As filed with the Securities and Exchange Commission on August 28, 1996
SEC Registration No. 33-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
NETWORK LONG DISTANCE, INC.
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(Exact Name of Registrant as Specified in Charter)
DELAWARE 72-1122018
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(State or Other Jurisdiction (IRS Employer)
of Incorporation) Identification No.)
525 Florida Street
Baton Rouge, Louisiana 70801
(504) 343-3125
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(Address and Telephone Number of Registrant's Principal
Executive Offices and Principal Place of Business)
Marc I. Becker, Chairman of the Board
525 Florida Street
Baton Rouge, Louisiana 70801
(504) 343-3125
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(Name, Address and Telephone Number of Agent for Service)
Copies to:
John B. Wills, Esq.
410 Seventeenth Street, Suite 1940
Denver, Colorado 80202
(303) 628-0747
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. / X /
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CALCULATION OF REGISTRATION FEE
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Title of Each Proposed Proposed
Class of Amount Maximum Maximum Aggregate Amount of
Securities to to be Offering Price Offering Registration
be Registered Registered(1) Per Share Price(2) Fee
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$.0001 Par Value 337,079 $11.00 $3,707,869 $1,278.58
Common Stock Shares Share
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(1) All securities subject to this Registration Statement are on behalf of
selling shareholders (see "Selling Shareholders").
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 by reference to the last sale reported on the
NASDAQ Small-Cap-SM- Market on August 15, 1996.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
The Exhibit Index appears on page II-6 of the sequentially numbered pages of
this Registration Statement. This Registration Statement, including exhibits,
contains 31 pages.
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NETWORK LONG DISTANCE, INC.
Cross-Reference Sheet pursuant to Item 501(b) of Regulation S-K between
Registration Statement (Form S-3) and Form of Prospectus.
Item Number and Caption Location in Prospectus
----------------------- ----------------------
1. Forepart of the Registration Cover Page; Inside Front
Statement and Outside Front Cover Pages
Cover Page of Prospectus
2. Inside Front and Outside Back Inside Front Cover Pages
3. Summary Information, Risk Prospectus Summary; Risk
Factors and Ratio of Earnings Factors
to Fixed Charges
4. Use of Proceeds Not Applicable
5. Determination of Offering Price Cover Page; Plan of Distribution
6. Dilution Not Applicable
7. Selling Security Holders Selling Shareholders
8. Plan of Distribution Plan of Distribution
9. Description of Securities to Not Applicable
be Registered
10. Interest of Named Experts Not Applicable
and Counsel
11. Material Changes Recent Developments
12. Incorporation of Certain Incorporation of Certain
Information by Reference Documents by Reference
13. Disclosure of Commission Part II, Item 17
Position on Indemnification
for Securities Act Liabilities
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<PAGE>
PROSPECTUS
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NETWORK LONG DISTANCE, INC.
337,079 SHARES COMMON STOCK
($.0001 PAR VALUE)
All of the shares of Network Long Distance, Inc. (the "Company") Common
Stock are being registered on behalf of security holders ("Selling
Shareholders"), which are offering for sale 337,079 shares of the Company's
Common Stock which are presently outstanding. The Selling Shareholders are not
restricted in the price or prices at which they may sell their shares and sales
of such shares may depress the market price of the Company's Common Stock.
(See "Selling Shareholders".)
This offering is not being underwritten. The shares will be offered and
sold by the Selling Shareholders from time to time at prices to be determined
at the time of such sales.
It is anticipated that sales of the 337,079 shares of Common Stock being
offered hereby when made, will be made through customary brokerage channels
either through broker-dealers acting as agents or brokers for the Selling
Shareholders, or through broker-dealers acting as principals who may then
resell the shares in the over-the-counter market or otherwise, or at private
sales in the over-the-counter market or otherwise, at negotiated prices related
to prevailing market prices at the time of the sales or by a combination of
such methods of offering. Thus, the period of distribution of such shares may
occur over an extended period of time. The Selling Shareholders will pay or
assume brokerage commissions or discounts incurred in the sale of their shares.
The Company is paying all of the expenses of registering the Common Stock
under the Securities Act of 1933, as amended, estimated to be $12,500 for
filing, printing, legal, accounting and miscellaneous expenses in connection
with the offering.
On August 15, 1996, the closing sale price of the Company's Common Stock
as reported on the NASDAQ Small-Cap-SM- Market was $11.00.
-----------------------------
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. (SEE "RISK FACTORS".)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
-----------------------------
The date of this Prospectus is August , 1996.
