Form 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
[ X ] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2001
OR
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from to .
Commission File No. 1-15383
USURF America, Inc.
(Exact Name of Small Business Issuer
as Specified in its Charter)
NEVADA 72-1346591
(State or Other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
8748 Quarters Lake Road, Baton Rouge, Louisiana 70809
(Address of Principal Executive Offices,
including Zip Code)
(225) 922-7744
(Issuer's telephone number, including area code)
Indicate by check mark whether Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that Registrant as
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days:
Yes [ X ] No [ ]
Indicate the number of shares outstanding of each of the
issuer's classes of common stock as of the latest
practicable date:
Class Outstanding as of 5-11-01
Common Stock,
$.0001 par value 19,824,770
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
USURF America, Inc.
Consolidated Balance Sheets as of March 31,
2001 (unaudited), and December 31, 2000
Consolidated Statements of Operations for
the Three Months Ended March 31, 2001 and
2000(unaudited)
Consolidated Statements of Cash Flows for
the Three Months Ended March 31, 2001 and
2000(unaudited)
Notes to Consolidated Financial Statements
<PAGE>
USURF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
12/31/00 3/31/01
(audited) (unaudited)
ASSETS
CURRENT ASSETS
Cash and cash
equivalents $ 1,088 $ 125,494
Accounts receivable
- net 0 384
Inventory 246,721 246,721
---------- ----------
Total current
assets 247,809 372,599
---------- ----------
PROPERTY AND EQUIPMENT,
Cost 138,954 138,954
Less: accumulated
depreciation (69,476) (81,056)
---------- ----------
69,478 57,898
---------- ----------
INVESTMENTS 68,029 68,029
---------- ----------
OTHER ASSETS 25,000 25,000
---------- ----------
25,000 25,000
---------- ----------
Total assets $ 410,316 $ 523,526
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Disbursements in excess of
cash balances 42,469 42,469
Accounts payable 1,472,030 1,473,817
Accrued payroll 158,262 200,155
Other current liabilities 41,824 51,824
Property dividends
payable 43,750 43,750
Notes payable to
stockholder 6,638 32,728
---------- ----------
Total current
liabilities 1,764,973 1,844,743
---------- ----------
LONG-TERM LIABILITIES
Deferred income tax 0 0
---------- ----------
Total
liabilities 1,764,973 1,844,743
STOCKHOLDERS' EQUITY
Common stock, $.0001
par value; Authorized:
100,000,000; Issued
and Outstanding:
16,688,808 shares at
December 31, 2000,
and 18,052,770 shares
at March 31, 2001 1,669 1,805
Additional paid-in
capital 34,183,962 35,131,339
Accumulated deficit (34,502,160) (35,403,419)
Subscriptions
receivable 933,514 313,000
Deferred consulting (1,971,642) (1,363,942)
---------- ----------
(1,354,657) (1,321,217)
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 410,316 $ 523,526
<PAGE>
USURF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
March 31,
2001 2000
(unaudited) (unaudited)
REVENUES
Internet access
revenues $ 384 $ 597,392
Internet access
costs and cost
of goods sold 0 (269,136)
---------- ----------
Gross profit 384 328,256
---------- ----------
OPERATING EXPENSES
Depreciation
and amortization 11,580 2,238,544
Professional fees 707,288 390,038
Rent 5,361 61,570
Salary and
commissions 160,746 399,358
Advertising 0 15,179
Other 16,668 249,530
---------- ----------
Total
Operating
Expenses 901,643 3,354,219
---------- ----------
LOSS FROM OPERATIONS (901,259) (3,025,963)
OTHER INCOME(EXPENSE)
Other income 0 6,618
Interest expense 0 (9,770)
---------- ----------
LOSS BEFORE INCOME TAX (901,259) (3,029,115)
INCOME TAX BENEFIT 0 471,519
---------- ----------
NET LOSS (901,259) (2,557,596)
Net loss per
common share (.05) (0.20)
Weighted average
number of
shares
outstanding 18,208,215 12,937,499
<PAGE>
USURF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended Three Months Ended
3/31/01 3/31/00
(unaudited) (unaudited)
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss $( 901,259) $(2,557,596)
Adjustment to
reconcile net loss
to net cash used
in operating
activities
Depreciation and
amortization 11,580 2,238,544
Consulting fees
recognized 670,400 311,750
Compensation expense 3,300 24,000
Deferred income
taxes 0 (471,519)
Accounts receivable (384) 633
Inventory 0 6,301
Other current
liabilities 10,000 (16,823)
Other assets and
liabilities 0 9,276
Deferred revenue 0 68,051
Accounts payable 1,786 49,464
Prepaid expenses and
other current assets 0 (3,381)
Accrued payroll 41,893 35,521
---------- ----------
Net cash used
in operating
activities (162,684) (305,779)
---------- ----------
CASH FLOWS FROM
INVESTING ACTIVITIES
Cash acquired in
acquisitions 0 7,704
Capital expenditures 0 (102,612)
---------- ----------
Net cash used
in investing
activities 0 (94,908)
---------- ----------
CASH FLOWS FROM
FINANCING ACTIVITIES
Payments on notes
payable and capital
lease obligations 0 (5,910)
Proceeds from sub-
scriptions receivable 261,000 115,000
Proceeds from note
payable to stockholder 26,090 286,400
Issuance of common
stock for cash 0 0
Payment on note
payable to stockholder 0 (11,093)
---------- ----------
Net cash provided
by financing
activities 287,090 384,397
---------- ----------
Net increase
(decrease)
in cash and
cash equivalents 124,406 (16,290)
Cash and cash equi-
valents, beginning
of period 1,088 75,313
Cash and cash equi-
valents, end of period 125,494 59,023
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
AND OTHER CASH FLOW INFORMATION
Three Months March 31, 2001:
- In January 2001, the Company entered into a one-year
consulting agreement, by issuing 200,000 shares of
stock valued at $62,000.
- In January 2001, the Company issued 800,000 shares of
stock valued at $248,000, in payment of a commitment
fee under a common stock purchase agreement.
- In January 2001, 774,162 shares were issued to the
Company's president, pursuant to a debt conversion
agreement, which shares were not issued in 2000, due
to an administrative error.
Three Months March 31, 2000:
- In January 2000, the Company entered into a one-year
legal and business consulting services agreement, by
issuing 100,000 shares of stock valued at $300,000.
- In January 2000, the Company entered into a one-year
business and communications consulting services
agreement, by issuing 60,000 shares of stock valued at
$180,000.
- In February 2000, the Company acquired all of the stock
of The Spinning Wheel, Inc., by issuing 81,063 shares
of stock valued at $324,252. This acquisition was
accounted for as a purchase business combination.
