As filed with the Securities and Exchange Commission on January 24, 2005
Registration No. 333 -
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
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DELTATHREE, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 13-4006766
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
75 BROAD STREET, 31ST FLOOR
NEW YORK, NEW YORK 10004
(212) 500-4850
(Address of Principal Executive Offices)
DELTATHREE, INC. 2004 STOCK INCENTIVE PLAN
DELTATHREE, INC. 2004 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
DELTATHREE, INC. 1999 STOCK INCENTIVE PLAN
DELTATHREE, INC. 1999 DIRECTORS COMPENSATION PLAN
(Full titles of the plans)
PAUL C. WHITE
CHIEF FINANCIAL OFFICER
DELTATHREE, INC.
75 BROAD STREET, 31ST FLOOR
NEW YORK, NEW YORK 10004
(212) 500-4850
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
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CALCULATION OF REGISTRATION FEE
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Proposed
Proposed Maximum Maximum
Title of Amount to be Offering Price Aggregate Amount of
Securities to be Registered Registered (1) Per Share Offering Price (2) Registration Fee
- ------------------------------------------- --------------------------------------------------------------------------------------
Class A Common Stock, par value $.001 per share 595,448 shares (2) $3.68 (3) $2,191,249 $257.91
- ------------------------------------------- --------------------------------------------------------------------------------------
Class A Common Stock, par value $.001 per share 400,500 shares (4) $2.85 (5) $1,141,425 $134.35
- ------------------------------------------- --------------------------------------------------------------------------------------
Class A Common Stock, par value $.001 per share 115,000 shares (6) $2.88 (5) $331,200 $38.98
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(1) Plus such indeterminate number of ordinary shares as may be issued to
prevent dilution resulting from stock dividends, stock splits or similar
transactions in accordance with Rule 416 under the Securities Act of 1933, as
amended.
(2) Represents the registration of 595,448 shares of common stock, par value
$.001 per share ("Common Stock") issuable upon exercise of options reserved for
grant under the deltathree, Inc. 2004 Stock Incentive Plan ("2004 Incentive
Plan").
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(h) and Rule 457(c) under the Securities Act of 1933, as
amended, based on the average of the high and low sale prices of the Common
Stock on the Nasdaq SmallCap Market as of January 21, 2005.
(4) Represents the registration of 400,500 shares of Common Stock issued or
issuable upon exercise of options granted under the 2004 Incentive Plan with an
average exercise price per share of $2.85.
(5) Calculated based on the weighted average exercise price of the options
pursuant to Rule 457(c) under the Securities Act of 1933, as amended.
(6) Represents the registration of 115,000 shares of Common Stock issued or
issuable upon exercise of options granted under the 2004 Non-Employee Director
Stock Option Plan ("2004 Director Plan") with a weighted average exercise price
per share of $2.88.
Pursuant to Rule 429 under the Securities Act of 1933, as amended, the reoffer
prospectus contained herein also relates to shares of Common Stock previously
registered under the registrant's Registration Statement on Form S-8
(Registration No. 333-34156).
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EXPLANATORY NOTE
This Registration Statement on Form S-8 registers an aggregate of
1,110,948 shares of common stock, par value $.001 per share, of deltathree, Inc.
("deltathree") for issuance in connection with deltathree's 2004 Stock Incentive
Plan and 2004 Non-Employee Director Stock Option Plan. Pursuant to General
Instruction E of Form S-8, the contents of an earlier Registration Statement on
Form S-8 (Registration No. 333-34156), filed with the Securities and Exchange
Commission on April 6, 2000 (the "Previous S-8"), relating to an aggregate of
4,000,000 shares of common stock, par value $.001 per share, for issuance in
connection with deltathree's 1999 Stock Incentive Plan and an aggregate of
600,000 shares of common stock, par value $.001 per share, for issuance in
connection with deltathree's 1999 Directors Compensation Plan, are hereby
incorporated by reference herein.
Pursuant to Rule 429 promulgated under the Securities Act of 1933, as
amended, in addition to being a new registration statement for the shares under
the 2004 Stock Incentive Plan and 2004 Non-Employee Director Stock Option Plan,
this Form S-8 also serves as a post-effective amendment to the Previous S-8 for
the purposes of adding a combined reoffer prospectus.
In accordance with the instructional Note to Part I of Form S-8 as
promulgated by the Securities and Exchange Commission, the information specified
by Part I of Form S-8 has been omitted from this Registration Statement on Form
S-8 for offers of Common Stock pursuant to the Plans. The Prospectus filed as
part of this Registration Statement has been prepared in accordance with the
requirements of Form S-3 and may be used for reofferings and resales of
registered shares of Common Stock which have been and/or may hereafter be issued
upon the exercise of options which have been and/or may hereafter be granted
under any of the Plans.
REOFFER PROSPECTUS
DELTATHREE, INC.
1,887,116 SHARES OF CLASS A COMMON STOCK
issued or issuable pursuant to
DELTATHREE, INC. 2004 STOCK INCENTIVE PLAN
DELTATHREE, INC. 2004 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
DELTATHREE, INC. 1999 STOCK INCENTIVE PLAN
DELTATHREE, INC. 1999 DIRECTORS COMPENSATION PLAN
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The Shares of Class A Common Stock, par value $.001 per share (the
"Common Stock"), offered hereby (the "Shares") are shares which have been or may
in the future be issued upon the exercise of stock options which (i) have been
or may in the future be granted under the deltathree, Inc. 2004 Stock Incentive
Plan and the deltathree, Inc. 2004 Non-Employee Director Stock Option Plan or
(ii) have been previously granted under the deltathree, Inc. 1999 Stock
Incentive Plan and the deltathree, Inc. 1999 Directors Compensation Plan
(collectively, the "Plans"), to be sold by stockholders of deltathree, Inc., a
Delaware corporation ("deltathree" or the "Company"), identified herein (the
"Selling Stockholders"). The Company will not receive any of the proceeds from
the sale of the Shares. Some or all of the Shares may be offered for sale from
time to time by the Selling Stockholders or by pledgees, donees, transferees, or
other successors in interest. Such sales may be made on one or more exchanges,
in the over-the-counter market, or otherwise, at prices and on terms then
prevailing, or at prices related to the then-current market price, or in
negotiated transactions or otherwise, or by underwriters pursuant to an
underwriting agreement in customary form, or in a combination of any such
methods of sale. The Selling Stockholders and any broker-dealers (including
underwriters) who may participate in a sale of the Shares may be deemed to be
statutory underwriters within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"), and the commissions paid or discounts or
concessions allowed to any of such broker-dealers (including underwriters) by
any person, as well as any profits received on the resale of the Shares if any
of such broker-dealers (including underwriters) should purchase any Shares as a
principal, may be deemed to be underwriting discounts and commissions under the
Securities Act. All discounts, commissions or fees incurred in connection with
the sale of the Shares offered hereby will be paid by the Selling Stockholders
or by the purchasers of the Shares, except that the expenses of registering the
Shares and preparing and filing this Prospectus with the Securities and Exchange
Commission (the "Commission"), and of registering or qualifying the Shares under
the blue sky laws of any jurisdiction necessary to permit the distribution as
described in this Prospectus, will be paid by the Company.
