AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 26, 2002
REGISTRATION NO.: 333-86581
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NUMBER ONE TO
FORM SB-2
Registration Statement under the Securities Act of 1933
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SPACE TELECOM, INC.
(Exact Name of Registrant as Specified in its Charter)
FLORIDA 01-0710239
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(State or Other Jurisdiction (Primary Standard Industrial (IRS Employer
of Incorporation or Organization) Classification Code Number) Identification Number)
292 South County Road, Suite 109, Palm Beach, Florida 33480 (561) 659-9054
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(Address and telephone number of principal executive offices)
RICHARD P. GREENE, ESQ.
2455 East Sunrise Boulevard, Suite 905, Ft. Lauderdale, Florida 33304 (954) 564-6616
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(Name, address and telephone Number of Agent for Service)
Approximate date of 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, as amended (the "Securities Act"), 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 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 this Form is a post-effective amendment filed pursuant to Rule 462(d) 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, check
the following box. [X]
CALCULATION OF REGISTRATION FEE
- --------------------------- --------------------------- ------------------------ ------------------------ ---------------
Title of each class of Dollar Proposed maximum Proposed maximum Amount of
securities amount offering price aggregate offering registration
to be registered to be Registered per Share price fee
- --------------------------- --------------------------- ------------------------ ------------------------ ---------------
Common stock, par value
$.0001 Maximum - 1,400,000 $2.50 $3,500,000 $322.00
- --------------------------- --------------------------- ------------------------ ------------------------ ---------------
Minimum - 10,000 $2.50 $ 25,000
- --------------------------- --------------------------- ------------------------ ------------------------ ---------------
Selling Stockholders 1,542,100 $2.50 $3,292,750 $ 354.68
- --------------------------- --------------------------- ------------------------ ------------------------ ---------------
Total $ 676.68 (1)
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(1) This registration fee is calculated at $.000092 for the shares offered based
on the maximum aggregate offering price of the securities being registered
in accordance with Rule 457(o). An additional 225,000 shares are being
registered therefore an additional registration fee of $51.75 is paid.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a), of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject to completion, dated September 26 , 2002
PRELIMINARY PROSPECTUS
SPACE TELECOM, INC.
We are offering up to 1,400,000 shares of our common stock and
1,542,100 are being registered for the benefit of the selling stockholders. Prior
to this offering, there has been no public trading market for our securities.
The public offering price will be $2.50 per share. This offering will expire one
year from the effective date of this prospectus. We must sell a minimum of
10,000 shares in order to receive proceeds from the Offering. The proceeds from
the sale of the securities will be placed in an escrow account opened at First
Union Bank, Palm Beach, Florida, until the 10,000 shares are completely sold.
This offer is being made on a minimum/maximum basis. In the event that
the minimum amount of 10,000 shares is not sold by the end of the 12 month
period commencing on the effective date of the registration statement (the
"Termination Date"), all funds shall be promptly returned to the investors,
without interest.
We are offering our shares of common stock at $2.50 per share on a
self-underwritten basis.
The selling shareholders will sell at a fixed price until the
securities are quoted on the OTC Bulletin Board. Once there is a market for our
securities, the selling stockholders will sell at prevailing market prices.
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The common stock being offered involves a high degree of risk.
See "Risk Factors" beginning on page 3 for a discussion
of certain factors that should be considered by prospective investors. The
common stock being offered is not listed on any national securities market.
--------------------
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 preliminary prospectus is September 26 , 2002
TABLE OF CONTENTS
Prospectus Summary.............................................................1
Risk Factors...................................................................3
Risks Related to Our Business...........................................5
Risks Related to Our Industry...........................................6
Risks Related to this Offering..........................................7
Use of Proceeds................................................................9
Determination of Offering Price...............................................12
Dilution......................................................................12
Dividend Policy ..............................................................13
Selling Security Holders......................................................13
Plan of Distribution..........................................................15
Legal Proceedings.............................................................17
Directors, Executive Officers, Promoters, and Control Persons.................18
Security Ownership of Certain Beneficial Owners and Management................20
Description of Securities.....................................................21
Interest of Named Experts and Counsel.........................................22
Disclosure of Commission Position on Indemnification for Securities
Act Liabilities.......................................................22
Description of Business.......................................................23
Management's Discussion and Analysis of Financial Condition and Results
of Operations.........................................................29
Description of Property.......................................................30
Certain Relationships and Related Transactions................................30
Market for Common Equity and Related Stockholder Matters......................30
Summary Compensation Table....................................................30
Financial Statements..........................................................32
Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures.................................................33
Legal Matters.................................................................33
Experts.......................................................................33
Indemnification of Directors and Officers.....................................35
Other Expenses of Issuance and Distribution...................................35
Recent Sales of Unregistered Securities.......................................36
Exhibits......................................................................37
Signatures....................................................................38
You should rely only on the information contained in or incorporated by
reference in this prospectus. We have not authorized anyone 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 provided by this prospectus is accurate as of any date other than
the date on the front of this prospectus.
PROSPECTUS SUMMARY
About Space Telecom, Inc.
We are a Florida corporation incorporated on December 10, 2001. We intend
to design, build and operate state-of-the-art Internet Provider ("IP") backbone
between the United States and the rest of the world with specific targeting to
emerging market countries. Those networks will also allow us to provide in-bound
and out-bound traffic between each point of our network, to provide convergent
telecommunications solutions and to develop connectivity with the most remote
areas of the third world countries. We intend to build five IP networks linking
up to 19 countries to the US and interconnecting them to each other and the rest
of the world. Our senior management and associates have experience in business
and the telecommunications industry, with special emphasis in financial,
technical and commercial fields and in the convergent telephony services.
We intend to seek licensing, registration or regulatory approval, where
applicable, from the Federal Communications Commissions (FCC) as well as the
regulatory agencies in the target countries, to be determined.
As of the date of this Prospectus, we have not yet commenced business
operations. We have very limited cash resources and are in need of substantial
additional capital to execute our business plan. Upon completion of the
Offering, we intend to fund operations and begin to receive revenues. We
anticipate that our revenue will be derived from a variety of sources,
including, but not limited to:
o voice and fax traffic
o lease of Internet and satellite bandwidth
o lease of local loop bandwidth
o lease of submarine fiber optic bandwidth
o video conference service
o network security consulting
o Web hosting through third party subcontractor
o network design, build-out and management for other companies.
We believe the bulk of revenue will come from the voice and faxes inbound
and outbound traffic, Internet bandwidth lease and satellite bandwidth lease.
Volumes will be significantly affected by the quality and by the availability of
these services. (See "Business of the Company.")
Our executive offices are located at 292 S County Road, Suite 109, Palm
Beach, Florida 33480 and our telephone number is (561) 659-9054.
About The OFfering
We are offering our shares of common stock at $2.50 per share on a
self-underwritten basis. At such time as the minimum offering amount has been
received and accepted, the funds may be paid and used by us in accordance with
the use of proceeds table set forth herein (see "Use of Proceeds.") In the event
that the minimum amount of 10,000 shares is not sold by the end of the 12 month
period commencing on the effective date of the registration statement (the
"Termination Date"), all funds shall be promptly returned to the investors,
without interest, within 10 days of the Termination Date.
Affiliates of our Company may not purchase shares of our stock in order to
achieve the minimum amount of our offering.
1
Common stock offered by Space Telecom 1,400,000 common shares
Termination Date This Offering will begin upon
effectiveness and will terminate
whenever all of the shares are
sold, or 12 months after the
date of effectiveness, whichever
comes first.
Common stock offered by Selling Stockholders 1,542,100 common shares
Common stock outstanding prior to this offering 6,421,000 common shares
Common stock outstanding after this offering 7,821,000 common shares
Primary offering The primary offering of
6,421,000 shares was
allocated to the founders of
this Company at par value
($.0001 per share)
The secondary offering of
1,400,000 shares are being
offered to the public at
market price. The opening
price has been fixed at $2.50
per share. This offering is
self underwritten and the
CEO, Directors and Officers
of the Company are
responsible for sale.
Selling shareholders The selling shareholders who
are the founders are selling
1,542,100 shares out of their
6,421,000 shares held by them.
Summary of financial data
Our company is a development stage enterprise and does not conduct
business operations. Consequently, this company has no income statement and has
produced an opening balance sheet as of May 31, 2002.
The company has received a loan of $5,000 from Alps Resources Bankers
in order to pay some expenses connected with this offering. It has also received
$630 from the founders as their contribution to the share capital of the company.
Our fiscal year end is December 31st.
2
RISK FACTORS
Investment risk
Investing in Space Telecom carries a certain number of risks that are
inherent to the telecommunications industry particularly in Third World
countries. The development stage of our company implies risks of uncertainty and
dependence on many outside factors such as the availability of funds, and our
dependence on foreign States' laws and regulations. The inside factors are more
related to our own capacity to achieve our objective by selecting and retaining
key personnel and managing effectively the risk of obsolescence of material and
equipment. New technologies and less costly and more efficient equipment have
become a regular feature of the telecommunications industry.
If any of the following risks occur, our business financial condition or
results of operations could be materially harmed. In such case, the trading
price of our common stock could decline, and you may lose all or part of your
investment.
You could lose all of your investment if Space Telecom does not remain a
going concern.
To achieve a going concern basis, a company must have adequate liquidity to
pay its creditors in a timely manner and dispose of sufficient positive cash
flows to finance its current operations whether of a capital nature or of a
current nature.
Development stage company
We were formed in 2001 and have yet to generate any revenue. There have not
been operations since inception and we are in the process of raising capital and
financing for our future operations. Therefore, we are subject to all the risks
inherent in the establishment of this new operating venture, including the
likelihood of operating losses.
In order to carry out our operating plans, we must obtain additional
funding from outside sources. We are relying, in part, on the success of this
offering in order to implement our plans to develop the Company. Presently, we
are relying on our ability to raise the necessary capital through borrowing to
fund the day-to-day operations. Due to our limited assets and resources, there
can be no assurance that we will be successful in obtaining the necessary
financing either from this offering or other sources including debt.
You may be unable to effectively evaluate our Company for investment
purposes because we have no operating history. Since we were founded in
2001, we have focused on the development of improved Internet Provider networks
which would link the U.S. and Europe to the African continent and some Asian
countries. The networks would allow us to provide inbound and outbound
telecommunications traffic. Our prospects for success must be considered in
light of the risks and difficulties encountered by a company in its development
stage.
Risks associated with operating in foreign countries
We intend to be engaged in the build-out and installation of
telecommunications equipment on the African continent and in some Asian
countries. The potential for employee injury could subject us to litigation and
potential liability for settlement, cancellation and/or judgment awards. We
intend to carry a full range of appropriate liability and other insurance. There
are no assurances that the amount of liability insurance and other coverage we
will secure will adequately cover all potential liability and/or other claims
and that any such liability and/or other claims will not exceed the coverage
limits of such a policy and that such insurance will continue to be available on
commercially reasonable terms or at all. Consequently, a liability claim or
other such claim with respect to uninsured liabilities or in excess of insured
liabilities would have a material adverse effect on our business, financial
condition and results of operation.
3
No assurance of a public market
Our common stock is not presently traded on any established market. There
is no prior trading market for our common stock and there can be no assurance
that a trading market for the common stock will develop, or if developed, that
it will continue. If no market develops, it may be difficult or impossible for
holders of the common stock to sell their shares if they should so desire. In
addition, there are substantial restrictions on the sale or transfer of the
common stock imposed by Federal and State securities laws. There are no
assurances that holders will be able to sell their offering of the common stock
or that sufficient shares will be sold to create a public market for the common
stock.
No assurance that offering will be successful
There can be no assurance that our offering will raise operating capital
for our initial 12 months of operations. Should the minimum amount of the
offering be the only amount raised in the offering, we could not operate for our
initial 12 months and amounts contributed by investors in reaching the minimum
would not be returned to the investors. Failure by the Company to raise
additional equity or debt financing would impair our operations and investors
may lose the total amount of their investment.
Selling shareholder effect on market
When our selling shareholders sell their respective shares, the market
price of our stock could be potentially depressed and as a result you may not be
able to sell your shares at the previously higher market price. Selling a large
volume of shares in a short period of time will create downward pressure on the
price of our common stock unless there is buying in the market. Without a
balanced market in our stock, all of our shareholders are at risk of selling
their shares at depressed prices, thus realizing a reduced gain, if any.