- In February 2000, the Company acquired all of the
ownership interests of Internet Innovations, L.L.C.,
by issuing 50,000 shares of stock valued at $437,500.
This acquisition was accounted for as a purchase
business combination.
<PAGE>
USURF AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2001
(Unaudited)
Note 1. Nature of Business, Organization and
Basis of Presentation
Basis of Presentation
USURF America, Inc. (USURF), formerly Internet Media
Corporation, was incorporated as Media Entertainment, Inc.
in the State of Nevada on November 1, 1996. USURF currently
provides wireless Internet access services to a small number
of customers in Santa Fe, New Mexico. USURF's
original purpose was to operate as a holding company in the
wireless cable television and community (low power)
television industries, as well as other segments of the
communications industry. Until January 1999, the Company was
in the development stage. In 1998 the Company changed its
focus to concentrate its efforts in the wireless internet
communications industry. The Company later ceased efforts
to develop the wireless cable and low power television
business areas and assigned all of its assets from the low
power television activities to New Wave Media Corp. in
exchange for a 15% ownership interest in New Wave Media
Corp.
Effective December 31, 1996, USURF acquired all of the
outstanding common stock of Winter Entertainment, Inc., a
Delaware corporation incorporated on December 28, 1995
(WEI), and Missouri Cable TV Corp., a Louisiana corporation
incorporated on October 9, 1996 (MCTV). WEI operates a
community television station in Baton Rouge, Louisiana; MCTV
owns wireless cable television channels in Poplar Bluff,
Missouri, which system has been constructed and is ready for
operation, and Lebanon, Missouri. Effective October 8,
1998, the Company formed Santa Fe Wireless Internet, Inc.
(Santa Fe), a New Mexico corporation, to hold the assets
acquired from Desert Rain Internet Services. Santa Fe was
organized to provide wireless internet access. The
acquisition of WEI and MCTV by USURF was accounted for as a
reorganization of companies under common control. The
assets and liabilities acquired were recorded at historical
cost in a manner similar to a pooling of interests. The
acquisition of Santa Fe was accounted for as a purchase
whereby cost is allocated to the assets acquired.
On January 29, 1999, the Company acquired all the stock of
CyberHighway, Inc., a Boise, Idaho-based ISP, by issuing
2,000,000 shares of stock valued at approximately
$15,940,000. In addition, 325,000 shares of common stock
were issued in payment of a finder's fee arising out of this
acquisition. This acquisition was accounted for as a
purchase business combination.
In June 1999, USURF acquired all the stock of Santa Fe Trail
Internet Plus, Inc., a Santa Fe, New Mexico-based ISP, by
issuing 100,000 shares of stock valued at approximately
$400,000. This acquisition was accounted for as a purchase
business combination.
In July 1999, USURF acquired all of the stock of Premier
Internet Services, Inc., an Idaho-based ISP, by issuing
127,000 shares of stock valued at approximately $508,000.
This acquisition was accounted for as a purchase business
combination.
In November 1999, the Company acquired the customer base of
Cyber Mountain, Inc. a Denver, Colorado-based ISP, for
25,000 shares of stock valued at approximately $75,000. In
December 1999, USURF acquired a portion of the ISP-related
equipment and customer base of Cyber Highway of North
Georgia, Inc., a Demorest, Georgia-based ISP for 54,000
shares of stock valued at approximately $212,000.
In February 2000, the Company acquired Spinning Wheel, Inc.,
an Idaho Springs, Idaho-based ISP, for 81,063 shares of
stock valued at approximately $325,000. This acquisition
has been accounted for as a purchase business combination.
In February 2000, the Company acquired Internet Innovations,
LLC, a Baton Rouge, Louisiana based web design company, for
50,000 shares of common stock valued at approximately
$437,000. This acquisition has been accounted for as a
purchase business combination.
Principles of Consolidation
The accompanying consolidated financial statements include
all the accounts of USURF and all wholly owned subsidiaries.
Inter-company transactions and balances have been eliminated
in the consolidation.
Loss Per Common Share
Basic loss per common share has been computed by dividing
the net loss by the weighted average number of shares of
common stock outstanding throughout the period.
Note 2. Interim Consolidated Financial Statements
In the opinion of management, the accompanying consolidated
financial statements for the three months ended March 31,
2001 and 2000, reflect all adjustments (consisting only of
normal recurring adjustments) necessary to present fairly
the financial condition, results of operations and cash
flows of USURF, including subsidiaries, and include the
accounts of USURF and all of its subsidiaries. All material
inter-company transactions and balances are eliminated.
The financial statements included herein have been prepared
by USURF, without audit, pursuant to the rules and
regulations of the SEC. Certain information and footnote
disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such
rules and regulations. It is suggested that these unaudited
financial statements be read in conjunction with the
financial statements and notes thereto included in
USURF's Annual Report on Form 10-KSB/A for the year
ended December 31, 2000, as filed with the SEC. Certain
reclassifications and adjustments may have been made to the
financial statements for the comparative period of the prior
fiscal year to conform with the 2001 presentation. The
results of operations for the interim periods are not
necessarily indicative of the results to be obtained for the
entire year.
Note 3. Notes Payable to Shareholder
March 31, 2001
(unaudited)
Notes payable to majority
stockholder, interest
accrues at 8%, due on
demand and unsecured $32,728
Note 4. Stock Sales
In February 2001, the Company sold, pursuant to a Securities
Purchase Agreement, 840,000 shares of common stock and
840,000 warrants with an exercise price of $.15, exercisable
for a period of three years from issuance. These securities
were sold for $126,000 in cash, with no portion of the
purchase price having been allocated to these warrants. In
connection with this transaction, the Company issued, as a
finder's fee, 84,000 shares of common stock and 336,000
warrants with an exercise price of $.15 per share,
exercisable for a period of three years from issuance.
In March 2001, the Company sold, pursuant a Securities
Purchase Agreement, 500,000 shares of common stock and
500,000 warrants with an exercise price of $.25, exercisable
for a period of three years from issuance. These securities
were sold for $125,000 in cash, with no portion of the
purchase price having been allocated to the warrants. In
connection with this transaction, the Company issued, as a
finder's fee, 50,000 shares of common stock and 200,000
warrants with an exercise price of $.25 per share,
exercisable for a period of three years from issuance.
Note 5. Other Material Stock Issuances
In January 2000, the Company issued 800,000 shares of its
common stock as a commitment fee under a common stock
purchase agreement to an unrelated company. See Note 7.
