<PAGE>
As filed with the Securities and Exchange Commission on July 31, 1996
(Registration No. 33-85396)
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C., 20549
--------------------------
POST EFFECTIVE AMENDMENT NO. 3
TO
FORM S-1
ON
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
THREE-L ENTERPRISES, INC.
(Exact name of Registration specified in charter)
DELAWARE 6770 72-1265159
- ------------------------ -------------------- ----------------------
(State of Incorporation) (Primary Industrial (I.R.S. Employer
Classification Code) I.D. Number)
1109 ANDREWS
METAIRIE, LOUISIANA 70005
TEL: (504) 831-8760
- --------------------------------------------------------------------------------
(Address, including zip code of principal place of business and telephone
number, including area code of Registrant's principal executive offices.)
HERMAN K. WATSKY
1109 ANDREWS
METAIRIE, LOUISIANA 70005
TEL: (504) 831-8760
WITH COPIES TO:
JOHN B. WILLS, ESQ.
410 SEVENTEENTH STREET, SUITE 1940
DENVER, COLORADO 80202
(303) 628-0747
FAX (303) 592-1846
- --------------------------------------------------------------------------------
(Name, address, including zip code and telephone number, including
area code of agents for service.)
Approximate date of commencement date or proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities act of
1933, check the following box [ ].
The Exhibit Index for this Registration Statement begins on sequential page
number .
- --------------------------------------------------------------------------------
<PAGE>
CROSS REFERENCE SHEET
FORM S-4
ITEM NO. CAPTION SECTIONS IN PROSPECTUS
- -------- ------- ------------------------
A. INFORMATION ABOUT THE TRANSACTION
1 Forefront of the Registration
Statement and Outside Front Cover
Page of Prospectus. . . . . . . . . . . . Outside Front Cover Page
2 Inside Front and Outside Back Cover
Pages of Prospectus . . . . . . . . . . . Inside Front Cover Pages
(i)(ii); Table of Contents
3 Risk Factors, Ratio of Earnings to
Fixed Charges and Other Information . . . Risk Factors; Prospectus
Summary
4 Terms of the Transaction. . . . . . . . . Terms of the Transaction
5 Pro Forma Financial Information . . . . . Not Applicable
6 Material Contracts with Company Being
Acquired. . . . . . . . . . . . . . . . . Not Applicable
7 Additional Information Required for
Reoffering by Persons and Parties
Deemed to Be Underwriters . . . . . . . . Not Applicable
8 Interest of Named Experts and Counsel . . Experts
9 Disclosure of Commission Position
on Indemnification for Securities Act
Liabilities..............................Statement as to Indemnification
B. INFORMATION ABOUT THE REGISTRANT
10 Information with Respect to S-3
Registrants . . . . . . . . . . . . . . . Not Applicable
11 Incorporation of Certain Information by
Reference . . . . . . . . . . . . . . . . Not Applicable
12 Information with Respect to S-2 or S-3
Registrants . . . . . . . . . . . . . . . Not Applicable
13 Incorporation of Certain Information by
Reference . . . . . . . . . . . . . . . . Not Applicable
<PAGE>
14 Information with Respect to Registrants
Other Than S-3 or S-2 Registrants . . . . Summary; Selected Financial
Data; Three-L Enterprises,
Inc.; Description of
Securities; Dividend Policy;
Material Changes; Three-L's
Management's Discussion and
Analysis of Financial
Condition and Results of
Operations
C. INFORMATION ABOUT COMPANY BEING
ACQUIRED
15 Information with Respect to S-3
Companies . . . . . . . . . . . . . . . . Not Applicable
16 Information with Respect to S-2 or S-3
Companies . . . . . . . . . . . . . . . . Not Applicable
17 Information with Respect to Companies
Other Than S-3 or S-2 Companies . . . . . Summary; Selected Financial
Data; Intelicom International
Corporation; Intelicom's
Management's Discussion and
Analysis
D. VOTING AND MANAGEMENT INFORMATION
18 Information if Proxies, Consents or
Authorizations are to be Solicited. . . . The Special Meeting
19 Information if Proxies, Consents or
Authorizations are not to be Solicited or
in an Exchange Offer. . . . . . . . . . . Not Applicable
20 Indemnification of Directors and Officers
............................................Indemnification of Directors
and Officers
21 Exhibits and Financial Statement
Schedules . . . . . . . . . . . . . . . . Exhibits and Financial
Statement Schedules
22 Undertakings. . . . . . . . . . . . . . . Undertakings
3
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THREE-L ENTERPRISES, INC.
PROSPECTUS AND PROXY STATEMENT
------------------
SPECIAL MEETING OF STOCKHOLDERS OF THREE-L ENTERPRISES, INC.
TO BE HELD ON SEPTEMBER 10, 1996
This Proxy Statement/Prospectus ("Proxy Statement/Prospectus") is being
furnished to stockholders of Three-L Enterprises, Inc., a Delaware corporation
("Three-L"), in connection (i) with the reconfirmation of their purchase of
shares in Three-L and (ii) the solicitation of proxies by the Board of Directors
of Three-L for use at the Special Meeting of Stockholders of Three-L (the
"Three-L Special Meeting"), including any adjournments or postponements thereof.
The Special Meeting is scheduled to be held on September 10, 1996.
RECONFIRMATION OFFER. Purchasers of shares in Three-L's public offering
("Stockholders") are being requested to reconfirm their investment (the
"Reconfirmation Offer") in Three-L based upon the information in this Proxy
Statement/Prospectus concerning the proposed Stock Exchange with Intelicom
International Corporation ("Intelicom"). Under Rule 419 adopted under the
Securities Act of 1933, as amended, (the "Act"), the shares of Common Stock sold
by Three-L in its initial public offering (the "Deposited Securities") and the
proceeds from the sale of such shares, less certain permitted withdrawals (the
"Deposited Funds"), were placed in escrow pending the Reconfirmation Offer. The
Deposited Securities and the Deposited Funds may be released to the Stockholders
and to Three-L, respectively, only if investors representing at least 80% of the
gross proceeds of the public offering (a total of 25,646 shares sold in the
offering) reconfirm their investment in Three-L. Upon Three-L's certification
to the escrow agent that the Stock Exchange has been consummated in accordance
with Rule 419, the Deposited Securities and Deposited Funds may be released to
Three-L. If the holders of at least 25,646 shares do not reconfirm their
investment in Three-L, the Stock Exchange Proposal described below will not be
consummated, and the management of Three-L will attempt to locate another
business opportunity for Three-L. If a Stockholder determines not to reconfirm
the investment in Three-L Common Stock, or if a Stockholder's response to the
Reconfirmation Offer is not received by Three-L on or before the Special
Meeting, such Stockholder's subscription for Three-L Common Stock, together with
interest thereon, will be refunded to such Stockholder.
STOCK EXCHANGE AND RELATED MATTERS. Holders of Three-L Common Stock
will also have the opportunity to consider and vote upon a proposal (the
"Proposal") to approve and adopt the Stock Exchange Agreement between Three-L
and Intelicom, the issuance of 1,420,687 shares of Three-L Common Stock (the
"Shares" and "Share Issuance") to the three shareholders of Intelicom, pursuant
to which Intelicom will become a wholly owned subsidiary of Three-L, and the
change of Three-L's name to "Intelicom Corporation." Holders of shares of
Three-L Common Stock entitled to vote also will consider and vote upon any other
matter that may properly come before the Three-L Special Meeting or any
adjournments or postponements thereof.
This Proxy Statement/Prospectus constitutes a prospectus of Three-L with
respect to the Reconfirmation Offer.
AN INVESTMENT IN INTELICOM'S SECURITIES INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" AT PAGE 19 OF THIS PROXY STATEMENT/PROSPECTUS.
The Three-L Common Stock is not listed for trading or quoted in the
over-the-counter market and not reported through the National Quotation Bureau's
"pink sheets." As of the date of this Proxy Statement/Prospectus there were no
bid or ask quotations for the Three-L Common Stock. See "DESCRIPTION OF THREE-L
COMMON STOCK."
This Proxy Statement/Prospectus, the accompanying forms of proxy and the
other enclosed documents are first being mailed to Stockholders of Three-L on or
about August 2, 1996.
------------------
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 COM-
MISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS JOINT
PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
----------------
The date of this Proxy Statement/Prospectus is August , 1996.
4
<PAGE>
TABLE OF CONTENTS
Page
----
AVAILABLE INFORMATION..........................................................8
SUMMARY........................................................................9
The Companies...........................................................9
The Special Meeting....................................................10
The Share Exchange.....................................................11
SELECTED FINANCIAL DATA
OF THREE-L ENTERPRISES, INC............................................14
SELECTED CONSOLIDATED FINANCIAL DATA
OF INTELICOM INTERNATIONAL, INC........................................15
SELECTED PRO FORMA CONSOLIDATED FINANCIAL DATA................................16
RISK FACTORS..................................................................18
THE SPECIAL MEETING...........................................................20
Matters To Be Considered at the Special Meeting........................21
Vote Required..........................................................21
Voting of Proxies......................................................22
Revocability of Proxies................................................22
Appraisal Rights.......................................................22
Solicitation of Proxies................................................22
Market for Common Stock................................................23
Resale of Three-L Common Stock.........................................23
INTELICOM INTERNATIONAL CORPORATION...........................................23
General................................................................23
Industry Overview and Competition......................................24
Plan of Operation and Description of Business..........................25
Major Contracts........................................................26
Products and Services..................................................26
Major Carriers and Marketing Strategies................................27
Government Regulation..................................................28
Employees..............................................................29
Properties.............................................................30
Litigation.............................................................30
Related Party Transactions.............................................30
THREE-L ENTERPRISES, INC.
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS........31
THREE-L ENTERPRISES, INC.
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
May 31, 1996...............................................32
5
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THREE-L ENTERPRISES, INC.
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF EARNINGS
Five Months Ended May 31, 1996................................33
THREE-L ENTERPRISES, INC.
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF EARNINGS
Year Ended December 31, 1995..................................34
THREE-L ENTERPRISES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS..................................................35
POST-STOCK EXCHANGE PROFILE AND STRATEGY.....................................36
Business..............................................................36
Management............................................................36
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS.........................................38
Three-L...............................................................38
Intelicom.............................................................38
DESCRIPTION OF CAPITAL STOCK OF THREE-L......................................39
TRANSFER AGENT...............................................................40
DESCRIPTION OF CAPITAL STOCK OF INTELICOM....................................40
EXPERTS......................................................................40
LEGAL OPINIONS...............................................................41
OTHER INFORMATION AND STOCKHOLDER PROPOSALS..................................41
THREE-L MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.........................................................42
General...............................................................42
The Intelicom Stock Exchange..........................................42
Results of Operations.................................................42
INTELICOM'S MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.................................................43
Overview..............................................................43
Results of Operations.................................................43
Liquidity and Capital Resources.......................................44
SELLING SHAREHOLDERS.........................................................46
Selling Shareholder Plan of Distribution..............................46
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF THREE-L ENTERPRISES, INC......S-1
INDEX TO CONSOLIDATED FINANCIAL STATEMENT OF INTELICOM INTERNATIONAL
CORPORATION..........................................................F-1
ANNEX I.....................................................................A-1
6
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PROXY................................................................A-1
ANNEX II....................................................................A-3
STOCK PURCHASE AGREEMENT ............................................A-3
7
<PAGE>
NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROXY STATEMENT/PROSPECTUS IN CONNECTION WITH THE OFFERING OF SECURITIES MADE
HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THREE-L OR INTELICOM. THIS PROXY
STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF
AN OFFER TO BUY, ANY SECURITIES, NOR DOES IT CONSTITUTE THE SOLICITATION OF A
PROXY, IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM IT IS NOT LAWFUL TO
MAKE ANY SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY
OF THIS PROXY STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THREE-L OR INTELICOM SINCE THE DATE HEREOF OR
THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
AVAILABLE INFORMATION
Three-L is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith must file reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). The reports, proxy
statements and other information filed by Three-L with the Commission can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and
should be available at the Commission's Regional Offices at 7 World Trade
Center, 13th Floor, New York, New York 10048, and 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such material also can be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.
Three-L has filed with the Commission a Registration Statement on Form
S-1 (together with any amendments thereto, the "Registration Statement") under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the Three-L Common Stock to be issued in the Share Exchange. This Proxy
Statement/Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits thereto. Such additional information
may be obtained from the Commission's principal office in Washington, D.C.
Statements contained in this Proxy Statement/Prospectus or in any document
incorporated in this Proxy Statement/Prospectus by reference as to the contents
of any contract or other document referred to herein or therein are not
necessarily complete, and in each instance reference is made to the copy of such
contract or other document filed as an exhibit to the Registration Statement or
such other document, each such statement being qualified in all respects by such
reference.
8
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SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE OR
INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT/PROSPECTUS. REFERENCE IS MADE
TO, AND THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, THE MORE DETAILED
INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY
STATEMENT/PROSPECTUS AND THE ANNEXES HERETO. AS USED HEREIN, UNLESS THE CONTEXT
OTHERWISE REQUIRES, "THREE-L" MEANS THREE-L ENTERPRISES, INC., AND "INTELICOM"
MEANS INTELICOM INTERNATIONAL CORPORATION. CERTAIN TELECOMMUNICATIONS INDUSTRY
TERMS USED HEREIN ARE DEFINED IN THE GLOSSARY INCLUDED HEREIN.
--------------------
STOCKHOLDERS OF THREE-L ARE URGED TO READ THIS PROXY
STATEMENT/PROSPECTUS AND THE ANNEXES HERETO IN THEIR ENTIRETY. STOCKHOLDERS
SHOULD CAREFULLY CONSIDER THE INFORMATION SET FORTH BELOW UNDER THE HEADING
"RISK FACTORS."
--------------------
THE COMPANIES
THREE-L ENTERPRISES, INC.
Three-L was formed on March 18, 1994. The primary purpose of the
Company has been to acquire an interest in one or more Business Combinations.
Three-L has had limited operations to date. Three-L has attempted to acquire a
participation interest in one or more business opportunities. The acquisition
of Intelicom will entail a change in the management and control of Three-L.
After the merger has taken place, the surviving entity will be Three-L; however,
Intelicom's management will replace the existing Three-L directors and
thereafter manage the operations of Three-L. The Three-L public offering was
characterized as a "blank check" due to the fact that the company is a
development stage company that issued a penny stock and that had no specific
business plan or purpose or had indicated that its business plan or purpose was
to merge with or be acquired by an unidentified company. A penny stock includes
most equity securities not excluded pursuant to Commission rule-making. Three-L
had no specific business in mind and did not restrict its search to any
particular industry.
Three-L is a Delaware corporation with executive offices located at 1109
Andrews, Metairie, Louisiana 70005, and its telephone number at that address is
(504) 831-8760.
INTELICOM INTERNATIONAL CORPORATION
Intelicom, a Florida corporation, is a national telecommunications,
marketing and consulting firm with headquarters and central operations in
Clearwater, Florida. Intelicom provides an array of communications products and
services to business users of all sizes, utilizing state-of-the-art digital
switching technology to offer world-wide transmission of voice, facsimile
documents, and data. Intelicom uses independent sales consultants to sell its
services through direct sales efforts. Revenues derived from customers signed
by Company's agents constituted approximately 87% and 95% of Intelicom's total
revenues for the five months ended May 31, 1996 and year ended December 31,
1995, respectively. The independent sales consultants receive commissions based
upon the service or product provided. Intelicom's principal business strategy
is to develop its network of independent sales consultants selling Intelicom's
services; acquisition of customer accounts or businesses of other resellers; and
the development of additional carrier relationships and additional products to
expand Intelicom's target market and product mix while improving profit margin
potential.
Intelicom's corporate offices are presently located at 28050 U.S.
Highway 19 North, Suite 202, Clearwater, FL 34621. Intelicom's telephone
number is (813) 797-9000.
9
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MANAGEMENT
At the Closing of the Stock Exchange Agreement, Three-L's Board of
Directors will resign, and two new directors that have been designated by
Intelicom (the "Intelicom Designees") will be appointed to fill the newly
created vacancies. Intelicom has informed Three-L that David Kanstoroom and
David Spezza are the Intelicom Designees. The Intelicom Designees currently are
directors of Intelicom. The terms of all directors of Three-L, including the
Intelicom Designees, will expire at the next annual meeting of Stockholders of
Three-L. See "POST STOCK EXCHANGE PROFILE AND STRATEGY - Management."
THE SPECIAL MEETING
PURPOSE OF THE MEETING
This Proxy Statement/Prospectus is being sent to the Stockholders
pursuant to the requirements of Rule 419 of Regulation C in connection with the
Reconfirmation Offer. Under Rule 419, the Deposited Securities and the
Deposited Funds were placed in escrow pending the Reconfirmation Offer. The
Reconfirmation Offer is made to the Stockholders through this Proxy
Statement/Prospectus, which is a post-effective amendment to Three-L's
Registration Statement. Within five days after the effective date of this Proxy
Statement/Prospectus, Three-L is required to furnish investors with the
prospectus, i.e. this Proxy Statement/Prospectus, which sets forth the terms of
the Reconfirmation Offer and information regarding the proposed acquisition
candidate (i.e. Intelicom) and its business, including audited financial
statements. According to Rule 419, Stockholders must have no fewer than 20 and
no more than 45 business days from the date of this Proxy Statement/Prospectus
to decide to reconfirm their investment and remain an investor or alternately,
require the return of their investment. Any Stockholder not making any decision
within said 45 day period will automatically have his investment funds returned.
Rule 419 further provides that if Three-L does not complete an acquisition
meeting the specific criteria of Rule 419 within 18 months of the date of its
original registration statement (i.e. by October 13, 1996), all of the Deposited
Funds in the Deposited Funds Escrow Account must be returned to the
Stockholders. The Deposited Securities and the Deposited Funds may be released
to the Stockholders and to Three-L, respectively, only if Stockholders
representing at least 80% of the gross proceeds of the public offering (a total
of 25,646 shares sold in the public offering) reconfirm their investment in
Three-L. Upon Three-L's certification to the escrow agent that the Stock
Exchange has been consummated in accordance with Rule 419, the Deposited
Securities and Deposited Funds may be released to Three-L. If the holders of at
least 25,646 shares do not reconfirm their investment in Three-L, the Stock
Exchange Proposal described below will not be consummated, and the management of
Three-L will attempt to locate another business opportunity for Three-L within
the remaining time provided under Rule 419. If a Stockholder determines not to
reconfirm the investment in Three-L Common Stock, or if a Stockholder's response
to the Reconfirmation Offer is not received by Three-L on or before the Special
Meeting, such Stockholder's subscription for Three-L Common Stock, together with
interest thereon, will be refunded to such Stockholder. See "THE SPECIAL
MEETING - Matters to be Considered at the Special Meeting - Reconfirmation
Offer."
TIME AND PLACE
The Three-L Special Meeting will be held at 11:00 a.m., Louisiana time,
on September 10, 1996, at 1109 Andrews, Metairie, Louisiana 70005.
MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING
At the Three-L Special Meeting, holders of Three-L's Common Stock will
have the opportunity (i) to reconfirm their investment in Three-L and (ii) to
consider and vote upon a proposal (the "Proposal") to approve the Stock Exchange
Agreement and the issuance of 1,420,687 shares of Three-L Common Stock (the
"Stock Issuance") in connection with the Stock Exchange Agreement, a conformed
copy of which appears as Annex II to this Proxy Statement/Prospectus, and to
change the name of Three-L to "Intelicom Corporation". The holders of shares of
Three-L Common Stock entitled to vote also will consider and vote upon any other
matter that may properly come before the Three-L Special Meeting or any
adjournments or postponements thereof.
10
<PAGE>
VOTES REQUIRED
The Reconfirmation Offer must be accepted by holders of at least 80% of
the gross proceeds of the public offering (a total of 25,646 shares sold in the
offering). If the holders of at least 25,646 shares do not reconfirm their
investment in Three-L, the Proposal will not be consummated, and the management
of Three-L will attempt to locate another business opportunity for Three-L. If a
Stockholder determines not to reconfirm his/her investment in Three-L Common
Stock, or if a Stockholder's response to the Reconfirmation Offer is not
received by Three-L on or before the Special Meeting, or by September 10, 1996
(45 days from the date of this Proxy Statement/Prospectus), whichever occurs
later, such Stockholder's subscription for Three-L Common Stock, together with
interest thereon, will be refunded to such Stockholder.
The approval of the Proposal requires the affirmative vote of a majority
of the votes cast on the Proposal, provided that the total votes cast on the
Proposal represent a majority of the outstanding shares of Three-L Common Stock
entitled to vote thereon.
Abstentions will have the effect of votes against the Proposal. See
"THE SPECIAL MEETING - Votes Required."
HOLDERS ENTITLED TO VOTE
Each purchaser in Three-L's initial public offering ("Stockholder") is
entitled to respond to the Reconfirmation Offer and the vote on the Proposal at
the Special Meeting on September 10, 1996. There are presently outstanding
76,381 shares of Three-L Common Stock.
SECURITY OWNERSHIP OF MANAGEMENT
As of May 30, 1996, directors and executive officers of Three-L and
their affiliates were beneficial owners of an aggregate of 44,000 shares
(approximately 57.6%) of the outstanding shares of Three-L Common Stock. The
directors and executive officers of Three-L who are also Stockholders of Three-L
have committed to vote their shares of Three-L Common Stock in favor of the
Proposal.
THE SHARE EXCHANGE
TERMS OF SHARE EXCHANGE
If the Proposal is approved by the Stockholders, at the Closing, Three-L
will issue 1,420,687 shares of its Common Stock to the three shareholders of
Intelicom in exchange for the 900 shares of Intelicom currently held by them,
which represents all of Intelicom's issued and outstanding Common Stock. As a
result, Intelicom will become a wholly owned subsidiary of Three-L, which will
then be known as "Intelicom Corporation." The shares issued to the Intelicom
shareholders will be restricted securities as that term is defined in Rule 144
adopted under the Securities Act of 1933, as amended ("the Act"), and hence will
not be able to be sold for two years from the date of Closing and except in
accordance with the terms of Rule 144.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of Three-L believes that the terms of the Share
Exchange are fair to and advisable and in the best interests of the Three-L
Stockholders, and have unanimously approved the Share Exchange Agreement and the
Share Issuance, and the name change. No fairness opinion has been or will be
sought by the Board of Directors due to the high cost and lack of available
funds for such an opinion.
