RESALE PROSPECTUS
TCOM VENTURES CORPORATION
UP TO 4,000,000
SHARES OF COMMON STOCK
WHICH THE SELLING SHAREHOLDERS MAY RESELL UNDER THIS PROSPECTUS
You should read this resale prospectus carefully before you invest. This
prospectus relates to 4,000,000 shares of common stock $.001 par value per share
(the "Common Stock") of TCOM Ventures Corporation (the "Company"). The
stockholders of the Company listed in the "Selling Stockholders" section of this
resale prospectus may offer and resell shares of Common Stock under this resale
prospectus for their own accounts. TCOM Ventures Corporation will not receive
any proceeds from the resale of these shares by the selling stockholders.
These shares were issued or are issuable to the selling stockholders and
others as follows
(i) 4,000,000 shares issued and issuable under the Amended and Restated
2000 Amended and Restated Non-Qualified Stock Option Plan (the "Plan")
The selling stockholders may offer their common stock through public or
private transactions, at prevailing market prices or at privately negotiated
prices. These future prices are not currently known.
TCOM Ventures Corporation stock is traded on the Nasdaq OTC Bulletin Board
under the symbol "TCMV". On July 21, 2000 the last reported sale price for the
common stock on the Nasdaq OTC Bulletin Board was $0.52 per share.
See Risk Factors beginning on page 2 to read about factors you should
consider before buying shares of common stock.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION MADE TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is July 21, 2000
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Risk Factors
You should carefully consider the risks described below before deciding
whether to invest in TCOM Ventures Corporation. If any of the contingencies
discussed in the following paragraphs or other materially adverse events
actually materialize, the business, financial condition and results of
operations of TCOM Ventures could be materially and adversely affected. In such
a case, the trading price of TCOM Ventures' common stock could decline, and you
could lose all or part of your investment.
TCOM Ventures Has Experienced Difficulty Implementing Its Business Plan
TCOM Ventures has an ambitious business plan that it has been attempting to
implement since April 1999. Since the company has experienced difficulty
obtaining financing from traditional sources, execution of most of its business
plan has been delayed. There can be no assurance that the business plan can be
implemented and successfully executed.
Substantial Doubt Exists as to TCOM Ventures' Ability to Continue as a Going
Concern
The independent auditor's report on the June 30, 1999, financial statements
of TCOM Ventures contains an explanatory paragraph that indicates there is
substantial doubt as to the company's ability to continue as a going concern.
Management projects that TCOM Ventures will continue to incur net losses and
experience negative cash flow for the foreseeable future. This will require
substantial amounts of capital. As of the date of this prospectus, management
does not have commitments for additional financing and cannot be sure that TCOM
Ventures will be able to obtain any such commitments at all or upon reasonable
terms and conditions.
Failure to Integrate Acquisitions Successfully May Adversely Affect TCOM
Ventures' Operating Results
The success of TCOM Ventures will depend to a great extent on its ability
to integrate the operations and management of the businesses that it has
acquired and businesses that it may acquire in the future. Consolidating
acquired businesses and integrating regional operations may take a significant
period of time, will place a significant strain on TCOM Ventures' resources and
could prove to be more expensive than expected. TCOM Ventures may increase
expenditures to accelerate the integration and consolidation of its acquired
operations, but it cannot guarantee this result nor can the company assure
investors that its resources will be sufficient to successfully implement its
expansion program.
Management's Planned Aggressive Growth Will Strain TCOM Ventures' Resources
Management intends to expand the operations of TCOM Ventures rapidly
through acquisitions by aggressively pursuing companies that provide or can
provide a national network system and infrastructure and then expand the network
through the acquisition and installation of necessary equipment, extensive
marketing efforts in new locations and the employment of qualified technical,
marketing and customer support personnel. This rapid growth will place a
significant strain on our managerial, operational and financial resources.
