xfones8.htm
As filed with the Securities and
Exchange Commission on April 8, 2009
Registration
No. 333-__________
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
XFONE,
INC.
(Exact
name of registrant as specified in its charter)
|
|
|
(State
or other jurisdiction of
incorporation
or organization)
|
|
(I.R.S.
Employer
Identification
No.)
|
5307
W Loop 289
Lubbock,
TX 79414, USA
(Address
of principal executive offices) (Zip Code)
Xfone,
Inc. 2007 Stock Incentive Plan
(Full
title of the plan)
Incorp
Services, Inc.
375
N Stephanie Street, Suite 1411
Henderson,
NV 89014-8909, USA
Telephone
number: 702.866.2500
(Name,
address, including zip code, and telephone number
Including
area code, of agent for service)
Copies
to:
GERSTEN
SAVAGE LLP
Arthur S.
Marcus, Esq.
Jaclyn
Amsel, Esq.
600
Lexington Avenue, 9th Floor
New York,
NY 10022
212-752-9700
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act).
Large accelerated
filer o |
Accelerated filer
o |
Non-accelerated
filer o
(Do not
check if smaller reporting company)
|
Smaller reporting
company þ |
CALCULATION
OF REGISTRATION FEE
Title
of Securities to Be Registered
|
|
Proposed Maximum Offering Price
per Share(1)
|
Proposed Maximum Aggregate
Offering Price(2)
|
Amount
of Registration Fee
|
Common
Stock, $0.001 par value(3)
|
1,050,000
|
$0.56
|
$588,000
|
$32.81
|
Common
Stock, $0.001 par value(4)
|
6,950,000
|
$0.56
|
$3,892,000
|
$217.17
|
TOTAL
|
8,000,000
|
--
|
$4,480,000
|
$249.98
|
(1)
|
The
provisions of Rule 416 under the Securities Act of 1933, as amended (the
“Securities Act”), shall apply to this Registration Statement and the
number of shares registered on this Registration Statement shall increase
or decrease as a result of stock splits, stock dividends, or similar
transactions. Includes an indeterminate number of additional shares that
may be issued to adjust the number of shares issued pursuant to the plans
described herein as the result of any future stock split, stock dividend,
or similar adjustment of Registrant’s outstanding common
stock.
|
(2)
|
Estimated
solely for the purpose of calculating the registration fee. The fee is
calculated pursuant to Rules 457(c) and 457(h) under the Securities Act
upon the basis of the average between the high and low prices for shares
of common stock of the Registrant as reported on the NYSE Amex LLC on
April 3, 2009, which was $0.56.
|
(3)
|
Represents
shares issuable upon awards previously granted under the Xfone, Inc. 2007
Stock Incentive Plan.
|
(4)
|
Represents
shares issuable upon awards that may be granted under the Xfone, Inc. 2007
Stock Incentive Plan.
|
TABLE
OF CONTENTS
|
Page
|
|
|
PART I INFORMATION REQUIRED IN THE SECTION
10(a) PROSPECTUS
|
|
|
|
|
5
|
|
|
PART II INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
|
|
|
|
|
30
|
|
31
|
|
31
|
|
31
|
|
32
|
|
32
|
|
33
|
|
|
SIGNATURES
|
|
|
|
|
35 |
EXPLANATORY
STATEMENT
This
registration statement on Form S-8 (the “Registration Statement”) relates to
8,000,000 shares of common stock of Xfone, Inc. (the “Registrant,” the
“Company,” “we,” “us” or “our”), $0.001 par value per share (the “Common
Stock”), which are issuable pursuant to, or upon exercise and/or vesting of,
awards that have been granted or may be granted under Xfone, Inc.’s 2007 Stock
Incentive Plan (the “2007 Plan”). Under the 2007 Plan, a total of
8,000,000 shares of Common Stock are available for issuance as or upon the
exercise of options, stock awards and performance awards to our employees, our
Affiliates (which is defined in the 2007 Plan to include, among others, (i) any
subsidiary of the Company, (ii) any Parent of the Company, (iii) any
corporation, or trade or business (including, without limitation, a partnership,
limited liability company or other entity) which is directly or indirectly
controlled fifty percent (50%) or more (whether by ownership of stock, assets or
an equivalent ownership interest or voting interest) by the Company or one of
its Affiliates, (iv) any other entity in which the Company or any of its
Affiliates has a material equity interest and which is designated as an
“Affiliate” by resolution of the Committee (as defined in the 2007 Plan); and
(v) any executive officer, director or ten percent (10%) shareholder of the
Company ), and/or consultants.
This
Registration Statement also includes a reoffer prospectus prepared in accordance
with General Instruction C of Form S-8 and in accordance with the
requirements of Part I of Form S-3, which may be utilized for
reofferings and resales on a continuous or a delayed basis in the future related
to the following.
·
|
Up
to 6,950,000 of the shares of Common Stock with respect to which the
reoffer prospectus relates for reoffers and resales by Selling
Stockholders who are our officers, directors and may be our “affiliates,”
as defined in Rule 405 of the Securities Act, who may acquire such
shares upon exercise of awards granted under the 2007 Plan. We
do not know whether any of such Selling Stockholders will be granted
awards under the 2007 Plan, will use this reoffer prospectus in connection
with the offer or sale of any shares of Common Stock, or, if this reoffer
prospectus is so used, how many shares of Common Stock will be offered or
sold. Such Selling Stockholders may resell all, a portion, or none
of the shares that they may acquire pursuant to the 2007 Plan.
Pursuant to Rule 424(b) under the Securities Act, we will
supplement this prospectus with the number of shares of Common Stock, if
any, to be offered or sold by such Selling Stockholders as that
information becomes known.
|
·
|
1,050,000
shares of Common Stock which are issuable upon exercise of awards granted
to three executive officers of one of our subsidiaries, NTS
Communications, Inc., who are named herein, which were received prior to
the filing of this Registration
Statement.
|
The
reoffer prospectus does not contain all of the information included in the
Registration Statement, certain items of which are contained in schedules and
exhibits to the Registration Statement, as permitted by the rules and
regulations of the Securities and Exchange Commission (the “SEC”).
Statements contained in this reoffer prospectus as to the contents of any
agreement, instrument or other document referred to herein are not necessarily
complete. With respect to each such agreement, instrument or other
document filed as an exhibit to the Registration Statement, we refer you to the
exhibit for a more complete description of the matter involved, and each such
statement shall be deemed qualified in its entirety by this
reference.
INFORMATION
REQUIRED IN THE SECTION 10(a) PROSPECTUS
The
Registrant has sent or given or will send or give documents containing the
information specified by Part I of this Registration Statement to participants
in the 2007 Plan, as specified in Rule 428(b)(1)(i) promulgated by the
Securities and Exchange Commission (the “Commission”) under the Securities Act
of 1933, as amended (the “Securities Act”). The Registrant is not filing such
documents with the Commission, but these documents constitute (along with the
documents incorporated by reference into this Registration Statement pursuant to
Item 3 of Part II hereof) a prospectus that meets the requirements of Section
10(a) of the Securities Act.
8,000,000 shares
of
Common
Stock
We are
registering 8,000,000 shares of our Common Stock, $0.001 par value per
share (the “Common Stock”), for resale from time to time by the Selling
Stockholders identified in this Prospectus, or to be named by prospectus
supplement, which have been issued or are issuable to them upon exercise of
awards granted to them under our 2007 Stock Incentive Plan (the “2007 Plan”).
We will not receive any proceeds from the sale of shares of Common Stock
pursuant to this reoffer prospectus. The Selling Stockholders identified
herein will acquire the shares pursuant to awards granted or to be granted under
our 2007 Plan and may resell all, a portion, or none of the shares of Common
Stock from time to time.
This
reoffer prospectus has been prepared for the purpose of registering 1,050,000
shares of Common Stock to be reoffered or resold by the Selling Stockholders
under the Securities Act of 1933, as amended (the “Securities Act”) to allow for
future sales by the Selling Stockholders named herein, as well as those
currently unknown but to be named as they become known, on a continuous or
delayed basis, to the public without restriction. Each Selling Stockholder
that sells shares of our Common Stock pursuant to this reoffer prospectus may be
deemed to be an “underwriter” within the meaning of the Securities Act.
Any commissions received by a broker or dealer in connection with resales of
shares may be deemed to be underwriting commissions or discounts under the
Securities Act.
You
should carefully read this Prospectus together with the documents we incorporate
by reference before you invest in our Common Stock.
Our
Common Stock is traded on the NYSE Amex LLC (formerly, the American Stock
Exchange and the NYSE Alternext US LLC) (“NYSE Amex”) and the Tel Aviv Stock
Exchange (“TASE”) under the symbol “XFN”. On April 3, 2009, the closing
price of our Common Stock was $0.56 (NYSE Amex) / 2.132 NIS
(TASE).
INVESTMENT
IN THE COMMON STOCK OFFERED BY THIS PROSPECTUS INVOLVES A HIGH DEGREE OF RISK.
YOU MAY LOSE YOUR ENTIRE INVESTMENT. CONSIDER CAREFULLY THE “RISK FACTORS”
DETAILED ON PAGES 9-17 OF THIS PROSPECTUS BEFORE INVESTING.
You
should rely only on the information contained in or incorporated by reference in
this Prospectus. We have not, and the Selling Stockholders have not, authorized
anyone, including any salesperson or broker, to give oral or written information
about this offering, Xfone, Inc., or the shares of Common Stock offered hereby
that is different from the information included in this Prospectus. If anyone
provides you with different information, you should not rely on it. The Selling
Stockholders are not making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information contained in this Prospectus is accurate only as of the date on
the front cover of this Prospectus. Our business, financial condition, results
of operations and prospects may have changed since that date.
This
Prospectus is not an offer to sell any securities other than the shares of
Common Stock offered hereby. This Prospectus is not an offer to sell securities
in any circumstances in which such an offer is unlawful.
