lindsey A. Gertner - 131,000 shares in August, 1999, purchased for $0.25
per share; Potter Financial Corporation - 143,000 shares in August, 1999,
purchased for $0.25 per share; Clifford Pierce - 2,166,700 shares in
August, 1999, exchanged for assets, as well as Cardiac Control Services,
Inc. on behalf of their shareholders as a group, prior to distribution of
the stock dividend..
4. Both Cardiac Control services, Inc. and the other five individual and/or
entity founders, described in footnote 3, obtained their shares as a
result of their contribution and efforts in forming CathTech, Inc. and the
subsequent merger with GoldenAccess.Com, Inc. in August, 1999.
5. CathTech, Inc. was incorporated under the laws of the State of Florida in
August, 1999, by Cardiac Control services, Inc. and the other five
individual and/or entity founders. They retained their shares in the
August, 1999, merger with GoldenAccess.Com, Inc., continuing their
"founder's" status, which can be characterized as a Section 4 (2)
exemption by an issuer not involving a public offering.
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II-3
<PAGE> 87
<TABLE>
<CAPTION>
EXHIBITS
INDEX TO EXHIBITS "TBPBA" = TO BE PROVIDED BY AMENDMENT
LIST OF EXHIBITS
----------------
<S> <C> <C>
1 Underwriting agreement Not Applicable
2 Plan of acquisition, reorganization, arrangement, liquidation Not Applicable
or succession
3.1 Articles of Incorporation of GAC.com Attached
3.1A Articles of Incorporation of Cath Tech Attached
3.2 By-laws GAC Attached
3.2A By-laws Cath Tech and Certification Attached
4 Instruments defining the rights of holders, including Attached
indentures (See 3.2) Common stock Specimen Certificate
4.1 Option Agreements Attached
5 Opinion re: legality Attached
6 No exhibit required Not Applicable
7 Opinion re: liquidation preference (See 3.2) Not Applicable
8 Opinion re: tax matters Not Applicable
9 Voting trust agreement Not Applicable
10 MATERIAL CONTRACTS
10.1 Form of IP Gateway Purchase Agreement Attached
10.2 Form of IP Gateway Commercial Service Agreement Attached
10.3 Lease for office in Argentina (Dated) Attached
10.3A Lease for office in Miami Attached
10.4 Discar Distribution Agreement Attached
10.5 Carrier Agreement with Easton Telecom (Frontier TBPBA
Communication) Pending
10.6 Carrier Agreement with International Telecom Communications Attached
10.7 Purchase Agreement and Bill of Sale Attached
10.8 CTI-PRO Distribution Agreement for Central and Eastern Europe Attached
</TABLE>
II-4
<PAGE> 88
<TABLE>
<S> <C> <C>
10.9 Partner Program Agreements with Cisco Attached
10.10 Partner Program with Dialogic Attached
10.11 Employment Agreement dated October 1, 1999 Attached
With Clifford Y. Pierce (President)
10.12 Employment Agreement dated October 1, 1999 Attached
With Paul Callihoo (Executive Vice-President)
10.13 Employment Agreement dated October 1, 1999 Attached
With Nigel Gray (Vice-President)
10.14 PL Data Teknik Distribution Agreement for Denmark (Pending) Attached
10.15 Integrated Communications Group Distribution Agreement Attached
for Hong Kong
10.16 Marketing Agreements TBPBA
11 Statement re: computation of per share earnings Not Applicable
12 No exhibit required Not Applicable
13 Annual or quarterly reports, Form 10-Q Not Applicable
14 Material Patents Not Applicable
15 Letter on unaudited interim financial information Not Applicable
(See page F-19)
16 Letter on change in certifying accountant Not Applicable
17 Letter on director resignation Not Applicable
18 Letter on change in accounting principles Not Applicable
19 Reports furnished to security holders Not Applicable
19.1 Letter to Shareholders dated TBPBA
20 Other documents or statements to security holders Not Applicable
20.1 State of Florida Merger Filings Attached
20.2 Plan and Articles of Merger Attached
21 Subsidiaries of the registrant Not Applicable
22 Published report regarding matters submitted to vote Not Applicable
23 Consent of experts and counsel Attached
23.1 Consent of counsel Attached
23.2 Consent of accountant Attached
24 Power of attorney Not Applicable
</TABLE>
II-5
<PAGE> 89
<TABLE>
<S> <C> <C>
25 Statement of eligibility of trustee Not Applicable
26 Invitations for competitive bids Not Applicable
27 Financial Data Schedule (See pages F1-F 10) Not Applicable
28 Information from reports furnished to state insurance Not Applicable
regulatory authorities
</TABLE>
II-6
<PAGE> 90
ITEM 28. UNDERTAKINGS
(a) RULE 415 OFFERING
The undersigned Registrant will:
(1) File, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to:
(a) Include any prospectus required by section 10(a)(3) of the
Securities Act;
(b) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in the
registration statement; any increase or decrease in volume of securities
offered, if the total dollar value of securities offered would not exceed that
which was registered, and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(c) Include any additional or changed material information on the plan
of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of the
Securities that remain unsold at the end of the offering.
(e) Request for acceleration of effective date.
SUBJECT TO THE TERMS AND CONDITIONS OF SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934, THE UNDERSIGNED REGISTRANT UNDERTAKES TO FILE WITH THE SECURITIES
AND EXCHANGE COMMISSION ANY SUPPLEMENTARY AND PERIODIC INFORMATION, DOCUMENTS,
AND REPORTS AS MAY BE PRESCRIBED BY ANY RULE OR REGULATION OF THE COMMISSION
HERETOFORE OR HEREAFTER DULY ADOPTED UNDER THE AUTHORITY CONFERRED TO THAT
SECTION.
