AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 22, 1999.
REGISTRATION NO. 333-66287
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
PRE-EFECTIVE
AMENDMENT NO. 2
ON
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
TEL-SAVE.COM, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 23-28277736
(State or other (I.R.S. Employee
jurisdiction of incorporation Identification Number)
or organization)
6805 ROUTE 202
NEW HOPE, PENNSYLVANIA. 18938
(215) 862-1500
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
------------------
ALOYSIUS T. LAWN, IV
GENERAL COUNSEL AND SECRETARY
TEL-SAVE.COM, INC.
6805 ROUTE 202 NEW HOPE, PA 18938
(215) 862-1500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective as determined by the
Selling Shareholders on the basis of market conditions and other factors.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933 (as defined below), other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
==================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) SHARE (2) PRICE (2) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $0.01 par value
per share .................. 758,359 $14.875 $11,280,591 $3,137
==================================================================================================================
</TABLE>
(1) This Registration Statement covers a total of 1,598,341 shares. See note 2.
(2) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933 based on the
average of the high and low prices of the Common Stock on the Nasdaq
National Market on January 19, 1999. Filing fees of $659 and $2,076
previously were paid in connection for 339,982 shares and 500,000 shares,
respectively.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the securities act or until this registration statement shall become effective
on such date as the securities and exchange commission, acting pursuant to said
section 8(a), may determine.
================================================================================
<PAGE>
SUBJECT TO COMPLETION
DATED JANUARY 22, 1999
PROSPECTUS
[GRAPHIC OMITTED]
1,598,341 SHARES OF COMMON STOCK
The persons listed in this Prospectus under "Selling Shareholders" may
offer and sell from time to time an aggregate of up to 1,598,341 shares of
common stock that they have acquired from us.
The Selling Shareholders may offer their shares through public or private
transactions, on or off the Nasdaq National Market, at prevailing market prices
or at privately negotiated prices. We will not receive any of the proceeds from
the sale of shares by the Selling Shareholders.
Our common stock is quoted on the Nasdaq National Market and traded under
the symbol "TALK."
Our principal executive offices are located at 6805 Route 202, New Hope,
Pennsylvania 18938, and our telephone number is (215) 862-1500.
------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 2 FOR A DISCUSSION OF CERTAIN MATERIAL
FACTORS THAT YOU SHOULD CONSIDER IN CONNECTION WITH AN INVESTMENT IN OUR COMMON
STOCK.
------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is January __, 1999
<PAGE>
THIS PROSPECTUS CONTAINS AND INCORPORATES BY REFERENCE CERTAIN FORWARD
LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995 WITH RESPECT TO OUR BUSINESS, FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, INCLUDING, WITHOUT LIMITATION, STATEMENTS UNDER THE CAPTIONS
"BUSINESS" AND "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS" IN OUR ANNUAL AND QUARTERLY REPORTS. THESE FORWARD
LOOKING STATEMENTS REFLECT OUR PLANS, EXPECTATIONS AND BELIEFS AND, ACCORDINGLY,
ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES. NO ASSURANCE CAN BE GIVEN THAT
ANY OF SUCH FORWARD LOOKING STATEMENTS WILL BE REALIZED. FACTORS THAT MAY CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH FORWARD
LOOKING STATEMENTS INCLUDE, AMONG OTHERS, THE FACTORS DISCUSSED IN THE SECTION
OF THIS PROSPECTUS ENTITLED "RISK FACTORS."
RISK FACTORS
You should consider carefully the following factors and other information
contained in our current and future reports in this prospectus before deciding
to invest in the shares of our common stock offered in this prospectus.
DEPENDENCY ON AOL AGREEMENT AND ELECTRONIC COMMERCE
At the beginning of 1997, we launched a major initiative for marketing and
selling our telecommunication services online. At that time, we entered into an
innovative telecommunications marketing agreement with America Online, Inc.
("AOL"). With the continued focus of our business on the sale and support of our
telecommunications services online and through e-commerce channels, we believe
that our business is currently dependent to a material extent upon our
agreements and relationship with AOL.
