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ACT Teleconferencing, Inc. – ‘424B4’ on 6/8/00

On: Thursday, 6/8/00, at 5:19pm ET · Accession #: 912057-0-27846 · File #: 333-32156

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 6/08/00  ACT Teleconferencing, Inc.        424B4                  1:224K                                   Merrill Corp/FA

Prospectus — Rule 424(b)(4)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B4       Prospectus                                            72    358K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Anti-Takeover Provisions Audio conferencing services Business Capitalization Cash and cash equivalents Certain Transactions Conferencing Services Cost of sales Description of Securities Dilution Distribution Dividend Policy Elimination of Director Liability Executive Compensation Experts Forward-Looking Statements Gross profit Indemnification of Officers and Directors Interest expense Legal Matters Long-Lived Assets Management Management's Discussion and Analysis of Financial Condition and Results of Operations Minority interest Net income before taxes and minority interest Net revenues Offering, The Preferred stock Price Range of Common Stock Principal Stockholders Prospectus Summary Report of Independent Auditors Risk Factors Selected Consolidated Financial Data Selling, general and administrative expense Share Rights Plan Shares Eligible for Future Sale Summary Consolidated Financial Data Table of Contents The offering Transfer Agent and Warrant Agent Use of Proceeds Where You Can Find More Information
1	1st Page - Filing Submission
2	Table of Contents
3	Prospectus Summary
5	The offering
6	Summary Consolidated Financial Data
7	Risk Factors
12	Forward-Looking Statements
"	Use of Proceeds
13	Price Range of Common Stock
"	Dividend Policy
14	Capitalization
15	Dilution
16	Selected Consolidated Financial Data
17	Management's Discussion and Analysis of Financial Condition and Results of Operations
18	Cost of sales
"	Net revenues
19	Gross profit
"	Selling, general and administrative expense
"	Interest expense
"	Minority interest
21	Conferencing Services
22	Net income before taxes and minority interest
24	Business
27	Audio conferencing services
34	Management
36	Executive Compensation
39	Principal Stockholders
40	Certain Transactions
42	Description of Securities
"	Preferred stock
44	Anti-Takeover Provisions
45	Share Rights Plan
46	Shares Eligible for Future Sale
47	Distribution
49	Elimination of Director Liability
"	Indemnification of Officers and Directors
50	Where You Can Find More Information
"	Legal Matters
"	Experts
"	Transfer Agent and Warrant Agent
52	Report of Independent Auditors
58	Long-Lived Assets
"	Cash and cash equivalents

424B4 1st Page of 72 TOC ↑Top Previous Next ↓Bottom Just 1st
Filed Pursuant to Rule 424(b)(4)
Registration Nos. 333-32156
and 333-38854

800,000 Shares of Common Stock
400,000 Warrants
400,000 Warrant Shares

------------

[Logo]

This is a public offering by ACT Teleconferencing, Inc. of 800,000
shares of common stock, 400,000 five year warrants to purchase one share of
common stock, and 400,000 warrant shares issuable upon the exercise of the
warrants. We will issue the shares and warrants separately and will issue one
warrant for each two shares of common stock. Each warrant will enable the
holder to purchase one share of common stock at 110 per cent of the closing
bid price of our common stock on May 23, 2000.

Our common stock is quoted on the Nasdaq Small Cap Market under the
symbol ACTT. On May 24, 2000, the last reported sale price of our common
stock was $5.6875 per share. This offering was priced on May 25, 2000.
Currently, there is no market for the warrants.

This is a best efforts offering. We may terminate the offering
and withdraw any unsold shares and warrants in our discretion.

-----------

Investing in our common stock involves risks. See "Risk Factors" on Page 8.

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PLACEMENT
AGENT
PRICE TO PUBLIC COMMISSIONS PROCEEDS TO ACT(1)

----------------------------------------------------------------------------------------------------------------------

Per share of common stock and one warrant for each
four shares of common stock........................ $5.00 $0.35 $4.65

----------------------------------------------------------------------------------------------------------------------

Total................................................. $4,000,000 $280,000 $3,720,000

-------------------
(1) Plus proceeds from the sale of the warrant shares upon exercise of the
warrants, to the extent exercised.

Delivery of the shares of common stock and the warrants will be made as
soon as is practicable.

Neither the Securities 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.

-----------

JOHN G. KINNARD AND COMPANY, INCORPORATED

-----------

This prospectus is dated June 9, 2000

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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS.
WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM
THAT CONTAINED IN THIS PROSPECTUS. WE ARE OFFERING TO SELL, AND SEEKING OFFERS
TO BUY, SHARES OF COMMON STOCK ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE
PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS OF
THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS
PROSPECTUS OR OF ANY SALE OF OUR COMMON STOCK.

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TABLE OF CONTENTS

PAGE
----

PROSPECTUS SUMMARY.............................................................................. 3
SUMMARY CONSOLIDATED FINANCIAL DATA............................................................. 6
RISK FACTORS.................................................................................... 7
FORWARD-LOOKING STATEMENTS...................................................................... 12
USE OF PROCEEDS................................................................................. 12
PRICE RANGE OF COMMON STOCK..................................................................... 13
DIVIDEND POLICY................................................................................. 13
CAPITALIZATION.................................................................................. 14
DILUTION........................................................................................ 15
SELECTED CONSOLIDATED FINANCIAL DATA............................................................ 16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS........... 17
BUSINESS........................................................................................ 24
MANAGEMENT...................................................................................... 34
EXECUTIVE COMPENSATION.......................................................................... 36
PRINCIPAL STOCKHOLDERS.......................................................................... 39
CERTAIN TRANSACTIONS............................................................................ 40
DESCRIPTION OF SECURITIES....................................................................... 42
SHARES ELIGIBLE FOR FUTURE SALE................................................................. 46
DISTRIBUTION.................................................................................... 47
ELIMINATION OF DIRECTOR LIABILITY............................................................... 49
INDEMNIFICATION OF OFFICERS AND DIRECTORS....................................................... 49
WHERE YOU CAN FIND MORE INFORMATION............................................................. 50
LEGAL MATTERS................................................................................... 50
EXPERTS......................................................................................... 50
TRANSFER AGENT AND WARRANT AGENT................................................................ 50
TABLE OF CONTENTS TO CONSOLIDATED FINANCIAL STATEMENTS.......................................... F-1

-----------

In this prospectus, "ACT," "we," "us," and "our" refer to ACT
Teleconferencing, Inc., a Colorado corporation.

Our logo and the names of our products and services mentioned in this
prospectus are either trademarks or servicemarks that we own. Each trademark,
trade name, or service mark of any other company appearing in this prospectus
belongs to its holder.

424B4 3rd Page of 72 TOC 1st Previous Next ↓Bottom Just 3rd
PROSPECTUS SUMMARY

THIS SUMMARY HIGHLIGHTS ONLY SELECTED INFORMATION CONTAINED ELSEWHERE
IN THIS PROSPECTUS. IT DOES NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT
TO YOU BEFORE INVESTING IN OUR COMMON STOCK. TO UNDERSTAND THIS OFFERING FULLY,
YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY, INCLUDING THE RISK FACTORS AND
FINANCIAL STATEMENTS.

ACT Teleconferencing, Inc. is a leading full service provider of audio,
video, data, and Internet-based conferencing services to businesses and
organizations in North America, Europe, and Asia. Our conferencing services
enable our clients to conduct electronic meetings efficiently and cost
effectively by linking multiple participants in geographically dispersed
locations.

Currently, we have 11 operations centers and 13 sales offices in
Australia, Belgium, Canada, France, Germany, Hong Kong, the Netherlands, the
United Kingdom, and the United States. Our global presence and the rapid growth
in the conferencing services market have allowed us to build a quality client
base ranging from Fortune 500 companies to small business enterprises. Our
primary focus is on providing high value-added conferencing services to
organizations in information-intensive industries, such as accounting firms,
consulting firms, investment banks, high tech companies, law firms, investor
relations firms, and other multinational companies. Our customers include
premier names such as Ernst & Young, Concert Global Networks, Industrial Bank of
Japan, Philips Electronics, KLM, and British Petroleum.

OUR BUSINESS

Our services are designed to meet the growing teleconferencing needs of
a broad range of customers across a diverse range of information-intensive
industries. We provide services to clients on a global basis while aiming to
deliver unsurpassed excellence in quality of service. We use state-of-the-art
conferencing technology that allows us to accommodate as many as 1,000
participants in conference calls or Internet presentations at a level of quality
consistent with the highest business standards. We purchase best of class
equipment and services from leading suppliers, allowing us to deploy the latest
available technology.

We believe that our extensive range of value-added conferencing
services, combined with our global presence and emphasis on superior customer
service, provides significant competitive advantages that have enabled us to
become the provider of choice for numerous high volume users of teleconferencing
services. Our global presence enables us to serve our clients by operating in
local time zones, providing local language service, and staffing our operations
centers with country nationals. Attending to the global needs of our customers
has allowed us to grow from approximately 20,000 conferences in 1994 to over
250,000 in 1999, a compound annual growth rate exceeding 65 percent.

We market our services internationally through our direct sales force
as well as through outsourcing and co-marketing arrangements with leading
telecommunications providers, such as GTE and Concert, the worldwide joint
venture of AT&T and British Telecom. These arrangements allow our outsourcing
and co-marketing partners to market our teleconferencing services as a part of a
total telecommunications solution for their customers.

RECENT DEVELOPMENTS

During 1999, we initiated new product development efforts in
Internet-based conferencing opportunities. As a result, we recently announced:

- The acquisition of an Internet service provider to accelerate the
development and deployment of new Internet-based data
conferencing products and services for our clients.

424B4 4th Page of 72 TOC 1st Previous Next ↓Bottom Just 4th
- An outsourcing agreement with INTERVU, Inc., authorizing us to
deliver their audio, video, and data streaming services. INTERVU
is a leading provider of streaming services over the Internet.

- Successful initial testing of a groundbreaking, full duplex
Internet telephony conferencing solution using Clarent
Corporation's gateway technology. Clarent is a leading developer
of technology that enables the conversion of Internet telephony
into conventional circuit-switched service. This service offering
is scheduled for beta testing with selected major
telecommunications providers in the first half of 2000, with full
introduction scheduled later in 2000.

- In April 2000, the addition of Microsoft-Registered Trademark-
technology and promotional support for our Internet
conferencing services, successful beta testing of our Internet
telephony conferencing service, and the successful launch of
our European Internet video streaming service.

MARKET OPPORTUNITY

Industry sources indicate that the total worldwide market for all types
of traditional teleconferencing services generated $1 billion in revenues in
1998. Market trends suggest that this market will grow to over $3 billion in
2004. This excludes the potential for Internet-based voice, video, and data
conferencing, which we expect to grow at a faster rate than the growth of
traditional conferencing services. Several factors are driving the rapid growth
in the teleconferencing services market, including:

- COST AND TIME ADVANTAGES: Teleconferencing allows clients to
conduct meetings, run training sessions, and share information
when face-to-face meetings would be too costly, impractical, or
inconvenient. In today's business environment, the speed of
obtaining information, efficient communication of that
information, and accelerated high quality decision-making are
increasingly recognized as competitive advantages.

- GLOBALIZATION AND CORPORATE DECENTRALIZATION: The increasing
number of companies with international subsidiaries has created a
growing demand for teleconferencing as a means of conducting
business meetings. The growing number of telecommuters who work
from home or who travel extensively have also increased the
demand for conferencing services.

- INTERNET APPLICATIONS: The emergence of the Internet as a
reliable communications medium is expected to reduce transmission
costs, stimulate usage, and generate new conferencing
applications such as voice over Internet and streaming of audio,
video, and data.

- DEREGULATION OF INTERNATIONAL TELECOMMUNICATIONS MARKETS: In
certain international markets, deregulation presents us with an
opportunity to enter new geographic markets with new value-added
teleconferencing services.

STRATEGY

Our objective is to become the world's leading single source provider
of audio, video, data, and Internet-based teleconferencing services. The key
elements of our strategy are to:

- Develop a full suite of Internet telephony teleconferencing
services.

- Capitalize on the global market for teleconferencing services by
growing our operations in major international markets and
expanding into others.

424B4 5th Page of 72 TOC 1st Previous Next ↓Bottom Just 5th
- Develop and leverage our present outsourcing and co-marketing
arrangements with major telecommunications service providers.

- Pursue strategic acquisitions to further increase our service
offerings, expand our customer base, and broaden our geographic
reach.

- Adapt and implement state of the art conferencing equipment and
technology.

- Maintain and grow long-term relationships with our clients by
providing superior service, the most extensive set of global
operations, and the broadest possible range of services.

OTHER INFORMATION

We were incorporated under the laws of Colorado in 1989 and commenced
operations on January 2, 1990. Our headquarters are located at 1658 Cole
Boulevard, Suite 130, Golden, Colorado, 80401 and our telephone number is (303)
235-9000. Our web site address is www.acttel.com. Information contained on our
web site does not constitute part of this prospectus.

THE OFFERING

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Common stock offered by ACT...................................... 800,000 shares
Warrants offered by ACT.......................................... 400,000 five year warrants
Common stock to be outstanding after the offering, based on
shares outstanding on March 31, 2000.......................... 5,628,374 shares

Use of proceeds (after expenses)................................. We plan to use the net proceeds to:

- accelerate development and deployment of Internet-based
conferencing products and services.
- acquire equipment to expand our capacity.
- develop Internet streaming and other high speed digital
services.
- provide working capital for potential acquisitions,
development of outsourcing, and co-marketing
opportunities.
- fund general corporate purposes.
Nasdaq SmallCap Market symbol.................................... ACTT

The 5,628,374 shares of common stock to be outstanding after this
offering is based on 4,828,374 shares outstanding on March 31, 2000, plus
800,000 shares offered in this prospectus, excluding:

- 2,089,300 shares of common stock issuable upon the exercise of
options and warrants outstanding as of March 31, 2000, at a
weighted average exercise price of $5.95 per share.

- 5,080 shares reserved for future grants under our 1991 and 1996
stock option plans.

- 72,940 shares reserved for purchase under our employee stock
purchase plan.

- 400,000 shares reserved for issuance on exercise of the warrants
offered through this prospectus.

- 80,000 shares reserved for issuance on exercise of the agent's
warrants (See "Distribution").

The information in this prospectus assumes there is no exercise of the
warrants offered through this prospectus.

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SUMMARY CONSOLIDATED FINANCIAL DATA

You should read the financial information set forth below, in
conjunction with our "Management's Discussion and Analysis of Financial
Condition and Results of Operations," consolidated financial statements, and
related notes appearing elsewhere in this prospectus. The pro forma balance
sheet data gives effect to the sale of the 800,000 shares of common stock
that we are offering under this prospectus at an assumed offering price of
$5.00 per share and deduction of agent's commissions and offering expenses,
resulting in net proceeds of approximately $3.3 million. Pro forma data does
not reflect the exercise of the warrants described in this offering.

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THREE MONTHS
YEAR ENDED DECEMBER 31 ENDED MARCH 31
---------------------- --------------
1995 1996 1997 1998 1999 1999 2000
---- ---- ---- ---- ---- ---- ----
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

STATEMENTS OF OPERATIONS
Net revenues............................ $ 3,461 $ 6,220 $ 10,234 $ 19,010 $ 28,329 $ 6,842 $ 8,184
Cost of services........................ 1,961 3,605 4,727 10,882 14,798 3,789 4,072
Selling, general, and administrative
expense................................. 1,668 3,526 5,310 9,121 11,992 2,827 3,267
Interest expense........................ 19 13 99 532 848 173 239
Provision for income taxes.............. 133 165 333 402 415 118 222
Minority interest....................... 104 119 201 190 195 62 197
Net income (loss)....................... (424) (1,208) (436) (2,117) 81 (126) 188
Net income (loss) per share(1).......... $ (.21) $ (.41) $ (.14) $ (.58) $ .01 $ (0.03) $ 0.03
Weighted average shares
outstanding-basic....................... 2,057 2,911 3,204 3,647 4,394 4,028 4,780
Weighted average shares
outstanding-diluted..................... 2,057 2,911 3,204 3,647 4,656 4,028 5,972

--------------------------------------------

(1) Per basic and diluted shares

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DECEMBER 31, 1999 MARCH 31, 2000
----------------- --------------
ACTUAL PRO FORMA
------ ---------
(UNAUDITED) (UNAUDITED)

CONSOLIDATED BALANCE SHEET DATA (IN THOUSANDS):
Cash and cash equivalents...................... $ 1,533 $ 875 $ 4,175
Accounts receivable and other current assets... 7,583 8,791 8,791
Total equipment-net............................ 11,275 11,623 11,623
Goodwill and other non-current assets.......... 1,707 2,633 2,633
-------------- -------------- --------------

Total assets................................... $ 22,098 $ 23,922 $ 27,222
====== ====== ======

Accounts payable and other current liabilities. $ 7,546 $ 7,524 $ 7,524
Long term debt................................. 5,003 4,958 4,958
Preferred stock................................ 1,693 1,704 1,704
Deferred income taxes (United Kingdom)......... 320 315 315
Minority interest.............................. 968 1,448 1,448
Stockholders' equity........................... 6,568 7,973 11,173
-------------- -------------- --------------

Total liabilities and stockholders' equity..... $ 22,098 $ 23,922 $ 27,222
========= ========= =========

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RISK FACTORS

THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY
CONSIDER THE RISKS DESCRIBED BELOW AND THE OTHER INFORMATION IN THIS PROSPECTUS
BEFORE DECIDING WHETHER TO INVEST IN OUR COMMON STOCK. WHILE WE HAVE ATTEMPTED
TO IDENTIFY ALL RISKS THAT ARE MATERIAL TO OUR BUSINESS, ADDITIONAL RISKS THAT
WE HAVE NOT YET IDENTIFIED OR THAT WE CURRENTLY THINK ARE IMMATERIAL MAY ALSO
IMPAIR OUR BUSINESS OPERATIONS. THE TRADING PRICE OF OUR COMMON STOCK COULD
DECLINE DUE TO ANY OF THESE RISKS, IN WHICH CASE YOU COULD LOSE ALL OR PART OF
YOUR INVESTMENT. IN ASSESSING THESE RISKS, YOU SHOULD ALSO REFER TO THE OTHER
INFORMATION IN THIS PROSPECTUS, INCLUDING THE CONSOLIDATED FINANCIAL STATEMENTS,
THE UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION, AND RELATED NOTES.

OUR REVENUES MAY FLUCTUATE BECAUSE WE DRAW SIGNIFICANT REVENUES FROM THREE MAJOR
CLIENTS.

The loss of any one of our three largest customers, but especially the
largest one, would have a material adverse effect on our business. Our three
largest customers represent over 40 percent of our total business.
Teleconferencing customers can easily switch to a competing provider or allocate
their business among several vendors. In 1999, our three largest customers
accounted for 24 percent, 14 percent, and 4 percent of our revenues. Mergers,
consolidations, or other changes in ownership or alliances that impact any of
our customers could also adversely impact our revenues or cause us to lose a
substantial client.

THE FAILURE TO MANAGE OUR GROWTH INTO NEW SERVICE OFFERINGS OR TO HIRE
ADDITIONAL QUALIFIED EMPLOYEES COULD HAVE A MATERIAL ADVERSE EFFECT ON US.

Our failure to attract and retain the necessary personnel or
effectively manage our growth in employees and operations could have a material
adverse affect on our business, financial condition, and operating results. The
expansion of our business into Internet-based service offerings as well as our
rapid internal growth will place a significant strain on our current management
resources. To structure, deliver, and support these new services, we will need
to provide additional training for current employees and compete in the market
for new employees, especially those who are skilled in the delivery of Internet
services. Competition for talented personnel is intense, and we cannot assure
you that we will be able to attract, integrate, and retain sufficiently
qualified staff to support the growth in our existing business or our expansion
into Internet-based conferencing services.

WE MAY NOT BE ABLE TO COMPETE AGAINST OUR MAJOR COMPETITORS IN THE
TELECOMMUNICATIONS INDUSTRY WHO HAVE SUBSTANTIALLY GREATER CAPITAL RESOURCES AND
NAME RECOGNITION THAN WE HAVE.

The telecommunications industry is highly competitive, and many of our
competitors and potential competitors have substantially greater capital
resources and name recognition than we have. Accordingly, we may not be able to
compete with them in terms of advertising, marketing, sales, and deployment of
capital. To compete successfully against other telecommunications and
teleconferencing providers, we must be able to maintain competitive pricing
while at the same time offering high quality services. A competitor that
operates substantially more ports than we operate will have more flexibility in
the size of conferences it can conduct and the prices it can charge. A well-
capitalized competitor can offer a wider array of service and pricing options
that we may not be able to match.

THE DEVELOPMENT OF INTERNET-BASED CONFERENCING SERVICES THAT COMPETE WITH
CONVENTIONAL CIRCUIT-SWITCHED AUDIO CONFERENCING INJECTS AN UNKNOWN COMPETITIVE
FACTOR INTO THE TELECONFERENCING INDUSTRY.

Over 90 percent of our current revenues are derived from audio
conferences that are carried over conventional circuit-switched analog and
digital telephone lines. The potential use of the Internet to transmit long
distance voice, video, and data and to develop new types of conferences
represents a material change in the telecommunications industry. The Internet
offers less expensive long distance transmission and greater flexibility

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in conferences that combine audio, video, and data. We offer no assurance
that our current business practices or our new initiatives in Internet
conferencing can address and exploit these developments, particularly since
the scope of change and the impact of change are not known to us at this
early stage of market development.

IF INTERNET TELEPHONY AND INTERNET INFRASTRUCTURE DO NOT CONTINUE TO DEVELOP AS
ANTICIPATED, OUR OPERATIONS WILL BE NEGATIVELY AFFECTED.

For Internet telephony and Internet-based conferencing services to be
commercially viable, the size of the network infrastructure, enabling
technologies, necessary performance improvements, and user security will need to
be upgraded and usage must increase substantially. If the Internet continues to
experience an increased number of users, increased frequency of use, or
increased bandwidth requirements, we can provide you no assurance that the
performance or reliability of the Internet will not be adversely affected. We
cannot assure you that the infrastructure or products or services necessary to
make the Internet a viable commercial marketplace for the long term will be
developed. The Internet has experienced a variety of outages and other delays as
a result of damage to portions of its infrastructure, and could face such
outages and delays in the future. These outages and delays could adversely
affect the level of Internet telephony usage, the level of traffic, and our
Internet-based teleconferencing services.

IF INTERNET TELEPHONY CONFERENCING DOES NOT GAIN MARKET ACCEPTANCE, OUR
POTENTIAL FOR GROWTH WILL BE ADVERSELY AFFECTED.

We cannot be certain that Internet telephone service will gain market
acceptance or prove to be a viable alternative to traditional telephone service.
If the Internet telephony market fails to develop or develops more slowly than
we expect, then our future revenues from conferencing over the Internet would be
adversely affected. TECHNOLOGICAL INNOVATIONS COULD RENDER OUR CURRENT SERVICES
OBSOLETE.

