UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-8
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
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CARDINAL
COMMUNICATIONS, INC.
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(Exact
name of registrant as specified in its
charter)
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NEVADA
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91-2117796
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(State
or other jurisdiction of incorporation or organization)
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(I.R.S.
Employer Identification No.)
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11101
West 120th
Avenue, Suite 220
Broomfield,
Colorado
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80021
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(Address
of principal executive offices)
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(Zip
Code)
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2005
EMPLOYEE STOCK OWNERSHIP PLAN
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(Full
title of the plan)
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Michael
L. Corrigan, Esq.
Law
Offices of Michael L. Corrigan
11995
El Camino Real, Suite 301
San
Diego, CA 92130-2567
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(Name
and address of agent for service)
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(858)
436-3368
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(Telephone
number, including area code, of agent for
service)
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CALCULATION
OF REGISTRATION FEE
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Title
of Securities to be registered
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Amount
to be registered(1)
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Proposed
maximum offering price per share(2)
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Proposed
maximum aggregate offering price(2)
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Amount
of registration fee(3)
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Common
Stock
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40,000,000
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$
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0.01
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$
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400,000
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$
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47.08
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TOTAL
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40,000,000
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$
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0.01
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$
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400,000
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$
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47.08
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This
Registration Statement shall also cover any additional shares of
common
stock which become issuable under this 2005 Employee Stock Ownership
Plan
by reason of any stock dividend, stock split, recapitalization or
other
similar transaction effected without the Registrant’s receipt of
consideration which results in an increase in the number of the
outstanding shares of Registrant’s common
stock.
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Estimated
solely for the purpose of calculating the registration fee in accordance
with Rule 457(c) and Rule 457(h) under the Securities Act of 1933,
based
on the average of the high and low prices of the Registrant’s common stock
as reported by the Over-The-Counter Bulletin Board on October 25,
2006.
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Calculated
pursuant to General Instruction E on Form
S-8.
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EXPLANATORY
NOTE
This
Registration Statement is being filed for the purpose of (i) increasing the
number of securities of the same class as other securities for which a
Registration Statement of the Registrant on Form S-8 relating to the same
employee benefit plan is effective and (ii) amending a reoffer prospectus
covering the sale of control securities held by certain affiliates.
The
contents of the Registrant’s Registration Statement on Form S-8 filed with the
Securities and Exchange Commission on January 7, 2005 (File No. 333-121916)
are
hereby incorporated by reference.
On
January 7, 2005, Cardinal Communications, Inc. (formerly USURF America, Inc.),
a
Nevada corporation, filed a Registration Statement in accordance with the
requirements of Form S-8 under the Securities Act of 1933, as amended, to
register 20,000,000 shares of its common stock which had been authorized and
reserved for issuance under the Registrant’s 2005 Employee Stock Ownership Plan.
An additional 20,000,000 shares of common stock were registered pursuant to
a
Registration Statement on Form S-8 (333-124760) filed with the Securities and
Exchange Commission on May 10, 2005, an additional 30,000,000 shares of common
stock were registered pursuant to a Registration Statement on Form S-8
(333-127903) filed with the Securities and Exchange Commission on August 29,
2005, an additional 40,000,000 shares of common stock were registered pursuant
to a Registration Statement on Form S-8 (333-130481) filed with the Securities
and Exchange Commission on December 20, 2005, and an additional 40,000,000
shares of common stock were registered pursuant to a Registration Statement
on
Form S-8 (333-130481) filed with the Securities and Exchange Commission on
April
28, 2006. This Registration Statement on Form S-8 is being filed with the
Securities and Exchange Commission to register an additional 40,000,000 shares
of common stock.
CONTROL
SECURITIES REOFFER PROSPECTUS
The
material which follows constitutes a prospectus prepared in accordance with
the
applicable requirements of Part I of Form S-3 and General Instruction C to
Form
S-8, to be used in connection with reoffers and resales of control securities
acquired under the Registrant’s 2005 Employee Stock Ownership Plan.
PROSPECTUS
CARDINAL
COMMUNICATIONS, INC.
20,000,000
SHARES OF COMMON STOCK
This
prospectus relates to the proposed resale from time to time of up to 20,000,000
shares of common stock by the selling shareholders whose names are set forth
in
this prospectus.
We
will
not receive any of the proceeds from the sale of these securities by the selling
shareholders.
Our
common stock currently is listed on the OTC Bulletin Board under the symbol
“CDNC.”
The
selling shareholders may sell their common stock by means of this prospectus
and
any applicable prospectus supplement or they may decide to sell their common
stock by other means, including pursuant to Rule 144, however they are not
obligated to sell their common stock at all. The selling shareholders may sell
their common stock from time to time in one or more types of transactions (which
may include block transactions) in any manner permitted by applicable law,
including in the over-the-counter market, in negotiated transactions, through
put or call option transactions relating to the common stock, through short
sales of common stock, or a combination of such methods of sale, at market
prices prevailing at the time of sale, at prices related to such market prices,
at negotiated prices, or at fixed prices. The selling shareholders may sell
their common stock directly to purchasers, in private transactions, or through
agents, underwriters or broker-dealers. The selling shareholders will pay any
applicable underwriting discounts, selling commissions and transfer taxes.
We
will pay all other expenses incident to the registration of the common stock.
The selling shareholders and any broker-dealers, agents or underwriters that
participate in the distribution of the common stock may be deemed to be
“underwriters” within the meaning of the Securities Act of 1933, and any
commission received by them and any profit on the resale of the common stock
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act.
An
investment in our securities involves a high degree of risk. You should purchase
our securities only if you can afford a complete loss of your investment. See
“Risk Factors” beginning at page 2.
Neither
the Securities and Exchange Commission nor any state securities commission
has
approved or disapproved of these securities or passed upon the adequacy or
accuracy of this prospectus. Any representation to the contrary is a criminal
offense.
The
date
of this prospectus is December 29, 2006.
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Interests
of Named Experts and Counsel
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Cardinal
Communications, Inc. is referred to in this prospectus as “Cardinal”, “we”, “us”
or “our”. We operate in two business segments.
Our
real
estate division, Sovereign Partners, LLC (“Sovereign”), operates in the
residential and planned community (real estate and communications
infrastructure) development industry. Our communication division, Cardinal
Broadband, LLC (“Broadband”) provides voice (telephone), video (cable
television) and data (Internet) services to business and residential customers
in Colorado.
Sovereign
Partners, LLC is currently developing the following projects:
Mountain
View at West T-Bone Ranch, Greeley, Colorado
Mountain
View at West T-Bone Ranch is a 21 acre multi-dwelling unit development located
in southwest Greeley, Colorado with onsite amenities including a clubhouse
with
pool, hot tub, and fitness room. The completed project will have 215 units
consisting of two-story flats with detached garages, along with 7-unit and
4-unit town homes with attached garages. To date, 94 units, three of the units
are models, have been sold with an average sale price of $140,489. As of
September 30, 2006, we had 7 units representing $1,178,800 of deferred revenue
representing sales of units which we can not recognize the revenue pending
the
satisfaction of future obligations. These units had an average sales price
of
$168,400.
