NEVADA 5133 04-3836208
(State or other jurisdiction (Primary Standard) (I.R.S. Employer
of incorporation Industrial Classification Identification No.)
or organization) Code Number)
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(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices, principal place of business and name, address and phone number of service agent)
COPIES TO: PAUL KELLY COPY TO: RICHARD W. JONES
106 MAY DRIVE 115 PERIMETER CENTER PLACE
SAXONBURG, PA 16056 SUITE 170
(724) 352-7606 ATLANTA, GA 30346
(770) 804-0500
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If the form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES TO BE AGGREGATE OFFERING PRICE
REGISTERED (1) AMOUNT OF REGISTRATION FEE (3)
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Common Stock, par value $.0001 per share $604,663 $64.70
(and associated common stock purchase
rights) (2)
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Rights (4) $0 (5)
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(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(f)(2) under the Securities Act, as amended. Includes $4,663 as
the assumed value of the shares to be issued in the spinoff, based on 1/3
of the par value of the shares to be issued. Currently 46,632,222 shares of
common stock are expected to be issued in the spinoff. Also includes
$600,000 as the value of the shares issueable upon the exercise of the
common stock purchase rights.
(2) Rights to acquire shares of the Registrant's common stock are attached to
and trade with the common stock of the Registrant. Value attributable to
such rights, if any, is reflected in the market price of the common stock.
No separate registration fee is required pursuant to Rule 457(h) (2).
(3) Calculated by multiplying the proposed maximum aggregate offering price by
$0.000107
(4) The rights are being issued without consideration to the holders of the
Registrant's common stock as of the Rights Offering Record Date set forth
in this Registration Statement.
(5) Pursuant to Rule 457(g), no separate registration fee is payable with
respect to the rights, since the rights are being registered in the same
Registration Statement as the securities to be offered pursuant thereto.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
The information contained in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is declared effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED MAY _____, 2006
NB TELECOM, INC.
SHARES OF COMMON STOCK AND COMMON STOCK PURCHASE RIGHTS
USIP.COM, Inc. ("USIP") is distributing to its stockholders all the outstanding shares of the common stock of NB Telecom, Inc. (the "Shares"), which is USIP's wholly owned subsidiary (the "Spinoff"). We expect USIP to effect the Spinoff beginning on the effective date of the registration statement to holders of record of USIP common stock on the effective date of this registration statement (the "Spinoff Record Date"). USIP will distribute one share of NB Telecom, Inc. ("NBT") common stock for every share of USIP common stock outstanding on the Spinoff Record Date. The actual number of NBT shares to be distributed in the Spinoff will depend on the number of USIP shares outstanding on that date.
USIP stockholders will not be required to pay for the shares of NBT common stock that they receive in the spinoff, nor will they be required to surrender or exchange their shares of USIP common stock. The spinoff is intended to be tax-free to the holders of USIP common stock for U.S. federal income tax purposes.
We are distributing at no charge to persons who are holders of our common stock on the Spinoff Record Date transferable rights to purchase up to an aggregate of 6,000,000 shares of our common stock at a cash subscription price of $.10 per share (the "rights offering"). The rights offering is being made to fund the costs and expenses of the Spinoff, to pay for debts and for our general corporate purposes following the Spinoff. The total purchase price of shares offered in the rights offering will be $600,000. You will not be entitled to receive any subscription rights unless you are a holder of our common stock as of the close of business on the Spinoff Record Date.
The subscription rights will expire if they are not exercised by 5:00 p.m., New York City time, on December 31, 2007 ("Rights Exercise Date"). We, in our sole discretion, may extend the Rights Exercise Date. Subscription rights that are not exercised by the expiration date of the rights offering will expire and have no value. If you receive rights in the rights offering you should carefully consider whether or not to exercise or sell your subscription rights before the expiration date
Prior to this offering, there has been no public market for the Shares, and it is possible that no such trading market will commence for a substantial period of time after the close of this offering. The Company's common stock is not quoted on any national exchange. When trading commences it is contemplated that the Shares will be traded on the National Association of Securities Dealers, Inc. over the counter market; however, there is no assurance that this will occur.
THE SHARES TO BE DISTRIBUTED HEREBY INVOLVE A HIGH DEGREE OF RISK. YOU SHOULD
CAREFULLY READ AND CONSIDER THE
"RISK FACTORS," COMMENCING ON PAGE 8 FOR INFORMATION THAT
SHOULD BE CONSIDERED BY THE RECIPIENTS OF THE SHARES.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SHARES OR PASSED
UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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Price to Underwriting Discounts And Proceeds to Us (4)
Public(1)(2) Commissions (3)
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Per Share (2) $.10 0 $.10
Total - 6,000,000 Shares $600,000 0 $600,0000
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(1) The shares of our common stock to be distributed in the Spinoff, will be
issued to all the holders of common stock of USIP on the Spinoff Record
Date, and no consideration or underwriter discounts or commissions will be
paid therefore. Accordingly, we will receive no proceeds in connection with
the Spinoff. Consequently, no such proceeds are reflected in the table
above.
(2) Up to 6,000,000 shares will be issued in connection with the exercise of
the stock purchase rights for an exercise price of $.10 per share.
(3) No fees or commissions will be paid in connection with the distribution of
the shares.
(4) Proceeds to be received by us in connection with the exercise of the stock
purchase rights, before deducting registration and distribution expenses
payable by us estimated at approximately $62,000.
The date of this Prospectus is May ____, 2006
TABLE OF CONTENTS
PAGE NO.
PART I
Prospectus Summary......................................................1
The Company.............................................................1
The Offering............................................................3
Where You Can find More Information.....................................6
Forward Looking Statements..............................................6
Risk Factors............................................................7
The Spinoff.............................................................16
Use of Proceeds.........................................................23
Capitalization..........................................................23
Dilution................................................................25
Plan of Operation.......................................................25
Business Plan...........................................................25
Management..............................................................29
Principal Stockholders..................................................31
Certain Relationships and Related Transactions..........................31
Description of Capital Stock............................................31
Experts.................................................................33
Legal Matters...........................................................33
Further Information.....................................................33
PART II
Information Not Required in Prospectus..................................36
Signatures..............................................................39
Power of Attorney.......................................................39
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed information and financial statements, including the notes thereto, appearing elsewhere in this prospectus. Because it is a summary, it does not contain all of the information you should consider before making an investment decision. You should read the entire prospectus carefully, including the sections titled "Risk Factors," "Management", and "Certain Transactions" and the financial statements and the notes relating to the financial statements.
THE COMPANY
NB Telecom, Inc. is a provider of privately owned and company owned payphones (COCOT's) located throughout the State of Pennsylvania. The Company receives revenues from the collection of the payphone coinage, a portion of usage of service from each payphone and a percentage of long distance fees for calls placed from each payphone. These fees are paid by the telecommunications service providers. In addition, the Company receives revenues from the service and repair of privately owned payphones, sales of payphone units and the sale of prepaid phone cards.
ORGANIZATION
We were initially incorporated under the laws of the State of Pennsylvania on November 16, 1999. Subsequently, we migrated our state of organization to Nevada, effective December 1, 2005. At this time we are a Nevada corporation.
RELATIONSHIP WITH USIP.COM, INC.
We are currently a wholly-owned subsidiary of USIP.com, Inc.. USIP's common stock is traded on the NASDAQ over the Counter Market under the symbol "USPO."
After the Spinoff, we will be an independent public company that is not controlled by USIP and USIP will hold no equity interest in us. We expect that our common stock will also be traded in the NASDAQ over the Counter Market at some point in time, although, there is no assurance that this will occur. Our current board members and officers and directors will remain as our officers and directors following the spin-off.
USIP has provided certain services to us, including tax, treasury, legal, auditing, corporate development, risk management, regulatory, compensatory and other services. Identifiable costs and salaries that were specific to our business were directly allocated to our operating businesses. Following the spin-off we will be responsible for all these costs.
THE SPINOFF
DISTRIBUTING
COMPANY USIP.com, Inc., is a Nevada corporation. For purposes of this
prospectus, "USIP.com, Inc." includes USIP and its consolidated
subsidiaries, other than NB Telecom, Inc., unless the context
otherwise specifies.
DISTRIBUTED
COMPANY NB Telecom, Inc., a Nevada corporation, originally organized as a
Pennsylvania corporation on November 16, 1999.
SPINOFF The distribution of all our common stock held by USIP to USIP's
common stock holders. On the distribution date, the distribution
agent will begin distributing shares of our common stock to
persons who were stockholders of USIP on the Spinoff Record Date.
Such holders will not be required to make any payment nor will
they be required to surrender or exchange their shares of USIP
common stock or take any other action to receive shares of our
common stock.
DISTRIBUTED
SHARES Based on the number of shares of USIP common stock outstanding on
the Spinoff Record Date, and the one for one distribution ratio,
we currently expect that approximately 46,632,222 shares of our
common stock will be distributed to the stockholders of USIP. No
fractional shares of our common stock will be distributed.
Instead all fractional shares will be rounded up to the next
whole number of shares.
SPINOFF RECORD
DATE The effective date of this registration statement.
DISTRIBUTION
AGENT Holladay Stock Transfer, Inc., located in Scottsdale, Arizona.
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DISTRIBUTED
SHARES Based on the number of shares of USIP common stock outstanding on
the Spinoff Record Date, and the one for one distribution ratio,
we currently expect that approximately 46,632,222 shares of our
common stock will be distributed to the stockholders of USIP. No
fractional shares of our common stock will be distributed.
Instead all fractional shares will be rounded up to the next
whole number of shares.
SPINOFF RECORD
DATE The effective date of this registration statement.
DISTRIBUTION
AGENT Holladay Stock Transfer, Inc., located in Scottsdale, Arizona.
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PURPOSES OF THE
DISTRIBUTION USIP's board of directors believes that the distribution is in
the best interest of USIP, its stockholders and us. USIP's board
of directors believes that the distribution will result in
various benefits to USIP and us, including, but not limited to,
the following:
* Separating USIP's Pennsylvania pay phone business from its New York pay phone business. This in turn will allow the management of each company to focus solely on the opportunities and challenges specific to each business.
* Eliminating competition for capital between our businesses; including greater investor clarity, which should allow the investment community to better understand and evaluate our business and USIP's businesses. We anticipate that this may expand the pool of capital available to us.
* Increasing the long term value of our respective common stocks. In addition, the Spinoff will enable us and USIP to offer our respective management and employees equity incentives that are economically aligned with the financial performance of our respective businesses; and
* Allowing us to make acquisitions using our stock, if we choose to make such acquisitions.
POWER TO AMEND,
MODIFY OR ABANDON
THE DISTRIBUTION USIP's board of directors may amend or modify the
Spinoff at any time prior to the Spinoff Record Date, and may
abandon the Spinoff at any time prior to the distribution of the
shares.
TRADING MARKET No public market exists for our common stock, although a
trading market may develop after the shares are distributed. We
will file an application to have our common stock traded on the
NASDAQ over the counter market.
DIVIDEND POLICY We currently anticipate that no cash dividends will be
paid on our common stock in the foreseeable future. Our board of
directors periodically will reevaluate this dividend policy
taking into account our operating results, capital needs, the
terms of our existing financing arrangements and other factors.
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U.S. FEDERAL
INCOME TAX
CONSEQUENCES The Spinoff is designed by management to be tax free under the
tax-free spin-off provisions of the Tax Code. Fractional shares
will not be issued but the number of shares to be received by the
shareholders with fractional shares will be rounded up to the
next whole number of shares.
OFFICERS AND
DIRECTORS At the time of the Spinoff, our officers and directors will
consist of the following:
Paul Kelly - President, Director
Craig Burton - Secretary, Director
Leonard Battaslia - Director.
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RISK FACTORS Stockholders should carefully consider the matters discussed in the section captioned "Risk Factors".
THE RIGHTS OFFERING
RIGHTS
OFFERED We are granting transferable rights to purchase up to 6,000,000
shares of our common stock to holders of record at 5:00 p.m., New
York time on the Spinoff Record Date. Each shareholder will
receive the right to purchase .128666 shares of common stock for
each share of our common stock currently held by such
shareholder, provided that the right to receive fractional shares
will be rounded down to the next lowest whole number of shares.
Each whole right entitles such holder to purchase one share of
our common stock. The rights are issued in the form of rights
certificates that accompany this prospectus.
SUBSCRIPTION
PRICE The subscription price for exercising the rights will be $.10 per
share, payable in cash. Payment by personal check must clear
payment on or before the expiration date, which may require two
or more business days from the date that we received your
personal check. As a result, we recommend that stockholders pay
the subscription price by wire transfer, certified or cashier's
check drawn on a U.S. bank or U.S. postal money order.
The subscription price was determined arbitrarily by USIP.Com, Inc.'s
board of directors. The subscription price is not necessarily
related to our book value, net worth or any other established
criteria of value and may or may not be considered the fair value
of the common stock to be offered in the rights offering.
SHARES OF COMMON STOCK
OUTSTANDING PRIOR TO THE
RIGHTS OFFERING 46,632,222.
EXPIRATION DATE
AND TIME The subscription period for the rights expires at 5:00 p.m.,
New York time, on December 31, 2007.
TRANSFERABILITY
OF RIGHTS The rights are transferable, and we expect that rights may
be purchased or sold through usual investment channels until the
close of business on the last trading day preceding the
expiration date. However, there has been no prior public market
for the rights, and we cannot assure you that a trading market
for the rights will develop or, if a market develops, that the
market will remain available throughout the subscription period.
FRACTIONAL
RIGHTS We will not issue fractional shares of common stock in the rights
offering nor will we pay cash in lieu of fractional rights. If a
holder's rights would allow it to purchase a fractional share, it
may exercise its rights only by rounding down to and paying for
the nearest whole share or by paying for any lesser number of
whole shares.
NO REVOCATION
OF EXERCISE Once a rights holder submits the form of rights
certificate to exercise any rights, such holder is not allowed to
revoke or change the exercise or request a refund of monies paid.
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AMENDMENT,
EXTENSION AND
TERMINATION We may withdraw or amend the provisions of the rights offering at
any time prior to the effective date of the Spinoff. We may amend
or extend the subscription period of the rights offering at any
time after the effective date of the Spinoff. We also reserve the
right to withdraw the rights offering at any time after the
Spinoff and prior to the expiration date for any reason, in which
event all funds received in the rights offering will be returned
without interest or deduction to those persons who subscribed for
shares in the rights offering.
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PROCEDURE FOR
EXERCISING
RIGHTS Rights holders wishing to exercise their rights must complete the
rights certificate and deliver it to NBT with full payment for
the amount of rights exercised under the subscription privilege.
NBT must receive the proper forms and payments in good funds on
or before the expiration date of the subscription period.
Rights holders wishing to exercise their rights may deliver the
documents and payments by mail or commercial courier. If regular
mail is used for this purpose, we recommend using insured,
registered mail.
PAYMENT
ADJUSTMENTS If a rights holder sends a payment that is insufficient to
purchase the number of shares such holder requested, or if the
number of shares such holder requested is not specified in the
forms, the payment received will be applied to exercise the
subscription privilege to the extent of the payment. If the
payment exceeds the subscription price for the full exercise of
the subscription privilege, the excess will be returned to such
holder as soon as it is practicable. Rights holders will not
receive interest or deduction on any payments refunded to them
under the rights offering.
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NOMINEE
ACCOUNTS If a rights holder wishes to purchase shares in the rights
offering or sell its rights and its shares are held by a
securities broker, bank, trust company or other nominee, such
holder should promptly contact its record holder(s) and request
that they exercise or sell rights on such holder's behalf. Such
holder may also contact the nominee and request that the nominee
send a separate rights certificate to it. If a holder wishes an
institution such as a broker or bank to exercise or sell such
holder's rights for it, such holder should contact that
institution promptly to arrange the method of exercise or sale.
FEES AND
COMMISSIONS Rights holders wishing to exercise or sell their rights are
responsible for the payment of all fees that a transfer agent,
broker or other persons holding such holder's shares may charge.
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U.S. FEDERAL
INCOME TAX
CONSEQUENCES Management believes that for U.S. federal income tax purposes,
rights holders exercising their rights will not recognize income
as a result of the exercise of their rights. Rights holders who
sell their rights may recognize a gain or loss upon such sale.
See "U.S. Federal Income Tax Treatment of Rights Distribution."
Such holders should, and are urged to, consult their own tax
advisor concerning the tax consequences of the rights offering
for their own tax situation.
NO RECOMMENDATION
TO RIGHTS
HOLDERS Neither our nor USIPs' board of directors makes any
recommendations as to whether persons receiving rights in the
rights offering should subscribe for shares of our common stock.
They should decide whether to subscribe for shares or transfer
their rights based upon their own assessment of their best
interests.
TRADING
MARKET No public market exists for our common stock. We expect that
rights may be purchased or sold through usual investment channels
until the close of business on the last trading day preceding the
expiration date. However, there has been no prior public market
for the rights, and we cannot assure rights holders that a
trading market for the rights will develop or, if a market
develops, that the market will remain available throughout the
subscription period. We will file an application to have our
common stock admitted to trading on the NASDAQ over the counter
market. No application will be made to have our rights listed on
the over the counter market.
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STOCK
CERTIFICATES We will deliver stock certificates representing our common stock
purchased by the exercise of rights as soon as practicable after
the rights are exercised .
ADDITIONAL
INFORMATION Stockholders of USIP with questions regarding the Spinoff or the
Rights Offering should contact:
NB TELECOM, INC.
CRAIG BURTON, PRESIDENT
USIP.COM, INC.
P. O. BOX 2711
LIVERPOOL, NEW YORK 13089
TELEPHONE: (315) 451-7515
FACSIMILE: (315) 453-7311
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND IN ANY ACCOMPANYING PROSPECTUS SUPPLEMENT. NO ONE HAS BEEN AUTHORIZED TO PROVIDE YOU WITH DIFFERENT INFORMATION.
THE SECURITIES ARE NOT BEING OFFERED IN ANY JURISDICTION WHERE THE OFFER IS NOT
PERMITTED.
YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS
OR ANY PROSPECTUS SUPPLEMENT IS ACCURATE AS OF ANY DATE
OTHER THAN THE DATE ON THE FRONT OF SUCH DOCUMENTS.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement on Form SB-2 that we filed with the Securities and Exchange Commission with respect to the Shares of common stock offered by this prospectus. This prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedule filed therewith. For further information about us and the Shares offered by this prospectus, reference is made to the registration statement and the accompanying exhibits and schedules. A copy of the registration statement and the associated exhibits and schedules may be inspected without charge at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549, and copies of all or any part of the registration statement may be obtained from such office upon the payment of the fees prescribed by the SEC.
Please call the SEC at 1-800-SEC-0330 for further information about its public reference room. The SEC maintains a World Wide Web site that contains reports, proxy and information statements and other information regarding registrants, including us, that file electronically with the SEC. The address of the website is http://www.sec.gov. Our registration statement and the exhibits and schedules we filed electronically with the SEC are available on this site.
As of the date of this prospectus, we will be subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and we will file reports and other information with the SEC. Such reports and other information can be inspected and/or obtained at the locations and website set forth above.
FORWARD LOOKING STATEMENTS
This prospectus includes "forward-looking statements". These statements involve known and unknown risks, uncertainties and other factors which could cause actual results, performance (financial or operating) or achievements expressed or implied by such forward-looking statements not to occur or be realized. Such forward-looking statements generally are based upon our best estimates of future results, performance or achievement, based upon current conditions, and the most recent results of operations. Forward-looking statements may be identified by the use of forward-looking terminology such as "may," "will," "expect," "believe," "estimate," "anticipate," "continue," or similar terms, variations of those terms or the negative of those terms. Potential risks and uncertainties include among other things, such factors as:
- Our ability to expand our customer base, which will be dependent on business, financial and other factors beyond our control, including, among others, seasonal aspects such as the winter months that tend to reduce the frequency of outdoor payphone use on the east coast; - Ability to increase our size and marketing area by purchasing payphones and locations from independent telephone companies; and - Whether the public uses our payphones, together with all the risks inherent in marketing of new products.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, we do not assume responsibility for the accuracy and completeness of the forward-looking statements after the date of this prospectus.
RISK FACTORS
You should carefully read and consider the following risk factors together with all of the other information included in this prospectus in evaluating us and our common stock. Our business, financial condition and results of operations could be materially and adversely affected by any of these risks. The trading price of our common stock could decline, and you may lose all or part of your investment. The risks described below are not the only ones facing our company. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations.
This prospectus also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks faced by us described below and elsewhere in this prospectus. You should carefully consider the following risk factors, other information included in this prospectus and information contained in our periodic reports that we will file with the Securities and Exchange Commission (the "SEC") following consummation of the Spinoff. The material risks and uncertainties described below are related to this offering. If any of the following risks actually occur, our business, financial condition or results of operations could be materially and adversely affected, and you may lose some or all of your investment.
UNLESS WE CAN REVERSE OUR HISTORY OF LOSSES, WE MAY HAVE TO DISCONTINUE OPERATIONS
If we are unable to achieve or sustain profitability, or if operating losses increase in the future, we may not be able to remain a viable company and may have to discontinue operations. Our expenses have historically exceeded our revenues and we have had losses in all fiscal years of operation, including those in fiscal years 2004 and 2005. Our net losses were $77,660 and $68,491 for fiscal years ended 2004, 2005 respectively. We have been concentrating on the development of our products, services and business plan. Our management believes that we can be profitable and that our business plan will be successful; however, there is no assurance that we will be successful in implementing our business plan or that we will be profitable now or in the future.
THE REPORT OF OUR INDEPENDENT AUDITORS INDICATES UNCERTAINTY CONCERNING OUR ABILITY TO CONTINUE AS A GOING CONCERN.
Our independent auditors have raised substantial doubt about our ability to continue as a going concern. We cannot assure you that this will not impair our ability to implement our business plan. Additionally, we cannot assure you that we will ever achieve significant revenues and therefore remain a going concern.