We expect technical innovations to stimulate new developments in
teleconferencing services. These range from the development of more
sophisticated computers, telephone sets, private branch exchanges,
customer-owned bridges, and centralized office switching equipment to Internet
telephony. Other competitive developments within the telecommunications
industry, such as low-priced long distance services and new uses for the
Internet, aside from the Internet-based services we are currently developing,
may lead the major telecommunications companies to offer low-cost
teleconferencing services as a strategy to obtain greater market share in other
product areas. These innovations and developments could render our current
service offerings obsolete or uneconomic.

WE MAY BE VULNERABLE TO TECHNICAL MALFUNCTIONS WHICH COULD ADVERSELY AFFECT OUR
OPERATIONS.

We depend upon our software systems, communications hardware, and
enhanced services platform to conduct our conferencing business. Our systems,
communications hardware, and platform are vulnerable to damage or interruption
from:

- Natural disasters.

- Power loss.

- Telecommunication failures.

- Loss of Internet access.

- Physical and electronic break-ins.

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- Hardware defects.

- Computer viruses.

- Intentional acts of vandalism and similar events.

If we experience substantial technical difficulties with our
teleconferencing bridges, hardware, or software, we may not succeed in routing
conferencing traffic effectively.

WE INCUR FINANCIAL RISKS IN OUR INTERNATIONAL OPERATIONS.

We incur financial risks associated with international operations and
related foreign currencies. International sales comprised approximately 55
percent of revenues in 1999 and we anticipate that international sales will
continue to account for a significant portion of our consolidated revenue. Our
international conferences that are initiated outside the United States are
denominated in local currency and are subject to foreign currency exchange
risks. The assets and liabilities in our international operations also are
denominated in each country's local currency and are subject to foreign currency
exchange risks.

IF WE ARE UNABLE TO EXPAND OUR INTERNATIONAL OPERATIONS WHEN WE IDENTIFY
OPPORTUNITIES AND BRING THEM TO A PROFITABLE OPERATION WITHIN A REASONABLE TIME,
WE MAY BE UNABLE TO COMPLETE OUR GLOBAL PLATFORM.

We cannot assure you that all our international offices will become and
remain profitable. Our international offices are in Canada, the United Kingdom,
France, Belgium, the Netherlands, Germany, Australia, and Hong Kong. We intend
to expand the scope of our international operations, which will require us to
open and staff new offices in additional countries, invest in more bridging
equipment, fund marketing expenses, and incur other start-up costs. We incur
these startup expenses when we open a new international office before we
generate any revenue from that office. We intend to continue opening new
international offices and view these expansion expenses as a necessary
investment in future revenue growth, but we need each of these offices to become
profitable within a reasonable time if we are to continue building our global
platform.

OUR PLANS TO EXPAND MAY BE DISCONTINUED IF WE ARE UNABLE TO OBTAIN SUFFICIENT
FINANCING.

We may not be able to fully implement our domestic and international
expansion plans with only the net proceeds from this offering, especially with
respect to our plans for Internet telephony conferencing. We may need additional
equity or debt financing, collaborative arrangements with corporate partners, or
funds from other sources for these purposes. Additional equity financings may be
dilutive to our stockholders and debt financing may impose restrictive covenants
on the way we operate our business. We may have difficulty obtaining these funds
on a timely basis and on acceptable terms, if at all. If we cannot obtain
adequate funds from operations or additional sources of financing, particularly
if obtaining or retaining a customer's business depends on the prompt expansion
of existing facilities or the opening of a new foreign office, we may experience
operational difficulties and the loss of customers. Our business, financial
condition, and results of operations will be materially and adversely affected
by the unavailability of capital when we need it.

THERE ARE FEW REGULATORY BARRIERS TO ENTRY INTO OUR CURRENT MARKETS AND NEW
COMPETITORS MAY ENTER AT ANY TIME.

There are few regulatory barriers to competition in our markets. Until
recently, local exchange carriers in the United States, including local
telephone companies, were prohibited from providing audio teleconferencing,
except in limited areas. Recent federal legislation allows local exchange
carriers to offer teleconferencing services.

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This legislation may result in additional competition if some or all of the
local exchange carriers choose to enter or expand their activities in the
teleconferencing market in the United States.

There are no significant regulatory barriers to enter the markets we
serve in Canada, the United Kingdom, the Netherlands, France, Belgium, Germany,
Australia, or Hong Kong. Barriers to entry in other foreign markets vary, but
may involve governmental regulation or government-owned telephone systems that
block changes in existing regulations or resist competition with independent
teleconferencing companies. These barriers may restrict our expansion into
additional foreign markets.

WE MAY NOT FIND THE INVESTMENT OPPORTUNITIES TO OPTIMIZE THE USE OF PROCEEDS
GENERATED BY THIS OFFERING.

The intense competition within our industry for traditional
conferencing services and the opportunity to explore, develop, and deliver
Internet conferencing services require that we have resources available on short
notice to allow us to penetrate new markets or provide new services. We have
broad discretion in the application of the proceeds of this offering and cannot
assure you that our judgment in selecting these opportunities will optimize our
use of these proceeds.

WE MAY BE UNABLE TO ADEQUATELY PROTECT OUR PROPRIETARY RIGHTS WHICH MAY LIMIT
OUR ABILITY TO COMPETE EFFECTIVELY.

We hold no patents. We may not be able to protect our proprietary
information, business practices, trade secrets, or trademarks against a
competitor's use, and we may not be successful in litigation we might bring to
protect our proprietary information, business practices, or trademarks. To
protect our proprietary rights, we rely generally on copyright, trademark, and
trade secret laws, and confidentiality agreements with employees and third
parties. However, employees, consultants, and others could breach their
confidentiality agreements and we may not have adequate remedies for such
breach. Further, while we believe our name and the "ACT" logo are unique in the
teleconferencing market, a variety of other enterprises' usage of the name "Act"
or "ACT" makes trademark protection in some contexts either unavailable or so
likely to generate litigation or the threat of litigation that the pursuit of
trademark protection is prohibitively expensive.

OUR COMMON STOCK PRICE HAS BEEN HIGHLY VOLATILE, AND WE EXPECT THIS VOLATILITY
TO CONTINUE.

The market price of our common stock is highly volatile and may
decline. We anticipate that the volatility of our common stock price may
continue due to factors such as:

- Actual or anticipated fluctuations in results of our operations.

- Changes in or failure to meet securities analysts' expectations.

- Changes in market valuations of other teleconferencing companies.

- Announcements by us or our competitors of significant
technological innovations, contracts, acquisitions, strategic
partnerships, joint ventures, or capital commitments.

- Introduction of new services by us or our competitors.

- Conditions and trends in the teleconferencing industry and
related technology industries.

- Future sales of our common stock.

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These factors are in addition to significant price and volume
fluctuations in the securities markets that may be unrelated to our operating
performance.

PROVISIONS OF OUR ARTICLES OF INCORPORATION COULD DELAY OR PREVENT A CHANGE IN
CONTROL OF ACT.

Certain provisions of our articles of incorporation may discourage,
delay, or prevent a merger or acquisition that a stockholder may consider
favorable. These provisions include:

- Authority of the board of directors to issue additional preferred
stock.

- Prohibition on cumulative voting in the election of directors.

- Election of directors by class for terms of three years.

- Limitations on the ability of third parties to acquire us by
their offer of a premium price to selected stockholders.

- Agreements with key executives which provide special termination
payments in the event of a change in control.

- A share rights plan that enables stockholders to dilute an
acquiring person's investment through the stockholders' purchase
of a large number of shares.

PURCHASERS IN THIS OFFERING WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION.

The offering price per share in this offering significantly exceeds our
net tangible book value per share. Accordingly, the purchasers of shares sold in
this offering will experience immediate and substantial dilution in the net
tangible book value of their investment.

THE PRICE OF OUR COMMON STOCK MAY BE ADVERSELY AFFECTED BY THE SALE OF A
SIGNIFICANT NUMBER OF THE SHARES AVAILABLE FOR FUTURE ISSUANCE THROUGH THE
EXERCISE OF OPTIONS AND WARRANTS.

The exercise of outstanding warrants and options and the potential sale
of the underlying shares could have a material adverse effect on the public
trading price of our stock, if the holders are willing to sell at a price that
is significantly less than the current market price or the number of shares sold
exceeds the number of shares the market can absorb at the current market price.

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FORWARD-LOOKING STATEMENTS

This prospectus contains certain forward-looking statements that
involve risks and uncertainties. These statements refer to objectives,
expectations, intentions, future events, or our future financial performance,
and involve known and unknown risks, uncertainties, and other factors that may
cause our actual results, level of activity, performance, or achievements to be
materially different from any results expressed or implied by these
forward-looking statements. In some cases, you can identify forward-looking
statements by words such as "may," "will," "should," "could," "expects,"
"anticipates," "intends," "plans," "believe," "estimates," "predicts,"
"potential," and similar expressions. Our actual results could differ materially
from those included in forward-looking statements. Factors that could contribute
to these differences include those matters discussed in "Risk Factors" and
elsewhere in this prospectus.

USE OF PROCEEDS

We estimate the net proceeds to us from the sale of 800,000 shares
of common stock and the 400,000 warrants in this offering will be $3.3
million after deducting estimated commissions and expenses payable to the
agent together with other offering expenses. We have not included proceeds
from exercise of the warrants.

We expect to use the net proceeds of this offering for these purposes:

- Investment in equipment, technology, and staff to develop and
market full duplex Internet telephony conferencing services
(approximately $1 million).

- Capacity expansion for traditional audio, video, and data
conferencing bridges and ancillary telecommunications equipment
(approximately $0.5 million).

- Development of Internet streaming and other high speed digital
services (approximately $0.5 million).

- Potential acquisitions, development of outsourcing and
co-marketing relationships with major telecommunications
providers, working capital, and general corporate purposes
(approximately $1.3 million).

While we consider potential acquisitions from time to time and have
recently completed one acquisition and the buy out of certain minority interests
in subsidiaries, we have not finalized commitments or agreements for any
acquisitions. Furthermore, we cannot guarantee that we will complete any other
acquisitions.

The amount of funds that we actually use for the above purposes will
depend on many factors, including revisions to our business plan, material
changes in our revenues or expenses, and other factors. Accordingly, our
management will have significant discretion over the use and investment of a
large portion of the net proceeds to us from the offering. See "Risk Factors-We
may not find the investment opportunities to optimize the use of proceeds
generated by this offering."

Prior to their eventual use, the net proceeds will be invested in high
quality, short-term investment instruments such as short-term corporate
investment grade or United States Government interest-bearing securities.

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PRICE RANGE OF COMMON STOCK

[Enlarge/Download Table]

HIGH LOW
---- ---

Fiscal year ended December 31, 1997
First Quarter.............................................................................................. $5.00 $2.88
Second Quarter............................................................................................. 7.50 4.99
Third Quarter.............................................................................................. 13.05 8.25
Fourth Quarter............................................................................................. 9.13 4.50
Fiscal year ended December 31, 1998
First Quarter.............................................................................................. 10.00 5.88
Second Quarter............................................................................................. 11.63 8.00
Third Quarter.............................................................................................. 10.63 6.50
Fourth Quarter............................................................................................. 7.25 5.25
Fiscal year ended December 31, 1999
First Quarter.............................................................................................. 5.63 4.63
Second Quarter............................................................................................. 6.63 4.00
Third Quarter.............................................................................................. 9.63 5.00
Fourth Quarter............................................................................................. 9.00 6.00
Fiscal year ended December 31, 2000
First Quarter.............................................................................................. 17.00 8.00

On May 24, 2000, the last reported sale price of our common stock was
$5.6875 per share, and we had approximately 1,300 stockholders.

DIVIDEND POLICY

We have never paid any dividends on our common stock or preferred
stock, in part due to existing loan covenant restrictions. We expect for the
foreseeable future to retain all of our earnings from operations for use in
expanding and developing our business. Any future decision as to the payment of
dividends will be at the discretion of our board of directors and will depend
upon our earnings, financial position, capital requirements, plans for
expansion, existing loan covenants, and such other factors as the board of
directors deems relevant.

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CAPITALIZATION

The following table sets forth our capitalization as of December 31,
1999, and March 31, 2000, and as adjusted to reflect the net proceeds of our
sale of 800,000 shares of common stock and 400,000 warrants in this offering
at an assumed public offering price of $5.00 per share (with one warrant
accompanying each two shares) and the application of the estimated net
proceeds. The information set forth below should be read in conjunction with
the Consolidated Financial Statements and Notes and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" contained
elsewhere in this prospectus.

[Enlarge/Download Table]

ACTUAL AS ADJUSTED(1)
------ -------------
AS OF AS OF
DECEMBER 31, 1999 MARCH 31, 2000
----------------- --------------
(UNAUDITED)
(AMOUNTS IN THOUSANDS)

Long-term debt, net of current maturities........................................ $5,003 $4,958 $4,958
Minority interest................................................................ 968 1,448 1,448
Preferred stock, non-voting, 1,000,000 shares authorized; 2,000 shares of
Series A redeemable preferred outstanding..................................... 1,693 1,704 1,704
Common stockholders' equity:
Common stock, no par value, 10,000,000 shares authorized; 4,595,947 shares
issued and outstanding at December 31, 1999, and 4,828,374 shares at March
31, 2000 (5,628,374 shares as adjusted)(2).................................... 11,378 12,767 16,667
Additional paid-in capital....................................................... 100 120 120
Accumulated deficit.............................................................. (4,809) (4,661) (4,661)
Accumulated other comprehensive loss............................................. (100) (253) (253)
------ ------ ------
Total common stockholders' equity................................................ 6,568 7,973 11,273
------ ------ ------

Total capitalization............................................................. $14,233 $16,083 $19,383
====== ====== ======

-----------

(1) Adjusted to reflect estimated net proceeds of $3.3 million from our sale of
800,000 shares of common stock and 400,000 warrants in this offering.

(2) Excludes: (i) options and warrants outstanding on March 31, 2000, to
purchase 2,089,300 shares of our common stock at a weighted average
exercise price of $5.95 per share; (ii) as of March 31, 2000, an additional
5,080 shares of common stock reserved for issuance in connection with
future stock options under our Stock Option Plans of 1991 and 1996; (iii)
as of March 31, 2000, an additional 72,940 shares of common stock reserved
for purchase under our Employee Stock Purchase Plan; (iv) warrants for the
purchase of 400,000 shares that accompany the shares of common stock
offered through this prospectus and that are exercisable at 110 percent
of the closing bid price per share on the day preceding the effective
date of this prospectus; and (v) agent's warrants to purchase 80,000
shares at 120 percent of the closing bid price per share on the day
preceding the effective date to be issued to our agent in this transaction.

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DILUTION

Our net tangible book value at March 31, 2000, was $5,503,549 or $1.14
per share of common stock. Net tangible book value per share represents the
amount of total tangible assets less total liabilities divided by the number of
shares of common stock outstanding. After giving effect to the sale of 800,000
shares of common stock accompanied by 400,000 warrants in this offering at an
assumed offering price of $5.00 per share and after deducting estimated
commissions and offering expenses, our pro forma net tangible book value as of
March 31, 2000, would have been $8,803,549 or $1.56 per share. This represents
an immediate increase in pro forma net tangible book value of $0.42 per share to
existing stockholders and an immediate dilution of $3.44 per share to new
investors purchasing shares of common stock in this offering. The following
table illustrates this dilution:

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Per share offering price............................................................... $5.00
Net tangible book value per share at March 31, 2000.................................... $1.14
Increase attributable to the offering to existing stockholders......................... $0.42
Pro forma tangible book value per share after offering................................. $1.56

Per share dilution to investors in the offering........................................ $3.44

The following table summarizes, as of March 31, 2000, on the pro forma
basis described above, the total number of shares and consideration paid to us
and the average price paid per share by the existing stockholders and by new
investors purchasing shares of common stock in the offering at an assumed
offering price of $5.00 per share, before agent's commissions and other
offering expenses:

[Enlarge/Download Table]

AVERAGE PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
------ ------- ------ ------- -----------------
SHARES PURCHASED TOTAL CONSIDERATION
---------------- -------------------

Existing stockholders........ 4,828,374 85.8% $12,767,168 76.1% $2.64
New investors................ 800,000 14.2% 4,000,000 23.9% 5.00
--------- ---- ----------- ----
Totals.................... 5,628,374 100% $16,767,168 100% $2.98
========= ==== =========== ====

These calculations assume the issuance of 800,000 shares of common
stock to be sold in this offering, but do not give effect to 2,089,300 shares of
common stock reserved for issuance upon the exercise of outstanding various
warrants and options under our Stock Option Plan of 1991 and our Stock Option
Plan of 1996; 72,940 shares to be issued under our Employee Stock Purchase Plan;
400,000 warrants to be issued in conjunction with the issuance of 800,000 shares
in this offering; and 80,000 agent's warrants to be issued to our agent in this
offering. See "Shares Eligible for Future Sale" and "Distribution."

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SELECTED CONSOLIDATED FINANCIAL DATA

The following selected financial data should be read in conjunction
with the Consolidated Financial Statements and related Notes to the Financial
Statements appearing elsewhere in this prospectus and "Management's Discussion
and Analysis of Financial Condition and Results of Operations." The consolidated
statements of operations data for each of the years ended December 31, 1997,
1998, and 1999, and the selected balance sheet data as of December 31, 1998 and
1999, are derived from our consolidated financial statements audited by Ernst &
Young L.L.P., our independent auditors, appearing elsewhere in this prospectus.
The selected statement of operations data for the years ended December 31, 1995
and 1996 and the selected balance sheet data as of December 31, 1995, 1996, and
1997 have been derived from audited financial statements of the Company not
included in this prospectus. The selected financial data provided below is not
necessarily indicative of our future results of operations or our financial
performance.

[Enlarge/Download Table]

1995 1996 1997 1998
---- ---- ---- ----

CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
Net revenues.............................. $3,461,204 $6,219,946 $10,234,403 $19,009,645
Costs and expenses:
Cost of services....................... 1,961,434 3,604,729 4,727,236 10,881,556
Selling, general, and administrative
expense............................. 1,668,200 3,526,164 5,309,444 9,121,235
Interest expense, net.................. 18,576 12,702 99,496 532,322
---------- ------------ ---------- ------------
Total costs and expenses.................. $3,648,210 $7,143,595 $10,136,176 $20,535,113
Income (loss) before income taxes and
minority interest...................... (187,006) (923,649) 98,227 (1,525,468)
Provision for income taxes................ (133,364) (164,591) (332,566) (401,762)

Income (loss) before minority interest.... (320,370) (1,088,340) (234,339) (1,927,230)
Minority interest......................... (103,690) (119,867) (202,469) (189,895)
---------- ------------ ---------- ------------
Net income (loss)......................... $(424,060) $(1,208,107) $(436,808) $(2,117,125)
========== ============ ========== ============
Net income (loss) per share-basic and
diluted................................ $(0.21) $(0.41) $(0.14) $(0.58)
========== ============ ========== ============
Weighted average basic shares outstanding. 2,056,940 2,911,187 3,204,747 3,647,188
========== ============ ========== ============
Weighted average diluted shares outstanding 2,056,940 2,911,187 3,204,747 3,647,188
========== ============ ========== ============
CONSOLIDATED BALANCE SHEET DATA
Cash and short-term investments........... $288,345 $621,742 $451,434 $369,407
Net working capital....................... 24,203 697,151 512,982 (1,257,904)
Total assets.............................. 2,662,804 4,085,269 7,929,711 15,326,200
Total liabilities, preferred stock, and
minority interest...................... 1,589,018 2,317,312 4,551,778 12,821,635
Stockholders' equity...................... 1,073,786 1,767,957 3,377,933 2,504,565

[Enlarge/Download Table]

THREE MONTHS ENDED
MARCH 31
--------------------
(unaudited)
1999 1999 2000
---- ---- ----

CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
Net revenues.............................. $28,328,791 $6,842,467 $8,183,767
Costs and expenses:
Cost of services....................... 14,797,606 3,788,894 4,071,656
Selling, general, and administrative
expense............................. 11,991,913 2,827,166 3,266,610
Interest expense, net.................. 848,014 172,800 238,555
----------- ---------- ----------
Total costs and expenses.................. $27,637,533 $6,788,860 $7,576,821
Income (loss) before income taxes and
minority interest...................... 691,258 53,607 606,946
Provision for income taxes................ (414,866) (117,942) (222,286)

Income (loss) before minority interest.... 276,392 (64,335) 384,660
Minority interest......................... (194,967) (62,136) (196,735)
----------- ---------- ----------
Net income (loss)......................... $81,425 $126,471 $187,925
=========== ========== ==========
Net income (loss) per share-basic and
diluted................................ $0.01 $(0.03) $0.03
=========== ========== ==========
Weighted average basic shares outstanding. 4,393,963 4,027,655 4,780,413
=========== ========== ==========
Weighted average diluted shares outstanding 4,655,501 4,027,655 5,971,935
=========== ========== ==========
CONSOLIDATED BALANCE SHEET DATA
Cash and short-term investments........... $1,532,551 $ 1,568,509 $ 874,150
Net working capital....................... 1,569,332 990,317 2,141,933
Total assets.............................. 22,098,343 19,147,675 23,922,034
Total liabilities, preferred stock, and
minority interest...................... 15,529,686 13,557,973 15,949,472
Stockholders' equity...................... 6,568,657 5,589,702 7,972,562

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

GENERAL. We are a full-service provider of audio, video, data and
Internet-based teleconferencing services to businesses and organizations in
North America, Europe and Asia. Our conferencing services enable our clients
to cost-effectively conduct remote meetings by linking participants in
geographically dispersed locations. We have 11 operations centers and 13
sales offices in 9 countries. Our primary focus is to provide high value
added conferencing services to organizations such as accounting firms,
consulting firms, investment banks, high tech companies, law firms, investor
relations firms, and other multinational companies.

We were incorporated in December 1989 and began offering audio
teleconferencing services at our Denver location in January 1990. In 1992 we
invested in an audio teleconferencing facility in the United Kingdom and in
1995 we invested in a similar operation in the Netherlands. In 1997 we
announced a major international capacity expansion plan intended to grow the
company from its then 3 locations in 3 countries (United States, United
Kingdom and Netherlands) to the current 13 offices in 9 countries offering a
full range of audio, video, and internet-based data conferencing services.
The rationale for this expansion plan is the rapidly growing market for
teleconferencing services worldwide, the expansion of Internet-based
conferencing services, and an increasing demand for additional services by
certain of our multi-national clients.

We completed our capacity expansion in 1999, after successful entry
into the markets of Canada, France, Belgium, Germany, Australia and Hong
Kong. During 1999 we also entered the rapidly growing field of Internet-based
teleconferencing products and applications. We now offer data conferencing
services in-house, and offer audio, video and data streaming applications
over the Internet to our clients with a nationally recognized provider of
broadcast streaming products.

During 1999, our operating performance improved significantly. We
were assisted by large volume increases in all the countries in which we have
operations but especially in the United States, which grew conference call
volumes by over 100%. As a consequence, net income improved by over $2
million.