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<PAGE>
No dealer, salesman or other person has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this Prospectus in connection with the offer
contained in this Prospectus, and, if given or made, such other information or
representations must not be relied upon as having been authorized by the
Company or the Selling Stockholders. Neither the delivery of this Prospectus
nor any sale made hereunder shall, under any circumstances, create an
implication that there has been no change in the affairs of the Company since
the date hereof.
AVAILABLE INFORMATION
---------------------
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, Room 1024 and at the following Regional
Offices of the Commission: Everett McKinley Dirksen Building, 219 South
Dearborn Street, Chicago, Illinois 60604, Room 1204, and Jacob K. Javits
Building, 75 Park Place, 14th Floor, New York, New York 10007. Copies of such
material also can be obtained at prescribed rates by writing to the Commission,
Public Reference Section, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549. The Company's Common Stock is quoted on NASDAQ, and financial
reports, proxy statements and other information concerning the Company may be
inspected at the National Association of Securities Dealers, Inc., Washington,
D.C.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
-----------------------------------------------
The following documents, all which were previously filed with the
Commission, are hereby incorporated by reference in this Prospectus:
1. The Company's Annual Report on Form 10-K for the year ended March 31,
1996.
2. The Company's Quarterly Report on Form 10-Q for the three months ended
June 30, 1996.
3. The Company's Current Reports on Form 8-K dated May 31, 1996, June 30,
1996 and Current Reports on Form 8K/A dated August 1, 1996 and August 5,
1996.
All documents filed by the Company prior to the date of this Prospectus
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act prior to the
termination of the offering of the shares of Common Stock shall be deemed to
be incorporated by reference in this Prospectus and to be a part hereof from
the date of filing of those documents.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus
to the extent that such statement is modified or replaced by a statement
contained in this Prospectus or in any other subsequently filed document that
also is or is deemed to be incorporated by reference into this Prospectus. Any
such statement so modified or superseded shall not be deemed, except as so
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<PAGE>
modified or replaced, to constitute a part of this Prospectus. The Company
undertakes to provide without charge to each person to whom a copy of this
Prospectus has been delivered, upon the written or oral request of any such
person, including any beneficial owner, a copy of any or all of the documents
referred to above that have been or may be incorporated in this Prospectus by
reference, other than exhibits to such documents. Written or oral requests for
such copies should be directed to Marc I. Becker, Chairman, Network Long
Distance, Inc., 525 Florida Street, Baton Rouge, Louisiana 70801, (504) 343-
3125.
3
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<PAGE>
TABLE OF CONTENTS
-----------------
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. . . . . . . . . . . . . . .2
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
RECENT DEVELOPMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SELLING SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
LEGAL OPINIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4
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PROSPECTUS SUMMARY
------------------
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information appearing elsewhere in this
Prospectus.
THE COMPANY
Network Long Distance, Inc. ("Network" or the "Company"), is a Delaware
corporation organized on December 9, 1987. Network maintains its principal
executive offices at 525 Florida Street, Baton Rouge, Louisiana 70801, and its
telephone number is (504) 343-3125.
Network is a long distance telecommunications company which provides long
distance and telecommunication services for resellers of the Company's services
to end-users ("switchless reseller division"), turnkey long distance services
for master agents of the Company's services sold to end-users ("agent
division") and long distance services for retail customers ("retail division").
The Company provides long distance services to businesses and residences.
The Company transmits long distance telephone calls through and over various
types of transmission circuits leased from other telecommunications carriers
at fixed or variable rates. Calls can be routed through the Company's
switching center, which selects the least expensive among the various available
transmission alternatives to complete the call. Calls can also be completed
by various underlying carriers and the Company provides billing, customer
service and other features relative to the call.
Based on the comparison of the Company's tariffed rate per minute as
compared to other long distance competitors, the Company believes its rates for
long distance services to be below those charged by AT&T, MCI and Sprint and
are competitive or below rates charged by other interexchange carriers. The
Company obtained this information from published Federal Communication
Commission Tariff schedules.
Profits are based on the Company's ability to charge rates in excess of
the Company's cost of transmitting calls over the transmission lines selected
by the switching equipment or in excess of underlying carrier costs.
The Company is a provider of long distance services throughout most of the
United States. The Company offers a variety of value added features and
options designed to attract long distance customers. The Company primarily
charges customers on the basis of minutes of usage at rates that vary with the
time of day of the call.