Note 6. Contingencies
A. Bankruptcy
On September 29, 2000, three creditors of
CyberHighway filed an involuntary petition in the
Idaho Federal Bankruptcy Court, styled In
Re: CyberHighway, Inc., Case No. 00-02454. In
December 2000, CyberHighway and the petitioning
creditors filed a joint motion to dismiss this
proceeding. The joint motion to dismiss requires the
approval of CyberHighway's creditors. However, some
of CyberHighway's creditors objected to the dismissal
of the proceeding. The basis of the creditors'
objection is their belief that CyberHighway's as-yet
unasserted damage claims against the original
petitioning creditors and their law firm and a claim
against Dialup USA, Inc. represent CyberHighway's most
valuable assets. These as-yet unasserted claims
include claims for bad faith filing of the original
bankruptcy petition as to the original petitioning
creditors and their law firm, as well as claim for
tortious interference with beneficial business
relationships as to Dialup USA, Inc. The objecting
creditors desire that all claims be adjudicated in the
bankruptcy court. The Company believes it is likely
that, at some time in the future, a final order of
bankruptcy will be entered with respect to
CyberHighway.
Subsequent to the involuntary bankruptcy,
CyberHighway lost nearly all of its customers. Due
to this loss of customer base, the Company's
intangible assets relating to those customers were
determined to be worthless. The write-off of the
intangible assets reflected on the Company's December
31, 2000 balance sheet was $4,814,272 (net of deferred
taxes). Due to this change in operating environment,
the Company's revenues have decreased substantially as
well as a decrease in expenses associated with the
elimination of personnel previously required to
operate the Company's network operations center, and
accordingly goodwill has been impaired. The
write-down of goodwill reflected on the Company's
December 31, 2000, balance sheet was $4,425,037.
B. Potential Rescission Claims
Since January 2000, a total of 5,032,085 shares of
the common stock of the Company may have been issued
in violation of Section 5 of the Securities Act of
1933, as amended. The aggregate value assigned to
these shares upon their issuance totaled $5,521,502.
It is possible that each of the issues of these
shares has a potential claim for rescission of
their respective issuance transactions.
The Company believes that it is unlikely that any of these
potential rescission claims will be asserted against the
Company.
Note 7. Financing Transaction
On October 9, 2000, the Company signed a common stock
purchase agreement with an unrelated company to sell up to
$10,000,000 of its common stock. This agreement was
replaced by a similar agreement on April 25, 2001, as
amended May 9, 2001. The purchase price of the shares under
this agreement will vary, based on future market prices of
the Company's common stock. The agreement calls for the
Company to meet certain requirements and maintain certain
criteria with respect to its common stock in order to avoid
an event of default. Upon the occurrence of the event of
default, the buyer would no longer obligated to purchase any
additional shares of stock. The agreement will expire on
May 31, 2001, if all of the circumstances necessary to
effect the transaction have not occurred by that date,
including completion of a registration statement with
respect thereto. This registration statement is to be filed
in the near future.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Background
Our management has determined to commit all of our
available resources to the exploitation of our Quick-Cell
wireless Internet access products. We currently lack the
capital necessary to do so.
We were organized to operate in the wireless cable and
community (low power) television industries. Due to
existing market conditions, we have abandoned our wireless
cable business. Because our Quick-Cell wireless Internet
access system can be adapted for use on the wireless cable
frequencies, we believe our frequencies possess future
value. However, these frequencies will not be of value to
us, unless and until the FCC approves two-way communications
on them. Due to this circumstance, our wireless-cable-related
assets were determined to be impaired and their $188,091 book
value written off in December 2000.
Effective July 1, 1999, we assigned all of our
television-related assets to New Wave Media Corp., in
exchange for a 15% ownership interest in New Wave common
stock. This business segment was discontinued as of that
date and, since then, has not, and will not, generate any
revenues. Our board of directors has declared a dividend
with respect to all of the New Wave shares. These shares
will be distributed to our shareholders, upon New
Wave's completion of a Securities Act registration of
the distribution transaction. This registration proceeding
has not been commenced by New Wave, due to a lack of funds
necessary to pay related professional expenses. New Wave
has advised us that it is making its best efforts to obtain
capital for this purpose, but cannot provide an exact time
by which this will occur.
Since 1998, we have acquired seven dial-up Internet service
providers, including CyberHighway, the business of
www.e-tail.com and a web design firm, none of which was an
affiliated company nor were any acquired from an affiliate.
All but one of these acquisitions were made for shares of
our stock. All of these acquisitions were accounted for as
a purchase, which means that we did not include past
operations of the acquired businesses in our historical
statements of operations. Also in connection with these
acquisitions, we recorded large amounts of amortizable
customer base and goodwill values, as a result of the
acquisitions' valuations exceeding the values of the
tangible net assets. At December 31, 2000, all of these
values were written off, due to the demise of
CyberHighway's business. Please see the discussion
under "CyberHighway Bankruptcy" below.
All of the customers of the acquired Internet access
providers were assimilated into the dial-up operations of
our CyberHighway subsidiary, which has few remaining
customers; please see the discussion under
"CyberHighway Bankruptcy" below.
Current Overview
Our management has committed all available current and
future capital and other resources to the commercial
exploitation of our Quick-Cell wireless Internet access
products. It is these products upon which our future is
based.
As CyberHighway's business has become defunct while
in bankruptcy, we have determined not to attempt to revive
our dial-up Internet access business and, for the
foreseeable future, we have abandoned development of our
e-commerce business.
In April 2001, we entered into a common stock purchase
agreement with Fusion Capital Fund II, LLC, which was
amended in May 2001. This agreement replaced a similar
agreement entered into in October 2000. Pursuant to the
agreement, Fusion Capital may purchase up to $10 million of
our common stock. We intend to file, in the very near
future, a registration statement with respect to the shares
issued and to be issued pursuant to the Fusion Capital
agreement. Please see the discussion under the heading
"Management's Plans Relating to Future
Liquidity", for a more thorough explanation of the
impact this agreement could have on our business. Should we
obtain this funding, we would be able to begin to pursue our
wireless Internet business plan. We have commenced
marketing of our Quick-Cell service through a reseller. We
will need more capital thereafter, as we continue to expand
our wireless Internet business. We may never possess enough
capital to permit us to earn a profit.
CyberHighway Bankruptcy
On September 29, 2000, an involuntary bankruptcy petition
was filed against CyberHighway in the Idaho Federal
Bankruptcy Court, styled In Re: CyberHighway, Inc., Case No.