The Common Stock is listed on The Nasdaq SmallCap Market System
("Nasdaq") under the symbol "DDDC." On January 21, 2005, the closing sale price
for the Common Stock of the Company, as reported by Nasdaq, was $3.58.
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE RISK FACTORS INDICATED UNDER
"RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES AUTHORITY NOR HAS THE COMMISSION OR
ANY STATE SECURITIES AUTHORITY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is January 24, 2005.
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No person has been authorized in connection with any offering made
hereby to give any information or to make any representation not contained in
this Prospectus, and, if given or made, such information or representation must
not be relied upon as having been authorized by the Company or any Selling
Stockholder. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any security other than the Shares offered by
this Prospectus, nor does it constitute an offer to sell or a solicitation of an
offer to buy any shares of Common Stock offered hereby to any person in any
jurisdiction where it is unlawful to make such offer or solicitation. Neither
the delivery of this Prospectus nor any sale hereunder shall, under any
circumstances, create any implication that information contained herein is
correct as of any time subsequent to the date hereof.
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AVAILABLE INFORMATION
The Company is subject to certain informational reporting requirements
of the Securities Exchange Act of 1934 and, in accordance therewith, files
reports, proxy statements and other information with the Securities and Exchange
Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549.
Copies of such material can be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549 at
prescribed rates. The Commission maintains a Web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission. The address of the Commission's
Web site is http://www.sec.gov.
The Company will provide without charge to each person, including
beneficial owners, to whom this Prospectus is delivered, upon the written or
oral request of such person, a copy of any and all of the documents that have
been or may be incorporated by reference in this Prospectus, other than exhibits
to such documents unless such exhibits are specifically incorporated by
reference into such documents. Requests for such copies should be directed to
Investor Relations, deltathree, Inc., 75 Broad Street, 31st Floor, New York, New
York 10004. The telephone number at this location is (212) 500-4850.
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"deltathree," the deltathree logo and iConnectHere are trademarks of
deltathree, Inc. Other trademarks and trade names appearing in this prospectus
are the property of their holders.
TABLE OF CONTENTS
PROSPECTUS.....................................................................1
OUR COMPANY....................................................................3
RISK FACTORS...................................................................4
USE OF PROCEEDS...............................................................11
SELLING STOCKHOLDERS..........................................................12
PLAN OF DISTRIBUTION..........................................................14
LEGAL MATTERS.................................................................14
EXPERTS .....................................................................14
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...............................14
2
OUR COMPANY
We are a provider of integrated Voice over Internet Protocol (VoIP)
telephony services. We were founded in 1996 to capitalize on the growth of the
Internet as a communications tool by commercially offering Internet Protocol
(IP) telephony services. IP telephony is the real time transmission of voice
communications in the form of digitized "packets" of information over the
Internet or a private network, similar to the way in which e-mail and other data
is transmitted. Our business currently includes: the provision of enhanced
Web-based and other communications services to individual consumers under our
iConnectHere brand name; the provision of enhanced Web-based and other
communications services to international resellers, under either their own brand
name, a white-label brand, and/or our iConnectHere brand name; the provision of
a total "Hosted Communications Solution" that enables resellers, corporate
customers and service providers to offer private label telecommunications to
their customer bases, and; the transmission of voice and data traffic for
communications carriers.
We have built a privately-managed, global network using IP technology
and offer our customers a unique suite of IP telephony products, including:
PC-to-Phone, Broadband Phone and Phone-to-Phone. We differentiate ourselves from
our competitors by providing a robust set of value-added services that enables
us to effectively address the challenges that have traditionally made the
provision of telecommunications services difficult. These operations management
tools include: account provisioning; e-commerce based payment processing
systems; billing and account management; and customer care. We are able to
provide our services at a cost to users that is generally lower than that
charged by traditional carriers because we minimize our network costs by using
efficient packet-switched technology and we generally avoid local access charges
and by-pass international settlement charges by routing international long
distance calls over our privately-managed network.
Prior to 1999, our focus was to build a privately-managed, global
network utilizing IP technology, and our business primarily consisted of
carrying and transmitting traffic for communications carriers over our network.
Beginning in 1999, we began to diversify our offerings by layering enhanced IP
telephony services over our network. These enhanced services were targeted at
consumers and were primarily accessible through our consumer Web site. During
2000, we began offering services on a co-branded or private-label basis to
service providers and other businesses to assist them in diversifying their
product offerings to their customer bases. Our privately-managed IP network
received the Best Built Public Network Award for excellence in IP
services/applications at SUPERCOMM 2000. We were also recognized as the best IP
telephony provider by SmartMoney magazine and PC World Magazine during 2000. We
were recognized for our innovative Broadband Phone offering during 2001,
receiving both the TMC Labs Innovation Award, and the Communications
SOLUTIONS(R) magazine Product of the Year Award. In 2001, we continued to
enhance our unique strengths through our pioneering work with the Session
Initiation Protocol (SIP), an Internet Engineering Task Force standard that has
been embraced by industry leaders such as Microsoft and the 3rd Generation
Partnership Project (3GPP), which is a global cooperation between six
organizational partners who are recognized as the world's major standardization
bodies from the United States, Europe, China, Japan and Korea. In 2001, we also
announced the launch of our state-of-the-art SIP (Session Initiation Protocol)
infrastructure, and we became one of the first service providers to have built
an end-to-end SIP network. Since 2001 we have continued to leverage our SIP
expertise. These activities included the launch of our SIP-based dialer, and the
addition of new devices, new features and new calling plans to our offerings and
these efforts continue to position us as one of the leading providers of VoIP
services. We continue to be recognized as an innovative, effective VoIP leader
as evidenced by such awards as being named as one of New York's Fastest Growing
Technology Companies in the Deloitte Technology Fast 50 Program in 2004, and
being named as a VoIP Service Provider Award Winner by TMC's INTERNET TELEPHONY
Magazine in 2004.