In January 1999, we completed substantial amendments to our agreement and
relationship with AOL, including an extension of the term of our AOL marketing
period and a restructuring of our marketing fee payments to AOL. From and after
June 2000, AOL has the right to market on a non-exclusive basis the
telecommunications services previously marketed on an exclusive basis in
exchange for the elimination of the fixed quarterly payments that would
otherwise continue to be payable by us. We cannot currently predict what impact
the elimination of our exclusivity period would have on our AOL business or
whether the minimum exclusivity period is of sufficient length to give us an
enduring competitive advantage in maintaining our AOL customer base. We believe
that the success or failure of our telecommunications agreement with AOL and
similar online initiatives will have a material effect on our business,
financial condition and results of operations. There can be no assurance that
our arrangement with AOL will be profitable for Tel-Save.com, Inc. (the
"Company") on a quarter to quarter basis or that our current experience with our
AOL Long Distance business is a fair indication of future results under the AOL
Agreement or generally in our e-commerce business.
Although we have expended substantial sums on marketing our AOL service
offerings, and under the new agreement will continue to expend substantial sums
related to marketing, there can be no assurance that these expenditures will
prove adequate to attract substantial additional customers to our service, or
that any such subscribers will remain our customers for a period of time
sufficient to recoup the costs of such marketing expenditures. See
"--Maintenance of End User Base."
The success of our online telecommunications sales and marketing business
depends in part on our ability quickly to establish telephone service following
an AOL subscriber's order. The provisioning of new customers has been adversely
affected by "PIC freezes" established by local telephone companies. These "PIC
freezes," though perhaps designed to avoid unauthorized transfers of telephone
service, have the effect, we believe, of interfering with a customer's choice to
switch service to a better priced product, such as our AOL Long Distance
service, by requiring the customer to contact his
2
<PAGE>
or her local phone company directly to change long distance carriers. This
requirement deprives new customers of the ability to take full advantage of our
online provisioning service, where a customer can sign-up and authorize a change
to AOL Long Distance entirely online through our innovative online customer care
and billing systems. The Federal Communications Commission is currently engaged
in rule-making proceedings that could modify the rules governing the offering,
implementation and lifting of PIC freezes. There can be no assurance, however,
that any such rules that are finally adopted will effectively limit the harmful
effects of PIC freezes that impede authorized transfers of service.
The success of our online initiatives depends on our ability to develop and
maintain complex systems to support our online subscription and billing
services. We have developed, and will seek to continue to develop and to
improve, our systems for customer care and billing services, including online
sign-up, call detail and billing reports and credit card payment in connection
with the AOL Agreement and other online initiatives. We will be required to
find, employ and retain skilled programmers to develop and maintain these
complex systems. Unanticipated delays or difficulties in developing these
systems or in hiring personnel could materially adversely affect our online
business, including our AOL telecommunications business.
DEPENDENCE ON AT&T
We have recently entered into long term agreements with AT&T, which, among
other things, significantly lower the overall costs of the services we acquire
from AT&T. There can be no assurances, however, that we would be able to
negotiate further amendments in the future to our agreements with AT&T should it
become necessary to maintain the profitability of our business. Circumstances
also may arise that could give rise to the termination of any of our agreements
with AT&T or otherwise result in the loss of our ability to obtain services from
AT&T. Any termination of our contracts with AT&T, the loss or reduction of
telecommunication services from AT&T, or the inability to negotiate cost
reductions with AT&T to meet competitive prices, could have a material adverse
effect on our financial condition and results of operations.
RECENT RAPID GROWTH
Since the inception of our business in 1989, as a reseller of AT&T
telecommunications services, we have grown dramatically in terms of revenues and
number of employees and have expanded rapidly the nature and scope of our
business. Although we have experienced significant growth in a relatively short
period of time and regularly consider growth opportunities through acquisitions,
joint ventures and partnerships as well as other business expansion
opportunities, there can be no assurance that the growth we have experienced
will continue or we will be able to achieve the growth contemplated by our
business strategy.