The following table shows revenues by major product sector over the
past 3 years:

[Enlarge/Download Table]

1997 1998 1999
---- ---- ----
(AMOUNTS IN THOUSANDS)

CONFERENCING SERVICES....................................................................
Audio conferencing services.............................................................. $9,493 $14,627 $25,133
Video, data and Internet-based services.................................................. 561 1,296 1,717
-------- -------- -------

10,054 15,923 26,850
GROWTH RATES %........................................................................... 69% 58% 69%
Equipment sales.......................................................................... 180 3,087 1,479
-------- -------- -------

Total.................................................................................... $10,234 $19,010 $28,329
-------- -------- -------

GROWTH RATES %........................................................................... 65% 86% 49%

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COMPONENTS OF MAJOR REVENUE AND EXPENSE ITEMS

REVENUES. We earn revenues from fees charged to clients for audio,
video, data and Internet-based teleconference bridging services, from charges
for enhanced services, and from rebilling certain long-distance telephone costs.
We also earn revenues from video equipment sales.

COST OF SALES. Cost of sales consists of telephony costs, depreciation
on our teleconferencing bridges and telecommunications equipment, equipment
product costs, operator and operations management salaries and office expenses
for operations staff.

SELLING, GENERAL, AND ADMINISTRATION EXPENSE. Selling, general, and
administration expense consist of salaries, benefits, and office expenses of our
selling and administrative organizations.

COST AS A PERCENTAGE OF SALES

The following table outlines certain items in our income statement as a
percentage of sales for each of the last three years:

[Enlarge/Download Table]
YEARS ENDED
-----------
DECEMBER 31
-----------
1997 1998 1999
---- ---- ----

Sales............................................................................................ 100% 100% 100%
Cost of sales.................................................................................... (46) (57) (52)
----- ----- -----

Gross profit..................................................................................... 54 43 48
Selling, general and administrative expense...................................................... (52) (48) (43)
----- ----- -----

Operating income................................................................................. 2 (5) 5
Interest expense................................................................................. (1) (3) (3)
----- ----- -----

Net income before taxes and minority interest.................................................... 1 (8) 2
Minority interest and income taxes............................................................... (5) (3) (2)
----- ----- -----

Net income (loss)................................................................................ (4) (11) -
----- ----- -----

RESULTS OF OPERATIONS

FISCAL YEAR ENDED DECEMBER 31, 1999, COMPARED TO FISCAL YEAR ENDED DECEMBER 31,
1998

NET REVENUES. Net revenues increased 49% to $28.3 million for the year
ended December 31, 1999, compared to $19 million for 1998. The 49% revenue
growth resulted from an increase in sales to established customers as well as
from sales to new customers. Audio conferencing revenues grew by 72% while
video, data, Internet and other enhanced conferencing services grew by 32%.
Audio conferencing accounted for 89% and 77% of our revenues in 1999 and 1998,
respectively. During 1999 we scaled back the sales of video equipment due to low
margins in that sector, with the result that video equipment sales accounted for
5% of total revenues in 1999, a reduction of 52%.

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GROSS PROFIT. Gross profit increased 67% to $13.5 million for the year ended
December 31, 1999, compared to $8.1 million for the prior year, reflecting the
achievement of significant economies of scale associated with volume increases
in all service sector categories. Gross profit percentage increased to 48% of
net revenues for the year ended December 31, 1999, compared to 43% of net
revenues for 1998.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general, and
administrative expenses for the year ended December 31, 1999 were $11.9 million,
or 42% of revenue, compared to $9.1 million or 48% of revenue for 1998. The 32%
increase in such expenses was incurred mainly as a result of the increase in
selling, general and administrative staff in new operations as well as marketing
expenses incurred to introduce new products and services associated with
Internet-based and other high-speed digital conferencing products.

INTEREST EXPENSE. Net interest expense grew by 59% from $532,322 to $848,013,
reflecting the 44% growth in our total asset base from $15.3 million at December
31, 1998 to $22.1 million at December 31, 1999. Although long-term debt held
relatively steady, $3.9 million in 1998 compared to $3.8 million in 1999,
short-term debt grew by over $1.6 million, mainly as a result of the extension
of a $1.0 million supplier line of credit. This line was opened in order to
finance our audio, video and data bridging capacity expansion worldwide.

TAXES ON INCOME. Taxes on income increased 3% to $414,866 for the year ended
December 31, 1999, compared to $401,762 for 1998, due to increased taxable
income earned by our 60% majority-owned United Kingdom subsidiary. We paid no
other income taxes due to domestic and international tax loss carry-forwards of
approximately $8.0 million.

MINORITY INTEREST. Minority interest grew by 3% from $189,895 in 1998 to
$194,967 in 1999, primarily reflecting lower growth in net after-tax income of
our 60% held United Kingdom subsidiary.

NET INCOME. Net income for the year was $81,425, or $0.01 per share, and
increased by $2,198,550, or $0.59 per share over the previous year loss of
$2,117,125 or $0.58 per share, mainly due to the ongoing revenue growth, higher
gross margins and increased economies of scale noted above.

FISCAL YEAR ENDED DECEMBER 31, 1998, COMPARED TO FISCAL YEAR ENDED DECEMBER 31,
1997

NET REVENUES. Net revenues increased 86% to $19 million for the year ended
December 31, 1998, compared to $10.2 million for 1997. As in 1997, revenue
growth resulted from increased service business to established customers and
increased revenues from higher priced enhanced services as well as from sales to
new customers. During the year ended December 31, 1998, audio conferencing
operations accounted for 77% of net revenues in 1998 compared to 93% in 1997,
and grew by 54%. Video and data conferencing grew by 131% accounting for 7% of
revenue in 1998 compared to 5% in 1997. Video equipment sales grew approximately
$3 million accounting for 16% of revenue in 1998 compared to 2% in 1997.

GROSS PROFIT. Gross profit increased 48% to $8.1 million for the year ended
December 31, 1998, compared to $5.5 million for the prior year, mainly
reflecting volume increases in sales of teleconferencing services. Gross profit
percentage declined to 43% of net revenues for the year ended December 31, 1998,
compared to 54% of net revenues for 1997, reflecting cost inefficiencies due to
the expansion of new operations in additional locations as well as the impact of
low margin video equipment sales.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general, and
administrative expense for the year ended December 31, 1998 were $9.1 million,
or 48% of revenue, compared to $5.3 million or 52% of revenue for 1997. The 72%
increase in such expense reflected the additional investment in the start up of
new international business units.

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INTEREST EXPENSE. Interest expense grew 435% from $99,496 to $532,322, mainly
reflecting the interest on a $2.5 million subordinated financing taken out to
fund the investment in international business units. This financing bears
interest at a rate of 13.5%. Interest expense also grew as a result of
additional capital leases and various bank loans taken out to finance our
international expansion.

TAXES ON INCOME. Taxes on income increased 20.8% to $401,762 for the year ended
December 31, 1998, compared to $332,566 for 1997, due to taxable income earned
by our 60% majority-owned United Kingdom subsidiary. We paid no other income
taxes due to current year and carry-forward losses.

MINORITY INTEREST. Minority interest declined by 6% from $202,469 in 1997 to
$189,895 in 1998. The decline in minority interest reflects the reduced
after-tax share of net income earned by our minority investment partners,
principally in our 60% held United Kingdom subsidiary, as well as the entry into
certain loss-generating international operations partially owned by minority
investors.

NET LOSS. Net Income declined by $1.7 million from a loss of $436,803 or $0.14
per share, to a loss of $2.1 million or $0.58 per share, reflecting mainly the
cost of our international expansion into various countries around the world.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 1999, we had approximately $1.5 million of cash and
cash equivalents. We will require additional cash to finance our ongoing revenue
growth, major capacity expansions and new product introductions.

Net cash used in operating activities for the year ended December 31,
1999 was $1 million, $242,000 in 1998 and $362,000 in 1997. Net cash used in
operating activities in 1998 and 1997 consisted primarily of increases in
accounts receivable and other assets, partially offset by increases in accounts
payable and accrued expenses. In 1999 net cash used in operating activities
consisted primarily of an increase in accounts receivable and reductions in
accounts payable and accrued expenses.

Net cash used in investing activities consisted of additions to
telecommunications and bridging equipment. Net cash used in investing activities
was $4.6 million for 1999, $5.5 million in 1998 and $1.8 million in 1997
reflecting our expansion into various countries as well as major capacity
expansions in North America.

Net cash provided by financing activities was $6.8 million in 1999, 5.7
million in 1998 and $1.9 million in 1997 and was achieved via a combination of
additional common stock issued, warrant conversions, and the utilization of
various lines of subordinated debt, interest bearing supplier credit and bank
credit. Additionally in 1999 the company issued preferred stock to help finance
expansion.

IMPACT OF YEAR 2000

In prior years, the Company discussed the nature and progress of its
plans to become Year 2000 ready. In late 1999, the Company completed its
remediation and testing of systems. As a result of those planning and
implementation efforts, the Company experienced no significant disruptions in
mission critical information technology and non-information technology systems
and believes those systems successfully responded to the Year 2000 date change.
The Company expensed approximately $150,000 during 1999 in connection with
remediating its systems. The Company is not aware of any material problems
resulting from Year 2000 issues, either with its products, internal systems, or
the products and services of third parties. The Company will continue to monitor
its mission critical computer applications and those of its suppliers and
vendors throughout the year 2000 to ensure that any latent Year 2000 matters
that may arise are addressed promptly.

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FIRST QUARTER OVERVIEW

During the three months ending March 31, 2000, we achieved continued
growth in teleconferencing revenues in all of our operations worldwide as well
as introducing new enhanced services in video, data, and Internet conferencing.
In addition to satisfactory profit improvements, our first quarter of 2000
included the following highlights:

- Revenues grew by 20% for the first quarter to March 31, 2000.

- Excluding the sale of video conferencing services and equipment,
growth in our core audio conferencing services business was 37%
for the first quarter.

- Operating efficiencies enabled us to improve gross margin from
45% to 50%.

- Operating income improved by 273%.

- Successful testing and development of a voice over Internet
telephony conferencing product.

- The introduction of video and data streaming services outsourced
to INTERVU.

- The acquisition of an Internet service provider in January 2000
to accelerate the introduction of Internet-based and data
conferencing services over the Internet.

- On January 1, 2000, Concert became the vehicle for an
international joint venture between AT&T and British Telecom. Our
initial services to Concert involved the delivery of services for
Concert's internal conferencing. We are now phasing into the
delivery of services to Concert's customers. Revenues from the
Concert agreement will depend on usage and pricing.

The following table shows revenues by major product sector:

[Enlarge/Download Table]

3 MONTHS ENDED MARCH 31
-----------------------
2000 1999 1998
---- ---- ----
(AMOUNTS IN THOUSANDS)
(unaudited)

CONFERENCING SERVICES
Audio conferencing services.............................................. $7,710 $5,614 $3,247
Video, data and Internet-based services.................................. 335 389 259
------ ------ ------
8,045 6,003 3,506
GROWTH RATES %........................................................... 34% 71% 68%

Equipment and other sales................................................ 139 838 587
------ ------ ------
Total.................................................................... $8,184 $6,843 $4,093
====== ====== ======
GROWTH RATES %........................................................... 20% 67% 93%

The following table outlines certain items in our income statement as a
percentage of sales:

[Enlarge/Download Table]

3 MONTHS ENDED MARCH 31
-----------------------
2000 1999 1998
---- ---- ----
(unaudited)

Sales................................................................... 100% 100% 100%
Cost of sales........................................................... (50) (55) (48)
---- ---- ----
Gross profit............................................................ 50 45 52
Selling, general and administrative expense............................. (40) (41) (48)
---- ---- ----
Operating income........................................................ 10 4 4
Interest expense........................................................ (3) (3) (1)
---- ---- ----
Net income before taxes and minority interest........................... 7 1 3
Minority interest and income taxes...................................... (5) (3) (7)
---- ---- ----
Net income (loss)....................................................... 2 (2) (4)
==== ==== ====

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RESULTS OF OPERATIONS

FIRST QUARTER ENDING MARCH 31, 2000, COMPARED TO FIRST QUARTER ENDING MARCH 31,
1999

NET REVENUES. Net revenues increased 20% to $8.2 million for the
quarter ending March 31, 2000, compared to $6.8 million for the same period in
1999, primarily due to ongoing sales volume growth in our audio conferencing
business, which grew by 37%. Audio conferencing operations accounted for 94% of
the total revenue.

Revenues from videoconferencing services declined by 16% due to the
loss of a customer as well as video bridging installation delays experienced in
our Dallas videoconferencing center as well as the lack of a full-featured video
bridging system in that location. In February 2000, we took the decision to
invest an additional $100,000 in video bridging equipment in Dallas to make our
service more feature-competitive and during April 2000 this decision began to
yield some initial success with improved revenues in video conferencing starting
to be achieved.

Our data streaming operations, outsourced to INTERVU, have met with
immediate initial success and appear to have rapid growth prospects. Testing of
our Internet telephony conferencing services, although successful, are not yet
revenue-generating.

GROSS PROFIT. Gross profit increased by 35% to $4.1 million for the
quarter ending March 31, 2000, compared to $3.1 million for the quarter ending
March 31, 1999. Gross profit percentage improved to 50% of sales from 45% for
the same period last year, mainly due to improved efficiencies and higher
traffic volumes over a fixed cost base. Our audioconferencing product mix is
shifting in favor of increased automated and outsourced volumes, which yield
improved margins and higher efficiencies.

SELLING, GENERAL, AND ADMINISTRATIVE COSTS. Selling, general, and
administrative costs for the first quarter of 2000 were $3.3 million and
accounted for 40% of revenue, compared to $2.8 million or 41% of revenue for the
same period last year. The 16% increase in such expenses resulted from an
ongoing increase in sales focus in the United States as well as ongoing
marketing efforts in the new international business units.

OPERATING INCOME (LOSS). Operating income improved by 273% from
$226,407 to $845,501 due to volume efficiencies gained as well as a 35%
improvement in gross profits compared to the 16% increase in selling, general
and administrative costs.

NET INTEREST EXPENSE. Net interest for the quarter ending March 31,
2000 was $238,555 compared to $172,800 for the same period last year, a 38%
increase. This increase was due to the increase in interest bearing debt taken
on in order to finance our capital expansion and working capital requirements.
This debt is carried at various interest rates at a weighted average cost of
approximately 12%.

NET INCOME BEFORE TAXES AND MINORITY INTEREST. Net income before taxes
and minority interest improved by $553,339 to $606,946 for the first quarter of
2000, compared to $53,607 for the first quarter in 1999. This improvement was
mainly due to revenue growth and operational efficiencies resulting in higher
gross profit margins as well as slower growth in selling, general, and
administrative costs.

TAXES ON INCOME AND MINORITY INTEREST. Taxes on income and minority
interest amounted to $419,021 for the first quarter of 2000, compared to
$180,078 for the first quarter of 1999, a 133% increase. This increase is due to
an increased contribution to consolidated net income by our 60% majority-owned
United Kingdom operation, which pays full tax.

NET INCOME. Net income reported for the quarter ending March 31, 2000
was $187,925, compared to a net loss of $126,471 for the quarter ending March
31, 1999. This improvement of $314,396 can be attributed to continued revenue
growth, improved operating efficiencies resulting in higher gross profit margins
and slower growth in selling, general, and administrative expenses.

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EARNINGS (LOSS) PER COMMON SHARE. Earnings per share improved from a
loss of $0.03 per share during the first quarter in 1999, to earnings of $0.03
per share for the first quarter in 2000. Earnings per share data are calculated
based on the weighted average number of fully-diluted of 5,971,935 shares. A
quarterly preferred dividend of $40,000 is deducted from net income in order to
calculate earnings per share.

SUBSEQUENT EVENT. In May 2000, we released from escrow
previously-issued shares and warrants to a vendor in connection with a
consulting agreement and, accordingly, a non-cash charge of approximately
$235,000 was rendered to fully reflect this transaction.

LIQUIDITY AND CAPITAL RESOURCES (FOR THE THREE MONTHS ENDING MARCH 31, 2000)

As of March 31, 2000, we had $874,150 in cash and cash equivalents. We
plan to continue to grow our business and will require additional cash to
finance our ongoing revenue growth, major capacity expansions and new product
introductions.

Net cash used in operating activities for the three months ended March
31, 2000 was $401,783. Net cash used in operating activities consisted primarily
of increases in accounts receivable and a reduction in accounts payable,
partially offset by increases in accrued expenses.

Net cash used in investing activities consisted of additions to
telecommunications and bridging equipment as well as various acquisitions and
investments into software. Net cash used in investing activities was $820,650.

Net cash provided by financing activities was $717,343 and was achieved
via a combination of additional common stock issued, and the utilization of
various lines of bank and supplier credit.

We anticipate that our available funds are sufficient to meet our needs
for working capital and capital expenditures in the near term. We will need to
raise additional funds as, for example, we intend to pursue additional
acquisitions, undertake new product developments and expand capacity. If we
raise additional funds through the issuance of equity, or equity-related or debt
securities, these securities may have rights, preferences or privileges senior
to those of the rights or our common stock and our stockholders may experience
additional dilution. We cannot be certain that additional financing will be
available to us on favorable terms when required, or at all.

If we should generate $15 million or more in proceeds from a public
offering of our common stock, we will be required, by a provision in the terms
of our Series A preferred stock, to redeem our Series A for $2 million. We have
no plans at this time for such an offering, but may develop such plans in the
future. This redemption will result in a non-recurring, non-cash charge of
approximately $300,000 at the time of the redemption. Additionally, if we elect
to repay our subordinated debt of $2.5 million substantially in advance of its
due date of March 31, 2003, we will incur a further non-recurring charge of
approximately $400,000 relating to deferred loan costs and warrant valuations at
the time of repayment. We granted a total of 40,000 employee stock options to
senior management which will become effective only if our stock price exceeds
$20 per share for ten consecutive days before June 10, 2002. In the quarter
these options become effective, we will incur a minimum compensation charge of
$630,000.

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BUSINESS

Industry sources estimate that the worldwide teleconferencing services
market amounted to approximately $1 billion in 1998, and will grow to over $3
billion by 2004. This excludes growth in Internet-based conferencing services.

Teleconferencing is now an essential business tool in bringing decision
makers together more frequently, at lower cost, and with fewer scheduling
conflicts than is possible with face-to-face meetings. Within our target markets
of multinationals, professional firms, mid-size firms, and government agencies,
our customers use teleconferencing as a high performance productivity tool to
accelerate decision making, reduce travel costs, and improve teamwork. Members
of project teams, consulting teams, and working groups spread across a country
or the world can assemble through this medium more quickly and economically than
in face-to-face meetings. Examples are board meetings, sales and marketing
groups, training programs, investor presentations, press conferences, workshops,
seminars, and any other form of business or professional meeting.

Several key trends in today's business world, as well as ongoing
developments in technology, are driving growth in the market for
teleconferencing services:

- Globalization and the resulting demand for additional business
communication.

- The need for accelerated decision-making and the trend towards
increased teamwork within companies.

- Growth of the Internet as a viable medium for the efficient
transport of large volumes of voice, video, and data.

- Enhancements to the overall quality of audio, video, and data
conferencing.

- Reduced costs of transmission and hardware.

- Increased bandwidth capacity.

- Improved quality of life for participants in meetings who would
otherwise need to spend additional time and effort traveling.

- Reduced travel budgets for companies.

AUDIO CONFERENCING SERVICES MARKET. We derive our audio conferencing revenue
from a fee for the bridging service which combines a few or several hundred
telephone lines into one call while maintaining volume and clarity; the cost of
long distance which we buy in bulk and resell; and enhanced services, such as
recording/replay or polling the opinions of conference participants.

The latest available research of industry consultants, Frost &
Sullivan, indicates that the North America market for all types of
audioconferencing services was approximately $885 million in 1998, as measured
by annual revenues. We estimate that North America was approximately 80 percent
of the total world market; accordingly, worldwide sales were over $1 billion
during 1998. These figures include bridging and other enhanced audio
conferencing services, but exclude long distance transmission charges. The major
long distance companies accounted for approximately 80 percent of this market
with the remaining 20 percent provided by independent companies such as
ourselves. We expect the audio conferencing services market to continue growing
at a compound rate of 20 to 25 percent annually through year 2005, which would
result in an audio conferencing services market of approximately $3 billion in
sales in 2005. This growth does not include development of the Internet-based
services market.

VIDEO CONFERENCING SERVICES MARKET. Frost & Sullivan estimated the United
States video conferencing services market in 1998 was $200 million, excluding
transmission charges and public room rental. The Frost & Sullivan

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report projects growth in the overall video conferencing market at a compound
annual rate of approximately 16 percent to over $400 million in the year 2005.

First introduced in the 1980s, video conferencing applications
initially involved expensive systems in dedicated locations used primarily for
group conferences. The introduction of affordable small group systems expanded
the use of video conferencing. The growing base of users with in-house systems,
combined with the greater bandwidth now available through the integrated
services digital network, or ISDN, will continue to drive increased usage as
well as increased Internet usage generally.

The appeal of videoconferencing is that it adds a person-to-person
dimension that improves communications in a growing number of applications.
Video is the preferred medium in certain industries. Examples of industry
applications include law (witness depositions), medicine (diagnosis and
treatment through telemedicine), manufacturing (determining production
problems), pharmaceuticals (marketing focus groups, research, and collaboration)
and education (distance learning discussions).

DATA CONFERENCING AND INTERNET TELEPHONY SERVICES MARKET. According to
International Data Corporation, a market research firm, the worldwide market for
Internet telephony services is expected to grow by 108 percent annually from
$480 million in 1999 to $19 billion in 2004. This research projects that, by
2004, Internet telephony minutes could reach 135 billion minutes, for a compound
annual growth rate from 1999 to 2004 of 119 percent. Currently, the Internet
telephony market is dominated by consumer voice calling; however, we expect that
adoption by business customers will follow improvements in quality and
usability. This research also suggests that enhanced services such as messaging
and conferencing could grow to approximately 25 percent of Internet telephony
services revenue by 2001. Similarly, we anticipate significant growth in the
amount of audio, video, and data conference calls that will be conducted over
the Internet.

Our next step in expanding Internet teleconferencing is to enable each
Internet conference participant to participate in a two-way, interactive
conference. Recent developments enable two-way voice transmissions to be made
using Internet telephony. Initially, we envision Internet conferencing to be an
incremental service rather than a replacement for our existing teleconferencing
solutions, but we believe that Internet-based services will comprise an
important percentage of the next generation of conferencing services. We are
preparing for the evolution to Internet conferencing services by:

- Designating a portion of the proceeds of this offering to the
development of our Internet telephony conferencing capabilities.

- Developing the first full duplex Internet conferencing solution
using Clarent Corporation's gateway and command center
technology. Clarent is a leading provider of the technology
required to convert Internet transmission of voice to the
circuit-switched network. Our Internet teleconferencing service,
which is now in beta testing, will be accessible through
Clarent's Internet telephony gateways and call command centers.

- Investing in new bridging equipment capable of hosting data
conferencing calls over the Internet and strengthening our video
and data streaming service offerings.

- Acquiring an Internet service provider in January 2000 to
accelerate our introduction of data conferencing services over
the Internet.

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OUR STRATEGY

Our objective is to become the world's leading independent provider of
global teleconferencing services. Our strategy is to:

- DEVELOP A FIRST-TO-MARKET INTERNET TELEPHONY CONFERENCING
SOLUTION. A significant portion of the global telecommunications
infrastructure is expected to shift to the Internet over time. We
intend to be first to market with an Internet telephony
conferencing solution developed in conjunction with Clarent
Corporation.

