U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-SB/A-1
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of the Securities Exchange Act of 1934
NOSTRAD TELECOMMUNICATIONS, INC.
(Name of Small Business Issuer in its Charter)
Nevada 88-0306460
(State of Incorporation) (IRS Employee Identification No.)
Suite 2482, 650 West Georgia Street
Vancouver, British Columbia Canada V6B 4N8
(Address of Principal executive Offices)
(604) 893-8778
(Issuer's Telephone Number:)
Common Stock, $.001 par value per share
(Securities to be Registered Under Section 12(g) of the Act)
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TABLE OF CONTENTS
PART I
Page
Item 1. Description of Business 3
Item 2. Management's Discussion and Analysis or Plan of Operation 30
Item 3. Description of Property 34
Item 4. Security Ownership of Certain Beneficial Owners and Management 36
Item 5. Directors, Executive Officers, Promoters and Control Persons 38
Item 6. Executive Compensation 43
Item 7. Certain Relationships and Related Transactions 44
Item 8. Description of Securities 44
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity
and Related Shareholder Matters 44
Item 2. Legal Proceedings 45
Item 3. Changes and Disagreements with Accountants
Item 9. Market for Common Equity and Related Shareholder Matters 45
Item 4. Recent Sales of Unregistered Securities 45
Item 5. Indemnification of Directors and Officers 45
PART F/S
Financial Statements 47
PART III
Items 1 and 2 Index to and Description of Exhibits 66
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GLOSSARY
As used in this registration statement, the following terms and abbreviations
have the meanings set forth below.
"Addressable" means the ability to signal from the headend or job site in such a
way that only the desired subscribers' receiving equipment are affected. It is
possible to send a signal to a subscriber and effect changes in the subscriber's
level of service.
"Amplifier" means a device used to increase the operating level of an input
signal. It is used in a cable system's distribution plant to compensate for the
effects of line loss caused by coaxial cable and passive devices.
"Beam benders" means low power signal repeaters that retransmit to an otherwise
shaded signal over a limited distance.
"CATV" means a broadband communications system capable of delivering multiple
channels of entertainment programming and non-entertainment information from a
set of centralized antennas, generally by coaxial cable, to a community. Many
cable television designs integrate microwave and satellite links into their
overall design and some now includes optical fibre as well. Commonly called
"Cable Television System".
"Converter" means a device for changing the frequency of a television signal. A
cable headend converter changes signals from frequencies at which they are
broadcast to clear channels that are available on the cable distribution system.
A set-top converter is added in front of a subscriber's television receiver to
change the frequency of the midband, superband, or hyperband signals to a
suitable channel or channels (typically a low VHF channel) which the television
receiver is able to tune into.
"Downlinking" means receiving signals via a Satellite dish refer to Uplinking
"DTH" or "Direct to Home Pay-Television Service" means a satellite service of
one or more entertainment or information program channels that can be received
directly using an antenna on the subscribers' premises
"Exchange Act" means the United States Securities Act of 1934 as amended.
"GHz" refers to a unit of measurement known as a Gigahertz, or one billion
cycles per second.
"FCC" means the United States Federal Communications Commission.
"Home Passed" or "Pass By" refers to the ability of a household to have line of
site with transmitter in order to receive a wireless signal. In the case of hard
wire cable, a home that the cable actually passes.
"Headend" refers to the control center of a CATV system where incoming signals
are amplified, converted, processed, and combined into a common cable, along
with any origination cable-casting for transmission to subscribers. System
usually includes antennas, preamplifiers, frequency converters, demodulators,
modulators, processors, and other related equipment.
"ISP" means internet service provider
"MHz" refers to a unit of measurement known as a Megahertz, one million cycles
per second.
"MDS" or "Multipoint Distribution System" refers to an omni-directional common
carrier microwave radio service authorized to transmit television signals and
other communications. MDS operates in the 2150 - 2162 MHz frequency range, with
an effective radius of 30 km.
"MMDS" or "Multichannel Multipoint Distribution System" refers to a collection
of various MDS services and
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instructional television fixed service on the directional microwave radio
authorization combined to provide up to 66 channels of entertainment, education,
and information.
"MDU" refers to multiple dwelling units such as apartments, hotels, and
commercial building.
"OTCBB" means the NASD over the counter electronic bulletin board.
"PPV" or "Pay-Per-View," refers to usage-based fee structure used sometimes in
CATV programming in which the user is charged a price for individual programs
requested.
"RO" means the ability to receive only of data, video, or voice via satellite.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the United States Securities Act of 1933, as amended.
"SMATV" refer to a multi-channel cable network service offered to private
landowner of and MDU.
"Subscription Television" means a system of distributing programs for premium
television programming, either over the air or by cable, for which the
subscriber pays a fee. The signals for such programming may be scrambled to keep
non-subscribers from receiving service. A decoder or descrambler might be used
to allow the paying subscribers to receive the pay television programming.
Synonymous with "premium television".
"UHF" or "Ultra High Frequency," refers to corresponding electromagnetic signals
ranging from 300 - 800 MHz; e.g. channels 14 - 69 on the television dial.
"Uplinking" refers to the beaming of signals from a terrestrial broadcast center
to a stationary Satellite.
"VSAT" or "Very Small Aperture Terminals" refer to small, software-driven earth
stations (typically 0.9-1.8 meters, which equates to 3-6 feet) used for the
reliable transmission of data, video, or voice via satellite.
"WCAI" or "WAC" refers to the Wireless Communications Association International
an organization which represents the broadband wireless industry worldwide. The
WCAI's mission is to advance the interests of the wireless systems that provide
video, voice and data services on a subscription basis through land-based towers
to fixed reception/transmit devices. Membership is comprised of fixed wireless
system operators worldwide, as well as: equipment and service suppliers; video,
software and other content providers; financial institutions; and engineers,
attorneys and other consultants.
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Item 1. Description of Business
A. The Company
1. Corporate Information
Nostrad Telecommunications, Inc. ("the Company" or "NTC") is a corporation
organized under the laws of the State of Nevada on September 24, 1993, as Cave
Productions, Inc. The Company changed its corporate name to Nostrad
Telecommunications, Inc. effective as of October 8th, 1997, in anticipation of
its acquisition of Nostrad Media Pte. Ltd. a Singapore company ("Nostrad Media")
and Omni Vision Africa Ltd., a British Virgin Island company ("Omni Vision").
Please refer to "Item 1. Description of Business - The Company - Corporate
History."
Although not required to do so, the Company has voluntarily filed this
registration statement because (1) it believes that it can more readily
accomplish its business and financing objectives if it were a reporting issuer
under the Exchange Act and (2) it wants to satisfy current conditions for
quotation of its common stock on the OTCBB.
The Company maintains its corporate offices at Suite 2482, 650 West Georgia
Street, Vancouver, British Columbia V6B 4N8. Its telephone number is (604)
893-8778 and, its facsimile number is (604) 893-8768. The Company moved its head
office from Las Vegas, Nevada in September of 1997, following the acquisition of
Nostrad Media and Omni Vision.
The Company maintains offices as follows: Vancouver, Canada, Singapore,
Ulaanbaatar, Mongolia, Kampala, Uganda, and Rabat, Morocco. Please refer to
"Item 3. Description of Property."
2. Corporate Structure
The following chart sets out the Company's corporate structure and
ownership interest in its various subsidiaries:
--------------------------------
Nostrand Telecommunciations Inc.
--------------------------------
- ---------------------------------------------------- ------------------------
OmniVision Africa Ltd. Nostrad Media Pte. Ltd.
100% 100%
- ---------------------------------------------------- ------------------------
- ---------- ---------- ---------- ---------- -------------
OmniVision OmniVision OmniVision OmniVision Mongolia
Uganda Tanzania Ghana Maroc Home Division
100% 80% 80% 65% 80%
- ---------- ---------- ---------- ---------- -------------
3. Corporate History
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The Company was organized for the purpose of creating a vehicle to locate
and acquire an operating business entity which management believed would be a
suitable and viable acquisition candidate. The Company had limited operating
activities from inception to September 30, 1997 when it effected the
Acquisition.
By Agreement dated February 25, 1998 with Nostrad Telecommunications Pte.
Ltd.. a privately held Singapore company ("Nostrad Singapore"), the Company
agreed to purchase (the "Acquisition") from Nostrad Singapore all of the issued
and outstanding capital stock of each of Nostrad Media and OmniVision in
exchange for 3,700,000 shares of the Company's common stock (on a post split
basis) and a $300,000 promissory note.
In furtherance of the Acquisition, a restructuring (the "Restructuring")
consisting of the following was effected:
1. Name Change. The name of Cave Productions was changed to Nostrad
Telecommunications, Inc.
2. Stock Split. On September 29, 1997 the then Board of Directors of the
Company approved a 5,000 for 1 stock split, which stock split was effective upon
filing on September 30, 1997 of a certificate of amendment to the Company's
certificate of incorporation.
The effect of the Stock Split was to increase the number of shares of the
Company's common stock $.001 par value per share, issued and outstanding from
600 to 3,000,000. The number of shareholders remained constant at eleven; being
the same eleven persons (the "Selling Shareholders") who acquired the 600 shares
on March 1, 1994. The Company believes that only one of the Selling Shareholders
was an affiliate of the Company at the time of the Acquisition.
3. Private Transactions. As an adjunct to and in order to facilitate the
Acquisition, the Selling Shareholders sold and transferred (the "Private
Transaction") to certain unaffiliated persons 2,840,000 shares of common stock
representing approximately 94.6% of the then issued and outstanding shares of
the Company's common stock.
As at January 31, the Company had 11,100,000 shares issued and outstanding.
B. The Business of the Company
The acquisition was treated as a "reverse take over" for accounting
purposes. Accordingly, the historical business description and financial
information presented is that of Nostrad Singapore.
The Company is, and for the past 3 years has been, focused on developing,
acquiring and managing media and telecommunication operations in emerging
markets of Asia, Africa and at a later stage, Latin America. To date, the
Company has obtained Subscription Television licenses in Morocco, Uganda, and
Tanzania, as well as an ISP licences in Morocco. The DTH services in Morocco
have been implemented with a launch of Showtime (a subsidiary of Viacom, Inc.)
programming in June 1999.
In order to implement its business, in each country in which the Company
operates, the Company requires various operating permits, licenses, and
allocation of specific frequency and channels by the appropriate government
Ministry in each county. The Company's current operations include:
A. Morocco Operations. Omni Vision Maroc, a 65% owned subsidiary, is licensed
to distribute Satellite DTH Subscription TV programming. The subsidiary has
entered into an agreement with Showtime, to distribute Showtime's DTH
programming package throughout Morocco.
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B. Tanzania MMDS Pay TV Operations. Omni Vision Tanzania, an 80% owned
subsidiary holds exclusive frequencies and licenses to operate a
seven-channel MMDS Subscription TV system in Tanzania. The Company has
applied for additional 8 channels in order to provide up to 15 channels of
subscription television service as well as wireless internet services.
C. Uganda MMDS Pay TV Operations. Omni Vision Uganda, an 100% owned subsidiary
holds exclusive frequencies and licenses to operate a 21-channel MMDS
system in Uganda.
D. Uganda Paging Operations. Omni Vision Uganda also holds licenses to operate
5 paging channels. The system is currently being implemented and is
expected to become operational by June/July of the year 2000.
E. Mongolia Paging Operations. Mongolia Omni Vision, an 80% owned subsidiary
holds licenses to operate 5 paging channels. The system currently has 2
channels in operation capable of providing service to 4,000 subscribers,
the system currently has 125 subscribers.
F. Mongolia MMDS Pay TV Operations. Mongolia Omni Vision also holds exclusive
frequencies and licenses to operate a 29-channel MMDS system, at this time
the Company has put this project on indefinite hold.
Overview
Television provides an important window to the world of entertainment,
knowledge and information while telecommunications is a gateway for human
interaction. The need and demand for these services are well documented. The
Company intends to provide these services to its chosen markets in emerging
economies, where market potential is significant and initial competition from
larger international corporations is limited or even non-existent,
For its Pay TV operations, the Company has chosen to deploy wireless MMDS
technology as it is proven in over 60 countries worldwide as currently the most
cost effective signal delivery solution that allows low-cost entry and quick
service roll-out. It enables the Company to provide appealing and
price-competitive programming to its subscribers in the targeted markets. The
targeted countries were selected based on the Company's view of their respective
market potential, relative political stability and governmental commitment to
economic reforms and development. Based on the licenses in hand, the
demographics, and high population densities, The Company's Pay-TV Networks, when
completed, will pass by over 5.4 million households subject to the necessary
receiver equipment being installed and the households subscribing for the Pay-TV
service.
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In the paging business, the Company, guided by its corporate philosophy of
providing appealing and cost competitive solutions to its customers, is
implementing alphanumeric and voice paging services in the two countries that it
has paging licenses. Alphanumeric and voice paging were selected as the
appropriate solutions for these emerging markets because access to public
telephones, and telephones in general, is rather limited.
Overall, the media and telecommunications markets in the targeted countries
are relatively undeveloped and with limited competition, thus, offering the
opportunities of smaller scale starts and rapid market growth as their economics
develop. With the current developments in the applied technologies, the Company
envisages and believes that it will be able to expand into multimedia services
through the integration of other convergent technologies in the future.
The Company has assembled a management and technical team with over 150
years of cumulative experience in implementation, management and operation of
cable TV, hardwire and wireless telecommunication systems in developed and
developing countries. The team will focus on building NTC's subscriber base,
with the goal of generating positive cash flows at low subscriber levels and
endeavor to retain customers through quality on-going services and marketing
programs.
Over the longer term, the Company expects to expand through internal
growth, acquisitions and joint ventures. Its also intends to enhance growth
through strategic alliances with international players, telecommunications
companies, should the opportunities arise, with the view of maximizing the
intrinsic value of the business and operations, and thus maximizing the
long-term value for its shareholders. The Company has already formed
associations with GlobeComm Systems and NetSat Express to develop VSAT Networks,
and to provide technical and system integration services to OmniVision Maroc.
(refer to page 15.)
Industry and Competitive Environment
Wireless system technology provides a very low cost and competitive medium
for the transmission of entertainment and information services to customers in
single family homes, multiple dwelling unit properties and commercial
properties. A city-wide wireless system can be quickly implemented in a
relatively short period of time (in less than 7 months, as compared to
conventional cable which may take as long as 3 to 4 years), with substantially
lower initial capital investments. The system can also be maintained at a
fraction of the cost of a conventional cable TV system.
Unlike conventional cable systems, wireless systems do not require
extensive coaxial cable networks, amplifiers and related equipment to meet low
and fairly dispersed initial demand. As a result, capital costs and plant
related operating costs are substantially lower. Hence, the Company anticipates
that it will be able to maintain cost and pricing advantages over conventional
hard wire cable and satellite delivery such as DBS (Direct Broadcast Satellite)
or DBH technology in the subscription television industry.
The Company will focus on developing wireless cable and telecommunications
systems in emerging markets where the terrain, frequency availability and other
conditions are conducive to the economical transmission of wireless signals. The
Company will target value-conscious consumers in both cabled and non-cabled
areas with its basic and premium programming. The Company will differentiate
itself by using its lower cost structure to offer customers competitive prices
for superior programming with an emphasis on
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customer service.
Technology
Wireless cable systems, otherwise known as Multichannel Multipoint
Distribution Systems or MMDS, are the latest in subscription pay TV technology.
MMDS can be set-up and implemented at a fraction of the time and cost required
by conventional cable operators, and other related technologies. The commercial
wireless cable industry began in the United States as a single channel
Multipoint Distribution Service MDS in September 1973. As a single channel
service offering Home Box Office ("HBO") and other movie services, MDS grew to
more than 500,000 subscribers in the early 1980s. But the business soon
collapsed before the onslaught of cable and home video. The FCC tried to revive
the medium in 1983, allocating eight channels to MMDS, and perhaps more
importantly, it permitted wireless operators to lease the twenty Instructional
Televisions Fixed Service channels previously restricted for educational use
only. However, regulatory delays and lack of capital continued to bog down the
business. Wireless cable received a boost from the United States 1992 Cable Act,
which guaranteed cable competitors access to cable programming on reasonable
terms.
The MMDS technology to be employed by the Company has very similar
technical characteristics to that used in the United States and Canada and has
been widely proven. The spectrum of frequencies used, (2.5 to 2.9 Hz), the
bandwidth per channel, (6 MHz), and other technical characteristics are
virtually the same. Although MMDS requires direct line-of-sight reception and
may be subject to interference by weather and topography, signal quality is high
and much less subject to the outages and degradation often experienced by CATV
coaxial cable systems.
MMDS operates from a central re-transmission facility known as the
"head-end," consisting of satellite reception equipment and other equipment
necessary to receive or produce the desired programming. The programming is then
transmitted by microwave transmitters from an antenna located on a tower to
provide a wide coverage area up to distances of 30 Kms. At the subscriber's
location, a small antenna typically located on the rooftop, receives the
microwave signals and converts them to frequencies that can be carried via
conventional in-home coaxial cable to a descrambling converter located on top of
the subscriber's television set.
Market Segmentation and Competing Pay-TV Delivery Technologies
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Other than the MMDS technology chosen by the Company as its delivery
platform, television signals are replayed by various competing services and
technologies. Details on these and comparisons with MMDS are described in more
detail below and in "Part I - Description of Business - Areas of Operation."
Cable
In the U.S., cable competes effectively with wireless only because of
amortized sunk costs in the cabling infrastructure which was built out over the
last 30-40 years, before the advent of wireless technologies. In addition, the
available MMDS frequencies in North America are limited, hence restricting the
number of channels that can be offered through this platform.
However, capital investment for MMDS is a fraction of conventional cable
television investment. Cable television investment is approximately $25,000 per
mile, as opposed to a total $500,000 for a wireless transmission facility. MMDS
can also serve market areas where it will not be economically viable for cable
operators due to low housing density (cost per subscriber's ratio). Hence, in
markets with little or no cable infrastructure, MMDS will be much more cost
efficient to implement.