Dependence on management
Management believes that its success will largely depend on implementation
of the business plan. Management is experienced in the area of operation in
which the Company will function. The focus of our operations will require
management's ability to master certain aspects in the running of this
telecommunications segment, as well as the enhancements of market opportunities
and competitive variables. We are unaware of any other organization that
provides state-of-the-art Internet Provider services to the African Continent.
Dilution
Following the purchase of the common stock, investors will experience
immediate and substantial dilution of their investment.
Arbitrary offering price
We have determined the number of shares to be offered based upon our
estimate of the amount of proceeds necessary for planned uses. The offering
price is not based on our assets, book value, or earnings. Accordingly, the
offering price should not be considered an indication of the actual fair market
value of the common stock as if appraised by a qualified third party.
Reliance on public acceptance
Our success is dependent on public acceptance and support of our services.
There are no assurances that the telecommunications trends will continue in the
direction that management forecasts and even if such trends continue, there are
no assurances that we will be able to derive the income and/or value from these
areas as projected. While the conclusions of our management on the prospects of
African and Asian telecommunications markets might be favorable, there are no
assurances that the actual operating results will reach the levels indicated by
management.
4
Proprietary know-how
Our success depends and will continue to depend on certain trade secrets,
on proprietary "know-how," and on its ongoing endeavors involving our proposed
networks. Our management is bound by employment agreements which include
non-disclosure clauses that are structured to protect the Company's proprietary
information and know-how. There can be no assurance that these agreements and
clauses will protect the Company or provide adequate remedies for the Company in
the event of unauthorized use or disclosure of such information, or that others
will not be able to develop similar networks or competing networks
independently. There can be no assurance that allegations of infringement of
proprietary rights will not be made or that, if made, such allegations would not
be sustained if litigated. Litigation may be necessary by the Company to enforce
proprietary know-how owned by the Company to defend the Company against claimed
infringement of the rights of others or to determine the ownership, scope or
viability of substantial litigation expenses and to divert time and effort of
management personnel. The occurrence of such litigation or the effect of an
adverse determination in any such litigation could have a material adverse
effect on our business, financial condition and results of operation.
Funds will not be returned to investors
We are offering a minimum amount of common stock which will result in
proceeds of $25,000 to the Company. Once the minimum offering amount has been
subscribed for, we will utilize those funds for our business operations and
investors will not receive a return of their investment. You should be aware
that receipt of the minimum offering amount would severely impair our business
operations.
General economic conditions
The financial success of the Company may be sensitive to adverse changes in
general economic conditions in the markets and/or regions in which its networks
will be utilized such as recession, inflation, unemployment increases, and
interest rates among its own operations, or the operations of the companies,
and/or networks leasing bandwidth services. Specifically, greater unemployment
could indicate that fewer paying customers could or would subscribe to our
services. These changes could cause the cost of talent, labor, capital and other
expenses to rise faster than the Company could absorb or respond to. Such
changing conditions also could reduce the profitability of the networks. We have
no control over any of these changes or conditions.
RISKS RELATED TO OUR BUSINESS
We may require substantial amounts of additional financing that may not be
available to us
The proceeds from the sale of the shares together with our existing sources
of capital may not be sufficient to meet our ultimate financial needs, and may
not be substantial in relationship to the operations or business in which we
intend to engage. It may be necessary for us to secure significant amounts of
additional financing. While we have various alternative plans to secure such
financing, there can be no assurance that any of such plans will be successful.
Lack of relavent experience by management.
The Company believes that it has ample experience to design and refine its
products. However, marketing and general operations requires management
experience of a different nature. The Company expects that it will generally
have little or no direct experience in the management operations and marketing
of the types of products and services the Company intends to market. Because of
the Company's lack of experience, it may be more vulnerable than others to
certain risks. The Company also may be more vulnerable to errors in judgment
that could have been prevented by more experienced management. As a result, lack
of previous experience could materially and adversely affect future operations
and prospects.
5
Our quarterly revenues and operating results may not be indicative of future
performance, are difficult to forecast and are likely to continue to fluctuate
Our quarterly revenues and operating results are likely to fluctuate
significantly from quarter to quarter as a result of several factors, many of
which are outside our control, and any of which could adversely affect our
business. These factors include:
o Inability to obtain license partner who offers our technology to
their subscribers;
o Increased competition by both established and startup companies who
provide similar services;
o Fluctuations in general economic conditions causing a decrease in
consumer spending; and
o Fluctuations in the general demand for telecommunications.
As a result of these fluctuations, period-to-period comparisons of our
quarterly results may not be meaningful and should not be relied upon as
indicators of future performance.
Our failure to develop and maintain strong relationships with license partners
would harm our ability to market our products, which would reduce future
revenues and increase our expenses
A significant portion of our sales will be influenced by the recommendation
of our product by telecommunication service companies. Losing the support of
these third parties may limit our ability to penetrate our target or potential
markets. These third parties are under no obligation to recommend or support our
product and could recommend or give higher priority to the products and services
of other companies or to their own products. A significant shift by these
companies toward favoring competing products could negatively affect our license
revenues.
RISKS RELATED TO OUR INDUSTRY
Competition in our markets is intense and could reduce our sales and prevent us
from achieving profitability
The market for our service is intensely competitive and subject to rapid
technological change. We expect the intensity of competition to increase in the
future. Increased competition is likely to result in price reductions, reduced
gross margins and loss of our market share, any one of which could reduce our
future revenues or earnings.
There are many telecommunications service providers active in the U.S,
Europe and other marketplaces. However, the Company is aware of only one which
will be in direct competition - ITXC, a publicly traded next-generation carrier
which targets the prepaid market of PC-to-phone international and domestic long
distance. ITXC also routes traffic for tier1 carriers as overflow routes.
Competitors are defined as those entities with deep financial resources,
control of physical assets in telecommunications, and experienced, knowledgeable
personnel.
In general, we believe that competition could ultimately assist us in
building product awareness and thus, in the short term, will be beneficial to
our objectives.
There can be no assurance that our current and future competitors will not
succeed in developing products, services and pricing that are more widely
accepted in the marketplace or that will render our products or services
noncompetitive. In addition, certain current and future competitors will have
the resources required to respond effectively to market changes or to compete
successfully with more aggressive pricing policies. There can be no assurance
that we will be able to successfully compete with current or future competitors
or that competitive pressures will not have a material adverse effect on our
business, financial condition and results of operations.
The telecommunications industry has only recently been opened up to
competition among private suppliers. Nonetheless, due to the enormous potential
for profit existing in this industry, there are and will continue to be numerous
other business entities seeking to profit from the carrier services and the
resellers market. Therefore, we will be competing against numerous other
businesses which market the same or similar products and/or services as those we
intend to market, many of which have or may have substantially greater capital
resources.
6
The principal factors of competition in the industry include product
quality, brand advertising (corporate recognition), trade and consumer
promotions and pricing.
Failure of our prospective license partners to receive necessary funding could
harm our business
Our targeted customers include industrial, commercial and residential
users. To the extent additional funding is less available for communications
companies as a result of a stock market decline or other factors, demand for our
product may decline significantly and thereby reduce our revenues.
Increasing government regulation of the communications industry and imposition
of sales and other taxes on our products sold by our license partners could
reduce the license of our product and harm our business
Federal, state or foreign agencies may adopt laws or regulations affecting
the telecommunications service providers. Although many of these laws or
regulations may not apply to our business directly, we expect that laws and
regulations relating to user pricing and quality of products and services could
indirectly affect our business.
If we are unable to meet the rapid changes in technology, our existing products
could become obsolete
The marketfor our products is marked by rapid technological change,
frequent new product introductions, technology enhancements, uncertain product
life cycles, changes in client demands and evolving industry standards. We
cannot be certain that we will successfully develop and market new products, new
product enhancements or new products compliant with present or emerging
technology standards. New products based on new technologies or new industry
standards can render existing products obsolete and unmarketable. To succeed, we
will need to enhance our current product and develop new products on a timely
basis to keep pace with developments related to communications technology and to
satisfy the increasingly sophisticated requirements of our clients.
Recent terrorist attacks have contributed to economic instability in the United
States; continued terrorist attacks, war or other civil disturbances could lead
to further economic instability adversely affecting our business
On September 11, 2001, the United States was the target of terrorist
attacks of unprecedented scope. These attacks have caused instability in the
global financial markets and other industries including the energy industry.
These attacks and the subsequent U.S. military campaign may lead to substantial
armed hostilities or to further acts of terrorism and civil disturbances in the
United States or elsewhere, which may contribute further to economic instability
in the United States and could have a material adverse effect on our business,
financial condition and operating results. These and other developments arising
out of the attacks may make the occurrence of one or more of the factors
discussed under "Risk Factors" in this prospectus more likely to occur.
RISKS RELATED TO THIS OFFERING
Control by principal stockholders, officers and directors could adversely affect
our stockholders
Upon completion of this offering, our officers, directors and
greater-than-five-percent stockholders (and their affiliates) will, in the
aggregate, beneficially own approximately 57% of our outstanding common stock,
assuming that they do not purchase shares in this offering. As a result, these
persons, acting together, will have the ability to control substantially all
matters submitted to our stockholders for approval (including the election and
removal of directors and any merger, consolidation or sale of all or
substantially all of our assets) and to control our management and affairs.
Although none of our officers, directors or large stockholders have committed to
purchase shares in this offering, it is possible that they may do so, thereby
increasing management's control.
7
We may issue additional securities which would dilute the value of the shares of
our common stock
Certain events over which you will have no control could result in the
issuance of additional shares of our common stock, which could dilute the value
of your shares of common stock. We may issue additional shares of common stock:
o to raise additional capital;
o upon the exercise of outstanding options and stock purchase warrants or
o additional options and warrants issued in the future;
o in connection with loans or other capital raising transactions; and
o in connection with acquisitions of other businesses or assets.
As of June 30, 2002, there were outstanding warrants and options to acquire
up to 530,000 additional shares of our common stock. If exercised, these
securities could dilute the value of the shares of common stock.
We do not intend to pay cash dividends
We have never declared or paid any cash dividends on our common stock. We
currently intend to retain any future earnings for funding our operations and,
therefore, do not expect to pay any cash dividends in the foreseeable future.
Our bylaws provide for indemnification of our board of directors
Our bylaws provide us to indemnify the members of our board of directors
against any loss or liability incurred in connection with our affairs (including
breaches of fiduciary obligations) so long as the loss or liability arises from
acts performed in good faith and which do not involve fraud or gross negligence
on the part of the members of the board of directors. Therefore, a stockholder
suing on behalf of Space Telecom may have a more limited right of action against
our board of directors than he would have in the absence of this indemnification
provision.
If you invest in our shares, there is no assurance that you will receive a
return on your investment
We cannot assure you that you will realize a positive return on your
investment or that you will not lose your entire investment in the shares. You
should read this prospectus and all exhibits carefully, and should consult with
your own personal legal and financial advisors prior to making any investment
decision.
If the market price of our shares falls below $5.00 per security,
transactions in our securities could become subject to penny stock regulations,
which could inhibit the marketability of our securities.
The Securities and Exchange Commission has adopted regulations which
generally define a "penny stock" to be any equity security that has a market
price (as defined) of less than $5.00 per share or an exercise price of less
than $5.00 per share, subject to certain exceptions. As a result, our securities
may become subject to rules that impose additional sales practice requirements
on broker-dealers who sell such securities to persons other than established
customers and accredited investors (generally those with assets in excess of
$1,000,000 or annual income exceeding $200,000, or $300,000 together with their
spouse). For transactions covered by these rules, the broker-dealer must make a
special suitability determination for the purchase of such securities and must
have received the purchaser's written consent to the transaction prior to the
purchase. Additionally, for any transaction involving a penny stock, unless
exempt, the rules require the delivery, prior to the transaction, of a risk
disclosure document mandated by the Commission relating to the penny stock
market. The broker-dealer must also disclose the commission payable to both the
broker-dealer and the registered representative, current quotations for the
securities and, if the broker-dealer is the sole market maker, the broker-dealer
must disclose this fact and the broker-dealer's presumed control over the
market. 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. Consequently, were our securities to become
subject to the "penny stock" rules, these rules could restrict the ability of
broker-dealers to facilitate transactions in our securities and could affect the
ability of investors to sell our securities in the secondary market and the
price at which our securities could be sold.
