U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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SIMPLICIA TELECOMMUNICATIONS, INC.
(Name of Small Business Issuer in Its Charter)
Delaware 4812
(State or Other Jurisdiction of (Primary Standard Industrial
Incorporation or Organization) Classification Code)
Pending
(I.R.S. Employer
Identification Number)
Simplicia Telecommunications Inc.
280 Fairways Bay NW
Airdrie, Alberta
T4B 2P5
(403) 615-5609
(Address, Including Zip Code, and Telephone Number, including Area Code, of
Registrant's Executive Offices)
Joseph Sierchio, Esq.
Sierchio & Company, LLP.
150 East 58th Street
New York, New York 10155
(Name, Address, Including Zip Code, and Telephone Number, including Area Code,
of Agent for Service)
Copies of all correspondence to:
Joseph Sierchio, Esq.
Sierchio & Company, LLP.
150 East 58th Street
New York, New York 10155
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APPROXIMATE DATE OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this registration statement becomes effective.
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If this Form is filed to register additional securities for an offering pursuant
to Rule 426(b) under the Securities Act of 1933, 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 of 1933, check the following box and list the
Securities Act Registration Statement number of the earlier Registration
Statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act of 1933, check the following box and list the
Securities Act Registration Statement number of the earlier 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
- ------------------------------------- --------------------- --------------------------- -------------------------- ---------------
Title Of Each Class Of Securities Number of Shares To Proposed Maximum Proposed Maximum Amount of
To Be Registered Be Registered Offering Price Per Share Aggregate Offering Price Registration
Fee
- ------------------------------------- --------------------- --------------------------- -------------------------- ---------------
- ------------------------------------- --------------------- --------------------------- -------------------------- ---------------
Common Stock, $.0001 par 300,000 $0.25 (1) $ 75,000 $23.00
value
- ------------------------------------- --------------------- --------------------------- -------------------------- ---------------
<FN>
(1) Calculated in accordance with Rule 457(o) under the Securities Act of 1933.
</FN>
The Registrant Hereby Amends This Registration Statement On Such Date Or Dates
As May Be Necessary To Delay Its Effective Date Until The Registrant Shall File
A Further Amendment Which Specifically States That This Registration Statement
Shall Thereafter Become Effective In Accordance With Section 8(A) Of The
Securities Act Of 1933, Or Until The Registration Statement Shall Become
Effective On Such Date As The Securities And Exchange Commission, Acting
Pursuant To Section 8(A), May Determine.
2
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities, and it is not soliciting an offer to buy these
securities, in any state where the offer or sale is not permitted.
PROSPECTUS
SIMPLICIA TELECOMMUNICATIONS, INC.
300,000 SHARES
COMMON STOCK
This is our initial public offering. We are offering to sell up to an
additional 300,000 shares of our common stock at a price of $0.25 per
share on a direct basis. We are offering the shares directly on a no minimum
basis. This means that the proceeds from the offering will not be kept in an
escrow account pending completion of this offering. We will use the proceeds, as
discussed in the prospectus, as we receive them. There is no maximum investment
amount per investor. At this time we intend to offer the shares ourselves
through our officers and directors. There is no commitment by anyone to purchase
any shares.
The minimum number of shares that an investor may purchase is 1000.
There is no trading market for our common stock.
See "Risk Factors" beginning on page 8 for a discussion of
risks to consider before purchasing our common stock.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Price to the Public(1) Maximum Commissions(1) Proceeds to the Company(2)
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Per Share $0.25 -0- $0.25
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Total 300,000 Shares $75,000 -0- $75,000
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
(1) We are offering the shares directly on a no minimum basis.
(2) Current working capital is expected to cover all but $18,000 of the
offering expenses currently estimated to be an aggregate of $50,000. We
have already paid approximately US$21,000 towards legal and accounting
expenses related to this offering.
The date of this prospectus is ______________, 2002.
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TABLE OF CONTENTS
Prospectus Summary............................................................5
Risk Factors..................................................................8
Cautionary Note Regarding Forward-Looking Statements ........................14
Use of Proceeds..............................................................15
Arbitrary Determination of Offering Price....................................16
Dilution.....................................................................17
Plan of Distribution ........................................................18
Management's Discussion and Analysis of Financial
Condition and Results of Operations........................................19
Business ....................................................................20
Management...................................................................27
Executive Compensation.......................................................29
Principal Shareholders.......................................................29
Description of Capital Stock.................................................30
Market for Our Common Stock..................................................31
Certain Relationships and Related Transactions...............................32
Limitation of Liability and indemnification matters .........................32
Legal Proceedings............................................................33
Legal Matters................................................................33
Experts......................................................................33
Interest of Named Experts and Counsel........................................33
Where You Can Find Additional Information....................................33
Financial Statements.........................................................34
4
PROSPECTUS SUMMARY
This summary highlights selected material information from the
prospectus, but may not contain all of the information that may be important to
you. We encourage you to read the entire prospectus, including "Risk Factors"
and our financial statements and the related notes, before making an investment
decision regarding the purchase of our common stock.
Unless the context otherwise requires, references to "Simplicia", "we", "us",
and "our", refer to Simplicia Telecommunications, Inc.
Simplicia
Simplicia was organized in July, 2001 under the laws of Delaware for
the purpose of entering into the business of recycling wireless assets.
We have filed a registration statement pursuant to the Securities Act
of 1933 in order to
- - become a reporting issuer, and
- - raise funds to offset the cost of becoming a reporting issuer, it
is our view that by becoming a reporting issuer we will be in an
improved position to effect private placement and or public
financings in the future; and
- - to satisfy certain of our obligations under a letter of Intent dated
December 12, 2001.
By Agreement dated August 1, 2001 by and among ourselves, Humanity
Direct Wireless Networks Inc. ("Humanity") , a company incorporated under the
Canada Business Corporation Act and the Phones for Sight Foundation (the
"Foundation"), a company limited by guarantee and not having share capital under
the Company's Act of 1985 and 1989 (UK) Humanity granted us the sale and
exclusive rights to the collection, refurbishment and resale of cellular phones
and other devices (collectively, the "telecommunications devices")in the United
States, its territories and possessions, as well as the right to the use of its
proprietary business plan in connection with the refurbishment and resale of the
telecommunications devices.
Subsequently, on December 12, 2001, we entered into a non-binding
letter of Intent with Humanity. In The Letter of Intent we agreed to consider
the possible acquisition of Humanity in consideration of a number of shares (or
securities exchangeable or convertible into shares) of the our common stock
equal to 85% of the to be issued and outstanding shares of our common stock
after giving effect to the consummation of the possible acquisition.
The possible acquisition is contingent upon a number of conditions
being satisfied; among the conditions to be satisfied are the following:
(a) We shall have filed a registration statement with the United
States Securities and Exchange Commission (the "SEC"), which
registration statement shall have been declared effective by
the SEC no later than April 30,2002; although the filing of
the registration statement of which this prospectus is part,
satisfies a portion of this condition, there is no assurance
that it will be declared effective prior to April 30, 2002.
5
(b) We shall have raised through the sale of our common stock at
least US$100,000 no later than June 30, 2002; we are looking
to raise up to a maximum of $75,000 in this offering; if we do
not raise at least $65,000 we may not satisfy this condition.
(c) Our common stock of shall be quoted for trading on the NASD
OTCBB; there is no market for our common stock; we have no
understandings with anyone regarding such a market or a
listing on any exchange and/or the NASD OTCBB.
(d) The shareholders of Humanity must approve the possible
acquisition; and
(e) Humanity shall have been satisfied with the results of its
due diligence investigations in respect of us and the
possible acquisition.
(f) The negotiation and execution of a definitive acquisition
agreement.
Accordingly, there is no assurance that either we or Humanity will be in a
position to consummate the possible acquisition. The Letter of Intent terminates
automatically on June 30, 2002.
Humanity had acquired the worldwide rights from the Foundation under an
agreement dated June 25, 2001 (the "Assigned Agreement"). The Foundation granted
to Humanity the sole and exclusive right, on the worldwide basis, to purchase
all non-refurbished wireless assets that were collected by the Foundation
through its Phones for Sight Initiative. The Foundation, through this
initiative, seeks to collect wireless assets and to raise funds for its purposes
via the refurbishment and resale of such wireless assets.
The Foundation is a non-profit charitable entity with the long-term
goal of funding the elimination of avoidable blindness. The Foundation's global
fundraising strategy centers on collecting deactivated cell phones and selling
them to wholesale cellular refurbishes. The Foundation's collection efforts will
focus on mobilizing deactivated cell phones from the wireless carriers, the
corporate community and the retail market on a global basis.
Our Offices and Telephone Number
Our offices are located at 280 Fairways Bay NW, Airdrie, Alberta,
Canada T4B 2P6. Our telephone number at our corporate offices is (403) 615-5609.
The Offering
We are offering to sell up to 300,000 shares of our common stock at a
price of $0.25 per share on a direct basis. We are offering the shares directly
through our officers and directors on a no minimum basis. This means that the
proceeds from the offering will not be kept in an escrow account pending
completion of this offering. We will use the proceeds, as discussed in the
prospectus, as we receive them. There is no maximum investment amount per
investor. The minimum number of shares an investor may purchase is 1000 shares.
6
Common Stock Outstanding Prior to and after the Offering
We currently have 1,600,000 shares issued and outstanding. Assuming all
of the shares are sold in this offering, we will have 1,900,000 shares issued
and outstanding.
Use of proceeds
The proceeds from the sale of the shares will be utilized to offset the costs of
becoming a reporting issuer and for general working capital purposes.
Term of Offering
The Offering will terminate on or before __________[a date which is 120 days
from the date of this prospectus].
7
RISK FACTORS
An investment in our shares is highly speculative, involves a high
degree of risk and should be made only by investors who can afford the loss of
their entire investment. Prospective investors, prior to making an investment
decision should carefully consider the following risk factors, together with the
other maters referred to herein, including the financial statements and notes
thereto. You should consider carefully the following risks before you decide to
buy our common stock. Our business, financial condition or results of operations
could be materially and adversely affected by any of the following risks.
Our long term liquidity and capital resources are uncertain.
In the event that our cash reserves are depleted, we may need to seek
additional capital. If we do, there can be no assurance that we will be
successful in raising a sufficient amount of additional capital or in internally
generating a sufficient amount of capital to meet our long term requirements.
From the date of inception through August 31, 2001 we have not earned any income
and have incurred losses totaling $6,016. If we are unable to generate the
required amount of additional capital, our ability to meet our obligations and
to continue our operations may be adversely affected.
The market for communications equipment products and services is rapidly
changing.
Our future will depend on the growth of the wireless equipment market. The
growth in the market for wireless equipment products and services is dependent
on a number of factors. These factors include:
o the amount of capital expenditures by network providers;
o regulatory and legal developments;
o the addition of new customers to the market; and
o end-user demand for wireless assets.
We cannot predict whether the market for refurbished wireless assets will
develop rapidly. Also, we cannot predict technological trends or new products in
this market. In addition, we cannot predict whether our products and services
will meet with market acceptance or be profitable. We may not be able to compete
successfully, and competitive pressures may materially and adversely affect our
business, operating results and financial condition.
We may not be able to compete successfully against current and future
competitors who are better financed than we are or are using a more evolved
technology.
There are no patents available for the business being undertaken and
thus there are no barriers to competition. Companies with greater financial,
technical, and marketing resources could severely impact our business model if
they enter our industry.
Competing technologies or any new technologies may provide significant
competition for us. We cannot assure you that one or more of the technologies
that we sell will not become inferior or obsolete at some time in the future.
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The wireless telecommunications industry is experiencing significant
technological change which may adversely affect demand for our products if we
are unable to anticipate and adapt to rapidly changing technology.
The wireless equipment industry is characterized by rapid
technological change. In our industry, we also face evolving industry standards,
changing market conditions and frequent new product and service introductions
and enhancements.
Technological changes that are affecting the telecommunications
industry may adversely affect our business model. Examples are as follows
. the increasing pace of digital upgrades in existing analog wireless
systems,
. evolving industry standards,
. ongoing improvements in the capacity and quality of digital
technology,
. shorter development cycles for new products and
enhancements, and
. changes in end-user requirements and preferences.
The introduction of products using new technologies or the adoption
of new industry standards can make existing products or products being
refurbished obsolete or unmarketable. In order to grow and remain competitive,
we will need to adapt to these rapidly changing technologies, to enhance our
existing solutions, and to introduce new solutions to address our customers'
changing demands.
If we fail to anticipate or respond on a cost-effective and timely
basis to technological developments, changes in industry standards or customer
requirements, or if we have any significant delays in product development or
introduction, our business, operating results and financial condition could be
affected in a material adverse way. Our business plan may not be transferable to
new technological developments.
Like others in the industry, we are uncertain about the extent of
customer. We cannot predict the effect of technological changes on our business,
and it is possible that technological developments will have a material adverse
effect on us.
Possible health effects of radio frequency emission may adversely affect the
demand for cellular telephone services.
Media reports have suggested that certain radio frequency emissions
from portable cellular telephones may be linked to cancer and interfere with
heart pacemakers and other medical devices. Concerns over radio frequency
emissions and interference may have the effect of discouraging the use of
cellular telephones, which could have an adverse effect upon our business. There
is no assurance that government authorities would not increase regulation of
cellular telephones resulting from these concerns or that cellular telephone
companies may be liable for costs or damages associated with these concerns.
9
Our future performance is dependent on our ability to retain key personnel.
Our performance is substantially dependent on the performance of our
senior management and sales personnel. In particular, our success depends on the
continued efforts of our president, Robert Auld and our vice president , Riaz
Sumar. The loss of the services of either of Messrs. Auld or Sumar could have a
material adverse effect on our business, results of operations and financial
condition. We do not have employment agreements in place with our senior
management or key employees.
Since we have not yet generated revenues, we expect that our operating results
fluctuate significantly.
Our operating results vary significantly from quarter to quarter. These
fluctuations are the result of a number of factors, including:
o the volume and timing of orders from and shipments to major
customers;
o the timing of and the ability to obtain new customer contracts;
o the timing of new product and service announcements;
o the availability of products and services;
o the overall level of capital expenditures by public network
providers;
o the market acceptance of our products and services or variations in
the mix of products and services we sell; and
o the availability and cost of key components.
We plan to grow through acquisition and expansion. Our expense levels
are based in part on expectations of future revenues. If revenue levels in a
particular period are lower than expected, our operating results will be
adversely affected.
The regulatory environment in which we operate is changing.
The wireless equipment industry is subject to regulation in the United
States and other countries. Our business is dependent upon the continued growth
of the industry in the United States and internationally. Federal and state
regulatory agencies regulate most of our domestic customers. Changes in current
or future laws or regulations in the United States or elsewhere could adversely
affect our business.
We may be unable to identify or complete suitable acquisitions and investments.
We may acquire or make investments in complementary businesses,
products, services or technologies. We cannot assure you that we will be able to
identify suitable acquisitions or investment candidates. Even if we identify
suitable candidates, we cannot assure you that we will be able to make
acquisitions or investments on commercially acceptable terms, if at all. If we
acquire a company, we may have difficulty assimilating its businesses, products,
services, technologies and personnel into our operations. These difficulties
could disrupt our ongoing business, distract our management and workforce,
increase our expenses and adversely affect our results of operations. In
addition, we may incur debt or be required to issue equity securities to pay for
future acquisitions or investments. The issuance of any equity securities could
be dilutive to our shareowners.
10
Our management is inexperienced in managing a public company.
Our current management has had limited experience in managing a public
company or a large operating company. There can be no assurance that we will be
able to effectively manage the expansion of our operations, that our systems,
procedures or controls will be adequate to support our operations or that our
management will be able to achieve the rapid execution necessary to fully
exploit the market opportunities for our products and services. Any inability to
manage growth effectively could have a material adverse effect on our business,
results of operations and financial condition.
The value and transferability of our shares may be adversely impacted by the
limited trading market for our shares and the penny stock rules.
There is no current trading market for our shares and there can be no
assurance that a trading market will develop, or, if such trading market does
develop, that it will be sustained. To the extent that a market develops for our
shares at all, they will likely appear in what is customarily known at the "pink
sheets" or on the NASD Bulletin Board, which may limit their marketability and
liquidity.
To date, neither we nor anyone acting on our behalf has taken any
affirmative steps to request or encourage any broker/dealer to act as a market
maker for our shares. Further, we have not had any discussions with any market
maker regarding the participation of any market maker in the future trading
market, if any, for our shares. In addition, holders of our common stock may
experience substantial difficulty in selling their securities including as a
result of the "penny stock rules," which restrict the ability of brokers to sell
certain securities of companies whose assets or revenues fall below the
thresholds established by those rules.
A substantial amount of the proceeds we raise in this offering will not be
utilized for the growth of our business.
Of the proposed maximum offering, we expect to use $15,000 to pay the
remainder of our costs of the offering, estimated at $50,000. Therefore,
approximately $60,000 of the maximum offering will be available for use in the
growth of our business in general.
Future sales of shares may adversely impact the value of our stock.
The total amount of shares covered by this prospectus would represent
approximately 16% of the number of our outstanding shares on the date of this
prospectus. If required, we will seek to raise additional capital through the
sale of our common stock. Future sales of shares by us could cause the market
price of our common stock to decline.
The offering price of our shares was arbitrarily determined by us.
Prior to this offering, there has been no public trading market for our
shares. The initial public offering price of our shares has been arbitrary
determined by us and does not bear any relationship to established valuation
criteria such as assets, book value or prospective earnings. Among the factors
considered by us were the proceeds to be raised by the offering, the lack of
11
trading market, the amount of capital to be contributed by the public in
proportion to the amount of stock to be retained by present stockholders and our
relative requirements.
Since we are in the early stage of development and have no operating history, it
may be difficult for you to assess our business and future prospects.
We were only recently incorporated; since incorporation our
activities were limited to corporate administrative matters, initial financing
and negotiation of the terms of the Humanity Agreement. There is nothing at this
time upon which to base an assumption that our plans will prove successful, and
there is no assurance that we will operate profitably. We have limited resources
and have had no revenues to date. See "Business."
We may lose our rights under the Humanity Agreement if we are in default of any
of the terms of the Humanity Agreement and we fail to cure that default within
30 days of being notified that we are in default. We may also lose our rights if
we fail to make royalty or rights payments required under the terms of the
Humanity Agreement.
We have limited marketing resources and have had no experience in marketing
telecommunications devices.
