As filed with the Securities and Exchange Commission on October 13, 2000
Registration Statement No. 333-46954
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
COVISTA COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
New Jersey 4813 22-1656895
(State or other juris- (Primary Standard (I.R.S. Employer
diction of incorporation Industrial Classification Identification No.)
or organization) Code Number)
150 Clove Road, 8th Floor
Little Falls, NJ 07424
(973) 812-1100
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
Thomas P. Gunning
Chief Financial Officer
Covista Communications, Inc.
150 Clove Road, 8th Floor
Little Falls, NJ 07424
(973) 812-1100
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copies to:
Sean P. McGuinness, Esq.
Christina L. Novak, Esq.
Swidler Berlin Shereff Friedman, LLP
3000 K Street, N.W., Suite 300
Washington, D.C. 20007
(202) 424-7500
and
Jay J. Miller, Esq.
430 East 57th Street
Suite 5-D
New York, NY 10022
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
CALCULATION OF REGISTRATION FEE
==============================================================================
TITLE OF AMOUNT TO BE PROPOSED MAXIMUM PROPOSED AMOUNT
SHARES TO BE REGISTERED OFFERING PRICE MAXIMUM OF
REGISTERED PER SHARE (1) AGGREGATE REGISTRATION
OFFERING PRICE FEE
------------------------------------------------------------------------------
Common Stock 2,454,661 $4.19 $10,285,029 $2,715.25*
par value
$0.05 per
share
=============================================================================
(1) Estimated solely for purposes of calculating the registration fee. In
accordance with Rule 457(c) of Regulation C, the estimated price for such
shares of common stock was based on the average of the high and low
reported prices on the Nasdaq National Market on September 27, 2000.
* Previously paid.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO
SAID SECTION 8(A), MAY DETERMINE.
<PAGE>
<PAGE>01
PROSPECTUS
SUBJECT TO COMPLETION, DATED OCTOBER 13, 2000
COVISTA COMMUNICATIONS, INC.
2,454,661 SHARES
COMMON STOCK
------------------------
This prospectus relates to the possible offer and sale from time to time of up
to 2,454,661 shares of our common stock, par value $.05 per share, by the
selling stockholders, who are the owners and pledgee of such Shares identified
on page 15 of this prospectus. The selling stockholders advised us that they,
acting as principals for their own account, directly or through agents,
dealers or underwriters that they may designate, may sell their shares of
common stock from time to time on terms that will be determined at the time of
sale. The selling stockholders may sell their shares through customary
brokerage channels, negotiated transactions or a combination of these methods
at fixed prices that may be changed, at market prices then prevailing or at
negotiated prices then obtainable. To the extent required, we will provide:
- the number of shares that will be sold,
- the names of the selling stockholders,
- the purchase price,
- the public offering price,
- the name of any agent, dealer or underwriter, and
- the amount of any offering expenses, applicable commissions or
discounts and any other material information regarding a
particular offer in an accompanying prospectus supplement or,
if appropriate, a post-effective amendment to the registration
statement of which this prospectus is a part.
Each selling stockholder reserves the right to accept and, together with
its agents, to reject in whole or in part, any proposed purchase of its
shares.
Since the shares registered by the registration statement are being
offered on a delayed or continuous basis as permitted by Rule 415 of the
Securities Act of 1933, we are not able to include in this prospectus
information about the price to the public of the shares or the proceeds to the
selling stockholders. The selling stockholders and any brokers or dealers
executing selling orders on their behalf may be deemed "underwriters" within
the meaning of the Securities Act, in which event the usual and customary
selling commissions which may be paid to the brokers or dealers may be deemed
to be underwriting commissions under the Securities Act. The aggregate
proceeds to the selling stockholders from the sale of the shares will be the
purchase price of the shares sold less any discounts or commissions. We can
give you no assurance that any or all of the shares that we register will be
sold.
We will not receive any of the proceeds from the shares of common stock
sold by the selling stockholders. Certain of the selling stockholders will
pay all of the expenses incurred in registering the shares of common stock
covered by this prospectus. Further information concerning the selling
stockholders and the shares of common stock that will be sold can be found in
the "Selling Stockholders" and "Plan of Distribution" sections of this
prospectus. Information concerning the selling stockholders may change from
time to time.
To the extent required, any changes will be set forth in an accompanying
prospectus supplement or if appropriate, a post-effective amendment to the
registration statement of which this prospectus is a part.
Our common stock is traded on the Nasdaq National Market under the symbol
"CVST." On September 27, 2000, the last reported sale price for our common
stock on the Nasdaq National Market was $4.25 per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 6 TO READ ABOUT CERTAIN RISKS THAT YOU
SHOULD CONSIDER BEFORE BUYING SHARES OF OUR COMMON STOCK.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
You should rely only on the information contained or incorporated by reference
in this prospectus. We have not authorized anyone to provide you with
different information. We are not making an offer of these securities in any
state where the offer is not permitted. You should not assume that the
information in this prospectus is accurate as of any date other than the date
on the front of this prospectus.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
The information in this preliminary prospectus is not complete and may be
changed. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This
preliminary prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any jurisdiction where the
offer of sale is not permitted.
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
The date of this prospectus is ____________2000.
----------------------------
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<PAGE>02
TABLE OF CONTENTS
Where You Can Find More Information 3
Incorporation by Reference 3
Forward-Looking Statements 5
The Company 5
Risk Factors 6
Use of Proceeds 14
Transfer Agent 15
Selling Stockholders 15
Plan of Distribution 15
Legal Matters 17
Experts 17
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<PAGE>03
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any materials that we have filed with the SEC at the SEC's Public Reference
Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain
information on the operation of the Public Reference Room by calling the SEC
at 1-800-SEC-0330. We file information electronically with the SEC. The SEC
maintains an Internet site that contains reports, proxy and information
statements and other information regarding issuers that file electronically
with the SEC. The address of the SEC's Internet site is http://www.sec.gov.
You also may inspect copies of these materials and other information about us
at the following regional offices of the SEC: CitiCorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center,
Suite 1300, New York, New York 10048.