3
RISK FACTORS
An investment in the shares being offered by this Prospectus involves a
high degree of risk. In addition to the other information in this Prospectus or
incorporated herein by reference, the following factors should be considered
carefully in evaluating an investment in the shares of Common Stock offered by
this Prospectus. This Prospectus contains and incorporates by reference
forward-looking statements within the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. Reference is made in particular to the
discussion set forth under "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 2003 (the "Form 10-K") and the Company's
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2004, June 30,
2004 and September 30, 2004, and under "Business" in the Form 10-K, incorporated
in this Prospectus by reference. Such statements are based on current
expectations that involve a number of uncertainties including those set forth in
the risk factors below. Actual results could differ materially from those
projected in the forward-looking statements.
RISKS RELATED TO OUR COMPANY
WE HAVE A HISTORY OF LOSSES AND NEGATIVE CASH FLOW AND WE ANTICIPATE THEY WILL
CONTINUE.
We have incurred significant losses since inception, and we expect to
continue to incur significant losses for the foreseeable future. We reported net
losses of approximately $8.3 million in 2003, approximately $12.1 million in
2002, and approximately $35.7 million in 2001. As of September 30, 2004 and
December 31, 2003, our accumulated deficit was approximately $150.5 million and
$147.9 million, respectively. We generated negative cash flow of approximately
$4.0 million during 2003 and $7.9 million during 2002. As a percentage of
revenues, our net loss was 63.4% in 2003, 93.4% in 2002 and 228.2% in 2001. Our
revenues may not grow or even continue at their current level. As a result,
while we believe we have sufficient funds to meet our working capital
requirements for at least the next fiscal year, we will need to increase our
revenues significantly to become profitable. In order to increase our revenues,
we need to attract and maintain customers to increase the fees we collect for
our services. If our revenues do not increase as much as we expect or if our
expenses increase at a greater pace than revenues, we may never be profitable
or, if we become profitable, we may not be able to sustain or increase
profitability on a quarterly or annual basis.
WE WILL NEED ADDITIONAL CAPITAL TO FINANCE OUR OPERATIONS IN THE FUTURE.
We intend to continue to enhance and expand our network and our product
offerings in order to maintain our competitive position and meet the increasing
demands for service quality, capacity and competitive pricing. Also, the
introduction of new products and/or service will require significant marketing
and promotional expenses that we often incur before we begin to receive the
related revenue. While we believe we have sufficient funds to meet our working
capital requirements for at least the next fiscal year, if our cash flow from
operations is not sufficient to meet our capital expenditure and working capital
requirements, we will need to raise additional capital to continue our
operations. Especially in light of current economic conditions and the
unfavorable market for telecommunications companies in particular, we may not be
able to raise additional capital, and if we are able to raise additional capital
through the issuance of additional equity, our current investors could
experience dilution. If we are unable to obtain additional capital, we may be
required to reduce the scope of our business or our anticipated growth, which
would reduce our revenues.
WE HAVE A LIMITED OPERATING HISTORY UPON WHICH YOU CAN EVALUATE US.
We have only a limited operating history upon which you can evaluate
our business and prospects. We commenced operations in June 1996. You should
consider our prospects in light of the risks, expenses and difficulties we may
encounter as an early stage company in the new and rapidly evolving market for
IP communications services. These risks include our ability:
o to increase acceptance of our enhanced IP communications services
(including our Hosted Communications Solution), thereby increasing
the number of users of our IP telephony services;
o to compete effectively;
4
o to develop new products and keep pace with developing technology.
In addition, because we expect an increasing percentage of our revenues
to be derived from our enhanced IP communications services (including our Hosted
Communications Solution), our past operating results may not be indicative of
our future results.
WE MAY NOT BE ABLE TO EXPAND OUR REVENUE AND ACHIEVE PROFITABILITY.
Our business strategy is to expand our revenue sources to include the
provision of enhanced IP communications services to several different customer
groups. We can neither assure you that we will be able to accomplish this nor
that this strategy will be profitable. Currently, our revenues are primarily
generated by sales of enhanced IP communications services through our direct
consumer offering, iConnectHere, and our service provider and reseller sales
channel (including sales of our Hosted Communications Solution). Enhanced IP
communications services from these channels generated 92.1%, 60.2%, and 54.8% of
our total revenues in 2003, 2002 and 2001, respectively. The provision of
enhanced IP communications services has not been profitable to date and may not
be profitable in the future.
In the future, we intend to generate increased revenues from enhanced
IP communications services, from multiple sources, many of which are unproven,
including the commercial sale of our Hosted Communications Solution. We expect
that our revenues for the foreseeable future will be dependent on, among other
factors:
o sales of enhanced IP communications services, including sales of our
Hosted Communications Solution;
o acceptance and use of IP telephony;
o expansion of service offerings;
o traffic levels on our network;
o the effect of competition, regulatory environment, international
long distance rates and access and transmission costs on our prices;
o continued improvement of our global network quality.
We may not be able to sustain our current revenues or successfully
generate additional revenues from the sale of enhanced IP communications
services, including Hosted Communications Solutions or carrier transmission
services.
WE CANNOT ASSURE YOU THAT A MARKET FOR OUR SERVICES WILL DEVELOP.
