VDC COMMUNICATIONS INC
424B3, 2000-10-30
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)
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                                                Filed pursuant to Rule 424(b)(3)
                                                Registration No. 333-46694
                                                Registration No. 333-80107

                                   Prospectus

                            VDC Communications, Inc.

                        8,558,648 shares of common stock

         The  selling  security  holders  identified  on pages 14 and 15 of this
prospectus, may offer and sell, from time to time, up to 8,558,648 shares of the
common stock of VDC Communications, Inc. The shares of common stock which may be
resold by the  selling  security  holders  constitute  approximately  35% of our
issued and outstanding common stock as of October 27, 2000. The selling security
holders  may sell all or some of  their  respective  shares  through  public  or
private  transactions,  at prevailing market prices, or at privately  negotiated
prices. We will not receive any part of the proceeds from sales of these shares.

         Our common stock is listed on the  American  Stock  Exchange  under the
symbol  "VDC".  The last  reported sale price of our common stock on October 26,
2000 on the American Stock Exchange was $0.15625 per share.  On October 27, 2000
the American  Stock  Exchange  imposed an indefinite  trading halt on our common
stock. In the event that trading does not resume on the American Stock Exchange,
it is expected that our common stock will trade on the OTC  Electronic  Bulletin
Board.

         The selling security holders may sell the shares through broker-dealers
who may receive  compensation  from the selling  security holders in the form of
discounts or commissions.  We will pay the costs of registering the shares under
this prospectus, including legal fees.

----------------------------------------

         Investing  in the common stock involves  a  high degree  of  risk.  See
"Risk Factors" beginning on Page 2.

----------------------------------------

         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.

                 The date of this prospectus is October 27, 2000

<PAGE>

                            VDC Communications, Inc.

<TABLE>
<CAPTION>
                                Table of Contents
                                -----------------

                                                                        Page No.
                                                                        --------

<S>                                                                        <C>
About VDC Communications, Inc.                                              1


Risk factors                                                                2


Forward-looking statements                                                 13


Use of proceeds                                                            13


Plan of distribution                                                       21


Legal matters                                                              23


Experts                                                                    23


Indemnification of directors and officers                                  23


Where you can find more information                                        24

</TABLE>

                                       i
<PAGE>

         This  prospectus is part of a registration  statement we filed with the
SEC. You should rely only on the information or representations provided in this
prospectus. VDC has authorized no one to provide you with different information.
VDC is 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 the document.

                                       ii
<PAGE>
                         About VDC Communications, Inc.

         VDC Communications,  Inc., directly and through its subsidiaries,  owns
telecommunications  switching and ancillary equipment, leases telecommunications
lines and  interconnects  a global  network of carriers and customers  providing
domestic  and  international  long  distance  telecommunications  services.  Our
customers  include  residential  long  distance  end  users  and  long  distance
telephone  companies that resell our services to their retail customers or other
telecommunications   companies.   We  currently  employ  digital  switching  and
transmission technology, and Internet Telephony, or Voice over Internet Protocol
("VoIP") gateway technology. Our telecommunications equipment, currently located
in New York and Los Angeles comprises our operating facilities.

         We believe  the  telecommunications  industry is  attractive  given its
current  size and future  growth  potential.  We are  currently  a domestic  and
international  telecommunications company providing retail and wholesale carrier
services.  Our  objective  is to  provide  these  services  to both  retail  and
wholesale  customers  utilizing VoIP and circuit  switched  technologies  in the
short term; and, migrating towards a pure VoIP network in the long term. We have
already  begun the  process of  transforming  our network  with next  generation
technology.

         During  the  fiscal  year  ended  June  30,  2000,   we  initiated  the
development of VDC's VoIP clearinghouse  through a wholly-owned  subsidiary.  We
expect that utilizing new Internet  technologies to provide voice and facsimile,
and possibly additional value added services in the future, will provide us: (i)
increased cost  efficiencies;  (ii) greater network  flexibility;  and, (iii) an
increased  network scope.  We expect that this can be achieved with a relatively
minimal  capital  outlay.  During fiscal 2000, we began the  development of this
clearinghouse  through this  subsidiary by:  ordering IP, or Internet  Protocol,
gateway equipment; and, provisioning to connect to the Internet. In addition, we
have since completed a trial and subsequently  initiated the clearinghouse.  Our
clearinghouse  is expected to allow  wholesale  customers to connect and use our
network via the public Internet for the  transmission of voice calls  worldwide.
The clearinghouse will provide the clearing and settling of all amounts due as a
result of  telecommunications  traffic passed. We have not passed any commercial
telecommunications  minutes,  voice or facsimile calls, over our VoIP network to
date.  As a result  of our  liquidity  constraints  and our  emphasis  on retail
telecommunications, we have been unable to commit resources, beyond our website,
to procuring customers for this network.

         VDC  Communications,  Inc.  ("VDC") was formerly the  subsidiary of VDC
Corporation  Ltd., a Bermuda public company ("VDC  Bermuda") that had its shares
registered  under the Securities  Exchange Act of 1934. On November 6, 1998, VDC
Bermuda merged with and into VDC for the principal  purpose of domesticating VDC
Bermuda  from a  Bermuda  company  to a  Delaware  corporation.  This  was  done
primarily to: (i) facilitate  access to the U.S. capital  markets;  (ii) enhance
the trading profile of VDC Bermuda's  securities  within the investment  banking
and brokerage communities;  and (iii) provide access to the comprehensive set of
corporate laws available to companies incorporated in Delaware.

                                       1
<PAGE>

         The  merger  was  completed  in  conjunction   with  a  prior  business
reorganization  of VDC Bermuda.  On March 6, 1998,  VDC (then a wholly owned and
newly formed subsidiary of VDC Bermuda) acquired Sky King Communications,  Inc.,
a development stage telecommunications company. The Sky King acquisition enabled
VDC  Bermuda  to  enter  the  telecommunications   business  and  reflected  the
culmination of an overall business reorganization in which VDC Bermuda curtailed
its prior lines of business.  (As used in this document,  the terms "VDC",  "we"
and "us" include both VDC and VDC Bermuda.  The use of these terms  reflects the
fact that through  November 6, 1998,  the publicly held company was VDC Bermuda.
Thereafter, due to the merger, the publicly held company was VDC.)

         Our  executive  offices are  located at 75 Holly Hill Lane,  Greenwich,
Connecticut, 06830, and our telephone number is (203) 869-5100.

Risk factors

         An investment in the shares of common stock offered by this  prospectus
involves  a high  degree  of risk and you  should  invest  only  after  you have
carefully gathered and reviewed  information about VDC. This prospectus has been
filed as part of a  registration  statement  on Form S-3,  and only  contains  a
summary of  information,  which may be relevant  to you in making an  investment
decision.  Accordingly,  prior to  making an  investment  decision,  you  should
carefully  evaluate,  among other  materials,  the following  risk factors,  the
remainder of the  information  set forth in this  prospectus  and the reports we
have  filed  with the SEC,  and  other  information  about  us  incorporated  by
reference into this document.

1.       The  auditors'  report  on  our  financial  statements contains a going
         concern qualification.

         We may not be able to continue as a going concern if we do not generate
profits or secure significant financing within the short term. Our auditors have
raised the issue  that we may not be able to  continue  as a going  concern as a
result of a lack of profits,  working capital  deficiency and future cash needs.
We have used  substantial  amounts of working capital in our operations and have
sustained significant operating losses. As of June 30, 2000, current liabilities
exceeded current assets by approximately  $2,700,000.  Our continued  operations
are  dependent  upon meeting  short term  financing  requirements  and long term
profitability.

2.       We are not profitable.

         We have  not yet  experienced  a  profitable  quarter  and may not ever
achieve   profitability.   We  have   yet  to   build   sufficient   volume   of
telecommunications  voice and  facsimile  traffic  to reach  profitability.  Our
current  expenses are greater than our  revenues.  This will  probably  continue
until we reach a greater  level of maturity and it is possible that our revenues
may never exceed our expenses. If operating losses continue we will need to find
new sources of financing  which may or may not be  available  or our  operations
will be in jeopardy.

                                       2
<PAGE>

3.       We have limited capital.

         Being a relatively small company in a capital intensive  industry,  our
limited capital is a significant risk to our future profitability and viability.
We may sell  additional  shares  of our  stock,  or  engage  in other  financing
activities,  in order to provide  capital that may be needed for our operations.
There is no guarantee that market conditions will permit us to do this. In fact,
we have been unable to complete a private  placement  of equity or debt  despite
diligent efforts over the past several months.  We believe this is due, in part,
to the recent  weakening in the capital  markets for smaller  telecommunications
companies.  If we cannot secure additional capital,  our continued operation may
be in jeopardy.  Our current cash is insufficient to support either our business
plans or our current rate of losses.

