AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 12, 2003
REGISTRATION NO.: 333-86581
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NUMBER FOUR 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 $3,855,250 $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).
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 ________________
PRELIMINARY PROSPECTUS
SPACE TELECOM, INC.
We are offering up to 1,400,000 shares of our common stock for
$3,500,000 in proceeds from the Offering. Prior to this offering, there has been
no public trading market for our securities. The public offering price will be
$2.50 per share and will be offered on a self-underwritten basis. 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 of $25,000 from the
Offering. The proceeds from the sale of the securities will be placed in an
escrow account opened at Grand Bank & Trust of Florida, 3601 PGA Boulevard,
Suite 102, Palm Beach, Florida, until a minimum of 10,000 shares in the primary
offering are sold.
This offer is being made on a 10,000 share minimum, 1,400,000 share
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 date of the prospectus (the
"Termination Date"), all funds shall be promptly returned to the investors,
without interest. Once the minimum offering amount has been raised, the proceeds
will be utilized by management as set forth herein (see "Use of Proceeds.")
The selling shareholders will only offer their shares after the minimum
primary offering has been reached. Selling shareholders will continue to offer
even if the primary offering has failed.
The selling shareholders will offer to sell up to 1,542,100 shares at a
fixed price of $2.50 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 May 12, 2003
TABLE OF CONTENTS
Prospectus Summary.............................................................1
Risk Factors...................................................................3
Risks Related to Our Business...........................................6
Risks Related to Our Industry...........................................7
Risks Related to this Offering..........................................9
Use of Proceeds...............................................................10
Determination of Offering Price...............................................17
Dilution......................................................................17
Dividend Policy ..............................................................19
Selling Security Holders......................................................19
Plan of Distribution..........................................................21
Legal Proceedings.............................................................23
Directors, Executive Officers, Promoters, and Control Persons.................24
Security Ownership of Certain Beneficial Owners and Management................29
Description of Securities.....................................................31
Interest of Named Experts and Counsel.........................................32
Disclosure of Commission Position on Indemnification for Securities
Act Liabilities.......................................................32
Description of Business.......................................................33
Management's Discussion and Analysis of Financial Condition and Results
of Operations.........................................................40
Description of Property.......................................................42
Certain Relationships and Related Transactions................................42
Market for Common Equity and Related Stockholder Matters......................42
Summary Compensation Table....................................................42
Financial Statements..........................................................44
Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures.................................................45
Legal Matters.................................................................45
Experts.......................................................................45
Indemnification of Directors and Officers.....................................47
Other Expenses of Issuance and Distribution...................................47
Recent Sales of Unregistered Securities.......................................48
Exhibits......................................................................49
Signatures....................................................................50
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 $2.50 per share on a
self-underwritten basis. At such time as the minimum offering amount has been
received and accepted, the funds may be paid and used by us in accordance with
the use of proceeds table set forth herein (see "Use of Proceeds.") In the event
that the minimum amount of 10,000 shares is not sold by the end of the 12 month
period commencing on the date of the Prospectus (the "Termination Date"),
all funds shall be promptly returned to the investors, without interest, within
10 days of the Termination Date.
Affiliates of our Company may not purchase shares of our stock in order to
achieve the minimum amount of our offering.
1
Common stock offered by Space Telecom 1,400,000 common shares
Termination Date This Offering will begin upon
the date of the Prospectus
and will terminate whenever
all of the shares are sold,
or 12 months after the date
of the Prospectus, whichever
comes first.
Common stock offered by Selling Stockholders 1,542,100 common shares
Common stock outstanding prior to this offering 6,421,000 common shares
Common stock outstanding after this offering 7,821,000 common shares
Primary offering The primary offering of
6,421,000 shares was
allocated to the founders of
this Company at par value
($.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.
We are offering a minimum of
10,000 shares at $2.50 per
share for a total amount of
$25,000.
We are offering a maximum of
1,400,000 at $2.50 per share
for a total amount of
$3,500,000.
Selling shareholders The selling shareholders are
selling 1,542,100 shares out
of their 6,421,000 shares
held by them at an initial
price of $2.50 per share, and
thereafter at prevailing
market prices.
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 financial statements
at March 31, 2003 are annexed hereto.
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
$642.10 from the founders as their contribution to the share capital of the
company.
Our fiscal year end is December 31st.
2
RISK FACTORS
Primary risks
Investing in Space Telecom carries a certain number of risks that are
inherent to the telecommunications industry particularly in Third World
countries. The risks can be divided into two main categories: Internal factors
and External factors.
Internal Factors
Our 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 equipment have become a regular
feature of the telecommunications industry.
External Factors
• The development stage of our company implies risks of dependence
on availability of funds
• Political stability of the foreign states where our products will
be sold
• Nationalization risks of local company that we will create in the
foreign countries.
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. Failure
to obtain funding from outside sources will adversely effect our future
operations. 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.
Risks associated with operating in foreign countries
Workers compensation
Liability claims or other such claims would have a material adverse effect
on our business and its future operations. 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.
3
Expropriation/cancellation of license and civil unrest
The political instability in Africa and Asia poses a major risk of
expropriation by a new government. Our operating license may be withdrawn as
telephone communication is a key element in the development of a country and a
succeeding government may decide to exercise control and our local subsidiary
company may be nationalized. This will adversely effect our profitability and we
may lose the equipment installed in that particular country. We may also face
the consequences of civil unrest which is a common feature in some countries in
Africa and Asia. This can be detrimental to our infrastructure built in those
countries.
3. Amendments to existing tax laws
Amended tax laws by new governments may adversely effect our profitability
or may even affect our continued operations within the country. When a foreign
company like ours brings a new business to a developing country (our target), it
will likely be entitled to tax breaks and exemptions from custom duties for
equipment and machines. These fiscal advantages may be withdrawn by a new
government.
Secondary Risks
No assurance of a public market
There can be no assurance that a public market for our shares will be
created and, if created, be maintained. 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
Failure by the Company to obtain debtor equity funding would impair our
operations and investors would not receive a return of their investment. There
can be no assurance that our offering will raise operating capital for our
initial 12 months of operations. We have set the minimum offering amount at
$25,000 which is not sufficient to fund our 12 month plan of operation.
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. Failure to keep key personnel who have required
technological expertise may have an adverse effect on our business operations.