8
Anti-takeover provisions in our articles of incorporation may adversely affect
the value of our outstanding securities
Pursuant to our articles of incorporation, our board of directors may
issue, without stockholder approval, up to 5,000,000 shares of Class B common
stock in the future with such preferences, limitations and relative rights as
the board may determine. The rights of the holders of common stock will be
subject to, and may be adversely affected by, the rights of the holders of any
preferred stock that may be issued in the future. The issuance of Class B stock,
while providing flexibility in connection with possible acquisitions and other
corporate purposes, could have the effect of delaying or preventing a change in
control of Space Telecom without further action by the stockholders.
Future sales of our common stock by our existing stockholders could
decrease the trading price of the common stock
FUTURE SALES OF OUR COMMON STOCK BY OUR EXISTING STOCKHOLDERS COULD DECREASE THE
TRADING PRICE OF THE COMMON STOCK
Sales of a large number of shares of our common stock in the public
markets after this offering, or the potential for such sales, could decrease the
trading price of our common stock and could impair our ability to raise capital
through future sales of our common stock. Upon completion of this offering,
there will be 7,821,000 shares of our common stock outstanding. Of these shares,
the 2,942,100 shares of common stock included in the shares sold in this
offering will be freely tradable without restrictions or further registration
under the Securities Act of 1933, unless such shares are purchased by our
"affiliates," as that term is defined in Rule 144 of the Securities Act of l933.
All of the rest of our outstanding shares and shares issuable upon the
exercise of outstanding options and warrants will be "restricted securities" for
purposes of Rule 144 of the Securities Act and may not be resold unless
registered under the Securities Act or sold pursuant to an applicable exemption
from registration, including the exemption contained in Rule 144. All of these
securities are eligible for sale on the open market under Rule 144 (subject to
the volume, holding period and manner of sale limitations of that rule), except
for shares which are subject to lockup agreements which prohibit their sale for
periods of between six months and 18 months after the closing date of this
offering, unless the sale is consented to by us and the representative of the
underwriters.
FORWARD-LOOKING STATEMENTS
Some of the information contained in this prospectus involves forward-
looking statements. These statements include, but are not limited to, statements
about our industry, plans, objectives, expectations and other statements that
are not historical facts. Forward-looking statements by their nature involve
risks and uncertainties. Therefore, actual results may differ materially from
those implied or expressed by these statements. Accordingly, you should not
place undue reliance on these forward-looking statements.
USE OF PROCEEDS
The net proceeds to Space Telecom range from $25,000 (the "Minimum") to
$3,500,000 (the "Maximum"). If the Minimum be raised, we anticipate operating
capital for three months. Assuming 100% of the offering is successfully sold, we
anticipate 24 months of capital requirements. More detailed tables indicating
the proposed use of funds are listed on the following pages.
It is possible that no proceeds may be raised from this offering. If fewer
than all of the shares are sold, we will have to delay or modify our current
plans. There can be no assurance that any delay or modification will not
adversely affect our development. If we require additional funds to develop our
plan, such funds may not be available on terms acceptable to us. In the event
that less than 10% of this offering is sold, we intend to focus our efforts and
capital on marketing. While there can be no assurance of success, it is our goal
to invest heavily in our marketing efforts in an attempt to take us out of the
development stage and begin recognizing transactional revenue. We will not
pursue any further development until additional funds either from sales or
investment capital can be secured.
9
Use of proceeds summary table
The foregoing represents our best estimate of allocation of the proceeds of
this offering, based upon the current state of our business operations and our
current plans. Pending application of the net proceeds of this offering, we may
temporarily invest such funds in interest-bearing accounts, certificates of
deposit, government obligations, short-term interest bearing obligations, and
similar short-term investments.
Schedule assumes we receive 100% of the offering or $3,500,000:
Expenses Dollar Amount % of Total
- -------------------------------------------------- -------------------- -----------
Hardware $ 1,800,000 51.4%
General and Administrative 775,000 22.1%
Refundable Deposit 400,000 11.4%
International Private Circuit 110,000 3.2%
Working Capital 365,000 10.5%
Offering Expenses 50,000 1.4%
-----------
$ 3,500,000 100.0%
If we receive 100% of the offering, more than 50% of the proceeds will
be used to purchase computers, equipment and software necessary for our project.
Besides obtaining the signatures of pre-intercommunication agreements, we shall
have to make a deposit of $100,000.00 in each country.
Hardware and furniture to build the Space Telecom backbone:
10 Voice over IP access servers $ 600,000
6 SS7/C7 signaling platforms 500,000
5 Satellite Earth Station 4.5 meters 500,000
1 Complete set of network management software 100,000
3 Compaq Server for billing software 85,000
5 Desktop workstations for the Miami office 5,000
5 Office furniture sets 10,000
Total $1,800,000
Refundable deposit for the interconnection with the major carrier in each country
To be able to implement and operate our own networks, Space Telecom
must, after the signature of the interconnection agreement with the major
telecommunication services provider in each country, pay a refundable deposit of
$100,000. This deposit is kept as a security bond in the event that Space
Telecom shall not fulfill its payment on a timely manner as described in each
interconnection agreement. The total amount for five countries is $100,000 x 5
= $500,000.
Initial deposit for the bandwidth leasing from satellite and submarine cable providers
International private circuit from the US to Senegal 1 Mbps full-duplex $ 22,000
International private circuit from the US to Mali 1 Mbps full-duplex 22,000
International private circuit from the US to Cameroon 1Mbps full-duplex 22,000
International private circuit from the US to Ghana 1 Mbps full-duplex 22,000
International private circuit from the US to Benin 1 Mbps full-duplex 22,000
Total $110,000
10
The following tables show our projected use of funds if we raise 50% or 75% of
the offering.
Schedule assumes we receive 50% of the offering or $1,750,000:
Expenses Dollar Amount % of Total
Hardware $ 900,000 51.42%
General and Administrative 400,000 22.87%
Refundable Deposit 200,000 11.43%
International Private Circuit 44,000 2.51%
Working Capital 156 000 8.91%
Offering Expenses 50,000 2.86%
$ 1,750,000 100.0%
If we receive only 50% of the offering, we shall target less countries.
We shall sign only two pre-intercommunication agreements and we shall have to
limit the international private circuit to two.
Schedule assumes we receive 75% of the offering or $2,625,000 :
Expenses Dollar Amount % of Total
Hardware 1,350,000 51.43%
General and Administrative 485,000 18.48
Refundable Deposit 400,000 15.24
International Private Circuit 88,000 3.35
Working Capital 252,000 9.60
Offering Expenses 50,000 1.90
$ 2,625,000 100.0%
If we receive 75% of the offering, we shall target four countries and
the number of the International Private Circuit will be four, accordingly. The
hardware and equipment will be adapted to the funds available.
Salaries and other payments to officers, directors, their affiliates or associates
The item "General and Administrative" includes the following payments
as duly resolved by the Board:
• The following gross monthly remuneration for the undermentioned be
and is approved to be effective as from the completion of the
initial public offering for an initial period of three years
1. Mr. Alain de Lenclos will be paid Seven Thousand Dollars
gross per month for his responsibilities as Chief Executive
Officer. The contract will be signed after completion of
initial public offering.
2. Mr. El Hassan Ennahou: The term of the agreement is from
September/October 2002 (depending on completion of the
public offering) to September 2005. His appointment is
subject to:
• Full time availability,
• Technical implementation of project
Salary of Seven Thousand Dollars gross per month as COO
plus shares sold at founders rate.
3. Mr. Jadoomanee Rampadaruth will be paid a gross amount of
Seven Thousand Dollars per month as CFO. The contract will
be signed after successful completion of the initial public
offering.
11
4. Amalgamated Resources Financial Marketing Corp. will be
paid a gross amount of seven Thousand Dollars per month for
providing marketing services.
5. Alps Resources Bankers, Inc will be paid a gross amount of
five thousand Dollars par month for providing managerial
services.
If we receive the minimum, approximately .7% of the offering or $25,000,
the funds will be used to obtain signatures of pre-interconnection agreements
with target countries.
DETERMINATION OF OFFERING PRICE
The offering price of the 1,400,000 common shares being offered on a
"direct participation" basis has been determined primarily by the capital
requirements of Space Telecom and has no relationship to any established
criteria of value, such as book value or earnings per share. Additionally,
because we have no operating history and have not generated any revenues to
date, the price of the shares is not based on past earnings nor is it indicative
of current market value for the assets owned by Space Telecom.
DILUTION
As of June 30, 2002, Space Telecom had a net book value of $630.00 or
$.0001 per share (based on 6,300,000 shares outstanding) which excludes
an additional 121,000 shares to the founders at $.0001 per share during the
month of June. The net tangible book value per share is equal to our total
tangible assets, less total liabilities and divided by total number of shares of
common stock outstanding. After giving effect to the sale of 100% of the shares
at the public offering price of $2.50 per share, our net tangible
book value would be $3,500,642.10 or $0.4476 per share.
This represents an immediate increase in net tangible book value of $.4475
per share attributable to new investors purchasing shares in this offering. The
following table illustrates the per share dilution in net tangible book value
per share to new investors assuming different levels of success in the sale of
this offering of common stock. Dilution is the difference between the public
offering price per share and the net tangible book value per share of common
stock after giving effect to the public offering.
12
Assuming the Assuming the
Sale of 100% Sale of .7%
of this Offering of this Offering
- --------------------------------------------------------------------------------------------------------------------
Public Offering Price of $ 2.50 $ 2.50
Net tangible book value per share for existing shareholders
before offering $0.0001 $ 0.0001
Increase per share attributable to payment for shares
purchased by new investors $0.4475 $0.0039
Pro Forma net tangible book value after offering $ 0.4476 $0.0040
Net Tangible book value dilution per share to new investors $ 2.0524 $ 2.4960
Table showing different levels of sale of this offering
Assuming the Assuming the Assuming the
sale of 10% sale of 50% sale of 75%
of this offering of this offering of this offering
Public Offering Price $ 2.50 $ 2.50 $ 2.50
Net tangible book value
per share for existing
shareholders before
offering $0.0001 $0.0001 $0.0001
Increase per share
attributable to payment
for shares purchased by
new investors $0.5343 $0.2457 $0.3513
Pro Forma net tangible
book value after offering $0.5344 $0.2458 $0.3514
Net tangible book value
dilution per share to new
investors $1.9656 $2.2542 $2.1486
The information set forth above regarding dilution assumes the sale of 100%
or 0.7% of the 1,400,000 shares being offered and the table above gives the same
information at different levels of subscription, viz 10%, 50% and 75% . If less
than 0.7% of the shares offered are purchased, those who do invest in the
offering will undergo even greater dilution of their investment dollar than the
amounts stated. The 1,542,100 shares being offered by the selling stockholders
are outstanding shares of common stock and, therefore, do not contribute to
dilution, however may contribute to depressing the market price for investors
based on the timing and amount of shares sold.
DIVIDEND POLICY
We have not paid cash dividends on our common stock since our inception. We
currently intend to retain any future earnings for use in the expansion of the
business, and therefore do not anticipate declaring any cash dividends in the
foreseeable future. The declaration and payment of cash dividends, if any, will
be at the discretion of the Board of Directors of the Company and will depend,
among other things, upon our earnings, capital requirements, and financial
condition.
SELLING SECURITY HOLDERS
The following table sets forth information as of June 30, 2002 with respect
to the beneficial ownership of our common stock both before and immediately
following the offering. The table includes those who beneficially own more than
5% of our outstanding common stock, the selling security holders in this
offering, and each of the Directors and Executive Officers in the summary
compensation table.
The percentages determined in these calculations are based upon 6,421,000
of our common shares that are issued and outstanding as of the date of this
Prospectus. The percentages determined in calculations after this offering were
determined by adding the 1,400,000 common shares that may be issued and
outstanding if 100% of the shares offered are sold. The Securities and Exchange
Commission's rules were followed in determining beneficial ownership. Therefore,
we have included shares over which a person has voting or investment power. We
have followed the Securities and Exchange Commission Rule 13d-3(d)(i) in
calculating percentage of ownership.