For a discussion of the factors considered by the Board of Directors in
selecting Intelicom please refer to other sections of this Proxy
Statement/Prospectus. See "Intelicom International Corporation" and "Three-L
Management's Discussion and Analysis of Financial Condition and Results of
Operations."
11
<PAGE>
THE BOARD OF DIRECTORS OF THREE-L UNANIMOUSLY RECOMMENDS THAT THE
HOLDERS OF THREE-L COMMON STOCK APPROVE THE PROPOSAL.
EFFECTIVE TIME OF THE STOCK EXCHANGE
The Stock Exchange will become effective upon the Closing. The Closing
will occur as soon as practicable following the Special Stockholders Meeting.
INTERESTS OF CERTAIN PERSONS IN THE MERGER AND CONFLICTS OF INTEREST
The two executive officers and directors and one non-officer/director
shareholder of Intelicom hold all of the issued and outstanding shares of
Intelicom (a total of 900 shares), and hence they will receive all 1,420,687
shares of Three-L Common Stock to be issued pursuant to the Stock Exchange.
At the Closing, all of the current directors of Three-L will resign and
be replaced by the two current directors of Intelicom (the "Intelicom
Designees"). The terms of all directors of Three-L, including the Intelicom
Designees, will expire at the next annual meeting of Stockholders of Three-L.
CONDITIONS TO THE STOCK EXCHANGE
The obligations of Three-L and Intelicom to consummate the Stock
Exchange and Share Issuance are subject to various conditions, including, among
other things, the effectiveness of this Registration Statement, obtaining the
requisite approval of the Stockholders of the Reconfirmation Offer and the
Proposal, and the absence of any order or other legal restraint or prohibition
preventing the consummation of the Stock Exchange. The obligation of Three-L to
consummate the Stock Exchange is subject to the fulfillment or waiver of various
additional conditions. The obligation of Intelicom to consummate the Stock
Exchange is subject to the fulfillment or waiver of various additional
conditions, including, among other things, that Three-L's Board of Directors
shall have taken all necessary and appropriate actions to cause the vacancies
created by the resignation of the current Three-L Directors to be filled at the
Closing by the election of the Intelicom Designees. See "POST-STOCK EXCHANGE
PROFILE AND STRATEGY - Management."
TERMINATION OF THE STOCK EXCHANGE AGREEMENT
The Stock Exchange Agreement may be terminated at any time prior to the
Effective Time (i) by mutual consent of Three-L and Intelicom, (ii) by either
Three-L or Intelicom (a) if any court or other governmental entity shall have
issued a final and nonappealable order, decree or ruling or taken any other
final and nonappealable action permanently enjoining or otherwise prohibiting
the Stock Exchange, (b) if the Stock Exchange shall not have been consummated on
or before December 31, 1996, or (c) if the requisite number of Stockholders do
not accept the Reconfirmation Offer or the Proposal is not approved by a
majority of the Three-L Stockholders.
NO RIGHTS OF APPRAISAL FOR DISSENTING SHAREHOLDERS OF THREE-L
In accordance with the General Corporation Law of the State of Delaware
(the "DGCL"), dissenting Stockholders of Three-L will not be entitled to
appraisal rights in connection with the Stock Exchange. Stockholders who do not
approve of the Proposal should not accept the Reconfirmation Offer, which will
cause Three-L to refund the amount they paid for the Three-L Common Stock in the
public offering, together with interest thereon. "THE SPECIAL MEETING -
Appraisal Rights."
RISK FACTORS OF STOCK EXCHANGE
In determining whether to approve the transactions pursuant to the Stock
Exchange Agreement, Three-L Stockholders should consider that there will be a
change in control as a result of the approval of the Stock Exchange Agreement,
the number of shares to be issued to Intelicom was determined arbitrarily by
negotiations between the management of Three-L and Intelicom, that no market
presently exists for the Three-L Common Stock at the Effective Date of this
Proxy Statement/Prospectus and at the date of the Special Meeting, and there can
be no
12
<PAGE>
assurance that a market will develop or be sustained, even if the Stock Exchange
is consummated. The Closing will occur as soon as practicable following the
Special Meeting and the satisfaction or waiver of the other conditions set forth
in the Stock Exchange Agreement. See "RISK FACTORS."
OTHER SIGNIFICANT CONSIDERATIONS
Stockholders of Three-L should also consider that the number of shares
to be issued to Intelicom Stockholders is a fixed number, i.e. 1,420,687 shares.
Based upon 76,381 shares of Three-L Common Stock outstanding, upon approval of
the Proposal by the Three-L Stockholders and consummation of the Share Exchange,
there will be 1,527,620 shares of Three-L outstanding (including 30,552 shares
issuable to the finder of the transaction). The 1,420,687 shares of Three-L
Common Stock issued to shareholders of Intelicom pursuant to the Stock Exchange
Agreement will comprise approximately 93% of the total number of shares of
Three-L Common Stock then outstanding. Therefore, the issuance of the shares to
Intelicom's Stockholders will significantly dilute the Three-L Stockholders.
RISK FACTORS OF INTELICOM
Shareholders of Three-L should also consider the risks associated with
Intelicom and the telecommunications industry including dependence on
management, dependence on services offered by carriers, competition, dependence
on sales agents, customer attrition and recent telecommunications legislation.
See "Risk Factors."
FINAL USE OF PROCEEDS
The final proceeds from the public offering when released from escrow if
the Stock Exchange is consummated and shareholders elect to remain shareholders
of Three-L is anticipated to be as follows: repayment of an Officer loan to the
Company of $7,500; legal fees of $10,000, accounting fees of $15,000, transfer
agent fees of $1,500 and the balance of $99,000 will be applied to Intelicom's
working capital.
FINDER'S FEE
In connection with the proposed Stock Exchange, Star Tel, Inc. of New
Orleans, Louisiana, acted as a finder in this transaction and will receive
30,552 shares of Three-L's Common Stock at the consummation of the Stock
Exchange. Star-Tel, Inc. was instrumental in the introduction of the management
of Intelicom to the management of Three-L and further provided a business plan
of Intelicom's operations for review by the Three-L management. None of the
Three-L Officers and Directors nor the Officers and Directors of Intelicom are
affiliates of Star Tel, Inc.
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<PAGE>
SELECTED FINANCIAL DATA
OF THREE-L ENTERPRISES, INC.
The following table sets forth selected historical financial data of
Three-L and has been derived from and should be read in conjunction with the
audited financial statements of Three-L for the period March 18, 1994
(Inception) through December 31, 1994 and for the year ended December 31, 1995,
including the respective notes thereto, included herein. In the opinion of
management, all adjustments, consisting of normal recurring accruals, considered
necessary for a fair presentation have been included in the unaudited interim
data. Unaudited interim results are not necessarily indicative of results which
may be expected for future periods.
<TABLE>
<CAPTION>
BALANCE SHEET
As and for the Year Ended Five Months Ended
December 31, May 31,
------------------------- ------------------------
Unaudited Unaudited
1995 1994 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current Assets $ 395 $ 8,147 $ 340 $ 8,731
Other Assets $ 169,935 $ 11,796 $ 183,701 $ 155,862
Total Assets $ 170,330 $ 19,943 $ 184,041 $ 164,593
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities $ 9,990 $ 0 $ 30,587 $ 1,032
Escrowed Common Stock $ 133,110 -- $ 133,110 $ 133,110
Stockholders' Equity $ 27,230 $ 19,943 $ 20,344 $ 30,451
Total Liabilities & Stockholders' Equity $ 170,330 $ 19,943 $ 184,041 $ 164,593
</TABLE>
14
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
OF INTELICOM INTERNATIONAL, INC.
The following table sets forth selected consolidated historical financial
data of Intelicom and has been derived from and should be read in conjunction
with the audited consolidated financial statements of Intelicom for each of the
two fiscal years ended December 31, 1994 and 1995, including the respective
notes thereto, included herein. In the opinion of management, all adjustments,
consisting of normal recurring accruals, considered necessary for a fair
presentation have been included in the unaudited interim data. Unaudited
interim results are not necessarily indicative of results which may be expected
for future periods.
<TABLE>
<CAPTION>
As of and for the Five Months Ended
Year Ended December 31, May 31,
--------------------------------------- ------------------------
Unaudited Unaudited
1995 1994 1993 1996 1995
-------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Sales $ 1,691,121 $ 840,493 $ 117,288 $ 858,408 $ 673,436
Earnings from operations 82,966 102,825 1,431 36,269 62,511
Net Earnings 82,966 102,825 1,431 25,280 62,511
Net earnings per common
share $ 92.18 $ 1.14 $ 0.01 $ 28.09 $ 69.46
Shares Outstanding 900 90,000 100,000 900 900
BALANCE SHEET DATA:
</TABLE>
<TABLE>
<CAPTION>
As of and for the Five Months Ended
Year Ended December 31, May 31,
--------------------------------------- -----------------------
1995 1994 1993 1996 1995
--------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
Cash $ 43,639 $ 38,515 $ 3,075 $ 61,334 $ 49,606
Working capital 106,937 67,781 (17,210) 127,873 133,844
Total assets 359,952 256,460 52,132 409,619 358,110
Redeemable preferred stock N/A N/A N/A N/A N/A
Stockholders' equity 156,453 102,556 2,002 181,733 165,067
</TABLE>
15
<PAGE>
SELECTED PRO FORMA CONSOLIDATED FINANCIAL DATA
The following table sets forth selected unaudited pro forma consolidated
financial data of Three-L giving effect to the Stock Exchange and reflecting
certain assumptions described in the notes to the unaudited pro forma
consolidated condensed financial statements. The Selected Pro Forma
Consolidated Statements of Earnings Data set forth below assume the Stock
Exchange was consummated as of December 31, 1993, and the Selected Pro Forma
Consolidated Balance Sheet Data set forth below assume the Stock Exchange was
consummated as of December 31,1993. The pro forma consolidated financial data
is presented for illustrative purposes only and is not necessarily indicative of
the operating results or financial position that would have occurred if the
Stock Exchange had been consummated on the dates indicated, nor is it
necessarily indicative of future operating results or financial position. The
pro forma consolidated financial data has been derived from and should be read
in conjunction with the unaudited pro forma consolidated condensed financial
statements, including the notes thereto, appearing elsewhere in this Prospectus,
and have been prepared to reflect the acquisition of Three-L by Intelicom as of
December 31, 1993 after giving effect to the pro forma adjustments described in
the notes. Since the present shareholders of Intelicom own approximately 93% of
Three-L after the acquisition, Intelicom in substance has acquired Three-L. See
"UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS."
PRO FORMA CONSOLIDATED STATEMENTS OF EARNINGS DATA
As of and for the Years Five Months
Ended December 31, Ended May 31,
----------------- ------------
1995 1996
-------- -------
Revenues:
Commissions $1,540,850 $ 748,891
Fees 146,461 106,494
Interest 3,810 3,023
Operating expenses: 1,615,658 829,025
Income before income taxes 75,463 29,383
Provision for income taxes 22,639 10,989
Net earnings from continuing operations 52,824 18,394
Earnings per share
Shares outstanding 1,527,620 1,527,620
Net earnings from continuing
operations per share .03 .01
Redeemable preferred stock -- --
Stockholders' equity 226,257 230,885
See notes accompanying the unaudited Pro Forma Consolidated Condensed Financial
Statements included elsewhere in this Proxy Statement/Prospectus.
16
<PAGE>
PRO FORMA CONSOLIDATED BALANCE SHEET DATA
Five Months
Ended May 31,
---------------
1996
--------
ASSETS
Current assets:
Cash and cash equivalents $ 194,784
Receivables 294,425
Notes receivable - related parties --
Other current assets --
-----------
Total current assets 489,209
Net property and equipment 43,860
Other assets 10,000
----------
$ 543,069
----------
----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable 41,353
Accrued and other liabilities 260,332
Notes Payable 10,499
----------
Total current liabilities 312,184
----------
Other long-term liabilities --
----------
Long-term debt --
----------
Deferred income taxes --
----------
Stockholders' equity:
Common Stock 152
Additional paid-in capital 205,453
Retained earnings (deficit) 25,280
Treasury stock, at cost --
----------
Total stockholders' equity 230,885
----------
$ 543,069
----------
----------
See notes accompanying the unaudited Pro Forma Consolidated Condensed Financial
Statements included elsewhere in this Proxy Statement/Prospectus.
17
<PAGE>
RISK FACTORS
The Securities offered hereby are speculative and involve a high degree of
risk. Therefore, shareholders of Three-L and Intelicom should read this entire
Proxy Statement/Prospectus and carefully consider, among others, the following
risk factors in addition to the other information set forth elsewhere in this
Proxy Statement/Prospectus prior to making a decision as to the proposed Stock
Exchange.
DEPENDENCY ON MANAGEMENT. Continued growth and expansion of Intelicom
depends on continued active participation of the current Intelicom management.
The Company has no employment agreements with Messrs Spezza and Kanstoroom and
anticipates that it will obtain "key man" insurance on these individuals. The
cost of the "key man" insurance, if obtained, will be paid from operating
revenues of Intelicom. The loss of either of these individuals' services could
adversely affect the continuation and future development of Intelicom's
business. Currently both Mr. Kanstoroom and Mr. Spezza devote full time to the
business of Intelicom.
EFFECTIVE CHANGE IN CONTROL. As of the date of this Proxy
Statement/Prospectus Three-L's Officers, Directors and family members have
beneficial ownership of approximately 44,000 shares of Common Stock, or
approximately 57.6% of the shares currently outstanding. After completion of
the Stock Exchange such persons will beneficially own approximately 2.8% of the
shares outstanding. On the other hand, the Intelicom shareholders will
beneficially own a total of 1,420,687 shares of Common Stock or approximately
93%. As a result, Intelicom's Officers and Directors will be, and in the
foreseeable future will continue to be, without the vote of the shareholders, in
a position to control Three-L by being able to nominate Three-L's Board of
Directors and vote and approve any shareholder proposals. The Board of
Directors, pursuant to Three-L's Articles and Bylaws, establish corporate
policies and in turn have the sole authority to nominate and elect Three-L's
Officers to carry out those policies.
NO DIVIDENDS. Three-L has paid no cash dividends on its Common Stock and
has no present intention of paying cash dividends in the foreseeable future even
after the Stock Exchange. It will be the policy of the new Board of Directors
to retain all earnings to provide for the growth of Intelicom. Payment of cash
dividends in the future will depend, among other things, upon Intelicom's future
earnings, requirements for capital improvements, the operating and financial
conditions of Intelicom and other factors deemed relevant by the Board of
Directors.
ARBITRARY DETERMINATION OF EXCHANGE RATE. Prior to the Exchange Agreement,
there was no public trading market for the Shares. Consequently, the value at
which the Shares are being exchanged has been arbitrarily determined by
negotiations between the management of Three-L and Intelicom's management and
does not bear any relationship to any established valuation criteria as assets,
book value or prospective earnings. Intelicom is entering the Exchange
Agreement to become part of and own a public company.
NASDAQ INELIGIBILITY AND MANAGEMENT; LACK OF LISTING OF SECURITIES FROM
NASDAQ SYSTEM. Under the current rules promulgated by the Securities and
Exchange Commission (the "Commission"), for an initial listing on Nasdaq, a
company must have at least $4,000,000 in total assets, at least $2,000,000 in
stockholders equity, and a minimum bid price of $3.00 per share. For continued
listing, a company must maintain at least $2,000,000 in total assets, at least
$1,000,000 in stockholders equity, and a minimum bid price of $1.00 per share.
The Three-L's Common Stock, currently and after the Exchange Agreement, is
not expected to be eligible for listing on Nasdaq under these rules.
Consequently Three-L's Common Stock and subsequent future transactions in the
Shares would become subject to the penny stock regulations which impose
additional sales practice requirements on broker-dealers who sell securities
(see "Risk of Low-Priced Stocks," below).
RISK OF LOW-PRICED STOCKS. As noted above, Three-L's Shares will not be
listed on Nasdaq, and no other exclusion from the definition of a "penny stock"
under applicable Commission regulations is available at this time, consequently,
the Shares will be subject to the penny stock rules that impose additional sales
practice requirements on broker-dealers who sell such securities to persons
other than established customers and accredited investors (generally defined as
investors with net worth in excess of $1,000,000 or annual income exceeding
$200,000, or $300,000 together with a spouse). For any transaction involving a
penny stock, unless exempt, the rules require
18
<PAGE>
the delivery, prior to the transaction, of a disclosure schedule relating to the
penny stock market. The broker-dealer must disclose the commission payable to
both the broker-dealer and the registered representative and current quotations
for the securities. Finally, monthly statements must be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks.
DEPENDENCE ON SERVICES OFFERED BY OTHER CARRIERS. Intelicom does not own
any transmission facilities, and its long distance services are dependent upon
BTI and Frontier for the transmission of its customers' calls. Intelicom has
not entered into long-term leases for multiple circuit capacity and has no
present plans to acquire transmission facilities. Accordingly, Intelicom's long
distance operations are subject to changes offered by such carriers and its
continued ability to obtain such services at bulk rates. There is no assurance
that Intelicom will continue to be able to obtain access to transmission
facilities sufficient to meet the needs of customers or that it will be able to
do so on a timely and cost-effective basis.
COMPETITION. The telecommunications industry is intensely competitive and
is significantly affected by the introduction of new services and the market
activities of major industry participants. Competition in the growing
telecommunications industry is based upon pricing, customer service, network
quality and value-added services. Intelicom competes with AT&T, MCI, Sprint and
other national and regional long distance carriers. Most of Intelicom's
competitors have greater name recognition, more extensive transmission networks
and greater engineering and marketing capabilities than Intelicom and have, or
have access to, substantially greater financial and personnel resources than
those available to Intelicom. Various regulatory factors can also have an
impact on Intelicom's ability to compete. For example, AT&T, which is
Intelicom's largest competitor, has achieved greater flexibility as the
divestiture laws which prohibited AT&T from anti-competitive pricing are
repealed over the years, allowing it to price its services more aggressively.
AT&T can now offer lower than tariff or "off tariff" pricing to customers in
competitive situations where a competing carrier has offered a lower price, in
writing, to the customer. The ability of Intelicom to compete effectively in
the telecommunications industry will depend upon its continued ability to
provide high quality, market-driven services at prices generally similar to, or
less than, those charged by its competitors. There can be no assurance that
Intelicom will be able to compete successfully with existing or future
companies.
GOVERNMENT REGULATION. Intelicom markets products and services utilizing
the networks of several first- and second-tier companies, which are subject to
extensive federal and state regulation, but Intelicom is not subject to the same
regulations being a non-facilities-based carrier. There can be no assurance
that the FCC or regulatory authorities in one or more states will not take
action that would subject Three-L to extensive governmental regulation or have
an adverse effect on the business or financial condition of Intelicom.
POTENTIAL INCREASE IN COMPETITION DUE TO RECENT TELECOMMUNICATIONS
LEGISLATION. Congress has recently passed a major telecommunications bill and
various state legislatures have under consideration or have passed various
proposals that would allow the local exchange carriers and large competitors
such as U.S. West to enter into the inter-LATA long distance market. Likewise
Congress and numerous state legislatures have adopted proposals which would open
up the local access currently dominated by the Bell operating companies.
Intelicom is unable to predict the impact of the various legislation; however it
does believe competition will increase in the long distance markets. See
"Intelicom International Corporation - Governmental Regulation."
OBSOLESCENCE DUE TO TECHNOLOGICAL CHANGE AND NEW SERVICES. The
telecommunications industry has been characterized by steady technological
change, frequent new service introductions and evolving industry standards.
Intelicom believes that its future success will depend on its ability to
anticipate such changes and to offer on a timely basis services that meet these
evolving industry standards. There can be no assurance that Intelicom will have
sufficient resources to make the investments necessary to acquire new technology
or to introduce new services that would satisfy an expanded range of customer
needs. See "Intelicom International Corporation - Industry Overview and
Competition."
CUSTOMER ATTRITION. A level of customer attrition is inherent in the long
distance industry. Attrition (the average number of customers from whom
revenues have terminated or been terminated as a result of non-payment or
dropped to zero usage expressed as a percentage of the total number of
customers) has averaged approximately
19
<PAGE>
1.0 % to 2.0% per month. There can be no assurance that the level of customer
attrition will not continue or increase.
DEPENDENCE ON AGENTS. Intelicom depends on continuing relationships with
its independent marketing agents to acquire new customer accounts. The majority
of Intelicom's current customer accounts have arisen through Intelicom's network
of independent marketing agents. In general, Intelicom's agreements with its
independent marketing agents provide that all customers introduced to Intelicom
by the agents are Intelicom's customers. Intelicom primarily uses independent
marketing agents to sell Intelicom's services through direct sales efforts.
Revenues derived from customers introduced to Intelicom by independent marketing
agents currently constitute approximately 87% and 95% of Intelicom's total
revenue for the five months ended May 31, 1996 and year ended December 31, 1995,
respectively. These percentages represent the total revenues derived from both
existing and new customers introduced to Intelicom by independent marketing
agents. The independent marketing agents receive residual commissions based on
billings. Although Intelicom has not experienced a significant turnover of its
agents, there can be no assurance that Intelicom's relationships with its
independent marketing agents will continue on a favorable basis or that such
agents will continue to sell Intelicom's services.
DEPENDENCE ON TWO CARRIERS FOR REVENUES. Intelicom receives approximately
78% of its commission revenues from two major telecommunications carriers namely
Frontier/WCT and BTI. If revenues from one or both of these carriers were to
decrease, it would adversely affect the business and revenues of Intelicom.
INABILITY TO COMPLY WITH CONDITIONS OF RULE 419. Three-L is a "blank
check" company and consequently its public offering was conducted in compliance
with the Commission's Rule 419. Under Rule 419, Stockholders have certain
rights and receive the substantive protection in connection with their purchase
of Three-L's common stock. To that end, the securities purchased by the
Stockholders and a substantial portion of the funds received in the offering
were deposited and held in the Deposited Funds Escrow Account and the Deposited
Securities Escrow Account until an acquisition meeting specific criteria is
completed. Before the acquisition can be completed and before the Deposited
Funds and Deposited Securities can be released to Three-L and the investors,
respectively, Three-L is required to update the Registration Statement with a
post-effective amendment, and within five days after the effective date thereof,
Three-L is required to furnish Stockholders with the prospectus produced thereby
containing the terms of the Reconfirmation Offer and information regarding the
proposed acquisition candidate and its business, including audited financial
statements. According to Rule 419, investors must have no fewer than 20 and no
more than 45 business days from the effective date of the post-effective
amendment to decide to reconfirm their investment and remain an investor or
alternately, require the return of their investment. Any Stockholders not
making any decision within said 45 day period will automatically have his
investment funds returned. Rule 419 further provides that if Three-L does not
complete an acquisition meeting the specific criteria within 18 months of the
Effective Date, all of the Deposited Funds in the Deposited Funds Escrow Account
must be returned to investors.
