As filed with the Securities and Exchange Commission on September 8, 2004
Registration No. 333-117649
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1 TO FORM S-3
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
EUROWEB INTERNATIONAL CORP.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 13-3696015
(State or Other Jurisdiction of Incorporation or (I.R.S. Employer
Organization) Identification No.)
1122 Budapest
Varosmajor utca 13. Hungary
(+36) 1-88-97-101
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
Csaba Toro
Chief Executive Officer
1122 Budapest
Varosmajor utca 13. Hungary
(+36) 1-88-97-101
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
WITH COPIES TO:
Gregory Sichenzia, Esq.
Stephen M. Fleming, Esq.
Sichenzia Ross Friedman Ference LLP
1065 Avenue of the Americas
New York, New York 10018
(212) 930-9700
United Corporate Services, Inc.
877 Walker Road, Suite C
Dover, Delaware 19904
(Name and Address of Agent Authorized to Received Notice in the United States)
Approximate date of commencement of proposed sale to the public: From time to
time, at the discretion of the selling shareholders after the effective date of
this registration statement
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box.
CALCULATION OF REGISTRATION FEE
======================================== =============== =================== ===================== =====================
Proposed Proposed
Title of Each Class of Securities to Amount to be Maximum Offering Maximum Aggregate Amount of
be Registered Registered Price per Share(1) Offering Price(1) Registration Fee
---------------------------------------- --------------- ------------------- --------------------- ---------------------
Shares of common stock 677,201 $2.84 $1,923,250.84 $243.68
---------------------------------------- --------------- ------------------- --------------------- ---------------------
$243.68
======================================== =============== =================== ===================== =====================
(1) Estimated in accordance with Rule 457(c) solely for the purpose of computing
the amount of the registration fee based on the average of the high and low
closing prices of the Registrant's common stock on the Nasdaq SmallCap Market on
July 20, 2004.
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 said Section 8(a), may determine.
The information contained in this prospectus is not complete and may be
changed. We may not sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This prospectus is not
an offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED SEPTEMBER 8, 2004
PROSPECTUS
EUROWEB INTERNATIONAL CORP.
677,201 Shares of Common Stock
This prospectus relates to the public offering of an aggregate of 677,201
shares of common stock which may be sold from time to time by the selling
stockholders of Euroweb International Corp. named in this prospectus. These
shares were issued to the selling stockholders in connection with the
acquisition of ELENDER Business Communications Services Ltd. ("Elender") by
Euroweb
The shares of common stock are being registered to permit the selling
stockholders to sell the shares from time to time in the public market. The
stockholders may sell the shares through ordinary brokerage transactions,
directly to market makers of our shares or through any other means described in
the section entitled "Plan of Distribution" beginning on page 19. We cannot
assure you that the selling stockholders will sell all or any portion of the
shares offered in this prospectus.
We have paid the expenses of preparing this prospectus and the related
registration expenses.
Our common stock is traded on the Nasdaq SmallCap Market under the symbol
"EWEB". The last reported sales price for our common stock on September 7, 2004,
was $2.93 per share.
The securities offered hereby involve a high degree of risk. See "Risk
Factors" beginning on page 8.
We may amend or supplement this prospectus from time to time by filing
amendments or supplements as required. You should read the entire prospectus and
any amendments or supplements carefully before you make your investment
decision.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
--------------------
The date of this prospectus is ______, 2004
TABLE OF CONTENTS
Where You Can Find More Information.........................4
Forward-Looking Statements..................................5
Prospectus Summary..........................................6
Risk Factors................................................7
Recent Developments........................................10
Use of Proceeds............................................12
Selling Stockholders.......................................13
Plan of Distribution.......................................15
Description of Securities to be Registered.................17
Legal Matters..............................................18
Experts....................................................18
Indemnification............................................18
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports and other information with
the Securities and Exchange Commission. You may read and copy any of these
documents at the SEC's public reference rooms in Washington, D.C.. Please call
the SEC at 1-800-SEC-0330 for further information on the public reference rooms.
Our SEC filings are also available to the public at the SEC' s website at
www.sec.gov.
