As filed with the Securities and Exchange Commission on December 4, 1997
Registration No. ____________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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TEL-COM WIRELESS CABLE TV CORPORATION
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(Exact name of registrant as specified in its charter)
FLORIDA 59-3175814
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(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
1506 N.E. 162ND STREET
NORTH MIAMI BEACH, FLORIDA 33162
(305) 947-3010
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(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
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MELVIN ROSEN
PRESIDENT
TEL-COM WIRELESS CABLE TV CORPORATION
1506 N.E. 162ND STREET
NORTH MIAMI BEACH, FLORIDA 33162
TELEPHONE NO. (305) 947-3010
FACSIMILE NO. (305) 919-8154
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(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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COPIES OF COMMUNICATIONS TO:
DALE S. BERGMAN, P.A.
BROAD AND CASSEL
201 SOUTH BISCAYNE BOULEVARD, SUITE 3000
MIAMI, FLORIDA 33131
TELEPHONE NO. (305) 373-9400
FACSIMILE NO. (305) 373-9443
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Approximate date of commencement of proposed sale to the public:
From time to time after this Registration Statement becomes effective.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
<PAGE>
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, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF SHARES AMOUNT TO OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED BE REGISTERED PER SHARE(1) PRICE(1) FEE
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<S> <C> <C> <C> <C>
Common Stock, 1,934,643 $2.41 $4,662,489 $1412.85
$.001 par value shares
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Common Stock, 225,000 $5.75 $ $392.03
$.001 par value(2) shares
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Common Stock, 1,000,000 500,000 @ $1.00 $3,000,000 $909.09
$.001 par value(3) shares 500,000 @ $5.00
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Common Stock, 350,000 300,000 @ $2.50 $750,000 $227.27
$.001 par value(4) shares 50,000 @ $1.00 $ 50,000 $ 15.15
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TOTAL:................................................................................................... $2,956.39
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) using the average of the high and low prices
reported for the Company's Common Stock as of December 1, 1997 and Rule
457(g)(1) with respect to the various warrants.
(2) Represents shares issuable upon the exercise of certain warrants issued to
the Company's private placement agent, as more fully set forth on the
cover page of the Prospectus included herein. Also includes such
additional shares as may be issuable as a result of the anti-dilution
provisions of said warrants.
(3) Represents shares issuable upon exercise of certain warrants issued to the
holder of the Company's convertible debenture as more fully set forth on
the cover page of the Prospectus included herein. Also includes such
additional shares as may be issuable as a result of the anti-dilution
provisions of said warrants.
(4) Represents shares issuable upon exercise of certain warrants issued to the
Company's financial consultant and subsequently assigned to certain
assignees, as more fully set forth on the cover page of the Prospectus
included herein. Also includes such additional shares as may be issuable
as a result of the anti-dilution provisions of said warrants.
Pursuant to Rule 429, this Registration Statement serves as Post-Effective
Amendment No. 3 to the Registrant's Registration Statement on Form SB-2 (File
No. 33-88788-A) relating to (i) 2,010,000 shares of Common Stock issuable upon
exercise of redeemable Common Stock purchase warrants sold in the Company's May
1995 initial public offering ("IPO") (the "IPO Warrants"), (ii) 100,000 shares
of Common Stock issuable upon exercise of 100,000 Underwriter's Stock Warrants
issued to the underwriter of the IPO, (iii) 140,000 shares of Common Stock and
140,000 IPO Warrants issuable upon exercise of 140,000 Underwriter's Warrants
issued to the underwriter of the IPO, and (iv) 140,000 shares of Common Stock
underlying said 140,000 IPO Warrants.
<PAGE>
================================================================================
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 this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
SUBJECT TO COMPLETION, DATED DECEMBER 4, 1997
PROSPECTUS
5,899,643 SHARES
TEL-COM WIRELESS CABLE TV
CORPORATION
COMMON STOCK
This Prospectus relates to an aggregate of 5,899,643 shares (the
"Shares") of common stock, par value $.001 per share (the "Common Stock"), of
Tel-Com Wireless Cable TV Corporation, a Florida corporation (the "Company")
proposed to be sold from time to time by certain shareholders of the Company
(the "Selling Shareholders"), consisting of the following: (i) 1,934,643 of the
shares consist of issued and outstanding shares of Common Stock of the Company,
(ii) 225,000 of the Shares are issuable upon exercise of certain warrants issued
to the Company's private placement agent in connection with the Company's 1994
Private Placement ("Private Placement Warrants"), (iii) 500,000 of the Shares
are issuable upon exercise of warrants at an exercise price of $1.00 per share
("$1.00 Warrants") and 500,000 of the Shares are issuable upon exercise of
Warrants at an exercise price of $5.00 per share ("$5.00 Warrants"), said $1.00
Warrants and $5.00 Warrants having been issued to the holder of the Company's
convertible debenture, and (iv) 50,000 of the Shares are issuable upon exercise
of a like number of one-year warrants having an exercise price of $1.00 per
share, 200,000 of the Shares are issuable upon exercise of a like number of
one-year warrants having an exercise price of $2.50 per share, and 100,000 of
the Shares are issuable upon exercise of a like number of three-year warrants
exercisable at $2.50 per share, all such warrants ("Consultants Warrants")
having been issued to the Company's financial consultant pursuant to a
Consulting Agreement entered into by the Company and said consultant as of July
24, 1997 and subsequently assigned to certain assignees ("Consultant's
Assignees"). See "Recent Developments," "Selling Shareholders" and "Description
of Securities." The Company will not receive any proceeds from the sale of the
Shares by the Selling Shareholders but will receive up to an aggregate of
approximately $1,552,500 upon exercise of the Underwriter's Warrants and the
Consultant's Warrants.
The Selling Shareholders have advised the Company that they may from
time to time sell all or a portion of the Shares offered hereby in one or more
transactions in the over-the-counter market, on the Nasdaq SmallCap Market or on
any other exchange on which the Common Stock may then be listed, in privately
negotiated transactions or otherwise, or a combination of such methods of sale,
at market prices prevailing at the time of sale or prices related to such
prevailing market prices or at negotiated prices. The Selling Shareholders may
effect such transactions by selling the Shares to or through broker-dealers, and
such broker-dealers may receive compensation in the form of underwriting
discounts, concessions or commissions from the Selling Shareholders and/or
purchasers of the Shares for whom they may act as agent (which compensation may
be in excess of customary commissions). The Selling Shareholders and any
participating broker-dealers may be deemed to be "underwriters" as defined in
the Securities Act of 1933, as amended (the "Securities Act"). Neither the
Company nor the Selling Shareholders can estimate at the present time the amount
of commissions or discounts, if any, that will be paid by the Selling
Shareholders on
<PAGE>
account of their sales of the Shares from time to time. The Company has agreed
to indemnify the Selling Shareholders against certain liabilities, including
certain liabilities under the Securities Act. See "Plan of Distribution."
This Prospectus also covers (i) 2,010,000 shares of Common Stock
issuable upon exercise of redeemable Common Stock purchase warrants sold in the
Company's May 1995 initial public offering ("IPO") ("IPO Warrants"), (ii)
100,000 shares of Common Stock issuable upon exercise of 100,000 Underwriter's
Stock Warrants issued to the underwriter of the IPO, (iii) 140,000 shares of
Common Stock and 140,000 IPO Warrants issuable upon exercise of 140,000
Underwriter's Warrants issued to the underwriter of the IPO, and (iv) 140,000
shares of Common Stock underlying said 140,000 IPO Warrants. See "Description of
Securities."
The Common Stock is quoted on the Nasdaq SmallCap Market under the
symbol "TCTV." On December 1, 1997, the last reported sales price of the Common
Stock on the Nasdaq SmallCap Market was $2.69 per share.
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SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR A DISCUSSION OF CERTAIN RISKS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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THE DATE OF THIS PROSPECTUS IS DECEMBER __, 1997
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<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange 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 filed by the Company may be inspected and
copied (at prescribed rates) at the public reference facilities maintained by
the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and
at the following regional offices located at Seven World Trade Center, Suite
1300, New York, New York 10048, and 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661, and may also be obtained from the Commission's website
located at http://www.sec.gov. Quotations relating to the Company's Common Stock
appear on the Nasdaq SmallCap Market, and reports, proxy statements and other
information concerning the Company can also be inspected at the offices of the
National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on
Form S-3 (the "Registration Statement") under the Securities Act with respect to
the Shares. This Prospectus, which is a part of the Registration Statement, does
not contain all the information set forth in, or annexed as exhibits to, such
Registration Statement, certain portions of which have been omitted pursuant to
rules and regulations of the Commission. For further information with respect to
the Company and the Shares, reference is hereby made to such Registration
Statement, including the exhibits thereto. Copies of the Registration Statement,
including exhibits, may be obtained from the aforementioned public reference
facilities of the Commission upon payment of the fees prescribed by the
Commission, or may be examined without charge at such facilities. Statements
contained herein concerning any document filed as an exhibit are not necessarily
complete and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statement. Each such statement is
qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission under
the Exchange Act are incorporated in and made a part of this Prospectus by
reference:
(a) the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1996; and
(b) the Company's Quarterly Reports on Form 10-QSB for the fiscal
quarters ended March 31, 1997, June 30, 1997, and September
30, 1997.
(c) Amendment No. 3 to the Company's Current Report on Form
8-K, dated June 3, 1997.
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<PAGE>
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date hereof and prior to the
termination of the sale of all of the Shares shall be deemed to be incorporated
by reference herein and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein,
or in any other subsequently filed documents, which also are incorporated or
deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed to
constitute a part of this Prospectus except as so modified or superseded.
This Prospectus incorporates documents by reference that are not
presented herein or delivered herewith. The Company hereby undertakes to
provide, without charge, to each person, including any beneficial owner, to whom
a copy of this Prospectus is delivered, on 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 addressed to: Samuel H. Simkin, Vice
President, Tel-Com Wireless Cable TV Corporation, 1506 N.E. 162nd Street, North
Miami Beach, Florida 33162, telephone number (305) 947-3010.