THE SPECIAL MEETING
This Proxy Statement/Prospectus is being furnished to Stockholders of
Three-L in connection with the Reconfirmation Offer and the solicitation of
proxies by the Three-L Board of Directors for use at the Three-L Special Meeting
at 1109 Andrews, Metairie, Louisiana 70005, on September 10, 1996 at 11:00
A.M., Central Standard Time, and at any adjournments or postponements thereof.
At the Three-L Special Meeting, Stockholders of Three-L will be asked (i)
to approve the Reconfirmation Offer and (ii) to approve the Proposal, including
the Stock Exchange Agreement and Stock Issuance, and the name change. The
Reconfirmation Offer must be approved by holders of Three-L Common Stock
representing at least 80% of the proceeds of Three-L's public offering
(approximately 25,646 shares). A conformed copy of the Stock Purchase Agreement
appears as Annex II to this Proxy Statement/Prospectus.
20
<PAGE>
MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING
RECONFIRMATION OFFER. At the Three-L Special Meeting, holders of shares of
Three-L Common Stock will have the opportunity to reconfirm their investment
(the "Reconfirmation Offer") in Three-L based upon the information in this Proxy
Statement/Prospectus concerning the proposed Stock Exchange Agreement with
Intelicom. Pursuant to the requirements of Rule 419, after Three-L's initial
public offering, the Deposited Securities and the Deposited Funds were placed in
escrow pending the Reconfirmation Offer. The Reconfirmation Offer is being made
by this Proxy Statement/Prospectus, which is a post-effective amendment to
Three-L's Registration Statement. Within five days after the effective date of
this Proxy Statement/Prospectus, Three-L is required to furnish investors with
this Proxy Statement/Prospectus, which sets forth the terms of the
Reconfirmation Offer and information regarding the proposed acquisition
candidate (i.e. Intelicom) and its business, including audited financial
statements. According to Rule 419, Stockholders then have no fewer than 20 and
no more than 45 business days from the date of this Proxy Statement/Prospectus
to decide to reconfirm their investment and remain an investor or alternately,
require the return of their investment. Any Stockholder not making any decision
within this 45 day period will automatically have his investment funds returned.
Rule 419 further provides that if Three-L does not complete an acquisition
meeting the specific criteria of Rule 419 within 18 months of the date of its
initial registration statement (i.e. October 13, 1996), all of the Deposited
funds in the Deposited Funds Escrow Account must be returned to the
Stockholders. The Deposited Securities and the Deposited Funds may be released
to the Stockholders and to Three-L, respectively, only if Stockholders
representing at least 80% of the gross proceeds of the public offering (a total
of 25,646 shares sold in the public offering) reconfirm their investment in
Three-L. Upon Three-L's certification to the escrow agent that the Stock
Exchange has been consummated in accordance with Rule 419, the Deposited
Securities and Deposited Funds may be released to Three-L. If the holders of at
least 25,646 shares do not reconfirm their investment in Three-L, the Stock
Exchange Proposal described below will not be consummated, and the management of
Three-L will attempt to locate another business opportunity for Three-L within
the remaining time provided under Rule 419. If a Stockholder determines not be
reconfirm the investment in Three-L Common Stock, or if a Stockholder's response
to the Reconfirmation Offer is not received by Three-L, on or before the Special
Meting, such Stockholder's subscription for Three-L Common Stock, together with
interest thereon, will be refunded to such Stockholder.
STOCK EXCHANGE AND RELATED MATTERS. Holders of Three-l Common Stock will
also have the opportunity to consider and vote upon a proposal (the "Proposal")
to approve and adopt the Stock Exchange Agreement, the Share Issuance and the
change of Three-L's name to "Intelicom International Corporation." Holders of
shares of Three-L Common Stock entitled to vote also will consider and vote upon
any other matter that may properly come before the Three-L Special Meeting or
any adjournments or postponements thereof.
THE BOARD OF DIRECTORS OF THREE-L HAS UNANIMOUSLY APPROVED THE STOCK
EXCHANGE AGREEMENT, THE SHARE ISSUANCE AND NAME CHANGE, AND RECOMMENDS A VOTE
FOR THE APPROVAL AND ADOPTION OF THE PROPOSAL.
VOTE REQUIRED
The investment in Three-L must be confirmed by investors representing at
least 80% of the gross proceeds of Three-L's public offering (a total of 25,646
shares sold in the offering). The Stock Exchange Agreement must be approved and
adopted by the affirmative vote of a majority of the outstanding shares of
Three-L's Common Stock entitled to vote thereon.
If a Three-L Stockholder, after having received at least twenty (20) days
notice, fails to respond to the Reconfirmation Offer prior to or at the Three-L
Special Meeting or by September 10, 1996 (45 days from the date of this Proxy
Statement/Prospectus), whichever is later, the Stockholder's subscription,
together with interest thereon, will be refunded to such Stockholder. For
purposes of the Proposal, abstentions will be counted as shares present for
purposes of determining the presence of a quorum on all matters. See "--Record
Date; Stock Entitled to Vote; Quorum." Abstentions will have the effect of
votes against the approval and adoption of the Proposal and the transactions
contemplated thereby.
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<PAGE>
As of May 1, 1996, directors and executive officers of Three-L were
beneficial owners of an aggregate of 44,000 shares (approximately 57.6%) of the
outstanding shares of Three-L Common Stock. The directors of Three-L and a non-
director shareholder have agreed to vote their shares of Three-L Common Stock in
favor of the Proposal at the Three-L Special Meeting or any adjournments or
postponements thereof. The directors of Intelicom, who are also the only
stockholders of Intelicom, do not own any shares of Three-L Common Stock.
VOTING OF PROXIES
Shares represented by all properly executed proxies received in time for
the Special Meeting and which have not been revoked will be voted at such
meetings in the manner specified by the holders thereof. PROXIES WHICH DO NOT
CONTAIN AN INSTRUCTION TO VOTE FOR OR AGAINST OR TO ABSTAIN FROM VOTING ON A
PARTICULAR MATTER DESCRIBED IN THE PROXY WILL BE VOTED IN FAVOR OF SUCH MATTER.
It is not expected that any matter other than those referred to herein will
be brought before the Special Meeting. If, however, other matters are properly
presented, the persons named as proxies will vote in accordance with their
judgment with respect to such matters, unless authority to do so is withheld in
the proxy.
REVOCABILITY OF PROXIES
The grant of a proxy on the enclosed Three-L form of proxy (Annex I) does
not preclude a stockholder from voting in person. A stockholder may revoke a
proxy at any time prior to its exercise by submitting a later dated proxy with
respect to the same shares, by filing with the Secretary of Three-L a duly
executed revocation, or by voting in person at the meeting. Attendance at the
Special Meeting will not in and of itself constitute a revocation of a proxy.
Only purchasers of stock in Three-L's initial public offering and its
Officers and Directors will be entitled to receive notice of and to vote at the
Three-L Special Meeting. There are presently outstanding 76,381 shares of
Three-L Common Stock. The holders of Three-L Common Stock are entitled to one
vote per share on each matter submitted to a vote at the Three-L Special
Meeting. The holders of a majority of the outstanding shares of Three-L Common
Stock entitled to vote must be present in person or by proxy at the Three-L
Special Meeting in order for a quorum to be present. Shares of Three-L Common
Stock represented by proxies which are marked "abstain" or which are not marked
as to any particular matter or matters will be counted as shares present for
purposes of determining the presence of a quorum on all matters.
In the event a quorum is not present in person or by proxy at the Three-L
Special Meeting, the Three-L Special Meeting is expected to be adjourned or
postponed.
APPRAISAL RIGHTS
Holders of Intelicom Common Stock who vote against the Proposal will not be
entitled to appraisal rights under the DGCL if the Stock Exchange Agreement is
consummated. The DGCL generally entitles a stockholder to exercise appraisal
rights upon a merger or consolidation of the corporation effected pursuant to
the DGCL. Appraisal rights are not provided for the issuance of additional
securities by a Delaware corporation.
SOLICITATION OF PROXIES
Three-L will bear the cost of printing and mailing this Proxy
Statement/Prospectus and costs associated with the solicitation of proxies from
its Stockholders. The Directors and Officers and employees of Three-L may
solicit proxies from Stockholders of Three-L by telephone or telegram or in
person. Such directors, officers and employees will not be additionally
compensated for such solicitation but may be reimbursed for out-of-pocket
expenses in connection therewith.
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MARKET FOR COMMON STOCK
Currently the combined companies do not meet the requirements for a Nasdaq
listing. It is therefore anticipated that, if a market for the shares of
Intelicom develops, it will be listed on the Bulletin Board. There can be no
assurance that a market for the shares of Intelicom will develop, or, if
developed, that it will be sustained.
RESALE OF THREE-L COMMON STOCK
Assuming holders of the required number of Three-L shares of Common Stock
approve the Reconfirmation Offer and the Proposal, the Three-L Common Stock,
when released from escrow and distributed to the Stockholders, will be freely
transferable. The shares of Three-L Common Stock issued to the Intelicom
stockholders will be "restricted securities," as that term is defined in Rule
144 adopted under the Act. In addition, each of the Intelicom stockholders will
be deemed to be an "affiliate" (as defined under the Act and generally
including, without limitation, directors, certain executive officers and
beneficial owners of 10% or more of a class of capital stock) of Three-L and, as
such, may not transfer the Three-L Common Stock received by them pursuant to the
Stock Exchange Agreement except in compliance with Rule 144. This Proxy
Statement/Prospectus does not cover resales of Three-L Common Stock received by
the Intelicom shareholders.
INTELICOM INTERNATIONAL CORPORATION
GENERAL
Intelicom International Corporation ("Intelicom") was incorporated under
the laws of the State of Florida in October, 1994. Intelicom is the successor
in interest to Intelicom Corporation which was incorporated under the laws of
the State of Florida in November, 1992, and commenced business in 1993.
Intelicom Corporation merged with and into Intelicom in December of 1995. The
combined companies shall hereinafter be referred to collectively as "Intelicom."
Prior to September, 1995, Intelicom s business purpose was restricted to
marketing retail telecommunication services (including, but not limited to, long
distance, conference calling, paging, pre-paid calling cards and voice mail
services) for other telecommunications companies through a network of
independent sales agents. In September of 1995, Intelicom entered into its
first wholesale long distance agreement which enabled the company to begin
purchasing telecommunications services from a wholesale provider and then
reselling those services under its own private label directly to end users. As
part of this effort to resell telecommunications services under its own private
label, Intelicom began billing its customers directly through its own billing
system which enables it to receive revenues directly from end users instead of
having to wait to receive sales commissions for business sold by Intelicom on
behalf of other telecommunications providers. However, Intelicom continues to
complement its own private labeled services with the services of other
telecommunications providers in order to offer its customers a wide array of
product offerings and sustain positive cash flow in the form of sales commission
payments from such other providers.
Intelicom s profits are derived from three major sources. The first source
of revenues is the difference between the cost per minute of service bought from
underlying carriers and the cost per minute billed to the end user customers. As
an interexchange long distance carrier, Intelicom can reduce its cost of long
distance transmission services by committing to large blocks of volume (measured
in minutes), thereby reducing its overall cost per minute and increasing its
profit per minute. The second revenue source is the sales commissions paid to
Intelicom from other carriers who directly bill customers signed up by Intelicom
on their behalf. These sales commissions are typically calculated as a
percentage of the sum total of all long distance services (excluding taxes)
billed to the customers signed up by Intelicom on behalf of the other carriers.
The third source of profits is the difference between the cost of materials sold
to Intelicom s independent sales agents and the price paid to Intelicom by those
sales agents.
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Intelicom offers personalized services at what it believes to be
competitive prices to residences and businesses of all sizes throughout the
United States. Among the services offered are the routing equipment and phone
lines of large carriers, such as WilTel, Frontier, Sprint, BTI and other
carriers which the company may contract with in the future. To date, Intelicom
has filed with the appropriate licensing commissions throughout the United
States to offer its own long distance services, and has received its
certification as a licensed long distance carrier in 26 states. Intelicom
believes it will be fully certified nationwide by September of 1996.
Intelicom markets its telecommunications services through a nationwide
network of sales agents. Intelicom's agents are solicited in three main ways:
(i) referred by another Intelicom agent; (ii) media advertisement (i.e.
newspaper ads, trade publications, etc.) and (iii) a referral from the
Telecommunications Resellers Association ("TRA"), of which Intelicom is a member
in good standing. 95% of the independent sales agents of Intelicom work on a
part-time basis. Less than 5% of Intelicom's independent contractors offer
competing services.
All Intelicom agents are paid on a straight commission basis. Commissions
are earned in three general categories. Direct commissions are commissions
earned as a percentage of long distance usage of all customers solicited by the
agent and placed on one of Intelicom's services. Direct commissions vary in
amount and by product, and are paid for so long as the client remains on an
Intelicom service and the agent remains in good standing with Intelicom. Agents
can also earn commissions in a sales management capacity by helping newer agents
solicit and bring business to Intelicom. These agents receive an override
commission based on the amount of business brought to Intelicom. Finally,
Intelicom offers its top agents the opportunity to share in up to 4% of
Intelicom's long distance revenues based upon preset production requirements.
So long as the customers remains with Intelicom and the agent remains in good
standing with Intelicom, the agent continues to earn commissions. Almost all
customers are solicited face to face.
Intelicom's agent program is available to individuals and businesses
nationwide. Intelicom currently has in excess of 1,000 independent agents.
Intelicom's agents have no geographical restrictions. Intelicom has two main
classifications of agents: sales agents and certified trainers. One in four
agents participates in additional training and expense to become a trainer
because of the additional compensation available for training new consultants.
Intelicom presently has approximately 250 trainers which are located throughout
the United States, with heavier concentrations in Florida, North Carolina,
Arizona, Utah, New Mexico, Idaho and California. Training consists of three to
five hours of initial training. The main topics of instruction are product
knowledge, techniques on building the agent's business, completion of paperwork,
understanding of the compensation plan and Intelicom's policies and procedures.
INDUSTRY OVERVIEW AND COMPETITION
Since the break-up of AT&T in 1984, the domestic long distance market has
roughly doubled to an estimated $60 billion in annual revenues. AT&T has
remained dominant, retaining approximately 60% of the market, with MCI and
Sprint increasing their market shares to approximately 18% and 9% of the market,
respectively. These three companies constitute what generally is regarded as
the first-tier in the long distance market. Large regional long distance
companies, some with national capabilities, such as LDDS WorldCom ("LDDS"),
Frontier Communications ("Frontier"), Cable & Wireless Communications, Inc. and
LCI International, constitute the second-tier of the industry and, cumulatively,
are believed to account for approximately 5% of the market. The remainder of
the market share is held by several hundred smaller companies, known as third-
tier carriers.
First- and second-tier companies, (most notably AT&T, MCI, Sprint and LDDS
(through its WilTel subsidiary) actively have been providing long distance
products for resale for a number of years in order to capture incremental
traffic volume.
Long distance companies can be categorized by several definitions. One
distinction is between facilities-based companies and non-facilities-based
companies, or resellers. Facilities-based companies own transmission
facilities, such as fiber optic cable or digital microwave equipment.
Profitability for facilities-based carriers is dependent not only upon their
ability to generate revenues but also upon their ability to manage complex
networking and transmission costs. Substantially all of the first- and second-
tier long distance companies are facilities-based
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carriers and generally offer service nationwide. Most facilities-based carriers
in the third-tier of the market generally offer their service only in a limited
geographic area. Some facilities-based carriers contract with other facilities-
based carriers to provide transmission where they have geographic gaps in their
facilities. Similarly, non-facilities-based companies, such as Intelicom,
contract with facilities-based carriers to provide transmission of their
customers' long distance traffic. Pricing in such contracts is typically either
on a fixed rate lease basis or a call volume basis. Profitability for non-
facilities-based carriers is based primarily on their ability to generate and
retain sufficient revenue volume to negotiate attractive pricing with one or
more facilities-based carriers.
A second distinction among long distance companies is that of switched
versus switchless carriers. Switched carriers have one or more switches, i.e.
computers that direct telecommunications traffic in accordance with programmed
instructions. All of the facilities-based carriers are switched carriers, as
are many non-facilities-based companies. Switchless carriers depend on one or
more facilities-based carriers to provide both transmission capacity and switch
facilities. In addition, switchless resellers enjoy the benefit of offering
their service on a nationwide basis, assuming that their underlying carrier has
a nationwide network. Intelicom currently is a switchless reseller, but intends
to become a switch based carrier when such a move would be cost-effective.
Competition in the long distance industry is based upon pricing, customer
service, network quality and value-added services. The success of a non-
facilities-based carrier, such as Intelicom, depends almost entirely upon the
amount of traffic that it can commit to the underlying carrier - the larger the
commitment, the lower the cost of service. Subject to contract restrictions and
customer brand loyalty, resellers like Intelicom may competitively bid their
traffic among other national long distance carriers to gain improvement in the
cost of service. The non-facilities-based carrier devotes its resources
entirely to marketing, operations and customer service, deferring the costs of
network maintenance and management to the underlying carrier.
The relationship between resellers and the major underlying carriers is
predicated primarily upon the pricing strategies of the first-tier companies,
which has resulted historically in higher rates to the small business customer.
Small customers typically are not able to make the volume commitments necessary
to negotiate reduced rates under individualized contracts. The higher rates
result from the higher cost of credit, collection, billing and customer service
per revenue dollar associated with small billing level long distance customers.
By committing to large volumes of traffic, the reseller is guaranteeing traffic
to the underlying carrier. The successful reseller efficiently markets the long
distance product, processes orders, verifies credit and provides customer
service to large numbers of small accounts.
Intelicom believes that the rapid evolution of the resale industry presents
an excellent opportunity for consolidation of third-tier companies in general,
and resellers, in particular. Many of these companies are undercapitalized and
may have difficulty providing their services profitably. Intelicom believes
that many of the carriers that provide resale products, particularly first-tier
carriers, would welcome a consolidation of resellers that would decrease the
number of companies with whom they contract, leaving only quality, well
capitalized resellers with whom to deal. Consolidation with other resellers
could, in Intelicom's opinion, achieve additional economies in both pricing with
underlying carriers and in operating costs such as customer service. Such
economies are not certain and cannot be adequately predicted.
PLAN OF OPERATION AND DESCRIPTION OF BUSINESS
From inception and until September 1995, Intelicom functioned primarily as
a telecommunications marketing and consulting firm offering the products and
services of most major long distance providers to Intelicom s customers on a
retail basis. In September of 1995, Intelicom began to purchase bulk long
distance service from Network Long Distance, Inc., a wholesale long distance
provider, and resell that service to Intelicom s customers under its own private
label. The sales pursuant to the contract were insignificant and Intelicom will
not renew the contract, upon its expiration in the fall of 1996. Intelicom's
current long distance contracts allow Intelicom the ability to provide long
distance service under its own private label, invoice its customers, and collect
revenue directly from its client base. Revenues from its wholesale division are
now based on 100% of end users billings instead of just a percentage paid to
Intelicom from another carrier as sales commission. To the best of its
knowledge, Intelicom is the only nationwide carrier that offers its customers a
diverse menu of long distance
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carriers, including both Intelicom s private labeled long distance services as
well as the services of other major carriers.
MAJOR CONTRACTS
BUSINESS TELECOM INCORPORATED AGREEMENT
In December of 1993, Business Telecom Incorporated ("BTI") and Intelicom
entered into an agency agreement for Intelicom to market long distance services
on BTI s behalf to commercial and residential customers. Prior to contracting
with Intelicom, BTI had little or no presence outside of its "on-net" areas
(i.e. North Carolina, South Carolina, Georgia, Florida, Tennessee, Alabama,
Virginia and the District of Columbia). Intelicom s management believes that,
through the successful sales efforts of Intelicom s network of independent sales
agents, BTI went from being a regional based carrier in the Southeast to being a
national telecommunications concern with customers nationwide.
BTI pays sales commissions to Intelicom on a monthly basis based on a
negotiated percentage multiplied by the long distance revenues of Intelicom s
entire customer base. BTI is responsible for all credit checks, bad debt,
collections costs and billing costs. Intelicom s commissions are paid on billed
revenues regardless if end-users pay their invoices to BTI. Consequently,
Intelicom suffers no charge backs or pay backs on delinquent or bad accounts.
Since 1993, BTI has continued to improve the commissions and rate structure
available to Intelicom in light of Intelicom s high level of sales and customer
quality. In addition, BTI offers value added services to Intelicom s current
product line. These services include paging, conference calling, operator
services, data services and special rates and programs for non-profit
organizations.
Subsequently, in March of 1996, Intelicom entered into a wholesale contract
with BTI. This contract enables Intelicom to resell long distance services
nationwide at competitive rates while, at the same time, maintaining margins
normally attained by only much larger long distance carriers. The contract was
agreed to as a wholesale arrangement meant to compliment the existing agency
agreement already in effect between the two companies. BTI has agreed to assist
Intelicom in setting up of all credit procedures as well as making Intelicom a
"beta site" for on-line access to all information needed by Intelicom to service
its customers. Intelicom has no "take or pay" commitments to BTI, and BTI has
agreed to allow all of Intelicom s business, both from the agency contract as
well as the wholesale contract, to be credited towards Intelicom qualifying for
more favorable rates and margins under the wholesale agreement. This additional
facet of the wholesale agreement allows Intelicom to offer its own services to
switched and dedicated customers of all sizes throughout the United States.
FRONTIER (FORMERLY WORLD CALL TELECOMMUNICATIONS, INC.) AGREEMENT
Intelicom entered into an agreement with Frontier (formerly World Cable
Telecommunications, Inc. "WCT") in June 1993 to market long distance services to
businesses and residential users across the United States. WCT pays commissions
to Intelicom on a monthly basis based on a negotiated percentage multiplied by
Intelicom s entire customer base long distance billings. WCT is responsible for
all credit checks, bad debt, collections costs and billing costs. Intelicom s
commissions are paid on billed revenue regardless if the end users pay bills to
WCT. Intelicom has no charge backs or pay backs on accounts that are delinquent
in payments or written off as bad debt.