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 April 8, 2009
TABLE
OF CONTENTS
The
following table of contents has been designed to help you find information
contained in this Prospectus.
We
encourage you read the entire Prospectus.
|
Page
|
|
7
|
|
9
|
|
18
|
|
18
|
|
18
|
|
18
|
|
19
|
|
19
|
|
21
|
|
22
|
|
26
|
|
26
|
|
26
|
|
26
|
|
26
|
|
27
|
|
28
|
General
As used
in this Prospectus, references to “the Company”, “we”, “our”, “ours” and “us”
refer to Xfone, Inc. and consolidated subsidiaries, unless otherwise indicated.
References to “Xfone” refer to Xfone, Inc. In addition, references to our
“financial statements” are to our consolidated financial statements except as
the context otherwise requires.
We
prepare our financial statements in United States dollars and in accordance with
generally accepted accounting principles as applied in the United States,
referred to as U.S. GAAP. In this Prospectus, references to “$” and “dollars”
are to United States dollars, “£”, “UKP”, or “GBP” are to British Pound
Sterling, and references to “NIS” and “shekels” are to New Israeli
Shekels.
About
Our Company
Xfone,
Inc. was incorporated in Nevada, U.S.A. in September 2000. We are a holding and
managing company with operations in the United States, the United Kingdom and
Israel offering a wide range of services, including: local, long distance and
international telephony services; video; prepaid and postpaid calling cards;
cellular services; Internet services; messaging services (Email/Fax Broadcast,
Email2Fax and Cyber-Number); and reselling opportunities. We serve customers
worldwide.
We have
two wholly owned subsidiaries in the United Kingdom, three wholly owned
subsidiaries in the United States, and one majority owned subsidiary in Israel.
These subsidiaries, and their consolidated subsidiaries, are shown in the
following diagram:
Where
You Can Find Us
Our
principal executive offices are located at 5307 W Loop 289, Lubbock,
Texas 79414, USA.
Our
telephone number is 806-771-5212, and our facsimile number is
806-788-3398. Our website is www.xfone.com. The
information contained on our website does not form part of this
Prospectus.
About
This Offering
Shares
of Common Stock, $0.001 par value per share, offered by the Selling
Stockholders:
|
8,000,000 shares
|
Shares
of Common Stock, $0.001 par value per share, outstanding prior to this
offering:
|
18,376,075
shares
|
Shares
of Common Stock, $0.001 par value per share, outstanding after this
offering:
|
18,376,075
shares
|
Use
of proceeds:
|
We
will not receive any of the proceeds from the sale of shares of Common
Stock by the Selling Stockholders identified in this Prospectus. The
Selling Stockholders will receive all net proceeds from the sale of the
shares of our Common Stock offered by this Prospectus.
We
will receive up to approximately $2,933,700 in proceeds from the exercise
of the options already granted under the 2007 Plan if and to the extent
that any such options are exercised by the Selling Stockholders identified
herein.
|
Risk
Factors:
|
An
investment in our Common Stock is subject to significant risks. You should
carefully consider the information set forth in the “Risk Factors” section
beginning on page 9 as well as other information set forth in this
Prospectus, including our financial statements and related
notes.
|
Dividend
policy:
|
We
have not paid any dividends on our Common Stock during the last three
fiscal years, and we do not anticipate the declaration or payment of any
dividends at any time in the foreseeable future.
|
NYSE
Amex LLC and Tel Aviv Stock Exchange Symbol:
|
XFN
|
Summary
Consolidated Financial Information
The
following table presents summary consolidated financial information for the
Company. You should read this information together with the financial statements
and the notes thereto, and the information under “Management's Discussion and
Analysis of Financial Condition and Results of Operations,” which is
incorporated by reference herein.
Effective
January 1, 2007, the Company changed its functional and reporting currency from
GBP to the U.S. dollar for the reason that the majority of the Company's
transactions and balances are denominated in U.S. dollars.
IN
POUNDS and US DOLLARS
|
|
December
31, 2008
(Audited)
|
|
December
31, 2007
(Audited)
|
|
|
December
31, 2006
(Audited)
|
|
|
December
31, 2005
(Audited)
|
|
|
December
31, 2004
(Audited)
|
|
Revenues
|
|
|
|
|
|
|
|
£
|
19,353,771
|
|
|
£
|
14,113,748
|
|
|
£
|
11,330,116
|
|
|
$
|
90,338,980
|
|
$
|
44,723,934
|
|
|
$
|
37,914,037
|
|
|
$
|
24,346,215
|
|
|
$
|
21,867,124
|
|
Operating
Profit (loss)
|
|
|
|
|
|
|
|
£
|
528,342
|
|
|
£
|
(45,746
|
)
|
|
£
|
112,782
|
|
|
$
|
4,814,196
|
|
$
|
(1,029,442
|
)
|
|
$
|
1,035,022
|
|
|
$
|
(78,913
|
)
|
|
$
|
217,670
|
|
Net
Income (loss)
|
|
|
|
|
|
|
|
£
|
337,262
|
|
|
£
|
26,078
|
|
|
£
|
39,874
|
|
|
$
|
2,047,237
|
|
$
|
(1,283,892
|
)
|
|
$
|
660,696
|
|
|
$
|
44,983
|
|
|
$
|
76,958
|
|
Basic
EPS
|
|
|
|
|
|
|
|
£
|
0.033
|
|
|
£
|
0.004
|
|
|
£
|
0.007
|
|
|
$
|
0.116
|
|
$
|
(0.109
|
)
|
|
$
|
0.065
|
|
|
$
|
0.007
|
|
|
$
|
0.013
|
|
Total
Assets
|
|
|
|
|
|
|
|
£
|
16,859,083
|
|
|
£
|
11,907,114
|
|
|
£
|
5,343,284
|
|
|
$
|
103,104,747
|
|
$
|
67,049,327
|
|
|
$
|
33,026,944
|
|
|
$
|
20,539,772
|
|
|
$
|
10,312,537
|
|
Long-Term
Liability
|
|
|
|
|
|
|
|
£
|
1,191,337
|
|
|
£
|
1,471,211
|
|
|
£
|
651,863
|
|
|
$
|
33,720,145
|
|
$
|
23,279,296
|
|
|
$
|
2,333,830
|
|
|
$
|
2,537,839
|
|
|
$
|
1,258,096
|
|
You
should carefully consider the risks described below before buying Common Stock
offered in this offering. The risks and uncertainties described below are not
the only risks we face. Additional risks and uncertainties not currently known
to us or that we currently deem immaterial may impair our business operations.
If any of the adverse events described in this risk factors section actually
occur, our business, results of operations and financial condition could be
materially adversely affected, the trading price of our Common Stock could
decline and you might lose all or part of your investment. We have had operating
losses from time to time and cannot assure that we will be profitable in the
foreseeable future. We make various statements in this section which constitute
“forward-looking” statements under Section 27A of the Securities
Act.
An
investment in our securities involves a high degree of risk. We cannot assure
prospective investors that we will continue operations or make a profit in the
future. No purchase of Common Stock should be made by any person who cannot
afford a total loss of his or her investment.
In
addition to the other information provided in this Prospectus, you should
carefully consider the following risk factors in evaluating our business before
purchasing any Common Stock.
RISKS
RELATED TO OUR BUSINESS
WHILE
WE ACT IN COMPLIANCE WITH THE GENERAL CONDITIONS OF ENTITLEMENT IN THE UNITED
KINGDOM AND ACCORDING TO OUR LICENSES IN THE UNITED STATES AND ISRAEL, IF WE DO
NOT COMPLY WITH AND CONTINUE TO FOLLOW THE TERMS OF SUCH REGIMES AND/OR LICENSES
AND THE RELEVANT LAWS AND REGULATIONS, WE COULD LOSE OUR ENTITLEMENT AND/OR
LICENSES TO CONDUCT OUR BUSINESSES IN THESE JURISDICTIONS.
Not
complying with, or indeed violating the conditions of our licenses and the
related laws and regulations could lead to the loss of, material changes to, or
freezing of our entitlement and/or licenses which
could have a material adverse effect on our operations. Without such
authorization or licenses we would not be able to provide any approved and/or
licensed services, resulting in a loss of revenues. Such violations of our
licenses in the U.S. or Israel could lead to monetary penalties.
WE
ARE SUBJECT TO EXTENSIVE REGULATION IN THE UNITED STATES, THE UNITED KINGDOM,
ISRAEL AND OTHER FOREIGN COUNTRIES WHICH MAY LEAD US TO INCUR INCREASED BUSINESS
COSTS AND HAVE NEGATIVE EFFECTS UPON OUR BUSINESS INCLUDING REVENUES AND
POTENTIAL PROFITABILITY.
We serve
customers in many countries, all of which have different regulations,
jurisdictions, and standards and controls related to licensing,
telecommunications, import/export, currency and trade. Regulatory changes
pertaining to future regulatory classification of Internet related telephone
services, otherwise known as VOIP telephony, may lead to burdensome regulatory
requirements and fees, as well as additional interconnection fees to carriers
and changes in access charges, universal service, and regulatory fee payments,
which would affect our international and long distance services related costs
and may have a material impact upon our ability to conduct business, as well as
our revenues. Our compliance with foreign rules and regulations may lead to
increased costs of doing business or reduced revenues from having to decrease or
eliminate our business in certain foreign countries, all of which may negatively
affect our potential profitability.
IF
OUR TELECOMMUNICATIONS INFRASTRUCTURE OR EQUIPMENT IS DAMAGED OR INOPERATIVE, WE
MAY NOT BE ABLE TO PROVIDE SERVICE TO OUR CUSTOMERS.