We are uncertain whether a market will develop for our enhanced IP
communications services, including our Hosted Communications Solutions. Our
market is new and rapidly evolving. Our ability to sell our services may be
inhibited by, among other factors, the reluctance of some end users to switch
from traditional communications carriers to IP communications carriers and by
concerns with the quality of IP telephony and the adequacy of security in the
exchange of information over the Internet. End users in markets serviced by
recently deregulated telecommunications providers are not familiar with
obtaining services from competitors of these providers and may be reluctant to
use new providers, such as us. Our ability to increase revenues depends on the
migration of traditional telephone network traffic to our IP network. We will
need to devote substantial resources to educate customers and end users about
the benefits of IP communications solutions in general and our services in
particular. If enterprises and their customers do not accept our enhanced IP
communications services as a means of sending and receiving communications, we
will not be able to increase our number of paid users or successfully generate
revenues in the future.
OUR FUTURE SUCCESS DEPENDS ON THE GROWTH IN THE USE OF THE INTERNET AS A MEANS
OF COMMUNICATIONS.
If the market for IP communications, in general, and our services in
particular, does not grow at the rate we anticipate or at all, we will not be
able to increase our number of users or generate revenues we anticipate. To be
successful, IP communications requires validation as an effective, quality means
of communication and as a viable alternative to traditional telephone service.
Demand and market acceptance for recently introduced services are subject to a
high level of uncertainty. The Internet may not prove to be a viable alternative
to traditional telephone service for reasons including:
o inconsistent quality or speed of service;
5
o traffic congestion on the Internet;
o potentially inadequate development of the necessary infrastructure;
o lack of acceptable security technologies;
o lack of timely development and commercialization of performance
improvements; and
o unavailability of cost-effective, high-speed access to the Internet.
If Internet usage grows, the Internet infrastructure may not be able to
support the demands placed on it by such growth, or its performance or
reliability may decline. In addition, Web sites may from time to time experience
interruptions in their service as a result of outages and other delays occurring
throughout the Internet network infrastructure. If these outages or delays
frequently occur in the future, Internet usage, as well as usage of our
communications portal and our services, could be adversely affected.
POTENTIAL FLUCTUATIONS IN OUR QUARTERLY FINANCIAL RESULTS MAKE IT DIFFICULT FOR
INVESTORS TO PREDICT OUR FUTURE PERFORMANCE.
Our quarterly operating results may fluctuate significantly in the
future as a result of a variety of factors, many of which are outside our
control. The factors generally within our control include:
o the rate at which we are able to attract users to purchase our
enhanced IP communications services, including our Hosted
Communications Solutions;
o the amount and timing of expenses to enhance marketing and promotion
efforts and to expand our infrastructure;
o the timing of announcements or introductions of new or enhanced
services by us.
The factors outside our control include:
o the timing of announcements or introductions of new or enhanced
services by our competitors;
o technical difficulties or network interruptions in the Internet or
our privately-managed network;
o general economic and competitive conditions specific to our
industry.
The foregoing factors also may create other risks affecting our
long-term success, as discussed in the other risk factors.
We believe that quarter-to-quarter comparisons of our historical
operating results may not be a good indication of our future performance, nor
would our operating results for any particular quarter be indicative of our
future operating results.
OUR NETWORK MAY NOT BE ABLE TO ACCOMMODATE OUR CAPACITY NEEDS.
We expect the volume of traffic we carry over our network to increase
significantly as we expand our operations and service offerings. Our network may
not be able to accommodate this additional volume. In order to ensure that we
are able to handle additional traffic, we may have to enter into long-term
agreements for leased capacity. To the extent that we overestimate our capacity
needs, we may be obligated to pay for more transmission capacity than we
actually use, resulting in costs without corresponding revenues. Conversely, if
we underestimate our capacity needs, we may be required to obtain additional
transmission capacity from more expensive sources. If we are unable to maintain
sufficient capacity to meet the needs of our users, our reputation could be
damaged and we could lose users.
WE FACE A RISK OF FAILURE OF COMPUTER AND COMMUNICATIONS SYSTEMS USED IN OUR
BUSINESS.
Our business depends on the efficient and uninterrupted operation of
our computer and communications systems as well as those that connect to our
network. We maintain communications systems primarily in five facilities in New
York, Los Angeles, Atlanta, London and Jerusalem. Our systems and those that
connect to our network are subject to disruption from natural disasters or other
sources of power loss, communications failure, hardware or software malfunction,
network failures and other events both within and beyond our control. Any system
interruptions that cause our services to be unavailable, including significant
6
or lengthy telephone network failures or difficulties for users in communicating
through our network or portal, could damage our reputation and result in a loss
of users.
OUR COMPUTER SYSTEMS AND OPERATIONS MAY BE VULNERABLE TO SECURITY BREACHES.
Our computer infrastructure is potentially vulnerable to physical or
electronic computer viruses, break-ins and similar disruptive problems and
security breaches that could cause interruptions, delays or loss of services to
our users. We believe that the secure transmission of confidential information
over the Internet, such as credit card numbers, is essential in maintaining user
confidence in our services. We rely on licensed encryption and authentication
technology to effect secure transmission of confidential information, including
credit card numbers. It is possible that advances in computer capabilities, new
technologies or other developments could result in a compromise or breach of the
technology we use to protect user transaction data. A party that is able to
circumvent our security systems could misappropriate proprietary information or
cause interruptions in our operations. Security breaches also could damage our
reputation and expose us to a risk of loss or litigation and possible liability.
Although we have experienced no security breaches to date of which we are aware,
we cannot guarantee you that our security measures will prevent security
breaches.
THIRD PARTIES MIGHT INFRINGE UPON OUR PROPRIETARY TECHNOLOGY.
We cannot assure you that the steps we have taken to protect our
intellectual property rights will prevent misappropriation of our proprietary
technology. To protect our rights to our intellectual property, we rely on a
combination of trademark and patent law, trade secret protection,
confidentiality agreements and other contractual arrangements with our
employees, affiliates, strategic partners and others. We may be unable to detect
the unauthorized use of, or take appropriate steps to enforce, our intellectual
property rights. Effective copyright and trade secret protection may not be
available in every country in which we offer or intend to offer our services.
Failure to adequately protect our intellectual property could harm our brand,
devalue our proprietary content and affect our ability to compete effectively.
Further, defending our intellectual property rights could result in the
expenditure of significant financial and managerial resources.
OUR SERVICES MAY INFRINGE ON THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS.
Third parties may assert claims that we have violated a patent or
infringed a copyright, trademark or other proprietary right belonging to them.