We are unaware of any other organization that provides state-of-the-art Internet
Provider services to the African Continent.
Failure on our part resulting from prolonged illness of key personnel or
our inability, whether technical or financial, to catch up with new technology
may result in loss of business and profits.
4
Reliance on public acceptance
Our success is dependent on public acceptance and support of our services
primarily in Africa and Asia . 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.
Proprietary know-how
The occurrence of intellectual property litigation or an adverse
determination would adversely effect our business operations and financial
condition. 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. Any leak to outside parties may result in new competitors and
loss of business and our profitability will not meet our expectations. 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.
5
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.
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
If telecommunication service companies favor competing products over our
product, our revenues would be seriously affected. This is because 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.
RISKS RELATED TO OUR INDUSTRY
The market for our telecommunication service is intensely competitive.
Our competitors may have better technology and greater capital
resources and accordingly our operations would be impaired. We expect the
intensity of competition to increase in the future as a result of rapid
technological change and lower priced equipment. 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.
The principal factors of competition in the industry include product
quality, brand advertising (corporate recognition), trade and consumer
promotions and pricing.
Our prospective licensed partners must generate adequate sales to stay in
business. Failure to achieve this level of sales will put them out of business
and adversely affect our own profitability which depends on their sales.
Failure by our licensed partners to generate adequate sales will seriously
impair our operations. 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 our client base and harm our business
Increased regulation and the imposition of taxes on our products would harm
our business and adversely affect our profitability. 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.
6
Rapid changes in telecommunications technology can cause our products to
become obsolete
Failure on our part to adapt our products to changes and to update our
technology will have an adverse effect on our profitability.
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. Furthermore, as many of the
African and Asian countries are Muslim and as such becoming more and more
anti-American, we risk, as a U.S. company, being the target of fanatics in some
of the countries where we plan our future development. Such conditions will have
an adverse effect on our results and might also result in loss of equipment and
sales. 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.
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:
7
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 March 31, 2003, there were outstanding warrants and options to
acquire up to 530,000 additional shares of our common stock. If exercised, these
securities would dilute the value of the shares of 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.
8
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.
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.
9
- -------------------- ----------------------- ----------------------- ----------------------- ---------------------
Maximum 75% 50% 10%
- -------------------- ----------------------- ----------------------- ----------------------- ---------------------
- -------------------- ------------- --------- ------------- --------- ------------- --------- ----------- ---------
Amount % Amount % Amount % Amount %
- -------------------- ------------- --------- ------------- --------- ------------- --------- ----------- ---------
General and
Administrative (1) $ 400,000 11% $ 255,000 10% $ 210,000 12% $ 100,000 29%
- -------------------- ------------- --------- ------------- --------- ------------- --------- ----------- ---------
Salaries (2) $ 400,000 11% $ 300,000 11% $ 200,000 11% 0 0
- -------------------- ------------- --------- ------------- --------- ------------- --------- ----------- ---------
Telecommunications
Equipment (3) $ 1,600,000 46% $ 1,150,000 44% $ 700,000 40% 0 0
- -------------------- ------------- --------- ------------- --------- ------------- --------- ----------- ---------
Software (4) $ 200,000 6% $ 200,000 8% $ 185,000 11% 0 0
- -------------------- ------------- --------- ------------- --------- ------------- --------- ----------- ---------
Professional Fees(5) $ 50,000 2% $ 50,000 2% $ 50,000 3% $ 50,000 14%
- -------------------- ------------- --------- ------------- --------- ------------- --------- ----------- ---------
Working Capital (6) $ 850,000 24% $ 670,000 25% $ 405,000 23% $ 50,000 14%
- -------------------- ------------- --------- ------------- --------- ------------- --------- ----------- ---------
Licensing
Agreements (7) 0 0 0 0 0 0 $150,000 43%
- -------------------- ------------- --------- ------------- --------- ------------- --------- ----------- ---------
Total $ 3,500,000 100% $ 2,625,000 100% $ 1,750,000 100% $350,000 100%
- -------------------- ------------- --------- ------------- --------- ------------- --------- ----------- ---------
(1) Includes furniture, fixture and other expenses associated with general and
administrative expenses.
(2) Includes expenses associated with salaries of CEO, CFO, CTO and other key
employees.
(3) Includes expenses associated with servers, signaling platforms and
satellite equipment.
(4) Includes expenses associated with management software and billing software.
(5) Includes expenses associated with legal and accounting fees.
(6) Includes refundable deposits in each country, international private
circuit and expenses generally associated with working capital.
(7) Includes deposits for license fees, equipment suppliers, and bandwidth
leasing expense.
9
Use of proceeds if only the minimum is raised, $25,000:
Obviously if we only raise such a small amount, our capacity to operate
will be greatly diminished. In such case, we will need additional funding very
quickly. In order to secure said funding we will be obliged to issue ten years
Corporate Bonds with an interest coupon.
Said bonds, apart from having a CUSIP number and being visible on
Bloomberg/Reuter, will also have a Standard & Poors Rating. Said rating will
be based on the Company and a 3A rated insurance company. Given that part of the
monies raised will be used to secure a ten year zero coupon bond from a 3A rated
insurance company, our bonds will thus be secured by said insurance policy for
its capital. The debt burden of our Company will only be the annually recurring
interest payments made against redemption of annual interest coupons.
The $25,000 will thus be used to start the licensing process in the U.S.
and some of the targeted countries as well as start the process of the issue of
our capital guaranteed ten years bonds.
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 March 31, 2003, Space Telecom had a net book value of $630.00 or
$.0001 per share (based on 6,421,000 shares outstanding) which includes an
additional 121,000 shares to the founders at $.0001 per share during the month
of June. This is a readjustment to compensate one of the founders in order to
bring him to the same level as originally agreed. A new resolution has been
passed to authorize this additional allocation of shares. There has not been any
other issue of additional common stock after this adjustment. 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 $0.4476 per share
obtained by dividing $3,500,642.10 by the number of shares outstanding, i.e.:
7,821,000 (6,300,000 + 121,000 + 1,400,000).
The net tangible value represents an increase of $0.4475 per share to
each founder ($0.4476 less $.0001). As far as the new investors who paid $2.50
per share, the net tangible book value represents a dilution of $2.0524 ($2.50
less $0.4476).
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.