PRODUCTS AND SERVICES
Intelicom currently markets a variety of switched and dedicated long
distance products. These products primarily fall into two categories: (i)
products from Intelicom s agent contracts with other long distance providers,
and (ii) Intelicom s own products offered through wholesale contracts, primarily
with BTI.
Intelicom s product mix includes residential and small, medium and large
commercial products. These products primarily utilize the underlying networks
of Frontier, BTI, WilTel and Sprint. Intelicom targets customers with long
distance phone bills ranging between $100 and $5,000 per month, although
Intelicom has several large
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customers billing over $20,000 per month. By offering such a wide range of
carrier products, Intelicom is able to offer greater network stability and back
up in the event of service interruption. More importantly, however, the vast
array of product options enables Intelicom the flexibility to offer favorable
rates and services to its customers. In addition, Intelicom also offers state-
of-the-art paging, conference calling and pre-paid calling cards to meet all of
its client needs. Intelicom also has contracts in place to begin offering local
dial tone and cellular services as deregulation makes these services available.
MAJOR CARRIERS AND MARKETING STRATEGIES
MAJOR CARRIERS
Intelicom receives a substantial portion of its commission revenues from
two major telecommunication carriers namely BTI and Frontier. Approximately 78%
of all commission generated under Intelicom s agent contracts comes from BTI and
Frontier.
MARKETING STRATEGIES - CURRENT
From its inception and up through 1995, Intelicom s primary strategy was to
market telecommunications services of various contract providers through its
nationwide network of independent agents. Intelicom s marketing strategy is for
its independent agents to be able to offer a menu of long distance providers to
potential customers. Intelicom currently has in excess of 1,000 full- and part-
time independent agents across the United States and has a goal, of which there
can be no assurance, of increasing that number in the next 12 - 18 months. The
funds of Three-l are not viewed as significant in this regard and future
expansion will be funded from operating revenues.
MARKETING STRATEGIES - FUTURE
Intelicom will continue to market telecommunications services through its
network of sales agents. These agents will continue to sell products available
through Intelicom s agency agreements, but will increasingly be offering the
products that Intelicom offers under it s own private label through its
wholesale contracts (primarily through the BTI wholesale contract). Intelicom
will also attempt to continue its expansion in the long distance industry
through acquisitions of existing long distance companies and/or their customer
accounts.
Intelicom anticipates it will be required to increase its in-house staff of
customer service and support personnel to increase the efficiency of order
processing and agent support. In addition, Intelicom will be aggressively
marketing its independent agent program to substantially increase the size of
its sales force nationwide as well as internationally. Intelicom believes it
can attract qualified sales agents due to an extensive mix of products including
the addition of local access service, favorable commission and bonus schedules
and the customer service.
ACQUISITION STRATEGY
Intelicom believes that there are in excess of 400 small to medium-sized
long distance companies operating throughout the United States which are similar
to Intelicom in terms of operating revenues and customer base. It is
anticipated that a portion of proceeds through any future equity financings will
be used to acquire other telecommunications companies. Although Intelicom
presently has no understanding, arrangement or agreement to make any other
acquisitions, based on its experience, Intelicom believes that many existing
resellers are willing to be acquired due to the lack of sufficient volume vis-a-
vis their current operating expenses. Intelicom believes it has the ability to
maximize the potential of these acquisitions through increased operating
efficiency without significant increase in overhead by eliminating duplicate
overhead and the enhanced use of Intelicom's software and switchless resellers
of long distance. There can be no assurance that the anticipated results of
such an acquisition will occur, and may be adversely affected by competitive and
other pressures.
Intelicom is also in the first stage of setting up a nationwide network of
professional training centers throughout the United States. The first training
center, which opened in March 1996, is located in Tampa, Florida. Intelicom
believes its idea of offering its independent agents state-of-the-art training
and support in the areas of writing business and building Intelicom s sales
force will increase retention of quality agents and the attraction of
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new quality agents. Intelicom s 12 - 18 month goal is to have 100 training
centers in major metropolitan areas across the United States. Since most of
Intelicom's agents are part time, the expansion and implementation of the
training centers will require more full time agents to participate in the
training program. Therefore, there can be no assurance that all 100 training
centers will be able to be established and be functioning within the 12 - 18
month timeframe. Intelicom expects to fund the training centers from cash flows
from operations and possibly in partnership with its more aggressive agents.
Intelicom also has a very aggressive plan to begin offering other ancillary
services such as local dial tone, cellular and other ancillary services.
Through its advanced billing services, Intelicom will be able to begin bundling
services together on one bill and be able to offer customers a one stop shop for
all of their telecommunication needs. Intelicom believes its ability to bundle
services will increase customer retention as well as profit margins.
GOVERNMENT REGULATION
LONG DISTANCE AND LOCAL ACCESS
The terms and conditions under which Intelicom provides telecommunications
services are subject to government regulation. Federal laws and FCC regulations
apply to interstate and international telecommunications, while particular state
regulatory authorities have jurisdiction over intrastate telecommunications.
FEDERAL
Intelicom is classified by the FCC as a non-dominant carrier. Among
domestic carriers, only AT&T and the LECs are classified as dominant carriers.
As a consequence, the FCC regulates many of their rates, charges and services to
a greater degree than Intelicom's, although AT&T has requested that it be
reclassified as a non-dominant carrier and the FCC is reviewing this issue. If
AT&T s designation as a dominant carrier were terminated, certain pricing
restrictions and regulatory oversight that currently apply to AT&T would be
eliminated which would make it easier for AT&T to more aggressively compete
directly with Intelicom for low volume long distance customers. International
carriers may also be classified as dominant if they are affiliated with foreign
carriers with substantial market share. The FCC has generally not chosen to
exercise its statutory power to regulate the charges, practices, classifications
or regulations of non-dominant carriers, although it has the power to do so. The
FCC retains the jurisdiction to act upon complaints against any common carrier
for failure to comply with its statutory obligations. The FCC also has the
authority to impose more stringent regulatory requirements on Intelicom and
change its regulatory classification; however, Intelicom is unaware of changes
in any FCC policies except as noted below.
Intelicom has all necessary authority to provide domestic interstate
telecommunication services.
Dominant and non-dominant carriers must maintain tariffs on file with the
FCC. Although the tariffs of non-dominant carriers, and the rates and charges
they specify, are subject to FCC review, they are presumed to be lawful and are
seldom contested. Until recently, domestic non-dominant carriers were permitted
by the FCC to file tariffs with a "reasonable range of rates" instead of the
detailed schedules of individual charges required of dominant carriers. In
reliance on the FCC s past practice of allowing relaxed tariff-filing
requirements for non-dominant domestic carriers, Intelicom and many of its
competitors did not maintain detailed rate schedules for domestic offerings in
their tariffs. Intelicom could be held liable for damages for its failure to do
so, although it believes that such an outcome is highly unlikely and would not
have a material adverse effect on it. As a domestic non-dominant carrier,
Intelicom is permitted to make tariff filings on a single day s notice and
without cost support to justify specific rates. Resale carriers are also
subject to a variety of miscellaneous regulations that, for instance, govern the
documentation and verifications necessary to change a consumer s long distance
carrier, limit the use of "800" numbers for pay-per-call services, require
disclosure of operator services and restrict interlocking directors and
management.
To date, the FCC has exercised its regulatory authority to control rates
only with respect to the rates of dominant carriers, and it has increasingly
relaxed its control in this area. As an example, although AT&T is classified as
a dominant carrier, the FCC has exempted most of its services, including
virtually all of the carrier s
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commercial and "800" services, from rate regulation because the FCC believes
that these services are subject to adequate competition. Similarly, the FCC has
required reduced local transport charges (i.e., the fee for use of the LEC
transmission facilities connecting the LEC s central offices and the
interexchange carrier s access point). In addition, the LECs are being afforded
a degree of pricing flexibility in setting access charges where adequate
competition exists.
The RBOCs are currently prohibited from providing inter-LATA interexchange
telecommunication services. Several motions to remove or modify this
restriction, in whole or in part, are currently pending before the United States
District Court for the District of Columbia. Many industry observers believe
that legislation will be enacted which will authorize RBOCs to provide inter-
LATA interexchange telecommunication services, and separate bills to this effect
have been passed by the House of Representatives and Senate in 1995. The
separate bills will be considered by a conference of the House of
Representatives and Senate. Such legislation, if passed, may or may not
include safeguards against anti-competitive conduct. Anti-competitive conduct
could result from an RBOC taking advantage of its access to all customers on its
existing network as well as its potentially lower costs related to and control
of the facilities used for termination and origination of calls within its
territory. Intelicom is unable to predict whether any particular form of
legislation will be enacted and, if enacted, the impact that any such
legislation would have on Intelicom's business and prospects.
In early 1996, the President signed legislation which will substantially
deregulate the telecommunications industry. The bill has far reaching impact on
the telecommunications industry and Intelicom's business in particular. The
bill effects the long distance services by allowing the seven regional Bell
companies into the long distance phone business after they have proved to the
FCC that they have opened their local phone networks to new competitors.
Intelicom believes that the increased competition will have the effect of
lowering prices overall and may provide Intelicom the ability to offer lower
costs to its customers. The bill will effect local access service by opening
local phone markets to new competitors such as AT&T, MCI and cable TV companies
and the BOC s would lose control of their current monopoly over local phone
customers. Prices may rise initially as competitors may not have the ability to
spend the large amount of funds necessary to build their own networks and
consequently they will be forced to lease Bell lines and resell service instead.
State regulation will still dictate how the new local access and rates take
place.
STATE
The intrastate long distance telecommunications operations of Intelicom are
also subject to various state laws and regulations, including prior
certification, notification and registration requirements. Currently, Intelicom
is certified and tariffed where required to provide intrastate service to
customers throughout the United States. Intelicom is subject to varying levels
of regulation in the states in which it provides intrastate telecommunications.
The vast majority of the states require Intelicom to apply for certification to
provide telecommunication services, or at least to register or to be found
exempt from regulation, before commencing intrastate service. The vast majority
of states also require Intelicom to file and maintain detailed tariffs listing
their rates for intrastate service. Many states also impose various reporting
requirements and/or require prior approval for transfers of control of certified
carriers, assignments of carrier assets, including customer bases, carrier stock
offerings and incurrence by carriers of significant debt obligations.
Certificates of authority can generally be conditioned, modified, canceled,
terminated or revoked by state regulatory authorities for failure to comply with
state law and/or the rules, regulations, and policies of the state regulatory
authorities. Fines and other penalties, including the return of all monies
received for intrastate traffic from residents of a state, may be imposed for
such violations. In certain states, prior regulatory approval may be required
for acquisitions of telecommunications operations. In the past, Intelicom
generally has not obtained such prior approval for its acquisitions. Intelicom
believes it is currently in compliance with applicable state regulations and has
filed for the ability to sell services in the states necessary to sell its
services. See "Risk Factors - Government Regulation."
EMPLOYEES
As of March 1, 1996, Intelicom had ten (10) full time employees, including
David Kanstoroom, Intelicom's Chief Executive Officer and David Spezza,
Intelicom's President.
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PROPERTIES
Intelicom leases its office space and some of its office equipment under
noncancellable operating leases expiring in various years ranging through 2000.
These leases generally require Intelicom to pay insurance, taxes, and other
expenses related to the leased property. Intelicom s executive offices consist
of 2,036 square feet located at 28050 U.S. 19 North, Suite 202, Clearwater,
Florida 34621. Monthly payments on leased office space is approximately $2,300
per month. The lease runs through the year 2000.
LITIGATION
As of the date of this Proxy Statement/Prospectus Intelicom is not a party
to any pending litigation.
RELATED PARTY TRANSACTIONS
Intelicom received working capital advances and loans from Intelicom's
shareholders. Intelicom has advanced funds to its shareholders for the
formation of two other related entities, Intelisoft and Intelicom International
(before the December 4, 1995 merger) for formation costs and the development of
computer software. There are no other transactions with these entities.
As part of its Independent Agent Agreement with its sales representatives,
Intelicom has a 2% revenue sharing pool that its representatives can qualify to
share in if they meet certain production requirements. Three shares of the 2%
revenue sharing pool are irrevocably reserved each month for the original three
shareholders of Intelicom, with such shares being allocated among Intelicom's
Officers and Directors in accordance with the policies as established by the
Intelicom Board of Directors. The three shareholders have waived any right to
any revenue until such time as so determined by the Board of Directors. If the
three shareholders do not take their monthly share of the revenue pool, they
retain no claim to the revenues in the pool for that month.
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THREE-L ENTERPRISES, INC.
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma consolidated condensed financial
statements reflect adjustments to the historical consolidated balance sheets and
statements of earnings of Three-L and Intelicom to give effect to the Stock
Exchange. The unaudited pro forma consolidated condensed balance sheets,
assumes the Stock Exchange was consummated as of December 31, 1993 and the
unaudited pro forma consolidated condensed statements of earnings assume the
Stock Exchange was consummated as of December 31, 1993.
The following pro forma consolidated condensed financial statements have
been prepared from, and should be read in conjunction with, the historical
consolidated financial statements and notes thereto of Three-L and Intelicom
that are included in this Proxy Statement/Prospectus, and have been prepared to
reflect the acquisition of Three-L by Intelicom as of December 31, 1993 after
giving effect to the pro forma adjustments described in the notes. Since the
present shareholders of Intelicom own approximately 93% of Three-L after the
acquisition, Intelicom in substance has acquired Three-L, thus the combination
is being accounted for as a reverse acquisition of Three-L by Intelicom. The
pro forma consolidated condensed statements of earnings are not necessarily
indicative of operating results that would have occurred had the Stock Exchange
been consummated as of December 31, 1993, nor are they indicative of future
operating results of the combined companies.
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THREE-L ENTERPRISES, INC.
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
MAY 31, 1996
<TABLE>
<CAPTION>
Historical Pro Forma
------------------------- ---------------------------
Three-L Intelicom Adjustments Consolidated
--------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 340 $ 61,334 (1) $ 133,110 $ 194,784
Receivables 294,425 294,425
Notes receivable - related parties
Other current assets
---------- --------- ---------- ---------
Total current assets 340 355,759 133,110 489,209
Net property and equipment 43,860 43,860
(1) (133,110)
Other assets 183,701 10,000 (2) (50,591) 10,000
---------- --------- ---------- ---------
$ 184,041 $ 409,619 $ (50,591) $ 543,069
--------- --------- ---------- ---------
--------- --------- ---------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 23,087 $ 18,266 $ 41,353
Accrued and other liabilities 206,621 (5) 53,711 260,332
---------- --------- ---------- ---------
Notes payable 7,500 2,999 10,499
---------- --------- ---------- ---------
Total current liabilities 30,587 227,886 53,711 312,184
---------- --------- ---------- ---------
Other long-term liabilities
---------- --------- ---------- ---------
Long-term debt
---------- --------- ---------- ---------
Deferred income taxes
---------- --------- ---------- ---------
Escrowed common stock 133,110 (1) (133,110)
---------- --------- ---------- ---------
Stockholders' equity:
(1) 3
(3) (758)
Common stock 4 900 (4) 3 152
(4) (3)
(1) 133,107
(6) 86,771
(3) 758
Additional paid-in capital 35,411 (2) (50,591) 205,453
(6) (86,771)
Retained earnings (deficit) (15,071) 180,833 (5) (53,711) 25,280
Treasury stock, at cost
---------- --------- ---------- ---------
Total stockholders' equity 20,344 181,733 28,808 230,885
---------- --------- ---------- ---------
$ 184,041 $ 409,619 $ (50,591) $ 543,069
---------- --------- ---------- ---------
---------- --------- ---------- ---------
</TABLE>
32
<PAGE>
THREE-L ENTERPRISES, INC.
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF EARNINGS
FIVE MONTHS ENDED MAY 31, 1996
<TABLE>
<CAPTION>
Historical Pro Forma
-------------------------- ----------------------------
Three-L Intelicom Adjustments Consolidated
---------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Revenues:
Commissions $ $ 748,891 $ $ 748,891
Interest Income 3,023 3,023
Other Income 106,494 106,494
----------- ----------- ------------ ----------
858,408 858,408
----------- ----------- ------------ ----------
Operating expenses:
Depreciation $ $ 4,725 $ $ 4,725
General and administrative 6,886 315,612 322,498
Interest expense
Other expense 501,802 501,802
Property impairment
----------- ----------- ------------ ----------
6,886 822,139 829,025
----------- ----------- ------------ ----------
Earnings before income taxes (6,886) 36,269 29,383
Provision for income taxes 10,989 10,989
----------- ----------- ------------ ----------
Net earnings from continuing operations $ (6,886) $ 25,280 $ $ 18,394
----------- ----------- ------------ ----------
----------- ----------- ------------ ----------
Shares outstanding 44,000 900 1,482,720 1,527,620
----------- ----------- ------------ ----------
----------- ----------- ------------ ----------
Net earnings from continuing
operations per share $ (.16) $ 28.09 $ .01
----------- ----------- ----------
----------- ----------- ----------
</TABLE>
33
<PAGE>
THREE-L ENTERPRISES, INC.
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF EARNINGS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Historical Pro Forma
------------------------- --------------------------
Three-L Intelicom Adjustments Consolidated
---------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
Revenues:
Commissions $ $1,540,850 $ $1,540,850
Interest Income 3,810 3,810
Other Income 146,461 146,461
---------- ---------- ----------- -----------
1,691,121 1,691,121
---------- ---------- ----------- -----------
Operating expenses:
Depreciation $ $9,305 $ $ 9,305
General and administrative 7,503 634,593 642,096
Interest expense 67 67
Other expense 964,190 964,190
Property impairment
---------- ---------- ----------- -----------
7,503 1,608,155 1,615,658
---------- ---------- ----------- -----------
Earnings before income taxes (7,503) 82,966 75,463
Provision for income taxes (5) 22,639 22,639
---------- ---------- ----------- -----------
Net earnings from continuing operations $ (7,503) $ 82,966 $ (22,639) $ 52,824
----------- ---------- ----------- ----------
----------- ---------- ----------- ----------
Shares outstanding 44,000 900 1,482,720 1,527,620
---------- ---------- ---------- ----------
----------- ---------- ----------- ----------
Net earnings from continuing
operations per share $ (.17) $ 92.18 $ .03
----------- ---------- ----------
----------- ---------- ----------
</TABLE>
See accompanying notes to unaudited pro forma consolidated condensed financial
statements
34
<PAGE>
THREE-L ENTERPRISES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS
PRO FORMA ADJUSTMENTS:
(1) Represents the release of cash and escrowed Common Stock from escrow in
conjunction with Rule 419 when the holders of at least 25,646 shares of
Three-L reconfirm the investment in Three-L.
(2) To record the netting of deferred offering costs against the escrowed
Common Stock proceeds in conjunction with Rule 419 investment
reconfirmation.
(3) To record the issuance of 1,420,687 shares, $.0001 par value, to the
shareholders of Intelicom on the consummation of the Stock Exchange
Agreement, reclassifying the balance of Common Stock to additional paid in
capital.
(4) Represents the issuance of 30,552 shares, $.0001 per share, to a finder in
conjunction with consummation of the Stock Exchange Agreement with
Intelicom.
(5) Represents charge in lieu of income taxes for previously taxed earnings as
a Subchapter S Corporation.
(6) Represents transfer of subchapter S corporation retained earnings to
additional paid in capital.
35
<PAGE>
POST-STOCK EXCHANGE PROFILE AND STRATEGY
BUSINESS
As a result of the Stock Exchange Agreement, Three-L (which will then be
known as Intelicom Corporation) will continue as a marketer and reseller of
telecommunications services for other companies. Intelicom will continue to buy
wholesale long distance services which it will resell to customers under its own
name in addition to continuing to market other companies' telecommunications
services.
MANAGEMENT
At the Closing, Three-L's Board of Directors will resign, and the Intelicom
Designees will fill the newly created vacancies. Intelicom has informed Three-
L that David Kanstoroom and David Spezza are the Intelicom Designees. All of
the Intelicom Designees currently are directors of Intelicom. The terms of the
new directors of Three-L, who will be the Intelicom Designees, will expire at
the next annual meeting of Stockholders of Three-L (which will then be known as
Intelicom).
In addition, following the Closing, David Kanstoroom, currently the Chief
Executive Officer of Intelicom, will become Chief Executive Officer of Three-L
and David Spezza, currently the President of Intelicom, will become the
President of Three-L.
The following table sets forth, with respect to each person who is or will
be a director of Three-L at the Closing, the person's age and the person's
positions and offices with Three-L. Individual background information
concerning each of such persons follows the table.
NAME AGE POSITION WITH THREE-L
- ---- --- ---------------------
Herman K. Watsky 69 President and Director
Roy D. Greenberg 39 Vice President and Director
Bernard A. Goldman 66 Secretary and Director
Gordon Dumont 39 Treasurer and Director
Edward P. Gothard 36 Director
David A. Kanstoroom (1) 31 Director
David Spezza (1) 31 Director
________________________
(1) Director of Intelicom who is a Intelicom Designee.
The directors of Three-L are elected to hold office until the next annual
meeting of shareholders and until their respective successors have been elected
and qualified. Officers of Three-L are elected by the Board of Directors and
hold office until their successors are elected and qualified.
Three-L has no audit or compensation committee.
The following sets forth certain biographical information concerning the
current officers and directors of Three-L and the Intelicom Designees.
36
<PAGE>
HERMAN K. WATSKY - PRESIDENT AND A MEMBER OF THE BOARD OF DIRECTORS.
Herman K. Watsky is a founder, the President and a member of the Board of
Directors of Three-L. Mr. Watsky has been semi-retired since October 1992.
From 1967 to 1992, he was the owner and operation of the Galleria Shoe Boutique,
Inc., a ladies shoe store in New Orleans, Louisiana.
DR. ROY D. GREENBERG - VICE PRESIDENT AND A MEMBER OF THE BOARD OF
DIRECTORS
Dr. Roy D. Greenberg is a founder, the Vice President and a member of the
Board of Directors of Three-L. From 1990 to present, Dr. Greenberg has been in
private practice, specializing in pediatric/child and adolescent populations
providing inpatient and outpatient services to children and families, including
standard psychological and behavioral assessment, individual and group
psychotherapy and cognitive - behavioral therapies. Also from 1990 to the
present, he has been the consultant to the Director of Special Education
Services and the staff of the Department of Special Education at the Desoto
County School system, Desoto County, Mississippi. From 1987 to 1989, he served
as a developmental specialist for children and families referred to the Human
Genetics Program at Tulane University Medical School, New Orleans, Louisiana.