4.       We are a company in the early stages of development.

         We  commenced  our present  operations  during the past 2-3 years,  and
therefore, have only a limited operating history upon which you can evaluate our
business and performance.

5.       We are diversifying our operations.

         We have recently entered into a phase of rapid diversification.  We are
expanding our business  lines from being a provider of  international  wholesale
telecommunications  services  to  becoming a diverse  supplier  of  residential,
traditional wholesale,  and VoIP wholesale  telecommunications  services.  These
efforts  require us to assume greater  risks,  which include but are not limited
to: greater demands on management's time; the ability of management to learn new
skills  while  continuing  to  manage   effectively  our  existing   operations;
investment  risks associated with  expenditures  for new lines of business;  and
increased pressures upon our operations and financial systems.

6.       Our stock is highly volatile.

         Our stock price  fluctuates  significantly.  We believe  that this will
most likely continue. Historically, the market prices for securities of emerging
companies in the telecommunications  industry have been highly volatile.  Future
announcements concerning us or our competitors, including results of operations,
technological  innovations,   government  regulations,   the  gain  or  loss  of
significant  customers,  general  trends  in the  industry,  market  conditions,
analysts'  estimates,  proprietary  rights,  significant  litigation,  and other
events in our industry, may have a significant impact on the market price of our
stock. In addition,  the stock market has  experienced  extreme price and volume
fluctuations  that  have  particularly   affected  the  market  price  for  many
technology and  telecommunications  companies and that have often been unrelated
to the operating performance of these companies. These broad market fluctuations
may adversely affect the market price of our common stock.

                                       3
<PAGE>

7.       There   are  a   number  of  risks  specifically  associated  with  our
         residential long distance operations.

         We may not be able to  successfully  integrate the  acquisition of Rare
Telephony,  Inc. into VDC. In addition,  we may not be able to develop our newly
acquired  residential services  successfully.  If the market for our residential
service  products  does not develop as we expect,  or develops  more slowly than
expected,  our business,  financial  condition and results of operations  may be
materially and adversely affected.  Our customers and potential customers may be
reluctant to use our  residential  services for a number of reasons,  including,
but not limited to: lack of product recognition; perceptions that the quality of
service may be  substandard;  and,  the  reluctance  of customers to change long
distance carriers.

8.       There  are a number of  risks that will be specifically associated with
         our VoIP operations.

         We may not be able to successfully develop our VoIP operations.  If the
market for Internet telephony and new services does not develop as we expect, or
develops  more slowly than  expected,  our  business,  financial  condition  and
results of operations  may be materially and adversely  affected.  Our customers
may be reluctant to use VoIP  services for a number of reasons,  including,  but
not  limited to:  perceptions  that the  quality of voice  transmitted  over the
Internet is substandard;  and perceptions that Internet telephony is unreliable.
In addition,  competition in the market place may limit our ability to obtain an
adequate profit margin.

9.       There  are   a   number  of  risks  specifically  associated  with  our
         traditional wholesale operations.

         Our traditional  wholesale  business depends  partially on carriers and
other communications  service providers  generating  international voice traffic
and selecting our network to carry at least some of this traffic.  If the volume
of  international  voice  traffic  fails  to  increase,  or  decreases,  and our
customers do not employ our network,  our traditional  wholesale operations will
not be  profitable,  which may  materially  and  adversely  affect our business,
financial  condition  and  results  of  operations.  We are  de-emphasizing  our
traditional  wholesale  services  during the year ending June 30, 2001. As such,
revenues from  traditional  wholesale  services have  decreased  during the year
ending June 30, 2001 and may  continue to  decrease.  We cannot  assure you that
end-users  will  continue to purchase  services  from our  customers or that our
wholesale customers will maintain a demand for our services.

10.      We rely heavily on certain underlying carriers.

         Separately, our wholesale and residential operations rely on one or two
underlying carriers for their underlying telecommunications  connectivity and/or
call completion.  If any of these carriers can no longer provide services to us,
or chooses to no longer provide  services to us, it may materially and adversely
affect our business.

                                       4
<PAGE>

11.      Additional shares will be available for sale in the public market which
         could cause the market price of our stock to drop significantly.

         We estimate that  approximately 21.6 million shares of our common stock
are  currently  eligible  for resale  under  applicable  securities  laws.  This
prospectus  registers  the  potential  resale of up to an  additional  1,388,706
shares of VDC common stock into the public  trading  market,  including  587,073
shares on behalf of Frederick A. Moran and his wife.  This would have the effect
of  increasing  the  number of shares  eligible  for  public  trading.  Sales of
substantial  amounts  of the stock in the  public  market  could have an adverse
effect on the price of the stock and may make it more  difficult  for us to sell
stock in the future.  Although it is impossible to predict market influences and
prospective  values for  securities,  it is  possible  that the  increase in the
number of shares  available for sale, in and of itself,  could have a depressive
effect on the price of our stock.

12.      The future issuance of additional shares of common stock could decrease
         the value of the shares.

         We are presently authorized to issue 50,000,000 shares of common stock,
of which  24,398,029  are  outstanding  as of  October  27,  2000.  Issuance  of
additional  shares  would  likely  have a  dilutive  effect  upon  the  existing
stockholders and may reduce the value of their investment. If, as of October 27,
2000,  holders of our outstanding  options and warrants exercise their rights to
purchase shares, we would have to issue up to 3,288,260 shares of common stock.

         We  may  issue additional shares for valid business purposes within the
discretion of our board of directors, including, without limitation:

        o         additional equity financings;

        o         the acquisition of other companies; and

        o         compensation  of  our  officers,  employees,  consultants, and
                  directors.

13.      We  may  not  be  able to compete successfully with other long distance
         carriers.

         AT&T,  MCI WorldCom  and Sprint  Corporation  dominate  the  U.S.-based
international  telecommunications  services  market.  We also compete with ITXC,
Inc.,  iBasis,  Inc. and other  foreign and  U.S.-based  long  distance and VoIP
providers, including the Regional Bell Operating Companies, which presently have
some FCC  authority  to resell  and  terminate  international  telecommunication
services.  Many of these  competitors have  considerably  greater  financial and
other  resources and more extensive  domestic and  international  communications
networks  than we do.  If we  compete  with them for the same  customers,  their
financial  strength  could hinder our ability to succeed.  For  example,  larger
competitors could discount services to attract or maintain customers. We may not
have the  financial  resources to  effectively  compete with them on that level.
Additionally,  in the future we may  compete  abroad  with a number of  dominant
telecommunications operators that previously held various monopolies established
by law over the  telecommunications  traffic in their  countries.  Further,  the

                                       5
<PAGE>

number of our  competitors is likely to increase as a result of the  competitive
opportunities created by a new Basic  Telecommunications  Agreement concluded by
members of the WTO in April 1997. Under the terms of the WTO agreement, starting
February 5, 1998,  the United  States and 68  countries  have  committed to open
their telecommunications markets to competition,  increase foreign ownership and
adopt measures to protect against  anti-competitive  behavior.  As a result,  we
believe that competition will continue to increase, placing downward pressure on
prices.  Such pressure  could  adversely  affect our gross margins if we are not
able to reduce our costs commensurate with such price reductions.

14.      Technical advancement could render our equipment obsolete.

         The  telecommunications  industry is in a period of rapid technological
evolution,  marked  by the  introduction  of  competitive  product  and  service
offerings,  such as the utilization of the Internet for international  voice and
data communications.  We are unable to predict which technological  developments
will challenge our competitive  position or the amount of expenditures that will
be  required  to respond to a rapidly  changing  technological  environment.  We
expect  that the  future  will bring  significant  technological  change.  It is
possible that these  changes  could result in more  advanced  telecommunications
equipment  that could  render our current  equipment  obsolete.  If this were to
happen,  we would most  likely  have to invest  significant  capital in this new
technology,  which  could  have a  material  adverse  effect  on  our  business,
operating  results  and  financial  condition.  In  addition,  we  are  somewhat
dependent on a limited number of equipment vendors.

15.      A   small  number  of  customers  historically  have  accounted  for  a
         significant percentage of our total sales.