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 an important part of this prospectus. Any information that we
incorporate by reference is automatically updated and superseded if information
contained in this prospectus modifies or replaces that information. In addition,
any information that we file with the SEC after the date of this prospectus will
update and supersede the information in this prospectus. You must look at all of
our SEC filings that we have incorporated by reference to determine if any of
the statements in a document incorporated by reference have been modified or
superseded.
We incorporate by reference the document listed below and any future
filings made with the SEC under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until all of the shares registered hereby have
been sold:
o Our annual report on Form 10-KSB for the year ended December 31, 2003;
o Our quarterly report on Form 10-QSB for the quarter ended June 30,
2004;
o Our current report on Form 8-K/A filed May 18, 2004 reporting our
acquisition of the remaining interest in Euroweb Hungary Rt. held by
PanTel Tavkozlesi es Kommunikacios rt.
o Our current report on Form 8-K/A filed July 22, 2004 reporting our
acquisition of Elender
You may request additional copies of these filings at no cost, by writing
or telephoning us at the following address or phone number:
Euroweb International Corp.
1122 Budapest
Varosmajor utca 13. Hungary
Attention: Secretary
(+36) 1-88-97-101
You should rely only on the information contained in this prospectus or to
which we have referred you. We have not authorized anyone to provide you with
information that is different. This prospectus may only be used where it is
legal to sell these securities. The information in this prospectus may only be
accurate on the date of this prospectus.
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FORWARD-LOOKING STATEMENTS
This prospectus, any prospectus supplement and the documents incorporated
by reference in this prospectus contain forward-looking statements. We have
based these forward-looking statements on our current expectations and
projections about future events.
These statements include, but are not limited to:
o our liquidity and capital resources, operating expenses, future
expenditures and our ability to continue as a going concern; and
o trends in industry activity generally.
In some cases, you can identify forward-looking statements by words such as
"may," "will," "should," "expect," "plan," "could," "anticipate," "intend,"
"believe," "estimate," "predict," "potential," "goal," or "continue" or similar
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 to be materially different from any future
results, levels of activity, performance or achievements expressed or implied by
such forward-looking statements.
Unless we are required to do so under U.S. federal securities laws or other
applicable laws, we do not intend to update or revise any forward-looking
statements.
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PROSPECTUS SUMMARY
We own and operate Internet service providers in the Czech Republic,
Hungary, Romania and Slovakia through our subsidiaries Euroweb Czech Republic
spol. s.r.o. ("Euroweb Czech"), Euroweb Hungary Rt. ("Euroweb Hungary"), Euroweb
Romania S.A. ("Euroweb Romania") and Euroweb Slovakia a.s. ("Euroweb Slovakia").
We operate in one industry segment, providing Internet access and additional
value added services to business customers.
Our revenues come from the following four sources:
o Internet service provider (Internet access, content and web services
and other services);
o international/domestic leased services;
o voice over Internet protocol ("VOIP") services; and
o the sale, rental and maintenance of dark fiber between the Hungarian
border and the Romanian City of Timisoara.
Our main customer in 2003 and the first quarter of 2004 for our
international/domestic leased line, Internet and VOIP services was Pantel
Telecommunication Rt., a related party.
6
Risk Factors
If you purchase shares of our common stock, you will take on a financial
risk. In deciding whether to invest, you should consider carefully the following
factors, the information contained in this prospectus and the other information
to which we have referred. If any of the following risks actually occur, our
business, financial condition or results of operations could be materially
adversely affected. In such case, the trading price of our common stock could
decline, and you may lose all or part of your investment.
Risk Related to our Business and Industry
Although we had a comprehensive gain for the first quarter of 2004, we had
incurred comprehensive losses for the prior periods and we will again incur
comprehensive losses if we are unable to generate sufficient revenue and control
costs.