Dr. Greenberg received a B.S. degree in psychology in 1977 from Tulane
University, a M.S. degree in 1982 in psychology from Tulane and a PH.D. in
psychology in 1985 also from Tulane. He is a member of the American
Psychological Association and the Society for Pediatric Psychology.
BERNARD A. GOLDMAN - SECRETARY AND A MEMBER OF THE BOARD OF DIRECTORS.
Bernard A. Goldman is a founder, the Secretary and a member of the Board of
Directors of Three-L. From 1986 to present, Mr. Goldman has been employed as a
salesman at a men's clothing store in Metairie, Louisiana. From 1948 to 1984,
he owned and operated Goldman's, a ladies clothing store in Bogalusa, Louisiana.
GORDON DUMONT - TREASURER AND A MEMBER OF THE BOARD OF DIRECTORS.
Gordon Dumont is a founder, the Treasurer and a member of the Board of
Directors of Three-L. From 1992 to present, he has been a marketing consultant
to Yvonne LaFleur and Namanco Products, Inc. where he created and implemented a
marketing program for a private label line of women's fragrance products and was
responsible for coordinating promotional activities. From 1976 to 1992, he was
the owner of The Athlete's Foot, New Orleans, Louisiana, a chain of 11 stores
with annual sales in excess of $5 million. Mr. Dumont received a B.S. degree in
accounting from the University of New Orleans in 1977.
EDWARD P. GOTHARD - DIRECTOR.
Edward P. Gothard is a founder and the Assistant Treasurer of the Company.
From 1987 to present, he has been engaged in the practice of law at McCloskey,
Longenstein & Stoller, New Orleans, Louisiana. He is admitted to practice in
the United States Court of Appeals, Fifth Circuit and is a member of the
Louisiana State Bar Association, Louisiana Association of Defense Counsel and
the American Trial Lawyers Association.
DAVID C. KANSTOROOM - DIRECTOR.
David C. Kanstoroom received B.S.B.A. degrees in Business in Computer
Science from the University of Florida in 1987. From 1992 to the present he has
served as a Director and Chief Executive Officer of Intelicom Corporation of
Clearwater, Florida. From 1987 to 1992, he was employed by International
Business Machines as a senior marketing consultant where he was responsible for
consulting with IBM's national customers and training new customer support
representatives.
37
<PAGE>
DAVID SPEZZA - DIRECTOR.
David Spezza received an accounting degree from Hofstra University in New
York in 1987. From 1992 to the present, Mr. Spezza was a Director and President
of Intelicom Corporation of Clearwater, Florida. From 1987 to 1992, he was
employed with Arthur Andersen & Co. in New York in the tax department.
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
THREE-L
The following table sets forth certain information regarding the beneficial
ownership of Three-L Common Stock as of May 31, 1996 by (i) each director of
Three-L, each executive officer of Three-L, all Directors and executive officers
of Three-L as a group, each Intelicom Designee and each person known by Three-L
to be the beneficial owner of more than 5% of the Three-L Common Stock and (ii)
the beneficial ownership of Three-L Common Stock as of May 31, 1996, after
giving effect to the issuance of 1,420,687 shares of Three-L Common Stock to the
Intelicom shareholders pursuant to the Stock Exchange Agreement, by each of the
persons referred to in clause (i) above.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP OF THREE-L COMMON STOCK
-------------------------------------------------
PERCENT AFTER
GIVING EFFECT TO
NAME OF BENEFICIAL OWNER SHARES PERCENT THE STOCK EXCHANGE
- ------------------------------------------------------------ -------- -------- -------------------
<S> <C> <C> <C>
Herman K. Watsky . . . . . . . . . . . . . . . . . . . . . 15,000 19.6% 1.0%
Gordon Dumont. . . . . . . . . . . . . . . . . . . . . . . 15,000 19.6% 1.0%
Bernard A. Goldman . . . . . . . . . . . . . . . . . . . . 6,500 8.5% *
Roy D. Greenberg . . . . . . . . . . . . . . . . . . . . . 6,500 8.5% *
Edward P. Gothard. . . . . . . . . . . . . . . . . . . . . 1,000 1.3% *
All Directors and Officers as a group (5 persons). . . . . 44,000 57.6% 2.9%
David Kanstoroom (2) . . . . . . . . . . . . . . . . . . . 473,562 0% 31.0%
David Spezza (2) . . . . . . . . . . . . . . . . . . . . . 473,562 0% 31.0%
Telecom Ventures and Acquisitions Corp . . . . . . . . . . 473,562 0% 31.0%
</TABLE>
- ----------------------------
(1) Calculated pursuant to Rule 13d-3(d) of the Securities Exchange Act of
1934. Unless otherwise stated below, each such person has sole voting and
investment power with respect to all such shares. Under Rule 13d-3(d),
shares not outstanding which are subject to options, warrants, rights or
conversion privileges exercisable within 60 days are deemed outstanding for
the purpose of calculating the number and percentage owned by such person,
but are not deemed outstanding for the purpose of calculating the
percentage owned by each other person listed.
(2) Intelicom Designees.
INTELICOM
The following table sets forth certain information regarding the beneficial
ownership of Intelicom Common Stock as of May 31, 1996 by (i) each director of
Intelicom, each executive officer of Intelicom, all directors and executive
officers of Intelicom as a group and each person known by Intelicom to be the
beneficial owner of more than 5% of the Intelicom Common Stock and (ii) the
beneficial ownership of Three-L Common Stock as of May
38
<PAGE>
31, 1996, after giving effect to the Stock Exchange Agreement, by each of the
persons referred to in clause (i) above.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP OF
BENEFICIAL OWNERSHIP THREE-L COMMON STOCK
OF INTELICOM AFTER GIVING EFFECT TO THE
COMMON STOCK (1) TRANSACTIONS
--------------------- --------------------------
NAME OF BENEFICIAL OWNER SHARES PERCENT SHARES PERCENT
- ----------------------------------------------------- ------ ------- ---------- -----------
<S> <C> <C> <C> <C>
David Kanstoroom . . . . . . . . . . . . . . . . . . . 300 33.3% 473,562.4 33.3%
David Spezza . . . . . . . . . . . . . . . . . . . . . 300 33.3% 473,562.3 33.3%
Telecom Ventures and Acquisitions Corp . . . . . . . . 300 33.3% 473,562.3 33.3%
All executive officers and directors as
a group ( 3 persons) . . . . . . . . . . . . . . . . . 900 100% 1,420,687 100%
</TABLE>
_______________________
(1) For purposes of determining the numbers of shares beneficially owned by the
named individuals and by all executive officers and directors as a group,
with respect to any director or executive officer who held options to
purchase shares of Intelicom Common Stock exercisable within 60 days of May
31, 1996, it was assumed that such options had been exercised and the
shares issued were outstanding. The respective directors and executive
officers have sole voting power and sole investment power over all shares
reflected in the table and in this note, except as described in the notes
to this table.
DESCRIPTION OF CAPITAL STOCK OF THREE-L
THE FOLLOWING STATEMENTS ARE BRIEF SUMMARIES OF CERTAIN PROVISIONS RELATING
TO THREE-L'S CAPITAL STOCK AND ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO
THE PROVISIONS OF THREE-L'S CERTIFICATE OF INCORPORATION, (THE "THREE-L
CHARTER"), AND BYLAWS (THE "THREE-L BYLAWS"), WHICH ARE INCORPORATED BY
REFERENCE AS EXHIBITS TO THE REGISTRATION STATEMENT OF WHICH THIS PROXY
STATEMENT/PROSPECTUS IS A PART.
Three-L's authorized capital consists of 100,000,000 shares of Three-L
Common Stock, par value $.0001 per share, and 25,000,000 shares of Preferred
Stock, par value $.0001 per share ("Preferred Stock"). As of May 1, 1996, there
were 76,381 shares of Three-L Common Stock outstanding.
Dividends may be declared and paid on the Three-L Common Stock out of
legally available surplus. Such dividends may be paid in cash, property or
shares of Three-L Common Stock. The Three-L Board of Directors may set aside
reserves out of funds available for dividends for any purpose the Three-L Board
of Directors determines to be in Three-L's best interest.
Each share of Three-L Common Stock is entitled to share equally in
dividends from sources legally available therefor when, as, and if declared by
the Three-L Board of Directors and, upon liquidation or dissolution of Three-L,
whether voluntary or involuntary, to share equally in the assets of Three-L
available for distribution to the holders of the Three-L Common Stock.
All outstanding shares of Three-L Common Stock are, and all shares to be
issued by Three-L pursuant to the Merger Agreement will be, validly issued,
fully paid and nonassessable. The Three-L Board of Directors is authorized to
issue additional shares of Three-L Common Stock within the limits authorized by
the Three-L Charter, without stockholder action.
39
<PAGE>
No shares of Preferred Stock have been issued. However, the Board of
Directors of Three-L has the right to fix the rights, privileges and
preferences, including preference upon liquidation, of any class of Preferred
Stock to be issued in the future out of authorized but unissued shares of
Preferred Stock. The Three-L Board of Directors may issue these shares after
adopting and filing a certificate of designation with the Secretary of State of
the State of Delaware.
TRANSFER AGENT
The Company's transfer agent is American Securities Transfer, Inc. of
Denver, Colorado. If the Stock Exchange is approved they will continue to serve
as the Company's transfer agent.
DESCRIPTION OF CAPITAL STOCK OF INTELICOM
THE FOLLOWING STATEMENTS ARE BRIEF SUMMARIES OF CERTAIN PROVISIONS RELATING
TO INTELICOM'S CAPITAL STOCK AND ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO
THE PROVISIONS OF INTELICOM'S CERTIFICATE OF INCORPORATION (THE "INTELICOM
CHARTER"), AND BYLAWS (THE "INTELICOM BYLAWS"), WHICH ARE INCLUDED AS EXHIBITS
TO THE REGISTRATION STATEMENT OF WHICH THIS PROXY STATEMENT/PROSPECTUS IS A
PART.
Intelicom's authorized capital consists of 1,000 shares of Intelicom Common
Stock, par value $1.00 per share. No class of Preferred Stock is authorized.
As of the date of this Proxy Statement/Prospectus, there are 900 shares of
Intelicom Common Stock outstanding.
Dividends may be declared and paid on the Intelicom Common Stock out of
legally available surplus. Such dividends may be paid in cash, property or
shares of Intelicom Common Stock. The Intelicom Board of Directors may set
aside reserves out of funds available for dividends for any purpose the
Intelicom Board of Directors determines to be in Intelicom's best interest.
Each share of Intelicom Common Stock is entitled to share equally in
dividends from sources legally available therefor when, as, and if declared by
the Intelicom Board of Directors and, upon liquidation or dissolution of
Intelicom, whether voluntary or involuntary, to share equally in the assets of
Intelicom available for distribution to the holders of the Intelicom Common
Stock.
Each holder of Intelicom Common Stock is entitled to one vote per share for
all purposes. The holders of Intelicom Common Stock are not entitled to
cumulative voting in the election of directors. Moreover, the holders of
Intelicom Common Stock have no preemptive rights and there is no redemption
right or right of conversion with respect to the Intelicom Common Stock.
EXPERTS
The financial statements of Three-L as of December 31,1994 and 1995 and for
the period March 18, 1994 (inception) to December 31, 1994 and for the year
ended December 31, 1995, have been audited by Schmidt + Associates, P.C.,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
The financial statements of Intelicom as of December 31, 1993, 1994 and
1995 and for each of the three years in the period ended December 31, 1995 have
been audited by Schmidt + Associates, independent auditors, as set forth in
their report thereon included therein. Such financial statements are included
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
40
<PAGE>
LEGAL OPINIONS
The legality of the Three-L Common Stock being offered hereby is being
passed upon for Three-L by John B. Wills, Esq., Denver, Colorado.
OTHER INFORMATION AND STOCKHOLDER PROPOSALS
Three-L's management knows of no other matters that may properly be, or
which are likely to be, brought before the Intelicom Special Meeting. However,
if any other matters are properly brought before such Special Meeting, the
persons named in the enclosed proxy or their substitutes will vote the proxies
in accordance with the recommendations of management.
In order to be considered for inclusion in the proxy statement for the next
annual meeting of Stockholders of Three-L, any stockholder proposal intended to
be presented at the meeting must have been received by Three-L on or before
December 31, 1996.
41
<PAGE>
THREE-L MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH
THE FINANCIAL STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN THIS PROXY
STATEMENT/PROSPECTUS.
GENERAL
Three-L was formed for the sole purpose of acquiring an interest in an
established business which is willing to consolidate with Three-L for the
purpose of establishing a future trading market for its Common Stock and seek
additional acquisitions in related or similar business entities.
THE INTELICOM STOCK EXCHANGE
On April 13, 1995, Three-L completed its initial public offering and
commenced seeking a business acquisition. The Company's President, Herman K.
Watsky together with the Three-L legal counsel reviewed various business plans
submitted by companies ranging from software development, marine supplies and
another long distance reseller. Based on management interviews and financial
statement analysis, the Three-L Board of Directors chose Intelicom based on its
plan of operations, aggressive management and its potential revenues from
operations. Additionally, management believes the telecommunications industry
to have significant financial viability in light of current legislation.
On November 20, 1995, Three-L entered into a letter of intent to acquire
all of the issued and outstanding shares of Intelicom. Intelicom is a national
reseller in the transmission of long distance telephone calls through and over
transmission lines owned by AT&T and other long distance carriers at tarriffed
rates. Consummation of the transaction is dependent upon holders of at least
25,646 shares reconfirming their investment in Three-L and the transaction in
accordance with and pursuant to Delaware corporate law and applicable SEC
Regulations. After the acquisition, the Intelicom shareholders will hold
approximately ninety three percent (93%) of Three-L's outstanding common stock.
The terms of the letter of intent were negotiated by Three-L's President
and David Kanstoroom of Intelicom. The primary issues in the negotiation were
the exchange rate and number of shares Intelicom would receive, a determination
as to the new management, Intelicom's current level of operations and financial
condition, and the desire of Intelicom to become a "public" company.
If approved, all members of Three-L's current board of Directors will
resign and representatives from Intelicom will be appointed to fill the
vacancies so created. Three-L and Intelicom have agreed to use their best
efforts to complete the transaction on or before June 30, 1996.
RESULTS OF OPERATIONS
Three-L has had no operations to date and its sole activity has consisted
of signing the letter of intent to acquire Intelicom. All funds received in the
public offering are currently being held in an escrow account and will only be
released in the event the Stock Exchange is approved.
42
<PAGE>
INTELICOM'S MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH
THE FINANCIAL STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN THIS PROXY
STATEMENT/PROSPECTUS.
OVERVIEW
Intelicom was founded in 1992, with operations beginning in 1993. Net
revenues have increased to approximately $858,408 for the five months ended May
31, 1996 ($2,060,000 if annualized). Intelicom has financed this growth
primarily with cash flow from operations. Intelicom has increased revenues
through its attainment of marketing agreements with several telecommunication
carriers, expanding its sales representative force and its attention to customer
service. In September of 1995, Intelicom began buying wholesale long distance
services which it resells to customers under its own name (private label
products and services).
The Company expects to experience continued growth in revenues from
operations due to the introduction of its own private label telecommunications
products and services, thereby allowing the Company to bill and collect directly
from its customers for telecommunications services rather than merely receiving
commissions from other telecommunications carriers for services provided by
those other carriers. The Company also expects its profitability to increase as
a result of its own private label billing and collection since it will be acting
in the role of an actual telecommunications carrier which buys and re-sells
telecommunications services. Through its strategy of continued growth through
expansion of its agent network, the Company expects to generate significant
savings in its transport costs by achieving volume discounts from its underlying
carriers. In addition, the Company anticipates that its ability to bill and
collect directly from its customers will enable it to provide streamlined and
efficient service to its customers, thereby generating enhanced customer loyalty
and lowering customer attrition. Finally, the Company intends to complement its
own private label billing and collection with the continued availability of
products and services of other major carriers on a sales agency basis, thereby
affording the Company the opportunity to attract and retain customers by
providing a diverse array of telecommunications products and services. It is
anticipated that these factors, combined with the Company's stated goal of
continuing to attract and train highly qualified individuals to serve as sales
agents and consultants, will provide significantly increased potential for
growth in revenues and operating profit.
RESULTS OF OPERATIONS
INTELICOM FOR THE FIVE MONTHS ENDED MAY 31, 1996, COMPARED TO THE FIVE MONTHS
ENDED MAY 31, 1995.
Revenue from operations for the five months ended May 31, 1996, was
$858,408 compared to $673, 436 for the five months ended May 31, 1995. This
increase in revenues is attributable to the increased experience of the sales
representatives, expansion of its agent network and the expanded availability of
products and service from other major carriers.
Intelicom received approximately $12,000 (1%) of revenues from sales of
it's own long distance product. These fees did not exist at May 31, 1995 and
are expected to continue to grow very rapidly.
Intelicom received approximately $106,500 (12%) of revenues from various
fees charged to it's sales representatives, compared to $83,500 (12%) for the
five months ended May 31, 1995.
Operating expenses increased $211,214 (35%) in the five months ended May
31, 1996 as a result of the 27% increase in revenues, additional professional
fees incurred to comply with SEC requirements and additional marketing efforts.
Commissions paid to sales representatives of $473,385 represents 58% of
total operating expenses of $822,139. This percentage is consistent with 1995.
Commission expenses incurred as a percentage of commission earned increased to
63% in 1996 versus 60% in 1995.
43
<PAGE>
INTELICOM FOR THE YEAR ENDED DECEMBER 31, 1995, COMPARED TO THE YEAR ENDED
DECEMBER 31, 1994.
Revenue from operations for the twelve months ended December 31, 1995, was
$1,691,000, compared to $840,000 for the twelve months ended December 31,1994.
This increase in revenues is attributable to more qualified sales
representatives, an improved incentive and benefit program for sales
representatives, more long distance reseller agreements, and increased efforts
on the part of management to stimulate sales production from its sales
representatives. Revenue increased $851,000 in 1995, or approximately 101%.
In September of 1995, Intelicom began offering its own long distance
product to end-users. This was a significant step in Intelicom's growth and
development. Through several very competitive contracts negotiated by
Intelicom, it is now able to provide services, bill end-users and collect
revenue directly from its customer base. Revenue directly from end-users in
1995 was minimal, but it is expected to expand rapidly compared to none in 1994.
Intelicom received approximately $145,000 (9%) of revenues from various
fees received from its sales representatives. These fees increased as a result
of an expanded sales force.
Operating expenses increased $870,000 (102%) in 1995 as a result of the
100% increase in revenues. Commissions paid to sales representatives of
$926,000 represents 58% of total operating expenses of $1,608,000. Intelicom
incurred significant increases in travel and marketing costs associated with
recruiting the expanded sales representative force and consummating cost
effective marketing and consulting agreements with its long distance providers.
Commission expenses incurred as a percentage of commission earned decreased to
60% in 1995 versus 66% in 1994. It is anticipated that this trend will continue
as a result of Intelicom offering its own products under its own name through
its wholesale contracts. Management believes the selling expenses attributed to
sales representative commissions will decrease as a percentage of net revenues
as a result of Intelicom beginning to offer its own long distance product to
end-users; however, other selling expenses will increase because of marketing
efforts for more customers and qualified sales representatives.
INTELICOM FOR THE YEAR ENDED DECEMBER 31, 1994, COMPARED TO THE YEAR ENDED
DECEMBER 31, 1993.
Revenues from operations for the twelve months ended December 31, 1994, was
$840,000, compared to $117,000 for the twelve months ended December 31, 1993.
This increase is attributable to a full year of operations in 1994 versus
development stage activities for the first half of 1993, beginning to conduct
business with its longest carrier, Frontier, for the second half of 1993 only,
and not starting to conduct business with its other significant carrier, BTI,
until 1994. Revenues increased $723,000 in 1994, or approximately 500%.
1994 revenues from fees attributable to its sales force were approximately
$112,000, 13% of total revenues. Fee revenue increased $51,000 (84%) in 1994 as
a result of the expansion of its sales representative group.
Operating expenses increased $622,000 in 1994 (503%) as a result of the
600% increase in revenues. Commissions paid to sales representatives of
$481,000 represents 65% of total operating expenses of $738,000. Commission
expenses incurred as a percentage of commissions earned decreased to 66% in 1994
versus 79% in 1993. This decrease in commission expense, as a percentage of
commission revenue, is the result of improvement in its compensation plan with
its independent agents. The agents earn compensation incentives based upon
overall revenue goals with lesser emphasis on specific commissions related to
specific customer sales. Other operating expenses have increased because of a
full year of operating activities in 1994 versus a portion of 1993 while
Intelicom was in the development stage.
LIQUIDITY AND CAPITAL RESOURCES
Intelicom's cash position at May 31, 1996 was $61,000 and net working
capital was $128,000.
Intelicom's cash position at December 31, 1995, was $44,000 and net working
capital was $113,000. Intelicom's agency agreements with its two primary long
distance carriers result in Intelicom's commission revenues being paid based on
billed revenue regardless if end-users pay bills to the carriers, thus improving
Intelicom's
44
<PAGE>
working capital. Intelicom has no charge backs, or pay backs on accounts that
are delinquent or written off as bad debt from its two primary carriers.
Intelicom's cash position at December 31, 1994, was $39,000 and working
capital was $79,000. Intelicom's sales representative agreements do not require
Intelicom to pay its agents, which represents 65% of Intelicom's annual cash
flow obligations, until the long distance carriers have paid them for long
distance services provided; therefore, Intelicom has not incurred working
capital shortages even with its substantial growth.
Cash flows from operations for Intelicom totaled $33,000 for the five
months ended May 31, 1996 ($79,000 if annualized) compared to $46,000 for the
year ended December 31, 1995, and $75,000 for the year ended December 31, 1994.
The decrease in Intelicom's cash flows from operating activities is the result
of Intelicom's substantial growth.
Cash outflows from investing activities for the five months ended May 31,
1996, year ended December 31, 1995 and year ended December 31, 1994, of $9,000,
$10,000 and $24,000, respectively, are the result of property and equipment
acquisitions.