To manage our growth, management must improve the operational systems,
procedures and controls of TCOM Ventures on a timely basis by centralizing and
standardizing TCOM Ventures' operations and upgrading and replacing outdated
infrastructure. If the demands placed on its network resources by a growing
subscriber base outpace its growth and operating plans, the quality and
reliability of our service may decline and relationships with customers may be
harmed as a result.
If TCOM Ventures Is Unable to Establish Satisfactory Peering Relationships,
Costs May Increase
Management intends to establish and maintain "peering" relationships with
other ISPs and with CLECs so that TCOM Ventures can exchange traffic without
paying transit costs. If management is unable to establish adequate peering
relationships, our costs will increase and our revenues could decrease. This
would harm the business, financial condition and results of operations of TCOM
Ventures.
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If Suppliers Fail to Provide TCOM Ventures With The Equipment it Needs, We May
Lose Customers
There are only a limited number of businesses that can supply TCOM Ventures
with the key components it will need for its planned network infrastructure,
including telecommunications services and networking equipment. Management
cannot be certain that suppliers and telecommunications carriers will continue
to sell or lease their products and services to TCOM Ventures at commercially
reasonable prices or at all. If there are delays in receiving this equipment,
TCOM Ventures may not be able to service its customers. Difficulties in
developing alternative sources of supply, if required, could adversely affect
its business, future financial condition or operating results. Moreover, failure
of telecommunications providers to provide the data communications capacity
required by TCOM Ventures for any reason could cause interruptions in its
ability to provide access services to its customers, which may materially and
adversely affect our business, financial condition and operating results.
Acquisitions of ISP Subscribers May Result in Subscriber Cancellations Due to
Billing Problems and Unfamiliarity with TCOM Ventures' Service
As part of management's growth strategy, TCOM Ventures may acquire
businesses, products, technologies and other assets, including ISP subscriber
accounts, or enter into joint venture arrangements that complement our
businesses. In an acquisition of ISP subscribers, TCOM Ventures may experience
subscription cancellations in the shortterm period following the acquisition due
to the lack of the acquired subscribers' familiarity with TCOM Ventures as their
ISP and billing issues that may arise due to poor record keeping and billing
administration by the selling company.
Acquisitions of Companies May Disrupt TCOM Ventures' Business and Distract
Management Due to Difficulties in Assimilating Personnel and Operations
If TCOM Ventures acquires another company, TCOM Ventures could encounter
difficulties in assimilating the acquiree's personnel and operations. This may
disrupt our ongoing business and distract management, as well as result in
unanticipated costs and difficulty in maintaining standards, controls and
procedures. TCOM Ventures may be required to incur debt or issue equity
securities to pay for any future acquisitions or to fund any losses or
unanticipated costs of the combined companies.
TCOM Ventures is Subject to All Risks Faced by Start-Up Internet Companies
TCOM Ventures may encounter certain risks and difficulties in building and
operating a business in the rapidly evolving telecommunications sector,
especially given its limited operating history:
* Future revenues will depend heavily on management's ability to acquire
businesses, to attract and retain subscribers and business customers,
and to increase per subscriber revenues.
* The telecommunications services business, including the Internet
services sector, is extremely competitive and is changing rapidly.
Competition could result in loss of customers and reduction of
revenues. Most of our competitors have significantly greater market
presence, brand recognition, and financial, technical and personnel
resources than TCOM Ventures has, and many have extensive coasttocoast
Internet backbones and large customer bases.
* We expect increasing competition from Internet service providers using
alternative technologies including:
* telecommunications providers that bundle Internet access with
basic local and long distance telecommunications services, which
could force TCOM Ventures to price its services at a level that
would have an adverse effect on its business, financial condition
and results of operations;
* major cable companies such as AT&T as they begin to offer
Internet connectivity through their cable infrastructure, which
is designed to increase the connection speed to the Internet; and
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* other alternative service companies that are approaching the
Internet connectivity market with various wireless terrestrial
and satellitebased service technologies, which currently offer
highspeed Internet access to business customers.
* Management expects TCOM Ventures to encounter significant pricing
pressure as a result of competition and advances in technology.