Continued growth of our current business will continue to place
significant demands on our management (many of whom, including the new
President, Chief
3
<PAGE>
Executive Officer, and Chairman of the Board of Directors, have recently joined
the Company), operational, financial and other resources and will require us to
enhance further our operations, management, financial and information systems
and controls and to expand, train and manage our employee base in certain areas
including customer service support and financial, marketing and administrative
resources. Success in this regard depends, among other things, on our ability to
fund or finance significant investments of resources and to manage, attract and
retain qualified personnel, competition for whom is intense. Our strategy also
has resulted in significantly increased financial management requirements.
COMPETITION
The long distance telecommunications industry is highly competitive and
affected by the introduction of new services by, and the market activities of,
major industry participants. Changes in the regulation of the telecommunications
industry may affect our competitive position, as may consolidation and alliances
across geographic regions and across industry segments. Competition in the long
distance business is based upon pricing, customer service, billing services and
perceived quality. We compete against numerous long distance carriers that offer
essentially the same services as we do. Several of our competitors are
substantially larger and have greater financial, technical and marketing
resources than we do.
Although we believe that we have the human and technical resources to
pursue our strategy and compete effectively in this competitive environment, our
success will depend upon our continued ability to provide high quality, high
value services at prices generally competitive with, or lower than, those
charged by our competitors. While OBN makes us more price competitive,
reductions in long distance prices charged by competitors still may have a
material adverse impact on our profitability. We also from time to time consider
providing telecommunications services we have not previously provided, which new
services, if offered, would face the same competitive pressures that affect our
existing services.
MAINTENANCE OF END USER BASE
End users are not obligated to purchase any minimum usage amount and can
discontinue service, without penalty, at any time. There can be no assurance
that end users will continue to buy their long distance telephone service
through us or through "partitions," independent carriers and marketing companies
that purchase services from us. If a significant portion of our end users were
to decide to purchase long distance service from other long distance service
providers, there can be no assurance that we would be able to replace them.
4
<PAGE>
A high level of customer attrition is inherent in the long distance
industry, and our financial results are affected by such attrition. Attrition is
attributable to a variety of factors, including the initiatives of existing and
new competitors as they engage in, among other things, national advertising
campaigns, telemarketing programs and cash payments and other forms of
incentives, as well as our termination of customers for non-payment.
DIRECT MARKETING RISKS
Both federal and state officials are tightening and increasing enforcement
of the rules governing the direct marketing, including the telemarketing of
telecommunications services and the requirements imposed on carriers seeking to
acquire customers in that manner. Customer complaints of unauthorized conversion
or "slamming" are widespread in the long distance industry and are beginning to
occur with respect to newly competitive local services. The Company has
discontinued its internal telemarketing operations, which may reduce our
exposure to customer complaints and federal, state or local enforcement actions
with respect to such direct telemarketing practices. However, certain government
officials have made inquiries with respect to the marketing of our services and
there remains a risk that we could be held accountable under applicable federal
and state laws for the direct marketing activities of third parties carried out
for our benefit. There also is the risk of enforcement actions by virtue of our
prior telemarketing and other marketing efforts, our ongoing support of our
customer/partitions and telemarketing and other marketing done in connection
with our online marketing agreements.
RELIANCE ON INDEPENDENT CARRIER AND MARKETING COMPANIES; LACK OF CONTROL OVER
MARKETING ACTIVITIES
Historically, we have marketed a significant portion of our services
through partitions, which generally have entered into non-exclusive agreements
with us. Most partitions to date have made no minimum use or revenue commitments
to us under these agreements. If we were to lose access to services on the AT&T
network or billing services or experience difficulties with OBN, our agreements
with partitions could be adversely affected.
Provisions in our agreements with the partitions mandate that they comply
with state and federal statutes and regulations, including those regulating
telemarketing. See "--Government Regulation" and "--Direct Marketing Risks."
Because our partitions are independent carriers and marketing companies,
however, we are unable to control their activities. We are also unable to
predict the extent of their compliance with applicable regulations or the effect
of increased regulatory review. Increased regulatory review could also affect
possible future acquisitions of new business from new partitions or other
resellers.
