SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
July 28, 2003
(Date of Report)
May 19, 2003
(Date of Earliest Event Reported)
US Wireless Online, Inc.
(Exact Name of Registrant as Specified in its Charter)
NEVADA 333-61424 82-0505220
(State or other jurisdiction Commission File Number (IRS Employer I.D. No.)
of incorporation)
745 West Main Street, Suite 100
Louisville, Kentucky 40202
--------------------------
(Address of Principal Executive Offices)
(502) 213-3700
--------------
(Registrant's Telephone Number)
-----------------
(Former Name or Former Address if changed Since Last Report)
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Businesses Acquired.
(b) Pro Forma Financial Information.
(c) Exhibits.
EXHIBIT NUMBER TITLE LOCATION
31.1 Certification of Chief Executive Officer pursuant to Section 302 Attached
of the Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive Officer pursuant to Section 906 Attached
of the Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this Current Report to be signed on its behalf by the
undersigned hereunto duly authorized.
US Wireless Online, Inc.
DATED: July 28, 2003 /s/ Doug Keeney
-------------------------
Doug Keeney
Doug Keeney
Chief Executive Officer
2
U.S. WIRELESS ONLINE, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
C O N T E N T S
Independent Auditor's Report. . . . . . . . . . . . 4
Balance Sheet . . . . . . . . . . . . . . . . . . . 5-6
Statements of Operations. . . . . . . . . . . . . . 7
Statements of Stockholders' Equity. . . . . . . . . 8
Statements of Cash Flows. . . . . . . . . . . . . . 9
Notes to the Financial Statements . . . . . . . . . 10-17
Proforma Consolidated Balance Sheet . . . . . . . . 18-20
Proforma Consolidated Statements of Operations. . . 21
Notes to Proforma Consolidated Financial Statements 22
3
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
of U.S. Wireless Online, Inc.
We have audited the accompanying balance sheet of U.S. Wireless Online, Inc. as
of December 31, 2002 and the related statements of operations, stockholders'
equity and cash flows for the years ended December 31, 2002 and 2001. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well a evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of U.S. Wireless
Online, Inc. as of December 31, 2002 and the results of its operations and cash
flows for the years ended December 31, 2002 and 2001 in conformity with
accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has suffered recurring
losses from operations, negative working capital and is dependent on financing
to continue operations, which raises substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
described in Note 2. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Chisholm & Associates
North Salt Lake, UT
April 25, 2003
4
U.S. WIRELESS ONLINE, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
BALANCE SHEET
ASSETS
------
December 31,
2002
-------------
Current Assets
Cash. . . . . . . . . . . . . . . . . . . . . . . $ 3,961
Accounts Receivables (Net of Allowance of $4,784) 80,858
Prepaid Expenses. . . . . . . . . . . . . . . . . 27,273
-------------
Total Current Assets. . . . . . . . . . . . . . 112,092
-------------
Property & Equipment (Net). . . . . . . . . . . . . 694,966
-------------
Other Assets
Client Base (Net) . . . . . . . . . . . . . . . 180,000
Deposits. . . . . . . . . . . . . . . . . . . . 269
-------------
Total Other Assets. . . . . . . . . . . . . . . 180,269
-------------
Total Assets. . . . . . . . . . . . . . . . . . $ 987,327
=============
The accompanying notes are an integral part of these financial statements.
5
U.S. WIRELESS ONLINE, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
BALANCE SHEET (CONTINUED)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . 726,127
Accrued Expenses . . . . . . . . . . . . . . . . . . . . . . . 42,208
Deffered Revenue . . . . . . . . . . . . . . . . . . . . . . . 17,394
Current Portion of Long term debt. . . . . . . . . . . . . . . 490,649
--------------
Total Current Liabilities. . . . . . . . . . . . . . . . . . 1,276,378
--------------
Long-Term Debt
Convertible Debentures . . . . . . . . . . . . . . . . . . . . 316,844
Notes Payable. . . . . . . . . . . . . . . . . . . . . . . . . 514,438
Note Payable - related party . . . . . . . . . . . . . . . . . 76,635
Lease Obligation . . . . . . . . . . . . . . . . . . . . . . . 72,620
Current Portion of Long Term Debt. . . . . . . . . . . . . . . (490,649)
--------------
Total Long Term Debt . . . . . . . . . . . . . . . . . . . . 489,888
--------------
Total Liabilities. . . . . . . . . . . . . . . . . . . . . . 1,766,266
--------------
Stockholders' Equity
Common Stock, Authorized 100,000,000 Shares, $.001 Par Value,
Issued and Outstanding 49,482,170 shares . . . . . . . . . . 49,482
Additional Paid in Capital . . . . . . . . . . . . . . . . . . 3,281,075
Subscription Receivable. . . . . . . . . . . . . . . . . . . . (210,500)
Retained Earnings (Deficit). . . . . . . . . . . . . . . . . . (3,898,995)
--------------
Total Stockholders' Equity . . . . . . . . . . . . . . . . . . . (778,938)
--------------
Total Liabilities and Stockholders' Equity . . . . . . . . . $ 987,327
==============
The accompanying notes are an integral part of these financial statements.