* TCOM Ventures will rely on a combination of copyright, trademark and
trade secret laws to protect its proprietary rights. Management cannot
be certain that the steps we, or the companies we have acquired, have
taken will be adequate to prevent the misappropriation of TCOM
Ventures' technology or that third parties, including competitors,
will not independently develop technologies that are substantially
equivalent or superior to TCOM Ventures' proprietary technology.
Market Overhang and Shares Available For Future Sale
The market price of TCOM Ventures Corporation common stock could drop if
substantial amounts of shares are sold in the public market or if the market
perceives that such sales could occur. A drop in the market price could
adversely affect holders of the stock and could also harm TCOM Ventures' ability
to raise additional capital by selling equity securities. TCOM Ventures has
registered for public sale in the registration statement of which this
prospectus is a part 4,000,000 shares of its common stock issuable under its
Amended and Restated 2000 Non-Qualified Stock Option Plan (the "Plan"), based on
a market price of the common stock of $0.52 per share as of July 21, 2000, and
as of that date, TCOM Ventures had outstanding and had agreed to issue options,
warrants and convertible securities for the purchase of up to approximately
12,936,134 shares of common stock (including those referred to above) at an
average price of $7.30 per share, representing approximately 44% of the
company's outstanding shares of common stock on a fully-diluted basis as of that
date. In addition, 13,725,000 shares issued by TCOM Ventures in connection with
its acquisition of Phoenix Communications, Inc., in a private transaction will
become eligible for sale in the public market under SEC Rule 144 in April 2000.
12,400,000 of these shares are held by current officers or directors of TCOM
Ventures. However, officers of the Company have entered into stock sale
restriction agreements and, in addition, are subject to the sale limitations of
SEC Rule 144(e) as described herein.
A Note About Forward-Looking Statements
This prospectus contains both historical and forwardlooking statements. All
statements other than statements of historical fact are, or may be deemed to be,
forwardlooking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The
forwardlooking statements in this prospectus are not based on historical facts,
but rather reflect the current expectations of the management of TCOM Ventures
Corporation concerning future results and events.
The forward-looking statements generally can be identified by the use of
terms such as "believe," "expect," "anticipate," "intend," "plan," "foresee,"
"likely," "will" or other similar words or phrases. Similarly, statements that
describe the objectives, plans or goals of TCOM Ventures are or may be
forwardlooking statements.
Forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause the actual results, performance or achievements
of TCOM Ventures to be different from any future results, performance and
achievements expressed or implied by these statements. You should review
carefully all information, including the financial statements and the notes to
the financial statements included in this prospectus. In addition to the factors
discussed above under "Risk Factors," the following important factors could
affect future results, causing the results to differ materially from those
expressed in the forwardlooking statements in this prospectus:
* the timing, impact and other uncertainties related to pending and
future acquisitions by TCOM Ventures Corporation
* the impact of new technologies;
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* changes in laws or rules or regulations of a governmental agency,
including the Federal Communications Commission;
* changes in tax requirements, including tax rate changes, new tax laws
and revised tax law interpretations; and
* interest rate fluctuations and other capital market conditions.
These factors are not necessarily all of the important factors that could
cause actual results to differ materially from those expressed in the
forwardlooking statements in this prospectus. Other unknown or unpredictable
factors also could have material adverse effects on the future results of TCOM
Ventures. The forwardlooking statements in this prospectus are made only as of
the date of this prospectus and TCOM Ventures does not have any obligation to
publicly update any forwardlooking statements to reflect subsequent events or
circumstances. TCOM Ventures cannot assure you that projected results will be
achieved.
Use Of Proceeds
Because this prospectus is solely for the purpose of permitting the
participants in the Amended and Restated 2000 Non-Qualified Stock Option Plan
("Participants") to offer and sell shares, TCOM Ventures will not receive any
proceeds from the sale of the shares being offered. The selling stockholders
will receive all the proceeds. However, TCOM Ventures will receive the proceeds
from any exercise of stock options which will be used for general corporate
purposes.