13
Shares Beneficially Number of Shares Beneficially
Owned Prior to Offering(1) Shares Being Owned After Offering(2)
Number Percent Offered Number Percent
------ ------- ----------------- ------ -------
Alexanco, Serge 50,000 * 5,000 45,000 *
Alps Resources Bankers 500,000 7.8% 50,000 450,000 6.0%
Amalgamated Resources Holdings 500,000 7.8% 50,000 450,000 6.0%
Amalgamated Resources Investments 500,000 7.8% 50,000 450,000 6.0%
Amalgamated Resources Marketing 400,000 6.2% 40,000 360,000 5.0%
Angus Associates 25,300 * 2,530 22,770 *
Berthoud, Claude 2,600 * 260 2,340 *
Bialade, Regine 2,000 * 200 1,800 *
Boudoux-d'Hatefeuille, Wulfran 354,000 5.5% 35,400 318,600 4.1%
Boudoux-d'Hatefeuille, Eymeric 1,000 * 100 900 *
Bourgeon, Ludovic 900 * 90 810 *
Bouvet, SARL 3,000 * 300 2,700 *
Brottier, Daniel 2,000 * 200 1,800 *
Cases-Trincq, Josiane 2,000 * 200 1,800 *
Chamoux, Sylvian 17,000 * 1,700 15,300 *
Chassard, Philippe 184,000 2.9% 18,400 165,600 2.1%
Covili, Frederic 2,600 * 260 2,340 *
Cruypenning, Laurent 400 * 40 360 *
De Lenclos, Alain 168,500 2.6% 16,850 151,650 1.9%
Debaecker, Michel 2,000 * 200 1,800 *
Dias, Louis 13,500 * 1,350 12,150 *
Doury, Fabienne 1,400 * 140 1,260 *
Dujardin, Philippe 2,600 * 260 2,340 *
Durocher, Jean-Luc 4,000 * 400 3,600 *
El Hassan Ennahou 1,400,000 21.8% 140,000 1,260,000 16.1%
Farys, Roland 22,400 * 2,240 20,160 *
Galin, Francois 8,000 * 800 7,200 *
Greene, Richard P. 250,000 3.9% 250,000 0 *
Haussy, Vauche Daniel 5,000 * 500 4,500 *
Hoffman, Ginette 20,000 * 2,000 18,000 *
Humbert, Jean-Marie 10,600 * 1,060 9,540 *
Kieffer, Serge 1,100 * 110 990 *
Kremer, Joseph 1,000 * 100 900 *
Lacoua, Oliver 3,000 * 300 2,700 *
LDV, Inc. 250,000 3.9% 250,000 0 *
Levy, Michele 10,000 * 1,000 9,000 *
Lux Providence S.A. 7,400 * 740 6,660 *
Mageur, Joel 2,900 * 290 2,610 *
Maude Resources, Inc. 62,800 1.0% 6,280 56,520 *
Mogeon, Philippe 1,300 * 130 1,170 *
Molko, Albert 121,000 1.9% 12,100 108,900 1.4%
Monin, Didier 1,700 * 170 1,530 *
Montant, Jean Pierre 365,000 5.7% 36,500 328,500 4.2%
D.P. Morton & Associates, LLC 250,000 3.9% 250,000 0 *
Narcos Portfolio 4,000 * 400 3,600 *
Panalland, Patrick 600 * 60 540 *
Parrot, Jean-Francois 2,400 * 240 2,160 *
Perdrix, Georges 4,500 * 450 4,050 *
Perdrix, Jean-Claude 1,800 * 180 1,620 *
14
Perdrix, Thierry` 1,800 * 180 1,620 *
Perlotto, Alvero 3,300 * 330 2,970 *
Perron, Jean-Pierre 1,300 * 130 1,170 *
Plassard, Robert 1,400 * 140 1,260 *
Rampadaruth, Amal 225,000 3.5% 22,500 202,500 2.6%
Rampadaruth, Aruna 25,000 * 2,500 22,500 *
Rampadaruth, Jadoomanee 202,500 3.2% 20,250 182,250 2.3%
Rampadaruth, Maya 25,000 * 2,500 22,500 *
Rampadaruth, Natalia 25,000 * 2,500 22,500 *
Remy, Claire 1,500 * 150 1,350 *
Remy, Jean-Francois 1,600 * 160 1,440 *
Remy, Michel 6,100 * 610 5,490 *
Robin, Catherine 1,300 * 130 1,170 *
Roux-Bognier, Claudine 2,300 * 230 2,070 *
Schmidt, Paul 250,000 3.9% 250,000 0 *
Souhard, Eric 2,000 * 200 1,800 *
Teuf, Alex 10,000 * 1,000 9,000 *
Toque, Dauphinoise 2,200 * 220 1,980 *
Vauche, Francis 43,000 * 4,300 38,700 *
Vauche, Frank 43,000 * 4,300 38,700 *
Vedere, Guy 1,000 * 100 900 *
Vedere, Paul 1,000 * 100 900 *
Wagenheim, Olivier 400 * 40 360 *
____________________________
* Indicates less than 1% beneficial ownership
1. Percentages were based on the number of shares issued and outstanding as of
June 30, 2002, which equaled 6,421,000 common shares.
2. Percentages were based on the number of shares issued and outstanding
assuming that 100% of the 1,400,000 common shares being Offered are
successfully sold, which would equal a total of 7,821,000 common shares
issued and outstanding. Also, in the last column it is assumed that the
selling shareholders have sold the number of share they have been authorized
to sell.
3. The Company's officers and directors control approximately 59% of the
Company's common stock.
4. Alain De Lenclos, El Hassan Ennahou, Jadoomanee Rampadaruth, Amal
Rampadaruth, JeanPierre Montant, and Wulfran Boudoux-d'Hatefeuille are
officers and/or directors of the Company.
PLAN OF DISTRIBUTION
We are offering 1,400,000 shares of common stock through officers and
directors on a "direct participation" basis at a purchase price of $2.50 per
share. This offering will begin upon effectiveness and will expire whenever all
of the shares are sold, or 12 months after the date of effectiveness, whichever
comes first. The Selling Stockholders will be selling 1,542,100 common shares.
This offering will be conducted beginning from the effective date and will
expire whenever all of the shares are sold or 12 months after the date of
effectiveness, whichever comes first. Space Telecom is managing this offering
without an underwriter. The shares will be offered and sold by our officers.
These officers will not receive a sales commission nor other compensation,
except for reimbursement of expenses actually incurred on behalf of Space
Telecom for such activities. In connection with their efforts, they will rely on
the safe harbor provisions of Rule 3a4-1 of the Securities and Exchange Act of
1934. Generally speaking, Rule 3a4-1 provides an exemption from the
broker/dealer registration requirements of the 1934 act for associated persons
of an issuer. No one, including Space Telecom, has made any commitment to
purchase any or all of the shares. Rather, the officers and directors will use
their best efforts to find purchasers for the shares. We cannot state how many
shares will successfully be sold.
Mr. Alain de Lenclos, CEO, Mr. Amal Rampadaruth, Chairman, Mr. Boudoux
D'Hautefeuille, Director, Mr. Jadoomanee Rampadaruth, CFO, Mr. Montant,
Director, and Mr. Ennahou, COO are responsible for the sale of the securities on
behalf of Space Telecom. They are not compensated in connection with their
participation by the payment of commissions or other remuneration based either
directly or indirectly on transactions in securities. These officers are not, at
the time of their participation, an associated person of a broker or a dealer.
These officers do not restrict their participation to transactions involving
offers and sales of securities to a registered broker or dealer, a registered
investment company or registered separate account, an insurance company, a bank,
a savings and loan association, a trust company or similar institution
supervised by a State or Federal Banking Authority or a Trust for which a bank,
a savings and loan association, a trust company or a registered investment
advisor either is the trustee or is authorized in writing to make investment
decisions or that are exempted by Section 3a-7, 3a-9 or 3a-10 of the Securities
Act of 1933 from registration provisions of that Act or that are made pursuant
to a plan or agreement submitted over vote or consent of the security holders
who will receive securities of the issuer in connection with a reclassification
of securities of the issuer, a merger or consolidation or a similar plan of
acquisition involving an exchange of securities or a transfer of assets of any
other person to the issuer in exchange for securities of the issuer, or that are
made pursuant to a bonus, profit sharing, pension, retirement, thrift, savings,
incentive, stock purchase, stock ownership, stock appreciation, stock option,
dividend reinvestment or similar plan for employees of an issuer or a subsidiary
of the issuer.
15
The Officers meet all of the following conditions:
• They primarily perform, or is intended primarily to perform at the
end of the offering, substantial duties for or on behalf of the
issuer other than in connection with transaction in securities; and
• They were not a broker or dealer, or an associated person of a
broker or dealer, within the preceding 12 months; and
• The Officers do not participate in selling and offering of
securities for any issuer more than once every 12 months other than
in reliance on paragraphs a4i or a4iii , except that for securities
issued pursuant to Rule 415 under the Securities Act 1933, the 12
months shall begin with the last sale of any security included
within one Rule 415 Registration. The Officers restrict their
participation to any one or more of the following activities;
a) Preparing any written communication or delivering
such communication through the mail or other means
that does not involve oral solicitation by the
officers of a potential purchaser, provided,
however, that the content of such communication is
approved by a partner, officer or director of
issuer,
b) Responding to enquiries of a potential purchaser in
a communication initiated by the potential
purchaser, provided, however, that the content of
such responses are limited to information contained
in a registration statement filed under the
Securities Act of 1933 or other offering document;
c) Performing ministerial and clerical work.
• No presumption shall arise that the Officers of Space Telecom have
violated Section 15a of the act solely by reason of their
participation in the sale of securities of Space Telecom if they do
not meet the conditions specified in paragraph (a) of this section.
We anticipate selling the shares to persons whom we believe may be
interested or who have contacted us with interest in purchasing the securities.
We may sell shares to such persons if they reside in a state in which the shares
legally may be sold and in which we are permitted to sell the shares. We are not
obligated to sell shares to any such persons.
We have established an escrow account at First Union National Bank wherein
funds will be held until such time as the Minimum offering amount has been
subscribed for. At that time, the funds will be dispersed to be used for our
business operations.
We reserve the right to reject any subscription in full or in part and to
terminate this offering at any time. Officers, directors, present stockholders
of Space Telecom and persons associated with them may purchase some of the
shares. However, officers, directors, and their affiliates shall not be
permitted to purchase more than 20% of the shares being sold and such purchases
will be held for investment and not for resale. In addition, no proceeds from
this offering will be used to finance any such purchases.
16
No person has been authorized to give any information or to make any
representations in connection with this offering other than those contained in
this prospectus and if given or made, that information or representation must
not be relied on as having been authorized by Space Telecom. This prospectus is
not an offer to sell or a solicitation of an offer to buy any of the securities
to any person in any jurisdiction in which that offer or solicitation is
unlawful. Neither the delivery of this prospectus nor any sale hereunder shall
under any circumstances, create any implication that the information in this
prospectus is correct as of any date later than the date of this prospectus.
Purchasers of shares either in this offering or in any subsequent trading
market that may develop must be residents of states in which the securities are
registered or exempt from registration. Some of the exemptions are self-
executing, that is to say that there are no notice or filing requirements, and
compliance with the conditions of the exemption render exemption applicable.
We have filed the registration statement, of which this prospectus forms a
part, with respect to the sale of the shares. There can be no assurance that the
Selling Stockholders will sell any or all of the shares they desire to sell, or
that we will sell any of the shares we desire to sell.
Under the Securities Exchange Act of 1934 and the regulations there under,
any person engaged in a distribution of the shares offered by this Prospectus
may not simultaneously engage in market making activities with respect to the
common stock of Space Telecom during the applicable "cooling off" periods prior
to the commencement of such distribution. In addition, and without limiting the
foregoing, the Selling Stockholders will be subject to applicable provisions of
the Exchange Act and the rules and regulations there under, which provisions may
limit the timing of purchases and sales of common stock by the Selling
Stockholders. We will pay all of the expenses incident to this offering and sale
of the Shares, other than commissions, discounts and fees of underwriters,
dealers, or agents.
We have advised the selling stockholders that, during such time as they may
be engaged in a distribution of any of the shares we are registering by this
Registration Statement, they are required to comply with Regulation M
promulgated under the Securities Exchange Act of 1934. In general, Regulation M
precludes any Selling Stockholder, any affiliated purchasers and any
broker-dealer or other person who participates in such distribution from bidding
for or purchasing, or attempting to induce any person to bid for or purchase,
any security which is the subject of the distribution until the entire
distribution is complete. Regulation M defines a "distribution" as an offering
of securities that is distinguished from ordinary trading activities by the
magnitude of the offering and the presence of special selling efforts and
selling methods. Regulation M also defines a "distribution participant" as an
underwriter, prospective underwriter, broker, dealer, or other person who has
agreed to participate or who is participating in a distribution. Our officers
and directors, along with affiliates, will not engage in any hedging, short, or
any other type of transaction covered by Regulation M.