WE MAY NOT SUCCEED OR BECOME PROFITABLE
We will need to generate significant revenues to achieve profitability and we may be unable to do so. Even if we do achieve profitability, we may not be able to sustain or increase profitability in the future. We expect that our expenses will continue to increase and there is no guarantee that we will not experience operating losses and negative cash flow from operations for this fiscal year or for the foreseeable future. If we do not achieve or sustain profitability, then we may be unable to continue our operation.
WE WILL FACE RISKS ENCOUNTERED BY SMALL CAP COMPANIES AND MAY BE UNSUCCESSFUL IN ADDRESSING THESE RISKS
We will face risks frequently encountered by small cap companies in new and rapidly evolving markets, including the market for pay telephone services. We may not succeed in addressing these risks, and our business strategy may not be successful. These risks include uncertainties about our ability to:
- attract a larger number of consumers for our services; - manage our operations; - develop new, strategic relationships and alliances; - attract, retain and motivate qualified personnel; and - successful business acquisitions.
WE WILL NEED ADDITIONAL CAPITAL FINANCING IN THE FUTURE
It is likely that we will be required to seek additional financing in the future to respond to increased expenses or shortfalls in anticipated revenues, respond to competitive pressures, develop new or enhanced products, or take advantage of unanticipated acquisition opportunities. We cannot be certain we will be able to find such additional financing on reasonable terms, or at all. If we are unable to obtain additional financing when needed, we could be required to modify our business plan in accordance with the extent of available financing.
IF WE CANNOT ATTRACT, RETAIN, MOTIVATE AND INTEGRATE ADDITIONAL SKILLED PERSONNEL, OUR ABILITY TO COMPETE WILL BE IMPAIRED
Many of our current and potential competitors have more employees than we do. Our success depends in large part on our ability to attract, retain and motivate highly qualified management and technical personnel. We face intense competition for qualified personnel. The industry in which we compete has a high level of employee mobility and aggressive recruiting of skilled personnel. If we are unable to continue to employ our key personnel or to attract and retain qualified personnel in the future, our ability to successfully execute our business plan will be jeopardized and our growth with be inhibited.
BECAUSE OUR OFFICERS AND DIRECTORS ARE INDEMNIFIED AGAINST CERTAIN LOSSES, WE MAY BE EXPOSED TO COSTS ASSOCIATED WITH LITIGATION
If our directors or officers become exposed to liabilities invoking the indemnification provisions, we could be exposed to additional unreimbursable costs, including legal fees. Our articles of incorporation and bylaws provide that our directors and officers will not be liable to us or to any shareholder and will be indemnified and held harmless for any consequences of any act or omission by the directors and officers unless the act or omission constitutes gross negligence or willful misconduct. Extended or protracted litigation could have a material adverse effect on our cash flow.
WE WILL DEPEND ON OUTSIDE MANUFACTURING SOURCES AND SUPPLIERS
We may contract with third party manufacturers to produce our products and we will depend on third party suppliers to obtain access to telephone and long distance services. We do not know what type of contracts we will have with such third party suppliers. Even a short-term disruption in our relationship with third party providers or suppliers could have a material adverse affect on our operations.
IF WE ARE SUBJECT TO SEC REGULATIONS RELATING TO LOW-PRICED STOCKS, THE MARKET FOR OUR COMMON STOCK COULD BE ADVERSELY AFFECTED
The Securities and Exchange Commission has adopted regulations concerning low-priced (or "penny") stocks. The regulations generally define "penny stock" to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. In the event our stock commences trading it could be classified as a penny stock.
The penny stock regulations require that broker-dealers, who recommend penny stocks to persons other than institutional accredited investors make a special suitability determination for the purchaser, receive the purchaser's written agreement to the transaction prior to the sale and provide the purchaser with risk disclosure documents that identify risks associated with investing in penny stocks. Furthermore, the broker-dealer must obtain a signed and dated acknowledgment from the purchaser demonstrating that the purchaser has actually received the required risk disclosure document before effecting a transaction in penny stock. These requirements have historically resulted in reducing the level of trading activity in securities that become subject to the penny stock rules.
The additional burdens imposed upon broker-dealers by these penny stock requirements may discourage broker-dealers from effecting transactions in the common stock, which could severely limit the market liquidity of our common stock and our shareholders' ability to sell our common stock in the secondary market
NO ASSURANCE OF PROFITABILITY
We may experience operating losses as we develop and implement our business plan. As a result, we may not be able to achieve or maintain profitability.
RISKS ASSOCIATED WITH POTENTIAL ACQUISITIONS
As part of our business strategy, we may make acquisitions of, or investments in, companies, businesses, products or technologies. Any such future acquisitions would be accompanied by the risks commonly encountered in such acquisitions. Those risks include, among other things:
- the difficulty of assimilating the operations and personnel of
the acquired companies,
- the potential disruption of our business or business plan,
- the diversion of resources from our existing businesses, and
products,
- the inability of management to integrate acquired businesses or
assets into our business plan, and
- additional expense associated with acquisitions.
There can be no assurance we would be successful in overcoming these risks or
any other problems encountered with such acquisitions, and our inability to overcome such risks could have a material adverse effect on our business, financial condition and results of operations.
POSSIBLE ISSUANCE OF ADDITIONAL SHARES WITHOUT STOCKHOLDER APPROVAL COULD DILUTE STOCKHOLDERS
Following the completion of the Spinoff, we will have approximately 46,632,222 Shares of common stock outstanding. Other than the pending rights offering describe elsewhere herein, there are currently no other material plans, agreements, commitments or undertakings with respect to the issuance of additional shares of common stock or securities convertible into shares of our common stock. Additional shares could be issued in the future, and the result of the issuance of additional shares would be to further dilute the percentage ownership of our common stock held by our stockholders.
INABILITY TO ATTRACT MARKET MAKERS
There is currently no public trading market for the Shares, and the Company is not currently a reporting Company with the United States Securities and Exchange Commission. The development of a public trading market depends not only the existence of willing buyers and sellers, but also on market makers. Following the completion of this offering it is contemplated that the Company will become a reporting company with the SEC, and certain broker-dealers may become market makers for the Shares. Under these circumstances, the market bid and asked prices for the Shares may be significantly influenced by decisions of the market makers to buy or sell the Shares for their own account, which may be critical for the establishment and maintenance of a liquid public market in the Shares. Market makers are not required to maintain a continuous two-sided market and are free to withdraw firm quotations at any time. We currently have no market makers. No assurance can be given that any market makers will be obtained by NBT, and the failure to obtain such market makers could have an adverse impact on the market price of the shares.
IF A MARKET FOR OUR COMMON STOCK DOES NOT DEVELOP, SHAREHOLDERS MAY BE UNABLE TO SELL THEIR SHARES.
There is currently no market for our common stock and we can provide no assurance that a market will develop. We currently plan to apply for listing of our common stock on the OTC Bulletin Board upon the effectiveness of the registration statement, of which this prospectus forms a part. However, there is no assurance that our shares will be traded on the bulletin board or, if traded, that a public market will materialize. If no market is ever developed for our shares, it will be difficult for shareholders to sell their stock. In such a case, shareholders may find that they are unable to achieve benefits from their investment.
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve risks and uncertainties. We use words such as anticipate, believe, plan, expect, future, intend and similar expressions to identify such forward-looking statements. You should not place too much reliance on these forward-looking statements. Our actual results are most likely to differ materially from those anticipated in these forward-looking statements for many reasons, including the risks we face as described in this "Risk Factors" section and elsewhere in this prospectus.
RISKS RELATED TO THE SPIN-OFF
WE HAVE NO RECENT OPERATING HISTORY AS AN INDEPENDENT COMPANY.
During the past several years, our business has operated as a wholly-owned subsidiary of USIP. After the Spinoff, we will be an independent public company. Our ability to satisfy our obligations and achieve or maintain profitability will be solely dependent upon the future performance of our business, and we will not be able to rely upon the financial and other resources of USIP.
During the period of its ownership of our businesses, USIP has performed certain significant corporate functions for us, including certain legal functions, accounting, insurance administration, and tax services. In connection the Spinoff, we intend to take steps to create our own, or to engage third parties to provide, corporate business functions that will replace those currently provided by USIP, including all legal functions, accounting, insurance administration, internal audit and tax services. As an independent public company, we will be required to bear the cost of replacing these services. We may not be able to perform, or engage third parties to provide, these functions with the same level of expertise and on the same or as favorable terms as they have been provided by USIP. In such event, our business and operations could suffer.
WE ARE DEPENDENT ON USIP FOR THE PERFORMANCE OF CERTAIN CORPORATE FUNCTIONS.
In recent years, USIP has performed certain significant corporate functions for us, including certain legal functions, accounting, information technology, insurance administration and tax services. Although USIP has historically allocated charges to us for these services, these charges may not reflect the actual cost to us of performing or replacing these services after the Spinoff. USIP will continue to provide some of these services to us during an interim period after the distribution in exchange for certain fees.
Once the Spinoff is completed, we intend to take steps to create our own, or to engage third parties to provide, corporate business functions that will replace many of those currently provided by USIP. As an independent public company, we will be required to bear the cost of performing or replacing these services. We may not be able to perform, or engage third parties to provide, these functions with the same level of expertise and on the same or as favorable terms as they have been provided by USIP.
IF THE SPINOFF IS DETERMINED TO BE A TAXABLE TRANSACTION, YOU AND USIP COULD BE SUBJECT TO MATERIAL AMOUNTS OF TAX.
No rulings have been requested with respect to the tax implications of the Spinoff, and no independent legal opinion will be obtained. Management has attempted to structure the Spinoff in a manner designed to assure that the Spinoff is tax-free to the shareholder's, however, there are numerous requirements that must be satisfied in order for the Spinoff to be accorded tax-free treatment under the Tax Code. Thus, there is a risk that the Spinoff will be taxable as a dividend by USIP to its stockholders.
If the Spinoff is determined to be a taxable transaction, the Spinoff could be held to be a distribution taxable as a dividend by USIP of our common stock to the stockholders of USIP for U.S. federal income tax purposes, and such stockholders and USIP could be liable for material amounts of taxes.
If the Spinoff were held to be a taxable distribution, USIP would be subject to tax to the extent that the fair market value of our common stock exceeds the adjusted tax basis of USIP in our common stock at the time of the distribution.
EVENTS SUBSEQUENT TO THE SPINOFF COULD RESULT IN SIGNIFICANT TAX LIABILITY.
Under U.S. federal income tax laws, even if the Spinoff qualifies for tax-free treatment, USIP may nevertheless be subject to tax if acquisitions or issuances of either our common stock or USIP stock following the Spinoff cause the stockholders of USIP to subsequently own less than a majority of the outstanding shares of either USIP or us. In particular, this tax will apply if such issuances or acquisitions occur as part of a plan or series of related transactions that include the Spinoff. For this purpose, any acquisitions or issuances of USIP stock or our stock within two years before or after the Spinoff are presumed to be part of such a plan, although this presumption may be rebutted. If the subsequent acquisitions or issuances of either the stock of USIP or our stock triggers this tax, USIP will be subject to tax on the gain that would have resulted from a sale of our stock distributed in the Spinoff.
IF THE SPINOFF IS NOT A LEGAL DIVIDEND, IT COULD BE HELD INVALID BY A COURT AND HARM USIP'S AND OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The Spinoff is subject to the provisions of Section 78.288 of the Nevada Revised Statutes, which requires that distributions be made only if after making such distribution, the Corporation is able to pay its debts as they become due. Although we believe that the Spinoff complies with the provisions of Section 78.288, a court could later determine that the Spinoff was invalid under Nevada law and reverse the transaction. The resulting complications, costs and expenses could harm USIP's and our financial condition and results of operations.
CREDITORS OF USIP AT THE TIME OF THE SPINOFF MAY CHALLENGE THE SPINOFF AS A FRAUDULENT CONVEYANCE OR TRANSFER THAT COULD LEAD A COURT TO VOID THE SPINOFF.
Creditors of USIP could challenge the Spinoff and if a lawsuit brought by an unpaid creditor, or by a representative of creditors of USIP such as a trustee in bankruptcy, were to find that, among other reasons, at the time of the Spinoff, we or USIP:
o was insolvent;
o was rendered insolvent by reason of the Spinoff;
o was engaged in a business or transaction for which USIP's or our remaining
assets constituted unreasonably small capital; or
o intended to incur, or believed it would incur, debts beyond its ability to pay
these debts as they matured,
the court may be asked to void the Spinoff (in whole or in part) as a fraudulent conveyance or transfer. The court could then require that our stockholders return to USIP some or all of the shares of our common stock issued in the Spinoff, or that USIP or us to fund liabilities of the other company for the benefit of its creditors. The measure of insolvency for purposes of the foregoing could vary depending upon the jurisdiction whose law is being applied. Generally, however, USIP and we would be considered insolvent if the fair value of its assets were less than the amount of its liabilities or if it is generally not paying its debts as they become due. Although we believe that the Spinoff does not constitute a fraudulent conveyance or fraudulent transfer, a court could later void the Spinoff as a fraudulent conveyance or transfer.
RISKS RELATED TO OUR COMMON STOCK
THERE IS NO PUBLIC MARKET FOR OUR COMMON STOCK.
Our common stock currently is not publicly traded. However, a trading market for
the shares may develop in the future. If a public market does develop the public market will establish trading prices for our common stock. We cannot assure you that an active public market for our common stock will develop or be sustained.
YOU MAY HAVE DIFFICULTY EVALUATING OUR BUSINESS, AS OUR HISTORICAL FINANCIAL INFORMATION MAY NOT BE REPRESENTATIVE OF WHAT OUR RESULTS OF OPERATIONS WOULD HAVE BEEN IF WE HAD BEEN AN INDEPENDENT COMPANY.
Our historical financial statements included in this prospectus may not reflect the results of operations, financial condition and cash flows that would have been achieved by us had we been operated independently during the periods and as of the dates presented.
THE COMBINED MARKET VALUE OF THE COMMON STOCK OF USIP AND OUR COMMON STOCK AFTER THE SPINOFF MAY NOT EQUAL OR EXCEED THE MARKET VALUE OF USIP COMMON STOCK PRIOR TO THE SPINOFF.
The combined market value of the outstanding shares of USIP's common stock and our common stock after the Spinoff may not be equal to or greater than the market value of the outstanding shares of USIP common stock prior to the Spinoff. After the Spinoff, shares of USIP common stock will continue to be listed for trading on the over the counter market. We also expect that our stock will be listed for trading on the over the counter market shortly after the Spinoff.
SUBSTANTIAL SALES OF OUR COMMON STOCK FOLLOWING THE SPINOFF COULD DEPRESS THE MARKET PRICE OF OUR COMMON STOCK.
All of the shares of our common stock issued in the Spinoff, other than shares distributed to our "affiliates" (as such term is defined in applicable securities laws) will be eligible for immediate resale in the public market. It is likely that some USIP stockholders will, and USIP stockholders holding a substantial number of our shares may, sell shares of our common stock received in the Spinoff for various reasons, including the fact that our business profile or market capitalization as an independent company does not fit their investment objectives. Any sales of substantial amounts of our common stock in the public market, or the perception that such sales might occur, could depress the market price of our common stock. We are unable to predict whether substantial amounts of our common stock will be sold in the open market following the Spinoff.
AFTER THE SPINOFF, THE PRICE OF OUR COMMON STOCK MAY BE VOLATILE AND YOU MAY LOSE ALL OR A PART OF YOUR INVESTMENT.
The price of our common stock after the Spinoff may fluctuate widely, depending upon a number of factors, many of which are beyond our control. For instance, it is possible that our future results of operations may be below the expectations of investors and, to the extent our company is followed by securities analysts, the expectations of these analysts. If this occurs, our stock price may decline. Other factors that could affect our stock price include the following:
o The perceived prospects of our business or the pay phone market as whole;
o changes in analysts' recommendations or projections, if any;
o Increased usage of cell phones;
o changes in market valuations of similar companies;
o actions or announcements by our competitors;
o actual or anticipated fluctuations in our operating results;
o litigation developments; and
o Changes in general economic or market conditions or other economic factors unrelated to our performance.
In addition, the stock markets have experienced significant price and trading volume fluctuations, and the market prices of telecommunications companies generally have been extremely volatile and have recently experienced sharp share price and trading volume changes. These broad market fluctuations may adversely affect the trading price of our common stock. In the past, following periods of volatility in the market price of a public company's securities, securities class action litigation has often been instituted against that company. Such litigation could result in substantial costs to us and a likely diversion of our management's attention.
WE DO NOT INTEND TO PAY DIVIDENDS ON OUR COMMON STOCK.
We have never declared or paid any cash dividend on our capital stock. We currently intend to retain any future earnings and do not expect to pay any
dividends in the foreseeable future. Any determination to pay dividends in the future will be made at the discretion of our board of directors and will depend on our results of operations, financial conditions, contractual restrictions, restrictions imposed by applicable law and other factors our board deems relevant. Accordingly, investors must be prepared to rely on sales of their common stock after price appreciation to earn an investment return, which may never occur. If our common stock does not appreciate in value, or if our common stock loses value, our stockholder may lose some or all of their investment in our shares.
RISKS RELATING TO THE RIGHTS OFFERING
THE SUBSCRIPTION PRICE DETERMINED FOR THE RIGHTS OFFERING IS NOT AN INDICATION OF THE FAIR VALUE OF OUR COMMON STOCK.
The subscription price of $.10 per share in the rights offering was arbitrarily set by our board of directors', based primarily on our need for capital following the Spinoff.
The subscription price does not necessarily bear any relationship to the book value of our assets, net worth, past operations, cash flows, losses, financial condition or any other established criteria for fair value. You should not consider the subscription price as an indication of the fair value of our common stock. Our common stock, when issued for trading, may trade at prices above or below the subscription price.
THE PRICE OF OUR COMMON STOCK MAY DECLINE BEFORE OR AFTER THE RIGHTS EXPIRE.
We can give you no assurances about the prices at which our common stock will trade once the Spinoff is completed and our common stock begins trading in the NASDAQ over the Counter Market. Such prices may be more than, less than or equal to the subscription price for our common stock in the rights offering. Even if such prices are more than or equal to the subscription price initially, we cannot assure you that the public trading market price of our common stock will not decline after you elect to exercise your rights. If that occurs, you may have committed to buy shares of common stock in the rights offering at a price greater than the prevailing market price, and could have an immediate unrealized loss. Moreover, we cannot assure you that following the exercise of your rights you will be able to sell your shares of common stock at a price equal to or greater than the subscription price. Until shares are delivered upon exercise of the rights offering, you will not be able to sell the shares of our common stock that you purchase in the rights offering. Certificates representing shares of our common stock purchased will be delivered as soon as practicable after the rights are exercised.
YOU MAY NOT REVOKE YOUR SUBSCRIPTION EXERCISE AND COULD BE COMMITTED TO BUYING SHARES ABOVE THE PREVAILING MARKET PRICE.
Once you exercise your subscription rights, you may not revoke the exercise. The public trading market price of our common stock may decline before the subscription rights expire, even if initially above the exercise price for the subscription rights. If you exercise your subscription rights and, afterwards, the public trading market price of our common stock decreases below the subscription price, you will have committed to buying shares of our common stock at a price above the prevailing market price. Moreover, you may be unable to sell your shares of common stock at a price equal to or greater than the subscription price you paid for such shares.
If we elect to withdraw or terminate the rights offering, we will have no obligation with respect to the subscription rights except to return, without interest or deduction, any payments received from subscribers.
IF YOU DO NOT ACT PROMPTLY AND FOLLOW THE SUBSCRIPTION INSTRUCTIONS, YOUR EXERCISE OF RIGHTS MAY BE REJECTED.
Stockholders who wish to purchase shares in the rights offering must act promptly to ensure that all required forms and payments are actually received by us prior to December 31, 2007, the expiration date of the rights offering. If you are a beneficial owner of shares, you must act promptly to ensure that your broker, custodian bank or other nominee acts for you and that all required forms and payments are actually received by NBT prior to the expiration date of the rights offering. We shall not be responsible if your broker, custodian or nominee fails to ensure that all required forms and payments are actually received by us prior to the expiration date of the rights offering. If you fail to complete and sign the required subscription forms, send an incorrect payment amount or otherwise fail to follow the subscription procedures that apply to your exercise of the rights, NBT may, depending on the circumstances, reject your subscription or accept it only to the extent of the payment received. We will not undertake to contact you concerning an incomplete or incorrect subscription form or payment, nor are we under any obligation to correct such forms or payment. We have the sole discretion to determine whether a subscription exercise properly follows the subscription procedures.
IF YOU DO NOT EXERCISE YOUR RIGHTS, YOUR RELATIVE OWNERSHIP INTEREST WILL EXPERIENCE DILUTION.
The rights offering is designed to enable us to raise capital while allowing all stockholders on the Spinoff Record Date to maintain their relative proportionate voting and economic interests. To the extent you do not exercise your rights and shares are purchased by other stockholders in the rights offering, your proportionate voting interest will be reduced, and the percentage of ownership that your original shares represented will be reduced.
NO PRIOR MARKET EXISTS FOR THE RIGHTS.
The rights are a new issue of securities with no established trading market and we cannot assure you that a market for the rights will develop or, if a market does develop, as to how liquid it will be. The rights are transferable until the close of business on the last trading day prior to the expiration date of the rights offering, at which time they will cease to have any value. If you wish to sell your rights or NBT tries to sell rights on your behalf in accordance with the procedures discussed in this prospectus but such rights cannot be sold, and either you subsequently provide NBT with instructions to exercise the rights and your instructions are not timely received by NBT or you do not provide any instructions to exercise your rights, then the rights will expire and will have no further value.
IF YOU MAKE PAYMENT OF THE SUBSCRIPTION PRICE BY PERSONAL CHECK, YOUR CHECK MAY NOT HAVE CLEARED IN SUFFICIENT TIME TO ENABLE YOU TO PURCHASE SHARES IN THIS RIGHTS OFFERING.