Determination Of Offering Price
This offering is solely for the purpose of allowing Particpants to sell
shares. The Participants may elect to sell some or all of their shares when they
choose, in the near future or at a later date, at the price at which they choose
to sell. As the market develops, the Participants will determine the price for
their shares.
Dilution
This offering is for sales of shares by Participants. Such sales will not
result in any dilution to the net tangible book value per share of the common
stock of TCOM Ventures before and after the sales. Prospective investors should
be aware, however, that the market price of shares being sold may not bear any
rational relationship to net tangible book value per share. As of December 31,
1999, the net tangible book value per outstanding share of the common stock of
TCOM Ventures was a negative $.21 per share. Thus, exercise of the options will
be non-dilutive.
Participants
The Participants acquired beneficial ownership of all the shares offered
for resale pursuant to this prospectus in compensatory transactions. These
transactions include stock bonuses for employees and stock options issued or
issuable under (i) the Amended and Restated 2000 Non-QualifiedStock Option Plan.
A shareholder is deemed to beneficially own shares held in his or her name and
certain shares he or she does not own but has the right to acquire upon option
exercise or otherwise within 60 days after the date of this prospectus.
After the sales are complete, the selling stockholders beneficially owning
1% or more of the outstanding common stock will be James C. Roberts (37%), Lynne
K. Roberts (37%) and Robert L. Fredrick (23%), based on 29,456,320 shares issued
and outstanding as of July 21, 2000. All of the option shares identified in the
table above have an exercise price of $10.55 per share.
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Plan Of Distribution
TCOM Ventures is registering this offering of shares on behalf of the
Participants. TCOM Ventures will pay all costs, expenses and fees related to the
registration, including all registration and filing fees, printing expenses,
fees and disbursements of its counsel, blue sky fees and expenses. The
Participants will pay any underwriting discounts and selling commissions in
connection with the sale of the shares.
The Participants may sell the shares covered by this prospectus from time
to time in one or more transactions through the OTC Bulletin Board or an
interdealer quotation system, on one or more securities exchanges, in
alternative trading markets or otherwise, at prices and at terms then prevailing
or at prices related to the then current market price, or in negotiated
transactions. The Participant will determine the prices at which they sell their
shares in these transactions. The Participant may effect the transactions by
selling the shares to or through broker-dealers. In effecting sales,
broker-dealers engaged by the Participants may arrange for other brokerdealers
to participate in the resales. The shares may be sold by one or more, or a
combination, of the following:
* a block trade in which the brokerdealer attempts to sell the shares as
agent but may position and resell a portion of the block as principal
to facilitate the transaction,
* purchases by a brokerdealer as principal and resale by the
brokerdealer for its account,
* ordinary brokerage transactions and transactions in which the broker
solicits purchasers, and
* privately negotiated transactions.
The amount of securities to be offered or resold by means of this
prospectus by each Participant, and any other person with whom he or she is
acting in concert for the purpose of selling securities of TCOM Ventures, is
limited by SEC Rule 144(e)(1) and (2). The number of shares resold may not
exceed, during any three-month period, the greater of:
* 1% of the shares of the class outstanding as shown by the most recent
report published by the issuer, or
* the average weekly reported volume of trading in such securities
during the four calendar weeks preceding the date of receipt of the
order to execute the transaction by the broker or the date of
execution of the transaction directly with a market maker.
For the purpose of determining the amount of securities sold during any
three-month period, the following provisions shall apply:
(i) Where both convertible securities and securities of the class into
which they are convertible are sold, the amount of convertible securities
sold shall be deemed to be the amount of securities of the class into which
they are convertible for the purpose of determining the aggregate amount of
securities of both classes sold;
(ii) The amount of securities sold for the account of a pledgee
thereof, or for the account of a purchaser of the pledged securities,
during any period of three months within one year after a default in the
obligation secured by the pledge, and the amount of securities sold during
the same three-month period for the account of the pledgor shall not
exceed, in the aggregate, the amount specified in paragraph SEC Rule
144(e)(1) or (2), whichever is applicable;
(iii) The amount of securities sold for the account of a donee thereof
during any period of three months within one year after the donation, and
the amount of securities sold during the same three-month period for the
account of the donor, shall not exceed, in the aggregate, the amount
specified in paragraph SEC Rule 144(e)(1) or (2), whichever is applicable;
(iv) Where securities were acquired by a trust from the settlor of the
trust, the amount of such securities sold for the account of the trust
during any period of three months within one year after the acquisition of
the securities by the trust, and the amount of securities sold during the
same three-month period for the account of the settlor, shall not exceed,
in the aggregate, the amount specified in paragraph SEC Rule 144(e)(1) or
(2), whichever is applicable.