         For  the  year  ended  June  30,  2000,  two  customers  accounted  for
approximately 70% of our total sales. Our customers  typically are not obligated
contractually to purchase any quantity of services in any particular period. The
loss of, or a material  reduction in orders by, one or more of our key customers
could  have a material  adverse  effect on  business,  financial  condition  and
results of operations. We expect to lose one of these customers.

16.      Our  cost  of   services   and   operating   expenses   may   fluctuate
         significantly.

         Our cost of  services,  operating  expenses  and cash flow in any given
period can vary due to factors including, but not limited to:

         (1)      fluctuations  in  rates  charged  by carriers to terminate our
                  telecommunications traffic;

         (2)      increases in bad debt expense and reserves;

         (3)      the timing  of capital expenditures and other costs associated
                  with  acquiring  or  obtaining  other rights to switching  and
                  other transmission facilities;

                                       6
<PAGE>

         (4)      costs  associated  with  changes  in staffing levels of sales,
                  marketing, technical support and administrative personnel;

         (5)      changes  in routing due to variations in the quality of vendor
                  transmission capability;

         (6)      loss of favorable routing options;

         (7)      actions by domestic or foreign regulatory entities;

         (8)      financial difficulties of major customers;

         (9)      pricing pressure resulting from increased competition;

         (10)     the level,  timing and pace  of our expansion in international
                  and commercial markets; and

         (11)     general  domestic  and  international  economic  and political
                  conditions.

17.      Some of our customers are high credit risks.

         We must  assume a certain  level of credit risk with our  customers  in
order to do business. Based on such failures in the past, we know that if one or
more of our customers fails or refuses to pay us in a timely manner,  or at all,
it could have a material  adverse  affect on business,  cash flow and  financial
condition.

18.      Limited  long-term purchase and resale agreements and pricing pressures
         for transmission capacity could adversely affect our gross margins.

         A  substantial  portion  of  transmission  capacity  is  obtained  on a
variable,  per minute and short-term basis,  subjecting us to the possibility of
unanticipated  price  increases  and  service  cancellations.  Since  we do  not
generally   have   long-term   arrangements   for  the  purchase  or  resale  of
international  long distance services,  and since rates fluctuate  significantly
over short  periods  of time,  our gross  margins  are  subject  to  significant
fluctuations  over  short  periods  of  time.  Our  gross  margins  also  may be
negatively impacted in the longer term by competitive pricing pressures.

19.      Our  ability  to  implement our plan successfully is dependent on a few
         key people.

         We are dependent on the management of VDC and its subsidiaries.  We are
particularly  dependent upon Frederick A. Moran, the Chief Executive  Officer of
VDC. Mr. Moran is also a  significant  shareholder  and Chairman of the Board of
Directors of VDC. VDC has an employment  agreement  with Mr. Moran through March
2003. We believe the combination of his employment agreement and equity interest
in VDC keeps Mr. Moran  highly  motivated to remain with VDC. We do not maintain
key man insurance on Mr. Moran's life.

                                       7
<PAGE>

20.      We may not be able to  attract  enough  qualified  technical  personnel
         because  they are in short  supply.  If this  happens,  our  ability to
         compete in our industry would likely be curtailed.

         We believe  that our success will depend in large part upon our ability
to attract,  retain, train and motivate highly-skilled  employees,  particularly
project managers and other senior technical  personnel.  Qualified personnel are
in great demand.  There is significant  competition for good employees and it is
likely  that  access  to  qualified   personnel  will  remain  limited  for  the
foreseeable  future.  Many of our competitors are in a better financial position
than VDC to offer  higher  compensation  to qualified  personnel.  We may not be
successful in attracting a sufficient number of such personnel in the future, or
in retaining, training and motivating the employees we are able to attract.

21.      Numerous contingencies could have a material adverse effect on us.

         Because we are in the early  stages of  development  and because of the
nature of the  industry in which we operate,  there are  numerous  contingencies
over which we have little or no control,  any one of which could have a material
adverse  effect on us. The  contingencies  include,  but are not limited to, the
addition  or loss of  major  customers,  whether  through  competition,  merger,
consolidation or otherwise;  the loss of economically beneficial routing options
for  telecommunications  traffic  termination;  financial  difficulties of major
customers;  pricing pressure resulting from increased competition;  credit risk;
and  technical  difficulties  with or failures  of portions of our network  that
could impact our ability to provide service to or bill our customers.

22.      The  future regulation of VoIP services may be burdensome and eliminate
         cost advantages.

         VoIP operations may become subject to regulation in the future. If VoIP
is regulated in a manner similar to traditional  telephony,  our VoIP operations
may be burdened and any cost advantages  provided by VoIP may be eliminated.  We
are unable to predict  whether,  and to what extent,  VoIP will be regulated and
the impact such regulation may have on our business.

23.      Government involvement in industry could have an adverse effect.

         We are subject to various U.S. and foreign  laws,  regulations,  agency
actions and court decisions. Our U.S. international  telecommunications  service
offerings are subject to  regulation by the FCC. The FCC requires  international
carriers to obtain authorization prior to acquiring international  facilities by
purchase or lease, or providing international  telecommunications service to the
public. Prior FCC approval is also required,  in most cases, to transfer control
of certificated carriers such as our subsidiaries. We must file certain reports,
notifications,  contracts,  and  other  documents  with  the  FCC and  must  pay
regulatory and other fees,  which are subject to change.  We are also subject to
FCC  policies  and  rules.  The FCC could  determine,  by its own  actions or in
response to a third party's  filing,  that certain of our services,  termination
arrangements,  agreements with foreign carriers,  or reports did not comply with
FCC  policies  and  rules.  If this  occurred,  the  FCC  could  impose  various
sanctions, including ordering us to discontinue such arrangements,  fining us or

                                       8
<PAGE>

revoking our authorizations.  Any of these actions could have a material adverse
effect on our business, operating results and financial condition.

24.      Recent  and  potential FCC actions may adversely affect our business by
         increasing  competition,   disrupting   transmission  arrangements  and
         increasing costs.

         Regulatory  action  that  may be  taken  in the  future  by the FCC may
intensify the competition which we face, impose additional  operating costs upon
us, disrupt certain of our transmission  arrangements or otherwise require us to
modify our  operations.  Recent FCC  rulemaking  orders and other  actions  have
lowered the entry  barriers for new  facilities-based  and resale  international
carriers  by  streamlining  the  processing  of new  applications  and  granting
non-dominant   carriers   greater   flexibility  in  establishing   non-standard
settlement  arrangements  with  non-dominant  foreign  carriers,  including  the
non-dominant  U.S.  affiliates of such  carriers.  In addition,  the FCC's rules
implementing the WTO agreement  presume that competition will be advanced by the
U.S. entry of  facilities-based  and resale carriers from WTO member  countries,
thus further  increasing the number of potential  competitors in the U.S. market
and the number of carriers which may also offer end-to-end services. The FCC has
also  sought to  reduce  the  foreign  termination  costs of U.S.  international
carriers by  prescribing  maximum or benchmark  settlement  rates which  foreign
carriers may charge U.S.  carriers for terminating  switched  telecommunications
traffic. The FCC has not stated how it will enforce its settlement benchmarks if
U.S.  carriers are unsuccessful in negotiating  settlement rates at or below the
prescribed  benchmarks.  If the  FCC  implements  the  reduced  benchmarks,  our
transmission  arrangements to certain  countries may need to modify our existing
arrangements.

         The   Telecommunications  Act  of  1996  permits  the  FCC  to  forbear
enforcement of the tariff  provisions in such act, which apply to all interstate
and international  carriers. The FCC has adopted rules eliminating the tariffing
requirements  for domestic  interstate  services and requiring those carriers to
de-tariff  their  interstate  offerings.  International  service  providers must
continue to file tariffs.  The FCC routinely  reviews the contribution  rate for
various levels of regulatory fees, including the rate for fees levied to support
universal  service,  which  fees may be  increased  in the  future  for  various
reasons,  including the need to support the universal  service programs mandated
by the Telecommunications Act of 1996, the total costs for which are still under
review by the FCC. We cannot  predict the net effect of these or other  possible
future FCC actions on our business,  operating results and financial  condition,
although the net effect could be material.

25.      Regulation of customers may materially adversely affect our revenues by
         decreasing the volume of traffic we receive from major customers.

         Our  customers are also subject to actions taken by domestic or foreign
regulatory  authorities  that may affect the  ability  of  customers  to deliver
traffic to us. Future regulatory  actions could materially  adversely affect the
volume of traffic  received from a major  customer,  which could have a material
adverse effect on our business, financial condition and results of operations.