We have no sales and marketing capabilities with respect to
telecommunications devices. According, we intend to use a portion of the
proceeds of this offering to develop our own sales and marketing force. The
development of an internal sales and marketing capability will entail
significant expenditures, management resources and marketing capability. If we
are unable to establish our own marketing capability, we will need to enter into
a joint venture, distribution or other arrangement with a third party with
established marketing resources. There can be no assurance that we would be able
to enter into third-party sales and marketing arrangements on favorable terms or
at all. In any event, arrangements with third parties would typically entail
sharing a significant percentage of sales which would reduce the profit margin
on sales of the telecommunications devices.
We will need additional financing to fund our business.
After the net proceeds of the offering have been exhausted (which is
currently expected to be September 30, 2002), we may require additional
financing in order to carry out our business plan. Such financing may take the
form of the issuance of common or preferred stock or debt securities, or may
involve bank financing. There can be no assurance that we will be able to obtain
such additional capital on a timely basis, on favorable terms, or at all. If we
are unable to generate the required amount of additional capital, our ability to
meet our obligations and to implement our business plan may be adversely
affected.
12
We need to attract, retain and motivate skilled personnel and retain our key
personnel in order for our business to succeed.
We believe that our future success will depend in large part upon our
ability to attract and retain highly skilled scientific, managerial and
marketing personnel. We face competition for such personnel from other
companies, research and academic institutions, government entities and other
organizations. There can be no assurance that we will be successful in hiring or
retaining the personnel we require.
If a market were to develop for our shares, the share prices may be highly
volatile.
The market prices of equity securities of telecommunications companies
have experienced extreme price volatility in recent years for reasons not
necessarily related to the individual performance of specific companies.
Accordingly, the market price of our shares following this offering may be
highly volatile. Factors such as announcements by us, or our competitors
concerning products, patents, technology, governmental regulatory actions, other
events affecting wireless devices and telecommunications companies generally and
general market conditions may have a significant impact on the market price of
our shares and could cause it to fluctuate substantially.
We have a large number of restricted shares outstanding, the potential sale of
which under Rule 144 may impact the price of our stock should a public trading
market ever develop.
Of the 150,000,000 shares of our common stock authorized, there are
presently issued and outstanding 1,600,000. All are "restricted securities" as
that term is defined under the Securities Act of 1933, and in the future may be
sold in compliance with Rule 144 of the Securities Act of 1933, or pursuant to a
Registration Statement filed under the Securities Act of 1933. Rule 144
provides, in essence, that a person holding restricted securities for a period
of 1 year may sell those securities in unsolicited brokerage transactions or in
transactions with a market maker, in an amount equal to 1% of our outstanding
shares every 3 months. Additionally, Rule 144 requires that an issuer of
securities make available adequate current public information with respect to
the issuer. That public information is deemed available if the issuer satisfies
the reporting requirements of Sections 13 or 15(d) of the Exchange Act and of
Rule 15c 2-11 of the Exchange Act. Rule 144 also permits, under certain
circumstances, the sale of shares by a person who is not an affiliate of a
company and who has satisfied a 2 year holding period without any quantity
limitation and whether or not there is adequate current public information
available. Investors should be aware that sales under Rule 144, or pursuant to a
Registration Statement filed under the Securities Act, may have a depressive
effect on the market price of our securities in any market that may develop for
our shares. Presently 1,600,000 of the outstanding shares will be available for
sale under Rule 144 when applicable. The currently issued and outstanding shares
will not be available for resale under Rule 144 until at least August 31, 2002.
13
Possible Issuance of Additional Shares Sales May Impact The Price Of
Our Stock Should A Public Trading Market Ever Develop.
Our Certificate of Incorporation, authorizes the issuance of
150,000,000 shares of common stock. Upon the sale of the maximum shares offered
in this offering, approximately 98.73% of our authorized common stock will
remain un-issued. Our Board of Directors has the power to issue any or all of
such additional common stock without stockholder approval. Potential investors
should be aware that any stock issuances may result in a reduction of the book
value or market price, if any, of the then outstanding common stock. If we were
to issue additional common stock, such issuance will reduce the proportionate
ownership and voting power of the other stockholders. Also, any new issuance of
common stock may result in a change of our control.
The offering price of the shares was arbitrarily determined by us and thus, is
not an indication of our stock's valuation.
Prior to this offering, there has been no public trading market for our
common stock. The initial public offering price of the Shares has been arbitrary
determined by us and does not bear any relationship to established valuation
criteria such as assets, book value or prospective earnings. Among the factors
considered by us were the proceeds to be raised by the offering, the lack of
trading market, the amount of capital to be contributed by the public in
proportion to the amount of stock to be retained by present stockholders and our
capital requirements over the next 18 months.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains statements that plan for or anticipate the
future, called "forward-looking statements." In some cases, you can identify
forward-looking statements by terminology such as "may," "will," "should,"
"could," "expects," "plans," "intends," "anticipates," "believes," "estimates,"
"predicts," "potential" or "continue" or the negative of such terms and other
comparable terminology.
These forward-looking statements include, without limitation,
statements about:
o our markets;
o our strategies;
o competition;
o expected activities and expenditures as we pursue our business plan;
and
o the adequacy of our available cash resources.
These statements appear in a number of places in this report and
include statements regarding our intent, belief or current expectations, those
of our directors or officers with respect to, among other things: (i) trends
affecting our financial condition or results of operations, (ii) our business
and growth strategies, (iii) the Internet and Internet commerce and (iv) our
financing plans. Although we believe that the expectations reflected in the
forward-looking statement are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements.
14
The Private Securities Litigation Reform Act of 1995, which provides a
"safe harbor" for similar statements by existing public companies, does not
apply to our offering.
The accompanying information contained in this prospectus, including,
without limitation, the information set forth under the headings "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," and "Business" identify important factors that could adversely
affect actual results and performance. All forward-looking statements
attributable to us are expressly qualified in their entirety by the foregoing
cautionary statement.
USE OF PROCEEDS
We have filed a registration statement pursuant to the Securities Act of 1933
in order to
- - become a reporting issuer;
- - raise funds to offset the cost of becoming a reporting issuer, it
is our view that by becoming a reporting issuer we will be in an
improved position to effect private placement and or public
financings in the future; And
- - to satisfy certain of our obligations under the Letter of Intent
signed December 12, 2001.
The shares are being offered directly by us on a no minimum basis. If
the 300,000 shares offered are sold, the gross proceeds of this offering will be
$75,000 and the net proceeds will be $25,000.00 after deducting the estimated
expenses of the offering. We expect expenses of the offering, including, but not
limited to, accounting fees and legal fees, to be approximately $50,000.00. Such
expenses will be paid from the offering proceeds to the extent available and
required. If we fail to raise sufficient funds to pay the offering expenses we
will pay any such deficiency from our existing working capital.
Since there is no minimum amount to be raised, proceeds from our sale
of shares will be available for use by us as the funds are received. All
subscriptions that are accepted by us are, subject to any applicable laws,
irrevocable. Because we are offering the shares on a direct basis, we cannot
represent what percentage of the offered shares we will actually sell. We will
receive none of the proceeds from the sale of the shares by the registered
shareholders.
The following table shows our intended application of the use of
proceeds as a percentage of the gross proceeds received from a minimum of 25% to
a maximum of 100%:
15
============================================================================================================
Intended use of proceeds 25% 50% 75% 100%
- ------------------------------------------------------------------------------------------------------------
Proceeds $18,750 $37,500 $56,250 $75,000
- ------------------------------------------------------------------------------------------------------------
Use of Proceeds
- ------------------------------------------------------------------------------------------------------------
Offering expenses 50,000 50,000 50,000 50,000
- ------------------------------------------------------------------------------------------------------------
Working Capital (31,250) (12,500) 6,250 25,000
============================================================================================================
Total $18,750 $ 37,500 $56,250 $ 75,000
============================================================================================================
The foregoing represents our best estimate of our allocation
of the net proceeds of the sale of the shares based upon our currently
contemplated operations, our business plan and current economic and industry
conditions and is subject to reapportionment of proceeds among the category
listed above or to new categories in response to, among other things, changes in
our plans, regulations, industry conditions, future revenues and expenditures
and the amount of the proceeds from the Offering. The amount and timing of
expenditures will vary depending on a number of factors, including changes in
our contemplated operations or business plan which may be affected by any delays
in the marketing and development and success of our business activities and
changes in economic and industry conditions. Any reallocation of the net
proceeds of the offering will be made at the discretion of our board of
directors but will be a part of our strategy to achieve growth and profitable
operations through the development of our products and commencement of our
marketing efforts. Our working capital requirements are a function of our future
growth and expansion, neither of which can be predicted with any reasonable
degree of certainty. We may need to seek funds through loans or other financing
arrangements in the future, and there can be no assurance that we will be able
to make these arrangements in the future should the need arise.
Based on our operating plan, we believe that the net proceeds of this
offering will be sufficient to satisfy capital requirements and finance our
operations for a least the next 12 months. Such belief is based upon certain
assumptions, and there can be no assurance that such assumptions are correct. We
may be required to raise substantial additional capital in the future in order
to carry out business plan. In addition, contingencies may arise which may
require us to obtain additional capital. Accordingly, there can be no assurance
that such resources will be sufficient to satisfy capital requirements for such
period. After the 12 month period, we anticipate that additional financing may
be required in order to meet our current plans for expansion. Such financing may
take the form of the issuance of common or preferred stock or debt securities,
or may involve bank financing. There can be no assurance that we will be able to
obtain such additional capital on a timely basis, on favorable terms, or at all.
In any of such events, we may be unable to implement our business plan.
Pending our use of the net proceeds of the offering, the funds will be
invested temporarily in certificates of deposit, short-term government
securities, or similar investments. Any income from these short-term investments
will be used for working capital.
It may be necessary for us to incur some administrative costs for
preparation and filings of periodic reports with the Securities and Exchange
Commission, the amount of which is not expected to be more than $10,000 through
December 31, 2002. It is expected that these costs would be paid from existing
working capital and cash flow from operations. We expect to keep any proceeds
not utilized for these purposes in a working capital reserve for payment of
unexpected operating expenses.
Except as described in this prospectus, no portion of the proceeds of
the offering will be paid to officers, directors and/or their affiliates or
associates.
ARBITRARY DETERMINATION OF OFFERING PRICE
There is no trading market for our shares. The initial offering price
of $0.25 per share has
16
been arbitrarily determined by us, and bears no relationship whatsoever to our
assets, earnings, book value or any other objective standard of value. Among the
factors considered by us in determining the initial offering price were:
o The lack of trading market
o The proceeds to be raised by the offering
o The amount of capital to be contributed by the public in proportion to
the amount of stock to be retained by present stockholders
o Our capital requirements
We have not declared, and do not foresee declaring, any dividends now
or into the foreseeable future.
DILUTION
The difference between the public offering price per share and the pro
forma net tangible book value per share of our Common Stock after this offering
constitutes the dilution to investors in this offering. Net tangible book value
per share is determined by dividing our net tangible book value (total tangible
assets less total liabilities) by the number of outstanding shares of Common
Stock. Dilution arises mainly from the arbitrary decision by a company as to the
offering price per share. Dilution of the value of the shares purchased by the
public in this offering will also be due, in part, to the lower book value of
the shares presently outstanding, and in part, to expenses incurred in
connection with the public offering.
Net tangible book value is the net tangible assets of a company (total
assets less total liabilities and intangible assets; please refer to "Financial
Statements"). At August 31, 2001, we had a net tangible book value of $18,904 OR
$ .02 per share.
After giving effect to the sale of the 300,000 shares being offered at
an initial public offering price of $0.25 per share and after deducting
estimated expenses of this offering ($50,000), our adjusted net tangible book
value at August 31, 2001 after the offering would have been $43,904 or $.02 per
share, representing an immediate increase in net tangible book value of $.01 per
share to the existing shareholders and an immediate dilution of $.23 or 91% per
share to new investors.
The following table illustrates the above information with respect to
dilution to new investors on a per share basis:
Initial public offering price $ 0.25
Pro forma net tangible book value at August 31, 2001 0.01
Increase in pro forma net tangible book value attributed to new investors 0.01
Adjusted pro forma net tangible book value after offering 0.02
Dilution to new investors 0.23
The following table sets forth, on a pro forma basis as of August 31,
2001, with respect to our existing stockholders and new investors, a comparison
of the number of shares of common stock we issued, percentage ownership of those
shares, the total consideration paid, the percentage of consideration paid and
the average per share.
17
Shares Purchased Total Consideration Average
(Approximately)
-------------------------------------- ------------------------------- ----------------------
Number Percentage Number Percentage Price per Share
-------------------- ----------------- --------------- --------------- ----------------------
Existing shareholders 1,560,000 84% $ 24,920 25% .02
New investors 300,000 16% 75,000 75% .25
-------------------- ----------------- --------------- --------------- ----------------------
Total 1,860,000 100% 99,920 100% .05
==================== ================= =============== =============== ======================
PLAN OF DISTRIBUTION
We are offering to sell up to 300,000 shares of our common stock at a
price of $0.25 per share directly on a no minimum basis This means that the
proceeds from the offering will not be kept in an escrow account pending
completion of this offering. The minimum number of shares you can purchase is
1000.
There is no maximum investment amount per investor. At this time we
intend to offer the shares ourselves through our officers and directors. This is
a direct offering, with no commitment by anyone to purchase any shares. Our
shares will be offered and sold by our principal executive officers and
directors. No compensation is to be paid to any person for the offer and sale of
the shares. Our officers and directors may distribute prospectuses related to
this offering. We estimate that approximately 100 Prospectuses will be
distributed by them. They intends to distribute prospectuses to acquaintances,
friends and business associates.
Although our officers and directors are associated persons as that term
is defined in Rule 3a4-1 under the Exchange Act, they are not deemed to be a
broker for the following reasons:
* They are not subject to a statutory disqualification as that term is
defined in Section 3(a)(39) of the Exchange Act at the time of their
participation in the sale of our securities.
* They will not be compensated for her participation in the sale of our
securities by the payment of commission or other remuneration based
either directly or indirectly on transactions in securities.
* They is not an associated person of a broker or dealers at the time of
her participation in the sale of our securities.
* They will restrict their participation to the following activities:
* Preparing any written communication or delivering that
communication through the mails or other means that does not
involve oral solicitation by them of a potential purchaser;
* Responding to inquiries of potential purchasers in
communications initiated by the potential purchasers,
provided however, that the content of those responses are
limited to information contained in a registration statement
filed under the Securities Act or other offering document; and
18
* Performing ministerial and clerical work involved in effecting
any transaction.
As of the date of this prospectus, no broker has been retained by us
for the sale of shares being offered. In the event a broker who may be deemed an
underwriter is retained by us, an amendment to our registration statement will
be filed.
Method of Subscribing
You may subscribe by filling in and signing the subscription agreement
and delivering it, prior to the expiration date, to us. The subscription price
of $0.25 per share must be paid in cash or by check, bank draft or postal
express money order payable in United States dollars to the order of "Simplicia
Telecommunications, Inc." and delivered to us. We reserve the right to reject
any subscription in whole or in part in our sole discretion for any reason
whatsoever notwithstanding the tender of payment at any time prior to our
acceptance of the subscriptions received.
Expiration Date
This offering will expire 120 days from the date of this prospectus.
Legal Proceedings
We are not a party to any pending legal proceeding.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of
operations should be read in conjunction with the Consolidated Financial
Statements and Notes thereto included elsewhere in this prospectus. This
discussion contains forward-looking statements that involve risks and
uncertainties. Our actual results may differ materially from those anticipated
in these forward-looking statements as a result of various factors, including
but not limited to, those set forth under "Risk Factors" and elsewhere in this
prospectus.
Overview
We were organized in July, 2001. Since our inception, and prior to July
2001, we have engaged only in corporate administrative and financing activities
and the negotiation of the Humanity Agreement.
We have filed a registration statement pursuant to the Securities Act
of 1933 in order to
- become a reporting issuer;
- raise funds to offset the cost of becoming a reporting issuer,
it is our view that by becoming a reporting issuer we will be
in an improved position to effect private placement and or
public financings in the future; and
- To satisfy certain of an obligations under the Letter of
Intent.
19
Liquidity And Capital Resources
We have cash on hand as of November 30, 2001 of approximately
$12,000.00. We have also paid $23,000.00 towards offering expenses of which
$3,500 represented accounting fees and $17,500 represented legal fees and
expenses. We feel that our cash on hand plus the maximum proceeds from the
offering will be sufficient to satisfy our current requirements through
September 2002. We expect to use the proceeds from this offering, after having
paid offering expenses, for working capital purposes.
Since we are able to sell refurbished wireless assets before we are
required to pay any royalties or rights payments, we don't anticipate having to
use the proceeds from this offering for those purposes.
However, we may require significant additional financial resources for
future expansion. It is not possible to quantify what amount may actually be
required. If needed, we may seek to obtain the financing through public or
private equity offerings. If we are unable to generate the required amount of
additional capital, our ability to implement our expansion strategies may be
adversely affected. No specific plans exist for a financing at this time.
We believe that the net proceeds from this offering (if fully
subscribed), and when combined with our cash on hand, will be sufficient to meet
our capital and operating requirements for a period of 12 months. After such
period, we may need additional financing. There is no assurance that we would be
able to obtain such financing on terms that are commercially viable.
BUSINESS
Background
By Agreement dated August 1, 2001 by and among ourselves, Humanity and
the Foundation, Humanity granted us the sale and exclusive rights to the
collection, refurbishment and resale of telecommunications devices in the United
States, its territories and possessions, as well as the right to the use of its
proprietary business plan in connection with the refurbishment and resale of the
telecommunications devices.
Humanity had acquired the worldwide rights from the Foundation under an
Assigned agreement. The Foundation granted to Humanity the sole and exclusive
right, on the worldwide basis, to purchase all non-refurbished wireless assets
that were collected by the Foundation through its Phones for Sight Initiative.
The Foundation, through this initiative, seeks to collect wireless assets and to
raise funds for its purposes via the refurbishment and resale of such wireless
assets.
The Foundation is a non-profit charitable entity with the long-term
goal of funding the elimination of avoidable blindness. The Foundation's global
fundraising strategy centers on
20
collecting deactivated cell phones and selling them to wholesale cellular
refurbishes. The Foundation's collection efforts will focus on mobilizing
deactivated cell phones from the wireless carriers, the corporate community and
the retail market on a global basis.