The major issue impending explosive development of wireless cable in
developed countries, such as those in North America and Europe, have not been
construction costs, but burdensome frequency licensing procedures and the
problems in obtaining access to the most desirable cable network areas.
Television Receive Only ("TVRO")
TVRO's are used by customers for direct reception of video programming from
various satellites (C-Band), and are generally used to receive free-to-air
programming. They are generally used in markets where subscribers do not have
access to cable or MMDS services. A conventional TVRO system can cost each
subscriber between $1,000 and $3,000 (for the installation and purchase of a
full-size satellite dish), depending on the features of the system, plus a
monthly fee for access to specific programming that are encoded. There is also a
need to re-position the receiver dish to several different satellites for
different programming. However, this positioning can be done via motorized
controls but would entail a higher equipment cost.
Satellite Master Antenna Television ("SMATV")
SMATV is a multi-channel cable network system service offered to private
landowners of multiple dwelling units. SMATV uses satellite receivers to receive
and compile programming and distributes the multi-channel programming to the
subscribers in multiple dwelling units and large buildings. SMATV is, however,
restricted mainly to free-to-air satellite programs as royalty fees for the
encrypted programming can be very expensive - no economies of scale.
Direct to Home
DTH companies transmit high-powered signals from a satellite directly to a
small dish (about 60-90 cm in diamerter) located at subscribers' homes. DTH is
capable of delivering over 500 channels of digital programming. Currently,
receiving equipment plus installation fees can cost each subscriber between $700
and $1,500, however the price of this $1,500 equipment is being reduced and it
is expected that the price deferential between MMDS and DTH will at some point
disappear. Each additional independent outlet requires a separate decoder device
at an additional cost to the subscriber. MMDS enjoys certain advantages over
DTH, specifically DTH's:
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* cost for constructing and launching satellites
* receiving equipment is costly for subscriber
* limitation on local programming programming (due to the high cost of
uplinking and re-broadcasting, it is not generally economically feasible to
include the local channels of several countries within the satellite
footprints) due to the small number of DTH subscribers in each country at
this time.
In the Company's target market areas, specifically in Morocco, Tanzania and
Uganda, it is not feasible to have local uplinking of DTH operations for at
least the medium term. The high costs of implementation are much too
prohibitive. In the meantime, foreign DTH operators, although high priced, do
present a source of competition, as a DTH operator can provide service to urban
and rural communities, since their broadcast footprint covers the whole country.
Additionally DTH providers are in some of the Company's target
marketssubsidizing the cost of the equipment and installation this may have an
impact on the cost differential that MMDS has over DTH at this time.
Telephone Companies - Video on Demand
Recently telephone companies in developed countries have been implementing
ADSL technology capable of providing audio/video services over telephone lines.
Such services are at present very costly to implement and restricted to offering
video-on-demand and high speed Internet service. It is as yet uncertain as to
whether the technology may be able to support multi-channel programming. The
Company believes that MMDS will continue to maintain a cost advantage over such
video services for a significant period.
* The cable industry has developed a service that enable customers to order
and pay for individually selected programs - Pay-Per-View. PPV has been
especially successful for specialty events carried on a pay-per-event
basis, such as sports events. PPV requires subscribers to have addressable
converters, as employed by the Company, which allow the Company to control
what subscribers watch without having to visit the subscribers' residences.
The Company believes that PPV has the potential for becoming popular as
additional exclusive events become available for distribution.
* Digital compression, currently being developed by several equipment
manufacturers, will allow several programs to be carried on one bandwidth,
as opposed to current technology that allows only one program per
bandwidth. Estimates of compression ratios are between 4:1 and 10:1 (about
150 to 300 channels). Digital technology will also enable MMDS to transmit
high definition television signals. NTC believes that any compression
technology that becomes commercially available will be beneficial to MMDS
operators and will help to greatly expand the channel capacity available
for programming.
* Currently, franchise cable operators are rebuilding their infrastructures
with fibre optic networks in order to provide their customers with greater
numbers of programming channels and services. In the past, franchise cable
systems have been limited to the number of programming channels offered to
customers by their current analogue transmission and coaxial cable
technologies.
* In addition, wireless technology can now offer broadband interactive
services - namely "fibre optics in the sky".
Other Wireless Competitors
In its target markets the Company can expect other MMDS wireless operators
to provide limited competition. This is mainly due to the limited bandwidth
(channel capacity) allocated in the target
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markets by the government authorities in the MMDS band. Over the longer term,
the Company anticipates the market for subscription TV will be large enough to
support the emergence of competitors, as the market develops within its region
of operation. The Company also expect that in the long run, consolidation is
bound to occur. Increased volume leads to decreased fixed unit and marginal
costs and only competitive companies will reach economies of scale for a given
market niche. Those firms that fail to achieve minimum economies of scale will
face an increasingly competitive environment and an inferior cost structure.
In Africa, the main competitor for the Company is MultiChoice, which
broadcasts terrestrially in the UHF frequency spectrum and via DTH, for the
premium direct-to-home market. While Multichoice focuses on such premium DTH
delivery, the Company will focus on terrestrial wireless broadcast, with direct
capital investments into its countries of operations. The Company will add value
to the local economies via local employment and subcontracting. MultiChoices'
DTH infrastructure and signals originate in South Africa and moreover,
subscribers in other African countries must eventually pay them there, thus
representing a source of foreign exchange drain. In the longer term, localized
Pay TV industries are more likely to be favored over imports by the governments
of our countries of operations. Please refer to "Part I - Item 1. Description of
Business - Areas of Operations" for a discussion of the competitive environment
and pricing comparisons in each of the Countries in which the Company operates.
C. Areas of Operation
* The Company has compiled, as to each country in which it operates, information
set forth under the caption "Vital Statistics" as well as the Captions
"Mongolia," "Morroco," "Uganda," and "Tanzania," from generally available public
information as at January 2000, published by sources which the Company believes
to be generally reliable.
Mongolia
Mongolia Homevision HH ("HomeVision") is currently holding the following
documents:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Date Title of License or Certificate Notes Duration
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mar 28, 1997 Mongolian State Registration Certificate
#21/475
- -----------------------------------------------------------------------------------------------------------------------------
May 17, 1996 License to Employ Radio Frequency 2.3 - 2.99 Ghz May 17, 1996 - May 17, 2006
24 Ghz - 29.9 Ghz Refer to Risk Factor 14
- -----------------------------------------------------------------------------------------------------------------------------
Feb 20, 1997 Foreign Investment Chief Order for Mongolia/Singapore No Specific Duration
Mongolia HomeVision HH Joint Venture Refer to Risk Factor 14
- -----------------------------------------------------------------------------------------------------------------------------
Nov 7, 1996 Permission to use channels to braodcast No Specific Duration
television in Ulaanbaatar Refer to Risk Factor 14
- -----------------------------------------------------------------------------------------------------------------------------
Jan 28, 1997 Special License #14 (#800) for provision No Specific Duration
of Paging Service, Ulaanbaatar, Darkan, Refer to Risk Factor 14
Erdenet
- -----------------------------------------------------------------------------------------------------------------------------
May 16, 1996 Certificate of Enterprise with Foreign May 16, 1996 - May 30, 2006
#800 Refer to Risk Factor 14
- -----------------------------------------------------------------------------------------------------------------------------
May 17, 1996 Communication Service License Certificate May 17, 1996 - May 17, 2006
#800 #32 Refer to Risk Factor 14
- -----------------------------------------------------------------------------------------------------------------------------
Aug 26, 1996 Mongolia State Radio, TV & Communications No Specific Duration
Dept. Operating License #01/016 Certificate Refer to Risk Factor 14
#800/#32
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Jan 22, 1997 Special License #06 TV Channel 33 No Specific Duration
MMDS 2484-2700 Refer to Risk Factor 14
- -----------------------------------------------------------------------------------------------------------------------------
Jan 22, 1997 Special License # 01 Frequency 163.1, No Specific Duration
155.3, 146.3 Mhz Refer to Risk Factor 14
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Nostrad Media, through its subsidiary, HomeVision obtained a license in Mongolia
to establish wireless broadcast pay-television (license granted in June 1996,
frequencies of 2.3-2.99 GHz). HomeVision's signals will pass 120,000+ TV
households and penetration rates of over 20% are projected over a 5-year period.
In line with HomeVision's plan to include telecommunications services in its
offerings, government approval for paging operations, including national
alphanumeric and voice paging, was obtained (frequencies 163.1, 146.300,
147.300, 155.300, and 156.300 MHz) in late 1996. The Company is operating voice,
numeric and alphanumeric paging (under the brand name of "NOSTRAD Paging") in
Ulaanbaatar. Subscription rates start at US5.00 for numeric, US10.00 for
alphanumeric and US15.00 for voice paging services, equipment costs range from
US$30.00-US250.00.
HomeVision has obtained a long-term lease on a 3-storey broadcasting center,
including the use of the existing transmission tower, from the Mongolian Radio
and TV Company.
- ----------
The center houses a production studio, satellite signal receiving and
re-transmission headend, and corporate administration and currently is the
operations and transmission center for the paging network.
HomeVision currently employs over 10 personnel for the paging operations.
Competition
There are four cable companies operating in Ulaanbaatar, of which, two are very
small start-ups. Their program offering consists of only free-to-air satellite
programming and does not include any of the encrypted programming, such as HBO,
Cinemax, Star Movies and ESPN, with the exception of Discovery. In addition,
they compile their own movie channel, consisting of pirated movies. Mongolia is
a recent signatory to the Berne Convention and the Mongolian authorities have
begun to take action against blatant copyright violations. The current
subscription rates for such free-to-air programming range from US$2-3/month.
Location, Demographics
Mongolia is completely landlocked between two large neighbors, Russia and China.
It is a vast country nearly three times the size of France and yet with a
population of only 2.4 million people. 85% of the people are Mongol, 7% Turkic,
(Mainly Kazakh), and 4.6% Tungsic. Four million Mongols live outside Mongolia.
The special feature of the Mongolian democratic evolution since 1990 is its very
peaceful and consensual nature. The democratic reforms have radically changed
the social structure, the state
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ideology, and the mentality of the ordinary citizen, and these changes have
taken place in a comparatively calm and stable manner. With the collapse of the
Soviet Union, the substantial aid, which Mongolia enjoyed, was abruptly cut off
in 1989/90. With the need for economic reform, the government raised prices of
commodities, coal, and electricity. Inflation rose dramatically. Expansionary
monetary policies continued throughout 1992/93 such that inflation rose to 146%
and peaked at 330% in 1993 before inflationary pressures eased. Inflation in
1995 was 66% falling to 53% in 1996 and the government goal for 1997 is 35%.
With the very positive indicators of the past few years and the steady
improvement in the standard of living for Mongolian households, the opportunity
to develop high quality subscription television system in Ulaanbaatar is
significant. The low level vegetation, the relatively flat composition of the
city, and the absence of severe high-rise and other man-made obstruction
problems supports the evaluation that a Multichannel Multipoint Television
Distribution System, will provide very effective and economic coverage, likely
supporting direct reception by about 85 percent or more of the apartment blocks
and individual reception locations in the target service area.
Since 1992, the Mongolian leaders have been gradually making the transition from
Soviet-style central planning to a market economy through privatization and
price reform and have been soliciting support from international financial
agencies and foreign investors.
In 1994, the economy showed signs of recovery with the slowdown of decline of
major economic indicators and GDP growth of 2.1%. In 1995 the GDP growth was
almost 6% and in 1996 was approaching 5%. Good progress has been made in setting
up market oriented institutions and in creating a legal and regulatory framework
for investment. The Foreign Investment Law protects foreign investors from
expropriation and offers substantial concessions.
Ulaanbaatar, the capital city, is in the central part of Mongolia on the river
Tuul. The population of the city is over 640,000 constituting 25% of Mongolia's
population. It is the largest industrial center and produces most of the total
industrial output. The building industry is active in speculative private
housing, and private offices and hotels are under construction, strengthening
the role of Ulaanbaatar as the country's prime focus for financial and other
services.
Although household income is low, the cost of housing is extremely low such that
the cost of food and similar household essentials accounts for 50% of income.
There is ample evidence that households have a relatively high percentage of
their total income available with which to purchase appliances such as stereos,
TV sets e.g. over 1,000 color TV sets per sets, per month are sold in stores in
Ulaanbaatar. Ulaanbaatar has a very young population. A population of over
640,000 in Ulaanbaatar divided by an average household size of 4.5 results in an
estimate of over 140,000 households. It is safe to estimate theestimated that
average family household "based upon demographic studies prepared by the
Mongolian Statistics Department 1994" consists of two adults and two children,
(i.e. when taking into account single parent families, extended families, etc.,
an average household in Ulaanbaatar consists of 4.5 members.
14
<PAGE>
Foreign Investment
By the end of 1995, more than 520 business entities with foreign investor
participation had been granted licenses to engage in commercial activity in
Mongolia. Businesses and individuals from 39 countries have invested more than
US$100 million between 1990 and 1995. Among the more recognized companies
currently operating in Mongolia are Sumitomo Corporation and KDD of Japan,
Korean Telecom, and Snyder Oil Corporation (SOCO), Nescor and Caterpillar from
the United States.
The World Trade Organization has extended membership to Mongolia, and in
addition, the United States Senate approved a bilateral investment treaty with
Mongolia in June, 1996, thus providing a legal framework for American investors
that expands on Mongolia's Foreign Investment Law. Many other countries have
also signed bilateral trade agreements of a similar nature with Mongolia.
The Foreign Investment Law of 1993 allows foreign investment through the
establishment of a completely foreign enterprise, or the establishment of a
business entity with the participation of a Mongolian investor. Additionally,
foreign investors are permitted to participate in the ongoing privatization of
state-owned property and enterprises. Both the Foreign Investment Law and the
U.S.-Mongolian bilateral investment treaty ensure that foreign investors receive
no less favorable treatment than Mongolian investors.
The Mongolian law specifically states that foreign investors shall be accorded
no less favorable treatment regarding the possession, use, and disposal of their
investments than that accorded to Mongolian investors, and goes on to specify
the right of a foreign investor to possess, use, and dispose of their property;
manage or participate in managing the business entity; and to transfer their
rights and obligations to other persons. Foreign investors have the right to
transfer abroad promptly (1) shares of profits and dividends, (2) proceeds from
the sales of their assets and securities, (3) proceeds from the transfer of
their property rights to other persons as well as from their withdrawal from or
the dissolution of the business entity. The U.S.-Mongolian bilateral investment
treaty stipulates that transfers must be made in a freely usable currency at the
prevailing rate of exchange on the date of the transfer.
The Foreign Investment Law explicitly states that foreign investment will not be
nationalized or subject to unlawful expropriation. Investments may be subjected
to expropriation exclusively for the public purposes or interests and only in
accordance with due process of law on a non-discriminatory basis with full
compensation.
Over the last six years, the market economy has firmly taken root in Mongolia,
and the government is moving to reform and strengthen its institutions to
welcome foreign business, secure new investment, and make the legal and
financial environment more predictable. Despite some initial missteps, Mongolia
has made a real commitment to openness and to playing a more visible role in the
international trading system.
Government Regulation and Licensing
Mongolia does not suffer from a shortage of laws and regulations; what it lacks
are experience and enforcement capability. Copies of the laws are readily
available oftentimes in English and officials do try to live up to the spirit
and letter of the legislation as written. The problem is the sheer volume of new
laws that have been enacted in the last few years. Since 1993, new laws or
amendments that impact directly on foreign investment include legislation on
accounting, anti-corruption, banking, bankruptcy, communications, consumer
protection, copyright, currency regulation, customs, deposits, energy, taxes,
foreign investment, labor, mineral, rights of trade unions, etc. The government
does not have any specific
15
<PAGE>
legislation regarding terrestrial broadcasting by MMDS systems. In the future
legislation may be introduced that may impact on the business of the Company.
Since a number of the Company's licenses in Mongolia do not have a specific
term, they may be susceptible to termination as a result of the enactment of new
laws in the future. The Company monitors on an on going basis legislation or
rule changes that may impact the business of the Company. Please refer to "Part
I Description of Business - Risk Factors."
Taxation
Article 20 of the Foreign Investment Law allows tax holidays and reduced
corporate tax for businesses with foreign investment. For basic
telecommunications networks, there is a ten-year tax holiday and provision for a
50% reduction for a further five years. In addition, corporate tax exemptions
and deductions are allowed for businesses involved in the implementation of
introducing advanced technology. Mongolia recently removed import taxes and
customs duties on capital goods brought into the country as part of foreign
investment in new businesses. A uniform 10% sales tax is imposed on all imports,
manufactured goods and some services and covers registered businesses with a
turnover exceeding 5 million Tugs. The sales tax base for domestically produced
goods and services is the selling price of goods, and the charges for performed
work and rendered services.
16
<PAGE>
Morocco
OmniVision Maroc SARL ("OVM") is currently holding the following documents:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Date of License Title of License or Certificate Notes Duration
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
July 20, 1998 Incorporation Certificte
- -------------------------------------------------------------------------------------------------------------------------
April 23, 1998 Exclusive Distribution Contract with Soread/OmniVision/ 5 years
Soread (government pay-TV distributor) Show Time/Gulf
DTH
- -------------------------------------------------------------------------------------------------------------------------
Jan 14th 1999 Amendment granting OmniVision Maroc with Gulf DTH 5 years
Exclusive Distribution Rights for /OmniVision
Showtime channels in Morocco
- -------------------------------------------------------------------------------------------------------------------------
March 11, 1999 Letter confirming OmniVision's Gulf DTH/ 5 years
distribution agreement OmniVision
- -------------------------------------------------------------------------------------------------------------------------
Jan 14th 1999 Amendment to Agreement dated Jan 14 1999 Gulf DTH/ 5 years
amending various issues. OmniVision
- -------------------------------------------------------------------------------------------------------------------------
Jan 14th 1999 Master Agreement granting certain Gulf DTH/ 5 years
Non-Exclusive Rights to distribute OmniVision
ShowTime in Morocco
- -------------------------------------------------------------------------------------------------------------------------
July 16, 1999 Agreement to develop VSAT Networks, and Globecomm/Omni 5 years
technical and system integration Vision Maroc
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
OmniVision Africa Ltd, through its subsidiary (OVM) was granted the necessary
licenses by the Ministry of Communication to distribute a DTH service throughout
Morocco. OVM on January 14th 1999 executed an agreement with Showtime, to
distribute their programming package throughout Morocco. Showtime started
uplinking its digital services on NileSat, in March of 1999, which allows its
signals to be received throughout most of North Africa on a 90 cm dish. NileSat
has rapidly established itself as one of the leading satellite solutions for the
Middle East and North Africa delivering the widest possible choice of Western
and Arabic channels. OVM in June of 1999 commenced the soft launch and on
October 22nd proceeded with the hard launch of the Showtime service.