The Company's goal is to establish itself as a second-level long distance
telecommunications company. The long distance industry is dominated by the
four largest long distance providers namely AT&T, MCI, World Com, Inc. and
Sprint, with revenues over $1 billion. The second level, the Company's goal,
is comprised of companies under $1 billion but in excess of $100 million in
annual revenues. The Company will attempt to achieve this goal through its
planned acquisition of other long distance companies, increased call volumes
and the addition of new services for its customers.
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The Company has four subsidiaries, M.M. Ross, Inc., Network Advanced
Services, Inc., Network Acquisition Corp. and Long Distance Telcom, Inc. All
references to the Company include its subsidiaries and its subsidiaries prior
operations, except as stated otherwise.
THE OFFERING
Securities Offered 337,079 Shares of Common Stock, $.0001
par value per share.
Offering Price All or part of the Shares offered hereby
may be sold from time to time in amounts
and on terms to be determined by the
Selling Shareholders at the time of the
sale.
NASDAQ Symbol "NTWK"
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RISK FACTORS
------------
Prospective purchasers of the Company's Common Stock should carefully
consider, together with the other information herein, the following:
DEPENDANCE ON CARRIERS AND THE AVAILABILITY OF TRANSMISSION FACILITIES NOT
ASSURED
The Company's long distance telephone business is dependent upon lease or
resale arrangements with fiber-optic and digital microwave carriers for the
transmission of calls. The future profitability of the Company is based upon
its ability to transmit long distance telephone calls over transmission
facilities leased from others on a cost-effective basis. The Company is
currently dependent on two primary carriers, Allnet Communications Services,
Inc. and Worldcom Network Services, Inc. ("Wiltel"). The Company leases
transmission facilities on one to four year contracts. The Company's contract
with Allnet Communications Services, Inc. expires in June 1997 and
automatically continues until either party elects to terminate after ninety
days written notice. The Company's lease with Wiltel expires the earlier of
expending $36 million or in April 1999. The Company utilizes other fiber optic
carriers to a lesser extent to supplement communication transport services,
however, there can be no assurance that in the future the Company will continue
to have access, on an ongoing basis, to transmission facilities at favorable
rates.
ADVERSE EFFECT OF SERVICE INTERRUPTIONS
The Company's business requires that transmission and switching facilities
and other equipment be operational 24 hours per day, 365 days per year. Long
distance telephone companies, including the Company, have on occasion and may
in the future experience temporary service interruptions or equipment failures,
in some cases resulting from causes beyond their control. Any such event
experienced by the Company would impair the Company's ability to service its
customers and could have a material adverse effect on the Company's business.
RECENT LOSSES FROM OPERATIONS
The Company has incurred losses and was unprofitable for the fiscal year
ended March 31, 1996 and experienced minimal profits in the first quarter of
its current fiscal year. Although the Company will attempt to attain
profitability as its recent acquisitions are integrated more fully into the
Company's operations, there is no assurance that this will occur or that the
Company will achieve, or be able to sustain, profitable operations.
CHANGE IN CUSTOMER FOCUS
The Company has recently elected to de-emphasize its wholesale customer
base in favor of retail business customers. It is anticipated this transaction
will cause additional time requirements of management, however, it is the
opinion of management that this will be a positive change in an attempt to
achieve profitability with the improvement of accounts receivable
collectability.
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<PAGE>
COMPETITION FROM OTHER LONG DISTANCE CARRIERS AND NEW COMPANIES
The long distance telecommunications industry is intensely competitive and
is significantly affected by the introduction of new services and the market
activities of industry participants. Competition in the long distance business
is based upon pricing, transmission quality, customer service, cost of
underlying facilities and to a lesser extent, value-added services. The
Company is characterized as a level three long distance company with revenues
of less than $100 million a year. As a result, it competes with AT&T, MCI,
WorldCom, Inc. and Sprint, which comprise level one, and other national and
regional long distance carriers which comprise level two and other level three
long distance companies. Some of the Company's competitors have greater name
recognition, more extensive transmission networks and greater engineering and
marketing capabilities than the Company and have, or have access to,
substantially greater financial and personnel resources than those available
to the Company. Various regulatory factors can also have an impact on the
Company's ability to compete. For example, AT&T, which is the Company's
largest competitor, has achieved greater flexibility over the years after the
lessening of tariff regulations, allowing it to price its services more
aggressively. The ability of the Company to compete effectively in the
telecommunications industry on all levels will depend upon its continued
ability to provide high quality, market-driven services at prices generally
similar to, or less than, those charged by its competitors. There can be no
assurance that the Company will be able to compete successfully with existing
or future companies.