10
Definition of terms
Increase per share attributable to payment for shares by new investors.
The reference for comparison is the par value of the stock which is $.0001 per
share. The increase per share is the difference between the par value per share
($.0001) and the book value of the share obtained by dividing net assets by the
total number of shares outstanding. (In the case of 100% success, this number
will be 3,500,642.10/7,821,000 = 0.4475.) Thus the increase will be $0.4476 less
$.0001 = $0.4475.
Pro forma net tangible value after offering
This value is obtained by dividing net assets after offering by the
number of shares outstanding. In the case of 100% success the net assets will be
3,500,642.10 divided by 7,821,000 which equals to $0.4476
Net tangible book value dilution per share to new subscribers
The new subscribers are buying the share at $2.50. The dilution
suffered is the difference between the cost price ($2.50) and the average value
of the share after offering. This number is obtained by dividing net assets
after offering by number of shares outstanding. Thus, in the case of a 100%
raise, the average value is 3,500,642.10 divided by 7,821,000 which equals to
$0.4476. Consequently the dilution to new subscribers will be $2.50 less $0.4476
which equals $2.0524. In the event only the minimum is raised, the net tangible
value after the offering is $.0534 and dilution to new subscribers is $2.4466
per share.
Per share dilution in net tangible value to new investors
according to level of funding
- ----------------------------------- ----------- ------------ ------------ ------------
Details 10% 50% 75% 100%
- ----------------------------------- ------------ ------------ ------------ ------------
Public offering price $ 2.50 $ 2.50 $ 2.50 $ 2.50
- ----------------------------------- ------------ ------------ ------------ ------------
Net tangible value after offering $ 0.0534 $ 0.2458 $ 0.3514 $ 0.4476
- ----------------------------------- ------------ ------------ ------------ ------------
Dilution to new investors $ 2.4466 $ 2.2542 $ 2.1486 $ 2.0524
- ----------------------------------- ------------ ------------ ------------ ------------
Increase per share (par value) attributable to payment for shares
purchased by new investors according to level of funding
- ----------------------------------- ----------- ------------ ------------ ------------
Details 10% 50% 75% 100%
- ----------------------------------- ----------- ------------ ------------ ------------
Par value $ 0.0001 $ 0.0001 $ 0.0001 $ 0.0001
- ----------------------------------- ----------- ------------ ------------ ------------
Net tangible value after offering $ 0.0534 $ 0.2458 $ 0.3514 $ 0.4476
- ----------------------------------- ----------- ------------ ------------ ------------
Increase per share to existing
shareholders (founders investors) $ 0.0533 $ 0.2457 $ 0.3513 $ 0.4475
- ----------------------------------- ----------- ------------ ------------ ------------
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.
11
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 March 31, 2003 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.
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 454,000 7.1% 45,400 408,600 5.2%
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 668,500 10.4% 66,850 601,200 7.7%
Debaecker, Michel 2,000 * 200 1,800 *
Dias, Louis 13,500 * 1,350 12,150 *
Doury, Fabienne 1,400 * 140 1,260 *
Dreyfus, Sarha 200,000 3.1% 20,000 180,000 2.3%
Dujardin, Philippe 2,600 * 260 2,340 *
12
Durocher, Jean-Luc 4,000 * 400 3,600 *
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 465,000 7.2% 46,500 418,500 5.4%
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 *
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 725,000 11.3% 72,500 652,500 8.3%
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 *
13
____________________________
* Indicates less than 1% beneficial ownership
1. Percentages were based on the number of shares issued and outstanding as of
March 31, 2003 , 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.
PLAN OF DISTRIBUTION
Primary Offering
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. 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. With the
exception of the cost of this registration of shares, no expenses will be paid
by the Company on behalf of the Selling Stockholders. 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 and, Mr.
Montant, Director are responsible for the sale of the securities on behalf of
Space Telecom. The principals of the Company will implement the following
procedures in connection with the primary and secondary offering of Shares.
1. The Companys principal selling shareholders (officers, directors and 10%
owners) will only offer their individual shares once the Minimum offering
has been closed.
2. Potential investors will only be sold shares from the Company and will not
be offered any shares from the principal selling shareholders of the
Company.
3. Principal Selling shareholders will provide subscription documents to all
potential investors which shall reflect the sale of shares only from the
Company and not the principal selling shareholders.
4. Principal selling shareholders will only sell their shares in unsolicited
brokers transactions if and when a market for the common stock has been
established.
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
14
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.
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 agreed to establish an escrow account at Grand Bank & Trust of
Florida 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.
15
To avoid confusion, an official subscription document will be used for the
sale of the shares belonging to the company as opposed to selling shareholders.
A copy of the subscription agreement is herewith annexed. The company will not
pay for expenses incurred by a selling shareholder to sell his personal shares.
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.
Secondary Offering
The Selling Securityholders will have their shares registered as set forth
herein. The shares may be sold in a secondary offering only after the Minimum
Offering amount has been sold. Selling shareholders will sell at a fixed price
of $2.50 per share until the shares are quoted on the OTC Bulletin Board. Once a
market has been established for our securities, the Selling shareholders may
sell at prevailing market prices. Selling shareholders may continue to offer
their shares even if the primary offering has failed.
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 registration expenses incident to this
offering and sale of the Shares, offered by the Selling security holders.
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.
16
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.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
Set forth below is certain information concerning our directors and
executive directors.
Name Age Position
---- --- --------
Alain de Lenclos 57 Chief Executive Officer, President
and Director
(Currently resides in Europe)
Jadoomanee Rampadaruth 61 Chief Financial Officer, Executive
Vice President, Secretary
and Director
(Currently resides in Europe)
Amal Rampadaruth 37 Chairman of the Board of Directors
(Currently resides in the U.S.)
Jean-Pierre Montant 52 Director
(Currently resides in Europe)
Wulfran Boudoux 58 Director
(Currently resides in Europe)
Jack Zeimantz 60 Chief Operating Officer (Currently
resides in U.S.)
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 serve in only a part time capacity
(15 hours a week) until after successful completion of this offering which is
defined as closing on 50% of the offering amount. They will be involved in a
full time capacity (40 hours per week) only after 50% of the offering has been
subscribed for. It will be considered appropriate to remunerate them on a
pro-rata basis after the 50% level.