Competition
There are two local free to air TV channels operating.
Canal+Horizon (20,000 subscribers) offers a 1 channel DTH service, at a cost of
$18 per month, which is being broadcast on HotBird on C Band and is encrypted.
In addition ART (2,000 subscribers) offers 10 channels and 70 free to air
channels, costing from $14-28 per month. In order to receive the C band signals
the subscriber requires a satellite receiver ($150-300), a C Band dish
($90-150), and a decoder
17
<PAGE>
($115-300). There are 3 other DTH providers all of which are illegal operators.
Their prices range from $700-1000 per year. It is also required to have an
address outside of Morocco in order to obtain signals. The ART signals will also
be offered on OmniVision's decoder, and Showtime is making arrangements for the
ART channels to be included in its lineup.
Subscription pricing: Showtime is offered at a price, which provides viewers
with the flexibility to choose the payment plan that best suits their needs.
Packages start from $49 per month, the Company offers a variety of subscription
and payment options and receiver for less than $2 per Day.
As of December 31, 1999 OmniVision has 150 individual subscriber, and 3 hotel's
(with combined total of 780 rooms) receiving the Showtime programming. Gross
revenue in 1999 was US$ 85,000.
OVM has also applied for the necessary licenses by the Ministry of Communication
to distribute terrestrial subscriber Pay-TV and Internet services throughout
Morocco utilising Wireless MMDS technology. OVM has requested frequency between
2.3 to 2.9 GHz, which would provide for up to 50 channels of programming, with
provision for 2 way Internet and data services. OVM's signals will pass 2.9
million+ TV households and it is projected that the subscriber base will exceed
345,000 by the 5th year of operation. OVM's Internet Service Provider license
there have been approved and the company plans to launch the service by year-end
1999.
OVM signed an agreement with Globecomm Systems "GSI" (NASDAQ: GCOM) to provide
systems integration and end to end wireless solutions for its ISP operations in
Morocco. As part of the agreement, GSI's subsidiary, NetSat Express, will
provide Satellite Internet Access into the US Internet backbone to OmniVision.
GSI designs, assembles and installs satellite ground segment systems and
networks which support a wide range of satellite communications applications,
including fixed, mobile and direct broadcast services as well as military
applications. NetSat Express provides satellite based Internet access services,
digital media distribution, and integration data, voice and video communications
services. Nostrad plans to use NetSat Express ACCESS PLUS services to provide a
comprehensive variety of Internet services including internet access, hosting,
caching, ip multicasting, ip telephony, multi-media, broadcasting. The Company
expects to begin to offer service by the middle of 2000.
Regulations
The government does not have any specific legislation regarding terrestrial re
broadcasting by MMDS systems. In the future legislation may be introduced that
may impact on the business of the Companythe Company. The Company monitors on an
on going basis legislation or regulation changes that may impact the business of
the Company.
Vital Statistics
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Demography, Economy Source 1994 1995 1996 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Population 1 26,075,000 26,621,000 27,170,000 27,518,000
- ------------------------------------------------------------------------------------------------------------------------------------
GNP per capita 1 1,164 1,218 1,355
- ------------------------------------------------------------------------------------------------------------------------------------
GNP per capita (PPP) 1 3,160 2,980 3,320
- ------------------------------------------------------------------------------------------------------------------------------------
Average exchange rate per US$ 1 9.20 8.54 8.72 9.53
- ------------------------------------------------------------------------------------------------------------------------------------
Consumer price index 1 126 134 138
- ------------------------------------------------------------------------------------------------------------------------------------
Main Telephone Lines 3 1,007,000 1,158,000 1,251,000 1,378,000
- ------------------------------------------------------------------------------------------------------------------------------------
Cellular Subscribers 3 13,794 29,511 42,942 74,442
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Television Receivers 3 1,830,000 2,500,000 3,500,000 5,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
Television Households 3 3,480,000 4,480,000
- ------------------------------------------------------------------------------------------------------------------------------------
Television per 100 inhabitants 3 7.02 9.39 12.88 18.16
- ------------------------------------------------------------------------------------------------------------------------------------
Home Satellite Antennas 5 403,000
- ------------------------------------------------------------------------------------------------------------------------------------
Internet Hosts 4 229 468 1,405
- ------------------------------------------------------------------------------------------------------------------------------------
Number of personal computers 5 35,000 45,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Source
1. World bank, from 1993, Office des Postes et Telecommunications estimates,
1996 UN
2. Including Public call offices and privately-operated telephone centers
3. Ministry of Post and telecommunications, ITU, OBS
4. RIPE
5. ITU
Morocco
Morocco is bounded on the north by the Mediterranean Sea, on the east and
southeast by Algeria, on the south by Western Sahara, and on the west by the
Atlantic Ocean. The area of Morocco is about 446,550 sq. km (about 172,413 sq.
mi.).
Morocco's resources are primarily agricultural, but mineral resources are also
significant. Among the latter, the most important is phosphate rock; other
minerals include coal, iron, lead, manganese, petroleum, silver, tin, and zinc.
The estimated population for 1995 was 28,260,000, giving the country an overall
population density of about 63 persons per sq. km (about 164 per sq.. mi.).
The capital of Morocco is Rabat, with a population (1998 estimate, greater city)
of 1,872,000. Other major urban centers, with their 1998 estimated (greater
city) populations, are Casablanca (5,210,000), the country's largest city and
main seaport; Marrakech (1,817,000) and Fes (1,412,000), both important trade
centers; and Tangier (854,000), a seaport on a bay of the Strait of Gibraltar.
Islam is the established state religion of Morocco. Almost the entire population
is Sunni Muslim. The monarch is the supreme Muslim authority in the country.
About 1 percent of the population is Christian, and less than 0.2 percent is
Jewish.
In 1963 schooling became compulsory in Morocco for children between the ages of
7 and 13, but significantly fewer girls than boys attend classes, and less than
40 percent of secondary-school-age Moroccans actually attend secondary school.
Arabic is the main language of instruction, and French is also used in secondary
schools. In the early 1990s it was estimated that 50 percent of the population
was literate. In the late 1980s more than 2.9 million pupils attended primary or
pre-primary schools, and more than 1.3 million students were enrolled in
secondary and vocational schools.
About 240,000 people were enrolled in schools of higher education in Morocco in
the late 1980s. Higher education of the traditional type is centered in Fes at
Al Qarawiyin University, which was founded in AD 859. Modern higher education is
offered at Mohammed V University (1957), at Rabat; Mohammed Ben Abdellah
University (1974), at Fes; Cadi Ayyad University (1978), at Marrakech; Hassan II
University (1976), at Casablanca; and Mohammed I University (1978), at Oujda.
Rabat also has
19
<PAGE>
colleges of fine arts, public administration, agriculture, and economics, and
the School of Native Arts and Crafts (1921) is in Tetouan.
Morocco is primarily an agricultural country, although no more than about 20
percent of the land is cultivated. In the early 1990s gross domestic product
(GDP) was estimated at $28 billion, or about $1,005 per person. The estimated
budget during the same period included revenues of about $7.5 billion and
expenditures of about $7.7 billion.
The principal crops of Morocco are cereals, particularly wheat and barley (3
million metric tons in the early 1990s); potatoes (900,000 metric tons);
tomatoes (900,000metric tons); melons (551,000 metric tons); olives (500,000
metric tons); grapes (294,000 metric tons); pulses (163,000 metric tons); dates
(82,000 metric tons); and sugarcane and sugar beets (3.7 million metric tons).
Many other fruits and vegetables are also grown. Livestock included about 17
million sheep, 5.5 million goats, and 3.3 million head of cattle.
Morocco is a leading producer of phosphate rock; annual output was about 21.4
million metric tons in the early 1990s. Other minerals produced were coal
(526,000 metric tons), iron ore (149,500), lead (95,300 metric tons), manganese
ore (49,400 metric tons), and zinc (40,100 metric tons).
Morocco's manufacturing sector is made up mostly of small-scale enterprises.
Construction materials, chemicals, textiles, footwear, processed food, wine,
refined petroleum, and many other kinds of goods are produced in Morocco.
Artisans produce fabrics, leather goods, ceramics, rugs and carpets, and
woodwork of high quality. Annual production in the early 1990s included about
1.2 million sq. m (about 1.4 million sq. yd) of rugs and carpets, 5.8 million
metric tons of cement, and 1.1 million tons of phosphoric acid.
Morocco's unit of currency is the dirham, consisting of 100 francs (9.651
dirhams equal U.S.$1 in 1998).
Morocco's leading exports are phosphates and phosphoric acid. Other exports
include citrus fruit, wheat, fish, and minerals. Annual exports in the early
1990s earned $3.5 billion. Imports, consisting mainly of industrial equipment,
food products, manufactured goods, and fuels, were valued at $6.5 billion. The
principal trade partners of Morocco are France, Spain, Italy, Germany, the
United States, and the United Arab Emirates. Morocco gains much foreign exchange
from remittances by Moroccans working abroad and from the expenditures of the
large number of tourists who visit the country each year.
Morocco has extensive port facilities, concentrated principally at Casablanca.
Other ports include Agadir, Kenitra, Mohammedia, Safi, and Tangier. In the early
1990s the country had some 1893 km (some 1176 mi.) of railroad track and 59,198
km (36,786 mi.) of roads, some 47 percent of which were hard-surfaced. Morocco
had about 669,637 passenger cars during the same period. Domestic and
international air service is provided by Royal Air Maroc; several major foreign
airlines also serve Morocco.
Radio and television programs are broadcast in several languages in Morocco, and
about 5.4 million radios and 2.9 million television receivers are in use in the
early 1998s. The country has 12 daily newspapers and numerous periodicals.
Morocco's work force in the mi.d-1980s included some 7.4 million persons.
Approximately 50 percent of the labor force was engaged in agriculture, about 26
percent worked in services, and some 24 percent was employed in manufacturing
and other sectors.
20
<PAGE>
Uganda
OmniVision Uganda Ltd. is currently holding the following documents:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Date of License Title of License or Certificiate Notes Duration
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
June, 4 1997 Certificate of Incorporation
544,490/1619978
- ------------------------------------------------------------------------------------------------------------------------
May 30, 1997 Joint Venture Agreement Orbitornics/OmniVis 50 years
sion Africa Joint
Venture
- ------------------------------------------------------------------------------------------------------------------------
Dec 16, 1997 Uganda Communications Commission 2.484 Ghz - 2.716 Indefinite
Assignment of Frequency Ghz Refer to Risk Factor 14
- ------------------------------------------------------------------------------------------------------------------------
Sept 7, 1999 Uganda Commuincations Commission 2.484 Ghz - 2.716 Indefinite
Extension of Assignment of Frequency Ghz Refer to Risk Factor 14
- ------------------------------------------------------------------------------------------------------------------------
Oct 19, 1998 Uganda Commuincations Commission No Specific Duration
Permi.ssion to Operate TV Broadcasting Refer to Risk Factor 14
Service Through MMDS Techniques
- ------------------------------------------------------------------------------------------------------------------------
May 7, 1998 Uganda Commuincations Commission 5 years
License to operate a Paging Service Refer to Risk Factor 14
License #TL-98-15
- ------------------------------------------------------------------------------------------------------------------------
May 19, 1999 Public Notice of OmniVision's licenses MMDS-Broadcasting No Specific Duration
to operate by the Uganda Communications & Paging Refer to Risk Factor 14
Commission
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
OmniVision Africa Ltd., through its subsidiary OmniVision Uganda Ltd. ("OVU"),
was granted the necessary licenses by the Ministry of Communication and the
Uganda Investment Authority for undertaking telecommunications activities and to
provide 21channels of pay TV (employing radio frequencies between 2.484 to 2.716
GHz). OVU was granted approval by the Ministry of Communications in Uganda to
expand its services to include paging services in Kampala, Jinja and Entebbe.
The paging operations are scheduled to be operational in Kampala by the middle
of 2000. OVU has obtained an agreement to use the existing transmission tower
and site on the top of Kololo Hill in Kampala for its MMDS and paging
transmission headends.
Competition
There are three local free to air TV channels operating. One is run by the local
government called UTV, operating on channel 5 VHF; and the other two, which are
privately owned are Sanyu TV on channel 28
21
<PAGE>
UHF and Channel TV on channel 12 VHF. This last station, however, is not being
received in most of Kampala because of the poor location of its broadcast site.
Multichoice of South Africa offers a M-Net package of three subscription
channels, consisting of channels 7, 11, and 13 VHF, which are being broadcast in
encrypted mode. Their programming is comprised a Movie channel (Movie Magic), a
sport channel (Super Sport), and the M-Net channel showing BBC/Kid TV. Although
this is an adequate choice of programming, given limited alternatives, it is
very expensive. Their fees consist of approximately US$120.00 for the
installation and a monthly fee of about US$45.00. Nevertheless, even with their
expensive pricing, there are approximately 3,500 subscribers to this service.
This indicates the demand for subscription television service.
Proposed Programming Charges
Basic subscriber charge $17.50 for 15 channels of basic with 5 premium channels.
Regulations
The government does not have any specific legislation regarding terrestrial re
broadcasting by MMDS systems. In the future legislation may be introduced that
may impact on the business of the Company. Since a number of the Company's
licenses in Uganda do not have a specific term they may be more susceptible to
termination as a result of the enactment of new laws. Please refer to "Part I -
Description of Business - Risk Factors." The Company monitors on an on going
basis legislation or regulation changes that may impact the business of the
Company.
Vital Statistics
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Demography, Economy Source 1994 1995 1996 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Population 1 18,592,000 19,022,000 20,256,000 20,791,000
- ------------------------------------------------------------------------------------------------------------------------------------
GNP per capita 1 282 315 251
- ------------------------------------------------------------------------------------------------------------------------------------
GNP per capita (PPP) 1 860 960 1,030
- ------------------------------------------------------------------------------------------------------------------------------------
Average exchange rate per US$ 1 979.45 968.90 1,046.08 1,083.01
- ------------------------------------------------------------------------------------------------------------------------------------
Consumer price index 1 227 247 265 283
- ------------------------------------------------------------------------------------------------------------------------------------
Main Telephone Lines 30,449 38,972 47,927 51,829
- ------------------------------------------------------------------------------------------------------------------------------------
Cellular Subscribers 1,747 4,000 5,000
- ------------------------------------------------------------------------------------------------------------------------------------
Television Receivers 2 400,000 500,000 525,000
- ------------------------------------------------------------------------------------------------------------------------------------
Television Households 2 399,728 500,278 524,630
- ------------------------------------------------------------------------------------------------------------------------------------
Television per 100 inhabitants 2 2.15 2.63 2.59
- ------------------------------------------------------------------------------------------------------------------------------------
Home Satellite Antennas 2
- ------------------------------------------------------------------------------------------------------------------------------------
Internet Hosts 3 58 17 30
- ------------------------------------------------------------------------------------------------------------------------------------
Number of personal computers 4 10,000 10,500
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Uganda
Uganda, a republic in eastern Africa, is bounded on the north by Sudan, on the
east by Kenya, on the south by Tanzania and Rwanda, and on the west by Zaire; it
is a member of the Commonwealth of Nations. Uganda has an area of 241,139 sq. km
(about 93,104 sq. mi.).
22
<PAGE>
Almost all the inhabitants of Uganda are black Africans. About two-thirds of the
people speak the Bantu language; they live in the southern half of the country
and include the Ganda, Soga, Nyoro, Nkole and Toro ethnic groups. Most of the
remaining people speak the Nilotic language; they live in the north and include
the Acholi, Lango, and Karamojong ethnic groups.
The 1995 population estimate was 20,405,000, giving the country an overall
population density of about 85 persons per sq. km (about 219 per sq. mi.).
Uganda's growth rate in the early 1990s was about 3 percent.
Uganda's capital and largest city is Kampala (population, 1997 provisional,
1,373,463), which is located near Lake Victoria. Other cities include Jinja
(90,979), Mbale (53,634), Gulu (42,841), Entebbe (71,638), Soroti (40,602) and
Mbarara (40,383).
The British educational system has been influential in Uganda, and missionary
schools have played an important role in educating the people. In the late
1980's about 2.6 million pupils attended some 7,900 primary schools in Uganda
and some 240,000 students were enrolled in more than 900 secondary, technical
and teacher-training schools. Uganda's leading institutions of higher education
are Makerere University (1922) and Uganda Technical College (1954), both located
in Kampala.
The economy of Uganda has shown a steady recovery since 1987 when the Government
of Uganda put into place an Economic Recovery Program Plan with assistance from
the World Bank and the IMF. As a result of the Government's commitment to
reforms, Uganda's annual Gross Domestic Product (GDP) growth averaged six
percent during fiscal years 1986-1994 and eight percent over the past three
years. GDP growth is expected to average six percent for the next three years.
The growth occurred across the economy, with final 1995/96 figures expected to
show growth of over six percent in agriculture and nearly eighteen percent in
manufacturing. Mining, transport, communications and construction sectors also
grew. The result of this strong economic growth is that the Ugandan economy
almost doubled in size in the past ten years.