The long distance telecommunications industry and the Company have
potential new competitors entering with new or add on technology. Cable
systems, satellite transmission companies and personal communication systems
(PCS), may offer long distance communication services, as well as, video, data
and interactive media services.
CHANGES IN GOVERNMENT REGULATION OF LONG DISTANCE COMPANIES
The Company is subject to extensive regulation at the federal and state
levels. The regulatory environment varies substantially by jurisdiction.
The regulation of the telecommunications industry is changing rapidly, and
the regulatory environment varies substantially from state to state. There can
be no assurance that future regulatory changes will not have a material adverse
impact on the Company. Recent developments include, without limitation,
enactment of legislation that modifies the 1982 AT&T divestiture decree's (the
"AT&T Divestiture Decree") restrictions on the provision of long distance
services between local access and transport areas ("LATAs"), as defined in the
AT&T Divestiture Decree, by the Bell Operating Companies ("BOCs"); action by
the Federal Communications Commission (the "FCC") or state public utility or
service agencies ("PUCs") changing access rates charged by local exchange
carriers ("LECs") and making other related changes to access and
interconnection policies, certain of which could have adverse consequences for
the Company; related FCC and state regulatory proceedings considering
additional deregulation of LEC access pricing; and various legislative and
regulatory proceedings that would result in new local exchange competition.
8
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<PAGE>
On February 8, 1996, President Clinton signed legislation, that: without
limitation, permits the BOCs to provide domestic and international long
distance services to customers outside of their home regions upon a finding by
the FCC that the petitioning BOC has satisfied certain criteria for opening up
its local exchange network to competition and that its provision of long
distance services would further the public interest to customers within their
home regions; removes existing barriers to entry into local service markets;
significantly changes the manner in which carrier-to-carrier arrangements are
regulated at the federal and state level; establishes procedures to revise
universal service standards; and establishes penalties for unauthorized
switching of customers. The FCC has instituted proceedings addressing the
implementation of this legislation. The Company cannot predict the effect such
legislation or the implementation such regulation will have on the Company or
the industry.
ADVERSE EFFECT OF RAPID TECHNOLOGICAL CHANGES AND SERVICE
The telecommunications industry has been characterized by rapid
technological change, frequent new service introductions and evolving industry
standards. The Company believes that its future success will depend on its
ability to anticipate such changes, and to offer on a timely basis services
that meet these evolving industry standards. There can be no assurance that
the Company will have sufficient resources to make the investments necessary
to acquire new technology or to introduce new services that would satisfy an
expanded range of customer needs.
DEPENDENCE ON MANAGEMENT FOR SUCCESSFUL OPERATIONS AND CONTINUED GROWTH
Continued growth and expansion of the Company depends on continued active
participation of Michael Ross and Marc Becker, two of the current Officers and
Directors of the Company. The Company has employment agreements with Mr. Ross
and Mr. Becker which commenced on January 1, 1994 and terminate December 31,
1997, however these agreements do not contain non-compete provisions. The
Company currently has "key-man" insurance on its Officers. The cost of the
"key-man" insurance is currently paid from operating revenues and in the
future, will be paid from operating revenues. The loss of the services of
either of these individuals could adversely affect the continuation and future
development of the Company's business. Messrs. Ross and Becker devote 100% of
their time to the business of the Company.
DIVIDEND POLICY
The Company has paid no cash dividends on its Common Stock and has no
present intention of paying cash dividends in the foreseeable future. It is
the present policy of the board of Directors to retain all earnings to provide
for the growth of the Company. Payment of cash dividends in the future will
depend, among other things, upon the company's future earnings, requirements
for capital improvements, the operating and financial conditions of the Company
and other factors deemed relevant by the Board of Directors.
EXPANSION POLICY
The Company is committed to an expansion policy of acquiring other long
distance and telecommunications companies for cash and the Company's common
stock. The Company may be required to raise additional capital and continue
to issue common stock to facilitate its expansion policy. There can be no
9
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<PAGE>
assurance that funding will be available and as the Company issues its common
stock for cash or in connection with an acquisition, existing shareholders will
face dilution of their existing investment in the Company.
RECENT DEVELOPMENTS
-------------------
UNIVERSAL NETWORK SERVICES, INC.