6
U.S. WIRELESS ONLINE, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
STATEMENT OF OPERATIONS
For the Year Ended
December 31,
--------------------------
2002 2001
------------ ------------
Revenues . . . . . . . . . . . . . . 1,996,106 1,381,861
Cost of Sales. . . . . . . . . . . . 906,536 647,642
------------ ------------
Gross Profit (Loss). . . . . . . . . 1,089,570 734,220
Operating Expenses
General & Administrative . . . . . 2,192,993 3,066,320
------------ ------------
Total Operating Expenses . . . . 2,192,993 3,066,320
------------ ------------
Net Operating Income (Loss). . . . . (1,103,423) (2,332,100)
------------ ------------
Other Income(Expense)
Interest Income. . . . . . . . . . - -
Interest Expense . . . . . . . . . (94,846) (52,561)
------------ ------------
Total Other Income(Expense). . . (94,846) (52,561)
------------ ------------
Net Income (Loss). . . . . . . . . . $(1,198,269) $(2,384,661)
============ ============
Net Income (Loss) Per Share. . . . . $ (0.02) $ (0.06)
============ ============
Weighted Average Shares Outstanding. 48,403,388 43,317,550
============ ============
The accompanying notes are an integral part of these financial statements.
7
U.S. WIRELESS ONLINE, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
Additional
Common Stock Paid-In Subscription Accumulated
Shares Amount Capital Receivable (Deficit)
---------- ------- ---------- ------------ ------------
Balance December 31, 2000. . . . . . . . . . 1,710,000 1,710 348,290 (50,000) (316,065)
Issuance of common stock for cash . . . . . 46,160,000 46,160 2,045,150 (400,000) -
and Subscription Receivable
Funds Received from Subscription Receivable - - - 25,000 -
Issuance of common stock for services . . . 464,330 464 92,402 - -
Options issued for Services . . . . . . . . - - 222,572 - -
Net Loss for the year ended
December 31, 2001 . . . . . . . . . . . . . - - - - (2,384,661)
---------- ------- ---------- ------------ ------------
Balance December 31, 2001 . . . . . . . . . 48,334,330 48,334 2,708,414 (425,000) (2,700,726)
Issuance of Common Stock
for services. . . . . . . . . . . . . . . . 1,147,840 1,148 228,420 - -
Sale of treasury stock. . . . . . . . . . . - - - (150,000) -
Funds Received from Subscription Receivable - - - 364,500 -
Options issued for Services . . . . . . . . - - 344,241 - -
Net Loss for the year ended
December 31, 2002 . . . . . . . . . . . . . - - - - (1,198,269)
---------- ------- ---------- ------------ ------------
Balance December 31, 2002 . . . . . . . . . . 49,482,170 $49,482 $3,281,075 $ (210,500) $(3,898,995)
========== ======= ========== ============ ============
The accompanying notes are an integral part of these financial statements.