The
Renaissance at Fox Hill, Greeley, Colorado
The
Renaissance at Fox Hill is a 13 acre multi-dwelling unit development located
in
Greeley, Colorado. The completed project will contain 123 dwelling units
consisting of two story stacked flats/carriage units with direct access garages
and 4-unit town homes with attached garages. To date, 49 units have been sold
with an average sale price of $173,512. As of September 30, 2006, we had 3
units
representing $748,525 of deferred revenue representing sales of units which
we
can not recognize the revenue pending the satisfaction of future obligations.
These units had an average sales price of $249,508.
Colony
Ridge Condominiums, (Settler’s Chase) Thornton, Colorado
The
Colony Ridge Condominiums are a mix of 4 three-story stacked flats over one
level of underground parking with elevators, and 98 town home-style residences
on an 11.65 acre parcel in Thornton, Colorado. Colony Ridge at Settler’s Chase
is the final phase in the master planned community of Settler’s Chase, located
in Thornton, Colorado. To date, 36 units, four of the units are models, have
been sold with an average sale price of $183,918.
SR
Condominiums, Parker, Colorado
The
SR
Condominiums are a mix of two and three story stacked flats with detached
garages marketed as Hunter’s Chase Condominiums in Parker, Colorado. The
completed project will include 188 dwelling units situated on a 13 acre parcel
and includes a clubhouse featuring an outdoor swimming pool and spa. To date,
35
units, two of the units are models, have been sold with an average sale price
of
$156,928.
Millstone
at Clear Creek, Golden, Colorado
The
Millstone at Clear Creek consists of three four-story condominium buildings
each
with a ground level parking structure located on an approximately 1.7 acre
parcel in Golden, Colorado. The completed project will have 78 dwelling units.
To date, 21 units have been sold and 51 units are under contract. The sold
units
have an average sales price of $274,493, and the average contracted sales price
is $349,904.
Sovereign
Pumpkin Ridge, Greeley, Colorado
The
Pumpkin Ridge development consists of 78 lots in the Pumpkin Ridge subdivision
located in west Greeley, Colorado. The plan is to build single and two-story
single family detached residences on each of the lots. To date, 24 units, three
of the units are models, have been sold with an average sale price of $278,794.
Settler’s
Commercial Development, Thornton, Colorado
Settler’s
Commercial Development is the commercial/retail component of a master planned
community. This 3.8 acre parcel is the final phase of the Settler’s Chase
subdivision to be developed and is located in Thornton, Colorado. Building
construction began in December 2005 and the estimated start of delivery of
space
to tenants is scheduled before year end 2006. 3 Margaritas Restaurants will
anchor the site and negotiations with other tenants are ongoing.
Sovereign
Parker Commercial, Parker, Colorado
Parker
Commercial consists of 18.5 undeveloped commercial acres located within the
downtown core of Parker, Colorado. This property is currently on the market
for
approximately $3.5 million.
Legacy
of Shorewood, Shorewood (Milwaukee), Wisconsin
Legacy
of
Shorewood is a 40 unit condominium project in the Village of Shorewood, a suburb
of Milwaukee. It is a single building, converted from its prior use as an
assisted living facility, renovated and rebuilt into 40 individual condominiums.
It is a 4-story structure with underground parking and elevator access. To
date,
29 units have been sold with an average sales price of $230,693.
El
Rio
Country Club, Arizona
El
Rio
consists of approximately 640 acres of land dedicated to a gated community
anchored by an 18-hole golf course. Sovereign Homes of Arizona has been named
one of the Preferred Builders for the 1600-home, master planned community
project in northwest Arizona's Mojave Valley. One model is currently under
construction which is expected to be finished in January 2007.
Going
Concern
Our
auditor stated in its report on our financial statements for the period ended
December 31, 2005 that we have experienced recurring losses and, as a result,
there exists substantial doubt about our ability to continue as a going concern.
For the Nine Months Ended September 30, 2006, we incurred a net loss of
$5,382,365 . As of September 30, 2006, Cardinal had an accumulated deficit
of
$77,947,136 . We are actively seeking customers for our services. The financial
statements do not include any adjustments relating to the recoverability and
classification of recorded assets, or the amounts and classification of
liabilities that might be necessary in the event we cannot continue in
existence. These factors raise substantial doubt about our ability to continue
as a going concern.
Corporate
Information
We
maintain our principal offices at 11101 West 120th
Avenue,
Suite 220, Broomfield, Colorado 80021. Our telephone number at that address
is
(303) 285-5379.
An
investment in our securities is very speculative and involves a high degree
of
risk. You should carefully consider the following risk factors, along with
the
other matters referred to in this prospectus, including our filings with the
Securities and Exchange Commission that are incorporated into this prospectus
by
reference, before you decide to acquire our securities. If you decide to acquire
our securities, you should be able to afford a complete loss of your
investment.
Risks
Associated With Our Business
Our
independent registered public account firm expressed in their audit report
related to our financial statements for the years ended December 31, 2005 and
2004, substantial doubt about our ability to continue as a going concern.
In
their
opinions on our financial statements for the years ended December 31, 2004
and
2005, our independent auditor, AJ. Robbins PC, expressed substantial doubt
about
our ability to continue as a going concern because of our recurring losses
and
negative working capital.
We
have a history of significant losses and we may never achieve or sustain
profitability. If we are unable to become profitable, our operations will be
adversely effected.
We
have
incurred annual operating losses since our inception. As a result, at September
30, 2006, we had an accumulated deficit of $77,947,136 . Our gross revenues
for
the Nine Months Ended September 30, 2006 and 2005, were $18,724,218 and
$12,274,618 with losses from operations of $2,297,884 and $4,783,561 and net
losses of $5,382,365 and $7,432,915 respectively.
As
we
pursue our business plan, we expect our operating expenses to increase
significantly. We will need to generate increased revenues to become profitable.
Accordingly, we cannot assure you that we will ever become or remain profitable.
If our revenues fail to grow at anticipated rates or our operating expenses
increase without a commensurate increase in our revenues, our financial
condition will be adversely affected. Our inability to become profitable on
a
quarterly or annual basis would have a materially adverse effect on our business
and financial condition. Also, the market price for our stock could fall.
We
Require Additional Funding.
We
do not
have sufficient cash on hand or cash generated from operations to continue
operations into the foreseeable future. To continue funding operations the
Company must raise additional cash, either through debt or equity
financing.