On May 8, 1996, effective May 31, 1996, the Company acquired all or
substantially all of the assets and assumed certain liabilities of Universal
Network Services, Inc. of Newport Beach, California ("UniNet"). UniNet is an
interexchange carrier that provides telecommunications services to both
residential and business customers throughout the United States and in certain
foreign countries. These assets consist of certain of UniNet's long distance
customer accounts and associated accounts receivable as of May 31, 1996. The
customer accounts which were purchased include retail customer contracts,
applications for service, applications for credit, customer lists, databases,
mailing lists and billing information.
The Company purchased the UniNet assets for approximately $3,628,000 in
cash and 243,758 shares of common stock with a value of approximately
$2,800,000 on the date of the transaction. Of the 243,758 shares given,
approximately 49,000 shares are held in escrow pending certain achievements in
the acquired customer base.
LONG DISTANCE TELCOM, INC.
On June 30, 1996, the Company purchased all of the issued and outstanding
stock of Long Distance Telcom, Inc., formerly known as Telecommunications
Ventures Limited Partnership No. 1, DBA Blue Ridge Telephone ("Blue Ridge").
The Company issued a total of 337,079 shares valued at approximately $3,700,000
in exchange for the Blue Ridge shares. The number of shares issued to Blue
Ridge was based upon a multiple of the dollar amount of Blue Ridge's monthly
revenue and accounts receivable and the market price of the Company's common
stock.
The Company believes the acquisition of the UniNet assets and Blue Ridge
to be beneficial as it will allow for the consolidation and reduction in
overhead costs while increasing overall revenues from operations. The Company
also believes the acquisitions will enhance its corporate image in an area of
the country in which it has had limited operations and may provide additional
acquisition opportunities.
There exists no material relationship between the Company, its officers
and directors and the UniNet and Blue Ridge officers, directors or affiliates.
The restricted common stock used by the Company to purchase Blue Ridge and the
assets of UniNet were from the Company's authorized but unissued common stock.
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SELLING SHAREHOLDERS
--------------------
All of the securities offered hereby are to be offered for the account of
the security holders set forth below ("Selling Shareholders").
Shares Beneficially Shares Beneficially
Owned Prior to Owned
Name Offering (1) After Offering
---------------- ------------------ ------------------
Linda L. Astle 3,980 -0-
James H. Bancroft &
Carolyn A. Bancroft 3,980 -0-
Robert K. Barry &
Candia C. Barry 3,980 -0-
Robert F. Bottone &
Kathleen R. Bottone 3,980 -0-
Dannie Burke 7,959 -0-
Wesley J. Cantrall &
Jane Cantrall 3,980 -0-
Joseph B. Chopek 3,980 -0-
Margaret Stiteler Chopek 230,616 -0-
Joseph J. Coury
c/o Coury Fncl
Svcs One Skyline 3,980 -0-
Joseph Ray Daniel 3,980 -0-
David Harbold 3,980 -0-
Gladys H. Hirschman 3,980 -0-
Cathleen G. Hook 3,980 -0-
I&B Partnership 1,990 -0-
James L. Inskeep Jr. &
Amy L. Inskeep Jr 1,990 -0-
James W. Jones &
Ellen I. Jones 1,990 -0-
Brian R. Jack &
Elizabeth J. Jack 3,980 -0-
Joseph C. Kincheloe 3,980 -0-
Clarence Kunstmann &
Elizabeth Kunstmann 3,980 -0-
The Estate of Norman B. Martin 3,980 -0-
Robert J. Prochko &
Judith A. Prochko 3,980 -0-
Prudential Securities Cust F/B/O
Leslie Ulanow 3,980 -0-
Charles W. Rochner &
Martin Rochner 3,980 -0-
Tracy Rutherford 995 -0-
Robert Seedlock 3,980 -0-
John Spargo 7,959 -0-
Carlton L. Stiteler &
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Nina T. Stiteler 3,980 -0-
Charles O. Turner &
Wynnell E. Turner 3,980 -0-
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Total 337,079
=======
____________________________
(1) All shares were issued by the Company in connection with the purchase of
all the outstanding stock of Long Distance Telcom, Inc. on June 30, 1996.
PLAN OF DISTRIBUTION
--------------------
The Selling Shareholders are not restricted as to the prices at which
they may sell their shares and sales of such shares at less than the market
price may depress the market price of the Company's Common Stock. Further, the
Selling Shareholders are not restricted as to the number of shares which may
be sold at any one time, and it is possible that a significant number of shares
could be sold at the same time which may also have a depressive effective on
the market price of the Company's Common Stock. However, it is anticipated
that the sale of the Common Stock being offered hereby will be made through
customary brokerage channels either through broker-dealers acting as agents or
brokers for the seller, or through broker-dealers acting as principals, who may
then resell the shares in the over-the-counter market, or a private sale in the
over-the-counter market or otherwise, at negotiated prices related to
prevailing market prices and customary brokerage commissions at the time of the
sales, or by a combination of such methods. Thus, the period for sale of such
shares by the Selling Shareholders may occur over an extended period of time.