5
<PAGE>
GOVERNMENT REGULATION
The Federal Communications Commission (the "FCC") and various state public
service and public utility commissions regulate us as a non-dominant provider of
long distance services. There can be no assurance that the FCC, state regulators
or other government entities will not take action having an adverse effect on
our business, financial condition or results of operations. FCC or state
regulatory or enforcement action also could affect the partitions adversely. We
also are subject to applicable regulatory standards for marketing activities,
and the increased FCC and state attention to certain marketing practices could
be significant to us. See "--Direct Marketing Risks."
ADVERSE EFFECT OF RAPID CHANGE IN TECHNOLOGY AND SERVICE
The telecommunications industry has been characterized by rapid
technological change, frequent new service introductions and evolving industry
standards. We believe that our future success will depend on our ability to
anticipate such changes and to offer on a timely basis services that meet or
compete with these evolving standards. There can be no assurance that we will
have sufficient resources to make necessary investments or to introduce new
services that would satisfy an expanded range of partition and end user needs.
RISKS RELATED TO OBN
In 1997, we deployed our own nationwide telecommunications network, One
Better Net, or OBN. At December 31, 1998, we provided services over OBN to
approximately 80% of the lines using our services. Operation as a switch-based
provider subjects us to risk of significant interruption in the provision of
services on OBN in the event of damage to our facilities (switching equipment or
connections to transmission facilities) such as fire or natural disaster could
cause. To the extent that we, rather than AT&T or another carrier, are
principally responsible for providing end users with telecommunications
services, interruption or failure to provide such services may subject us to
claims from end users who suffer damages as a result of such interruption or
failure. Thus, interruptions or other difficulties in operating OBN could have a
material adverse effect on our financial condition and results of operations.
ABSENCE OF DIVIDENDS
We have not paid cash dividends since inception and do not anticipate
paying any cash dividends in the foreseeable future.
ANTI-TAKEOVER CONSIDERATIONS
We have an authorized class of 5,000,000 shares of preferred stock that may
be issued by our board of directors on such terms and with such rights,
preferences and designations as our board may determine. Issuance of such
preferred stock, depending upon its rights, preferences and designations, may
have the effect of delaying, deterring
6
<PAGE>
or preventing a change in control. A change of control also may be delayed or
prevented by provisions of the Delaware General Corporation Law and our bylaws,
as well as our charter, which divides our board of directors into three classes,
each of which is elected for three year terms. Such anti-takeover effects may
deter a third party from acquiring us or engaging in a similar transaction
affecting control in which our shareholders might receive a premium for their
shares over the then-current market value.
SHARES ELIGIBLE FOR FUTURE SALE
Future sales of substantial amounts of our common stock could adversely
affect the market price of our common stock. Although the Company believes that
as of January 11, 1999, each of Mr. Borislow and Mr. Paul Rosenberg beneficially
owned less than 10% of the outstanding common stock of the Company, a decision
by either of Mr. Borislow or Mr. Rosenberg to sell his shares could adversely
affect the market price of the common stock. Each of Mr. Borislow and Mr.
Rosenberg has a registration rights agreement with the Company covering the
shares of common stock owned by him.
As of January 11, our employees and directors had outstanding options to
purchase 10,230,810 shares of common stock. In addition, as of such date, there
were warrants outstanding to purchase up to2,721,984 shares of common stock and
4,596,698 shares reserved for issuance upon the conversion of our outstanding
4-1/2% Convertible Subordinated Notes due 2002 and our 5% Convertible
Subordinated Notes due 2004. Holders of warrants also have registration rights
under certain conditions.
Sales of substantial amounts of our common stock in the public market, or
the perception that such sales could occur, may adversely affect the market
price of our common stock.
YEAR 2000 RISKS
The "Year 2000" issue refers to the potential harm from computer programs
that identify dates by the last two digits of the year rather than using the
full four digits. As such, dates after January 1, 2000 could be misidentified
and such programs could fail.