00-02454, by ProPeople Staffing, CTC Telecom, Inc. and
Hawkins-Smith. In December 2000, CyberHighway and the
petitioning creditors filed a joint motion to dismiss this
proceeding. The joint motion to dismiss requires the
approval of CyberHighway's creditors. However, some of
CyberHighway's creditors have objected to the
dismissal of the proceeding. The basis of the
creditors' objection is their belief that
CyberHighway's as-yet unasserted damage claims against
the original petitioning creditors and their law firm and a
claim against Dialup USA, Inc. represent
CyberHighway's most valuable assets. These as-yet
unasserted claims include claims for bad faith filing of the
original bankruptcy petition as to the original petitioning
creditors and their law firm, as well as a claim for
tortious interference with beneficial business relationships
as to Dialup USA, Inc. The objecting creditors desire that
these claims be adjudicated in the bankruptcy court. It is
likely that, at some time in the future, a final order of
bankruptcy will be entered with respect to CyberHighway. No
prediction of the timing of such an order can be made,
although we believe that such an order would come only after
the final adjudication of the claims described above.
The January 1999 acquisition of CyberHighway fundamentally
altered our company. Our annual revenues went from nearly
zero to about $2.5 million. Throughout 2000, operating
losses at CyberHighway, primarily personnel costs and leased
telephone-line charges, steadily increased, while revenues
began to decrease slightly each quarter. This trend
continued until September 2000.
As a means to achieve immediate cost savings at
CyberHighway, in September 2000, the following actions were
taken:
- CyberHighway sold its affiliate-ISP business for
$40,500, in cash; and
- CyberHighway contracted with Dialup USA for all
"backroom and customer support services, which
took effect at the end of October 2000.
These actions did reduce monthly operating costs by
approximately $50,000.
However, the involuntary bankruptcy proceeding started the
demise of CyberHighway's business, in effect rendering
our September 2000 actions meaningless. Since that time,
CyberHighway's company-owned dial-up customer base has
gone from approximately 8,500 to none. The filing of the
involuntary bankruptcy and CyberHighway's switch-over
to the network of Dialup USA were the primary causes of
CyberHighway's customer base demise. We will not
apply any available future capital to the revitalization of
our dial-up Internet access business.
This sudden and permanent demise of CyberHighway's
customer base has rendered our intangible assets relating to
those customers to become worthless. The write-off of these
intangible assets totalled $4,814,272, net of deferred
taxes, as reflected in our December 31, 2000, financial
statements. Due to this change in operating environment,
monthly revenues have decreased substantially, and,
accordingly, goodwill has been impaired. The write-down of
goodwill totalled $4,425,037, as reflected in our December
31, 2000, balance sheet.
Shareholder Loans - Conversion to Equity
In August 2000, our president, David M. Loflin, converted
all loan amounts owed to him, including accrued interest,
into a total of 774,162 shares of our common stock. The
total amount of indebtedness converted to common stock was
$967,703. Since August 2000, Mr. Loflin has made small
loans to us to ease periods of restricted cash flow. At
March 31, 2001, we owed Mr. Loflin $32,728.
Results of Operations
General. By the end of February 2001, CyberHighway had
lost all of its dial-up Internet access customers and we do
not foresee the revitalization of CyberHighway's
business. You should not purchase our common stock
expecting that CyberHighway's business will assist in
making us profitable.
Our revenues for the first quarter of 2000 were derived
from CyberHighway's business. During the first
quarter of 2001, we derived no revenue from
CyberHighway's business.
For the first three months of 2001, our small amount of
revenues were dervied from our Quick-Cell wireless Internet
access system in Santa Fe, New Mexico. With the demise of
CyberHighway, any future revenues will be derived from sales
of our Quick-Cell wireless Internet access service. We
currently lack the capital necessary to pursue our
Quick-Cell business plan, and we may never possess enough
capital with which to exploit fully our Quick-Cell products.
In this circumstance, it is likely that we would never earn
a profit.
Before the demise of CyberHighway, our revenues were
derived primarily from monthly customer payments for dial-up
access and from per-customer royalty payments from our
CyberHighway affiliate-ISPs.
Beginning in March 2000, we began initial Quick-Cell
wireless Internet access operations in Santa Fe, New Mexico.
Currently, we have approximately 120 Quick-Cell customers.
Throughout 2000, these customers were in their one-year
"free-use" period. Beginning in March 2001, we
began to bill the customers who had completed their one-year
of free use. The lack of growth of our wireless Internet
access business during 2000 is due to the fact that our
available monies were applied to CyberHighway expenses and
corporate overhead. We had no available capital to apply to
the expansion of the Santa Fe market.
In the middle of 2000, we began marketing our Quick-Cell
systems to local exchange telephone companies, independent
telephone companies, digital subscriber line resellers and
Internet service providers. We sold three Quick-Cell
systems in a short time, and received approximately 200
additional indications of interest via e-mail and telephone
from other telecommunications companies and others, 25% of
which our management considered to be of a serious nature.
Due to a lack of capital, however, this marketing effort was
suspended before we investigated the nature of the other
inquiring companies. No paying customers use these systems,
due to circumstances involving these companies that are
beyond our control. During 2001, we do not expect to derive
significant revenues from customer modem sales to these
Quick-Cell purchasers.
In cities in which we construct company-owned Quick-Cell
systems, we intend to employ telephone marketing as the
initial means for acquiring customers and, later, mass
media. We will employ a sales force that will focus
primarily on potential business customers. This focus on
business customers is based on our management's
informal study of Internet usage by businesses versus home
users that revealed businesses' higher demand for
high-speed Internet access. Our management's decision
may prove to have been incorrect, which would significantly
impair our ability to earn a profit. Our management
believes, based on its collective business experience, that
effective marketing techniques can overcome
Quick-Cell's lack of name recognition, although this
belief may also prove to be incorrect. Our Quick-Cell
business will not be able to succeed without additional
capital.
In cities where a Quick-Cell reseller operates, we will not
have final approval of the reseller's marketing
strategies. Our resellers will be permitted to market our
Quick-Cell service in any commercially reasonable manner. We
cannot, therefore, assure you that any of our resellers will
ever achieve high enough sales levels that would permit us
to earn a profit.
Under our Quick-Cell reseller agreement with Wireless
WebConnect!, Inc., we expect to derive revenues as follows:
- WebConnect's purchase of each Quick-Cell cell site;
- WebConnect's purchase of all customer modems;
- Charges for installation services on behalf of
every customer acquired by WebConnect; and
- Monthly per-Quick-Cell-customer royalties'
while we anticipate that this monthly per-customer royalty
will average approximately $12.00, we cannot assure you that
the monthly per-customer will be that high; in any event,
given the number of customers that can use a single
Quick-Cell cell site, approximately 2,000, the lowest
monthly per-customer royalty to be paid by WebConnect will
be about $9.00.
We expect our revenues for all of 2001 to be significantly
below those of 2000, since we no longer will derive revenues
from the operations of CyberHighway. In 2001, we will
produce significant revenues only if:
- our Quick-Cell reseller is as successful selling
our wireless Internet access products as it has been
in the past in reselling a competing wireless
Internet access service; or
- we are able to obtain at least $2,500,000 under the
Fusion Capital agreement.