THE COMPANY
GENERAL
Tel-Com is a developer, owner and operator of wireless cable television
systems in Costa Rica and Wisconsin. Wireless cable television is provided to
subscribers by transmitting designated frequencies over the air to a small
receiving antenna at each subscriber's location. The Company provides television
and related cable services for multiple dwelling units, commercial locations and
single family residences.
Since wireless cable systems do not require an extensive network of
coaxial cable and amplifiers, their capital cost per installed subscriber is
significantly less than that for hard-wire cable systems. In addition, operating
costs of wireless cable systems are generally lower than those of comparable
hard-wire cable systems due to lower network maintenance and depreciation
expense. As a result of lower capital and operating costs, Tel-Com is generally
able to charge less for its standard cable packages than the amount charged for
comparable service provided by its hard-wire cable competition.
THE COSTA RICAN SYSTEM. The Company acquired certain rights to up to 18
pay television broadcast channels in Costa Rica in February 1996 (the "Costa
Rica Acquisition"). Three channels are UHF frequencies (Channels 56, 58 and 60),
three are "superband" frequencies (Channels 35, 37 and 39), and twelve are
microwave frequencies similar to those used in the LaCrosse system. The
Company's transmission equipment is located on a leased tower site on a
mountaintop approximately 12,000 feet above sea level and 10,000 feet above the
San Jose
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<PAGE>
Central Valley. From this site, the Company is capable of broadcasting its
signals over a radius of more than 100 miles.
As of November 30, 1997, the Company had approximately 4,300
subscribers in the Costa Rican System. Costa Rica has a population of over
3,350,000 and over 750,000 households which are capable of receiving the
Company's signals. Unlike most of the United States, Costa Rica has very low
cable penetration. An estimated 60,000 households - less than 10% of the
population - have cable or pay television of any kind. By contrast, in the
United States, over 70% of households have access to cable television. A large
majority of the uncabled households in Costa Rica currently have access to cable
television only through Tel-Com's system.
In addition to the country's 22 "off-air" VHF/UHF channels, the Company
currently offers six channels of pay television in Costa Rica: HBO-Ole, Cinemax,
Sony Entertainment, Warner Brothers Network, Fox Sports International and
Discovery Channel. Each subscriber receives an addressable set-top converter and
remote control, as well as an antenna which is installed on the roof to receive
the Company's television signals. Monthly subscription fees are currently $15 to
$19.50 per month, depending on the programming package.
In Costa Rica, the Company emphasizes its picture quality and the
reliability of its wireless transmission. Because the Company transmits its
television signals via VHF and UHF frequencies instead of microwave frequencies
which are typically used in wireless cable operations, the Costa Rican System
does not require line-of-sight between the transmission point and the
subscriber. The Company believes that it provides a high-quality,
price-competitive alternative to hard-wire cable services in Costa Rica.
The Company plans to undertake efforts to increase its subscriber base
in Costa Rica, although there can be no assurances that the Company will be
successful in such endeavor.
THE LACROSSE, WISCONSIN SYSTEM. The Company operates a wireless cable
television system in LaCrosse, Wisconsin (the "LaCrosse System"). The LaCrosse
System began transmitting programming in December 1994 and, as of November 30,
1997 had approximately 1,200 subscribers. There are approximately 70,000
households within the LaCrosse System's 25-mile signal pattern. The System
currently offers 22 channels, consisting of 17 wireless cable channels and five
(5) local "off-air" (VHF/UHF) broadcast channels. In addition, the Company has
entered into lease agreements for Instructional Television Fixed Service
("ITFS") excess capacity for eight additional channels for use in the LaCrosse
System: four (4) channels with each of the Shekinah Network and the Morningstar
Educational Network.
Monthly subscription fees for the LaCrosse System start at $23.50 for
basic programming, including a premium movie channel. This monthly fee is
significantly below what the two "hard-wire" cable companies in LaCrosse charge
for their equivalent programming packages. In LaCrosse, the Company focuses its
marketing efforts on the reliability of its service. The Company provides
24-hour per day service, with rapid response time on incoming telephone calls,
and flexible installation scheduling. In LaCrosse, the Company has positioned
itself as a reliable, cost-effective alternative to traditional hard-wire cable
operations, which presently serve over 50% of the area's 70,000 households
within the area's 25-mile radius.
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<PAGE>
The Company's management expects to need additional financing for the
expansion of its business, and to support working capital requirements in future
years. The Company currently is exploring financing alternatives to allow the
Company to finance such expansion, although there can be no assurance that such
financing alternatives will be available to the Company or will be available on
terms favorable to the Company. Such financing may take the form of an
investment in equity securities or convertible debt securities of the Company,
and may result in dilution to the Company's shareholders.
The principal executive offices of the Company are located at 1506 N.E.
162nd Street, North Miami Beach, Florida 33162, and its telephone number is
(305) 947-3010.
RECENT DEVELOPMENTS
COSTA RICA ACQUISITION - DEBT RESTRUCTURING
On February 12, 1997, the Company and the seller under the Costa Rica
Acquisition ("Seller") entered into an agreement providing for the restructuring
of the $2 million note given by the Company to Seller as part of the payment for
the acquisition of Canal 19. This agreement was amended and restated by a letter
agreement dated February 21, 1997. The agreement, as amended and restated,
provided for the Company to make a payment of $625,000 toward reduction of the
principal balance of the note on or before March 7, 1997. The remaining
principal balance, plus accrued interest thereon, was to be paid on or before
February 23, 1998, provided that, with an additional payment of $100,000, the
Company could extend such maturity date for an additional period of six months.
The Company paid Seller a deposit of $50,000 on February 24, 1997. The $50,000
deposit was to be applied toward the principal balance of the note provided,
however, that if the $625,000 principal reduction payment was not timely paid,
Seller could retain such deposit. The Company failed to pay the $625,000 payment
and the Seller therefore retained the $50,000 deposit.
On May 19, 1997, the Company entered into a Debt Restructuring
Agreement ("Debt Restructuring Agreement") with the Seller for the restructuring
of the $2 million debt into a secured Convertible Debenture to mature in 12
months with interest to accrue at 12% per annum (7% to be paid monthly and 5% at
maturity) (the "Convertible Debenture" or "Debenture"). The adjusted principal
amount of the Convertible Debenture is $2.1 million plus certain expenses owed
or reimbursable to Seller at the issue date of the Debenture. At the Company's
option, $1 million of this amount may be extended for an additional period of 12
months with interest to accrue on such amount at 15% per annum (8% to be paid
monthly in arrears and 7% to be paid at maturity). The Seller has the option,
exercisable within six months of the issue date of the Debenture, to extend the
Debenture an additional 12 months, in which event, commencing on the first day
of the 13th month after the issue date of the, one-half of the principal amount
will accrue interest at 12% per annum (7% to be paid monthly in arrears and 5%
to be paid at maturity) and one-half of the principal amount will accrue
interest at 15% per annum (8% to be paid monthly in arrears and 7% to be paid at
maturity).
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<PAGE>
As consideration for the debt restructuring described above, the
Company agreed to issue to the Seller (i) 180,000 shares of the Company's common
stock with piggy-back registration rights, (ii) a warrant to purchase 500,000
shares at $1.00 per share (the "$1.00 Warrant"), and (iii) a warrant to purchase
500,000 shares at $5.00 per share (the "$5.00 Warrant"). Under the Agreement,
the Seller received the right to nominate two members to the Company's Board of
Directors until such time as Seller exercised the conversion rights under the
Convertible Debenture and received a release from any liability in connection
with the Costa Rica Acquisition.
The Convertible Debenture is convertible by Seller into the Company's
Common Stock at any time after the issue date prior to payment of the Debenture
on at least 30 days' advance notice to the Company. The conversion price is
equal to the lesser of (1) $.50 per share of Common Stock or (2) a price per
share of common stock, equal to the average of the closing "bid" for the
Company's common stock, as reported on Nasdaq, for the five trading days
immediately prior to the conversion date. The Company is obligated to reserve
for issuance upon conversion a sufficient number of shares of common stock and
register such reserved shares and maintain an effective registration statement
for such shares.
Although it is anticipated that the Seller will convert the Convertible
Debenture before its due date, until such conversion, if the Company defaults in
its obligations under the Convertible Debenture, then Seller will be entitled to
a transfer of all stock of the Costa Rican entities involved in the Costa Rica
Acquisition and the right to purchase all capital assets of the Company in Costa
Rica for fair market value. The capital assets of the Company in Costa Rica
consist primarily of subscriber contracts, transmission equipment and subscriber
reception equipment necessary for the operation of the Costa Rican wireless
cable television service.
Upon consummation of the Debt Restructuring Agreement, Fernand Duquette
and Richard Vega resigned from their positions as directors of the Company, and
Fernand Duquette additionally resigned as the Company's President and Chief
Executive Officer. The Seller and his designee, Samuel H. Simkin, were appointed
to the Company's Board of Directors and Seller was appointed the Company's
President and Chief Executive Officer. As a result, a change in control of the
Company is deemed to have taken place.
ACQUISITION OF MAJORITY INTEREST IN FIFTH AVENUE CHANNEL, INC.
On November 20, 1997, the Company reached an agreement in principle to
acquire 60% of the capital stock of The Fifth Avenue Channel, Inc. (the
"Channel"), which plans to premiere a new 24-hour luxury lifestyles television
channel in the Spring of 1998. Although consummation of the transaction is
subject to the execution and delivery of a definitive written agreement, it is
anticipated that the transaction will be structured as follows: Shares of common
stock of the Channel will be purchased from Melvin Rosen, the Company's
President and Chief Executive Officer, and International Broadcast Corporation
("IBC") in exchange for 200,000 shares of the Company's Common Stock to be
issued on a pro-rata basis at closing and up to an additional 400,000 shares of
the Company's Common Stock which will be issuable to Mr. Rosen and IBC, also on
a pro-rata basis, based upon future performance of the Channel. Following the
acquisition, Mr. Rosen and IBC will continue to be minority shareholders in the
Channel along with Ivana Trump, who will continue to serve as its Chairman of
the Board. Ms. Trump is expected to serve as the hostess of the Channel.