If such a failure occurs to our internal computer-based systems or if the
computer-based systems, on which our business depends, that are operated by
others were to malfunction, we could be unable to continue to provide
telecommunications services, to sign up new customers or to bill existing
customers for services. Such failures, if they occur, would have a material
adverse effect on our business and financial condition. However, because of the
complexity of the issues and the number of parties involved whose actions could
affect us and the fact that many of the issues are outside our control, it is
difficult for us to predict the nature or likelihood of such effects.
We are dependent upon computer systems operated by third parties, such as
local exchange carriers, AT&T, AOL and other vendors. Other parties whose
ability to deal with Year 2000 issues could affect us include our partitions and
the credit card companies
7
<PAGE>
through which most of our and AOL's customers are billed. We are generally not
in a position to require either that these other companies give assurances to
the Company as to their continued provision of services or that such companies
take the necessary actions to assure that they will be ready for the Year 2000.
Accordingly, while none of these other companies on which we depend have told us
that they do not expect to be ready for Year 2000 issues, we do not believe we
can project the likelihood of such parties' abilities to provide uninterrupted
services to us. Given the nature of our relationships with most of these
significant suppliers, it may be impracticable for us to replace them should
they be unable to continue to provide these services. The failure of any of
these companies to provide uninterrupted service to us likely would have a
material adverse effect on our business and results of operations and financial
condition.
USE OF PROCEEDS
We will not receive any of the proceeds from the shares offered in this
prospectus.
PLAN OF DISTRIBUTION
The shares offered pursuant to this prospectus are being offered on behalf
of the Selling Shareholders or their respective pledgees, donees, transferees
or other successors in interest. We will not receive any proceeds from this
offering. The shares may be offered for sale from time to time in the open
market, on the Nasdaq National Market, in privately negotiated transactions, or
in a combination of such methods, at market prices prevailing at the time of
sale or at negotiated prices. The shares are intended to be sold through one or
more brokers or dealers or directly to purchasers. Such broker-dealers may
receive compensation in the form of commissions, discounts or concessions from
the Selling Shareholders and/or purchasers of the shares for whom such
broker-dealers may act as agent, or to whom they may sell as principal, or both
(which compensation as to a particular broker-dealer may be in excess of
customary commissions). The Selling Shareholders and any broker-dealers who act
in connection with the sale of the shares under this prospectus may deemed to be
"underwriters" within the meaning of the Securities Act, and any commissions
they receive and proceeds of any sale of shares may be deemed to be underwriting
discounts and commissions under the Securities Act.
Pursuant to applicable rules and regulations under the Exchange Act, any
distribution participant and their affiliated purchasers (as defined in
Regulation M adopted under the Exchange Act) may not simultaneously engage in
market making activities with respect to such shares for a restricted period
beginning on the day proxy solicitation or offering materials are first
disseminated to security holders and ending upon the completion of the
distribution, except under certain limited circumstances. In addition to, and
without limiting the foregoing, the Selling Shareholders, their affiliated
purchasers and any other person participating in such distribution will be
subject to applicable provisions of the Exchange Act and rules and regulations
thereunder, which provisions prohibit, except under certain limited
circumstances, purchases and sales of any of the shares by the selling
shareholders and any other such shareholders during the above-referenced
restricted period. The foregoing may affect the marketability of the shares and
the ability of any person or entity to engage in market making activities with
respect to the shares.
We have agreed to pay all of the expenses incident to the registration,
offering and sale of the shares to the public other than commissions or
discounts of underwriters, broker-dealers or agents. We have agreed to indemnify
the Selling Shareholders against certain liabilities, including certain
liabilities under the Securities Act.
From time to time, one or more of the Selling Shareholders may pledge,
hypothecate or grant a security interest in some or all of the shares that they
own. In the event of a foreclosure or event of default in connection with such
pledges, the shares may be transferred to the persons to whom the shares have
been pledged. If such a transfer occurs, the transferees will be deemed to be
Selling Shareholders under this plan of distribution. At the same time, the
Selling Shareholders whose shares were transferred will beneficially own less
shares. The plan of distribution for the shares of the Selling Shareholders will
otherwise remain unchanged.