Our reseller may not be successful enough for us to make a
profit, nor can we assure you that funding under the Fusion
Capital agreement will permit us to make a profit.
Three Months Ended March 31, 2001, versus Three Months
Ended March 31, 2000. During the 2000 period, all of our
revenues were generated by CyberHighway's dial-up
Internet access operations. We derived our revenues from
monthly customer payments for dial-up Internet access, which
averaged approximately $18.00 per customer. We also derived
revenue from per-customer royalty payments from our
CyberHighway affiliate-ISPs, which averaged approximately
$1.75 per customer. This affiliate-ISP business was sold in
September 2000.
During the 2001 period, we had only small revenues from our
wireless Internet access business. We derived no revenues
from CyberHighway's operations. Whether or not we
obtain capital, our existing operations in Santa Fe will
increase slightly from month to month, as our customers end
their free-use periods and begin to pay for our wireless
Internet access services.
Our revenues for all of 2001 can be expected to be
significantly below our revenue levels of 2000. However,
due to uncertainties relating to the timing of receipt of
expected funds under the Fusion Capital agreement, we can
make no prediction of our actual revenues.
Our operating results for the first quarters of 2001 and
2000 are summarized in the following table:
First First
Quarter 2001 Quarter 2000
Revenues $ 384 $ 597,392
Internet access costs
and cost of
goods sold 0 269,136
Gross Profit 384 328,256
Operating Expenses 901,643 3,354,219
Loss from Operations 901,259 3,025,963
Net Loss 901,259 2,557,596
Our net loss of $901,259 for the first quarter of 2001 was
significantly less than our net loss for the 2000 period of
$2,557,596. This reduced net loss is attributable primarily
to:
- Depreciation and amortization decreasing from
$2,238,544 for the 2000 period to $11,580 for the 2001
period. This reduction is due to the demise of
CyberHighway's business and the write-off of all of
our intangible assets associated with that business, which
occurred during December 2000. We no longer amortize those
intangible assets.
- Professional fees increased from $390,038 in the 2000
period to $707,288 in the 2001 period. This increase is due
to the issuance of 800,000 shares as a commitment fee under
a common stock purchase agreement, which shares were valued
at $248,000, as well as the monthly amortization of various
consulting agreements under which we issued stock for
services during 2000 and 2001.
- Salary and commissions fell from $399,358 in 2000 to
$160,746 in 2001. Our lower salary and commissions during
2001 is attributable to CyberHighway's demise, its
personnel having been reduced from about 30 during the first
quarter of 2000 to none, now.
- Rent expense decreased from $61,570 during the first
quarter of 2000 to $5,361 during the 2001 period. This
large decrease is the result of our abandoning all leased
premises of CyberHighway, following the filing of the
involuntary bankruptcy proceeding. Our monthly lease
expense for the remainder of 2001 will be higher, due to our
recent leasing of a small assembly facility in Baton Rouge,
Louisiana.
- Other expenses fell from $249,530 in 2000 to $16,668
in 2001. The reduction in this line item is attributable to
the demise of CyberHighway's business, as well as our
severe lack of capital during the last half of 2000 and most
of the first quarter of 2001.
Our statements of operations reflect an income tax benefit
of $471,519 for the 2000 period and no such benefit for the
2001 period. This income tax benefit was attributable to
the difference in the bases of our acquired customer bases
for book versus tax purposes. Since our intangible assets
were completely written-off as of December 31, 2000, we no
longer derive any similar income tax benefit.
We expect that our results of operations for the second
quarter of 2001 will be similar to those of the first
quarter of 2001.
During the first quarter of 2001, we issued 320,000 shares
of common stock under two consulting agreements; these
shares were valued for financial accounting purposes at
$99,200, in the aggregate. This amount will be expensed in
equal monthly amounts during 2001. Subsequent to March 31,
2001, we issued 300,000 shares under a consulting agreement;
these shares have been valued for financial accounting
purposes at $150,000, in the aggregate, and will be expensed
in equal monthly amounts during the remainder of 2001 and
the first quarter of 2002.
During the first quarter of 2000, we issued 160,000 shares
of common stock under two separate consulting agreements;
these shares were valued for financial accounting purposes
at $480,000, in the aggregate. This amount was expensed in
equal monthly amounts during 2000.
Liquidity and Capital Resources
General. Since our inception, we have had a significant
working capital deficit. Following the CyberHighway
acquisition and until the recent demise of
CyberHighway's business, we generated significant
monthly revenues, yet continued to have a working capital
deficit. Currently, we are substantially illiquid, although
we do possess approximately $100,000 in cash, the result of
recent securities sales to private investors. Without
additional capital, it is possible that we would be forced
to cease operations.
Our Capital Needs. To sustain our current level of
operations for the next twelve months, we will require
additional capital of approximately $300,000. To accomplish
our goals of expanding our Quick-Cell business, we will
require at least $2.5 million. If we are unable to obtain
this needed capital, we could be forced to cease our
operations.
Currently we do not possess enough capital to accomplish
our goals for our Quick-Cell wireless Internet access
business, including the construction of Quick-Cell systems.
When we refer to the construction of a Quick-Cell system in
any city, that process requires the following expenditures:
- A single Quick-Cell cell site, including a
Quick-Cell server modem, parts and configuration -
projected average cost: $25,000;
- Tower lease site - projected average cost: $500 per month;
- Direct T1 telephone line connection to the Internet -
projected average cost: $1,200 per month; and
- Initial inventory of customer modems - approximate
cost: $70,000.
Each Quick-Cell cell site added to an existing system will
cost approximately $25,000 for the server modem, parts and
configuration, plus tower lease costs and, if customer usage
requires, the cost of a direct T1 telephone line connection
to the Internet.
Should we be able to obtain the minimum of $400,000 per
month pursuant to the Fusion Capital agreement, we would
have enough money to pay for the construction of the initial
Quick-Cell cell site in at least three markets per month.
We cannot assure you that we will be able to construct
Quick-Cell cell sites at that rate.
In light of the relatively small amount of capital required
to construct each Quick-Cell cell site, we believe that the
expected funding under the Fusion Capital agreement would
provide us with enough capital to construct the initial
Quick-Cell cell site and commence marketing activities in
approximately 60 markets. With the Quick-Cell construction
permitted by this amount of capital, we will be able to
determine whether our Quick-Cell wireless Internet access
business is a viable business, as presently offered.
However, the funds expected under the Fusion Capital
agreement will not be adequate for us to pursue our complete
Quick-Cell business plan, and we cannot assure you that we
will be able to obtain capital when needed. Our inability
to obtain further capital when needed would lessen our
chance of earning a profit, as we would become illiquid.