None of our Officers and Directors currently hold such responsibilities in
any reporting company and have never been affiliated with a blank check
company.
The named directors are currently serving and will hold office until the
next annual meeting of shareholders and a vote of the shareholders (1,400,000 -
maximum offering) is not considered appropriate as the first year's operations
will be mostly of an organizational nature. The organization committee was held
on October 27, 2001. The Chairman, CEO and CFO/Secretary are actually serving
without any remuneration.
17
Biographies
Alain De Lenclos, Chief Executive Officer, President and Director
Mr. De Lenclos, age 57, 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 serves as a director of ALPS Resources Bankers, Inc. of Palm
Beach, Florida. ALPS assists domestic and foreign companies in the process of
going public and assists in securing financing sources. 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 Cabinet Assurance De
Placement Et D'Investissemend located in Haute Savoie, France, which specialized
in insurance and investment. From 1982 to 1985, he was responsible for Lloyds
Continental 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.
Jadoomanee Rampadaruth, Chief Financial Officer, Executive Vice President,
Secretary and Director
Jadoomanee Rampadaruth, FCCA, age 61, will be responsible for the
company's financial operations, accounts payable and receivable, interaction
with auditors and investor relations. From 1995 to date, 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. all of
which are affiliated with Space Telecom based on common ownership of Amal
Rampadaruth, son of Mr. Jadoomanee Rampadaruth.
From 1999 to date he served as 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.
Alps Resources Bankers Inc, Palm Beach, FL Alps Resources Bankers Inc,
Palm Beach, FL Amalgamated Resources Technologies, Inc.
From May 1998 to September 1998, he was the Executive VP and Director of
the following companies: First Anglo-Swiss (FAS) Holding Inc., Las Vegas, NV,
a holding company of all other FAS companies. This company was sold to US
Bridge Construction of New York (USBR -NASDAQ NSM symbol); 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., a holding company of mining
companies, Las Vegas; FAS International Builders Corp., a 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.
From 1992 to 1995, he was a Director and a shareowner (sold) of Commercial
& Fiduciary Bank Ltd., located in Rome, Italy with a back office in Geneva,
Switzerland.
From 1992 to 1993, he was a Director and shareowner (sold) of Interglobe
Plc, a British Telecom company located in London, England. Interglobe Plc
(listed on the British stock market) used to market a telephone card for
business persons traveling abroad and having to call their business contacts
from hotel rooms.
18
From 1982 to 1992 he was employed as Chief Accountant of the Agence de
Cooperation Culturelle et Technique, an international organization based in
Paris.
From 1986 to 1996, he was a part-time lecturer in Anglo-Saxon Accounting
and Financial Management at the Universite Paris IX Dauphine, France.
Amal Rampadaruth, Chairman of the Board of Directors
Amal Rampadaruth, age 37, along with Mr. De Lenclos, will be involved in
all negotiations with overseas governments and relevant agencies.
Since 1995 to date, 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.
He is also the President/CEO of Alps Resources Bankers Inc, a company
organized to help domestic and foreign companies with their IPOS; help them
secure Governmental, Municipal and State Loans and Grants and help them with
their financing needs. He is also President of Amalgamated Resources
Technologies, Inc., located in Palm Beach, Florida, a company having interests
in technological companies. Amalgamated Resources Technologies works in
conjunction with Alps Resources Bankers and helps manage targeted technological
companies.
From May 1998 to September 1998, he was the Chairman/CEO and Director of
the following companies: First Anglo-Swiss (FAS) Holding Inc., Las Vegas, NV, a
holding company of all other FAS companies. This company was sold to US Bridge
Construction of New York (USBR -NASDAQ NSM symbol); 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., a holding company of mining companies, Las Vegas; FAS
International Builders Corp., a 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.
From 1999 to 2002, Mr. Rampadaruth was the President and CEO of Terra
Holdings, Inc. He was also the President and CEO and Palm Beach Life / Merrion
Holdings Inc., equity participation in European companies and others.
From 1992 to 1995, he was a Director and the Chairman/CEO and a shareowner
(sold) of Commercial & Fiduciary Bank Ltd., located in Rome, Italy, with a back
office in Geneva, Switzerland.
From 1992 to 1993, he was also a Director and shareowner (sold) of
Interglobe Plc, a British Telecom company located in London, England.
Jean-Pierre Montant, Director
Jean-Pierre Montant, age 52, is a Director 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.
19
Wulfran Boudoux-D'Hautefeuille, Director
Wulfran Boudoux-D`Hautefeuille, age 58, is a Director 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. From 1980 to present,
Administrator of Caisse d'Allocations Familiales in the Haute Pyrenees.
Mr. Jack Zeimantz, Chief Operating Officer
Jack Zeimantz, age 60, will be responsible for all the operations of the
company as Chief Operating Officer. From August 2001 to present time Mr.
Zeimantz provides consultancy services through his company "Jack Zeimantz &
Associates". From May 1996 to July 2001 Mr. Zeimantz worked for Metricom, Inc.,
San Jose, CA. He was a consultant from May 1996 to November 1996 and then
assumed full time employment.
From June 1995 to May 1996 full time employee of Nextel Communications, Los
Angeles, CA.
From 1986 to June 1989 he worked for Tele-America Communications, Inc.,
Glendale, CA, the largest privately owned pay phone company.
20
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 31, 2003,
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 918,500 (1) (7) 14.3% 11.7%
5, Rue Emile Favre
74300 Cluses, France
Wulfran Boudoux-d'Hautefeuille 455,000 (3) 7.1% 5.8%
65500 Pujo, France
Jean Pierre Montant 465,000 7.2% 6.0%
16, Rue des Pervenches
64140 Lons, France
Amal Rampadaruth 1,000,000 (4)(7) 15.6% 12.8%
292 South County Road, #109
Palm Beach, FL 33480
Jadoomanee Rampadaruth 237,500 (5) 3.7% 3.0%
292 South County Road, #109
Palm Beach, FL 33480
Alps Resources Bankers (5) 500,000 7.8% 6.4%
292 South County Road, #109
Palm Beach, FL 33480
Amalgamated Resources Holdings (5) 500,000 7.8% 6.4%
292 South County Road, #109
Palm Beach, FL 33480
Amalgamated Resources Investments (5) 500,000 7.8% 6.4%
292 South County Road, #109
Palm Beach, FL 33480
Amalgamated Resources Marketing (5) 400,000 6.2% 5.1%
292 South County Road, #109
Palm Beach, FL 33480
21
All directors and executive
officers as a group (5 persons) 3,076,000 72.6% 39.3%
All directors, executive officers
and affiliates as a group 4,976,000 77.5% 63.6%
- ------------------------
NOTE: The Board of Directors has decided to cancel the allotment of shares to
the COO and has reallocated the shares as follows:
(a) Alain de Lenclos 500,000
(b) Amal Rampadaruth 500,000
(c) Wulfran Boudoux d'Hautefeuille 100,000
(d) Jean-Pierre Montant 100,000
(e) Sarha Dreyfus (president of the Advisory Board) 200,000
----------
Total 1,400,000
The number of shares allocated to each of the above-named beneficiaries
has been adjusted accordingly. The 10,000 option allocated to the COO was
equally cancelled. These options are reserved for the CTO to be recruited.