Any personal check used to pay for shares to be issued in this rights offering must clear prior to the expiration date of this rights offering, and the clearing process may require two or more business days. If you choose to exercise your rights, in whole or in part, and to pay for shares by personal check and your check has not cleared prior to the expiration date of this rights offering, you will not have satisfied the conditions to exercise your rights and will not receive the shares you attempted to purchase and you will lose the value of your rights.
THE SPINOFF
USIP's business has diverged geographically over the years so that its operations in New York are separate and distinct from its operations in Pennsylvania. USIP's board has come to realize that the operations of USIP could be more streamlined and more focused if its New York business was separated from its Pennsylvania business. To address these issues USIP's board of directors believes that the Spinoff is in the best interests of USIP and its shareholders and will result in benefits to both USIP and to us, including the following:
o IMPROVED MANAGEMENT FOCUS. The Spinoff will allow our management team and the management team of USIP to focus solely on the opportunities and challenges specific to each business, including the adoption of strategies and resource allocation policies that reflect the financial and strategic characteristics of each business.
O ELIMINATION OF COMPETITION FOR CAPITAL. The Spinoff will eliminate competition for capital between our business and USIP's business. Presently, USIP's management and board of directors are faced with allocating limited internal capital between and among businesses that are geographically differentiated and which have different investment risk, return profiles and capital requirements. The Spinoff will eliminate this competition and inefficient capital allocation and instead will result in two separate businesses with unique capital structures and distinct investment return profiles. Therefore, USIP's board of directors believes that the Spinoff should lead to better capital allocation decisions in both businesses over time.
o CLEARER GEOGRAPHIC FOCUS. The Spinoff will provide greater investor clarity as it will allow investors and the capital markets to judge each company differently based on the reward and risk potential of each geographic market. This should allow the investment community to better understand and evaluate our business and USIP's business. Therefore, we believe the Spinoff should increase options for, and potentially lower the cost of, capital to us.
o MORE EFFECTIVE EMPLOYEE COMPENSATION AND RETENTION. The board believes that, the Spinoff will enable us and USIP to offer our respective management and employees equity incentives that are economically aligned with the financial performance of our respective businesses, the Spinoff should assist each of us in attracting and retaining high caliber employees with experience in our respective businesses.
o MAKE ACQUISITIONS WITH STOCK. Although we have no current plans to make any acquisitions, having our own independently traded stock will serve to facilitate acquisitions using stock if we decide to make any such acquisitions in the future.
MANNER OF EFFECTING THE SPINOFF
GENERAL. If all conditions to the Spinoff are satisfied or waived, and subject to the right of the board of directors of USIP to amend, modify, defer or abandon the Spinoff at any time prior to the distribution date, the Spinoff will be effected by means of a distribution of all of the outstanding shares of our common stock owned by USIP on or about the distribution date to stockholders of record of USIP on the Spinoff Record Date.
DISTRIBUTION AGENT. The distribution agent that has been engaged by USIP for purposes of effecting the Spinoff is Holladay Stock Transfer Company. The address of the distribution agent is Holladay Stock Transfer, Inc., 2939 N. 67th Place, Suite C, Scottsdale, Arizona 85251 and its telephone number is (480) 481-3940.
NUMBER OF SHARES TO BE DISTRIBUTED. Under the terms of this Spinoff, for every
share of USIP common stock that a shareholder owns at 5:00 p.m. on the Spinoff Record Date, stockholders of USIP will be entitled to receive one share of our common stock. No fractional shares of our common stock will be distributed. Fractional shares will be rounded up, and shareholders will receive the next whole share of common stock for any fractional shares to which they may be entitled. In order to be entitled to receive shares of our common stock in the distribution, USIP stockholders must be stockholders at the close of business on the Spinoff Record Date. For registered USIP stockholders, our transfer agent will credit their shares of our common stock to book-entry accounts established to hold their shares of our common stock. Our distribution agent will send these stockholders a statement reflecting their ownership of our common stock.
Book-entry refers to a method of recording stock ownership in our records in which no physical certificates are issued. For stockholders who own USIP common stock through a broker or other nominee, their shares of our common stock will be credited to their accounts by the broker or other nominee. Each share of our common stock that is distributed will be validly issued, fully paid and non-assessable and free of preemptive rights. See "Description of Capital Stock". Following the distribution, stockholders whose shares are held in book-entry form may request the transfer of their shares of our common stock to a brokerage or other account at any time as well as the delivery of physical stock certificates for their shares, in each case without charge. See "--When and how you will receive the shares in the spinoff" below.
USIP stockholders are not required to pay cash or any other consideration for the shares of our common stock that they receive in the Spinoff. They will continue to own their shares of USIP common stock and, if they were a USIP stockholder on the Spinoff Record Date, will also receive shares of our common stock. The Spinoff will not otherwise change the number of, or the rights associated with, outstanding USIP common shares.
TRADING BETWEEN THE RECORD DATE AND THE DISTRIBUTION DATE. During the period between the Spinoff Record Date and ending at the market close on the distribution date, there will be two markets in shares of USIP common stock: a "regular way" market and an "ex-dividend" market. Shares that trade on the regular way market will trade with an entitlement to shares of our common stock distributed pursuant to the Spinoff. Shares that trade on the ex-dividend market will trade without an entitlement to shares of our common stock distributed pursuant to the Spinoff. Therefore, if you own USIP common shares at 5:00 p.m., New York time, on the Spinoff Record Date, and sell those shares on the regular way market prior to market close on the distribution date, you will also be trading the shares of our common stock that would have been distributed to you pursuant to the Spinoff. If you sell those shares of USIP common stock on the ex-dividend market prior to the distribution date, you will still receive the shares of our common stock that were to be distributed to you pursuant to your ownership of shares of USIP common stock.
Furthermore, between the period beginning on or shortly before the Spinoff Record Date and market close on the distribution date, a "when-issued" trading market in our common stock may develop. The when-issued trading market will be a market for shares of our common stock that will be distributed to USIP stockholders on the distribution date. If you own shares of USIP common stock at 5:00 p.m., New York time, on the Spinoff Record Date, then you will be entitled to shares of our common stock distributed pursuant to the Spinoff. You may trade this entitlement to shares of our common stock, without the shares of USIP common stock you own, on the when-issued trading market.
WHEN AND HOW YOU WILL RECEIVE THE SHARES IN THE SPINOFF. USIP will effect the Spinoff after market close on the distribution date by releasing the shares of our common stock to be distributed in the Spinoff to Holladay Stock Transfer, Inc., the Distribution Agent for the Spinoff. As of 5:00 p.m., New York time, on the tenth day after the Spinoff Record Date (the "Distribution Date"). The Distribution Agent will cause the shares of our common stock to which USIP stockholders are entitled to be registered in their names. As of that time, they will become the record holders of that number of shares of our common stock.
USIP stockholders will receive shares of our common stock by book-entry transfer or through delivery of stock certificates representing such shares from the Distribution Agent. The Distribution Agent will begin distributing shares of our common stock on or promptly after the Distribution Date. We currently estimate that it will take approximately two weeks from the Distribution Date for the Distribution Agent to complete these mailings.
Holders of USIP common stock should not send certificates to us, USIP or the Distribution Agent. After the Spinoff, USIP stock certificates will continue to represent the same number of shares of USIP common stock as is currently shown on the face of each certificate.
RESULTS OF THE SPINOFF
After the Spinoff, we will be a separate public company. The number and identity of the holders of our common stock immediately following the Spinoff will be approximately the same as the number and identity of the holders of USIP common stock on the Spinoff Record Date, subject to sales in the when-issued trading market that may develop. Immediately after the Spinoff, we expect to have approximately 372 holders of record of our common stock and approximately 46,632,222 shares of our common stock will be outstanding, based on the number of stockholders of record of USIP common stock and the number of outstanding shares of USIP common stock on the Spinoff Record Date. The actual number of shares to be distributed will be determined based on the number of USIP shares outstanding on the Spinoff Record Date.
ACCOUNTING TREATMENT OF THE SPINOFF
As a result of the Spinoff, the stockholders' equity of USIP will decrease by an amount equal to the net book value of the assets and liabilities of our company, which will be removed from the balance sheet of USIP when the Spinoff is completed.
We will continue to have the same basis in our assets after the Spinoff as we had immediately prior to the Spinoff.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE SPINOFF
The Spinoff is designed to be implemented on tax free basis to the shareholders, to NBT and to USIP. No opinion of counsel or revenue ruling from the internal revenue service will be sought or requested. In the event the transaction is not granted tax free status the parties could incur substantial tax liability (See "Risk Factors").
MODIFICATION OR ABANDONMENT OF THE SPINOFF
The Spinoff may be amended, modified or abandoned at any time prior to the distribution date by USIP's board of directors in its sole discretion. In addition, the spinoff will not be completed unless all conditions have been satisfied or waived by USIP.
RELATIONSHIP BETWEEN USIP AND US
AFTER THE SPINOFF
We are currently a wholly-owned subsidiary of USIP, and our results of operations are included in the consolidated financial results of USIP. After the Spinoff, we will be an independent public company and USIP will hold no ownership interest in us. Contractual relationships may exist between the two companies after the merger and those relationships will be maintained at arms length in the ordinary course of business.
We and USIP each will have sole responsibility for expenses and claims arising out of our respective activities after the Spinoff.
CONDITIONS PRECEDENT TO THE SPINOFF. USIP will have the absolute discretion to determine the terms of the Spinoff, whether to proceed with the Spinoff and the date of the Spinoff. Notwithstanding that discretion, there are a number of conditions to the Spinoff, including the following:
o The Form SB-2 registration statement of which this prospectus forms a part has become effective under the Securities Act; o The prospectus has been mailed to the holders of USIP common stock; o All regulatory approvals necessary to consummate the Spinoff, if any, have been received and are in full force and effect; o No order, preliminary or permanent injunction or decree has been issued by any court of competent jurisdiction, and no other legal restraint or prohibition;
The conditions are for the benefit of USIP, and USIP's board of directors has reserved the right to waive any or all of these conditions to consummation of the Spinoff. USIP's board of directors may not provide its stockholders with notice if any of these conditions to consummation of the Spinoff are waived.
DIVISION OF ASSETS. Almost all of the assets and employees necessary to operate our business following the Spinoff are currently our assets and employees, and there will be, therefore, minimal need to transfer employees in connection with the Spinoff.
O TRADEMARKS AND SERVICEMARKS. USIP will agree to transfer to us rights in and to certain trademarks and servicemarks used exclusively in our business. With respect to certain USIP trademarks and servicemarks covering goods and services applicable to both of our businesses, we have agreed with USIP that we and they will become joint owners by assignment of those marks. Thereafter, we and USIP will file instruments with the PTO to request that the PTO divide these jointly owned marks between us such that we each would own the registrations for those trademarks and servicemarks for the registration classes covering the goods and services applicable to our respective businesses. We have agreed to negotiate in good faith with USIP regarding terms of use of such jointly owned marks if the PTO denies our request to divide these marks.
ACCESS TO INFORMATION; NONCOMPETITION; CONFIDENTIALITY. USIP and we will agree to afford to one another, and each of our respective accountants, counsel and representatives, reasonable access during normal business hours to all personnel, documents, agreements, books, records, computer data and other data in our respective possession relating to the other party or the business and affairs of the other party (other than data and information subject to an attorney-client or other privilege), to the extent such access is reasonably required by the other party, for audit, accounting, regulatory compliance and disclosure and reporting purposes.
EXPENSES. Except as otherwise set forth in other agreements between USIP and us, all costs or expenses incurred in connection with the Spinoff will be paid by USIP.
INDEMNIFICATION. We will agree to indemnify and hold harmless USIP from any claims following the Distribution Date arising out of any and all debts, liabilities, assessments, costs and any other obligations of any kind arising from the conduct of our business and any damages associated therewith. USIP will agree to indemnify and hold us harmless from any claims following the Distribution Date arising out of any and all debts, liabilities, assessments, costs and any other obligations of any kind not arising from the conduct of our business.
THE RIGHTS OFFERING
THE RIGHTS
We are distributing transferable subscription rights to the persons who own shares of our common stock on 5:00 p.m., New York time on the Spinoff Record Date, at no cost to such stockholders. We will give each such stockholder a right to purchase .128666 shares of our common stock for each share of our common stock that the holder owns on the Spinoff Record Date, for an aggregate total of 6,000,000 shares. The subscription rights will be evidenced by rights certificates. Each whole right will entitle the rights holder to purchase one share of our common stock for $.10 per share. If rights holders wish to exercise their rights, they must do so before 5:00 p.m., New York time, on December 31, 2007, the expiration date of the rights offering. After that date, the rights will expire and will no longer be exercisable unless we earlier decide to extend the expiration of the rights offering. See "--Expiration Date and Amendments" below.
SUBSCRIPTION PRIVILEGE
Each whole right entitles the holder to purchase one share of our common stock for $.10 per share. Rights holders are not required to exercise any or all of their rights. We will deliver to the stockholders who purchase shares in the rights offering certificates representing the shares purchased as soon as practicable after the exercise of the rights.
METHOD OF EXERCISING RIGHTS
The exercise of rights is irrevocable and may not be cancelled or modified. Rights holders may exercise their rights as follows:
SUBSCRIPTION BY REGISTERED HOLDERS
Rights holders who are registered holders of our common stock may exercise their subscription privilege by properly completing and executing the rights certificate and forwarding it, together with payment in full of the subscription price for each share of the common stock for which they subscribe, to NBT at the address set forth in the summary above.
SUBSCRIPTION BY DTC PARTICIPANTS
Banks, trust companies, securities dealers and brokers that hold shares of our common stock on the Spinoff Record Date as nominee for more than one beneficial owner may, upon proper showing to the Company, exercise their subscription privilege on the same basis as if the beneficial owners were record holders on the Spinoff Record Date.
SUBSCRIPTION BY BENEFICIAL OWNERS
Rights holders who are beneficial owners of shares of our common stock and whose shares are registered in the name of a broker, custodian bank or other nominee, and rights holders who hold common stock certificates and would prefer to have an institution conduct the transaction relating to the rights on their behalf, should instruct their broker, custodian bank or other nominee or institution to exercise their rights and deliver all documents and payment on their behalf prior to 5:00 p.m. New York time, on December 31, 2007, the expiration date of the rights offering. A rights holder's subscription rights will not be considered exercised unless NBT receives from such rights holder, its broker, custodian, nominee or institution, as the case may be, all of the required documents and such holder's full subscription price payment prior to 5:00 p.m. New York time, on the expiration date.
PAYMENT METHOD
Payments must be made in full in U.S. currency by:
o wire transfer of immediately available funds to NB Telecom, Inc., care of NB Telecom, Inc. - Rights Escrow Agent Bank, Routing Number 043311497, Account Number 20302209;
o check or bank draft payable to NB Telecom, Inc. drawn upon a U.S. bank; or
o postal, telegraphic or express money order payable to NB Telecom, Inc.
Any personal check used to pay for shares of common stock must clear the appropriate financial institutions prior to the expiration date. The clearing house may require two or more business days. Accordingly, rights holders who wish to pay the subscription price by means of a uncertified personal check are urged to make payment sufficiently in advance of the expiration date to ensure such payment is received and clears by such date. Rights certificates received after that time will not be honored, and we will return payment to the sender, without interest or deduction.
We will be deemed to receive payment upon:
o clearance of any uncertified check deposited by us;
o receipt by us of any certified check bank draft drawn upon a U.S. bank; or
o receipt by us of any postal, telegraphic or express money order.
Rights holders wishing to subscribe should read the instruction letter accompanying the rights certificate carefully and strictly follow it. DO NOT SEND RIGHTS CERTIFICATES OR PAYMENTS TO US. Except as described below, we will not consider a subscription received until we have received delivery of a properly completed and duly executed rights certificate and payment of the full subscription amount. The risk of delivery of all documents and payments is on each rights holder or its nominee, not us.
The method of delivery of rights certificates and payment of the subscription amount to NBT will be at the risk of the holders of rights, but, if sent by mail, we recommend that rights holders send those certificates and payments by overnight courier or by registered mail, properly insured, with return receipt requested, and that a sufficient number of days be allowed to ensure delivery to us and clearance of payment before the expiration of the subscription period. Because uncertified personal checks may take at least two or more business days to clear, we strongly urge rights holders to pay or arrange for payment by means of certified or cashier's check or money order to avoid missing the opportunity to exercise their subscription rights should they decide to exercise such subscription rights.
CALCULATION OF SUBSCRIPTION RIGHTS EXERCISED
Rights holders who do not indicate the number of subscription rights being exercised, or do not forward full payment of the total subscription price payment for the number of subscription rights that they indicate are being exercised, will be deemed to have exercised their subscription privilege with respect to the maximum number of subscription rights that may be exercised with the aggregate subscription price payment they delivered to us. If we do not apply a rights holder's full subscription price payment to its purchase of shares of our common stock, we will return the excess amount to such rights holder by mail, without interest or deduction, as soon as practicable after the expiration date of the rights offering.
EXPIRATION DATE AND AMENDMENTS
The subscription period, during which rights holders may exercise their subscription privilege, expires at 5:00 p.m., New York time, on December 31, 2007, the expiration date, unless extended. If such holders do not exercise their rights prior to that time, their rights will expire and will no longer be exercisable. We will not be required to issue shares of our common stock to a rights holder if we receive such holder's rights certificate or payment after that time, regardless of when such holder sent the rights certificate and payment.
We will extend the duration of the rights offering as required by applicable law and may choose to extend it if we decide that changes in the market price of our common stock warrant an extension or if we decide to give investors more time to exercise their subscription rights in the rights offering. If we elect to extend the expiration of the rights offering, we will issue a press release announcing such extension no later than 9:00 a.m., New York time, on the next business day after the most recently announced expiration date.
We reserve the right, in our sole discretion, to amend or modify the terms of the rights offering.
SUBSCRIPTION PRICE
Our board of directors determined the subscription price on an arbitrary basis after considering our need for capital following the Spinoff. The subscription price is not necessarily related to our book value, net worth or any other established criteria of value and may or may not be considered the fair value of the common stock to be offered in the rights offering.
We cannot assure rights holders that the market price of our common stock will not decline during or after the rights offering. We also cannot assure rights holders that they will ever be able to sell shares of our common stock purchased during the rights offering at a price equal to or greater than the subscription price. We urge all rights holders to obtain a current quote for our common stock before exercising their rights.
CONDITIONS, WITHDRAWAL AND TERMINATION
Our board may withdraw the rights offering at any time prior to the completion of the Spinoff for any reason. We reserve the right to withdraw the rights offering at any time after the Spinoff and on or prior to the expiration date for any reason. The rights offering is conditioned upon the consummation of the Spinoff as described elsewhere in this prospectus.
We may terminate the rights offering, in whole or in part, at any time after the Spinoff and at any time before completion of the rights offering if there is any judgment, order, decree, injunction, statute, law or regulation entered, enacted, amended or held to be applicable to the rights offering that in the sole judgment of our board of directors would or might make the rights offering or its completion, whether in whole or in part, illegal or otherwise restrict or prohibit completion of the rights offering. We may waive any of these conditions and choose to proceed with the rights offering even if one or more of these events occur. If we terminate the rights offering, in whole or in part, all affected subscription rights will expire without value, and all subscription payments received by us will be returned without interest or deduction as soon as practicable.
DELIVERY OF SUBSCRIPTION DOCUMENTS AND PAYMENTS
The address to which subscription documents, rights certificates, and payments other than wire transfers should be mailed or delivered is:
NB Telecom, Inc. 106 May Drive Saxonburg, PA 16056 Attn: Mr. Paul Kelley, President
If a rights holder delivers subscription documents, rights certificates in a manner different than that described in this prospectus, then we may not honor the exercise of such holder's subscription privileges.
Rights holders should direct any questions or requests for assistance concerning the method of subscribing for the shares of common stock or any requests for additional copies of the prospectus to Mr. Paul Kelly at the telephone number noted above.
FEES AND EXPENSES
We will pay all expenses charged by the transfer agent in connection with the distribution and exercise of the rights. Rights holders are responsible for paying all other commissions, fees, taxes or other expenses incurred in connection with the exercise of the rights.
FRACTIONAL SHARES OF COMMON STOCK AND FRACTIONAL RIGHTS
We will not issue fractional shares of common stock. If a rights holder's rights would allow it to purchase a fractional share, such holder may exercise its rights only by rounding down to and paying for the nearest whole share or by paying for any lesser number of whole shares.
NOTICE TO BENEFICIAL HOLDERS
If a rights holder is a broker, a trustee or a depositary for securities who holds shares of our common stock for the account of others on the Rights Offering Record Date, such holder should notify the respective beneficial owners of such shares of the rights offering as soon as possible to find out their intentions with respect to exercising or selling their subscription rights. Such rights holders should obtain instructions from the beneficial owner with respect to their subscription rights, as set forth in the instructions we have provided to rights holders for their distribution to beneficial owners. If the beneficial owner so instructs, a rights holder should complete the appropriate subscription rights certificates and submit them to NBT, at the address noted above, with the proper payment. If a rights holder holds shares of our common stock for the account(s) of more than one beneficial owner, such holder may exercise the number of subscription rights to which all such beneficial owners in the aggregate otherwise would have been entitled had they been direct record holders of our common stock on the Spinoff Record Date, provided that the rights holder, as a nominee record holder, makes a proper showing to us.
BENEFICIAL OWNERS
If a rights holder is a beneficial owner of shares of our common stock or will receive subscription rights through a broker, custodian bank or other nominee, we will ask such holder's broker, custodian bank or other nominee to notify such holder of the rights offering. If a rights holder wishes to exercise or sell its subscription rights, such holder should have its broker, custodian bank or other nominee act for it. If a rights holder holds certificates of our common stock directly and would prefer to have its broker, custodian bank or other nominee act for it, such holder should contact its nominee and request it to effect the transactions for such holder. To indicate its decision with respect to its subscription rights, rights holders should complete and return to their broker, custodian bank or other nominee the form entitled "Beneficial Owners Election Form." Rights holders should receive this form from their broker, custodian bank
or other nominee with the other rights offering materials. If a rights holder wishes to obtain a separate subscription rights certificate, it should contact the nominee as soon as possible and request that a separate subscription rights certificate be issued to it. Rights holders should contact their broker, custodian bank or other nominee if they do not receive this form, but believe they are entitled to participate in the rights offering. We are not responsible if a rights holder does not receive the form from its broker, custodian bank or nominee or if a rights holder receives it without sufficient time to respond.