We incorporate licensed third-party technology in some of our services. In these
license agreements, the licensors have agreed to indemnify us with respect to
any claim by a third party that the licensed software infringes any patent or
other proprietary right so long as we have not made changes to the licensed
software. We cannot assure you that these provisions will be adequate to protect
us from infringement claims. Any infringement claims, even if not meritorious,
could result in the expenditure of significant financial and managerial
resources.
OPERATING INTERNATIONALLY EXPOSES US TO ADDITIONAL AND UNPREDICTABLE RISKS.
We intend to continue to enter additional markets in Eastern Europe,
Latin America, Africa and Asia and to expand our existing operations outside the
United States. International operations are subject to inherent risks,
including:
o potentially weaker protection of intellectual property rights;
o political instability;
o unexpected changes in regulations and tariffs;
o fluctuations in exchange rates;
o varying tax consequences; and
o uncertain market acceptance and difficulties in marketing efforts
due to language and cultural differences.
7
WE HAVE EXPERIENCED LOSSES AS A RESULT OF FRAUD.
We have experienced losses due to fraud. While in 2003, we experienced
losses from fraud of less than 1% of our revenues, callers have obtained our
services without rendering payment by unlawfully using our access numbers and
personal identification numbers. While we have implemented anti-fraud measures
in order to control losses relating to these practices, and these measures have
proven to be effective today, these measures may not in the future be sufficient
to effectively limit all of our exposure in the future from fraud and future
losses could rise significantly above current levels.
INTENSE COMPETITION COULD REDUCE OUR MARKET SHARE AND HARM OUR FINANCIAL
PERFORMANCE.
Competition in the market for enhanced IP communications services is
becoming increasingly intense and is expected to increase significantly in the
future. The market for enhanced Internet and IP communications is new and
rapidly evolving. We expect that competition from companies both in the Internet
and telecommunications industries will increase in the future. Our competitors
include both start-up IP telephony service providers and established traditional
communications providers. Many of our existing competitors and potential
competitors have broader portfolios of services, greater financial, management
and operational resources, greater brand-name recognition, larger subscriber
bases and more experience than we have. In addition, many of our IP telephony
competitors use the Internet instead of a private network to transmit traffic.
Operating and capital costs of these providers may be less than ours,
potentially giving them a competitive advantage over us in terms of pricing.
We also compete in the growing market of discount telecommunications
services including calling cards, prepaid cards, call-back services, dial-around
or 10-10 calling and collect calling services. In addition, some Internet
service providers have begun to aggressively enhance their real time interactive
communications, focusing initially on instant messaging, although some have
begun to provide PC-to-PC, PC-to-phone and/or broadband phone services.
If we are unable to provide competitive service offerings, we may lose
existing users and be unable to attract additional users. In addition, many of
our competitors, especially traditional carriers, enjoy economies of scale that
result in a lower cost structure for transmission and related costs, which cause
significant pricing pressures within the industry. Although the minutes of use
we sell are increasing, revenues are not increasing at the same rate due
primarily to a decrease in revenue per minute for our carrier transmission
services. In order to remain competitive we intend to increase our efforts to
promote our services, and we cannot be sure that we will be successful in doing
this.
In addition to these competitive factors, recent and pending
deregulation in some of our markets may encourage new entrants. We cannot assure
you that additional competitors will not enter markets that we plan to serve or
that we will be able to compete effectively.
DECREASING TELECOMMUNICATIONS RATES MAY DIMINISH OR ELIMINATE OUR COMPETITIVE
PRICING ADVANTAGE.
Decreasing telecommunications rates may diminish or eliminate the
competitive pricing advantage of our services. International and domestic
telecommunications rates have decreased significantly over the last few years in
most of the markets in which we operate, and we anticipate that rates will
continue to be reduced in all of the markets in which we do business or expect
to do business. Users who select our services to take advantage of the current
pricing differential between traditional telecommunications rates and our rates
may switch to traditional telecommunications carriers as such pricing
differentials diminish or disappear, and we will be unable to use such pricing
differentials to attract new customers in the future. In addition, our ability
to market our carrier transmission services to telecommunications carriers
depends upon the existence of spreads between the rates offered by us and the
rates offered by traditional telecommunications carriers, as well as a spread
between the retail and wholesale rates charged by the carriers from which we
obtain wholesale service. Continued rate decreases will require us to lower our
rates to remain competitive and will reduce or possibly eliminate our gross
profit from our carrier transmission services. If telecommunications rates
continue to decline, we may lose users for our services.
8
GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES RELATING TO IP TELEPHONY COULD
HARM OUR BUSINESS.
Historically, voice communications services have been provided by
regulated telecommunications common carriers. We offer voice communications to
the public for international and domestic calls using IP telephony, and we do
not operate as a licensed telecommunications common carrier in any jurisdiction.
Based on specific regulatory classifications and recent regulatory decisions, we
believe we qualify for certain exemptions from telecommunications common carrier
regulation in many of our markets. However, the growth of IP telephony has led
to close examination of its regulatory treatment in many jurisdictions making
the legal status of our services uncertain and subject to change as a result of
future regulatory action, judicial decisions or legislation in any of the
jurisdictions in which we operate. Established regulated telecommunications
carriers have sought and may continue to seek regulatory actions to restrict the
ability of companies such as ours to provide services or to increase the cost of
providing such services. In addition, our services may be subject to regulation
if regulators distinguish phone-to- phone telephony service using IP
technologies over privately-managed networks such as our services from
integrated PC-to-PC and PC-originated voice services over the Internet. Some
regulators may decide to treat the former as regulated common carrier services
and the latter as unregulated enhanced or information services.
Application of new regulatory restrictions or requirements to us could
increase our costs of doing business and prevent us from delivering our services
through our current arrangements. In such event, we would consider a variety of
alternative arrangements for providing our services, including obtaining
appropriate regulatory authorizations for our local network partners or
ourselves, changing our service arrangements for a particular country or
limiting our service offerings. Such regulations could limit our service
offerings, raise our costs and restrict our pricing flexibility, and potentially
limit our ability to compete effectively. Further, regulations and laws which
affect the growth of the Internet could hinder our ability to provide our
services over the Internet.