- CAPITALIZE ON THE GLOBAL MARKET FOR TELECONFERENCING THROUGH A
LOCAL PRESENCE. We use local operations centers staffed by
country nationals. We operate in local time zones and provide
local language services. We employ local management and staff to
develop customer loyalty and improve local market penetration.
Our network of local centers provides our multinational
conference customers with knowledgeable and consistent service,
regardless of the continent or time zone.

- DEVELOP AND LEVERAGE OUR PRESENT DISTRIBUTION CHANNELS THROUGH
MAJOR THIRD- PARTY OUTSOURCE RELATIONSHIPS. Our outsourcing
arrangement with Concert and our co-marketing relationship with
GTE allow us to concentrate on additional volume delivery to
their major customers while they promote our conferencing
services as part of an overall product portfolio. We intend to
leverage these two major opportunities and seek similar
arrangements with other telecommunications providers.

- PURSUE ACQUISITIONS. Having built the base of our
teleconferencing platform in key markets worldwide, we are
positioned to expand our infrastructure and obtain additional
market size through acquisitions. We will consider acquisitions
that increase our service offerings, expand our customer base,
and broaden our geographic coverage. We will also utilize
acquisitions to broaden our technical expertise and enlarge our
pool of management talent.

- ADAPT AND IMPLEMENT STATE OF THE ART AND BEST PRACTICES
TECHNOLOGY. Rather than invest in expensive research and
development, we take advantage of technological advances by
third-party vendors. We buy best-of-class equipment to deliver
audio, video, and data conferencing over the public
circuit-switched telephone network and through the Internet
telephony gateway. This allows us to leverage high technology
development efforts of third parties and provide our customers
with reliable conventional teleconferencing as well as innovative
voice over Internet conferencing applications.

- FOSTER AND MAINTAIN LONG-TERM RELATIONSHIPS WITH OUR CUSTOMERS.
We train our people to be committed to the delivery of superior
service through our proprietary customer care and service quality
training programs. Our quality standards and solid customer
relationships generate large amounts of repeat business and
frequent referrals from satisfied clients. Our long-term
relationships with our customers are enhanced by our extensive
global operations and our broad range of services.

OUR SERVICES

We are a single-source provider of audio, video, data, and
Internet-based conferencing services that are designed to meet the global
teleconferencing needs of a broad range of customers across a diverse range of
information-intensive businesses. We derive the large majority of our current
revenue from audio conferencing (approximately 90 percent) with the remaining 10
percent from the expanding video, data, and Internet-based conferencing sector.
Although we expect audio conferencing to continue comprising the bulk of our
revenues for the foreseeable future, we expect to generate a significant and
growing proportion of our revenues from new business, including enhanced
services and video, data, and Internet-based conferencing services.

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AUDIO CONFERENCING SERVICES. Our ActionCall-SM- audio conferencing services
include full service-attended conferencing, reservationless unattended
conferencing, and a comprehensive suite of enhanced audio conferencing services.
We generate revenues by charging clients a fee per minute for bridging,
attendant call management, and various enhanced conferencing services, as well
as charges related to long distance transmission costs.

In a full service-attended conference, our conference coordinators
either will call each participant (a dial-out conference) or provide
participants with a toll free or local number for them to call at a certain time
(a dial-in conference). In an unattended conference, we provide the customer
with a dial-in telephone number and a code to allow the customers to arrange
their own conferences on our bridging equipment. We connect audio conference
participants to a high quality conference call from their office, at home, at a
project site, in their car, or on any mobile phone.

Our enhanced audio conferencing services, which are available on
request, include:

- Continuous monitoring and operator access.

- Security codes.

- Blast dial-out.

- Participant volume control and muting.

- Conference recording, translation, and transcription.

- Digital replay.

- Network management and fault reporting.

- Broadcast faxes, pre-notification fax, email, and participant
notification.

- Question and answer and polling services for large investor
relations calls.

- Customized billing.

VIDEO CONFERENCING SERVICES. We offer our ActionView-SM- video conferencing
through our multipoint video bridging centers in Dallas, Paris, Amsterdam, and
London, as well as through outsourced arrangements in Australia and Canada. Our
offerings include full-service and advanced technical management features such
as:

- Operator-controlled conferences.

- Continuous on-screen presence of all participants.

- Reservations and scheduling management.

- Room reservations.

- Video taping and cassettes.

- Multiple line speeds and voice-activated switching controls.

- Training, installation, and maintenance of equipment.

- Video conferencing site certification.

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Our video bridging services enable us to provide video conferences that
link from two to 48 locations. Although we can accommodate higher numbers by
linking several video bridges, most video conferences, as a practical matter,
involve three to ten locations. Technical features of our multipoint control
units enable us to display all parties on one screen or select only certain
parties as needed during a conference. Similar to a television interview,
participants from two locations can be on screen while other locations are in a
viewing-only mode.

We generate revenues from video conferencing in the same manner as
audio conferencing, but at higher per-minute rates. Recent decreases in
per-minute rates for bridging and long distance transmission, driven by improved
technology and competition among the long distance companies, have stimulated
the market for video conferencing and are expected to continue to do so.

DATA AND INTERNET-BASED CONFERENCING SERVICES. An outgrowth of the Internet
is the use of data conferencing to broadcast data for viewing by participants
during an audio or video meeting. We enhance the audio or video conference by
simultaneously transmitting data through our ActionData-SM- suite of services
over the Internet or a corporate intranet to personal computers of
participants. While not interactive, Internet streaming broadcasts are
especially useful in large conferences to enhance the audio or video
interaction. These services enable:

- Interactive audio or video conferences with simultaneous data
streaming.

- Collaborative revision of data by participants equipped with
appropriate software.

- Viewing of whiteboard illustrations, slide presentations, or
drawings.

Until the introduction of advanced Internet gateway technology that
enables simultaneous two-way, or full duplex, voice transmission at acceptable
quality and reliability levels, Internet technology did not allow effective,
high quality interactive conferencing, in comparison with the existing public-
switched telephone network. While reasonable voice quality is available on
internal intranets or virtual private networks for companies only wishing to
conduct in-house conference calls, the development of gateway technology opens
the market for us to begin providing high quality Internet telephony
conferencing involving more than one company. We selected Clarent Corporation's
technology in January 2000 in order to test, develop, and introduce the gateway
and command center that will enable the delivery of a first-ever full duplex
Internet telephony conferencing service.

We plan to implement the new solution, which we are initially calling
Action VOIP-SM- , a voice over Internet protocol service, using our own
combination of bridging equipment and software, in a beta test with selected
telecommunications companies. We believe the potential market for Internet
protocol telephony conferences is significant, but until these services are
fully implemented and we can evaluate customer response, we cannot anticipate
the degree to which it will impact our business.

We expect increasing volumes of long distance to be carried over the
Internet because it will cost less than the public-switched circuit network. We
anticipate this development will stimulate the market for teleconferencing
generally and for collaborative types of conferences that integrate voice, data,
and video. Our existing data and Internet services will also continue to be
provided in support of and as an adjunct to our conventional circuit- switched
telephone network, rather than as a complete substitute for audio or video
conferencing.

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Currently, we provide the following data and Internet-based services:

- ActionCast-SM--one-way audio streaming for up to 5,000 passive
participants, for example, stockholders listening to analysts.

- ActionCastPlus-SM--audio streaming plus a PowerPoint-Registered
Trademark- presentation.

- ActionVideo-SM--audio and video streaming over the Internet.

- ActionEmail-SM--broadcast email services.

- WebRez-SM--teleconference reservations accessed by Internet.

- ActionConnect-SM--a web-based unattended conferencing service.

We will continue to provide these services as we roll out our Action
VOIP-SM- conferencing service.

SERVICE QUALITY AND CUSTOMER CARE

We train all employees in the principles of customer care management,
which include continuous service quality monitoring and the development of
positive relationships with clients. We pursue a philosophy of continuous
performance improvement, meaning we consistently measure our performance and
endeavor to improve it.

We actively monitor, analyze, and control all facets of a conference
call, including reservation, call execution, billing, and follow up with
customer satisfaction surveys. We believe our commitment to quality and customer
satisfaction is among the strongest in the industry.

We also review our performance with our customers on a regular basis,
continually set specific performance improvement goals, and modify our
operations accordingly. Feedback from our customers indicates that these factors
contribute to our high customer retention rate.

SALES AND MARKETING

Over 60 percent of our annual growth results from additional demand by
existing customers. Our sales and marketing strategy is based on two main
tenets: we attract customers through multiple distribution channels and, once
the relationship has been established, we cross sell multiple services
throughout the customer's organization worldwide.

We attract our customers through direct and indirect sales efforts such
as customer referrals, telemarketing, trade show promotions, and advertising.
Our direct sales force focuses on multinational and mid-market accounts. We also
leverage outsourcing relationships with large telecommunications providers, such
as Concert and GTE. Our range of service offerings allows us to cross sell our
services once we have initially established an account.

We have built a customer base of approximately 2,000 established
accounts. Our records indicate that over 5,000 schedulers, administrative staff,
and managers employed by these customers are responsible for requesting or
arranging conferences with us. These customers range from small manufacturing
firms to Fortune 500 companies, and are exclusive of customers of Concert and
GTE. Over 60 percent of our revenue is generated by 30 major multinational
businesses that contact us through approximately 1,000 individual conference
schedulers within those businesses.

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We have targeted the following customer groups for our conferencing
services and applications:

- Major multinational companies, investment banks, and professional
services firms within the Fortune 1000 (GLOBAL ACCOUNTS).
Selected global customers using our audio, video, data, or
Internet conferencing services include Ernst & Young, Industrial
Bank of Japan, British Petroleum, ABN Amro Bank, Philips
Electronics, and KLM.

- Medium-to-large-sized domestic companies, associations, and
governmental organizations (MIDMARKET ACCOUNTS), such as the
American Electronics Association, the State of Colorado, and a
number of universities.

- Customers of major telecommunications providers such as Concert
and GTE, which we access through outsourcing and co-marketing
arrangements (OUTSOURCED AND CO-MARKETING RELATIONSHIPS).

GLOBAL ACCOUNTS. Our global account managers based in New York, London,
Amsterdam, and Paris are responsible for some 30 multinational accounts
comprising 60 percent of our international business. We focus on the home
country or headquarters of these multinationals as a base for developing our
global business relationships. Each account manager deals with the customer's
home country office or headquarters when establishing global service.

MIDMARKET ACCOUNTS. Our direct sales staff targets medium to large companies
with a high volume of teleconferencing, as well as smaller companies with lower
demand for our services. As in any business, purchasers of higher volume sales
benefit from volume discounts. While we continue to promote sales to our global
accounts, we seek situations in which we can provide competitive services to
mid-sized companies at higher margins. Our direct sales effort manages each of
our midmarket accounts through contacts with our customers' upper management and
also with their administrative staff who are responsible for scheduling and
travel budgets. Once we have become a repeat provider of services for a
customer, we stress personal contact with the call organizers, conference
chairpersons, and members of senior management within our customers'
organizations.

OUTSOURCED AND CO-MARKETING RELATIONSHIPS. Outsourced and co-marketing
relationships with major telecommunications companies are a relatively new
development within our company. Our independence from other network providers
allows us to serve their customers without concern that we would compete for
their customers' other telecommunication business.

- CONCERT. On January 1, 2000, Concert became the vehicle for an
international joint venture between AT&T and British Telecom. Our
initial services to Concert involved the delivery of services for
Concert's internal conferencing. We are now phasing into the
delivery of services to Concert's customers. Revenues from the
Concert agreement will depend on usage and pricing.

- GTE. In July 1999, GTE Corporation designated us as a major
supplier of teleconferencing services to all subsidiaries and
divisions of GTE, the only independent teleconferencing provider
so designated by GTE. We sell and cooperatively market our
services directly to GTE's customers in conjunction with GTE on
large volume telecommunications bids. Revenues from GTE customers
depend on usage and pricing.

- INTERVU. In March 2000, we announced an agreement to work
together with INTERVU, Inc., a leading provider of audio and
video streaming over the Internet, as one of our co-marketing
partners. We expect definitive arrangements to be completed
during the second quarter of 2000. Revenues will depend on usage
and pricing. INTERVU has announced that it has signed a merger
agreement with Akamai Technologies, Inc. which is subject to
shareholder and regulatory approvals.

- OTHER OUTSOURCING AND CO-MARKETING OPPORTUNITIES. We believe our
role as an independent full-service teleconferencing provider
will continue to drive our growth in this sector, because, while
teleconferencing is an essential part of a telecommunications
provider's portfolio of services, it can often be provided
effectively on an outsource basis. For example, we are currently
negotiating an international teleconferencing services agreement
with a major long-distance carrier. None of our outsource
relationships are on an exclusive basis, and our revenues are
dependent upon our delivery of high quality service at
competitive prices.

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INTELLECTUAL PROPERTY

We seek to protect our proprietary information and business practices
as trade secrets. We have developed customized copyrighted software, which we
consider proprietary, for our service and quality control functions, and have
also developed in-depth technical know-how with respect to the operation of
telecommunications equipment and the coordination of large volume conference
calls. We require each of our employees to execute a nondisclosure agreement for
the protection of our confidential information. We hold no patents.

Our United Kingdom subsidiary has a British trademark for "CONFERCALL,"
and we own British trademarks for "ACT" and "ACTIONCALL," which we license to
our United Kingdom subsidiary. "ACT Teleconferencing" is trademarked in the
Benelux countries. "ACT" is not trademarked in the United States since a wide
variety of companies use "ACT" in their corporate name or advertising. However,
we believe we are the only enterprise currently using "ACT" in the
teleconferencing industry. We claim a number of service marks that use "ACT" or
"Action" in the mark. Nevertheless, other enterprises' usage of "ACT" makes
registered trademark protection prohibitively expensive.

SUPPLIERS

We are not dependent on any single carrier or supplier for any of the
services we sell. We have negotiated volume discounts with our primary long-
distance carriers, and believe we could negotiate similar arrangements at
similarly competitive prices with one or more other carriers should our current
carriers be unable to continue to provide service at competitive prices.

The equipment we purchase for use in our operations is also available
from a variety of suppliers, some of which compete in the teleconferencing
services business. We have chosen to purchase most of our audio bridging
equipment from Compunetix, a supplier based in Pittsburgh, Pennsylvania.
According to Compunetix, it accounts for approximately 30 percent of the
worldwide market for conferencing bridges. Compunetix is a supplier of
conferencing platforms to U.S. government agencies such as the National
Aeronautics and Space Administration, the Federal Aviation Administration
emergency management platform, and the U.S. Department of Defense, as well as
major telecommunications providers. We recently added Outreach Technologies,
Spectel, Videoserver, Accord, and Clarent Corporation to our list of equipment
suppliers.

OUR COMPETITION

We compete with major long distance companies, independently owned
teleconferencing companies, and in-house services such as company-operated
bridges and private branch exchange equipment.

The principal competitive factors in the teleconferencing market are
service, quality, reliability, price, name recognition, and available capacity.
The location of an operations center can also be a competitive factor, as a
local presence will reduce transmission costs and reflect the language, accent,
or business practices of local customers. In certain cities and countries, we
have opened local sales offices to ensure that marketing is more personal and
effective.

Our competition comes from large companies such as AT&T, MCI Worldcom,
Global Crossing, Sprint, British Telecom, Bell Canada, France Telecom, Deutsche
Telekom, Telstra, Belgakom, and Hong Kong Tel. We also face competition from
independent teleconferencing companies similar to us, including Premiere
Technologies, Intercall, Vialog, and Genesys. In the United States, we may also
face additional competition from the regional carriers which, under the
Telecommunications Act of 1996, will be allowed to provide long distance
services nationwide under certain conditions and whose long distance customers
would expect access to teleconferencing services. This may become an additional
opportunity for us, as certain regional bell carriers may choose to outsource
their customers' needs to independent teleconferencing providers.

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Despite their large share of the teleconferencing services market,
teleconferencing is not a primary focus of the major long distance carriers. We
have been able to compete with the conferencing divisions of the long distance
companies on the basis of quality of service for the large volume business of
prestigious companies such as investment banks, accounting and consulting firms,
and law firms. Excess long-distance line capacity enables the long distance
companies to offer discounted prices to high-volume conferencing customers, but
they generally charge higher prices to smaller and medium volume customers. This
creates a pricing structure that enables us and others to compete on a price-
and-service basis for the teleconferencing business of the medium and smaller
businesses.

There are few regulatory barriers in the countries in which we operate,
but new entrants into the teleconferencing business will face various economic
barriers. The complex planning, installation, and operation of a global
teleconferencing platform involving multiple facilities and office locations
such as ours, together with the implementation of network technology and
coordination of operations, would likely take extensive funding to replicate.

Some companies own and operate their own conferencing bridges, but many
companies find that the costs of operating their own bridge outweigh the
benefits and prefer to outsource their teleconferencing services. Technology is
available to enhance private branch exchange conferencing capability (usually up
to six calls), but private branch exchange-handled conference calls typically
have poor sound quality and each additional line weakens the overall sound
volume. Additional competition may also develop from more sophisticated
telephone sets and other centralized switching devices. These alternative
techniques may enable our customers to conduct some of their own conferences,
but we believe they will continue to outsource their larger conferences,
particularly if their distance meetings require a collaboration of audio, video,
data, and Internet conferencing techniques.

FACILITIES

Our development of local facilities serves the dual purpose of
providing local language, local currency, and local time zone services to the
areas served by each operations center, as well as backup and overflow capacity
among other centers in the event all or part of a conference needs to be
rerouted from an operations center that is at full capacity.

We currently lease office and operations space at our locations in
Denver, Holmdel, Dallas, Toronto, Ottawa, London, Amsterdam, Brussels, Paris,
Frankfurt, Sydney, Adelaide, and Hong Kong, which we have listed in the table
below. We also plan to add an operations facility in Frankfurt by the second
quarter of 2000.

[Download Table]

LOCATION COUNTRY DESCRIPTION YEAR ESTABLISHED
-------- ------- ----------- ----------------

Denver United States Sales and operations 1990
London United Kingdom Sales and operations 1992
Amsterdam Netherlands Sales and operations 1995
Brussels Belgium Sales office 1996
Sydney Australia Sales and operations 1997
Holmdel United States Sales and operations 1997
Paris France Sales and operations 1997
Ottawa Canada Sales and operations 1998
Toronto Canada Sales and operations 1998
Frankfurt Germany Sales office 1998
Adelaide Australia Sales and operations 1999
Dallas United States Sales and operations 1999
Hong Kong China Sales and operations 1999

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All operations are in office locations close to the city center or in
nearby suburbs. These leases expire or are renegotiable within the next five
years and are adequate for our expansion plans. Forward lease commitments are
not significant in relation to total ongoing operating expenses and all lease
costs are consistent with generally available market rentals. We believe we
could obtain comparable facilities at similar market rates if necessary.

Our operations centers provide us with a high degree of redundancy. We
can reroute most of our conferences to other centers if necessary. By networking
our operations centers in different time zones, we use idle evening and
nighttime capacity in one center to fulfill daytime demand at another center.

Each of our operations centers includes at least one audio or video
bridge. Our capacity is measured in ports, with one port needed for each
conference participant. Our audio conferencing call centers operate more than
3,000 ports worldwide. This enables us to handle conferences of varying sizes by
linking the port capacity of our operation centers together. Although we can
network our ports to handle 1,000 or more participants and have handled
conferences of this size, the low demand for such a large conference and the
logistics of handling multiple conferences during the business day make it
unlikely that large conferences will exceed 500 participants. Weekday mornings
and early afternoons are peak conferencing times. Our video conferencing
capacity includes over 300 ports operated from Dallas, London, Paris, and
Amsterdam. Our data conferencing capacity includes 192 ports operated from four
bridges-two in the United States, one in Canada, and one in Australia. We
outsource our overflow to other teleconferencing companies in the event we have
temporary capacity limitations. We also provide outsourced services to certain
of our competitors when they have similar capacity constraints.

REGULATION

Although the telecommunications industry has been subject to extensive
regulation, government regulation or licensing has no material impact on the
delivery of teleconferencing services in the countries where we now conduct our
business.

EMPLOYEES

We have an employee base of 290 worldwide. There are 134 employees in
our North American operations, 120 in our European operations, and 36 in our
Asia Pacific operations. Of the total worldwide employees, approximately 60
percent are in teleconferencing operations, 20 percent are in sales and
marketing, and 20 percent are in management and administration. Our entry into
Internet conferencing eventually will require new employees, but we expect the
initial growth in the number of employees to be gradual. We do not anticipate
any material change in the number of employees in the near future. None of our
employees are represented by labor unions. We have not experienced any work
stoppages and consider our employee relations to be good.

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MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

Officers receive salaries agreed upon by the officer and the board and
are eligible for performance incentives determined from time to time by the
board.

Our executive officers and directors since the beginning of the 1999
fiscal year are as follows:

[Enlarge/Download Table]

NAME AGE* POSITION
---- ---- --------

Gerald D. Van Eeckhout............... 59 Chairman of the Board; Chief Executive Officer
Gavin J. Thomson..................... 42 Chief Financial and Planning Officer, Secretary and Treasurer
Gene Warren.......................... 48 Regional Managing Director, North America
Thierry Bignet....................... 44 Regional Managing Director, Europe
Peter Eeles.......................... 44 Regional Managing Director, Asia Pacific
David L. Holden...................... 39 Managing Director, ACT Teleconferencing Limited, UK
Charles T. Stout..................... 53 Director of Global Projects, Assistant Secretary and Assistant Treasurer
Carolyn R. Van Eeckhout.............. 61 Vice President, Human Resources, and Director
James F. Seifert..................... 72 Director
Ronald J. Bach....................... 66 Director
Donald L. Sturtevant................. 62 Director

-----------
* Age is as of March 31, 2000

GERALD D. VAN EECKHOUT, one of our founders, has been chairman of our
board of directors and chief executive officer since our formation in 1989. He
has served as a director and chairman since 1989, and his current term as a
director ends in 2001. From 1982 to 1989, Mr. Van Eeckhout was president, chief
executive officer, and a director of ConferTech International, Inc., a
teleconferencing services and manufacturing company, which was subsequently sold
to Global Crossing. Before 1982 he served seven years as chief financial and
administrative officer of Medtronic, Inc., five years as chief financial and
planning officer at Pillsbury International Division, and eight years as a
certified public accountant with Touche Ross & Co., based in Minneapolis,
Minnesota. He received a bachelor of science degree from the University of North
Dakota in 1962, and completed the Stanford Executive Program in 1976. He has
also been a national director of the American Electronic Association and
President of the University of North Dakota Foundation.

GAVIN J. THOMSON, our chief financial and planning officer, secretary,
and treasurer, joined us in February 1997. From 1994 to 1996, Mr. Thomson served
as managing director of TEK Corporation, a consumer electronics company based in
Johannesburg, South Africa. Before holding that position he was the chief
financial officer of TEK Electronics, then one of the largest consumer appliance
companies in South Africa, for a period of four years. He is a chartered
accountant (South Africa) and received his bachelor's and post-graduate degrees
in accounting from Natal University, South Africa; earned his master's degree in
business administration from the University of Denver; and completed the
Stanford Business School Advanced Management College.