Although we had a net profit of $40,860 for the three months ended March
31, 2004, we incurred net losses of $1,576,060 for the year ended December 31,
2003 and $5,894,234 for the year ended December 31, 2002. We may not sustain
profitability on a quarterly or annual basis in the future. If revenues grow
more slowly than we anticipate or if operating expenses exceed our expectations
or cannot be adjusted accordingly, we will incur losses. Our possible success is
dependent upon the successful development and marketing of our services and
products, as to which there is no assurance. Any future success that we might
enjoy will depend upon many factors, including factors out of our control or
which cannot be predicted at this time. These factors may include changes in or
increased levels of competition, including the entry of additional competitors
and increased success by existing competitors, changes in general economic
conditions, increases in operating costs, including costs of supplies, personnel
and equipment, reduced margins caused by competitive pressures and other
factors. These conditions may have a materially adverse effect upon us or may
force us to reduce or curtail operations.
We would incur material additional expenses, which would reduce our revenue, if
the Internet service industry becomes subject to additional regulations.
The Internet service industry is not currently subject to direct regulation
other than regulation applicable to businesses generally. However, changes in
the regulatory environment relating to the telecommunications, Internet and
media industries could have an effect on our business, which effect may be
materially adverse to our interests. Additionally, legislative proposals from
international, federal, state and foreign governmental bodies in the areas of
content regulation, intellectual property, privacy rights and tax issues, could
impose additional regulations and obligations upon all online service and
content providers, which effect may be materially adverse to our interests. We
cannot predict the likelihood that any such legislation will pass, nor the
financial impact, if any, the resulting regulation may have on it.
Moreover, the applicability to persons engaged in Internet commerce of
existing laws governing issues such as intellectual property ownership, libel
and personal privacy is uncertain. Recent events relating to the use of online
services for certain activities has increased public focus and could lead to
increased pressure on foreign and national legislatures to impose regulations on
online service providers. The law relating to the liability of entities
conducting business over the Internet for information carried on, or
disseminated through, their systems is currently unsettled and has been the
subject of several recent private lawsuits. In the event that a similar action
be initiated against us, costs incurred as a result of such actions could have a
material adverse effect on the business of our company.
Our future success is dependent, in part, on the performance and continued
service of our CEO and our ability to attract additional qualified personnel and
if we are unable to do so our results from operations may be negatively
impacted.
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Our success will be dependent on the personal efforts of Csaba Toro, Chief
Executive Officer. The loss of the services of Mr. Toro could have a material
adverse effect on our business and prospects. We do not have and do not intend
to obtain "key-man" insurance on the life of any of our officers. The success of
our company is largely dependent upon our ability to hire and retain additional
qualified management, marketing, technical, financial and other personnel.
Competition for qualified personnel is intense, and there can be no assurance
that we will be able to hire or retain additional qualified management. The
inability to attract and retain qualified management and other personnel will
have a material adverse effect on our company as our key personnel are critical
to our overall management as well as the development of our technology, our
culture and our strategic direction.
Our wholly owned subsidiary, Euroweb Romania, is highly dependent on one
customer, Pantel Rt., which is owned by KPN Telecom B.V. If Pantel is to
terminate our services our results from operations would be materially impacted
if either the sales by Pantel from Euroweb Romania or the sales to Pantel by
Euroweb Hungary were terminated.
The majority owner of Pantel Rt. is KPN Telecom B.V., which also owns
43.53% of our common stock. Such ownership improved the co-operation of the two
companies, which has resulted in a high level of dependency in the case of
Euroweb Romania. Actual dependency from Pantel Rt., taking into account the
direct and Pantel Rt. related sales, represents approximately 85% of total sales
of Euroweb Romania. In addition, in February 2004 a Service Contract was entered
between Euroweb Hungary and its subsidiaries and Pantel, by which Euroweb
Hungary agreed to buy services from Pantel on an annual basis of HUF 600,000,000
plus value added tax during the next three years. In the event that the Euroweb
Hungary does not satisfy this annual commitment, then it is required to pay to
Pantel a penalty equal to 25% of the annual commitment less any services
purchased. We have agreed to guarantee the payment of the annual commitment.