(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) The shares have been re-allocated as described above. The 10,000 options
are reserved for the CTO.
(3) Includes 1,000 shares owned by Eymeric Boudoux-d'Hautefeuille.
(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
(7) Mr. De Lenclos and Mr. Amal Rampadaruth will each be entitled to an
additional 2,500,000 votes with their respective holdings of Class A
Common Stock.
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 March 31, 2003, there were 6,421,000 common
shares issued and outstanding. There were 72 holders of common stock as of March
31, 2003.
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.
22
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 and
may not cumulate votes for election of directors. Amal Rampadaruth and Alain de
Lenclos have been allocated 2,500,000 shares each. This is primarily for hostile
takeover attempts and such Class A shares will not share in dividend
distributions to shareholders. There are no plans or arrangements to issue
additional Class A shares.
The amendment to Articles of Incorporation of Space Telecom were filed on
May 16, 2002. The first item amended articles IV of the Articles of
Incorporation as follows:
This corporation is authorized to issue an aggregate of One Hundred Five
Million shares as follows:
- One Hundred Million (100,000,000) shares of common stock, $.0001 par
value per share; and
- Five Million (5,000,000) shares of Class A common stock, $.0001 par
value, having 10 votes per share."
Space Telecom is offering 1,400,000 shares of common stock out of
100,000,000 authorized shares.
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 will be paid $30,000 to complete this registration statement. This
amount is fully earned as of the date hereof and will be payable out of proceeds
of the offering.
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. In fact, the certifying accountant is being paid from the proceeds of
this offering. The advanc from Alps Resources Bankers, Inc., provided the
advance fees required to this effect.
23
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
Space Telecom was incorporated on December 1, 2001 in the state of Florida.
Space Telecom (ST) intends to use the Internet Protocol (IP) to transport
interactive voice communications in real time by using Voice Over Internet
Protocol (VOIP) through Cisco VOIP gateway switches and 4/1 voice compression
equipment, other related services, such as, fax, voice messages, and video, will
be added to the switches using these formats, then retail to the national
telephone carriers, private and public corporations. These conventional services
will be carried and/or transported to the domestic and international markets
utilizing IP technology over high bandwidth facilities originating from ST's
switches. ST will use all the approved international standards to deliver their
services. ST will also use other Internet carrier backbones as a window to the
world utilizing IP transmissions. Essentially, these conventional services,
voice, fax, video, voice messaging will be converted to data packets,
specifically,IP data/packets. Data packets are simply information organized in a
specific manner for transmission purposes. These data packets are transmitted
from an originating location gateway or entry point, and received at a
designation location, receiving gateway or exit points. The gateway switches
allow for the entrance and exit points of data packets across communication
mediums to connect the destinations. The communication medium is typically
fiber, wire, satellite or cable. The data packets will be transmitted using IP
packet technology. IP is the technology used for the addressing of switch
routing for the destination and reception of the data. These mediums of
communications are usually defined in terms of bandwidth. Bandwidth is the
amount of information that is being carried or delivered between two points,
i.e., the amount of capacity which it takes to carry the data signals. The
gateways serve as access points, points of entry and exit for processing
information going from one location to a destination and back again, it will
determine the priority and speed of the data, the addressing for the owners
equipment and the format being used. The switches also keep track of usage and
billing information. They are the information traffic officers of the Internet.
ST will manage all their services from their network operations center (NOC)
located in Miami, Florida where the billing and featuring services originate.
24
These networks are typically designed and implemented according to standard
industry practices set by various standard bodies; such as the International
Telecommunication Union (ITU), Federal Communications Commissions, American
National Standard Institute (ANSI), European Telecommunication Standard
Institute (ETSI), etc. Making use of the proliferation of the Internet protocol,
multitude of services available and the standards for interoperability with
existing conventional telephone networks will provide the framework which Space
Telecom plans to develop its business.
The cost to implement VOIP, a specific application to transmit voice
communications using the IP and related services, is typically lower to
implement. This offers greater flexibility of services and ease of access to
markets with the global acceptance of the technology standards.
Today the global proliferation of IP technology is common practice among
current telecommunication operators and vendors. They are adhering to ITU, FCC,
etc. standards for traditional voice, fax, video and voice messaging services.
This is the fundamental basis for Space Telecom to successfully develop and
implement its overall business objectives.
According to Probe Research and an article by Ian Scales published by
America's Network (October 1, 2002 issue), Internet telephony traffic is
doubling every year. The growth rate will start to flatten by 2007 and IP
telephony, the science of transmitting voice, data packets, or video over
greater distance than capable by human speech, will comprise half of all voice
international traffic. In 2002 worldwide penetration was 13% of all
international traffic. It is in the international wholesale market, rather than
in national long distance or access that IP telephony is currently needed.
By developing low cost networks based on IP technology in strategically
selected locations globally. Space Telecom will have the opportunity to offer
the same quality standards as a traditional telephone service provider for voice
and other related services. The standard for quality of service termed "toll
quality" is the quality of service which traditional telephone companies
operate. Standards have been set to define "toll quality" for VOIP and other
related telephony services over IP
The networks that Space Telecom plans to deploy will be specifically
designed as privately owned and controlled IP networks, with interoperability to
traditional networks and the Internet, thus giving Space Telecom greater
flexibility for its overall business objectives. The ability to either use
traditional networks or to utilize its own IP network will allow Space Telecom
to make a determination on the best and least costly method of offering its
services to the market.