Expected Proceeds from the Fusion Capital Agreement.
Beginning near the end of the second quarter of 2001, we
expect to begin to receive the first funds of up to $10
million under our agreement with Fusion Capital. Assuming
we receive the entire $10 million under that agreement, of
which there is no assurance, we anticipate that we will
apply these funds as follows:
Purchase of Quick-Cell Equipment $6,000,000
Construction of Quick-Cell Systems 1,300,000
Marketing 1,000,000
General and Administrative Expenses 200,000
Finder's Fee 800,000
Working Capital 700,000
Total $10,000,000
Should all of our outstanding warrants, including all of
the warrants to be issued in connection with the Fusion
Capital agreement, be exercised, we would receive cash
proceeds of approximately $2,540,000. Funds received from
the exercise of warrants would be used to purchase
Quick-Cell equipment, to construct Quick-Cell systems, to
market our Quick-Cell wireless Internet access service and
for working capital.
You should note that we may never receive any of the funds
discussed above. Our failure to obtain capital from these
sources could cause us to cease our operations.
March 31, 2001. Historically, we have had a significant
working capital deficit. At March 31, 2001, our working
capital deficit was $1,472,144, which is slightly lower than
our $1,517,164 deficit at December 31, 2000. Although we
had slightly higher accounts payable, accrued payroll and
notes payable to a shareholder at March 31, 2001, compared
to December 31, 2000, these increases were offset by our
receipt of cash pursuant to private sales of securities of
$251,000 during the first quarter of 2001. Most of our
accounts payable are accounts payable of CyberHighway.
Without additional capital, our working capital deficit can
be expected to become larger each quarter.
The following table sets forth our current assets and
current liabilities at March 31, 2001, and December 31,
2000:
3/31/01 12/31/00
Current Assets Cash $125,494 $ 1,088
Accounts
Receivable 384 0
Inventory 246,721 246,721
Current
Liabilities Disbursements
in excess of
cash balances $ 42,469 $ 42,469
Accounts
payable 1,473,817 1,472,030
Accrued
payroll 200,155 158,262
Other current
liabilities 51,824 41,824
Property divi-
dends payable 43,750 43,750
Notes payable
to stockholder 32,728 6,638
Our accrued payroll at March 31, 2001, as well as at
December 31, 2000, is attributable to accrued salary of our
president and two of our vice presidents.
The increase in notes payable to stockholder, from $6,638
at December 31, 2000, to $32,728 at March 31, 2001,
represents loans made to us by our president, David M.
Loflin. All of this indebtedness is due on demand and bears
interest at 8% per annum. The funds loaned during 1Q 2000
were used primarily for operating expenses. Mr. Loflin has
advised us that he does not intend to demand payment of his
loans, until their repayment would not adversely affect our
financial position. Without outside funding, it is possible
that Mr. Loflin may loan us additional funds, though no
assurance or prediction can be made in this regard.
In addition to Mr. Loflin's loans, during the first
quarter of 2001, we obtained a total of $261,000 in cash
from private sales of our securities.
- In February 2001, we sold 840,000 units of securities,
each unit being comprised of one share of our stock and one
warrant with an exercise price of $.15 per share, to a
private investor for $126,000 in cash. The warrants are
exercisable for a period of three years. In connection with
this sale of securities, we issued to a finder 84,000 shares
of our common stock and a warrant to purchase 336,000 shares
of our common stock at an exercise price of $.15 per share.
These warrants are exercisable for a period of three years.
The 84,000 shares issued to the finder were valued at $.15
per share, a total value of $12,600. No value was placed on
the warrants issued.
- In March 2001, we sold 500,000 units of securities, each
unit being comprised of one share of our stock and one
warrant with an exercise price of $.25 per share, to a
private investor for $125,000 in cash. The warrants are
exercisable for a period of three years. In connection with
this sale of securities, we issued to a finder 50,000 shares
of our common stock and a warrant to purchase 200,000 shares
of our common stock at an exercise price of $.25 per share.
These warrants are exercisable for a period of three years.
The 50,000 shares issued to the finder were valued at $.25
per share, a total value of $12,500. No value was placed on
the warrants issued.
The funds received were used for working capital and for
the initial costs associated with the establishment of a new
company-owned Quick-Cell wireless Internet access system.
Without obtaining at least $1,000,000 in new capital, we
will continue to have a significant working capital deficit
and will not be able to operate from a position of
liquidity. This will impair our ability to pursue our
Quick-Cell business plan and, thus, our ability ever to earn
a profit.
If we are unable to obtain significant additional capital,
it is possible that we would be forced to cease operations.
Cash Flows from Operating Activities. During the first
quarter of 2001, our operations used $162,684 in cash
compared to cash used of $305,779 during the first quarter
of 2000. In both periods, the use of cash in operations was
a direct result of the lack of revenues compared to our
operating expenses, particularly salary and commissions.
Cash Flows from Investing Activities. During the first
quarter of 2001, our investing activities neither provided
nor used cash. In the first quarter of 2000, we used cash
of $94,908 in our investing activities, where our equipment
purchases were offset, in part, by cash acquired in
acquisitions. Because we lack working capital, we cannot
predict our cash flows from investing activities for the
remainder of 2001.
Cash Flows from Financing Activities. For the first
quarter of 2001, our financing activities provided $287,090
in cash. Of this amount, $26,090 is attributable to loans
from our president and $261,000 is attributable to private
sales of securities. For the first quarter of 2000, our
financing activities provided $384,397 in cash, $115,000 of
which is attributable to private sales of our securities and
$286,400 of which is attributable to loans from our
president. We continue to seek capital and cannot,
therefore, predict future levels of cash flows from
financing activities.
Management's Plans Relating to Future Liquidity
To sustain our current level of operations for the next
twelve months, we will require additional capital of
approximately $300,000. To accomplish our goals of
expanding our Quick-Cell business, we will require at least
$2.5 million.
Our best opportunity for obtaining needed funds is pursuant
to the Fusion Capital agreement. The following summarizes
the important terms under the Fusion Capital agreement:
- Fusion Capital may purchase up to $10 million of our
common stock;
- The selling price to Fusion Capital will be equal to a
price based upon the future market price of the common stock
without any fixed discount to the market price;
- We have the right to require Fusion Capital to purchase
up to $20,000 each trading day during the agreement;
- Should our stock price be $5.00 or higher for five
consecutive trading days, we have the right to require
Fusion Capital to purchase up to the full remaining portion
of the $10 million commitment; and
- During the term of the Fusion Capital agreement, we may
not issue, or agree to issue, any variable-priced equity or
variable-priced "equity-like" securities, unless
we have obtained Fusion Capital's prior written consent.
We may never realize proceeds under the Fusion Capital
agreement.