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<PAGE>
FORWARD-LOOKING STATEMENTS
The Company cautions readers that certain important factors may affect
the Company's actual results and could cause such results to differ materially
from any forward-looking statements that may be deemed to have been made in this
Prospectus or that are otherwise made by or on behalf of the Company. For this
purpose, any statements contained in this Prospectus that are not statements of
historical fact may be deemed to be forward-looking statements. Without limiting
the generality of the foregoing, words such as "may," "will," "expect,"
"believe," "anticipate," "intend," "could," "estimate" or "continue" or the
negative variations thereof or comparable terminology are intended to identify
forward-looking statements. Factors which may cause or contribute to such
difference in results include, but are not limited to, those discussed in the
sections captioned "Risk Factors" below as well as those discussed elsewhere in
this Prospectus and from time to time in the Company's filings with the
Commission.
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<PAGE>
RISK FACTORS
THE SHARES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF
RISK. BEFORE INVESTING IN THE COMMON STOCK, PROSPECTIVE PURCHASERS SHOULD
CAREFULLY CONSIDER THE MATTERS SET FORTH BELOW AS WELL AS THE OTHER INFORMATION
SET FORTH IN THIS PROSPECTUS, BEFORE MAKING AN INVESTMENT DECISION.
LIMITED OPERATING HISTORY: OPERATING LOSSES: ACCUMULATED DEFICIT AND
LIMITED FUNDS: GOING CONCERN ISSUES. The Company was organized in May 1993 and
commenced operations, on a limited basis, in September 1994. For the year ended
December 31, 1996, the Company incurred operating losses aggregating $1,382,214.
The Company's accumulated deficit at September 30, 1997 was $3,992,180. The
Company had a net loss of $1,707,332 for the nine months ended September 30,
1997, in comparison to $931,239 during the same period in 1996. This net loss
reflects the continued build-up of operations in Costa Rica, the operation of
the Lacrosse system, and the professional services necessary to assure
compliance with FCC, SEC and Costa Rican regulation. The net loss for the 1997
period also includes $805,000 of non-recurring financial and public relations
consulting service costs that were not incurred in the comparable nine month
period ended September 30, 1996. The Company expects to continue experiencing
net losses while it develops and expands its wireless cable systems and the
to-be acquired Fifth Avenue Channel. The Company's financial resources are
limited and have to date been depleted through expansion and losses sustained by
the Company since its inception. The Company's expansion activities and net
losses have placed substantial pressure on the working capital and liquidity of
the Company. The Company is currently experiencing a cash shortage. These
conditions raise substantial doubt as to the Company's ability to continue as a
going concern. The ability of the Company to finance its activities and growth
will depend on its ability to procure additional financing and achieve a
profitable level of operations. There can be no assurance that such financing
can be obtained. No assurance can be given that the Company will generate
substantial revenues or that the Company's business operations will prove to be
profitable. The Company's operations are subject to all of the risks inherent in
the establishment of a new business, particularly one in the highly competitive
pay television industry. The likelihood of the success of the Company must be
considered in light of its limited financial resources and the problems,
expenses, difficulties, complications and delays. frequently encountered in
connection with establishing a new business, including, without limitation,
market acceptance of the Company's services, regulatory problems, unanticipated
expenses and competition. There can be no assurances that the Company's business
will be successful.
COMPETITION; PHYSICAL LIMITATIONS OF WIRELESS CABLE TRANSMISSION. The
pay television industry is highly competitive. Wireless cable television systems
face or may face competition from several sources, such as traditional hard-wire
cable companies, satellite receivers, direct broadcast satellites ("DBS") and
other alternative methods of distributing and receiving television
transmissions. Further, premium movie services offered by cable television
systems have encountered significant competition from the home video cassette
recorder industry. In areas where a number of local off-air VHF/UHF broadcast
signals can be received without the benefit of cable television, cable
television systems have also experienced competition from the availability of
broadcast signals generally and have found market penetration more difficult.
-9-
<PAGE>
Several actual and potential competitors have greater financial, marketing, and
other resources than the Company.
Wireless cable programming is transmitted through the air via microwave
frequencies that generally require a direct "line-of-sight" from the transmitter
facility to the subscriber's receiving antenna. In communities with dense
foliage, hilly terrain, tall buildings or other obstructions in the transmission
path, transmission may be blocked at certain locations without the use of signal
repeaters known as "beam-benders." Traditional hard-wire cable systems deliver
the signal to a subscriber's location through a network of coaxial cable and
amplifiers and do not require a direct line-of-sight for transmission and,
therefore, may have a competitive advantage over the Company in those areas
where the reception of wireless cable transmissions is difficult or impossible.
In addition, in limited circumstances, extreme adverse weather could damage
wireless cable transmission and receiver antennas as well as transmission site
equipment. Such conditions would not similarly affect hardwire cable systems.
Wireless cable programming can only be transmitted in the United States
on the frequencies made available for wireless cable by the FCC. Currently, and
until the commercial availability of digital compression technology, the number
of channels of cable television programming that can be provided to subscribers
of wireless cable systems is limited to 33. Hard-wire cable systems are not
limited in this regard and frequently offer more channels of cable television
programming than wireless cable systems. Satellite receivers and DBS have the
capability of delivering over 100 channels of programming.
Digital capability is ultimately essential for wireless to compete with
hard-wire cable. The ability to offer substantially more programming utilizing
existing wireless cable channel capacity is dependent on effectively deploying
digital compression technology. Digital compression technology has only recently
become commercially available to the wireless cable industry. The Company does
not expect, for financial and other reasons, to be able to deploy such
technology for several years.
It is expected that the cost of digital compression equipment will
exceed the cost of analog equipment. There can be no assurance that the Company
will have the financial resources to successfully deploy digital technology, or
that cost-effective digital compression equipment will be available to the
Company. Failure by the Company to deploy digital technology could have a
material adverse effect on its operating results and business expansion.
Unlike hard-wire operators, wireless cable operators who do not hold
licenses to the frequencies in their markets have to lease the wireless cable
channels on which they transmit their programming from channel license holders.
Leases generally require the operator to pay the lessor a fee based on a
percentage of subscription revenues, averaging approximately 5%, or, if greater,
a minimum monthly fee. Although hard-wire operators do not have to lease
channels, they do have to pay franchise fees generally on all gross revenues
from cable system operations (as compared to only subscription revenues in the
case of wireless cable), typically in the range of 3% to 5%, an expense that is
not incurred by wireless operators. Programming is generally available to
traditional hard-wire and wireless operators on comparable terms, although
operators that have a smaller number of subscribers often are required to pay
higher
-10-
<PAGE>
per subscriber fees. Accordingly, operators in the initial operating stage
generally pay higher programming fees on a per subscriber basis.
Certain hard-wire cable operators have announced their intention to
develop interactive features for use by their subscribers, such as shopping via
video catalogs and playing video games with neighbors. Interactive services are
not currently available for wireless cable. The Company believes that the same
manufacturers who currently are developing digital compression converters for
both hard-wire and wireless cable will also make new developments in
interactivity available to both industry segments. The FCC has designated a
return path channel for use in connection with interactive services which may be
offered by wireless cable operators. The Company believes that, if it is
economically feasible to do so, wireless cable systems can include two-way
interactivity. There can be no assurance that interactive services will be made
available for wireless cable systems and, therefore, to the extent such services
are available on hard-wire cable systems, the Company could be at a competitive
disadvantage.
Legislative, regulatory and technological developments may result in
additional and significant new competition, including competition from local
telephone companies. No assurance can be given that the Company will compete
successfully with hard-wire cable and other pay television systems, or
otherwise.
NEED FOR ADDITIONAL FINANCING FOR GROWTH. The growth of the Company's
business will require investment on a continuing basis to finance capital
expenditures and related expenses for subscriber growth and new system
development. There can be no assurance that the Company will be able to procure
additional capital or generate sufficient revenues to fund its operations after
such period. Although the Company is actively pursuing additional financing
alternatives, the Company has no arrangements or commitments for additional
capital, and there can be no assurance that the Company will be able to raise
such capital. The development of, and expansion into, new markets will require
additional financing, which may not be available on satisfactory terms, if at
all. Failure to obtain such additional financing could adversely affect the
growth of the Company. The Company does not currently have any available bank
credit facilities. There can be no assurance that any additional required or
desired financing will be available, through bank borrowings, debt or equity
offerings, or otherwise, on acceptable terms, if at all.
The Company paid part of the purchase price in connection with the
Costa Rica Acquisition by delivery to the Seller of a promissory note in the
principal amount of $2,000,000. Principal, and accrued but unpaid interest if
any, on this note was due and payable on February 23, 1997. The payment of this
promissory note was secured by all of the shares of stock acquired by the
Company in the Costa Rica Acquisition. The Company was unable to raise
additional debt or equity capital to fund the $2,000,000 payment that was due in
February 1997. As a result, the Company entered into negotiations with the
holder of said note, which negotiations ultimately resulted in a restructuring
of this debt pursuant to the terms of the Debt Restructuring Agreement. Although
the holder of the Convertible Debenture has expressed an intention to convert
the Debenture to Common Stock, until such conversion has occurred, there is the
possibility that the Company could lose all of its rights to the broadcast
licenses for the
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<PAGE>
Costa Rica system if the Company defaults under the Debt Restructuring
Agreement. Such loss would have a material adverse effect on the Company.