Space Telecom intends to enter into strategic markets based on market
analysis from the FCC documentation Section 43.61 International Traffic Data
Reports, published documentation from the ITU on profitability according to
industry standard published rates from selected markets, status of target market
liberalization, availability of public tenders or licenses, established
positions with prospective joint ventures with Private Corporation or national
public telephone carriers, favorable market conditions for new technology
implementation and strategic market relationships from members of Space Telecom.
It is in the opinion of management that if we use these methods, we will have a
greater degree of success as a market entry strategy. As of the date hereof,
management has had no discussions with any prospective acquisition or merger
candidate.
Point of presence
In order to facilitate the overall plan and objective of Space Telecom,
strategic facilities must be deployed to conduct the necessary business
activities. The criteria for the facilities will require the following:
25
1) Co-location with international and domestic high speed
communications providers
2) Secured facilities
3) Proximity with traditional national and international telephony
carriers
4) Industry Standard uninterruptible power sources
In each targeted location we will provide the necessary hardware, software
and operations personnel to support our products and services. These locations
are referred to as Points of Presence (POP) and are essentially
telecommunications facilities that support equipment, services, network,
monitoring activities, bandwidth connections, and network operation functions.
Generally, these facilities also serve as point of distribution for numerous
telecommunications providers to buy and sell their respective services. Example
of such are:
o Technology Center of the Americas (TECOTA) which hosts the National
Access Point of the Americas (ANAP) in Miami, FL
o Band-X and Arbinet which are trading centers for telephony products
and services, where bids and offers are posted to prospective buyers
or sellers.
* Note: Both of the above descriptions are also referred to as Carrier Hotels.
Carrier Hotels typically provide all of the basic facilities to operate
telecommunications services, such as: power requirements, access to various
wired and wireless communication mediums and telecom provider's networks, etc.
The exchange of services and the use of facilities are bound contractually
by service agreements in order to ensure facets of operational consistency and
quality. This provides some level of contractual guarantee of services. Each
location will be designed and monitored similarly. Sufficient training and
documentation based on industry standards will be developed and adhered to in
order to effectively operate, manage and maintain the Points of Presence.
As we are a start-up company and have not generated any sales, thurpose of
the initial round of funding is to implement 5 major points of presence. These
five major points of presence will serve as the central Hub Site, locations
where many different connections are aggregated. They will be designed to
support additional points of presence as we develop access to specific target
markets. The five major hubs will be located in Miami, New York, Los Angeles,
London and Paris.
Space Telecom has selected Miami, Florida as the base to build our primary
Point of Presence and network operations center (NOC). In industry terms, this
is referred to as a Super Hub. The network operation center will be the primary
control center and headquarters for our services.
The location of the main Point of Presence and the Network Operation Center
was based on the following considerations.
The National Access Point of the Americas (ANAP) is located and hosted in
Miami, FL at Technology Center of the Americas (TECOTA). ANAP is the fifth
Tier-1 Network Access Point (NAP) in the United States, i.e., one of the primary
points of connection that comprise the backbone of the Internet. ANAP is the
premier technology facility providing interconnection between global carriers,
ISPs and connecting fiber networks in Latin America, Europe and Africa to those
in the U.S. of the Americas which is a new state-of-the-art telecommunications
co-location building. Establishing a presence in this facility will provide
Space Telecom with speed to market, access to the core communication of the
Internet and provide better operational efficiency for Space Telecom's services.
26
The NAP of the Americas also hosts Global Crossing, Level 3, Metromedia
Fiber, Qwest, AOL Time Warner Communications, EPIK Communications, FPL Fibernet
and XO Communications (http://www.carrierhotels.net) national and international
traditional multi-year signatories. Space telecom will have the ability to
interconnect to the major carriers for the exchange of telecommunications
services. The building was opened for business in 2001 and designed according to
the industry standards for all facets of the Telecommunications industry, such
as; backup power supply (UPS), generators, fire protection, secure access,
monitoring., etc.
The location and overall benefits of ANAP in Miami, FL, will provide the
framework for Space Telecom to successfully implement the targeted foreign
points of presence. Space Telecom plans to develop the targeted markets and
utilize its locations in Miami, FL as the central control center for managing
the remote foreign destination or POP.
ANAP provides connectivity through fiber optic links and submarine cables
to Europe, South America and 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 local connections is based on the bandwidth and the
mileage between the origination point and the interconnection point.
The satellite providers we plan to work with, Panamasat, Intelsat and
teleport facilities are in a radius of 20 miles from the NAP of the Americas. We
will be leasing a local loop from BellSouth to be interconnected with these
facilities.
The choice of ANAP will effectively enhance our business goal of providing
lower costs for accessing the necessary communication lines and increasing
operational efficiency. The network-operating center we plan to establish in
Miami will be equipped to permit the most efficient use of communication
mediums, Fiber and Satellite bandwidth.
The five major points of presence and the additional 19 will be connected
to one another, i.e., each point of presence will be accessible to the other
depending on the specific product or services targeted for the market.
The points of presence will use industry Standard Security. Primary service
for this network will be the carrying of private and public voice communications.
The use of proceeds of the funds includes lease and purchase of equipment,
software, lease of facilities, engineering and monitoring support, training,
deposit for Internet Protocol connections, administration and operation and
miscellaneous expenses directly associated with the deployment of these
services.
In each country we plan to go we will install the same type of point of
presence. This will include locked cabinets that will hold all the networking
equipment required for our business.
We will provide on site training and documentation on all parts of the
network. 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.
Space Telecom is a start-up company and has not generated any sales. The
first round of funding will allow us to build the core five Points of Presence
and subsequently deploy target markets as we conclude the activities to acquire
access to the targeted market. Space Telecom's goal is to deploy remote Points
of Presence in 19 countries, all connected to the U.S. Point of Presence at ANAP.
27
By initially funding the first five cities we shorten the time between the
total investment and the revenues generated to sustain the complete network. The
use of the proceeds includes leasing of equipment, satellite links, fiber optic
point-to-point connections, internet bandwidth, extensive travel to deploy in
each country of our points of presence, maintaining the networks and customer
support 24 hours per day, 7 days a week and 365 days per year. These
requirements need to be met in order to successfully implement and operate in
the current telecommunications, specifically the international VOIP, and other
related services environment.