There was an increase in industrial production index from 169.2 in December 1992
to 229.2 in December 1993, approximately 19%. Much of this growth resulted from
increased output of drinks and tobacco 25%, food processing 38%, and chemicals,
paint and soap 18%. This development resulted from a number of policy reforms,
including greater control of inflation, liberalization of trade, and improved
investment and exchange regimes. These policies have further improved the
industrial production index to 260.6 in 1994 with an approximate 14% increase
over 1993. The country has significant natural resources, including ample
fertile lands, regular rainfall, and mineral deposits. The gross national
product (GNP) in 1996s was estimated at $6 billion, or about $300 per capita.
The Government of Uganda appears to be liberalizing the economy. In the past few
years, the government has abolished monopolies in coffee, cotton, power
generation and telecommunications. Foreign exchange, based on a
market-determined exchange rate, can be freely purchased. Many public
enterprises have been privatized or are scheduled for privatization. Loss-making
companies are being liquidated, enterprises, which could be managed better by
private companies, are being divested, and other enterprises are being
restructured.
In 1991 the Uganda legislature, the National Resistance Council, enacted a law,
the Investment Code, that provided conditions that are more favorable for
investment in Uganda for both local and foreign investors. Under that same
legislation, the Uganda Investment Authority was established with the major aim
of promoting and facilitating investments in Uganda. The Code came into effect
on 25th January 1991.
23
<PAGE>
Tanzania
OmniVision Tanzania Ltd. is currently holding the following documents:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Date of License Title of License or Certiciate Notes Duration
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Oct 29, 1998 Certificate of Incorporation # 35098 No Specific Duration
Refer to Risk Factor 14
- --------------------------------------------------------------------------------------------------------------------
Oct 15, 1998 Joint Venture Agreement between No Specific Duration
- --------------------------------------------------------------------------------------------------------------------
Sept 10, 1998 Tanzania Broadcasting Commi.ssion 2.532 - 2.635 GHz No Specific Duration
- --------------------------------------------------------------------------------------------------------------------
Aug 13, 1999 Tanzania Broadcasting Commi.ssion 2.509-2.683 Ghz No Specific Duration
Construction Permi.t for MMDS and 8 channels Refer to Risk Factor 14
Assignment of additional Frequencies
for Pay-TV
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
OmniVision (Africa) Ltd., through its subsidiary OmniVision Tanzania Ltd.
("OVT"), in conjunction with CableVision (Africa) Ltd., the parent Company of
Coast Television Network Ltd. (CTN), has been allocated frequency licenses by
the Ministry of Telecommunications for undertaking telecommunications activities
and to provide, initially, 13 channels (applications for up to 15 channels have
been submitted) of pay TV (employing radio frequencies between 2.5 to 2.58 GHz).
OVT's local partner has agreed to provide the transmission tower atop their
building and transmission facilities for the MMDS Pay-TV project.
Tanzania
The United Republic of Tanzania is bounded on the north by Kenya and Uganda, on
the east by the Indian Ocean, on the south by Mozambique, Malawi and Zambia, and
on the west by Zaire, Burundi and Rwanda. The country includes the islands of
Zanzibar, Pemba and other offshore islands in the Indian Ocean. The total area
of Tanzania is 945,087 sq. km (364,898 sq. mi.). Dar es Salaam is the capital
and largest city.
The landscape of mainland Tanzania is generally flat and low along the coast,
but a plateau at an average altitude of about 1,200 m (about 4,000 ft)
constitutes the greater part of the country. Isolated mountain groups rise in
the northeast and southwest. The volcanic Kilimanjaro (5,895 m/19,340 ft), the
highest mountain in Africa, is located near the northeastern border. Three of
the great lakes of Africa lie on the borders of the country and partially within
it. Lake Tanganyika is located on the western border, Lake Victoria on the
northwest and Lake Nyasa (Malawi) on the southwest. Lakes Nyasa and Tanganyika
lie in
24
<PAGE>
the Great Rift Valley, a tremendous geological fault system extending from the
Middle East to Mozambique.
Zanzibar, separated from the coast of the mainland by a channel some 40 km (some
25 mi.) wide, is about 90 km (about 55 mi.) long and covers an area of 1,658 sq.
km (about 640 sq. mi.). It is the largest coral island off the coast of Africa.
Pemba, some 40 km (some 25 mi.) northwest of Zanzibar, is about 68 km (about 42
mi.) long and has an area of approximately 984 sq. km (380 sq. mi.). Both
Zanzibar and Pemba are mostly low-lying.
Diamonds are by far the most important of the minerals currently being exploited
in Tanzania. Large deposits of coal and iron ore are known to exist in the
southern region. Forestland constitutes one of the most substantial natural
resources of the country. Among the many hardwoods found are mahogany and
camphorwood. The country abounds in wildlife, including antelope, zebra,
elephant, hippopotamus, rhinoceros, giraffe, lion, leopard, cheetah and monkey.
The population of Tanzania (1995 estimate) is about 30,742,000, giving the
country an overall population density of about 33 persons per sq. km (about 84
per sq. mi.). Yet, the population distribution is irregular, with high densities
found near fertile soils around Kilimanjaro and the shores of Lake Nyasa, and
comparatively low density throughout much of the interior of the country. The
government has reversed a policy of resettling people in registered villages
after its effectiveness proved limited.
The largest city and seat of government, Dar es Salaam, has a population (1997)
of 3,260,850. Other major cities are Mwanza (223,013), a port on Lake Victoria,
and Tanga (187,634), an industrial center and seaport. Zanzibar (357,634) is the
largest city on the island. Dodoma (203,833) has been designated as the eventual
capital of Tanzania.
Under the new administration of President Benjamin Mkapa, the Tanzanian
Government has set out to reverse the socialist policies began by former
President Nyerere and to reduce government interference in the economy. As such,
the government has embarked on a policy of selling off government corporations.
This effort has continued over the last twelve months with a number of large
corporations going up for auction. The largest and most notable corporation on
the auctioning block, the Tanzanian Cigarette Company, has been sold to
RJR/Nabisco Corporation.
The economy of Tanzania is primarily agricultural. More than 80% of the
economically active population is engaged in farming and agricultural products
account for about 75% of the annual exports.
The country is the world's largest producer of sisal and cloves. A series of
development plans has stressed growth of the agricultural cash economy and a
reduction in dependence on imports for manufactured goods. GDP (1995): US$ 4.0
bil. Real GDP Growth Rate (1995): 3.9%
The Tanzanian government continues to provide incentives to outside investors
wishing to invest in Tanzania. In 1990, the government created the Investment
Promotion Center (IPC) and charged it with promoting international investment in
Tanzania, assisting potential investors, and providing investment incentives to
individuals and companies wishing to set up shop in Tanzania. In 1995, the
government introduced a uniform tax of 5 percent on imported capital goods,
thereby rationalizing (and encouraging) investment across the board while
reducing the negative effect of excessive special exemptions.
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D. Risk Factors
1. The Company has had a limited operating history.
The Company has only recently commenced operations and has limited assets.
It has a limited record of commercial production, earnings or sales. The
Company, therefore, must be considered promotional and in its early formative
and development stage.
2. The Company's success is based upon the commercial acceptance of its
products and services.
There is no assurance that the Company's products and services will achieve
commercial acceptance or, if they do, that a functionally equivalent product or
service will not be developed by competitors with access to significantly
greater resources to devote to research, development and marketing. There is
nothing at this time upon which to base an assumption that the Company's
business plan will prove successful, and there is no assurance that the Company
will be able to operate profitably.
3. The Company may need additional funding in order to fully implement its
business plan.
The Company has limited financial resources and does not have any
significant cash flow at this time; accordingly, to the extent that additional
funds are required, the Company will seek to obtain such funds through equity
and/or debt offering. There is no assurance that if additional funding were
needed, it would be available to the Company on terms and conditions acceptable
to it. Failure to obtain such additional financing could result in delay or
indefinite postponement of the process to the market place or the ability to
supply sufficient product to the market place on a continual and profitable
basis.
4. The Company may face competition from larger companies.
The communications industry is intensely competitive and the Company
competes and will compete with companies having greater financial resources and
technical facilities. Therefore to the extent that the Company is able to
establish sales, revenues and property there is no assurance that it would be
able to sustain such sales, revenues and profits. Moreover, although not a major
factor today, if and when the Company begins achieving its objectives, larger,
better financed companies in peripheral businesses may be attracted to the
Company's markets. They may be prepared to spend large sums quickly to develop
competitive products and to mount major marketing campaigns. The Company is
aware of this possibility and hopes to establish itself as an industry leader
early on. Time is of the essence and the Company's financing and marketing
programs are essential to minimize this risk.
5. The Company's success in the countries in which it operates is dependent on
access to adequate labor and key personnel.
The Company will depend upon recruiting and maintaining qualified personnel
to staff its operations. The Company believes that such personnel are currently
available at reasonable salaries and wages. There can be no assurance, however,
that such personnel will always be available in the future. The continuing
development of the process has been almost entirely dependent on the skills of
management and certain key employees of the Company with which the Company has
no employment agreements. Loss of the services of any part of this management
team and key employees could have a material adverse effect upon the Company.
Please refer to "Item 5. Directors, Executive Officers, Promoters and Control
Persons."
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6. In the future there may be conflicts of interest between the Company and
other entities affiliated with its officers and directors.
From time to time certain of the directors and executive officers of the
Company may serve as directors or executive officers of other companies and, to
the extent that such other companies participate in the industries in which the
Company may participate, the directors of the Company may have a conflict of
interest. In addition, the Company's dependence on directors and officers who
devote time to other business interests may create conflicts of interest, i.e.
that the fiduciary obligations of an individual to the other company conflict
with the individual fiduciary obligations of the Company and visa versa.
Directors and officers must exercise their judgment to resolve all conflicts of
interest in a manner consistent with their fiduciary duties to the Company. In
the event that such a conflict of interest arises at a meeting of the directors
of the Company, a director who has such a conflict will abstain from voting for
or against the approval of such a participation or such terms. In appropriate
cases, the Company will establish a special committee of independent directors
to review a matter in which several directors, or management, may have a
conflict. The Company is not aware of the existence of any conflict of interest
as described herein.
7. The Company has not paid any dividends nor does it expect to pay any
dividends in the foreseeable future.
Since its inception, the Company has had no earnings and has not paid any
dividends on its Common Stock. Payment of future dividends, if any, will be
determined by the Company's Board of Directors based on conditions then
existing, including the Company's financial condition, capital requirements,
cash flow, profitability, business outlook and other factors. Additionally, the
Company intends for the foreseeable future to follow a policy of retaining all
or substantially all of its earnings, if any, to finance the development and
expansion of its business.
8. The Company is subject to currency risks.
The Company is exposed to currency risk as some of its accounts payable are
denominated in currencies other than the US dollar. The Company earns revenue
and incurs operating expenses predominantly in US dollars. Unfavorable changes
in the applicable exchange rates may result in a decrease or increase in foreign
exchange gain or loss.
The Company does not use derivatives to reduce its exposure to foreign
currency risk.
9. The Company may be subject to credit risks.
Credit risk arises from the possibility that the entities to which the
Company sells products or services may experience financial difficulty and be
unable to fulfill their contractual obligation. This risk is mitigated by
proactive credit management policies that include regular monitoring of the
debtor's payment history and performance, geographic location of the debtor, and
obtaining collateral security where appropriate.
10. The Company may be subject to "Year 2000" risks.
Currently the Company does not rely on any computer programs that will
materially impact the operations of the Company in the event of a Year 2000
disruption. However, like any other Company, advances and changes in available
technology can significantly impact its business and operation. Consequently,
although the Company has not identified any specific year 2000 issue, the "Year
2000" problem creates risk for the Company from unforeseen problems in its own
computer systems and from
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third parties, including but not limited to financial institutions, with whom it
transacts business. Such failures of the Company and/or third parties computer
systems could have a material impact on the Company's ability to conduct its
business. Please refer to "Item 2. Management's Discussion and Analysis or Plan
of Operation."
11. The sale or transfer of the shares by shareholders may be subject to the
so-called "Penny Stock Rules."
Under Rule 15g-9 of the Exchange Act, a broker or dealer may not sell a
"penny stock" (as defined in Rule 3a51-1) to or effect the purchase of a penny
stock by any person unless:
(a) such sale or purchase is exempt from Rule 15g-9;
(b) prior to the transaction the broker or dealer has (1) approved the
person's account for transaction in penny stocks in accordance with
Rule 15g-9, and (2) received from the person a written agreement to
the transaction setting forth the identity and quantity of the penny
stock to be purchased; and
(c) the purchaser has been provided an appropriate disclosure statement as
to penny stock investment.
The Commission adopted regulations that generally define a penny stock to
be any equity security other than a security excluded from such definition by
Rule 3a51-1. Such exemptions include, but are not limited to (1) an equity
security issued by an issuer that has (i) net tangible assets of at least
US$2,000,000, if such issuer has been in continuous operations for at least
three years, (ii) net tangible assets of at least US$5,000,000, if such issuer
has been in continuous operation for less than three years, or (iii) average
revenue of at least US$6,000,000 for the preceding three years; (2) except for
purposes of Section 7(b) of the Exchange Act and Rule 419, any security that has
a price of US$5.00 or more; and (3) a security that is authorized or approved
for authorization upon notice of issuance for quotation on the NASDAQ Stock
Market, Inc.'s Automated Quotation System. It is likely that shares of Common
Stock, assuming a market were to develop therefore, will be subject to the
regulations on penny stocks; consequently, the market liquidity for the Common
Stock may be adversely affected by such regulations limiting the ability of
broker/dealers to sell the Company's Common Stock and the ability of
shareholders to sell their securities in the secondary market.
Moreover, the Company's shares may only be sold or transferred by its
shareholders in those jurisdictions in which an exemption for such "secondary
trading" exists or in which the shares may have been registered.
12. Since there is a limited market for the Company's Common Stock, shareholders
may find it difficult to sell their shares.
Although the Common Stock is quoted for trading on the "pink sheets," it is
not quoted on any exchange. Therefore, the market for and the liquidity of the
Common Stock is very limited.
In the absence of a security being quoted on NASDAQ, or the Company having
$2,000.000 in net tangible assets, trading in the Common Stock would be covered
by a Securities and Exchange Commission (the `Commission") rule under which
broker/dealers who recommend such securities to persons other than established
customers and accredited investors (generally institutions with assets in excess
of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000jointly with their spouse) must make a
special written agreement to a transaction prior to sale. Securities are also
exempt from the rule if the market price is at least $5.00 per share.
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The Securities Enforcement and Penny Stock Reform Act of 1990 requires
additional disclosure related to the market for penny stock and for trades in
any stock defined as a penny stock. The Commission has recently adopted
regulations under such act which defines penny stock to be any non-NASDAQ equity
security that has a market price of less than $5 per share (as defined). Unless
exempt, for any transaction in a penny stock, the new rules require the
delivery, prior to any transaction in a penny stock, of a disclosure schedule
prepared by the Commission explaining important concepts involving the penny
stock market, the nature of such market, terms used in such market, the
broker/dealer/s disciplinary history and the customer's rights and remedies in
case of fraud or abuse in the sale.
Disclosure also has to be made about commissions payable to both the
broker/dealer and the registered representative and current quotations of
securities. Finally, monthly statements must be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stocks. Non-NASDAQ stock would not be covered by the
definitions of penny stock for (i) issuers who have $2,000,000 in tangible
assets ($5,000,000 if the issuer has not been in continuous operations for three
years); (ii) transactions in which the customer is an institutional accredited
investor; and (iii) transactions that are not recommended by the broker/dealer.
13. Shareholders may be subject to dilution through the possible future issuance
of common stock.
The Company is authorized to issue up to 25,000,000 shares of Common Stock.
Presently there are 11,100,000 shares of Common Stock outstanding. Additional
issuances of Common Stock may be required foe raising capital, acquiring stock
or assets of other companies, compensating employees or undertaking other
activities without stockholder approval. These additional issuances of Common
Stock will increase the number of outstanding shares and further dilute
stockholders' interest. Since the Company's Common Stock is currently subject to
the existing rules on penny stocks, the market liquidity for the Company's
securities can be severely adversely affected.
14. The Company is subject to the risks generally associated with operations in
foreign and developing countries.
The Company is subject to risks associated with operating in foreign and
developing countries. These risks may take the form of, but not necessarily
limited to, nationalization, expropriation, or regulated out of existence (this
can be done in whole or in part), riots, and war change in tax rates, or a
freeze on capital repatriation.
The target countries have in place internationally recognized laws to
protect and encourage foreign investment. The target countries do not have any
specific legislation regarding terrestrial rebroadcasting by MMDS systems. In
the future legislation may be introduced that may impact on the business of the
Company. The Company monitors on an on-going basis legislation or regulation
changes that may impact the business of the country.
15. The Company is subject to general business risks associated with providing
its products and services.
Such risks include:
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Pirating of Signals. All MMDS systems in the target markets will have in place
the most up to date encryption technology to reduce pirating of signals.
Bill Collections. In order to minimize collection risk, the Company is
implementing computerized tracking, which will monitor customer payment records
and suspend or cancel service for non-payment. This can be done from the head
office without the need to visit the subscriber premises. As the Company will be
selling instead of leasing out its decoders, loss from non-payment is also
reduced.
Service interruptions due to poor installation. The Company will institute a
quality assurance program in conjunction with on-going training and customer
service monitoring to ensure quality service at a reasonable cost. The
installation of subscriber equipment is a relatively simple task, which requires
basic mechanical skills.
However, no assurance can be given that the Company's efforts to minimize or
eliminate these risks will prove successful.
16. The Company may be subject to certain risks arising from technical problems
associated with providing its products and services.
Such risks include:
Quality of hardware products can cause service problems. All the equipment
manufacturers providing systems for the projects will have installed MMDS
systems throughout the world and have a long service record.
Equipment maintenance problems due to non-availability of parts and timely
delivery. The Company will have back up equipment available on site. In
addition, the main transmitter has redundancy built in to reduce service
interruption.