GENE WARREN, our regional managing director of North America operations
since 1997, joined us in August 1996. Mr. Warren came to us with over 20 years
of executive and technical experience in telecommunications. From 1993 to 1996,
Mr. Warren served as senior vice president of business development, operations,
and technology at Global Access, a teleconferencing services company later
acquired by Genesys Group. Prior to his employment by Global Access, he served
as director of technical services for ConferTech International and senior
director of technical support for MCI. Mr. Warren received a bachelor of science
degree in physics and mathematics from Clark Atlanta University in 1975. He also
holds a master's degree in business administration from Regis University.

THIERRY BIGNET, our regional managing director of European operations,
joined us in November 1997. From 1990 to 1995, he was the founder and senior
consultant of Carta France, an independent business consultant in Europe to
companies such as Volvo and Peugeot. From 1995 to 1997, Mr. Bignet was chairman
and CEO of Genesys Group, then a leading European provider of unattended
teleconferencing services. He holds a Master of Business Administration degree
from Ecole Superieure des Dirigeants d'Enterprises (Paris) and an undergraduate
degree in engineering from Institut National d'Informatique de Gestion (Paris).

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PETER EELES currently our regional managing director of Asia-Pacific
operations, joined us in February 1997. From 1994 to 1997, he was director of
CSG Systems, a telecommunications systems company based in Sydney, Australia.
Prior to 1994, he worked for Telstra, an Australian telecommunications company,
in various technical, sales, and marketing functions. He is a telecommunications
engineer and holds a degree in electronics.

DAVID L. HOLDEN has been the managing director of ACT Teleconferencing
Limited since 1992. Immediately before joining us, he was employed for seven
years with British Telecommunications as general manager of its audio
teleconferencing service business in London. Mr. Holden received a bachelor of
science degree in business administration from the University of Wales.

CHARLES T. STOUT has held the position of director of global
projects since 1998. He was also our treasurer from 1991 until 1996, and
served as vice president of finance for U.S. operations from 1996 to 1998. In
1998, he became assistant secretary and assistant treasurer. From 1985 to
1990, Mr. Stout was vice president of finance for ConferTech International,
Inc., an audio teleconferencing service and manufacturing company. From 1991
to 1992, Mr. Stout held an accounting management position with Capital
Associates International, Inc., and from 1992 to 1995, the Resolution Trust
Corporation engaged Mr. Stout as an accountant. He holds a bachelor's degree
and a master's degree in accounting and management science from the
University of Colorado.

CAROLYN R. VAN EECKHOUT, one of our founders, serves as vice
president of human resources for ACT Teleconferencing, Inc. She has been one
of our directors since 1991 and has been employed by us since our inception.
From 1985 to 1989, she was a self-employed consultant to various health
professionals and the Denver Public Schools. She received her bachelor's
degree in education from Pennsylvania State University. Her current term as a
director ends 2002.

JAMES F. SEIFERT, one of our directors since 1991, has been chairman
and chief executive officer of James F. Seifert & Sons LLC since 1993. Mr.
Seifert was previously chairman and chief executive officer of Grafton Group,
Inc., doing business as Seifert's, a women's apparel chain that operated up
to 234 stores. Mr. Seifert received his bachelor of science degree in
commerce from the University of North Dakota in 1950. He is a former
president of the University of North Dakota Foundation. His current term as a
director ends in 2000.

RONALD J. BACH, a director since 1992, is a certified public
accountant who was employed continuously by the firm of Deloitte and Touche
from 1955 until his retirement in 1991 at which time he was partner in charge
of its Bloomington, Minnesota office. He holds a bachelors degree in business
administration from the University of Minnesota, and serves as a director of
a number of privately held companies in which he has an ownership interest.
His current term as a director ends in 2001.

DONALD L. STURTEVANT was elected as one of our directors in 1996.
His current term as a director ends in 2002. Since 1996, he has been the
chief operating officer and a director of St. Croix Medical, Inc., a medical
implantable hearing systems company. He was president and chief executive
officer of MediVators, Inc. from 1991 through 1996. Previously, he held the
positions of CEO and chairman of the board of BallistiVet, Inc., from 1988
through 1990. From 1985 through 1987 Mr. Sturtevant was vice president of
Alpha Business Group, Inc., a medical venture management group which he
co-founded. From 1972 to 1985 Mr. Sturtevant held various positions at
Medtronic, Inc., including vice president and general manager of the
instrument division. Mr. Sturtevant received a bachelor of science degree in
business administration from the University of Minnesota in 1966 and is a
1975 graduate of Northwestern University's International Management Program
in Bergenstock, Switzerland.

GERALD D. VAN EECKHOUT and CAROLYN R. VAN EECKHOUT are husband and
wife. All officers serve at the discretion of our board of directors.

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EXECUTIVE COMPENSATION

The following table sets forth information regarding compensation we
paid to our chief executive officer and our four most highly compensated
executive officers who were serving as executive officers at the end of fiscal
years ended December 31, 1999, December 31, 1998, and December 31, 1997. All
amounts are in U.S. dollars.

[Enlarge/Download Table]

FISCAL SECURITIES ALL OTHER
NAME YEAR SALARY BONUS UNDERLYING OPTIONS(1) COMPENSATION
------ ------ ----- --------------------- ------------
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------

Gerald D. Van Eeckhout 1999 $160,000 $36,320 $18,771(2)(3)
1998 120,000 87,752 50,000(4) 18,771(2)(3)
1997 120,000 54,816 150,000(5)
Gavin J. Thomson 1999 140,000 5,091 10,000(6) 4,800(3)
1998 120,000 3,616 4,800(3)
1997 100,000 100,000(7)
Gene Warren 1999 145,000 173,982 20,000(6) 6,418(3)
1998 120,000 43,342
1997 96,081 39,835 100,000(8)
Thierry Bignet 1999 140,000 30,599 5,000(6) 6,000(3)
1998 120,000 4,898 50,000(9) 6,000(3)
David L. Holden 1999 112,000 27,600 17,280(3)
1998 106,000 20,343 15,500(10)
1997 80,000 51,320 45,000(10)

-----------

(1) All options are for the purchase of common stock.

(2) Includes an annual disability insurance premium payment of $1,971 per year
and a split dollar life insurance policy premium of $12,000 per year.

(3) Includes car allowances.

(4) 50,000 options granted on December 22, 1998, at an exercise price of $6.05
per share. These options vest at 50 percent per annum.

(5) Includes 100,000 options granted on November 1, 1996, at an exercise price
of $3.03 per share; 50,000 options granted on September 3, 1996, at an
exercise price of $3.03 per share. These options vest at 25 percent per
annum.

(6) On June 10, 1999, Messrs. Thomson, Bignet, and Warren received grants of
10,000, 5,000, and 20,000 options, respectively, at an exercise price of
$4.25 per share. These options are only valid if our closing bid price is
$20 or more for a minimum of ten days before June 10, 2002; however, they
will vest immediately in such circumstance.

(7) Includes 50,000 options granted on February 15, 1997, at an exercise price
of $3.00 per share; 25,000 options granted on June 18, 1997, at an exercise
price of $5.00 per share; and 25,000 options granted on December 30, 1997,
at an exercise price of $6.00 per share. These options vest at 25 percent
per annum.

(8) Includes 50,000 options granted on November 1, 1996, at an exercise price
of $2.75 per share; 25,000 options granted on June 18, 1997, at an exercise
price of $5.00 per share; and 25,000 options granted on December 30, 1997,
at an exercise price of $6.00 per share. These options vest at 25 percent
per annum.

(9) 50,000 options granted on December 30, 1997, at an exercise price of $6.00
per share. These options vest at 25 percent per annum.

(10) Includes 45,000 options granted on July 1, 1996, at an exercise price of
$3.00 per share; 4,500 options granted on December 30, 1997, at an exercise
price of $6.00 per share; and 10,500 options granted on July 1, 1998, at an
exercise price of $9.00 per share. These options vest at 25 percent per
annum.

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STOCK OPTIONS

The following two tables set forth information concerning stock option
grants to our chief executive officer and our four most highly compensated
executive officers during 1999:

OPTION GRANTS IN FISCAL 1999

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PERCENTAGE OF
NUMBER OF TOTAL OPTIONS
SECURITIES GRANTED TO EXERCISE
UNDERLYING OPTIONS EMPLOYEES IN LAST PRICE EXPIRATION
NAME GRANTED POSITION FISCAL YEAR ($/SHARE) DATE 5% 10%
---- ---------------- ----------- --------- ---- -- ---
POTENTIAL REALIZABLE VALUE AT ASSUMED
ANNUAL RATES OF STOCK APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(1)
----------------- --------------

Gerald D. Van Eeckhout... none 0% n/a n/a n/a n/a
Gene Warren.............. 20,000(1) 9.8% $4.25 June 10, 2002 n/a n/a
Gavin J. Thomson......... 10,000(1) 4.9% $4.25 June 10, 2002 n/a n/a
Thierry Bignet........... 5,000(1) 2.5% $4.25 June 10, 2002 n/a n/a
David L. Holden.......... none 0% n/a n/a n/a n/a

-----------

(1) This option grant becomes valid only if the closing bid price of our
common stock is $20 or more for a minimum of ten consecutive days
before June 10, 2002. No value will be realizable at a 5 percent
appreciation rate (value of $4.4625 per share) or 10 percent
appreciation rate (value of $4.675 per share), because the grant will
not be effective until the $20 closing bid price condition is
satisfied. In the quarter these options become valid, we will incur a
compensation charge for the difference between the exercise price and
the fair market value of the underlying shares.

AGGREGATED OPTIONS EXERCISED IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES

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SHARES ACQUIRED VALUE
---------------- ------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
DECEMBER 31, 1999 AT DECEMBER 31, 1999
---------------------- --------------------

Gerald D. Van Eeckhout. - - 137,500 62,500 $607,875 $235,125
Gene Warren............ - - 62,500 57,500 259,375 128,125
Gavin J. Thomson....... - - 48,000 60,000 177,500 187,500
Thierry Bignet......... - - 25,000 30,000 50,000 50,000
David L. Holden........ - - 38,625 21,375 170,625 60,750

Through December 31, 1999, the total increase in stock options granted
in 1999 to the above executive officers, net of forfeiture and exercise,
amounted to 35,000. The total number of stock options granted during 1999 was
221,700, bringing the total outstanding to 1,106,352.

DIRECTORS' FEES

We have adopted a compensation plan for our three non-executive
directors which provides for payment of directors' fees in the form of stock
options or stock grants. Under this plan, we granted stock options for a total
of 15,000 shares in 1997, or 5,000 options for each of our three non-executive
directors, at an exercise price of $5.00 per share; for a total of 15,000 shares
in 1998 at an exercise price of $9.00 per share; for a total of 15,000 shares in
1999 at an exercise price of $5.25 per share; and for a total of 15,000 shares
at an exercise price of $8.00 per share in 2000. All options vest one year from
the date of grant and expire ten years from the date of grant. In 2000, we made
stock grants of 500 shares to each of our non-executive directors at a grant
price of $8.00 per share.

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KEY EMPLOYEE INSURANCE

We maintain a key-employee life insurance policy on the lives of all of
our senior executives in amounts ranging from $500,000 to $1.8 million; the
major portion of proceeds are payable to us with the balance to the executive's
estate. The intended purpose of these policies is to assist us in replacing
these executives and in making other adjustments in operations in the event of
their death. Our United Kingdom subsidiary holds an additional life insurance
policy on the life of David L. Holden, its managing director, in the amount of
(pound)1,090,000, payable to the subsidiary. The proceeds are for the purpose of
recruiting a successor, acquiring a portion of Mr. Holden's estate's ownership
of 40 percent of the subsidiary's shares, and other adjustments to operations.
We have the option to repurchase Mr. Holden's shares upon his death or
disability.

KEY EMPLOYEE AGREEMENTS

Our board adopted executive agreements with Gerald D. Van Eeckhout,
Gene Warren, and Gavin J. Thomson as of April 1, 1999, as amended on July 26,
1999. If any person that is not our affiliate takes control of us, the takeover
triggers the effective date of the executive agreements. Each executive
agreement provides that the executive is entitled to a three-year employment
agreement commencing on the effective date at the executive's regular salary and
bonus. If the executive is dismissed without cause or leaves for good reason as
defined under the agreement, the executive is entitled to three years' salary
and a bonus that is determined according to the board of directors' bonus
policy. Our board of directors has determined that the average compensation of
these executives historically has been less than the compensation received for
comparable responsibilities in other companies. Accordingly, our board has
decided that actual compensation under these executive agreements may exceed
limitations imposed by the Internal Revenue Code on "parachute payments" if such
compensation is triggered before April 1, 2002, and, therefore, these payments
may not be fully deductible and to the extent they are not fully deductible,
they will be subject to a 20 percent excise tax. If such compensation is
triggered on or after April 1, 2002, the amount will be limited to three times
the average total compensation for each person over the preceding five years in
accordance with Section 280G of the Code and will be deductible and not subject
to the 20 percent excise tax.

One of our founders, Gerald D. Van Eeckhout, also has executed a
five-year employment agreement dated July 1, 1999, at a salary and bonus no less
than the amount in effect upon execution of the agreement, which includes
covenants prohibiting competition with us following the termination of his
employment. This employment agreement ensures that the services of Mr. Van
Eeckhout will be available to us, as determined by the board of directors, and
will prohibit Mr. Van Eeckhout from engaging in activities on behalf of a
competitor for two years following termination of his employment. Compensation
under his agreement is reviewed annually by the compensation committee of the
board of directors and includes medical insurance and other benefits available
to employees generally. If a change in control occurs, as defined in the
executive agreement, Mr. Van Eeckhout's executive agreement will prevail over
the terms of his employment agreement, except that his benefits and spousal
benefits for his wife, Carolyn R. Van Eeckhout, including medical coverage, will
continue for the balance of the five year term, and he will receive a minimum of
two years compensation under the employment agreement.

Our United Kingdom subsidiary has a service agreement with its managing
director, David L. Holden, which may be terminated by the employer or employee
on six months' notice. Under this agreement, Mr. Holden receives a base salary,
currently (pound)85,000 (US $140,000) per year, and a performance-related bonus
as determined by the subsidiary's board from time to time.

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PRINCIPAL STOCKHOLDERS

The following table sets forth certain information known to us
regarding beneficial ownership of our common stock as of March 31, 2000, by our
principal stockholders. For this purpose, a principal stockholder is a person
that holds beneficial ownership of five percent or more of our outstanding
common stock. Under the rules of the Securities and Exchange Commission,
beneficial ownership includes voting or investment power with respect to
securities and includes the shares issuable pursuant to stock options that are
exercisable within 60 days following March 31, 2000. Shares issuable from stock
options are deemed outstanding for computing the percentage of the person
holding such options but are not outstanding for computing the percentage of any
other person.

The number of shares of common stock outstanding after this offering
includes 800,000 shares of common stock we are offering for sale in this
offering. The percentage of beneficial ownership for the following table is
based on 4,828,374 shares of common stock outstanding as of March 31, 2000, and
5,628,374 shares of common stock outstanding after the completion of this
offering.

To our knowledge, except as indicated in the footnotes to this table,
the persons named in the table have sole voting and investment power with
respect to all shares of common stock.

[Enlarge/Download Table]

SHARES TO
MATERIAL BE SOLD
NAME AND ADDRESS OF RELATIONSHIP WITH IN THE
BENEFICIAL OWNER ACT NUMBER PERCENTAGE OFFERING NUMBER PERCENTAGE
---------------- --- ------ ---------- -------- ------ ----------
SHARES OF COMMON STOCK SHARES BENEFICIALLY OWNED
BENEFICIALLY OWNED PRIOR TO AFTER
THE OFFERING THE OFFERING
------------ ------------

Officers and
Gerald D. and Carolyn R. Van Eeckhout(1) Directors 611,000 15.4% None 611,000 13.3%
James F. Seifert(1) (2)................ Director 231,250 5.6% None 231,250 4.9%
Nikos Moschos(3)....................... Stockholder 466,236 9.7% None 466,236 8.4%
Katerina Scordou(4).................... Stockholder 307,440 6.4% None 307,440 5.5%
Katerina Kopsida(5).................... Stockholder 358,100 7.4% None 358,100 6.4%
Alexandros Makris(6)................... Stockholder 240,000 5.0% None 240,000 4.3%
All Directors and executive officers as
a group (11 persons)................ 998,838 28.1% None 998,838 24.7%

-----------

(1) 1658 Cole Boulevard, Suite 130, Golden, Colorado 80101.

(2) Held jointly with his spouse, Nancy Seifert.

(3) Agiou Konstaninou 40, 2nd Floor, Marousi, Athens 15124, Greece; 307,440 of
these shares are held by Mr. Moschos and Katerina Scordou (his spouse) and
158,796 shares are held by Euro-American Securities SA, a company he
controls.

(4) Agiou Konstaninou 40, 2nd Floor, Marousi, Athens 15124, Greece; held with
Nikos Moschos (her spouse).

(5) 9, Leonidiou Street, Nea Kiffisia, Athens 14562, Greece.

(6) Orfeos 13, Rodon Ekali, Athens 14565, Greece.

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CERTAIN TRANSACTIONS

PRIVATE EQUITY, LEASE, AND SUBORDINATED DEBT TRANSACTIONS

We have obtained financing for our expansion and operations through
several private equity, debt, or lease transactions that involved the issuance
of securities in reliance on exemptions from the Securities Act of 1933.

SIRROM CAPITAL CORPORATION AND EQUITAS, L.P. In 1998, we issued subordinated
notes in the amount of $1,610,000 and $890,000, or a total of $2,500,000, in
favor of Sirrom Capital Corporation and Equitas, L.P., under a subordinated loan
and security agreement. The subordinated notes bear interest at 13.5 percent,
payable monthly, are due on March 31, 2003, and are secured by a subordinated
security interest in our accounts receivable, inventory, intangibles, equipment,
and other personal property as well as our pledge of 100 percent of our voting
shares in our subsidiary, ACT Teleconferencing Services, Inc., and our 60
percent ownership interest in the outstanding shares of ACT Teleconferencing
Limited, a United Kingdom company, collectively, the collateral. The
subordinated notes became subject to an intercreditor and subordination
agreement dated May 20, 1999, between Sirrom Investments, Inc. (assignee of
Sirrom) and Equitas and our commercial lender, Coast Business Credit, in which
Sirrom Investments, Inc. and Equitas agreed to subordinate their rights in the
collateral to a $2,000,000 line of credit that Coast Business Credit made
available to ACT Teleconferencing Services, Inc.

When we issued the subordinated notes, we also issued warrants to
Sirrom as of March 31, 1998 for the purchase of 183,853 shares of common stock
at an exercise price of $7.00 per share, expiring on April 30, 2003. If the
subordinated notes are not fully paid on the second, third, or fourth
anniversaries of issuance, the number of shares subject to the Sirrom warrants
will increase to 216,802 shares on the second anniversary, 269,702 shares on the
third anniversary, and 360,495 shares on the fourth anniversary. We issued
identical warrants to Equitas for the purchase of 147,114 shares of common
stock, the Equitas warrants. If the subordinated notes to Equitas are not fully
paid on the second, third, or fourth anniversary dates, the number of shares
subject to the Equitas warrants will increase to 173,832 shares on the second
anniversary, 200,825 shares on the third anniversary, and 228,410 shares on the
fourth anniversary.

The number of shares subject to the Sirrom warrants and the Equitas
warrants are subject to anti-dilution adjustments and are also subject to
adjustment for stock splits, stock dividends, consolidations, and similar
transactions. Holders of shares issued upon the exercise of the Sirrom warrants
and Equitas warrants have piggy-back registration rights.

R.C.C. FINANCE GROUP LTD. In 1998, R.C.C. Finance Group Ltd., a New York
corporation, R.C.C., issued an equity lease commitment to us in the amount of
$2,000,000. We have drawn on the commitment to finance our acquisition of
conferencing bridges and related equipment in support of our expansion to new
offices and for handling the volume of traffic the Concert agreement may
generate. As consideration for the commitment, we granted to R.C.C. a warrant to
purchase 75,000 shares of our common stock at an exercise price of $8.00 per
share, based on the market price of $8.00 per share on April 7, 1998, the R.C.C.
warrants. All these warrants were exercised in the first quarter of 2000 on a
cashless basis.

1999 PRIVATE PLACEMENT. In February 1999, we closed on a private placement
of securities, the 1999 private placement, in which we sold 109,912 units at
$5.50 per unit, which was the average closing price of our common stock on the
Nasdaq SmallCap Market for the preceding ten trading days. Each unit was
comprised of one share of common stock and a warrant, the 1999 private placement
warrants, to purchase one share of common stock at an exercise price of $7.00
and expiring on December 31, 2003. See "Certain Transactions-Private Equity,
Lease, and Subordinated Debt Transactions-1999 Private Placement." The following
officers and directors of ACT participated:

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[Enlarge/Download Table]

UNITS VALUE
----- -----

Gerald and Carolyn Van Eeckhout..................................................... 16,000 $88,000
James Seifert....................................................................... 18,000 99,000
Thierry Bignet...................................................................... 500 2,750
Peter Eeles......................................................................... 500 2,750

Additionally, Bill Seifert, brother of director James Seifert, participated in
the private offering and purchased 18,181 units for $100,000.

ISSUANCE OF PREFERRED STOCK. On October 19, 1999, we issued 2,000 shares of
Series A preferred stock to GMN Investors II, L.P. for $2,000,000. In connection
with this transaction, we also issued warrants to GMN to purchase 400,000 shares
of common stock at an exercise price of $7.00 per share, expiring on October 19,
2006. See "Description of Securities-Preferred Stock-Series A."

EMPLOYEE STOCK PURCHASE PLAN

During plan years ending December 31, 1998 and December 31, 1999, the
following executive officers purchased 10,973 shares under our employee stock
purchase plan:

[Download Table]

SHARES
------

Gavin Thomson......................................... 4,190
Gene Warren........................................... 4,056
Thierry Bignet........................................ 786
Peter Eeles........................................... 1,941

Total................................................. 10,973

Participants in this plan contribute monthly to the plan which
purchases shares in their names every six months on each December 31 and June
30. See "Description of Securities-Employee Stock Purchase Plan."

OPTIONS AND WARRANTS
We have granted options or warrants for the purchase of our common
stock to various officers, directors, subsidiary officers, consultants, lenders,
and investors. See also "Executive Compensation-Stock Options" and "Description
of Securities-Stock Options."

We will at all times reserve a sufficient number of shares of common
stock for issuance upon exercise of the warrants and options currently
outstanding. All currently outstanding shares of common stock are, and any
common stock issued in this offering or in connection with the future exercise
of options or warrants will be, fully paid and non-assessable.

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DESCRIPTION OF SECURITIES

Our authorized capital stock consists of 10,000,000 shares of common
stock, no par value, and 1,000,000 shares of non-voting preferred stock, no par
value. On October 19, 1999, we issued 2,000 shares of Series A preferred stock
to one investor, which shares are currently outstanding. In connection with our
stockholder rights plan, we created Series B Junior Participating Preferred
Shares for stockholders of record on and following December 10, 1999, but have
not issued any Series B shares.