Humanity Agreement:
-------------------
Under the terms of the Humanity Agreement:
- we paid to Humanity the amount of (ten) US Dollars (USD$10.00) for
the sole and exclusive right in the United States of America, its
territories and possessions to carry out Humanity Proprietary
Business Plan and any modifications thereof;
- We will pay the Foundation Royalties as follows;
- ---------------------------------------- -------------------------------------
Net Proceeds CDN$ * Royalty % of Net Proceeds
- ---------------------------------------- -------------------------------------
- ---------------------------------------- -------------------------------------
$0.00 - $500,000.00 1.5%
- ---------------------------------------- -------------------------------------
- ---------------------------------------- -------------------------------------
$500,000.01 - $1,000,000.00 3.0%
- ---------------------------------------- -------------------------------------
- ---------------------------------------- -------------------------------------
$1,000,000.01 - $2,000,000.00 4.0%
- ---------------------------------------- -------------------------------------
- ---------------------------------------- -------------------------------------
$2,000,000.01 - $5,000,000.00 5.0%
- ---------------------------------------- -------------------------------------
- ---------------------------------------- -------------------------------------
$5,000,000.01 and Over 10.0%
- ---------------------------------------- -------------------------------------
* Net proceeds are based upon funds actually received by us and do not
include any receivable amounts, excise taxes, or bad debts.
- - We will also pay to Humanity US$1.00 per Telecommunications Device
resold at a specified minimum price by us (the "Rights Payment").
The Rights Payment is payable on a quarterly basis and is due no
later than the 30th day after the end of each quarter.
Commencing on January 1, 2002 (the "Deliverable Date"), the Foundation
is required to deliver to us not less than 20,000 Telecommunications Devices
monthly ("Minimum Deliverable") that can be refurbished and resold on
commercially reasonable terms in accordance with the Proprietary Business Plan.
An earlier Deliverable Date may be implemented at our option upon 30 days
written notice to the Foundation.
The Humanity Agreement may be terminated by the Foundation upon six (6)
months' prior written notice to us if (i) we are in default of our obligations
under the Agreement and we fail to cure such default within thirty (30) days
following written notice thereof delivered by the Foundation to us, or (ii) if
we fail to make the Rights Payment to Humanity.
The Humanity Agreement may be terminated by us upon six (6) months'
prior written notice to the Foundation if (i) the Foundation is in default of
its obligations under Agreement and fails to cure such default within thirty
(30) days following written notice thereof delivered by us to the Foundation, or
(ii) if the Foundation fails to make the Minimum Deliverable.
The Agreement may also be terminated by us upon six (6) months' prior
written notice
21
to the Humanity if Humanity is in default of its obligations under Agreement and
fails to cure such default within thirty (30) days following written notice
thereof delivered by us to Humanity.
In the event that the Assigned Agreement between the Foundation and the
Humanity is terminated for any reason, the Assigned Agreement shall be deemed to
exist in its entirety with us except that it will only apply to the United
States of America, its territories and possessions and no further Rights Payment
shall be due to Humanity.
Subsequently, on December 12, 2001, we entered into a non-binding
letter of Intent with Humanity. In The Letter of Intent we agreed to consider
the possible acquisition of Humanity in consideration of a number of shares (or
securities exchangeable or convertible into shares) of the our common stock
equal to 85% of the to be issued and outstanding shares of our common stock
after giving effect to the consummation of the possible acquisition.
The possible acquisition is contingent upon a number of conditions
being satisfied; among the conditions to be satisfied are the following:
(g) We shall have filed a registration statement with the SEC,
which registration statement shall have been declared
effective by the SEC no later than April 30,2002; although the
filing of the registration statement of which this prospectus
is part, satisfies a portion of this condition, there is no
assurance that it will be declared effective prior to April
30, 2002.
(h) We shall have raised through the sale of our common stock at
least US$100,000 no later than June 30, 2002; we are looking
to raise up to a maximum of $75,000 in this offering; if we do
not raise at least $65,000 we may not satisfy this condition.
(i) Our common stock of shall be quoted for trading on the NASD
OTCBB; there is no market for our common stock; we have no
understandings with anyone regarding such a market or a
listing on any exchange and/or the NASD OTCBB.
(j) The shareholders of Humanity must approve the possible
acquisition; and
(k) Humanity shall have been satisfied with the results of its
due diligence investigations in respect of us and the
possible acquisition.
(l) The negotiation and execution of a definitive acquisition
agreement.
Accordingly, there is no assurance that either we or Humanity will be in a
position to consummate the possible acquisition. The Letter of Intent terminates
automatically on June 30, 2002.
Our Intended Business
- ---------------------
We intend to collect unused wireless assets through the Foundation's
charitable-based collection network, add value through the refurbishing process
and use contracted sales agents
22
to distribute product to growing domestic and emerging markets.
We believe that there is a demand for refurbished product in order to
satisfy the wireless infrastructures being developed in the emerging economies
as they cannot obtain a consistent supply of new cell phone product.
In addition, we recognize that refurbished cellular telephone equipment
provides North American service providers with the opportunity to penetrate
domestic price-sensitive markets by providing low-cost terminal equipment.
According to our research, global cell phone usage is expected to
exceed a billion subscribers by 2003 and market penetration is only at 20% in
North America but is expected to rise to 70% by 2008. Cell phone adoption
patterns and market segmentation indicates that much of this additional growth
will be generated by the price-sensitive consumer.
Wireless infrastructures are expected to replace landline systems in
many regions as installation is less costly and connectivity costs (airtime) are
comparable. Due to technological advancements, product penetration, rapid
product turnover and environmental concerns, there exists a supply of surplus
mobile wireless assets. These are primarily cell phones but also include
personal organizers (Palm Pilots), wireless-enabled laptops and pagers. We
intend to reclaim the value in these surplus assets.
We will be the exclusive purchaser in the United States of all product
sourced through the global collection efforts of the Phone for Sight Foundation.
The cell phones will be refurbished to insure good working order. Refurbishing
production capacity will be established through strategic alliances, outsourcing
or new construction. This capacity will be matched with the Foundation's main
product collection centers.
We currently have a relationship in the US with Recellular Incorporated
that was established by Humanity Direct. Recellular Incorporated will purchase a
number the collected phones from us. ReCelluar Wireless has provided Humanity
with a letter of intent to purchase a number of phones every month. Since we
have the rights in the United States, its territories and possessions, to carry
out the Humanity business plan, we will replace Humanity in that letter of
intent.
There exists a large market for recycled cellular phones within North
America. As Cellular Service Providers shift their marketing focus from the
mid / high income market segment to the price-sensitive consumer segment in an
attempt to secure market share and maximize infrastructure utilization, the
demand for low-cost end user equipment increases. Through our relationship with
Recellular and other refurbishing and sales agents we will be able to meet this
demand with high-quality refurbished equipment.
Internationally, product demand exists to satisfy the enormous wireless
infrastructures being developed in the emerging economies. With the US being one
of the largest target markets for collection of used mobile assets, these
markets will be a prime target for Simplicia. Due to the relatively low cost of
refurbished wireless assets a new cellular phone market can
23
be developed. We have been given the authority, by Humanity, to sell phones
collected in the United States, its territories and possessions to emerging
markets such as Africa.
The Phones For Sight Foundation
The Phones for Sight Foundation was established in 2000 to take part in
the fight against avoidable blindness and to support blind citizens globally.
The Phones for Sight program will raise funds through the collection of the
worlds deactivated cell phones. Cell phones are a serious environmental hazard,
not suitable for landfill disposal due to the cadmium in the batteries. They are
a perfect product to recycle. The telecommunications cell phones will be resold
to the refurbishing wholesale industry. Humanity obtained the global rights to
purchase all collected wireless assets from the Foundation for refurbishment and
resale. In an agreement dated August 1, 2001 between the Foundation, Humanity
and ourselves, we were granted these rights in the United States and were
granted the rights to use the Business Plan of Humanity as necessary for the
collection, refurbishment, and resale of wireless assets.
Primary subscriber market growth, combined with rapid technological
developments in the wireless market has created a surplus of cell phones and
other wireless appliances. Proposed European environmental legislation
(effective 2004) will dramatically effect how cell phone manufacturers dispose
of their hazardous components. This legislation under the "Take Back Initiative"
by ETEL (European Telecom Association) will contribute to this asset base and
help insure that much of the wireless assets remain to be re-introduced to the
market. We expect that similar legislation will also be implemented in the
United States.
Product Type:
- -------------
In Europe, GSM technology accounts for 90%+ of the wireless market. In
North America, there is a much broader mix of systems with GSM comprising around
10% of the Market. Recently the major manufacturers have expressed a willing to
move a consistent technology framework (Globe and Mail, April 2001).
Market Penetration:
- -------------------
It has been reported that US and Canadian penetration was
around 20% in 1999 but is expected to grow to 40% by 2005 and 70% by 2008.
Market Size:
- ------------
It has been reported that the global growth rates for wireless
markets will reach into the 30%-40% region for 2001 and likely higher going
forward.. Wireless airtime costs are now competitive with landline systems,
spurring a push for the consumer to abandon landline connectivity for the
convenience of mobile. When this conversion accelerates, the wireless market is
expected to quadruple in the next decade; all personal communications may take
place in the wireless market.
24
Churn Rates:
- ------------
A sustainable supply of wireless assets is paramount to both the
Foundation achieving their humanitarian mission and for the success of
Simplicia. The US refurbishing industry has not flourished due to its inability
to collect a consistent volume of surplus cell phones. The greatest challenge
has been how to motivate the world's telecom companies, major corporations and
private citizens to donate or return their used wireless assets into the hands
of the private sector for either charitable, profit or environmental reasons.
Simplicia will overcome this obstacle by purchasing wireless assets from the
Foundation.
Anticipated churn rates for all wireless assets are estimated at
25-30%. This will deliver millions of potential new product into the market
place every year for conservatively 10 years before penetration flat-lines. The
move to web-access cellular is accelerating - one commentator estimates that 48
million people will surf the web with "smart" mobile phones by 2002, growing to
204 million by 2005. Many believe that voice recognition internet software will
drive the 3rd wave product turnover in cell technology. This all results in
increased asset flow to Simplicia.
Wholesale Market:
- -----------------
The wholesale market is split between the mature markets of North
America, Europe, Australia and Asia and the developing economy countries, each
with different needs.
Mature Markets: Increasing Market Penetration
- ----------------------------------------------
The issue in the developed markets is not so much availability but
rather increased market penetration. Refurbished product sold to the carriers
will form their entry point product for pre-paid sales. Many carriers are
promoting entry point product as a security feature for children, the elderly,
etc. These phones simply need to be able to make/receive calls and refurbished
product achieves this at a reasonable price. Europe possesses a much higher rate
of pre-paid systems than in the US (fifteen to one). However, pre-paid is
accelerating its market penetration in North America as it has proven to be a
more efficient and profitable system for the carriers. As in the developing
markets, the carriers will be our primary wholesale target.
We believe there is also a substantial corporate pre-paid market
opportunity. We believe that pre-paid will be attractive to the corporations as
they can control how much their employees spend on airtime and hence, their
costs. Refurbished sales efforts will target the corporate market through two
channels. First, as a source of less expensive phones that can be used by their
employees and second, as a branded price-point cell phone product that can be
sold through their retail chains. We will attempt to develop a co-branding
strategy for these clients, such as the "Phones for Sight" pre-paid cell phone
to strengthen brand loyalty and increase sales.
We believe that, through our relationship with the Foundation, we will
have a reliable supply of wireless assets. With respect to the demand side of
the equation, we believe we have
25
found a buyer of all the refurbished wireless assets we are able to produce.
This is solidified by a letter of intent between Recellular Incorporated and
Humanity indicating ReCellular Incorporated's desire to purchase from us our
collected cellular assets.
ReCellular Incorporated is the world leader in trading and refurbishing
wireless equipment. Established in 1991, they have pioneered and defined
wireless refurbishing for over 10 years. They work with all levels of wireless
service providers from the largest carriers to the smallest agents.
Competition
There are no patents available for the business being undertaken and
thus there are no barriers to competition. Companies with greater financial,
technical, and marketing resources could severely impact our business model if
they enter our industry.
Competing technologies or any new technologies may provide significant
competition for us. We cannot assure you that one or more of the technologies
that we sell will not become inferior or obsolete at some time in the future.
New technologies that are comparable to cellular service include:
.personal communications services, .
.ESMR and
.satellite-based services.
Personal communications services refer to the series of two-way
communication licenses recently awarded by the FCC which are expected to use
digital wireless technologies. Many personal communication services licensees
who will compete with us have access to substantial capital resources. In
addition, many of these companies, or their affiliates, already operate large
cellular telephone systems and thus bring significant wireless experience to
this new marketplace.
ESMR is a two-way wireless communications service that incorporates
characteristics of cellular technology, including many low-power transmitters
and connection with the network that provides traditional telephone services.
ESMR service may compete with cellular service by providing digital
communication technology, lower rates, enhanced privacy and additional features
such as electronic mail and built-in paging. Nextel Communications, Inc. is the
primary provider of such services today. The FCC has issued a number of licenses
for satellite-based services that would enable subscribers to access mobile
communications systems throughout the world. Additional proposals for the
provision of satellite services remain pending with the FCC and foreign
regulatory bodies must approve certain aspects of some satellite systems.
Competition in the industry is intense. We believe that competition may
increase substantially with the increased use of wireless assets. We believe our
success in competing with other companies in our industry will depend primarily
on our engineering, manufacturing and marketing skills, the price, quality and
reliability of our products, and our delivery and service
26
capabilities. We anticipate increasing pricing pressures from current and future
competitors. Many of our foreign and domestic competitors have more extensive
engineering, manufacturing, marketing, financial and personnel resources than we
have. As a result, they may be able to respond more quickly to changes in
customer requirements. We cannot predict whether we will be able to compete
successfully with our existing and new products and services or with current and
future competitors.
In addition, we believe that technological change, the increasing
addition of Internet/data, video, voice, and other services to networks,
continuing regulatory changes and industry consolidation or new entrants will
continue to cause rapid evolution in the competitive environment. The full scope
and nature of these changes is difficult to predict at this time. Increased
competition could lead to price cuts, reduced gross margins and loss of market
share, which may seriously harm our business, operating results and financial
condition.
Employees
As of November 15, 2001 we had no employees.
Properties
We currently are using the offices of our President on a month to
month, rent free basis.
MANAGEMENT
Our director(s), executive officer(s) and other key employees, and
their ages, as of the date of this prospectus, are as follows:
Name Age Positions held Since
- ---- --- -------------- -----
Robert G. Auld 29 President July 2001
Riaz Sumar 31 CFO & Corporate Secretary July 2001
The backgrounds of our directors, executive officers and significant employees
are as follows:
Robert G. Auld MBA, PEng President
In the last 5 years Robert Auld has held a number of positions in key management
roles. Since July, 2001 Robert Auld has served as President of Simplicia.
Between January 2000 and present Robert Auld has been the President of Auld
Management Consulting. Since April, 2001 Robert Auld has held the position of
President and CEO of North American Gem Inc. Between November 1998 and January
2000, Robert Auld held the position of Senior Project Manager with IBM Canada.
Between November 1995 and November 1998, he was employed by Computing Devices
Canada a division of General Dynamics. He has managed various telecommunications
and computer infrastructure projects ranging in size from $500,000 to
27
$50,000,000 for clients including IBM, Canadian Department of National Defense,
General Dynamics, and, Alberta Treasury Branches.
Riaz Sumar CGA, Secretary
Since April, 2001 Robert Auld has held the position of President and CEO of
North American Gem Inc. From 1996 until present Riaz Sumar has been the
controller for Tracer Petroleum Corporation, a publicly traded international oil
and gas company. His responsibilities included financial and public reporting as
well as corporate governance. More recently, Mr. Sumar also worked with Corona
Ventures Group Ltd., a private venture capital company where he helped analyze
business plans of various companies and provided management support for
companies that were in development stages.
All directors hold office until the next annual meeting of stockholders and
until their successors have been duly elected and qualified. There are no
agreements with respect to the election of directors. We have not compensated
our directors for service on the Board of Directors or any committee thereof. As
of the date hereof, no director has accrued any expenses or compensation.
Officers are appointed annually by the Board of Directors and each executive
officer serves at the discretion of the Board of Directors. We do not have any
standing committees at this time.
There are no family relationships between any of our directors,
executive officers and other key personnel.
All of our directors and officers are elected annually to serve for
one year or until their successors are duly elected and qualified.
During the past ten years none of our directors, executive officers,
promoter or control persons of the Company were:
(1) the subject of any bankruptcy petition filed by or against any
business of which such person was a general partner or executive officer either
at the time of the bankruptcy or within two years prior to that time;
(2) convicted in a criminal proceeding or is subject to a
pending criminal proceeding (excluding traffic violations and other minor
offenses);
(3) subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting
his involvement in any type of business, securities or banking activities; or
(4) found by a court of competent jurisdiction (in a civil action), the
Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law.
28
EXECUTIVE COMPENSATION
The following summary compensation table reflects all compensation
awarded to, earned by, or paid to our Chief Executive Officer and president and
other employees for all services rendered to us in all capacities during each of
the years ended August 31, 1999, 2000 and 2001. None of our other executive
offices received salary and bonus exceeding $100,000 during those years.
- ---------------------------------------------------------------------------------------------------------
Summary Compensation Table
- ---------------------------------------------------------------------------------------------------------
- ------------------------------------------------- -------- -------------- ---------- --------------------
All Annual
Name and Principal Position Year Salary Bonus Compensation
--------------------------- ---- ------ ----- ------------
(**)
- ------------------------------------------------- -------- -------------- ---------- --------------------
- ------------------------------------------------- -------- -------------- ---------- --------------------
Robert Auld, President 2001 Nil Nil Nil
2000 N/A N/A N/A
1999 N/A N/A N/A
- ------------------------------------------------- -------- -------------- ---------- --------------------
- ------------------------------------------------- -------- -------------- ---------- --------------------
Riaz Sumar, Corporate Secretary 2001 Nil Nil Nil
2000 N/A N/A N/A
1999 N/A N/A N/A
- ------------------------------------------------- -------- -------------- ---------- --------------------
Directors' Compensation
Directors are not compensated for their services.
Employment and Severance Agreement
There are no employment contracts or agreements between the company and
the officers.
We do not have any employee stock option or other incentive plans
PRINCIPAL SHAREHOLDERS
The following lists as of November 30, 2001 the beneficial ownership of
shares of each person known to us who owns more than 5% of our issued and
outstanding shares and of our directors, executive officers and significant
employees.