Satellite Delivery problems. As programming originates, and is downlinked, from
numerous satellites in the region, program providers would be able to switch to
alternative delivery during periods of down time as there is available
transponder space for such switching.
Analog to Digital Conversion. The current engineering design of the systems to
be implemented have the ability to be upgraded to digital in the future. The
customer equipment will also have to be upgraded, however until the price
becomes more affordable the digital conversion will not take place.
However, no assurance can be given that the Company's efforts to minimize or
eliminate these risks will prove to be successful.
Item 2. Management's Discussion and Analysis or Plan of Operation
Results of Operations
The Company is a start up telecommunications company. Expenditures to-date
have been primarily focused on purchasing capital equipment, and for general
overhead in the Company's three international offices. Its only source of
operational revenues at this start-up phase is from its Pay-TV operations in
Morocco, and the paging operations in Mongolia. Consequently, the Company lost
$970,000 or $0.13 per share during the year ended December 31, 1998 ("YE 98") as
compared with experiencing a loss of
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$327,000 or $0.11 per share during the nine months ended December 31, 1997 ("YE
97"). The Company's primary focus for the last two years has been and continues
to be MMDS Subscription TV services and is currently licensed in Kampala,
Uganda; and in Dar es Salaam, Tanzania. The Company is authorized to distribute
DTH subscriber Pay-TV in Morocco. The Company will implement these licenses as
soon as possible and is also endeavoring to obtain MMDS licenses in areas with
great potential for Subscription TV.
Year ended December 31, 1998 compared to the year ended December 31, 1997
During YE 98 the Company commenced implementation of its Pay-TV services in
Morroco, under an exclusive distribution agreement with Showtime (a Viacom
company) and Paging and MMDS operations in Kampala, Uganda. To date, the Company
has completed its construction of its head-end site for the Pay-TV and Paging
systems. The Paging transmitters, terminal and pager inventory are on site and
the Company plans to launch this operation in December. The Company has also
recently completed engineering and systems design for Tanzania and Ghana and
plans to launch Pay TV services there in 1st Q 2000. Due to the slowdown of the
Asian markets and unresolved programming copyright issues, facilitation of the
Subscription TV roll out in Mongolia has been delayed.
The Company has secured an agreement to distribute "Showtime" programming
package, a DTH service in Morocco. Showtime is a Viacom Company headquartered in
Dubai, UAE and uplinks 12 specialty Pay-TV channels and 25 Free to Air channels.
During the 3rd quarter, the Company completed a private placement of
1,500,000 shares raising a total of $955,255 net of $19,745 in finder's fees.
Also during the YE 98, the Company closed on its acquisition of the balance
(20%) of OmniVision (U) Ltd. by issuing 500,000 shares; as well as closing on
its 80% owned OmniVision Ghana Ltd. by issuing to Nostrad Singapore 1,200,000
shares. The Company also entered into a Stock Option Plan where it is committed
to issue up to 1,500,000 shares to officers, directors, employees, and
consultants upon exercise of options. The Company has also issued an offering
memorandum to raise $5,000,000 by issuing 50 units of $100,000 each, each unit
consisting of 100,000 shares and 50,000 share purchase warrants exercisable at
$1.00 in year one and $1.50 in year two.
During YE 98, General and administration expenses, net of depreciation and
foreign exchange were $792,000 as compared to $128,000 during the YE 97. The
cause of this increase is due to the opening of the Kampala head office and
increased administration activities.
As at December 31, 1998, the Company's working capital was a $777,000
deficiency, as compared to working capital of $11,000 as at December 31, 1997.
The Company owed $582,000 to certain shareholders. This amount is included in
the working capital deficiency. The Company has no other long-term liabilities.
Nine months ended September 30, 1999 compared to the nine months ended September
30, 1998
During Fiscal-99 the Company:
1. Commenced providing direct to home ("DTH") television service in Morocco.
2. Commenced ordering the balance of the equipment required to launch its
Paging and MMDS operations in Kampala, Uganda. To date, the Company has
completed its construction of its head-end site for the Paging and MMDS
systems.
3. Completed the main antenna atop the largest building in Dar es Salaam.
Commenced leasehold improvements required
4. Completed engineering and systems design for Tanzania and Ghana and plans
to launch Pay TV
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services there in 1st Quarter 2000. Due to the slowdown of the Asian
markets and unresolved programming copyright issues, facilitation of the
Subscription TV roll out in Mongolia has been indefinitely delayed.
The Company has entered into an agreement to distribute "Showtime"
programming package, a Direct to Home (DTH) service. Showtime is a Viacom
Company headquartered in Dubai, UAE and uplinks 12 specialty Pay-TV channels and
25 Free to Air channels. The Company is also in the process of securing
exclusive licenses for MMDS frequencies in the Ivory Coast, Morocco, Tunisia,
Bangladesh and Indonesia. In Pakistan NOSTRAD is in the final stages of
negotiations to acquire equity and to provide Subscriber Management,
Programming, Operational and Technical Management for the country's exclusive
MMDS operator. It is planned to utilize and expand on the transmission
equipment, the current viewing base (estimated to be around 600,000 households),
and the frequency spectrum of the current operation. NOSTRAD intends to upgrade
the current head-end to receive digitally encrypted signals and to re-encrypt
the signal for the terrestrial re-broadcast of the Subscription TV service. In
addition, NOSTRAD will implement a complete operational plan, including
installation of a subscriber management system and marketing strategy, as well
as acquisition of programming for the network.
During Fiscal-99, General and administration expenses, net of depreciation
and foreign exchange were $740,000 as compared to $330,000 during Fiscal - 98.
The cause of this increase is due to the opening of the Kampala and Casablanca
offices and increased administration activities.
Liquidity and Capital Resources
As at September 30, 1999, the Company's working capital was a $1,275,000
deficiency, as compared to working capital deficiency of $271,000 as at
September 30, 1998. The Company currently owes $677,000 to its majority
shareholders as well as $346,000 to officers. These amounts are included in the
working capital deficiency. The Company has no other long-term liabilities.
Additional working capital is intended to be raised by way private placement and
further borrowings from its majority shareholder.
Plan of Operation
Projects
o The Morocco DTH project. The Company has commenced marketing ShowTime's DTH
services with the hard launch scheduled for the end of commenced in October
1999. The initial inventory of decoder boxes and receiver dishes have
arrived in country. As of December 31, 1999 OmniVision has 150 individual
subscriber, and 3 Hotel's (with combined total of 780 rooms). The Company
is obligated to commence marketing the DTH service. In order to accomplish
this the Company will require $75,000 in the 1st Quarter of 2000.
o The Uganda Pay TV project. It is anticipated that the Company will be able
to roll out the Pay TV project in the second half of the year 2000. In
order to accomplish this the Company will require an additional $800,000 to
cover inventory, marketing, additional equipment and other startup costs.
Subject to receiving financing, the Company anticipates that the equipment
will arrive in Kampala by the end of May 2000. The Company has completed
the construction of the head-end and entered into a long term lease of
tower space on Kololo Hill.
o The Uganda Pager System. The Company has acquired licenses to provide pager
service throughout Kampala. It is planned to launch the Paging service by
the middle of 2000. The Paging and Pay TV
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project will be administered and managed from the same location.
o The Mongolian Pager System. The Company has commenced marketing of its
pager system in Mongolia. The Company has the capacity of 4,000 subscribers
with its current equipment. The break even level is approximately 500
pagers.
o The Mongolian PAY-TV project. The Company has decided to postpone
indefinitely its launch of Pay TV in Mongolia. The reason for the delay is
due to the lack of regulatory control on hard cable systems, resulting in
intense competition and non-compliance by competitors with programming
copyrights, i.e. they are relaying unauthorized (pirated) signals. The
Company at this time still holds the rights to the frequency and various
licenses to operate.
o The Tanzania Pay TV project. The Company has decided to commence roll out
of Pay TV in Dar es Salaam at approximately the same time as Uganda. In
order to accomplish this the Company will require an additional $1,000,000.
The Company plans to co-locate its transmission facilities with its local
partner, Central Television Network (CTN), which operates one of the local
free to air Television stations.
Funding
To date, the Company has obtained licenses to provide PAY-TV in areas where
over 5,400,000 TV households will be passed by the Company's signals. The
Company must now commence a marketing program and sell its receivers and
subscription to the TV households. If all or parts of the target markets are to
be rolled out, the Company must raise approximately $8.0 million over the next
24 months. The Company plans to raise the funds by way of equity, debt, or other
similar financial instruments. The Company plans to seek assistance from various
investment advisors to advise the Company on the most appropriate method of
raising these funds on a best effort basis.
Statements in this registration statement that may not be historical facts
and that may be forward-looking statements are subject to a variety of risks and
uncertainties. There are a number of important factors that could cause actual
results to differ materially from those expressed in any forward-looking
statements made by the Company. These factors include, but are not limited to:
(i) the nature of the Pay TV markets, specifically obtaining suitable
programming at a reasonable cost, (ii) the ability of the Company to raise
capital for projects within the context of overall telecommunication capital
market dynamics, (iii) the establishment of a sustainable subscriber base to the
point of economic viability, (iv) the viability of Pay TV projects based on
imperfect demographic analysis, (v) regulatory changes impacting on the nature,
scope and content of projects and operations, throughout the Company's areas of
operations, (vi) other factors detailed from time to time in the Company's
filings with the United States Securities and Exchange Commission, and (vii) or
any other factors. In order to mitigate the political risk in the Company's
target markets, the Company has arranged for political risk insurance provided
through Lloyd's of London, based on a variable valuation of the operating
companies in the nations concerned.
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The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date. The effects of the Year 2000 Issue may be experienced before, on, or after
January 1, 2000, and, if not addressed, the impact on operations and financial
reporting may range from minor errors to significant systems failure which could
affect an entity's ability to conduct normal business operations. It is not
possible to be certain that all aspect of the Year 2000 Issue affecting the
Company, including those related to the efforts of customers, suppliers, or
other third parties will be fully resolved. To date the Company has not incurred
any year 2000 issues.
Item 3. Description of Property
Vancouver
The Company maintains an office at Suite 2482-- 650 West Georgia Street,
Vancouver, BC, Canada. The office lease is month to month term at a cost of CND
1,200 per month. Based on the current market conditions for office space the
Company is confident that it could secure other offices under similar terms and
conditions should its tenancy be terminated. It is equipped with the necessary
office telecommunications and equipment to provide the day to day management of
the Company's operations.
Singapore
The Company maintains an office at #14-20/03 Forum, 583 Orchard Road,
Singapore for a period of three (3) years commencing from 25 May 1998 to 24
April 2001 with an option to renew for a further term of three (3) years at a
cost of $7,500 per month. It is equipped with the necessary office
telecommunications and equipment to provide the day to day management of the
Company's operations in Asia.
Ulanbatar Mongolia
HomeVision, maintains an operational office and transmission facility at
the Mongolia Broadcasting Station in Ulannbatar. The term of the lease is for 3
years commencing January 1 1997 currently the offices are on a month to month
basis at a cost of approximately $900 per month. Based on the current market
conditions for office space in Ulannbatar.Ulaanaabatar the Company is confident
that it could secure other offices under similar terms and conditions should its
tenancy be terminated. The offices are equipped with computers, and
telecommunication infrastructure. The transmission facility includes 2 DX and 1
Eagle 250Watt paging transmitters, a Zetron 2000 and a 640A paging terminal,
transmission antennas and pager inventory.
Kampala, Uganda
OVU maintains an operational office at Plot 5 Clemente Road, Nakasero,
Kampala, Uganda. The term of the lease is for a period of five years from
September 7, 1998 with one five-year option at a cost of $900 per month. The
offices are equipped with computers, telecommunication infrastructure, a Zetron
2000 paging terminal, pager inventory, and radio link transmitters to the
Company's Kololo Hill transmitter facility. The transmission facility on Kololo
Hill includes, 1 DX 250Watt paging transmitter and 2 50 Watt ComWave MMDS
transmitters, satellite receiving equipment, power conditioning and electrical
distribution infrastructure.
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Rabat, Morocco
OVM, maintains an office a repair and distribution center at Villa Yasmina
31 Ave. Tarikibn Ziad, Rabat Morocco. . The offices are sub-leased from Afro
American Services on a month to month basis at a cost of $1,000 per month. Based
on the current market conditions for office space in Rabat the Company is
confident that it could secure other offices under similar terms and conditions
should its tenancy be terminated. The offices are equipped with computers,
telecommunication infrastructure, VSAT receive only satellite dishes and
satellite receiver equipment. The offices also include demonstration facilities
for showing satellite television programs that the Company distributes. The
repair and distribution center includes test installation, and electronic repair
equipment, and Integrated Receiver Decoder, satellite dish and coaxial cable
inventory.
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Item 4. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock of the Company as of September 30, 1999, (i) each
person who is known by the Company to own beneficially more than five percent
(5%) of the Company's outstanding Common Stock; (ii) each of the Company's
directors and officers; and (iii) all directors and officers of the Company as a
group.
<TABLE>
<CAPTION>
=================================================================================================
Shares of Percentage of
Common issued and
Stock outstanding
Name and address Beneficially shares held
of Beneficial Owner Owned
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Nostrad Telecommunications Pte. Ltd.
(70% Kam Lo Lim, 20% SS Teo, 10% C Farnworth)
14-02-03 Forum 583 Orchard Road, Singapore 238884 5,303,000 48%
Siong Seng Teo
23 Queen Astrid Park, Singapore 266828 2,144,900(2) 19%
Kam Lo Lim
24 Cornwall Gardens, Singapore 269649 5,903,000(3) 52%
Cher Lim
437 Southborough Dr., West Vancouver, BC Canada V7S 1M3 100,000 1%
Chris Farnworth
901- 1188 Quebec Street, Vancouver, BC, Canada V6A 4B3 782,473(4) 7%
David Alexander
2555 Keats Road, North Vancouver, BC, Canada, V7H 2M7 217,000(5) 2%
Directors and Officers as a group (6 persons) 7,026,173 61%
=============================================================================================
</TABLE>
36
<PAGE>
(1) Nostrad Telecommunications Pte. Ltd. (previously defined as Nostrad
Singapore) is a privately owned Singapore company the share ownership of which
is as follows Kam Lo (Lawrence) Lim, a director and President of the Company who
owns 60%; Siong Seng Teo a director of the Company owns 30%; and, Chris
Farnworth, a Senior Vice President and director of the Company owns 10%.
(2) Includes 1,590,900 shares of the shares owned of record by Nostrad Singapore
and reflecting Mr. Teo proportionate interest in Nostrad Singapore, but does not
include 91,667 owned by Teng Seng Teo (Mr. Teo's brother) as to which Mr. Teo
disclaims any beneficial ownership.
(3) Includes the 5,303,000 shares owned of record and beneficially by Nostrad
Singapore but does not include 93,333 shares owned of record by Lim Yok Blen
(Mr. Lim's father), 75,000 shares owned by Kam Soe Lim (Mr. Lim's brother),
91,667 owned by Siew Lee Lim (Mr. Lim's sister) and 98,334 shares owned by Tang
Wan Tien (Mr. Lim's mother) as to which shares Mr. Lim disclaims any beneficial
ownership. Also includes 200,000shares underlying an option granted to Mr. Lim
by the Company. See "Item 6. Executive Compensation."
(4) Includes 530,000 shares of the shares owned by Nostrad Singapore and
reflecting Mr. Farnworth's proportionate interest in Nostrad Singapore, 18,000
shares owned of record by Mr. Farnworth's wife Myrna Farnworth, and 27,000
shares owned by GECO Holding Ltd, a British Columbia corporation, wholly owned
by Mr. Farnworth.
Also includes 150,000 shares underlying an option granted to Mr. Farnworth
by the Company. See "Item 6. Executive Compensation."
(5) Owned of record by 482130 BC Ltd, a British Columbia corporation wholly
owned by David Alexander. Also includes 150,000 shares underlying an option
granted to Mr. Alexander by the Company. See "Item 6. Executive Compensation."
37
<PAGE>
Item 5. Directors, Executive Officers, Promoters and Control Persons
The following persons are the directors and executive officers of the
Company:
<TABLE>
<CAPTION>
===========================================================================================================
Name Age Position Held Term
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Dr. John Tydeman 53 Chairman of the Board and Director July 1, 1998
Chairman as of
September 27, 1999
- -----------------------------------------------------------------------------------------------------------
Lawrence Lim 41 Chief Executive Officer, President and Director September 30, 1997
- -----------------------------------------------------------------------------------------------------------
Chris Farmworth 49 Senior Vice President, Business Development and
Operations, February 1, 1998.
- -----------------------------------------------------------------------------------------------------------
David Alexander 48 Chief Financial Officer March 1, 1998
- -----------------------------------------------------------------------------------------------------------
Siong Seng Teo 52 Director September 30,
- -----------------------------------------------------------------------------------------------------------
Cher Lim 28 Director September 30, 1997
- -----------------------------------------------------------------------------------------------------------
</TABLE>
All directors and officers of the Company are elected annually to serve for
one year or until their successors are duly elected and qualified.
The Company currently has four full time personnel and is supported to the
extent required by outside experts and consultants. Additional staff will be
recruited as required to support the Company's growth and development. All of
the full time personnel are contracted consultants. Key personnel also have
equity positions and have executed confidentiality and non-competition
agreements. Compensation levels are and will be commensurate with industry
standards with incentive programs extended to the key personnel. Additionally
OVM has approximately 15 full time employees, OVU has approximately 10 full time
employees and HomeVision employs approximately 10 full time staff.
Directors and Officers
38
<PAGE>
DR. JOHN TYDEMAN
Dr. John Tydeman, Chairman of the Board and Director, is the Programming and
Strategic Liaison for the Company. A summary of Dr. Tydeman's employment history
over the last five years is as follows: Dr. Tydeman is a self-employed
consultant to the telecommunications industry specializing in designing, fixing
and implementing pay television and satellite ventures. In 1995 - 1996, Dr.