INCORPORATION BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with the SEC, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 before the termination of the offering of the
shares made under this prospectus:
- The description of our common stock contained in our registration
statement on Form 8-A filed with the SEC on April 2, 1998;
- Our annual report on Form 10-K for the fiscal year ended
January 31, 2000, as filed with the SEC on May 1, 2000;
- Our quarterly report on Form 10-Q for the quarter ended April 30,
2000, as filed with the SEC on June 9, 2000;
- Our proxy statement on Schedule 14A for our annual meeting of
stockholders, as filed with the SEC on August 10, 2000;
- Our quarterly report on Form 10-Q for the quarter ended July 31, 2000,
as filed with the SEC on September 14, 2000; and
- Our Current Report on Form 8-K, as filed with the SEC on October
3,2000.
We will provide without charge to each person who requests it in writing a
copy of any or all of the documents incorporated by reference in this
prospectus, except the exhibits to those documents (unless the exhibits are
specifically incorporated by reference in the documents). You should direct
requests for these copies to Thomas P. Gunning at 150 Clove Road, 8th Floor,
Little Falls, NJ 07424, or by telephone at (973) 812-1100. This prospectus is
part of a registration statement we filed with the SEC. The prospectus and any
accompanying prospectus supplement do not contain all of the information
included in the registration statement. We have omitted certain parts of the
registration statement in accordance with the rules and regulations of the
SEC. For further information, we refer you to the registration statement,
including its exhibits and schedules. Statements contained in this prospectus
and any accompanying prospectus supplement about the provisions or contents of
any contract, agreement or any other document referred to are not necessarily
complete. For each of these contracts, agreements or documents filed as an
<PAGE>
<PAGE>04
exhibit to the registration statement, we refer you to the actual exhibit for
a more complete description of the matters involved. You should not assume
that the information in this prospectus or any supplement is accurate as of
any date other than the date on the front of those documents.
<PAGE>
<PAGE>05
FORWARD-LOOKING STATEMENTS
Some of the information included or incorporated by reference in this
prospectus contains forward-looking statements, including statements that are
not historical or factual. We intend these forward looking statements to be
covered by the safe harbor provisions for forward-looking statements contained
in the Private Securities Litigation Reform Act of 1995 and we are including
this paragraph for purposes of complying with these safe harbor provisions.
The forward-looking statements include statements regarding our intent, belief
or expectations. You can identify these statements by the use of terminology
such as "may," "will," "expect," "believe," "intend," "plan," "estimate,"
"should" and other comparable terms. In addition, we, through our senior
management, from time to time make forward-looking oral and written public
statements concerning our expected future operations and other developments.
Investors are cautioned that, while forward-looking statements reflect our
good faith beliefs and best judgment based upon current information, they are
not guarantees of future performance and are subject to known and unknown
risks and uncertainties. Actual results may differ materially from the
expectations contained in the forward-looking statements as a result of
various factors. Such factors include, but are not limited to, the risks under
the caption "Risk Factors".
UNLESS OTHERWISE INDICATED OR UNLESS THE CONTEXT OTHERWISE REQUIRES, ALL
REFERENCES IN THIS PROSPECTUS TO "WE," "US," "OUR" OR THE "COMPANY" MEANS
COVISTA COMMUNICATIONS,INC.
THE COMPANY
We are a regional facilities-based long distance telecommunications and
Internet services provider servicing both the commercial and wholesale
marketplace. Our products and services include a broad range of voice, data
and Internet solutions, including long distance and toll-free services,
calling card, data, Internet access, DSL, email, facsimile, directory
assistance and teleconferencing services. The wholesale division provides
domestic and international termination services to carriers worldwide at
competitive rates. We currently own and operate two long distance switches,
one in New York City and one in Newark, New Jersey. In addition, we currently
own and operate two carrier grade routers, a remote access server and an email
server located in New York City and Northern New Jersey for our Internet
service offerings. We process approximately 95% of all our call volume through
our own facilities. We also have a Network Operations Center ("NOC") in
Northern New Jersey to monitor and control our New Jersey network and to
coordinate our various services.
For the fiscal year ended January 31, 2000, we had gross revenues of
approximately $140 million, derived approximately 60% from wholesale and 40%
from commercial services. In the retail market, we intend to continue to focus
our efforts on small to medium-sized customers with sales of $1 million to $60
million and monthly communications bills that range from $500 to $30,000. Our
commercial sales activities have been concentrated in Northern New Jersey and
New York City, where, according to industry sources, 40% of the total United
States telecommunications market is represented. We intend to focus our
efforts on further penetrating commercial users of our services in the
Northeast and to augment the services offered to our customers by introducing
local exchange telecommunications service offerings in selected northeastern
markets.
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<PAGE>06
We are a New Jersey corporation with our principal executive offices at
Overlook at Great Notch, 150 Clove Road, Little Falls, New Jersey 07424, and
our telephone number is (973) 812-1100. We incorporated in 1959 as Faradyne
Electronics Corp. In November 1991, we changed our name from
Faradyne Electronics Corp. to Total-Tel Communications, Inc. In September
2000, we changed our name from Total-Tel USA Communications, Inc. to Covista
Communications, Inc.
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS AND OTHER INFORMATION IN
THIS DOCUMENT BEFORE YOU DECIDE WHETHER TO PURCHASE OUR COMMON STOCK. THE
RISKS SET FORTH BELOW ARE IN ADDITION TO RISKS THAT APPLY TO MOST BUSINESSES.
RAPID CHANGES IN TECHNOLOGY COULD PLACE US AT A COMPETITIVE DISADVANTAGE.
Our success will depend on the capacity, reliability, and security of our
networks. A substantial portion of our future revenues will be derived from
providing tailored, value-added network services to our customers. We must
continue to expand and adapt our network infrastructure as the number of users
and the amount of information they wish to transfer increase and as customer
requirements change.
The markets we service are characterized by:
- rapidly changing technology;
- changes in end-user requirements;
- frequent introduction of new services and other products;
- evolving industry standards;
- emerging competition; and
- decreases in the cost of equipment and the pricing of existing as
well as new services and other products.