Should we obtain at least $2.5 million under the Fusion
Capital agreement, we expect that we will be able to
accomplish our two primary objectives:
- Placing at least 20,000 customers on our Quick-Cell
systems during the next year; and
- proving the commercial viability of our Quick-Cell
wireless Internet access service.
We cannot assure you that we will accomplish these
objectives.
Currently, we have no other sources for funding on the
scale of the Fusion Capital transaction.
If we do not obtain the necessary funding, we would be
forced to cease operations.
Capital Expenditures
During 2000, we made approximately $195,000 in equipment
purchases, approximately 40% for wireless Internet equipment
and approximately 60% for needed equipment in our network
operations center. We currently have no capital with which
to make any significant capital expenditures. Should we
obtain funding under the Fusion Capital agreement, we will
be able to make major expenditures on Quick-Cell-related
equipment, as described above. However, without additional
capital, we will make no capital expenditures. During
Fiscal 1999, we made $614,193 in equipment purchases.
CERTAIN STATEMENTS CONTAINED IN THIS
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS" ARE
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND
ARE, THUS, PROSPECTIVE. THESE FORWARD-LOOKING STATEMENTS
ARE SUBJECT TO RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM FUTURE
RESULTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING
STATEMENTS. THE MOST SIGNIFICANT OF SUCH RISKS,
UNCERTAINTIES AND OTHER FACTORS IS OUR ABILITY TO OBTAIN
CAPITAL IN AMOUNTS NECESSARY FOR US TO ACCOMPLISH OUR PLAN
FOR THE EXPLOITATION OF OUR QUICK-CELL WIRELESS INTERNET
ACCESS PRODUCTS, AS WELL AS CONSUMER ACCEPTANCE OF THESE
PRODUCTS.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
CyberHighway Involuntary Bankruptcy
On September 29, 2000, an involuntary bankruptcy petition
was filed against CyberHighway in the Idaho Federal
Bankruptcy Court, styled In Re: CyberHighway, Inc., Case No.
00-02454. The petitioning creditors were ProPeople
Staffing, CTC Telecom, Inc. and Hawkins-Smith. In December
2000, CyberHighway and the petitioning creditors filed a
joint motion to dismiss this proceeding. The joint motion
to dismiss requires the approval of CyberHighway's
creditors. However, some of CyberHighway's creditors
have objected to the dismissal of the proceeding. The basis
of the creditors' objection is their belief that
CyberHighway's as-yet unasserted damage claims against
the original petitioning creditors and their law firm and a
claim against Dialup USA, Inc. represent
CyberHighway's most valuable assets. These as-yet
unasserted claims include claims for bad faith filing of the
original bankruptcy petition as to the original petitioning
creditors and their law firm, as well as claim for tortious
interference with beneficial business relationships as to
Dialup USA, Inc. The objecting creditors desire that these
claims be adjudicated in the bankruptcy court. It is likely
that, at some time in the future, a final order of
bankruptcy will be entered with respect to CyberHighway, no
prediction of the timing of such an order can be made,
although we believe that such an order would come only after
the final adjudication of the claims described above.
Other Litigation
In November 2000, CyberHighway requested and received a
temporary restraining order against Darrell Davis, formerly
one of our officers, and his wife, Deanna Davis. We have
alleged that the Davises have diverted dial-up customers
from CyberHighway to a company controlled by him, all while
he was an employee of USURF America. We expect that a
hearing for our motion for a permanent injunction will occur
in the very near future. In addition, we are seeking
monetary damages in this action. This case is in its early
stages and no prediction as to its final outcome can be
made. This case is styled: CyberHighway, Inc. versus Deanna
Davis, individually and d/b/a Cyber-Trail, Inc., and Darrell
D. Davis, 19th Judicial District Court, Parish of East Baton
Rouge, State of Louisiana.
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From: Stephanie Edwards <sedwards@sabrerealty.com>
To: "'Michelle \"Roni\" Wiseman'" <michelle.wiseman@airmail.net>
Subject: Super Staples
Date: Mon, 14 May 2001 15:20:52 -0500
MIME-Version: 1.0
Content-Type: text/plain; charset="us-ascii"
Content-Transfer-Encoding: quoted-printable
X-Airmail-Delivered: Mon, 14 May 2001 16:01:52 -0500 (CDT)
X-Airmail-Spooled: Mon, 14 May 2001 15:24:58 -0500 (CDT)
Hey, so remind me---which brand of staples were our "super staples?" I =
am in dire need...
Also, on an unrelated subject, check out this website:
www.tenayas.com
They have a new location at Park & the Tollway & they take reservations =
for weekday lunches. I'm going tomorrow & will let you know how it is. =
The menu looks interesting!
R
During the three months ended March 31, 2001, we issued
securities as follows:
1.(a) Securities Sold. In January 2000, we issued
800,000 shares of Common Stock.
(b) Underwriters and Other Purchasers. Such shares
were issued to Fusion Capital Fund II, LLC.
(c) Consideration. Such shares were issued as a
commitment fee under a common stock purchase agreement and
were valued at $.31 per share.
(d) Exemption from Registration Claimed. The Company
relied upon the exemption from registration afforded by
Section 4(2) of the Securities Act of 1933, as amended, but
this exemption may not have been available
(e) Terms of Conversion or Exercise. Not applicable.
2. (a) Securities Sold. In January 2001, 200,000 shares
of Company Common Stock were issued.
(b) Underwriter or Other Purchasers. Such shares of
Common Stock were issued to Fair Market, Inc.
(c) Consideration. Such shares of Common Stock were
issued pursuant to a letter agreement, at a price of $.375
per share.
(d) Exemption from Registration Claimed. The Company
relied upon the exemption from registration afforded by
Section 4(2) of the Securities Act of 1933, as amended, but
this exemption may not have been available.
(e) Terms of Conversion or Exercise. Not applicable.
3. (a) Securities Sold. In January 2001, 120,000 shares
of Company Common Stock were issued.
(b) Underwriter or Other Purchasers. Such shares of
Common Stock were issued to Nostas/Faessel Group.
(c) Consideration. Such shares of Common Stock were
issued pursuant to a letter agreement, at a price of $.375
per share.
(d) Exemption from Registration Claimed. The Company
relied upon the exemption from registration afforded by
Section 4(2) of the Securities Act of 1933, as amended, but
this exemption may not have been available.
(e) Terms of Conversion or Exercise. Not applicable.
4. (a) Securities Sold. In January 2001, 20,000 shares
of Company Common Stock were issued.
(b) Underwriter or Other Purchasers. Such shares of
Common Stock were issued to CyberHighway of North Georgia.
(c) Consideration. Such shares of Common Stock were
issued pursuant to a letter agreement, at a price of $.375
per share.