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(v) The amount of securities sold for the account of the estate of a
deceased person, or for the account of a beneficiary of such estate, during
any period of three months and the amount of securities sold during the
same period for the account of the deceased person prior to his death shall
not exceed, in the aggregate, the amount specified in SEC Rule 144(e) (1)
or (2), whichever is applicable; provided, that no limitation on amount
shall apply if the estate or beneficiary thereof is not an affiliate of the
issuer;
(vi) When two or more affiliates or other persons agree to act in
concert for the purpose of selling securities of an issuer, all securities
of the same class sold for the account of all such persons during any
period of three months shall be aggregated for the purpose of determining
the limitation on the amount of securities sold;
(vii) The following sales of securities need not be included in
determining the amount of securities sold: securities sold pursuant to an
effective registration statement under the Securities Act; securities sold
pursuant to an exemption provided by Regulation A under the Securities Act;
securities sold in a transaction exempt pursuant to Section 4 of the
Securities Act and not involving any public offering; and securities sold
offshore pursuant to Regulation S under the Securities Act.
Officers of TCOM Ventures holding an aggregate of 18,894,556 shares of
its common stock and options and warrants for the purchase of an additional
2,923,222 shares of common stock have entered into stock sale restriction
agreements whereby they agreed, among other things, that the maximum amount
each will sell during any period of 30 consecutive calendar days will not
exceed the lesser of $25,000 in gross proceeds or 5,000 shares; that no
share will be sold for a price less than $4.25; and that they will not
engage in any short sales of the stock. The board of directors may waive
any of the restrictions on an individual basis and may terminate the
agreement at any time.
The Participants may enter into hedging transactions with
broker-dealers. In these transactions, broker-dealers may engage in short
sales of the common stock in the course of hedging the positions they
assume with the Participants. The Participants also may sell the common
stock short pursuant to this prospectus and redeliver the shares to close
out these short positions. The Participants may enter into option or other
transactions with broker-dealers that require the delivery to the
broker-dealer of the shares covered by this prospectus. The broker-dealer
may then resell or otherwise transfer the shares pursuant to this
prospectus. The Participants also may loan or pledge the shares to a
broker-dealer. The broker-dealer may then sell the loaned shares or, upon a
default by the Participant, the broker-dealer may sell the pledged shares
pursuant to this prospectus.
The Participants may engage in other financing transactions that may
include forward contract transactions or borrowings from financial
institutions in which the shares are pledged as security. In connection
with any of these forward contract transactions, the Participants would
pledge shares to secure their obligations and the counterparty to these
transactions would sell the common stock short to hedge its transaction
with the Participant. Upon a default by the Participant under any of these
financings, including a forward contract transaction, the pledgee or its
transferee may sell the pledged shares pursuant to this prospectus. Any
such pledgee or its transferee will be identified in this prospectus by
post-effective amendment to the registration statement of which it is a
part.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from the Participant. Broker-dealers
or agents may also receive compensation from the purchasers of the shares
for whom they act as agents or to whom they sell as principals, or both.
Compensation to a particular broker-dealer may be in excess of customary
commissions and will be in amounts to be negotiated with a Participant in
connection with the sale. Broker-dealers or agents, any other participating
broker-dealers and the Participants may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act in connection
with sales of the shares. Accordingly, any commission, discount or
concession received by them and any profit on the resale of the shares
purchased by them may be deemed to be underwriting discounts or commissions
under the Securities Act. Because the Participants may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act,
the Participants will be subject to the prospectus delivery requirements of
the Securities Act.