                                       9
<PAGE>

26.      Government  regulatory  policies  may increase pricing pressures in our
         industry.

         We expect that government regulatory policies are likely to continue to
have a major impact on the pricing of network  services and possibly  accelerate
the entrance of new competitors and consolidation of the industry.  These trends
may  affect  demand  for  such  services.   Tariff  rates,   whether  determined
autonomously  by   telecommunications   service  providers  or  in  response  to
regulatory  directives,  may affect the cost  effectiveness of deploying network
services. Tariff policies are under continuous review and are subject to change.
User uncertainty regarding future policies may also negatively affect demand for
our services.

27.      The international telecommunications market is risky.

         The  international  telecommunications  market involves  certain risks,
such   as   changes   in   U.S.   and   foreign   government   regulations   and
telecommunications standards, dependence on foreign partners, tariffs, taxes and
other trade barriers,  the potential for  nationalization and economic downturns
and  political  instability  in  foreign  countries.   Moreover,   international
operations  are subject to the Foreign  Corrupt  Practices Act  ("FCPA"),  which
generally prohibits U.S. companies and their intermediaries from bribing foreign
officials  for the  purpose of  obtaining  or keeping  business.  Failure by our
agents, strategic partners and other intermediaries,  whether past or future, to
comply with the FCPA could  result in our facing  liability.  In  addition,  our
business  could be adversely  affected by a reversal in the current trend toward
the deregulation of the telecommunications industry.

         International sales are subject to inherent risks, including:

         (1)      unexpected changes  in  regulatory  requirements,  tariffs  or
                  other barriers;

         (2)      difficulties in staffing and managing foreign operations;

         (3)      longer payment cycles;

         (4)      unstable political environments;

         (5)      dependence on foreign partners;

         (6)      greater difficulty in accounts receivable collection; and

         (7)      potentially adverse tax consequences.

         We may  rely on  foreign  partners  to  terminate  traffic  in  foreign
countries  and to assist  in  installing  transmission  facilities  and  network
equipment,  complying with local  regulations,  obtaining  required licenses and
assisting with customer and vendor  relationships.  We may have limited recourse
if our foreign partners do not perform.  Our arrangements  with foreign partners
may expose us to significant  legal,  regulatory or economic risks over which we
may have little control.

                                       10
<PAGE>

28.      We  may  lose revenue  or  incur  additional costs because  of  network
         failure.

         Any  system  or  network  failure  that  causes  interruptions  in  our
operations  could  have a material  adverse  effect on our  business,  financial
condition or results of  operations.  Our services are  dependent on our own and
other companies' abilities to successfully integrate technologies and equipment.
In connecting  with other  companies'  equipment,  we take the risk of not being
able to provide service due to their error. In addition,  there is the risk that
our  equipment  may  malfunction  or that we  could  make an  error,  which  may
negatively  affect our customers'  service and/or our ability to accurately bill
our  customers for  services.  Our hardware and other  equipment may also suffer
damage from natural disasters such as fires, floods, hurricanes and earthquakes,
other  catastrophic  events such as civil  unrest,  terrorism  and war and other
sources of power loss and telecommunications failures. We have taken a number of
steps to prevent our service from being affected by natural disasters,  fire and
the like.  We have built  redundant  systems for power supply to our  equipment.
Nevertheless,  there can be no assurance  that any such systems will prevent the
switches from becoming  disabled in the event of an earthquake,  power outage or
otherwise.  The failure of our network,  or a significant  decrease in telephone
traffic resulting from effects of a natural or man-made  disaster,  could have a
material adverse effect on our relationship with our customers and our business,
operating results and financial condition.

29.      Our common stock might be delisted from AMEX.  There is the possibility
         that  "penny stock rules"  might become applicable  to our common stock
         and have an impact on the liquidity of our common stock.

         Our common stock is currently listed for trading on the AMEX. There can
be no  assurance  that such  listing  will be  maintained.  As  described in our
filings with the Securities and Exchange Commission, the AMEX has been reviewing
our economic  condition  and business  prospects in  connection  with an ongoing
evaluation of our qualification for listing on AMEX.

         In the event of a delisting  of our common  stock,  the public  trading
market for our common  stock would be  adversely  affected  and the common stock
would  likely be quoted on the OTC  Bulletin  Board which  provides  for limited
liquidity.  In addition,  in the event our common stock continues to trade below
$5.00, it will be subject to SEC rules and regulations which impose  limitations
upon the manner in which certain low priced securities  (referred to as a "penny
stock") are publicly traded.  Under these regulations,  a penny stock is defined
as any  equity  security  having a market  price of less than  $5.00 per  share,
subject to certain  exceptions.  Such  exceptions  include  any equity  security
listed on the AMEX,  Nasdaq  National  Market or SmallCap  Market and any equity
security  issued  by an  issuer  that has (i) net  tangible  assets  of at least
$2,000,000,  if such issuer has been in  continuous  operation  for three years,
(ii) net  tangible  assets of at least  $5,000,000,  if such  issuer has been in
continuous  operation for less than three years, or (iii) average annual revenue
of at least $6,000,000 if such issuer has been in continuous  operation for less
than three years. Unless an exception is available,  the regulations require the
delivery,  prior to any  transaction  involving a penny  stock,  of a disclosure
schedule  explaining the penny stock market and the risks associated  therewith.
Under these regulations, certain broker/dealers who recommend such securities to
persons other than established  customers and certain accredited  investors must

                                       11
<PAGE>

make a special written  suitability  determination for the purchaser and receive
the purchaser's written agreement to a transaction prior to sale.

30.      We  may  not  be  able  to  continue  to obtain sufficient transmission
         facilities on a cost-effective basis.

         The failure to obtain telecommunications facilities that are sufficient
to support our  network  traffic in a manner that  ensures the  reliability  and
quality of our telecommunications services may have a material adverse effect on
our business, financial condition or results of operations. Our business depends
in part, on our ability to obtain  transmission  facilities on a  cost-effective
basis.

31.      Foreign governments may not provide us with practical  opportunities to
         compete in their telecommunications markets.

         We may be subject to regulation in foreign countries in connection with
certain of our business activities.  For example,  laws or regulations in either
the  transmitting  or  terminating  foreign  jurisdiction  may affect our use of
transit,  resale or other routing arrangements.  In addition, our operations may
be affected by foreign countries,  either independently or jointly as members of
national  organizations  such as the WTO may have  adopted  or may adopt laws or
regulatory  requirements  regarding such services for which  compliance would be
difficult  or  expensive  and that could force us to choose less  cost-effective
routing  alternatives  and that could adversely  affect our business,  operating
results  and  financial  condition.  To the  extent  that  we  seek  to  provide
telecommunications  services in other  non-U.S.  markets,  we are subject to the
developing  laws  and  regulations   governing  the  competitive   provision  of
telecommunications  services in those  markets.  We may expand our operations as
these markets implement  scheduled  liberalization to permit  competition in the
full range of telecommunications services in the next several years. The nature,
extent and timing of the  opportunity for us to compete in these markets will be
determined,  in part, by the actions taken by the governments in these countries
to  implement  competition  and the  response  of  incumbent  carriers  to these
efforts.  The  regulatory  regimes in these  countries  may not  provide us with
practical opportunities to compete in the near future, or at all, and we may not
be able to take advantage of any such liberalization in a timely manner.

         Governments  of many  countries  exercise  substantial  influence  over
various aspects of their countries'  telecommunications  markets. In some cases,
the government  owns or controls  companies  that are or may become  competitors
with us and/or our partners,  such as national telephone  companies,  upon which
our foreign partners may depend for required interconnections to local telephone
networks and other services.  Certain actions of these foreign governments could
have a material adverse effect on our operations.  In highly regulated countries
in which we are not dealing  directly with the dominant local exchange  carrier,
the  dominant  carrier  may have the ability to  terminate  service to us or our
foreign  partner  and, if this occurs,  we may have  limited or no recourse.  In
countries where competition is not yet fully established and we are dealing with
an alternative operator,  foreign laws may prohibit or impede new operators from
offering services.