METHOD OF TRANSFERRING AND SELLING RIGHTS
We expect that rights may be purchased or sold through usual investment channels until the close of business on the last trading day preceding the expiration time. However, there has been no prior public market for the rights, and we cannot assure you that a trading market for the rights will develop or, if a market develops, that the market will remain available throughout the subscription period. We also cannot assure you of the prices at which the rights will trade, if at all. If you do not exercise or sell your rights you will lose any value inherent in the rights. See "--General Considerations Regarding the Partial Exercise, Transfer or Sale of Rights" below.
TRANSFER OF RIGHTS
You may transfer rights in whole by endorsing the rights certificate for transfer. Please follow the instructions for transfer included in the information sent to you with your rights certificate. If you wish to transfer only a portion of the rights, you should deliver your properly endorsed rights certificate to NBT. With your rights certificate, you should include instructions to register such portion of the rights evidenced thereby in the name of the transferee (and to issue a new rights certificate to the transferee evidencing such transferred rights). You may only transfer whole rights and not fractions of a right. If there is sufficient time before the expiration of the rights offering, we will send you a new rights certificate evidencing the balance of the rights issued to you but not transferred to the transferee. You may also instruct us to send the rights certificate to one or more additional transferees. If you wish to sell your remaining rights, you may request that we send you certificates representing your remaining (whole) rights so that you may sell them through your broker or dealer. You may also request that we attempt to sell your rights for you, as described below.
If you wish to transfer all or a portion of your rights, you should allow a sufficient amount of time prior to the time the rights expire for us to:
o receive and process your transfer instructions; and
o issue and transmit a new rights certificate to your transferee or transferees with respect to transferred rights, and to you with respect to any rights you retained.
GENERAL CONSIDERATIONS REGARDING THE PARTIAL EXERCISE, TRANSFER OR SALE OF RIGHTS
The amount of time needed by your transferee to exercise or sell its rights depends upon the method by which the transferor delivers the rights certificates, the method of payment made by the transferee and the number of transactions which the holder instructs NBT to effect. You should also allow up to ten business days for your transferee to exercise or sell the rights transferred to it. We will not be liable to a transferee or transferor of rights if rights certificates or any other required documents are not received in time for exercise or sale prior to the expiration date.
You will receive a new rights certificate upon a partial exercise, transfer or sale of rights only if we receive your properly endorsed rights certificate no later than 5:00 p.m., New York City time, on December 24, 2007, five business days before the expiration date. We will not issue a new rights certificate if your rights certificate is received after that time and date. If your instructions and rights certificate are received by us after that time and date, you will not receive a new rights certificate and therefore will not be able to sell or exercise your remaining rights.
You are responsible for all commissions, fees and other expenses (including brokerage commissions and transfer taxes) incurred in connection with the purchase, sale or exercise of your rights, except that we will pay all fees of the transfer agent associated with the exercise of rights.
If you do not exercise your rights before the expiration date, your rights will expire and will no longer be exercisable.
VALIDITY OF SUBSCRIPTIONS
We will resolve all questions regarding the validity and form of the exercise of a rights holder's subscription privilege, including time of receipt and eligibility to participate in the rights offering. Our determination will be final and binding. Once made, subscriptions and directions are irrevocable, and we will not accept any alternative, conditional or contingent subscriptions or directions. We reserve the absolute right to reject any subscriptions or directions not properly submitted or the acceptance of which would be unlawful. Rights holders must resolve any irregularities in connection with their subscriptions before the subscription period expires, unless waived by us in our
sole discretion. We will not be under any duty to notify rights holders or their representative of defects in their subscriptions. A subscription will be considered accepted, subject to our right to withdraw or terminate the rights offering, only when a properly completed and duly executed rights certificate and any other required documents and payment of the full subscription amount have been received by us. Our interpretations of the terms and conditions of the rights offering will be final and binding.
RIGHTS OF SUBSCRIBERS
Rights holders will have no rights as a stockholder with respect to shares of common stock for which they subscribe in the rights offering until certificates representing shares of common stock are issued to such holders. Rights holders will have no right to revoke their subscriptions after they deliver their completed rights certificate, payment and other required documents to NBT.
NO REVOCATION OR CHANGE
Once a rights holder submits the form of rights certificate to exercise any rights, such holder is not allowed to revoke or change the exercise or request a refund of monies paid. All exercises of rights are irrevocable, even if a rights holder learns subsequently information about us that it considers to be unfavorable. Rights holders should not exercise their rights unless they are certain that they wish to purchase shares of our common stock at the subscription price.
REGULATORY LIMITATION
We will not be required to issue to a rights holder shares of our common stock pursuant to the rights offering if, in our opinion, such holder is required to obtain prior clearance or approval from any state or federal regulatory authorities to own or control such shares and if, at the time the rights offering expires, such holder has not obtained such clearance or approval.
U.S. FEDERAL INCOME TAX TREATMENT OF RIGHTS DISTRIBUTION
Management believes that, for U.S. federal income tax purposes, rights holders will not recognize income as a result of the receipt or exercise of their rights. However, management recommends that holders seek advice from their own advisors regarding the tax impact of the receipt or exercise of rights with respect to their individual tax situations.
NO RECOMMENDATION TO RIGHTS HOLDERS
Neither our board of directors nor USIP.Com, Inc.'s board of directors is making any recommendations to rights holders as to whether or not they should exercise their rights.
SHARES OF COMMON STOCK OUTSTANDING AFTER THE RIGHTS OFFERING
Based on the 46,632,222 shares of our common stock that we anticipate will be issued and outstanding upon consummation of the Spinoff, 52,632,222 shares of our common stock will be issued and outstanding after the rights offering expires, assuming the exercise of all the rights offered hereby. This is an increase in the number of outstanding shares of our common stock of approximately 13%.
FOREIGN SHAREHOLDERS
We will not mail rights certificates to stockholders on the Spinoff Record Date whose addresses are outside the United States. Instead, we will hold the rights certificates for those holders' accounts. To exercise their rights, foreign holders must notify us before 5:00 p.m., New York City time, on December 27, 2007, three business days prior to the expiration date, and must establish to our satisfaction that such exercise is permitted under applicable law. If a foreign holder does not notify and provide acceptable instructions to us by such time (and if no contrary instructions have been received), such foreign holder's rights will be cancelled.
OTHER MATTERS
We are not making the rights offering in any state or other jurisdiction in which it is unlawful to do so, nor are we distributing or accepting any offers to purchase any shares of our common stock from subscription rights holders who are residents of those states or other jurisdictions or who are otherwise prohibited by federal or state laws or regulations to accept or exercise the subscription rights. We may delay the commencement of the rights offering in those states or other jurisdictions, or change the terms of the rights offering, in whole or in part, in order to comply with the securities laws or other legal requirements of those states or other jurisdictions. Subject to state securities laws and regulations, we also have the discretion to delay allocation and distribution of any shares you may elect to purchase by exercise of your privilege in order to comply with state securities laws. We may decline to make modifications to the terms of the rights offering requested by those states or other jurisdictions, in which case, if you are a resident in those states or jurisdictions or if you are otherwise prohibited by federal or state laws or regulations from accepting or exercising the subscription rights you will not be eligible to participate in the rights offering.
USE OF PROCEEDS
Our gross proceeds from the rights offering will be $600,000, assuming all rights are exercised. We intend to use the proceeds from this offering, together with cash flow from operations for working capital and other general corporate purposes, which may include general and administrative expenses.
CAPITALIZATION
The following table sets forth (i) our historical capitalization as of December 31, 2005, (ii) our adjusted capitalization assuming the Spinoff was effective on December 31, 2005, and (iii) our adjusted capitalization after giving effect to the spinoff and our receipt of approximately $600,000 in net cash proceeds, assuming the rights offering was consummated on December 31, 2005. The table should be read in conjunction with our historical consolidated financial statements, including the notes thereto contained elsewhere herein:
December 31, 2005
----------------- -------------------- --------------------
Actual As Adjusted for As Adjusted for
the Spinoff Spinoff and Rights
Offering
Total Liabilities $104,039 $104,039 $104,039
Stockholders' Equity:
Common Stock no par value per Share;
200 Shares authorized; 100
Shares issued and outstanding; (1) $356,394 $356,394 $956,394
Retain earnings $(400,340) $(400,340) $(400,340)
--------- --------- ---------
Total Stockholders' Equity $ (43,946) $ (43,946) $556,054
Total Capitalization $ 60,093 $ 60,093 $660,093
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(1) Effective March 23, 2006, NBT effected a merger whereby the domicile of the Corporation was migrated from Pennsylvania to Nevada, and the name of the corporation was changed from NB Payphones, Ltd. to NB Telecom, Inc. As a result of that merger, the authorized shares of NBT was increased to 100,000,000 common shares and 10,000,000 preferred shares, with a par value of $.0001 per share. As of the Spinoff Record Date, the number of shares of common stock of NBT held by USIP was 46,632,222 which is equal to the number of shares of USIP common stock currently outstanding.
DILUTION
Purchasers of our common stock in the rights offering will experience an immediate dilution of the net tangible book value per share of our common stock. Our net tangible book value as of December 31, 2005 will be approximately ($43,946), or ($.0009) per share of our common stock (based upon 46,632,222 shares of our common stock assumed to be outstanding.) Net tangible book value per share is equal to our total net tangible book value, which is our total tangible assets less our total liabilities, divided by the number of shares of our outstanding common stock. Dilution per share equals the difference between the amount per share paid by purchasers of shares of common stock in the rights offering and the net tangible book value per share of our common stock immediately after the rights offering. Based on the aggregate offering of $600,000, our pro forma net tangible book value as of December 312, 2005 would have been approximately $556,054, or $.0106 per share. This represents an immediate increase in pro forma net tangible book value to existing stockholders of $.0115 per share and an immediate dilution to purchasers in the rights offering of $.0894 per share. The following table illustrates this per share dilution (based upon 56,632,222 shares of our common stock that would be outstanding following the consummation of the spinoff and completion of the rights offering assuming that all rights outstanding are exercised.)
Subscription Price $ 0.10
Net tangible book value per share prior to the rights offering ($.0009)
Increase per share attributable to the rights offering $.0115
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Pro forma net tangible book value per share after the rights offering $ .0106
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Dilution in net tangible book value per share to purchasers $ .0894
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PLAN OF OPERATION
For the year ending December 31, 2005, we have incurred operating losses relating primarily to development and general administrative costs. During the year ended December 31, 2005, we posted a loss of $68,491. Our plan of operation for the twelve months following the date of this prospectus is to expand our payphone network by finding desirable locations for new pay phones, and by acquiring other companies.
As of December 31, 2005 we had total assets of $60,093, including cash of $2,033. Our liabilities at that time were $104,039. We are operating at the current time in a manner designed to reduce expenses and maintain our cash reserves. We are operating out of the home of our president in order to eliminate our rent expense. As a result, we expect our total expenses over the next twelve months to be approximately $45,000. These expenses will consist primarily of telephone line message and unit charges. (see "Risk Factors").
We anticipate that we will have sufficient funds to satisfy our cash requirements over the next twelve months; however, if we do not have sufficient earnings to fund our operations over the next twelve months we will seek additional funding. We currently do not have specific plans of how we will obtain such funding; however, we anticipate that such funding will be in the form of short term loans from our directors or other third parties. We do not have any plans in place for any future equity financing. If we are unable to raise the required financing we will be delayed in implementing our business plan.
We do not expect to have any significant product research and development, any significant purchase of plant or equipment or any significant changes in the number of employees over the next twelve months.
BUSINESS PLAN
GENERAL OVERVIEW
NB Telecom, Inc. ("NBT," the "Company," "we," "our" or "us") was originally incorporated as NB Payphones, Inc. on November 16, 1999 under the laws of Pennsylvania. On April 29, 2000 all our outstanding shares of common stock were purchased by USIP, and we have operated as a wholly-owned subsidiary of USIP since that time. On March 23, 2006, the corporate domicile of NB Payphones, Inc. was migrated to Nevada, and our name was changed to NB Telecom, Inc.
SMART PAYPHONE TECHNOLOGY
Our payphones utilize "smart" technology which provides voice synthesized calling instructions, detects and counts coins deposited during each call, informs the caller at certain intervals of the time remaining on each call, identifies the need for and the amount of an additional deposit in order to continue the call, and provides other functions associated with the completion of calls. Through the use of a non-volatile, electronically erasable, programmable memory chips, the payphones can also be programmed and reprogrammed from our central computer facilities to update rate information or to direct different types of calls to particular carriers. Our payphones can also distinguish coins by size and weight, report to our central host computer the total amount of coin in the coin box, perform self-diagnosis and automatically report problems to a pre-programmed service number.
CUSTOMER SERVICE.
The technology we use enables us to (i) respond quickly to equipment malfunctions and (ii) maintain accurate records of payphone activity, which can be verified by customers. We strive to minimize "downtime" on our payphones by identifying service problems as quickly as possible. We employ both advanced telecommunications technology and trained field technicians as part of our commitment to provide superior customer service. The records generated through our technology also allow for more timely and accurate payment of commissions to Location Owners.
OPERATIONS
As of December 1, 2005 we owned and operated approximately 145 payphones in Pennsylvania.
COIN CALLS
Our payphones generate coin revenues primarily from local calls. Historically, the maximum rate that LECs and IPPs could charge for local calls was generally set by state regulatory authorities and in most cases was $0.25 through October 6, 1997. We charge $0.35, and $0.50. In ensuring "fair compensation" for all calls, the FCC determined that local coin rates from payphones should be generally deregulated by October 7, 1997, but provided for possible modifications or exemptions from deregulation upon a detailed demonstration by an individual state that there are market failures within the state that would not allow market-based rates to develop. On July 1, 1997, a federal court issued an order that upheld the FCC's authority to deregulate local coin call rates. In accordance with the FCC's ruling and the court order, certain RBOCs, LECs and
IPPs, began to increase rates for local coin calls from $0.25 to $0.35 after October 7, 1997.
Long distance carriers that have contracted to provide transmission services to our payphones typically carry long distance coin calls. We pay a charge to the long-distance carrier each time the carrier transports a long-distance call for which we receive coin revenue from an end user.
NON-COIN CALLS
We also receive revenue from non-coin calls made from our payphones. Traditional non-coin calls include credit card, calling card, prepaid calling card, collect and third party billed calls where the caller dials "0" plus the number or simply dials "0" for an operator.
The services needed to complete a non-coin call include providing an automated or live operator to answer the call, verifying billing information, validating calling cards and credit cards, routing and transmitting the call to its destination, monitoring the call's duration and determining the charge for the call, and billing and collecting the applicable charge. We have contracted with operator service providers to handle these calls and perform all associated functions, while paying us a commission on the revenues generated.
REGULATIONS AND DIAL-AROUND COMPENSATION
On September 20, 1996 the Federal Communications Commission ("FCC") adopted rules, which became effective November 7, 1996 (the "1996 Payphone Order"), initially mandating dial-around compensation for both access code calls and 800 subscriber calls at a flat rate of $45.85 per payphone per month (131 calls multiplied by $0.35 per call). Commencing October 7, 1997 and ending October 6, 1998 the $45.85 per payphone per month rate was to transition to a per-call system at the rate of $0.35 per call. Several parties challenged certain of the FCC regulations including the dial-around compensation rate. On July 1, 1997 a federal court vacated certain portions of the FCC's 1996 Payphone Order, including the dial-around compensation rate.
In accordance with the court's mandate, on October 9, 1997 the FCC adopted a second order (the "1997 Payphone Order"), establishing a rate of $0.284 per call for the first two years of per-call compensation (October 7, 1997 through October 6, 1999). The IXCs were required to pay this per-call amount to payphone service providers, beginning October 7, 1997. On May 15, 1998 the court again remanded the per-call compensation rate to the FCC for further explanation without vacating the $0.284 default rate.
On February 4, 1999 the FCC released a third order (the "1999 Payphone Order"), in which the FCC abandoned its efforts to derive a "market based" default dial-around compensation rate and instead adopted a "cost based" rate of $0.24 per dial-around call. This rate became effective on April 21, 1999 and served as a default rate through January 31, 2002.
In a decision released January 31, 2002 (the "2002 Payphone Order") the FCC partially addressed the remaining issues concerning the "true-up" required for interim and intermediate period compensation. The FCC adjusted the per-call rate to $0.229, for the interim period only, to reflect a different method of calculating the delay in IXC payments to PSPs for the interim period, and determined that the total interim period compensation should be $33.89 per payphone per month ($0.229 times an average of 148 calls per payphone per month). The 2002 Payphone Order deferred to a later order its determination of the allocation of this total compensation rate among the various carriers required to pay compensation for the interim period.
On October 23, 2002 the FCC released its Fifth Order on Reconsideration and Order on Remand (The "Interim Order"), which resolved the remaining issues surrounding the interim/intermediate period true-up and specifically how monthly per-phone compensation owed to PSPs is to be allocated among the relevant dial-around carriers. The Interim Order also resolves how certain offsets to such payments will be handled and a host of other issues raised by parties in their remaining FCC challenges to the 1999 Payphone Order and the 2002 Payphone Order. In the Interim Order the FCC ordered a true-up for the interim period and increased the adjusted monthly rate to $35.22 per payphone per month, to compensate for the three-month payment delay inherent in the dial-around payment system. The new rate of $35.22 per payphone per month is a composite rate, allocated among approximately five hundred carriers based on their estimated dial-around traffic during the interim period. The FCC also ordered a true-up requiring PSPs, to refund an amount equal to $0.046 (the difference between the old $0.284 rate and the current $0.238 rate) to each carrier that compensated the PSP on a per-call basis during the intermediate period. Interest on additional payments and refunds is to be computed from the original payment date, at the IRS prescribed rate applicable to late tax payments.
On August 2, 2002 and September 2, 2002 respectively, the APCC and the RBOCs filed petitions with the FCC to revisit and increase the dial-around compensation level. Using the FCC's existing formula, as approved by the Court in its June 26, 2000 order, and adjusted only to reflect current costs and call volumes, the APCC and RBOCs petitions support approximately doubling of the current $0.45 rate. In response to the petitions, on September 2, 2002 the FCC put them out for comment and reply comment by interested parties, seeking input on how the Commission should proceed to address the issues raised by the filings.
Our objectives are to continue to review our overall cost structure, improve route density and service quality, monitor and take action on our under performing telephones. We have implemented the following strategy to meet our objectives.
CUSTOMERS, SALES AND MARKETING
The Location Owners with whom we contract are a diverse group of small and medium sized businesses, which are frequented by individuals needing payphone access. The majority of our payphones are located at convenience stores, truck stops, service stations, grocery stores, colleges and hospitals and all of our customers are a result of acquisitions from (ITOC's), Independent Telephone Operating Companies.
We install our payphones in convenience stores, truck stops, service stations, grocery stores, colleges and hospitals. Before we install a phone, we search for, and utilize historical revenue information about each payphone location. In locations where historical revenue information is not available, we rely on our site survey to examine geographic factors, population density, traffic patterns and other factors in determining whether to install a payphone. We recognize, however, that recent changes in payphone traffic volumes and usage patterns being experienced on an industry-wide basis warrant a continued assessment of the location and deployment of our payphones.
Our location agreements may provide for revenue sharing with the applicable Location Owners based on fixed percentages of revenues. Our agreements also provide for monthly billing for payphone service. We can terminate a location agreement on 30 days' notice to the Location Owner if the payphone does not generate sufficient revenue.
SERVICE AND EQUIPMENT SUPPLIERS
Our primary suppliers provide payphone components, local line access, long-distance transmission and operator services. To promote acceptance by end users accustomed to using RBOC or LEC-owned payphone equipment, we utilize payphones designed to be similar in appearance and operation to payphones owned by LECs.
We purchase circuit boards from various manufacturers for repair and installation of our payphones. We primarily obtain local line access from various LECs, including Verizon, North Pittsburgh Telephone Co. and various other incumbent and competitive suppliers of local line access. New sources of local line access are expected to emerge as competition continues to develop in local service markets. Long-distance services are provided to our company by various long-distance and operator service providers, including AT&T, Qwest, ILD Telecommunications, Inc., and others.
We expect the basic availability of such products and services to continue in the future; however, the continuing availability of alternative sources cannot be assured. Although we are not aware of any current circumstances that would require us to seek alternative suppliers for any material portion of the products or services used in the operation of our business, transition from our existing suppliers, if necessary, could have a disruptive effect on our operations and could give rise to unforeseen delays and/or expenses.
ASSEMBLY AND REPAIR OF PAYPHONES
We assemble and repair payphone equipment for our use. The assembly of payphone equipment provides us with technical expertise used in the operation, service, maintenance and repair of our payphones. We assemble, refurbish or replace payphones from standard payphone components either obtained from our sizable inventory or purchased from component manufacturers. These components include a metal case, an integrated circuit board incorporating a microprocessor, a handset and cord, and a coin box and lock. On the occasion when components are not available from inventory, we can purchase the components from several suppliers. We do not believe that the loss of any single supplier would have a material adverse effect on our assembly operations.
Our payphones comply with all material regulatory requirements regarding the performance and quality of payphone equipment and have all of the operating characteristics required by the applicable regulatory authorities, including free access to local emergency (911) telephone numbers, dial-around access to all available carriers, and automatic coin return capability for incomplete calls.
TECHNOLOGY
The payphone equipment we install makes use of microprocessors to provide voice synthesized calling instructions, detect and count coin deposits during each call, inform the caller at certain intervals of the time remaining on each call, identify the need for and the amount of an additional deposit and other functions associated with completion of calls. Through the use of non-volatile, electronically erasable, programmable read-only memory chips, our payphones can also be programmed and reprogrammed from our central computer facilities to update rate information or to direct different kinds of calls to particular carriers.