Further, we has also agreed to guarantee a loan in the amount of HUF 245,000,000
plus interest payable by a Euroweb Hungary subsidiary to Pantel as well as the
payment of HUF 93,000,000 plus value added tax to be made by Euroweb Hungary to
Pantel in connection with unpaid services that have incurred to date. Despite
the fact that co-operation is based on arm's length agreements, disagreements
between the management of Pantel Rt. and our company, or an effective change of
ownership in one or both companies, may result in the loss of the Pantel Rt.
related revenues and their significant margin or the services provided by Pantel
to our company.
Increased competition in the Internet service industry may make it difficult for
our company to attract and retain customers and to maintain current pricing
levels.
The market for Internet-based products and services are new, intensely
competitive, rapidly evolving and subject to rapid technological change. We
expect competition to persist, intensify and increase in the future. Such
competition could materially adversely affect our business, operating results or
financial condition.
We believe that the main competitors of Euroweb Slovakia are four of the
largest or most active providers in Slovakia:
o Nextra;
o GTS Slovakia;
o SLOVANET; and
o the incumbent telecom operator, Slovak Telecom.
8
All of the above are all also providing internet services. Both Nextra and
GTS Inec have a customer base similar to ours.
Romania's Internet market is in the initial phase of development. At
present, other then Euroweb Romania, there are several other data transmission
companies providing internet services, which also cover the entire territory of
Romania:
o RDS;
o GTS Romania;
o Equant;
o Connex; and
o Romtelecom.
As a result of the acquisition of the remaining interest of Euroweb Hungary
in 2004, it became our largest subsidiary, which faces the following direct
competition on the Hungarian Internet market:
o Axelero (incumbent Matav's subsidiary);
o GTS Hungary; and
o Interware.
We may face intense competition from other companies directly involved in
the same business and also from many other companies offering products, which
can be used in lieu of those offered by our company. Competition can take many
forms, including convenience in obtaining products, service, marketing and
distribution channels. We may not be able to compete successfully against
current or future competitors or that competitive pressures faced by us will not
materially adversely affect our business, operating results or financial
condition.
Risks Related to our Common Stock
The substantial number of shares that are or will be eligible for sale,
including the 677,201 shares of common stock being registered pursuant to this
prospectus would represent approximately 13% of our total outstanding shares,
which could cause our common stock price to decline even if we are successful.
Sales of significant amounts of common stock in the public market, or the
perception that such sales may occur, could materially affect the market price
of our common stock. These sales might also make it more difficult for us to
sell equity or equity-related securities in the future at a time and price that
we deem appropriate. We are registering 677,201 shares of common stock pursuant
to our prospectus. The shares being registered pursuant to this prospectus would
represent approximately 13% of our total outstanding.
9
We have anti-takeover provisions, which could inhibit potential investors or
delay or prevent a change of control that may favor you.
Some of the provisions of our certificate of incorporation, our bylaws and
Delaware law could, together or separately, discourage potential acquisition
proposals or delay or prevent a change in control. In particular, our board of
directors is authorized to issue up to 5,000,000 shares of preferred stock (less
any outstanding shares of preferred stock) with rights and privileges that might
be senior to our common stock, without the consent of the holders of the common
stock.
RECENT DEVELOPMENTS
Euroweb Hungary Rt.
On February 12, 2004, we entered into a Share Purchase Agreement with
PanTel Tavkozlesi es Kommunikacios rt. ("Pantel"), a Hungarian corporation, to
acquire Pantel's 51% interest in Euroweb Hungary that provides Internet service
and is based in Budapest, Hungary. The acquisition was closed on March 1, 2004.
Prior to this acquisition, we owned 49% of Euroweb Hungary and, as a result of
this acquisition, Euroweb Hungary became a wholly-owned subsidiary of our
company. The purchase price of EURO 1,650,000 (approximately $2,105,000) was
funded from cash that we had previously raised.
As part of the acquisition, we guaranteed the purchase of HUF 600 million
(approximately $3,000,000) of services (annually from 2004-2006) by Euroweb
Hungary and its subsidiaries from Pantel. In 2003, Euroweb Hungary and
subsidiaries (Freestart Kft. and Neophone Rt.) purchased in excess of HUF 700
million (approximately $3,500,000) in services from Pantel. In the event that
Euroweb Hungary and its subsidiaries do not satisfy this commitment, then
Euroweb Hungary is required to pay to Pantel a penalty equal to 25% of the
commitment amount less any services purchased.