COMMON STOCK

The holders of shares of common stock are entitled to one vote for each
share held of record on all matters on which stockholders are entitled or
permitted to vote. There is no cumulative voting for the election of directors.
After recognition of any applicable preferences to any outstanding preferred
stock, holders of common stock are entitled to receive dividends as the board of
directors may lawfully declare out of funds legally available and in liquidation
and to share pro rata in any other distribution to the holders of common stock.
We have never paid any dividends. Holders of common stock have no preemptive or
subscription rights. There are no conversion rights, redemption rights, sinking
fund provisions, fixed dividend rights, liabilities to further calls, assessment
for liabilities under state statute, restriction on alienability, or any
discriminating provision against existing or prospective stock with respect to
the common stock.

PREFERRED STOCK

Our board of directors is authorized to establish by resolution
different classes or series of non-voting preferred stock and to fix the rights,
preferences, and privileges, including dividend rights, dividend rates,
conversion rights, terms of redemption, redemption prices, liquidation
preferences, and the number of shares constituting any class or series or the
designation of such class or series without any further stockholder vote or
action. The issuance of a class or series of preferred stock with special rights
or privileges could have the effect of delaying, deferring, or preventing a
change in our control, which may adversely affect the voting and other rights of
the holders of common stock. See "Description of Securities-Anti-Takeover
Provisions."

SERIES A. We issued 2,000 shares of preferred stock, Series A, to GMN
Investors II, L.P. for $2 million on October 19, 1999. The issuance of Series A
was accompanied by warrants to purchase 400,000 shares of common stock at $7.00
per share, expiring on October 19, 2006, the GMN warrants. The holders of Series
A are entitled to dividends of 8 percent per year compounded quarterly, payable
when declared by our board of directors, but no later than the redemption of
Series A or on liquidation of our company. Holders of Series A have no voting
rights except in certain instances as provided by statute. The warrants include
customary anti-dilution provisions. Our redemption of the Series A shares is
mandatory on October 19, 2004, or upon our default in the terms of the
investor's purchase of Series A. Redemption is also mandatory if we obtain net
proceeds of $15 million or more in a public offering of our capital stock. In
addition, we have the right to redeem Series A shares for any reason prior to
October 19, 2004, upon payment to the holders of $2 million plus accrued but
unpaid dividends, as adjusted for any stock dividend, stock split, combination,
or similar recapitalization.

SERIES B. As part of a share rights plan, effective on and following
December 10, 1999, our board created Series B Junior Participating Preferred
Shares, no par, non-voting, under authority of our Articles of Incorporation.
Each share of Series B is entitled to receive a dividend when, as, and if
declared by the board of directors out of funds legally available for this
purpose, payable quarterly in cash at the rate of $1.00 per share (one cent per
1/100th share) or 100 times the cash or non-cash dividends payable to holders of
shares of common stock. Shares of Series B have priority in payment of dividends
and distributions on dissolution of our company which is senior to holders of
common stock, but junior to creditors and to holders of Series A. Whether any
shares of Series B will be issued and the number of shares issued will be
determined under provisions of the rights plan.

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STOCK OPTIONS

As of December 31, 1999, we had a total of 1,106,352 stock options
outstanding that we had granted under two similar plans.

We adopted the Stock Option Plan of 1991, the 1991 Plan, in order to
attract, retain, and motivate key employees and consultants by providing them a
means of acquiring an ownership interest in us. The 1991 Plan covers incentive
stock options within the meaning of section 422 of the Internal Revenue Code, as
amended, and nonstatutory (sometimes called nonqualified) stock options. This
plan was amended as of April 28, 1995, to reserve a total of 400,000 shares of
common stock for this purpose.

We adopted the Stock Option Plan of 1996, the 1996 Plan, at the 1997
annual meeting of stockholders. At our 1998 annual meeting, we increased the
number of shares subject to options under the 1996 Plan from 400,000 to 800,000.
The 1996 Plan was adopted for the same purposes as was the 1991 Plan, and
likewise covers incentive stock options and nonstatutory stock options.

The personnel and compensation committee of the board of directors
administers the plans. The term of options under the plans may not exceed ten
years from the date of grant. The plans also provide that the purchase price of
the shares covered by incentive stock options may not be less than the fair
market value of the shares on the date the option is granted and that the
exercise price of a nonstatutory option shall not be less than 85 percent of
such fair market value.

As a general rule, our incentive stock options vest at the rate of 25
percent per year. The committee determines the length of each option at the time
of grant with both plans providing a maximum term of ten years (five years for
holders of ten percent of our outstanding shares). The employee may exercise the
options granted under the plans only during his or her employment and, under
specified circumstances, for three months following termination of employment.
In the event the employee dies while holding options, the employee's personal
representative has twelve months, or until the expiration date of the options,
whichever is earlier, to exercise the options. The number of shares purchasable
and the purchase price under both plans are subject to antidilution provisions
and adjustments upon the occurrence of specified events. The committee has power
to establish the exercise price of nonstatutory options granted.

As of December 31, 1999, there were 1,106,352 options outstanding under
the plans, and 76,100 options had been exercised. Of the 1,106,352 outstanding
options, 961,352 were incentive stock options with exercise prices ranging from
$2.00 to $9.00 per share and expiration dates between August 15, 2003, and
December 12, 2009. As of December 31, 1999, we had options for 17,548 shares
available for issuance. As of March 31, 2000, an additional 24,591 stock options
were exercised reducing the total outstanding under the plans to 997,948 shares.
On March 31, 2000, we had options for 5,080 shares available for granting.

WARRANTS

PREVIOUSLY-ISSUED WARRANTS. We have issued various common stock
purchase warrants from time to time, collectively, the warrants, which, as of
December 31, 1999, entitled the holders to purchase a total of 1,022,539
shares of common stock. The warrants include 400,000 GMN warrants (See
"Description of Securities-Preferred Stock-Series A"), 10,000 R.C.C. warrants
(See "Description of Securities-Private Equity, Lease, and Subordinated Debt
Transactions-R.C.C. Finance Group Ltd."), and 109,912 1999 private placement
warrants (See "Certain Transactions-Private Equity, Lease, and Subordinated
Debt Transactions-1999 Private Placement"). As of March 31, 2000, all R.C.C.
warrants for R.C.C. Finance Group had been exercised on a cashless basis.

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The above warrants expire at various dates from March 31, 2003, to
October 19, 2006. See Note 5 of Notes to Consolidated Financial Statements.

WARRANTS OFFERED THROUGH THIS PROSPECTUS. The 400,000 warrants
issued in this offering may be exercised at any time on or before five years
following the effective date of this offering. Each warrant entitles the
holder to purchase one share of our common stock at an exercise price of
$6.05 (110 percent of the closing bid price for our common stock on the
Nasdaq SmallCap Market on May 23, 2000).

EMPLOYEE STOCK PURCHASE PLAN

Our employee stock purchase plan became effective July 1, 1998. The
plan has been structured within the meaning of Section 423(b) of the Internal
Revenue Code of 1986. The purpose of the plan is to provide employees with an
opportunity to acquire an ownership interest in us through the purchase of our
common stock, thereby developing a stronger incentive to work for our continued
success. A maximum of 100,000 shares of common stock are available for sale to
our employees under the plan. The purchase price of each share of common stock
will be the lesser of 85 percent of the fair market value of such share on the
first day of the six month purchase period, or 85 percent of the fair market
value of such share on the last day of the purchase period. One purchase period
commences on January 1 of each year and ends on the following June 30. The other
purchase period begins on July 1 and ends on the following December 31.
Participants declare on the first day of the purchase period an amount they wish
to be deducted from their wages during each payroll period to be applied toward
the purchase of shares. Participants have the right to terminate their payroll
deductions at any time. Currently, 60 employees have elected to participate in
the plan, but we cannot determine the number of shares that will be purchased
during any purchase period until the close of that period. Through March 31,
2000, our employees had purchased 27,060 shares of common stock under the plan.

ANTI-TAKEOVER PROVISIONS

STAGGERED TERMS FOR DIRECTORS. Our articles of incorporation set the
maximum number of directors at nine, with the actual number of seats filled
determined by the board from time to time. Each class is elected for a term
expiring at the annual meeting of stockholders in the third year after the
election. The board has established the size of the board at six members, which
consists of three classes of two members each. Currently, there are five members
and one vacancy. Election of the board by classes strengthens the position of
the board in dealing with takeover attempts. By making it difficult to unseat
the entire board at one annual meeting, it is intended that the board as a whole
will have more bargaining power in the event a potential acquiring person
proposes a takeover.

BUSINESS COMBINATIONS. A provision of our articles of incorporation
regarding business combinations imposes substantial conditions on third parties
who might attempt to acquire control of us through a two-tiered pricing strategy
in which a premium price is paid to obtain a majority of the voting stock and a
less desirable consideration, sometimes in the form of bonds or other securities
is paid to other stockholders. These conditions include approval of such
proposals by holders of two-thirds of the outstanding shares unless (1) the
board of directors as constituted prior to receipt of the proposals approve, or
(2) the proposal involves a merger, consolidation, exchange of shares, or sale
of all or substantially all our assets and the cash per share the stockholders
will receive is not less than the highest per share price any person pays,
including the person's affiliates, whose beneficial ownership of the common
stock, in the aggregate, equals or exceeds 20 percent of the outstanding voting
power. The effect of these conditions is to discourage new stockholders from
replacing incumbent directors with new directors solely for the purpose of
obtaining approval of a tender offer and to require that the same consideration
per share be paid to all stockholders that an acquiring person, who would be
willing to pay a premium to obtain a 20 percent or more position in our common
stock, would pay. The amendment discourages two-tiered pricing proposals and
strengthens the board of directors' position in dealing with potential takeover
proposals.

However, the conditions imposed on third parties attempting to take us
over and the potential benefits of the classification of directors are offset,
in part, by the possibility that a corporate suitor might be discouraged from
making a takeover offer, thereby depriving stockholders of an opportunity to
sell their shares at an attractive price. On balance, it is our management's
belief that its strengthened position in dealing with suitors will enable it to
bargain more effectively with all potential business partners, including those
desiring a takeover.

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RIGHTS AND PREFERENCES OF PREFERRED STOCK. The board of directors will
determine the rights and limitations of the preferred stock. Stockholder
approval will not be required for the issuance of such shares. Such shares of
preferred stock could have rights that are senior to the rights of the holders
of shares of common stock, e.g., preferred liquidation rights, cumulative
dividends, or voting and conversion rights that could adversely affect the
voting power or dividend rights of the holders of common stock and delay, defer,
or prevent a change in control of us.

AGREEMENTS WITH CERTAIN OFFICERS. We entered executive agreements dated
April 1, 1999, as amended July 26, 1999, with Gerald D. Van Eeckhout, Gavin J.
Thomson, and Gene Warren. The executive agreements provide that in the event of
a change in our control, as defined in the agreements, any termination without
cause or resignation with good reason, generally defined as a significant change
in employment duties, will trigger payment of a special termination payment
equal to three times the executive's then-current base salary and bonus. We also
entered a five year employment agreement with Gerald D. Van Eeckhout dated July
1, 1999. If a change in control occurs, the terms of Mr. Van Eeckhout's
executive agreement will prevail over the terms of the employment agreement,
with certain exceptions. See "Executive Compensation-Key Employee Agreements."

SHARE RIGHTS PLAN. On November 18, 1999, our board of directors adopted
a share rights plan, commonly known as a "poison pill." Each right entitles the
holder, upon payment of the exercise price of $80.00 per right, to purchase
1/100th of a share of Series B Junior Participating Preferred (See "Description
of Securities-Preferred Stock-Series B") Each share of Series B is entitled to
receive a dividend when, as, and if declared by the by the board of directors
out of funds legally available for this purpose, payable quarterly in cash at
the rate of $1.00 per share (one cent per 1/100th share) or 100 times the cash
or non-cash dividends payable to holders of shares of common stock. Our board
declared a dividend of one right for each share of common stock. The rights were
issued to stockholders of record on and following December 10, 1999. These
rights are not exercisable or transferable separately from shares of common
stock until 15 days after the ownership of our common stock by any person or
group of persons acting together as acquiring person exceeds 20 percent of our
outstanding common stock or 15 days after a tender offer that would result in
beneficial ownership of at least 20 percent of our common stock. We can redeem
the rights before an acquiring person's ownership of our common stock exceeds 20
percent, subject to an exception for persons who inadvertently cross the 20
percent threshold and promptly divest to a level below 20 percent. The rights
expire in ten years and are subject to extension.

Instead of exercising the right to acquire Series B, the holder of the
right may exercise the right, following expiration of the redemption period, to
purchase the number of shares of common stock, priced at its then market value,
which is equal to twice the exercise price. For example, if the market price of
common stock is $16 per share, the holder of one right could purchase 10 shares
for each right ($80 times 2 divided by $16 per share). This is called a "Flip-in
Right" and has the effect of substantially diluting the acquiring person's
ownership of our common stock because the acquiring person or group is
ineligible to exercise this right. The Flip-in Right also entitles the board to
issue common stock of the same economic value to rights holders had they
exercised their rights, unless the acquiring person holds at least 50 percent of
the outstanding shares of common stock. The rights also become exercisable for
the common stock of a surviving or acquiring corporation with market values of
twice the exercise paid, called a "Flip-over Right."

Our board has broad authority to amend the plan prior to the
exercisability of the rights and to amend the plan after the rights are
exercisable if the amendments do not adversely affect the interests of rights
holders.

The rights plan discourages hostile takeover bids by the potentially
dilutive effect of the exercise of the rights on the acquiring person. The
purpose of the rights plan is to provide our board with a stronger hand in
negotiating the sale of our company, should that opportunity be presented. The
board will consider the fairness of any offer that it considered a good faith
attempt to provide fair value to the stockholders, but it feels it must have the
rights plan in effect to deter hostile offers that are undervalued, given all
the information about our company then available to the board. Our agent in this
offering, John G. Kinnard and Company, Incorporated, provided us investment
banking advice in conjunction with our consideration of the rights plan.

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SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of common stock in the public market
following the offering could adversely affect the market price of the common
stock and adversely affect our ability to raise capital at a time and on terms
favorable to us.

As of December 31, 1999, we had 4,595,947 shares of common stock issued
and outstanding, together with warrants to purchase a total of 1,022,539 shares
of common stock at a weighted average purchase price of $6.95 per share. See
"Description of Securities-Warrants." We also had a total of 1,106,352 options
outstanding under the Stock Option Plan of 1991, and the Stock Option Plan of
1996, as amended, at a weighted average purchase price of $4.93 per share. See
"Description of Securities-Stock Options."

If all the warrants and options were to be exercised, the number of
outstanding shares of common stock would increase from 4,595,947 shares as of
December 31, 1999, to 6,724,838 shares; however, 544,515 stock options are
subject to vesting restrictions and 400,000 warrants are subject to lock-up
restrictions. All of the shares optioned under the Stock Option Plans of 1991
and 1996 are the subject of effective registration statements. Holder of the
warrants can request registration under their demand or piggy-back registration
rights. All of the options outstanding and certain of the warrants outstanding
may be exercised by the surrender of options or warrants outstanding at the
value per option that is equal to the excess of the market price per share over
the exercise price on the date of exercise, a cashless exercise, or through a
combination of cashless exercise and payment. In a cashless exercise, the
dilutive effect on existing stockholders of our issuance of shares underlying
the warrants and options is lessened because the shares underlying the
surrendered warrants or options do not become outstanding shares.

Of the 4,595,947 shares outstanding on December 31, 1999, 1,254,930
shares or 27.3 percent are "restricted securities" as defined in Rule 144 under
the Securities Act. Holders of restricted securities are eligible to resell such
securities under the provisions of Rule 144. Generally, Rule 144 requires a
one-year holding period, compliance with certain volume limitations, and the
filing of Form 144 with the Securities and Exchange Commission before sales can
be effected. However, Rule 144(k) allows persons, who have held restricted
securities for at least two years and who have not been "affiliates" for the
three months prior to such sale, to sell shares without complying with Rule 144.
"Affiliates," generally, are persons who are in a position of control such as
executive officers, directors, and principal stockholders. Restricted securities
are those shares issued to our founders and other investors prior to our initial
public offering in February 1996, shares issued in private placements since our
initial public offering, or stock grants. Excluding affiliates' ownership at
February 29, 2000, of 998,108 shares that continue to be restricted, the
required holding period under Rule 144(k) for non-affiliates has now been
satisfied for all shares issued prior to February 28, 1998. In addition,
1,022,539 shares underlying warrants, when issued, will be deemed restricted
securities unless included in an effective registration statement. Holders of
405,967 of these warrants have the right to purchase shares through a cashless
exercise. The Securities and Exchange Commission has indicated that holders of
restricted shares purchased through a cashless exercise are permitted to sell
those restricted shares through Rule 144 procedures, assuming the warrants have
been held for one year and all the requirements of Rule 144 are satisfied.

As of March 31, 2000, an additional 24,591 stock options were exercised
and 75,000 warrants were exercised on a cashless basis. This reduced the total
number of options and warrants outstanding at March 31, 2000, to 2,029,300 with
a weighted average exercise price of $5.83 per share.

The warrants offered through this prospectus will increase
outstanding warrants by 400,000.

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DISTRIBUTION

Our agent, John G. Kinnard and Company, Incorporated has agreed to
represent us in the offer and sale of 800,000 shares of our common stock,
accompanied by one warrant for each two shares sold, a total of 400,000
warrants.

The agent is acting on a best efforts basis and has no obligation to
purchase the shares itself.

The agency agreement provides that the obligations of the agent to
obtain purchasers of the shares of common stock included in this offering are
subject to approval of legal matters by their counsel and to customary
conditions, including the effectiveness of the registration statements, the
receipt of a comfort letter from our independent accountants, the continuing
correctness of our representations, the continued listing of the common stock
for quotation on the Nasdaq SmallCap Market, and no occurrence of an event
that would have a material adverse effect on us. We have not granted our
agent an over-allotment option. The agent may sell less than the 800,000
shares offered; accordingly, with our concurrence the offering may be
terminated at any time and any unsold shares and warrants withdrawn from
registration.

The agreement contains covenants of indemnity between the agent and us
against civil liabilities, including liabilities under the Securities Act and
liabilities arising from breaches of representations and warranties contained in
the underwriting agreement.

We will pay the agent a commission equal to seven percent of the gross
proceeds of all shares sold in this offering. We will reimburse the agent's
out-of-pocket expenses in connection with this offering as currently structured,
which are estimated to be less than $20,000. In addition, we have agreed to pay
approximately $125,000 in legal and other expenses incurred by the agent as
underwriter in an earlier version of this offering that was suspended due to
material changes in market conditions.

Upon completion of this offering, we will sell to the agent for $1 a
warrant to purchase up to 80,000 shares of common stock (ten percent of shares
sold). The agent's warrant will become exercisable one year after the effective
date of this offering at a per share exercise price equal to 120 percent of the
closing bid price on the day preceding the effective date of this prospectus
and will expire five years from the effective date of this offering. The
agent's warrant and underlying shares of common stock will be restricted from
sale, transfer, assignment, or hypothecation for a period of one year from
the date of this prospectus, except to the agent's officers and partners.
During the exercise period, holders of the agent's warrant are entitled to
certain demand and incidental registration rights with respect to the shares
of common stock issuable upon exercise of the agent's warrant. The common
stock issuable on exercise of the agent's warrant is subject to adjustment in
certain events to prevent dilution.

The agent does not have any material relationship with us, except for
its effort to underwrite an earlier version of this offering and for services
provided us in conjunction with the adoption of our rights plan in November
1999, for which we paid a fee customary for such services. See "Description of
Securities--Anti-Takeover Provisions--Share Rights Plan."

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The following table summarizes the compensation and estimated expenses
which we will pay:

[Download Table]

PER SHARE TOTAL
--------- -----

Agent's commissions ....................... $ 0.35 $280,000
Our expenses............................... $450,000

Other than in the United States, no action has been taken by the agent
or us that would permit a public offering of the shares of common stock included
in this offering in any jurisdiction where action for that purpose is required.
The shares of common stock included in this offering may not be offered or sold,
directly or indirectly, nor may this prospectus or any other offering material
or advertisement in connection with the offer and sale of any shares of common
stock be distributed or published in any jurisdiction, except under
circumstances that will result in compliance with the applicable rules and
regulations of such jurisdiction. Persons who receive this prospectus are
advised to inform themselves about and to observe any restrictions relating to
this offering of the common stock and the distribution of this prospectus. This
prospectus is not an offer to sell or a solicitation of an offer to buy any
shares of common stock included in this offering in any jurisdiction in which
that would not be permitted or legal.

424B4 49th Page of 72 TOC 1st Previous Next ↓Bottom Just 49th
ELIMINATION OF DIRECTOR LIABILITY

Our articles eliminate the personal liability of our directors to the
company and to our stockholders for monetary damages for breach of fiduciary
duty, except in the instances described below. The Colorado Business Corporation
Act authorizes the elimination of personal liability and is designed, among
other things, to encourage qualified individuals to serve as directors of
Colorado corporations by permitting Colorado corporations to limit or eliminate
directors' liability for monetary damages for breach of the duty of care.

Directors remain liable for breaches of their duty of loyalty to us and
our stockholders, as well as for acts or omissions not in good faith or that
involve intentional misconduct or a knowing violation of law and for
transactions from which a director derives improper personal benefit. The
articles do not eliminate director liability under a separate provision of the
Colorado Business Corporation Act that makes directors personally liable for
unlawful payments of dividends, unlawful stock repurchases or redemptions,
unlawful distributions of assets during liquidation, and unlawful loans or
guarantees to a director. The Colorado Business Corporation Act expressly sets
forth a negligence standard with respect to such liability.

The provisions that eliminate liability as described above will apply
to our officers only if they are our directors and are acting in their capacity
as directors and will not apply to our officers who are not directors.

INDEMNIFICATION OF OFFICERS AND DIRECTORS

The Colorado Business Corporation Act contains provisions permitting
and, in some situations, requiring Colorado corporations to provide
indemnification to their officers and directors for losses and litigation
expense incurred in connection with their service to the corporation. Our
Articles and Bylaws contain provisions requiring our indemnification of our
directors and officers and other persons acting in their corporate capacities.

The Colorado Business Corporation Act permits indemnification of a
director of a Colorado corporation, in the case of a third-party action, if the
director:

- Conducted himself or herself in good faith,

- Reasonably believed that (a) in the case of conduct in his or her
official capacity, his or her conduct was in the corporation's
best interest, or (b) in all other cases, his or her conduct was
not opposed to the corporation's best interest, and

- In the case of any criminal proceeding, had no reasonable cause
to believe that his or her conduct was unlawful.

The Act further provides for mandatory indemnification of directors and
officers who are successful on the merits or otherwise in litigation. The
statute limits the indemnification that a corporation may provide to its
directors in a derivative action in which the director is held liable to the
corporation, or in any proceeding in which the director is held liable on the
basis of his improper receipt of a personal benefit.

In addition, we may enter into agreements with our directors providing
contractually for indemnification consistent with the Articles and Bylaws.
Currently, we have no such agreements. The Colorado Business Corporation Act
also authorizes us to purchase insurance for our directors and officers insuring
them against risks as to which we may be unable lawfully to indemnify them. We
have obtained limited insurance coverage for our officers and directors as well
as insurance coverage to reimburse us for potential costs of our corporate
indemnification of officers and directors.