Tydeman was Chief Executive Officer for the start-up of ATL (the News
Corporation and Subhash Chandra joint venture - ZEE TV in India, reporting to
Rupert Murdoch). In 1996-1997, Dr. Tydeman was the Chief Executive Officer for
the start up of ShowTime (a Kipco and Viacom joint venture). 1997- Present Dr.
Tydeman currently consults to ATL; ShowTime; the Dolphin Group, a privately held
Middle Eastern, multi-business enterprise; and the Shinawatra Group of Thailand.
Dr. Tydeman holds a Ph.D. in systems engineering, an honors degree in
statistics, as well as a degree in economics. Dr. Tydeman's other interests do
not conflict with the business of The Company. Dr. Tydeman is available to the
Company on as required basis and devotes 30-40% of his time to the business of
the Company.
LAWRENCE LIM
Mr. Lawrence Lim, President and Chief Executive Officer, is a co-founder of the
Company. A summary of Mr. Lim's employment history over the last five years is
as follows: Mr. Lim is the principal shareholder and Managing Director of
Nostrad International Pte. Ltd. ("NI"), a holding company with interests in
trading, distribution, manufacturing, and telecommunications through sixteen
subsidiary companies located in seven countries in Asia. Mr. Lim holds a
Bachelor's degree from the University of British Columbia as well as a Master of
Business Administration degree from the National University of Singapore. Mr.
Lim's other interests do not conflict with the business of the Company. Mr. Lim
devotes 60-70% of his time to the business of the Company.
Mr. Lim's responsibilities include directing the overall management and business
development of the Company, as well as serving on the Board of Directors.
CHRISTOPHER FARNWORTH
Mr. Christopher Farnworth, Director and Senior Vice President, Business
Development and Operations, is a co-founder of the Company. A summary of Mr.
Farnworth's employment history over the last five years is as follows: Mr.
Farnworth has supervised the Company's technology selection, identified the
system vendors, and heads the long-term strategic planning for the Company. Mr.
Farnworth commenced his employment with the Company and its predecessor during
1994.
39
<PAGE>
Mr. Farnworth is responsible for the day-to-day operations of the Company
including international business market development and marketing, as well as
sitting on the Board of Directors.
SIONG SENG, TEO
Siong Seng, Teo is a co-founder of the Company. A summary of Mr. Teo's
employment history over the last five years is as follows: Mr. Teo is a
shareholder and the Managing Director of Pacific International Lines Pte. Ltd.
("PIL"), privately held shipping and transportation group in Southeast Asia. Mr.
Teo is also the Chief Executive Officer of Singamas Container Holdings Limited,
a container manufacturing companythe Company listed on the Hong Kong Stock
Exchange. Mr. Teo is a member and the chairman of various advisory committees of
the Singapore Trade Development Board and serves as a council member of the
Singapore Chinese Chamber of Commerce and Industry. Mr. Teo holds a First Class
Honors degree in Naval Architecture and Ocean Engineering from the University of
Glasgow.. Teo's other interests do not conflict with the business of the
Company. Mr. Teo is available to the Company on as required basis and devotes
10-15% of his time to the business of the Company.
Mr. Teo's responsibilities include serving as a member of the Board of Directors
and assisting in formulating the long term strategic planning of the Company.
CHER LIM
Cher Lim serves as a member of the Board of Directors. A summary of Ms. Lim's
employment history over the last five years is as follows: Ms. Lim worked for
Eurasia Damac, a major Asian diamond broker, headquartered in Singapore. Ms.
Lim's other interests do not conflict with the business of the Company. Ms. Lim
is available to the Company on as required basis and devotes 10% of his time to
the business of the Company.
DAVID ALEXANDER
David Alexander, CA, is the Chief Financial Officer and Controller for the
Company. A summary of Mr. Alexander's employment history over the last five
years is as follows: Mr. Alexander is a self-employed consultant. Since 1994,
Mr. Alexander has served as chief financial officer of Laminco Resources Inc.
Since 1996, Mr. Alexander has served as a director for Pinewood Resources Inc.
Mr. Alexander became CFO of the Company during 1998. Mr. Alexander has a degree
in commerce from UBC and is an active member of the Institute of Chartered
Accountants of British Columbia.
Mr. Alexander is responsible for providing the administrative support to
operations, as well as regulatory and shareholder reporting and liaison.
40
<PAGE>
Key Employees
MICHAEL DEMAN
Mr. DeMan is the Company's Regional Manager. Mr. DeMan is based in the Company's
Kampala, Uganda office. A summary of Mr. DeMan's employment history over the
last five years is as follows: From 1998 to the present Mr. DeMan has worked for
the Company and has been responsible for the operations management and
subscriber development for the Company's telecommunications operations in
Africa. From 1991 to 1997 he was involved in the design, construction and
operational management of a number of MMDS and SMATV networks, including
Cabletel and CableVision in Caracas Venezuela. His broad experience ranges from
the regulatory environment to working with notable companies such as Cabeltel,
Commtel Partners, and Comcast, to develop MMDS and fibre optic delivery systems.
He also has extensive background in capital cost analysis, operating budgets, C
and KU Band satellite receiving equipment, telephony, fibre optic delivery
systems, audio/video/data communications and network IT systems, including
Wireless Cable (MMDS), Paging, PCS, T1s, HFC, LANs, RF, DTH and DTH delivery
systems.
ANTON M. VAN WOUW
Mr. Anton M. van Wouw is an independent consultant who is responsible for the
engineering and systems integration for the Company. Mr. van Wouw's employment
history over the last five years is as follows: Mr. van Wouw's major clients
over the last five years are Rogers Cable, Shaw Cable, BC Telephony,
Multi-Vision (Bolivia), and Can Bras (Brazil). Mr. van Wouw has extensive
experience in the implementation of Pay TV and inter-system microwave, covering
all aspects from systems engineering to hands on installations. Mr. van Wouw is
a registered professional engineer (UBC). Mr. VanWouw acts, as a consultant for
a number of companies with similar operations although in geographic areas that
are unrelated to the Company's business, his activities are related only to
technical and engineering duties and posses no conflict of interest.
Mr. van Wouw is responsible for system design, engineering, and integration.
General
During the past five years no director, person nominated to become a
director, executive officer, promoter or control person of the Company:
(1) was the subject any bankruptcy petition filed by or against any
business of which such person was a general partner or executive officer either
at the time of the bankruptcy or within two years prior to that time;
(2) was convicted in a criminal proceeding or while subject to a pending
crimi.nal proceeding (excluding traffic violations and other minor offenses);
(3) was subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or
41
<PAGE>
otherwise limiting his involvement in any type of business, securities or
banking activities; or
(4) was found by a court of competent jurisdiction (in a civil action), the
Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law.
42
<PAGE>
Item 6. Executive Compensation
The following table sets forth information concerning the compensation of
the named executive officers from September 30, 1997.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Annual Compensation Long-Term Compensation
--------------------------------------------------------------------------
Awards Payments
-------------------------------------------
Other Securities All
Year Annual Restricted Under- other
or Compen- Stock Lying LTIP Compen-
Name And Period Salary Bonuses sation Award(s) Options/ Payouts sation
Principal Position Ended ($) ($) ($) ($) SARs (1) ($) ($)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lawrence Lim, President & 12/31/97
CEO -------------------------------------------------------------------------------------
12/31/98 80,000 200,000
-------------------------------------------------------------------------------------
12/31/99 96,000
- ------------------------------------------------------------------------------------------------------------------
David Alexanader, CFO 12/31/97
-------------------------------------------------------------------------------------
12/31/98 60,000 150,000
-------------------------------------------------------------------------------------
12/31/99 72,000
- ------------------------------------------------------------------------------------------------------------------
Chris Farnworth, Senior VP 12/31/97
-------------------------------------------------------------------------------------
12/31/98 60,000 150,000
-------------------------------------------------------------------------------------
12/31/99 72,000
-------------------------------------------------------------------------------------
TOTALS 12/31/97
-------------------------------------------------------------------------------------
12/31/98 200,000 500,000
- ------------------------------------------------------------------------------------------------------------------
12/31/99 240,000
==================================================================================================================
</TABLE>
(1) The options are exercisable at $0.65 per share and expire in September 28,
2000.
43
<PAGE>
Item 7. Certain Relationships and Related Transactions
The President of the Company, Lawence Lim, together with Vice President,
Chris Farnworth, and Siong Seng Teo, own a Singapore Company, Nostrad
Telecommunications Pte. Ltd. ("Nostrad Singapore"). Nostrad Singapore has
entered into a share purchase agreement with the Company whereby Nostrad
Singapore has had the following shares issued to it for providing pay TV
licenses:
1. Mongolia MMDS licenses 2,000,000 shares September 30, 1997.
2. Uganda MMDS licenses 1,700,000 shares September 30, 1997
3. Ghana MMDS licenses 1,200,000 shares April 20, 1998
4. Tanzania MMDS licenses 1,200,000 shares September 15, 1999
Nostrad Singapore also received pursuant to the September 30, 1997 vend-in
a promissory note for $300,000 from the Company. Nostrad Singapore can, if
vended into the Company before February 25, 2000, earn up to an additional
2,000,000 shares if a Morocco Pay TV license is vended to the Company; and up to
an additional 1,500,000 shares if an Indonesia Pay TV license is vended to the
Company.
On February 1, 1998, the Company entered into five year Confidential
Services Agreements as follows:
1. Mr. Lawrence Lim at $8,000 per month.
2. Mr. Christopher Farnworth at $6,000 per month through his wholly owned
holding company Geco Holdings Ltd.
3. Mr. David Alexander at $6,000 per month through his wholly owned holding
company 482130 BC Ltd.
Item 8. Description of Securities
The Company is authorized to issue 25,000,000 shares of the Common Stock of
which 11,100,000 shares were issued and outstanding as of December 31, 1999.
Each outstanding share of the Common Stock entitles the holder to one vote,
either in person or by proxy, on all matters that may be voted upon by the
owners thereof at meetings of the shareholders.
The holders of the Common Stock (i) have equal rights to dividends from
funds legally available therefore, when, and if, declared by the Board of
Directors of the Company; (ii) are entitled to share ratably in all of the
assets of the Company available for distribution to the holders of the Common
Stock upon liquidation, dissolution or winding up of the affairs of the Company;
(iii) do not have preemptive, subscription or conversion rights; and (iv) are
entitled to one non-cumulative vote per share on all matters on which
shareholders may vote at all meetings of shareholders.
The holders of the Common Stock of the Company do not have cumulative
voting rights, which means that the holders of more than 50% of such outstanding
shares, voting for the election of directors, can elect all directors of the
Company if they so choose and, in such event, the holders of the remaining
shares will not be able to elect any of the Company's directors.
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Related
44
<PAGE>
Stockholder Matters
The Common Stock has been quoted on the Pink Sheets since February 1999
under the symbol NSTC. The following table sets forth high and low bid prices
for the Common Stock for the calendar quarters indicated as reported by J.
Alexander Securities Inc. These prices represent quotations between dealers
without adjustment for retail markup, markdown or commission and may not
represent actual transactions.
High Low Volume
Feb. Through March 31, 1999 $1.50 $0.875 16,700
April Through June 30, 1999 1.30 .875 58,900
July Through September 30,1999 1.25 .875 17,000
October through December 31, 1999 1.00 .875 --
As at December 31, 1999 the Company had approximately 230 registered
holders of its common stock.
Item 2. Legal Proceedings
The Company is not a party to any proceeding or litigation and has no
knowledge of any threatened or pending proceeding or litigation against the
Company.
Item 3. Changes in and Disagreements with Accountants
There have been no changes in or disagreements with the Company's
accountants.
Item 4. Recent Sales of Unregistered Securities
During the past 3 years, the Company issued the following securities.
1 Pursuant to the Acquisition and Restructuring, the Company issued 3,700,000
shares to Nostrad Telecommunications Pte. Ltd. Singapore in reliance on
Section 4(2) of the Securities Act. These shares were issued February 25,
1998.
2 The Company issued 1,500,000 shares on September 15, 1998 to 20 non-US
persons in consideration of an aggregate of $1,000,000 in reliance of
Regulation S of the Securities Act.
3 The Company issued 500,000 shares on September 15, 1998 in exchange for an
additional 20% interest in OmniVision (U) Ltd., a Uganda company.
4 The Company issued 1,200,000 shares on September 15, 1998 to Nostrad
Singapore under a share purchase agreement for obtaining pay TV licenses in
Ghana in reliance on Section 4(2) of the Securities Act.
5 The Company issued 1,200,000 shares on September 15, 1999 to Nostrad
Singapore under a share purchase agreement for obtaining pay TV licenses in
Tanzania in reliance on Section 4(2) of the Securities Act.
The Company believes that all of the issuances of the Common Stock were
exempt from the registration requirements of the Securities Act by virtue of
Section 4(2) thereof, Regulation D and/or S under the Securities Act.
Item 5. Indemnification of Directors and Officers
45
<PAGE>
Except as hereinafter set forth there is no charter provision, bylaw,
contract, arrangement or statute under which any officer or director of the
Company is insured or indemnified in any manner against any liability which he
may incur in his capacity as such.
Article VIII of the Company's By-laws provides in relevant part, that:
"...the corporation shall indemnify any director, officer, employee or
agent of the corporation, or any person serving in any such capacity of any
other entity or enterprise at the request of the corporation, against any and
all legal expenses (including attorney's fees), claims and/or liabilities
arising out of any action, suit or proceeding, except an action by or in the
right of the corporation."
Expenses incurred in defending any action, suit or proceeding may be paid
by the Company in advance of the final disposition, when authorized by the Board
of Directors. The Company does not have nor does it anticipating obtaining any
directors' and officers' liability insurance.
The Securities and Exchange Commission's Policy on Indemnification.
Insofar as indemnification for liabilities arising under the Act may be
permitted to any of the Company's directors, officers and controlling persons
pursuant to any provisions contained in the Company's certificate of
incorporation, by-laws or otherwise, the Company has been advised that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or controlling
person in connection with the securities being registered, the Company will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
indemnification by it is against public policy as expressed in the Act and will
be governed by final adjudication of such issue.
46
<PAGE>
PART F/S
Item 13. Financial Statements
NOSTRAD TELECOMMUNICATIONS INC.
INDEX
A. Audited Page No.
--------
Audited Report Dated May 28, 1999..................................... 48
Consolidated Balance Sheets December 31, 1998 & 1997.................. 49
Consolidated Statements of Operations
Years ended December 31, 1998 & 1997............................. 50
Consolidated Statement of Shareholders Equity
For the year ended December 31, 1998............................. 51
Consolidated Statement of Cash Flows
Years ended December 31, 1998 & 1997............................. 52
Notes to Consolidated Financial Statements............................ 53-60
B. Unaudited
Consolidated Balance Sheets
September 30, 1999 & 1998 and December 31, 1998.................. 61
Consolidated Statements of Operations
Nine Months & Quarters ended September 30, 1999 & 1998........... 62
Consolidated Statement of Shareholders Equity
For the Nine Months ended September 30, 1999..................... 63
Consolidated Statement of Cash Flows
Nine Months & Quarters ended September 30, 1999 & 1998........... 64
Notes to Consolidated Financial Statements............................ 65
47
<PAGE>
INDEPENDENTAUDITORS' REPORT
To the Board of Directors and
Stockholders of Nostrad Telecommunications, Inc.
We have audited the accompanying consolidated balance sheet of Nostrad
Telecommunications, Inc. and subsidiaries (the "Company") as of December 31,
1998, and the related consolidated statements of loss, deficit and cash flows
for each of the two years then ended. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion of these consolidated statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
1 to the financial statements, the Company has suffered significant recurring
net losses, negative operating cash flow, and has uncertainty relative to the
successful exploitation of its assets which raise substantial doubt about its
ability to continue as a going concern. Management's plans regarding those
matters are also described in Note 1 to the financial statements. The financial
statements do not include any adjustments that might arise from these
uncertainties.
/s/ Jay Shapiro
---------------------------
JAY J. SHAPIRO, C.P.A.