In March 1996, the Company was the successful bidder on broadcast
licenses for two (2) additional U.S. wireless cable markets (Wausau and Stevens
Point, Wisconsin) for which it has met its 20% partial payments obligations. The
total price for the licenses will be $1,189,351, plus interest payments. The
Company paid the initial 20% deposit in the total amount of $237,872 for the two
licenses. The balance of the winning bids is payable in quarterly installments
for a 10 year period running from the date that the license is conditionally
issued. Interest only payments must be made for the first two years.
The grant of the Wisconsin licenses is conditioned on the Company fully
and timely meeting its quarterly payment obligations, and the development of
operating systems within 18 months of the grant of each license. The Company is
unable to predict the exact date by which such systems must be operational,
since it does not know when the licenses will be conditionally issued by the
FCC. The Company estimates that the cost of developing a fully operational
system in each market would be approximately $1,200,000 per system. As of the
date of this Prospectus, the Company has not taken any steps to develop these
systems. Development of these markets, and the funding of the acquisition price
for the licenses, will require additional debt or equity financing, which may
not be available to the Company on acceptable terms, if at all. The Company has
no arrangements or commitments for such future financing, and there can be no
assurance that the Company will be able to raise such capital. Failure to obtain
such additional financing could cause a forfeit of the licenses and could
adversely affect the financial position and growth of the Company.
Additionally, the Company was the successful bidder on the broadcast
license for the Hickory-Lenoir-Morganton North Carolina market (the "Hickory
License"), and made the initial 10% down payment on said license. However, on
September 1, 1996, the balance of the Hickory License deposit was defaulted. As
a result, a maximum default payment of three percent of the defaulting bidder's
bid amount would be due to the FCC. In addition, the Company may be liable to
the FCC for the difference between the Company's winning bid and a lower winning
bid received by the FCC in a subsequent auction of this license. The FCC has not
yet announced plans to re-auction the Hickory License.
To the extent that future financing requirements are satisfied through
the issuance of equity securities, investors may experience significant dilution
in the net book value per share of Common Stock. Additional debt could result in
a substantial portion of the Company's cash flow from operations being dedicated
to the payment of principal and interest on such indebtedness and may render the
Company more vulnerable to competitive pressures and economic downturns. The
Company's future capital requirements will depend upon a number of factors, many
of which are not within the Company's control, including programming costs,
capital costs, marketing expenses, staffing levels, subscriber growth and
competitive conditions.
IMPEDIMENTS TO PROPOSED EXPANSION. The Company has adopted a business
strategy which includes, in part, growth through the development of additional
wireless cable systems. The Company's proposed expansion will be dependent on,
among other things, the availability
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<PAGE>
of channel license rights on terms and conditions acceptable to the Company, if
at all; successful development and construction of operating systems; the
availability of suitable management and other personnel; the Company's general
ability to manage growth; and the availability of adequate financing. The
Company's management will be responsible for the selection of expansion
opportunities in its sole discretion and shareholders will not be presented with
advance information regarding expansion opportunities or the ability to approve
or disapprove system expansion opportunities. There can be no assurance that the
Company will be successful in its proposed business strategy. See "Need for
Additional Financing for Growth" and "Business."
RISK OF LOSS OF LICENSE RIGHTS. There is a substantial risk of loss of
the Company's rights to the two new Wisconsin licenses. The two new Wisconsin
licenses are conditionally granted subject to the full and timely payment of the
purchase price, and development of operating systems within specified time
periods. The Company does not currently have the capital to fund its purchase or
development obligations. Additionally, although the holder of the Convertible
Debenture has indicated his intent to convert the Debenture to Common Stock
before the end of the calendar year, there is, until such conversion is
effectuated, risk of loss of the Company's rights to its licenses in Costa Rica
in the event that the Company is unable to make the required payments when due
pursuant to the Debt Restructuring Agreement involving part of the purchase
price in the Costa Rica Acquisition. Failure to raise the necessary capital to
fund the Company's obligations with respect to the new Wisconsin licenses and/or
the Convertible Debenture may cause the Company to lose such license rights and
could have a material adverse effect on the Company's financial condition,
results of operations and prospects for growth. See "Need for Additional
Financing for Growth."
SIGNIFICANT OUTSTANDING INDEBTEDNESS. The Company has incurred
significant indebtedness in connection with the acquisition of its Costa Rican
operations. Of the Company's total indebtedness, $2,000,000 was incurred in
connection with the acquisition of the wireless cable system in Costa Rica. Two
million dollars of the purchase price for the Costa Rica Acquisition was paid in
the form of a promissory note due February 23, 1997, secured by a pledge of all
of the shares of stock acquired by the Company in the Costa Rica Acquisition.
The Company defaulted on its obligations under this promissory note, resulting
in a negotiated restructuring of the debt pursuant to the terms of the Debt
Restructuring Agreement. If the Company defaults under the Debt Restructuring
Agreement, the holder could foreclose on all of the stock acquired by the
Company in the Costa Rica Acquisition. Although the holder of the Convertible
Debenture has indicated his intent to convert the Debenture to Common Stock
before the due date, and although the Company anticipates that it will repay its
outstanding indebtedness out of cash flow from operations, existing cash
resources, the proceeds from the exercise of the Warrants, future debt or equity
financings, or a combination thereof, there can be no assurance that the Company
will have the financial resources to repay such amounts when due or that the
Company will be able to raise additional capital to satisfy its outstanding
indebtedness. The Company does not have a bank line of credit and there can be
no assurance that any required or desired financing will be available, through
bank borrowings, debt or equity offerings, or otherwise, on acceptable terms.
There can be no assurance that the Company will receive significant proceeds, if
any, from the exercise of the Warrants, the Debenture Warrants, or the
Consultant's Warrants.
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<PAGE>
DEPENDENCE ON KEY INDIVIDUALS. The Company's development and success
depends upon the continued contributions of its newly installed executive
officers, particularly Melvin Rosen, President of the Company and Samuel H.
Simkin, Vice President of the Company. The loss of the services of either Mr.
Rosen or Mr. Simkin could have a material, adverse effect on the Company. The
Company has not entered into employment agreements with either Mr. Rosen or Mr.
Simkin. The Company's success is also dependent upon its ability to attract and
retain qualified employees to meet the Company's needs during its growth.
TERMINATION OR EXPIRATION OF CHANNEL LICENSES. FCC licenses for U.S.
wireless cable channels generally must be renewed every 10 years, and there is
no automatic renewal of such licenses. The U.S. channel licenses owned by the
Company expire at different times beginning in 2001. In the United States,
channel licenses are subject to non-renewal, revocation or cancellation for
violations of the Communications Act of 1934, as amended (the "Communications
Act") or the FCC's rules and policies. Under Costa Rican law, licenses are
granted for a limited time, but are automatically extended by payment of certain
corresponding dues, provided that the functioning and installation of the
station are adjusted to the stipulations of the relevant regulations. The
termination of, or failure to renew, a channel license would result in the
Company's being unable to deliver television programming on any such channel and
could have a material adverse effect on the Company. See "Government
Regulation."
GOVERNMENT REGULATION. The business of the Company in the United States
is subject to regulation by the FCC and other regulatory agencies. The Company's
Costa Rican operations are subject to regulation under Costa Rican law.
In the United States, the wireless cable industry is subject to
regulation by the FCC pursuant to the Communications Act. The Communications Act
empowers the FCC, among other things: to issue, revoke, modify and renew
licenses within the spectrum available to wireless cable; to approve the
assignment and/or transfer of control over such licenses; to determine the
location of wireless cable systems; to regulate the kind, configuration and
operation of equipment used by wireless cable systems; and to impose certain
equal employment opportunity requirements on wireless cable operators.
Applications for renewal of licenses must be filed within a certain period prior
to expiration and there is no automatic renewal of such licenses. Petitions to
deny applications for renewal may be filed during certain periods following the
filing of such applications. Licenses are subject to revocation, cancellation or
non-renewal for violation of the Communications Act or the FCC's rules and
policies.
The retransmission of local off-air VHF/UHF broadcasts is regulated by
the United States Copyright Office (the "U.S. Copyright Office") pursuant to the
Copyright Act of 1976, as amended (the "Copyright Act"). Secondary transmission
of a broadcast signal is permissible only if approved by the copyright holder or
if subject to compulsory licensing under the Copyright Act. The U.S. Copyright
Office has taken the position that, effective January 1, 1995, wireless cable
operators, unlike traditional hard-wire cable operators, will not be "cable
systems" entitled to a compulsory license under the Copyright Act. Pursuant to
the Cable Television Consumer Protection and Competition Act of 1992 (the "Cable
Act"), local broadcasters may require that cable operators obtain their consent
before retransmitting local off-air VHF/UHF broadcasts. The Company has obtained
such consent for the one broadcast signal
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<PAGE>
in its LaCrosse, Wisconsin system that the Company is retransmitting on a
wireless cable channel. There can be no assurance that such consents will not be
required in the Company's future markets, if any, or that the Company will be
able to obtain such consents on terms satisfactory to the Company, if required.
See "Business."
Television operations in Costa Rica are regulated mainly by the Radio
and Television Law - LEY DE RADIO Y TELEVISION, No. 1758 of 19 June 1954, as
amended (the "Law"); the Regulation of Wireless Stations - REGLAMENTO DE
ESTACIONES INALAMBRICAS, No. 63 of 11 December, 1956,- and the Broadcasting Rule
of Atlantic City and the International Agreements Regarding Broadcasting
executed in Washington, D.C., on March of 1949, which have been ratified by the
Congress of Costa Rica. According to the Law, television operations can only be
established, conducted and exploited by means of a concession granted by the
Radio Control Office ("RCO"), upon payment of the taxes and completion of all
formal requirements imposed by the Law. Once the concession is granted, the RCO
will periodically control and supervise its operation. In order to verify that
the terms and conditions of the concession are being fulfilled, the RCO is
authorized to visit and inspect the place of business of the concessionaire at
any time. If there is any incorrect technical functioning, the licensee, within
forty-eight hours, must reestablish the concession to its original terms under
penalty of cancellation of the license.