29
- ---------------------------------------- -------------------------------------- -----------------------
Name and Address of Beneficial Owner Amount and Nature of Beneficial Percent of Class
Ownership
- ---------------------------------------- -------------------------------------- -----------------------
- ---------------------------------------- -------------------------------------- -----------------------
Robert Auld (1) 650,000 40.6%
280 Fairways Bay NW
Calgary, Alberta T4B 2P5
- ---------------------------------------- -------------------------------------- -----------------------
- ---------------------------------------- -------------------------------------- -----------------------
Riaz Sumar (1) 650,000 40.6%
Suite 1204
1030 - 16th Avenue SW
Calgary, Alberta T2R 1N1
- ---------------------------------------- -------------------------------------- -----------------------
- ---------------------------------------- -------------------------------------- -----------------------
Joseph Sierchio (2) 200,000 12.5%
150 East 58th Street
New York, New York 10155
- ---------------------------------------- -------------------------------------- -----------------------
- ---------------------------------------- -------------------------------------- -----------------------
Christina McDonald (3) 100,000 6.3%
21 Buggey Lane
Ajax, ON
L1S 4S7
- ---------------------------------------- -------------------------------------- -----------------------
<FN>
1) Directors and officer as a group (Mr. Auld and Mr. Sumar) own 83.4% of the issued and outstanding shares in the Simplicia.
2) Joseph Sierchio is a partner of Sierchio and Company LLP, our legal counsel.
3) Christina McDonald is the wife of the President of Humanity.
</FN>
DESCRIPTION OF CAPITAL STOCK
We are authorized to issue 150,000,000 shares of common stock, $.0001
par value per share, of which 1,600,000 shares were issued and outstanding as of
the date of this offering memorandum. Each outstanding share of common stock
entitles the holder to one vote, either in person or by proxy, on all matters
that may be voted upon by the owners of those shares at meetings of the
stockholders.
The holders of common stock (i) have equal rights to dividends from
funds legally available for the payment of dividends, when, as and if declared
by our board of directors; (ii) are entitled to share ratably in all of our
assets available for distribution to holders of common stock upon liquidation,
dissolution or winding up of our affairs; (iii) do not have preemptive,
subscription or conversion rights, and (iv) are entitled to one non-cumulative
vote per share on all matters on which stockholders may vote at all meetings of
stockholders.
All shares of common stock which are the subject of this offering, when
issued, will be fully paid for and non-assessable, with no personal liability
attaching to their ownership. The holders of shares of our common stock do not
have cumulative voting rights, which means that the holders of more than 50% of
the outstanding common stock, voting for the election of directors, can elect
all of our directors if they so choose and, in that event, the holders of the
remaining common stock will not be able to elect any of our directors.
Each share of common stock is entitled to share pro rata in dividends
and distributions with respect to the common stock when, as and if declared by
the board of directors from
30
funds legally available for that purpose. No holder of any shares of common
stock has any pre-emptive right to subscribe for any of our securities. Upon
dissolution, liquidation or winding up of our company, the assets will be
divided pro rata on a share-for-share basis among holders of the shares of
common stock after any required distribution to the holders of preferred stock,
if any. All shares of common stock outstanding are fully paid and nonassessable.
Each shareholder of common stock is entitled to one vote per share with
respect to all matters that are required by law to be submitted to shareholders.
Dividends
We have not declared any dividends since inception, and have no present
intention of paying any cash dividends on our Units in the foreseeable future.
The payment of dividends, if any, in the future, rests within the discretion of
our board of directors and will depend, among other things, upon our earnings,
our capital requirements and our financial condition, as well as other relevant
facts.
Transfer Agent and Registrar
Currently, we are acting as our own transfer agent and registrar for
our common stock. Upon completion of the offering we will engage Stocktrans,
Inc.,7 E. Lancaster Avenue, Ardmore, Pennsylvania 19003 to act as our transfer
agent.
MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
There has been no trading market for our common stock nor is there any
assurance that one will develop. There are currently 4 beneficial holders of our
outstanding common stock. The outstanding shares of common stock were sold in
reliance upon an exemption from registration contained in Section 4(2) of the
Securities Act. There can be no assurance that a trading market will develop. To
date, neither we nor anyone acting on our behalf has taken any affirmative steps
to retain or encourage any broker/dealer to act as a market maker for our common
stock. Further, there have been no discussions or understandings, preliminary or
otherwise, between us or anyone acting on our behalf and any market maker
regarding the participation of any such market maker in the future trading
market, if any, for our common stock.
There are no outstanding options or warrants to purchase, or securities
convertible into, our common equity. All of the shares of our common stock
currently outstanding are restricted securities as that term is defined in the
Securities Act.
As of the date of this offering memorandum, none our shares of common
stock are immediately eligible for sale in the public market without restriction
or further registration under the Securities Act unless purchased by or issued
to any "affiliate" of ours, as that term is defined in Rule 144 promulgated
under the Securities Act, described below. All
31
other outstanding shares of our common stock are "restricted securities" as such
term is defined under Rule 144, in that those shares were issued in private
transactions not involving a public offering and may not be sold in the absence
of registration other than in accordance with Rule 144, 144(k) or 701
promulgated under the Securities Act or another exemption from registration.
Sales of substantial amounts of our shares under Rule 144, this
offering memorandum or otherwise could adversely affect the prevailing market
price of our common stock and could impair our ability to raise capital through
the future sale of our securities.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There have been no transactions during the last two years, or proposed
transactions, to which we were or are a party in which any of our directors,
officers, shareholders, owning more than 5% of our securities or members of
their family had or have a material interest. Each of our directors acquired
650,000 shares of our common stock at an aggregate price of $4,950.
32
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
We believe that provisions of our Articles of Incorporation and bylaws
will be useful to attract and retain qualified persons as directors and
officers. Our Articles of Incorporation limit the liability of directors and
officers to the fullest extent permitted by Delaware law. This is intended to
allow our directors and officers the benefit of Delaware's corporation law which
provides that directors and officers of Delaware corporations may be relieved of
monetary liabilities for breach of their fiduciary duties as directors, except
under circumstances which involve acts or omissions which involve intentional
misconduct, fraud or a knowing violation of law.
In the event that a claim for indemnification against those liabilities
(other than our payment of expenses incurred or paid by a director, officer or
controlling person in the successful defense of any action, suit or proceeding)
is asserted by a director, officer or controlling person in connection with the
securities being registered, we will, unless in the opinion of our counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether the indemnification by us is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of that issue.
LEGAL PROCEEDINGS
We are not a party to any pending lawsuit or legal proceedings nor are
we aware of any threatened lawsuit or proceeding.
LEGAL MATTERS
The validity of the issuance of the common stock offered hereby has
been passed upon for us by Sierchio & Company, LLP, New York, New York.
EXPERTS
The financial statements of Simplicia Telecommunications Inc. at
August 31, 2001, appearing in this prospectus and in the registration statement
have been audited by Richard Prinzi Jr. CPA., independent Certified Public
Accountants, as set forth in their report thereon appearing elsewhere herein,
and are included in reliance upon such report given upon the authority of such
firm as experts in auditing and accounting.
INTEREST OF NAMED EXPERTS AND COUNSEL
Joseph Sierchio, a partner of Sierchio & Company, LLP, our legal counsel, owns
200,000 shares of our common stock.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form SB-2. This prospectus, which is a part of the registration
statement, does not contain all of the information included in the registration
statement. Some information is omitted and you should refer to the registration
statement and its exhibits. With respect to references made in this prospectus
to any of our contracts, agreements or other documents, such references are not
necessarily complete and you should refer to the exhibits attached to the
registration statement for copies of the actual contract, agreement or other
document.
We intend to send an annual report, including audited financial
statements, to our shareholders. We will also file annual, quarterly and current
reports, and other information with the Securities and Exchange Commission.
Our registration statement and other filings with the Securities and
Exchange Commission can be reviewed by accessing the Securities and Exchange
Commission's Internet site at http://www.sec.gov, which contains reports, proxy
and information statements and other information regarding registrants that file
electronically with the Securities and Exchange Commission.
Simplicia Telecommunications, Inc.
(A Development Stage Company)
Financial Statements
Simplicia Telecommunications, Inc.
(A Development Stage Company)
Index To Financial Statements
Page
Report of Independent Public Accounts F2
Financial Statements:
Balance Sheet-August 31, 2001 F3
Statement of Operations for July 27, 2001 (Date of Inception)
through August 31, 2001 F4
Statement of Changes in Shareholders' Equity for the period
July 27, 2001 (Date of Inception) through August 31, 2001. F5
Statement of Cash Flows for the period July 27, 2001 (Date
of Inception) through August 31, 2001. F6
Notes to Financial Statements F7 to F9
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- ----------------------------------------
To The Board of Directors Simplicia Telecommunications, Inc..:
We have audited the accompanying balance sheet of Simplicia Telecommunications,
Inc.. (a Delaware Corporation in the Development Stage) as of August 31, 2001,
and the related statements of operations, changes in shareholders' equity and
cash flows for the period from July 27, 2001 (Date of Inception) through August
31, 2001. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
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 audit provides 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 Simplicia Telecommunications,
Inc. as of August 31, 2001, and the related statements of operations, changes in
shareholders' equity and cash flows for the period from July 27, 2001 (Date of
Inception) through August 31, 2001 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note #1 to the financial
statements, the Company has no established source of revenue. This raises
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are described in Note #1. The financial
statements do not include any adjustments that might result from the outcome for
this uncertainty.
/s/ "Richard Prinzi Jr., CPA"
Staten Island, New York
December 2, 2001
F2
Simplicia Telecommunications, Inc.
(A Development Stage Company)
Balance Sheets
Assets
August 31,
2001
----------------
Current Assets:
Cash $ 2,369
Subscription Receivable 15,000
Prepaid Expenses 3,113
----------------
Total Current Assets 20,482
----------------
Total Assets 20,482
================
Liabilities And Shareholders' Equity
Current Liabilities:
Accounts Payable $ 1,578
----------------
Total Current Liabilities 1,578
----------------
Total Liabilities 1,578
----------------
Shareholders' Equity:
Common stock, $.0001 par value,150,000,000 shares
Authorized, 1,560,000 shares issued and outstanding 156
Additional Paid in Capital 24,764
----------------
Total Stockholders' Equity 24,920
Loss accumulated during the development stage (6,016)
----------------
Total Shareholders' Equity 18,904
----------------
Total Liabilities and Shareholders' Equity $ 20,482
================
See Accompanying Notes to Financial Statements
F3
Simplicia Telecommunications, Inc.
(A Development Stage Company)
Statement of Operations
For the period
July 27, 2001
(Date of Inception)
To August 31, 2001
-------------------
Income:
Total Income $ 0
-------------------
Expenses:
Legal & Professional 4,551
Bank Charges 12
Licenses & Permits 10
Travel 1,443
-------------------
Total Expenses 6,016
-------------------
Loss Accumulated During The Development Stage $ (6,016)
===================
Loss per Common Share $ (.0039)
===================
Weighted Average of Common Shares Outstanding 1,560,000
===================
See Accompanying Notes to Financial Statement
F4
Simplicia Telecommunications, Inc.
(A Development Stage Company)
Statement of Changes in Shareholders' Equity
Common Stock Loss
------------------------------ Accumulated
Additional During the
Paid In Development
Par Value Capital Stage Total
---------------------------------------------------------------------------------------
For the Period July 27, 2001
(Date of Inception)
Through August 31, 2001
- ----------------------------
Issuance of stock 1,560,000 $ 156 $ 24,764 $ 24,920
Loss Accumulated During the
Development Stage $ (6,016) (6,016)
---------------------------------------------------------------------------------------
Balance, August 31, 2001 1,560,000 $ 156 $ 24,764 $ (6,016) $ 18,904
=======================================================================================
See Accompanying Notes to Financial Statements
F5
Simplicia Telecommunications, Inc.
(A Development Stage Company)
Statement of Cash Flows
For the period July
27, 2001 (Date of
Inception) To
August 31, 2001
-------------------
Cash Flows From Operating Activities:
Loss Accumulated During the Development Stage $ (6,016)
Net (increase) decrease in Subscription Receivable (15,000)
Net (increase) decrease in Prepaid Expenses (3,113)
Net increase (decrease) in Accounts Payable 1,578
-------------------
Net Cash Used in Operating Activities (22,551)
-------------------
Cash Flow From Financing Activities:
Proceeds from issuance of common stock 24,920
-------------------
Net Cash Provided By Financing Activities 24,920
-------------------
Net Increase in Cash: 2,369
-------------------
Cash, beginning of period 0
-------------------
Cash, end of period $ 2,369
===================
See Accompanying Notes to Financial Statements
F6
Simplicia Telecommunications, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1. COMPANY INFORMATION
Simplicia Telecommunications, Inc.., ("The Company") was organized July 27,
2001, under the laws of the State of Delaware, as Simplicia Telecommunications,
Inc.. The Company is currently in the development stage. Management has elected
an August 31 year-end for the Company. The Company will be in the development
stage until it raises the required capital and begins recycling wireless assets.
The Company acquired the worldwide rights from the Phones for Sight Foundation,
a non-profit charitable entity, for the sale and exclusive rights to the
collection, refurbishment and resale of cellular phones and other devices in the
United States, its territories and possessions, as well as the right to the use
of its proprietary business plan in connection with the refurbishment and resale
of the cellular phones and other devices. The Company intends to commence
operations following the successful consummation of this offering and may need
additional financing in order to carry out its business plan.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash & Cash Equivalents
For the purpose of the statement of cash flows, cash equivalents include all
highly liquid investments, with a maturity of three months or less.
Basis of Financial Statements
These financial statements are prepared on the accrual basis of accounting in
conformity with generally accepted accounting principles.
Income Taxes
Income taxes are accounted for in accordance with Statement of Financial
Accounting Standards No.109, "Accounting for Income Taxes". Under this method,
deferred income taxes are determined based on differences between the tax basis
of assets and liabilities and their financial reporting amounts at each year
end, and are measured based on enacted tax rates and laws that will be in effect
when the differences are expected to reverse. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized. No provision for income taxes is included in the
statement due to its immaterial amount.
F7
Simplicia Telecommunications, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Utilization of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and 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.
Net Income Per Common Share
Net income per common share is computed based on the weighted average number of
common shares outstanding and common stock equivalents, if not anti-dilutive.
NOTE 3. CAPITAL STOCK
The Company is offering ("The Offering") the right to subscribe for 300,000
shares at $.25 per share on a no minimum basis. This means that the proceeds
from the offering will not be kept in an escrow account pending completion of
this offering. The shares will be sold through the President and Directors of
the Company and no compensation is to be paid to any person for the offer and
sale of the shares.
The Company's Certificate of Incorporation authorizes the issuance of
150,000,000 shares of common stock. The Company's Board of Directors has the
power to issue any or all of the authorized but un-issued common stock without
stockholder approval. To the extent that additional shares of common stock are
issued, dilution to the interest of the Company's stockholders participating in
the Offering will occur.
There are presently outstanding 1,560,000 shares of the Company's Common Stock
for which a relatively nominal consideration was paid. In contrast, the
purchasers of the Shares offered are providing the Company with $75,000 of
funding. Purchasers of the Shares will represent 16% of all Shares outstanding,
although they will have provided the major portion of the Company's funding to
date. The purchasers of the Shares offered hereby would have no effective voice
in the Company's management and the Company would be controlled by the existing
stockholders.
F8
Simplicia Telecommunications, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 3. CAPITAL STOCK (Continued)
Upon any liquidation, dissolution or winding up of the Company, holders of
Shares of Common Stock are entitled to receive pro rata all of the assets of the
Company available for distribution to holders of shares of the Company's Common
Stock. Moreover, In the event such a liquidation were to occur all stockholders
of the Company, including those owning shares purchased privately at less than
the public offering price, will receive the liquidated assets on a pro-rata
basis (as opposed to being based on the amounts paid for such shares).
On August 31, 2001, the Company accepted a subscription agreement for 60,000
shares at $.25 per share. The Funds were received on September 6, 2001. At
August 31, 2001, $15,000 was recorded as subscription receivable on the Balance
Sheet.
NOTE 4. INCOME TAXES
The Company has available at August 31, 2001, $6,016 of unused operating loss
carry forwards that may be applied against future taxable income and expire in
various years beginning 2019.
NOTE 5. RELATED PARTY TRANSACTIONS
As of August 31, 2001, the officers of the Company owned 1,300,000 shares and
the Company's attorney owned 200,000 shares of the 1,560,000 shares outstanding
of the Company.
F9
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. Indemnification of Officers and Directors.
The only statute, charter provision, by-law, contract, or other
arrangement under which any controlling person, director or officers of the
Registrant is insured or indemnified in any manner against any liability which
he may incur in his capacity as such, is as follows:
Our Certificate of Incorporation and our By-laws require us to
indemnify officers and directors to the fullest extent permitted by the Delaware
Business Corporation Law (DBCA). Simplicia has also entered into agreements to
indemnify its directors and executive officers to provide the maximum
indemnification permitted by Delaware law. These agreements, among other
provisions, provide indemnification for certain expenses (including attorney
fees), judgments, fines and settlement amounts incurred in any action or
proceeding, including any action by or in our right.
Our By-laws require us to indemnify our directors, officers, employees
and agent to the maximum extent permitted by the DBCA. Section 317 of the DBCA
provides that a corporation has the power to indemnify and hold harmless a
director, officer, employer, or agent of the corporation who is or is made a
party or is threatened to be made a party to any threatened action, suit or
proceeding, whether civil, criminal, administrative or investigative, against
all expense, liability and loss actually and reasonably incurred by such person
in connection with such a proceeding if he or she acted in good faith and in a
manner he or she reasonably believed to be in the best interest of the
corporation, and, with respect to any criminal proceeding, had no reasonable
cause to believe that the conduct was unlawful. If it is determined that the
conduct of such person meets these standards, such person may be indemnified for
expenses incurred and amounts paid in such proceeding if actually and reasonably
in connection therewith.
If such a proceeding is brought by or on behalf of the corporation
(i.e., a derivative suit), such person may be indemnified against expenses
actually and reasonably incurred if such person acted in good faith and in a
manner reasonably believed to be in the best interest of the corporation and its
shareholders. There can be no indemnification with respect to any matter as to
which such person is adjudged to be liable to the corporation unless and only to
the extent that the court in which such action or suit was brought shall
determine upon application that, despite such adjudication but in view of all of
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as the court shall deem proper.
Where any such person is successful in any such proceeding, such person
is entitled to be indemnified against expenses actually and reasonably incurred
by him or her. In all other cases (unless order by a court), indemnification is
made by the corporation upon determination by it that indemnification of such
person is proper in the circumstances because such person has met the applicable
standard or conduct.