                                       12
<PAGE>

32.      Anti-takeover provisions may deter change in control transactions.

         Certain provisions of our certificate of incorporation, as amended, and
bylaws,  as amended,  and the General  Corporation  Law of the State of Delaware
(the "GCL") could deter a change in our  management or render more  difficult an
attempt to obtain control of us, even if such  transactions  would be beneficial
to our  shareholders.  For example,  we are subject to the provisions of the GCL
that prohibit a public  Delaware  corporation  from engaging in a broad range of
business   combinations   with  a  person  who,  together  with  affiliates  and
associates,  owns 15% or more of the corporation's outstanding voting shares (an
"Interested  Stockholder") for three years after the person became an Interested
Stockholder, unless the business combination is approved in a prescribed manner.
The certificate of incorporation  includes  undesignated  preferred stock, which
may enable the board of directors to discourage an attempt to obtain  control of
us by means of a tender offer, proxy contest,  merger or otherwise. In addition,
the certificate of  incorporation  provides for a classified  board of directors
such that  approximately only one-third of the members of the board of directors
will be elected at each annual meeting of  stockholders.  A classified  board of
directors may have the effect of delaying,  deferring or discouraging changes in
control  of  us.  Further,  certain  other  provisions  of  the  certificate  of
incorporation  and bylaws and of the GCL could  delay or make more  difficult  a
merger,  tender  offer or proxy  contest  involving  us.  Additionally,  certain
federal  regulations  require prior approval of certain  transfers of control of
telecommunications  companies,  which  could also have the  effect of  delaying,
deferring or preventing a change in control.

33.      We have not paid any dividends to our stockholders and do not expect to
         anytime in the near future.

         Instead, we plan to retain future earnings, if any, for investment back
into VDC.

                           Forward-looking statements

         This prospectus contains forward-looking  statements within the meaning
of  the   Private   Securities   Litigation   Reform   Act  of  1995.   Although
forward-looking  statements  are  based on  assumptions  made,  and  information
believed,  by us to be  reasonable,  we cannot be certain that these  statements
will prove to be correct.  These statements are subject to risks,  uncertainties
and assumptions. Should one or more of these risks or uncertainties materialize,
or should  underlying  assumptions  prove  incorrect,  actual  results  may vary
materially from those anticipated, estimated, projected or expected.

                                 Use of proceeds

         We will not  receive  any of the  proceeds  from the sale of the shares
offered by this  prospectus,  although we will receive the exercise price of the
warrants if the warrants are  exercised.  Any such proceeds will be used for our
general working capital.

                                       13
<PAGE>

                            Selling Security Holders

      All of the shares of common  stock of VDC offered by this  prospectus  are
being sold for the account of the selling  security  holders  identified  in the
following table.

      The  selling  security  holders  are  offering  for sale an  aggregate  of
8,558,648 shares of common stock which include:

     o   8,437,113 shares of common stock; and

      o 121,535 shares of common stock issuable, if at all, upon the exercise of
certain common stock purchase warrants.

      The following table sets forth as of October 25, 2000 the number of shares
being  held of  record  or  beneficially  (to the  extent  known by VDC) by such
selling  security  holders and  provides (by  footnote  reference)  any material
relationship between VDC and such Selling Security Holder, all of which is based
upon information currently available to VDC. Both the number of shares listed as
being  offered by the  selling  security  holders in the table and the  holders'
respective  percentage  of share  ownership  after the offering are based on the
assumptions  that all of the shares  being  offered  are sold  pursuant  to this
offering,  and that no other  shares of common stock are acquired or disposed of
by the selling  security  holders  prior to the  termination  of this  offering.
Because the selling  security holders may sell all, some or none of their shares
or may acquire or dispose of other shares of common  stock,  we cannot  estimate
the aggregate  number of shares that will be sold in this offering or the number
or percentage of shares of common stock that each selling  security  holder will
own upon completion of this offering.

      The shares of common stock offered by the selling  security holders may be
offered for sale from time to time at market  prices  prevailing  at the time of
sale or at negotiated prices, and without payment of any underwriting  discounts
or  commissions  except  for usual and  customary  selling  commissions  paid to
brokers or dealers.

<TABLE>
<CAPTION>
                                       SHARES BENEFICIALLY OWNED                                   SHARES TO BE BENEFICIALLY
                                          PRIOR TO OFFERING (1)                                       OWNED AFTER OFFERING
 NAME                                       NUMBER OF SHARES     PERCENT       SHARES BEING OFFERED     NUMBER OF SHARES     PERCENT
 ----                                       ----------------     -------       --------------------     ----------------     -------
<S>                                              <C>             <C>                <C>                         <C>          <C>
 Activated Communications Limited                  39,072           *                 39,072                      0            0%
 Partnership
 Adase Partners, L. P.                            206,000           *                206,000 (2)                  0            0%
 Anne Moran Trust (3)                                 250           *                    250                      0            0%
 Dean Brizel and Jeanne Brizel                      2,000           *                  2,000 (5)                  0            0%
 Stephen Buell                                      2,000           *                  2,000 (5)                  0            0%
 Capital Opportunity Partners One, L.P.             2,000           *                  2,000 (5)                  0            0%
 Arthur Cooper and Joanie Cooper                    4,000           *                  4,000 (6)                  0            0%
 Mark Eshman and Jill Eshman trustees for           2,000           *                  2,000 (5)                  0            0%
 the Eshman Living Trust dated 9/24/90
 FAC Enterprises, Inc.                             54,852           *                 54,852                      0            0%
 Jeffrey Feingold and Barbara Feingold              2,000           *                  2,000 (5)                  0            0%
 Fred Fraenkel                                     22,000           *                 22,000 (4)                  0            0%
 Torunn Garin                                      66,000           *                 66,000 (2)                  0            0%
 ING Barings, LLC                                   4,500           *                  4,500 (7)                  0            0%

                                       14
<PAGE>

 Henry D. Jacobs, Jr.                             112,740           *                 40,740 (8)             72,000             *
 The Lucien I. Levy Revocable Living Trust         31,500           *                 27,500                  4,000             *
 The Elvire Levy Revocable Living Trust            18,000           *                 10,000                  8,000             *
 Merl Trust                                        61,459           *                 58,125                  3,334             *
 Anne Moran (9)                                    63,643           *                 63,643                      0            0%
 Anne Moran IRA                                    61,046           *                 61,046                      0            0%
 Clayton F. Moran (10)                          1,525,663 (11)     6.2%            1,425,600                100,063             *
 Frederick A. Moran (12)                        4,246,387 (13)    17.3%              100,000                223,500 (14)        *
 Fred Moran, IRA                                   85,998           *                 85,998                      0            0%
 Fred Moran Trust (15)                                180           *                    180                      0            0%
 Frederick A. Moran and Anne Moran                 41,380           *                 41,380                      0            0%
 Frederick A. Moran and Joan Moran (16)           973,510          3.9%              973,510                      0            0%
 Frederick W. Moran (17)                        1,200,063 (18)     4.9%            1,200,000                     63             *
 Joan Moran IRA                                       248           *                    248                      0            0%
 Kent Moran (19)                                   15,671           *                 15,671                      0            0%
 Kent Moran IRA                                       333           *                    333                      0            0%
 Luke Moran (19)                                   22,102           *                 22,102                      0            0%
 Luke Moran IRA                                       333           *                    333                      0            0%
 Kent F. Moran Trust (20)                       1,328,810          5.4%            1,328,810                      0            0%
 Luke F. Moran Trust (21)                       1,328,660          5.4%            1,328,660                      0            0%
 Moran Equity Fund, Inc.                              938           *                    938                      0            0%
 O.T. Finance, SA                                  88,375           *                 76,375                 12,000             *
 Paradigm Group, LLC                              170,914           *                170,914 (22)                 0            0%
 Robert Paterno (23)                              239,943           *                 45,000                194,943             *
 PGP I Investors, LLC                             133,318           *                133,318 (24)                 0            0%
 RC&A Group, Inc.                                  81,633           *                 81,633                      0            0%
 Tab K. Rosenfeld                                  18,250           *                 18,250                      0            0%
 Peter J. Salzano (25)                            563,795 (26)     2.3%               50,000                513,795           2.1%
 Santa Fe Capital Group (NM), Inc.                  3,000           *                  3,000                      0            0%
 Scott Schenker and Randi Schenker                 22,000           *                 22,000 (4)                  0            0%
 Alan B. Snyder                                   707,567 (27)     2.9%              641,667                 65,900             *
 Alan B. Snyder, IRA                              125,000           *                125,000                      0            0%
                                                                                     -------
 TOTAL                                                                             8,558,648

</TABLE>

(*)      Less than 1%

(1)      Based  upon 24,398,029 shares of common stock outstanding as of October
         25, 2000.

(2)      Includes  6,000  shares  issuable,  if  at  all,  upon  the exercise of
         outstanding warrants to purchase common stock.

(3)      A trust for the benefit of Frederick  W. Moran, Clayton F. Moran,  Kent
         F. Moran and Luke F. Moran.  Anne Moran is the mother  of  Frederick A.
         Moran.