Indemnification for liabilities arising under the Securities Act of 1933 (the
"Act") may be permitted to our directors, officers and controlling persons
pursuant to these provisions, or otherwise, but we have 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 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 any of our directors, officers or
controlling persons in connection with the Securities being registered, we
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 us is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
II-7
<PAGE> 91
SIGNATURES
IN ACCORDANCE WITH THE REQUIREMENTS OF THE SECURITIES ACT OF 1933,
THIS 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 OUR BEHALF BY THE UNDERSIGNED, IN THE
CITY OF MIAMI, STATE OF FLORIDA, ON JANUARY 7, 2000.
(REGISTRANT) GOLDENACCESS.COM, INC.
BY: /SS/
---------------------------------------------
CLIFFORD Y. PIERCE, PRESIDENT, CFO, AND
CHAIRMAN OF THE BOARD OF DIRECTORS
IN ACCORDANCE WITH THE SECURITIES ACT OF 1933 THIS REGISTRATION WAS SIGNED BY
THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
(SIGNATURE) /SS/ (DATE) JANUARY 7, 2000
----------------------------------- ---------------
NIGEL GRAY
VICE PRESIDENT, DIRECTOR
(SIGNATURE) /SS/ (DATE) JANUARY 7, 2000
----------------------------------- ---------------
PAUL CALLIHOO
EXECUTIVE VICE PRESIDENT,
DIRECTOR
(SIGNATURE) /SS/ (DATE) JANUARY 7, 2000
----------------------------------- ---------------
DAVID W. HEATH
DIRECTOR
(SIGNATURE) /SS/ (DATE) JANUARY 7, 2000
----------------------------------- ---------------
SEYMOUR KANTOR
DIRECTOR
WHO MUST SIGN: THE SMALL BUSINESS ISSUER, ITS PRINCIPAL EXECUTIVE OFFICER OR
OFFICERS, ITS PRINCIPAL FINANCIAL OFFICER, ITS CONTROLLER OR PRINCIPAL
ACCOUNTING OFFICER AND AT LEAST THE MAJORITY OF DIRECTORS OR PERSONS PERFORMING
SIMILAR FUNCTIONS.
II-8
<PAGE> 92
<TABLE>
<CAPTION>
EXHIBITS
INDEX TO EXHIBITS "TBPBA" = TO BE PROVIDED BY AMENDMENT
LIST OF EXHIBITS
----------------
<S> <C> <C>
1 Underwriting agreement Not Applicable
2 Plan of acquisition, reorganization, arrangement, Not Applicable
liquidation or succession
3.1 Articles of Incorporation of GAC.com Attached
3.1A Articles of Incorporation of Cath Tech Attached
3.2 By-laws GAC Attached
3.2A By-laws Cath Tech and Certification Attached
4 Instruments defining the rights of holders, including Attached
indentures (See 3.2) Common stock Specimen Certificate
4.1 Option Agreements Attached
5 Opinion re: legality Attached
6 No exhibit required Not Applicable
7 Opinion re: liquidation preference (See 3.2) Not Applicable
8 Opinion re: tax matters Not Applicable
9 Voting trust agreement Not Applicable
10 MATERIAL CONTRACTS
10.1 Form of IP Gateway Purchase Agreement Attached
10.2 Form of IP Gateway Commercial Service Agreement Attached
10.3 Lease for office in Argentina (Dated) Attached
10.3A Lease for office in Miami Attached
10.4 Discar Distribution Agreement Attached
10.5 Carrier Agreement with Easton Telecom (Frontier TBPBA
Communication) (Pending)
10.6 Carrier Agreement with International Telecom Communications Attached
10.7 Purchase Agreement and Bill of Sale Attached
10.8 CTI-PRO Distribution Agreement for Central and Eastern Europe Attached
10.9 Partner Program Agreements with Cisco Attached
</TABLE>
<PAGE> 93
<TABLE>
<S> <C> <C>
10.10 Partner Program with Dialogic Attached
10.11 Employment Agreement dated October 1, 1999 Attached
With Clifford Y. Pierce (President)
10.12 Employment Agreement dated October 1, 1999 Attached
With Paul Callihoo (Executive Vice-President )
10.13 Employment Agreement dated October 1, 1999 Attached
With Nigel Gray (Vice-President )
10.14 PL Data Teknik Distribution Agreement for Denmark (Pending) Attached
10.15 Integrated Communications Group Distribution Agreement Attached
for Hong Kong
10.16 Marketing Agreements TBPBA
11 Statement re: computation of per share earnings Not Applicable
12 No exhibit required Not Applicable
13 Annual or quarterly reports, Form 10-Q Not Applicable
14 Material Patents Not Applicable
15 Letter on unaudited interim financial information Not Applicable
(See page F-19)
16 Letter on change in certifying accountant Not Applicable
17 Letter on director resignation Not Applicable
18 Letter on change in accounting principles Not Applicable
19 Reports furnished to security holders Not Applicable
19.1 Letter to Shareholders (dated) TBPBA
20 Other documents or statements to security holders Not Applicable
20.1 State of Florida Merger Filings Attached
20.2 Plan and Articles of Merger Attached
21 Subsidiaries of the registrant Not Applicable
22 Published report regarding matters submitted to vote Not Applicable
23 Consent of experts and counsel Attached
23.1 Consent of counsel Attached
23.2 Consent of accountant Attached
24 Power of attorney Not Applicable
25 Statement of eligibility of trustee Not Applicable
</TABLE>
<PAGE> 94
<TABLE>
<S> <C> <C>
26 Invitations for competitive bids Not Applicable
27 Financial Data Schedule (See pages F1-F-10) Not Applicable
28 Information from reports furnished to state insurance Not Applicable
regulatory authorities
</TABLE>
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