8
<PAGE>
SELLING SHAREHOLDERS
This prospectus offers 839,982 shares of our common stock. Of these, 2,050
were initially issued to Randy Burns, 1,026 to Charles Mashburn, 167,257 to W.
Gerald Quick, 167,257 to Gerald D. Skinner and 2,392 to Kenneth Stegall pursuant
to the Agreement and Plan of Reorganization by and among us, TS Billing, Inc.
and Compco, Inc. dated November 26, 1997 (the "Merger Agreement"). Messrs. Burns
Mashburn, Quick, Skinner and Stegall are now our employees. 500,000 shares
offered in this prospectus were issued, in the aggregate, to Menachem Goldstone
and Avrohom Oustatcher in connection with a settlement among the parties.
Messrs. Goldstone and Outstatcher are former employees and consultants of ours.
The remaining Selling Shareholders acquired their shares of Common Stock upon
the conversions of certain convertible notes that had been issued by the
Company.
The following table provides certain information with respect to the shares
held by each selling shareholder as of the date of this prospectus. The shares
registered under the registration statement of which this prospectus is a part
may be offered from time to time by the selling shareholders named below.
However, such selling shareholders are under no obligation to sell all or any
portion of such shares, nor are the selling shareholders obligated to sell any
such shares immediately under this prospectus. We will not receive any proceeds
from any sales of shares by the selling shareholders. All information with
respect to share ownership has been furnished by the selling shareholders.
The following table sets forth certain information with respect to the
beneficial ownership of the shares by each selling shareholder as of January 12,
1999.
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF NUMBER OF
SHARES SHARES SHARES
NAME AND ADDRESS(1) BENEFICIALLY OWNED REGISTERED HEREIN HELD AFTER OFFERING(2)
- --------------------------- -------------------- ------------------- -----------------------
<S> <C> <C> <C>
Randy Burns ................... 2,153 2,050 103
Menachem Goldstone ............ 262,500 250,000 12,500
Charles Mashburn .............. 1,078 1,026 52
Avrohom Oustatcher ............ 277,200 250,000 27,200
W. Gerald Quick ............... 175,620 167,257 8,363
Gerald D. Skinner ............. 175,620 167,257 8,363
Kenneth Stegall ............... 2,512 2,392 120
Kennilworth Partners LP II(3).. 158,469 150,922 7,547
Taft Securities, L.L.C.(4)..... 318,204 236,900 81,304
Aragon Investments, Ltd.(4).... 352,646 194,380 158,266
Olympus Securities, Ltd.(4).... 184,965 176,157 8,808
</TABLE>
- ----------
(1) The address of each of the selling shareholders is c/o Tel-Save Holdings,
Inc., 6805 Route 202, New Hope, Pennsylvania 18938.
(2) Assumes all of the shares offered by this prospectus are sold.
(3) The Company has been advised that Kennilworth Advisors LLC, a New York
limited liability company, is the general partner of Kennilworth Partners
LP II, and that Mr. Jeffery Parket is the managing partner of Kennilworth
Partners LP II.
(4) The Company has been advised that Citadel Limited Partnership is the
trading manager of each of Taft Securities, L.L.C., Aragon Investments,
Ltd. and Olympus Securities, Ltd. and consequently has voting control and
investment discretion over securities held by those entities. The ownership
information for each of Taft Securities, L.L.C., Aragon Investments, Ltd.
and Olympus Securities, Ltd. does not include the ownership information for
such other entities or Citadel Limited Partnership. Citadel Limited
Partnership, Taft Securities, L.L.C., Aragon Investments, Ltd. and Olympus
Securities, Ltd. each disclaims beneficial ownership of the securities held
by the other entities.