We expect these changes to continue and our long-term success will
increasingly depend upon our ability to enhance existing products and services
and to develop new products and services that meet changing customer
requirements on a timely and cost-effective basis. We cannot assure you that
we can successfully identify new opportunities and develop and bring new
products and services to the market in a timely and cost effective manner. We
also can not assure you that the products, services or technologies that
others develop will not render our products, services or technologies non-
competitive or obsolete. Furthermore, there is no guarantee that products or
service developments or enhancements we introduce will achieve or sustain
market acceptance or that they will effectively address the compatibility and
interoperability issues raised by technological changes or new industry
standards.
Our failure to expand network infrastructure or our other products and
services on a timely basis or adapt to changing customer requirements and
evolving industry standards could have a material adverse effect on our
business, financial condition, and results of operations.
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<PAGE>07
WE FACE SIGNIFICANT DOMESTIC AND INTERNATIONAL COMPETITION THAT MAY ADVERSELY
AFFECT OUR ABILITY TO ATTRACT AND RETAIN CUSTOMERS.
The United States telecommunications industry is highly competitive,
rapidly evolving, and significantly influenced by the marketing and pricing
decisions of the larger industry participants. We compete with a number of
well-established providers, as well as many other providers with less
significant market share. Many of our competitors:
- are significantly larger than us;
- have substantially greater financial, technical, and marketing
resources;
- have larger networks than us;
- offer a broader portfolio of services than we do;
- have long-standing relationships with many of our target customers;
- have long-standing relationships with our competitors; and
- have greater name recognition and "brand" loyalty
Our competitors which provide long distance services in the United States
include, among others, AT&T, MCI WorldCom, Inc. and Sprint Communications,
Inc. In addition, the FCC has recently granted approval for some of the
Regional Bell Operating Companies ("RBOC") to provide in-region long distance
service in New York and Texas. RBOCs are expected to seek approval to provide
in-region long distance services in additional states, further increasing
competition from companies that have significantly greater name recognition
and financial, technical and marketing resources than we do.
Our DSL services face competition from other providers of high speed
Internet access including cable companies providing high speed Internet access
through cable modems. Some of our competitors for high speed Internet
services, such as AT&T, have acquired major cable networks which could be used
to compete against us. In addition, incumbent local exchange carriers
("ILECs") have substantially increased their competition for high speed
Internet access.
The long distance and data services industries have relatively
insignificant barriers to entry, thus new competitors are continually entering
the market. These entities compete with us for the same customers and there
is significant customer turnover, particularly with our residential
customers. We face competition from carriers that offer a broader portfolio of
bundled telecommunications services than we do, including long distance, local
exchange, Internet, and data services. We believe that new and existing
competitors are likely to continue to expand their service offerings to appeal
to our existing and potential customers. Our ability to compete effectively
will depend on our ability to provide network reliability and high quality
service at competitive prices. Prices for long distance and data services have
decreased over the past several years and we expect that decline to continue.
Our competitors may reduce rates or offer incentives to our existing and
potential customers. Several domestic long distance carriers have introduced
pricing strategies which provide for fixed, low rates for domestic calls. .
Because we believe that to maintain our competitive position we must be able
to reduce our prices to meet reductions in rates by others, our business could
be adversely affected by such reductions. Some carriers are expanding their
capacity and network facilities. We may see more downward price pressure if
industry expansion results in capacity which exceeds overall demand, or along
our routes. We cannot predict to what extent we may need to reduce our prices
to remain competitive or whether we will be able to sustain future pricing
levels as our competitors introduce competing services or similar services at
lower prices.
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<PAGE>08
In addition, the regulatory environment in which we operate is changing.
As this regulatory environment evolves, our competitors may obtain greater or
unique competitive advantages. New technologies may also result in new
regulation or competitors entering the marketplace. To the extent IP
telephony is not regulated, providers of IP telephony could create substantial
downward pricing pressure on non-IP telephony providers.
In addition to the competitive risk factors listed above with regard to
domestic providers, local providers in international markets generally have
competitive advantages over us due to:
- their control over the intra-national transmission lines and
connections to such lines;
- their ability to delay access to lines; and
- the reluctance of some regulators to adopt policies and grant
regulatory approvals which will result in increased competition for
the local carrier.
Our business in an international location would be adversely affected if
the local carrier significantly uses its competitive advantages. Recent and
pending deregulation in various countries, however, may encourage new
entrants. The number of competitors is likely to increase as a result of the
new competitive opportunities created by the World Trade Organization
agreement on telecommunications. Under such agreement, the United States and
68 other countries committed to open their telecommunications markets to
competition as of January 1998.
Strategic alliances or transactions are prevalent and could result in
additional competition domestically and internationally. Consolidation in the
telecommunications industry may create even larger competitors with greater
financial and other resources. These mergers and alliances could create
increased competition in the telecommunications services market, increased
price competition in the long distance market, and potentially reduce the
number of customers that purchase wholesale international long distance
services from us. The effects of such strategic alliances or transactions
could have an adverse effect on our business, financial condition, and results
of operations.
WE HAVE A HISTORY OF LOSSES, HAVE AN ACCUMULATED DEFICIT AND MAY NEVER ACHIEVE
OR SUSTAIN SIGNIFICANT REVENUES OR PROFITABILITY.
We have incurred operating losses since January 31, 1999 and we could
continue to incur net losses for the foreseeable future. As of July 31, 2000,
we had an accumulated deficit of $5,536,530. We may never achieve or sustain
significant revenues or profitability in the future and we may be unable to
meet our capital requirements.
WE MAY EXPERIENCE DECREASING PRICES FOR OUR SERVICES, WHICH MAY IMPAIR
OURABILITY TO ACHIEVE PROFITABILITY OR POSITIVE CASH FLOW. We may
experience decreasing prices for our services due to competition,volume-based
pricing and other factors. Currently, we charge higher prices forsome of our
services than some of our competitors do for their similar services.As a
result, we cannot assure you that our customers will select our services over
those of our competitors. In addition, we cannot assure you that our costs to
provide such services will decrease proportionally to the prices we are able
to charge our customers. We expect to reduce prices periodically in the future
to respond to competition and to generate increased sales volume.