We rely
on our telecommunications equipment, including, but not limited to our
switchboard and switches, to provide services to our customers. In the event
that such equipment is not able to provide the services for which it is then
used, we may not be able to provide services to our customers. While we have
back-up for much of this equipment, if any portion of the equipment is
unavailable for any extended period of time, it will be difficult to provide
service to our customers, might give rise to the ability of our customers to
terminate agreements with us, and would generally have a detrimental effect on
retaining our customers. In addition, if we are unable to provide service,
our customers in the U.S. could lose access to 911 and would not be
able to access health and safety services in an emergency. This
could result in potential liability for claims of property damage,
personal injury, and death because a customer could not contact
emergency health and safety services. This also might give rise to the
ability of our customers to terminate agreements with us, and would generally
have a detrimental effect on retaining our customers.
IF
OUR SUPPLIERS' TELECOMMUNICATIONS INFRASTRUCTURE IS DAMAGED, IT COULD INCREASE
OUR EXPENSES AND WE MAY NOT BE ABLE TO PROVIDE SERVICE TO OUR
CUSTOMERS.
We rely
on certain suppliers' telecommunications infrastructure in order to provide
services to our customers. If their ability to supply such services to us is
damaged in any way, we may be required to incur additional costs to replace such
services and we may not be able to provide service to our
customers.
IF
OUR INFORMATION AND BILLINGS SYSTEMS ARE UNABLE TO FUNCTION PROPERLY AS OUR
OPERATIONS GROW, WE MAY EXPERIENCE SYSTEM DISRUPTIONS, REDUCED LEVELS OF
CUSTOMER SERVICE AND A DECLINING CUSTOMER BASE AND REVENUES.
Over the
past two years, our business revenues and operations have increased
significantly. We now handle millions of transactions on a daily basis with
hundreds of thousands of customers and users located in many countries.
Accordingly, our information and billing systems are under increasing stress. We
use internally developed and acquired systems to operate our services and for
transaction processing, including billing and collections processing. We must
continually improve these systems in order to meet the level of use.
Furthermore, in the future, we may add features and functionality to our
products and services using internally developed or third party licensed
technologies. Our inability to add software and hardware or develop and upgrade
existing technology, transaction processing systems and network infrastructure
to meet increased volume through our processing systems or provide new features
or functionality, may cause system disruptions, slower response times,
reductions in levels of customer service, decreased quality of the user's
experience, collection difficulties, and delays in reporting accurate financial
information. Any such failure could cause system disruptions, reduced levels of
customer service, and a declining customer base and revenues.
WE
SERVE AN EXTREMELY LARGE NUMBER OF CUSTOMERS / USERS AND ARE THUS AT RISK FOR
CLASS ACTION LAWSUITS.
Class
action lawsuits have become much more popular in both the United States and
Israel where we have much of our operations, and because we provide services to
so many customers / users, it is possible that such customers / users may join
together in a large or expensive class action to initiate an action. On
December 16, 2008, Omer Fleisig filed a request to approve a claim as a class
action (the "Class Action Request") against Xfone 018 Ltd. ("Xfone 018"), a 69%
owned Israel based subsidiary of the Company, and Israel 10 - Shidury Haruts
Hahadash Ltd., an entity unrelated to the Company ("Israel 10"), in the District
Court in Petach Tikva, Israel. Fleisig attempted to participate in a
television call-in game show, which was produced by Israel 10, using Xfone 018’s
international telecom services. The claim alleges that although Fleisig's two
attempts to participate in the show were unsuccessful because he received a busy
signal when trying to call in, he was billed by Xfone 018 for both
attempts. Fleisig seeks damages for the billed attempts. He was billed
approximately $2.50 for the calls. The Class Action Request states total damages
of NIS 24,750,000 (approximately $5,856,602) which reflects Fleisig's estimation
of damages caused to all participants in the game show which (pursuant to the
Class Action Request) allegedly received a busy signal while trying
to call in to the game during a certain period defined in the
Class Action Request. All parties are currently attempting to reach an
understanding regarding the scope of the Class Action Request and its
justification, if at all. As of March 31, 2009, this matter is pending.
Approval of the Class Action Request could result in substantial costs,
potential liabilities and the diversion of management’s attention and resources,
subsequently causing a material adverse affect on our financial condition and
results of operations.
TERRORIST
ATTACKS, WAR, OR ARMED CONFLICT OR POLITICAL / ECONOMIC EVENTS OR UPHEAVALS MAY
LEAD TO A DISRUPTION IN OUR SERVICES AS WELL AS DECREASED DEMAND.
Terrorist
attacks in the United States, the United Kingdom, or Israel, as well as the
United States and the United Kingdom's involvement in Iraq or in armed conflict
or political / economic events in countries where we conduct business, may
negatively impact consumers' confidence in relying on alternative communication
lines and spending in the countries where we conduct our business. Certain of
our key employees, officers and directors are residents of Israel. Accordingly,
armed conflicts between Israel and its neighbors, terrorism, political and
economic conditions in Israel directly affect the Company's business. Any such
occurrences could lead to an interruption in our services and could negatively
affect our revenues and results of operations. Moreover, the governments in
those countries might take extreme measures that could prohibit access to
alternative communication lines.
NATURAL
DISASTERS AND ACTS OF G.OD MAY RESULT IN INCREASED COSTS.
Our
wholly owned subsidiary Xfone USA, Inc. is positioned in an environment which
has a higher than average propensity to experience hurricanes. In 2005, we
suffered adverse affects to our business from Hurricane Katrina. Additionally,
our principal executive offices, which are also the headquarters of our wholly
owned subsidiaries NTS Communications, Inc. and Xfone USA, Inc., are located in
Lubbock, Texas, which is a location where tornadoes are most frequent. In the
event of another hurricane, or tornado, the cost of restructuring our
facilities, as well as the time spent in rebuilding and organizing our
infrastructure might be long and costly. There is no guarantee that we will not
be negatively affected in the future by other natural disasters, hurricanes,
tornadoes or acts of G.od.
IF
WE ARE UNABLE TO OBTAIN FINANCING AS WE GROW OUR BUSINESS, WE MAY HAVE TO
CURTAIL OUR PLANS AND THE VALUE OF YOUR INVESTMENT MAY BE NEGATIVELY
AFFECTED.
Our
future business will involve substantial costs, primarily those costs associated
with capital expenses associated with network deployment and upgrades,
marketing, business development, and possible mergers and acquisitions. If our
revenues are insufficient to fund our operations as we grow our business, we may
need traditional bank financing or financing from debt or equity offerings.
However, if we are unable to obtain financing when needed, we may be forced to
curtail our operations, which could negatively affect our revenues and potential
profitability and the value of your investment. There can be no assurance that
we will be able to obtain additional financing when needed or if available that
it will be on commercially reasonable terms.
THE
COMPANY MIGHT BE REGARDED AS A LOCAL TAX RESIDENT IN COUNTRIES OTHER THAN
THE UNITED STATES.
The
Company was incorporated in Nevada, U.S.A, and accordingly is a US tax
resident and is taxed in the US. To the best knowledge of the Company, and based
on consultancy provided by its accountants, the Company is not a tax
resident in any other country in which it conducts business (directly or
indirectly through local subsidiaries). However, there is no assurance that none
of the local tax authorities in these countries will determine that the
Company is a local tax resident, and thus we recommend that the investors
examine the tax implication of such potential classification. Any determination
by such local tax authorities could have an adverse effect on our results of
operations or the consequences of your investment in our
securities.
SHOULD
OUR AGREEMENTS WITH OUR PRINCIPAL SUPPLIERS, AT&T INC., BRITISH
TELECOMMUNICATIONS OR BEZEQ THE ISRAEL TELECOMMUNICATION
CORP. LIMITED BE CANCELLED, OUR OPERATIONS WILL BE NEGATIVELY
IMPACTED.
We are
dependent on several of our principal suppliers. However, these suppliers are
required to provide us with services according to the relevant regulations and
their licenses to operate as a telecommunications provider in the relevant
jurisdictions. Should our agreements involving our principal suppliers,
AT&T, Inc., British Telecommunications or Bezeq The Israel Telecommunication
Corp. Limited be cancelled, our operations may be negatively
affected.
WE
ARE DEPENDENT ON THE TARRIFS OF THE PRIMARY NETWORK PROVIDERS IN THE
UK
Many of
our UK customers use our services as alternatives to those provided by their
primary network supplier (e.g. BT, Vodafone, O2). Should the primary network
suppliers adversely change the charges they make on their customers for
connecting to our services, then our services will be less attractive and we
would be likely to suffer a loss of customers.
WE
MAY BE UNABLE TO ADEQUATELY COMPETE WITH OUR COMPETITORS.
The
telecommunications business is a very competitive one. Our competitors may be
able to adapt more quickly to changes in customer needs or to devote greater
resources than we can to developing and expanding our services. Such competitors
could also attempt to increase their presence in our markets by forming
strategic alliances with other competitors, by offering new or improved products
or services or by increasing their efforts to gain and retain market share
through competitive pricing. Companies which currently view our services as
complementary to their own (such as mobile network operators) may decide, where
the regulatory regime permits, to change this policy and bar their customers
from accessing our services or charge their customers a premium to access our
services. As the market for our services matures, price competition and
penetration into the market will intensify. Such competition may adversely
affect our gross profits, margins and results of operations. There can be no
assurance that we will be able to continue to compete successfully with existing
or new competitors.
OUR
MANAGEMENT DECISIONS ARE MADE BY OUR FOUNDER AND CHAIRMAN OF OUR BOARD OF
DIRECTORS, ABRAHAM KEINAN, AND OUR PRESIDENT AND CHIEF EXECUTIVE OFFICER, GUY
NISSENSON, AND OUR TREASURER, CHIEF FINANCIAL OFFICER AND PRINCIPAL ACCOUNTING
OFFICER, NIV KRIKOV; IF WE LOSE THEIR SERVICES, OUR OPERATIONS WILL BE
NEGATIVELY IMPACTED.