A corporation may advance expenses incurred in defending any such
proceeding upon receipt of an undertaking to repay any amount so advanced if it
is ultimately determined that the person is not eligible for indemnification.
The indemnification rights provided in Section 317 of the DBCA are not
exclusive of additional rights to indemnification for breach of duty to the
corporation and its shareholders to the extent additional rights are authorized
in the corporation's articles of incorporation and are not exclusive of any
other rights to indemnification under any by-law, agreement, vote of
shareholders or disinterested directors or otherwise, with as to action in his
or her office and as to action in another capacity which holding such office.
ITEM 25. Other Expenses of Issuance and Distribution.
The following table sets forth an itemization of various expenses, all
of which we will pay, in connection with the sale and distribution of the
securities being registered. All of the amounts shown are estimates, except the
Securities and Exchange Commission registration fee.
- ---------------------------------------------------------------
Securities and Exchange Commission Registration Fee $ 23
- ---------------------------------------------------------------
- ---------------------------------------------------------------
Accounting Fees and Expenses
4,000
- ---------------------------------------------------------------
- ---------------------------------------------------------------
Transfer Agents Fees
1,500
- ---------------------------------------------------------------
- ---------------------------------------------------------------
Printing Costs
500
- ---------------------------------------------------------------
- ---------------------------------------------------------------
Edgar Fees
3,000
- ---------------------------------------------------------------
- ---------------------------------------------------------------
Legal Fees and Expenses
37,500
- ---------------------------------------------------------------
- ---------------------------------------------------------------
Blue Sky Fees
2,000
- ---------------------------------------------------------------
- ---------------------------------------------------------------
Miscellaneous
1,500
- ---------------------------------------------------------------
- ---------------------------------------------------------------
TOTAL $50,023
- ---------------------------------------------------------------
ITEM 26. Recent Sales of Unregistered Securities.
Set forth in chronological order is information regarding shares of
common and preferred stock issued from incorporation-to the date of this
prospectus. Also included is the consideration, if any, received by us for such
securities.We believe that all of the issuances were exempt from registration of
the Securities Act of 1933, amended, by virtue of section 4(2) thereof and/or
Regulation S promulgated thereunder.
- -------------------------------------------------------------------------------
Name Number Date Amount
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Joseph Sierchio 200,000 July 30, 2001 $20.00
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Robert Auld 650,000 August 28, 2001 $4,950
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Riaz Sumar 650,000 August 28, 2001 $4,950
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Christina McDonald 60,000 September 6, 2001 $15,000
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Christina McDonald 40,000 November 29, 2001 $10,000
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Total 1,600,000 $34,920
- -------------------------------------------------------------------------------
Item 27. Exhibits
The following Exhibits are attached hereto:
EXHIBIT INDEX
EXHIBIT DESCRIPTION OF EXHIBIT AND FILING REFERENCE
NUMBER
3.1 Certificate of Incorporation
3.2 Bylaws
5.1 Opinion of Sierchio & Company, LLP, regarding the legality of
the securities being registered
10.1 Memorandum of Agreement between Humanity and the Foundation
dated June 25, 2001 and Amendment thereto dated July 31, 2001
10.2 Memorandum of Agreement between Humanity, Simplicia and the
Foundation dated August 1, 2001
10.3 Recellular Incorporated Letter of Intent dated October 12,
2001
10.4 Letter Of Intent between Humanity and Simplicia dated December
12, 2001
23.1 Consent of Sierchio & Company, LLP (included in Exhibit 5.1)
23.2 Consent of Richard Prinzi JR. CPA
ITEM 28. Undertakings
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 24 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
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 for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the following persons in the capacities
and on the 17 th Day of December, 2001 in the City of Airdrie, Alberta, Canada.
Simplicia Telecommunications, Inc.
By: /s/ "Robert Auld"
- ---------------------
Robert Auld, President and Director
By: /s/ "Riaz Sumar"
- --------------------
Riaz Sumar, CFO & Corporate Secretary
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
--------------------
SIMPLICIA TELECOMMUNICATIONS, INC.
EXHIBIT INDEX
EXHIBIT DESCRIPTION OF EXHIBIT AND FILING REFERENCE
NUMBER
3.1 Certificate of Incorporation
3.2 Bylaws
5.1 Opinion of Sierchio & Company, LLP, regarding the legality of
the securities being registered
10.1 Memorandum of Agreement between Humanity and the Foundation
dated June 25, 2001 and Amendment thereto dated July 31, 2001
10.2 Memorandum of Agreement between Humanity, Simplicia and the
Foundation dated August 1, 2001
10.3 Recellular Incorporated Letter of Intent dated October 12, 2001
10.4 Letter Of Intent between Humanity and Simplicia dated
December 12, 2001
23.1 Consent of Sierchio & Company, LLP (included in Exhibit 5.1)
23.2 Consent of Richard Prinzi JR. CPA
EXHIBIT 3.1
State of Delaware
Page 1
Office of the Secretary of State
- --------------------------------
I, HARRIET SMITH WINDSOR, SECRETARY OF THE STATE OF DELAWARE,
DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE
CERTIFICATE OF INCORPORATION OF "SIMPLICIA TELECOMMUNICATIONS INC."
FILED IN THIS OFFICE ON THE TWENTY-SEVENTH DAY OF JULY, A.D. 2001, AT 3
O'CLOCK P.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW
CASTLE COUNTY RECORDER OF DEEDS.
"Harriet Smith Windsor"
-----------------------------------------
Harriet Smith Windsor, Secretary of State
Authentication: 1268535
Date: 07-30-01
STATE OF DELAWARE
CERTIFICATE OF INCORPORATION
A STOCK CORPORATION
FIRST: The name of the corporation shall be:
Simplicia Telecommunications Inc.
SECOND: Its registered office in the State of Delaware is to be located at
2711 Centerville Road, Suite 400, the City of Wilmington, County
of New Castle and its registered agent at such address is
CORPORATION SERVICE COMPANY.
THIRD: The purpose or purposes of the corporation shall be:
To engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of Delaware.
FOURTH: The total number of shares of stock which the corporation is
authorized to issue is:
150,000,000 common shares with par value of $0.000100 per common share
FIFTH: The name and address of the incorporator is as follows:
Robert Auld
280 Fairways Bay NW
Airdrie, Alberta, Canada
T4B 2P5
SIXTH: The Board of Directors shall have the power to adopt, amend or repeal
the by-laws.
SEVENTH: No director shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding the foregoing sentence, a director shall
be liable to the extent provided by applicable law, (i) for breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived an
improper personal benefit. No amendment to or repeal of this Article
Seventh shall apply to or have any effect on the liability or alleged liability
of any director of the Corporation for or with respect to any acts or omissions
of such director occurring prior to such amendment.
I, The Undersigned, for the purpose of forming a corporation under the laws of
the State of Delaware, do make, file and record this Certificate, and do certify
that the facts herein stated are true, and I have accordingly hereunto set my
hand this 27th day of July, A.D. 2001
BY: "Robert Auld"
(Incorporator)
NAME: Robert G. Auld
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STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 3:00 PM 07/27/2001
010367527 - 3419668
EXHIBIT 3.2
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BY-LAW NO.1
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OF
SIMPLICIA TELECOMMUNICATIONS INC.
(a Delaware corporation)
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ARTICLE I
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STOCKHOLDERS
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1. CERTIFICATES REPRESENTING STOCK. Certificates representing
stock in the corporation shall be signed by, or in the name of, the corporation
by the Chairperson or Vice-Chairperson of the Board of Directors, if any, or by
the President or a Vice-President and by the Treasurer or an Assistant Treasurer
or the Secretary or an Assistant Secretary of the corporation. Any or all the
signatures on any such certificate may be a facsimile. In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent, or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if such person were such officer, transfer
agent, or registrar at the date of issue.
Whenever the corporation shall be authorized to issue more
than one class of stock or more than one series of any class of stock, and
whenever the corporation shall issue any shares of its stock as partly paid
stock, the certificates representing shares of any such class or series or of
any such partly paid stock shall set forth thereon the statements prescribed by
the General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock or
uncertificated shares in place of any certificate theretofore issued by it,
alleged to have been lost, stolen, or destroyed, and the Board of Directors may
require the owner of the lost, stolen, or destroyed certificate, or such owner's
legal representative, to give the corporation a bond sufficient to indemnify the
corporation against any claim that may be made against it on account of the
alleged loss, theft, or destruction of any such certificate or the issuance of
any such new certificate or uncertificated shares.
2. UNCERTIFICATED SHARES. Subject to any conditions imposed by
the General Corporation Law, the Board of Directors of the corporation may
provide by resolution or resolutions that some or all of any or all classes or
series of the stock of the corporation shall be uncertificated shares. Within a
reasonable time after the issuance or transfer of any uncertificated shares, the
corporation shall send to the registered owner thereof any written notice
prescribed by the General Corporation Law.
3. FRACTIONAL SHARE INTERESTS. The corporation may, but shall
not be required to, issue fractions of a share. If the corporation does not
issue fractions of a share, it shall (1) arrange for the disposition of
fractional interests by those entitled thereto, (2) pay in cash the fair value
of fractions of a share as of the time when those entitled to receive such
fractions are determined, or (3) issue scrip or warrants in registered form
(either represented by a certificate or uncertificated) or bearer form
(represented by a certificate) which shall entitle the holder to receive a full
share upon the surrender of such scrip or warrants aggregating a full share. A
certificate for a fractional share or an uncertificated fractional share shall,
but scrip or warrants shall not unless otherwise provided therein, entitle the
holder to exercise voting rights, to receive dividends thereon, and to
participate in any of the assets of the corporation in the event of liquidation.
The Board of Directors may cause scrip or warrants to be issued subject to the
conditions that they shall become void if not exchanged for certificates
representing the full shares or uncertificated full shares before a specified
date, or subject to the conditions that the shares for which scrip or warrants
are exchangeable may be sold by the corporation and the proceeds thereof
distributed to the holders of scrip or warrants, or subject to any other
conditions which the Board of Directors may impose.
4. STOCK TRANSFERS. Upon compliance with provisions
restricting the transfer or registration of transfer of shares of stock, if any,
transfers or registration of transfers of shares of stock of the corporation
shall be made only on the stock ledger of the corporation by the registered
holder thereof, or by the registered holder's attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary of the corporation
or with a transfer agent or a registrar, if any, and, in the case of shares
represented by certificates, on surrender of the certificate or certificates for
such shares of stock properly endorsed and the payment of all taxes due thereon.
5. RECORD DATE FOR STOCKHOLDERS. In order that the corporation
may determine the stockholders entitled to notice of or to vote at any meeting
of stockholders or any adjournment thereof, the Board of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which record date shall not be more than sixty nor less than ten days before the
date of such meeting. If no record date is fixed by the Board of Directors, the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting. In order that the corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than ten days after the date upon
which the resolution fixing the record date
is adopted by the Board of Directors. If no record date has been fixed by the
Board of Directors, the record date for determining the stockholders entitled to
consent to corporate action in writing without a meeting, when no prior action
by the Board of Directors is required by the General Corporation Law, shall be
the first date on which a signed written consent setting forth the action taken
or proposed to be taken is delivered to the corporation by delivery to its
principal place of business or an officer or agent of the corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. If no record date has been fixed by the Board of Directors and prior
action by the Board of Directors is required by the General Corporation Law, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting shall be at the close of business on the day on
which the Board of Directors adopts the resolution taking such prior action. In
order that the corporation may determine the stockholders entitled to receive
payment of any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion, or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty days prior to such action. If
no record date is fixed, the record date for determining stockholders for any
such purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
6. MEANING OF CERTAIN TERMS. As used herein in respect of the
right to notice of a meeting of stockholders or a waiver thereof or to
participate or vote thereat or to consent or dissent in writing in lieu of a
meeting, as the case may be, the term "share" or "shares" or "share of stock" or
"shares of stock" or "stockholder" or "stockholders" refers to an outstanding
share or shares of stock and to a holder or holders of record of outstanding
shares of stock when the corporation is authorized to issue only one class of
shares of stock, and said reference is also intended to include any outstanding
share or shares of stock and any holder or holders of record of outstanding
shares of stock of any class upon which or upon whom the certificate of
incorporation confers such rights where there are two or more classes or series
of shares of stock or upon which or upon whom the General Corporation Law
confers such rights notwithstanding that the certificate of incorporation may
provide for more than one class or series of shares of stock, one or more of
which are limited or denied such rights thereunder; provided, however, that no
such right shall vest in the event of an increase or a decrease in the
authorized number of shares of stock of any class or series which is otherwise
denied voting rights under the provisions of the certificate of incorporation,
except as any provision of law may otherwise require.
7. STOCKHOLDER MEETINGS.
- TIME. The annual meeting shall be held on the date and at
the time fixed, from time to time, by the directors, provided, that the first
annual meeting shall be held on a date within thirteen months after the
organization of the corporation, and each successive annual meeting shall be
held on a date within thirteen months after the date of the preceding annual
meeting. A special meeting shall be held on the date and at the time fixed by
the directors.
- PLACE. Annual meetings and special meetings may be held at
such place, either within or without the State of Delaware, as the directors
may, from time to time, fix. Whenever the directors shall fail to fix such
place, the meeting shall be held at the registered office of the corporation in
the State of Delaware. The board of directors may also, in its sole discretion,
determine that the meeting shall not be held at any place, but may instead be
held solely by means of remote communication as authorized by Section 211(a)(2)
of the Delaware General Corporation Law. If a meeting by remote communication is
authorized by the board of directors in its sole discretion, and subject to
guidelines and procedures as the board of directors may adopt, stockholders and
proxyholders not physically present at a meeting of stockholders may, by means
of remote communication participate in a meeting of stockholders and be deemed
present in person and vote at a meeting of stockholders whether such meeting is
to be held at a designated place or solely by means of remote communication,
provided that (a) the corporation shall implement reasonable measures to verify
that each person deemed present and permitted to vote at the meeting by means of
remote communication is a stockholder or proxyholder, (b) the corporation shall
implement reasonable measures to provide such stockholders and proxyholders a
reasonable opportunity to participate in the meeting and to vote on matters
submitted to the stockholders, including an opportunity to read or hear the
proceedings of the meeting substantially concurrently with such proceedings, and
(c) if any stockholder or proxyholder votes or takes other action at the meeting
by means of remote communication, a record of such vote or other action shall be
maintained by the corporation.
- CALL. Annual meetings and special meetings may be called by
the directors or by any officer instructed by the directors to call the meeting.
- NOTICE OR WAIVER OF NOTICE. Written notice of all meetings
shall be given, which shall state the place, if any, date, and hour of the
meeting, the means of remote communication, if any, by which stockholders and
proxyholders may be deemed to be present in person and vote at such meeting, and
in the case of a special meeting, the purpose or purposes for which the meeting
is called. The notice of an annual meeting shall state that the meeting is
called for the election of directors and for the transaction of other business
which may properly come before the meeting, and shall (if any other action which
could be taken at a special meeting is to be taken at such annual meeting) state
the purpose or purposes. The notice of any meeting shall also include, or be
accompanied by, any additional statements, information, or documents prescribed
by the General Corporation Law. Except as otherwise provided by the General
Corporation Law, the written notice of any meeting shall be given not less than
ten days nor more than sixty days before the date of the meeting to each
stockholder entitled to vote at such meeting. If mailed, notice is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at such stockholder's address as it appears on the records of the
corporation. If a meeting is adjourned to another time or place, notice need not
be given of the adjourned meeting if the time, place, if any, thereof, and the
means of remote communications, if any, by which stockholders and proxyholders
may be deemed to be present in person and vote at such adjourned meeting are
announced at the meeting at which the adjournment is taken. At the adjourned
meeting the corporation may transact any business which might have been
transacted at the original meeting. If the adjournment is for more than 30 days,
or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting
shall be given to each stockholder of record entitled to vote at the meeting.
Whenever notice is required to be given under the Delaware General Corporation
Law, certificate of incorporation or bylaws, a written waiver signed by the
person entitled to notice, or a waiver by electronic transmission by the person
entitled to notice, whether before or after the time stated therein, shall be
deemed equivalent to notice. Attendance of a stockholder at a meeting of
stockholders shall constitute a waiver of notice of such meeting, except when
the stockholder attends the meeting for the express purpose of objecting, at the
beginning of the meeting, 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 regular or special meeting of the stockholders need be
specified in any written waiver of notice or any waiver by electronic
transmission unless so required by the certificate of incorporation or these
bylaws.
- STOCKHOLDER LIST. The officer who has charge of the stock
ledger of the corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting for a period of at least ten days prior to the meeting on
a reasonably accessible electronic network, provided that the information
required to gain access to such list is provided with the notice of the meeting
or during ordinary business hours at the principal place of business of the
corporation. In the event that the corporation determines to make the list
available on an electronic network, the corporation may take reasonable steps to
ensure that such information is available only to stockholders of the
corporation. If the meeting is to be held at a place, then the list shall be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present. If the meeting
is to be held solely by means of remote communication, then the list shall also
be open to the examination of any stockholder during the whole time of the
meeting on a reasonably accessible electronic network, and the information
required to access such list shall be provided with the notice of the meeting.
The stock ledger shall be the only evidence as to who are the stockholders
entitled to examine the stock ledger, the list required by this section or the
books of the corporation, or to vote in person or by proxy at any meeting of
stockholders.
- CONDUCT OF MEETING. Meetings of the stockholders shall be
presided over by one of the following officers in the order of seniority and if
present and acting - the Chairperson of the Board, if any, the Vice-Chairperson
of the Board, if any, the President, a Vice-President, or, if none of the
foregoing is in office and present and acting, by a chairperson to be chosen by
the stockholders. The Secretary of the corporation, or in such Secretary's
absence, an Assistant Secretary, shall act as secretary of every meeting, but if
neither the Secretary nor an Assistant Secretary is present the chairperson of
the meeting shall appoint a secretary of the meeting.