(4)      Includes  2,000  shares  issuable,  if  at  all,  upon  the exercise of
         outstanding warrants to purchase common stock.

(5)      Represents  2,000 shares  issuable,  if  at  all,  upon the exercise of
         outstanding warrants to purchase common stock.

                                       15
<PAGE>

(6)      Represents 4,000 shares issuable,  if  at  all,  upon  the  exercise of
         outstanding warrants to purchase common stock.

(7)      Represents 4,500  shares  issuable,  if at all,  upon  the  exercise of
         outstanding warrants to purchase common stock.

(8)      Includes  3,703  shares  issuable, if  at  all, upon  the  exercise  of
         outstanding warrants to purchase common stock.

(9)      Mother of Frederick A. Moran.

(10)     An adult son of Frederick A. Moran  and  employed  as  Chief  Financial
         Officer  and  Treasurer  of VDC.  Mr.  Moran  formerly  served as  Vice
         President, Finance, of VDC and as a member of VDC's Audit Committee.

(11)     Includes   options  to  purchase  50,000  shares  of  common  stock,  a
         restricted  stock award of 50,000 shares,  and 63 shares that Mr. Moran
         has the right to acquire  upon  demand  from a trust.  Does not include
         options to purchase 220,000 shares of common stock which may vest in or
         after June 2001.

(12)     Frederick  A.  Moran  serves  as  Chairman,  Chief  Executive  Officer,
         Secretary  and  Director of  VDC.  Mr. Moran also serves as a member of
         VDC's Audit Committee and  Compensation  Committee.  Mr. Moran formerly
         served as Chief Financial Officer of VDC.

(13)     Includes options,  in the name of Mr. Moran, to purchase 190,000 shares
         of common  stock and  options,  in the name of Joan Moran,  to purchase
         8,500  shares  of  common  stock.  Does not  include  1,200,063  shares
         beneficially   owned  by  Frederick  W.  Moran  and  1,525,663   shares
         beneficially  owned by Clayton F. Moran,  both of whom are Mr.  Moran's
         adult children.  Does not include options, in the name of Mr. Moran, to
         purchase  705,000  shares  of common  stock  which may vest in or after
         August 2001. Does not include options, in the name of Mr. Moran's wife,
         to purchase  34,000  shares of common  stock which may vest in or after
         August  2001.  The  beneficial  ownership  of the  following  shares is
         attributed to Frederick A. Moran:  Frederick A. Moran  (125,000  shares
         plus  options to  purchase  190,000  shares);  Joan Moran  (options  to
         purchase  8,500  shares);  Frederick  A. Moran and Joan Moran  (973,510
         shares);  Frederick A. Moran and Anne Moran (41,380 shares);  the Moran
         Equity Fund,  Inc.  (938  shares);  the Luke F. Moran Trust  (1,328,660
         shares);  the Kent F. Moran  Trust  (1,328,810  shares);  Luke F. Moran
         (22,102 shares); Kent F. Moran (15,671 shares); the Frederick A. Moran,
         IRA (85,998  shares);  the Frederick Moran Trust (90 shares);  the Anne
         Moran Trust (125  shares);  the Luke Moran IRA (333  shares);  the Kent
         Moran IRA (333  shares);  the Joan Moran IRA (248  shares);  Anne Moran
         (63,643 shares);  and the Anne Moran IRA (61,046 shares). Mr. Moran has
         filed a Schedule 13D (and an amendment  thereto)  reporting  beneficial
         ownership of more than 10% of VDC  Communications,  Inc.'s  outstanding
         shares of common stock. This Schedule 13D contains numerous disclaimers
         including one in which he asserts "[t]he filing of this Statement shall
         not be  construed  as an  admission  that Mr. Moran is, for purposes of


                                       16
<PAGE>

         Section  13(d),  or  13(g)  of the  Act,  the  beneficial  owner of any
         securities covered by the Statement."

(14)     All  shares   beneficially  owned  by   Mr.  Moran,  other  than  those
         represented  by vested  options  and another  25,000  shares of  common
         stock beneficially owned by Mr. Moran, are being offered hereby.

(15)     A  trust  for the benefit of Frederick W. Moran, Clayton F. Moran, Kent
         F. Moran and Luke F. Moran.

(16)     Joan Moran is the wife of Frederick A. Moran and an employee of VDC.

(17)     An adult son of Frederick A. Moran.

(18)     Includes 63  shares that Mr. Moran has the right to acquire upon demand
         from a trust.

(19)     A minor child of Frederick A. Moran.

(20)     A trust for the benefit of Kent F. Moran.

(21)     A trust for the benefit of Luke F. Moran.

(22)     Includes  64,814  shares issuable,  if  at  all,  upon  the exercise of
         outstanding warrants to purchase common stock.

(23)     A former employee of Rare Telephony, Inc., a wholly-owned subsidiary of
         VDC.

(24)     Includes  18,518  shares  issuable,  if  at  all,  upon the exercise of
         outstanding warrants to purchase common stock.

(25)     An  independent  contractor  of  Rare  Telephony,  Inc., a wholly-owned
         subsidiary of VDC.

(26)     Includes  125,167 shares  in the name  of  Mr. Salzano  and  beneficial
         ownership of 438,628 shares through Mr.  Salzano's role as President of
         Network Consulting Group, Inc.

(27)     Does  not  include 125,000 shares in the name  of  Alan B. Synder, IRA,
         over which Mr. Snyder has investment control.

         We will pay all offering  expenses  except the fees and expenses of any
counsel  and other  advisors  that the  selling  security  holder  may employ to
represent them in connection with the offering and all brokerage or underwriting
discounts or commissions paid to  broker-dealers  in connection with the sale of
the shares.

                                       17
<PAGE>

                            Description of securities

Common stock

         VDC is authorized to issue  50,000,000  shares of common stock,  $.0001
par value per share, of which 24,398,029 are outstanding as of October 27, 2000.

         Holders of common stock have equal rights to receive dividends when and
if declared by the board of directors,  out of legally available funds.  Holders
of common  stock  have one vote for each  share  held of record  and do not have
cumulative voting rights.

         Holders of common stock are entitled upon  liquidation  of VDC to share
ratably in the net assets available for distribution,  subject to the rights, if
any, of holders of any preferred stock then outstanding.  Shares of common stock
are not redeemable and have no pre-emptive or similar  rights.  All  outstanding
shares of common stock are fully paid and non-assessable.

Preferred stock

         Pursuant to VDC's certificate of incorporation,  the board of directors
has the authority to issue up to 10,000,000  shares of preferred  stock,  $.0001
par value per share,  in one or more series and to fix the rights,  preferences,
privileges and restrictions thereof,  including dividend rights, dividend rates,
conversion  rights,  voting  rights,  terms of  redemption,  redemption  prices,
liquidation  preferences and the number of shares constituting any series or the
designation   of  such  series,   without   further  vote  or  action  by  VDC's
stockholders.  The issuance of preferred  stock may have the effect of delaying,
deferring or preventing a change in control of VDC without further action by the
stockholders and may adversely affect the voting and other rights of the holders
of common  stock.  The  issuance of preferred  stock with voting and  conversion
rights may  adversely  affect the voting  power of the holders of common  stock,
including the loss of voting control to others.

Warrants

         As of October 27, 2000,  warrants to purchase 125,535 shares of Company
common stock are outstanding (the "Warrants") as follows:

            Number of Warrants      Exercise Price        Expiration Date
            ------------------      --------------        ---------------

                   4,500                $7.00              August 7, 2001

                 121,035                $6.00                 May, 2002
                 -------
        TOTAL:   125,535

Registration rights

         This  prospectus  has been prepared,  in part,  pursuant to contractual
registration  rights  granted  in  connection  with the  prior  sale of  certain
securities by VDC in private transactions.

                                       18
<PAGE>

Provisions having a possible anti-takeover effect

         Delaware General Corporation Law

         The provisions of Section 203 of the Delaware General  Corporation Law,
an anti-takeover law, govern us. In general, the law prohibits a public Delaware
corporation  from  engaging  in a  "business  combination"  with an  "interested
stockholder"  for a period of three years after the date of the  transaction  in
which  the  person  became  an  interested  stockholder,   unless  the  business
combination is approved in a prescribed manner.  "Business combination" includes
mergers,  asset sales and other transactions resulting in a financial benefit to
the stockholder.  An "interested stockholder" is a person who, together with its
affiliates and associates,  owns (or within three years, did own) 15% or more of
the corporation's voting stock.