There are no contractual arrangements between or among any of the
Selling Shareholders and the Company with regard to the sale of the shares and
no professional underwriter in its capacity as such will be acting for the
Selling Shareholders.
EXPERTS
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The financial statements of Network Long Distance, Inc., incorporated by
reference in this prospectus and elsewhere in the registration statement, to
the extent and for the periods indicated in their reports, have been audited
by Arthur Andersen LLP, independent public accountants, and are included herein
in reliance upon the authority of said firm as experts in accounting and
auditing in giving said report.
The financial statements of Network Long Distance, Inc., incorporated by
reference in this prospectus and elsewhere in the registration statement, to
the extent and for the periods indicated in their reports, have been audited
by Faulk and Winkler LLC, independent public accountants, and are included
herein in reliance upon the authority of said firm as experts in accounting and
auditing in giving said report.
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The financial statements of Universal Network Services, Inc.,
incorporated by reference in this prospectus and elsewhere in the registration
statement,to the extent and for the periods indicated in their reports, have
been audited by Corbin & Wertz, independent certified public accountants, and
are included herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said report.
The financial statements of Telecommunications Ventures Limited
Partnership No. 1 T/A Blue Ridge Telephone incorporated by reference in this
prospectus and elsewhere in the registration statement, to the extent and for
the periods indicated in their report, have been audited by Yount, Hyde &
Barbour, P.C., independent certified public accountants, and are included
herein in reliance upon the authority of said firm as experts in accounting and
auditing in giving said report.
LEGAL OPINIONS
--------------
The legality of the Shares offered hereby will be passed upon for the
Company by John B. Wills, Attorney At Law.
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PART II
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INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses of the offering, all of which are to be born by
the Registrant, are as follows:
SEC Filing Fee. . . . . . . . . . . . . . .$ 1,278.58
Printing Expenses . . . . . . . . . . . . . 500.00 *
Accounting Fees and Expenses. . . . . . . . 4,000.00 *
Legal Fees and Expenses . . . . . . . . . . 4,500.00 *
Miscellaneous . . . . . . . . . . . . . . . 1,721.42 *
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Total . . . . . . . . . . . . . . . . . $12,000.00
==========
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*Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
1) Section 145 of the General Corporation Law of Delaware provides:
"(a) A corporation shall have power to indemnify any person
who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation) by reason of
the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonable incurred by him
in connection with such action, suit or proceeding if he acted in
good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of NOLO CONTENDERE, shall not, of itself, create a
presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that
his conduct was unlawful.
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(b) A corporation shall have power to indemnify any person
who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right
of the corporation to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the
corporation 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 the defense or
settlement of such action or suit if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was
brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
(c) To the extent that a director, officer, employee or agent
of a corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in
subsections (a) and (b), or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(d) Any indemnification under subsections (a) and (b) (unless
ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is
proper in the circumstances because he has met the applicable
standard of conduct set forth in subsections (a) and (b). Such
determination shall be made (1) by the board of directors by a
majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (2) if such a quorum
is not obtainable, or, even if obtainable a quorum of disinterested
directors so directs, by independent legal counsel in a written
opinion, or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an
officer or director in defending any civil, criminal,
administrative, or investigative action, suit or proceeding may be
paid by the corporation in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified
by the corporation as authorized in this Section. Such expenses
(including attorneys' fees) incurred by other employees and agents
may be so paid upon such terms and conditions, if any, as the board
of directors deems appropriate.
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(f) The indemnification and advancement of expenses provided
by, or grated pursuant to, the other subsections of this section
shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses my be entitled
under any by-law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office.
(g) A corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust
or other enterprise against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status
as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of this
section.
(h) For purposes of this Section, references to "the
corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent
of a constituent) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or
agents, so that any person who is or was a director, officer,
employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand
in the same position under the provisions of this Section with
respect to the resulting or surviving corporation as he would have
with respect to such constituent corporation if its separate
existence had continued.
(i) For purposes of this Section, references to "other
enterprises": shall include employee benefit plans; references to
"fines" shall include any excise taxes assessed on a person with
respect to an employee benefit plan; and references to "serving at
the request of the corporation" shall include any service as a
director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer,
employee, or agent with respect to an employee benefit plan, its
participants, or beneficiaries; and a person who acted in good
faith and in a manner he reasonably believed to be in the interest
of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best
interests of the corporation": as referred to in this Section.