The Law establishes that licenses are granted for a limited time, but
they are automatically extended by payment of the corresponding dues, provided
that the functioning and installation of the station are adjusted to the
stipulations of the Law. The transfer or alienation of the right to a frequency
is permitted only with the previous authorization of the RCO, which means that a
formal request has to be submitted to the RCO on these terms.
Article 3 of the Law requires that concessionaires have not less than
65% Costa Rican ownership. The Company has been advised by its Costa Rican
counsel that this provision is not being actively enforced and that there is a
decision from the Constitutional Court declaring a similar provision in a
related law (LEY DE MEDIOS DE DIFUSION Y AGENCIAS DE PUBLICIDAD) to be
unconstitutional. However, based on Costa Rican counsel's recommendation, the
Company structured its ownership of these licenses to be indirect through a
tiered subsidiary structure of Costa Rican corporations to provide for 100%
Costa Rican ownership of the companies holding the licenses, which the Company
believes adequately meets all requirements of Costa Rican law. However, in the
event this structure is not acceptable to the government, an alternate ownership
structure would have to be implemented, which could have a material adverse
effect on the Company.
Wireless cable operators are also subject to regulation by the Federal
Aviation Administration with respect to the construction of transmission towers
and to certain local zoning regulations affecting construction of towers and
other facilities. There may also be restrictions imposed by local authorities.
There can be no assurance that the Company will not be required to incur
additional costs in complying with such regulations and restrictions. Due to the
regulated nature of the cable industry, the Company's growth and operations may
be adversely impacted by the adoption of new, or changes to, existing laws or
regulations or the interpretations thereof.
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<PAGE>
IMPACT OF RECENTLY ENACTED LEGISLATION. The recently enacted
Telecommunications Act of 1996 (the "1996 Act") could have a material impact on
the wireless cable industry and the competitive environment in which the Company
operates. The 1996 Act will result in comprehensive changes to the regulatory
environment for the telecommunications industry as a whole. The legislation
will, among other things, substantially reduce regulatory authority over cable
rates. Another provision of the 1996 Act will afford hard-wire cable operators
greater flexibility to offer lower rates to certain of their subscribers, and
would thereby permit cable operators to offer discounts on hard-wire cable
service to the Company's subscribers or prospective subscribers. The legislation
will permit telephone companies to enter the video distribution business,
subject to certain conditions. The entry of telephone companies into the video
distribution business, with greater access to capital and other resources, could
provide significant competition to the wireless cable industry, including the
Company. In addition, the legislation will afford relief to the Direct Broadcast
Satellite ("DBS") industry by exempting DBS providers from local restrictions on
reception antennas and preempting the authority of local governments to impose
certain taxes. The Company cannot predict the substance of rules and policies to
be adopted by the FCC in implementing the provisions of the legislation. See
"Business-Government Regulation."
RISKS OF INTERNATIONAL OPERATIONS. A significant percentage of the
Company's revenues, on a consolidated basis, is derived from the operations of
its wholly-owned subsidiary in Costa Rica. These revenues are subject to the
risks normally associated with international operations which include, without
limitation, difficulties in staffing and managing foreign operations, losses
from currency conversion and fluctuating exchange rates, limitations (including
taxes) on the repatriation of earnings, slower and more difficult accounts
receivable collection, greater difficulty and expense in administering business
abroad, complications in complying with foreign laws and changes in regulatory
requirements, and cultural differences in the conduct of business. There can be
no assurance that these factors will not have a material adverse effect on the
Company's business, operating results, and financial condition.
DEPENDENCE ON PROGRAM MATERIAL AGREEMENTS. In connection with its
distribution of television programming, the Company is dependent on fixed-term
contracts with various program suppliers. Although the Company has no reason to
believe that any such contracts will be canceled or will not be renewed upon
expiration, if such contracts are canceled or not renewed, the Company will have
to seek program material from other sources. There is no assurance that other
program material will be available to the Company on acceptable terms or at all
or, if so available, that such material will be acceptable to the Company's
subscribers. The likelihood that program material will be unavailable to the
Company is significantly mitigated by the Cable Act and various FCC regulations
issued thereunder, which, among other things, impose limits on exclusive
programming contracts and generally prohibit cable programmers in which a cable
operator has an attributable interest from discriminating against cable
competitors with respect to the price, terms and conditions of sale of
programming. However, no such protections are available in international
markets.
CONFLICTS OF INTEREST. Conflicts of interest could arise in the
negotiation of the terms of any transaction between the Company and its
shareholders, officers, directors or affiliates. The Company has no plans or
arrangements, including the hiring of an independent third party, for
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<PAGE>
the resolution of disputes between the Company and such persons, if they arise.
The Company and its public shareholders could be adversely affected should such
individuals choose to place their own interests before those of the Company. No
assurance can be given that conflicts of interest will not cause the Company to
lose potential opportunities, profits, or management attention. The Board of
Directors of the Company has adopted a policy regarding transactions between the
Company and any officer, director, or affiliate, including loan transactions,
requiring that all such transactions be approved by a majority of the
independent and disinterested members of the Board of Directors and that all
such transactions be for a bona fide business purpose and be entered into on
terms at least as favorable to the Company as could be obtained from
unaffiliated independent third parties.
UNCERTAINTY OF SIGNIFICANT ASSUMPTIONS AND INFORMATION. The Company's
plans for implementing its proposed business operations and achieving
profitability from its intended operations are based on the experience, judgment
and certain assumptions of its management and upon certain available information
concerning the wireless cable industry in general and the Company's potential
markets. No independent market studies have been conducted concerning the extent
to which customers will subscribe to the Company's wireless cable services nor
are any such studies planned. There can be no assurance that the Company's plans
will materialize, or that the Company's assumptions will prove correct. See
"Business."
VOTING POWER OF PRESENT MANAGEMENT. As of the date of this Prospectus,
the Company's officers and directors own approximately 14.9% of the outstanding
Common Stock of the Company. Additionally, the holder of the Company's
Convertible Debenture as well as the Debenture Warrants, also an officer and
director of the Company, beneficially owns an additional 58.8% of the
outstanding Common Stock of the Company. Consequently, these individuals may be
in a position to influence a majority of the Company's Directors and generally
to exercise control over the Company's affairs.
DIVIDENDS UNLIKELY. The Company has not paid any dividends on its
Common Stock and does not intend to declare or pay cash dividends in the
foreseeable future. Earnings are expected to be retained to finance and expand
its business.
RISK OF FUTURE SALES OF COMMON STOCK. Future sales of substantial
amounts of Common Stock pursuant to Rule 144 under the Securities Act of 1933,
as amended (the "Securities Act") or otherwise by certain shareholders could
have a material adverse impact on the market price for the Common Stock at the
time. There are presently 598,212 outstanding shares of Common Stock of the
Company beneficially held by members of management and other existing
shareholders of the Company which are deemed "restricted securities" as defined
by Rule 144 under the Securities Act. Under certain circumstances, these shares
may be sold without registration pursuant to the provisions of Rule 144. In
general, under Rule 144, a person (or persons whose shares are aggregated) who
has satisfied a one-year holding period may, under certain circumstances, sell
within any three-month period a number of restricted securities which does not
exceed the greater of one (1%) percent of the shares outstanding or the average
weekly trading volume during the four calendar weeks preceding the notice of
sale required by Rule 144. In addition, Rule 144 permits, under certain
circumstances, the sale of restricted securities by a person who is not an
affiliate of the Company and has satisfied a two-year holding period without any
quantity limitations. Any sales of shares by shareholders pursuant to Rule 144
may have a depressive effect on the price of the Common Stock.
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RISK OF AUTHORIZATION OF PREFERRED STOCK. The Company's Articles of
Incorporation authorizes the issuance of 5,000,000 shares of "blank check"
preferred stock with such designations, rights and preferences as may be
determined from time to time by the Board of Directors. Accordingly, the Board
of Directors is empowered, without stockholder approval (but subject to
applicable government regulatory restrictions), to issue preferred stock with
dividend, liquidation, conversion, voting or other rights which could adversely
affect the voting power or other rights of the holders of the Company's Common
Stock. In the event of issuance, the preferred stock could be utilized, under
certain circumstances, as a method of discouraging, delaying or preventing a
change in control of the Company. The Company issued 200 shares of its Series A
Convertible Preferred Stock in November 1996 and 100 shares of its Series B
Convertible Preferred Stock in March 1997, all of which shares have been
converted to shares of Common Stock. Although the Company has no present
intention to issue any additional shares of preferred stock, there can be no
assurance that the Company will not do so in the future.
POSSIBLE APPLICABILITY OF RULES RELATING TO LOW-PRICED STOCKS; NO
ASSURANCE OF CONTINUED LISTING ON NASDAQ. While the Company's Common Stock and
Warrants are listed on the Nasdaq SmallCap Market, there can be no assurance
that such listing will continue. If the Common Stock were to be delisted for
failure to meet the maintenance requirements, the shares might be subject to the
penny stock rules promulgated under the Securities Exchange Act of 1934. The
Commission has adopted regulations which generally define a "penny stock" to be
any equity security that has a market price (as defined) of less than $5.00 per
share, subject to certain exceptions. The shares of Common Stock offered hereby
may be deemed to be "penny stocks" and thus become subject to rules that impose
additional sales practice requirements on broker/dealers who sell such
securities to persons other than established customers and accredited investors,
unless the Common Stock is listed on The Nasdaq SmallCap Market. Consequently,
the "penny stock" rules may restrict the ability of broker/dealers to sell the
Company's securities and may affect the ability of purchasers in this offering
to sell the Company's securities in a secondary market.