We also guaranteed a loan of HUF 245,000,000 ($1,201,687) plus interest
payable provided by Pantel to Freestart Kft., a subsidiary of Euroweb Hungary,
as well as a guarantee of HUF 93,000,000 ($456,150) related to trade payables.
ELENDER Business Communications Services Ltd.
On February 23, 2004, we entered into a Shares Purchase Agreement with
Vitonas Investments Limited, a company with registered seat in Cyprus, Certus
Kft., a Hungarian corporation and Rumed 2000 Kft., a Hungarian corporation, to
acquire their 100% interest in Elender is a Hungarian corporation. Elender is an
Internet service provider located in Hungary that provides internet access to
the corporate and institutional (public) sector and, amongst others, 2,300
schools in Hungary. The Elender acquisition was closed on June 9, 2004.
The total purchase price paid by our company for the acquisition of Elender
was as follows:
o cash in the amount of $6,500,000; and
o 677,201 shares of our common stock.
The number of shares was calculated by dividing $3,000,000 by $4.43, which is
the average trade weighted stock market price during the 60 days prior to
signing of the binding term sheet between the parties. At closing, Elender had
debt valued at $2,900,000, consisting of a bank loan and a non-transferable
shareholders loan payable by Elender to Vitonas Investments Limited,
10
Certus Kft., and Rumed 2000 Kft. We guaranteed the full repayment of the
non-transferable shareholders loan in a period of one and a half years and, in
addition, we have also placed in escrow 248,111 shares, which are to be issued
to the sellers in the event that there is a default in connection with the
non-transferable shareholders loan.
11
USE OF PROCEEDS
We will not receive any proceeds from the sale of common stock by the
selling stockholders. All of the net proceeds from the sale of our common stock
will go to the selling stockholders.
12
SELLING STOCKHOLDERS
The table below sets forth information concerning the resale of the shares
of common stock by the selling stockholders. We will not receive any proceeds
from the resale of the common stock by the selling stockholders. We will receive
proceeds from the exercise of the warrants. Assuming all the shares registered
below are sold by the selling stockholders, none of the selling stockholders
will continue to own any shares of our common stock.
The following table also sets forth the name of each entity who is offering
the resale of shares of common stock by this prospectus, the number of shares of
common stock beneficially owned by each person, the number of shares of common
stock that may be sold in this offering and the number of shares of common stock
each person will own after the offering, assuming they sell all of the shares
offered.
Shares Beneficially Owned Shares Beneficially Owned
Prior to the Offering (1) After the Offering (2)
------------------ ---------------- -------------------------------- ---------------- --------------------------------
Total Shares
Registered
Name Number Percent Number Percent
----------------------------------- --------------- ---------------- ---------------- ---------------- ---------------
CERTUS Kereskedelmi Korlatolt 82,890 1.55% 82,890 0 --
Felelossegu Tarsasag(1)
Hungary
1025 Budapest Vihorlat u. 10
----------------------------------- --------------- ---------------- ---------------- ---------------- ---------------
RUMED 2000 Kft. (2) 72,257 1.35% 72,257 0 --
Hungary
1056 Budapest
Iranyi u. 1
----------------------------------- --------------- ---------------- ---------------- ---------------- ---------------
Vitonas Investments Limited 522,054 9.77% 522,054 0 --
Chrysanthou Mylona 3, P.C. (3)
3030 Limassol
Cyprus
----------------------------------- --------------- ---------------- ---------------- ---------------- ---------------
Total 677,201
----------------------------------- --------------- ---------------- ---------------- ---------------- ---------------
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The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 of the Securities Exchange Act of 1934, and the
information is not necessarily indicative of beneficial ownership for any other
purpose. Under such rule, beneficial ownership includes any shares as to which
the selling stockholder has sole or shared voting power or investment power and
also any shares, which the selling stockholder has the right to acquire within
60 days.
(1) CERTUS Kereskedelmi Korlatolt Felelossegu Tarsasag is beneficially owned by
Lepp Gyula, Lepp Judit, and Leppne Ruzsovics Krisztina.