- PROXY REPRESENTATION. Each stockholder entitled to vote at a
meeting of stockholders or to express consent or dissent to corporate action in
writing without a meeting may authorize another person or persons to act for
such stockholder by proxy, but no such proxy shall be voted or acted upon after
3 years from its date, unless the proxy provides for a longer period. A
stockholder may execute a writing authorizing another person or persons to act
for such stockholder as proxy. Execution may be accomplished by the stockholder
or such stockholder=s authorized officer, director, employee or agent signing
such writing or causing such person=s signature to be affixed to such writing by
any reasonable means including, but not limited to, by facsimile signature. A
stockholder may also authorize another person or persons to act for such
stockholder as proxy by transmitting or authorizing the transmission of a
telegram, cablegram, or other means of electronic transmission to the person who
will be the holder of the proxy or to a proxy solicitation firm, proxy support
service organization or like agent duly authorized by the person who will be the
holder of the proxy to receive such transmission, provided that any such
telegram, cablegram or other means of electronic transmission must either set
forth or be submitted with information from which it can be determined that the
telegram, cablegram or other electronic transmission was authorized by the
stockholder. If it is determined that such telegrams, cablegrams or other
electronic transmissions are valid, the inspectors or, if there are no
inspectors, such other persons making the determination shall specify the
information upon which they relied. Any copy, facsimile telecommunication or
other reliable reproduction of the writing or transmission created pursuant to
Section 212(c) of the Delaware General Corporation Law may be substituted or
used in lieu of the original writing or transmission for any and all purposes
for which the original writing or transmission could be used, provided that such
copy, facsimile telecommunication or other reproduction shall be a complete
reproduction of the entire original writing or transmission. A duly executed
proxy shall be irrevocable if it states that it is irrevocable and, if, and only
as long as, it is coupled with an interest sufficient in law to support an
irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the corporation generally.
- INSPECTORS. The directors, in advance of any meeting, may,
but need not, appoint one or more inspectors of election to act at the meeting
or any adjournment thereof. If an inspector or inspectors are not appointed, the
person presiding at the meeting may, but need not, appoint one or more
inspectors. In case any person who may be appointed as an inspector fails to
appear or act, the vacancy may be filled by appointment made by the directors in
advance of the meeting or at the meeting by the person presiding thereat. Each
inspector, if any, before entering upon the discharge of duties of inspector,
shall take and sign an oath faithfully to execute the duties of inspector at
such meeting with strict impartiality and according to the best of such
inspector's ability. The inspectors, if any, shall determine the number of
shares of stock outstanding and the voting power of each, the shares of stock
represented at the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes, ballots, or consents, hear and determine
all challenges and questions arising in connection with the right to vote, count
and tabulate all votes, ballots, or consents, determine the result, and do such
acts as are proper to conduct the election or vote with fairness to all
stockholders. On request of the person presiding at the meeting, the inspector
or inspectors, if any, shall make a report in writing of any challenge,
question, or matter determined by such inspector or inspectors and execute a
certificate of any fact found by such inspector or inspectors. Except as may
otherwise be required by subsection (e) of Section 231 of the
General Corporation Law, the provisions of that Section shall not apply to the
corporation.
- QUORUM. The holders of a majority of the outstanding shares
of stock shall constitute a quorum at a meeting of stockholders for the
transaction of any business. The stockholders present may adjourn the meeting
despite the absence of a quorum.
- VOTING. Each share of stock shall entitle the holder thereof
to one vote. Directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at the meeting and entitled to
vote on the election of directors. Any other action shall be authorized by a
majority of the votes cast except where the General Corporation Law prescribes a
different percentage of votes and/or a different exercise of voting power, and
except as may be otherwise prescribed by the provisions of the certificate of
incorporation and these Bylaws. In the election of directors, and for any other
action, voting need not be by ballot.
8. STOCKHOLDER ACTION WITHOUT MEETINGS. Except as any
provision of the General Corporation Law may otherwise require, any action
required by the General Corporation Law to be taken at any annual or special
meeting of stockholders, or any action which may be taken at any annual or
special meeting of stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. A telegram, cablegram or other electronic transmission consenting to
an action to be taken and transmitted by a stockholder or proxyholder, or by a
person or persons authorized to act for a stockholder or proxyholder, shall be
deemed to be written, signed and dated for the purposes of this section,
provided that any such telegram, cablegram or other electronic transmission sets
forth or is delivered with information from which the corporation can determine
that the telegram, cablegram or other electronic transmission was transmitted by
the stockholder or proxyholder or by a person or persons authorized to act for
the stockholder or proxyholder and the date on which such stockholder or
proxyholder or authorized person or persons transmitted such telegram, cablegram
or electronic transmission. The date on which such telegram, cablegram or
electronic transmission is transmitted shall be deemed to be the date on which
such consent was signed. No consent given by telegram, cablegram or other
electronic transmission shall be deemed to have been delivered until such
consent is reproduced in paper form and until such paper shall be delivered to
the corporation by delivery to its principal place of business or an officer or
agent of the corporation having custody of the book in which the proceedings of
meetings of stockholders are recorded, to the extent and in the manner provided
by resolution of the board of directors of the corporation.. Any copy, facsimile
or other reliable reproduction of a consent in writing may be substituted or
used in lieu of the original writing for any and all purposes for which the
original writing could be used, provided that such copy, facsimile or other
reproduction shall be a complete reproduction of the entire original writing.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have not
consented in writing. Action taken pursuant to this paragraph shall be subject
to the provisions of Section
228 of the General Corporation Law.
ARTICLE II
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DIRECTORS
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1. FUNCTIONS AND DEFINITION. The business and affairs of the
corporation shall be managed by or under the direction of the Board of Directors
of the corporation. The Board of Directors shall have the authority to fix the
compensation of the members thereof. The use of the phrase "whole board" herein
refers to the total number of directors which the corporation would have if
there were no vacancies.
2. QUALIFICATIONS AND NUMBER. A director need not be a
stockholder, a citizen of the United States, or a resident of the State of
Delaware. The initial Board of Directors shall consist of two persons.
Thereafter the number of directors constituting the whole board shall be at
least one. Subject to the foregoing limitation and except for the first Board of
Directors, such number may be fixed from time to time by action of the
stockholders or of the directors, or, if the number is not fixed, the number
shall be five. The number of directors may be increased or decreased by action
of the stockholders or of the directors.
3. ELECTION AND TERM. The first Board of Directors, unless the
members thereof shall have been named in the certificate of incorporation, shall
be elected by the incorporator or incorporators and shall hold office until the
first annual meeting of stockholders and until their successors are elected and
qualified or until their earlier resignation or removal. Any director may resign
at any time upon notice given in writing or by electronic transmission to the
corporation. Thereafter, directors who are elected at an annual meeting of
stockholders, and directors who are elected in the interim to fill vacancies and
newly created directorships, shall hold office until the next annual meeting of
stockholders and until their successors are elected and qualified or until their
earlier resignation or removal. Except as the General Corporation Law may
otherwise require, in the interim between annual meetings of stockholders or of
special meetings of stockholders called for the election of directors and/or for
the removal of one or more directors and for the filling of any vacancy in that
connection, newly created directorships and any vacancies in the Board of
Directors, including unfilled vacancies resulting from the removal of directors
for cause or without cause, may be filled by the vote of a majority of the
remaining directors then in office, although less than a quorum, or by the sole
remaining director.
4. MEETINGS.
- TIME. Meetings shall be held at such time as the Board shall
fix, except that the first meeting of a newly elected Board shall be held as
soon after its election as the directors may conveniently assemble.
- PLACE. Meetings shall be held at such place within or
without the State of Delaware as shall be fixed by the Board.
- CALL. No call shall be required for regular meetings for
which the time and place have been fixed. Special meetings may be called by or
at the
direction of the Chairperson of the Board, if any, the Vice-Chairperson
of the Board, if any, of the President, or of a majority of the directors in
office.
- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be
required for regular meetings for which the time and place have been fixed.
Written, oral, or any other mode of notice of the time and place shall be given
for special meetings in sufficient time for the convenient assembly of the
directors thereat. Whenever notice is required to be given under the Delaware
General Corporation Law, certificate of incorporation or bylaws, a written
waiver signed by the person entitled to notice, or a waiver by electronic
transmission by the person entitled to notice, whether before or after the time
stated therein, shall be deemed equivalent to notice. Attendance of any such
person at a meeting shall constitute a waiver of notice of such meeting, except
when such person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, 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 regular or special meeting of the directors need be
specified in any written waiver of notice.
- QUORUM AND ACTION. A majority of the whole Board shall
constitute a quorum except when a vacancy or vacancies prevents such majority,
whereupon a majority of the directors in office shall constitute a quorum,
provided, that such majority shall constitute at least one-third of the whole
Board. A majority of the directors present, whether or not a quorum is present,
may adjourn a meeting to another time and place. Except as herein otherwise
provided, and except as otherwise provided by the General Corporation Law, the
vote of the majority of the directors present at a meeting at which a quorum is
present shall be the act of the Board. The quorum and voting provisions herein
stated shall not be construed as conflicting with any provisions of the General
Corporation Law and these Bylaws which govern a meeting of directors held to
fill vacancies and newly created directorships in the Board or action of
disinterested directors.
Any member or members of the Board of Directors or of any
committee designated by the Board, may participate in a meeting of the Board, or
any such committee, as the case may be, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other.
- CHAIRPERSON OF THE MEETING. The Chairperson of the Board, if
any and if present and acting, shall preside at all meetings. Otherwise, the
Vice-Chairperson of the Board, if any and if present and acting, or the
President, if present and acting, or any other director chosen by the Board,
shall preside.
5. REMOVAL OF DIRECTORS. Except as may otherwise be
provided by the General Corporation Law, any director or the entire Board of
Directors may be removed, with or without cause, by the holders of a majority of
the shares then entitled to vote at an election of directors.
6. COMMITTEES. The Board of Directors may designate one or
more committees, each committee to consist of one or more of the directors of
the corporation. The Board may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. In the absence or disqualification of any member
of any such committee or committees, the member or members thereof present at
any meeting and not disqualified from voting, whether or not such member or
members constitute a quorum, may unanimously appoint another member of the Board
of Directors to act at the meeting in the place of any such absent or
disqualified member. Any such committee, to the extent provided in the
resolution of the Board, shall have and may exercise all the powers and
authority of the Board of Directors in the management of the business and
affairs of the corporation with the exception of any power or authority the
delegation of which is prohibited by Section 141 of the General Corporation Law,
and may authorize the seal of the corporation to be affixed to all papers which
may require it.
7. WRITTEN ACTION. Any action required or permitted to be
taken at any meeting of the Board of Directors or any committee thereof may be
taken without a meeting if all members of the Board or committee, as the case
may be, consent thereto in writing or electronic transmission, and the writing
or writings or electronic transmission or transmissions are filed with the
minutes of proceedings of the Board or committee. Such filing shall be in paper
form if the minutes are maintained in paper form and shall be in electronic form
if the minutes are maintained in electronic form.
ARTICLE III
-----------
OFFICERS
--------
The officers of the corporation shall consist of a President,
a Secretary, a Treasurer, and, if deemed necessary, expedient, or desirable by
the Board of Directors, a Chairperson of the Board, a Vice-Chairperson of the
Board, an Executive Vice-President, one or more other Vice-Presidents, one or
more Assistant Secretaries, one or more Assistant Treasurers, and such other
officers with such titles as the resolution of the Board of Directors choosing
them shall designate. Except as may otherwise be provided in the resolution of
the Board of Directors choosing such officer, no officer other than the
Chairperson or Vice-Chairperson of the Board, if any, need be a director. Any
number of offices may be held by the same person, as the directors may
determine.
Unless otherwise provided in the resolution choosing such
officer, each officer shall be chosen for a term which shall continue until the
meeting of the Board of Directors following the next annual meeting of
stockholders and until such officer's successor shall have been chosen and
qualified.
All officers of the corporation shall have such authority and
perform such duties in the management and operation of the corporation as shall
be prescribed in the resolutions of the Board of Directors designating and
choosing such officers and prescribing their authority and duties, and shall
have such additional authority and duties as are incident to their office except
to the extent that such resolutions may be inconsistent therewith. The Secretary
or an Assistant Secretary of the corporation shall record all of the proceedings
of all meetings and actions in writing of stockholders, directors, and
committees of directors, and shall exercise such additional authority and
perform such additional duties as the Board shall assign to such Secretary or
Assistant Secretary. Any officer may be removed, with or without cause, by the
Board of Directors. Any vacancy in any office may be filled by the Board of
Directors.
ARTICLE IV
----------
CORPORATE SEAL
--------------
The corporate seal shall be in such form as the Board of
Directors shall prescribe.
ARTICLE V
---------
FISCAL YEAR
-----------
The fiscal year of the corporation shall be fixed, and shall
be subject to change, by the Board of Directors.
ARTICLE VI
----------
CONTROL OVER BYLAWS
-------------------
Subject to the provisions of the certificate of incorporation
and the provisions of the General Corporation Law, the power to amend, alter, or
repeal these Bylaws and to adopt new Bylaws may be exercised by the Board of
Directors or by the stockholders.
I HEREBY CERTIFY that the foregoing is a full, true, and
correct copy of the Bylaws Simplicia Telecommunications Inc., a Delaware
corporation, as in effect on the date hereof.
Dated: July 30, 2001
"Riaz Sumar"
-------------------------------------
Secretary of Simplicia Telecommunications Inc.
(SEAL)
EXHIBIT 5.1
-----------
SIERCHIO & COMPANY, LLP
ATTORNEYS
150 East 58th Street, 25th Floor
New York, New York 10155
Telephone (212) 446-9500 - Facsimile (212) 446-9504
December 17 , 2001
Simplicia Telecommunications, Inc.
280 Fairway Bay NW
Airdrie, Alberta T4B 2P5
Re: Simplicia Telecommunications, Inc.
Registration Statement on Form SB-2 (SEC File No. ---)
------------------------------------------------------
Dear Sir or Madam:
We have acted as counsel for Simplicia Telecommunications, Inc., a
corporation existing under the laws of the State of Delaware(the "Company") in
connection with the reparation and filing of a registration statement on Form
SB-2 (the "Registration Statement") relating to the registration and the offer
and sale by the Company of 300,000 of the Company's common shares, $0.0001 par
value (the "Common Shares").
In this connection, we have examined such documents, corporate records,
officers' certificates and other instruments as we have deemed necessary or
appropriate for purposes of this opinion, including, but not limited to, (i) the
Company's Certificate of Incorporation and Bylaws, (ii) the Company's
Certificate of Amendment of the Certificate of Incorporation, and (iii) the
Registration Statement. We have assumed the legal capacity to sign and the
genuineness of all signatures of all persons executing instruments or documents
examined or relied upon by us and have assumed the conformity with the original
documents of all documents examined by us as copies of such documents.
Based upon and subject to the foregoing, we are of the opinion that
when offered and sold as described in the Registration Statement, the Common
Shares will be validly issued, fully paid and non-assessable.
SIERCHIO & COMPANY, LLP
We hereby consent to the reference to this firm under the captions "Legal
Matters" and "Interests of Named Experts and Counsel" in the Prospectus and to
the filing of this opinion as an exhibit to the Registration Statement. In
giving this consent, we do not thereby concede that we are within the category
of persons whose consent is required under the Securities Act of 1933, as
amended, or the rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours
Sierchio & Company LLP.
By: /s/ Joseph Sierchio
-----------------------
Joseph Sierchio, Partner
EXHIBIT 10.1
------------
MEMORANDUM OF AGREEMENT
THIS AGREEMENT is made this 25th day of June, 2001,
B E T W E E N:
PHONES FOR SIGHT FOUNDATION,
A Company limited by guarantee and not having share
capital under The Companies Act of 1985 and 1989 (UK)
(the "Foundation")
- and -
HUMANITY DIRECT WIRELESS NETWORKS INC.,
a company incorporated under the
Canada Business Corporations Act
- --------------------------------
(The "Company")
WHEREAS the Foundation was set up, inter alia, to collect, directly or
indirectly, used cellular telephones and other wireless technology devices
(hereinafter collectively called the "Collected Devices") and to raise funds for
its purposes via, inter alia, the refurbishment and resale of such telephones
and devices (the "Phones For Sight Initiative");
AND WHEREAS the Foundation was set up to provide financial support
of prevention of blindness programs in accordance with the priorities of Vision
2020 or other programs consistent with the stated mission of the Foundation and
its global Phones For Sight surplus wireless assets collection program.
AND WHEREAS the Company has created a proprietary business plan (the
"Proprietary Business Plan" as set forth in Schedule "A" annexed hereto) for the
establishment of a global network for the refurbishment and resale of used
cellular telephones and other wireless technology devices,
AND WHEREAS the Company has a strong management team that has
established relationships within the telecommunications and refurbishment
industries as well as other charitable organizations with respect to the blind
community.
NOW, THEREFORE, for good and valuable consideration the sufficiency of which is
hereby acknowledged, THE PARTIES AGREE AS FOLLOWS:
Grant of Rights
1. Subject to the terms and conditions of this Agreement, the
Foundation hereby grants to the Company the sole and exclusive
right, on a worldwide basis, to purchase all of the
non-refurbished Collected Devices from the Foundation. For greater
certainty, the Phones For Sight Initiative, pursuant to which the
Foundation seeks to collect Collected Devices, shall be carried
out solely by the
Foundation and shall in no event be assigned or
licensed, in any manner whatsoever, to any third parties.
2 Subject to the terms and conditions of this Agreement, the
Foundation hereby grants to the Company the sole and exclusive
right and license, on a worldwide basis, to use the Foundation's
intellectual property in respect of the Phones For Sight
Initiative. For greater clarity, the Foundation's intellectual
property means its international copyrighted worldwide collection
process of surplus wireless assets.
3 Subject to the terms and conditions of this Agreement, the Company
hereby agrees to purchase all of the Collected Devices from the
Foundation provided that such purchase obligation shall only apply
in respect of Collected Devices that can be refurbished and resold
on commercially reasonable terms in accordance with the
Proprietary Business Plan.
Foundation Responsibilities
4 The Foundation shall, without cost to the Company, arrange for the
delivery of all Collected Devices to the sorting/refurbishing
centres designated by the Company. The Foundation shall contract
financially with the Company to deliver the following service: The
Company will arrange for the retrieval from the
sorting/refurbishing centres globally, of all waste of the
Collected Devices not purchased by the Company pursuant to this
Agreement and will arrange for the disposal of all waste products
or by-products in an environmentally correct manner.
5 The Foundation shall use commercially reasonable efforts to
promote and market its "Phones For Sight" initiative and to
solicit and procure and create other sustainable revenue channels
in the public and private sectors (including corporate
sponsorships) with a view to maximizing the donation and
collection of Collected Devices therefore maximising the donations
and support for Vision 2020 programs.
6 The Foundation shall use commercially reasonable efforts to
procure registration as a "charity", as that term is commonly
understood, in all jurisdictions were the number of Collected
Devices available for collection by the Foundation over time makes
such registration demonstrably economically viable for the
Foundation and provided that such status is available in each
jurisdiction.