(j) The indemnification and advancement of expenses provided
by, or granted pursuant to, this section shall, unless otherwise
provided when authorized or ratified, continue as to a person who
has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of
such a person."
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2) Article IX of the Company's Articles of Incorporation provide as follows:
ARTICLE IX
INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS
(a) The corporation shall have power to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation)
by reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of NOLO CONTENDERE or its
equivalent, shall not, or itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
(b) The corporation shall have power to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation 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 the defense or settlement of such action or suit if he acted
in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the corporation and except that no indemnification
shall be made in respect of any claim, issue or matter at to which such person
shall have been adjudged to be liable to the corporation unless and only to the
extent that the Court of Chancery or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court
of Chancery or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of the
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b), or in
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him
in connection therewith.
(d) Any indemnification under subsections (a) and (b) (unless ordered by
a court) shall be made by the corporation only as authorized in the specific
case upon a determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he has met the
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applicable standard of conduct set forth in subsections (a) and (b). Such
determination shall be made (1) by the board of directors by a majority vote
of a quorum consisting of directors who were not parties to such action, suit
or proceeding, or (2) if such a quorum is not obtainable, or, even if
obtainable a quorum or disinterested directors so directs, by independent legal
counsel in a written opinion, or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative, or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount
if it shall ultimately be determined that he is not entitled to be indemnified
by the corporation as authorized in this Section. Such expenses (including
attorneys' fees) incurred by other employees and agents may be so paid upon
such terms and conditions, if any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any by-law, agreement, vote of
stockholders of disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
(g) The corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the corporation would have the power to indemnify him
against such liability under the provisions of this section.
(h) For purposes of this Section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so
that any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation partnership, joint venture, trust or other enterprise, shall stand
in the same position under the provisions of this Section with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
(i) For purposes of this Section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee,
or agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
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of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
Section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
ITEM 16. EXHIBITS.
The following Exhibits are filed as part of this Registration Statement
pursuant to Item 601 of Regulation S-K:
Exhibit No. Title
- ----------- -----
5 Opinion of John B. Wills, Attorney at Law, regarding the
legality of the securities being registered dated August
15, 1996.
24.1 Consent of John B. Wills, Attorney at Law, dated August
15, 1996.
24.2 Consent of Arthur Andersen LLP dated August 27, 1996.
24.3 Consent of Faulk & Winkler LLC dated August 27, 1996.
24.4 Consent of Corbin & Wertz dated August 27, 1996.
24.5 Consent of Yount, Hyde & Barbour, P.C. dated August 27,
1996.
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes:
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(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant of Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and duly caused this registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Baton Rouge, State of Louisiana on August 27, 1996.
NETWORK LONG DISTANCE, INC.
Date: August 27, 1996 By: /s/ Michael M. Ross
----------------------------------
Michael M. Ross, President
and Chief Executive Officer
Date: August 27, 1996 By: /s/ Marc I. Becker
----------------------------------
Marc I. Becker, Vice President,
Secretary, Principal Financial Officer
and Principal Accounting Officer
SIGNATURE DATE
- --------- ----
/s/ Michael M. Ross August 27, 1996
- ------------------------------ -----------------------------
Michael M. Ross
/s/ Marc I. Becker August 27, 1996
- ------------------------------ -----------------------------
Marc I. Becker
/s/ Joseph M. Edelman August 27, 1996
- ------------------------------ -----------------------------
Joseph M. Edelman
/s/ Leon L. Nowalsky August 27, 1996
- ------------------------------ -----------------------------
Leon L. Nowalsky
/s/ Russell J. Page August 27, 1996
- ------------------------------ -----------------------------
Russell J. Page
/s/ Tim Sledz August 27, 1996
- ------------------------------ -----------------------------
Tim Sledz
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NETWORK LONG DISTANCE, INC.
FORM S-3 REGISTRATION STATEMENT
EXHIBIT INDEX
-------------
Exhibit Number
in Registration Sequentially
Statement Description Numbered Pages
- -------------- ----------- --------------
5 Opinion of John B. Wills,
Attorney at Law dated August 15, 1996
24.1 Consent of John B. Wills,
Attorney at Law dated August 15, 1996
24.2 Consent of Arthur Andersen LLP
dated August 27, 1996
24.3 Consent of Faulk and Winkler LLC
dated August 27, 1996
24.4 Consent of Corbin & Wertz
dated August 27, 1996
24.5 Consent of Yount, Hyde & Barbour, P.C.
dated August 27, 1996
EXHIBIT 5
[LETTERHEAD]
August 15, 1996
Network Long Distance, Inc.