No assurance can be given that the Company will be successful in obtaining
any
such financing with acceptable terms, or that such financing will provide for
payments to the Company sufficient to continue to sustain operations. In the
absence of such financing the Company may be required to reduce operations.
Even
assuming the Company is successful in securing additional sources of financing
to fund the continued operations, there can be no assurance that the Company
will become profitable or self sustaining in the future.
We
have in the past and may in the future engage in acquisitions, which will cause
us to incur a variety of costs and which may not achieve anticipated or desired
results. We may not achieve the results we anticipate and desire from our
acquisition of the sovereign companies.
From
time
to time we engage in discussions with third parties concerning potential
acquisitions of businesses, products, technologies and other assets.
Acquisitions may require us to make considerable cash outlays and can entail
the
need for us to issue equity securities, incur debt and contingent liabilities,
incur amortization expenses related to intangible assets, and can result in
the
impairment of goodwill, which could harm our profitability. Acquisitions involve
a number of additional risks, including:
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difficulties
in and costs associated with the assimilation of the operations,
technologies, personnel and products of the acquired companies,
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assumption
of known or unknown liabilities or other unanticipated events or
circumstances,
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risks
of entering markets in which we have limited or no experience, and
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potential
loss of key employees.
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Any
of
these risks could harm our ability to achieve profitability of acquired
operations or to realize other anticipated benefits of an acquisition.
On
February 18, 2005 we acquired Sovereign Partners, LLC which we now own and
operate as a subsidiary in the residential and planned community (real estate
and communications infrastructure) development industry. In connection with
the
acquisition, we issued common stock and newly created Series B preferred stock.
That issuance was dilutive to our shareholders. We are obligated to issue more
shares of preferred stock, which is convertible to common stock on a hundred
for
one basis, under the terms of the acquisition agreement with Sovereign. All
such
issuances will be dilutive to our shareholders. In addition, the preferred
stock
we are issuing is senior to the rights of our common stock holders upon
liquidation. If we are unable to assimilate
Sovereign's
management and operations, or if we incur unforeseen liabilities, or if the
operations of Sovereign do not continue to grow or if they diminish, we will
not
obtain recognizable benefits from the acquisition and our shareholders will
have
suffered material dilution.
We
have senior secured convertible debentures totaling $5,550,000 due in 2006,
collateralized by all our assets. We do not have the funds available to pay
these debentures if not converted into common stock. If the debentures are
not
paid or converted, the debenture holders could foreclose on our assets.
We
have
entered into a series of private placements totaling $5,550,000 in senior
secured debentures, convertible into common stock. Senior Secured debentures
totaling $4,300,000 were due in July 2006 and are currently in default. We
do
not currently have the funds to pay these debentures and we cannot assure you
that we will have the funds to pay them. If the debentures are not paid or
converted, the debenture holders could foreclose on all of our assets. The
debentures are collateralized by all of our assets.
We
have a note payable to Evergreen Venture Partners, LLC due in 2006. We currently
do not have the funds available to pay this note when due.
In
2005
we entered into an agreement with Evergreen Venture Partners, LLC to purchase
17,000,000 unregistered shares of our common stock for a $750,000 note payable.
The terms of the agreement call for payment of the note in July 2006. This
note
is currently in default. We do not have the funds to pay this debenture and
we
cannot assure you that we will have the funds to pay it.
We
have the ability, without shareholder approval, to issue preferred stock and
designate the rights, preferences and privileges that may be senior to common
stock.
In
November 2004, we issued 10,000 shares of Series A Convertible Preferred Stock
("Series A Stock") at $100.00 per share, for a total consideration of
$1,000,000. The Series A Stock is convertible into our common stock at a
conversion price ranging from $0.05 to $0.075 as calculated in accordance with
the Certificate of Designation. The Series A Stock has a liquidation preference
ahead of the common stock in the event of any dissolution or winding up of
our
Company and is entitled to any dividends that may be declared from time to
time
by the Board of Directors. All of the original 10,000 shares of issued Series
A
Stock have been converted into 20,000,000 shares of common stock. Currently
there are no outstanding shares of Series A Stock.
In
February 2005, we issued 35,000,000 shares of our common stock and 100,000
shares of our newly created Series B Convertible Preferred Stock in
the
acquisition
of the Sovereign Partners LLC. The Series B Preferred Stock is convertible
into
our common stock at a conversion rate of one hundred (100) shares of common
stock for each one (1) share of Series B Preferred Stock, in accordance with
the
Certificate of Designation. The Series B Preferred Stock has a liquidation
preference ahead of the common stock in the event of any dissolution or winding
up of our Company and is entitled to any dividends that may be declared from
time to time by our Board of Directors.
We
have a
total of 100,000,000 authorized shares of preferred stock. The Board of
Directors may determine, without shareholder approval, the rights, preferences
and privileges of the preferred stock. Depending on the rights, preferences
and
privileges granted when the preferred stock is issued, it may have the effect
of
delaying, deferring or preventing a change in control without further action
by
the shareholders, may discourage bids for our common stock at a premium over
the
market price of the common stock and may adversely affect the market price
of
and the voting and other rights of the holders of our common stock.
We
can issue common stock without shareholder approval that may cause dilution
to
existing shareholders.
We
have
800,000,000 authorized shares of common stock that can be issued by the Board
of
Directors. At September 30 2006, we had 20,896,523 shares of common stock
available for issue. Under most circumstances the Board of Directors has the
right to issue these shares.
Our
common stock has experienced significant price volatility in the past and we
expect it to experience high volatility in the future. This high volatility
substantially increases the risk of loss to persons owning our common stock.
The
trading price for our common stock has been, and we expect it to continue to
be,
highly volatile. For example, the closing bid price of our stock has fluctuated
between $0.0046 and $0.35 per share since January 1, 2003. The price at which
our common stock trades depends upon a number of factors, including our
historical and anticipated operating results and general market and economic
conditions, which are beyond our control. In addition, the stock market has,
from time to time, experienced extreme price and volume fluctuations. These
broad market fluctuations may lower the market price of our common stock.
Moreover, during periods of stock market price volatility, share prices of
many
telecommunications companies have often fluctuated in a manner not necessarily
related to their operating performance. Accordingly, our common stock may be
subject to greater price volatility than the stock market as a
whole.
Future
sales of common stock may cause the price of our common stock to decline.
Future
sales of substantial amounts of common stock pursuant to Rule 144 under the
Securities Act of 1933 or otherwise by certain shareholders could have a
material adverse impact on the market price for the common stock at the time.
As
of the date of this prospectus, there are 72,193,881 outstanding shares of
our
common stock held by shareholders which are deemed "restricted securities"
as
defined by Rule 144 under the Securities Act. Under certain circumstances,
these
shares may be sold without registration pursuant to the provisions of Rule
144.