Net cash outflows from financing activities for the five months ended May
31, 1996, year ended December 31, 1995 and year ended December 31, 1994, of
$6,000, $31,000 and $16,000, respectively, are primarily the result of net
repayments of shareholder loans/advances and 1995 distributions to shareholders,
in contemplation of Intelicom converting to C-Corporation status for income tax
purposes.
45
<PAGE>
SELLING SHAREHOLDERS
The following table sets forth the number and percentage of shares of
Warrants/Common Stock that are being "piggy backed" for sale by this Proxy
Statement/Prospectus for the account of Barron Chase Securities, Inc. and/or its
assigns pursuant to the Underwriting Agreement dated April 13, 1995 between the
Company and Barron Chase Securities (the "Selling Shareholders"). The Selling
Shareholders will receive shares of Common Stock upon exercise of the Warrants
to purchase Common Stock. No underwriter is obligated to sell or purchase any
of such shares. The shares of Common Stock may be sold by such Selling
Shareholders from time to time in the public marketplace. The Company has
agreed to update the information contained in this Proxy/Prospectus to reflect
any facts or events arising after the date of this Proxy/Prospectus, which,
individually, or in the aggregate, represents a fundamental change in the
information set forth in this Proxy/Prospectus and to include any material
information respecting a plan of distribution materially different from the plan
of distribution disclosed in this Prospectus.
The Company also consents to the use of the Proxy Statement/Prospectus by
the Selling Shareholders in connection with sales of the Common Stock registered
hereunder.
Number of Total Number
Shares of of preferred
Common Stock Shares Total Amount
to be Owned Prior Owned After
Name Registered to Offering Offering
- ---- ------------ ------------ ------------
Robert T. Kirk 2,738 (1) 2,738 0
Wendy Gusrae 500 (1) 500 0
Totals 3,238 3,238 0
____________________________
(1) Represents shares of Common Stock underlying Warrants previously issued by
the Company.
SELLING SHAREHOLDER PLAN OF DISTRIBUTION
The Selling Shareholders are not restricted as to the prices at which they
may sell their shares and sales of such shares at less than the market price may
depress the market price of the Company's Common Stock. Further, the Selling
Shareholders are not restricted as to the number of shares which may be sold at
any one time, and it is possible that a significant number of shares could be
sold at the same time which may also have a depressive effect on the market
price of the Company's Common Stock. However, it is anticipated that the sale
of the Common Stock being offered hereby will be made through customary
brokerage channels either through broker-dealers acting as agents or brokers for
the seller, or through broker-dealers acting as principals, who may then resell
the shares in the over-the-counter market, or a private sale in the over-the-
counter market or otherwise, at negotiated prices related to prevailing market
prices and customary brokerage commissions at the time of the sales, or by a
combination of such methods. Thus, the period for sale of such shares by
Selling Shareholders may occur over an extended period of time.
There are no contractual arrangements between or among any of the Selling
Shareholders and the Company with regard to the sale of the shares and no
professional underwriter in its capacity as such will be acting for the Selling
Shareholders.
The Company will not receive any proceeds from the sale of the shares of
Common Stock by the Selling Shareholders.
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<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF THREE-L ENTERPRISES, INC.
Report of Independent Public Accountants.....................................S-1
Balance Sheets at December 31, 1994 and 1995.................................S-2
Statements of Operations from March 18, 1994 (inception) to December 31,
1994 and for the year ended December 31, 1995................................S-3
Statements of Stockholders' Equity from March 18, 1994 (inception) to
December 31, 1994 and for the year ended December 31, 1995...................S-4
Statements of Cash Flows from March 18, 1994 (inception) to
December 31, 1994 and for the year ended December 31, 1995...................S-5
Notes to the Consolidated Financial Statements.........................S-6 - S-9
Unaudited Balance Sheets at May 31, 1996 and 1995...........................S-10
Unaudited Statements of Operations for the five months ended May 31, 1996
and 1995....................................................................S-11
Unaudited Statement of Stockholders' Equity at May 31, 1996.................S-12
Unaudited Statements of Cash Flows for the five months ended May 31, 1996
and 1995....................................................................S-13
S-1
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENT OF INTELICOM INTERNATIONAL CORPORATION
Report of Independent Public Accountants.....................................F-1
Consolidated Balance Sheets at December 31, 1993, 1994 and 1995..............F-2
Consolidated Statements of Earnings for each of the three years
in the period ended December 31, 1995........................................F-3
Consolidated Statement of Stockholders' Equity for each of the
three years in the period ended December 31, 1995............................F-4
Consolidated Statements of Cash Flows for each of the three years
in the period ended December 31, 1995........................................F-5
Notes to the Consolidated Financial Statements........................F-6 - F-11
Unaudited Consolidated Balance Sheets at May 31, 1996 and 1995..............F-12
Unaudited Consolidated Statements of Earnings for the five months
ended May 31, 1996 and 1995.................................................F-13
Unaudited Consolidated Statement of Stockholders' Equity at May 31, 1996....F-14
Unaudited Consolidated Statements of Cash Flows for the five months
ended May 31, 1996 and 1995.................................................F-15
F-1
<PAGE>
ANNEX I
PROXY PROXY
THREE-L ENTERPRISES, INC.
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE SPECIAL MEETING OF THE SHAREHOLDERS TO BE HELD SEPTEMBER 10, 1996
The undersigned hereby constitutes and appoints Herman K. Watsky and Gordon
Dumont, and each of them, the true and lawful attorneys and proxies of the
undersigned, with full power of substitution and appointment, for and in the
name, place and stead of the undersigned, to act for and vote all of the
undersigned's shares of the $.0001 par value common stock of Three-L
Enterprises, Inc., a Delaware corporation at the Special Meeting of Shareholders
to be held at 1109 Andrews, Metairie, Louisiana, at 11:00 a.m. Central Standard
Time, on September 10, 1996, and any and all adjournments thereof, for the
following purposes:
1. To reconfirm their investment in Three-L Enterprises, Inc.
/ / FOR / / AGAINST / / ABSTAIN
2. To consider and approve the Stock Exchange Agreement with Intelicom
International Corporation ("Intelicom") and the issuance of 1,420,687
shares of Three-L Common Stock for all of the issued and outstanding
shares of Intelicom.
/ / FOR / / AGAINST / / ABSTAIN
3. To transact such other business as properly may come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ABOVE.
The undersigned hereby revokes any proxies as to said shares and heretofore
given by the undersigned, and ratifies and confirms all that said attorneys and
proxies may lawfully do by virtue hereof.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING IN ACCORDANCE WITH
THE SHAREHOLDER'S SPECIFICATION ABOVE. THIS PROXY CONFERS DISCRETIONARY
AUTHORITY IN RESPECT TO MATTERS NOT KNOWN OR DETERMINED AT THE TIME OF THE
MAILING OF THE NOTICE OF THE SPECIAL MEETING OF SHAREHOLDERS TO THE UNDERSIGNED.
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The undersigned hereby acknowledges
receipt of the Notice of Special
Meeting of Shareholders and Proxy
Statement furnished therewith.
Dated: , 1996
--------------------------
--------------------------------------
--------------------------------------
Signature(s) of Shareholder(s)
Signature(s) should agree with the
name(s) hereon. Executors,
administrators, trustees, guardians
and attorneys should indicate when
signing. Attorneys should submit
powers of attorney.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THREE-L
ENTERPRISES, INC. PLEASE SIGN AND RETURN THIS PROXY TO THREE-L ENTERPRISES,
INC., 1109 ANDREWS, METAIRIE, LOUISIANA 70005. THE GIVING OF A PROXY WILL NOT
AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
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ANNEX II
STOCK PURCHASE AGREEMENT
--------------------
BETWEEN
DAVID A. KANSTOROOM
DAVID SPEZZA
TELECOM VENTURES AND ACQUISITIONS CORP
as Sellers
AND
THREE - L ENTERPRISES, INC.
as Purchaser,
relating to the purchase of
all of the outstanding stock of
INTELICOM INTERNATIONAL CORPORATION
September __, 1996
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is executed as of the _____ day of
September, 1996 (hereinafter called the "Agreement"), between and among David A.
Kanstoroom, David Spezza and Telecom Ventures and Acquisitions Corp (hereinafter
referred to as the "Selling Stockholders"), Three-L Enterprises, Inc.
(hereinafter referred to as "Purchaser"), a corporation organized and existing
in accordance with the laws of the State of Delaware, and Intelicom
International Corporation (the "Company"), a corporation organized and existing
under the laws of the State of Florida.
RECITALS
WHEREAS, the Company is a corporation organized and existing under the
laws of the State of Florida, having its principal place of business at 28050
U.S. 19 North, Suite 202, Clearwater, Florida 34621. The Selling Stockholders
own 100% of the outstanding capital stock of the Company.
WHEREAS, Purchaser is a corporation organized and existing under the laws
of the State of Delaware, having its principal place of business located at 1109
Andrews, Metairie, Louisiana 70005.
WHEREAS, Purchaser has offered to purchase 100% of the outstanding capital
shares of the Company (the "Shares") in consideration of the issuance of
1,420,687 shares of the Purchaser's common stock to the Selling Stockholders,
and other good and valuable consideration, the adequacy whereof is hereby
acknowledged. The Selling Stockholders are willing to sell the Shares pursuant
to the provisions of this Agreement.
NOW, THEREFORE, in consideration of the above premises and of the
respective representations, warranties and agreements herein contained, the
parties hereto agree as follows:
1. THE PURCHASE
1.1 AGREEMENT TO PURCHASE. Purchaser hereby agrees to purchase, and
Selling Stockholders hereby agree to sell to Purchaser the Shares in
consideration of the issuance of 1,420,687 shares of the Purchaser's common
stock to the Selling Stockholders, such shares to be delivered to the Selling
Stockholders at the Closing.
1.2 CLOSING. The completion of the purchase shall take place as may be
agreed between the parties, but no later than June 30, 1996 (the "Closing
Date'). The date of completion of the purchase shall be hereinafter referred to
as the "Effective Date."
2. ACTIONS ON THE EFFECTIVE DATE
2.1 DIRECTORS. On the Effective Date, (i) Purchaser's Board of
Directors shall be reduced from five to three, (ii) Purchaser's directors shall
appoint the Selling Stockholders as Directors of Purchaser, and (iii) the
remaining Directors of Purchaser shall resign.
2.2 OFFICERS. On the Effective Date, all of Purchaser's Officers shall
resign, and David A. Kanstoroom shall be appointed as Chief Executive Officer
and Secretary and David Spezza as President and Treasurer.
2.3 PURCHASER ACTIONS AT CLOSING. On the Effective Date, Purchaser
shall deliver to Selling Stockholders certificates for a total of 1,420,687
shares of Purchaser's common stock, as follows:
David A. Kanstoroom 473,562.4 shares
David Spezza 473,562.3 shares
Telecom Ventures and Acquisitions Corp 473,562.3 shares
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2.4 THE SELLING STOCKHOLDERS' ACTIONS AT CLOSING. On the Effective
Date, the Selling Stockholders shall deliver to Purchaser
2.4.1 Certificates representing the Shares, all of which are owned
by the Selling Stockholders, properly endorsed and assigned to Purchaser; and
2.4.2 All of the books and records of the Company.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and
warrants to Selling Stockholders as follows:
3.1 ORGANIZATION AND GOOD STANDING. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Purchaser has full power and authority, corporate and otherwise, to
carry on its business in the State of Delaware.
3.2 CORPORATE POWERS, GOVERNMENTAL CONSENTS AND LAW. Purchaser has the
unconditional right, power and authority to execute, pursue and complete this
Agreement. Except as set forth in Section 7 hereof, no consent, approval,
authorization or order of any court or governmental agency or body or union or
other body is required by Purchaser to complete the transactions contemplated
herein.
3.3 AUTHORIZATION BY DIRECTORS AND SHAREHOLDERS. The execution and
delivery of this Agreement and the completion of the transactions contemplated
hereby have been duly authorized by the Board of Directors and the shareholders
of Purchaser.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and
warrants to Purchaser as follows:
4.1 ORGANIZATION AND GOOD STANDING. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida. The Company has full power and authority, corporate and otherwise, to
carry on its business as and where now conducted.
4.2 AUTHORIZED CAPITALIZATION. The authorized capital stock of the
Company is 1,000 shares of common stock, $1.00 par value. As of the date of
this Agreement, there are 900 shares of common stock issued and outstanding, all
of which are owned by the Selling Stockholders. The Company has no outstanding
warrants, options, convertible securities, contracts, commitments, or other
rights or demands of any character to acquire any additional shares of its
common stock or any other security.
4.3 SUBSIDIARIES. The Company has no subsidiaries as of the date
hereof.
4.4 CORPORATE POWERS, GOVERNMENTAL CONSENTS AND LAWS. The Company has
the unconditional right, power and authority to execute, pursue and complete
this Agreement. No consent, approval, authorization or order of any court or
governmental agency or body or union or other body is required by the Company to
complete the transactions contemplated herein.
4.5 DELIVERY OF DOCUMENTS. Copies of the articles of incorporation,
bylaws and minutes of the Company have been made available for inspection by
representatives of Purchaser and are true, complete, unmodified and correct
copies of the articles of incorporation, as amended, and the bylaws of the
Company in effect at the date hereof and the minutes of meetings of its
shareholders, directors and committees thereof.
4.6 MATERIAL TRANSACTIONS AND ADVERSE CHANGES. As of the date of this
Agreement, there has not been, occurred or arisen:
4.6.1 Any material adverse change in the business or financial
condition of the Company since December 31, 1995, except as set forth on
Schedule 4.6.1 attached hereto; or
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4.6.2 Any damage or destruction in the nature of a casualty loss,
whether covered by insurance or not, materially and adversely affecting any one
or more properties or the business of the Company; or
4.6.3 Any borrowing of money or any commitment to borrow money by
the Company or any cancellation, termination or modification of any existing
loan and/or commitment to lend money to the Company, except as set forth on
Schedule 4.6.3 attached hereto; or
4.6.4 The creation of or entrance into any new or existing
business entity by the Company, except as set forth on Schedule 4.6.4 attached
hereto; or
4.6.5 Any other event, condition or state of facts of any
character which materially and adversely affects, or, to the best of the
knowledge of the Company, threatens to materially and adversely affect, the
business or assets of the Company, or results of operations or financial
condition of the Company.
4.7 TAXES.
4.7.1 All income, excise, unemployment, social security,
occupation, franchise and other taxes, duties or charges levied, assessed or
imposed upon the Company by the United States or by any government, state,
municipality or governmental subdivision have been duly paid or adequately
provided for and all income, excise, unemployment, social security, occupation,
franchise and other tax reports or other reports required by law or regulation
have been duly filed.
4.7.2 All federal and state tax returns of the Company required to
have been filed previously have been filed by the Company with the appropriate
governmental agency and all assessments with respect to such periods have been
paid. Adequate reserves have been established for all income and other tax
liabilities on the Company's financial statements for the period then ended and
for all preceding periods for the Company.
4.7.3 The Company has not waived any statute of limitations with
respect to any of its liabilities, including, without limitation, liability for
federal income or any other taxes for any period prior to the date hereof.
4.8 CONTRACTS. Except as set forth on Schedule 4.8 attached hereto, the
Company is not a party to any contract not made in the ordinary course of
business, nor is the Company a party to any (1) contract for the employment of
any officer or individual employee, (2) contract with any union, (3) bank loan
or other credit agreement, (4) bonus, deferred compensation, profit sharing,
pension or retirement arrangement, (5) leases for real or personal property, (6)
partnership or joint venture agreement, or (7) other material contract,
agreement or commitment, whether or not made in the ordinary course of business.
4.9 FINANCIAL STATEMENTS. Attached hereto as Schedule 4.9 are true and
complete copies of the financial statements of the Company as of December 31,
1994 and 1995. Such financial statements present fairly, to the extent reported
thereon, the financial position of the Company as of the end of the periods
reflected thereon. The financial information described herein is collectively
referred to as the "Financial Statements."
4.10 CONTINGENT LIABILITIES. There are no claims, actions, suits,
proceedings or investigations pending or threatened, against or affecting the
Company or its properties, in any court or before or by any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or arbitration tribunal, or other forum
which, if adversely determined against the Company would materially affect the
business, prospects, properties or assets of the Company or the right of the
Company to conduct its business as currently conducted. There are no judgments,
decrees, orders, writs, injunctions, demands or any other mandates outstanding
to which, to the knowledge of the Company, the Company is a party or by which it
is bound or affected which adversely affects the business, prospects, properties
or assets of the Company.
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<PAGE>
4.11 GUARANTEES. There are no contracts or commitments by the Company
directly or indirectly guaranteeing the payment, performance or both payment and
performance of the obligations of third parties.
4.12 COMPLIANCE WITH LAWS. The Company has complied in all material
respects with all applicable laws, orders and regulations of the federal, state,
municipal and/or other governments and/or any instrumentality thereof, domestic
or foreign, applicable to its assets and/or to the business conducted by it
including, without limitation, all applicable securities laws, and is not in
violation of any laws, orders and regulations which singly or in the aggregate
are material.
4.13 INDEBTEDNESS OWED TO STOCKHOLDERS, OFFICERS, DIRECTORS OR EMPLOYEES.
The Company is not indebted to any stockholder, officer, director or employee as
of the date hereof.
4.14 INDEBTEDNESS OWED BY STOCKHOLDERS, OFFICERS, DIRECTORS OR EMPLOYEES.
No money is owed to the Company by any of the stockholders, officers, directors
or employees of the Company.
4.15 NO SUBSEQUENT MATERIAL EVENTS. Other than in the ordinary course of
business, there have been (1) no commitments made or outstanding for the payment
of salaries, bonuses, fees or other forms of compensation of any employee, (2)
no loans made or agreed to be made to any person, firm or corporation, (3) no
dividends or other distributions declared or paid, (4) no purchase or
commitments for the purchase or redemption of any shares of outstanding capital
stock, (5) no capital expenditures and no commitments for capital expenditures,
and (6) no other material transactions other than in the ordinary course of
business.
4.16 AUTHORIZATION BY DIRECTORS AND THREE STOCKHOLDERS. The execution
and delivery of this Agreement has been duly and properly authorized by the
Board of Directors and the three stockholders of the Company.
4.17 STATUS OF THE SHARES. The Shares have been legally and validly
issued to the Selling Stockholders and are duly authorized, fully paid and
nonassessable.
4.18 ESTOPPEL. All statements herein with respect to the Company are
true and correct and the Company has not made any untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements made herein, in the light of the circumstances under which they were
made, not misleading.
5. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS. The Selling
Stockholders, and each of them, represent and warrant to Purchaser as follows:
5.1 The Selling Stockholders are the owner of all of the outstanding
shares of the Company and have the capacity to enter into, and to perform the
obligations required by this Agreement.
5.2 No other person has any direct or indirect interest in the Shares,
and the Selling Stockholders are the sole party in interest with respect to the
Shares.
5.3 The Selling Stockholders have completed due investigation and, after
such investigation, has no reason to believe that any of the representations or
warranties of the Company contained in Section 4, above, are not true, correct,
and complete, and none of the representations or warranties of the Company omits
any statement or information necessary, in light of the circumstances, to make
such representation or warranty not misleading.
5.4 RESTRICTED SECURITIES. The Selling Stockholders understand that the
shares of Purchaser acquired by them are and will continue to be restricted
securities within the meaning of Rule 144 of the General Rules and Regulations
under the Securities Act of 1933, as amended (the "Act") and applicable state
statutes, and each consents to the placement of an appropriate restrictive
legend or legends on any certificates evidencing the shares and any certificates
issued in replacement or exchange therefor and acknowledges that Purchaser will
cause its stock transfer records to note such restrictions. The Selling
Stockholders further understand that the shares cannot be sold unless they are
registered under the Act and any applicable state securities laws or unless an
exemption from such registration requirements is available; that they must bear
the economic risks of the investment in the shares for an
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<PAGE>
indefinite period of time because they have not been registered under the Act or
any state securities laws; and that the Purchaser is the only person which may
register the shares under the Act and state securities statutes and the
Purchaser has not made any representations to it regarding the registration of
the shares or compliance with Regulation A or some other exemption under the
Act.
6. SURVIVAL
6.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of Purchaser, the Company, and the Selling
Stockholders contained in this Agreement shall survive the Closing for a period
of three years.
7. ADDITIONAL AGREEMENTS
7.1 STOCKHOLDER APPROVAL. Purchaser shall promptly call a meeting of
its stockholders (the "Purchaser Stockholder Meeting") for the purpose of
complying with the requirements of Rule 419 adopted under the Securities Act of
1933, as amended, and approval of the Stock Purchase which is the subject of
this Agreement, and shall use its reasonable best efforts to obtain stockholder
approval of both. The Purchaser Stockholder Meeting shall be held as soon as
practicable following the date upon which the Registration Statement becomes
effective, and Purchaser will, through its Board of Directors, recommend to its
stockholders the approval of the Stock Exchange.
7.2 REGISTRATION STATEMENT AND PROXY STATEMENT. Purchaser shall
prepare and file with the Securities and Exchange Commission ("SEC") as soon as
practicable a proxy statement for use at the Purchaser Stockholder Meeting
(the"Proxy Statement"), and Purchaser shall prepare and file with the SEC as
soon as practicable a registration statement (the"Registration Statement")
(including the Proxy Statement as a prospectus therein) and shall use all
reasonable efforts to have the Registration Statement declared effective by the
SEC as soon as practicable. Purchaser shall also take any action required to be
taken under state securities or "Blue Sky" laws in connection with the issuance
of the Purchaser's common stock pursuant to this Agreement. The Company and the
Selling Stockholders shall furnish Purchaser with all information concerning the
Company, its officers, directors and stockholders, as the case may be, required
for use in the Registration Statement and the Proxy Statement, and the Company
and Purchaser shall each take such other actions as the other may reasonable
request in connection with the preparation of the Registration Statement and the
Proxy Statement.
8. MISCELLANEOUS
8.1 NOTICE. Any notice, request, instruction or other document to be
given hereunder shall be in writing and, except as otherwise provided for
herein, shall be delivered personally or sent by registered or certified mail as
follows:
If to Selling Stockholders:
DAVID A. KANSTOROOM
28050 U.S. 19 North, Suite 202
Clearwater, Florida 34621
DAVID SPEZZA
28050 U.S. 19 North, Suite 202
Clearwater, Florida 34621
TELECOM VENTURES AND ACQUISITIONS CORP
28050 U.S. 19 North, Suite 202
Clearwater, Florida 34621
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If to Purchaser:
THREE - L ENTERPRISES, INC.