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<PAGE>09
As a result, we cannot predict whether demand for our services will exist at
prices that enable us to achieve profitability or positive cash flow.
A HIGH LEVEL OF CUSTOMER CHURN IS INHERENT IN THE TELECOMMUNICATIONS INDUSTRY,
AND THIS MAY AFFECT OUR FINANCIAL RESULTS.
The attrition of our customers, also known as "churn," is attributable to
a variety of factors, including our termination of customers for nonpayment
and the initiatives of existing and new competitors which, to attract new
customers, may implement national advertising campaigns, utilize telemarketing
programs, and provide cash payments and other forms of incentives. To retain
our customer base, we implement programs and enhancements, such as value-added
services, agent and affinity sales programs, improved customer service,
competitive price adjustments and an aggressive retention program. Some
purchasers of our long distance services are not obligated to purchase any
minimum amount of our services, and can stop using our service at any time and
without penalty. Some customers may not continue to buy their long distance
telephone service through us or through independent agents and resellers that
purchase services from us. If a significant portion of our customers were to
decide to purchase long distance service from other providers, we may not be
able to replace them and our financial results would be adversely affected.
CARRIER CUSTOMERS ACCOUNT FOR A SIGNIFICANT PORTION OF OUR REVENUES; CARRIER
CUSTOMER REVENUES ARE UNPREDICTABLE.
We provide telecommunications services to carrier customers principally
in the United States. Our revenues from such services accounted for
approximately 50% of revenues in the fiscal year ended January 31, 2000 and
were the only profitable segment of our business. We also expect our revenues
from carrier services to be approximately 50% for the fiscal year ending
January 31, 2001. Thus, the loss of revenue from carrier customers could have
a material adverse effect upon our business. Carrier customers are extremely
price sensitive, generate low margin business, and frequently choose to move
their business based solely on small price changes. Our carrier customers may
use more than one communications service provider. They can quickly switch
from our services to other providers without incurring significant expense. We
cannot assure you that we will be able to retain our customers. Competition
from new market entrants may also have a material adverse effect on our
ability to retain carrier customers.
Also, some of our carrier customers have limited financial resources,
resulting in a higher risk of delinquency or non-payment than with more
creditworthy customers. While we have instituted credit criteria to reduce
our exposure to the higher risks associated with carrier customers, we cannot
provide you any assurance that such criteria and methods will afford adequate
protection against such risk. In addition, some of our competitors have been
involved in litigation concerning payments due under approved interconnection
agreements. Such litigation includes the payment of reciprocal compensation
for the termination of calls on a competitor's network. We do not know
whether we will be required to make such reciprocal payments in the future.
WE RELY ON LEASED CAPACITY AND ARE VULNERABLE TO THE AVAILABILITY OF AND
CHANGES IN OUR LEASING ARRANGEMENTS.
Transmission lines leased by us from transmission facilities-based
carriers with which we compete connect all telephone calls made by our
customers. Our profitability will depend, in substantial part, on our ability
to obtain and use leased capacity on a cost-effective basis. Leases for our
capacity include terms ranging from one to sixty months. Thus, we are
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<PAGE>10
vulnerable to changes in our lease arrangements, such as price increases and
service cancellations. Although we believe we have and will continue to enjoy
favorable relationships with the other transmission facilities-based carriers
from which we lease transmission lines, we cannot assure you that leased
capacity will continue to be available at cost-effective rates.
WE RELY ON THIRD PARTIES FOR ACCESS TO TELEPHONY SERVICES.
Since we provide and expect to continue to provide most of our services
through connections supplied by other telecommunications providers, we depend
on their cooperation. Such other providers include some of our major
competitors. We will need to enter into interconnection agreements with some
of these competitors as we expand into other product lines. We cannot assure
you that we will be able to enter into such interconnection agreements on
favorable terms or at all. Even when we enter into an interconnection
agreement, we do not know if our orders for services will be fulfilled in a
timely manner. Our services to customers may be interrupted by the failure of
other parties to interconnection agreements to maintain equipment and provide
service in a reliable and timely manner, which would risk loss of business for
us. In addition, we do not know if the rates charged to us under
interconnection agreements will allow us to offer our services at competitive
rates.
IF OUR INFORMATION SYSTEMS FAIL TO ACCURATELY CAPTURE CUSTOMER BILLS WE MAY
LOSE POTENTIAL REVENUES.
We are dependent upon our information systems and switching equipment to:
- provide service to our customers;
- manage our network;
- collect billing information; and
- perform other vital functions.
In operating our business, we must process millions of call detail
records quickly and accurately to produce customer bills. While we believe
our billing and information systems currently are capable of processing such
data, we cannot assure you that such systems will not require enhancement or
substantial investments in the future. However, we are continually enhancing
our billing system and seeking to upgrade the other information systems used
in our business. In particular, with regard to our planned entry into the
local exchange telecommunications market, we will need to develop a new
billing system to capture such sales. We may encounter difficulties in
integrating new technology into our systems. If we are unable to bill and
collect receivables from our customers because of problems with our
information systems, our cash flows could be interrupted which could
materially adversely affect our business, financial condition and results of
operations.
IF CHANGES ARE MADE TO EXISTING GOVERNMENT REGULATIONS OR ADDITIONAL
GOVERNMENT REGULATIONS ARE PUT INTO EFFECT, OUR OPERATIONS AND FINANCIAL
CONDITION MAY BE ADVERSELY AFFECTED.
Legislation, regulations, regulatory actions, and court decisions affect
us and our ability to compete. Telecommunications services are subject to
significant regulation at the Federal, State, local and, international levels.
Delays in receiving required regulatory approvals or the enactment of new and
adverse legislation, or regulatory requirements may adversely affect our
business, financial condition and results of operations. In addition, future
legislative, judicial or regulatory agency actions could alter competitive
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<PAGE>11
conditions in the markets in which we operate, in ways not necessarily to our
advantage. Domestic or international regulators or third parties may also
raise material issues regarding our compliance or non-compliance with
applicable laws and regulations.
The Telecommunications Act of 1996 provides for significant deregulation
of the domestic telecommunications industry. Certain pertinent provisions,
however, remain subject to judicial review and additional FCC rulemaking, and,
thus, it is difficult to predict what effect the legislation will have on our
operations and us.