Our payphones can distinguish coins by size and weight, report to a remote location the total coins in the coin box, perform self-diagnosis and automatically report problems to a pre-programmed service number, and immediately report attempts at vandalism or theft. Many of our payphones operate on power available from the telephone lines, thereby avoiding the need for and reliance upon an additional power source at the installation location.
We provide all technical support required to operate the payphones, such as
computers and software at our headquarters in Saxonburg, Pennsylvania. Our assembly and repair support provides materials, equipment, spare parts and accessories to maintain our payphones.
MAJOR CUSTOMERS
No individual customer accounted for more than 5% of our consolidated revenues in 2003 and 2004.
COMPETITION
We compete for payphone locations directly with RBOCs, LECs and other IPPs. We also compete, indirectly, with long-distance companies, which can offer Location Owners commissions on long-distance calls made from LEC-owned payphones. We compete with LECs and long-distance companies who may have substantially greater financial, marketing and other resources.
We believe that our principal competition is from providers of wireless communications services for both local and long distance traffic. Certain providers of wireless communication services have introduced rate plans that are competitively priced with certain of the products offered by us, and have negatively impacted the usage of payphones throughout the nation.
We believe that the competitive factors among payphone providers are (1) the commission payments to a Location Owner, (2) the ability to serve accounts with locations in several LATAs or states, (3) the quality of service and the availability of specialized services provided to a Location Owner and payphone users, and (4) responsiveness to customer service needs. We believe that we are currently competitive in each of these areas.
Additionally, a number of domestic IPPs continue to experience financial difficulties from various competitive and regulatory factors impacting the pay telephone industry generally, which may impair their ability to compete prospectively. While no assurances can be given, we believe that these circumstances create an opportunity for us to obtain new location agreements and reduced site commissions going forward. There are no guarantees that we will be able to obtain new location agreements that are advantageous to our company.
We compete with long-distance carriers that provide dial-around services that can be accessed through our payphones. Certain national long-distance operator service providers and prepaid calling card providers have implemented extensive advertising promotions and distribution schemes which have increased dial-around activity on payphones owned by LECs and IPPs, including our company, thereby reducing traffic to our primary providers of long-distance service. While we do receive compensation for dial-around calls placed from our payphones, regulatory efforts are underway to improve the collection system and provide us with the ability to collect that portion of dial-around calls that are owed.
OUR EMPLOYEES
We currently have one full time employee. We may, from time to time, supplement our regular work force as necessary with temporary and contract personnel. None of our employees are represented by a labor union. We believe we have a good relationship with our employee.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The present officers and directors of NBT will continue to be the officers and directors of NBT after the Spinoff. This will result in the following persons serving in the following capacities for one year or until their respective successors are elected and qualified:
Name Age Position
---- --- --------
Paul Kelly 59 President and Director
Craig Burton 43 Secretary and Director
Leonard J. Battaglia 40 Director
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Paul Kelly is the President and a Director of the Company, and has held this position since December, 2005. Mr. Kelly has served as a service representative and maintenance technician for NB Telecom since November, 1999. Mr. Kelly served in the U.S. Navy from 1963 to 1966 and he graduated from Freeport High School, located in Freeport, Pennsylvania in 1963.
Craig Burton is the Secretary and a Director of the Company, and he has held these positions since December, 2005. Mr. Burton attended the University of South Carolina-Coastal and was a licensed real estate agent in the State of New York. He began working in marketing for a long distance carrier in 1996 and in 1999, Mr. Burton became Director of Marketing for Datone Communications, Inc., an owner of payphones and distributor of prepaid calling cards. Datone was acquired by USIP in January, 2000, and it has been a wholly owned subsidiary of USIP since that date. Mr. Burton currently serves as President and a Director of
USIP and he has held these positions since January 31, 2000.
Leonard J. Battaglia is a Director of the Company, and has held this position since December, 2005. Mr. Battaglia attended New York Institute of Technology. His background includes Real Estate development in New York City. He also has had an extensive background in Marketing and Sales for several Telecommunication Companies. Since 1998 Mr. Battaglia has held the position of Vice President and CEO of Seven Ocean Enterprise., Inc., a manufacturer of telecommunication equipment and products, located in Queens, New York.
BOARD OF DIRECTORS; ELECTION OF OFFICERS
All directors hold their office until the next annual meeting of shareholders or until their successors are duly elected and qualified. Any vacancy occurring in the board of directors may be filled by the shareholders, the board of directors, or if the directors remaining in the office constitute less than a quorum of the board of directors, they may fill the vacancy by the affirmative vote of a majority of the directors remaining in office. A director elected to fill a vacancy is elected for the unexpired term of his predecessor in office. Any directorship filled by reason of an increase in the number of directors shall expire at the next shareholders' meeting in which directors are elected, unless the vacancy is filled by the shareholders, in which case the terms shall expiree on the later of (i) the next meeting of the shareholders or (ii) the term designated for the director at the time of creation of the position being filled.
AUDIT COMMITTEE
NBT does not currently have an audit committee. Our Board of Directors will serve in this capacity. This policy will be continued after the Spin-off. In addition, the Board does not have a financial expert as defined by Regulations S-B Item 401. However, NBT will be seeking a candidate to serve in this role in the future.
CODE OF ETHICS
NBT has not adopted a Code of Ethics for its principal executive and financial officers. Due to NBT's limited operations the Company's Board of Directors does not believe a code of ethics is necessary at this time. NBT's Board of Directors will revisit this issue in the future to determine if adoption of a code of ethics is appropriate. In the meantime, NBT's management intends to promote honest and ethical conduct, full and fair disclosures in its reports with the SEC, and compliance with the applicable governmental laws and regulations.
EXECUTIVE COMPENSATION
In accordance with the requirements of Item 402(b) of Regulation S-B of the Securities Act of 1933, as amended, set forth below is a summary compensation table. The table below addresses all compensation awarded to, earned by or paid to our officers and directors. We do not have any employment agreements, stock option plans or other type of employee benefit plans.
Long-Term Compensation
Annual Compensation Awards
------------------------------------------------------------------------------------------------------------------------------------
Name and Year Salary($) Bonus($) Other Annual Restricted Securities LTIP All Other Compensation
Principal Compensation Stock Underlying Payouts
Position Award(s) Option/SARS (4)
(#)
-------------- ----------- ----------- ------------ --------------- ------------ --------------- ----------- -----------------------
Paul Kelly 2004 $33,448 $0 $0 $0 0 $0 $0
President
2005 $33,448 $0 $0 $0 0 $0
$0
Craig Burton 2004 $0 $0 $0 $0 0 $0 $0
(1)
2005 $0 $0 $0 $0 0 $0
$0
-------------- ----------- ----------- ------------ --------------- ------------ --------------- ----------- -----------------------
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(1) Mr. Burton has not and will not receive any compensation from NBT in connection with his role as an officer and director of the Company.
PERSONAL LIABILITY AND INDEMNIFICATION OF DIRECTORS
Our Bylaws contain provisions in accordance with the Nevada Corporate Code which reduce the potential personal liability of directors for certain monetary damages and provide for indemnification of directors and other persons. We are unaware of any pending or threatened litigation against us or our directors that would result in any liability for which our directors would seek indemnification or similar protection at this time.
Such indemnification provisions are intended to increase the protection provided directors and, thus, increase our ability to attract and retain qualified persons to serve as directors. Because directors liability insurance is only available at considerable cost and with low dollar limits of coverage and broad policy exclusions, we do not currently maintain a liability insurance policy for the benefit of our directors, but we may attempt to acquire such insurance in the future. We believe that the substantial increase in the number of lawsuits being threatened or filed against corporations and their directors has resulted in a growing reluctance on the part of capable persons to serve as members of boards of directors of companies, particularly of companies which are or intend to become public companies.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling persons of the small business issuer pursuant to the foregoing provisions, or otherwise, the small business issuer has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.
PRINCIPAL STOCKHOLDERS
Prior to the Spinoff, all the outstanding shares of our common stock will be owned by our parent company, USIP.Com, Inc. The address of USIP.Com, Inc.'s principal executive office is 7325 Oswego Road, Liverpool, New York 13090. The following table sets forth information regarding the projected beneficial ownership of our common stock immediately after our spin-off, based on the current ownership of the common stock of USIP, by: (i) each person known by us to beneficially own 5% or more of the Shares of outstanding common stock of USIP, (ii) each of our executive officers and directors, and (iii) all of our executive officers and directors as a group. Except as otherwise indicated, all Shares are beneficially owned, and investment and voting power is held by, the persons named as owners.
Name and Address of Beneficial Amount and Nature of Common Percentage Ownership of Common Stock
Stock Beneficially Owned
Owner Before Spinoff
--------------------------------- ----------------------------- ----------------------------------------
Paul Kelly 0 0%
Craig Burton 1,150,000 2.5%
Greenwich Holdings, LLC 36,560,106 78.4%
Leonard J. Battaglia 100,000 .2%
All Officers and Directors as a 1,250,000 2.68%
Group (3 persons)
------------------------------------------------------------------------------------------------
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None of the following parties has, since our date of incorporation, had any material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that has or will materially affect us:
Any of our directors or officers;
Any person who beneficially owns, directly or indirectly, shares carrying more
than 10% of the voting rights attached to our outstanding shares of common
stock; Any of our promoters; Any relative or spouse of any of the foregoing
persons who has the same house as such person.
DESCRIPTION OF CAPITAL STOCK
CAPITAL STOCK
We are authorized to issue 110,000,000 shares of capital stock, consisting of 100,000,000 shares of $.0001 par value common stock and 10,000,000 shares of $.0001 par value preferred stock.
COMMON STOCK
General. We have 46,632,222 Shares of common stock issued and outstanding prior to this offering. All Shares of common stock currently outstanding are validly issued, fully paid and non-assessable, and all Shares which are the subject of this prospectus, when issued and paid for pursuant to this offering, will be validly issued, fully paid and non-assessable.
Voting Rights. Each Share of our common stock entitles the holder thereof to one vote, either in person or by proxy, at meetings of stockholders. Our Board of Directors is elected annually at each annual meeting of the stockholders. See "Principal Stockholders" and "Risk Factors".
Dividend Policy. All Shares of common stock are entitled to participate ratably in dividends when, as and if declared by our Board of Directors out of the funds legally available therefor. Any such dividends may be paid in cash, property or additional Shares of common stock. We have not paid any dividends since our inception and presently anticipate that all earnings, if any, will be retained for development of our business and that no dividends on the Shares of common stock will be declared in the foreseeable future. The decision to issue future dividends will be subject to the discretion of our Board of Directors and will depend upon, among other things, future earnings, our operating and financial condition, our capital requirements, general business conditions and other pertinent facts. There can be no assurance that any dividends on the common stock will ever be paid.
Miscellaneous Rights and Provisions. Holders of common stock have no preemptive or other subscriptions rights, conversions rights, redemption or sinking fund provisions. In the event of the liquidation or dissolution, whether voluntary or involuntary, of the Company, each Share of common stock is entitled to Share ratably in any assets available for distribution to holders of the equity of the Company after satisfaction of all liabilities.
Shares Eligible for future Sale. Upon completion of the Spinoff, we will have 46,632,222 Shares of common stock outstanding. All of the Shares except shares held by certain affiliates will be freely tradeable.
PREFERRED STOCK
We may issue up to 10,000,000 shares of our preferred stock, par value $.0001 per share, from time to time in one or more series. As of the date of this prospectus, no shares of preferred stock have been issued. Our Board of Directors, without further approval of our stockholders, is authorized to fix the dividend rights and terms, conversion rights, voting rights, redemption rights, liquidation preferences and other rights and restrictions relating to any series of Preferred Stock that may be issued in the future. Issuances of shares of preferred stock, while providing flexibility in connection with possible financings, acquisitions and other corporate purposes, could, among other things, adversely affect the voting power of the holders of our common stock and prior series of preferred stock then outstanding.
STOCK OPTION GRANTS
To date we have not granted any stock options.
REGISTRATION RIGHTS
As of the date of this registration statement we have not granted registration rights to any of our shareholders.
NO PUBLIC MARKET FOR COMMON STOCK
There is presently no public market for our common stock. We anticipate applying for trading of our common stock on the over the counter bulletin board upon the completion of the Spinoff and the effectiveness of the registration statement of which this prospectus forms a part; however, we can provide no assurance that our shares will be traded on the bulletin board or, if traded, that a public market will materialize.
CERTAIN PROVISIONS IN THE BY LAWS
Our articles of incorporation allow us to indemnify our offices and directors to the maximum extent allowed under Nevada law. This includes indemnification for liability which could arise under the Securities Act. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the registrant under these provisions, the registrant has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is therefore unenforceable.
EXPERTS
Our financial statements as of December 31, 2005, appearing in this prospectus and registration statement have been audited by Robison Hill & Co., Certified Public Accountant, independent auditors, as set forth in their report thereon, appearing elsewhere in this prospectus and in this registration statement, and
are included in reliance upon such reports given upon the authority of said firm as experts in accounting and auditing.
LEGAL MATTERS
The validity of the Shares offered hereby will be passed upon for us by Buker, Jones & Haley, a professional corporation located in Atlanta, Georgia.
FURTHER INFORMATION
You should rely only on the information in this prospectus or any prospectus supplement to this prospectus. We have not authorized anyone else to provide you with different information. Offers of the securities are being made only in states where the offers are permitted. You should not assume that the information in this prospectus or any prospectus supplement is accurate as of any date other than the date on the front of those documents.
This prospectus is part of a Registration Statement on Form SB-2 that has been filed with the SEC. It does not include all of the information that is in the registration statement and the additional documents filed as exhibits with it. For more detailed information, you should read the exhibits themselves.
NB PAYPHONES LTD.
(A WHOLLY OWNED SUBSIDIARY OF USIP.COM, INC.)
-:-
INDEPENDENT AUDITOR'S REPORT
DECEMBER 31, 2005 AND 2004
CONTENTS
Page
Independent Auditor's Report...............................................F - 1
Balance Sheets
December 31, 2005 and 2004...............................................F - 3
Statements of Operations
For the Years Ended December 31, 2005 and 2004...........................F - 4
Statement of Stockholders' Equity
For the Years Ended December 31, 2005 and 2004...........................F - 6
Statements of Cash Flows
For the Years Ended December 31, 2005 and 2004...........................F - 7
Notes to Financial Statements..............................................F - 8
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INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholders NB Payphones, LTD
We have audited the accompanying balance sheets of NB Payphones, LTD as of December 31, 2005 and 2004, and the related statements of operations, cash flows, and the statement of stockholders' equity for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (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 financial statements referred to above present fairly, in all material respects, the financial position of NB Payphones, LTD as of December 31, 2005 and 2004, and the results of its operations and its cash flows for the years then ended are in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 9 to the financial statements, the Company has incurred annual operating losses since inception. As of December 31, 2005, the Company has increased its line of credit borrowings to meet operating costs, and has seen stockholders' equity declining. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that might result from the outcome of the foregoing uncertainties.
Respectfully submitted,
/s/ Robison, Hill & Co,
----------------------------
Certified Public Accountants
Salt Lake City, Utah
March 22, 2006
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NB PAYPHONES LTD
(A WHOLLY OWNED SUBSIDIARY OF USIP.COM, INC.)
BALANCE SHEETS
DECEMBER 31, 2005 AND 2004
December 31,
2005 2004
---------------- -----------------
CURRENT ASSETS
Cash $ 2,033 $ 1,558
Commissions and Sales Receivable, Net 14,422 12,714
Inventory 1,251 1,251
Prepaid Expenses 30 30
---------------- -----------------
TOTAL CURRENT ASSETS 17,736 15,553
---------------- -----------------
FIXED ASSETS
Telephone and Office Equipment 213,244 283,447
Vehicle 11,634 11,634
---------------- -----------------
224,878 295,081
Less: Accumulated Depreciation (182,521) (201,386)
---------------- -----------------
Net Fixed Assets 42,357 93,695
---------------- -----------------
TOTAL ASSETS $ 60,093 $ 109,248
================ =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 66,073 $ 37,779
Related Party Payable 27,858 46,924
Notes Payable Related Party 10,108 -
---------------- -----------------
TOTAL CURRENT LIABILITIES 104,039 84,703
---------------- -----------------
TOTAL LONG-TERM LIABILITIES - -
TOTAL LIABILITIES 104,039 84,703
---------------- -----------------
STOCKHOLDERS' EQUITY
Common Stock, .no par value 200 shares authorized,
100 shares issued and outstanding at December 31, 2005 and 2004 356,394 356,394
Retained Earnings (400,340) (331,849)
---------------- -----------------
TOTAL STOCKHOLDERS' EQUITY (43,946) 24,545
---------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 60,093 $ 109,248
================ =================
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The accompanying notes are an integral part of these financial statements.
NB PAYPHONES LTD
(A WHOLLY OWNED SUBSIDIARY OF USIP.COM, INC.)
STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
2005 2004
----------------- ----------------
SALES
Commissions $ 4,428 $ 4,591
Coin Collections 16,808 28,196
Dial Around 36,095 19,006
Equipment Sales 897 1,112
Phone Card Sales 30 50
Service and Repair Sales 38,493 43,095
----------------- ----------------
Total Sales 96,751 96,050
----------------- ----------------
COST OF SALES
Telecommunications Costs 53,989 84,714
Contractor Fees 23,800 35,280
Repairs and Service Supplies 210 1,112
Depreciation 30,458 42,470
Travel 781 1,093
----------------- ----------------
Total Cost of Sales 109,238 164,669
----------------- ----------------
Gross Profit (12,487) (68,619)
----------------- ----------------
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NB PAYPHONES LTD
(A WHOLLY OWNED SUBSIDIARY OF USIP.COM, INC.)
STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
(Continued)
2005 2004
----------------- ----------------
OPERATING EXPENSES
Insurance $ 5,043 $ 2,184
Telephone 22,895 1,473
Vehicle Expenses 1,287 749
Rent 364 360
Professional Fees 15,737 -
Office Expense 2,440 3,085
----------------- ----------------
Total Operating Expenses 47,766 7,851
----------------- ----------------
(60,253) (76,470)
----------------- ----------------
OTHER INCOME (EXPENSE)
Gain (Loss) on Sale of Equipment (8,130) (263)
Interest Expense (108) (927)
----------------- ----------------
Total Other Income (8,238) (1,190)
----------------- ----------------
NET INCOME $ (68,491) $ (77,660)
================= ================
Weighted Common Shares Outstanding 100 100
Net Loss per Common Share $ (684.91) $ (776.60)
================= ================
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The accompanying notes are an integral part of these financial statements.
NB PAYPHONES LTD
(A WHOLLY OWNED SUBSIDIARY OF USIP.COM, INC.)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEAR ENDING DECEMBER 31, 2005 AND 2004
Common Stock Retained
Shares Amount Earnings
--------------- ---------------- -----------------
Balance as of January 1, 2004 100 $ 356,394 $ (254,189)
Net Loss - - (77,660)
---------------- ---------------- -----------------
Balance as of December 31, 2004 100 356,394 (331,849)
Net Loss - - (68,491)
---------------- ---------------- -----------------
Balance as of December 31, 2005 100 $ 356,394 $ (400,340)
================ ================ =================
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The accompanying notes are an integral part of these financial statements.
NB PAYPHONES LTD
(A WHOLLY OWNED SUBSIDIARY OF USIP.COM, INC.)
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
2005 2004
---------------- -----------------
Cash Flows From Operating Activities:
Net (Loss) $ (68,491) $ (77,660)
Adjustments to reconcile net (loss) to net
cash provided (used) by operating activities:
Depreciation Expense 30,458 42,470
Gain (Loss) on Sale of Equipment 8,130 263
(Increase) Decrease in Commission Receivables (1,708) 8,815
Increase (Decrease) in Accounts Payable 28,295 6,726
Increase (Decrease) in Related Party Payable (19,067) 17,879
---------------- -----------------
Net cash (used) by operating activities (22,383) (1,507)
---------------- -----------------
Cash Flows From Investing Activities:
Proceeds from Sale of Equipment 12,750 848
---------------- -----------------
Net cash (used) by investing activities 12,750 848
---------------- -----------------
Cash Flows From Financing Activities:
Proceeds from Related Party Notes 10,108 -
Payments on Notes Payable - (2,327)
---------------- -----------------
Net cash provided by financing activities 10,108 (2,327)
---------------- -----------------
Net Increase (Decrease) in cash 475 (2,986)
Cash - Beginning of Period 1,558 4,544
---------------- -----------------
Cash - End of Period $ 2,033 $ 1,558
================ =================
Supplemental Disclosures of Cash Flow Information:
Cash Paid During Period The Period For:
Interest $ - $ 928
Income Taxes $ - $ -
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The accompanying notes are an integral part of these financial statements.
NB PAYPHONES, LTD.
(A WHOLLY OWNED SUBSIDIARY OF USIP.COM, INC.)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
NOTE 1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
NB Payphones, LTD. is currently a provider of both privately owned and company owned payphones (COCOT's) and stations in Pennsylvania. The Company receives revenues from the collection of the payphone coinage, a portion of usage of service from each payphone and a percentage of long distance calls placed from each payphone from the telecommunications service providers. In addition, the Company also receives revenues from the service and repair of privately owned payphones, sales of payphone units and the sales of prepaid phone cards.
The accompanying Financial Statements include the accounts of NB Payphones, LTD. which is a wholly owned subsidiary of USIP.COM, Inc.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
MANAGEMENT ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting principals requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
CONCENTRATIONS OF CREDIT RISK
The Company's payphones are located primarily in Pennsylvania and usage of those phones may be affected by economic conditions in those areas. The company has experienced about a 30% drop in revenue's, due to increased competition from other payphone providers and increase usage of wireless communications.
The Company maintains cash balances with a financial institution insured by the Federal Deposit Insurance Corporation up to $100,000. There are no uninsured balances at December 31, 2005.
NB PAYPHONES, LTD.