(2) RUMED 2000 Kft. is beneficially owned by Dr. Koka Janos and Dr. Kokane
Ruzsovics Agnes.
(3) Vitonas Investments Limited is beneficially owned by WALLIS BEFEKTETESI
GAZDASAGI TANACSADO ES VAGYONKEZELESI RT ("Wallis"). Wallis, a limited company,
with its registered seat in Hungary owns 99.9% of the outstanding ordinary
shares of Vitonas Investments Limited. The majority shareholder of Wallis, Mr.
Tibor Veres, owns 83.55% of Wallis, may be deemed the control person of the
shares owned by Vitonas, with final voting power and investment control over
such shares.
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PLAN OF DISTRIBUTION
We are registering the shares of common stock on behalf of the selling
stockholders. We are paying all costs, expenses and fees in connection with the
registration of shares offered by this prospectus. Brokerage commissions, if
any, attributable to the sale of shares will be borne by the selling
stockholders.
Each selling stockholder of the common stock of our company and any of
their pledgees, assignees and successors-in-interest may, from time to time,
sell any or all of their shares of common stock on the Nasdaq SmallCap Market or
any other stock exchange, market or trading facility on which the shares are
traded or in private transactions. These sales may be at fixed or negotiated
prices. A selling stockholder may use any one or more of the following methods
when selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
o block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the
applicable exchange;
o privately negotiated transactions;
o settlement of short sales;
o broker-dealers may agree with the selling stockholders to sell a
specified number of such shares at a stipulated price per share;
o a combination of any such methods of sale;
o through the writing or settlement of options or other hedging
transactions, whether through an options exchange or otherwise; or
o any other method permitted pursuant to applicable law.
The selling stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, as amended, if available, rather than under this
prospectus.
Broker-dealers engaged by the selling stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. Each selling stockholder does not expect these commissions and
discounts relating to its sales of shares to exceed what is customary in the
types of transactions involved.
In connection with the sale of our common stock or interests therein, the
selling stockholders may enter into hedging transactions with broker-dealers or
other financial institutions, which may in turn engage in short sales of the
common stock in the course of hedging the positions they assume. The selling
stockholders may also sell shares of our common stock short and deliver these
securities to close out their short positions, or loan or pledge the common
stock to broker-dealers that in turn may sell these securities. The selling
stockholders may also enter into option or other transactions with
broker-dealers or
15
other financial institutions or the creation of one or more derivative
securities which require the delivery to such broker-dealer or other financial
institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction).
The selling stockholders and any broker-dealers or agents that are involved
in selling the shares may be deemed to be "underwriters" within the meaning of
the Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. Each selling stockholder has informed us
that it does not have any agreement or understanding, directly or indirectly,
with any person to distribute the common stock.
We are required to pay certain fees and expenses incurred incident to the
registration of the shares. We have agreed to indemnify the selling stockholders
against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act.
Because the selling stockholders may be deemed to be "underwriters" within
the meaning of the Securities Act, they will be subject to the prospectus
delivery requirements of the Securities Act. In addition, any securities covered
by this prospectus which qualify for sale pursuant to Rule 144 under the
Securities Act may be sold under Rule 144 rather than under this prospectus.
Each selling stockholder has advised us that they have not entered into any
agreements, understandings or arrangements with any underwriter or broker-dealer
regarding the sale of the resale shares. There is no underwriter or coordinating
broker acting in connection with the proposed sale of the resale shares by the
selling stockholders.
We agreed to keep this prospectus effective until the earlier of (i) the
date on which the shares may be resold by the selling stockholders without
registration and without regard to any volume limitations by reason of Rule
144(e) under the Securities Act or any other rule of similar effect or (ii) all
of the shares have been sold pursuant to the prospectus or Rule 144 under the
Securities Act or any other rule of similar effect. The resale shares will be
sold only through registered or licensed brokers or dealers if required under
applicable state securities laws. In addition, in certain states, the resale
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the resale shares may not simultaneously engage
in market making activities with respect to our common stock for a period of two
business days prior to the commencement of the distribution. In addition, the
selling stockholders will be subject to applicable provisions of the Exchange
Act and the rules and regulations thereunder, including Regulation M, which may
limit the timing of purchases and sales of shares of our common stock by the
selling stockholders or any other person. We will make copies of this prospectus
available to the selling stockholders and have informed them of the need to
deliver a copy of this prospectus to each purchaser at or prior to the time of
the sale.