The Nasdaq Stock Market, Inc. has adopted certain changes to the
maintenance criteria for listing eligibility on The Nasdaq SmallCap Market. The
new maintenance standards require at least $2,000,000 in net tangible assets
(total assets less total liabilities and goodwill) or $500,000 in net income in
two of the last three years, a public float of at least 500,000 shares, a
$1,000,000 market value of public float, a minimum bid price of $1.00 per share,
at least two market makers, at least 300 shareholders and at least two outside
directors. The Commission recently approved these criteria, and a compliance
period for the new maintenance criteria is in the process of being implemented.
If the Company is or becomes unable to meet the listing criteria of The Nasdaq
SmallCap Market and becomes delisted therefrom, trading, if any, in the Common
Stock would thereafter be conducted in the over-the-counter market on the OTC
Electronic Bulletin Board. In such an event, the market price of the Common
Stock may be adversely impacted and an investor may find it difficult to dispose
of, or to obtain accurate quotations as to the market value of the Common Stock.
EFFECT OF OUTSTANDING WARRANTS AND CONVERTIBLE SECURITIES. As of the
date of this Prospectus, the Company has outstanding warrants to purchase an
aggregate of 3,965,000 shares
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of Common Stock and the Convertible Debenture convertible into 4,732,000 shares
of Common Stock. As long as such warrants and convertible securities remain
unexercised or are not converted, as the case may be, the terms under which the
Company could obtain additional capital may be adversely affected. Moreover, the
holders of the warrants and convertible securities may be expected to exercise
or convert them at a time when the Company would, in all likelihood, be able to
obtain any needed capital by a new offering of its securities on terms more
favorable than those provided by such securities.
USE OF PROCEEDS
The Company will receive no proceeds from the sale of any of or all of
the Shares of Common Stock being offered by the Selling Shareholders hereunder
or upon conversion of the Convertible Debentures, but may receive an aggregate
of approximately $1,552,500 upon exercise of all of the Warrants, Debenture
Warrants and the Consultant's Warrants. The Debenture Warrants provide for
cashless exercise, which, if such option is used as is presumed in the above
figure, would result in no proceeds being received by the Company upon such
exercise. Such proceeds, if any, will be used for working capital and other
corporate purposes.
Expenses expected to be incurred by the Company in connection with the
registration of the Shares are estimated at approximately $30,000.
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SELLING SHAREHOLDERS
The Company has been advised by the Selling Shareholders that, with the
exception of Melvin Rosen, none of the Selling Shareholders has or had a
position, office or other material relationship with the Company or any of its
affiliates within the past three years. Unless otherwise indicated, the
following table sets forth certain information with respect to the ownership of
the Company's Common Stock by each Selling Shareholder as of the date of this
Prospectus.
<TABLE>
<CAPTION>
OWNERSHIP OF SHARES NUMBER OF OWNERSHIP OF SHARES
NAME AND ADDRESS OF SELLING OF COMMON STOCK SHARES OF COMMON STOCK
SHAREHOLDER PRIOR TO OFFERING OFFERED HEREBY AFTER OFFERING(1)
- --------------------------- ------------------------ -------------- -----------------------
SHARES PERCENTAGE SHARES PERCENTAGE
------- ---------- ------ ----------
<S> <C> <C> <C> <C> <C>
Michael Ploshnick(2)................ 80,000(3) 2.0% 80,000 0 *
17346 St. James Court
Boca Raton, FL 33496
Howard Schwartz(2).................. 144,000(4) 3.5% 144,000 0 *
23 Pheasant Run Ln.
Dix Hills, NY 11746
Steven Finkelstein(2)............... 131,000(5) 3.2% 131,000 0 *
6 Horizon Road, #2803
Fort Lee, NJ 07024
Salvatore Marasa(2)................. 144,000(6) 3.5% 144,000 0 *
242 Pondview Lane
Smithtown, NY 11787
David Ganz(2)....................... 144,000(7) 3.5% 144,000 0 *
1220 Terry Rd.
Renkonkoma, NY 11779
Edward Goldner(2)................... 13,000(8) * 13,000 0 *
127 14th Street
W. Babylon, NY 11704
Anthony Imbo(2)..................... 144,000(9) 3.5% 144,000 0 *
1995 Orinoco Drive
West Islip, NY 11795
Melvin Rosen........................ 6,033,212(10) 61.9% 1,301,212 4,732,000 48.57%
1506 N.E. 162 Street
North Miami Beach, FL 33162
Amber Capital Corporation........... 394,477 9.8% 394,477 0 *
2 Spur Lane
Rolling Hills, CA 90274
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<PAGE>
Investor Resource
Services, Inc...................... 394,477 9.8% 394,477 0 *
490 North Causeway
New Smyrna Beach, FL 32169
Aurora Holdings, Inc............... 394,477 9.8% 394,477 0 *
1020 Brookstown Avenue
Suite 14
Winston-Salem, NC 27101
J.W. Barclay & Co., Inc............ 225,000(11) 5.3% 225,000 0 *
One Battery Park Plaza
New York, NY 10004
</TABLE>
- -------------------------
* Less than 1%.
(1) Assumes that all Shares are sold pursuant to this offering and that
no other shares of Common Stock are acquired or disposed of by the
Selling Shareholders prior to the termination of this offering. Because
the Selling Shareholders may sell all, some or none of their Shares or
may acquire or dispose of other shares of Common Stock, no reliable
estimate can be made of the aggregate number of Shares that will be sold
pursuant to this offering or the number or percentage of shares of Common
Stock that each Selling Shareholder will own upon completion of this
offering.
(2) An assignee of a portion of the Consultant's Warrants.
(3) Consists of shares of Common Stock issuable due to exercise of one-year
warrants for the purchase of 50,000 shares of Common Stock of an exercise
price of $1.00 per share, one-year warrants for the purchase of 20,000
shares of Common Stock at an exercise price of $2.50 per share, and
three-year warrants for the purchase of 10,000 shares of Common Stock at
an exercise price of $2.50 per share.
(4) Consists of shares of Common Stock issuable due to exercise of one-year
warrants for the purchase of 90,000 shares of Common Stock at an exercise
price of $1.00 per share, one-year warrants for the purchase of 36,000
shares of Common Stock at an exercise price of $2.50 per share, and
three-year warrants for the purchase of 18,000 shares of Common Stock at
an exercise price of $2.50 per share.
(5) Consists of shares of Common Stock issuable due to exercise of one-year
warrants for the purchase of 77,000 shares of Common Stock at an exercise
price of $1.00 per share, one-year warrants for the purchase of 36,000
shares of Common Stock at an exercise price of $2.50 per share, and
three-year warrants for the purchase of 18,000 shares of Common Stock at
an exercise price of $2.50 per share.
(6) Consists of shares of Common stock issuable due to exercise of one-year
warrants for the purchase of 90,000 shares of Common Stock at an exercise
price of $1.00 per share, one-year warrants for the purchase of 36,000
shares of Common Stock at an exercise price of $2.50 per share, and
three-year warrants for the purchase of 18,000 shares of Common Stock at
an exercise price of $2.50 per share.
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<PAGE>
(7) Consists of shares of Common stock issuable due to exercise of one-year
warrants for the purchase of 90,000 shares of Common Stock at an exercise
price of $1.00 per share, one-year warrants for the purchase of 36,000
shares of Common Stock at an exercise price of $2.50 per share, and
three-year warrants for the purchase of 18,000 shares of Common Stock at
an exercise price of $2.50 per share.
(8) Consists of shares of Common Stock issuable due to exercise of one-year
warrants for the purchase of 13,000 shares of Common Stock at an exercise
price of $1.00 per share.
(9) Consists of shares of Common stock issuable due to exercise of one-year
warrants for the purchase of 90,000 shares of Common Stock at an exercise
price of $1.00 per share, one-year warrants for the purchase of 36,000
shares of Common Stock at an exercise price of $2.50 per share, and
three-year warrants for the purchase of 18,000 shares of Common Stock at
an exercise price of $2.50 per share.
(10) Consists of an aggregate of 301,212 shares of Common Stock issued in
part as part of the consideration for the Costa Rica Acquisition and in
part as part of the consideration for the Debt Restructuring Agreement,
and also includes shares of Common Stock issuable upon exercise of the
Debenture Warrants and upon conversion of the Convertible Debenture. Does
not include 350,000 additional shares of Common Stock that would be
issuable in the event that the Company repays Mr. Rosen a debt of
approximately $175,000 which may be due him based on an increase in the
number of subscribers in Costa Rica (approximately 3,500 subscribers
multiplied by $50 each), and Mr. Rosen elects to convert said debt to
350,000 shares of Common Stock at a conversion price of $.50 per share.
(11) Consists of shares of Common Stock issuable upon exercise of Private
Placement Warrants to purchase 225,000 shares of Common Stock at an
exercise price of $5.75 per share.
PLAN OF DISTRIBUTION
The Selling Shareholders have advised the Company that they may from
time to time sell all or a portion of the Shares offered hereby in one or more
transactions in the over-the-counter market, on the Nasdaq SmallCap Market, or
on any other exchange on which the Common Stock may then be listed, in privately
negotiated transactions or otherwise, or a combination of such methods of sale,
at market prices prevailing at the time of sale or prices related to such
prevailing market prices or at negotiated prices. The Selling Shareholders may
effect such
-22-
<PAGE>
transactions by selling the Shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of underwriting discounts,
concessions or commissions from the Selling Shareholders and/or purchasers of
the Shares for whom they may act as agent (which compensation may be in excess
of customary commissions). The Selling Shareholders and any participating
broker-dealers may be deemed to be "underwriters" as defined in the Securities
Act. Neither the Company nor the Selling Shareholders can estimate at the
present time the amount of commissions or discounts, if any, that will be paid
by the Selling Shareholders on account of their sales of the Shares from time to
time.
Under the securities laws of certain states, the Shares may be sold in
such states only through registered or licensed broker-dealers or pursuant to
available exemptions from such requirements. In addition, in certain states the
Shares may not be sold therein unless the Shares have been registered or
qualified for sale in such state or an exemption from such requirement is
available and is complied with.