8
U.S. WIRELESS ONLINE, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
STATEMENT OF CASH FLOWS
For the years ended
December 31,
--------------------------
2002 2001
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) . . . . . . . . . . . . . . . . . . . . . . $(1,323,769) $(2,384,661)
Adjustments to Reconcile Net Loss to Net Cash
Provided by Operations:
Depreciation & Amortization. . . . . . . . . . . . . . . . 317,637 333,003
Options issued for Services. . . . . . . . . . . . . . . . 344,241 222,572
Shares issued for Services . . . . . . . . . . . . . . . . 229,568 92,866
Bad Debt Expense . . . . . . . . . . . . . . . . . . . . . (10,358) 15,142
Change in Assets and Liabilities
Increase (Decrease) in Cash Overdraft . . . . . . . . . . - (13,589)
(Increase) Decrease in Accounts Receivable . . . . . . . . 72,296 (156,336)
(Increase) Decrease in Deferred Revenue. . . . . . . . . . (27,249) 44,643
Increase (Decrease) in Deposits and Prepaids . . . . . . . 9,057 (36,599)
Increase (Decrease) in Accounts Payable/ Accrued Expenses. 76,456 653,599
------------ ------------
Net Cash Provided(Used) by Operating Activities . . . . . . . (312,122) (1,229,360)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale Property and Equipment . . . . . . . . . . 97,804 -
Purchases of Property and Equipment . . . . . . . . . . . . . - (1,502,778)
------------ ------------
Net Cash Provided (Used) by Investing Activities. . . . . . . 97,804 (1,502,778)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Subscription Receivable . . . . . . . . . . . . . . . . . . . 189,500 (400,000)
Proceeds from Stockholder Loan. . . . . . . . . . . . . . . . 92,132 (150,000)
Payments on Convertible Debentures. . . . . . . . . . . . . . (442,300) -
Proceeds from Convertible Debentures. . . . . . . . . . . . . - 1,344,144
Proceeds from Stock issuance. . . . . . . . . . . . . . . . . 125,500 2,141,310
------------ ------------
Net Cash Provided(Used) by Financing Activities . . . . . . . (35,167) 2,935,454
------------ ------------
The accompanying notes are an integral part of these financial statements.
9
U.S. WIRELESS ONLINE, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
NOTE 1 - DESCRIPTION OF BUSINESS
a. The Company and Nature of Business
U.S. Wireless Online, Inc. (the Company) was incorporated in Georgia in
June 2000 under the corporate name U.S. Wireless Online, Inc.
(U.S.Wireless). During 2001 the Company moved its corporate offices to
Louisville, Kentucky
The Company provides wireless internet and email services and
communications services to businesses. The Company provides these services
to Customers in the United States of America.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company recognizes income and expenses on the accrual basis of
accounting.
b. Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company considers all
short-term investments purchased with a remaining maturity of three months
or less to be cash equivalents.
At various times throughout the year the Company had cash deposits at a
bank in excess of the maximum amounts insured by the FDIC.
c. Property and Equipment
Property and equipment are stated at cost less accumulation depreciation.
Depreciation is provided for in amount sufficient to relate the cost of
depreciable assets to operations over their estimated service lives,
principally on a straight line-basis. Maintenance and repairs are charged
to expense as incurred, costs of major additions and betterments are
capitalized. In accordance with SFAS 144, the Company reviews long-lived
assets held and used for possible impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. As of December 31, 2002, there were no impairments.
10
U.S. WIRELESS ONLINE, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
d. Advertising Costs
Advertising costs are expensed as incurred. Total advertising costs charged
to expense for the years ended December 31, 2002 and 2001 were $2,161 and
$80,977, respectively.
e. Use of Estimates in the Financial Statements
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that effect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reported period. Actual results
could differ from those estimates.
f. Earnings per Share
The Company adopted the provisions of Statement of Financial Accounting
Standards (SFAS) No. 128, "Earnings per Share". SFAS No. 128 requires the
presentation of basic and diluted Earnings per Share (EPS). Basic EPS is
computed by dividing income available to common stockholders by the
weighted-average number of common shares outstanding for the period.
Diluted EPS includes the potential dilution that could occur if options or
other contracts to issue common stock were exercised or converted.
For the Years Ended
December 31,
--------------------------
2002 2001
------------ ------------
Income (Loss)(numerator) $(1,198,269) $(2,384,662)
Shares (denominator) . . 48,403,388 43,317,550
------------ ------------
Per Share Amount . . . . $ (0.02) $ (0.06)
============ ============
g. Income Taxes
The Company accounts for income taxes using the liability method, which
requires the determination of deferred tax assets and liabilities based on
the difference between the financial and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which
differences are expected to reverse. Deferred tax assets are adjusted by a
valuation allowance, if, based on the weight of available evidence, it is
more likely than not that some portion or all of the deferred tax assets
will not be realized. Since inception, U.S. Wireless, with the consent of
its stockholders, elected to be taxed as an S-Corporation under the
Internal Revenue Code and similar state statutes.
11
U.S. WIRELESS ONLINE, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
h. Concentration of Credit Risk
The Company extends credit to customers which results in accounts
receivable arising from its normal business activities. The Company does
not require collateral or other security to support financial instruments
subject to credit risk. The Company routinely assesses the financial
strength of its customers and based upon factors surrounding the credit
risk of the customers believes that its accounts receivable credit risk
exposure is limited.
i. Fair Value of Financial Instruments
SFAS No. 107, "Disclosures about Fair Value of Financial Instruments"
requires that the Company disclose estimated fair values of financial
instruments. The carrying amounts reported in the statement of financial
position for current assets and current liabilities qualifying as financial
instruments are a reasonable estimate of fair value.
j. Revenue Recognition
The Company provides wireless internet access to customers for a contract
period of 1 year. The customers are billed for services on a monthly basis.