LEGAL MATTERS
Aloysius T. Lawn, IV, our General Counsel and Secretary, has rendered an
opinion to the effect that the shares of common stock offered by this prospectus
are duly authorized, legally issued, fully paid and non-assessable. Mr. Lawn
owns 153,650 shares of common stock, holds vested options to purchase 50,000
shares at a price of $5.75 per share, and holds rights to purchase 10,183 shares
of Common Stock.
EXPERTS
The consolidated financial statements and schedule of the Company and its
subsidiaries incorporated by reference in this prospectus have been audited by
BDO Seidman, LLP, independent certified public accountants, to the extent and
for the periods set forth in their reports incorporated in this prospectus by
reference, and are incorporated in this prospectus in reliance upon such reports
given upon the authority of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
at the SEC's web site at http://www.sec.gov.
9
<PAGE>
The SEC allows us to incorporate by reference the information that we file
with the SEC, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings (File
No. 0-26728) we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934:
a. our annual report on Form 10-K for the year ended December 31, 1997 and
the amendments to our annual report filed with the SEC on April 17, 1998
and April 30, 1998;
b. our quarterly reports on Form 10-Q for the quarters ended March 31, 1998
and June 30, 1998;
c. our current reports on Form 8-K, dated March 10, 1998, August 27, 1998,
September 18, 1998 and January 20, 1999; and
d. the description of our capital stock contained in our registration
statement on Form 8-A, dated September 8, 1995.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Aloysius T. Lawn, IV
General Counsel and Secretary
Tel-Save Holdings, Inc.
6805 Route 202
New Hope, PA 18938
(215) 862-1500
This prospectus is part of a registration statement we filed with the SEC.
You should rely only on the information or representations provided in this
prospectus. We have authorized no one to provide information other than that
provided in this prospectus. We have authorized no one to provide you with
different information. We are not making an offer of these securities in any
state where the offer is not permitted. You should not assume that the
information in this prospectus is accurate as of any date other than the date on
the front of this document.
10
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
======================================================= =======================================================
1,598,341 SHARES
[GRAPHIC OMITTED]
TABLE OF CONTENTS
PAGE
----
<S> <C>
Risk Factors ................................. 2
Use Of Proceeds .............................. 8
Plan Of Distribution ......................... 8
Selling Shareholders ......................... 9
Legal Matters ................................ 9
Experts ...................................... 9
COMMON STOCK
Where You Can Find More Information .......... 9
--------------- ----------
PROSPECTUS
----------
January __, 1999
======================================================= =======================================================
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
SEC registration fee ................. $ 5,872
Legal fees and expenses .............. 20,000
Accounting fees and expenses ......... 5,000
Printing ............................. 5,000
Miscellaneous ........................ -------
Total .............................. $35,872
=======
ITEM 15. INDEMNIFICATION OF DIRECTOR AND OFFICERS.
The Delaware General Corporation Law provides, in substance, that Delaware
corporations shall have the power, under specified circumstances, to indemnify
their directors, officers, employees and agents in connection with actions or
suits by or in the right of the corporation, by reason of the fact that they
were or are such directors, officers, employees and agents, against expenses
(including attorneys' fees) and, in the case of actions, suits or proceedings
brought by third parties, against judgment, fines and amounts paid in settlement
actually and reasonably incurred in any such action, suit or proceeding.
The Company's Bylaws also provide for indemnification to the fullest extent
permitted by the Delaware General Corporation Law. Reference is made to the
Company's Bylaws.
As permitted by the Delaware General Corporation Law, the Company's Bylaws
eliminate the personal liability of its directors to the Company and its
stockholders, in certain circumstances, for monetary damages arising from a
breach of the director's duty of care. Additionally, the Company has entered
into indemnification agreements with some of its directors and officers. These
agreements provide for indemnification to the fullest extent permitted by law
and, in certain respects, may provide greater protection than that specifically
provided for by provide indemnification for, among other things, conduct which
is adjudged to be fraud, deliberate dishonesty or willful misconduct.
The Company has purchased an insurance policy that purports to insure the
officers and directors against certain liabilities incurred by them in the
discharge of their functions as officers and directors.
ITEM 16. EXHIBITS.