We currently are subject to Federal and State government regulation of
our long distance telephone service. We are required by Federal and State law
and regulations to file tariffs listing the rates and terms and conditions of
services provided by us. Such tariffs must be accepted by the relevant
regulatory authority and are generally subject to challenge by third parties.
We are generally also required to obtain certification from the relevant state
authorities prior to starting intrastate service. In addition, we must
maintain a certificate issued by the Federal Communications Commission in
providing international services. We believe that future regulatory,
judicial, and legislative changes as well asnd certification and compliance
requirements will continue to have a material effect on us.
The FCC recently detariffed domestic interstate services for nondominant
carriers like us. By the end of a transition period which is to expire
January 31, 2001, carriers must cancel their domestic interstate tariff
offerings that are covered by the FCC's detariffing order, and inform
customers by alternate means of their rates, terms and conditions of service.
The FCC is currently considering whether to eliminate other tariffing
requirements. Elimination of tariffs will require that we secure contractual
agreements with each of our customers, containing the terms of the services
offered. While we currently have service agreements already in place with many
of our customers, the contracts may not contain all of the provisions included
in our tariffs. To the extent that disputes arise over such contracts,
carriers, including us, may no longer resort to the legal doctrine that the
terms of a filed tariff supercede individual contract language.
To originate and terminate calls in connection with providing their
services, long distance carriers like us must purchase "access" from local
exchange carriers. Access charges represent a significant portion of our cost
of services. The interstate access charges of ILECs are subject to extensive
regulation by the FCC. Competitive local exchange carriers' ("CLECs")
interstate access charges are subject to a lesser degree of FCC regulation,
but remain subject to the requirement that all charges be just, reasonable and
not unreasonably discriminatory. The FCC recently adopted an order intended
to significantly reduce access charges paid by long distance companies, and we
expect that our costs should decrease as a result. AT&T and Sprint, however,
have committed to the FCC to pass through to their customers the decrease in
access charges. As a result it may be difficult for us to realize the
benefits of these cost reductions. The Federal Communications Commission has
also reformed its regulation of local exchange carriers access charges to
better account for increasing levels of competition. Under these rules, local
exchange carriers will be permitted to allow volume discounts in the pricing
of access charges. We believe these rules may cause us to be placed at a
significant cost disadvantage to larger competitors.
International regulatory agencies and legislatures impose substantial
restrictions on telecommunications providers operating in their countries, and
may impose substantial restrictions on foreign providers. The interpretation
<PAGE>
<PAGE>12
and enforcement of such laws and regulations vary and could limit our ability
to provide some telecommunications services. Furthermore, changes in current
or future laws or regulations or future intervention could have a material
adverse effect on us. Even if national and local laws permit us to conduct
our operations as currently conducted, we may still face significant
resistance to the implementation of such legislation from local carriers,
regulators, trade unions, and other sources. These and other potential
obstacles to deregulation may have a material adverse effect on our business,
financial condition and results of operations.
We cannot assure you that future regulatory, judicial, or legislative
activities will not have a material adverse effect on our business, financial
condition or results of operations.
WE DEPEND ON CERTAIN EXECUTIVE AND TECHNICAL PERSONNEL FOR THE OPERATION OF
OUR NETWORK AND SYSTEMS.
The loss or unavailability of one or more of certain executive or
technical personnel could have an adverse effect on our operations. Our future
success will also depend on our ability to attract and retain additional key
management and technical personnel. The competition to hire qualified
employees and personnel in the telecommunications and Internet industries is
intense and there are a limited number of persons with knowledge of and
experience in particular sectors of the telecommunications industry. We have
experienced significant personnel turnover during the past several years and
we cannot guarantee that we will be successful in attracting and retaining
such executives and technical personnel in the future.
WE CANNOT ASSURE YOU THAT OUR ENTRY INTO THE LOCAL EXCHANGE TELECOMMUNICATIONS
SERVICES MARKET WILL BE SUCCESSFUL.
We intend to offer local exchange telecommunications services in selected
northeastern markets utilizing total service resale provided by the ILECs.
The market for local telecommunications services is extremely competitive.
Many existing competitors, particularly the ILECs, have greater financial,
personnel, brand and name recognition and other resources than we do.
Moreover, we expect that new competitors will enter this market, and that some
existing as well as new competitors may offer a broader portfolio of services
than those offered by us. Increased competition has resulted in downward
price pressure, lowering profit margins. In addition, many of our competitors
will have lower operating costs than we do through their purchase of unbundled
network elements from the ILEC or their construction of their own facilities.
We cannot assure you that we will be able to compete effectively with other
providers in our region or that we will be able to achieve or sustain market
acceptance at desired pricing levels to become profitable.
WE ARE SUBJECT TO THE RISK OF SYSTEM FAILURE AND SECURITY RISKS.
We must provide reliable service if we are to succeed in marketing our
services to business customers. Our networks are subject to a variety of
potential problems including:
- physical damage;
- power loss and capacity limitations;
- software defects;
- human error;
- equipment failure;
- breaches of security (by computer virus, break-ins, or otherwise);
and
<PAGE>
<PAGE>13
- natural disasters (such as fires, earthquakes, floods, and similar
events).
In the past, we have experienced switching equipment outages, which
temporarily prevented our customers from using our services. We cannot assure
you that our equipment will not experience problems in the future. Any
failure of our network or other systems or hardware that causes significant
interruptions to our operations could:
- damage our reputation;
- result in a loss of customers; and
- harm our ability to retain and obtain customers, which could
have a material adverse effect on our ability to generate
revenues.
To date, we have not experienced significant quality problems. However,
we may, from time to time, experience problems which would affect the quality
of the voice and data transmitted over our network. Although we generally seek
to limit our liability through our contracts with customers, we cannot assure
you that we could not be held liable for damages resulting from service
failures. In addition, we purchase capacity on other carriers' networks and
as a result, we rely on the transmission quality of other carriers' networks
and, therefore, are vulnerable to any system failures of those carriers as
well.