WE MAY NOT BE ABLE TO KEEP PACE WITH RAPID TECHNOLOGICAL CHANGES IN THE
COMMUNICATIONS INDUSTRY.
Our industry is subject to rapid technological change. We cannot
predict the effect of technological changes on our business. In addition, widely
accepted standards have not yet developed for the technologies we use. We expect
that new services and technologies will emerge in the market in which we
compete. These new services and technologies may be superior to the services and
technologies that we use, or these new services may render our services and
technologies obsolete.
To be successful, we must adapt to our rapidly changing market by
continually improving and expanding the scope of services we offer and by
developing new services and technologies to meet customer needs. Our success
will depend, in part, on our ability to license leading technologies and respond
to technological advances and emerging industry standards on a cost-effective
and timely basis. We will need to spend significant amounts of capital to
enhance and expand our services to keep pace with changing technologies.
RISKS RELATED TO OUR RELATIONSHIP WITH ATAREY
ATAREY HAS SIGNIFICANT INFLUENCE ON ALL MATTERS SUBMITTED TO A STOCKHOLDER VOTE
Atarey Hasharon Chevra Lepituach Vehashkaot Benadlan (1991) Ltd.
("Atarey") owns approximately 44% of the voting power and economic interest in
us. As long as Atarey continues to beneficially own a significant amount of our
shares, Atarey will be able to exercise significant influence over decisions
affecting us, including:
o composition of our board of directors and, through it, our direction
and policies, including the appointment and removal of officers;
o mergers or other business combinations;
o acquisitions or dispositions of assets by us;
o future issuances of capital stock or other securities by us;
o incurrence of debt by us;
o amendments, waivers and modifications to any agreements between us
and Atarey;
o payment of dividends on our capital stock;
o approval of our business plans and general business development.
9
RISKS RELATED TO OUR COMMON STOCK
A THIRD PARTY MAY BE DETERRED FROM ACQUIRING OUR COMPANY.
Atarey's significant ownership of our company could delay, deter or
prevent a third party from attempting to acquire control of us. This may have
the effect of discouraging a third party from making a tender offer or otherwise
attempting to obtain control of us, even though such a change in ownership would
be economically beneficial to us and our stockholders.
VOLATILITY OF OUR STOCK PRICE COULD ADVERSELY AFFECT OUR STOCKHOLDERS.
Since trading commenced in November 1999, the market price of our
common stock has been highly volatile and may continue to be volatile and could
be subject to wide fluctuations in response to factors such as:
o variations in our actual or anticipated quarterly operating results
or those of our competitors;
o announcements by us or our competitors of technological innovations;
o introduction of new products or services by us or our competitors;
o changes in financial estimates by securities analysts;
o conditions or trends in the Internet industry;
o changes in the market valuations of other Internet companies;
o announcements by us or our competitors of significant acquisitions;
o our entry into strategic partnerships or joint ventures; or
o sales of our common stock by Atarey.
All of these factors are, in whole or part, beyond our control and may
materially adversely affect the market price of our common stock regardless of
our performance.
Investors may not be able to resell their shares of our common stock
following periods of volatility because of the market's adverse reaction to such
volatility. In addition, the stock market in general, and the market for
telecommunications, Internet-related and technology companies in particular, has
been dramatically decreased and is extremely depressed. We cannot assure you
that our common stock will trade at the same levels of other telecommunications
or Internet stocks or that telecommunications or Internet stocks in general will
sustain their current market prices.
THE LIQUIDITY OF OUR COMMON STOCK COULD BE ADVERSELY AFFECTED BY CHANGES IN OUR
NASDAQ LISTING.
Our common stock is currently listed on the Nasdaq SmallCap Market. The
listing of our common stock was transferred from the Nasdaq National Market to
the Nasdaq SmallCap Market effective on September 17, 2002. We currently meet
all criteria for continued inclusion in the Nasdaq SmallCap Market. However,
based on the volatile nature of our stock price, we can make no assurances that
we will continue to do so. Failure to meet these criteria could result in our
delisting from the Nasdaq SmallCap Market. If our shares were to be delisted
from the Nasdaq SmallCap Market, our shares would continue to trade, if at all,
on the OTC Bulletin Board, upon application by the requisite market makers. This
would adversely impact our stock price, as well as the liquidity of the market
for our shares which, as a result, would adversely affect the ability of our
stockholders to purchase and sell their shares in an orderly manner, or at all.
Furthermore, a delisting of our shares could damage our general business
reputation and impair our ability to raise additional funds. Any of the
foregoing events could have a material adverse effect on our business, financial
condition and operating results.
WE DO NOT INTEND TO PAY DIVIDENDS.
We have never declared or paid any cash dividends on our common stock.
We intend to retain any future earnings to finance our operations and to expand
our business and, therefore, do not expect to pay any cash dividends in the
foreseeable future.
10
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference herein
contain forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. These statements relate to
future events or our future financial performance. These statements include but
are not limited to statements regarding: uncertainty of financial estimates and
projections, the competitive environment for Internet telephony, our limited
operating history, changes of rates of all related telecommunications services,
the level and rate of customer acceptance of new products and services,
legislation that may affect the Internet telephony industry, rapid technological
changes, as well as other risks referenced from time to time in our filings with
the Securities and Exchange Commission. In some cases, you can identify
forward-looking statements by terminology such as "may," "will," "should,"
"expects," "anticipates," "believes," "estimates," "predicts," "potential" or
"continue" or the negative of such terms or other comparable terminology. These
statements are only predictions and involve known and unknown risks,
uncertainties and other factors, including the risks outlined under "Risk
Factors" that may cause our or our industry's actual results, levels of
activity, performance or achievements expressed or implied by such
forward-looking statements. Before deciding to purchase our common stock you
should carefully consider the risks described in the "Risk Factors" section, in
additional to the other information set forth in this prospectus and the
documents incorporated by reference herein.
USE OF PROCEEDS
We will not receive any proceeds from the sale of shares of our common
stock by the selling stockholders.