Business
It is the intent of Space Telecom to provide a complete array of
telecommunication services including voice, fax, video, audio, data, and
Internet. Space telecom will use the most advanced generation of equipment based
on the industry standards and specifications for implementing its networks.
Although we have not signed any specific vendor agreements, we have conducted
product research from numerous trade publications and shows as well as general
research on the specific products from the manufacturer's literature. Based on
current assessments and the ability to consult with subject matter experts, if
deemed necessary Space Telecom will be able to select which ones will allow the
best overall benefit for our business objectives. Space Telecom has reviewed for
consideration well established manufacturers such as, Cisco, Clarent, Nortel
Network, Sun Microsystems, Lucent, Sonus Networks and Mockingbird. The result of
this effort is to select a product(s) that will serve as our central platform
and will allow for the array of services we plan to offer.
It is the intent of Space Telecom to offer the following telephony services
based on an Internet Protocol Network:
o Voice Over Internet Protocol (VOIP): The transmission of real time
voice communication of over IP based networks. It is the intent of
management to build a private IP network with connections as deemed
necessary for the business to access the public Internet and
traditional telephone carrier networks. Space Telecom plans to
wholesale these services to other telephony carriers and various
resellers.
o Fax Over Internet Protocol (FaxOIP) Real time and delayed
Fax-over-IP: Facsimile transmission over an Internet Protocol based
network is similar to the transmission of VOIP, however, a facsimile
is information and can be transmitted in real time or in a store
and forward method. The store and forward method of transmitting
facsimile allows for greater efficiency of use of the network
because the facsimile can be transmitted during the time when less
usage is on the network. As stated earlier, an IP based network
allows for the transport of various media, voice, video, data,
audio, and facsimile. The real time and delayed fax-over-IP services
allow any corporation to reduce its costs drastically.
o International Private Line (IPL): It is the intent of Space Telecom
to purchase bandwidth not for the use of its services but also for
the resale of bandwidth to other carriers and specifically
multinational corporations in emerging countries. It is the intent
of Space Telecom to design the Points of Presence to a specification
that will accommodate the resale of international Private Lines. The
International Private Lines will be transported over satellite earth
station facilities or fiber optics depending on the availability,
cost and competitive market price point.
28
o High bandwidth Internet dedicated access on wire lines and wireless:
It is the intent of Space Telecom to resell Internet services to
emerging markets. As discussed previously, Space Telecom intends to
locate its facilities at ANAP. ANAP is directly connected to the
core of the Public Internet. A strategic location such as this will
provide Space Telecom with quality service. 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: The video conference services are easy to
implement, especially since videoconferencing devices are becoming
increasingly more affordable.
o Prepaid 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, ANI Fraud Blocking, Automatic Recharging and/or
replenishment capabilities, Point of Sale Recharge/Activation,
Variable Expiration Dates, Flexible Rating, Report Generation,
Custom Voice Prompts and Promotions, International Direct Dial
service, and 24-hour Multi-lingual Operator Service will be offered
through software features in the VOIP switch, in the near future.
Competition
In the United States and Europe, there is significant competition due to
open competition, however, Space Telecom overall business objective is to
utilize the United States, United Kingdom, and Europe as the primary
distribution centers for our telephony services. It is the intent of Space
Telecom to focus on the development of emerging markets in Africa, the Middle
East and Asia as markets for development.
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 air time. 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.
Space Telecom is a start-up company and has not yet gained a competitive
position in the industry.
29
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 and will require both U.S. and foreign
approval. The 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. We will require government approval in the U.S., however, are
unaware of any current or proposed regulations which will adversely effect our
proposed operations. 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. We will require governmental approval in the foreign countries where
we plan to operate. We are unaware of any existing or probable regulation which
could adversely effect our proposed operations. 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.
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 We may
receive substantially less than the $3,500,000 maximum offering, in which case
funds will be allocated to complete the following steps based upon the funding
level achieved. This step process demonstrates a timeline which sets forth the
critical points which must be achieved for us to develop and offer our services.
Step 1 - The minimum of $25,000 will be used to begin the licensing
process in the U .S. and targeted countries. Timeframe: immediate
Step 2 - The initial $110,000 received will be used as the initial
deposit for bandwidth leasing from satellite and submarine cable
providers. Timeframe: immediate
30
Step 3 - 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. Timeframe:
immediate
Step 4 - 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. Timeframe: 6 to 9
months
Step 5 - An additional $775,000 would be used to cover expenses for
office and administrative expenses such as rent, office equipment,
salaries. Timeframe: 12 months
With $3,500,000, we would not require additional financing during the first
12 month period as we expect a stream of revenue to cover fluctuations in the
cost of equipment, etc. In the event only the minimum is raised, we will
acquire additional capital to accomplish more than Step 1 set forth above. We
have no plan to sell additional stock to raise more money during the 12 months
following start of operations.
Liquidity and capital resources
As of March 31, 2003, we have $1,236 in cash as reflected on the balance
sheet. Based upon our current low cost of operation, we can meet our cash
requirements for the next 3 months until such time, if ever, offering proceeds
are received. 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 are 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.
31
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
$4,000 per month. Upon funding, we intend to lease space to accommodate the
administrative staff while our technical office will be located in Miami for
reasons of convenience.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Jadoomanee Rampadaruth, the Company's Executive Vice President, CFO and
Director, is the father of Amal Rampadaruth, the Company's Chairman of the Board.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Prior to this offering, there has been no public market for the common
stock of the Company. At the present time neither any National Securities
Exchange nor the NASDAQ stock market lists the securities offered. There is no
public trading market for our common stock. There are outstanding 6,421,000
common shares as of March 31, 2003. These are deemed restricted securities and
may be sold only pursuant to Rule 144 unless otherwise registered in an
effective registration statement. We are currently offering 1,400,000 common
shares through this offering. We have also agreed to register an additional
1,542,100 for selling shareholders.
Since its inception, no dividends have been paid on our common stock. We
intend to retain any earnings for use in the business activities, so it is not
expected that any dividends on the common stock will be declared and paid in the
foreseeable future.
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the aggregate
compensation paid or to be paid by Space Telecom to its Chief Executive Officer
and each of the other executive officers for services rendered in all capacities
to the Company for the fiscal year ended December 31, 2001.