In general, under Rule 144, a person (or persons whose shares are aggregated)
who has satisfied a one-year holding period may, under certain circumstances,
sell within any three-month period a number of restricted securities which
does
not exceed the greater of one (1%) percent of the shares outstanding or the
average weekly trading volume during the four calendar weeks preceding the
notice of sale required by Rule 144. In addition, Rule 144 permits, under
certain circumstances, the sale of restricted securities without any quantity
limitations by a person who is not an affiliate of ours and has satisfied a
two-year holding period. Any sales of shares by shareholders pursuant to Rule
144 may cause the price of our common stock to decline.
Sovereign
Partners, LLC is routinely involved in litigation matters arising from accidents
and warranty related claims; although we strive to keep the litigation costs
and
payments if any, to a minimum, and we maintain liability insurance, we cannot
be
assured that litigation will not have an adverse impact on the operations and
financial performance of the company taken as a whole.
Sovereign
Partners, LLC (“Sovereign”), a wholly owned subsidiary of the Company, performs
residential and commercial construction activities directly and through
sub-contractors. Such activities frequently give rise to warranty claims and
personal injury claims against Sovereign and other job contractors. Although
Sovereign has procedures in place to assist in the prevention of such claims,
litigation arising from accidents and warranty issues are an inevitable part
of
the business. While Sovereign maintains insurance for such claims in reasonable
amounts to protect it from losses, we cannot predict if any pending or future
claims will have an adverse impact on our financial condition and results of
operations. Also, we cannot be certain that liability insurance will continue
to
be available to Sovereign on terms acceptable to Sovereign, if at all. Loss
of
Sovereign’s liability insurance could have an adverse impact on our financial
condition and results of operations.
Our
common stock is subject to penny stock rules which may be detrimental to
investors.
Our
common stock has traded at a price substantially below $5.00 per share,
subjecting trading in the stock to certain SEC rules requiring additional
disclosures by broker-dealers. These rules generally apply to any
non-NASDAQ
equity
security that has a market price of less than $5.00 per share, subject to
certain exceptions, commonly referred to as a "penny stock." Such rules require
the delivery, prior to any penny stock transaction, of a disclosure schedule
explaining the penny stock market and the risks associated therewith and impose
various sales practice requirements on broker-dealers who sell penny stocks
to
persons other than established customers and institutional or wealthy investors.
For these types of transactions, the broker-dealer must make a special
suitability determination for the purchaser and have received the purchaser's
written consent to the transaction prior to the sale. The broker-dealer also
must disclose the commissions payable to the broker-dealer, current bid and
offer quotations for the penny stock and, if the broker-dealer is the sole
market maker, the broker-dealer must disclose this fact and the broker-dealer's
presumed control over the market. Such information must be provided to the
customer orally or in writing before or with the written confirmation of trade
sent to the customer. Monthly statements must be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stocks. The additional burdens imposed upon
broker-dealers by such requirements could discourage broker-dealers from
effecting transactions in our common stock. These disclosure requirements may
have the effect of reducing the level of trading activity in the secondary
market for a stock that becomes subject to the penny stock rules.
We
operate in a highly competitive market, and we may not be able to compete
effectively against established competitors with greater financial resources
and
more diverse strategic plans.
We
face
competition from many communications providers with significantly greater
financial, technical and marketing resources, longer operating histories,
well-established brand names, larger customer bases and diverse strategic plans
and technologies. Intense competition has led to declining prices and margins
for many communications services. We expect this trend to continue as
competition intensifies in the future. We expect significant competition from
traditional and new communications companies, including local, long distance,
cable modem, Internet, digital subscriber line, fixed and mobile wireless and
satellite data service providers, some of which are described in more detail
below. If these potential competitors successfully focus on our market, we
may
face intense competition which could harm our business. In addition, we may
also
face severe price competition for building access rights, which could result
in
higher sales and marketing expenses and lower profit margins.
Our
business is cyclical and is significantly impacted by changes in general and
local economic conditions.
Our
Real
Estate business is cyclical and is significantly impacted by changes in national
and general economic factors outside of our control, such as
short
and
long term interest rates, the availability of financing for homebuyers, consumer
confidence (which can be substantially affected by external conditions,
including international hostilities, federal mortgage financing programs, and
federal income tax provisions. The cyclicality of our business is also highly
sensitive to changes in economic conditions that can occur on a local or
regional basis, such as changes in housing demand, population growth, employment
levels and job growth, and property taxes. Weather conditions and natural
disasters such as earthquakes, hurricanes, tornadoes, floods, droughts, fires
and other environmental conditions can harm our homebuilding business on a
local
or regional basis. Civil unrest can also have an adverse effect on our
homebuilding business. Fluctuating lumber prices and shortages, as well as
shortages or price fluctuations in other important building materials, can
have
an adverse effect on our homebuilding business. Similarly, labor shortages
or
unrest among key trades, such as carpenters, roofers, electricians and plumbers,
can delay the delivery of our homes and increase our costs. Rebuilding efforts
underway in the gulf coast region of the United States following the destruction
caused by the two devastating hurricanes there in the summer of 2005 may cause
or exacerbate shortages of labor and/or certain materials. The difficulties
described above can cause demand and prices for our homes to diminish or cause
us to take longer and incur more costs to build our homes. We may not be able
to
recover these increased costs by raising prices because the price of each home
is usually set several months before the home is delivered, as our customers
typically sign their home purchase contracts before construction has even begun
on their homes. In addition, some of the difficulties described above could
cause some homebuyers to cancel their home purchase contracts
altogether.
An
adverse change in economic conditions could reduce the demand for homes and,
as
a result, could reduce our earnings.
Changes
in national and regional economic conditions, as well as local economic
conditions where our subsidiaries conduct operations and where prospective
purchasers of our homebuilding subsidiaries’ homes live, can have a negative
impact on our business. Adverse changes in employment levels, job growth,
consumer confidence, housing demand, interest rates and population growth may
reduce demand and depress prices for our homebuilding subsidiaries’ homes. This,
in turn, can reduce our earnings. A material decline in the value of new
residential housing could also result in a decreased value for the land, housing
inventory and housing work-in-progress that we own. Any pronounced down cycle
in
the homebuilding industry in Colorado, Arizona and Wisconsin, could cause demand
for our homes and land that we own to weaken significantly.
Our
success depends on the availability of improved lots and undeveloped land that
meet our land investment criteria.
The
availability of finished and partially developed lots and undeveloped land
for
purchase that meet our internal criteria depends on a number of factors outside
our control, including land availability in general, competition with other
homebuilders and land buyers for desirable property, inflation in land prices,
and zoning, allowable housing density and other regulatory requirements. Should
suitable lots or land become less available, the number of homes we may be
able
to build and sell could be reduced, and the cost of land could be increased,
perhaps substantially, which could adversely impact our results of
operations.