11
SELLING STOCKHOLDERS
The Selling Stockholders are offering hereby Shares which have been or
may hereafter be acquired by them upon the exercise of options granted under the
Plans. In addition to the persons named below, the Selling Stockholders include
certain unnamed non-affiliates, each of whom holds less than the lesser of 1,000
shares or one percent (1%) of the shares of Common Stock issuable under the
Plans, and who may use this Prospectus for reoffers and resales of up to that
amount of shares. The names of additional Selling Stockholders and the number of
Shares offered hereby by them may be added to this Prospectus from time to time
by an addendum or supplement to this Prospectus. Other persons who acquire
Shares from the Selling Stockholders may also be identified as Selling
Stockholders by means of an addendum or supplement to this Prospectus.
The following table sets forth certain information with respect to the
Selling Stockholders as of December 31, 2004.
Number of
Shares Number of Percentage of
Beneficially Shares to be Class to be
Owned Number of Beneficially Beneficially
Prior to Shares Being Owned After Owned After
Name Offering (1) Offered (2) Offering (3) Offering
- -------------------------------------------------------------------------------------------------------
Noam Bardin (4) 796,304 608,938 187,366 *
Shimmy Zimels (5) 713,407 648,938 64,469 *
Paul C. White (6) 400,000 400,000 0 *
Ilan Biran (7) 49,848 49,848 0 *
Amir Gera (8) 44,848 44,848 0 *
Joshua Maor (9) 70,999 54,848 16,151 *
Lior Samuelson (10) 54,848 54,848 0 *
Noam Ben-Ozer (11) 24,848 24,848 0 *
Total 1,887,116
* Less than 1% of the outstanding Common Stock.
(1) Includes all shares of Common Stock owned by the Selling Stockholder and
Shares of Common Stock which the Selling Stockholder has the right to acquire,
through the exercise of options including those granted under the Plans, whether
or not such right has yet become exercisable or will become exercisable within
60 days after December 31, 2004.
(2) Includes certain shares of Common Stock acquired by the Selling Stockholder
pursuant to the exercise of options granted under the Plans and all shares of
Common Stock which the Selling Stockholder has the right to acquire, through the
exercise of options granted under the Plans, whether or not such right has yet
become exercisable or will become exercisable within 60 days after December 31,
2004.
(3) Includes shares of Common Stock owned by the Selling Stockholder and Shares
of Common Stock which the Selling Stockholder has the right to acquire, through
12
the exercise of options, other than those granted under the Plans, within 60
days after December 31, 2004. Assumes all shares registered pursuant hereto will
be sold, although there can be no assurance that any of the Selling Stockholders
will offer for sale or sell any or all of the Common Stock offered by them
pursuant to this Prospectus. Also assumes that no other shares are acquired or
transferred by the Selling Stockholder.
(4) Includes 555,604 shares which Mr. Bardin has the right to acquire upon the
exercise of options within 60 days after December 31, 2004. Mr. Bardin has been
Chairman of the Board of Directors of the Company since April 2002. Mr. Bardin
served as Chief Executive Officer and President from July 2000 through June
2002.
(5) Includes 478,937 shares which Mr. Zimels has the right to acquire upon the
exercise of options within 60 days after December 31, 2004. Mr. Zimels has been
Chief Executive Officer, President and a Director of the Company since June 2002
and prior to that served as Vice President of Operations and Chief Operating
Officer of the Company beginning in June 1997.
(6) Includes 248,332 shares which Mr. White has the right to acquire upon the
exercise of options within 60 days after December 31, 2004. Mr. White has been
Chief Financial Officer of the Company since September 2000.
(7) Includes 24,848 shares which Mr. Biran has the right to acquire upon the
exercise of options within 60 days after December 31, 2004. Mr. Biran has been a
Director of the Company since December 2003.
(8) Includes 24,848 shares which Mr. Gera has the right to acquire upon the
exercise of options within 60 days after December 31, 2004. Mr. Gera has been a
Director of the Company since June 2001.
(9) Includes 24,848 shares which Mr. Maor has the right to acquire upon the
exercise of options within 60 days after December 31, 2004. Mr. Maor has been a
Director of the Company since June 2001.
(10) Includes 34,848 shares which Mr. Samuelson has the right to acquire upon
the exercise of options within 60 days after December 31, 2004. Mr. Samuelson
has been a Director of the Company since August 2001.
(11) Includes 24,848 shares which Mr. Ben-Ozer has the right to acquire upon the
exercise of options within 60 days after December 31, 2004. Mr. Ben-Ozer has
been a Director of the Company since September 2004.
13
PLAN OF DISTRIBUTION
The Shares may be offered and sold from time to time by the Selling
Stockholders, or by pledgees, donees, transferees or other successors in
interest. Such offers and sales may be made from time to time on one or more
exchanges or in the over-the-counter market, or otherwise, at prices and on
terms then prevailing or at prices related to the then-current market price, or
in negotiated transactions. The Shares may be sold by one or more of the
following: (a) a block trade in which the broker or dealer so engaged will
attempt to sell the Shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction; (b) purchases by a broker or
dealer as principal and resale by such broker or dealer for its account; (c) an
exchange distribution in accordance with the rules of such exchange; (d)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers; and (e) a combination of any such methods of sale. In effecting
sales, brokers or dealers engaged by the Selling Stockholders may arrange for
other brokers or dealers to participate. Brokers or dealers may receive
commissions or discounts from Selling Stockholders or from purchasers in amounts
to be negotiated immediately prior to the sale. Such brokers or dealers and any
other participating brokers or dealers may be deemed to be "underwriters" within
the meaning of the Securities Act in connection with such sales.
In addition, any securities covered by this Prospectus which qualify
for sale pursuant to Rule 144 or Rule 701 promulgated under the Securities Act
("Rule 144" or "Rule 701") may be sold under Rule 144 or Rule 701 rather than
pursuant to this Prospectus.
The Company and the Selling Stockholders may enter into customary
agreements concerning indemnification and the provision of information in
connection with the sale of the Shares.
There is no assurance that any of the Selling Stockholders will offer
for sale or sell any or all the Common Stock covered by this Prospectus.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered has
been passed upon for the Company by Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C. of New York, New York.
EXPERTS
The financial statements incorporated in this Prospectus by reference
to the Company's Annual Report on Form 10-K for the year ended December 31, 2003
have been so incorporated in reliance upon the report of Brightman Almagor &
Co., a member firm of Deloitte & Touche Tohmatsu, independent accountants, given
on the authority of said firm as experts in auditing and accounting.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus and information we file later with the
SEC will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934.