32
Annual Long-Term All Other
Compensation Compensation Awards Compensation
Restricted
Name and Stock Stock Securities Group
Principal Fiscal Awards Awards Underlying Matching Life Ins.
Position Year Salary Bonus ($) (#) 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
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.
33
SPACE TELECOM, INC.
(A DEVELOPMENT STAGE COMPANY)
EXAMINATION OF FINANCIAL STATEMENTS
MARCH 31, 2003
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITOR'S REPORT F-1
FINANCIAL STATEMENTS:
Balance Sheet F-2
Statements of Operations F-3
Statements of Cash Flows F-4
NOTES TO FINANCIAL STATEMENTS F-5 - F-6
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 March 31, 2003 and the
related statements of operations and cash flows from the date of inception
(December 10, 2001) to March 31, 2003. 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 March
31, 2003 and its operations and cash flows from the date of inception (December
10, 2001) to March 31, 2003 in conformity with accounting principles generally
accepted in the United States of America.
/s/ Holyfield & Thomas, LLC
West Palm Beach, Florida
April 30, 2003
F-1
SPACE TELECOM, INC.
(A Development Stage Company)
BALANCE SHEET
AS OF MARCH 31, 2003
ASSETS
CURRENT ASSETS:
Cash $ 1,236
TOTAL ASSETS $ 1,236
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable to stockholders $ 9,373
STOCKHOLDERS' EQUITY:
Common stock; $.0001 par value,
105,000,000 shares authorized,
6,421,000 shares issued and outstanding 642
Class A Common stock; $.0001 par value,
having 10 votes per share, 5,000,000
shares authorized, none issued and
outstanding
Deficit incurred during the development stage (8,779)
Total stockholders' equity (deficit) (8,137)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,236
See Independent Auditor's Report and Accompanying Notes to Financial Statements.
F-2
SPACE TELECOM, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
FOR THE PERIOD DECEMBER 10, 2001 (date of inception)
TO MARCH 31, 2003
Three Months Ended From Inception
March 31, 2003 to March 31, 2003
Revenues $ $
Expenses
Audit fees 2,500
Filing fees 448 4,498
Legal fees 200
Office expenses 45 1,581
Total expenses 8,779
Deficit incurred $ (493) $ (8,779)
Deficit as of December 31, 2002 (8,286)
Accumulated deficit $ (8,779)
See Independent Auditor's Report and Accompanying Notes to Financial Statements.
F-3
SPACE TELECOM, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
FOR THE PERIOD DECEMBER 10, 2001 (date of inception)
TO MARCH 31, 2003
Three Months Ended From Inception
March 31, 2003 to March 31, 2003
Cash flows from operating activities $ (493) $ (8,779)
Cash flows from investing activities 0
Cash flows from financing activities
Issuance of common stock 12 642
Borrowing from stockholder 600 10,373
Repayment of loan (1,000)
Net cash provided by financing activities 612 10,015
Increase in cash 119 1,236
Cash, beginning of period 1,117 0
Cash, end of period $ 1,236 $ 1,236
See Independent Auditor's Report and Accompanying Notes to Financial Statements.
F-4
SPACE TELECOM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENT
AS OF MARCH 31, 2003
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. In January 2003,
an additional 121,000 shares were issed to one of the founders, thus bringing
the total issued to 6,421,000 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 March 31, 2003.
See Independent Auditor's Report.
F-5
SPACE TELECOM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENT
AS OF MARCH 31, 2003
3. DEVELOPMENT STAGE OPERATIONS
The Company was formed in December, 2001. The Company is in the process of
raising capital, and financing for its future operations. As of December 31,
2002, the Company had sixty-nine stockholders.
4. NOTE PAYABLE TO STOCKHOLDER
The Company borrowed $10,373 from Alps Resources Bankers, Inc. (a stockholder).
The note bears interest at 10% and is due on demand.
See Independent Auditor's Report.
F-6
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 March 31, 2003, 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.
34
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.
35
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
----- ----------------------
Registration Fee $ 676.58
Printing Expense - Final Prospectus $ 5,000.00 *
Standard & Poor's $ 4,000.00 *
Transfer Agent $ 2,375.00 *
Legal Fees $ 30,000.00 *
Accounting Fees $ 10,000.00 *
-------------
Total offering expense $ 52,051.68 *
* These figures represent estimations by management.
36
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, at its inception, sold 6,421,000 shares of its common stock to
its initial shareholders including founders at a price of $.0001 per share
pursuant to Section 4(2) and/or Rule 504 of Regulation D of the Securities Act
of 1933, as amended, as being sold not in connection with a public distribution
of securities. The common shares were sold to the shareholders in a private
transaction. Based upon the fact that no general solicitation or advertising was
used, and the limited shareholder base along with access to Company information,
we believe we meet the exemption criteria. The 5,000,000 shares of Class A
common stock were issued to 2 of the Company's officers and directors for
control purposes only. The share issuance is exempt under the above referenced
exemptions based on only 2 principals having been issued the shares. Both had
access to material information and the issuance was not in connection with a
public distribution of securities. 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 date of the prospectus (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.
37
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 of Consents & Council (2)
23.2 Consent of Holyfield & Thomas, LLC, Certified Public Accountants
24 Power of Attorney (not applicable)
99 Additional Exhibits
99.1 Subscription Agreement
99.2 Escrow Agreement and Indemnification Agreement
_____________________
1. Incorporated by reference to our Registration Statement on Form SB-2 filed
July 17, 2002, file number 333-96581
2. Incorporated by reference to our Registration Statement on Form SB-2
Amendment One filed September 27, 2002, file number 333-96581
38
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
Two to the registration statement to be signed on its behalf by the undersigned
in the City of Palm Beach, Florida on the 6th day of May, 2003.
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: May 6, 2003 /s/ Alain De Lenclos
__________________________
Alain De Lenclos, CEO, President and Director
(Principal Executive Officer)
Date: May 6, 2003 /s/ Jadoomanee Rampadaruth
___________________________
Jadoomanee Rampadaruth, CFO, VP, Secretary and Director
(Principal Financial Officer and
Principal Accounting Officer)
Date: May 6, 2003 /s/ Amal Rampadaruth
___________________________
Amal Rampadaruth, Chairman of the
Board of Directors