Home
prices and sales activity in the particular markets and regions in which we
do
business impact our results of operations because our business is concentrated
in these markets.
Home
prices and sales activity in some of our key markets have declined from time
to
time for market-specific reasons, including adverse weather or economic
contraction due to, among other things, the failure or decline of key industries
and employers. If home prices or sales activity decline in one or more of the
key markets in which we operate, our costs may not decline at all or at the
same
rate and, as a result, our overall results of operations may be adversely
impacted.
Interest
rate increases or changes in federal lending programs could lower demand for
our
homes.
Nearly
all of our customers finance the purchase of their homes, and a significant
number of these customers arrange their financing through our subsidiary
Lighthouse Lending, LLC. Increases in interest rates or decreases in
availability of mortgage financing would increase monthly mortgage costs for
our
potential homebuyers and could therefore reduce demand for our homes and
mortgages. Increased interest rates can also hinder our ability to realize
our
backlog because our sales contracts provide our customers with a financing
contingency. Financing contingencies allow customers to cancel their home
purchase contracts in the event they cannot arrange for financing at interest
rates that were prevailing when they signed their contracts. Because the
availability of Fannie Mae, FHLMC, FHA and VA mortgage financing is an important
factor in marketing many of our homes, any limitations or restrictions on the
availability of those types of financing could reduce our home
sales.
We
are subject to substantial legal and regulatory requirements regarding the
development of land, the homebuilding process and protection of the environment,
which can cause us to suffer delays and incur costs associated with compliance
and which can prohibit or restrict homebuilding activity in some regions or
areas.
Our
homebuilding business is heavily regulated and subject to increasing local,
state and federal statutes, ordinances, rules and regulations
concerning
zoning,
resource protection, other environmental impacts, building design, construction
and similar matters. These regulations often provide broad discretion to
governmental authorities that regulate these matters, which can result in
unanticipated delays or increases in the cost of a specified project or a number
of projects in particular markets. We may also experience periodic delays in
homebuilding projects due to building moratoria in any of the areas in which
we
operate. We are also subject to a variety of local, state and federal statutes,
ordinances, rules and regulations concerning the environment. These laws and
regulations may cause delays in construction and delivery of new homes, may
cause us to incur substantial compliance and other costs, and can prohibit
or
severely restrict homebuilding activity in certain environmentally sensitive
regions or areas. In addition, environmental laws may impose liability for
the
costs of removal or remediation of hazardous or toxic substances whether or
not
the developer or owner of the property knew of, or was responsible for, the
presence of those substances. The presence of those substances on our properties
may prevent us from selling our homes and we may also be liable, under
applicable laws and regulations or lawsuits brought by private parties, for
hazardous or toxic substances on properties and lots that we have sold in the
past. The mortgage brokering operations of Lighthouse Lending, LLC are heavily
regulated and subject to the rules and regulations promulgated by a number
of
governmental and quasi-governmental agencies. There are a number of federal
and
state statutes and regulations which, among other things, prohibit
discrimination, establish underwriting guidelines which include obtaining
inspections and appraisals, require credit reports on prospective borrowers
and
fix maximum loan amounts. A finding that we materially violated any of the
foregoing laws could have an adverse effect on our results of
operations.
We
build homes in highly competitive markets, which could hurt our future operating
results.
We
compete in each of our markets with a number of homebuilding companies for
homebuyers, land, financing, raw materials and skilled management and labor
resources. Our competitors include large national homebuilders, as well as
other
smaller regional and local builders that can have an advantage in local markets
because of long-standing relationships they may have with local labor or land
sellers. We also compete with other housing alternatives, such as existing
homes
and rental housing. These competitive conditions can make it difficult for
us to
acquire desirable land which meets our land buying criteria, cause us to offer
or to increase our sales incentives or price discounts, and result in reduced
sales. Any of these competitive conditions can adversely impact our revenues,
increase our costs and/or impede the growth of our local or regional
homebuilding businesses.
Changing
market conditions may adversely impact our ability to sell homes at expected
prices.
There
is
often a significant amount of time between when we initially acquire land and
when we can make homes on that land available for sale. The market value of
a
proposed home can vary significantly during this time due to changing market
conditions. In the past, we have benefited from increases in the value of homes
over time, but if market conditions were to reverse, we may need to sell homes
at lower prices than we anticipate. We may also need to take write-downs of
our
home inventories and land holdings if market values decline.
Because
of the seasonal nature of our real estate business, our quarterly operating
results fluctuate.
We
have
experienced seasonal fluctuations in quarterly operating results. We typically
do not commence significant construction on a home before a sales contract
has
been signed with a homebuyer. A significant percentage of our sales contracts
are made during the spring and summer months. Construction of our homes
typically requires approximately four months and weather delays that often
occur
during late winter and early spring may extend this period. As a result of
these
combined factors, we historically have experienced uneven quarterly results,
with lower revenues and operating income generally during the first and second
quarters of our fiscal year.
Our
leverage may place burdens on our ability to comply with the terms of our
indebtedness, may restrict our ability to operate and may prevent us from
fulfilling our obligations.
The
amount of our debt could have important consequences. For example: it could
limit our ability to obtain future financing for working capital, capital
expenditures, acquisitions, debt service requirements or other requirements;
require us to dedicate a substantial portion of our cash flow from operations
to
the payment of our debt and reduce our ability to use our cash flow for other
purposes; impact our flexibility in planning for, or reacting to, changes in
our
business; place us at a competitive disadvantage because we have more debt
than
some of our competitors; and make us more vulnerable in the event of a downturn
in our business or in general economic conditions. Our ability to meet our
debt
service and other obligations will depend upon our future performance. We are
engaged in businesses that are substantially affected by changes in economic
cycles. Our revenues and earnings vary with the level of general economic
activity in the markets we serve. Our businesses could also be affected by
financial, political, business and other factors, many of which are beyond
our
control. The factors that affect our ability to generate cash can also affect
our ability to raise additional funds through the sale of debt and/or equity
securities, the refinancing of debt or the sale of assets. Changes in prevailing
interest rates may also affect our ability to meet our debt service obligations,
because borrowings under our bank credit facilities bear interest at floating
rates. A higher interest rate on our debt could adversely affect our operating
results. Our business may not generate sufficient cash flow from operations
and
borrowings
may
not
be available to us under our bank credit facilities in an amount sufficient
to
enable us to pay our debt service obligations or to fund our other liquidity
needs. We may need to refinance all or a portion of our debt on or before
maturity, which we may not be able to do on favorable terms or at all. The
indentures governing our outstanding debt instruments and our bank credit
facilities include various financial covenants and restrictions, including
restrictions on debt incurrence, sales of assets and cash distributions by
us.