Our network may be vulnerable to unauthorized access, computer viruses
and other disruptive problems. Internet service provider, telecommunications
carrier and corporate networks have in the past experienced and, in the
future, may experience, interruptions in service as a result of accidental or
intentional actions of Internet users, current and former employees and
others. Unauthorized access could also potentially jeopardize the security of
confidential information stored in the computer systems of our customers.
This might result in liability to our customers and also might deter potential
customers. We have implemented security measures that are standard within the
telecommunications industry. Such measures, however, may be circumvented.
Eliminating computer viruses and alleviating other security problems may
require interruptions, delays or cessation of service to our customers which
could harm our business, financial condition, results of operations and cash
flow.
FUTURE SALES OF OUR COMMON STOCK MAY DEPRESS OUR STOCK PRICE.
Sales of a substantial number of shares of our common stock in the
publicmarket, or the appearance that such shares available for sale, could
adverselyaffect the market price for our common stock. As of September 14,
2000, we had 7,944,091 shares of common stock outstanding. A significant
number of these shares are not currently publicly traded but are available for
immediate resale to the public, subject to certain volume limitations and
under the securities laws. As of September 14, 2000, we also have 99,000
shares of our common stock subject to outstanding options under our 1987
Employee Stock Option Plan. In addition, as of September 14, 2000, we have
21,550 shares of our common stock remaining that are reserved for issuance
pursuant to options under our 1996 Stock Option Plan, and of which 190,600
shares are subject to outstanding options. As of September 14, 2000, we also
have 82,800 shares of our common stock remaining that are reserved for
issuance pursuant to options under our 1999 Employee Equity Incentive Plan,
and of which 667,200 are subject to outstanding options. Shares underlying
vested options are generally eligible for immediate resale in the public
market. In the past, our common stock has traded at low volumes. The
<PAGE>
<PAGE>14
registration of the shares pursuant to this prospectus will create additional
market overhang. Future sales of the shares into the public market could have
an adverse affect on the prevailing market price of our common stock.
OUR PRINCIPAL STOCKHOLDER HOLDS A LARGE PERCENTAGE OF OUR COMMON STOCK AND, AS
A RESULT, COULD INFLUENCE MANAGEMENT DECISIONS.
A substantial portion (in excess of 45%) of our issued and outstanding
voting shares is now held by Walt Anderson or Revision LLC and Gold & Appel
Transfer, S.A., entities controlled by Mr. Anderson. As a result of his
percentage ownership of our shares, Mr. Anderson could influence decisions on
certain matters, including the election of directors, increasing our
authorized capital stock, selling our assets, merging or dissolving our
business and generally may be able to direct our corporate affairs.
1,751,132 of the shares which Mr. Anderson controls are pledged to an
unrelated third party lender to secure a personal loan. If an event of
default should occur with respect to such loan, the pledgee would hold a
substantial portion (in excess of 22%) of our issued and outstanding voting
shares and could, therefore, substantially influence management decisions of
our Company.
WE MAY INCUR LIABILITY AS AN INTERNET SERVICE PROVIDER.
We are an Internet service provider, or an ISP. The law governing the
liability of online service providers and Internet access providers for
participating in the hosting or transmission of objectionable materials or
information currently remains unsettled. Under the Telecommunications Act of
1996, courts can impose civil and criminal penalties for the use of
interactive computer services for the transmission of certain indecent or
obscene communications. The United States Supreme Court in 1997 held this
provision unconstitutional as it related to indecent, but not obscene,
communications. Also, some states have adopted or may adopt in the future
similar requirements. The constitutionality of such state requirements
remains unsettled. Laws have also been adopted relating to Internet user
privacy. In the United States, the Children's Online Privacy Protection Act
applies to the online collection of personal information from children under
the age of 13. The Federal Trade Commission has issued rules under that Act
and may impose penalties for non-compliance with the Act and the rules. In
addition, several private parties have filed lawsuits seeking to hold ISPs
accountable for information that they transmit, such as libelous material and
copyrighted material. We cannot predict the outcome of this litigation or the
potential for the imposition of liability on ISPs for information that they
host, distribute or transport. These suits and other laws and regulations
could materially change the way ISPs must conduct business and could impact
our determination to expand or continue this business. To the extent we
become parties to such litigation, such litigation could have a material
adverse effect on our business, financial condition and results of operations.
USE OF PROCEEDS
We will not receive any of the proceeds from the offer and sale by the
selling stockholders of the shares of our common stock, nor will any proceeds
be available for use by us or for our benefit. Certain of the selling
stockholders will pay all of the expenses incurred in registering the shares
of common stock covered by this prospectus.
<PAGE>
<PAGE>15
TRANSFER AGENT
The Transfer Agent for our common stock is American Stock Transfer &
Trust Company, 40 Wall Street, New York, New York 10005.
SELLING STOCKHOLDERS
The following table sets forth the name of, and number of shares owned
by, each selling stockholder. The shares may be offered from time to time by
the selling stockholders named below. However, such selling stockholders are
under no obligation to sell all or any portion of such shares nor are the
selling stockholders obligated to sell any such shares immediately under this
prospectus. Because the selling stockholders may sell all or some of their
shares of common stock offered hereby, no estimate can be given as to the
number of shares of common stock that will be held by any selling stockholder
upon termination of any offering made under this prospectus. To the extent
required, we will provide any additional or changed information regarding any
selling stockholder in a prospectus supplement or, if appropriate, a post-
effective amendment to the registration statement of which this prospectus is
a part. The following information is based upon information furnished to us by
or on behalf of the selling stockholders.
NAME OF NUMBER OF SHARES NUMBER OF SHARES
SELLING OWNED BEFORE BEING
STOCKHOLDER OFFERING (1) REGISTERED
--------------- ------------------ -------------------
Gold & Appel Transfer, S.A.(2) 1,241,708 571,400
Revision LLC(2) 2,353,896 1,179,732
Foundation for the International Non-
Governmental Development of Space (2) 725,329 703,529
Donald A. Burns (3) 2,454,661 2,454,661
(1) Information set forth in the table regarding the selling stockholder is
provided to the best of our knowledge based on information furnished to
us by each selling stockholder and/or available to us through our stock
ledgers or inquiries to brokers.