16
DESCRIPTION OF SECURITIES TO BE REGISTERED
The rights evidenced by the shares of common stock to be registered
hereunder are described below. Our total authorized capital stock is 35,000,000
shares of common stock and 5,000,000 shares of preferred stock. As of September
7, 2004, there were issued and outstanding 5,342,533 shares of common stock.
Common Stock. Each holder of common stock is entitled to one vote per share
held of record on all matters submitted to a vote of the stockholders. All
shares of common stock are entitled to participate in any distributions or
dividends that may be declared by the board of directors, subject to any
preferential dividend rights of outstanding shares of preferred stock. Subject
to prior rights of creditors, all shares of common stock are entitled, in the
event of our liquidation, dissolution or winding up, to participate ratably in
the distribution of all our remaining assets, after distribution in full of
preferential amounts, if any, to be distributed to holders of preferred stock.
There are no sinking fund provisions applicable to the common stock. Our common
stock has no preemptive or conversion rights or other subscription rights. All
of the shares of common stock offered by us under this prospectus will, when
issued, be fully paid and non-assessable.
17
LEGAL MATTERS
The validity of the issuance of the shares being offered hereby will be
passed upon for us by Sichenzia Ross Friedman Ference LLP, New York, New York.
EXPERTS
Our financial statements and schedules incorporated by reference in this
prospectus, to the extent and for the periods indicated in their reports, have
been audited by KPMG Hungaria Kft., independent public accountants.
The ELENDER Business Communications Services Rt. financial statements
incorporated in this prospectus by reference from the Company's Current Report
on Form 8-K/A filed July 22, 2004 have been audited by Deloitte Auditing and
Consulting Ltd, an independent registered public accounting firm, as stated in
their report, which is incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling us
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distributions.
SEC registration fee............... $243.68
Legal fees and expenses............ $35,000.00
Total.............................. $35,243.68
Item 15. Indemnification of Directors and Officers.
Our Certificate of Incorporation, as amended and restated, provide to the
fullest extent permitted by Section 145 of the General Corporation Law of the
State of Delaware, that our directors or officers shall not be personally liable
to us or our shareholders for damages for breach of such director's or officer's
fiduciary duty. The effect of this provision of our Certificate of
Incorporation, as amended and restated, is to eliminate our rights and our
shareholders (through shareholders' derivative suits on behalf of our company)
to recover damages against a director or officer for breach of the fiduciary
duty of care as a director or officer (including breaches resulting from
negligent or grossly negligent behavior), except under certain situations
defined by statute. We believe that the indemnification provisions in our
Articles of Incorporation, as amended, are necessary to attract and retain
qualified persons as directors and officers.
Our By Laws also provide that the Board of Directors may also authorize the
company to indemnify our employees or agents, and to advance the reasonable
expenses of such persons, to the same extent, following the same determinations
and upon the same conditions as are required for the indemnification of and
advancement of expenses to our directors and officers. As of the date of this
Registration Statement, the Board of Directors has not extended indemnification
rights to persons other than directors and officers.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling us
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable.
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Item 16. Exhibits.