(A WHOLLY OWNED SUBSIDIARY OF USIP.COM, INC.)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid instruments with a maturity of three months or less when purchased to be cash equivalents for purposes of classification in the balance sheets and statement of cash flows. Cash and Cash equivalents consists of cash in bank (checking) accounts.
FIXED ASSETS AND DEPRECIATION
Fixed assets are stated at cost. Depreciation is calculated on a straight-line basis over the useful lives of the related assets, which range from five to seven years.
INCOME TAXES
Income taxes are accounted for in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes". Under SFAS No. 109, deferred income taxes are recognized using the asset and liability method by applying tax rates to cumulative temporary differences based on when and how they are expected to affect the tax return. Deferred tax assets and liabilities are adjusted for income tax rate changes.
NET (LOSS) PER COMMON SHARE
Net loss per common share has been calculated by taking the net loss for the current period and dividing by the weighted average shares outstanding at the end of the period.
REVENUE RECOGNITION
The Company derives its primary revenue from the sources described below, which includes dial around revenues, coin collections, and telephone equipment repairs and sales. Other revenues generated by the company include, phone card sales, and commissions.
Dial around revenues are generated from calls to gain access to a different long distance carrier than is already programmed into the phone. Revenues from dial around calls are recorded based upon estimates until the coin collection revenues are generated when callers deposit coins into the phones to make calls. Coin revenues are recorded in an amount equal to the coins collected. Revenues on commissions, phone card sales, and telephone equipment repairs and sales are realized when the services are provided.
NB PAYPHONES, LTD.
(A WHOLLY OWNED SUBSIDIARY OF USIP.COM, INC.)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
NOTE 2. INVENTORY
Inventory is valued at the lower of cost, determined on the first-in, first-out basis (FIFO), or market value. At December 31, inventory consists of the following:
2005 2004
---------------- ----------------
Calling Cards $0 $0
Parts and Accessories 1,251 1,251
---------------- ----------------
$1,251 $1,251
================ ================
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NOTE 3. COMMISSIONS AND SALES RECEIVABLE
Commissions and Sales Receivable consists of the following at December 31:
2005 2004
------------------- ------------------
Commissions Receivable $13,768 $11,844
Sales Receivable 654 870
------------------- ------------------
$14,422 $12,714
=================== ==================
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NOTE 4. RELATED PARTY NOTE
The Company has a note payable to Craig Burton, Presidnet of the Company. This note has a due date of November 21, 2007 and carry interest of 10%. As of December 31, 2005 the outstanding principal on the note was $5,000 and accrued interest was $54.
The Company has a note payable with a relative of Joseph Passalaqua, Secretary of the Company. This note has a due date of November 21, 2007 and carry interest of 10%. As of December 31, 2005 the outstanding principal on the note was $5,000 and accrued interest was $54.
NOTE 5. RELATED PARTY PAYABLE
As of December 31, 2005 and 2004 the Company had payables due to USIP.Com, Inc., the Companies parent company in the amount of 27,858 and 46,924, respectively.
NOTE 6. COMMITMENTS
As of December 31, 2004 and 2003, all activities of the Company have been conducted by corporate officers from either Companies Parents business offices. Currently, there are no outstanding debts owed by the company for the use of these facilities and there are no commitments for future use of the facilities.
NB PAYPHONES, LTD.
(A WHOLLY OWNED SUBSIDIARY OF USIP.COM, INC.)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
NOTE 7. MAJOR DIAL AROUND COMPENSATION PROVIDERS (COMMISSIONS)
The Company received approximately 95% of total dial around and zero-plus compensation (commissions) from two providers.
NOTE 8. INCOME TAXES
As of December 31, 2005, the Company had a net operating loss carryforward for income tax reporting purposes of approximately $146,153 that may be offset against future taxable income through 2021. Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited. No tax benefit has been reported in the financial statements, because the Company believes there is a 50% or greater chance the carry-forwards will expire unused. Accordingly, the potential tax benefits of the loss carry-forwards are offset by a valuation allowance of the same amount.
2005 2004
------------------ ------------------
Net Operating Losses 100,949 77,662
Valuation Allowance (100,949) (77,662)
------------------ ------------------
- -
================== ==================
|
The provision for income taxes differs from the amount computed using the federal US statutory income tax rate as follows:
2005 2004
--------------- --------------
Provision (Benefit) at US Statutory Rate (23,287) (26,405)
Increase (Decrease) in Valuation Allowance 23,287 26,405
--------------- --------------
- -
=============== ==============
|
The Company evaluates its valuation allowance requirements based on projected future operations. When circumstances change and causes a change in management's judgement about the recoverability of deferred tax assets, the impact of the change on the valuation is reflected in current income.
NB PAYPHONES, LTD.
(A WHOLLY OWNED SUBSIDIARY OF USIP.COM, INC.)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
NOTE 9. GOING CONCERN CONSIDERATIONS
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States, which contemplates the Company as a going concern. However, the Company has sustained substantial operating losses in recent. The company has a current ratio of .170 for the year ended December 31, 2005, and has a deficit in stockholders' equity. The Companies ability to continue as a going concern is dependent upon obtaining the additional capital as well as additional revue to be successful in its planned activity. Management believes that actions presently being taken to revise the Company's operating and financial requirements provide them with the opportunity to continue as a going concern.
These financial statements do not reflect adjustments that would be necessary if the Company were unable to continue as a "going concern". While management believes that the actions already taken or planned, will mitigate the adverse conditions and events which raise doubt about the validity of the "going concern" assumption used in preparing these financial statements, there can be no assurance that these actions will be successful.
If the Company were unable to continue as a "going concern", then substantial adjustments would be necessary to the carrying values of assets, the reported amounts of its liabilities, the reported revenues and expenses, and the balance sheet classifications used.
NOTE 10. PLAN OF MERGER
On December, 27, 2005, the Company entered into an agreement with USIP.COM, Inc., that upon completion, 100% (100 shares) of the Companies shares would be returned, and the Company would cease to be a wholly owned subsidiary of USIP.COM, Inc. As of the date of this report, the transaction has not been completed.
On December 27, 2005 the Company signed an Agreement and Plan of Merger ("Agreement") with NB Telecom, Inc., ("Telecom") a newly formed Nevada corporation. Under the terms of the proposed Merger the Company shall be merged into Telecom, with Telecom continuing as the surviving corporation. The Merger became effective as of March 23, 2006.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Our bylaws and articles of incorporation provide that our officers and directors are indemnified to the fullest extent provided by the Nevada Revised Statutes ("NRS").
Under the Nevada Revised Statutes, director immunity- from liability to a company or its shareholders for monetary liabilities applies automatically unless it is specifically limited by a company's Articles of Incorporation. Our Articles of Incorporation do not specifically limit the directors' immunity. The NRS excepts from that immunity (a) a willful failure to deal fairly with the company or its shareholders in connection with a matter in which the director has a material conflict of interest; (b) a violation of criminal law, unless the director had reasonable cause to believe that his or her conduct was lawful or no reasonable cause to believe that his or her conduct was unlawful; (c) a transaction from which the director derived an improper personal profit; and (d) willful misconduct.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of NBT pursuant to the foregoing, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.
The Company has not purchased insurance for the directors and officers which would provide coverage for their acts as an officer or director of the Company.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses of the distribution, all of which are to be borne by the Registrant, are as follows:
SEC Registration Fee . . . . . . . . . . . . . . . . $ 64.70
Blue Sky Fees and Expenses . . . . . . . . . . . . $ 10,000*
Accounting Fees and Expenses . . . . . . . . . . . $ 15,000*
Legal Fees and Expenses . . . . . . . . . . . . . . $ 30,000*
Printing and Engraving . . . . . . . . . . . . . . . $ 5,000*
Transfer Agent and Registrar fees . . . . . . . . . . . $ 1,000*
Total . . . . . . . . . . . . . . . . . . . . $ 61,064.70*
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*All the amounts noted above are estimates other then the commission's registration fee.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES - NONE.
ITEM 27. EXHIBITS.
ITEM 28. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers, and controlling persons of the small business issuer pursuant to the foregoing provisions, or otherwise, the small business issuer has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other than the payment by the small business issuer of expenses incurred or paid by a director, officer or controlling person of the small business issuer in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the small business issuer will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
Registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities, a post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii) Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and
(iii) Include any additional or changed material information on the plan of distribution.
(2) For determining any liability under the Securities Act, treat each post-effective amendment that contains a form of prospectus as a new registration statement for the securities offered in the registration statement, and the offering of the securities at that time as the initial bona fide offering of those securities.
(3) File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering.
(4) That for determining liability of the undersigned small business issuer under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned small business issuer undertakes that in a primary offering of securities of the undersigned small business issuer pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned small business issuer will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned small business issuer relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned small business issuer or used or referred to by the undersigned small business issuer;
(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned small business issuer or its securities provided by or on behalf of the undersigned small business issuer; and
(iv) Any other communication that is an offer in the offering made by the undersigned small business issuer to the purchaser.
For determining any liability under the Securities Act, treat the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the small business issuer under Rule 424(b)(1), or (4) or 497(h) under the Securities Act as part of this registration statement as of the time the Commission declared it effective.
For determining any liability under the Securities Act, treat each post-effective amendment that contains a form of prospectus as a new registration statement for the securities offered in the registration statement, and that offering of the securities at that time as the initial BONA FIDE offering of those securities.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements of filing on Form SB-2 and authorized this registration statement to be signed on its behalf by the undersigned, in the City of Saxonburg, Pennsylvania on the 12 day of May, 2006.
NB TELECOM, INC.
By: /s/ Paul Kelly
------------------
Paul Kelly
President, Chief Executive Officer and Director
By: /s/ Craig Burton
--------------------
Craig Burton, Secretary, Principal Financial
Officer and Director
|
In accordance with the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the date stated
Signatures
/s/ Paul Kelly
--------------
Paul Kelly President, Chief Executive Officer, Director and
Chairman of the Board
/s/ Craig Burton
----------------
Craig Burton Secretary, Principal Financial Officer and Director
|
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Craig Burton, with full power of substitution, his/her true and lawful attorney-in-fact and agent to do any and all acts and things in his/her name and on his/her behalf in his/her capacities indicated below which he may deem necessary or advisable to enable NB Telecom, Inc. to comply with the Securities Act of 1933, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but not limited to, power and authority to sign for him/her in his/her name in the capacities stated below, any and all amendments (including post-effective amendments) thereto, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in such connection, as fully to all intents and purposes as we might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue thereof.
In accordance with the requirements of the Securities Act of 1933, this registration statement was signed by the following persons in the capacities
Signatures
s/ Paul Kelly President, Chief Executive Officer, Director and -------------- Paul Kelly Chairman of the Board s/ Craig Burton Secretary, Principal Financial Officer, Director ---------------- Craig Burton |
END OF FILING
See exhibit3-1.pdf
EXHIBIT 3.2
BYLAWS
OF
NB TELECOM, INC.
ARTICLE I
NAME AND PRINCIPAL OFFICE
Section 1. The name of this corporation is:
NB TELECOM, INC.
Section 2. The principal office of the corporation shall be located at such place as shall be designated by the Board of Directors, and it may maintain branch offices or agents elsewhere, within or without the State of Nevada, as the Board of Directors may from time to time determine.
Section 3. The corporation shall at all times maintain a registered office and registered agent within the State of Nevada, at such place within said state as shall be designated by the Board of Directors.
ARTICLE II
CAPITAL STOCK
Section 1. The authorized capital stock of the corporation shall consist of 110,000,000 shares of which 100,000,000 shares shall be designated of common stock with $.0001 par value and 10,000,000 shares to be designated as Preferred Stock with a $.0001 par value. The Preferred Stock may be issued in one or more series, and the preferences, rights and powers of such Preferred Shares shall be determined in the discretion of the Board of Directors. Said capital stock shall be evidenced by certificates of stock, issued in the name of the corporation and signed by the President and Secretary of the corporation under the corporate seal.
Section 2. Said shares of stock shall be transferable only on the books of the corporation or its authorized registration and transfer agent. The stock transfer records shall be kept by the corporation or the appropriate designee of the corporation as may be determined by the Board of Directors.
Section 3. Shares of stock may be represented at all shareholder meetings by the shareholders of record or by written proxy directed to any other person or legal entity and filed with the Secretary of the corporation prior to the beginning of any shareholder meeting. No person, however, shall be entitled to vote any shares of stock in person or by proxy at any such meeting unless the same shall have been transferred to him/her on the books of the corporation at least 30 days prior to the said meeting.
Section 4. Before a new stock certificate shall be transferred or issued to replace a lost certificate, proof of loss together with proper indemnification procedures, including an indemnification bond, if requested by the Board of Directors, shall be furnished by the applicant for the new certificate. Any cost of reissuing and indemnifying the corporation for reissuing lost certificates shall be paid by the applicant.
Section 5. The owner as reflected on the books of the corporation, subject to the provisions of Section 3 of this Article II, shall be entitled to one vote for each share of stock owned by him/her. No cumulative voting shall be allowed.
Section 6. The corporation shall not be allowed to vote any Treasury stock held by it.
Section 7. The Board of Directors may fix a date or dates at which time or times the persons reflected on the books of the corporation as shareholders shall receive dividends or distributions of the corporate assets.
Section 8. The corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Nevada.
Section 9. Shares standing in the name of another corporation, domestic or foreign, may be voted by such officer, agent or proxy as the Bylaws of such corporation may prescribe or, in the absence of such provision, as the Board of Directors of such corporation may determine. Shares standing in the name of a deceased person may be voted by the executor or administrator of such deceased person, either in person or by proxy. Shares standing in the name of a guardian, conservator or trustee may be voted by such fiduciary, either in person or by proxy, but no such fiduciary shall be entitled to vote shares held in such fiduciary capacity without a transfer of such shares into the name of such fiduciary. Shares standing in the name of a receiver may be voted by such receiver. A shareholder whose shares are pledged shall be entitled to vote such shares, unless, in the transfer by the pledgor on the books of the corporation, he/she has expressly empowered the pledgee to vote thereon, in which case only the pledgee or his/her proxy may represent the stock and vote thereon.
Section 10. There shall be issued no fractional shares of the corporation. In the event a shareholder shall be entitled to a fractional share by virtue of the declaration of a stock dividend or stock split or otherwise, the corporation shall issue to said shareholder a certificate, called scrip, acknowledging the right of said shareholder to said fractional share. At any time that a shareholder shall become the holder of sufficient scrip to total one or more whole shares, then, at the request of said shareholder, the corporation shall issue said whole share or shares to said shareholder. No holder of any scrip shall be entitled to any vote on account thereof.
Section 11. All issued shares of the corporation shall be fully paid and nonassessable; there shall be issued no partially paid shares of the corporation.
Section 12. Shares of the corporation shall be issued for such consideration as shall be fixed from time to time by the Board of Directors; provided, however, that no such shares shall be issued for consideration less than the par value of such shares.
Section 13. Treasury shares may be disposed of by the corporation for such consideration as may be fixed from time to time by the Board of Directors.
ARTICLE III
MEETINGS OF SHAREHOLDERS
Section 1. An annual meeting of the shareholders shall be held annually, within five (5) months of the end of each fiscal year of the Corporation. The annual meeting shall be held at such time and place and on such date as the Directors shall determine from time to time and as shall be specified in the notice of the meeting; at which time the shareholders shall elect a Board of Directors and transact such other business as may be properly brought before the meeting. Notwithstanding the foregoing, the Board of Directors may cause the annual meeting of shareholders to be held on such other date in any year as they shall determine to be in the best interests of the corporation; and any business transacted at said meeting shall have the same validity as if transacted on the date designated herein.
Notice of the annual meeting, stating the time and place thereof, shall be mailed to each shareholder at his/her address as shown on the records of the corporation not less than ten (10) days and not more than sixty (60) days prior to such meeting.
Section 2. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or shareholders entitled to receive payment of dividends, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not less than ten (10) nor more than sixty (60) days prior to the date on which the particular action requiring such determination of shareholders is to be taken. If no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of dividends, the date on which notice of the meeting is mailed, or the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this Section, such determination shall apply to any adjournment thereof.
Section 3. A simple majority of the capital stock issued and outstanding, represented in person or by proxy, shall constitute a quorum for the transaction of business at any shareholders' meeting.
Section 4. A special meeting of the shareholders may be called at any time by the President or as directed by a majority vote of the Board of Directors. The same notice shall be given of special meetings as is herein provided for the annual meeting, except that, in the case of special meetings, the notice shall state the objective therefor, and no matters may be considered except those mentioned in said notice.
Section 5. A special meeting of the shareholders shall be called by the corporation upon the written request of the holders of not less than twenty-five (25%) percent of the outstanding shares of the corporation. Such written request shall be presented to the Secretary of the corporation. The Secretary shall then comply with the provisions of this Article regarding notice to shareholders of any special or annual meeting.
Section 6. Notice of meetings, both annual and special, may be waived by any shareholder, and his/her presence at such meetings will constitute such a waiver.
Section 7. At all meetings of shareholders, all questions shall be determined by a majority vote of the holders of each class of capital stock entitled to vote, present in person or by proxy, unless otherwise provided for by these Bylaws or by the laws of the State of Nevada.
Section 8. Whenever the vote of shareholders at a meeting thereof is required or permitted to be taken, for or in connection with any corporate action, by any provision of the laws of Nevada, the meeting and vote of shareholders may be dispensed with if all of the shareholders who would have been entitled to vote upon the action if such meeting were held shall consent in writing to such corporate action being taken; or if the Articles of Incorporation authorizes the action to be taken with the written consent of the holders of less than all of the stock who would have been entitled to vote upon the action if a meeting were held, then on the written consent of the shareholders having not less than such percentage of the number of votes as may be authorized in the Articles of Incorporation; provided that, in no case shall action be taken upon the written consent of the holders of stock having less than the minimum percentage of the vote required by statute for the proposed corporate action, and provided that prompt notice be given to all shareholders of the taking of corporate action without a meeting and by less than unanimous written consent.
Section 9. The Board of Directors may adopt whatever rules it deems necessary or desirable for the orderly transaction of business at any meeting of shareholders; provided that such rules shall be in writing and shall be distributed to the shareholders prior to or at the beginning of said meeting, and provided further that such rules shall not abrogate any right of the holders of capital stock as defined by statute or by these Bylaws.
ARTICLE IV
BOARD OF DIRECTORS
Section 1. The business and affairs of the corporation shall be managed by its Board of Directors, which may exercise all powers of the corporation as are not, by statute, by the Articles of Incorporation or by these Bylaws, directed or required to be exercised or done by the shareholders.
Section 2. The number of Directors which shall constitute the whole Board shall be not less than one (1) nor more than fifteen (15). Such number of Directors shall from time to time be fixed and determined by the shareholders and shall be set forth in the notice of any meeting of shareholders held for the purpose of electing Directors. The Directors shall be elected at the Annual Meeting of the Shareholders, except as provided in Section 3 of this Article IV, and each Director elected shall hold office until his/her successor shall be elected and shall qualify. Except as provided otherwise herein, Directors need not be residents of Nevada nor shareholders of the corporation.
Section 3. Any Director may resign at any time by written notice to the corporation. Any such resignation shall take effect at the date of receipt of such notice or any later time specified therein, and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. If any vacancy occurs on the Board of Directors caused by death, resignation, retirement, disqualification or removal from office of any Director or otherwise, or if any new directorship is created by an increase in the authorized number of Directors, a majority of the Directors then in office, though less than a quorum, or a sole remaining Director may choose a successor or fill the newly created directorship; and a Director so chosen shall hold office until the next annual meeting and until his/her successor shall be duly elected and shall qualify, unless sooner displaced.
Section 4. A regular meeting of the Board of Directors shall be held each year, without other notice than this Bylaw, at the place of and immediately following the Annual Meeting of Shareholders, and other regular meetings of the Board of Directors shall be held each year, at such time and place as the Board of Directors may provide, by resolution, either within or without the State of Nevada, without other notice than such resolution.
Section 5. A special meeting of the Board of Directors may be called by the President and shall be called by the Secretary on the written request of any two Directors. The President so calling, or the Directors so requesting, any such meeting shall fix the time and place, either within or without the State of Nevada, as the place for holding such meeting.
Section 6. Written notice of special meetings of the Board of Directors shall be given to each Director at least twenty-four (24) hours prior to the time of any such meeting. Any Director may waive notice of any meeting. The attendance of a Director at any meeting shall constitute a waiver of notice of such meeting, except where a Director attends a meeting for the purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at nor the purpose of any special meeting of the Board of Directors needs to be specified in the notice or waiver of notice of such meeting, except that notice shall be given of any proposed amendment to the Bylaws if it is to be adopted at any special meeting or with respect to any other matter where notice is required by statute.
Section 7. A simple majority of the Board of Directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, and the act of a majority of the Directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute, by the Articles of Incorporation or by these Bylaws. If a quorum shall not be present at any meeting of the Board of Directors, the Directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.
Section 8. Unless otherwise restricted by the Articles of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof, as provided in Article V of these Bylaws, may be taken without a meeting; provided that a written consent thereto is signed by all members of the Board or of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board or committee.
Section 9. Directors, as such, shall not be entitled to any stated salary for their services unless voted by the Board of Directors. By resolution of the Board, a fixed sum and expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of the Board of Directors or any meeting of a committee of Directors. No provision of these Bylaws shall be construed to preclude any Director from serving the corporation in any other capacity and receiving compensation therefor.
Section 10. Members of the Board of Directors, or any committee designated by such Board, may participate in a meeting of such Board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section shall constitute presence in person at such meeting.
ARTICLE V
COMMITTEES OF DIRECTORS
Section 1. The Board of Directors may, by resolution passed by a majority of the entire Board, designate one or more committees, including, if it shall so determine, an Executive Committee. Each such committee shall consist of two or more of the Directors of the corporation, which shall have and may exercise such of the powers of the Board of Directors in the management of the business and affairs of the corporation as may be provided in this Article and may authorize the seal of the corporation to be affixed to all papers which may require it. The Board of Directors may designate one or more Directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of such committee. Such committee or committees shall have such name or names and such authority as may be determined from time to time by resolution adopted by the Board of Directors.