(2) The shares are beneficially owned by the stockholder and are pledged to
Donald A. Burns, an unrelated third party lender, to secure a personal
loan. This registration statement covers the sale of the shares by either
the selling stockholder or the Pledgee.
(3) Includes 571,400 shares beneficially owned by Gold & Appel Transfer,
S.A., 1,179,732 shares beneficially owned by Revision LLC, and 703,529
shares beneficially owned by Foundation for the International Non-
Governmental Development of Space, all of which shares are pledged to
Donald A. Burns to secure a $13 million personal loan, which matures on
March 1, 2001.
PLAN OF DISTRIBUTION
The shares of common stock covered by this prospectus may be offered and
sold from time to time by the selling stockholders. References in this plan of
distribution to "selling stockholders" include donees and pledgees selling
shares received from a named selling stockholder after the date of this
prospectus. The selling stockholders will act independently of us in making
decisions with respect to the timing, manner and size of each sale. The
selling stockholders may sell the shares on the Nasdaq National Market, or in
private sales at negotiated prices. The shares may be sold by one or more of
<PAGE>
<PAGE>16
the following methods of sale, at market prices prevailing at the time of
sale, or at negotiated prices:
- a block trade in which the broker-dealer so engaged will attempt
to sell the shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
- purchases by a broker-dealer as principal and resale by such
broker-dealer for its own account pursuant to this prospectus;
- an over-the-counter distribution in accordance with the rules of the
Nasdaq National Market;
- ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
- in privately negotiated transactions.
If required, this prospectus may be amended or supplemented from time to
time to describe a specific plan of distribution. In addition, in the event
that a selling stockholder notifies us that a donee or pledgee intends to sell
shares, we will file a supplement to this prospectus. In effecting sales,
broker-dealers engaged by the selling stockholders may arrange for other
broker-dealers to participate in the resales. The selling stockholders may
enter into hedging transactions with broker-dealers in connection with
distributions of the shares or otherwise. In such transactions, broker-dealers
or other financial institutions may engage in short sales of the shares in the
course of hedging the positions they assume with a selling stockholder. The
selling stockholders may also sell shares short and redeliver the shares to
close out such short positions (to the extent not prohibited by Section 16(c)
of the Exchange Act). The selling stockholders may also enter into option or
other transactions with broker-dealers which require the delivery to the
broker-dealer of the shares. The broker-dealer may then resell or otherwise
transfer such shares pursuant to this prospectus. The selling stockholders may
also pledge or loan the shares to a broker-dealer. The broker-dealer may sell
the shares so loaned, or upon a default the broker-dealer may sell the pledged
shares pursuant to this prospectus. In addition, any shares that qualify for
sale pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to
this prospectus.
In effecting sales, broker-dealers or agents engaged by the selling
stockholders may arrange for other broker-dealers or agents to participate.
Broker-dealers or agents may receive compensation in the form of commissions,
discounts or concessions from selling stockholders. 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. Gold & Appel
Transfer, S.A. will pay all expenses incident to the offering and sale of the
shares to the public other than any commissions and discounts of underwriters,
dealers or agents and any transfer taxes.
The selling stockholders and any underwriter, broker-dealer or agent who
participates in the distribution of such shares may be underwriters under the
Securities Act of 1933, and any discount, commission or concession they
receive may be deemed an underwriting discount or commission under the
Securities Act of 1933.
In order to comply with the securities laws of some states, if
applicable, the shares must be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in some states the
<PAGE>
<PAGE>17
shares may not be sold unless they have been registered or qualified for sale
in the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
We have advised the selling stockholders that the anti-manipulation rules
of Regulation M under the Securities Exchange Act of 1934 may apply to sales
of shares in the market and to the activities of the selling stockholders and
their affiliates. In addition, we will make copies of this prospectus
available to the selling stockholders and we have informed them of the need
for delivery of copies of this prospectus to purchasers at or prior to the
time of any sale of the shares offered by this prospectus. The selling
stockholders may indemnify any broker-dealer that participates in transactions
involving the sale of the shares against some liabilities, including
liabilities arising under the Securities Act of 1933.
At the time a particular offer of shares is made, if required, a
prospectus supplement will be distributed that will set forth the number of
shares being offered and the terms of the offering, including the name of any
underwriter, dealer or agent, the purchase price paid by any underwriter, any
discount, commission and other item constituting compensation, any discount,
commission or concession allowed or reallowed or paid to any dealer, and the
proposed selling price to the public.
LEGAL MATTERS
Certain legal matters relating to the validity of the shares of our
common stock covered by this prospectus will be passed upon for the Company by
the Law Offices of Jay J. Miller, Esq., 430 East 57th Street, New York, New
York, 10022, counsel for the Company. Mr. Miller is a director and
stockholder of the Company.
EXPERTS
The financial statements and the related financial statement schedule
incorporated in this prospectus by reference from the Company's Annual Report
on Form 10-K for the year ended January 31, 2000 have been audited by Deloitte
& Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated in reliance
upon the report of such firm given upon their authority as experts in
accounting and auditing.
WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR OTHER PERSON TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THE OFFER
CONTAINED HEREIN OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY US. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF ANY OFFER TO BUY ANY SECURITY OTHER THAN THOSE TO WHICH IT
RELATES, NOR DOES IT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN
OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCE, CREATES
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF OUR COMPANY
SINCE THE DATE HEREOF NOR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
<PAGE>
<PAGE>18
2,454,661 Shares
COVISTA
COMMUNICATIONS, INC.
Common Stock
------------------
PROSPECTUS
-------------------
, 2000
<PAGE>
<PAGE>19
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The table below sets forth the various costs and expenses, other than
underwriting discounts and commissions, to be incurred by certain of the
selling stockholders in connection with the issuance and distribution of the
securities being registered. All amounts shown represent estimates except the
SEC's registration fee.