1109 Andrews
Metairie, Louisiana 70005
Attention: Herman K. Watsky
and to JOHN B. WILLS, ESQ.
410 Seventeenth St.
. Suite 1940
Denver, Co. 80202
If to the Company:
INTELICOM INTERNATIONAL CORPORATION
28050 U.S. 19 North, Suite 202
Clearwater, Florida 34621
or to any subsequent address as to which the other party is advised in
accordance with the foregoing.
8.2 BENEFIT. This Agreement shall be binding upon and shall inure to
the benefit of Selling Stockholders, Purchaser and the Company and their
respective successors and assigns. Nothing in this Agreement, express or
implied, is intended to confer upon any person, other than Selling Stockholders,
Purchaser and the Company and their successors and assigns, any rights or
remedies under or by reason thereof.
8.3 FEES. Except as otherwise provided herein, Selling Stockholders and
Purchasers shall pay their own costs and expenses incident to the negotiation,
preparation and performance of this Agreement, and compliance with all
agreements and conditions contained herein, including all fees, expenses and
disbursements of their respective counsel, whether or not the transactions
contemplated hereby are completed.
8.4 MODIFICATION. This Agreement cannot be modified, changed,
discharged or terminated except by an instrument in writing, signed by the party
against whom the enforcement of any waiver, change, discharge or termination is
sought. This Agreement contains the entire understanding between the parties
with respect to the transactions covered hereby.
8.5 APPLICABLE LAW. This Agreement will be construed and governed in
accordance with the laws of the State of Delaware.
8.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
8.7 FINDER'S FEE. Each of the parties hereto represent and warrant to
each other that no broker or other person is entitled to a brokerage or finder's
fee or commission or other compensation in respect to the execution of this
Agreement and the completion of the transactions contemplated hereby. Each of
the parties hereto agree to indemnify and hold the other harmless against and in
respect to any and all claims, losses, liabilities or expenses which may be
asserted against such other party by any broker or other person who claims to be
entitled to a brokerage or finder's fee or commission in respect of the
execution of this Agreement and the completion of the transactions contemplated
hereby by reason of his or its acting at the request of such party.
8.8 LEGAL REPRESENTATION. Each party acknowledges that he or it has
obtained such legal, accounting, and investment representation as such party has
deemed necessary or appropriate, and no party is relying on representation
obtained by any other party with respect to this Agreement or the actions
contemplated hereby.
A-9
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the day and year first above written.
DAVID A. KANSTOROOM
- ----------------------------------
David A. Kanstoroom
DAVID SPEZZA
- ----------------------------------
David Spezza
TELECOM VENTURES AND ACQUISITIONS CORP
- ----------------------------------
- ----------------------------------
THREE - L ENTERPRISES, INC.
By:
------------------------------
Herman K. Watsky, President
INTELICOM INTERNATIONAL CORPORATION
By:
-----------------------------
David Spezza, President
A-10
<PAGE>
THREE-L ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
Financial Statements
with
Independent Auditors' Report
December 31, 1995
and
December 31, 1994
<PAGE>
THREE-L ENTERPRISES, INC.
INDEX TO FINANCIAL STATEMENTS
Page
----
Independent Auditors' Report S-1
Financial Statements:
Balance Sheets S-2
Statements of Operations S-3
Statement of Stockholders' Equity S-4
Statements of Cash Flows S-5
Notes to Financial Statements S-6 - S-9
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Three-L Enterprises, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheets of Three-L Enterprises, Inc. (a
development stage company) as of December 31, 1995 and December 31, 1994, and
the related statements of operations, stockholders' equity, and cash flows for
the years then ended and the period March 18, 1994 (inception) through December
31, 1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Three-L Enterprises, Inc. (a
development stage company) as of December 31, 1995 and December 31, 1994, and
the results of their operations and their cash flows for the years then ended
and the period March 18, 1994 (inception) through December 31, 1995 in
conformity with generally accepted accounting principles.
SCHMIDT + ASSOCIATES, P.C.
March 12, 1996
Greenwood Village, Colorado
S-1
<PAGE>
THREE-L ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
December 31, 1995 and 1994
ASSETS
12/31/95 12/31/94
--------- --------
CURRENT ASSETS:
Cash $ 395 $ 8,147
OTHER ASSETS:
Deferred offering costs 36,825 11,796
Cash held in escrow 133,110 -
--------- --------
$ 170,330 $ 19,943
--------- --------
--------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 4,990 $ -
Note Payable - officer 5,000 -
--------- --------
Total Liabilities 9,990 -
--------- --------
COMMITMENTS AND CONTINGENCIES
ESCROWED COMMON STOCK 133,110 -
--------- --------
STOCKHOLDERS' EQUITY:
Preferred stock, $.0001 par value;
25,000,000 shares authorized;
none issued $ - $ -
Common Stock, $.0001 par value;
100,000,000 shares authorized;
44,000 issued and outstanding 4 4
Additional paid-in capital 35,411 20,621
(Deficit) accumulated during the
development stage (8,185) (682)
--------- --------
Total stockholders' equity 27,230 19,943
--------- --------
$ 170,330 $ 19,943
--------- --------
--------- --------
See accompanying notes to financial statements.
S-2
<PAGE>
THREE-L ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1995 and 1994
March 18,
1994
(Inception)
to
December 31,
1995 1994 1995
-------- -------- ----
REVENUES $ - $ - $ -
-------- -------- --------
EXPENSES:
General and administrative 7,503 682 8,185
-------- -------- --------
NET (LOSS) $ (7,503) $ (682) $ (8,185)
-------- -------- --------
-------- -------- --------
NET (LOSS) PER SHARE OF
COMMON STOCK $ (.17) $ (.02) $ (.19)
-------- -------- --------
-------- -------- --------
Weighted average number of
common shares outstanding 44,000 44,000 44,000
-------- -------- --------
-------- -------- --------
See accompanying notes to financial statements.
S-3
<PAGE>
THREE-L ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
(Deficit)
Accumulated
During
Common Stock Additional the
----------------- Paid-In Development
Shares Amount Capital Stage
------ ------ ------- -----
Balances, March 18, 1994
(inception) - $ - $ - $ -
Issuance of common stock
for cash, $.46875 per
share 44,000 4 20,621 -
Net (loss) for period
March 18, 1994 (inception),
to December 31, 1994 - - - (682)
------ --- ------- -------
Balances, December 31, 1994 44,000 4 20,621 (682)
Net proceeds received from
public offering (see Note 2) - - 14,790 -
Net (loss) for period - - - (7,503)
------ --- ------- -------
Balances, December 31, 1995 44,000 $ 4 $ 35,411 $ (8,185)
------ --- -------- --------
------ --- -------- --------
See accompanying notes to financial statements.
S-4
<PAGE>
THREE-L ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1995 and 1994
March 18,
1994
(Inception)
to
December 31,
1995 1994 1995
--------- --------- ---------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net (loss) $ (7,503) $ (682) $ (8,185)
Increase in accounts payable 4,990 - 4,990
--------- --------- ---------
Net cash (used) by operating
activities (2,513) (682) (3,195)
--------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES: - - -
--------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from sale of common
stock - 20,625 20,625
Proceeds from sale of escrowed
common stock (see Note 2) 14,790 - 14,790
Proceeds from borrowings from
note payable - officer 5,000 - 5,000
(Increase) in deferred offering
costs (25,029) (11,796) (36,825)
--------- --------- ---------
Net cash provided (used) by
financing activities (5,239) 8,829 3,590
--------- --------- ---------
NET INCREASE (DECREASE) IN CASH (7,752) 8,147 395
CASH, beginning of period 8,147 - -
--------- --------- ---------
CASH, end of year $ 395 $ 8,147 $ 395
--------- --------- ---------
--------- --------- ---------
See accompanying notes to financial statements.
S-5
<PAGE>
THREE-L ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
ORGANIZATION
Three-L Enterprises, Inc. (a development stage company) ("the Company") was
incorporated under the laws of the State of Delaware on March 18, 1994, for
the purpose of providing a vehicle to be used to raise capital and seek
business opportunities believed to hold a potential for profit. The
Company is in the development stage as defined in the Statement of
Financial Accounting Standards No. 7. There have been no operations since
incorporation.
DEFERRED OFFERING COSTS
Deferred offering costs represent expenses incurred by the Company in
connection with its initial public offering (Note 2) and will be charged
against the proceeds of the offering, if the proposed merger or acquisition
is successful, or expensed if unsuccessful.
(LOSS) PER COMMON SHARE
(Loss) per common share is computed by dividing net loss available to
common stockholders by the weighted average number of common shares
outstanding during the period.
INCOME TAXES
The Company has adopted the liability method of accounting for income taxes
pursuant to Statement of Financial Accounting Standards No. 109. Under
this method, deferred income taxes are recorded to reflect the tax
consequences in future years of temporary differences between the tax basis
of the assets and liabilities and their financial amounts at year-end. The
Company will provide a valuation allowance to reduce deferred tax assets to
their net realizable value. For financial reporting, start-up costs are
expensed as incurred; for tax purposes they are capitalized and will be
amortized over five years when operations begin. The Company is not in
operation at this date.
S-6
<PAGE>
THREE-L ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (Continued)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
2. INITIAL PUBLIC OFFERING
In April, 1995, the Company completed an initial public offering of 32,381
shares of $.0001 par value common stock, through an underwriter on a "firm
commitment" basis at $5.25 per share. The offering, which was made under
Rule 419 of Regulation C, required that the proceeds, less certain
allowable deductions and all the securities purchased by investors, be
placed into an escrow account until the offering has been reconfirmed by
the Company's shareholders and the Company becomes a party to a merger or
acquisition with another business in accordance with the provisions of Rule
419. The proceeds have been placed in a non-interest bearing account. In
the event an acquisition is not consummated within 18 months of the
effective date of this offering, which was April 13, 1995, the proceeds
held in escrow will be returned to all investors, and none of the
securities will be issued.
The following summarizes the public offering:
Gross proceeds from sale of
common stock $ 170,000
Underwriter commissions and
nonaccountable expenses paid
directly from proceeds (22,100)
Funds received by the Company
as permitted under Rule 419 (14,790)
---------
Net proceeds held in escrow $ 133,110
---------
---------
S-7
<PAGE>
THREE-L ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (Continued)
2. INITIAL PUBLIC OFFERING (Continued)
Because the conditions of Rule 419 have not been met, the Company is
reporting the sale of the 32,381 shares of common stock between the
liability and stockholders' equity sections of the balance sheets.
The Company also issued the underwriter warrants to purchase 3,238 shares
of common stock, which will be exercisable for a period of four years,
commencing one year from the date of closing, which was April 13, 1995, at
an exercise price of $6.30 per shares, subject to adjustment in certain
events. The shares underlying the warrants are subject to piggybank
registration rights, expiring seven years after the effective date of the
offering.
3. RELATED PARTY TRANSACTIONS
The Company maintains its offices in space provided by the Company's
President pursuant to an oral agreement on rent-free basis with
reimbursement for out-of-pocket expenses, such as telephone. In addition,
the Company borrowed $5,000 from the Company's president to pay legal fees.
This note is due on demand, non-interest bearing, and dated December 29,
1995.
4. STOCKHOLDERS' EQUITY
In connection with organizing the Company, the Company issued 2,200,000
shares of its common stock to its officers and directors for an aggregate
of $20,625 in cash.
On February 6, 1995, the Company completed a one share for 50 shares
reverse split of its common stock, resulting in a reduction of the
Company's outstanding shares from 2,200,000 to 44,000 shares. All
accompanying financial information and (loss) per share have been
retroactively adjusted in the accompanying financial statements to reflect
the stock split.
The Company has authorized 25,000,000 shares of $.0001 par value preferred
stock. No rights and preferences have been determined and no shares have
been issued.
S-8
<PAGE>
THREE-L ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (Concluded)
5. FINDER'S FEE
Three-L has entered into a finder's fee agreement with a telecommunications
consulting firm. In conformity with the restrictions set forth in
Three-L's S-1 Registration Form and Prospectus, Three-L shall issue
30,552 shares of Three-L common stock to finder if the proposed business
combination discussed below is consummated.
6. PROPOSED BUSINESS COMBINATION
On November 20, 1995, the Company entered into a letter of intent to
acquire all of the issued and outstanding shares of Intelicom International
Corporation (Intelicom). Consummation of the transaction is dependent upon
the shareholders of the Company reconfirming their investment in the
Company in accordance with Rule 419 and approving the issuance of 1,420,687
shares of the Company's common stock to the holders of Intelicom's common
stock. The Company is in the process of preparing the required Amendment
to its registration statement to comply with Rule 419 and obtain the
shareholders consent.
The Company proposes to acquire Intelicom in a transaction intended to be a
tax free exchange under the Internal Revenue Code, in exchange for
"restricted shares" of Three-L Enterprises, Inc. common stock. Intelicom
must have a minimum fair market value of $134,639 at the time of the
merger.
S-9
<PAGE>
THREE-L ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
(Unaudited)
May 31, 1996 and 1995
ASSETS
5/31/96 5/31/95
--------- ---------
CURRENT ASSETS:
Cash $ 340 $ 8,731
OTHER ASSETS:
Deferred offering costs 50,591 22,752
Cash held in escrow 133,110 133,110
--------- ---------
$ 184,041 $ 164,593
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 23,087 $ 1,032
Note Payable - officer 7,500 -
--------- ---------
Total Liabilities 30,587 1,032
--------- ---------
COMMITMENTS AND CONTINGENCIES
ESCROWED COMMON STOCK 133,110 133,110
--------- ---------
STOCKHOLDERS' EQUITY:
Preferred stock, $.0001 par value;
25,000,000 shares authorized;
none issued $ - $ -
Common Stock, $.0001 par value;
100,000,000 shares authorized;
44,000 issued and outstanding 4 4
Additional paid-in capital 35,411 35,411
(Deficit) accumulated during the
development stage (15,071) (4,964)
--------- ---------
Total stockholders' equity 20,344 30,451
--------- ---------
$ 184,041 $ 164,593
--------- ---------
--------- ---------
S-10
<PAGE>
THREE-L ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(Unaudited)
For the Five Months Ended May 31, 1996 and 1995
March 18,
1994
(Inception)
to
5/31/96 5/31/95 May 31, 1996
-------- -------- ------------
REVENUES $ - $ - $ -
-------- -------- --------
EXPENSES:
General and administrative 6,886 4,282 15,071
-------- -------- --------
NET (LOSS) $ (6,886) $ (4,282) $(15,071)
-------- -------- --------
-------- -------- --------
NET (LOSS) PER SHARE OF
COMMON STOCK $ (.16) $ (.10) $ (.34)
-------- -------- --------
-------- -------- --------
Weighted average number of
common shares outstanding 44,000 44,000 44,000
-------- -------- --------
-------- -------- --------
S-11
<PAGE>
THREE-L ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)
(Deficit)
During Accumulated
Common Stock Additional the
----------------- Paid-In Development
Shares Amount Capital Stage
------ ------ ------- -----------
Balances, March 18, 1994
(inception) - $ - $ - $ -
Issuance of common stock
for cash, $.46875 per
share 44,000 4 20,621 -
Net (loss) for period
March 18, 1994 (inception),
to December 31, 1994 - - - (682)
------ --- -------- --------
Balances, December 31, 1994 44,000 4 20,621 (682)
Net proceeds received from
public offering (see Note 2) - - 14,790 -
Net (loss) for period - - - (7,503)
------ --- -------- --------
Balances, December 31, 1995 44,000 $ 4 $ 35,411 $ (8,185)
Net (loss) for period - - - (6,886)
------ --- -------- --------
Balances, May 31, 1996 44,000 $ 4 $ 35,411 $(15,071)
------ --- -------- --------
------ --- -------- --------
S-12
<PAGE>
THREE-L ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Five Months Ended May 31, 1996 and 1995
March 18,
1994
(Inception)
to
5/31/96 5/31/95 May 31, 1996
--------- --------- ------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net (loss) $ (6,886) $ (4,282) $ (15,071)
Increase in accounts payable 18,097 1,032 23,087
--------- --------- ---------
Net cash (used) by operating
activities 11,211 (3,250) 8,016
--------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES: - - -
--------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from sale of common
stock - - 20,625
Proceeds from sale of escrowed
common stock (see Note 2) - 14,790 14,790
Proceeds from borrowings from
note payable - officer 2,500 - 7,500
(Increase) in deferred offering
costs (13,766) (10,956) (50,591)
--------- --------- ---------
Net cash provided (used) by
financing activities (11,266) 3,834 (7,676)
--------- --------- ---------
NET INCREASE (DECREASE) IN CASH ( 55) 584 340
CASH, beginning of period 395 8,147 -
--------- --------- ---------
CASH, end of year $ 340 $ 8,731 $ 340
--------- --------- ---------
--------- --------- ---------
S-13
<PAGE>
INTELICOM INTERNATIONAL CORPORATION
Financial Statements
with
Independent Auditors' Report
December 31, 1995
and
December 31, 1994
<PAGE>
INTELICOM INTERNATIONAL CORPORATION
INDEX TO FINANCIAL STATEMENTS
Page
--------
Independent Auditors' Report F-1
Financial Statements:
Balance Sheets F-2
Statements of Earnings F-3
Statement of Stockholders' Equity F-4
Statements of Cash Flows F-5
Notes to Financial Statements F-6 - F-11
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Intelicom International Corporation
Clearwater, Florida
We have audited the accompanying balance sheets of Intelicom International
Corporation (a Florida corporation) as of December 31, 1995 and December 31,
1994, and the related statements of earnings, stockholders' equity, and cash
flows for the years ended December 31, 1995, December 31, 1994 and December 31,
1993. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Intelicom International
Corporation as of December 31, 1995 and December 31, 1994, and the results of
its operations and its cash flows for the years ended December 31, 1995,
December 31, 1994 and December 31, 1993, in conformity with generally accepted
accounting principles.
SCHMIDT + ASSOCIATES, P.C.
January 27, 1996
Greenwood Village, Colorado
F-1
<PAGE>
INTELICOM INTERNATIONAL CORPORATION
(FORMERLY INTELICOM CORPORATION)
BALANCE SHEETS
December 31, 1995 and 1994
ASSETS
12/31/95 12/31/94
-------- --------
Current assets:
Cash 43,639 38,515
Accounts receivable - trade 261,797 179,456
Notes receivable - related parties - 3,714
Prepaid expenses 5,000 -
-------- --------
Total current assets 310,436 221,685
-------- --------
Property and equipment:
Furniture & equipment 55,459 41,414
Accumulated depreciation (15,943) (6,639)
-------- --------
Net property and equipment 39,516 34,775
-------- --------
Other assets:
Deposits 10,000 -
-------- --------
Total Assets $359,952 $256,460
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 18,266 5,494
Accrued expenses 176,162 137,587
Notes payable - shareholders 6,091 10,823
Current portion of long-term debt 2,980 -
-------- --------
Total current liabilities 203,499 153,904
-------- --------
Stockholders' equity:
Common stock (1,000 shares
authorized, 900 shares issued
and outstanding at $1.00 par
value on December 31, 1995) 900 1,150
Additional paid-in capital - 1,150
Retained earnings 155,553 104,256
Treasury stock, at cost - (4,000)
-------- --------
Total stockholders' equity 156,453 102,556
-------- --------
Total Liabilities &
Stockholders' Equity $359,952 $256,460
-------- --------
-------- --------
See accompany notes to financial statements.
F-2
<PAGE>
INTELICOM INTERNATIONAL CORPORATION
(FORMERLY INTELICOM CORPORATION)
STATEMENTS OF EARNINGS
December 31, 1995, 1994 and 1993
1995 1994 1993
---- ---- ----
Revenues:
Commissions $ 1,540,850 $ 728,318 $ 56,640
Fees 146,461 111,894 60,648
Interest 3,810 281 -
----------- --------- -----------
Total revenues 1,691,121 840,493 117,288
----------- --------- -----------
Operating expenses:
Charitable contributions 200 100 -
Commissions 925,693 480,945 44,841
Computer expense 91,273 43,819 3,308
Prepaid calling cards 15,372 - -
Depreciation 9,305 4,960 1,679
Insurance 15,741 1,952 12
Interest 67 306 919
Marketing costs 45,619 10,167 10,495
Meals 114 - -
Miscellaneous 2,968 2,339 125
Office supplies 35,944 17,575 6,428
Postage 25,049 11,569 6,213
Printing 37,664 3,791 -
Professional fees 38,219 5,232 35
Rent 47,254 19,004 10,566
Salaries 153,529 98,783 15,731
Taxes/filing fees 25,967 9,118 50
Telephone 35,337 13,435 10,341
Trade publications 4,621 160 -
Travel 90,835 14,413 5,114
Long distance billing
services 7,384 - -
----------- --------- -----------
Total operating expenses 1,608,155 737,668 115,857
----------- --------- -----------
Net earnings $ 82,966 $ 102,825 $ 1,431
----------- --------- -----------
----------- --------- -----------
Proforma information:
Historical net earnings $ 82,966 $ 102,825 $ 1,431
Charge in lieu of income
taxes for subchapter S
corporation 24,890 30,850 429
----------- --------- -----------
Proforma net earnings $ 58,076 $ 71,975 $ 1,002
----------- --------- -----------
----------- --------- -----------
See accompany notes to financial statements.