The Company will pay certain expenses in connection with this offering,
estimated to be approximately $30,000, but will not pay for any underwriting
commissions and discounts, if any, or counsel fees or other expenses of the
Selling Shareholders. The Company has agreed to indemnify the Selling
Shareholders, their directors, officers, agents and representatives, and any
underwriters, against certain liabilities, including certain liabilities under
the Securities Act. The Selling Shareholders have also agreed to indemnify the
Company, its directors, officers, agents and representatives against certain
liabilities, including certain liabilities under the Securities Act.
The Selling Shareholders and other persons participating in the
distribution of the Shares offered hereby are subject to the applicable
requirements of Rule 10b-6 promulgated under the Exchange Act in connection with
sales of the Shares.
DESCRIPTION OF SECURITIES
GENERAL
The Company's authorized capital stock consists of 10,000,000 shares of
Common Stock, par value $.001 per share, and 5,000,000 shares of preferred
stock, par value $.001 per share (the "Preferred Stock"). As of the date of this
Prospectus, 4,009,643 shares of Common Stock and no shares of Preferred Stock
were outstanding. The transfer agent for the Common Stock is Continental Stock
Transfer & Trust Company, 2 Broadway, New York, New York 10004.
COMMON STOCK
The Company is authorized to issue 10,000,000 shares of Common Stock,
$.001 par value, of which 4,009,643 shares are issued and outstanding as of the
date of this Prospectus. The issued and outstanding shares of Common Stock are
fully paid and non-assessable. Holders of Common Stock are entitled to one vote
for each share held of record on all matters submitted to a vote of stockholders
and may not cumulate their votes for the election of directors. Shares
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<PAGE>
of Common Stock are not redeemable, do not have any conversion or preemptive
rights and are not subject to further calls or assessments once fully paid.
Holders of Common Stock will be entitled to share pro rata in such
dividends and other distributions as may be declared from time to time by the
Board of Directors out of funds legally available therefore, subject to any
prior rights accruing to any holders of preferred stock of the Company. Upon
liquidation or dissolution of the Company, holders of shares of Common Stock
will be entitled to share proportionally in all assets available for
distribution to such holders.
PREFERRED STOCK
The Board of Directors has the authority, without further action by the
stockholders, to issue up to 5,000,000 shares of Preferred Stock, par value of
$.001 per share, in one or more series and to fix the rights, preferences,
privileges and restrictions thereof, including dividend rights, conversion
rights, voting rights, terms of redemption, liquidation preferences and the
number of shares constituting any series or the designation of such series.
There are currently no issued and outstanding shares of preferred stock. The
issuance of Preferred Stock could adversely affect the voting power of holders
of Common Stock and could have the effect of delaying, deferring or preventing a
change in control of the Company.
PURCHASE WARRANTS AND CONVERTIBLE DEBENTURE
As of the date of this Prospectus, the Company has issued and
outstanding a total of 3,965,000 warrants to purchase a like number of shares of
its Common Stock. Of such total, 1,610,000 were sold by the Company and 400,000
were sold by certain selling securityholders in the Company's initial public
offering in May 1995 (the "IPO Warrants"), 100,000 Underwriters' Stock Warrants
and 140,000 Underwriters' Warrants were sold to the underwriter of such
offering, 225,000 warrants (the "Private Placement Warrants") were sold in a
private offering in August 1994, 1,000,000 of the warrants are the Debenture
Warrants and 350,000 of the warrants are the Consultant's Warrants.
The various exercise or conversion prices and the number of shares of
Common Stock purchasable upon the exercise of the warrants and conversion of the
Convertible Debenture are subject to adjustment upon the occurrence of certain
events, including stock dividends, stock splits, combinations or
reclassification of the Common Stock. The warrants and the Convertible Debenture
do not confer upon holders any voting or any other rights as shareholders of the
Company.
The following is a brief summary of certain provisions of the warrants,
but such summary does not purport to be complete and is qualified in all
respects by reference to the actual text of the particular warrant agreement.
IPO WARRANTS
The IPO Warrants are exercisable at a price of $5.75 per share at any
time until May 3, 2003 and are governed by a warrant agreement between the
Company and Continental Stock Transfer & Trust Company as warrant agent.
-24-
<PAGE>
IPO Warrants are subject to redemption by the Company, upon 30 days'
prior written notice, at a price of $.25 per IPO Warrant, if the closing sale or
bid price per share of the Common Stock equals or exceeds 120% of the
then-current exercise price (initially $5.75, subject to adjustment) per share
for the 20 trading days ending on the third trading day prior to the mailing of
the notice of the redemption.
UNDERWRITER'S WARRANTS AND UNDERWRITER'S STOCK WARRANTS
The 140,000 Underwriter's Warrants and the 100,000 Underwriter's Stock
Warrants were issued to designees of the Company's Underwriter in the Company's
initial public offering of securities in May 1995. The 140,000 Underwriter's
Warrants entitle the holders to purchase a like number of underlying warrants
("Underlying Warrants"), which are identical to the IPO Warrants described
above, i.e., each Underlying Warrant entitles the holder to purchase one share
of Common Stock at an exercise price of $5.75 until May 3, 2000, and is subject
to redemption by the Company upon 30 days prior written notice at a price of
$.25 per Underlying Warrant, provided that the closing sale or bid price per
share of the Company's Common Stock equals or exceeds 120% of the then current
exercise price (initially $5.75, subject to adjustment) to the 20 trading days
ending on the third trading day prior to the mailing of the notice of
redemption. The Underwriter's Warrants are exercisable for a like number of
Underlying Warrants at a price of $.375 per warrant and the Underwriter's Stock
Warrants are exercisable for a like number of shares of Common Stock at a price
of $7.50 per share. The Underwriter's Warrants and the Underwriter's Stock
Warrants are exercisable until May 3, 2000.
PRIVATE PLACEMENT WARRANTS
In August 1994, the Company issued an aggregate of 225,000 Private
Placement Warrants as part of the sale of units of its securities. Such warrants
may be exercised no sooner than one year and no later than five years from the
date of their issuance at an exercise price of $5.75 per share. The warrants
provide for adjustment of the number of shares underlying the warrants upon the
occurrence of certain events, as stock dividends, stock splits, or other
reclassifications of the Company's common stock, a consolidation or merger of
the Company, or a liquidating distribution of the Company's common stock.
CONVERTIBLE DEBENTURE AND DEBENTURE WARRANTS ISSUED IN CONNECTION WITH
DEBT RESTRUCTURING
As part of the restructuring of the Company's debt for the Costa Rica
Acquisition, the Company issued a Convertible Debenture to the Seller under said
Acquisition.
The Convertible Debenture is set to mature 12 months from its face date
with interest to accrue at 12% per annum (7% to be paid monthly and 5% at
maturity). The principal amount of the Convertible Debenture is $2 million plus
certain expenses owed or reimbursable to Seller at the issue date of the
Convertible Debenture. At the Company's option, $1 million of this amount may be
extended for an additional period of 12 months with interest to accrue on such
amount at 15% per annum (8% to be paid monthly in arrears and 7% to be paid at
maturity). The Seller has the option, exercisable within six months of the issue
date of the Convertible
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<PAGE>
Debenture, to elect or extend the maturity date of the Convertible Debenture of
an additional 12 months, in which event, commencing on the first day of the 13th
month after the issue date of the Convertible Debenture, one-half of the
principal amount will accrue interest at 12% per annum (7% to be paid monthly in
arrears and 5% to be paid at maturity) and one-half of the principal amount will
accrue interest at 15% per annum (8% to be paid monthly in arrears and 7% to be
paid at maturity).
As further consideration for the above-described debt restructuring,
the Company agreed to issue to the Seller the Debenture Warrants, which consist
of (i) a warrant to purchase 500,000 shares at $1.00 per share, and (ii) a
warrant to purchase 500,000 shares at $5.00 per share. The Debenture Warrants
have a term of five years and provide for cashless exercise and anti-dilution.
The Convertible Debenture is convertible by the Seller into the
Company's common stock at any time after the issue date prior to payment of the
debenture on at least 30 days advance notice to the Company. The conversion
price is equal to the lesser of (1) $.50 per share of common stock or (2) a
price per share of common stock equal to the average of the closing "bid" for
the Company's common stock as reported on NASDAQ for the five trading days
immediately prior to the conversion date. The Company is obligated to reserve
for issuance upon conversion a sufficient number of shares of common stock and
to register such reserved shares and maintain an effective registration
statement for such shares. The Seller has expressed his intent to convert the
Convertible Debenture by December 31, 1997, although such conversion has not yet
taken place.
CONSULTANT'S WARRANTS
The Consultant's Warrants were issued to Meyers, Pollock, Robbins,
Inc., the Company's financial consultant pursuant to a Consultant Agreement
entered into by the Company and said Consultant as of July 24, 1997. The
Consultant's Warrants have subsequently been assigned to certain individuals.
The Consultant's Warrants consist of the following: (i) one-year
warrants for the purchase of 500,000 shares of Common Stock at an exercise price
of $1.00 per share; (ii) one-year warrants for the purchase price of 200,000
shares of Common Stock at an exercise price of $2.50 per share; and (iii)
three-year warrants for the purchase of 100,000 shares of Common Stock at an
exercise price of $2.50 per share. The one-year warrants for the purchase of
450,000 shares of Common Stock at an exercise price of $1.00 per share were
exercised in October 1997, leaving one-year warrants for the purchase of 50,000
shares of Common Stock at an exercise price of $1.00 per share unexercised as of
the date of this Prospectus.
CERTAIN ANTI-TAKEOVER EFFECTS
Florida has enacted legislation that may deter or frustrate takeovers
of Florida corporations. The Florida Control Share Act generally provides that
shares acquired in excess of certain specified thresholds will not possess any
voting rights unless such voting rights are approved by a majority vote of a
corporation's disinterested shareholders. The Florida Affiliated Transactions
Act generally requires supermajority approval by disinterested shareholders of
-26-
<PAGE>
certain specified transactions between a public corporation and holders of more
than 10% of the outstanding voting shares of the corporation (or their
affiliates). Florida law and the Company's Articles of Incorporation also
authorize the Company to indemnify the Company's directors, officers, employees
and agents. Pursuant to such authorization, the Company has entered into
agreements with each of its directors and certain of its officers providing for
indemnification to the fullest extent permitted by law.
