UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): December 29, 2000
VDC COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware 001-14281 061524454
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(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification No.)
incorporation)
75 Holly Hill Lane
Greenwich, Connecticut 06830
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(Address of principal executive office)
(203) 869-5100
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or former address, if changed since last report.)
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Item 5. Other Events.
See the following press release, dated January 2, 2001, announcing the
initiation by VDC Communications, Inc. of massive expense reductions, including
the resignation of the C.E.O. and C.F.O.
FOR IMMEDIATE RELEASE
Contact: Anthony F. DeJesus
(973) 621-6660
VDC COMMUNICATIONS INITIATES MASSIVE EXPENSE
REDUCTIONS, INCLUDING RESIGNATION OF C.E.O. AND C.F.O.
Greenwich, CT: January 2, 2001. VDC Communications, Inc. (AMEX:"VDC")
announced that it is undertaking substantial expense reductions necessitated by
its continuing negative cash flow, its inability to pay operating expenses, its
inability to raise additional capital, and its depleted and inadequate cash
position. VDC's current liquidity-constrained circumstances result primarily
from: the inability of VDC's recently acquired retail long distance operation to
sufficiently reduce its cash losses; and, VDC's inability to raise funds.
The cutbacks include an approximate 48% staff and operations reduction
at the retail long distance unit, the expected elimination of the Los Angeles
wholesale switching facility, the ceasing of wholesale long distance operations
in general, and a severe curtailment in VDC's corporate overhead. The remaining
operations will be consolidated to further reduce cash expenses. As of today,
VDC does not know the extent of any charges that will be incurred as a result of
these actions.
In addition, VDC has been in talks with unsecured creditors for months
in attempts to settle past due payables. VDC has experienced modest success with
certain vendors by finding mutually agreeable compromises. Nevertheless, these
settlements have not had a material impact on VDC's balance sheet and, as such,
VDC has been unable to complete the proposed financing announced on October 27,
2000. As part of its ongoing plan, VDC will continue to seek compromise of its
undisputed accounts payable in the hope of settling with its creditors. VDC will
also continue to seek alternatives in regard to improving the balance sheet,
including but not limited to: capital raising, and the sale of asset(s).
However, VDC has recently been unsuccessful in raising capital and it is
unlikely that asset sales will satisfactorily address VDC's current liquidity
situation. VDC is also considering merger and acquisition possibilities.
In order to maximize reductions, Frederick A. Moran, VDC's Chairman,
C.E.O., Secretary, and Director and Clayton F. Moran, VDC's C.F.O. and
Treasurer, have resigned. Anthony DeJesus, C.P.A., VDC's Controller, has been
appointed Director, Chairman, C.E.O., C.F.O., Secretary and Treasurer by VDC's
Board of Directors. Mr. DeJesus joined VDC in July 1998. Prior to joining VDC,
Mr. DeJesus had been an audit manager at the accounting firm BDO Seidman, L.L.P.
Since July 1998, he has been an integral part of VDC's management team. Since
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VDC's continuing operations are substantially those of VDC's retail subsidiary,
it is expected that the operating capability will be provided internally by this
subsidiary's staff.
Anthony DeJesus, VDC's newly-appointed Chairman and C.E.O., stated:
"Anticipating the international wholesale long distance business' severe
industry-wide debacle and the continued predatory tactics of a
monopolistically-positioned critical infrastructure vendor, VDC attempted to
migrate from a low-growth, margin-squeezed international wholesale business to
the higher margin retail domestic long distance business. While VDC has reduced
the cash burn rate of its retail long distance operation by about 75% since its
June 2000 acquisition, the reductions have proven insufficient in light of VDC's
inability to raise additional capital in the currently poor financing
environment. It is management's hope that this large cutback in operating
expenses will prove sufficient to permit VDC to achieve positive operating cash
flow. It is hoped that revenues produced by the existing customer base may prove
sufficient to cover substantially reduced expenses. In order to maximize expense
reductions, VDC has curtailed its marketing staff by approximately 57%. VDC
hopes that the current marketing effort will offset expected customer attrition
and possibly generate marginal growth."
VDC is a long distance telecommunications company providing domestic
and international services to retail customers. Certain statements in this press
release are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements made
by VDC involve known and unknown risks, uncertainties and other factors which
may cause the actual results, performance or achievements of VDC to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
but are not limited to: (i) VDC's limited capital and possible bankruptcy; (ii)
VDC's ability to operate profitably; (iii) VDC's ability to secure sufficient
financing in order to fund its operations; (iv) competitive and other market
conditions, including pricing pressure, that may adversely affect the scope of
VDC's operations; (v) VDC's dependence on certain key personnel; (vi) VDC's
concentration of revenues from a couple of larger customers; (vii) network
failure or complications, including service delays; (viii) VDC's ability to
successfully integrate potential mergers and/or acquisitions into VDC, including
the retention of certain key personnel; (ix) dependence upon a limited number of
equipment vendors; (x) network capacity constraints; and, (xi) inherent
regulatory, licensing and political risks and other risks as are described from
time to time in the SEC reports filed by VDC, including a Registration Statement
on Form S-3 (No. 333-46694) and a VDC prospectus dated October 27, 2000. Given
these uncertainties, readers are cautioned not to place undue reliance on such
forward-looking statements, which speak only as of the date made. VDC disclaims
any obligation to update any of the forward-looking statements contained herein
to reflect any change in VDC's expectation with regard thereto or any change in
events, conditions, circumstances or assumptions underlying such statements.
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
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Dated: January 2, 2001 VDC COMMUNICATIONS, INC.
By: /s/ Anthony F. DeJesus
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Anthony F. DeJesus
Chairman and Chief Executive Officer