SEC Registration fee $ 2,715.25
Accounting fees and expenses (estimated) $15,000.00
Legal fees and expenses (estimated) $25,000.00
----------
Total (estimated) $42,715.25 +
==========
+ All of the expenses of issuance and distribution will be borne by Gold &
Appel Transfer, S.A.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article Eighth of the Registrant's Certificate of Incorporation provides
that the Registrant's directors will not be personally liable to the Company
or its stockholders for monetary damages resulting from breaches of their
fiduciary duty as directors, except for liability for any breach of duty based
upon an act or omission which is either(a) in breach of the director's duty of
loyalty to the Company or its stockholders, (b) not in good faith or involves
a knowing violation of law, or(c) results in the director's receipt of an
improper benefit.
The Registrant has also entered into indemnification agreements with each
of its directors and officers which provide for indemnification against
judgments, fines, amounts paid in settlement and other liabilities and
expenses, to the fullest extent permitted by law. The indemnification is
available, provided that such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interest of the
Registrant, and with respect to any criminal proceeding, if such person had no
reasonable cause to believe such conduct was unlawful.
The Registrant maintain liability insurance over its directors and
officers in the covered amount of $2,000,000 and may purchase further
insurance or make other arrangements for such obligations to the extent
permitted by the New Jersey Business Corporation Act.
Statutory authority for indemnification of and insurance for the
Registrant's directors and officers is contained in the New Jersey Business
Corporation Act, in particular, Section 14A:3-5 of the Business Corporation
Act, the material provisions of which may be summarized as follows:
Directors and officers may be indemnified in non-derivative proceedings
against settlements, judgments, fines and penalties and against reasonable
expenses (including counsel fees) where the person acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests
of the corporation and also, in a criminal proceeding, he must have had no
reasonable cause to believe that his conduct was unlawful. In derivative
<PAGE>
<PAGE>20
proceedings such persons may be indemnified against reasonable expenses
(including counsel fees) where the person acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, but not against settlements, judgments, fines or penalties except
that, without a court determination as to entitlement to indemnity, no
indemnity may be provided to a person who has been adjudged liable to the
corporation. In all cases, the Business Corporation Act provides that
indemnification may only be made by the corporation (unless ordered by a
court) only as authorized in a specific case upon a determination that
indemnification is proper in the circumstances because the person has met the
applicable standard of conduct required of the person, requires a person to be
indemnified for reasonable expenses (including counsel fees) to the extent he
has been successful in any proceeding and permits a corporation to advance
expenses upon an undertaking for repayment if it shall be ultimately
determined that the director or officer is not entitled to indemnification.
The indemnification and advancement of expenses provided by or granted
pursuant to the Business Corporation Act is not exclusive of other rights of
indemnification to which a corporate agent may be entitled under a certificate
of incorporation, by-law, agreement, vote of shareholders or otherwise.
However, no indemnification may be made to or on behalf of a director or
officer if a final adjudication adverse to the director or officer establishes
that the director's or officer's acts or omissions were in breach of his duty
of loyalty to the corporation or its shareholders, were not in good faith or
involved a knowing violation of law, or resulted in receipt by the director or
officer of an improper personal benefit. A corporation may purchase and
maintain insurance on behalf of any directors and officers against expenses
incurred in any proceeding and liabilities asserted against them by reason of
being or having been a director of officer, whether or not the corporation
would have the power to indemnify the directors or officers against such
expenses and liabilities under the statute.
ITEM 16. EXHIBITS.
The following exhibits are filed as part of this registration statement.
EXHIBIT
NUMBER DESCRIPTION
-------- ------------
*4.1 Promissory Note in the original principal amount of $13,000,000
made by Gold & Appel Transfer, S.A., Revision LLC and Walter C.
Anderson in favor of Donald A. Burns, dated as of August 7,
2000.
*4.2 Stock Pledge Agreement between Gold & Appel Transfer, S.A.,
Revision LLC, Foundation for the International Non-Governmental
Development of Space and Walter C. Anderson, as Pledgors, in
favor of Donald A. Burns, as Pledgee, dated as of August 7,
2000.
*5.1 Form of Opinion regarding legality
23.1 Consent of Deloitte & Touche LLP
*24.1 Power of Attorney
----------------
* Previously filed as an exhibit to the Registrant's Registration Statement on
Form S-3 filed with the Securities and Exchange Commission on September 29,
2000.
<PAGE>
<PAGE>21
ITEM 17. UNDERTAKINGS
(a) Rule 415 Offering.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) to include a prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimate maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
However, subparagraphs (i) and (ii) do not apply if the information
required to be included in a post-effective amendment by those paragraphs is
contained in the periodic reports filed by the Registrant pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934, that are incorporated by
reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) Filings Incorporating Subsequent Exchange Act Documents by Reference.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934(and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of1934) that is incorporated by reference in the
<PAGE>
<PAGE>22
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Incorporated Annual and Quarterly Reports.
The undersigned Registrant hereby further undertakes to deliver or cause
to be delivered with the prospectus, to each person to whom the prospectus is
sent or given, the latest annual report to security holders that is
incorporated by reference in the prospectus and furnished pursuant to and
meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities
Exchange Act of 1934; and, where interim financial information required to be
presented by Article 3 of Regulation S-X is not set forth in the prospectus,
to deliver, or cause to be delivered to each person to whom the prospectus is
sent or given, the latest quarterly report that is specifically incorporated
by reference in the prospectus to provide such interim financial information.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Company pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
(d) Rule 430A Offering
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule
430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b) (1) or 497(h) under the
Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
<PAGE>
<PAGE>23
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Little Falls, State of New Jersey, on the 10th day
of October 2000.
Covista Communications, Inc.
By: *
------------------------------
A. John Leach,
President, Director and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons, in the capacities
indicated, as of October 10, 2000.
*
------------------------ President, Chief Executive Officer & Director
A. John Leach
/s/ Thomas P. Gunning Vice President, Secretary, Treasurer and
----------------------- Chief Financial Officer
Thomas P. Gunning
* Chairman of the Board
-----------------------
Walt Anderson
* Director
-----------------------
Leon Genet
*
------------------------ Director
Henry G. Luken, III
* Director
-----------------------
Jay J. Miller
* Thomas P. Gunning, by signing his name hereto, signs this document on
behalf of each of the persons so indicated above pursuant to powers of
attorney duly executed by such person and filed with the Securities and
Exchange Commission on September 29, 2000.