7 The Foundation hereby represents and warrants to the Company as
follows:
a. The Foundation is a company incorporated and existing as a
company limited by guarantee and not having share capital
under The Companies Act of 1985 and 1989 (UK). The Foundation
currently
has three Board of Trustee members.
b. The Foundation will apply for formal charity status to become
a "charity", as that term is commonly understood in each
country jurisdiction, executing the Phones for Sight
initiative, where the number of Collected Devices available
for collection by the Foundation makes such registration
demonstrably economically viable, provided that such charity
registration status is available in each country jurisdiction.
Tax receipts will be issued to donors of Collected Devices in
country jurisdictions where applicable.
c. This Agreement constitutes a legal, valid and binding
obligation of the Foundation enforceable against it in
accordance with its terms.
d. The trustees of the Foundation have approved the Agreement
and Mr.Christian Garms has been authorized to execute the
Agreement on behalf of the Foundation.
8. The Foundation hereby covenants and agrees that, during the term
of thisAgreement, it will maintain in good standing (i) its status
as a company limited by guarantee and not having share capital
under The Companies Act of 1985 and 1989 (UK), and (ii) its status
as a "charity" under the laws of the United Kingdom and under the
laws of each additional jurisdiction under which such registration
is procured.
9. The Foundation shall invest the proceeds received from the Company
into the support of prevention of blindness programs in accordance
with the priorities of Vision 2020 or other programs consistent
with the stated goals of the Foundation which also includes the
delivery of free cell phones/airtime to blind citizens globally.
Company Responsibilities
10. The Company shall, without cost to the Foundation, use
commercially reasonable efforts to refurbish all Collected Devices
and to sell such refurbished Collected Devices at the best
available prices.
11. The Company shall on behalf of the Foundation and without cost to
the Company, arrange for the disposal of all waste products or
by-products in an environmentally correct manner as outlined in
sub-section 4.
12. The Company shall maintain complete and accurate records in
respect of (i) the Collected Devices delivered to the Company by
or on behalf of the Foundation, (ii) the Collected Devices
retrieved from the Company and the disposal of all waste products
or by-products on behalf of the Foundation, (iii) the acquisition
by the Company of Collective Devices, (iv) the refurbishment and
sale of Collected
Devices, and (v) all amounts due and owing to
the Foundation pursuant to this Agreement. The Company shall
provide detailed quarterly reports to the Foundation in respect of
the foregoing throughout the term of this Agreement. The
Foundation shall, at its sole expense, be entitled to audit the
foregoing records of the Company.
13. The Company hereby represents and warrants to the Foundation as
follows:
a. The Company is a company incorporated and validly existing under the
Canada Business Corporations Act.
b. This Agreement constitutes a legal, valid and binding obligation of
the Company, enforceable against it in accordance with its terms.
c. The Agreement has been approved by the Board of Directors of the
Company and Mr. Jim Earle, is authorized to execute the Agreement on
behalf of the Company.
Pricing and Payment Terms
14. Upon execution and delivery of this Agreement, the Company shall
pay to the Foundation the amount of (ten thousand) United States
Dollars (USD$10,000.00) as an interest free advance against
amounts payable by the Company to the Foundation under this
Agreement. If any portion of such advance remains outstanding upon
termination of this Agreement, the Foundation shall forthwith
repay such outstanding amount to the Company.
15. The purchase prices (the "Prices") initially payable by the
Company to the Foundation for each of the Collected Devices shall
be mutually agreed upon at the time of delivery and shall be
dependant on such factors as age, wear and tear, brand, and model
of the Collected devices. The minimum prices shall be
approximately $5.00usd per device subject to make, model, age and
condition of the collected device. All prices paid will be based
on fair market value.
Prices shall be payable within 45 days of the end of each
month during which Collected Devices are delivered to the
company.
16. The Prices in respect of any additional Collected Devices shall
be agreed upon by the Foundation and the Company in writing.
17. The Company shall pay to the Foundation, on a yearly basis, a
percentage of the net proceeds of sales of refurbished Collected
Devices (the "Royalties"). The Royalties shall be determined as
outlined in Schedule "B" annexed hereto. <<<<< (NOTE TO DRAFT
SUGGEST MUTUAL AGREEMENT ON A SLIDING SCALE FOR NET PROCEEDS OF
UNDER $500,000, $500,000 TO $1,000,000, $1,000,000 TO $2,000,000,
AND $2,000,000 AND ABOVE. PERHAPS 1.5%, 3%, 5%, AND 7%
RESPECTIVELY
TO ALLOW THE COMPANY TO REINVEST AS MUCH CAPITAL AS
POSSIBLE INTO GROWTH IN THE EARLY STAGES.) For greater certainty
net proceeds shall be based upon funds actually received by the
Company and shall not include any receivable amounts, excise
taxes, or bad debts.
18. As a condition precedent to the execution of this Agreement,
the Company will appoint a nominee of the Foundation to the
Board of Directors. Mr. Christian Garms is considered for this
appointment.
Performance Minimum's
19. During the period commencing on the date of this Agreement and
ending on July 31, 2001 (the "Deliverable Date"), the Foundation
shall deliver to the Company not less than 20,000 Collected
Devices monthly (Minimum Deliverable") that can be refurbished and
resold on commercially reasonable terms in accordance with the
Proprietary Business Plan.
20. The Foundation shall be responsible for delivering at least the
Minimum Deliverable every thirty days from the Deliverable Date.
The Minimum Deliverable may be increased upon mutual agreement in
writing.
21. For greater certainty, any dispute regarding new Minimums
Deliverable shall be settled by arbitration in accordance with the
terms of this Agreement.
Termination
22. This Agreement may be terminated by the Foundation upon six (6)
months' prior written notice to the Company where (i) the Company
is in default of its obligations under this Agreement and fails to
cure such default within thirty (30) days following written notice
thereof delivered by the Foundation to the Company, or (ii) the
Company fails to make payment to the Foundation of any Minimum
Payable.
23. This Agreement may be terminated by the Company upon six (6)
months' prior written notice to the Foundation where (i) the
Foundation is in default of its obligations under this Agreement
and fails to cure such default within thirty (30) days following
written notice thereof delivered by the Company to the Foundation,
or (ii) the Foundation fails to make any Minimum Deliverable.
Arbitration
24. All disputes arising in connection with this Agreement shall be
finally settled under the Rules of Conciliation and Arbitration of
the International Chamber of Commerce as presently in force, by
one or more arbitrators appointed in accordance with said Rules.
25. Either party may, without inconsistency with this Agreement to
arbitrate, seek from a court any provisional remedy that may be
necessary to protect trademark or other rights or property.
However, the final right of determination of any provisional
remedy granted and of the ultimate controversy shall be decided by
the arbitral tribunal.
26. This Agreement is made, executed and delivered in Toronto, Canada,
and any controversy arising hereunder or in relation to this
Agreement shall be governed by and construed in accordance with
the domestic laws of the Province of Ontario, Canada. The parties
hereto hereby agree that the application of the United Nations
Convention on Contracts for the International Sale of Goods to
this Agreement does not apply and is strictly excluded.
Confidentiality
27. The Foundation hereby acknowledges and agrees that the
Proprietary Business Plan is proprietary to the Company and is
the sole and exclusive property of the Company.
28. The Company hereby acknowledges and agrees that the name "Phones
For Sight Initiative" is proprietary to the Foundation and is the
sole and exclusive property of the Foundation. The Company hereby
covenants and agrees to use the information and intellectual
property associated with the Phones For Sight Initiative solely in
accordance with, and in furtherance of, its obligations under this
Agreement.
Miscellaneous
29. Any notice or other documents required or permitted to be given
hereunder or in connection with any arbitration pursuant hereto
shall be in writing and shall be delivered, mailed by prepaid
registered mail, return receipt requested, delivered personally by
hand, delivered by overnight courier, or sent by facsimile
transmission addressed to the party to whom it is to be given at
the address shown below or at such other address or addresses as
the party to whom such writing or document is to be given shall
have last notified the other party hereto in accordance with the
provisions of this section:
a. if to the Foundation, at:
1636 Parkway
Solent Business Park
Whiteley, Hampshire
PO15 7AH
b. if to the Company, at:
21 Buggey Lane
Ajax, Ontario
L1S 4S7
30. Any such notice or other document shall:
a. if delivered by hand or overnight courier, be deemed to have
been given and received at the place of receipt on the date of
delivery, provided that if such date is a day other than a
business day in the country of receipt, such notice or
document shall be deemed to have been given and received at
the place of receipt on the first business day in the country
of receipt thereafter;
b. if mailed, be deemed to have been given and received at the
place of receipt on the date of actual receipt. In the event of
postal disruption, such notices or documents must either be
delivered personally or sent by facsimile transmission; and
c. if transmitted by facsimile transmission, be deemed to have
been given and received at the place of receipt on the next
business day in the country of receipt following the day of
sending upon receipt of confirmation.
31. This Agreement constitutes the entire agreement of the parties
hereto with respect to the subject-matter hereof and, except as
herein stated and in the instruments and documents to be executed
and delivered pursuant hereto, contains all of the
representations, undertakings and agreements of all parties hereto
respecting the subject-matter hereof. This Agreement supersedes
all prior meetings, correspondence and negotiations between the
parties. There are no representations, warranties, covenants,
agreements, or collateral understandings, oral or otherwise,
expressed or implied, undertakings or agreements of any kind
between all the parties hereto respecting the subject-matter
hereof except those contained herein.
32. No delay on the part of either party in exercising any of its
rights hereunder or failure to exercise the same, nor the
acquiescence thereto shall operate as a release except in the
specific instance for which it is given. None of the terms,
conditions or provisions of the Agreement shall be held to have
been changed, waived, varied, modified or altered by any act or
knowledge of either party, their respective agents, servants or
employees, and the terms of this Agreement may not be changed,
waived, varied, modified or altered except by a statement in
writing signed by both parties.
33. Neither this Agreement nor any of the rights or duties of the
parties hereunder shall be assigned, transferred or conveyed
by operation of law or otherwise.
34. This Agreement and everything herein contained shall ensure to the
benefit of, and be binding upon, the parties hereto and their
respective successors and permitted assigns.
35. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original and all of which taken
together shall be deemed to constitute one and the same
instrument.
36. Time shall be of the essence of this Agreement.
IN WITNESS WHEREOF this Agreement has been executed and delivered on
the date first written above.
THE PHONES FOR SIGHT FOUNDATION
Per: "Christian Garms"
-----------------------------
Name: Christian Garms
Title: Chairman
I have legal authority to bind the Foundation.
HUMANITY DIRECT
WIRELESS NETWORKS INC.
Per: "Jim Earle"
----------------------------
Name: Jim Earle
Title: President
I have legal authority to bind the
Company.
SCHEDULE B ROYALTY SCHEDULE
- ---------------------------------------------------------------------------
Net Proceeds CDN$ Royalty % of Net Proceeds
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
$0.00- $1,000,000.00 3.0%
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
$1,000,000.01 - $2,000,000.00 4.0%
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
$2,000,000.01 - $5,000,000.00 5.0%
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
$5,000,000.01 and Over 10.0%
- ---------------------------------------------------------------------------
MEMORANDUM OF AGREEMENT
AMENDMENT # 1
THIS AMENDMENT AGREEMENT NO 1 is made this 31st day of July, 2001,
B E T W E E N:
PHONES FOR SIGHT FOUNDATION,
A Company limited by guarantee and not having share
capital under The Companies Act of 1985 and 1989 (UK)
(the "Foundation")
- and -
HUMANITY DIRECT WIRELESS NETWORKS INC.,
a company incorporated under the
Canada Business Corporations Act
- --------------------------------
(The "Company")
WHEREAS the Foundation and the Company are parties to the Memorandum of
Agreement dated 25, June 2001.
AND WHEREAS the Foundation and the Company have agreed to amend the
Memorandum of Agreement in the manner set out in this Agreement.
THE PARTIES AGREE AS FOLLOWS:
1. Interpretation
In this Agreement, headings are for convenience only and shall not
effect interpretation and terms defined in the Memorandum of Agreement and
used in this Agreement and shall have the same meaning as in the Memorandum
of Agreement.
2. Amendments to the Memorandum of Agreement
The Memorandum of Agreement shall, with effect from the date of this
Agreement, be amended in the following manner:
Performance Minimum's
(a) Clause 18 - in Clause 18 delete "July 31" and substitute in lieu
"November 30".
3. Ratification
The Foundation and the Company ratify and confirm the provisions of
the Memorandum of Agreement as amended by this agreement.
4. Counterparts
This Agreement may be executed in counterpart. Once a counterpart
executed by a party has been exchanged for a counterpart executed by each
other party, this Agreement shall be deemed to be fully executed and
effective from its date.
5. Governing Law
This Agreement is made, executed and delivered in Toronto, Canada, and
any controversy arising hereunder or in relation to this Agreement shall be
governed by and construed in accordance with the domestic laws of the
Province of Ontario, Canada. The parties hereto hereby agree that the
application of the United Nations Convention on Contracts for the
International Sale of Goods to this Agreement does not apply and is
strictly excluded.
IN WITNESS WHEREOF this Agreement has been executed and delivered on
the date first written above.
THE PHONES FOR SIGHT FOUNDATION
Per: "Christian Garms"
-------------------------------------
Name: Christian Garms
Title: Chairman
I have legal authority to bind the Foundation.
HUMANITY DIRECT
WIRELESS NETWORKS INC.
Per: "Jim Earle"
-------------------------------------
Name: Jim Earle
Title: President
I have legal authority to bind the Company.
EXHIBIT 10.2
------------
MEMORANDUM OF AGREEMENT
THIS AGREEMENT is made this 1st day of August, 2001,
B E T W E E N:
HUMANITY DIRECT WIRELESS NETWORKS INC.,
a company incorporated under the
Canada Business Corporations Act
- --------------------------------
(The "Assignor")
- and -
SIMPLICIA TELLECOMMUNICATIONS INC.,
a company incorporated in Delaware
(The "Assignee")
and
PHONES FOR SIGHT FOUNDATION,
A Company limited by guarantee and not having share
capital under The Companies Act of 1985 and 1989 (UK)
(the "Foundation")
WHEREAS the Assignor and the Foundation have entered into a Memorandum
of Agreement (the "Assigned Agreement") dated June 25, 2001 (attached as
Schedule AA) with respect to the collection, refurbishment, and resale of
wireless assets,
AND WHEREAS the Foundation granted to the Assignor the sole and
exclusive right, on a worldwide basis, to purchase all non-refurbished wireless
assets that were collected by the Foundation. For greater certainty, the Phones
For Sight Initiative, pursuant to which the Foundation seeks to collect wireless
assets and to raise funds for its purposes via the refurbishment and resale of
such wireless assets,
AND WHEREAS the Assignor has created a proprietary business plan (the
"Proprietary Business Plan" as set forth in Schedule "A" annexed hereto) for the
establishment of a global network for the refurbishment and resale of used
cellular telephones and other wireless technology devices,
AND WHEREAS the Assignor wishes to grant to the Assignee, in the United
States of America its territories and possessions, the sole and exclusive rights
granted to the Assignor under the Assigned Agreement,
AND WHEREAS the Assignor wishes to grant to the Assignee the right to
use the Proprietary Business Plan for the establishment of a network for the
refurbishment and resale of used cellular telephones and other wireless
technology devices in the United States of America its territories and
possessions.
NOW, THEREFORE, for good and valuable consideration the sufficiency of which is
hereby acknowledged, THE PARTIES AGREE AS FOLLOWS:
Grant of Rights
1. Subject to the terms and conditions of this Agreement, the
Assignor hereby grants to the Assignee in the United States of
America its territories and possessions, the sole and exclusive
rights granted to the Assignor under the Assigned Agreement.
2. Subject to the terms and conditions of this Agreement, the
Assignee hereby accepts these rights, as outlined in the Assigned
Agreement, in the United States of America, its territories and
possessions.
3. Subject to the terms and conditions of this Agreement, the
Foundation approves of the grant of the above-mentioned rights
to the Assignee.
4. Subject to the terms and conditions of this Agreement, the
Foundation hereby releases, relieves and discharges the Assignor
from all covenants, obligations and liabilities arising or
accruing on its part under the Assigned Agreement on or after the
date hereof in respect of the United States of America its
territories and possessions.
Foundation's Responsibilities
5. The Foundation's responsibilities to the Assignee shall be
consistent with those outlined in the Assigned Agreement.
6. The Foundation hereby represents and warrants to the Assignee as
follows:
a. The Foundation is a company incorporated and existing as a
company limited by guarantee and not having share capital
under The Companies Act of 1985 and 1989 (UK). The Foundation
currently has three Board of Trustee members.
b. This Agreement constitutes a legal, valid and binding obligation
of the Foundation enforceable against it in accordance with
its terms.
c. The members and directors of the Foundation have approved the
Agreement and Mr. Christian Garms has been authorized to
execute the Agreement on behalf of the Foundation.
Assignee Responsibilities
7. The Assignee hereby accepts the assignment of the Assigned
Agreement from the Assignor and covenants and agrees with the
Assignor and the Foundation that it shall at all times from and
after the date hereof be bound by, observe and perform all of the
covenants and obligations hereafter accruing on the part of the
Assignor under the Assigned Agreement in respect of the United
States its territories and possessions.
8. The Assignee agrees that the marketing and distribution of
Collected Devices shall not be inconsistent with the Assigned
Agreement and the Proprietary Business Plan.
9. The Assignee hereby represents and warrants to the Foundation
and Assignor as follows:
d. The Assignee is a company incorporated and validly existing in
Delaware.
e. This Agreement constitutes a legal, valid and binding obligation
of the Assignee, enforceable against it in accordance with its
terms.
f. The Agreement has been approved by the Board of Directors of
the Assignee and Mr. Robert Auld, is authorized to execute the
Agreement on behalf of the Assignee.
Assignor Responsibilities
10. The Assignor shall make available to the Assignee its Proprietary
Business Plan and all related marketing material.
11. The Assignor will notify the Assignee of any new business
strategies being proposed or undertaken and will, without
additional cost, allow the Assignee to use any strategies that
would insure the success of the Assignee.
12. The Assignor hereby represents and warrants to the Assignee as
follows:
g. The Assignor is a company incorporated and validly existing under
the Canada Business Corporations Act.
h. This Agreement constitutes a legal, valid and binding obligation
of the Assignor, enforceable against it in accordance with
its terms.
i. The Agreement has been approved by the Board of Directors of
the Assignor and Mr. Jim Earle, is authorized to execute the
Agreement on behalf of the Assignor.