Section 2. In the event the Board of Directors shall, pursuant to
Section 1 of this Article, designate an Executive Committee to have and exercise
the full powers of the Board of Directors, such power shall extend to the full
limit of the powers of the entire Board of Directors, except that no committee
of Directors shall have or exercise any of the following powers: amend the
Articles of Incorporation of the corporation; undertake any actions toward
merger or consolidation of the corporation; recommend the lease, sale or
exchange of all or substantially all of the assets of the corporation; amend
these Bylaws; declare any dividend; or authorize the issuance of any of the
stock of the corporation.
Section 3. Each committee of Directors shall keep regular minutes of its proceedings and report same to the Board of Directors when required.
Section 4. Members of special or standing committees may be allowed compensation for attending committee meetings, if the Board shall so determine.
ARTICLE VI
NOTICE
Section 1. Whenever, under the provisions of the statutes, the Articles of Incorporation or these Bylaws, notice is required to be given to any Directors, member of any committee or shareholders, such notice shall be in writing and shall be delivered personally or mailed to such Director, member or shareholder or, in the case of a Director or a member of any committee, may be delivered in person or given orally by telephone. If mailed, notice to a Director, member of a committee or shareholder shall be deemed to be given when deposited in the United States mail in a sealed envelope, with postage thereon prepaid, addressed, in the case of a shareholder, to the shareholder at the shareholder's address as it appears on the records of the corporation or, in the case of a Director or a member of a committee, to such person at his/her business address. If sent by telegraph, notice to a Director or member of a committee shall be deemed to be given when the telegram, so addressed, is delivered to the telegraph company.
Section 2. Whenever any notice is required to be given under the provisions of the statutes, the Articles of Incorporation or these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.
ARTICLE VII
OFFICERS
Section 1. The officers of the corporation shall be a President, one or more Vice Presidents, any one or more of which may be designated Executive Vice President or Senior Vice President, a Secretary and a Treasurer. The Board of Directors may appoint such other officers and agents, including Assistant Vice Presidents, Assistant Secretaries and Assistant Treasurers, as it shall deem necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined by the Board. Any two or more offices may be held by the same person. The President shall be elected from among the Directors. With that exception, none of the other officers need be a Director, and none of the officers need be a shareholder of the corporation.
Section 2. The officers of the corporation shall be elected annually by the Board of Directors at its first regular meeting held after the Annual Meeting of Shareholders or as soon thereafter as conveniently possible. Each officer shall hold office until his/her successor shall have been chosen and shall have qualified, or until his/her death or the effective date of his/her resignation or removal, or until he/she shall cease to be a Director in the case of the President.
Section 3. Any officer or agent elected or appointed by the Board of Directors may be removed without cause by affirmative vote of a majority of the Board of Directors whenever, in its judgment, the best interests of the corporation shall be served thereby, but such removal shall be without prejudice to the contractual rights, if any, of the person so removed. Any officer may resign at any time by giving written notice to the corporation. Any such resignation shall take effect on the date of receipt of such notice or at any later time specified therein, and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.
Section 4. Any vacancy occurring in any office of the corporation by death, resignation, removal or otherwise may be filled by the Board of Directors for the unexpired portion of the term.
Section 5. The salaries of all officers and agents of the corporation shall be fixed by the Board of Directors or pursuant to its direction, and no officer shall be prevented from receiving such salary by reason of his/her also being a Director.
Section 6. The President shall be the chief executive officer of the corporation and subject to the control of the Board of Directors, shall generally supervise and control the business and affairs of the corporation. The President shall preside at all meetings of the Board of Directors and the shareholders. He/She shall have the power to appoint and remove subordinate officers, agents and employees, except those elected or appointed by the Board of Directors. The President shall keep the Board of Directors and the Executive Committee fully informed and shall consult with them concerning the business of the corporation. The President may sign, with the Secretary or any other officer of the corporation thereunto authorized by the Board of Directors, certificates for shares of the corporation and any deeds, bonds, mortgages, contracts, checks, notes, drafts or other instruments which the Board of Directors has authorized to be executed, except in cases where the signing and execution thereof has been expressly delegated by these Bylaws or by the Board of Directors to some other officer or agent of the corporation, or shall be required by law to be otherwise executed. The President shall vote, or give a proxy to any other officer of the corporation to vote, all shares of stock of any other corporation standing in the name of the corporation and, in general, shall perform all other duties incident to the office of President and such other duties as may be prescribed by the Board of Directors or the Executive Committee from time to time.
Section 7. In the absence of the President, or in the event of his/her inability or refusal to act, the Executive Vice President (or, in the event there shall be no Vice President designated Executive Vice President, any Vice President designated by the Board) shall perform the duties and exercise the powers of the President. The Vice Presidents shall perform such other duties as from time to time may be assigned to them by the President, the Board of Directors or the Executive Committee.
Section 8. The Secretary shall: (a) keep the minutes of the meetings of the shareholders, the Board of Directors and the committees of Directors; (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) be custodian of the corporate records and of the seal of the corporation, and see that the seal is affixed to all certificates for shares or a facsimile thereof is affixed to all certificates for shares prior to the issuance thereof and to all documents, the execution of which on behalf of the corporation under its seal is duly authorized in accordance with the provisions of these Bylaws; (d) keep or cause to be kept a register of the post office address of each shareholder as furnished by each shareholder; (e) sign, with the President, certificates for shares of the corporation, the issuance of which shall have been authorized by resolution of the Board of Directors; (f) have general charge of the stock transfer books of the corporation; and (g) in general, perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned by the President, the Board of Directors or the Executive Committee.
Section 9. If required by the Board of Directors, the Treasurer shall give a bond for the faithful discharge of his/her duties in such sum and with such surety or sureties as the Board of Directors shall determine. The Treasurer shall: (a) have charge and custody of and be responsible for all funds and securities of the corporation; (b) receive and give receipts for monies due and payable to the corporation from any source whatsoever and deposit all such monies in the name of the corporation in such banks, trust companies or other depositories as shall be selected in accordance with the provisions of these Bylaws; (c) prepare or cause to be prepared, for submission at each regular meeting of the Directors, at each annual meeting of the shareholders and at such other times as may be required by the Directors, the President or the Executive Committee, a statement of financial condition of the corporation in such detail as may be required; and (d) in general, perform all of the duties incident to the office of Treasurer and such other duties as from time to time may be assigned by the President, Board of Directors or Executive Committee.
Section 10. The Assistant Secretaries and Assistant Treasurers shall, in general, perform such duties as shall be assigned to them by the Secretary or the Treasurer, respectively, or by the President, Board of Directors or Executive Committee. The Assistant Secretaries and Assistant Treasurers shall, in the absence of the Secretary or Treasurer, respectively, perform all functions and duties which such absent officers may delegate, but such delegation shall not relieve the absent officer from the responsibilities and liabilities of his/her office. The Assistant Treasurers shall, if required by the Board of Directors, give bonds for the faithful discharge of their duties in such sums and with such sureties as the Board of Directors shall determine.
ARTICLE VIII
CONTRACTS, CHECKS AND DEPOSITS
Section 1. Subject to the provisions of these Bylaws, the Board of Directors may authorize any officer or officers and agent or agents to enter into any contract or execute and deliver any such instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances.
Section 2. All checks, demands, drafts or other orders for payment of money, notes or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers or such agent or agents of the corporation and in such manner as may be determined by the Board of Directors.
Section 3. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies or other depositories as the Board of Directors may select.
ARTICLE IX
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation may be declared by the Board of Directors at any regular or special meeting pursuant to law. Dividends may be paid in cash, in property or in shares of capital stock.
Section 2. Before payment of any dividends, there may be set aside out of any funds the corporation available for dividends such sum or sums as the Directors may from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, for equalizing dividends, for repairing or maintaining any property of the corporation or for such other purpose as the Directors deem conducive to the best interests of the corporation, and the Directors may modify or abolish any such reserve in the manner in which it was created.
ARTICLE X
INDEMNIFICATION
Section 1. The Corporation shall indemnify each person who is or was a director, officer, employee or agent of the Corporation (including the heirs, executors, administrators or estate of such person) or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise to the full extent permitted under the Nevada Revised Statutes or any successor law or laws of the Code. Any such indemnification shall be made in accordance with the provisions of the Nevada Revised Statutes.
Section 2. The Corporation may purchase and maintain insurance, at its expense, to protect itself and any of the above-referenced parties against any liability, cost, payment or expense, whether or not the Corporation would have the power to indemnify such person against such liability.
ARTICLE XI
FISCAL YEAR
The fiscal year of the corporation shall be set by resolution of the Board of Directors.
ARTICLE XII
AMENDMENTS TO BYLAWS
At any regular meeting of the Board of Directors or at any meeting of the Board of Directors specially called for said purpose, with each Director having been mailed, along with notice of said meeting, a copy of the proposed changes in the Bylaws, these Bylaws may be altered, amended or repealed, in whole or in part, and new Bylaws may be adopted in accordance with the copy of the proposed changes mailed to the Directors by vote of a majority of said Directors.
I HEREBY CERTIFY that the foregoing Bylaws were duly adopted by the Board of Directors of the corporation on November ___, 2005.
s/ Craig Burton Craig Burton Secretary |
(CORPORATE SEAL)
EXHIBIT 4.1
[FRONT OF CERTIFICATE]
NUMBER SHARES
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
NB TELECOM, INC.
The Corporation is authorized to issue 110,000,000 total Shares 100,000,000 Share of Common $.0001 par 10,000,000 Shares of Preferred $.0001 par
THIS CERTIFIES THAT __________________________________________ IS THE OWNER OF ___________________ SHARES OF THE CAPITAL STOCK OF TB TELECOM, INC., WHICH SHARES ARE FULLY PAID, NON-ASSESSABLE AND TRANSFERABLE ONLY ON THE BOOKS OF THE CORPORATION BY THE HOLDER HEREOF IN PERSON OR BY DULY AUTHORIZED ATTORNEY, ON SURRENDER OF THIS CERTIFICATE PROPERLY ENDORSED.
IN WITNESS WHEREOF, THE DULY AUTHORIZED OFFICERS OF THIS CORPORATION HAVE
HEREUNTO SUBSCRIBED THEIR NAMES AND CAUSED THE CORPORATE SEAL TO BE HERETO
AFFIXED AT _________________________ THIS _________________________ DAY OF
______________________, A.D. _______________
---------------------------- -----------------------------
Secretary President
Shares $.0001 Each.
Par Value
|
[BACK OF CERTIFICATE]
FOR VALUE RECEIVED, _____ HEREBY SELL, ASSIGN AND TRANSFER UNTO __________________ _________________________________ SHARES OF THE CAPITAL STOCK REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY IRREVOCABLY CONSTITUTE, AND APPOINT __________________________ TO TRANSFER THE SAID STOCK ON THE BOOKS OF THE WITHIN NAMED CORPORATION WITH FULL POWER OF SUBSTITUTION IN THE PREMISES.
DATED _____________________, 20_____
IN PRESENCE OF ______________________________ ______________________________
NOTICE. THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THIS CERTIFICATE, IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.
CERTIFICATE
FOR
SHARES
OF THE
CAPITAL STOCK
ISSUED TO
DATED
{A0032081.DOC}
ROBISON, HILL & CO. CERTIFIED PUBLIC ACCOUNTANTS
A PROFESSIONAL CORPORATION
Brent M. Davies, CPA
David O. Seal, CPA
W. Dale Westenskow, CPA
Barry D. Loveless, CPA
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated March 22, 2006 accompanying the financial statements of NB Payphones Ltd. which are included in this Form SB-2 registration statement. We consent to the inclusion in the registration statement of the aforementioned reports.
We also consent to the reference to us under the caption "Experts" in the SB
/s/ Robison, Hill & Co. ----------------------- Robison, Hill & Co. Certified Public Accountants Salt Lake City, Utah May 11, 2006 |
(FORM OF LETTER TO SHAREHOLDERS)
EXHIBIT 99.1
SPINOFF AND RIGHTS OFFERING
STOCKHOLDERS OF USIP.COM, INC.
Dear Stockholder:
This notice is being sent by USIP.Com, Inc. ("USIP") to all holders of record ("Recordholders") of shares of its common stock, par value $.0001 per share (the "USIP Shares"), at the close of business on _______________________, 2006 (the "Record Date"), in connection with the spin-off of the shares of the $.0001 par value common stock of NB Telecom, Inc. ("Common Stock") and in connection with a distribution in a rights offering (the "Rights Offering") of transferable subscription rights (the "Rights") to subscribe for and purchase shares of the Common Stock of NB Telecom, Inc. (the "Shares"). The Rights are described in NB Telecom, Inc.'s Prospectus dated _______________________, 2006 (the "Prospectus").
The Shares are being distributed as a spinoff of all the outstanding common stock of NB Telecom, Inc., a wholly owned subsidiary of USIP, in accordance with the terms as described in the attached Prospectus. You are not required to make any payment in connection with this spinoff.
In the Rights Offering, NB Telecom, Inc. is offering an aggregate of 6,000,000 Shares, as described in the Prospectus.
As described in the accompanying Prospectus in the spin-off, you will receive one share of NB Telecom, Inc. Common stock for each share of USIP common stock currently owned. In addition, you will receive a right to receive .128666 shares of the common stock of NB Telecom for each share of USIP common stock you own of record as of the close of business on the Record Date.
The Rights will expire, if not exercised, at 5:00 p.m., New York City time on December 31, 2007, unless extended in the sole discretion of NB Telecom Inc.'s management (as it may be extended, the "Expiration Date").
Each whole Right will allow you to subscribe for one Share at the cash price of $.10 per Share (the "Subscription Price").
The Rights will be evidenced by Rights certificates (the "Subscription Rights Certificates"), which will be transferable until the close of business on the last trading day preceding the Expiration Date, at which time they will cease to have value.
Enclosed are copies of the following documents:
1. Prospectus;
2. Shares of common stock of NB Telecom, Inc.
3. Subscription Rights Certificate;
4. Instructions as to Use of NB Telecom, Inc.'s Subscription Rights Certificates; and
5. A return envelope addressed to the Company.
Your prompt action is requested. To exercise Rights, you must complete properly and sign the Subscription Rights Certificate and forward it, with payment of the Subscription Price in full for each Share subscribed to NB Telecom, Inc., as indicated in the Prospectus in the Sections entitled "The Rights Offering--Method of Exercising Rights" and "The Rights Offering--Payment Method". The Company must receive the Subscription Rights Certificate with payment in full of the Subscription Price, including final clearance of any checks, prior to 5:00 p.m., New York City time, on the Expiration Date. FAILURE TO RETURN THE PROPERLY COMPLETED SUBSCRIPTION RIGHTS CERTIFICATE WITH THE CORRECT PAYMENT WILL RESULT IN YOUR NOT BEING ABLE TO EXERCISE YOUR RIGHTS. A Rights holder cannot revoke the exercise of its Rights.
Additional copies of the enclosed materials may be obtained from USIP by writing to USIP.Com, Inc., P. O. Box 2711, Liverpool, New York 13089. The telephone number is (315) 451-7515.
Very truly yours,
USIP.Com, Inc.
By:_______________________________
Craig Burton, President
(FORM OF LETTER TO BROKERS)
EXHIBIT 99.2
NB TELECOM, INC.
COMMON STOCK, PAR VALUE $.0001 PER SHARE
OFFERED PURSUANT TO RIGHTS DISTRIBUTED TO RECORD
STOCKHOLDERS OF NB TELECOM, INC.
To SECURITIES DEALERS, COMMERCIAL BANKS,
TRUST COMPANIES AND OTHER NOMINEES:
This letter is being distributed to securities dealers, commercial banks, trust companies and other nominees in connection with the offering (the "Rights Offering") by NB Telecom, Inc. ("NBT) of shares ("Shares") of common stock, par value $.0001 per share, of NBT (the "Common Stock") pursuant to transferable subscription rights (the "Rights") distributed to all holders of record ("Recordholders") of shares of Common Stock of USIP.Com, Inc. at the close of business on _______________________, 2006 (the "Record Date").
In the Rights Offering, NBT is offering an aggregate of 6,000,000 Shares, as described in the Prospectus.
The Rights will expire, if not exercised, at 5:00 p.m., New York City time, on December 31, 2007, unless extended in the sole discretion of USIP.Com (as it may be extended, the "Expiration Date").
Each Right allows the holder thereof to subscribe for one Share at the cash price of $.10 per Share (the "Subscription Price").
The Rights are evidenced by a transferable Rights certificate (a "Subscription Rights Certificate") registered in your name or the name of your nominee. Each beneficial owner of shares of Common Stock registered in your name or the name of your nominee is entitled to .12866 of a Right for each share of Common Stock owned by such beneficial owner as of the close of business on the Record Date. The Rights will be transferable until the close of business on the last trading day preceding the Expiration Date, at which time they will cease to have value.
We are asking persons who hold shares of Common Stock beneficially and who have received the Rights distributable with respect to those shares through a broker, dealer, commercial bank, trust company or other nominee, as well as persons who hold certificates of Common Stock directly and prefer to have such institutions effect transactions relating to the Rights on their behalf, to contact the appropriate institution or nominee and request it to effect the transactions for them. In addition, we are asking beneficial owners who wish to obtain a separate Subscription Rights Certificate to contact the appropriate nominee as soon as possible and request that a separate Subscription Rights Certificate be issued.
Please take prompt action to notify all beneficial owners of Common Stock for which or whom you act as nominee as to the Rights Offering and the procedures and deadlines that must be followed to exercise their Rights.
All commissions, fees and other expenses (including brokerage commissions and transfer taxes) incurred in connection with the exercise of the Rights, other than fees and expenses of the Transfer Agent, will be for the account of the holder of the Rights, and none of such commissions, fees or expenses will be paid by NBT.
Enclosed are copies of the following documents:
1. Prospectus;
2. Instruction as to Use of NB Telecom, Inc. Subscription Rights Certificates.
3. A form of letter that may be sent to your clients for whose accounts you hold shares of Common Stock registered in your name or the name of your nominee, with an attached form of instruction;
4. A return envelope addressed to the Company.
Your prompt action is requested. To exercise Rights, you should deliver the
properly completed and signed Subscription Rights Certificate, with payment of
the Subscription Price in full for each Share subscribed for, to the Company, as
indicated in the Prospectus. The Company must receive the Subscription Rights
Certificate with payment of the Subscription Price, including final clearance of
any checks, prior to 5:00 p.m., New York City time, on the Expiration Date.
FAILURE TO RETURN THE PROPERLY COMPLETED SUBSCRIPTION RIGHTS CERTIFICATE WITH
THE CORRECT PAYMENT WILL RESULT IN YOUR NOT BEING ABLE TO EXERCISE YOUR RIGHTS.
A Rights holder cannot revoke the exercise of its Rights. Rights not exercised
or sold prior to the Expiration Date will expire without value and will be made
available for purchase by other shareholders of Record on the Rights Offering
Record Date "The Rights Offering--Intended Purchases; Backstop Agreement".
Additional copies of the enclosed materials may be obtained from the Company.
Very truly yours,
USIP.Com, Inc.
By:_______________________________
Craig Burton, President
NOTHING IN THE PROSPECTUS OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY PERSON AS AN AGENT OF NBT, OR ANY OTHER PERSON MAKING OR DEEMED TO BE MAKING OFFERS OF THE SECURITIES ISSUABLE UPON VALID EXERCISE OF THE RIGHTS, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM WITH RESPECT TO THE OFFERING EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS.
(FORM OF RIGHTS CERTIFICATE)
EXHIBIT 99.3
RIGHTS CERTIFICATE NO.: NUMBER OF RIGHTS:
THE TERMS AND CONDITIONS OF THE RIGHTS OFFERING ARE SET FORTH IN THE COMPANY'S PROSPECTUS DATED ___________________________, 2006 (THE "PROSPECTUS") AND ARE INCORPORATED HEREIN BY REFERENCE. COPIES OF THE PROSPECTUS ARE AVAILABLE UPON REQUEST FROM NB TELECOM, INC...
NB TELECOM, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
CUSIP NO.: _________
SUBSCRIPTION RIGHTS CERTIFICATE
EVIDENCING SUBSCRIPTION RIGHTS TO PURCHASE SHARES OF COMMON STOCK OF
NB TELECOM, INC.
SUBSCRIPTION PRICE: $.10 PER SHARE
THE SUBSCRIPTION RIGHTS WILL EXPIRE IF NOT EXERCISED ON OR BEFORE 5:00 P.M., NEW YORK CITY TIME, ON DECEMBER 31, 2007, UNLESS EXTENDED BY THE COMPANY.
REGISTERED OWNER:
THIS CERTIFIES THAT the registered owner whose name is inscribed hereon is the owner of the number of subscription rights ("Rights") set forth above. Each whole Right entitles the holder thereof, or its assigns, to subscribe for and purchase one share of common stock (each, a "Share"), with a par value of $.0001 per share, of NB Telecom, Inc., a Nevada corporation, (the "Common Stock"), at a subscription price of $.10 per Share, pursuant to a rights offering (the "Rights Offering"), on the terms and subject to the conditions set forth in the Prospectus and the "Instructions accompanying this Subscription Rights Certificate. The Rights represented by this Subscription Rights Certificate may be exercised by completing Form 1 and all other appropriate forms on the reverse side hereof and by returning the full payment of the subscription price for each Share as to which the Rights evidenced by this Subscription Rights Certificate are exercised in accordance with the "Instructions as to Use of NB Telecom, Inc. Subscription Rights Certificates" that accompanies this Subscription Rights Certificate. The Rights evidenced by this Subscription Rights Certificate may also be transferred or sold by completing Form 2 on the reverse side hereof in accordance with the "Instructions as to Use of NB Telecom, Inc. Subscription Rights Certificates" that accompanies this Subscription Rights Certificate.
Transferable upon the books of NB Telecom, Inc. in person or by duly authorized attorney upon surrender of this Subscription Rights Certificate property endorsed. This Subscription Rights Certificate is not valid unless countersigned by the transfer agent and registered by the registrar.