(d) Exemption from Registration Claimed. The Company
relied upon the exemption from registration afforded by
Section 4(2) of the Securities Act of 1933, as amended, but
this exemption may not have been available.
(e) Terms of Conversion or Exercise. Not applicable.
5. (a) Securities Sold. In January 2001, 10,000 shares
of Company Common Stock were issued.
(b) Underwriter or Other Purchasers. Such shares of
Common Stock were issued to Fusion Capital Fund II, LLC.
(c) Consideration. Such shares of Common Stock were
issued pursuant to a letter agreement, at a price of $.375
per share.
(d) Exemption from Registration Claimed. The Company
relied upon the exemption from registration afforded by
Section 4(2) of the Securities Act of 1933, as amended, but
this exemption may not have been available.
(e) Terms of Conversion or Exercise. Not applicable.
6. (a) Securities Sold. In February 2001, 840,000 shares
of Company Common Stock were issued.
(b) Underwriter or Other Purchasers. Such shares of
Common Stock were issued to Claymore Asset Management Group
Ltd.
(c) Consideration. Such shares of Common Stock were
issued pursuant to a securities purchase agreement, at a
price of $.15 per share.
(d) Exemption from Registration Claimed. These
securities are exempt from registration under the Securities
Act of 1933, as amended, pursuant to the provisions of
Regulation S thereunder.
(e) Terms of Conversion or Exercise. Not applicable.
7. (a) Securities Sold. In February 2001, 840,000 common
stock purchase warrants of the Company were issued.
(b) Underwriter or Other Purchasers. Such warrants
were issued to Claymore Asset Management Group Ltd.
(c) Consideration. Such warrants were issued for no
additional consideration pursuant to a securities purchase
agreement.
(d) Exemption from Registration Claimed. These
securities are exempt from registration under the Securities
Act of 1933, as amended, pursuant to the provisions of
Regulation S thereunder.
(e) Terms of Conversion or Exercise. Exercise price
of the warrants is $.15 per share and exercisable for a
period of three years from issuance.
8. (a) Securities Sold. In February 2001, 84,000 shares
of Company Common Stock were issued.
(b) Underwriter or Other Purchasers. Such shares of
Common Stock were issued to Shelter Capital Ltd.
(c) Consideration. Such shares of Common Stock were
issued pursuant to a finder's fee agreement, at a
price of $.15 per share.
(d) Exemption from Registration Claimed. These
securities are exempt from registration under the Securities
Act of 1933, as amended, pursuant to the provisions of
Regulation S thereunder.
(e) Terms of Conversion or Exercise. Not applicable.
9. (a) Securities Sold. In February 2001, 336,000 common
stock purchase warrants of the Company were issued.
(b) Underwriter or Other Purchasers. Such warrants
were issued to Shelter Capital Ltd.
(c) Consideration. Such warrants were issued for no
additional consideration pursuant to a finder's fee
agreement.
(d) Exemption from Registration Claimed. These
securities are exempt from registration under the Securities
Act of 1933, as amended, pursuant to the provisions of
Regulation S thereunder.
(e) Terms of Conversion or Exercise. Exercise price
of the warrants is $.15 per share and exercisable for a
period of three years from issuance.
10. (a) Securities Sold. In March 2001, 500,000 shares
of Company Common Stock were issued.
(b) Underwriter or Other Purchasers. Such shares of
Common Stock were issued to Atlas Securities Inc.
(c) Consideration. Such shares of Common Stock were
issued pursuant to a securities purchase agreement, at a
price of $.25 per share.
(d) Exemption from Registration Claimed. These
securities are exempt from registration under the Securities
Act of 1933, as amended, pursuant to the provisions of
Regulation S thereunder.
(e) Terms of Conversion or Exercise. Not applicable.
11. (a) Securities Sold. In March 2001, 500,000 common
stock purchase warrants of the Company were issued.
(b) Underwriter or Other Purchasers. Such warrants
were issued to Atlas Securities Inc.
(c) Consideration. Such warrants were issued for no
additional consideration pursuant to a securities purchase
agreement.
(d) Exemption from Registration Claimed. These
securities are exempt from registration under the Securities
Act of 1933, as amended, pursuant to the provisions of
Regulation S thereunder.
(e) Terms of Conversion or Exercise. Exercise price of
the warrants is $.25 per share and exercisable for a period
of three years from issuance.
12. (a) Securities Sold. In December 2000, 50,000 shares
of Company Common Stock were issued.
(b) Underwriter or Other Purchasers. Such shares of
Common Stock were issued to Shelter Capital Ltd.
(c) Consideration. Such shares of Common Stock were
issued pursuant to a finder's fee agreement, at a
price of $.25 per share.
(d) Exemption from Registration Claimed. These
securities are exempt from registration under the Securities
Act of 1933, as amended, pursuant to the provisions of
Regulation S thereunder.
(e) Terms of Conversion or Exercise. Not applicable.
13. (a) Securities Sold. In December 2000, 200,000
common stock purchase warrants of the Company were issued.
(b) Underwriter or Other Purchasers. Such warrants
were issued to Shelter Capital Ltd.
(c) Consideration. Such warrants were issued for no
additional consideration pursuant to a finder's fee
agreement.
(d) Exemption from Registration Claimed. These
securities are exempt from registration under the Securities
Act of 1933, as amended, pursuant to the provisions of
Regulation S thereunder.
(e) Terms of Conversion or Exercise. Exercise price
of the warrants is $.25 per share and exercisable for a
period of three years from issuance.
Subsequent to March 31, 2001, the Company has issued
unregistered securities, as follows:
1.(a) Securities Sold. In April 2000, we issued
300,000 shares of Common Stock.
(b) Underwriters and Other Purchasers. Such shares
were issued to IBC.TV, LLC.
(c) Consideration. Such shares were sold for cash in
the amount of $.50 per share.
(d) Exemption from Registration Claimed. The Company
relied upon the exemption from registration afforded by
Section 4(2) of the Securities Act of 1933, as amended, but
this exemption may not have been available.
(e) Terms of Conversion or Exercise. Not applicable.
Item 3. Defaults upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote
of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
None.
(b) Reports on From 8-K.
During the three months ended March 31, 2001, on
or about March 14, 2001, we filed a Current
Report on Form 8-K in which we reported the
resignation of one of our directors.
Subsequent to March 31, 2001, on or about April
5, 2001, we filed a Current Report on Form 8-K
in which we made disclosure pursuant to
Regulation FD.
SIGNATURES
In accordance with the requirements of the Securities
Exchange Act of 1934, Registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto
duly authorized.
Dated: May 14, 2001.
USURF AMERICA, INC.
By: /s/ David M. Loflin
David M. Loflin
President and Acting
Principal Financial Officer