Regulation M prohibits any bids or purchases made in order to stabilize the
price of a security in connection with the distribution of that security, except
as specifically permitted by Rule 104 of Regulation M. These stabilizing
transactions may cause the price of the common stock to be higher than it would
otherwise be in the absence of those transactions. We have advised the Selling
Stockholders that stabilizing transactions permitted by Regulation M allow bids
to purchase our common stock so long as the stabilizing bids do not exceed a
specified maximum, and that Regulation M specifically prohibits stabilizing that
is the result of fraudulent, manipulative, or deceptive practices. Selling
Stockholders and distribution participants will be required to consult with
their own legal counsel to ensure compliance with Regulation M.
LEGAL PROCEEDINGS
As of the date of this prospectus, neither Space Telecom nor any of its'
officers or directors are involved in any litigation either as plaintiffs or
defendants. As of this date, there is not any threatened or pending litigation
against Space Telecom or any of its' officers or directors.
17
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
Set forth below is certain information concerning the our directors and
executive directors.
Name Age Position
---- --- --------
Alain de Lenclos 57 Chief Executive Officer, President
and Director
(Currently resides in Europe)
El Hassan Ennahou 34 Chief Operating Officer and Senior
Vice President
(Currently resides in the U.S.)
Jadoomanee Rampadaruth 60 Chief Financial Officer, Executive
Vice President, Secretary
and Director
(Currently resides in Europe)
Amal Rampadaruth 36 Chairman of the Board of Directors
(Currently resides in the U.S.)
Jean-Pierre Montant 51 Director
(Currently resides in Europe)
Wulfran Boudoux d'Hautefeuille 57 Director
(Currently resides in Europe)
The Directors shall be elected to each annual general meeting and shall
hold office until the next annual meeting of shareholders and until the
Director's successor has been elected and qualified or until the Director's
resignation or removal from office.
The Directors have been named but will only serve their terms after
successful completion of this offering.
None of our Officers and Directors currently hold such responsibilities
in any reporting company.
Biographies
Alain De Lenclos, Chief Executive Officer, President and Director
Mr. De Lenclos, age 56, will primarily be responsible for research of new
markets, contracts follow-up and general management. He will also handle
negotiations with overseas governments in order to have all authorizations
necessary for the development and expansion of our business. Since January 2002,
Mr. De Lenclos is the official representative in Europe of ALPS Resources
Bankers, Inc. of Palm Beach, Florida. He acquired his knowledge in
telecommunications with Circlenet Communications from 2000 to 2001 during which
time he was responsible for work done in African countries to establish the
telecommunication network and obtain the required permits. For the period 1985
to 2000, he was the Chief Administrator of a company located in Haute Savoie,
France, which specialized in insurance and investment. From 1982 to 1985, he was
responsible for all the P.F.A insurance companies in Haute Savoie Insurance and
investment opportunities. From 1979 to 1981, he was an agent at the Lloyd
Insurance company in Haute-Savoie, France. In France, Mr. De Lenclos received a
Diploma as an Accountant and Diploma as an Optician and studied law for two
years. He was in the marine corps Jeanne d'Arc and Colbert from 1965 to 1967.
El Hassan Ennahou, Chief Operating Officer and Senior Vice President
El Hassan Ennahou, age 34, is responsible for the technical operations,
international business development and overseas management functions, marketing
and sales of services to telephone operators. In addition, he will negotiate
with target companies to obtain all necessary licenses. From 1999 to 2000, he
was Vice President and CFO of Circlenet Communications, a newly created voice
over IP carrier targeting the South American markets and from 2000 to 2001, he
was President and CEO of Circlenet Communications, with the mission received
from the shareholders to reorganize and review the entire strategy of the
initial business plan. Due to the dramatic events of September 11, 2001,
Circlenet was not able to raise funding to start generating income. Mr. Ennahou
has experience in the design, build-out and operation of an IP network. He also
has been able to maintain relationships with the suppliers, the regulation
authorities worldwide and the customers of Circlenet. From 1997 to 1999, he was
Vice President for angel investors in charge of scouting companies looking for
startup and early stage funding in Belgium, Netherlands and Luxemburg with the
goal to go public on the newly created EASDAQ stock market. He also worked as
asset manager in private banking from 1991 to 1999 and developed a network of
contacts and clients in Africa and in Europe. From 1991 to 1998, he was
President and COO of SCIBIS SA, a Belgium software distributor company. During
this period, he was President and CEO of Global Tech Investments Ltd, a
corporation based in Luxemburg which specialized in the management of individual
investors portfolios with the use of stock options, strategies and real-time
trading tools. Mr. Ennahou attended Universite du Travail Paul Pasteur in
Charleroi Belgium 1986-1990 where he received a B.A. in Business Administration
and Finance. He received a B.A. in Computer Sciences and Information Technology
from I.A.C.E Universite Libre de Bruxelles Belgium 1986-1990. Institut Superieur
Economique et Commerciales du Hainaut Belgium 1982-1986, Undergraduate in Sales
and Marketing.
18
Jadoomanee Rampadaruth, Chief Financial Officer, Executive Vice President,
Secretary and Director
Jadoomanee Rampadaruth, FCCA, age 60, will be responsible for the company's
financial operations, accounts payable and receivable, interaction with auditors
and investor relations. Since 1999, Mr. Rampadaruth has been the Chairman and
CFO of the following companies: Terra Holdings Inc., a holding company of
technological companies in Palm Beach, Florida; Palm Beach Life, Merrion
Holdings Inc., equity participation in European companies and others in Las
Vegas, NV; Alps Resources Bankers Inc, Palm Beach, FL; and ARTI, Holding Company
of Technological Companies, Palm Beach, FL. From 1992 to present, he is a
Director and was a share owner (sold) of Commercial & Fiduciary Bank Ltd., and
he is the Chairman and CFO of: Amalgamated Resources Group of Companies;
Amalgamated Resources International Fund Corp.; Amalgamated Resources Holding
SA; Amalgamated Resources Corp.; and Amalgamated Resources Financial Marketing
Corp. From May 1998 to September 1998, he was the Executive VP and Director of
the following companies: First Anglo-Swiss (FAS) Holding Inc., holding company
of all other FAS companies, (USBR -NASDAQ NSM), Las Vegas, NV; FAS Marketing
Corp., used to market FAS bonds, Las Vegas, NV; FAS Mergers & Acquisitions, Las
Vegas; FAS Eastern European Financial Equities Corp., holding company of all
Eastern European Real Estate, Las Vegas; Eastern European Real Estate Fund
Corp., Las Vegas; FAS Mining Corp., holding company of mining companies, Las
Vegas; FAS International Builders Corp., holding company of European
construction companies, Las Vegas; COVIPRO, parent company of a French real
estate company, Las Vegas; Texas Turbo Jet Inc., jet engine parts, Texas, USA;
and Arbinson Mining Inc., Gold Mining, Nevada. In 1990, he created Brama Corp.,
a company incorporated in the U.S. with representative offices in Paris and
Geneva, which provided services for the management and control of the day-to-day
running of small companies. From 1986 to 1996, he was a part-time lecturer in
Anglo-Saxon Accounting and Financial Management at the Universite Paris IX
Dauphine, France. The lectures were delivered to students preparing the
MAGISTERE DE SCIENCES ET DE GESTION (Master Level), with emphasis on the
comparative aspects of accounting techniques used in France, England and the US.
Mr. Rampadaruth is an F.C.C.A. Fellow of the Chartered Association of Certified
Accountants. The Chartered Association of Certified Accountants is based in
London and has recently been awarded the Royal Charter. It is the equivalent of
the American CPA.
Amal Rampadaruth, Chairman of the Board of Directors
Amal Rampadaruth, age 36, along with Mr. De Lenclos, will be involved in
all negotiations with overseas governments and relevant agencies. Since 1995, he
is the President and CEO of The Amalgamated Resources Group of Companies, which
was created to take over and continue all of the activities of Commercial and
Fiduciary Bancorp, Inc., in the US, Bahamas, France, Luxembourg, Switzerland and
others; Amalgamated Resources Financial Marketing Corp., which is used to
promote all our financial products and instruments; and Amalgamated Resources
Holdings, Inc., a US holding company. Since 1999, Mr. Rampadaruth is the
President and CEO of Terra Holdings, Inc., a holding company of technological
companies; and Palm Beach Life / Merrion Holdings Inc., equity participation in
European companies and others. He is the President of Alps Resources Bankers
Inc, Palm Beach, Florida and ARTI, a holding company of technological companies.
From 1988 to 1998, he was the Chairman and CEO of the following: Commercial and
Fiduciary Bancorp., Inc., Financial Investments, USA, managed in Geneva,
Switzerland; Commercial and Fiduciary Bank Ltd., a full bank with credit card
facilities, loans, investments and others, Rome, Italy, managed in Geneva,
Switzerland; Merchant Trade Finance Ltd., a marketing company for Interglobe
Plc., a British Telecom Company, USA, managed in Geneva, Switzerland. From May
1998 to September 1998, he was the Chairman and CEO of First Anglo-Swiss (FAS)
Holding Inc., Holding Company of all other FAS Companies, (USBR -NASDAQ NSM),
Las Vegas, USA; FAS Marketing Corp., used to market FAS bonds; FAS Mergers &
Acquisitions; FAS Eastern European Financial Equities Corp., a holding company
of all Eastern European real estate; FAS Mining Corp., a holding company of
mining companies; FAS International Builders Corp., a holding company of
European construction companies. During this same period he was and Chairman of
Eastern European Real Estate Fund Corp., Las Vegas, USA; Director of COVIPRO,
Parent Company of a French real estate company; Chairman of Texas Turbo Jet
Inc., Jet Engine Parts, Texas, USA; and Chairman of Arbinson Mining Inc., Gold
Mining, Nevada, USA,
19
Jean-Pierre Montant, Director
Jean-Pierre Montant, age 51, is a member of the administrative council of
Space Telecom. From 1989-2002, he was an Advisor and administrator of S.A Espace
Conseil Synergie in Lons, France. His responsibilities included giving advice to
companies; audit and analysis reports; create and validate a network of
partners; in charge of teams to build up projects; and recruit employees. From
1986 to 1988, he was executive officer in distribution for Carrefour (Pau and
Echirolles Pau France). He was in charge of a team of 20 to 60 persons and was
also responsible for negotiating with suppliers. From 1976 to 1978, he was
responsible for a team of 11 persons to serve a restaurant of 200 persons at the
Treves casino in Germany.
Wulfran Boudoux-D'Hautefeuille, Director
Wulfran Boudoux-D`Hautefeuille, age 57, is a member of the administrative
council of Space Telecom. Since 1968, he has been an insurance agent with Group
AXA. He has experience in many areas of insurance including, but not limited to,
risk prevention, damage insurance, Civil responsibility, I.A.R.D., personal,
life and investment insurance. Also responsible for creating contracts, opening
and closing files on disasters; handled accounting, including movement of funds.
From 1985 to present, President of P.A.C.T. in Hautes Pyrenees. 1980 to present,
Administrator of Caisse d'Allocations Familiales in the Haute Pyrenees and
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of June 30, 2002,
with respect to the beneficial ownership of our common stock by each beneficial
owner of more than 5% of the outstanding shares, each director, each executive
officer named in the Summary Compensation Table and all executive officers and
directors as a group, and sets forth the number of shares of our common stock
owned by each such person and group. Unless otherwise indicated, the owners have
sole voting and investment power with respect to their respective shares.
Percentage of Outstanding
Common Stock Owned
-------------------------
Name and Address Shares of Common Stock Before After Offering
of Beneficial Owner Beneficially Owned Offering of All Shares
--------------------- --------------------------- -------- -------------
Alain De Lenclos 418,500 (1) 6.5% 5.3%
5, Rue Emile Favre
74300 Cluses, France
El Hassan Ennahou 1,410,000 (2) 21.9% 18.0%
292 South County Rd, #109
Palm Beach, FL 33480
Wulfran Boudoux-d'Hautefeuille 355,000 (3) 5.5% 4.5%
65500 Pujo, France
Jean Pierre Montant 365,000 5.7% 4.7%
16, Rue des Pervenches
64140 Lons, France
Amal Rampadaruth 500,000 (4) 7.8% 6.4%
292 South County Road, #109
Palm Beach, FL 33480
20
Jadoomanee Rampadaruth 237,500 (5) 3.7% 3.0%
292 South County Road, #109
Palm Beach, FL 33480
Alps Resources Bankers (6) 500,000 7.8% 6.4%
292 South County Road, #109
Palm Beach, FL 33480
Amalgamated Resources Holdings (6) 500,000 7.8% 6.4%
292 South County Road, #109
Palm Beach, FL 33480
Amalgamated Resources Investments (6) 500,000 7.8% 6.4%
292 South County Road, #109
Palm Beach, FL 33480
Amalgamated Resources Marketing (6) 400,000 6.2% 5.1%
292 South County Road, #109
Palm Beach, FL 33480
All directors and executive
officers as a group (6 persons) 5,186,000 72.6% 59.7%
- ------------------------
* Indicates less than 1% beneficial ownership.