As far as exculpation or indemnification for liabilities arising under
the Securities Act of 1933 may be permitted for directors and officers and
controlling persons, we have been advised that in the opinion of the Securities
and Exchange Commission such exculpation or indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable.

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WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and current reports, proxy statements, and
other information with the SEC. You may read and copy any reports, statements,
or other information on file at the SEC's public reference room in Washington,
D.C. You can request copies of those documents, upon payment of a duplicating
fee, by writing to the SEC.

We have filed a Registration Statement on Form S-1 with the SEC. This
prospectus, which forms a part of the Registration Statement, does not contain
all of the information included in the Registration Statement. Certain
information is omitted, and you should refer to the Registration Statement and
its exhibits. With respect to references made in this prospectus to any contract
or other document of ours, such references are not necessarily complete, and you
should refer to the exhibits attached to the Registration Statement for copies
of the actual contract or document. You may review a copy of the Registration
Statement at the SEC's public reference rooms at 450 Fifth Street, N.W.,
Washington, D.C. 20549; Chicago, Illinois; or New York, New York. Please call
the Securities and Exchange Commission at 1-800-SEC-0330 for further information
on the operation of the public reference rooms.

Our Securities and Exchange Commission filings and the Registration
Statement can also be reviewed by accessing the SEC's Internet site at
http://www.sec.gov.

LEGAL MATTERS

The legality of the issuance of shares we are offering will be passed
upon by Faegre & Benson LLP, Denver, Colorado. Certain legal matters will be
passed upon for the agent by Fredrikson and Byron, P.A., Minneapolis, Minnesota.

EXPERTS

Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements as of December 31, 1999 and 1998, and for each of the three
years in the period ended December 31, 1999 as set forth in their report, which
is included in this prospectus and elsewhere in this registration statement. Our
consolidated financial statements are included in this prospectus in reliance on
their report, given on their authority as experts in accounting and auditing.

TRANSFER AGENT AND WARRANT AGENT

Our stock transfer agent and warrant agent is American Securities
Transfer and Trust, Inc., 12039 West Alameda Parkway, Suite Z-2, Lakewood, CO
80228.

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CONSOLIDATED FINANCIAL STATEMENTS

TABLE OF CONTENTS

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Report of Independent Auditors.............................................................................................. F-2
Consolidated Balance Sheets at December 31, 1999 and 1998................................................................... F-3
Consolidated Statements of Operations for each of the three years in the period ended December 31, 1999..................... F-4
Consolidated Statements of Shareholders' Equity for each of the three years in the period ended December 31, 1999........... F-5
Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 1999..................... F-6
Notes to Consolidated Financial Statements.................................................................................. F-7
Unaudited Consolidated Balance Sheet at March 31, 2000...................................................................... F-18
Unaudited Consolidated Statements of Operation for the three months ended March 31, 2000 and 1999........................... F-19
Unaudited Statements of Cash Flows for the three months ended March 31, 2000 and 1999....................................... F-21
Notes to Unaudited Consolidated Financial Statements........................................................................ F-22

F-1

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REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders
ACT Teleconferencing, Inc.

We have audited the accompanying consolidated balance sheets of ACT
Teleconferencing, Inc. as of December 31, 1999 and 1998, and the related
consolidated statements of operations, shareholders' equity and cash flows for
each of the three years in the period ended December 31, 1999. Our audit also
included the 1999 financial statement schedule listed in Item 16(b) of Part II
of this registration statement. These financial statements and schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
ACT Teleconferencing, Inc. at December 31, 1999 and 1998, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States. Also, in our opinion, the related 1999
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, present fairly, in all material respects, the
information set forth therein.

ERNST & YOUNG LLP

Denver, Colorado
February 8, 2000

F-2

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ACT Teleconferencing, Inc. Consolidated Balance Sheets

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DECEMBER 31,
------------
1999 1998
---- ----

ASSETS
Current assets:
Cash and cash equivalents................................................................... $1,532,551 $369,407
Accounts receivable (net of allowance for doubtful accounts of $153,677 and $32,644 in 1999
and 1998, respectively).................................................................. 6,606,641 4,295,216
Prepaid expenses............................................................................ 847,021 571,597
Inventory................................................................................... 129,519 269,796
---------- ----------
Total current assets........................................................................ 9,115,732 5,506,016
Equipment:
Telecommunications equipment................................................................ 8,254,966 5,840,969
Office equipment............................................................................ 6,383,765 4,205,347
Less: accumulated depreciation.............................................................. (3,363,484) (1,969,428)
---------- ----------
Total equipment-net......................................................................... 11,275,247 8,076,888
Other assets:
Goodwill (net of accumulated amortization of $247,980 and $136,340 in 1999 and 1998,
respectively)............................................................................ 1,456,944 1,537,321
Deferred loan placement fees................................................................ 250,420 205,975
---------- ----------
Total assets................................................................................... $22,098,343 $15,326,200
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of debt..................................................................... $2,313,454 $686,691
Accounts payable............................................................................ 2,541,822 2,935,331
Accrued liabilities......................................................................... 1,492,382 1,814,877
Capital lease obligations due in one year................................................... 609,076 1,111,126
Income taxes payable........................................................................ 589,666 215,895
---------- ----------
Total current liabilities................................................................... 7,546,400 6,763,920
Long-term debt................................................................................. 3,778,614 3,940,867
Capital lease obligations due after one year................................................... 1,223,795 1,008,184
Preferred stock, no par value, 1,000,000 shares authorized; 2,000 issued....................... 1,693,006 -
Deferred income taxes (United Kingdom)......................................................... 320,112 302,145
Minority interest.............................................................................. 967,559 806,519
Shareholders' equity:
Common stock, no par value; 10,000,000 shares authorized 4,595,947 and 3,755,633 shares
issued and outstanding in 1999 and 1998, respectively.................................... 11,378,103 7,463,931
Additional paid in capital.................................................................. 99,900 -
Accumulated deficit......................................................................... (4,809,176) (4,846,194)
Accumulated other comprehensive loss........................................................ (99,970) (113,172)
---------- ----------
Total shareholders' equity.................................................................. 6,568,857 2,504,565
---------- ----------

Total liabilities and shareholders' equity..................................................... $22,098,343 $15,326,200
========== ==========

F-3

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ACT Teleconferencing, Inc. Consolidated Statements of Operations

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YEAR ENDED DECEMBER 31,
1999 1998 1997
---- ---- ----

Net revenues................................................................. $28,328,791 $19,009,645 $10,234,403
Cost of services............................................................. (14,797,606) (10,881,556) (4,727,236)
----------- ----------- -----------
Gross profit................................................................. 13,531,185 8,128,089 5,507,167
Selling, general and administration expense.................................. (11,991,914) (9,121,235) (5,309,444)
----------- ----------- -----------
Operating income............................................................. 1,539,271 (993,146) 197,723
Interest expense............................................................. (848,013) (532,322) (99,496)
----------- ----------- -----------
Income (loss) before income taxes and minority interest...................... 691,258 (1,525,468) 98,227
Provision for income taxes................................................... (414,866) (401,762) (332,566)
----------- ----------- -----------
Income (loss) before minority interest....................................... 276,392 (1,927,230) (234,339)
Minority interest in earnings of consolidated subsidiary..................... (194,967) (189,895) (202,469)
----------- ----------- -----------
Net income (loss)............................................................ $81,425 $(2,117,125) $(436,808)
=========== =========== ===========
Net income (loss) per share-basic and fully diluted.......................... $0.01 $(0.58) $(0.14)
=========== =========== ===========
Weighted average number of shares outstanding-basic.......................... 4,393,963 3,647,188 3,204,747
=========== =========== ===========
Weighted average number of shares outstanding-fully diluted.................. 4,655,501 3,647,188 3,204,747
=========== =========== ===========

See notes to consolidated financial statements

F-4

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ACT Teleconferencing, Inc. Consolidated Statements of Shareholders' Equity
Common Stock

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ACCUMULATED OTHER
-----------------
COMMON STOCK COMPREHENSIVE
------------ -------------
SHARES VALUE ACCUMULATED DEFICIT INCOME (LOSS) TOTAL
------------ ----- ------------------- ----------------- -----

Balance at December 31, 1996.... 2,939,930 $4,022,671 $(2,292,261) $37,547 $1,767,957
Employee stock option exercise.. 43,500 52,000 52,000
Shares issued in connection with
exercise of warrants......... 514,950 1,520,834 1,520,834
Share issuance as fee to warrant
placement agent.............. 33,000 115,500 115,500
Shares issued for acquisitions.. 81,378 447,579 447,579
Comprehensive loss
Net loss..................... (436,808) (436,808)
Other comprehensive loss, net
of tax....................
Foreign currency translation
adjustment (89,129) (89,129)
------
Total comprehensive loss........ $(525,937)
=======
Balance at December 31, 1997.... 3,612,758 $6,158,584 $(2,729,069) $(51,582) $3,377,933
Shares issued in connection with
exercise of warrants......... 26,893 136,000 136,000
Employee stock option exercise.. 2,000 6,000 6,000
Issue of warrants in lieu of
interest..................... 486,521 486,521
Shares issued for acquisitions.. 113,982 676,826 676,826
Comprehensive loss
Net loss..................... (2,117,125) (2,117,125)
Foreign currency translation
adjustment, net of tax.... (61,590) (61,590)
Total comprehensive loss........ $(2,178,715)
=========
Balance at December 31, 1998.... 3,755,633 $7,463,931 $(4,846,194) $(113,172) $2,504,565
Shares issued in connection with
exercise of warrants......... 562,654 2,619,890 2,619,890
Issuance of private placement
shares....................... 109,912 592,505 592,505
Shares issued in connection with
the employee stock purchase
plan......................... 12,304 50,990 50,990
Shares issued as payment for
consulting fees.............. 30,500 84,591 84,591
Employee stock option exercise.. 4,500 12,660 12,660
Exercise of unit purchase 120,444 553,537 553,537
option.......................
Additional paid in
capital-warrant issue........ 99,900 99,900
Preferred dividend.............. (44,407) (44,407)
Comprehensive income
Net income................... 81,425 81,425
Other comprehensive loss, net
of tax....................
Foreign currency translation. 13,202 13,202
Total comprehensive income...... $94,627
======
Balance at December 31, 1999.... 4,595,947 $11,478,003 $(4,809,176) $(99,970) $6,568,857

F-5

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ACT Teleconferencing, Inc Consolidated Statements of Cash Flow

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YEAR ENDED DECEMBER 31,
1999 1998 1997
---- ---- ----

OPERATING ACTIVITIES
Net income (loss)........................................................ $81,425 $(2,117,125) $(436,808)
Adjustments to reconcile net income (loss) to net cash used for operating
activities:
Depreciation.......................................................... 1,394,056 874,489 358,382
Amortization of goodwill.............................................. 80,377 57,920 18,054
Deferred income tax................................................... 17,967 184,691 76,416
Minority interest..................................................... 161,040 199,275 202,469
---------- ----------- ----------

Cash flow before changes in operating assets and liabilities:......... 1,734,865 (800,750) 218,513
Changes in operating assets and liabilities (net of effect of business
combinations):
Accounts receivable................................................... (2,287,387) (1,324,560) (1,310,000)
Inventory............................................................. 140,277 (133,680) 73,276
Prepaid expenses and other assets..................................... (275,424) (364,794) (124,612)
Accounts payable...................................................... (425,438) 1,471,474 288,217
Income tax payable.................................................... 373,771 (84,506) 136,243
Accrued liabilities................................................... (322,495) 994,452 356,356
---------- ----------- ----------

Net cash used for operating activities................................... (1,061,831) (242,364) (362,007)
INVESTING ACTIVITIES
Property and equipment purchases......................................... (4,592,415) (5,268,971) (1,618,359)
Short term notes redeemed................................................ (24,037) 11,776 (26,739)
Sale of marketable securities............................................ - 50,000 -
Cash paid for acquisitions net of cash acquired.......................... - (249,298) (101,257)
---------- ----------- ----------

Net cash used for investing activities................................... (4,616,452) (5,456,493) (1,746,355)
FINANCING ACTIVITIES
Net proceeds from the issuance of debt................................... 1,178,071 5,255,875 258,985
Net proceeds from issuance of common stock............................... 4,014,072 628,521 1,688,334
Net proceeds from issuance of preferred stock............................ 1,680,526
Deferred loan issuance costs............................................. (44,445) (205,975) -
---------- ----------- ----------

Net cash provided by financing activities................................ 6,828,224 5,678,421 1,947,319
Effect of exchange rate changes on cash.................................. 13,202 (61,590) (9,265)
---------- ----------- ----------

Net increase (decrease) in cash and cash equivalents..................... 1,163,143 (82,026) (170,308)
Cash and cash equivalents, beginning of year............................. 369,408 451,434 621,742
---------- ----------- ----------

CASH AND CASH EQUIVALENTS, END OF YEAR................................... $1,532,551 $369,408 $451,434
---------- ----------- ----------
---------- ----------- ----------

F-6

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ACT Teleconferencing, Inc. Notes to Consolidated Financial Statements
December 31, 1999 and 1998

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

BUSINESS

ACT Teleconferencing, Inc. (the Company) is engaged in the business of
providing high quality audio, video and data conferencing products and services
to business clients worldwide. The Company operates principally in the United
States, Canada, the United Kingdom, France, the Netherlands, Belgium, Germany,
Australia, and Hong Kong.

BASIS OF PRESENTATION

The consolidated financial statements include the accounts of ACT
Teleconferencing, Inc, its wholly-owned domestic and worldwide subsidiaries ACT
Teleconferencing Services Inc, ACT Videoconferencing Inc, ACT Research Inc, ACT
Teleconferencing Canada Inc, ACT Teleconferencing Limited (United Kingdom), ACT
Business Solutions Limited (United Kingdom), ACT Teleconferencing France SA, ACT
Teleconferencing BV (Netherlands), ACT Teleconferencing Gmbh (Germany), ACT
Teleconferencing Belgium SA, ACT Teleconferencing (Pty) Limited (Australia), and
ACT Teleconferencing Hong Kong Limited. With the exception of ACT
Teleconferencing Limited (UK), which is 60% held, and ACT Teleconferencing (Pty)
Limited (Australia) and ACT Business Solutions Limited, both of which are 80%
held, ACT owns 100% of all of its subsidiaries.

REVENUE RECOGNITION

Revenue is recognized upon completion of conferencing services or
delivery of equipment.

USE OF ESTIMATES

The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

INVENTORIES

Video and audio equipment inventories are stated at the lower of cost
or market, on a first-in, first-out ("FIFO") basis. Equipment is priced using
specific unit costs consisting of materials, labor, and related manufacturing
overhead, but exclusive of research and development, selling, and general and
administrative expenses, which are charged to operations as incurred.

EQUIPMENT AND DEPRECIATION

Equipment is stated at cost. Depreciation is calculated on a
straight-line basis over the estimated useful lives of five years for office
furniture and five or ten years for telecommunications equipment. Depreciation
expense includes capital lease amortization charges.

GOODWILL

Goodwill represents the excess of purchase price over tangible assets
acquired less liabilities assumed arising from acquisitions and is being
amortized on a straight-line basis over an estimated useful life of fifteen (15)
years.

F-7

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LONG-LIVED ASSETS

Long-Lived Assets are reviewed for impairment when events indicate that
the carrying amount may not be recoverable. If such events are noted, the
Company estimates the future flows to be generated by those assets. In the event
that the sum of the cash flows is less than the carrying amount of those assets,
the assets would be written down to fair value, which is normally measured by
discounting the estimated future cash flows.

FOREIGN CURRENCY CONVERSION

The financial statements of the Company's foreign subsidiaries have
been translated into United States dollars at the average exchange rate during
the year for the statement of operations and year-end rate for the balance
sheet.

CASH AND CASH EQUIVALENTS

The Company considers all liquid investments with original maturities
of three months or less when purchased to be cash equivalents.

NET INCOME (LOSS) PER COMMON SHARE

Net income (loss) per common share is computed based upon the weighted
average number of shares of common stock outstanding during the period. In
February 1997, the Financial Accounting Standards Board issued Statement No.
128, Earnings per Share, which was adopted on December 31, 1997. Under the new
requirements for calculating basic and fully diluted earnings per share, the
dilutive effect of stock options and warrants has been included. Although
options and warrants are included in the computation of fully diluted earnings
per share in 1999, the effect of 1998 and 1997 is anti-dilutive and therefore
not disclosed.

RECLASSIFICATIONS

Certain reclassifications have been made to the 1998 financial
statement presentation in order to conform to the 1999 presentation.

F-8

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2. LONG AND SHORT TERM DEBT

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DECEMBER 31,
------------
1999 1998
---- ----

ACT Teleconferencing Services, Inc., a United States subsidiary, has a line of credit secured by
all tangible and intangible assets with the exception of leased assets of its operations. The
line of credit carries an interest rate of 2% above the prime rate (7.5% at December 31,
1999), no less than 9% per annum with a borrowing base restricted to qualified accounts
receivable up to $2 million. ............................................................... $1,429,511 $ -
Revolving lines of credit, available through various banks, secured by accounts receivable and
mortgage debenture over assets. These short-term financings bear interest rates ranging from
2% to 3.75% above the bank's prime rate. The maximum borrowing base ranges from $32,800 to
$825,000. .................................................................................. 109,284 617,377
Subordinated debt financing-promissory note payable by ACT Teleconferencing, Inc. bearing an
interest rate of 13.5% per annum with monthly interest payments of $28,125. Principal is due
on the maturity date of March 31, 2003. The note is secured by a second lien on Company
assets, subordinated to the Company's senior lenders. ...................................... 2,500,000 2,500,000
Line of credit to equipment vendor owed by ACT Teleconferencing, Inc. bearing interest at 6% per
annum. Payments are due in monthly installments calculated on 6% of principal balance and
interest. This facility is limited to $1,000,000. .......................................... 925,809 717,968
Subordinated two-year convertible note to an equipment vendor payable by ACT
Teleconferencing, Inc. bearing interest at 9%, with principal due on July 31, 2001. This note
will be converted into common stock at a conversion price of $7 per share if it is not repaid
on or before due date. ..................................................................... 500,000 -
Note payable by a subsidiary to an equipment vendor at an interest rate of 7% until 2002.
Payments of $93,333 are due annually. ...................................................... 280,000 280,000
Notes payable to vendors bearing interest at rates from 14.157% to 16.75% due in monthly
interest and principal repayments of $13,525. These notes are collateralized by certain
telecommunications and bridging equipment owned by a subsidiary. ........................... 396,845 493,295
Bank notes payable bearing interest at rates ranging from 6% to 9.6%. Monthly or quarterly
payments are made in accordance with the debt agreements. The notes are secured by registered
mortgage debentures or corporate guarantee. Maturity dates range from August 2002 to
September 2003. ............................................................................ 266,860 432,464
---------- ----------

Subtotal....................................................................................... 6,408,309 5,041,104
Less deferred interest cost.................................................................... (316,241) (413,546)
---------- ----------

Subtotal....................................................................................... 6,092,068 4,627,558
Less, current portion of long term debt........................................................ (2,313,454) (686,691)
---------- ----------

Long term debt................................................................................. $3,778,614 $3,940,867
---------- ----------
---------- ----------

F-9

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Total interest paid on notes and capitalized leases for the year ended
December 31, 1999, 1998, and 1997 amounted to $848,013, $532,322, and $99,496,
respectively.

The aggregate minimum annual payments as of December 31, 1999 for long
term debt are as follows:

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2000....................................................................................... $2,313,453
2001....................................................................................... 1,136,406
2002....................................................................................... 415,259
2003....................................................................................... 43,191
2004 and thereafter........................................................................ 2,500,000
----------

$6,408,309
----------
----------

3. COMMITMENTS-OPERATING AND CAPITALIZED LEASES

OPERATING LEASES

The company leases office space in the United States, Canada, the
United Kingdom, France, the Netherlands, Australia, and Hong Kong. These leases
expire December 2000 through July 2008. Total rent expense charged to operations
was $1,109,422, $743,380, and $301,316 for the years ended December 31, 1999,
1998, and 1997, respectively.

The Company has also entered into several operating leases for computer
and office equipment. Total rent expense charged under these leases was
$243,074, $102,351, and $51,715 for the years ended December 31, 1999, 1998, and
1997, respectively.

CAPITALIZED LEASES

The Company leases telecommunication equipment, office equipment,
computers and furniture under long-term leases classified as capital leases. For
several of these leases, the Company has the option to purchase the equipment
for a nominal cost at the termination of the lease. The assets classified as
capital leases are amortized over the shorter of the estimated useful life of
the property or the lease term. Amortization related to the leased assets is
included in depreciation for financial reporting purposes.

The following property is secured under capital leases:

[Enlarge/Download Table]

DECEMBER 31
-----------
1999 1998
---- ----

Telecommunications and office equipment, computers and furniture.......... $2,582,438 $2,317,286
Less accumulated depreciation............................................. (498,281) (278,613)
---------- ----------

Net value of equipment secured............................................ $2,084,157 $2,038,676
---------- ----------
---------- ----------

F-10

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The aggregate minimum annual commitments for operating and capital
leases as of December 31, 1999 are as follows:

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OPERATING CAPITAL
LEASES LEASES
------ ------

2000...................................................................... $1,568,365 $807,685
2001...................................................................... 1,294,032 716,823
2002...................................................................... 1,100,143 418,740
2003...................................................................... 700,730 222,435
2004 and thereafter....................................................... 576,048 5,257
---------- ----------

Total minimum lease payments.............................................. $5,239,318 $2,170,940
---------- ----------
---------- ----------

Less amounts representing interest........................................ (338,069)
----------

Present value of net minimum capital leases payments...................... $1,832,871
Less capital lease obligations due within one year........................ (609,076)
----------

Capital lease obligations due after one year.............................. $1,223,795
----------
----------

During 1999 and 1998, the Company incurred capital lease obligations of
$422,336 and $1,714,690 respectively, in connection with lease agreements to
acquire equipment.

4. SHAREHOLDERS' EQUITY

Our authorized capital stock consists of 10,000,000 shares of common
stock, no par value, and 1,000,000 shares of non-voting preferred stock, no par
value.

PREFERRED STOCK

SERIES A. On October 19, 1999 we issued 2,000 shares of Series A 8%
preferred stock to GMN Investors II, L.P. for $2,000,000. This transaction was
accompanied by the issuance of 400,000 warrants to purchase shares of common
stock at $7.00 per share (see Warrants Outstanding below). The holders of Series
A are entitled to dividends compounded quarterly, payable no later than the
redemption date. Redemption of the Preferred stock is mandatory on October 19,
2004. We have the right to redeem this instrument for any reason prior to
October 19, 2004 by payment of $2,000,000 plus any outstanding dividends. At
December 31, 1999, the preferred stock had a value of $1,693,006, net of
deferred placement cost of $306,994 which is accreted to redemption value
through October 19, 2004, and we recognized $31,927 for ordinary dividends and
$12,480 for accretion of discount.

COMMON STOCK

The holders of shares of common stock are entitled to one vote for each
share held of record on all matters on which stockholders are entitled or
permitted to vote.