A Professional Corporation
Encino, California
May 28, 1999
48
<PAGE>
Consolidated Financial Statements
CONSOLIDATED BALANCE SHEET
- --------------------------------------------------------------------------------
Assets December 31, December 31,
1998 1997
--------------------------
Current Assets
Cash $ 74,367 $ 2,387
Trade receivables 34,222 25,690
Due from related parties -- --
Inventory 108,114 7,778
Deposits & prepaid expenses 32,120 40,277
- --------------------------------------------------------------------------------
248,823 76,132
Licenses and Development Costs (note 3)
Licenses, net 275,140 141,440
Deferred development costs 386,447 120,734
- --------------------------------------------------------------------------------
661,587 262,174
Fixed Assets (note 4)
Fixed Assets 463,281 204,007
less Accumulated Depreciation (144,730) (54,580)
- --------------------------------------------------------------------------------
318,551 149,427
- --------------------------------------------------------------------------------
$ 1,228,961 $ 487,733
================================================================================
Liabilities
Current Liabilities
Accounts payable (note 7) $ 435,074 $ 61,543
Shareholder loans (note 7) 581,849 74,436
Other 8,867 4,014
- --------------------------------------------------------------------------------
1,025,790 139,993
- --------------------------------------------------------------------------------
Commitments (notes 5, 7, and 8)
Shareholders' Equity
Share Capital (note 5)
Authorized
25,000,000 common shares, par value $0.001
Issued & outstanding - 9,900,000 common shares
shares (3,000,000 common shares at
December 31, 1997) 9,900 6,700
Additional Paid-in Capital 1,489,695 367,640
Share subscriptions received -- 300,000
Accumulated Deficit (1,296,424) (326,600)
- --------------------------------------------------------------------------------
203,171 347,740
- --------------------------------------------------------------------------------
$ 1,228,961 $ 487,733
================================================================================
The notes to consolidated financial statements are an integral part thereof
49
<PAGE>
Consolidated Financial Statements
CONSOLIDATED STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
Year ended Year ended
December 30, December 30,
1998 1997
----------- -----------
Revenues
Sales & Service Revenues $ 60,126 $ 15,997
- --------------------------------------------------------------------------------
Cost of Sales
Materials 50,534 14,655
Direct Marketing 13,931 2,458
- --------------------------------------------------------------------------------
64,465 17,113
- --------------------------------------------------------------------------------
Gross Profit (4,339) (1,116)
Expenses
Professional costs 279,047 16,528
Office and administration 270,282 47,318
Travel 127,195 21,680
Depreciation & amortization 90,308 73,932
Salary and benefits 59,376 39,652
Communication costs 37,244 2,631
Investor relations 18,797 --
- --------------------------------------------------------------------------------
882,249 201,741
- --------------------------------------------------------------------------------
Operating Loss (886,588) (202,857)
Other
Deferred Cost write down (71,307) (132,000)
- --------------------------------------------------------------------------------
Net loss ($ 957,895) ($ 334,857)
================================================================================
Average Number of outstanding 7,638,082 3,000,000
- --------------------------------------------------------------------------------
Net (loss) per share $ (0.13) $ (0.11)
================================================================================
The notes to consolidated financial statements are an integral part thereof
50
<PAGE>
Consolidated Financial Statements
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
December 31, 1998
Foreign
Currency
Subscribed Common Stock Additional Translation
---------------------------------------------- Paid-in Adjustment Accumulated
Shares Amount Shares Amount Capital Deficit Total
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Common stock
split after
January 1,
1997 -- $ -- 3,000,000 $3,000 $ -- $ -- $ -- $ (3,000)
Share
Subscriptions 461,538 300,000 -- -- -- -- -- (300,000)
Reverse
Acquisition by
Nostrad -- -- 3,700,000 3,700 (367,640) 8,257 -- (371,340)
Net loss - 1997 -- -- -- -- -- -- 326,600 (326,600)
- ---------------------------------------------------------------------------------------------------------------------
Balance
December 31,
1997 461,538 300,000 6,700,000 6,700 367,640 8,257 (326,600) 347,740
- ---------------------------------------------------------------------------------------------------------------------
Private
Placement, net
of Subscriptions (461,538) (300,000) 1,500,000 1,500 973,500 -- -- 675,000
Finders Fees -- -- -- - (19,745) -- -- (19,745)
Shares issued
for Licenses -- -- 1,700,000 1,700 168,300 -- -- 170,000
Net loss - 1998 -- -- -- - -- (11,929) (969,824) (969,824)
- ---------------------------------------------------------------------------------------------------------------------
Balance
December 31,
1998 -- $ -- 9,900,000 $9,900 $1,489,695 $(3,672) $(1,296,424) $ 203,171
=====================================================================================================================
</TABLE>
The notes to the consolidated financial statements are an integral part thereof
51
<PAGE>
Consolidated Financial Statements
CONSOLIDATED STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------------
Year ended Year ended
December 30, December 30,
1998 1997
OPERATING ACTIVITIES
Net income (loss) for period $ (957,895) $ (334,857)
Add expense items not involving cash
Development cost write down 71,307 132,000
Depreciation 90,308 73,932
- --------------------------------------------------------------------------------
(796,280) (128,857)
Add changes in non-cash working capital
items:
Accounts receivable (8,532)
Inventory (100,355) (7,779)
Deposits & prepaid expenses 8,156 (40,277)
Accounts Payable 366,455 73,814
- --------------------------------------------------------------------------------
Net funds (used) by operating activities (530,536) (128,857)
INVESTING ACTIVITIES
Licenses & deferred development costs (300,720) (413,526)
Fixed asset purchases (259,432) (204,007)
- --------------------------------------------------------------------------------
Net funds (used) by investing activities (560,152) (617,533)
FINANCING ACTIVITIES
Shares issued for cash, net 955,255 --
Shares issued in reverse acquisition -- 374,340
Shares subscriptions (300,000) 300,000
Shareholder loans 507,413 74,437
- --------------------------------------------------------------------------------
Net funds provided by financing activities 1,162,668 748,777
- --------------------------------------------------------------------------------
NET INCREASE IN CASH 71,979 2,387
Cash at beginning of period 2,387 --
- --------------------------------------------------------------------------------
CASH AT END OF PERIOD $ 74,366 $ 2,387
================================================================================
The notes to consolidated financial statements are an integral part thereof
Supplemental information:
Interest paid $ -- $ --
----------- ------------
Taxes paid $ -- $ --
----------- ------------
Shares issued for licenses $ 170,000 $ --
----------- ------------
52
<PAGE>
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1998
1. ORGANIZATION AND BASIS OF PRESENTATION
Nostrad Telecommunications Inc. ("Nostrad" or the "Company") was incorporated in
Nevada on September 24, 1993. On September 29, 1997, the Company's name was
changed from Cave Productions, Inc. to Nostrad. Effective September 30, 1997,
Nostrad Telecommunications Pte. Ltd., a private Singapore company ("Nostrad
Singapore") sold its wholly owned subsidiary companies Nostrad Media Pte. Ltd.,
a Singapore company which holds the Company's interests in Asian licenses; and
OmniVision Africa Ltd., a British Virgin Island company, which holds the
Company's interests in African licenses; (collectively as "Nostrad
Subsidiaries") to the Company for 3,700,000 common shares and $300,000 cash or
kind. The transaction was accounted for as a reverse acquisition with no effect
on the historic financial statements of the acquirers. The historic financial
statements of the acquirers were combined without recognition of purchase
accounting. Nostrad Singapore may also be compensated up to 5,000,000 shares of
common stock for successful performance relative to license issuance in three
emerging countries.
The Company is focused on developing, acquiring and managing media and
telecommunication operations in emerging markets of Asia, Africa and at a later
stage, Latin America. To-date, Nostrad has obtained Subscription Television
licenses in Morocco, Uganda, Ghana and Tanzania. The DTH Subscription TV
services in Morocco have been implemented with a recently commenced soft-launch
in February 1999. Full launch of ShowTime (a subsidiary of Viacom) and ART
programming is expected to be in April 1999. In addition, Nostrad has obtained
nation-wide paging licenses in Uganda and is currently implementing alphanumeric
and voice paging services in Kampala. Apart from the foregoing, the Company is
also actively pursuing licenses for Subscription TV, Internet Service Provision,
Mobile and Fixed Wireless Telephony, and Paging Services in other countries in
Asia and the African sub-continent
A. Morocco Operations. A 65% owned company is licensed to distribute Satellite
DTH Subscription TV programming. The subsidiary has entered into an
agreement with Showtime, a Viacom company, to distribute Showtime's direct
to home (DTH) programming package throughout Morocco. Applications have
been made for operating license and frequencies to provide up to
60-channels of MMDS Subscription TV, Internet Services and Paging
operations.
B. Tanzania MMDS Pay TV Operations. A 80% owned company holds exclusive
frequencies and licenses to operate a seven-channel MMDS Subscription TV
system in Tanzania. Applications have been approved for additional
frequencies to provide up to 15 channels of programming.
C. Ghana MMDS Pay TV Operations. An 80% owned subsidiary holds exclusive
frequencies and licenses to operate a six-channel MMDS Subcription TV
system in Ghana. Applications have been made for additional frequencies to
provide up to 18 channels of programming.
D. Uganda MMDS Pay TV Operations. A 100% owned subsidiary holds exclusive
frequencies and licenses to operate a 19-channel MMDS system in Uganda.
Applications have been made for an additional 8 frequencies.
E. Uganda Paging Operations. A 100% owned subsidiary holds licenses to operate
5 paging channels. The system is currently being implemented.
F. Mongolia Paging Operations. An 80% owned subsidiary holds licenses to
operate 5 paging channels. The system currently has 2 channels in operation
capable of providing service to 4,000 subscribers.
G. Mongolia MMDS Pay TV Operations. An 80% owned subsidiary holds exclusive
frequencies and licenses to operate a 35 channel MMDS system.
53
<PAGE>
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1998
1. ORGANIZATION AND BASIS OF PRESENTATION (continued)
The summary chart of the Company's holdings are as follows:
--------------------------------
Nostrand Telecommunciations Inc.
--------------------------------
- ---------------------------------------------------- ------------------------
OmniVision Africa Ltd. Nostrad Media Pte. Ltd.
100% 100%
- ---------------------------------------------------- ------------------------
- ---------- ---------- ---------- ---------- ----------
OmniVision OmniVision OmniVision OmniVision Mongolia
Uganda Tanzania Ghana Maroc HomeVision
100% 80% 80% 65% 80%
- ---------- ---------- ---------- ---------- ----------
The Company has executed an Agreement with Entertainment World Ltd. ("EWL") an
Australian Stock Exchange (ASTL) listed company, for the establishment of Asia
Learning World Pte Ltd ("ALW") which plans to telecast two new learning channels
throughout the Asia-Pacific Region via digital satellite and cable transmission
systems. ALW will fill a need in the Asia market for both Pay-TV with
substantive knowledge programming and for students who seek an international
quality degrees and other training opportunities. In addition, the relationship
formed by Nostrad and ALW blends a unique mix of skills that will enable ALW to
possess the requisite experience and credibility to deal with education markets
and Pay-TV operators. Nostrad has entered into a five year agreement to provide
management services to ALW.
As of September 30, 1997, the Company agreed to issue 2,000,000 common shares
and pay $150,000 for 100 per cent of the issued and outstanding common shares of
Nostrad Media Pte. Ltd., and agreed to issue 1,700,000 common shares and to pay
$150,000 for 100 per cent of the issued and outstanding common shares of
OmniVision Africa Ltd. The Company has also agreed to issue performance shares
to be issued within 24 months of September 30, 1997 as outlined on the following
table. To date 1,200,000 shares have been issued for obtaining the Ghana MMDS
license.
54
<PAGE>
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1998
1. ORGANIZATION AND BASIS OF PRESENTATION (Continued)
Country Performance Stock
----------------------------------------------------------------
Tanzania 1,500,000
Morocco 2,000,000
Indonesia 1,500,000
-------------------------
5,000,000
=========================
The Company is in the process of establishing an international telecommunication
operation, which includes providing wireless cable, paging, telephone and
internet services. The recoverability of the amounts shown for licenses and
deferred development costs is dependent upon the ability of the Company to
obtain necessary financing to complete the infrastructure required to provide
these services, and to operate on a profitable basis. The Company has completed
a common stock offering of 1,500,000 common shares and has received $955,255 in
net proceeds. The Company, during its startup phase, has experienced a
substantial operating deficit since inception of $1,296,424. Management has been
dependent on financing from related parties, which have invested approximately
$1,000,000 as of December 31, 1998. There is no assurance that related parties
will continue such funding or that the Company can satisfy $1,025,790 in
obligations from the successful exploitation of its assets. These financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the
Company and of acquired subsidiary companies: Nostrad Media Pte. Ltd. (100%
owned), Mongolia Home Vision Corporation HH (80% owned by Nostrad Media Pte.
Ltd.), OmniVision Africa Ltd. (100% owned), OmniVision (U) Ltd. (100% owned by
OmniVision Africa Ltd.), OmniVision (Ghana) Ltd. (80% owned by OmniVision Africa
Ltd.), OmniVision (Tanzania) Ltd. (80% owned by OmniVision Africa Ltd. and
OmniVision (Maroc) Ltd. (65% owned by OmniVision Africa Ltd.). All significant
inter-company accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires the Company's management to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and related notes to the financial statements.
Cash Equivalents
The Company defines cash equivalents as highly liquid financial instruments
purchased with a maturity of ninety days or less.
55
<PAGE>
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1998
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Inventory
The Company records inventory on a FIFO basis at the lower of cost or market.
Licenses and Deferred Development Costs
The Company capitalizes the costs related to obtaining rights to provide paging,
cable television, telephone, and Internet services in specific countries, and
for the rights to broadcast specific channels. Costs incurred are initially
capitalized as Deferred Development Costs. If after a twelve-month period,
rights have not been fully obtained, the Deferred Development Costs will be
expensed. There is no assurance that revenues exceeding these costs will be
realized by the Company.
Fixed Assets
Fixed assets are recorded at cost and are depreciated on a straight line basis
over their estimated useful life as follows:
Years
-----
o Office equipment, furniture & fixtures 3
o Automotive & transportation equipment 3
o Leasehold improvements 3
o Operating Equipment & tools 3
o Transmission Station & Tower 5
Foreign Currency Translation
Transactions recorded are translated into United States dollars, its reporting
currency, as follows:
o Monetary assets and liabilities at the rate prevailing at the balance sheet
date.
o Non-monetary assets and liabilities at historic rates
o Income and expenses at the average rate in effect during the year. Any gain
or loss is reflected on the consolidated statement of operations & deficit.
The local currencies of Canada, Singapore, Mongolia, Uganda and Ghana are the
Company's functional currencies. Accordingly, the translation gain or loss is
reported as a component of Stockholder Equity.
Earnings per share
Earnings per share are calculated by dividing the Income (loss) available to
common stockholders by the weighted average number of shares outstanding during
the period. The weighted average number of shares is determined by weighting the
number of shares outstanding by the number of days which the shares were
outstanding during the year.
56
<PAGE>
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1998
3. LICENSES AND DEFERRED DEVELOPMENT COSTS
Accumulated costs incurred in obtaining license agreements and deferred
development costs for expenses used to obtaining licenses are as follows:
Licenses
Country Amount
- --------------------------------------------------------------------------------
Ghana (a) $ 120,000
Uganda (b) 87,500
Mongolia (c) 106,267
----------
313,767
Amortization (38,627)
----------
$ 275,140
==========
Deferred Development Costs
Country Amount
- --------------------------------------------------------------------------------
Myanmar $ 11,882
Pakistan 9,902
Asia Learning World (d) 40,354
Democratic Republic of the Congo 5,782
Ghana 36,341**
Morocco (f) 52,094**
Uganda 147,319**
Cote d'Ivorie 42
Kenya 10,986
Tanzania (e) 26,946**
Indonesia 29,382
Tunisia 5,177
Bangladesh 10,241
----------
$ 386,447
==========
(a) Ghana
The licenses granted to the Company by the Government of Ghana (see note 1) give
the Company exclusive rights to certain frequency spectrum. The Company has also
entered into agreements to broadcast certain channels in Ghana. The Company
issued Nostrad Singapore 1,200,000 shares as per agreement (See Note 5).
(b) Uganda
The licenses granted to the Company by the Government of Uganda (see note 1)
give the Company exclusive rights to certain frequency spectrum. The Company has
also entered into exclusive agreements to broadcast certain channels in Uganda.
In November 1997, the Company's interest in its Uganda subsidiary has increased
from 80% to 100%. (See Note 5 (a), Share Capital)
(c) Mongolia
The Company has entered into several agreements in Mongolia (see note 1), which
grant the Company exclusive rights to broadcast under certain frequency
spectrum. During May 1998, the paging system has been upgraded to offer voice
paging, answering services, remote message retrieval, and storage in
Ulaanbaator, Mongolia's capital. Upon completion of beta testing, the Company
will launch its paging services. The Company has also entered into exclusive
agreements to broadcast certain channels in Mongolia. The License granted
expires May 17, 2006.
57
<PAGE>
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1998
3. LICENSES AND DEFERRED DEVELOPMENT COSTS (continued)
(d) Asia Learning World
In order to provide a substantial education component to the Company's broadcast
system, the Company has agreed to enter into a joint venture project with
Entertainment World Ltd. known as the "Asia Learning World".
(e) Tanzania
The licenses granted to the Company by the Government of Tanzania (see note 1)
give the Company exclusive rights to certain frequency spectrum. The Company has
also entered into agreements to broadcast certain channels in Tanzania. The
Company will be issuing Nostrad Singapore up to 1,500,000 shares as per
agreement (See Note 1).
(f) Morocco
The Company has applied for exclusive rights to certain frequency spectrum to
the Government of Morocco. If received, the Company will enter into exclusive
agreement to broadcast certain channels in Morocco. The Company also has certain
rights to market Satellite DTH Subscription TV channels in Morocco. If the
Company is successful to obtaining exclusive rights to certain frequency
spectrum, the Company will be issuing Nostrad Singapore up to 2,000,000 shares
as per agreement.
4. FIXED ASSETS
Fixed assets of the Company consist of the following:
December 31, December 31,
1998 1997
- ------------------------------------------------------------------------------
Office equipment, furniture & fixtures $ 85,537 $ 21,081
Transportation equipment 26,000 25,624
Leasehold improvements 22,147 27,435
Transmission station & tower 267,289 100,668
Operating equipment & tools 62,308 29,199
--------- ---------
463,281 204,007
(144,730) (54,580)
--------- ---------
$ 318,551 $ 149,427
========= =========
58
<PAGE>
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1998
5. SHARE CAPITAL
a) Common shares issued and outstanding since inception are as follows:
<TABLE>
<CAPTION>
Fiscal period and consideration received Number of Par value Additional paid-in
shares amount capital
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
March 1, 1993 - cash 3,000,000 $3,000 $ --
September 30, 1997
Purchase of Nostrad Media Pte. Ltd. and
OmniVision Africa Ltd. 3,700,000 3,700 367,640
September 15, 1998
Private Placemen (b) 1,500,000 1,500 953,755
September 15, 1998
Acquisition of 20% of Uganda License (a) 500,000 500 49,500
Acquisition of 80% of 1,500,000 shares for
Ghana license interests 1,200,000 1,200 118,800
--------------------------------------------
9,900,000 $9,900 $1,489,695
============================================
</TABLE>
a) On October 15, 1997, the Company entered into an agreement to purchase the
remaining 20% interest in OmniVision (U) Ltd. for consideration of 500,000
shares of the Company. Shares were issued on September 15, 1998.
b) The Company entered into a Private Placement Offering dated November 27,
1997. Under the terms of this agreement, the Company issued 1,500,000
shares for total proceeds of $975,000. Finders fees of $19,745 were paid.