The
success of our business is largely dependent upon the expertise of our Chairman
of the Board, Abraham Keinan, our President, Chief Executive Officer and
Director, Guy Nissenson, and our Treasurer, Chief Financial Officer and
Principal Accounting Officer, Niv Krikov. Because Messrs Keinan, Nissenson and
Krikov are essential to our operations, you must rely on their management
decisions. We have not obtained any “key man” life insurance relating to Messrs
Keinan, Nissenson or Krikov. There is no assurance that we would be able to hire
and retain another Chairman of the Board, President/Chief Executive Officer, or
Treasurer/Chief Financial Officer/ Principal Accounting Officer with
comparable expertise. As a result, the loss of either Mr. Keinan's, Mr.
Nissenson's or Mr. Krikov’s services could have a materially adverse affect upon
our business, financial condition, and results of operation.
WE
ARE ADVERSELY AFFECTED BY THE DEVALUATION OF THE DOLLAR AGAINST THE NEW ISRAELI
SHEKEL AND COULD BE ADVERSELY AFFECTED BY THE RATE OF INFLATION IN
ISRAEL.
Substantially
all of our revenues are generated in U.S. dollars. Substantially all of our
long-term debt is incurred in NIS and linked to the CPI in Israel. As
a result, inflation in Israel and/or the devaluation of the U.S. dollar in
relation to the NIS has and may continue to have the effect of increasing the
cost in U.S. dollars of financing expenses; hence, our U.S. dollar-measured
results of operations are and may continue to be adversely
affected. Because exchange rates between the NIS and the U.S. dollar
fluctuate continuously, exchange rate fluctuations have an impact on our
profitability and period-to-period comparisons of our results of operations.
During 2008, the value of the U.S. dollar decreased in relation to the NIS by
1.14%, and the inflation rate in Israel was 3.8% and as such affected our
results of operations in 2008. If this trend continues, it will continue to
adversely affect our result of operations.
WE
ARE ADVERSELY AFFECTED BY THE DEVALUATION OF THE BRITISH POUND AGAINST THE US
DOLLAR AND EURO.
Substantially
all of our purchases of telecom ‘minutes’ by our UK operations are for
international calls, which are ultimately priced in relation to the US dollar or
the Euro. Devaluation of the British Pound in relation to these currencies will
increase our costs and decrease our margin on products where it is not possible
to pass on cost increases to customers due to the general market
environment.
OUR
MANAGEMENT HAS SIGNIFICANT CONTROL OVER STOCKHOLDER MATTERS AND THEY WILL BE
ABLE TO ELECT OUR DIRECTORS AND ACCORDINGLY CONTROL OUR
OPERATIONS.
As of the
date of this Prospectus, our Chairman of the Board, Abraham Keinan, beneficially
owns 18% of our Common Stock. Our President, Chief Executive Officer, and
Director, Guy Nissenson beneficially owns 0.61% of our Common Stock and has
significant influence over an additional 6.55% of our Common Stock, which is
owned by Campbeltown Business Ltd., an entity owned and controlled by Mr.
Nissenson and his family. In addition, certain stockholders provided Mr.
Nissenson and Mr. Keinan with irrevocable proxies representing a total of 5.59%
of our Common Stock.
In
addition, Shemer S. Schwartz, a director, beneficially owns 0.048% of our Common
Stock, and our wholly owned subsidiary, Swiftnet Limited, beneficially owns
0.71% of our Common Stock. Therefore, our management potentially may vote
31.508% of our Common Stock, without giving effect to the issuance of any shares
upon the exercise of outstanding warrants or options. As such, our management
may have control over the outcome of matters submitted to a vote of the holders
of our Common Stock, including the election of our directors (who serve on a
classified Board of Directors, with staggered terms of office), amendments to
our articles of incorporation and bylaws and approval of significant corporate
transactions. Additionally, our management may be able to delay, deter or
prevent a change in our control that might be beneficial to our other
stockholders. We need to emphasize the fact that management could make
substantial decisions that could be protected under the business judgment rule,
and not necessarily satisfy minority shareholders (for example, expanding the
territory of operation at heavy costs, or by limiting the territory of our
operations in order to save capital).
In
addition to the foregoing, our Chairman of the Board, Abraham Keinan, and our
President, Chief Executive Officer, and Director, Guy Nissenson, exercise
significant control over stockholder matters through a September 28, 2004 Voting
Agreement between Mr. Keinan, Mr. Nissenson and Campbeltown Business, Ltd., an
entity owned and controlled by Mr. Nissenson and his family. This agreement,
which is for a term of 10 years, provides that: (a) Messrs. Keinan and Nissenson
and Campbeltown Business, Ltd. agree to vote any shares of our Common Stock
controlled by them only in such manner as previously agreed by all these
parties; and (b) in the event of any disagreement regarding the manner of
voting, a party to the agreement will not vote any shares, unless all the
parties have settled the disagreement.
CERTAIN
OF OUR EXISTING CREDIT FACILITIES CONTAIN A NUMBER OF RESTRICTIONS AND
OBLIGATIONS THAT MAY LIMIT OUR FINANCIAL FLEXIBILITY.
Our
credit facilities contain a number of restrictive covenants that limit our
financial flexibility. These covenants, among other things, restrict our right
to pledge our assets, make loans or give guarantees, and engage in mergers or
consolidations. Our ability to continue to comply with these and other
obligations depends in part on the future performance of our business. There can
be no assurance that such obligations will not have a materially adverse affect
on our ability to finance our future operations.
RISKS
RELATED TO OUR COMMON STOCK
THERE
IS A LIMITED MARKET FOR OUR COMMON STOCK, AND AN ACTIVE TRADING MARKET FOR OUR
COMMON STOCK MAY NEVER DEVELOP, WHICH MAY MAKE IT DIFFICULT TO RESELL YOUR
SHARES.
Trading
in our stock has been limited and has been characterized by wide fluctuations in
trading prices, due to many factors that may have little to do with our
operations or business prospects. Therefore, shareholders should be aware that
the lack of exposure to our stock in the investment community could consequently
be reflected by a lack of market trading upon the issuance of material
information that could be perceived as disappointing or very encouraging from a
market point of view. This could result in an inability for shareholders to be
able to dispose of their shares.
THE
MARKET PRICE OF OUR COMMON STOCK MAY BE VOLATILE AND YOU MAY NOT BE ABLE TO
RESELL YOUR SHARES AT OR ABOVE THE PRICE YOU PAID FOR THEM, OR AT
ALL.
The stock
markets in general have experienced during the past few years extreme price and
volume fluctuations. The market prices of securities of technology companies
have been extremely volatile, and have experienced fluctuations that have often
been unrelated or disproportionate to the operating performance of those
companies. These broad market fluctuations could adversely affect the market
price of our Common Stock. For example, during 2003, the market price of our
Common Stock fluctuated between $0.35 and $6.00; during 2004, the market price
of our Common Stock fluctuated between $1.95 and $5.75; during 2005, the market
price fluctuated between $2.30 and $4.29; during 2006, the market price
fluctuated between $2.18 and $3.84; during 2007, the market price fluctuated
between $2.34 and $3.88; and during 2008, the market price fluctuated between
$0.57 and $3.90. During the first quarter of 2009, the market price
of our Common Stock traded on the NYSE Amex fluctuated between $0.47 and
$0.81.
The
market price of our Common Stock may continue to fluctuate substantially due to
a variety of factors, including:
·
|
any
actual or anticipated fluctuations in our or our competitors' revenues and
operating results;
|
·
|
shortfalls
in our operating results from levels forecast by us or by securities
analysts;
|
·
|
public
announcements concerning us or our
competitors;
|
·
|
the
introduction or market acceptance of new products or service offerings by
us or by our competitors;
|
·
|
changes
in product pricing policies by us or our
competitors;
|
·
|
changes
in security analysts' financial
estimates;
|
·
|
changes
in accounting principles;
|
·
|
sales
of our shares by existing shareholders;
and
|
·
|
the
loss of any of our key personnel.
|
In
addition, economic, political, and market conditions and military conflicts and,
in particular, those specifically related to Israel, may affect the market price
of our shares.
OUR
SHARES OF COMMON STOCK ARE TRADED ON MORE THAN ONE MARKET AND THIS MAY RESULT IN
PRICE VARIATIONS.
Our
shares of Common Stock are currently traded on the NYSE Amex and the Tel Aviv
Stock Exchange. Trading in our shares of Common Stock on these markets takes
place in different currencies (dollars on the NYSE Amex, and NIS on the TASE),
and at different times (resulting from different time zones, different trading
days and different public holidays in the United States and Israel). The trading
prices of our Common Stock on these two markets may differ due to these and
other factors. Any decrease in the trading price of our shares of Common Stock
on one of these markets could cause a decrease in the trading price of our
shares of Common Stock on the other market.
FUTURE
SALES OF OUR SHARES IN THE PUBLIC MARKET OR ISSUANCES OF ADDITIONAL SECURITIES
COULD CAUSE THE MARKET PRICE FOR OUR SHARES OF COMMON STOCK TO
FALL.
As of
April 3, 2009, we had 18,376,075 shares of Common Stock issued and outstanding.
In addition, we have reserved 5,489,595 shares of Common Stock for issuance
under our 2004 Stock Option Plan, 8,000,000 shares of Common Stock for issuance
under our 2007 Stock Incentive Plan, and 5,878,972 shares of Common Stock
underlying warrants. We also have a contractual obligation to issue warrants to
purchase an aggregate of 482,179 shares of our Common Stock to two former
employees of Xfone USA, Inc. If a large number of shares of our Common Stock is
sold in a short period, the price of our Common Stock would likely
decrease.