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The Participants will be subject to applicable provisions of the
Securities Exchange Act of 1934 and the associated rules and regulations,
including Regulation M. These provisions may limit the timing of purchases
and sales of shares of the common stock of TCOM Ventures by the
participants. TCOM Ventures will make copies of this prospectus available
to the Participants and has informed them of the need for delivery of
copies of this prospectus to purchasers at or before the time of any sale
of the shares.
Legal Opinion
Vanderkam & Sanders, Houston, TX has passed upon the legality of the
shares offered by this prospectus.
Experts
Ehrhardt Keefe Steiner & Hottman, P.C., independent auditors, have
audited the consolidated equity and cash flows of TCOM Ventures Corporation
as of the quarter ended March 31, 2000 as set forth in the Form 10-Q
Registration Statement filed May 22 , 2000, which is incorporated by
reference in this prospectus and elsewhere in the registration statement.
Ehrhardt Keefe Steiner & Hottman, P.C., independent auditors, have
audited the consolidated equity and cash flows of TCOM Ventures Corporation
as of the year ended June 30, 1999 as set forth in the Registration
Statement filed on form SB-2 filed on February 24, 2000, which is
incorporated by reference in this prospectus and elsewhere in the
registration statement.
The consolidated statements of operations, stockholders' equity and
cash flows of TCOM Ventures Corporation and subsidiary for the year ended
June 30, 1998 included in this prospectus have been included herein in
reliance on the report of Gerstle, Rosen & Associates, P.A., independent
certified public accountants, given on authority of that firm as experts in
accounting and auditing.
The balance sheets of America's Web Station as of December 31, 1997
and 1998 and the statements of operations, stockholders' equity and cash
flows for the period then ended included in this prospectus have been
included herein in reliance on the report of Girardin Baldwin & Associates
LLP, independent certified public accountants, given on authority of that
firm as experts in accounting and auditing.
With respect to the unaudited interim financial information included
herein, the independent certified public accountants have not audited or
reviewed the information and have not expressed an opinion or any other
form of assurance with respect to this information.
The pro forma combined statement of operations and cash flows for the
year ended June 30, 1999 have not been audited or reviewed by the
independent certified public accountants and they do not express an opinion
or purport to give any other form of assurance on them.
In May 1999, the board of directors of TCOM Ventures appointed
Ehrhardt Keefe Steiner & Hottman P.C. to serve as its principal independent
accountant for the fiscal year ending June 30, 1999. Gerstle, Rosen &
Associates, P.A., reported on the financial statements of TCOM Ventures for
the fiscal year ended June 30, 1998. Its report for that year noted that
TCOM Ventures had suffered recurring losses from operations that raised
substantial doubt about its ability to continue as a going concern. The
same matter was emphasized in the auditor's report for the fiscal year June
30, 1999. There were no disagreements with the former accountants on any
matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure.
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How To Obtain Additional Information
TCOM Ventures Corporation has filed a registration statement with the
Securities and Exchange Commission relating to the securities offered by this
prospectus. The prospectus does not contain all of the information set forth in
the registration statement. For further information with respect to TCOM
Ventures and the securities offered by this prospectus, refer to the
registration statement. In addition, TCOM Ventures recently became a public
company required to file annual and quarterly reports with the Securities and
Exchange Commission. As of the date of this prospectus, no reports have been
required to be filed. You may read and copy the registration statement and any
materials TCOM Ventures files with the Securities and Exchange Commission at the
Securities and Exchange Commission's Public Reference Room at 450 Fifth Street,
N.W., Washington, DC 20549. The public may obtain information on the operation
of the Public Reference Room by calling the Securities and Exchange Commission
at 1800SEC0330. The Securities and Exchange Commission also maintains an
Internet site at www.sec.gov where TCOM Ventures' Securities and Exchange
Commission filings can be viewed.