Should we not comply with any of those restrictions or covenants, the holders
of
those debt instruments or the banks, as appropriate, could cause our debt to
become due and payable prior to maturity.
We
may have difficulty in continuing to obtain the additional financing required
to
operate and develop our business.
Our
construction operations require significant amounts of cash and/or available
credit. It is not possible to predict the future terms or availability of
additional capital. Our bank credit facilities limit our ability to borrow
additional funds by placing a maximum cap on our leverage ratio. If conditions
in the capital markets change significantly, it could reduce our sales and
may
hinder our future growth and results of operations.
Our
future growth may be limited by contracting economies in the markets in which
we
currently operate, as well as our inability to enter
markets.
Our
future growth and results of operations could be adversely affected if the
markets in which we currently operate do not continue to support the expansion
of our existing business or if we are unable to identify new markets for entry.
Our inability to grow organically in existing markets or to expand into new
markets would limit our ability to achieve our growth objectives and would
adversely impact our future operating results.
Regulation
of the internet.
Due
to
the increasing popularity and use of the Internet by broad segments of the
population, it is possible that laws and regulations may be adopted with respect
to the Internet pertaining to content of Web sites, privacy, pricing, encryption
standards, consumer protection, electronic commerce, taxation, and copyright
infringement and other intellectual property issues. No one is able to predict
the effect, if any, that any future regulatory changes or developments may
have
on the demand for our Internet access or other Internet-related services.
Changes in the regulatory environment relating to the Internet access industry,
including the enactment of laws or promulgation of regulations that directly
or
indirectly affect the costs of telecommunications access or that increase the
likelihood or scope of competition from national or regional
telephone
companies, could materially and adversely affect our business, operating results
and financial condition.
We
will
not receive any of the proceeds from this offering.
All
of
the common stock registered for sale under this prospectus will be owned prior
to the offer and sale of such shares by our current or former employees,
officers, directors, consultants and/or advisors (the “selling shareholders”).
All of the shares owned by the selling shareholders were, or will be, acquired
by them pursuant to the Registrant’s 2005 Employee Stock Plan. The names of the
selling shareholders are set forth below.
We
are
registering the common stock covered by this prospectus for the selling
shareholders. As used in this prospectus, “selling shareholders” includes the
pledgees, donees, transferees or others who may later hold the selling
shareholders’ interests. We will pay the costs and fees of registering the
common shares, but the selling shareholders will pay any brokerage commissions,
discounts or other expenses relating to the sale of the common
stock.
The
selling shareholders may sell their common stock by means of this prospectus
and
any applicable prospectus supplement or they may decide to sell them in any
other manner permitted by applicable law, including pursuant to Rule 144,
however they are not obligated to sell their common stock at all. The selling
shareholders may sell their common stock from time to time in one or more types
of transactions (which may include block transactions) in the over-the-counter
market, in negotiated transactions, through put or call option transactions,
through short sales of common stock, or a combination of such methods of sale,
at market prices prevailing at the time of sale, at prices related to such
market prices, at negotiated prices, or at fixed prices. The selling
shareholders may sell their common stock directly to purchasers, in private
transactions, or through agents, underwriters or broker-dealers. The selling
shareholders will pay any applicable underwriting discounts, selling commissions
and transfer taxes. We will pay all other expenses incident to the registration
of the common stock. The selling shareholders and any broker-dealers, agents
or
underwriters that participate in the distribution of the common stock may be
deemed to be “underwriters” within the meaning of the Securities Act of 1933,
and any commission received by them and any profit on the resale of the common
stock purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.
Additional
information related to the selling shareholders and the plan of distribution
may
be provided in one or more supplemental prospectuses.
The
following table sets forth the names of the selling shareholders who may sell
their shares pursuant to this prospectus. The selling shareholders have, or
within the past three years have had, positions, offices or other material
relationships with us or with our predecessors or affiliates. The following
table also sets forth certain information as of the date of this prospectus,
to
the best of our knowledge, regarding the ownership of our common stock by the
selling shareholders and as adjusted to give effect to the sale of all the
common stock offered by the selling shareholders pursuant to this
prospectus.
| |
|
Shares
|
|
Shares
|
|
Shares
|
|
Percentage
Owned
|
|
|
Selling
|
|
held
before the
|
|
being
|
|
held
after the
|
|
after
the
|
|
|
Shareholder
|
|
Offering
|
|
Offered
|
|
Offering
|
|
Offering
|
|
|
Ron
Bass
|
|
|
201,600
|
|
|
3,571,429
|
|
|
3,773,029
|
|
|
0.7
|
%
|
|
Jeff
Fiebig
|
|
|
2,502,685
|
|
|
4,285,714
|
|
|
6,788,399
|
|
|
1.3
|
%
|
|
Edouard
Garneau
|
|
|
19,853,110
|
|
|
5,285,714
|
|
|
25,138,824
|
|
|
4.7
|
%
|
|
D.
Brian Karr
|
|
|
|
|
|
4,285,714
|
|
|
4,285,714
|
|
|
0.8
|
%
|
|
Joseph
Durnford
|
|
|
—
|
|
|
857,143
|
|
|
857,143
|
|
|
0.2
|
%
|
|
Kerry
Briggs
|
|
|
447,600
|
|
|
857,143
|
|
|
1,304,743
|
|
|
0.2
|
%
|
|
Richard
Wilson
|
|
|
4,129,347
|
|
|
857,143
|
|
|
4,986,490
|
|
|
0.9
|
%
|
|
Totals
|
|
|
27,134,342
|
|
|
20,000,000
|
|
|
47,134,342
|
|
|
8.8
|
%
|
This
prospectus is part of a Registration Statement on Form S-8 that we filed with
the Securities and Exchange Commission (the “SEC”). We omitted certain
information in the Registration Statement from this prospectus in accordance
with the rules of the SEC. We file our annual, quarterly and special reports,
proxy statements and other information with the SEC. You can inspect and copy
the Registration Statement as well as reports, proxy statements and other
information we have filed with the SEC at the public reference room maintained
by the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. You
can
obtain copies from the Public Reference Room of the SEC at 450 Fifth Street,
N.W., Washington, D.C. 20549 if you pay certain fees. You can call the SEC
at
1-800-732-0330 for further information about the operation of the Public
Reference Room. We are also required to file electronic versions of these
documents with the SEC, which may be accessed through the SEC’s World Wide Web
site at http://www.sec.gov.
The
SEC
allows us to “incorporate by reference” certain of our publicly-filed documents
into this prospectus, which means that information included in these documents
is considered part of this prospectus. Information that we file with the SEC
subsequent to the date of this prospectus will automatically update and
supersede this information. We incorporate by reference the documents listed
below and any future filings made with the SEC under sections 13(a), 13(c),
14
or 15(d) of the Securities Exchange Act of 1934, as amended.