RISKS
RELATED TO OUR NON-CONVERTIBLE BONDS
WE
ARE A HOLDING AND MANAGING COMPANY AND OUR ABILITY TO MEET OUR OBLIGATIONS UNDER
THE NON-CONVERTIBLE BONDS LARGELY DEPENDS UPON THE FINANCIAL CONDITION AND
INDEBTEDNESS OF OUR OPERATING SUBSIDIARIES.
We are a
holding and managing company with no significant assets other than our interest
in our subsidiaries. Therefore, our ability to make interest and principal
payments on our non-convertible bonds largely depends upon the
future performance and the cash flow of our operating subsidiaries. In addition,
our non-convertible bonds are structurally subordinated to the indebtedness of
our subsidiaries.
WE
MAY NOT BE ABLE TO MAKE OUR DEBT PAYMENTS IN THE FUTURE.
Our
ability to meet our debt obligations will depend on whether we can successfully
implement our strategy, as well as on financial, competitive, and other factors,
including some factors that are beyond our control. If we are unable to generate
sufficient cash flow from operations to meet principal and interest payments on
our debt, we may have to refinance all or part of our indebtedness. In addition,
cash flows from our operations may be insufficient to repay in full at maturity
our non-convertible bonds, in which case our non-convertible bonds may need to
be refinanced. Our ability to refinance our indebtedness, including our
non-convertible bonds, will depend on, among other things:
·
|
our
financial condition at the time;
|
·
|
restrictions
in agreements governing our debt;
and
|
·
|
other
factors, including market conditions.
|
We cannot
ensure that any such refinancing would be possible on terms that we could accept
or that we could obtain additional financing. If refinancing will not be
possible or if additional financing will not be available, we may have to sell
our assets under circumstances that might not yield the highest prices, or
default on our debt obligations, including our non-convertible bonds, which
would permit our bond holders and holders of other outstanding indebtedness to
accelerate their maturity dates.
OUR
INDEBTEDNESS AND DEBT SERVICE OBLIGATIONS HAVE INCREASED WITH THE ISSUANCE OF
OUR NON-CONVERTIBLE BONDS IN DECEMBER 2007, WHICH MAY ADVERSELY AFFECT OUR CASH
FLOW, CASH POSITION AND SHARE PRICE.
If we are
unable to generate cash or raise additional cash financings sufficient to meet
our obligations and need to use existing cash or liquidate investments in order
to fund our obligations, we may have to delay or curtail marketing and network
development programs. Our indebtedness could have significant additional
negative consequences, including, without limitation:
·
|
requiring
the dedication of a portion of our expected cash flow to service our
indebtedness, thereby reducing the amount of our expected cash flow
available for other purposes, including funding our marketing programs and
other capital expenditures;
|
·
|
increasing
our vulnerability to general adverse economic conditions;
|
·
|
limiting
our ability to obtain additional financing;
and
|
·
|
placing
us at a possible competitive disadvantage to less leveraged competitors
and competitors that have better access to capital
resources.
|
SPECIAL
NOTE REGARDING FORWARD LOOKING
STATEMENTS
This
Prospectus contains “forward-looking statements” and information relating to our
business that are based on our beliefs as well as assumptions made by us or
based upon information currently available to us. When used in this Prospectus,
the words "anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,”
“plan,” “project,” “should” and similar expressions are intended to identify
forward-looking statements. These forward-looking statements include, but are
not limited to, statements relating to our performance in “Business” and
“Management's Discussion and Analysis of Financial Condition and Results of
Operations” in our latest Annual Report which is incorporated by reference
herein. These statements reflect our current views and assumptions with respect
to future events and are subject to risks and uncertainties. Actual and future
results and trends could differ materially from those set forth in such
statements due to various factors. Such factors include, among others: general
economic and business conditions; industry capacity; industry trends;
competition; changes in business strategy or development plans; project
performance; availability, terms, and deployment of capital; and availability of
qualified personnel. These forward-looking statements speak only as of the date
of this Prospectus. Subject at all times to relevant securities law disclosure
requirements, we expressly disclaim any obligation or undertaking to disseminate
any update or revisions to any forward-looking statement contained herein to
reflect any change in our expectations with regard thereto or any changes in
events, conditions or circumstances on which any such statement is based. In
addition, we cannot assess the impact of each factor on our business or the
extent to which any factor, or combination of factors, may cause actual results
to differ materially from those contained in any forward-looking
statements.
TAX
CONSIDERATIONS
We are
not providing any tax advice as to the acquisition, holding or disposition of
the securities offered herein. In making an investment decision, investors are
strongly encouraged to consult their own tax advisor to determine the
U.S. federal, state and any applicable foreign tax consequences relating to
their investment in our securities.
USE
OF PROCEEDS
The
Selling Stockholders will receive all proceeds from the sale of the shares of
our Common Stock in this offering. We will not receive any of the proceeds from
the sale of shares of our Common Stock by the Selling Stockholders. We will pay
all expenses (other than transfer taxes) of the Selling Stockholders in
connection with this offering.
We will
receive proceeds of up to approximately $2,933,700 from the exercise of the
stock options already granted under the 2007 Plan if and to the extent that any
such options are exercised by the Selling Stockholders.
DETERMINATION
OF OFFERING PRICE
Our
Common Stock is traded on the NYSE Amex and the TASE under the symbol “XFN”.
On April 3, 2009, the closing price of our Common Stock was $0.56 (NYSE
Amex) / 2.132 NIS (TASE).
The
Selling Stockholders may offer to sell the shares of Common Stock being offered
in this Prospectus at fixed prices, at prevailing market prices at the time of
sale, at varying prices or at negotiated prices.
The
Selling Stockholders may, from time to time, sell all or a portion of the shares
of Common Stock on any market where our Common Stock may be listed or quoted
(currently the NYSE Amex and the Tel Aviv Stock Exchange), in privately
negotiated transactions or otherwise. Such sales may be at fixed prices
prevailing at the time of sale, at prices related to the market prices or at
negotiated prices. Consequently, there is no offering price being
established for the shares. See “Plan of Distribution” below for
additional information.
As of
April 3, 2009, we had 18,376,075 shares of Common Stock issued and
outstanding or 29,520,047 shares of Common Stock issued and outstanding on
a fully diluted basis. This number includes the shares issuable upon exercise of
the options already granted to, and held by, the Selling Stockholders identified
herein. The offering by the Selling Stockholders will not have a dilutive effect
on our Common Stock.
SELLING
STOCKHOLDERS
Under our
Stock Incentive Plan, a total of 8,000,000 shares of our Common Stock are
available for issuance as or upon the exercise of options, stock awards and
performance awards to our employees, our Affiliates (which is defined in the
2007 Plan to include, among others, (i) any subsidiary of the Company, (ii) any
Parent of the Company, (iii) any corporation, or trade or business (including,
without limitation, a partnership, limited liability company or other entity)
which is directly or indirectly controlled fifty percent (50%) or more (whether
by ownership of stock, assets or an equivalent ownership interest or voting
interest) by the Company or one of its Affiliates, (iv) any other entity in
which the Company or any of its Affiliates has a material equity interest and
which is designated as an “Affiliate” by resolution of the Committee (as defined in the 2007 Plan);
and (v) any executive officer, director or ten percent (10%) shareholder of the
Company), or a consultant.
6,950,000
of the shares of Common Stock to which this reoffer prospectus relates are being
registered for reoffers and resales by the Selling Stockholders who are our
officers, directors and may be our “affiliates,” as defined in Rule 405 of
the Securities Act, who may acquire such shares upon exercise of awards granted
under the 2007 Plan. We do not know whether any of such individuals will be
granted awards under the 2007 Plan, whether any of such Selling Stockholders
will use this prospectus in connection with the offer or sale of any shares of
Common Stock, or, if this prospectus is so used, how many shares of Common Stock
will be offered or sold. The selling stockholders may resell all, a
portion, or none of the shares that they may acquire pursuant to the 2007
Plan. Pursuant to Rule 424(b) under the Securities Act, we will
supplement this prospectus with the number of shares of Common Stock, if any, to
be offered or sold by such Selling Stockholders as that information becomes
known.
In
addition, the prospectus relates to an aggregate of 1,050,000 shares of Common
Stock which are issuable upon exercise of stock options granted to the
three Selling Stockholders identified below on February 26, 2008 under the 2007
Plan, and in accordance with the terms of each selling stockholder’s respective
Employment Agreement with NTS Communications, Inc., the Company’s wholly owned
subsidiary. All stock options are currently exercisable at an exercise price of
$2.794 per share, and expire as to all shares on February 26, 2013.
The
number of shares presented as owned in this table assumes that all options are
fully exercised, and that all shares offered are sold.
In
addition, certain unnamed non-affiliates may also use this reoffer prospectus
for reoffers and resales of shares of Common Stock issuable under the 2007 Plan,
if they hold less than the lesser of 1,000 shares or 1% of the aggregate shares
of Common Stock issuable under the 2007 Plan, or 80,000 shares.
All
expenses incurred with respect to the registration of the Common Stock will be
bared by us, but we will not be obligated to pay any underwriting fees,
discounts, commissions or other expenses incurred by the Selling Stockholders in
connection with the sale of such shares.
The
following table sets forth information with respect to the maximum number of
shares of Common Stock beneficially owned by the Selling Stockholders named
below and as adjusted to give effect to the sale of the shares offered hereby.
The shares beneficially owned have been determined in accordance with rules
promulgated by the Securities and Exchange Commission, and the information is
not necessarily indicative of beneficial ownership for any other purpose. The
information in the table below is current as of the date of this Prospectus. All
information contained in the table below is based upon information provided to
us by the Selling Stockholders and we have not independently verified this
information. The Selling Stockholders are not making any representation that any
shares covered by this Prospectus will be offered for sale. The Selling
Stockholders may from time to time offer and sell pursuant to this Prospectus
any or all of the Common Stock being registered.
Except as
indicated below in the notes to the tables below, none of the Selling
Stockholders held any position or office with us, nor are any of the Selling
Stockholders associates or affiliates of any of our officers or directors.