The initial installation fees charged to the customer are deferred and
recognized during the contract period of 1 year. Deferred revenue also
includes advance payments for monthly services and advances received for
conventions.
k. Receivables
Accounts receivable is recorded net of an allowance account when management
deems a receivable to be uncollectible. As of December 31, 2002 and 2001,
accounts deemed to be uncollectible amounted to $4,784and $15,142
respectively.
12
U.S. WIRELESS ONLINE, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
l. Going Concern
The accompanying Financial Statements have been prepared assuming that the
Company will continue as a going concern. The Company has suffered
recurring losses negative working capital and is dependent upon raising
capital to continue operations. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty. It is
management's plan to raise additional capital in order to expand
operations, liquidate debt and operate profitably.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment at December 31, 2002 consists of the following:
Estimated
2002 Useful Lives
---------- ------------
Furniture & Fixtures . . . . . . . . . . . $ 10,575 7 years
Automobiles. . . . . . . . . . . . . . . . 10,007 5 years
Office Equipment . . . . . . . . . . . . . 24,535 5 years
Wireless Equipment . . . . . . . . . . . . 1,053,919 5 years
Network Software . . . . . . . . . . . . . 2,219 5 years
----------
1,101,255
Less: accumulated depreciation 406,289
----------
Property and Equipment, Net . . . . . . . . . $ 694,966
==========
Depreciation expense for the years ended December 31, 2002 and 2001 were
$317,637 and $333,003, respectively.
13
U.S. WIRELESS ONLINE, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
NOTE 4 - LONG-TERM LIABILITIES
Long-term liabilities are detailed in the following schedules as of
December 31, 2002:
Convertible Debentures:
Convertible Note payable to a Company, due in total by,
Conversion of Cash or Equity by November 2002
including interest at 8%, in default. . . . . . . . . . $ 181,844
Convertible Note Payable to a Company, due in total by
Conversion of Cash or Equity by November 2002
Including interest at 8%. . . . . . . . . . . . . . . . 135,000
----------
Total Convertible Debentures. . . . . . . . . . . . . . 316,844
----------
Notes payable:
Note payable to a Bank, due in total in October 2006,
including interest at 7.5%. . . . . . . . . . . . . . . 464,437
Line of Credit due and Individual, is due on demand
Bears interest at 10% . . . . . . . . . . . . . . . . . 50,000
----------
Total Notes Payable . . . . . . . . . . . . . . . . . . 514,437
----------
Notes payable - related party
Note payable to an individual, bears no interest
And is due on demand. . . . . . . . . . . . . . . . . . 76,635
----------
Total notes payable - related party . . . . . . . . . . 76,635
----------
Lease Obligation
Note payable to a Company, due in total on March 2003,
including interest at 7.10% . . . . . . . . . . . . . . 72,620
----------
Total Lease Obligation. . . . . . . . . . . . . . . . . 72,620
----------
Total Notes Payable . . . . . . . . . . . . . . . . . . $ 903,901
----------
Total long-term liabilities . . . . . . . . . . . . . $ 980,536
----------
14
U.S. WIRELESS ONLINE, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
NOTE 4 - LONG-TERM LIABILITIES (Continued)
Balance Forward. . . . . . . . . . . . 980,536
Less: current portion. . . . . . . . . (341,393)
Less: current portion - related party. (76,635)
Less: current portion-lease obligation (72,620)
----------
Total current portion. . . . . . . . . (490,648)
----------
Total Long-Term Liabilities. . . . . . $ 489,888
----------
Future minimum principal payments on notes payable are as follows:
2003 $ 418,028
2004 253,053
2005 127,217
2006 109,618
-------------
Total $ 907,916
=============
Future minimum lease payments on lease obligations are as follows:
2003 $ 76,317
Less: portion recorded in interest: (3,697)
-----------
$ 72,620
===========
NOTE 5 - RELATED PARTY TRANSACTIONS
During 2002, the Company entered into an agreement with a director and
major shareholder providing for an interest free loan due upon demand.