F-3
<PAGE>
INTELICOM INTERNATIONAL CORPORATION
(FORMERLY INTELICOM CORPORATION)
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Additional
Common Stock Paid-In Retained Treasury Stock
Shares Amount Capital Earnings Shares Amount
<S> <C> <C> <C> <C> <C> <C>
Balances, January 1, 1993 -- $ -- $ -- $ -- -- $ --
Issued 100,000 shares on
July 6, 1993 100,000 1,000
Net earnings 1,431
------- --------- -------- -------- ------ --------
Balances, December 31, 1993 100,000 1,000 -- 1,431 -- --
Purchased 25,000 shares of
founding stockholder's stock,
June 15, 1994 (25,000) (4,000)
Issued 15,000 shares to
remaining stockholders on
June 15, 1994 15,000 150 1,150
Net earnings 102,825
------- --------- -------- -------- ------ --------
Balances, December 31, 1994 115,000 1,150 1,150 104,256 (25,000) (4,000)
Recapitalization on merger
with International on
December 4, 1995 (114,100) (250) (1,150) 25,000 4,000
Net earnings 82,966
Distributions to stockholders (31,669)
------- --------- -------- -------- ------- --------
Balances, December 31, 1995 900 $900 $ -- $155,553 -- $ --
------- --------- -------- -------- ------- --------
------- --------- -------- -------- ------- --------
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
INTELICOM INTERNATIONAL CORPORATION
(FORMERLY INTELICOM CORPORATION)
STATEMENTS OF CASH FLOWS
December 31, 1995, 1994 and 1993
1995 1994 1993
--------- --------- ---------
Cash flows from operating
activities:
Net income $ 82,966 $ 102,825 $ 1,431
Adjustment to reconcile net
income to net cash provided
(used) by operating activities:
Depreciation 9,305 4,959 1,679
(Increase) in accounts receivable (82,341) (151,040) (28,416)
(Increase) in prepaid expenses (5,000) - -
(Increase) in deposits (10,000) - -
Increase in:
Accounts payable - trade 12,772 3,865 1,629
Accrued expenses 38,574 114,854 22,733
--------- ---------- ---------
Net cash provided by
operating activities 46,276 75,463 (944)
--------- ---------- ---------
Cash flows from investing
activities:
Acquisition of property and
equipment (14,045) (20,094) (21,320)
(Increase) decrease in notes
receivable 3,715 (3,715) -
--------- ---------- ---------
Net cash (used) by
investing activities (10,330) (23,809) (21,320)
--------- ---------- ---------
Cash flows from financing
activities:
Payments on notes payable -
shareholders (32,104) (30,343) (2,667)
Stock issuance/purchases 2,600 (1,700) -
Borrowing from note payable 2,980 - -
Distributions to shareholders (31,669) - -
Borrowing from shareholders 27,371 15,829 28,006
--------- ---------- ---------
Net cash (used) by
financing activities (30,822) (16,214) 25,339
--------- ---------- ---------
Net increase in cash 5,124 35,440 3,075
Cash, beginning of year 38,515 3,075 -
--------- ---------- ---------
Cash, end of year $ 43,639 $ 38,515 $ 3,075
--------- ---------- ---------
--------- ---------- ---------
Cash paid during the year for:
Interest $ 67 $ 306 $ 919
--------- ---------- ---------
--------- ---------- ---------
See accompanying notes to financial statements.
F-5
<PAGE>
INTELICOM INTERNATIONAL CORPORATION
(FORMERLY INTELICOM CORPORATION)
NOTES TO FINANCIAL STATEMENTS
December 31, 1995 and 1994
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
ORGANIZATION AND BASIS OF PRESENTATION
Intelicom International Corporation ("Intelicom" or "the Company") was
incorporated under the laws of the State of Florida in October, 1994. The
Company did not have any business activities until its tax free merger with
Intelicom Corporation in December of 1995. Intelicom Corporation was
incorporated under the laws of the State of Florida in November of 1992,
and began conducting business in 1993. The officers and directors approved
the merger of Intelicom and Intelicom Corporation effective December 4,
1995, in preparation for the proposed merger with Three-L Enterprises,
Inc., as discussed below. The accompanying financial statements present
the accounts and transactions of Intelicom and the transactions of the
predecessor corporation, Intelicom Corporation, from inception to December
31, 1995. The merger has been accounted for in a manner similar to that
used in accounting for a pooling-of-interests business combination.
DESCRIPTION OF BUSINESS
Intelicom's primary business purpose prior to September, 1995 was to market
telecommunication services for other companies. In September, 1995, the
company began buying wholesale long distance services which it resells to
customers under it's own name in addition to continuing to market other
companies services. The Company receives revenue from carriers of long
distance whose services it markets, and also assists some carriers in
collection efforts. In September, 1995, the Company began receiving
revenue from private individuals and companies for the sale of its own
services.
INCOME TAXES
The stockholders of the Company have consented to the Company's election to
be treated as a "small business corporation" under the provisions of
Subchapter S of the Internal Revenue Code. Accordingly, the Company did
not have any tax liability and its stockholders were subject to federal
income tax liabilities based on their respective interests in the Company's
taxable income. As a result of the merger discussed above, the S
corporation status of the Company terminated on December 4, 1995, and
thereafter the Company will pay income taxes based on its taxable income in
future years.
F-6
<PAGE>
INTELICOM INTERNATIONAL CORPORATION
(FORMERLY INTELICOM CORPORATION)
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1995 and 1994
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
MAJOR CARRIER RELATIONSHIPS
The Company receives a substantial portion of its commission revenues from
two major telecommunication carriers. During 1995, 1994 and 1993,
commissions from these two carriers aggregated $1,298,596, $562,842 and
$32,829, respectively. At December 31, 1995, 1994 and 1993, commissions
due from those carriers included in trade accounts receivable were
$228,002, $155,666 and $21,368, respectively.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Depreciation and amortization
are provided using the straight-line method over the following estimated
useful lives: furniture, fixtures, and equipment - 7 years; computer
equipment - 5 years.
COMMON STOCK
The Company is authorized to issue 1,000 shares of $1.00 par value common
stock. The Company has issued 900 shares of its common stock in
conjunction with the merger with Intelicom Corporation, as discussed
previously.
ADVERTISING
Advertising costs are expensed as incurred.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
F-7
<PAGE>
INTELICOM INTERNATIONAL CORPORATION
(FORMERLY INTELICOM CORPORATION)
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1995 and 1994
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
REVENUE RECOGNITION
The Company receives commissions for the sale of telephone services. These
commissions are earned as the services are provided.
2. ACCRUED EXPENSES
Accrued expenses consisted of the following at December 31:
1995 1994
---- ----
Commissions payable $ 163,623 $ 123,376
Wages payable 11,562 12,785
Payroll taxes payable 977 1,426
--------- ---------
$ 176,162 $ 137,587
--------- ---------
--------- ---------
3. NOTES PAYABLE
Notes payable consists of a note payable to American General Finance for
the purchase of a computer due in 1996. The minimum payment on the note is
$268, including interest at 18%. The note is collateralized by the
computer.
4. COMMITMENTS AND CONTINGENCIES
OPERATING LEASES
The Company leases its office space and some of its office equipment under
noncancellable operating leases expiring in various years ranging through
2000. These leases generally require the Company to pay insurance, taxes
and other expenses related to the leased property.
Several of the equipment leases contain options to purchase the leased
equipment at fair market value upon expiration of the lease.
F-8
<PAGE>
INTELICOM INTERNATIONAL CORPORATION
(FORMERLY INTELICOM CORPORATION)
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1995 and 1994
4. COMMITMENTS AND CONTINGENCIES (Continued)
OPERATING LEASES (CONTINUED)
Future minimum lease payments under these operating leases are as follows
as of December 31:
1996 $ 40,052
1997 40,952
1998 40,226
1999 40,406
2000 20,881
---------
$ 182,517
---------
---------
Rent expense for all operating leases was $46,590, $16,059 and $5,614,
during 1995, 1994 and 1993, respectively.
LEGAL PROCEEDINGS
The Company is involved in litigation with a computer software company
related to a contract dispute. The case is set for trial in March 1996.
The Company has filed a pending motion for Summary Judgement. The Company
will continue to vigorously defend their position and has filed a Counter
Complaint for the costs and expenses that it has had to incur due to the
software company's breach of the agreement. If the software company is
successful with their complaint, a judgement in the amount of approximately
$44,000 may be awarded. The case is in the discovery stage and the outcome
cannot be determined at this time.
5. INCOME TAXES
As described in Note 1, the stockholders have consented to the Company's
election to be treated as a "small business corporation" under the
provision of Subchapter S of the Internal Revenue Code and income taxes are
imposed on the stockholders rather than the Company. The Company did not
have any tax liability and its Stockholders were subject to federal income
tax liabilities based on their respective interests in the Company's
taxable income. As a result of the proposed merger, the S corporation
status of the Company has terminated and the Company will bear income taxes
based on its taxable income in the future.
F-9
<PAGE>
INTELICOM INTERNATIONAL CORPORATION
(FORMERLY INTELICOM CORPORATION)
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1995 and 1994
5. INCOME TAXES (CONTINUED)
Although the Company's S corporation status was terminated on December 4,
1995, the income tax effects of C corporation status for the period of
December 4, 1995, to December 31, 1995, are insignificant and no temporary
differences have been recognized in the current period.
The Company plans to adopt, prospectively, the provisions of FASB Statement
No. 109 "Accounting for Income Taxes" (SFAS No. 109), effective January 1,
1996. Under the liability method prescribed by SFAS No. 109, deferred
income taxes will reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and amounts due for income tax purposes.
6. SUBSEQUENT EVENTS
On January 16, 1996, the Company established a letter of credit with
Republic Bank in the amount of $10,000 which is collateralized by the
general assets of the Corporation.
7. PROPOSED BUSINESS COMBINATION
The Company has entered into a "Letter of Intent" with Three-L Enterprises,
Inc. (a public company) to exchange all of the outstanding shares of
Intelicom for a majority interest in Three-L Enterprises, Inc. Three-L
Enterprises, Inc. proposes to acquire Intelicom in a transaction intended
to be a tax free exchange under the Internal Revenue Code, in exchange for
"restricted shares" of Three-L Enterprises, Inc. common stock. The Company
must have a minimum fair market value of $134,639 at the time of the
merger and meet certain other conditions, including the filing of a
Registration Statement with the Securities and Exchange Commission and the
approval of the majority of the shareholders of Three-L Enterprises, Inc.
8. RELATED PARTY TRANSACTIONS
The Company received working capital advances and loans from the
Corporation's shareholders. The Company has advanced funds to its
shareholders for the formation of two other related entities, Intelisoft
and Intelicom International (before the December 4, 1995 merger) for
formation costs and the development of computer software. There are no
other transactions with these entities.
F-10
<PAGE>
INTELICOM INTERNATIONAL CORPORATION
(FORMERLY INTELICOM CORPORATION)
NOTES TO FINANCIAL STATEMENTS (Concluded)
December 31, 1995 and 1994
8. RELATED PARTY TRANSACTIONS (Continued)
As part of its Independent Agent Agreement with its sales representatives,
the Company has a 2% revenue sharing pool that its representatives can
qualify to share in if they meet certain production requirements. Three
shares of the 2% revenue sharing pool shall be irrevocably reserved for the
original founding members of Intelicom Corporation, with such shares being
allocated among the founding members in accordance with the policies as
established by the board of directors. The rights to such shares shall be
irrevocably vested in and to the founding members after two years of full
time employment. The founders have waived any right to any revenue sharing
through December 31, 1995.
9. TREASURY STOCK
Treasury stock is shown at cost.
On June 15, 1994, the Company signed an agreement to purchase 20,000 of the
25,000 shares of Intelicom common stock issued and owned by one of the
original founders of the Company. Consideration for this treasury stock
consisted of the repayment of a shareholder loan of $15,000 by June 30,
1994, the remaining $1,000 of the shareholder loan by May 30, 1996, and
$4,000 for the 20,000 shares to be paid by May 30, 1996. The remaining
5,000 shares were delivered to and held by Bill Olive, one of the other
founding shareholders of Intelicom.
On February 5, 1996, Intelicom entered into a Mutual Release and Settlement
Agreement whereby the Company agreed to prepay the remaining $5,000 owed on
the note payable and treasury stock transaction discussed above and the
founding shareholder holding the remaining 5,000 shares tendered them to
the Company for no additional consideration and the former Intelicom
Corporation shareholder completely waived and renounced any rights or
claims to any ownership in the 5,000 shares or any other ownership in
Intelicom International or Intelicom Corporation. Based on the substance
and intent of this treasury stock transaction, the entire 25,000 shares of
stock originally owned by the one founding shareholder of Intelicom
Corporation has been treated as a treasury stock purchase at June 15, 1994.
F-11
<PAGE>
INTELICOM INTERNATIONAL CORPORATION
(FORMERLY INTELICOM CORPORATION)
BALANCE SHEETS
(Unaudited)
May 31, 1996 and 1995
ASSETS
5/31/96 5/31/95
------- -------
Current assets:
Cash $ 61,334 $ 49,606
Accounts receivable - trade 294,425 273,167
Notes receivable - related parties - 4,114
------- -------
Total current assets 355,759 326,887
------- -------
Property and equipment:
Furniture & equipment 64,529 41,414
Accumulated depreciation (20,669) (10,191)
------- -------
Net property and equipment 43,860 31,223
------- -------
Other assets:
Deposits 10,000 -
------- -------
Total Assets $409,619 $358,110
------- -------
------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 18,266 $ 2,250
Accrued expenses 206,621 182,280
Current portion of long-term debt 2,999 8,513
------- -------
Total current liabilities 227,886 193,043
------- -------
Stockholders' equity:
Common stock (1,000 shares
authorized, 900 shares issued
and outstanding at $1.00 par
value on December 31, 1995) 900 1,150
Additional paid-in capital - 1,150
Retained earnings 180,833 166,767
Treasury stock, at cost - (4,000)
------- -------
Total stockholders' equity 181,733 165,067
------- -------
Total Liabilities &
Stockholders' Equity $409,619 $358,110
------- -------
------- -------
F-12
<PAGE>
INTELICOM INTERNATIONAL CORPORATION
(FORMERLY INTELICOM CORPORATION)
STATEMENTS OF EARNINGS
(Unaudited)
For the Five Months Ended May 31, 1996 and 1995
5/31/96 5/31/95
------- -------
Revenues:
Commissions $ 748,891 $ 589,366
Fees 106,494 83,469
Interest 3,023 601
--------- ---------
Total revenues 858,408 673,436
--------- ---------
Operating expenses:
Charitable contributions - 200
Commissions 473,385 345,078
Computer expense 41,728 44,233
Prepaid calling cards 473 -
Depreciation 4,725 3,553
Insurance 10,657 6,830
Marketing costs 37,559 16,220
Miscellaneous 1,357 3,260
Office supplies 6,858 12,070
Postage 7,197 8,306
Printing - 5,234
Professional fees 62,276 5,219
Rent 17,808 20,120
Salaries 79,197 60,959
Taxes/filing fees 14,305 18,504
Telephone 7,787 14,188
Trade shows - 4,620
Travel 34,770 42,331
Utilities/Maintenance 4,770 -
Long distance billing
services 17,287 -
--------- ---------
Total operating expenses 822,139 610,925
--------- ---------
Net earnings before taxes 36,269 62,511
Income taxes 10,989 -
--------- ---------
Net earnings $ 25,280 $ 62,511
--------- ---------
--------- ---------
Proforma information:
Historical net earnings $ 62,511
Charge in lieu of income
taxes for subchapter S
corporation 17,469
---------
Proforma net earnings $ 25,280 $ 45,042
--------- ---------
--------- ---------
F-13
<PAGE>
INTELICOM INTERNATIONAL CORPORATION
(FORMERLY INTELICOM CORPORATION)
STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-In Retained Treasury Stock
Shares Amount Capital Earnings Shares Amount
<S> <C> <C> <C> <C> <C> <C>
Balances, January 1, 1993 -- $ -- $ -- $ -- -- $ --
Issued 100,000 shares on
July 6, 1993 100,000 1,000
Net earnings 1,431
------- -------- ------- ------- ------- -------
Balances, December 31, 1993 100,000 1,000 -- 1,431 -- --
Purchased 25,000 shares of
founding stockholder's stock,
June 15, 1994 (25,000) (4,000)
Issued 15,000 shares to remaining
stockholders on June 15, 1994 15,000 150 1,150
Net earnings 102,825
------- -------- ------- ------- ------- -------
Balances, December 31, 1994 115,000 1,150 1,150 104,256 (25,000) (4,000)
Recapitalization on merger
with International on 12/4/95 (114,100) (250) (1,150) 25,000 4,000
Net earnings 82,966
Distributions to stockholders (31,669)
------- -------- ------- ------- ------- -------
Balances, December 31, 1995 900 900 -- 155,553 -- --
Net earnings 25,280
------- -------- ------- ------- ------- -------
Balances, May 31, 1996 900 $ 900 -- $180,833 -- --
------- -------- ------- ------- ------- -------
------- -------- ------- ------- ------- -------
</TABLE>
See accompanying notes to financial statements.
F-14
<PAGE>
INTELICOM INTERNATIONAL CORPORATION
(FORMERLY INTELICOM CORPORATION)
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Five Months Ended May 31, 1996 and 1995
5/31/96 5/31/95
------- -------
Cash flows from operating
activities:
Net income $ 25,280 $ 62,511
Adjustment to reconcile net
income to net cash provided
(used) by operating activities:
Depreciation 4,725 3,552
(Increase) in accounts receivable (32,628) (93,711)
Increase in:
Accounts payable - trade - (3,244)
Accrued expenses 30,459 44,693
--------- --------
Net cash provided by
operating activities 32,836 13,801
--------- --------
Cash flows from investing
activities:
Acquisition of property and
equipment (9,069) -
(Increase) decrease in notes
receivable - (400)
--------- --------
Net cash (used) by
investing activities (9,069) (400)
--------- --------
Cash flows from financing
activities:
Payments on notes payable -
shareholders (6,072) (2,310)
--------- --------
Net cash (used) by
financing activities (6,072) (2,310)
--------- --------
Net increase in cash 17,695 11,091
Cash, beginning of year 43,639 38,515
--------- --------
Cash, end of year $ 61,334 $ 49,606
--------- --------
--------- --------
F-15
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
A. The Delaware General Corporation Law ("DGCL") allows indemnification of
directors, officers, employees and agents of Three-L against liabilities
Section 145 of the General Corporation Law of Delaware provides:
"(a) A corporation shall have power to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonable incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of NOLO CONTENDERE, shall not, of
itself, create a presumption that the person did not act in good faith and
in a manner which he reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was
unlawful.
(b) A corporation shall have power to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation
and except that no indemnification shall be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b), or
in defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) (unless ordered
by a court) shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has
met the applicable standard of conduct set forth in subsections (a) and
(b). Such determination shall be made (1) by the board of directors by a
majority vote of a quorum consisting of directors who were not parties to
such action, suit or proceeding, or (2) if such a quorum is not obtainable,
or, even if obtainable a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (3) by the stockholders.
II-1
<PAGE>
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative, or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation as authorized in this Section. Such
expenses (including attorneys' fees) incurred by other employees and agents
may be so paid upon such terms and conditions, if any, as the board of
directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
grated pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking indemnification
or advancement of expenses my be entitled under any by-law, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding
such office.
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under the provisions of this section.
(h) For purposes of this Section, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under
the provisions of this Section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation
if its separate existence had continued.
(i) For purposes of this Section, references to "other enterprises":
shall include employee benefit plans; references to "fines" shall include
any excise taxes assessed on a person with respect to an employee benefit
plan; and references to "serving at the request of the corporation" shall
include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such
director, officer, employee, or agent with respect to an employee benefit
plan, its participants, or beneficiaries; and a person who acted in good
faith and in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed
to have acted in a manner "not opposed to the best interests of the
corporation": as referred to in this Section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person."
II-2
<PAGE>
B. Article X of the Registrant's Certificate of Incorporation provides as
follows:
The corporation shall, to the fullest extent permitted by Section 145
of the General Corporation Law of the State of Delaware, as the same may be
amended and/or supplemented, indemnify any and all persons whom it shall
have the power to indemnify under said section from and against any and all
of the expenses, liabilities or other matters referred to in or covered by
said section, and the indemnification provided for herein shall not be
deemed exclusive of any other rights to which those indemnified may be
entitled under any Bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as
to action in another capacity while holding such office, and shall continue
as to a person who has ceased to be a director, officer, employee or agent
and shall inure to the benefit of the heirs, executors, and administrators
of such person.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) The following documents are filed as exhibits to this Form S-4:
NUMBER DESCRIPTION
------ -----------
3.1 Certificate of Incorporation, dated March 18, 1994.(1)*
3.2 Bylaws(1)*
3.3 Intelicom Certificate of Incorporation*
3.4 Intelicom Bylaws*
5 Opinion of John B. Wills, Esq. re: legality of shares to be
issued(1)*
10.1 Agreement between Business Telecom Incorporated and Intelicom
International Corporation dated July 28, 1994*
10.2 Agreement between (WCT)(now Frontier) and Intelicom International
Corporation dated April 1, 1993*
10.3 Agreement dated February 20, 1996, between Business Telecom
Incorporated and Intelicom International Corporation*
23 Consent of Schmidt & Associates, P.C.*
23.1 Consent of Schmidt & Associates, P.C.*
23.2 Consent of Schmidt & Associates, P.C.
28.1 Escrow Agreement(1)*
28.2 Deposited Fund Escrow Agreement(1)*
28.3 Deposited Securities Escrow Agreement(1)*
28.4 Amended Deposited Securities Escrow Agreement(1)*
___________________
* previously filed
(1) Incorporated by reference from the like numbered exhibits filed with the
Registrant's Registration Statement on Form S-1, No. 33-85396.
(B) Financial statement schedules have been omitted because they are not
required or the information is included in the financial statements and notes
thereto.
II-3
<PAGE>
ITEM 22. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the"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
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New
Orleans, State of Louisiana on July 30, 1996.
THREE-L ENTERPRISES, INC.
By: /s/ Herman K. Watsky
-----------------------------------
Herman K. Watsky, President
In accordance with to the requirements of the Securities Act of 1993, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Herman K. Watsky President, Principal July 30, 1996
- ---------------------------- Executive Officer and
Herman K. Watsky a Director
/s/ Vice President and July 30, 1996
- ---------------------------- a Director
Dr. Roy D. Greenberg
/s/ Secretary and a Director July 30, 1996
- ----------------------------
Bernard A. Goldman
/s/ Gordon Dumont Treasurer, Chief Financial July 30, 1996
- ---------------------------- Officer, Principal Accounting
Gordon Dumont Officer and a Director
/s/Edward P. Gothard Director July 30, 1996
- ----------------------------
Edward P. Gothard
II-5
<PAGE>
Exhibit 23.2
INDEPENDENT AUDITOR'S CONSENT
We consent to the use in this Post Effective Amendment No. 2 to Form S-1 of
Three-L Enterprises, Inc. on Form S-4 Registration Statement of our report dated
March 12, 1996 on the financial statements of Three-L Enterprises, Inc. and our
report dated January 27, 1996 on the financial statements of Intelicom
International Corporation, appearing in the Prospectus, which is part of this
Registration Statement.
We also consent to the reference to us under the headings "Selected Financial
Data" and "Experts" in such Prospectus.
/s/Schmidt & Associates, P.C.
SCHMIDT & ASSOCIATES, P.C.
July 29, 1996
Greenwood Village, Colorado