Except as indicated below, no selling stockholder is the beneficial owner of any
additional shares of Common Stock or other equity securities issued by us or any
securities convertible into, or exercisable or exchangeable for, our equity
securities. Except as indicated below, no selling stockholder is a registered
broker-dealer or an affiliate of a broker-dealer.
For
purposes of this table, beneficial ownership is determined in accordance with
the Securities and Exchange Commission rules, and includes investment power with
respect to shares and shares owned pursuant to warrants or options exercisable
within 60 days. The number of shares presented as owned in the tables assumes
that all warrants and options are fully exercised, and the "Number of Shares
Beneficially Owned after the Offering” columns assume the sale of all shares
offered.
The
percentages of shares beneficially owned are based on 18,376,075 shares of
our Common Stock issued and outstanding as of April 3, 2009, and
is calculated by dividing the number of shares that person beneficially
owns by the sum of (a) the total number of shares outstanding on April 3, 2009,
plus (b) the number of shares such person has the right to acquire within
60 days of April 3, 2009.
We may
require the Selling Stockholders to suspend the sales of the securities
offered by this Prospectus upon the occurrence of any event that makes any
statement in this Prospectus or the related Registration Statement untrue in any
material respect or that requires the changing of statements in these documents
in order to make statements in those documents not misleading.
Name
of Selling
Stockholder
|
|
Number
of Shares Beneficially Owned Prior to the Offering
|
|
|
Percentage
of Shares Beneficially Owned Prior to the Offering
|
|
|
Number
of Shares
Being
Offered
Hereby
|
|
|
Number
of Shares to be Beneficially Owned After the Offering
|
|
|
Percentage
of Shares to be Beneficially Owned After the Offering
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barbara
Baldwin(1)
|
|
|
912,773
|
|
|
|
4.90
|
%
|
|
|
250,000
|
|
|
|
662,773
|
|
|
|
3.56
|
%
|
Brad
Worthington(2)
|
|
|
454,787
|
|
|
|
2.42
|
%
|
|
|
400,000
|
|
|
|
54,787
|
|
|
|
0.29
|
%
|
Jerry
Hoover(3)
|
|
|
411,928
|
|
|
|
2.19
|
%
|
|
|
400,000
|
|
|
|
11,928
|
|
|
|
0.06
|
%
|
Total:
|
|
|
1,779,488
|
|
|
|
9.16
|
%
|
|
|
1,050,000
|
|
|
|
729,488
|
|
|
|
3.76
|
%
|
(1)
|
Ms.
Baldwin is the President, Chief Executive Officer and Director of Xfone
USA, Inc. and NTS Communications, Inc., two of the Company’s wholly owned
subsidiaries. The address for Ms. Baldwin is 6005 88th Street, Lubbock,
TX 79424, U.S.A.
|
(2)
|
Mr.
Worthington is an Executive Vice President and Chief Operating Officer of
NTS Communications, Inc. The address for Mr. Worthington is 3517 158th
Street, Lubbock, TX 79423, U.S.A.
|
(3)
|
Mr.
Hoover is an Executive Vice President, and Chief Financial Officer of NTS
Communications, Inc. The address for Mr. Hoover is 4818 100th Street,
Lubbock, TX 79424, U.S.A.
|
The
Selling Stockholders may, from time to time, sell all or a portion of the shares
of Common Stock on any market where our Common Stock may be listed or quoted
(currently the NYSE Amex and the Tel Aviv Stock Exchange), in privately
negotiated transactions or otherwise. Such sales may be at fixed prices
prevailing at the time of sale, at prices related to the market prices or at
negotiated prices. The shares of Common Stock being offered for resale by this
Prospectus may be sold by the selling security holders by one or more of the
following methods:
·
|
block
trades in which the broker or dealer so engaged will attempt to sell the
shares of Common Stock as agent but may position and resell a portion of
the block as principal to facilitate the
transaction;
|
·
|
purchases
by broker or dealer as principal and resale by the broker or dealer for
its account pursuant to this
Prospectus;
|
·
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
·
|
ordinary
brokerage transactions and transactions in which the broker solicits
purchasers;
|
·
|
privately
negotiated transactions;
|
·
|
market
sales (both long and short to the extent permitted under the federal
securities laws);
|
·
|
at
the market to or through market makers or into an existing market for the
shares;
|
·
|
through
transactions in options, swaps or other derivatives (whether exchange
listed or otherwise); and
|
·
|
a
combination of any of the aforementioned methods of
sale.
|
In the
event of the transfer by any of the Selling Stockholders of its options or
shares of Common Stock to any pledgee, donee or other transferee, we will amend
this Prospectus and the Registration Statement of which this Prospectus forms a
part by the filing of a prospectus supplement or a post-effective amendment in
order to have the pledgee, donee or other transferee in place of the Selling
Stockholder who has transferred his, her or its shares.
In
effecting sales, brokers and dealers engaged by the Selling Stockholders may
arrange for other brokers or dealers to participate. Brokers or dealers may
receive commissions or discounts from a selling stockholder or, if any of the
broker-dealers act as an agent for the purchaser of such shares, from a
purchaser in amounts to be negotiated which are not expected to exceed those
customary in the types of transactions involved. Broker-dealers may agree with a
selling stockholder to sell a specified number of the shares of Common Stock at
a stipulated price per share. Such an agreement may also require the
broker-dealer to purchase as principal any unsold shares of Common Stock at the
price required to fulfill the broker-dealer commitment to the selling
stockholder if such broker-dealer is unable to sell the shares on behalf of the
selling stockholder. Broker-dealers who acquire shares of Common Stock as
principal may thereafter resell the shares of Common Stock from time to time in
transactions which may involve block transactions and sales to and through other
broker-dealers, including transactions of the nature described above. Such sales
by a broker-dealer could be at prices and on terms then prevailing at the time
of sale, at prices related to the then-current market price or in negotiated
transactions. In connection with such resales, the broker-dealer may pay to or
receive from the purchasers of the shares commissions as described
above.
The
Selling Stockholders and any broker-dealers or agents that participate with the
Selling Stockholders in the sale of the shares of Common Stock may be deemed to
be “underwriters” within the meaning of the Securities Act in connection with
these sales. In that event, any commissions received by the broker-dealers or
agents and any profit on the resale of the shares of Common Stock purchased by
them may be deemed to be underwriting commissions or discounts under the
Securities Act.
From time
to time, any of the Selling Stockholders may pledge shares of Common Stock
pursuant to the margin provisions of customer agreements with brokers. Upon a
default by a selling stockholder, their broker may offer and sell the pledged
shares of Common Stock from time to time. Upon a sale of the shares of Common
Stock, the Selling Stockholders intend to comply with the Prospectus delivery
requirements under the Securities Act by delivering a Prospectus to each
purchaser in the transaction. We intend to file any amendments or other
necessary documents in compliance with the Securities Act which may be required
in the event any of the Selling Stockholders defaults under any customer
agreement with brokers.
To the
extent required under the Securities Act, a post effective amendment to this
Registration Statement will be filed disclosing the name of any broker-dealers,
the number of shares of Common Stock involved, the price at which the Common
Stock is to be sold, the commissions paid or discounts or concessions allowed to
such broker-dealers, where applicable, that such broker-dealers did not conduct
any investigation to verify the information set out or incorporated by reference
in this Prospectus and other facts material to the transaction. We and the
Selling Stockholders will be subject to applicable provisions of the Exchange
Act and the rules and regulations under it, including, without limitation, Rule
10b-5 and, insofar as a selling stockholder is a distribution participant and
we, under certain circumstances, may be a distribution participant, under
Regulation M. All of the foregoing may affect the marketability of the Common
Stock.
Any
commissions, discounts or other fees payable to brokers or dealers in connection
with any sale of the shares of Common Stock will be borne by the Selling
Stockholders, the purchasers participating in such transaction, or
both.
Any
shares of Common Stock covered by this Prospectus which qualify for sale
pursuant to Rule 144 under the Securities Act, as amended, may be sold under
Rule 144 rather than pursuant to this Prospectus.
Capitalization
Common
Stock:
Authorized
- 75,000,000 (par value $0.001)
Issued
and outstanding as of April 3, 2009 - 18,376,075
Preferred
Stock:
Authorized
/ Issued and outstanding as of April 3, 2009 - None
Pursuant
to a resolution of the Board of Directors of the Company dated July 11,
2006, in connection with the listing of the shares of the Company
on the TASE, the Company agreed that as long as its shares are
listed for trading on the TASE, the Company shall not create,
issue or allot shares of a class other than the class listed for
trading on the TASE, other than allotments or issuances that
comply with the requirements of Section 46B(A)(1) of
the Israel Securities Law, 1968.
Treasury
Stock:
Issued
and outstanding as of April 3, 2009 - None
Warrants:
Issued
and outstanding as of April 3, 2009 - 5,878,972
Each
issued and outstanding warrant is exercisable into one share of Common Stock at
an exercise price range of $2.86 - $6.80 per share.
The
Company has a contractual obligation to issue warrants to purchase an aggregate
of 482,179 shares of its Common Stock to two former employees of Xfone USA, Inc.
450,000 of such warrants are to be exercisable at $3.63 per share, 3,725 of such
warrants are to be exercisable at $3.04 per share, and the remaining 28,454
shares are to be exercisable at $3.26 per share. The issuance of these warrants
was subject to the approval of the NYSE Amex, the TASE and/or any other
applicable exchange or market where our Common Stock is traded. We
received approval from the NYSE Amex on March 27, 2009. Approval from the TASE
had been granted on August 27, 2008, but expired on February 25, 2009. The
issuance of these warrants is pending our receipt of new approval from the
TASE.