(1) Share ownership includes 250,000 options exercisable at $2.50 per share
for a period of 24 months from the effective date of the Offering.
(2) Share ownership includes 10,000 options exercisable at $2.50 per share for
a period of 24 months from the effective date of the Offering.
(3) Includes 1,000 shares owned by Eymeric Boudoux-d'Hatefeuille.
(4) Includes 25,000 shares owned by Natalia Rampadaruth, who is the wife of
Amal Rampadaruth. Share ownership includes 250,000 options exercisable at
$2.50 per share for a period of 24 months from the effective date of the
Offering.
(5) Includes 25,000 shares owned by Maya Rampadaruth, who is the wife of
Jadoomanee Rampadaruth. Share ownership includes 10,000 options
exercisable at $2.50 per share for a period of 24 months from the
effective date of the Offering.
(6) Amal Rampadaruth is also a beneficial owner of Alps Resources Bankers;
Amalgamated Resources Holdings; Amalgamated Resources Investments; and
Amalgamated Resources Marketing
DESCRIPTION OF SECURITIES
Common Stock
Our authorized common stock consists of 100,000,000 shares of common stock,
$.0001 par value per share. As of June 30, 2002, there were 6,421,000 common
shares issued and outstanding. There were approximately 69 holders of common
stock as of June 30, 2002.
Holders of common stock are entitled to one vote per share on all matters
submitted to a vote of shareholders and may not cumulate votes for the election
of directors. Holders of the common stock have the right to receive dividends
when, as, and if declared by the board of directors from funds legally
available. Upon liquidation of Space Telecom, holders of the common stock are
entitled to share pro rata in any assets available for distribution to
shareholders after payment of all obligations of the Company. Holders of common
stock have no preemptive rights and have no rights to convert their common stock
into any other securities. All shares of common stock have equal rights and
preferences. All shares of common stock now outstanding are fully paid for and
non-assessable.
Holders of Class A common stock are entitled to 10 votes per share on all
matters submitted to a vote of shareholders and may not cumulate votes for the
election of directors.
21
Class A common stock
We have 5,000,000 shares of Class A common stock authorized, $.0001 par
value. Holders of Class A common stock are entitled to 10 votes per share. Amal
Rampadaruth and Alain de Lenclos have been been allocated 2,500,000 shares each.
The Class A common stock carries voting rights only when there is an attempt for
a hostile takeover and may not be voted for any other purpose. It has no
influence on the normal management of the company.
We have never paid a cash dividend on the common stock. We currently intend
to retain all earnings, if any, to increase our capital to effect planned
development activities and to pay dividends only when it is prudent to do so and
our performance justifies such action. Holders of common stock are entitled to
receive dividends out of funds legally available when, as, and if declared by
our board of directors.
Other securities
There are currently no preferred shares or other debt or equity
securities issued, outstanding, or authorized.
Transfer Agent and Registrar
We are acting as our own transfer agent and registrar.
INTEREST OF NAMED EXPERTS AND COUNSEL
Richard P. Greene, P.A. shall opine as to the validity of the shares
registered in this registration statement. Mr. Greene owns 250,000 shares of the
Company's common stock, all of which will be registered in the Registration
Statement. Mr. Greene also has 10,000 options to acquire shares at an exercise
price of $2.50 per share for 24 months from the effective date of the Offering.
Mr. Greene was paid $30,000 to complete this registration statement.
The certifying accountant has been paid out of the loan granted by Alps
Resources Bankers Inc. The loan will be repaid out of the proceeds from the
offering.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Space Telecom's articles of incorporation provide that it will indemnify
any officer, director, or former officer or director, to the full extent
permitted by law. This could include indemnification for liabilities under
securities laws enacted for shareholder protection.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
small business issuer pursuant to the foregoing provisions, or otherwise, the
small business issuer 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 small
business issuer of expenses incurred or paid by a director, officer or
controlling person of the small business issuer 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 small
business issuer will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
DESCRIPTION OF BUSINESS
Development
Space Telecom was incorporated on December 1, 2001 in the state of Florida.
We intend to design, build and operate state-of-the-art Internet Provider ("IP")
network between the US the rest of the world with specific targeting to emerging
market countries. A cautious market study carried out by Mr. Hassan El Ennahou
confirmed our main goal to build improved IP networks linking the US and Europe
to the African continent, the Middle-East and some Asian countries. When
established, those networks could also allow us to provide in-bound and
out-bound traffic between each point of our proposed network, to provide
convergent telecommunications solutions and to develop connectivity with the
most remote areas of the third world countries.
22
In order to build this network, we have decided to locate our main operation
center in Miami, Florida. This location offers the following advantages:
1. Miami hosts the Network Access Point ("NAP") of the Americas which is a
new state-of-the-art telecommunications co-location building. The NAP of
the Americas is one of the six main Internet Tier 1 backbone hubs in the
U.S. This means that we are directly connected to the core network of
the Internet with a large amount of bandwidth available on demand in a
short time period.
2. The NAP of the Americas also hosts multiple Tier 1 carriers and allows the
use of switching fabrics to interconnect all the members of the co-
locations facilities. The building was opened for business in 2001. It was
built from scratch and includes all of the safety features requested by
the telecommunication industry (backup power supply, generators, fire
protection, secure access, monitoring.)
3. With the interconnection agreement including the maintenance by certified
engineers on our equipment in each foreign point of presence, Space
Telecom will control remotely all of its gateways worldwide for the
network operations center ("NOC") to be located in our future Miami office.
4. All the U.S. Tier 1 carriers, the switchless resellers customers and the
prepaid calling card companies are located within a five mile radius from
Brickel Avenue, the business district of Miami.
5. Most of the Tier 1 carrier's backbone end in the NAP of the Americas or
within a five mile radius from it and it is less expensive to rent local
loop in Miami and faster to obtain for the local telephone company.
6. We will h ave connectivity through fiber optic links and submarine cables
to Europe, South America and the other NAP of the U.S. The proximity of
the operations from this main hub reduces the cost for private lines
called local loop provided by BellSouth. The cost of those local loops is
based on the bandwidth and the mileage between the origination point and
the interconnection point.
7. The satellite providers we plan to work with (Panamasat and Intelsat) have
their teleport facilities in a radius of 20 miles from the NAP of the
Americas. We will just need to lease a local loop from BellSouth to be
interconnected.
8. The NAP of the Americas has bandwidth available with the first
telecommunications hub in the world in New York. This will allow the sales
department to promote our network to almost all the international Tier 1
carriers without the need to have offices in New York, London or Paris.
We will use the equipment provided by five different vendors (Cisco,
Lucent, Mockingbird, Sonus and Clarent) to build our IP network. This will
ensure our network will always be ahead of the new development in the
telecommunications market without the risk of being limited by a specific vendor
standard.
Point of presence
23
In each country we plan to go, we will install the same type of point
of presence. This will include a cabinet with lock. In the cabinet will be
installed a router, access server and compression device, signaling SS7/C7
server, satellite modems, remote reboot system and alarm monitoring, UPS backup
power supply, Ethernet hub, backup model for remot access, and host PC. Near the
teleport facilities of our partners, we will install our own teleport with a 4,5
meters satellite antenna and all the devices needed to have full redundancy to
operate in safe conditions. The cabinet and the teleport will always be in the
central office of the Tier 1 carrier with whom we plan to sign the
interconnection agreement. This will guarantee the security of our assets and
also reduce the time of intervention of the engineers in the case of technical
problems.
We will also provide training and documentation on all parts of the
network on site. To be sure of the commitment of the engineer of the Tier 1
carrier where our equipment will be located, we shall pay the salary of each
engineer in charge of the maintenance of our equipment locally.
We are a start-up company and have not generated any sales. The first round
of funding will allow us to build up to five IP networks linking 19 countries to
the US and interconnecting them to each other and with the rest of the world
within 18 months after the IPO. The main reason for this amount is to shorten
the time between the investment and the income generated by those networks to a
maximum of 6 months after the first calls are generated. The use of proceeds of
the funds includes lease of equipments, lease of satellite links, lease of fiber
optic point-to-point connections, lease internet bandwidth, extensive travel to
deploy in each country of our points of presence, maintaining the networks and
customers support 24/7/365 is a requirement when you provide services to Tier 1
carriers.
Business
Our network will enable us to offer voice-over-IP, real time fax-over-IP,
data transmissions, video-conferencing, unified messaging, audio text, prepaid
Internet phone calls and voice mail services for GSM operators and Internet
connectivity in each targeted country.
These services will offer our customers the best possible solution
because they:
1. Will provide high quality connectivity with third world countries
where this type of connectivity is in short supply due to lack of
funding.
2. Strengthen our relationship with the major local
telecommunication providers through our approach of
interconnection agreements in exchange of our investment in each
country to expand the international backbone and provide high
bandwidth Internet.
3. Save them time and money
4. Provide an alternative, cost effective way for them to access a
state-of-the-art telecommunication network providing the above
mentioned services.
The bi-lateral interconnections agreement lasts for 10 years at which
time it may be extended for 5 years or terminated.
1. Our IP Networks will be based on the state-of-the-art and well
improved technology actually in the markets provided by multiple
well known vendors (Cisco, Lucent, Mockingbird, Sonus and Clarent
equipments).
2. Our Network operating center based in Miami will be equipped to
permit a most efficient use of the bandwidth and a real-time
billing platform to allow us to generate a positive cash flow
within the first 9 months of operation.
Even though at this time our expertise is unique in the marketplace, we
expect advances to be made and competitors to arise and offer similar services.
We will meet this challenge by:
1. Signing new interconnections agreements with major foreign Tier 1
carriers in countries not yet targeted by the competition, due to
a lack of knowledge from our competitors of the third world
emerging markets situation.
24
2. Hiring staff specialized in new value added services areas and
web based services.
3. Increasing our continuing education and training expense.
4. Adding complementary bandwidth to our networks in operation to
reduce our operating costs and increase our revenues and profit
margin.
5. Remaining at par with new Technology via constant updates.
We will offer to our customers the complete panel of services that can
be provided on IP network including:
o Voice-over-IP on privately managed networks: By developing low cost
VOIP networks throughout the world, Space Telecom will have the
opportunity to wholesale voice traffic through privately owned IP
networks with the same quality as the classic telephone network, to
various carriers and resellers.
o Real time and delayed Fax-over-IP: Because IP network are in essence
data network, there are no limitations on the type of media they can
transport. The real time and delayed fax-over-IP services are a very
lucrative business and allow any corporation to reduce their costs
drastically.
o International Private Line (IPL): With the type of network that we
intend to implement and the use of our own Earth station worldwide,
we will offer to our peers and to the large corporations the
opportunity to buy from us dedicated point-to-point connections at a
competitive price. This type of service suits the special needs of
large corporations which want to keep permanent data link with their
subsidiaries around the world (countries where we are present).
o High bandwidth Internet dedicated access on wire lines and wireless:
We will be able to provide to the African telecommunications company,
high bandwidth Internet access. With these services, they will
expand their customer base and reduce the price of the subscription
fee which could increase the demand for Internet access. To provide
this service, we will help the local operator by implementing
wireless point to multipoint connections with a bandwidth from 2.048
Mbps and up to 45 Mbps.
o Video Conference: With the level of bandwidth we intend to operate,
the video conference services are easy to implement, especially
since videoconferencing devices are becoming more and more affordable.
o Prepaid Calling Cards: We intend to design a competitive, feature
rich service package targeting both the reseller market and carrier
services market.
o The Calling Card features will include: Audio Text, Conference
Calling, Message Store and Forward, Selective Call Blocking,
Verified and Non-verified Account Codes, Speed Dialing, Virtual
Office, Polling of Client Demographics, ANI Fraud Blocking,
Automatic Recharging and/or replenishment capabilities, Point of
Sale Recharge/Activation, Variable Card Expiration Dates, Flexible
Rating, Report Generation, Custom Voice Prompts and Promotions,
International Direct Dial service, and 24-hour Multi-lingual
Operator Service.
o Prepaid Cellular and Paging: Despite the wireless industry's rapid
growth, a significant percentage of those applying for service are
rejected due to credit issues. Accordingly, the concept of prepaid
wireless service presents a considerable opportunity throughout the
markets we intend to target worldwide.