525 Florida Street
Baton Rouge, LA 70801
RE: SEC REGISTRATION STATEMENT ON FORM S-3
Gentlemen:
I am counsel for Network Long Distance, Inc., a Delaware
corporation (the "Company"), in connection with its proposed public
offering under the Securities Act of 1933, as amended, of 337,079
shares of the Company's Common Stock through a Registration
Statement on Form S-3 as to which this opinion is a part, to be
filed with the Securities and Exchange Commission (the
"Commission").
In connection with rendering my opinion as set forth below, I
have reviewed and examined originals or copies identified to my
satisfaction of the following:
(1) Certificate and Amended Certificate of Incorporation of
the Company as filed with the Secretary of State of the State of
Delaware.
(2) Minute Book containing the written deliberations and
resolutions of the Board of Directors and Shareholders of the
Company.
(3) The Registration Statement and the Preliminary Prospectus
contained within the Registration Statement.
(4) The other exhibits to the Registration Statement filed
with the Commission.
I have examined such other documents and records, instruments
and certificates of public officials, officers and representatives
of the Company, and have made such other investigations as I have
deemed necessary or appropriate under the circumstances.
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Network Long Distance, Inc.
August 15, 1996
Page 2
Based upon the foregoing and in reliance thereon, it is my
opinion that the 337,079 shares of Common Stock, $.0001 value, have
been duly and validly authorized, legally issued, and are fully
paid and non-assessable.
I hereby consent to the use of this opinion as an exhibit to
the Registration Statement and to the use of my name under the
caption "Legal Matters" in the Prospectus constituting a part
thereof.
Very truly yours,
/s/ JOHN B. WILLS
--------------------------
John B. Wills
JBW/db
EXHIBIT 24.1
CONSENT OF ATTORNEYS
Reference is made to the Registration Statement on Form S-3 of
Network Long Distance, Inc.
I hereby consent to the use of my opinion concerning the
legality of the securities being registered dated August 15, 1996
filed as an exhibit to the Registration Statement, and to being
named in the Registration Statement as having advised Network Long
Distance, Inc. as to the legality of its securities proposed to be
sold.
JOHN B. WILLS
Attorney at Law
By: /s/ JOHN B. WILLS
--------------------------
John B. Wills
Denver, Colorado
August 15, 1996
EXHIBIT 24.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our
report dated May 24, 1996 included in Network Long Distance, Inc.'s
Form 10-K for the year ended March 31, 1996 and our report dated
August 6, 1996 included in Network Long Distance, Inc.'s Form 8-K/A
dated June 30, 1996, and to all references to our Firm included in
this registration statement.
/s/ ARTHUR ANDERSEN LLP
--------------------------
Arthur Andersen LLP
Jackson, Mississippi
August 27, 1996
EXHIBIT 24.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our
report dated June 3, 1994, included in Network Long Distance,
Inc.'s Form 10-K for the year ended March 31, 1996, and our report
dated August 5, 1996, included in Network Long Distance, Inc.'s Form
8-K/A dated August 5, 1996, and to all references to our Firm
included in this registration statement.
/s/ FAULK & WINKLER, LLC
--------------------------
Faulk & Winkler, LLC
Baton Rouge, Louisiana
August 27, 1996
EXHIBIT 24.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
Board of Directors
Universal Network Services, Inc.
and Subsidiaries
We consent to the incorporation by reference in this Form S-3
Registration Statement of Network Long Distance, Inc., of our
report dated May 24, 1996, related to the 1994 and 1995
consolidated financial statements of Universal Network Services,
Inc. and subsidiaries, included in Network Long Distance, Inc.'s
Form 8-K/A dated August 2, 1996 and to the reference to our firm
under the heading "Experts" included in the Prospectus.
/s/ CORBIN & WERTZ
--------------------------
Corbin & Wertz
Irvine, California
August 27, 1996
EXHIBIT 24.5
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our
report dated May 10, 1996 included in Network Long Distance, Inc.'s
Form 8-K/A dated August 5, 1996, and to all references to our Firm
included in this registration statement.
/s/ YOUNT, HYDE & BARBOUR, P.C.
------------------------------
Yount, Hyde & Barbour, P.C.
Culpeper, Virginia
August 27, 1996