Options under the Company's
2004 Stock Option Plan:
Authorized
- 5,500,000
Granted
and outstanding as of April 3, 2009 - 4,215,000
Each
granted and outstanding option is exercisable into one share of Common Stock at
an exercise price range of $3.146 - $3.50 per
share.
Plan
Administrator (Pool + Terminated) as of April 3, 2009 - 1,274,595
Exercised
as of April 3, 2009 - 10,405
Options under the Company's
2007 Stock Incentive Plan:
Authorized
- 8,000,000
Granted
and outstanding as of April 3, 2009 - 1,050,000
Each
granted and outstanding option is exercisable into one share of Common Stock at
an exercise price of $2.794 per share.
The
Company has a contractual obligation to issue options to purchase an aggregate
of 300,000 shares of Common Stock to Roni Haliva, the General Manager of Xfone
018 Ltd, pursuant to his employment contract dated August 26, 2007, at an
exercise price of $3.50 per share, of which (i) options to purchase 75,000
shares will be exercisable after 12 months have elapsed from the commencement of
his employment, but not before the qualifying date (the “First Exercise Date”);
and (ii) options to purchase 18,750 shares will be exercisable at the end of
every 3 month period, beginning after 3 months have elapsed from the First
Exercise Date. These options will expire 120 days after termination of Mr.
Haliva’s employment with Xfone 018 Ltd. As of April 3, 2009 the options have not
yet been granted.
Pursuant
to a Board of Directors resolution dated May 9, 2007, the Company has a
contractual obligation to issue options to purchase a certain amount of shares
of common stock to Niv Krikov, the Treasurer, Chief Financial Officer and
Principal Accounting Officer of the Company, as to be recommended by the Chief
Executive Officer of the Company and approved of the Board of
Directors.
Plan
Administrator (Pool + Terminated) as of April 3, 2009 - 6,950,000
Exercised
as of April 3, 2009 - None
Series A
Bonds:
On
December 13, 2007 (the “Date of Issuance”), the Company accepted offers, for the
issuance of securities to Israeli institutional investors, for total gross
proceeds of NIS 100,382,100 (approximately $25,562,032, based on the exchange
rate as of December 13, 2007) par value non-convertible bonds (Series A) (the
“Bonds”). The Bonds were issued for an amount equal to their par
value.
The
Bonds accrue annual interest that is paid semi-annually on the 1st of June
and on the 1st of December of every year from 2008 until 2015 (inclusive). The
principal of the Bonds is repaid in eight equal annual payments on the 1st of
December of every year from 2008 until 2015 (inclusive). The principal and
interest of the Bonds are linked to the Israeli Consumer Price
Index.
On
November 4, 2008, the Company filed a public prospectus (the “Prospectus”) with
the Israel Securities Authority (the “ISA”) and the Tel Aviv Stock Exchange
("TASE") for listing of the Bonds for trading on the TASE. On November 11,
2008 (the “Date of Listing”), the Bonds commenced trading on the TASE. From the
Date of Issuance until the Date of Listing, the Bonds accrued annual
interest at a rate of 9%. As of the Date of Listing, the interest rate for the
unpaid balance of the Bonds was reduced by 1% to an annual interest rate of
8%
The Bonds
may only be traded in Israel. The Bonds were rated A3 by Midroog Limited,
an Israeli rating company which is a subsidiary of Moody’s Investor Services. On
February 19, 2009, Midroog filed its annual monitoring report (the “Monitoring
Report”) with the Tel-Aviv Stock Exchange. According to the Monitoring Report,
Midroog’s rating committee reaffirmed the A3 rating assigned to the Bonds.
However, the rating committee decided on a negative outlook on the rating of the
Bonds, largely, but not exclusively, due to the increase of the risk level in
the business environment in which the Company operates, resulting from the
increasing recession in the United States and the threat it poses on the
Company's business, since the Company’s core activity is based in the U.S.
While the Monitoring Report recognizes that the Company shows relative
stability in its financial results and adherence to its expected cash flow
coverage ratios, it cites the Company s currency exposure resulting from the New
Israeli Shekel index-linked bonds in relation to the U.S. dollar, which is the
Company’s major activity currency.
As of
April 3, 2009, the principal balance of the Bonds (adjusted to the CPI) was NIS
91,495,342 (approximately $ 22,180,689).
Dividends
No cash
dividend was declared in 2007, 2008 or through the date of this
Prospectus.
Description
of Rights and Liabilities of Common Stockholders
Dividend Rights - The
holders of outstanding shares of Common Stock are entitled to receive dividends
out of assets legally available therefore at such times and in such amounts as
the board of directors of the Company may from time to time
determine.
Voting Rights - Each
holder of the Company's Common Stock is entitled to one vote for each share held
on record on all matters submitted to the vote of stockholders, including the
election of directors. All voting is non-cumulative, which means that the holder
of more than fifty percent (50%) of the shares voting for the election of the
directors can elect all the directors. The board of directors may issue shares
for consideration of previously authorized but un-issued Common Stock without
future stockholder action.
Classification of Board of
Directors – On October 25, 2007, the Board adopted amendments to the
Company’s Bylaws in order to, among other things, provide that the Board shall
be comprised of not less than two (2), and no more than eight (8) directors, and
to create a classified board by dividing the Board’s membership into three
classes: Class A (three (3) directors), Class B (three (3) directors) and Class
C (two (2) directors). On December 17, 2007, the Company’s
stockholders re-elected the eight directors then serving to Classes A, B and C
created on October 25, 2007, to serve until re-elected or the election and
qualification of their successors, or until their earlier resignation, removal
or death. The three classes had staggered terms of office and in
accordance therewith, the Class A directors would serve for one year, and then
would be up for re-election for a three-year term at the 2008 Annual Meeting of
Stockholders, the directors serving in Class B of the Board would serve for two
years, and then would be up for re-election for a three-year term at the 2009
Annual Meeting of Stockholders, and the directors serving in Class C of the
Board would serve for three years, and then would be up for re-election for
another three-year term at the 2010 Annual Meeting of Stockholders.
Subsequently, the Board of Directors re-evaluated the structure of the Board,
and felt that it would be in the best interests of the Company and its
stockholders if each director served for a one-year term only. Accordingly, on
January 15, 2009, the Board of Directors approved and adopted the Company’s
Reamended and Restated Bylaws (the “2009 Amended Bylaws”), which, among other
things, de-classified the Board from its previous 3-class structure. The 2009
Amended Bylaws provided that each director elected or re-elected at an Annual
Meeting of Stockholders would serve until the next Annual Meeting, except for
Abraham Keinan, Guy Nissenson and Shemer Shimon Schwarz, who were re-elected at
the Company’s 2008 Annual Meeting of Stockholders as Class A directors in
accordance with the previous classified structure, and will therefore next stand
for re-election at the 2011 Annual Meeting of Stockholders. The 2009 Amended
Bylaws also increased the Board size to be comprised of not less than two (2)
and no more than ten (10) directors.
Except as
set forth above, directors are elected at the annual meeting of stockholders by
a plurality of votes and a separate vote for the election and/or re-election of
directors shall be held at each annual meeting for each directorship having
nominees for election and/or re-election at such annual
meeting.
Liquidation Rights -
Upon liquidation, the holders of the Common Stock are entitled to receive pro
rata all of the assets of the Company available for distribution to such
holders.
Preemptive Rights -
Holders of Common Stock are not entitled to preemptive rights.
Redemption rights -
No redemption rights exist for shares of Common Stock.
Sinking Fund
Provisions - No sinking fund provisions exist.
Further Liability for
Calls - No shares of Common Stock are subject to further call or
assessment by the Company.
Potential Liabilities of
Common Stockholders to State and Local Authorities - No material
potential liabilities are anticipated to be imposed on stockholders under state
statues. Certain Nevada regulations, however, require regulation of beneficial
owners of more than 5% of the voting securities. Stockholders that fall into
this category, therefore, may be subject to fines in circumstances where
non-compliance with these regulations is established.
The
validity of the issuance of the Common Stock offered hereby will be passed upon
for us by Gersten Savage LLP, at 600 Lexington Avenue, New York, New
York 10022.
EXPERTS
Our
consolidated balance sheets as of December 31, 2007 and 2008 and the related
consolidated statements of operations, stockholders' equity and cash flows for
the years then ended included in this Prospectus are in reliance on the report
of Stark Winter Schenkein & Co., LLP, independent registered public
accounting firm, given on the authority of that firm as experts in accounting
and auditing.
INTERESTS
OF NAMES EXPERTS AND COUNSEL
No expert
or counsel named in this prospectus as having prepared or certified any part of
this prospectus or having given an opinion upon the validity of the securities
being registered or upon other legal matters in connection with the registration
or offering of the Common Stock was employed on a contingency basis or had, or
is to receive, in connection with the offering, a substantial interest, directly
or indirectly, in the Company, nor was any such person connected with the
Company as a promoter, managing or principal underwriter, voting trustee,
director, officer or employee.
TRANSFER
AGENT
Our
transfer agent is Transfer Online, Inc., located at 317 SW Alder Street, 2nd
Floor Portland, OR 97204.
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 (the
“Act”) may be permitted to directors, officers and controlling persons of
the small business issuer pursuant to the foregoing provisions, or otherwise,
the Company 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.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The
following documents we have filed with the Commission are hereby incorporated by
reference:
(a)
|
our
Annual Report on Form 10-K, containing audited financial statements for
the fiscal year ended December 31, 2008, filed with the Commission on
April 1, 2009;
|
(b)
|
our
Current Report on Form 8-K dated January 15, 2009, filed with the
Commission on January 16, 2009;
|
(c)
|
our
Current Report on Form 8-K dated February 19, 2009, filed with the
Commission on February 19, 2009;
|
(d)
|
our
Current Report on Form 8-K dated March 17, 2009, filed with the Commission
on March 17, 2009;
|
(e)
|
our
Current Report on Form 8-K dated April 1, 2009, filed with the Commission
on April 1, 2009;
|
(f)
|
a
description of the our Common Stock, par value $0.001 per share, contained
in the Registration Statement on Form 8A filed with the Commission on June
3, 2005, filed by the Registrant to register the securities under the
Securities Act, including all amendments filed for the purpose of updating
such securities’ description; and
|
(g)
|
our
Definitive Proxy Statement on Schedule 14A, filed with the Commission on
November 10, 2008.
|
Any
statement contained in a document incorporated, or deemed to be incorporated, by
reference in this Registration Statement shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained in this Registration Statement or incorporated by reference,
or in any other subsequently filed document that also is or is deemed to be
incorporated by reference, modifies or supersedes the statement. Any statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Registration Statement.