25
o Marketing Strategy Our market consists of major tier 1 carriers,
businesses and governmental agencies that need most efficient and
reliable communications media at a competitive pricing.
We estimate that about 50 major carriers, 75 resellers of international
long distance telephone service providers, 2,000 large corporations and 30
governmental agencies could be interested to use our services and, thereby,
reduce their operating costs. Assuming we are able to serve 10% of this customer
base, we could generate 8 to 10 million minutes per month.
On a full capacity usage, we would be able to generate a maximum of 50
million minutes per month without the need to invest in new equipment by
increasing the satellite bandwidth and it takes only a week to increase the
bandwidth. Therefore, to optimize our revenues we have two objectives: practice
an aggressive pricing policy and increase the dollars spent per customer by
providing value added services. Our strategy to achieve this is to offer the
highest quality connectivity and the most efficient and reliable customer
support. We intend to do this by:
1. Offering competitive prices - we intend to be well under the
prices of the classic public switched telephone network company
2. Providing a state-of-the-art IP networks with the latest update
in compression, bandwidth management and remote monitoring
3. Implementing a user-friendly, customer oriented, web-based
automated circuit provisioning, customer support and billing
management
Competition
Although competition in our market is intense, it appears that most U.S.
companies do not think people living in Africa or in our other target countries
can afford the cost of phone service and have decided to focus on the domestic
markets. However, in western Africa the ratio of penetration of the GSM phone
has overcome the total amount of fixed lines. The profit margin in the French
African countries is almost 1000% by minute of airtime. In Senegal alone the
amount of GSM phones grew from 15,000 in 1999 to 420,000 today. The demand for
fixed lines is 750,000 fixed lines with a waiting list of three years. People
are willing to pay up to $500 to have telephone service in their home. This can
be done with the help of a company specialized in wireless local loop technology
who is willing to close a deal that will give five to ten years concession on
the entire network to be built and managed in a joint venture. Senegal and other
ex-French colonies currencies are fully convertible and guaranteed by the French
national bank and now by the European Union . This means that all profit
generated by those networks can be transferred to the U.S. or to Europe, without
limitations of any kind.
Competitive advantages
The distinctive competitive advantages which Space Telecom Inc. will bring
to this market are:
• Together, our experienced management team has 10 years of hands-on
experience in financial, technical and commercial fields and four
years in the convergent telephony services.
• A very good relationship with most of the key players in the
telecommunications field and with the FCCs in Africa and Europe.
Most of those relations are at a personal level and they have
already helped us to prepare the way to expedite the legal process
attach to all telecommunication network worldwide.
• Due to our proactive policy to help to our local partner's staff
include that fully trained and up to date with our equipment and
with all the aspects of the origination of traffic from those
countries to Europe and the US through IP networks. This commitment
guarantees Space Telecom of the full cooperation of the local
telecommunications services provider and the strength of our
partnership.
26
• Our time to design, implement and operate a new network will not
exceed 30 days after the signature of the interconnection agreement.
This reduces the return on investment for each point of presence to
a maximum of 150 days after the first call will be generated. This
time frame is based on a gross profit of 5 cents per minute on a
monthly traffic of 2,000,000 minutes.
• Targeting in priority the Tier 1 carriers, we will position Space
Telecom as their best secondary routes, by practicing an aggressive
price policy, to pull the customer's business to us. When the
customers are connected to us and they operate for a few months,
they will realize that we are reliable and we provide them with the
best customer support.
• Each new route will add a significant asset value to our network and
this will put Space Telecom in a good position to be a potential
take over for a Tier 1 carrier who wants to reduced its termination
cost by bypassing the settlement rates agreements in place today.
• With our low need of staff to operate a large international
IP-network, Space Telecom will be able to provide 24x7x365 customer
support without adding too much overhead expense.
• Because of the nature of telecommunications, we will be able to rent
office space in more moderately priced buildings thereby reducing
our production costs.
• As a unique service company, we will be able to keep our margins
high, allowing us to provide internal financing for growth
possibilities.
• A level and policy of capitalization that will allow us to fully
address the needs to keep up to date our state-of-the-art network,
should be scheduled by the board of directors and reviewed on a
quarterly basis.
• By keeping a close control over the cost of operations, we will be
able to auto finance all new investments needed and keep the market
value of Space Telecom very attractive in the event that our growth
should require a new round of funding or in the event of a take-over
by one of our customers.
• Our initial verbal agreement allows us to prepare a sufficient
amount of business contracts that will be signed as soon as the Tier
1 carriers will be able to proceed the standard testing of our
telephone network.
Being a private network and working with the major local companies, we
can provide our services at a lower cost. Also, the personal contacts of members
of our team with the diffeent governments in the target countries and their
declared readiness to sign the necessary agreements with us, give Space Telecom
an edge over its competition.
We have opted for a minimum / maximum proceeds from this offering. We
have planned our business in such a way as to adapt ourselves to the level of
funding received.
The minimum funding will allow us to obtain the necessary signatures
for the pre-interconnection agreements in the target countries. These
agreements, (we already have the declared intents) will trigger additional
funding, whether public or private.
27
If we receive 50% of the maximum funding we shall target less
countries. We shall sign only two pre-intercommunications agreements and limit
the international private circuit s to two. We shall allocate the proceeds as
follows:
Hardware $ 900,000
General and Administration 400,000
Refundable Deposit 200,000
International Private Circuits 44,000
Balance for working capital and offering costs 206,000
Total $1,750,000
If we receive 75% of the maximum funding under this offering we shall
target a minimum of four countries and four international private circuits. In
this hypothesis, the alocation of funds will be as follows:
Hardware $1,350,000
General and Administration 485,000
Refundable Deposit 400,000
International Private Circuits 88,000
Balance for working capital and offering costs 302,000
Total $2,625,000
The maximum proceeds will ensure that we shall be able to achieve
profitability and positive cash flows in a short period of time. Any alternate
amount will have the effect of retarding the achievement of the goals fixed. The
alternate amounts will not put our business in jeopardy although it will provide
more time for competition to pick up.
Patents and Trademarks
At the present time, we do not own any patents or trademarks.
Government regulations
The Company's international telecommunications services will be subject to
the jurisdiction of many regulators. The U.S. Federal Communications Commission
("FCC") has imposed certain restrictions on international telecommunications
providers, including the requirement that authorized carriers provide service in
a manner consistent with the laws of the countries in which they operate. Local
laws and regulations differ significantly among the jurisdictions in which we
intend to operate, and the interpretation and enforcement of such laws and
regulations vary and are often based on the informal views of the local
ministries which, in some case, are subject to influence by government owned or
sanctioned local telephone companies. In addition, failure to interpret
accurately the applicable laws and regulations and the mode of their enforcement
in particular jurisdictions could result in significant monetary penalties
imposed against us . We intend to generate a significant portion of our revenues
from customers originating calls in Africa and Europe. There can be no assurance
that foreign regulations will not have a material adverse effect on our
business, results of operations and financial condition.
Employees
We presently have no full time employees. Staffing levels will be
determined as we progress and grow. As many independent contractors as possible
will be used to keep payroll expenses to a minimum. Areas such as sales and
marketing will be assigned to outside agencies, eliminating the need for inside
positions to handle such areas. As travel needs dictate, several independent
contractors could be moved to full time employees to facilitate travel to and
from various network sites around the country. We do not anticipate this
occurring for at least six months.
28
MANAGEMENT'S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS
We intend to build an improved IP networks linking the U.S. and Europe to
the African continent, the Middle-east and some Asian countries. Those networks
would allow us to provide in-bound and out-bound traffic between each point of
our proposed network, to provide convergent telecommunications solutions and to
develop connectivity with the most remote area of the third world countries. Our
primary focus at this point is developing our marketing efforts in the most
effective and efficient manner possible.
Our 12 month plan of operation requires the receipt of $3,500,000 and
will be utilized as follows:
Step 1 - The initial $110,000 received will be used as the initial
deposit for bandwidth leasing from satellite and submarine cable providers.
Step 2 - An additional receipt of $400,000 will cover the refundable
deposit for the interconnection with the major carrier in four countries.
To be able to implement and operate our own networks, after signature of
an interconnection agreement with the major telecommunication service
provider in each country, we must pay a refundable deposit of $100,000.
The deposit is kept as a security bond in the event we cannot fulfill
payment in a timely basis.
Step 3 - An additional $1,800,000 would cover expenses involving
hardware and equipment to build the backbone. The hardware and equipment
may be financed through a leasing company or financed through a financial
institution. Generally, financial institutions would require 40% up front
to do this type of financing.
Step 4 - An additional $775,000 would be used to cover expenses for
office and administrative expenses such as rent, office equipment,
salaries.
The company would not require additional financing during the first
twelve months period as it expects a stream of revenue to cover whatever
fluctuations in the cost of equipment, etc. We have no plans to sell additional
stock to raise more money during the twelve months following the start of
operations.
Liquidity and capital resources
We are presently relying on our ability to borrow to funds for our
day-to-day operations. We are relying, in part on the success of this offering
to provide us with the necessary capital to subsidize the day-to-day operations
until we can reach a level of sales that will sustain our operating expenses.
There can be no assurance that we will be able to borrow capital to continue
operations. There also can be no assurance that any shares of this offering will
be successfully sold, and if sold, the capital received will be adequate to
continue operations. The financial statements made part hereof have been
presented on the basis of the continuation of the Company as a going concern and
do not include any adjustments relating to the recoverability and classification
of recorded asset amounts or amounts and classification of liabilities that
might be necessary should we be unable to continue as a going concern.
Marketing
Most of our marketing and promotion will be accomplished through our
officers who will be part of the sales organization. The services we can offer
our customers is one of the best sales tools we have. While we intend to hire a
person to be responsible for marketing, follow up and promotion, we believe it
is critical that any marketing program include all of our officers as sales
resources. Our main channel of distribution will be direct to our customer as
the result of direct interconnection with their networks. By close follow up, we
will stay in touch with their special needs or comments to make our services
better.
Our management has experience in telecommunications. Building on this
experience, we intend to develop networks using our own personnel. The prior
operations in which management has been involved have no affiliation with Space
Telecom.
Pricing will be structured to provide telecommunications at a relatively
low cost. While exact prices have yet to be established, we intend to offer
lower rates than our companies. Discounts and special offers will be established
with and offered by various vendors in the various markets in which we have
networks.
29
With our minimum offering of only $25,000, we may not be able to fund our
operations for the initial 12 months without alternative financing sources. We
believe $3,500,000 would be required to implement and operate our own networks,
therefore should only the minimum offering be raised, money contributed by
investors may be insufficient to carry out the contemplated business plan and
such funds would not be returned to investors. We have stated in the Use of
Proceeds section that the minimum offering amount would sustain our operations
for approximately three months wherein we would travel and secure agreements to
offer our services. Should additional funds not be raised in the offering, we
would restructure the current plan and seek additional private equity or debt
financing.
Employees
We presently plan to add six employees to our staff. The level of employees
is primarily contingent on the level of success of this offering. We anticipate
paying these employees at a rate of $240,000 per annum.
All our Officers have signed Employment Contracts that will become
effective when the Company is funded. All contracts are for a period of five
years and all have a non-compete clause included in the Agreement. All
Agreements require full time devotion to the Company.
DESCRIPTION OF PROPERTY
We will lease office space at South County Road, Palm Beach, Florida for
$4,000 per month. Upon funding, we intend to lease space to accommodate the
administrative staff while our technical office will be located in Miami for
reasons of convenience.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Jadoomanee Rampadaruth, the Company's Executive Vice President, CFO and
Director, is the father of Amal Rampadaruth, the Company's Chairman of the Board.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Prior to this offering, there has been no public market for the common
stock of the Company. At the present time neither any National Securities
Exchange nor the NASDAQ stock market lists the securities offered. There is no
public trading market for our common stock. There are outstanding 6,421,000
common shares as of June 30, 2002. These are deemed restricted securities and
may be sold only pursuant to Rule 144 unless otherwise registered in an
effective registration statement. We are currently offering 1,400,000 common
shares through this offering. We have also agreed to register an additional
1,542,100 for selling shareholders.