Additionally, the authority possessed by the Board of Directors to
issue Preferred Stock could potentially be used to discourage attempts by others
to obtain control of the Company through merger, tender offer, proxy contest or
otherwise by making such attempts more difficult to achieve or more costly. The
Board of Directors may issue Preferred Stock with voting and conversion rights
that could adversely affect the voting power of the holders of Common Stock.
Except as described above, there are no agreements or understandings for the
issuance of Preferred Stock and the Board of Directors has no intention to issue
additional series of Preferred Stock as of the date of this Prospectus.
SHARES ELIGIBLE FOR FUTURE SALE
See "Risk Factors -- Shares Eligible for Future Sale."
LEGAL MATTERS
The validity of the Shares is being passed upon for the Company by
Broad and Cassel, a partnership including professional associations, 201 South
Biscayne Boulevard, Suite 3000, Miami, Florida 33131.
EXPERTS
The financial statements incorporated by reference in this Prospectus
have been audited by BDO Seidman, LLP, independent certified public accountants,
to the extent and for the periods set forth in their report incorporated herein
by reference, and are included in reliance upon such report given upon the
authority of said firm as experts in auditing and accounting.
-27-
<PAGE>
================================================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING MADE HEREBY, AND
ANY INFORMATION OR REPRESENTATION NOT CONTAINED OR INCORPORATED HEREIN MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OTHER THAN THE SHARES DESCRIBED IN THE COVER PAGE HEREOF, OR AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE SHARES OFFERED HEREBY IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALES MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
---------------------
TABLE OF CONTENTS
PAGE
----
AVAILABLE INFORMATION..............................................3
INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE...........................................3
THE COMPANY........................................................4
FORWARD-LOOKING STATEMENTS.........................................8
RISK FACTORS.......................................................9
USE OF PROCEEDS...................................................19
SELLING SHAREHOLDERS..............................................20
PLAN OF DISTRIBUTION..............................................22
DESCRIPTION OF SECURITIES.........................................23
LEGAL MATTERS.....................................................27
EXPERTS...........................................................27
5,899,643 SHARES
TEL-COM WIRELESS CABLE TV
CORPORATION
COMMON STOCK
-----------------------
PROSPECTUS
-----------------------
DECEMBER __, 1997
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The Company estimates that its expenses in connection with this
registration statement will be as follows:
Securities and Exchange Commission registration fee... $ 2,956.39
Legal fees and expenses............................... 20,000.00
Accounting fees and expenses.......................... 2,000.00
Miscellaneous......................................... 5,043.61
--------------
Total........................................ $ 30,000,00
==============
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company has authority under Section 607.0850 of the Florida
Business Corporation Act (the "FBCA") to indemnify its directors and officers to
the extent provided for in the FBCA. The Company's Articles of Incorporation
provide that the Company shall indemnify and may insure its officers and
directors to the fullest extent permitted by law. The Company has also entered
into agreements with each of its directors and executive officers wherein it has
agreed to indemnify each of them to the fullest extent permitted by law.
The provisions of the FBCA that authorize indemnification do not
eliminate the duty of care of a director, and in appropriate circumstances
equitable remedies such as injunctive or other forms of nonmonetary relief will
remain available under Florida law. In addition, each director will continue to
be subject to liability for (a) violations of criminal laws, unless the director
had reasonable cause to believe his conduct was lawful or had no reasonable
cause to believe his conduct was unlawful, (b) deriving an improper personal
benefit from a transaction, (c) voting for or assenting to an unlawful
distribution, and (d) willful misconduct or conscious disregard for the best
interests of the Company in a proceeding by or in the right of the Company to
procure a judgment in its favor or in a proceeding by or in the right of a
shareholder. The statute does not affect a director's responsibilities under any
other law, such as the federal securities laws. The effect of the foregoing is
to require the Company to indemnify the officers and directors of the Company
for any claim arising against such persons in their official capacities if such
person acted in good faith and in a manner that 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.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that in the
opinion of the Securities and Exchange Commission,
II-1
<PAGE>
such indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable.
Pursuant to certain registration rights agreements, each of the Company
and the Selling Shareholders has agreed to indemnify the others and their
directors, officers, agents and representatives (and with respect to the
indemnification by the Company, any underwriters) against certain civil
liabilities that may be incurred in connection with this offering, including
certain liabilities under the Securities Act.
ITEM 16. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
5.1 Opinion of Broad and Cassel.
23.1 Consent of Broad and Cassel (included in Exhibit 5.1 hereto).
23.2 Consent of BDO Seidman, LLP.
24.1 Power of Attorney (see page II-4 of the Registration Statement).
- -----------------
ITEM 17. UNDERTAKINGS.
(a) RULE 415 OFFERING. The undersigned Registrant hereby
undertakes to:
(1) File, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10
(a)(3) of the Securities Act.
(ii) Reflect in the prospectus any facts or events
which, individually or together, represent a fundamental change in the
information in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total dollar value
of securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range may
be reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement.
II-2
<PAGE>
(iii) Include any additional or changed material
information on the plan of distribution.
(2) For determining liability under the Securities Act, treat
each post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial BONA
FIDE offering.
(3) File a post-effective amendment to remove from
registration any of the securities that remain unsold at the end of the
offering.
(b) REQUEST FOR ACCELERATION OF EFFECTIVE DATE. Insofar as
indemnification for liabilities arising under the Securities Act 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 Securities 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 Securities Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of North Miami Beach, State of Florida, on this 4th day
of December, 1997.
TEL-COM WIRELESS CABLE TV
CORPORATION
By:/S/ MELVIN ROSEN
--------------------------------------
Melvin Rosen
Chairman of the Board and President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Melvin Rosen and Samuel H. Simkin
his true and lawful attorneys-in-fact, each acting alone, with full powers of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any or all amendments, including any
post-effective amendments, to this Registration Statement, and to file the same,
with exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact or their substitutes, each acting alone, may lawfully do
or cause to be done by virtue hereof.
II-4
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/S/ MELVIN ROSEN Chairman of the Board and President December 4, 1997
- ----------------------------------- (principal executive officer and principal
MELVIN ROSEN financial and accounting officer)
/S/ SAMUEL H. SIMKIN Vice President, Director December 4, 1997
- -----------------------------------
SAMUEL H. SIMKIN
/S/ DENNIS J. DEVLIN Director December 4, 1997
- -----------------------------------
DENNIS J. DEVLIN
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
5.1 Opinion of Broad and Cassel.
23.2 Consent of BDO Seidman, LLP.
BROAD AND CASSEL
201 South Biscayne Boulevard
Suite 3000
Miami, Florida 33131
December 4, 1997
Tel-Com Wireless Cable TV Corporation
1506 N.E. 162nd Street
North Miami Beach, Florida 33162
Re: TEL-COM WIRELESS CABLE TV CORPORATION
REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
You have requested our opinion with respect to the shares of the
Company's common stock, par value $.001 per share (the "Common Stock"), included
in the Registration Statement on Form S-3 (the "Form S-3") filed with the U.S.
Securities and Exchange Commission pursuant to the Securities Act of 1933, as
amended (the "Securities Act").
As counsel to the Company, we have examined the original or certified
copies of such records of the Company, and such agreements, certificates of
public officials, certificates of officers or representatives of the Company and
others, and such other documents as we deem relevant and necessary for the
opinions expressed in this letter. In such examination, we have assumed the
genuineness of all signatures on original documents, and the conformity to
original documents of all copies submitted to us as conformed or photostatic
copies. As to various questions of fact material to such opinions, we have
relied upon statements or certificates of officials and representatives of the
Company and others.
Based on, and subject to the foregoing, we are of the opinion that the
issued and outstanding shares of Common Stock being registered on behalf of the
Selling Shareholders as described in the Form S-3 have been duly and validly
issued, and are fully paid and non-assessable. Furthermore, we are of the
opinion that the shares of Common Stock being registered in the Form S-3 that
are issuable due to or upon exercise or conversion of the Company's warrants,
shall, upon such issuance as described in the Form S-3, be duly and validly
issued and fully paid and nonassessable.
<PAGE>
Tel-Com Wireless Cable TV Corporation
December 4, 1997
Page 2
In rendering this opinion, we advise you that members of this Firm are
members of the Bar of the State of Florida, and we express no opinion herein
concerning the applicability or effect of any laws of any other jurisdiction,
except the securities laws of the United States of America referred to herein.
This opinion has been prepared and is to be construed in accordance
with the Report on Standards for Florida Opinions, dated April 8, 1991, issued
by the Business Law Section of The Florida Bar (the "Report"). The Report is
incorporated by reference into this opinion.
We hereby consent to the filing of this opinion as an exhibit to the
Form S-3. We also consent to the use of our name under the caption "Legal
Matters" in the Prospectus constituting part of the Form S-3. In giving such
consent, we do not thereby admit that we are included within the category of
persons whose consent is required under Section 7 of the Securities Act, or the
rules and regulations promulgated thereunder.
Very truly yours,
/s/ Broad and Cassel
------------------------
BROAD AND CASSEL
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Tel-Com Wireless Cable TV Corporation
North Miami Beach, Florida
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our report dated April 4,
1997 relating to the consolidated financial statements of Tel-Com Wireless Cable
TV Corporation appearing in the Company's Annual Report on Form 10-KSB for the
year ended December 31, 1996. Our report contains an explanatory paragraph
regarding the Company's ability to continue as a going concern.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
/s/ BDO SEIDMAN, LLP
------------------------
BDO Seidman, LLP
Orlando, Florida
December 3, 1997