In
addition, all documents we subsequently file pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be a part hereof from the date of filing of such
documents.
You may
request a copy of these filings at no cost, by writing or telephoning us at the
following address or telephone number:
Xfone,
Inc.
5307 W
Loop 289,
Lubbock,
TX 79414, USA
Attn:
Alon Reisser
806.771.5212
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
We have
filed with the Securities and Exchange Commission under the Securities Act of
1933 a Registration Statement on Form S-8, of which this Prospectus forms a
part, with respect to the shares being offered in this offering. This Prospectus
does not contain all of the information set forth in the Registration Statement,
certain items of which are omitted in accordance with the rules and regulations
of the Securities and Exchange Commission. The omitted information may be
inspected and copied at the Public Reference Room maintained by the Securities
and Exchange Commission at 100 F. Street, N.E., Washington, D.C. 20549. You
can obtain information about operation of the Public Reference Room by calling
the Securities and Exchange Commission at 1-800-SEC-0330.
In
addition, we are a reporting company and file annual, quarterly and current
reports, proxy statements and other information with the SEC. Our SEC filings
(File No. 001-32521) are available to the public over the Internet at the
SEC’s web site at www.sec.gov, and at our web site at www.xfone.com. You may
also read and copy any document we file at the SEC’s Public Reference
Room. Copies of such material can be obtained from the Public
Reference Room at prescribed rates.
Statements
contained in this Prospectus as to the contents of any contract or other
document filed as an exhibit to the Registration Statement are not necessarily
complete and in each instance reference is made to the copy of the document
filed as an exhibit to the Registration Statement, each statement made in this
Prospectus relating to such documents being qualified in all respect by such
reference. For further information with respect to us and the securities being
offered hereby, reference is hereby made to the Registration Statement,
including the exhibits thereto.
Dealer
Prospectus Delivery Obligation
You
should rely only on the information incorporated by reference or contained in
this Prospectus. We have not authorized any dealer, salesperson or other person
to give you different information. This Prospectus does not constitute an offer
to sell nor are they seeking an offer to buy the securities referred to in this
Prospectus in any jurisdiction where the offer or sale is not permitted. The
information contained in this Prospectus and the documents incorporated by
reference are correct only as of the date shown on the cover page of these
documents, regardless of the time of the delivery of these documents or any sale
of the securities referred to in this Prospectus.
8,000,000
Shares
of
Common
Stock
PROSPECTUS
April
8, 2009
PART
II
INFORMATION
REQUIRED IN THE REGISTRATION STATEMENT
Item
3.
|
Incorporation
of Documents by
Reference.
|
The
following documents we have filed with the Commission are hereby incorporated by
reference:
(h)
|
our
Annual Report on Form 10-K, containing audited financial statements for
the fiscal year ended December 31, 2008, filed with the Commission on
April 1, 2009;
|
(i)
|
our
Current Report on Form 8-K dated January 15, 2009, filed with the
Commission on January 16, 2009;
|
(j)
|
our
Current Report on Form 8-K dated February 19, 2009, filed with the
Commission on February 19, 2009;
|
(k)
|
our
Current Report on Form 8-K dated March 17, 2009, filed with the Commission
on March 17, 2009;
|
(l)
|
our
Current Report on Form 8-K dated April 1, 2009, filed with the Commission
on April 1, 2009;
|
(m)
|
a
description of the our Common Stock, par value $0.001 per share, contained
in the Registration Statement on Form 8A filed with the Commission on June
3, 2005, filed by the Registrant to register the securities under the
Securities Act, including all amendments filed for the purpose of updating
such securities’ description; and
|
(n)
|
our
Definitive Proxy Statement on Schedule 14A, filed with the Commission on
November 10, 2008.
|
Any
statement contained in a document incorporated, or deemed to be incorporated, by
reference in this Registration Statement shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained in this Registration Statement or incorporated by reference,
or in any other subsequently filed document that also is or is deemed to be
incorporated by reference, modifies or supersedes the statement. Any statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Registration Statement.
In
addition, all documents we subsequently file pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be a part hereof from the date of filing of such
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.
|
The
Nevada Revised Statutes (“NRS”)
Under
Nevada law, a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses, including attorneys' fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with the action, suit or proceeding if he:
(a) Is
not liable pursuant to NRS 78.138; or
(b) Acted
in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful.
The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person is liable pursuant to NRS 78.138 or
did not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the corporation, or that, with respect
to any criminal action or proceeding, he had reasonable cause to believe that
his conduct was unlawful.
Under our
Bylaws, the corporation shall indemnify any individual made a party to a
proceeding because he is or was an officer, director, employee or agent of the
corporation against liability incurred in the proceeding, all pursuant to and
consistent with the provisions of NRS 78.751, as amended from time to
time.
The
expenses of officers and directors incurred in defending a civil or criminal
action, suit or proceeding shall be paid by the corporation as they are incurred
and in advance of the final deposition of the action, suit or proceeding, but
only after receipt by the corporation of an undertaking by or on behalf of the
officer or director on terms set by the Board of Directors, to repay the
expenses advanced if it is ultimately determined by a court of competent
jurisdiction that he is not entitled to be indemnified by the
corporation.
The
indemnification permitted herein is intended to be to the fullest extent
permissible under the laws of the State of Nevada, and any amendments
thereto.
The
Company's Bylaws
Article 7
of our Bylaws provides that subject to the laws of the State of Nevada, we shall
indemnify any person against liabilities and other expenses incurred as the
result of defending or administering any pending or anticipated legal issue in
connection with service to the Company, if it is determined by the Board that
such person acted in good faith and in a manner which he reasonably believed was
in the best interest of the Company.
Indemnification
Agreements
Following
a March 29, 2006 resolution of the Board of Directors of the Company,
the Company has entered into indemnification agreements with its Directors
and Officers.
Disclosure
of Commission Position of Indemnification for Securities Act
Liabilities
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 (the
“Act”) may be permitted to directors, officers and controlling persons of
the small business issuer pursuant to the foregoing provisions, or otherwise,
the Company 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.
Not
applicable.
|
|
|
|
5.1
|
Opinion
of Gersten Savage LLP.
|
|
|
|
|
23.3
|
Consent
of Gersten Savage LLP (incorporated by reference to
Exhibit 5.1).
|
24.1
|
Power
of Attorney (contained on the signature page of this Registration
Statement).
|
(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 (the “Securities Act”);
|
(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) under the Securities Act 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;
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;
|
provided,
however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or section 15(d) of the
Securities Exchange Act of 1934 (the “Exchange Act”) that are incorporated by
reference in the registration statement.
(2)
|
That,
for the purpose of determining any liability under the Securities Act 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, each filing of the registrant’s
annual report pursuant to Section 13(a) or Section 15(d) of the Exchange
Act (and where applicable, each filing of an employee benefit plan’s
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering
thereof.
|
(c)
|
Insofar
as indemnification for liabilities arising under the Securities Act, may
be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing previsions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities
Act, and is therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by 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 Securities Act and will be governed by the final adjudication of
such issue.
|
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 of
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 of
London, United Kingdom, on April 8, 2009.
|
XFONE, INC. |
|
|
|
|
|
|
By:
|
/s/
Guy Nissenson |
|
|
|
Guy
Nissenson |
|
|
|
President,
Chief Executive Officer and Director |
|
|
|
|
|
POWER
OF ATTORNEY
Each
person whose signature appears below hereby constitutes and appoints Guy
Nissenson, as such person’s true and lawful attorney-in-fact and agent, with
full powers of substitution and re-substitution, for such person and in such
person’s name, place and stead, in any and all capacities, to sign any or all
amendments (including post effective amendments) to this Registration Statement,
and to file the same, with all exhibits thereto, and other 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 or necessary to be done in and about the
premises, as fully to all intents and purposes as such person might or could do
in person, hereby ratifying and confirming all that said attorney-in-fact and
agent or his substitute or substitutes, may lawfully do or cause to be done by
virtue thereof.
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 date
indicated.
|
|
|
|
|
|
/s/
Abraham Keinan
|
Chairman
of the Board
|
April
8, 2009
|
Abraham
Keinan
|
|
|
|
|
/s/Guy
Nissenson
|
President,
Chief Executive Officer and Director
|
|
Guy
Nissenson
|
|
|
|
|
/s/
Itzhak Almog
|
Director
and Chairman of the Audit Committee and the Nominating
Committee
|
|
Itzhak
Almog
|
|
|
|
|
/s/Eyal
J. Harish
|
Director
|
|
Eyal
J. Harish
|
|
|
|
|
|
/s/
Israel Singer
|
Director
and member of the Audit Committee
|
|
Israel
Singer
|
|
|
|
|
/s/
Niv Krikov
|
Treasurer,
Chief Financial Officer and Principal Accounting Officer
|
|
Niv
Krikov
|
|
|
|
|
|
5.1
|
Opinion
of Gersten Savage LLP.
|
|
|
|
|
23.3
|
Consent
of Gersten Savage LLP (incorporated by reference to
Exhibit 5.1).
|
24.1
|
Power
of Attorney (contained on the signature page of this Registration
Statement).
|