Since its inception, no dividends have been paid on our common stock. We
intend to retain any earnings for use in the business activities, so it is not
expected that any dividends on the common stock will be declared and paid in the
foreseeable future.
30
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the aggregate
compensation paid or to be paid by Space Telecom to its Chief Executive Officer
and each of the other executive officers for services rendered in all capacities
to the Company for the fiscal year ended December 31, 2001.
Annual Long-Term All Other
Compensation Compensation Awards Compensation
Restricted
Name and Stock Stock Securities Group
Principal Fiscal Awards Awards Underlying Matching Life Ins.
Position Year Salary Bonus ($) (#) Options 401K Premium
Alain De Lenclos 2001 $-0- -0- -0- -0- -0- -0- -0-
CEO/President
Jadoomanee
Rampadaruth 2001 $-0- -0- -0- -0- -0- -0- -0-
CFO/VP
El Hassan Ennahou 2001 $-0- -0- -0- -0- -0- -0- -0-
COO/VP
31
Amal Rampadaruth 2001 $-0- -0- -0- -0- -0- -0- -0-
Chairman
Jean-Pierre
Montant 2001 $-0- -0- -0- -0- -0- -0- -0-
Director
Wulfran Boudoux-
d'Hautefeuille 2001 $-0- -0- -0- -0- -0- -0- -0-
Director
Stock options
Our Board of Directors has granted stock options exercisable during 24
months after this offering.
Benefit plans
Currently we have no benefit plans. When the funding is completed, we
intend to offer a 401k plan for our employees and officers. Additionally, we
intend to add a group health plan for employees which will pay the monthly
premiums for the employee only. Family members of the employee can be added to
the plan but at their own expense. We feel that it will be important to be able
to offer these minimal benefits in order to attract and retain talented employees.
Future compensation
We do not have plans to increase the current levels of compensation to
its employees, officers, or directors either through the use of additional wages,
incentive programs, restricted stock awards, or otherwise.
31
SPACE TELECOM, INC.
(A DEVELOPMENT STAGE COMPANY)
EXAMINATION OF FINANCIAL STATEMENTS
MAY 31, 2002
TABLE OF CONTENT
PAGE
INDEPENDENT AUDITOR'S REPORT.................................................F-1
FINANCIAL STATEMENTS:
Balance Sheet.......................................................F-2
Statement of Cash Flows.............................................F-3
NOTES TO FINANCIAL STATEMENTS..........................................F-4 - F-5
32
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
Space Telecom, Inc.
Palm Beach, Florida
We have audited the accompanying balance sheet of Space Telecom, Inc. (a Florida
corporation and a development stage company) as of May 31, 2002 and the related
statement of cash flows for the month of May, 2002. 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statement is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statement. 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 Space Telecom, Inc. as of May
31, 2002 and it's cash flows for the month of May, 2002 in conformity with
accounting principles generally accepted in the United States of America.
/s/ Holyfield & Thomas, LLC
West Palm Beach, Florida
June 17, 2002
F-1
SPACE TELECOM, INC.
(A Development Stage Company)
BALANCE SHEET
AS OF May 31, 2002
ASSETS
CURRENT ASSETS:
Cash $5,630
TOTAL ASSETS $5,630
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable to stockholder $5,000
STOCKHOLDERS' EQUITY:
Common stock; $.0001 par value,
105,000,000 shares authorized,
6,300,000 shares issued and outstanding 630
Class A Common stock; $.0001 par value,
having 10 votes per share, 5,000,000
shares authorized, none issued and
outstanding
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $5,630
See Independent Auditor's Report and Accompanying Notes to Financial Statement.
F-2
SPACE TELECOM, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
FOR THE MONTH OF MAY, 2002
Cash flows from operating activities $ 0
Cash flows from investing activities 0
Cash flows from financing activities
Issuance of common stock 630
Borrowing from stockholder 5,000
Net cash provided by financing activities 5,630
Increase in cash 5,630
Cash, beginning of period 0
Cash, end of period $ 5,630
See Independent Auditor's Report and Accompanying Notes to Financial Statement.
F-3
SPACE TELECOM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENT
AS OF MAY 31, 2002
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Space Telecom, Inc. ("the Company") is a development stage enterprise
incorporated under the laws of the State of Florida in December 2001. The
Company's offices are in Palm Beach, Florida, its only location.
Space Telecom, Inc. does not presently conduct business operations.
Method of Accounting
The Company will report the results of its operations using the accrual method
of accounting for both financial statement and income tax purposes. Under this
method, income is recognized when earned and expenses are deducted when
incurred. The accounting policies of the Company are in accordance with
generally accepted accounting principles and conform to the standards applicable
to development stage companies.
Income Taxes
The Company has no taxable income to date; therefore, no provision for federal
or state taxes has been made.
2. Common Stock and Class A Common Stock
The Company was incorporated with an authorized capital of 25,000,000 shares of
$0.001 par value common stock in December 2001. An article of amendment was
filed in May 2002 modifying the capital structure of the Company to an
authorized capital of 105,000,000 shares of $0.0001 par value common stock. The
Company has issued 6,300,000 shares to founder shareholders. It has earmarked
1,400,000 shares to be offered to the public after the completion of the
required filings with the Securities and Exchange Commission. Options for
530,000 shares exercisable at $2.50 per share within a period of two years from
the effective date of the public offering have been granted to key officers of
the Company.
The Company is also authorized to issue 5,000,000 shares of Class A common stock
having a par value of $0.0001 with 10 votes per share. No Class A common stock
has been issued at May 31, 2002.
See Independent Auditor's Report.
F-4
SPACE TELECOM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENT
AS OF MAY 31, 2002
3. Development Stage Operations
The Company was formed in December, 2001. There have not been operations since
inception and the Company is in the process of raising capital, and financing
for its future operations. As of May 31, 2002, the Company had sixty-nine
stockholders.
4. Note Payable to Stockholder
The Company borrowed $5,000 from Alps Resources Bankers, Inc. (a stockholder) on
May 28, 2002. The note bears interest at 10% and is due in six months.
See Independent Auditor's Report.
F-5
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
There have been no changes in or disagreements with our accountants
since the inception as required to be disclosed pursuant to Item 304 of
Regulation SB.
LEGAL MATTERS
The validity of the issuance of our shares of common stock being
offered has been passed upon by Richard P. Greene, P.A., located in Fort
Lauderdale, Florida.
EXPERTS
The audited financial statements as of May 31, 2002, appearing in this
prospectus and registration statement have been audited by Holyfield & Thomas,
LLC, Certified Public Accountants and Advisors, and are included in reliance
upon such reports given upon the authority of Holyfield & Thomas, LLC, as
experts in accounting and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
A registration statement on Form SB-2, including amendments thereto,
relating to the shares offered hereby has been filed with the Securities and
Exchange Commission. This prospectus does not contain all of the information set
forth in the registration statement and the exhibits and schedules thereto.
Statements contained in the prospectus as to the contents of any contract or
other document referred to 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, each such statement being qualified in
all respects by such reference. For further information with respect to Space
Telecom and the shares offered hereby, reference is made to such registration
statement, exhibits and schedules. A copy of the registration statement may be
inspected by anyone without charge at the Commission's principal office location
at 450 Fifth Street, N.W., Washington, D.C. 20549, and copies of all or any part
thereof may be obtained from the Public Reference Branch of the Commission upon
the payment of certain fees prescribed by the Commission. You may also obtain
information on the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The Commission also maintains a site on the World Wide Web at http://www.sec.gov
that contains information regarding registrants that file electronically with
the Commission.
32
You should rely only on information contained
in this prospectus. We have not authorized
anyone to provide you with information different
from that contained in this prospectus. We are
offering to sell, and seeking offers to
buy, shares of common stock only in jurisdictions
where offers and sales are permitted. The
information contained in this prospectus is
accurate only as of the date of this prospectus,
regardless of the time of delivery of 1,400,000 shares
this prospectus or of any sale of our common stock.
No action is being taken in any jurisdiction
outside the United States to permit a public
offering of the common stock or possession or
distribution of this prospectus in any such
jurisdiction. Persons who come into possession
of this prospectus in jurisdictions outside
the United States are required to inform
themselves about and to observe any SPACE TELECOM INC
restrictions as to this offering and
the distribution of this prospectus applicable
to that jurisdiction. Until the effective date
all dealers that buy, sell or trade in our ----------------------
common stock, whether or not participating
in this offering, may be required to deliver
a prospectus.
Prospectus
Until ____________, all dealers effecting
transactions in registered securities,
whether or not participating in this ----------------------
distribution, may be required to deliver
a prospectus. This is in addition to the
obligation of dealers to deliver a prospectus
when acting as underwriters and with respect
to their unsold allotments or subscriptions.
September 26, 2002
33
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Space Telecom's Certificate of Incorporation eliminates, subject to certain
exceptions, directors' personal liability to the Company or its stockholders for
monetary damages and for breaches of fiduciary duties. The articles of
incorporation does not, however, eliminate or limit the personal liability of a
director for (i) any breach of the director's duty of loyalty to Space Telecom
or its stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) unlawful payments of
dividends or unlawful stock repurchases or redemptions as provided FOR UNDER the
Florida General Corporation Law or (iv) from any transaction from which the
director derived an improper personal benefit.
Space Telecom's Bylaws provide that the Company shall indemnify its
directors, officers, and employees, to the full extent permitted under the
General Corporation Law of Florida. In addition, we have entered or will enter
into indemnification agreements with our directors, and officers that provide
for indemnification in addition to the indemnification provided in our By Laws.
The indemnification agreements contain provisions that may require us, among
other things, to indemnify our directors and executive officers against certain
liabilities (other than liabilities arising from intentional or knowing and
culpable violations of law) that may arise by reason of their status or service
as directors or executive officers of Space Telecom or other entities to which
they provide service at the request of the Company and to advance expenses they
may incur as a result of any proceeding against them as to which they could be
indemnified. We believe that these provisions and agreements are necessary to
attract and retain qualified directors and officers. We will obtain an insurance
policy covering directors and officers for claims that such directors and
officers may otherwise be required to pay.
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
It is estimated that the expenses incurred in connection with
distribution of the shares of common stock being offered will be as follows:
Expenses to be paid by
Item Space Telecom
-------- -------------------------
Printing Expense - Final Prospectus $ 5,000.00 *
Standard & Poor's $ 4,000.00 *
Transfer Agent $ 2,375.00 *
-------------
Total offering expense $ 11,375.00 *
* These figures represent estimations by management.
34
RECENT SALES OF UNREGISTERED SECURITIES
The following sets forth information concerning unregistered sales of our
common stock. These were unsolicited transactions and did not involve any public
solicitation or advertisement in any way.
The Company sold 6,421,000 shares of its common stock to the founders at a
price of $.0001 per share. The use of amount received is not considered
material for disclosure. The Company has not sold any registered shares.
Undertakings
This offering is being conducted on a continuous basis pursuant to Rule
415 of the Securities Act of 1933.
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. To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than 20%
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.
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.
To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
35
EXHIBITS
Exhibit #
3.1 Articles of Incorporation and Amendments (1)
3.2 By-Laws (1)
4 Instruments defining the rights of holders (refer to exhibit 3)
9 Voting Trust agreement (not applicable)
10 Material contracts
11 Statement re: Computation of per share earnings (not applicable)
21 Subsidiary of the Registrant (not applicable)
23.1 Opinion Re: Legality and Consent of Experts & Counsel (1)
23.2 Consent of Holyfield & Thomas, LLC, Certified Public Accountants
24 Power of Attorney (not applicable)
99 Additional Exhibits
_____________________
1. Incorporated by reference to our Registration Statement on Form SB-2 filed
July 17, 2002, file number 333-96581
36
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this Amendment Number
1 to the registration statement to be signed on its behalf by the undersigned in
the City of Palm Beach, Florida on the 17th day of September, 2002.
SPACE TELECOM, INC.
/s/ Alain De Lenclos
__________________________
Alain De Lenclos, CEO and President
(Principal Executive Officer)
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated:
Date: September 17, 2002 /s/ Alain De Lenclos
__________________________
Alain De Lenclos, CEO, President and Director
(Principal Executive Officer)
Date: September 17, 2002 /s/ Jadoomanee Rampadaruth
___________________________
Jadoomanee Rampadaruth, CFO, VP, Secretary and Director
(Principal Accounting Officer)
Date: September 17, 2002 /s/ Amal Rampadaruth
___________________________
Amal Rampadaruth, Chairman of the
Board of Directors