The
following documents filed with the SEC are incorporated by reference into this
prospectus:
| |
(i)
|
our
Annual Report on Form 10-KSB for the fiscal year ended December 31,
2005
that we filed on April 17, 2006 and amended on December 1,
2006;
|
| |
(ii)
|
a
Proxy Statement filed on May 4, 2005;
|
| |
(iii)
|
our
Quarterly Report on Form 10-QSB for the quarter ended March 31, 2006
that
we filed on May 22, 2006 and amended on December 6,
2006;
|
| |
(iv)
|
our
Quarterly Report on Form 10-QSB for the quarter ended June 30, 2006
that
we filed on August 22, 2006; and
|
| |
(v)
|
our
Quarterly Report on Form 10-QSB for the quarter ended September 30,
2006
that we filed on November 20, 2006;
and
|
| |
(vi)
|
the
description of our securities which is contained in a Form 8-A (File
No.
001-15383) that we filed on October 8,
1999.
|
All
documents that we file pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act after the date of this prospectus and prior to the termination
of
this offering shall be deemed to be incorporated by reference in this prospectus
and to be a part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
prospectus to the extent that a statement contained herein or in any other
subsequently filed documents which are deemed to be incorporated by reference
herein modifies or supersedes such earlier statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this prospectus or the prospectus
supplement.
We
will
provide without charge to you, on written or oral request, a copy of any or
all
of the foregoing documents incorporated herein by reference (other than exhibits
to such documents, unless the exhibits are specifically incorporated by
reference in the information we send to you). You should direct any requests
for
documents to Corporate Secretary, c/o Cardinal Communications, Inc.,
11101
West 120th Avenue, Suite 220, Broomfield,
Colorado 80021,
telephone (303) 285-5379.
Except
for the historical information contained herein, the discussion in this
prospectus contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those discussed
herein. Important factors that could cause, in whole or in part, actual results
to differ materially from those in the forward-looking statements include,
but
are not limited to, those discussed in the section entitled “Risk Factors” as
well as those discussed elsewhere in this prospectus and in any documents
incorporated herein by reference.
FOR
SECURITIES ACT LIABILITIES
Article
X
of our Articles of Incorporation provides that no director or officer shall
be
personally liable to us or our shareholders for damages for breach of fiduciary
duty as a director or officer; provided, however, that such provision shall
not
eliminate or limit the liability of a director or officer for (1) acts or
omissions which involve intentional misconduct, fraud or a knowing violation
of
law or (2) the payment of dividends in
violation
of law. Any repeal or modification of Article X shall be prospective only and
shall not adversely affect any right or protection of a director or officer
existing at the time of such repeal or modification for any breach covered
by
Article X which occurred prior to any such repeal or modification. The effect
of
Article X is that directors and officers will experience no monetary loss for
damages arising out of actions taken (or not taken) in such capacities, except
for damages arising out of intentional misconduct, fraud or a knowing violation
of law, or the payment of dividends in violation of law.
As
permitted by Nevada law, our bylaws provide that we will indemnify our directors
and officers against expense and liabilities they incur to defend, settle or
satisfy any civil action, including any action alleging negligence, or criminal
action brought against them on account of their being or having been directors
or officers unless, in any such action, they are judged to have acted with
gross
negligence or willful misconduct.
Nevada
Revised Statutes 78.7502, 78.751, and 78.752 have provisions that provide for
discretionary and mandatory indemnification of officers, directors, employees,
and agents of a corporation. Under these provisions, such persons may be
indemnified by a corporation against expenses, including attorney’s fees,
judgment, fines and amounts paid in settlement, actually and reasonably incurred
by him in connection with the action, suit or proceeding, if he acted in good
faith and in a manner which he reasonably believed to be in or opposed to the
best interests of the corporation and with respect to any criminal action or
proceeding, had no reasonable cause to any action, suit or proceeding, had
no
reasonable cause to believe his conduct was unlawful.
To
the
extent that a director, officer, employee or agent of a corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding, or in defense of any claim, issue or matter, he must be indemnified
by a corporation against expenses, including attorney’s fees, actually and
reasonably incurred by him in connection with the defense.
Any
indemnification, unless ordered by a court or advanced by a corporation, must
be
made only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances. The determination must be made:
| |
·
|
By
the board of directors by majority vote of a quorum consisting of
directors who were not parties to that act, suit or
proceeding;
|
| |
·
|
If
a majority vote of a quorum consisting of directors who were not
parties
to the act, suit or proceeding cannot be obtained, by independent
legal
counsel in a written opinion; or
|
| |
·
|
If
a quorum consisting of directors who were not parties to the act,
suit or
proceeding cannot be obtained, by independent legal counsel in a
written
opinion;
|
Expenses
of officers and directors incurred in defending a civil or criminal action,
suit
or proceeding must be paid by the corporation as they are incurred and in
advance of the final disposition of the action, suit or proceeding, upon receipt
of an undertaking by the director or officer to repay the amount if it is
ultimately determined by a court of competent jurisdiction that he is not
entitled to be indemnified by a corporation.
To
the
extent that a director, officer, employee or agent of a corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in subsections 1 and 2, or in defense of any claim,
issue
or matter therein, a corporation shall indemnify him against expenses, including
attorneys’ fees, actually and reasonably incurred by him in connection with the
defense.
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted for our directors, officers and controlling persons pursuant to the
foregoing provisions, or otherwise, we have been advised that in the opinion
of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In
the event that a claim for indemnification against such liabilities (other
than
the payment by us for expenses incurred or paid by a director, officer or
controlling person 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, 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 our indemnification is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of the issue by the court.
PART
II
INFORMATION
REQUIRED IN THE REGISTRATION STATEMENT
| Item
3. |
Incorporation
of Documents by Reference.
|
The
following documents filed with the SEC are incorporated by reference into this
prospectus:
| |
(i)
|
our
Annual Report on Form 10-KSB for the fiscal year ended December 31,
2005
that we filed on April 17, 2006 and amended on December 1,
2006;
|
| |
(ii)
|
a
Proxy Statement filed on May 4, 2005;
|
| |
(iii)
|
our
Quarterly Report on Form 10-QSB for the quarter ended March 31, 2006
that
we filed on May 22, 2006 and amended on December 6,
2006;
|
| |
(iv)
|
our
Quarterly Report on Form 10-QSB for the quarter ended June 30, 2006
that
we filed on August 22, 2006; and
|
| |
(v)
|
our
Quarterly Report on Form 10-QSB for the quarter ended September 30,
2006
that we filed on November 20, 2006;
and
|
| |
(vi)
|
the
description of our securities which is contained in a Form 8-A (File
No.