Nostrad Singapore had agreed to convert a maximum of the $300,000 owed to
shares by participating in the Private Placement Offering. As the Private
Placement Offering was oversubscribed, Nostrad converted $60,693 to acquire
shares.
c) The Company has reserved 5,000,000 shares of common stock for successful
performance by Nostrad Singapore in obtaining licenses in three countries.
As formal agreements have been entered into with Ghana and Tanzania, the
Company has issued 1,200,000 shares to Nostrad Singapore for its 80%
interest in licenses in Ghana.
d) On September 30, 1998, the Company entered into a Stock Option Plan. Under
the terms of this agreement, the Company can issue up to 1,500,000 shares
to officers, directors, consultants and key employees. Stock option
agreements entered into to date agree to issue up to 1,235,000 shares at
$0.65 per share. Each stock option agreement expires on September 30, 2000.
At the time the stock options were issued, there was no market for the
stock. Subsequently, the stock has commenced trading but with little
volume. Consequently, there is no compensation cost for the Company's stock
option plan and application of FASB Statement No. 123, "Accounting for
Stock-Based Compensation" results in the net loss and net loss per common
share remaining unchanged.
6. INCOME TAXES
The Company has incurred losses totaling approximately $1,296,000 that may be
carried forward to reduce taxable income in future years. No deferred asset has
been recognized due to the uncertainty of future realization of any tax benefit.
59
<PAGE>
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1998
7. COMMITMENTS
The Company has an agreement with its officers to provide international
management of its operations. The terms of the contract are for a period of five
years at an annual cost of $240,000. Related party transactions include amounts
in accounts payable due to a director or related company of $286,000 and amounts
due to Nostrad Singapore of $581,849. Both of these amounts carry no interest
and are supported by notes payable on demand.
8. YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date. The effects of the Year 2000 Issue may be experienced before, on, or after
January 1, 2000, and, if not addressed, the impact on operations and financial
reporting may range from minor errors to significant systems failure which could
affect an entity's ability to conduct normal business operations. It is not
possible to be certain that all aspect of the Year 2000 Issue affecting the
Company, including those related to the efforts of customers, suppliers, or
other third parties will be fully resolved.
9. COMPREHENSIVE INCOME
Effective December 31, 1998, the Company adopted FASB Statement #130
("FAS#130"), "Reporting Comprehensive Income". Comprehensive income for this
Companythe Company includes foreign currency adjustments. The adoption of
FAS#130 did not have a material effect on the Company's primary financial
statements, but did affect the presentation of the accompanying Company
statement of shareholders' equity.
60
<PAGE>
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets September 30, December 31, September 30,
1999 1998 1998
(unaudited) (unaudited)
----------------------------------------------
<S> <C> <C> <C>
Current Assets
Cash $ 61,563 $ 74,367 $ 45,276
Trade receivables 45,768 34,222 64,962
Due from related parties 52,872 -- 162,644
Inventory 105,942 108,114
Deposits & prepaid expenses 41,206 32,120 77,138
- -----------------------------------------------------------------------------------------------------
307,351 248,823 350,020
Licenses and Development Costs (note 2)
Licenses, net 369,825 275,140 507,237
Deferred development costs 408,911 386,447 244,075
- -----------------------------------------------------------------------------------------------------
778,736 661,587 751,312
Fixed Assets
Fixed Assets 505,929 463,281 359,819
less Accumulated Depreciation (244,713) (144,730) (101,984)
- -----------------------------------------------------------------------------------------------------
261,216 318,551 257,836
- -----------------------------------------------------------------------------------------------------
$ 1,347,303 $ 1,228,961 $ 1,359,168
=====================================================================================================
Liabilities
Current Liabilities
Accounts payable $ 905,821 $ 435,074 $ 243,980
Shareholder loans 676,593 581,849 328,136
Other 274,521 8,867 8,689
- -----------------------------------------------------------------------------------------------------
1,856,936 1,025,790 620,796
- -----------------------------------------------------------------------------------------------------
Commitments
Shareholders' Equity
Share Capital
Authorized
25,000,000 common shares, par value $0.001
Issued & outstanding - 11,100,000 common 11,100 9,900 9,900
shares (9,900,000 common shares at September 30
& December 30, 1998)
Additional Paid-in Capital 1,608,495 1,489,695 1,489,695
Accumulated Deficit (2,129,228) (1,296,424) (761,223)
- -----------------------------------------------------------------------------------------------------
(509,633) 203,171 738,372
- -----------------------------------------------------------------------------------------------------
$ 1,347,303 $ 1,228,961 $ 13,59,168
=====================================================================================================
</TABLE>
The notes to unaudited condensed consolidated financial statements are an
integral part thereof
61
<PAGE>
Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine months Nine months Quarter Quarter
Ended Ended ended ended
September 30, September 30, September 30, September 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues
Sales & Service Revenues $ 39,805 $ 38,419 $ (11,758) $ 26,059
- ----------------------------------------------------------------------------------------------------
Cost of Sales
Materials 71,403 27,625 58,921 22,821
Direct Marketing 18,776 13,554 8,662 4,581
- ----------------------------------------------------------------------------------------------------
70,179 41,179 67,583 27,402
- ----------------------------------------------------------------------------------------------------
Gross Profit (50,374) (2,760) (79,341) (1,343)
Expenses
Professional costs 285,746 123,012 81,879 79,164
Office and administration 155,039 82,301 (30,050) 25,086
Travel 74,637 75,857 23,532 35,640
Depreciation & amortization 120,982 60,921 54,896 19,715
Salary and benefits 168,760 26,509 58,582 6,854
Communication costs 42,715 22,408 22,315 13,511
Investor relations 12,908 -- 6,370 --
- ----------------------------------------------------------------------------------------------------
860,787 391,007 217,524 169,356
- ----------------------------------------------------------------------------------------------------
Operating Loss (911,161) (393,768) (296,865) (170,699)
Other
Deferred Cost Write down -- (63,674) -- (63,674)
- ----------------------------------------------------------------------------------------------------
Net loss (911,161) (457,442) $ (296,865) (234,373)
====================================================================================================
Average Number of
outstanding
shares 9,974,725 6,875,824 10,121,739 7,221,739
- ----------------------------------------------------------------------------------------------------
Net (loss) per share $ (0.091) $ (.067) $ (0.029) $ (.032)
====================================================================================================
</TABLE>
The notes to unaudited condensed consolidated financial statements are an
integral part thereof
62
<PAGE>
Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
- --------------------------------------------------------------------------------
September 30, 1999
<TABLE>
<CAPTION>
Foreign
Subscribed Common Stock Additional Currency
--------------------- ------------------------- Paid-in Translation Accumulated
Shares Amount Shares Amount Capital Adjustment Deficit Total
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Common stock
split after
January 1,
1997 -- $ -- 3,000,000 $ 3,000 $ -- $ -- $ -- $ 3,000
Share
Subscriptions 461,538 300,000 -- -- -- -- -- 300,000
Reverse
Acquisition by
Nostrad -- -- 3,700,000 3,700 367,640 -- -- 371,340
Foreign
Currency
Translation -- -- -- -- -- 8,257 -- 8,257
- ------------------------------------------------------------------------------------------------------------------------------
Net loss - 1997 -- -- -- -- -- -- (334,857) (334,857)
- ------------------------------------------------------------------------------------------------------------------------------
Balance
December 31,
1997 461,538 300,000 6,700,000 6,700 367,640 8,257 (334,857) 347,740
- ------------------------------------------------------------------------------------------------------------------------------
Private
Placement, net
of Subcriptions (461,538) (300,000) 1,500,000 1,500 973,500 -- -- 675,000
Finders Fees -- -- -- -- (19,745) -- -- (19,745)
Shares issued for
Licenses -- -- 1,700,000 1,700 168,300 -- -- 170,000
Foreign
Currency
Translation -- -- -- -- -- (11,929) -- (11,929)
- ------------------------------------------------------------------------------------------------------------------------------
Net loss - 1998 -- -- -- -- -- -- (957,895) (957,895)
- ------------------------------------------------------------------------------------------------------------------------------
Balance
December 31,
1998 $ -- $ -- 9,900,000 $ 9,900 $1,489,695 $ (3,672) $(1,292,752) $ 203,171
- ------------------------------------------------------------------------------------------------------------------------------
Shares issued
for Licenses -- -- 1,200,000 1,200 118,800 -- -- 120,000
- ------------------------------------------------------------------------------------------------------------------------------
Foreign
Currency
Translation -- -- -- -- -- 78,357 -- 78,357
- ------------------------------------------------------------------------------------------------------------------------------
Net loss - 1999 -- -- -- -- -- -- (911,161) (911,161)
- ------------------------------------------------------------------------------------------------------------------------------
Balance
June 30, 1999 $ -- $ -- 11,100,000 $ 11,100 $1,608,495 $ 74,685 $(2,203,919) $(509,633)
==============================================================================================================================
</TABLE>
The notes to the unaudited condensed consolidated financial statements are an
integral part thereof
63
<PAGE>
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Nine months Nine months Quarter Quarter
Ended Ended ended ended
September 30, September 30, September 30, September 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) for period $(911,161) $(457,442) $(296,865) $(234,373)
Add expense items not involving
Development cost writedown -- 63,674 -- 63,674
Depreciation 120,982 60,921 54,896 19,714
- --------------------------------------------------------------------------------------------
(790,179) (332,847) (241,969) (150,985)
Add changes in non-cash working
Accounts receivable (64,419) (39,272) (11,968) (24,044)
Inventory 2,172 (154,866) 1,486 (82,782)
Deposits & prepaids (9,086) (36,861) (3,378) (25,173)
Accounts Payable 814,759 209,931 285,535 127,760
- --------------------------------------------------------------------------------------------
Net funds (used) by operating
activities (46,753) (353,915) 29,706 (155,224)
INVESTING ACTIVITIES
Licenses & deferred development 2,852 (396,329) (3,687) (192,943)
Fixed asset purchases (63,646) (155,812) 3,227 (96,321)
- --------------------------------------------------------------------------------------------
Net funds (used) by investing
activities (60,794) (552,141) (460) (289,264)
FINANCING ACTIVITIES
Shares issued for cash, net -- 955,255 -- 955,255
Share subsciptions -- (300,000) -- (904,250)
Shareholder loans 94,744 293,690 (18,000) 247,676
- --------------------------------------------------------------------------------------------
Net funds provided by financing
activities 94,744 948,945 (18,000) 298,681
- --------------------------------------------------------------------------------------------
NET INCREASE IN CASH (12,803) 42,889 11,246 (145,807)
Cash at beginning of period 74,366 2,387 51,317 191,083
- --------------------------------------------------------------------------------------------
CASH AT END OF PERIOD $ 61,563 $ 45,276 $ 61,563 $ 45,276
============================================================================================
The notes to condensed consolidated financial statements are an integral part thereof
Supplemental information:
Interest paid $ -- $ -- $ -- $ --
Taxes paid $ -- $ -- $ -- $ --
Shares issued for licenses $ 120,000 $ 170,000 $ 120,000 $ 170,000
--------- --------- --------- ---------
</TABLE>
64
<PAGE>
Condensed Consolidated Financial Statements
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
September 30, 1999
1. INTERIM FINANCIAL STATEMENTS
The results of operations for the interim period shown in this report are
not necessarily indicative of results to be expected for the fiscal year.
In the opinion of management, the information contained herein reflects all
adjustments necessary to make the results of operations for the interim
period a fair statement of such operations. All such adjustments are of a
normal recurring nature.
2. CONTINUING OPERATIONS
Nostrad Telecommunications Inc. ("Nostrad" or the "Company") was
incorporated in Nevada on September 24, 1993. On September 29, 1997, the
Company's name was changed from Cave Productions, Inc. to Nostrad.
Effective September 30, 1997, Nostrad Telecommunications Pte. Ltd., a
private Singapore company ("Nostrad Singapore") sold its wholly owned
subsidiary companies Nostrad Media Pte. Ltd., a Singapore company which
holds the Company's interests in Asian licenses; and OmniVision Africa
Ltd., a British Virgin Island company, which holds the Company's interests
in African licenses; (collectively as "Nostrad Subsidiaries") to the
Company for 3,700,000 common shares and $300,000 cash or kind. Nostrad
Singapore may also be compensated up to 3,500,000 shares of common stock
for successful performance relative to license issuance in two emerging
countries.
In order to develop the licenses held by the Company, the Company must
continue to raise funds. The Company has been heavily reliant upon its
major shareholder, Nostrad Singapore to continue to fund the Company's
growth. During the current fiscal year the Company's common shares
commenced trading on the over the counter pink sheets. The Company is
currently applying to get the Company's shares listed on a major stock
exchange. If the Company is unable to list its shares, the ability to raise
additional funds through the issuance of shares may be hampered.
These financial statements have been prepared on the going concern basis,
which assumes the realization of assets and liquidation of liabilities in
the normal course of business. The application of the going concern concept
is dependent upon the ability of the Company to raise additional financing
and attain future profitable operations.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements have been prepared in accordance with United
States generally accepted accounting principles
a) The accompanying consolidated financial statements include the
accounts of the Company and of acquired subsidiary companies: Nostrad
Media Pte. Ltd. (100% owned), Mongolia Home Vision Corporation HH (80%
owned by Nostrad Media Pte. Ltd.), OmniVision Africa Ltd. (100%
owned), OmniVision (U) Ltd. (100% owned by OmniVision Africa Ltd.),
OmniVision (Ghana) Ltd. (80% owned by OmniVision Africa Ltd.),
OmniVision (Tanzania) Ltd. (80% owned by OmniVision Africa Ltd. and
OmniVision (Maroc) Ltd. (65% owned by OmniVision Africa Ltd.). All
significant inter-company accounts and transactions have been
eliminated in consolidation.
b) The Company capitalizes the costs related to obtaining rights to
provide paging, cable television, telephone, and Internet services in
specific countries, and for the rights to broadcast specific channels.
Costs incurred are initially capitalized as Deferred Development
Costs. If after a twelve-month period, rights have not been fully
obtained, the Deferred Development Costs will be expensed. There is no
assurance that revenues exceeding these costs will be realized by the
Company.
65
<PAGE>
PART III
Items 1 and 2 Index to and Description of Exhibits
No. Description*
2.1 Certificate of Incorporation*
2.2 Certificate of Amendment*
2.3 Certificate of Good Standing*
2.4 Certificate of Secretary of State*
2.5 By-Laws*
6.1 Agreement dated October 20,1998 between the Company and Asia Learning
World Pte Ltd.*
6.2 Memorandum of Understanding between OmniVision Africa Ltd. and
CableVision (Africa) Ltd.*
6.3 Agreement dated October 20, 1998 between Asia Learning World Pte Ltd. and
Entertainment World Limited CAN.*
6.4 Agreement dated October 20, 1998 between Asia Learning World Pte. Ltd and
Entertainment World Limited CAN*
6.5 Agreement between the Company and Entertainment World Limited CAN*
6.6 Memorandum of Understanding among Globecommm Systems, NetSat Express and
Omnivision Maroc SARL*
6.7 Agreement dated January 4, 1999 between OmniVision Maroc SARL and GulfDTH
Production*
6.8 Amending Agreement dated May 27, 1999 between Omnivision Maroc SARL and
GulfDTH Production*
6.9 Amendment Agreement dated January 14, 1999 between Omnivision Maroc SARL
and GulfDTH Production*
6.10 Lease Agreement dated February 5,1997*
6.11 Stock Purchase Agreement dated February 25, 1997*
6.12 Joint Venture Agreement dated May 30, 1997*
6.13 Agreement dated August 6, 1999 between the Company and Pfluger
Enterprises, L.L.C.*
6.14 Distribution Agreement between La Societe d'Etudes et Realization
audiovisuelles and OmniVision*
6.15 Agreement between the government of the Republic of Uganda and M/S
Omnivision (U) Ltd.*
27 Financial Data Schedule*
- ----------
* Previously Filed.
66
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Registrant has caused this Amendment No. 1 to its registration statement on Form
10SB to be signed on its behalf by the undersigned, thereunder duly authorized.
Dated: February 21, 2000 Nostrad Telecommunications, Inc.
By:/s/ Chris Farnworth
----------------------------
Chris Farnworth, Vice President
67
<PAGE>
NOSTRAD TELECOMMUNICATIONS, INC.
Registration Statement on Form 10 SB
Index to Exhibits
No. Description
2.1 Certificate of Incorporation*
2.2 Certificate of Amendment*
2.3 Certificate of Good Standing*
2.4 Certificate of Secretary of State*
2.5 By-Laws*
6.1 Agreement dated October 20,1998 between the Company and Asia Learning
World Pte Ltd.*
6.2 Memorandum of Understanding between Omnivision Africa Ltd. and
CableVision (Africa) Ltd.*
6.3 Agreement dated October 20, 1998 between Asia Learning World Pte Ltd. and
Entertainment World Limited CAN.*
6.4 Agreement dated October 20, 1998 between Asia Learning World Pte. Ltd and
Entertainment World Limited CAN*
6.5 Agreement between the Company and Entertainment World Limited CAN*
6.6 Memorandum of Understanding among Globecommm Systems, NetSat Express and
Omnivision Maroc SARL*
6.7 Agreement dated January 4, 1999 between OmniVision Maroc SARL and GulfDTH
Production*
6.8 Amending Agreement dated May 27, 1999 between Omnivision Maroc SARL and
GulfDTH Production*
6.9 Amendment Agreement dated January 14, 1999 between Omnivision Maroc SARL
and GulfDTH Production*
6.10 Lease Agreement dated February 5,1997*
6.11 Stock Purchase Agreement dated February 25, 1997*
6.12 Joint Venture Agreement dated May 30, 1997*
6.13 Agreement dated August 6, 1999 between the Compan and Pfluger
Enterprises, L.L.C.*
6.14 Distribution Agreement between La Societe d'Etudes et Realisation
audiovisuelles and OmniVision*
6.15 Agreement between the government of the Republic of Uganda and M/S
Omnivision (U) Ltd.*
27 Financial Data Schedule*
- ----------
* Previously Filed.
68