The documents we are incorporating by reference as of their respective dates of
filing are:
o Amendment No. 1 to Annual Report on Form 10-K/A for the year ended
December 31, 2003, filed on April 29, 2004;
14
o Annual Report on Form 10-K for the year ended December 31, 2003,
filed on March 30, 2004;
o Quarterly Report on Form 10-Q for the quarter ended March 31, 2004,
filed on May 14, 2004;
o Quarterly Report on Form 10-Q for the quarter ended June 30, 2004,
filed on August 4, 2004;
o Quarterly Report on Form 10-Q for the quarter ended September 30,
2004, filed on November 4, 2004; and
o The description of our common stock contained in our Registration
Statement on Form 8-A filed with the SEC on November 23, 1999,
including any amendments or reports filed for the purpose of
updating that description.
You may request, orally or in writing, a copy of these documents, which
will be provided to you at no cost, by contacting:
Investor Relations, deltathree, Inc., 75 Broad Street, 31st Floor, New
York, New York 10004. Telephone: (212) 500-4850.
15
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference.
The following documents filed by the Registrant with the Commission are
incorporated herein by reference:
o Amendment No. 1 to Annual Report on Form 10-K/A for the year ended
December 31, 2003, filed on April 29, 2004;
o Annual Report on Form 10-K for the year ended December 31, 2003,
filed on March 30, 2004;
o Quarterly Report on Form 10-Q for the quarter ended March 31, 2004,
filed on May 14, 2004;
o Quarterly Report on Form 10-Q for the quarter ended June 30, 2004,
filed on August 4, 2004;
o Quarterly Report on Form 10-Q for the quarter ended September 30,
2004, filed on November 4, 2004; and
o The description of our common stock contained in our Registration
Statement on Form 8-A filed with the SEC on November 23, 1999,
including any amendments or reports filed for the purpose of
updating that description.
All reports and other documents filed by the Registrant after the date
hereof pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934 prior to the filing of a post-effective amendment which
indicates that all securities offered hereby have been sold or which deregisters
all securities then remaining unsold, shall be deemed to be incorporated by
reference herein and to be part hereof from the date of filing of such reports
and documents.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Incorporated herein by reference from Registration Statement on Form
S-3, No. 333-109495.
Item 7. Exemption from Registration Claimed.
Not applicable.
II-1
Item 8. Exhibits.
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
4.1* Restated Certificate of Incorporation of deltathree, Inc.
4.2** Amendment to Restated Certificate of Incorporation of deltathree,
Inc.
4.3* Amended and Restated By-laws of deltathree, Inc.
4.4* Specimen Certificate of Class A Common Stock.
4.5* deltathree, Inc. 1999 Stock Incentive Plan
4.6* deltathree, Inc. 1999 Directors Compensation Plan
4.7 deltathree, Inc. 2004 Stock Incentive Plan
4.8 deltathree, Inc. 2004 Non-Employee Director Stock Option Plan
5.1 Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
regarding legality of the shares of common stock being registered
23.1 Consent of Brightman Almagor & Co.
23.2 Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
(included in Exhibit 5.1 to this Registration Statement on Form S-8)
24.1 Power of Attorney (included on signature page)
- ----------
* Incorporated by reference to the Company's registration statement on Form
S-1 (Registration No. 333-86503).
** Incorporated by reference to the Company's annual report on Form 10-K/A
filed on April 30, 2001.
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represents a fundamental
change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation 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) (Section 230.424(b) of this chapter) if, in the
aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective Registration Statement.
II-2
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the Registration Statement is on Form S-3 or Form S-8, and
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in this
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing
of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid
by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City New York and State of New York on the 24th day of
January, 2005.
DELTATHREE, INC.
By: /s/ Paul C. White
----------------------------
Paul C. White
Chief Financial Officer
POWER OF ATTORNEY
The registrant and each person whose signature appears below
constitutes and appoints Shimmy Zimels and Paul C. White and each of them
singly, his, her or its true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him, her or it and in his, her or
its name, place and stead, in any and all capacities, to sign and file (i) any
and all amendments (including post-effective amendments) to this Registration
Statement, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as he, she, or it
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ Shimmy Zimels Chief Executive Officer, President January 21, 2005
- ------------------------------ and Director
Shimmy Zimels
(Principal Executive Officer)
/s/ Paul C. White Chief Financial Officer (Principal January 21, 2005
- ------------------------------ Accounting and Financial Officer)
Paul C. White
/s/ Noam Bardin Chairman of the Board of Directors January 21, 2005
- ------------------------------
Noam Bardin
/s/ Ilan Biran Director January 21, 2005
- ------------------------------
Ilan Biran
/s/ Amir Gera Director January 21, 2005
- ------------------------------
Amir Gera
/s/ Noam Ben-Ozer Director January 21 2005
- ------------------------------
Noam Ben-Ozer
/s/ Joshua Maor Director January 21, 2005
- ------------------------------
Joshua Maor
Director January 21, 2005
- ------------------------------
Lior Samuelson
II-4
DELTATHREE, INC.
INDEX TO EXHIBITS FILED WITH
FORM S-8 REGISTRATION STATEMENT
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
4.1* Restated Certificate of Incorporation of deltathree, Inc.
4.2** Amendment to Restated Certificate of Incorporation of deltathree,
Inc.
4.3* Amended and Restated By-laws of deltathree, Inc.
4.4* Specimen Certificate of Class A Common Stock.
4.5* deltathree, Inc. 1999 Stock Incentive Plan
4.6* deltathree, Inc. 1999 Directors Compensation Plan
4.7 deltathree, Inc. 2004 Stock Incentive Plan
4.8 deltathree, Inc. 2004 Non-Employee Director Stock Option Plan
5.1 Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
regarding legality of the shares of common stock being registered
23.1 Consent of Brightman Almagor & Co.
23.2 Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
(included in Exhibit 5.1 to this Registration Statement on Form S-8)
24.1 Power of Attorney (included on signature page)
- ----------
* Incorporated by reference to the Company's registration statement on Form
S-1 (Registration No. 333-86503).
** Incorporated by reference to the Company's annual report on Form 10-K/A
filed on April 30, 2001.
II-6