Pricing and Payment Terms
13. Upon execution and delivery of this Agreement, the Assignee shall
pay to the Assignor the amount of (ten) United States Dollars
(USD$10.00) for the sole and exclusive right in the United States
of America its territories and possessions to carry out the
Proprietary Business Plan and any modifications thereof.
14. The Assignee shall pay to the Foundation Royalties as detailed
in the Assigned Agreement.
15. The Assignee will pay to the Assignor US$1.00 per Collected Device
resold at a minimum of US$25.00 (the "Rights Payment") for the
right to use its Proprietary Business Plan for the establishment
of a network for the refurbishment and resale of used cellular
telephones and other wireless technology devices in the United
States of America its territories and possessions. The Rights
Payment shall be payable on a quarterly basis and be due no later
than the 30th day after the end of each quarter.
16. The Assignee shall maintain complete and accurate records in
respect of (i) the Collected Devices delivered to the Assignee by
or on behalf of the Foundation, (ii) the Collected Devices
retrieved from the Assignee by or on behalf of the Foundation,
(iii) the acquisition by the Assignee of Collected Devices, (iv)
the refurbishment and sale of Collected Devices, and (v) all
amounts due and owing to the Foundation and the Assignor pursuant
to this Agreement. The Assignee shall provide detailed quarterly
reports to the Foundation and Assignor in respect of the foregoing
throughout the term of this Agreement. The Foundation and/or the
Assignor shall, at its/their sole expense, be entitled to audit
the foregoing records of the Assignee.
Performance Minimum's
Commencing on January 1, 2002 (the "Deliverable Date"), the Foundation
shall deliver to the Assignee not less than 20,000 Collected Devices
monthly (Minimum Deliverable") that can be refurbished and resold on
commercially reasonable terms in accordance with the Proprietary Business
Plan.
17. The Foundation shall be responsible for delivering at least the
Minimum Deliverable every thirty days from the Deliverable Date.
The Minimum Deliverable may be increased upon mutual agreement in
writing.
18. For greater certainty, any dispute regarding any new Minimum
Deliverable shall be settled by arbitration in accordance with
the terms of this Agreement.
19. An earlier Deliverable Date may be implemented at the option of
the Assignee upon 30 days written notice to the Foundation.
Termination
20. This Agreement may be terminated by the Foundation upon six (6)
months' prior written notice to the Assignee where (i) the
Assignee is in default of its obligations under this Agreement and
fails to cure such default within thirty (30) days following
written notice thereof delivered by the Foundation to the
Assignee, or (ii) the Assignee fails to make payment to the
Foundation of any Royalties payable.
21. This Agreement may be terminated by the Assignor upon six (6)
months' prior written notice to the Assignee where (i) the
Assignee is in default of its obligations under this Agreement and
fails to cure such default within thirty (30) days following
written notice thereof delivered by the Assignor to the Assignee,
or (ii) the Assignee fails to make the Rights Payment to the
Assignor.
22. This Agreement may be terminated by the Assignee upon six (6)
months' prior written notice to the Foundation where (i) the
Foundation is in default of its obligations under this Agreement
and fails to cure such default within thirty (30) days following
written notice thereof delivered by the Assignee to the
Foundation, or (ii) the Foundation fails to make any Minimum
Deliverable.
23. This Agreement may be terminated by the Assignee upon six (6)
months' prior written notice to the Assignor where (i) the
Assignor is in default of its obligations under this Agreement and
fails to cure such default within thirty (30) days following
written notice thereof delivered by the Assignee to the Assignor.
24. In the event that the Assigned Agreement between the Foundation
and the Assignor is terminated for any reason, the Assigned
Agreement shall be deemed to exist in its entirety with the
Assignee except that it will only apply to the United States of
America its territories and possessions and no further Rights
Payments shall be due to the Assignor.
Arbitration
25. All disputes arising in connection with this Agreement shall be
finally settled under the Rules of Conciliation and Arbitration of
the International Chamber of Commerce as presently in force, by
one or more arbitrators appointed in accordance with said Rules.
26. Either party may, without inconsistency with this Agreement to
arbitrate, seek from a court any provisional remedy that may be
necessary to protect trademark or other rights or property.
However, the final right of determination of any provisional
remedy granted and of the ultimate controversy shall be decided by
the arbitral tribunal.
27. This Agreement is made, executed and delivered in Toronto, Canada,
and any controversy arising hereunder or in relation to this
Agreement shall be governed by and construed in accordance with
the domestic laws of the Province of Ontario, Canada. The parties
hereto hereby agree that the application of the United Nations
Convention on Contracts for the International Sale of Goods to
this Agreement does not apply and is strictly excluded.
Confidentiality
28. The Assignee hereby acknowledges and agrees that the Proprietary
Business Plan is proprietary to the Assignor and is the sole and
exclusive property of the Assignor. The Assignee hereby covenants
and agrees to use the information and intellectual property
associated with the Proprietary Business Plan solely in accordance
with, and in furtherance of, its obligations under this Agreement.
29. The Assignee hereby acknowledges and agrees that the name "Phones
For Sight Initiative" is proprietary to the Foundation and is the
sole and exclusive property of the Foundation. The Assignee hereby
covenants and agrees to use the information and intellectual
property associated with the Phones For Sight Initiative solely in
accordance with, and in furtherance of, its obligations under this
Agreement.
Miscellaneous
30. Any notice or other documents required or permitted to be given
hereunder or in connection with any arbitration pursuant hereto
shall be in writing and shall be delivered, mailed by prepaid
registered mail, return receipt requested, delivered personally by
hand, delivered by overnight courier, or sent by facsimile
transmission addressed to the party to whom it is to be given at
the address shown below or at such other address or addresses as
the party to whom such writing or document is to be given shall
have last notified the other party hereto in accordance with the
provisions of this section:
j. if to the Foundation, at:
1636 Parkway
Solent Business Park
Whiteley, Hampshire
PO15 7AH
k. if to the Assignor, at:
21 Buggey Lane
Ajax, Ontario
L1S 4S7
l. c. if to the Assignee, at:
280 Fairways Bay NW
Airdrie, Alberta, Canada
T4B 2P5
31. Any such notice or other document shall:
m. if delivered by hand or overnight courier, be deemed to have
been given and received at the place of receipt on the date of
delivery, provided that if such date is a day other than a
business day in the country of receipt, such notice or
document shall be deemed to have been given and received at
the place of receipt on the first business day in the country
of receipt thereafter;
n. if mailed, be deemed to have been given and received at the place
of receipt on the date of actual receipt. In the event of
postal disruption, such notices or documents must either be
delivered personally or sent by facsimile transmission;
and
o. if transmitted by facsimile transmission, be deemed to have
been given and received at the place of receipt on the next
business day in the country of receipt following the day of
sending upon receipt of confirmation.
32. This Agreement constitutes the entire agreement of the parties
hereto with respect to the subject-matter hereof and, except as
herein stated and in the instruments and documents to be executed
and delivered pursuant hereto, contains all of the
representations, undertakings and agreements of all parties hereto
respecting the subject-matter hereof. This Agreement supersedes
all prior meetings, correspondence and negotiations between the
parties. There are no representations, warranties, covenants,
agreements, or collateral understandings, oral or otherwise,
expressed or implied, undertakings or agreements of any kind
between all the parties hereto respecting the subject-matter
hereof except those contained herein.
33. No delay on the part of either party in exercising any of its
rights hereunder or failure to exercise the same, nor the
acquiescence thereto shall operate as a release except in the
specific instance for which it is given. None of the terms,
conditions or provisions of the Agreement shall be held to have
been changed, waived, varied, modified or altered by any act or
knowledge of either party, their respective agents, servants or
employees, and the terms of this Agreement may not be changed,
waived, varied, modified or altered except by a statement in
writing signed by both parties.
34. Neither this Agreement nor any of the rights or duties of the
parties hereunder shall be assigned, transferred or conveyed
by operation of law or otherwise.
35. This Agreement and everything herein contained shall ensure to the
benefit of, and be binding upon, the parties hereto and their
respective successors and permitted assigns.
36. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original and all of which taken
together shall be deemed to constitute one and the same
instrument.
37. Time shall be of the essence of this Agreement.
IN WITNESS WHEREOF this Agreement has been executed and delivered
on the date first written above.
THE PHONES FOR SIGHT FOUNDATION
Per: "Christian Garms"
---------------------------------------
Name: Christian Garms
Title: Chairman
I have legal authority to bind the Foundation.
HUMANITY DIRECT
WIRELESS NETWORKS INC.
Per: "Jim Earle"
---------------------------------------
Name: Jim Earle
Title: President
I have legal authority to bind the Company.
SIMPLICIA TELECOMMUNICATIONS INC.
Per: "Robert Auld"
Name: Robert Auld
Title: President
I have legal authority to bind the Company.
EXHIBIT 10.3
------------
[GRAPHIC OMITTED][GRAPHIC OMITTED]ReCellularinc.
1580 E. Ellsworth Road
Ann Arbor, MI 48108
734-205-2200 Voice
734-205-2155 Fax
www.recellular.com
October 12, 2001
Mr. Jim Earle
President, COO
Humanity Direct Wireless Networks Inc.
21 Buggey Lane
Ajax, Ontario L1S 4S7
Canada
Dear Mr. Earle:
ReCellular Inc., the world leader wireless trading and refurbishing, is
continuously looking for new channels of input. At current purchasing volumes in
excess of 140,000 phones per month, ReCellular is interested in expansion of its
volume during the next 12-18 month period.
Based on our conversations with you, ReCellular is interested in many of the
phones becoming available during the next year of collection from Humanity
Direct Wireless Networks. Specifically, ReCellular is interested in quantities
of 40,000 to 60,000 phones per month. The value of such phones will vary
dramatically and will be based on age and technology. As the largest trading
operation in the industry, ReCellular is confident in providing the best prices
for the quantities available.
Our experience in purchasing large volumes of product is evidenced in our
strategic relationships with many carriers and industry leaders within the
United States and abroad. Our programs are successful because of both our
ability to process tens of thousands monthly, and our extensive distribution
network worldwide. This combination provides companies, like Humanity Direct
Wireless Networks, the confidence necessary for a successful business model.
Please provide ReCellular a timeline for product to become available. With this
timeline, we would like as much information as possible as to location of
product and shipment condition. We look forward to hearing back from you and
beginning a successful purchase program.
Do not hesitate to contact me at 734-205-2250 if you have any questions. Thank
you.
Sincerely,
Jenifer Chambers
Strategic Account Manager
Donation Programs
EXHIBIT 10.4
------------
Simplicia Telecommunications, Inc.
280 Fairway Bay NW
Airdrie, Alberta T4B 2P5
(403) 615-5609
December 12, 2001
Humanity Direct Wireless Networks, Inc.
21 Buggey Lane,
Ajax, Ontario
L1S 4S7
(905) 619-2900
Attention: James Earle, President
Re: Proposal to Purchase all of the Issued and Outstanding Stock
of Humanity Direct Wireless Networks, Inc. (the "Company")
Dear Sirs:
This letter is intended to summarize the principal terms of a proposal being
considered by Simplicia Telecommunications, Inc. (the "Buyer") regarding its
possible acquisition of the Company. In this letter, (i) the Buyer and the
Company are sometimes called the "Parties", (ii) the Company and its
subsidiaries are sometimes called the "Target Companies", and (iii) the Buyer's
possible acquisition of the Company is sometimes called the "Possible
Acquisition".
PART ONE
The Parties wish to commence negotiating a definitive written acquisition
agreement providing for the Possible Acquisition (a "Definitive Agreement"). To
facilitate the negotiation of a Definitive Agreement, the Parties request that
the Buyer's counsel prepare an initial draft. The form of the Possible
Acquisition has yet to be determined and it may be structured, without
limitation, as an asset or share acquisition, or merger, or consolidation, or
amalgamation. The execution of any such Definitive Agreement would be subject to
required corporate and shareholder approvals. For greater certainty, any
Possible Acquisition will require the approval of the shareholders of the
Company.
Based on the information currently known to the Buyer, it is proposed that the
Definitive Agreement include the following terms:
1. BASIC TRANSACTION
The consideration for the Possible Acquisition will be a number of shares (or
securities exchangeable or convertible into shares) of the Buyer's common stock
equal to 85% of the to be issued and outstanding shares of the Buyers common
stock after giving effect to the consummation of the Possible Acquisition.
2. OTHER TERMS
The Company would make comprehensive representations and warranties to the
Buyer, and would provide comprehensive covenants, indemnities and other
protections for the benefit of the Buyer. The consummation of a Possible
Acquisition by the Buyer would be subject to the satisfaction of various
conditions, including:
(m) The Buyer shall have filed a registration statement with the
United States Securities and Exchange Commission (the "SEC"),
which registration statement shall have been declared
effective by the SEC no later than April 30,2002;
(n) The Buyer shall have raised through the sale of its common stock at
least US$100,000 no later than June 30, 2002;
(o) The common stock of the Buyer shall be quoted for trading on the NASD
OTCBB;
(p) The shareholders of the Company shall have approved the Possible
Acquisition; and
(q) The Company shall have been satisfied with the results of its
due diligence investigations in respect of the Buyer and the
Possible Acquisition.
PART TWO
The following paragraphs of this letter (the "Binding Provisions") are the
legally binding and enforceable agreements of the Buyer and the Company.
1. ACCESS
During the period from the date this letter is signed by the Company (the
"Signing Date") until the earlier of (i) June 30, 2002 or (ii) date on which
either Party provides the other Party with written notice that negotiations
toward a Definitive Agreement are terminated (the "Termination Date"), the
Company will afford the Buyer full and free access to each Target Company, its
personnel, properties, contracts, books and records, and all other documents and
data.
2. CONFIDENTIALITY
Except as and to the extent required by law, including, but not limited to
disclosures to be made by the Buyer in the aforementioned registration statement
and as may be permitted in that certain Agreement dated August 1, 2001 between
the Buyer and the Company, the Buyer will not disclose or use, and will direct
its representatives not to disclose or use to the detriment of the Target
Companies, any Confidential Information (as defined below) with respect to the
Target Companies furnished, or to be furnished, by the Target Companies, or
their respective representatives to the Buyer or its representatives at any time
or in any manner other than in connection with its evaluation of a Possible
Acquisition. For purposes of this paragraph, "Confidential Information" means
any information about the Target Companies unless (a) such information becomes
publicly available through no fault of the Buyer or its representatives, (b) the
use of such information is necessary or appropriate in making any filing or
obtaining any consent or approval required for the consummation of a Possible
Acquisition, or (c) the furnishing or use of such information is required by or
necessary or appropriate in connection with legal proceedings. Upon the written
request of the Company, the Buyer will promptly return to the Company or the
Target Companies or destroy any Confidential Information in its possession and
certify in writing to the Company that it has done so.
3. DISCLOSURE
Except as and to the extent required by law, including, but not limited to
disclosures to be made by the Buyer in the aforementioned registration statement
and as may be permitted in that certain Agreement dated August 1, 2001 between
the Buyer and the Company, without the prior written consent of the other Party,
neither the Buyer nor the Company will, and each will direct its representatives
not to make, directly or indirectly, any public comment, statement, or
communication with respect to, or otherwise disclose or to permit the disclosure
of the existence of discussions regarding, a Possible Acquisition or any of the
terms, conditions, or other aspects of a Possible Acquisition.
4. COSTS
The Parties agree that the Company will be responsible for and bear all of the
reasonable costs of consummating a Possible Transaction subject to the prior
approval of any such costs by the Company.
5. ENTIRE AGREEMENT
This Agreement constitute the entire agreement between the Parties, and
supersede all prior oral or written agreements, understandings, representations
and warranties, and courses of conduct and dealing between the parties and their
principals on the subject matter hereof. Except as otherwise provided herein,
this Agreement may be amended or modified only by a writing, including but not
limited to the Definitive Agreement, executed by all of the parties.
6. GOVERNING LAW
This Agreement will be governed by and construed under the laws of the State of
New York without regard to conflicts of laws principles.
7. JURISDICTION: SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or based on any
right arising out of, this Letter may be brought against any of the Parties in
the courts of the State of New York, County of New York, or, if it has or can
acquire jurisdiction, in the United States District Court for the Southern
District of New York, and each of the Parties consents to the jurisdiction of
such courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any action
or proceeding referred to in the preceding sentence may be served on any party
anywhere in the world.
8. TERMINATION
This Agreement will automatically terminate on June 30, 2002 and may be
terminated earlier upon written notice by either Party to the other Party
unilaterally, for any reason or no reason, with or without cause, at any time;
provided, however, that the termination of the Binding Provisions will not
affect the liability of a Party for breach of any of the Binding Provisions
prior to the termination. Upon termination of the Binding Provisions, the
Parties will have no further obligations hereunder, except as stated in this
Part Two, which will survive any such termination.
9. COUNTERPARTS
This Letter may be executed in one or more counterparts, each of which will be
deemed to be an original copy of this Letter and all of which, when taken
together, will be deemed to constitute one and the same agreement.
10. NO LIABILITY
The paragraphs and provisions of Part One of this Letter do not constitute and
will not give rise to any legally binding obligation on the part of any of the
Parties or any of the Target Companies. Moreover, except as expressly provided
in the Binding Provisions (or as expressly provided in any binding written
agreement that the Parties may enter into in the future), no past or future
action, course of conduct, or failure to act relating to the Possible
Acquisition, or relating to the negotiation of the terms of the Possible
Acquisition or any Definitive Agreement, will give rise to or serve as a basis
for any obligation or other liability on the part of the Parties or any of the
Target Companies.
If you are in agreement with the foregoing, please sign and return one copy of
this letter agreement, which thereupon will constitute our agreement with
respect to its subject matter.
Very truly yours,
Simplicia Telecommunications, Inc.
By: /s/ "Robert Auld"
-----------------
Name: Robert Auld
Title: President
Duly executed and agreed as to by the undersigned on this 12th day of December
2001.
Humanity Direct Wireless Networks, Inc.
By: /s/ "Jim Earle"
---------------
Name: Jim Earle
Title: President
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITOR
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form SB-2 of our report dated August 31, 2001 relating
to the financial statements of Simplicia Telecommunications, Inc. as of August
31, 2001 and for the period from July 27, 2001 (date of inception) to August 31,
2001, which appears in such Prospectus. We also consent to the reference to us
under the heading "Experts" in such Prospectus.
/s/ "Richard Prinzi Jr., CPA"
Staten Island, New York
December 2, 2001