During 1999 we increased our issued share capital from 3,755,633 shares
outstanding to 4,595,947. Our share capital was increased by warrant conversions
as well as a private placement of shares, both described more fully below (see
1999 Private Placement and Warrant Conversions). ACT Teleconferencing, Inc.
Notes to Consolidated Financial Statements December 31, 1999 and 1998

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4. SHAREHOLDERS' EQUITY

1999 PRIVATE PLACEMENT

In February 1999, the Company completed a private offering of
109,212 units, each comprised of one share of common stock at $5.50 per share
and one warrant to purchase one share of common stock. The private placement
raised net capital of $592,505. The warrants are exercisable at $7.00 and
expire December 31, 2003. The shares and the shares underlying the warrants
entitle the holder to piggyback registration rights from June 30, 1999,
through December 31, 2003.

WARRANT CONVERSIONS

On February 2, 1999 a total of 549,154 warrants, or 77% of the total
publicly held 1996 warrants, which were issued pursuant to our initial public
offering were exercised at a conversion price of $5 per share raising cash
proceeds to our company, net of expenses, of $2,619,890.

Pursuant also to our initial public offering, we had granted a unit
purchase option to the underwriter. Each unit contained the right to obtain
one share of common stock for $4.20 per share and a three-year warrant for
the purchase of a share at $5.00 per share. The unit purchase option granted
the holder the right to purchase up to 71,250 units or 142,500 shares at an
average price of $4.60 via the exercise of the unit. In August 1999, 60,222
unit purchase options were exercised resulting in the issuance of 120,444
shares at an average exercise price of $4.60 per unit, raising $553,537 in
net proceeds to the Company.

WARRANTS OUTSTANDING

On March 31, 1998, in conjunction with the issuance of its $2.5
million subordinated promissory notes, the Company issued stock purchase
warrants for the purchase of 330,967 shares of common stock at an exercise
price of $7.00 per share to Sirrom Capital Corp. and Equitas L.P. If the
notes are not fully paid on the second, third, or fourth anniversary dates
from the above date, the number of shares subject to these warrants will
increase to 390,634, 470,527, and 588,905 shares, respectively, retaining the
same strike price of $7.00 per share. The warrants expire on March 31, 2003.

In February 1999 we issued 109,212 warrants in connection with our
private placement at a $7.00 exercise price and an expiration date of
December 31, 2003. On October 19, 1999, in association with the issue of
preferred stock, we issued 400,000 warrants to GMN Investors II at a $7.00
exercise price and an expiration date of October 19, 2006.

In 1998, R.C.C. Finance issued a $2 million lease commitment to us.
We granted R.C.C. 75,000 warrants at an exercise price of $8.00 per share and
an expiration date of April 3, 2003.

During 1999 we issued 95,000 warrants at an average strike price of
$5.95 for consulting services for work to be done for the company in investor
relations, global business development, and the identification of new
partners and acquisitions in new markets.

We have 21,660 warrants remaining at an average strike price of
$6.39 per share, 11,660 of which were pursuant to the underwriter's unit
purchase option not yet exercised at $5.00 per share.

All warrants were issued at or above market price on the day of the
grant. All warrants are also subject to customary anti-dilution provisions
and to adjustment in the event of stock splits, stock dividends,
consolidations,

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and the like. Holders of shares issued upon the exercise of these warrants
have piggy-back rights to registration and certain investors, principally GMN
Investors II, have demand registration rights.

Holders of warrants are not entitled to vote, receive dividends, or
exercise any of the rights of shareholders of Common Stock for any purpose
until the warrants have been duly exercised. Warrants issued during 1998 and
1999 were valued at their estimated fair market value based on valuation
opinions provided by independent investment banks.

5. STOCK OPTION PLAN

The Company's 1991 Stock Option Plan, as approved by shareholders,
authorizes the grant of options to officers, key employees, and consultants
for up to 400,000 shares of the Company's common stock. The Stock Option Plan
of 1996, as amended and as approved by shareholders, authorizes the grant of
an additional 800,000 options to officers, key employees, and consultants of
the Company for a total of 1.2 million options authorized. Options granted
under both plans generally have 10-year terms and vest 25% each year
following the date of grant.

The Company has elected to follow Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25) and
related Interpretations in accounting for its employee stock options. Under
APB 25, because the exercise price of the Company's employee stock options
are generally equal to the market price of the underlying stock on the date
of grant, no compensation expense is recognized. FASB Statement No. 123,
"Accounting for stock-based compensation" establishes an alternative method
of expense recognition for stock-based compensation awards to employees based
on fair values. The Company elected not to adopt FASB Statement No. 123 for
expense recognition purposes.

Pro forma information regarding net income and earnings per share is
required by FASB Statement No. 123, which also requires that the information
be determined as if the Company has accounted for its employee stock options
granted subsequent to December 31, 1994 under the fair value method of that
Statement. The fair value for these options was estimated at the date of
grant using a Black-Scholes option pricing model. The following are
weighted-average assumptions for 1999, 1998 and 1997, respectively: risk-free
interest rate of 6.0%; a dividend yield of 0%; volatility factors of the
expected market price of the Company's common stock of .77, .75, and .80; and
a weighted-average expected life of the option of 7 years.

The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting
restrictions and are fully transferable. In addition, option valuation models
require the input of highly subjective assumptions including the expected
stock price volatility. Because the Company's employee stock options have
characteristics significantly different from those of traded options, and
because changes in the subjective input assumptions can materially affect the
fair value estimate, in management's opinion, the existing models do not
necessarily provide a reliable single measure of the fair value of its
employee stock options.

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For purposes of pro forma disclosures, the estimated fair value of
the options is amortized to expense over the options' vesting period. The
Company's pro forma information is as follows:

[Download Table]

1999 1998 1997
---- ---- ----

Pro forma net loss........................... $(1,001,935) $(2,746,828) $(714,230)
Pro forma loss per share..................... $(.23) $(.75) $(.22)

A summary of the Company's stock option activity, and related
information for the years ended December 31 follows:

[Enlarge/Download Table]

1999 1998 1997
---- ---- ----
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
---------- --------- ----------- ---------- --------- ----------

Outstanding-beginning of year................. 902,437 $4.89 730,400 $4.02 454,300 $2.53
Granted....................................... 221,700 5.18 232,693 7.54 325,100 5.62
Exercised..................................... (4,500) 3.00 (2,000) 3.00 (43,500) 1.20
Forfeited..................................... (13,285) 7.35 (58,656) 4.69 (5,500) 2.00
---------- -------- ---------- -------- ---------- -------
Outstanding-end of year....................... 1,106,352 $4.93 902,437 $4.89 730,400 $4.02
========== ========== ==========
Exercisable at end of year.................... 561,837 $4.02 341,675 $3.15 186,350 $5.62
Weighted-average fair value of options
granted during the year
Market price equals exercise price......... $3.78 $6.68 $3.74
Market price exceeds exercise price........ $4.05 $6.25 -
Market price is less than exercise price... - $3.94 -

The following table summarizes our stock options outstanding at
December 31, 1999:

[Download Table]

WEIGHTED-AVERAGE
REMAINING WEIGHTED-AVERAGE
EXERCISE PRICE RANGE SHARES CONTRACTUAL LIFE EXERCISE PRICE
-------------------- --------- ----------------- -----------------

$2.00 98,500 4.7 years $2.00
$2.75-$3.03 347,800 6.86 years $2.98
$4.25-$5.25 148,640 9.5 years $4.37
$5.00-$6.05 323,900 8.66 years $5.70
$6.50-$7.00 71,700 10 years $6.86
$9.00 115,812 8.5 years $9.00
-------

1,106,352
=========

6. INCOME TAXES

The Company accounts for income taxes in conformity with FASB
Statement No. 109, Accounting for Income Taxes. Under the provisions of FASB
Statement No. 109, a deferred tax liability or asset (net of valuation
allowance) is provided in the financial statements by applying the provisions
of applicable tax laws to measure the deferred tax consequences of temporary
differences. This will result in net taxable or deductible amounts in future
years as a result of events recognized in the financial statements in the
current or preceding years.

Income tax expense and the related current and deferred tax
liabilities for all periods presented relate solely to the Company's U.K.
operations and therefore have no relation to the U.S. statutory rates.

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For financial reporting purposes, income before income taxes
includes the following components:

[Download Table]

1999 1998 1997
---- ---- ----

Pretax income (loss):
United States........................... $710,747 $(1,701,724) $(564,701)
Foreign................................. (19,489) 176,256 662,928
---------- ------------ ----------

$691,258 $(1,525,468) $98,227
========== ============ ==========

The provision for income taxes for the years ended December 31, is
comprised of the following:

[Download Table]

1999 1998 1997
---- ---- ----

Current.................................. $393,331 $217,242 $256,154
Deferred................................. 18,138 184,520 76,412
-------- -------- --------

$411,469 $401,762 $332,566
======== ======== ========

Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
Significant components of the Company's deferred tax liabilities and assets
as of December 31 are as follows:

[Enlarge/Download Table]

1999 1998 1997
---- ---- ----

Deferred Tax Liabilities--Domestic
Tax depreciation in excess of book depreciation................... $ (495,227) $ (257,627) $(100,267)
Deferred Tax Assets--Domestic
Net operating loss carry-forward.................................. 1,826,424 2,019,656 926,714
Reserves for doubtful accounts.................................... 28,723 7,764 3,850
Other............................................................. (93,998) (41,106) 12,381

1,761,149 1,986,314 942,945
Valuation allowance for deferred tax assets.......................... (1,265,922) (1,728,687) (842,678)

Net Deferred Tax--Domestic........................................... $ - $ - $ -
============ ============ ==========
Deferred Tax Liabilities--International
Tax depreciation in excess of book depreciation................... $320,112 $ (302,145) $(117,454)
Deferred Tax Assets--International
Net operating loss carry-forward.................................. 1,096,655 698,677 335,088
Other............................................................. - - 3,234
Valuation allowance for deferred tax assets.......................... (1,096,655) (698,677) (338,322)
------------ ------------ ----------

Net Deferred Tax Liability--International............................. $ (320,112) $ (302,145) $(117,454)

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The reconciliation of income tax attributable to continuing
operations computed at the U.S. federal statutory tax rates to actual income
tax expense is:

[Download Table]

1999 1998 1997
---- ---- ----

Expected rate at 35%............................... $241,940 $(533,914) $ 34,379
Effect of permanent difference..................... 41,567 38,172 26,163
Utilization of NOLs................................ (40,339) - -
Foreign taxes...................................... (38,692) (47,024) (17,194)
Valuation allowance................................ 210,390 944,528 289,238
--------- --------- ---------

$414,866 $401,762 $332,586
========= ========= =========

Taxes of $0, $279,008, and $118,989 were paid during 1999, 1998, and
1997, respectively. The total domestic net operating loss carry forward of
approximately $4.7 million will begin to expire in the year 2005. The Company
has not provided for any taxes on undistributed foreign earnings as the
Company intends to permanently reinvest these earnings in the future growth
of the business and there are no unremitted, cumulative foreign earnings.

7. BUSINESS SEGMENT ANALYSIS

The Company offers a broad range of audio, video, and data
teleconferencing services and products to corporate business clients and
institutions, and these products and services are considered one line of
business. The Company's management makes decisions on resource allocation and
assesses performance based on the market potential of each operating
location. Each of the locations offers the same products and services, has
similar customers and teleconferencing equipment, and is managed directly by
the Company's executives, allowing all locations to be aggregated under the
guidelines of FAS 131 resulting in one reportable line of business. Audio
conferencing services presently comprise approximately 90% of total services.
Video, data, and Internet conferencing are presently services which are
offered together with the audio product offering and their revenues are
approximately 10% of total revenues. The following is a summary of the
significant geographic markets:

FOR THE YEAR ENDED DECEMBER 31, 1999:

[Enlarge/Download Table]

NORTH AMERICA EUROPE ASIA PACIFIC TOTAL
-------------- ----------- ------------ -----------

Net Revenues............................................ $14,182,533 $12,049,040 $2,097,218 $28,328,791
Long-Lived Assets....................................... 7,282,181 4,210,370 1,239,639 12,732,190
Deferred Tax Liability.................................. - 320,112 - 320,112

FOR THE YEAR ENDED DECEMBER 31, 1998:

NORTH AMERICA EUROPE ASIA PACIFIC TOTAL
-------------- ----------- ------------ -----------

Net Revenues............................................ $8,241,490 $10,190,686 $577,469 $19,009,645
Long-Lived Assets....................................... 4,626,746 4,081,218 906,245 9,614,209
Deferred Tax Liability.................................. - 302,145 - 302,145

FOR THE YEAR ENDED DECEMBER 31, 1997:

NORTH AMERICA EUROPE ASIA PACIFIC TOTAL
-------------- ----------- ------------ -----------

Net Revenues............................................. $4,706,890 $5,424,307 $103,206 $10,234,403
Long-Lived Assets........................................ 1,968,535 2,024,994 209,833 4,203,363
Deferred Tax Liability................................... - 117,454 - 117,454

One customer accounted for 24%, 22%, and 24% of consolidated
revenues for the years ended December 31, 1999, 1998, and 1997, respectively.

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8. FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's financial instruments consist primarily of cash,
temporary investments, accounts receivable, accounts payable, long-term debt,
and capitalized lease obligations.

Because accounts receivable and accounts payable are short-term
instruments that are settled at face value, the Company considers the
carrying amounts to approximate fair value.

The fair value of long-term debt, consisting of notes and
capitalized lease obligations, is based on interest rates available to the
Company and comparisons to market rates. The Company considers the carrying
amounts to approximate fair value.

9. DEFINED CONTRIBUTION PLAN

The Company has a defined contribution 401(k) plan for its United
States employees, which allows eligible employees to contribute a percentage
of their compensation and provides for certain discretionary employer
matching contributions. For the years ended December 31, 1999, 1998, and
1997, the Company contributed $0, $24,980, and $15,355, respectively.

10. EMPLOYEE STOCK PURCHASE PLAN

Our employee stock purchase plan became effective July 1, 1998. The
plan has been structured within the meaning of Section 423(b) of the Internal
Revenue Code of 1986. A maximum of 100,000 shares of common stock are
available for sale to our employees under the plan. The purchase price of
each share of common stock will be the lesser of 85% of the fair market value
of such share on the first day of the six month purchase period, or 85% of
the fair market value of such share on the last day of the purchase period.
Currently 60 employees have elected to participate in the plan. Through
December 31, 1999, our employees had purchased 27,060 shares of common stock
under the plan.

11. SUBSEQUENT EVENTS

Effective January 1, 2000, we acquired the remaining minority
interest in ACT Teleconferencing (Pty) Ltd, based in Australia, for stock
issued, consideration aggregating approximately $400,000 and 16.7% of ACT
Business Solutions Limited, based in the United Kingdom, for stock issued,
consideration aggregating approximately $130,000.

Effective January 6, 2000 we acquired the assets of the Internet
service provider division of Mueller Telecommunications, Inc. for stock
issued, consideration aggregating approximately $365,000.

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ACT TELECONFERENCING, INC.
CONSOLIDATED BALANCE SHEETS

[Enlarge/Download Table]

MARCH 31, DECEMBER 31,
2000 1999
----------- -----------
(unaudited) (audited)

ASSETS
Current Assets:
Cash and cash equivalents $ 874,150 $ 1,532,551
Accounts receivable (net of allowance for doubtful accounts
of $167,559 and $153,677 in 2000 and 1999 respectively) 7,385,865 6,606,641
Prepaid expenses 1,266,107 847,021
Inventory 139,664 129,519
------------ ------------
Total current assets 9,665,786 9,115,732

Equipment:
Telecommunications equipment 7,856,148 8,254,966
Office equipment 7,559,992 6,383,765
Less: accumulated depreciation (3,792,989) (3,363,484)
------------ ------------
Total equipment - net 11,623,151 11,275,247

Other Assets:
Goodwill (net of accumulated amortization of $291,079 and
$247,980 in 2000 and 1999 respectively) 2,469,016 1,456,944
Deferred loan placement fees 164,081 250,420
------------ ------------
Total assets $23,922,034 $22,098,343
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of debt $ 2,428,643 $ 2,313,454
Accounts payable 2,130,336 2,541,822
Accrued liabilities 1,726,154 1,492,382
Capital lease obligations due in one year 637,452 609,076
Income taxes payable 601,268 589,666
------------ ------------
Total current liabilities 7,523,853 7,546,400

Long-term debt 3,765,497 3,778,614

Capital lease obligations due after one year 1,193,418 1,223,795

Preferred stock, no par value, 1,000,000 shares authorized;
2,000 issued (net of deferred placement cost of $295,230
and 306,944 in 2000 and 1999 respectively) 1,703,770 1,693,006

Deferred income taxes (United Kingdom) 315,356 320,112

Minority interest 1,447,578 967,559

Shareholders' equity:
Common stock, no par value; 10,000,000 shares authorized
4,828,374 and 4,595,947 shares issued and outstanding
in 2000 and 1999 respectively 12,767,168 11,378,103
Additional paid in capital 119,925 99,900
Accumulated deficit (4,661,250) (4,809,176)
Accumulated other comprehensive loss (253,281) (99,970)
------------ ------------
Total Shareholders' equity 7,972,562 6,568,857
------------ ------------
Total liabilities and shareholders' equity $23,922,034 $22,098,343
============ ============

See notes to consolidated financial statements.

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ACT TELECONFERENCING, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

[Enlarge/Download Table]

THREE MONTHS ENDED MARCH 31,
2000 1999
----------- -----------

Net revenues $ 8,183,767 $ 6,842,467
Cost of Services (4,071,656) (3,788,894)
------------ ------------
Gross Profit 4,112,111 3,053,573
Selling, general and administration expense (3,266,610) (2,827,166)
------------ ------------
Operating Income 845,501 226,407
Interest expense (238,555) (172,800)
------------ ------------
Income (loss) before income taxes and minority interest 606,946 53,607
Provision for income taxes (222,286) (117,942)
------------ ------------
Income (loss) before minority interest 384,660 (64,335)
Minority interest in earnings of consolidated subsidiary (196,735) (62,136)
------------ ------------
Net income (loss) $ 187,925 $ (126,471)
============ ============
Net income (loss) per share-basic and fully diluted $ 0.03 $ (0.03)
============ ============
Weighted average number of shares outstanding-basic 4,780,413 4,027,655
============ ============
Weighted average number of shares outstanding-fully diluted 5,971,935 4,027,655
============ ============

See notes to consolidated financial statements.

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ACT TELECONFERENCING, INC
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)

[Download Table]

THREE MONTHS ENDED MARCH 31,
2000 1999
------------ ------------

OPERATING ACTIVITIES
Net income (loss) $ 187,925 $ (126,471)
Adjustments to reconcile net income (loss)
to net cash used for operating activities:
Depreciation 429,504 311,604
Amortization of goodwill 102,745 32,105
Deferred preferred stock issuance cost 10,764
Deferred loan issuance costs 14,453 13,203
Deferred income tax (4,756) (8,684)
Minority interest 178,029 30,591
------------ ------------
Cash flow before changes in operating assets
and liabilities: 918,664 252,348

Changes in operating assets and liabilities
(net of effect of business combinations):
Accounts receivable (756,989) (1,749,991)
Inventory (10,145) 41,857
Prepaid expenses and other assets (347,200) (169,822)
Accounts payable (451,487) 413,856
Income tax payable 11,602 105,625
Accrued liabilities 233,772 351,242
------------ ------------
Net cash used for operating activities (401,783) (754,885)

INVESTING ACTIVITIES
Property and equipment purchases (690,409) (1,058,500)
Short term notes redeemed - (9,999)
Cash paid for acquisitions net of cash acquired (130,241) -
------------ ------------
Net cash used for investing activities (820,650) (1,068,499)

FINANCING ACTIVITIES
Net proceeds from the issuance of debt 100,072 (156,293)
Net proceeds from issuance of common stock 617,271 3,345,682
Deferred Loan Issuance Costs (32,829)
------------ ------------
Net cash provided by financing activities 717,343 3,156,560

Effect of exchange rate changes on cash (153,311) (134,074)

------------ ------------
Net increase (decrease) in cash and cash
equivalents (658,401) 1,199,102

Cash and cash equivalents, beginning of year 1,532,551 369,408

------------ ------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 874,150 $ 1,568,510
============ ============

See notes to consolidated financial statements.

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ACT TELECONFERENCING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

BASIS OF PRESENTATION

The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310(b)
of Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments, consisting
of normal recurring accruals, considered necessary for a fair presentation have
been included. Operating results for the three-month period ending March 31,
2000 are not necessarily indicative of the results that may be expected for the
year ended December 31, 2000. For further information, refer to the financial
statements and footnotes included in our annual report on Form 10-KSB for the
year ended December 31, 1999 and its amendments.

NET INCOME (LOSS) PER COMMON SHARE

RECLASSIFICATIONS

Certain reclassifications have been made to the 1999 quarterly
financial statement presentation in order to conform to the 2000 presentation.

SUBSEQUENT EVENT

In May 2000, we released from escrow shares and warrants
previously-issued to a vendor in connection with a consulting agreement and,
accordingly, a non-cash charge of approximately $235,000 was rendered to fully
reflect this transaction.

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[Included on the inside back cover is the opening page of our website
(acttel.com), a brief description of our business, and our address and telephone
number]

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘424B4’ Filing	Date	First	Last	Other Filings

	12/12/09	43
	10/19/06	41	62
	10/19/04	42	61
	12/31/03	40	62	10-K, 10-K/A, NT 10-K, S-3
	8/15/03	43
	4/30/03	40		10-K/A
	4/3/03	62
	3/31/03	23	62	10-Q, NT 10-K
	6/10/02	23	37
	4/1/02	38
	7/31/01	59
	12/31/00	13	71	10-K405
	6/9/00	1
Filed on:	6/8/00			AW, S-1MEF
	5/25/00	1
	5/24/00	1	13
	5/23/00	1	44
	3/31/00	5	71	10QSB
	2/29/00	46
	2/8/00	52
	1/6/00	67
	1/1/00	21	67
	12/31/99	6	71	10KSB, 10KSB/A
	12/10/99	42	45
	11/18/99	45		8-K
	10/19/99	41	62
	7/26/99	38	45
	7/1/99	38	45
	6/30/99	62		10QSB
	6/10/99	36
	5/20/99	40
	4/1/99	38	45
	3/31/99	22	51	10-K, 10KSB, 10QSB
	2/2/99	62
	12/31/98	13	67	10-K, 10KSB, 10KSB/A
	12/22/98	36
	7/1/98	36	67
	4/7/98	40
	3/31/98	40	62	10QSB
	2/28/98	46
	12/31/97	13	71	10KSB, 10KSB/A
	12/30/97	36
	6/18/97	36
	2/15/97	36
	12/31/96	16	55	10KSB, NT 10-K
	11/1/96	36
	9/3/96	36
	7/1/96	36		8-K
	12/31/95	16
	4/28/95	43
	12/31/94	63
				List all Filings

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Filing Submission 0000912057-00-027846 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

ACT Teleconferencing, Inc. – ‘424B4’ on 6/8/00

On: Thursday, 6/8/00, at 5:19pm ET · Accession #: 912057-0-27846 · File #: 333-32156

Prospectus — Rule 424(b)(4)Filing Table of Contents

Document Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Prospectus — Rule 424(b)(4)
Filing Table of Contents