         The provisions  regarding  certain business  combinations  could delay,
defer  or  prevent  a  change  in  control  of VDC or the  removal  of  existing
management.   A  takeover   transaction   frequently  affords  stockholders  the
opportunity to sell their shares at a premium over current market prices.

         The provisions described above,  together with the ability of the board
of  directors  to issue  preferred  stock,  may  delay or deter a change  in the
control or management of VDC.

         Certificate of incorporation and bylaws

         VDC's certificate of incorporation, as amended, provides that the board
of directors be divided into three classes of directors, with each class serving
a staggered three-year term. The classification system of electing directors may
tend to  discourage  a third  party  from  making  a tender  offer or  otherwise
attempting to obtain control of VDC and may maintain the incumbency of the board
of  directors,  as  the  classification  of the  board  of  directors  generally
increases the difficulty of replacing a majority of the directors.

         Additionally,  VDC's bylaws, as amended,  provide that special meetings
of stockholders may only be called by either the Chief Executive  Officer or the
President,  or  pursuant  to a written  request  of a  majority  of the board of
directors.  Special  meetings  may  not be  called  by the  stockholders.  These
provisions  could have the effect of  delaying  consideration  of a  stockholder
proposal until the next annual  meeting.  The provisions  would also prevent the
holders of a majority of the voting  power of the capital  stock of VDC entitled
to  vote  from  unilaterally   using  the  written  consent  procedure  to  take
stockholder  action.  Moreover,  a  stockholder  could  not  force  the board of
directors to call a special meeting of the  stockholders  prior to the time such
persons  believe such  consideration  to be  appropriate,  except as required by
Delaware law.

         The  bylaws  establish   advance  notice   procedures  with  regard  to
stockholder  proposals and the nomination,  other than by or at the direction of
the board of directors or a committee  thereof,  of  candidates  for election as
directors.  These  procedures  provide  that  stockholder  nominations  for  the
election of  directors  at an annual  meeting must be in writing and received by
VDC's  Secretary  not  less  than 50 days  nor  more  than 75 days  prior to the
meeting; provided,  however, that in the event that less than 60 days' notice or
prior  public  disclosure  of the  date  of the  meeting  is  given  or  made to

                                       19
<PAGE>

stockholders,  notice by the  stockholder  must be  received  not later than the
close of business on the tenth day following the day on which such notice of the
date of the  meeting was mailed or such public  disclosure  was made,  whichever
first occurs.  The notice of nominations for the elections of directors must set
forth certain  information with respect to the stockholder giving the notice and
with respect to each nominee.

         By  requiring  advance  notice  of  nominations  by  stockholders,  the
foregoing  procedures  will  afford the board of  directors  an  opportunity  to
consider the  qualifications  of the proposed nominees and, to the extent deemed
necessary or desirable by the board of directors,  to inform  stockholders about
such  qualifications.  By requiring  advance notice of other proposed  business,
such  procedures  will provide the board of  directors  with an  opportunity  to
inform  stockholders  prior to such  meetings,  of any  business  proposed to be
conducted at such meetings, together with any recommendations as to the board of
directors'  position regarding action to be taken with respect to such business,
so that  stockholders  can better decide  whether to attend such a meeting or to
grant a proxy regarding the disposition of any such business.

         Although the  certificate of  incorporation  and the bylaws do not give
the  board  of  directors  any  power  to  approve  or  disapprove   stockholder
nominations for the election of directors or proposals for action, they may have
the  effect of  precluding  a  contest  for the  election  of  directors  or the
consideration  of  stockholder  proposals  if  the  proper  procedures  are  not
followed,  and of  discouraging  or  deterring a third party from  conducting  a
solicitation  of proxies to elect its own slate of  directors  or to approve its
own proposal,  with regard to whether consideration of such nominee or proposals
might be harmful or beneficial to VDC and its stockholders.

         The certificate of incorporation provides that the bylaws of VDC may be
adopted, altered, amended or repealed by the board of directors of VDC except as
otherwise  provided by law. The certificate of incorporation  also provides that
any bylaw made by the board of directors,  may be altered,  amended or repealed,
and new bylaws made by the affirmative  vote of the holders of two-thirds of the
combined voting power of the then  outstanding  shares of stock entitled to vote
on the proposed adoption,  alteration,  amendment or repeal of or to the bylaws.
This provision  modifies the default rules of the Delaware  General  Corporation
Law by providing  that the board of  directors  may adopt and modify the bylaws.
Additionally,  the  provision  alters the Delaware  General  Corporation  Law by
requiring the affirmative vote of two-thirds of the combined voting power of the
than outstanding shares, as opposed to a simple majority.

         The  certificate  of  incorporation  provides  that  amendments  to the
certificate of  incorporation  shall require the affirmative vote of the holders
of two-thirds  of the combined  voting power of the then  outstanding  shares of
stock  entitled  to  vote  on  any  proposed  amendment  to the  certificate  of
incorporation.  However, in the event that a resolution to amend the certificate
of  incorporation  is adopted by the affirmative vote of at least eighty percent
(80%) of the board of directors,  approval of the  amendment  shall only require
the affirmative  vote of the holders of a majority  combined voting power of the
then  outstanding  shares  of the  stock  entitled  to  vote  generally  on such
amendment.  This  provision  modifies the default rules of the Delaware  General
Corporation Law by requiring a higher level of shareholder  approval in favor of
modifying the certificate of incorporation.

                                       20
<PAGE>

         Pursuant to VDC's certificate of incorporation,  the board of directors
has the authority to issue up to 10,000,000  shares of preferred stock in one or
more  series and to fix the rights,  preferences,  privileges  and  restrictions
thereof,  including dividend rights,  dividend rates,  conversion rights, voting
rights, terms of redemption,  redemption prices, liquidation preferences and the
number of shares  constituting  any series or the  designation  of such  series,
without further vote or action by VDC's stockholders.  The issuance of preferred
stock may have the  effect of  delaying,  deferring  or  preventing  a change in
control of VDC without  further  action by the  stockholders  and may  adversely
affect the voting and other rights of the holders of common stock.  The issuance
of preferred  stock with voting and conversion  rights may adversely  affect the
voting  power of the  holders  of  common  stock,  including  the loss of voting
control to others.

         The foregoing provisions of the certificate of incorporation and bylaws
could discourage  potential  acquisition  proposals and could delay or prevent a
change  in  control  of VDC.  These  provisions  are  intended  to  enhance  the
likelihood  of  continuity  and  stability  in the  composition  of the board of
directors  and in the  policies  formulated  by the  board of  directors  and to
discourage  certain  types  of  transactions  that  may  involve  an  actual  or
threatened change of control of VDC. These provisions are designed to reduce the
vulnerability of VDC to an unsolicited acquisition proposal. The provisions also
are intended to  discourage  certain  tactics that may be used in proxy  fights.
However,  such  provisions  could have the effect of  discouraging  others  from
making  tender  offers for VDC's  shares  and, as a  consequence,  they also may
inhibit  fluctuations in the market price of VDC's shares that could result from
actual or rumored takeover attempts. Such provisions also may have the effect of
preventing changes in the management of VDC.

                              Plan of distribution

         The selling  security  holders have not advised us of any specific plan
for  distribution of the shares offered hereby,  but it is anticipated  that the
shares  will be sold from time to time by the  selling  security  holders  or by
pledgees, donees, transferees or other successors in interest. Such sales may be
made on the American  Stock  Exchange,  any other exchange upon which our shares
may trade in the future, over-the-counter,  or otherwise, at prices and at terms
then  prevailing or at prices  related to the then current  market price,  or in
negotiated transactions. The shares may be sold by one or more of the following:

        o     a block  trade in which  the  broker or  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;

        o     purchases  by  a broker or dealer for its account pursuant to this
              prospectus;

        o     ordinary  brokerage  transactions  and  transactions  in which the
              broker solicits purchases;

        o     through options, swaps or derivatives;

        o     in privately negotiated transactions;

                                       21
<PAGE>

        o     in transactions to cover short sales;

        o     through a combination of any such methods of sale; or

        o     in accordance  with Rule 144 under the Securities Act, rather than
              pursuant to this prospectus.