EXHIBIT NO. DESCRIPTION
----------- -----------
5.1 Opinion of Aloysius T. Lawn, IV.
23.1 Consent of BDO Seidman, LLP.
23.2 Consent of Aloysius T. Lawn, IV (included as part of Exhibit 5.1).
24.1 Power of Attorney (included as part of the signature page).
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
II-1
<PAGE>
(ii) To reflect in the prospectus any facts or events arising after
the effective date of registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represents a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was registered)
and any deviation form the low or high and of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the registration statement is on Form S-3, Form S-8 or Form F-3, and
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished
to the Commission by the registrar pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from the registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(d) The undersigned hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, any information omitted from the form of prospectus filed as a part of
this registration statement in reliance upon Rule 430A and contained in any
form of prospectus filed by the registrant pursuant to Rule 242(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this pre-effective
amendment to the registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Township of Solebury,
Commonwealth of Pennsylvania, on January 22, 1999.
TEL-SAVE HOLDINGS, INC.
By: /s/ Gabriel Battista
-----------------------------------
Gabriel Battista
Chairman of the Board of
Directors, Chief Executive
Officer, President and Director
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated below:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Gabriel Battista Chairman of the Board of Directors, Chief January 22, 1999
- ----------------------------- Executive Officer, President and Director
Gabriel Battista (Principal Executive Officer)
* Director January 22, 1999
- ---------------------------
Gary W. McCulla
* Director January 22, 1999
- ---------------------------
Emanuel J. DeMaio
* Chief Financial Officer and Director January 22, 1999
- --------------------------- (Principal Financial Officer)
George P. Farley
* Controller (Principal Accounting Officer) January 22, 1999
- ---------------------------
Kevin R. Kelly
* Director January 22, 1999
- ---------------------------
Harold First
* Director January 22, 1999
- ---------------------------
Ronald R. Thoma
/s/ Aloysius T. Lawn IV Power of Attorney January 22, 1999
- ---------------------------
Aloysius T. Lawn IV
</TABLE>
II-3
Exhibit 5.1
January 22, 1999
Board of Directors
Tel-Save Holdings, Inc.
6805 Route 202
New Hope, Pennsylvania 18938
Shares of Common Stock of Tel-Save.com, Inc.
To Be Resold Pursuant to Registration Statement on Form S-3 (No.
333-66287)
----------------------------------------------------------------------
Gentlemen:
I have acted as general counsel to Tel-Save.com, Inc. (the "Company") in
connection with the Company's filing pursuant to the Securities Act of 1933, as
amended, of a registration statement (the "Registration Statement") on Form S-3
(No. 333-66287) relating to the offering for resale of up to 1,598,341 shares of
the Company's common stock, par value $.01 per share (the "Common Stock"), by
certain persons named in the Registration Statement. You have requested my
opinion as to certain matters with respect to the Common Stock.
I have examined such corporate records of the Company, including its
Amended and Restated Certificate of Incorporation, its Bylaws, and resolutions
of the Company's board of directors (the "Board of Directors"), as well as such
other documents as I deemed necessary for rendering the opinion hereinafter
expressed.
On the basis of the foregoing, I am of the opinion that the Common Stock
has been duly authorized by the Board of Directors and is validly issued, fully
paid, and nonassessable.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of my name therein.
Sincerely yours,
/s/ Aloysius T. Lawn, IV
Aloysius T. Lawn, IV
General Counsel and Secretary
EXHIBIT 23.1
CONSENT OF BDO SEIDMAN, LLP
Tel-Save.com, Inc.
New Hope, Pennsylvania
We hereby consent to the incorporation by reference in this Prospectus
constituting a part of this Amendment No. 2 to the Registration Statement on
form S-3 (file number 333-66287) of our reports dated February 5, 1998, relating
to the consolidated financial statements and schedule of Tel-Save.com, Inc. (the
"Company") (formerly Tel-Save Holdings, Inc. and Subsidiaries) appearing in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
/s/ BDO Seidman, LLP
New York, New York
January 20, 1999