001-15383) that we filed on October 8,
1999.
|
In
addition, all documents subsequently filed by the Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934,
prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference into this
registration statement and to be a part hereof from the date of filing of such
documents.
| Item
4. |
Description
of Securities.
|
Not
applicable. The securities to be registered are registered under Section 12
of
the Securities Exchange Act of 1934.
| Item
5. |
Interests
of Named Experts and
Counsel.
|
Not
applicable.
| Item
6. |
Indemnification
of Directors and Officers.
|
Article
X
of our Articles of Incorporation provides that no director or officer shall
be
personally liable to us or our shareholders for damages for breach
of
fiduciary
duty as a director or officer; provided, however, that such provision shall
not
eliminate or limit the liability of a director or officer for (1) acts or
omissions which involve intentional misconduct, fraud or a knowing violation
of
law or (2) the payment of dividends in violation of law. Any repeal or
modification of Article X shall be prospective only and shall not adversely
affect any right or protection of a director or officer existing at the time
of
such repeal or modification for any breach covered by Article X which occurred
prior to any such repeal or modification. The effect of Article X is that
directors and officers will experience no monetary loss for damages arising
out
of actions taken (or not taken) in such capacities, except for damages arising
out of intentional misconduct, fraud or a knowing violation of law, or the
payment of dividends in violation of law.
As
permitted by Nevada law, our bylaws provide that we will indemnify our directors
and officers against expense and liabilities they incur to defend, settle or
satisfy any civil action, including any action alleging negligence, or criminal
action brought against them on account of their being or having been directors
or officers unless, in any such action, they are judged to have acted with
gross
negligence or willful misconduct.
Nevada
Revised Statutes 78.7502, 78.751, and 78.752 have similar provisions that
provide for discretionary and mandatory indemnification of officers, directors,
employees, and agents of a corporation. Under these provisions, such persons
may
be indemnified by a corporation against expenses, including attorney’s fees,
judgment, fines and amounts paid in settlement, actually and reasonably incurred
by him in connection with the action, suit or proceeding, if he acted in good
faith and in a manner which he reasonably believed to be in or opposed to the
best interests of the corporation and with respect to any criminal action or
proceeding, had no reasonable cause to any action, suit or proceeding, had
no
reasonable cause to believe his conduct was unlawful.
To
the
extent that a director, officer, employee or agent of a corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding, or in defense of any claim, issue or matter, he must be indemnified
by a corporation against expenses, including attorney’s fees, actually and
reasonably incurred by him in connection with the defense.
Any
indemnification, unless ordered by a court or advanced by a corporation, must
be
made only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances. The determination must be made:
| |
·
|
By
the board of directors by majority vote of a quorum consisting of
directors who were not parties to that act, suit or
proceeding;
|
|
|
· |
If
a majority vote of a quorum consisting of directors who were not
parties
to the act, suit or proceeding cannot be obtained, by independent
legal
counsel in a written opinion; or
|
| |
·
|
If
a quorum consisting of directors who were not parties to the act,
suit or
proceeding cannot be obtained, by independent legal counsel in a
written
opinion;
|
Expenses
of officers and directors incurred in defending a civil or criminal action,
suit
or proceeding must be paid by the corporation as they are incurred and in
advance of the final disposition of the action, suit or proceeding, upon receipt
of an undertaking by the director or officer to repay the amount if it is
ultimately determined by a court of competent jurisdiction that he is not
entitled to be indemnified by a corporation.
To
the
extent that a director, officer, employee or agent of a corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in subsections 1 and 2, or in defense of any claim,
issue
or matter therein, a corporation shall indemnify him against expenses, including
attorneys’ fees, actually and reasonably incurred by him in connection with the
defense.
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted for our directors, officers and controlling persons pursuant to the
foregoing provisions, or otherwise, we have been advised that in the opinion
of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In
the event that a claim for indemnification against such liabilities (other
than
the payment by us for expenses incurred or paid by a director, officer or
controlling person 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, 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 our indemnification is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of the issue by the court.
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 foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act
of
1933 and is, therefore, unenforceable.
| Item
7. |
Exemption
From Registration Claimed.
|
Not
applicable.
|
|
5. |
Opinion
regarding legality (including
consent)*
|
|
|
10.1 |
2005
Employee Stock Ownership Plan(1)
|
|
|
10.2 |
2005
Employee Stock Ownership Plan(2)
|
|
|
10.3 |
2005
Employee Stock Ownership Plan(3)
|
|
|
10.4 |
2005
Employee Stock Ownership Plan(4)
|
|
|
10.5 |
2005
Employee Stock Ownership Plan(5)
|
| |
|
Consent
of AJ. Robbins PC*
|
| (1) |
Incorporated
by reference to Exhibit 10.1 included in the S-8 Registration Statement
filed with the Securities and Exchange Commission on January 7,
2005.
|
| (2) |
Incorporated
by reference to Exhibit 10.2 included in the S-8 Registration Statement
filed with the Securities and Exchange Commission on May 10,
2005.
|
| (3) |
Incorporated
by reference to Exhibit 10.3 included in the S-8 Registration Statement
filed with the Securities and Exchange Commission on August 29,
2005.
|
| (4) |
Incorporated
by reference to Exhibit 10.3 included in the S-8 Registration Statement
filed with the Securities and Exchange Commission on December 20,
2005.
|
| (5) |
Incorporated
by reference to Exhibit 10.3 included in the S-8 Registration Statement
filed with the Securities and Exchange Commission on April 28,
2005.
|
(a) The
undersigned Registrant hereby undertakes (1) to file, during any period in
which
offers or sales are being made, a post-effective amendment to this registration
statement to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement; (2) that,
for
the purpose of determining any liability under the Securities Act of 1933,
each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof;
(3)
to remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
(b) The
undersigned Registrant hereby undertakes that, for purposes of determining
any
liability under the Securities Act of 1933, each filing of the Registrant’s
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan’s annual report pursuant to section 15(d) 0f the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall
be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be
the initial bona fide offering thereof.
(c) Insofar
as indemnification for liabilities arising under the Securities Act of 1933
may
be permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public
policy
as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will
be governed by the final adjudication of such issue.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the Registrant certifies
that
it has reasonable grounds to believe that it meets all of the requirements
for
filing on Form S-8 and has duly caused this S-8 Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City
of Broomfield, State of Colorado on the 29th day of December, 2006.
CARDINAL
COMMUNICATIONS, INC.
By:
/s/ Edouard A. Garneau
Chief
Executive Officer and Director
Edouard
A. Garneau
Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated.
December
29, 2006
Chairman
of the Board and Director
Richard
E. Wilson
December
29, 2006
Director
- Jeffrey W. Fiebig
December
29, 2006
Director
- Joseph Durnford
December
29, 2006
Director
- Kerry Briggs
December
29, 2006
Chief
Financial Officer
D.
Brian
Karr
December
29, 2006
Principal
Accounting Officer
Ronald
S.
Bass