         The  selling  security  holders  may  sell  their  shares  directly  to
purchasers  or may use brokers,  dealers,  underwriters  or agents to sell their
shares.  In effecting sales,  brokers or dealers engaged by the selling security
holders  may  arrange for other  brokers or dealers to  participate.  Brokers or
dealers may  receive  commissions,  discounts  or  concessions  from the selling
security holders,  or, if any such broker-dealer acts as agent for the purchaser
of shares,  from the purchaser in amounts to be negotiated  immediately prior to
the sale.  The  compensation  received  by brokers or  dealers  may,  but is not
expected  to,  exceed  that  which is  customary  for the types of  transactions
involved.  Broker-dealers  may agree  with a selling  security  holder to sell a
specified number of shares at a stipulated  price per share,  and, to the extent
the  broker-dealer  is unable  to do so  acting as agent for a selling  security
holder,  to purchase as  principal  any unsold  shares at the price  required to
fulfill  the   broker-dealer   commitment  to  the  selling   security   holder.
Broker-dealers  who acquire shares as principal may thereafter resell the shares
from time to time in  transactions,  which may involve  block  transactions  and
sales to and through other broker-dealers,  including transactions of the nature
described  above,  in the over-the  counter market or otherwise at prices and on
terms  then  prevailing  at the time of sale,  at  prices  then  related  to the
then-current  market price or in negotiated  transactions.  In  connection  with
resales of the shares,  broker-dealers may pay to or receive from the purchasers
of shares commissions as described above.

         The  selling  security  holders and any  broker-dealers  or agents that
participate  with the selling  security holders in the sale of the shares may be
deemed to be  "underwriters"  within the meaning of the Securities  Act. In that
event, any commissions  received by  broker-dealers  or agents and any profit on
the  resale of the  shares  purchased  by them may be deemed to be  underwriting
commissions or discounts under the Securities Act.

         From time to time the  selling  security  holders  may  engage in short
sales,   short  sales  against  the  box,  puts  and  calls  and  other  hedging
transactions  in our  securities,  and  may  sell  and  deliver  the  shares  in
connection with such  transactions or in settlement of securities  loans.  These
transactions  may  be  entered  into  with  broker-dealers  or  other  financial
institutions.  In  addition,  from time to time, a selling  security  holder may
pledge its shares pursuant to the margin  provisions of its customer  agreements
with its  broker-dealer.  Upon  delivery of the shares or a default by a selling
security holder,  the broker-dealer or financial  institution may offer and sell
the pledged shares from time to time.

         We will not receive any proceeds  from the sale of the shares.  We will
pay the  expenses of  preparing  this  prospectus  and the related  registration
statement.  The selling security holders have been advised that they are subject
to the applicable  provisions of the Exchange Act, including without limitation,
Rules 10b-5 and Regulation M thereunder.

                                       22
<PAGE>

                                  Legal matters

         The  validity  of the  issuance of the shares of common  stock  offered
hereby  will  be  passed  upon  for  us  by  Buchanan   Ingersoll   Professional
Corporation,  Eleven Penn Center, 1835 Market Street, 14th Floor,  Philadelphia,
Pennsylvania 19103.

                                     Experts

         The financial  statements  incorporated in this prospectus by reference
from VDC's Reports on Forms 10-K and 8-K/A for the year ended June 30, 2000 have
been audited by BDO Seidman, LLP, independent  certified public accountants,  to
the  extent  and for the  periods  set  forth in their  reports  (which  contain
explanatory  paragraphs regarding VDC's ability to continue as a going concern),
which are also incorporated  herein by reference,  and have been so incorporated
in reliance upon the reports of said firm as experts in auditing and accounting.

                    Indemnification of directors and officers

         Our  certificate  of   incorporation   reflects  the  adoption  of  the
provisions of Section  102(b)(7) of the Delaware General  Corporation Law, which
eliminate or limit the personal  liability of a director to our  stockholders or
us  for   monetary   damages  for  breach  of  fiduciary   duty  under   certain
circumstances.  Our  certificate  of  incorporation  also provides that we shall
indemnify  any person,  who was or is a party to a  proceeding  by reason of the
fact that he is or was a director or officer of VDC, or is or was serving at our
request  as a  director,  officer,  employee  or agent of  another  corporation,
partnership,   joint  venture,  trust  or  other  enterprise,  against  expenses
(including   attorneys'  fees)  actually  and  reasonably  incurred  by  him  in
connection  with a  proceeding  if he acted  in good  faith  and in a manner  he
reasonably  believed to be or not opposed to our best  interests,  in accordance
with, and to the full extent permitted by, the GCL as it currently exists or may
be amended (but, in the case of any such amendment, only to the extent that such
amendment  permits VDC to provide broader  indemnification  rights than said law
permitted  VDC  to  provide  prior  to  such  amendment).   Our  certificate  of
incorporation  also  provides  that we may, by action of our board of directors,
provide  indemnification  to employees and agents of VDC with the same scope and
effect  as  the  foregoing   indemnification  of  directors  and  officers.  The
determination  of whether  indemnification  is proper  under the  circumstances,
unless made by the court, shall be determined by our board of directors.

         We have  liability  insurance  for the  benefit  of our  directors  and
officers. The insurance covers claims against such persons due to any:

        o         breach of duty;                o         misleading statement;

        o         neglect;                       o         omission; or

        o         error;                         o         negligent act.

        o         misstatement;

                                       23
<PAGE>

         The insurance also provides  certain  coverage for VDC and employees of
VDC in connection  with certain  securities  law claims.  The  insurance  covers
claims referenced above,  except as prohibited by law, or otherwise  excluded by
such insurance policy.

         Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to  directors,  officers,  and  controlling  persons of VDC
pursuant to the foregoing provisions, or otherwise, VDC has been advised that in
the  opinion  of the SEC  such  indemnification  is  against  public  policy  as
expressed in the Securities Act and is, therefore, unenforceable.

                       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  document  VDC files at the SEC's public  reference  facilities  at 450
Fifth  Street,   N.W.,   Washington,   D.C.  20549.   Please  call  the  SEC  at
1-800-SEC-0330  for further  information on the public  reference  room. Our SEC
filings  are  also   available  to  the  public  from  the  SEC's  web  site  at
http://www.sec.gov  and at the  Commission's  regional  offices at 7 World Trade
Center,  Suite 1300, New York, New York 10048 and Northwest  Atrium Center,  500
West  Madison  Street,  Suite  1400,  Chicago,  Illinois  60661.  Copies of such
materials may be obtained upon written  request  addressed to the  Commission at
the Public Reference Section, at 450 Fifth Street, N.W., Washington, D.C. 20549,
at  prescribed  rates.  Our SEC filings are also  available at the office of the
American Stock  Exchange.  For further  information  on obtaining  copies of our
public filings at the American Stock Exchange, you should call 212-306-1484.

         The SEC allows VDC to  "incorporate  by reference" the  information VDC
files with them, which means that VDC 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 later  information  that VDC
files with the SEC will automatically update and supersede this information. VDC
incorporates by reference the documents listed below and any future filings made
with the SEC  under  Sections  13(a),  13(c),  14,  or  15(d) of the  Securities
Exchange Act of 1934 until the selling security holders sell all the shares.

         1.       Annual Report on Form 10-K for the year ended June 30, 2000;

         2.       Report  on  Form 8-K dated June 14, 2000 reporting acquisition
                  of Rare Telephony, Inc;

         3.       An   Amendment  to  Form  8-K  (Form  8-K/A)  filed  with  the
                  Securities and Exchange Commission on August 25, 2000 amending
                  a previously filed Form 8-K dated as of June 14, 2000 relative
                  to the Company's acquisition of Rare Telephony, Inc;

         4.       Report  on  Form  8-K  dated  October  16,  2000  reporting an
                  exploration  of alternatives to address liquidity concerns and
                  a stock option repricing; and

                                       24
<PAGE>

         5.       The descriptions of the VDC's common stock which are contained
                  in registration statements on Form 8-A under the Exchange Act,
                  including  any  amendment  reports  filed for the  purpose  of
                  updating such description.

         VDC  will  provide,  without  charge,  to each  person,  including  any
beneficial  owner,  to whom a copy of this  prospectus  is  delivered,  upon the
written or oral request of such person,  a copy of any or all of the information
incorporated  herein by reference.  Exhibits to any of such documents,  however,
will not be provided  unless such  exhibits  are  specifically  incorporated  by
reference into such documents. The requests should be made to:

                                    Clayton F. Moran, Chief Financial Officer
                                    VDC Communications, Inc.
                                    75 Holly Hill Lane
                                    Greenwich, Connecticut 06830
                                    (203) 869-5100


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                                     [LOGO]

                                8,558,648 shares

                            VDC Communications, Inc.

                                  Common Stock

                               -------------------

                               P r o s p e c t u s

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                                October 27, 2000



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