The exhibits filed as part of this Registration Statement are as follows:
Exhibit Number Description
------------------ -- ------------------------------------------------------------------------------------------------
2.1 Subscription Agreement and Option Agreement with KPN(1)(2)
3.1 Certificate of Incorporation filed November 9, 1992(1)
3.2 Amendment to Certificate of Incorporation filed July 9,1997(2)
3.3 Restated Certificate of Incorporation(6)
3.4 Amendment to the Restated Certificate of Incorporation(7)
3.5 By-laws(2)
4.1 Form of Common Stock Certificate(1)
4.2 Intentionally left blank
4.3 Placement Agreement between Registrant and J.W. Barclay & Co., Inc. and form of Placement
Agent Warrants issued in connection with private placement financing(1)
5.1 Opinion of Sichenzia Ross Friedman Ference LLP
10.1 Shares Purchase Agreement between PanTel Tavkozlesi es Kommunikacios rt., a Hungarian company,
and Euroweb International Corp., a Delaware corporation (3)
10.2 Guaranty by Euroweb International Corp., a Delaware corporation, in favor of PanTel Tavkozlesi
es Kommunikacios rt., a Hungarian company (3)
10.3 Shares Purchase Agreement between Vitonas Investments Limited, a Hungarian corporation, Certus
Kft., a Hungarian corporation, Rumed 2000 Kft., a Hungarian corporation and Euroweb
International Corp., a Delaware corporation, dated as of February 23, 2004. (4)
14.1 Code of Ethics and Business Conduct of Officers, Directors and Euroweb International Corp.
23.1 Consent from KPMG Hungaria Kft.
23.2 Consent from Deloitte Auditing and Consulting Ltd.
23.3 Consent from Counsel (incorporated in Exhibit 5.1)
(1) Exhibits are incorporated by reference to Registrant's Registration
Statement on Form SB-2 dated May 12, 1993 (Registration No. 33-62672-NY, as
amended)
(2) Filed with Form 10-QSB for quarter ended June 30, 1998.
(3) Filed as an exhibit to Form 8-K on February 27, 2004.
(4) Filed as an exhibit to Form 8-K on March 9, 2004.
(5) Filed as an exhibit to Form 10-KSB for the year ended December 31, 2003.
(6) Filed as exhibit A to the Definitive Proxy filed on May 7, 2003.
(7) Filed as exhibit A to the Definitive Proxy filed on May 12, 2004.
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Item 17. Undertakings
(a) The undersigned Registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof), which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes on 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; and
(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, as amended, 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.
4. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as
amended, each filing of the Registrant's Annual Report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934,
as amended, that is incorporated by reference in the Registration
Statement shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
5. Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "Act"), may be permitted to
directors, officers and controlling persons of the Registrant pursuant
to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities 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
21
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.
6. The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus
is sent or given, the latest annual report to security holders that is
incorporated by reference in the prospectus and furnished pursuant to
and meeting the requirements of Rule 14-a or Rule 14c-3 under the
Securities Exchange Act of 1934; and, where interim financial
information required to be presented by Article 3 of Regulations S-X
are not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the
latest quarterly report that is specifically incorporated by reference
in the prospectus to provide such interim financial information.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant, Euroweb International Corp., certifies that it has reasonable
grounds to believe that it meets all of the requirements for filing on Form S-3
and has duly caused this Registration Statement on Form S-3 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Budapest,
Country of Hungary, on the 8th day of September 2004.
EUROWEB INTERNATIONAL CORP.
By: /s/ Csaba Toro
--------------
Name: Csaba Toro
Title: Chief Executive Officer
23
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Csaba Toro
his or her true and lawful attorney in fact and agent, with full power of
substitution and resubstitution, for him or her and in his name, place and
stead, in any and all capacities, to sign any or all amendments (including post
effective amendments) to the Registration Statement, and to sign any
registration statement for the same offering covered by this Registration
Statement that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933, as amended, and all post effective amendments thereto,
and to file the same, with all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, each acting alone, or his or her 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 on Form S-3 has been signed below by the following
persons in the capacities and on the dates indicated:
Signature Title Date
By:/s/ Csaba Toro Chief Executive Officer and September 8, 2004
------------------ Director (Principal Executive
Csaba Toro Officer)
By:/s/ Peter Szigeti Chief Accounting Officer September 8, 2004
-------------------- (Principal Financial and
Peter Szigeti Accounting Officer)
By: /s/ Csaba Toro as Attorney in Fact Chairman of the Board September 8, 2004
--------------------------------------
Stewart Reich
By: /s/Csaba Toro as Attorney in Fact Director September 8, 2004
-------------------------------------
Howard Cooper
By: Director September 8, 2004
Hans Lipman
By: Director September 8, 2004
Daniel Kwantes
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