Witness the seal of NB Telecom, Inc. and the signature of its duly authorized officers.
Dated: ______________________, 2006
PAUL KELLY CRAIG BURTON
CHIEF EXECUTIVE OFFICER, PRESIDENT AND DIRECTOR SECRETARY AND DIRECTOR
COUNTERSIGNED AND REGISTERED:
-----------------------------------------------
as TRANSFER AGENT AND REGISTRAR
|
By:
AUTHORIZED SIGNATURE
DELIVERY OPTIONS FOR SUBSCRIPTION RIGHTS CERTIFICATE
BY MAIL OR BY HAND OR OVERNIGHT COURIER:
NB Telecom, Inc.
106 May Drive
Saxonburg, PA 16056
Delivery other than in the manner or to the addresses listed above
will not constitute valid delivery.
PLEASE PRINT ALL INFORMATION CLEARLY AND LEGIBLY.
FORM 1--EXERCISE OF SUBSCRIPTION RIGHTS
To subscribe for Shares, please complete lines (a) and (b) and sign under From 3 below.
(a) SUBSCRIPTION:
I apply for ___________________ Shares x $.10 = $______________
(No. of Shares) (Subscription Price) (Payment)
(b) Total Amount of Payment Enclosed = $
METHOD OF PAYMENT (CHECK ONE)
- Check or bank draft drawn on a U.S. bank, or postal, telegraphic or express money order payable to NB Telecom, Inc. Funds paid by an uncertified check may take at least two business days to clear.
- Wire transfer of immediately available funds directly to the following account NB Telecom, Inc.:
Routing Number: 043311497
Account Number: 20302209
FORM 2--SALE OR TRANSFER TO DESIGNATED TRANSFEREE OR THROUGH BANK OR BROKER
To sell or transfer your subscription rights to another person, complete this Form. To sell your subscription rights through your bank or broker, sign below under this Form 2, but leave the rest of this Form 2 blank.
For value received, ___________ of the subscription rights represented by this Subscription Rights Certificate are assigned to:
(Print Full Name of Assignee) (Print Full Address Tax ID or Social Security No. Signature(s)
IMPORTANT: The signature(s) must correspond with the name(s) as printed on the reverse side of this Subscription Rights Certificate in every particular, without alteration or enlargement, or any other change whatsoever.
FORM 3--DELIVERY TO DIFFERENT ADDRESS
If you wish for the Shares underlying your subscription right or a certificate representing unexercised subscription rights to be delivered to an address different from that shown on the face of this Subscription Rights Certificate, please enter the alternate address below and sign under Form 4.
FORM 4--SIGNATURE
TO SUBSCRIBE: I acknowledge that I have received the Prospectus for this Rights Offering and I hereby irrevocably subscribe for the number of Shares indicated above on the terms and conditions specified in the Prospectus.
Signature(s) __________________________________________________________________. IMPORTANT: The signature(s) must correspond with the name(s) as printed on the reverse of this Subscription Rights Certificate in every particular, without alteration or enlargement, or any other change whatsoever.
(FORM OF INSTRUCTIONS FOR RIGHTS CERTIFICATE)
EXHIBIT 99.4
INSTRUCTIONS AS TO USE OF NB TELECOM, INC. SUBSCRIPTION RIGHTS
CERTIFICATES
PLEASE CONSULT NB TELECOM, INC., YOUR BANK
OR BROKER WITH ANY QUESTIONS
The following instructions relate to a rights offering (the "Rights Offering")
by NB Telecom, Inc., a Nevada corporation ("NBT"), to the holders of record (the
"Recordholders") of its common stock, par value $.0001 per share (the "Common
Stock"), as described in NBT's Prospectus dated _______________________, 2006
(the "Prospectus"). Recordholders of Common Stock at the close of business on
_______________________, 2006 (the "Record Date") are receiving transferable
subscription rights (the "Rights") to subscribe for and purchase one share
("Share") of Common Stock. An aggregate of 6,000,000 Shares are being offered by
the Prospectus. Each Recordholder will receive .128666 of a Right for each share
of Common Stock owned of record as of the close of business on the Record Date.
The Rights will expire, if not exercised, at 5:00 p.m., New York City time, on
December 31, 2007, unless extended in the sole discretion of NBT (as it may be
extended, the "Expiration Date"). After the Expiration Date, unexercised Rights
will be null and void, will be made available to other shareholders. NBT will
not be obligated to honor any purported exercise of Rights received after 5:00
p.m., New York City time, on the Expiration Date, regardless of when the
documents relating to such exercise were sent, NBT may extend the Expiration
Date by giving oral or written notice to the Transfer Agent on or before the
Expiration Date, which notice will be followed by a press release issued no
later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date. The Rights will be evidenced by
transferable Rights certificates (the "Subscription Rights Certificates").
Each full Right allows the holder thereof to subscribe for one Share at the cash price of $.10 per Share (the "Subscription Price").
The number of Rights to which you are entitled is printed on the face of your Subscription Rights Certificate. To subscribe for Shares pursuant to the Rights, you must indicate your wishes with regard to the exercise of your Rights by completing the appropriate portions of your Subscription Rights Certificate and returning the certificate to NBT in the envelope provided pursuant to the procedures described in the prospectus.
YOUR SUBSCRIPTION RIGHTS CERTIFICATES OR NOTICE OF GUARANTEED DELIVERY, AND SUBSCRIPTION PRICE PAYMENT, INCLUDING FINAL CLEARANCE OF ANY CHECKS, MUST BE RECEIVED BY NBT, ON OR BEFORE 5:00 P.M., NEW YOUR CITY TIME, ON THE EXPIRATION DATE. ONCE A HOLDER OF RIGHTS HAS EXERCISED ITS RIGHTS, SUCH EXERCISE MAY NOT BE REVOKED. RIGHTS NOT EXERCISED PRIOR TO THE EXPIRATION DATE OF THE RIGHTS OFFERING WILL EXPIRE WITHOUT VALUE.
1. METHOD OF SUBSCRIPTION - EXERCISE OF RIGHTS.
To exercise Rights, complete your Subscription Rights Certificate and send the
properly completed and executed Subscription Rights Certificate evidencing such
Rights, together with payment in full of the Subscription Price for each whole
share subscribed for pursuant to the Rights, to NBT, on or prior to 5:00 p.m.,
New York City time, on the Expiration Date. Payment of the Subscription Price
will be held in a segregated account to be maintained by NBT. All payments must
be made in U.S. dollars for the full whole number of Shares being subscribed for
(a) by check or bank draft drawn upon a U.S. bank or postal, telegraphic or
express money order payable to NB Telecom, Inc., or (b) by wire transfer of
immediately available funds, to the following account.
-----------------------------------------.
Routing Number: 043311497
Account Number: 20302209
(such account, the "Subscription Account"). Any wire transfer should clearly indicate the identity of the subscriber who is paying the Subscription Price by the wire transfer. Payments will be deemed to have been received by NBT only upon (i) clearance of any uncertified check, (ii) receipt by NBT of any certified check or bank draft drawn upon a U.S. bank or of any postal, telegraphic or express money order or (iii) receipt of collected funds in the Subscription Account designated above. If paying by check, bank draft or money order, please reference your Subscription Rights Certificate number on your check, bank draft or money order. If paying by uncertified personal check, please note that the funds paid thereby may take two or more business days to clear. Accordingly, Rights holders who wish to pay the Subscription Price by means of uncertified personal check are urged to make payment sufficiently in advance of the Expiration Date to ensure that such payment is received and clears by such date and are urged to consider payment by means of certified or cashier's check, money order or wire transfer of funds.
The Subscription Rights Certificate and payment of the Subscription Price, (as defined below) must be delivered to NBT by one of the methods described below:
BY MAIL OR BY HAND OR OVERNIGHT COURIER:
NB Telecom, Inc.
106 May Drive
Saxonburg, PA 16056
Telephone Number for Confirmation: (724) 352-7606.
Delivery to any address or by a method other than those set forth above does not constitute valid delivery. If you have any questions or require additional copies of relevant documents please contact NBT.
By making arrangements with your bank or broker for the delivery of funds on your behalf you may also request such bank or broker to exercise the Subscription Rights Certificate on your behalf.
If you exercise less than all of the Rights evidenced by your Subscription Rights Certificate by so indicating in Form 1 of your Subscription Rights Certificate, NBT, if you so request, will issue to you a new Subscription Rights Certificate evidencing the unexercised Rights. A new Subscription Rights Certificate will be issued to you upon the partial exercise of Rights only if NBT receives a properly endorsed Subscription Rights Certificate no later than 5:00 p.m., New York City time, on December 27, 2006, the third business day prior to the Expiration Date. After such date no new Subscription Rights Certificates will be issued. Accordingly, if after such date you exercise less than all of your Rights, you will lose the power to exercise your remaining Rights. All deliveries of newly issued Subscription Rights Certificates will be at your own risk.
If you do not indicate the number of Rights being exercised, if you do not forward full payment of the total Subscription Price payment for the number of Rights that you indicate are being exercised, or if your aggregate Subscription Price payment is greater than the amount you owe for your subscription, NBT will attempt to contact you to correct the discrepancy. If, however, NBT is unable to contact you, or you do not provide the requested information, you will be deemed not to have exercised your Rights. NBT will not be liable for any failure to contact you.
2. ISSUANCE OF THE SHARES.
As soon as practicable after the Expiration Date and the valid exercise of Rights, NBT will mail to each exercising Rights holder certificates representing shares purchased pursuant to the Rights. See "The Rights Offering - Subscription Privilege" in the Prospectus. The foregoing deliveries and payments will be made to the address shown on the face of your Subscription Rights Certificate unless you provide instructions to the contrary in Form 3 of your Subscription Rights Certificate.
3. SALE OR TRANSFER OF RIGHTS.
A. SALE OF RIGHTS THROUGH A BANK OR BROKER. To sell Rights evidenced by a
Subscription Rights Certificate through your bank or broker, sign Form 2 of your
Subscription Rights Certificate leaving the rest of the form blank (your broker
will add the buyer's name later). Your Subscription Rights Certificate should be
delivered to your bank or broker in ample time for it to be exercised. If Form 2
is completed without designating a transferee, NBT may thereafter treat the
bearer of the Subscription Rights Certificate as the absolute owner of all of
the Rights evidenced by such Subscription Rights Certificate for all purposes,
and NBT shall not be affected by any notice to the contrary. Because your bank
or broker cannot issue Subscription Rights Certificates, if you wish to sell
less than all of the Rights evidenced by a Subscription Rights Certificate,
either you or your bank or broker must instruct NBT as to the action to be taken
with respect to the Rights not sold, or you or your bank or broker must first
have your Subscription Rights Certificate divided into Subscription Rights
Certificates of appropriate denominations by following the instructions in
Section 4 of these instructions. The Subscription Rights Certificates evidencing
the number of Rights you intend to sell can then be transferred by your bank or
broker in accordance with the instructions in this Section 3(a).
B TRANSFER OF RIGHTS TO A DESIGNATED TRANSFEREE. To transfer your Rights to a transferee other than a bank or broker, you must complete Form 2 in its entirety, execute the Subscription Rights Certificate. A Subscription Rights Certificate that has been properly transferred in its entirety may be exercised by a new holder without having a new Subscription Rights Certificate issued. In order to exercise, or otherwise take action with respect to, such a transferred Subscription Rights Certificate, the new holder should deliver the Subscription Rights Certificate, together with payment of the applicable Subscription Price and complete separate instructions signed by the new holder, to NBT in ample time to permit NBT to take the desired action. Because only NBT can issue Subscription Rights Certificates, if you wish to transfer less than all of the Rights evidenced by your Subscription Rights Certificate to a designated transferee, you must instruct NBT as to the action to be taken with respect to the Rights not sold or transferred, or you must divide your Subscription Rights Certificate into Subscription Rights Certificates of appropriate smaller denominations by following the instructions in Section 4 below. The Subscription Rights Certificate evidencing the number of Rights you intend to transfer can then be transferred by following the instructions in this Section 3(b).
C. Rights holders wishing to transfer a portion of their Rights should allow a
sufficient amount of time prior to the Expiration Date for (i) the transfer
instructions to be received and processed by NBT, (ii) a new Subscription Rights
Certificate to be issued and transmitted to the transferee or transferees with
respect to transferred Rights and to the transferor with respect to retained
Rights, if any, and (iii) the Rights evidenced by such new subscription Rights
Certificates to be exercised or sold by the recipients thereof. NBT will
facilitate transfers of Subscription Rights Certificates only until 5:00 p.m.,
New York City time, on December 27, 2007, the third business day before the
Expiration Date, or in the case of sales to be made by NBT pursuant to Section
3(c), until 11:00 a.m., New York City time, on December 25, 2007, the fifth
business day before the Expiration Date.
D. NBT shall not have any liability to a transferee or transferor of Rights if Subscription Rights Certificates are not received in time for exercise or sale prior to the Expiration Date.
E. COMMISSIONS, FEES AND EXPENSES. NBT will pay all fees and expenses of the Transfer Agent and has also agreed to indemnify the Transfer Agent from certain liabilities that they may incur in connection with the rights offering. All commissions, fees and other expenses (including brokerage commissions and transfer taxes) incurred in connection with the purchase, sale or exercise of Rights will be for the account of the transferor of the Rights, and none of such commissions, fees or expenses will be paid by NBT.
4. DIVISION OF SUBSCRIPTION RIGHTS CERTIFICATE INTO SMALLER DENOMINATIONS.
To have a Subscription Rights Certificate divided into smaller denominations, send your Subscription Rights Certificate, together with complete separate instructions (including specification of the denominations into which you wish your Rights to be divided) signed by you, to NBT, allowing a sufficient amount of time for new Subscription Rights Certificates to be issued and returned so that they can be used prior to the Expiration Date. Alternatively, you may ask a bank or broker to effect such actions on your behalf. NBT will facilitate subdivisions of Subscription Rights Certificates only until 5:00 p.m., New York City time, on December 27, 2007, three business days prior to the Expiration Date. As a result of delays in the mail, the time of the transmittal, the necessary processing time and other factors, you or your transferee may not receive such new Subscription Rights Certificates in time to enable the Rights holder to complete a sale or exercise by the Expiration Date. NBT will not be liable to either a transferor for any such delays.
5. EXECUTION.
A. EXECUTION BY REGISTERED HOLDER. The signature on the Subscription Rights Certificate must correspond with the name of the registered holder exactly as it appears on the face of the Subscription Rights Certificate without any alteration, enlargement or change whatsoever. Persons who sign the Subscription Rights Certificate in a representative or other fiduciary capacity must indicate their capacity when signing and, unless waived by NBT in its sole and absolute discretion, must present to NBT satisfactory evidence of their authority to so act.
B. EXECUTION BY PERSON OTHER THAN REGISTERED HOLDER. If the Subscription Rights Certificate is executed by a person other than the holder named on the face of the Subscription Rights Certificate, proper evidence of authority of the person executing the Subscription Rights Certificate must accompany the same unless, for good cause, NBT dispenses with proof of authority.
6. METHOD OF DELIVERY.
The method of delivery of Subscription Rights Certificates and payment of the Subscription Price will be at the election and risk of the Rights holder, but, if sent by mail, it is recommended that such certificates and payments be sent by registered mail, properly insured, with return receipt requested, and that a sufficient number of days be allowed to ensure delivery to NBT and the clearance of payment prior to 5:00 p.m., New York City time, on the Expiration Date. Because uncertified personal checks may take two or more business days to clear, you are strongly urged to pay, or arrange for payment, by means of certified or cashier's check, money order or wire transfer of funds.
7. SPECIAL PROVISIONS RELATING TO THE DELIVERY OF RIGHTS THROUGH THE DEPOSITORY TRUST COMPANY.
In the case of Rights that are held of record through the Depository Trust Company (the "Book-Entry Transfer Facility"), exercises of the Rights may be effected by instructing the Book-Entry Transfer Facility to transfer Rights from the Book-Entry Transfer Facility account of such holder to the Book-Entry Transfer Facility account of NBT, together with certification as to the aggregate number of Rights exercised and the number of Shares thereby subscribed for pursuant to the Rights by each beneficial owner of Rights on whose behalf such nominee is acting, and payment of the Subscription Price for each Share subscribed for pursuant to the Rights.
(FORM OF LETTER TO CLIENTS)
EXHIBIT 99.5
NB TELECOM, INC.
SHARES OF COMMON STOCK, PAR VALUE $.001 PER SHARE
OFFERED PURSUANT TO RIGHTS DISTRIBUTED TO RECORD
STOCKHOLDERS OF NB TELECOM, INC.
_________________________, 2006
TO OUR CLIENTS:
Enclosed for your consideration are a Prospectus, dated _______________________, 2006 (the "Prospectus"), and the "Instructions as to the Use of NB Telecom, Inc. Subscription Rights Certificates" relating to and the offering (the "Rights Offering") by NB Telecom, Inc. ("NBT") of shares ("Shares") of common stock, par value $.0001 per share, of NB Telecom, Inc. (the "Common Stock"), pursuant to transferable subscription rights (the "Rights") distributed to all holders of record of shares of Common Stock at the close of business on __________________, 2006 (the "Record Date"). The Rights are described in NBT's Prospectus.
In the Rights Offering, NBT is offering an aggregate of 6,000,000 Shares, as described in the Prospectus.
The Rights will expire, if not exercised, at 5:00 p.m., New York City time, on December 31, 2007, unless extended in the sole discretion of NBT (as it may be extended, the "Expiration Date").
As described in the accompanying Prospectus, you will receive .128666 of a Right for each share of Common Stock carried by us in your account as of the Record Date.
Each whole Right will allow you to subscribe for one Share at the cash price of $.10 per share (the "Subscription Price").
The Rights will be evidenced by transferable Rights certificates, and will be null and void at the close of business on the Expiration Date. The Rights will be transferable until the close of business on the last trading day preceding the Expiration Date.
THE MATERIALS ENCLOSED ARE BEING FORWARDED TO YOU AS THE BENEFICIAL OWNER OF COMMON STOCK CARRIED BY US IN YOUR ACCOUNT BUT NOT REGISTERED IN YOUR NAME. EXERCISES AND SALES OF RIGHTS MAY BE MADE ONLY BY US AS THE RECORD OWNER AND PURSUANT TO YOUR INSTRUCTIONS. Accordingly, we request instructions as to whether you wish to elect to subscribe for any Shares to which you are entitled pursuant to the terms and subject to the conditions set forth in the enclosed Prospectus. However, we urge you to read the Prospectus and other enclosed materials carefully before instructing us to exercise your Rights.
Your instructions to us should be forwarded as promptly as possible in order to permit us to exercise Rights on your behalf in accordance with the provisions of the Rights Offering. The Rights Offering will expire at 5:00 p.m., New York City time, on the Expiration Date. Once you have exercised your Rights, such exercise may not be revoked.
If you wish to have us, on your behalf, exercise the Rights for any Shares to which you are entitled, please so instruct us by completing, executing and returning to us the instruction form on the reverse side of this letter.
ANY QUESTIONS OR REQUESTS FOR ASSISTANCE CONCERNING THE RIGHTS OFFERING SHOULD BE DIRECTED TO NB TELECOM, INC., AT 106 MAY DRIVE, SAXONBURG, PA 16056. NBT TELECOM'S TELEPHONE NUMBER IS (724) 352-7606.
BENEFICIAL OWNER ELECTION FORM
INSTRUCTIONS
The undersigned acknowledge(s) receipt of your letter and the enclosed materials referred to therein relating to the offering of Shares (as defined in the Prospectus) of NB Telecom, Inc. ("NBT").
This form will instruct you whether to exercise rights to purchase Shares distributed with respect to the shares of NBT's common stock held by you for the account of the undersigned, pursuant to the terms and subject to the conditions set forth in the Prospectus and the related "Instructions as to Use of NBT's. Subscription Rights Certificates."
Box 1. Please DO NOT EXERCISE RIGHTS for Shares.
Box 2. Please EXERCISE RIGHTS for Shares as set forth below.
NUMBER OF SUBSCRIPTION PRICE PAYMENT
SHARES
$.10 $__________________
|
Box 3. Payment in the following amount is enclosed $_________________.
Box 4. Please deduct payment from the following account maintained by you as follows:
Type of Account Account No.
Amount to be deducted: $________________
Signature(s)
Box 5. Please sell ______________ of my Rights.
Box 6. Please attempt to have the transfer agent sell ___________ of my Rights.
Signature(s):
Please type or print name(s) below:
Dated: _____________________, 2006
(FORM OF NOMINEE HOLDER CERTIFICATE FORM)
EXHIBIT 99.6
NOMINEE HOLDER CERTIFICATION
FOR NB TELECOM, INC. RIGHTS OFFERING
The undersigned hereby certifies that it is a broker-dealer registered with the
Securities and Exchange Commission, a commercial bank or trust company, a
securities depository or participant therein, or a nominee holding of record of
_______ shares of common stock of NB Telecom, Inc. (the "Company") on behalf of
_____________ beneficial owners as of the close of business on
[________________], 2006, the record date for the rights offering described in
the Prospectus dated [________________], 2006 (the "Prospectus"). The
undersigned has received a copy of the Prospectus. As stated in the Prospectus,
one subscription right was distributed for every share the Company's Common
Stock held of record as of the close of business on the record date.
The undersigned, on behalf of the beneficial owners of _____________ subscription rights, is subscribing for _________________ shares of the Company's Common Stock at $________________ per share pursuant to the exercise of subscription rights pursuant to the terms described in the Prospectus. Accordingly, the undersigned is hereby transmitting the exercise price of $-------------------.
The undersigned further certifies that each subscriber for whose account the undersigned is subscribing for shares of the Company's Common Stock is a bona fide beneficial owner of the Company's Common Stock as of the Record Date and that such beneficial ownership is reflected on the undersigned's records. The undersigned agrees to provide the Company or its designee with such additional information as the Company deems reasonably necessary to verify the foregoing.