Amounts outstanding under the agreement at December 31, 2002 was $76,635.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company signed a lease agreement for an office facility in Louisville,
Kentucky. The company pays $1,500 per month on a month to month lease. A
second office space in Louisville is being leased for $4,146 per month for
the first year and
15
U.S. WIRELESS ONLINE, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
NOTE 6 COMMITMENTS AND CONTINGENCIES (Continued)
increases by approximately $300 each year . Lease terminates in November of
2006. The company also leased office space in Georgia for $1,250 per month,
the terms were for twelve months ending in March 2003. Total rent expense
for the years ended December 31, 2002 and 2001 was $158,693 and $182,548
respectively.
The Company also leases roof top space. Transmittal towers are erected to
transmit wireless internet broadcasts. The company leases rooftop space in
Georgia, Kentucky, Ohio and Indiana. Rooftop leases very in price and time
span. Rooftop lease expense for the years ended December 31, 2002 and 2001
was $375,036 and $311,954 respectively.
NOTE 7- STOCKHOLDERS' EQUITY TRANSACTIONS
During 2001, the Company issued 25,910,000 shares of common stock to
investors for cash in the amount of $2,091,310 or an average price of $0.08
per share. Included in the issuance was a $400,000 subscription receivable
of which $189,500 was received in 2002. The Company also issued 464,370
shares of common stock to employees and consultants in lieu of wages and
services in the amount of $92,866 or at an average price of $0.20 per
share.
During 2002, the Company issued 20,250,000 shares of common stock to
investors for cash in the amount of $315,000 or an average price of $0.20
per share. Common stock in the amount of 1,147,840 was issued to employees
and consultants in lieu of wages and services in the amount of $229,568 or
$0.20 per share.
During 2001, stock options were issued to employees and consultants under a
unqualified stock option plan. 4,410,000 options were issued of which
$222,572 was expensed. The valuation price was established using the Black-
Scholes pricing model and was established to be $0.15 per share. Options
vest over a two year period and were expensed during 2001 from the issuance
date up to the end of the 2001 year. 2,525,000 options of the 4,410,000
outstanding had vested 75% the remaining 1,885,000 had vested 100%. In 2002
an expense in the amount of $344,241 was made on the remaining vested
options.
In June 2002 the Company purchased Treasury stock for $150,000. In the same
period the shares were sold at the same price and booked as a subscription
receivable.
NOTE 8 - CONVERTIBLE PROMISSORY NOTE.
In May 2001 the Company issued a convertible promissory note to a company in the
amount of $181,844.40. The note is convertible in cash or equity of the company.
The note matures in six months. As of December 31,2002 and 2001 the full balance
was still outstanding. A second convertible note was issued to a company
16
U.S. WIRELESS ONLINE, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
NOTE 8 CONVERTIBLE PROMISSORY NOTE ( Continued)
in May of 2001 in the amount of $442,300. In consideration for the note the
Company received software to be used in its operations. The note is to be
converted into cash or equity of the company. The note accrues interest at
8% per annum and matures six months from the date the note was effective.
As of December 31, 2002 the note was satisfied in full by returning the
software
NOTE 9 CLIENT BASE
In May 2001, the Company acquired the assets of Darwin networks, Inc. a
Delaware corporation engaged in providing high speed internet services to
700 customers in Louisville, KY, Cincinnati, Columbus and Dayton, Ohio and
Atlanta, Georgia. Pursuant to the acquisition the Company recorded $320,000
in equipment and $300,000 for the value of the client base aquired. The
client base is being amortized over a 5 year term on the straight line
basis.
NOTE 11 SUBSEQUENT EVENTS
In May 2003 the Company entered into a plan of reorganization with Cach
Foods, Inc. ("CACH") a Nevada Corporation. The agreement which provides
among other things that not less than 80% of the outstanding shares of
WIRELESS be acquired by CACH, in exchange for up to 13,472,846 post split
shares of CACH . At Closing not less than 39,543,736 common shares, which
represents not less than 80% of the outstanding shares of WIRELESS shall be
acquired by CACH in exchange for up to 13,472,846 post split restricted
common shares of CACH.
CACH will amend its Articles of Incorporation to change the name of the
Company to "U.S. Wireless Online, Inc." Prior to closing, CACH is to effect
a .48 to 1 reverse split of the 12,152,000 current issued and outstanding
CACH shares with rounding up for any fractional shares. Options to purchase
1,528,154 shares of WIRELESS common stock shall be exchanged for options to
purchase 1,528,154 shares of CACH common stock .
In March 2003 50,000 options were issued to employees of the company.
Options have a two year vesting period. Options have been valued at $.15.
In April 2003 40,000 options were issued to employees for services. Options
have a two year vesting period. Options have been valued at $.15 per
option. No options have been converted or exercised
17
U.S. WIRELESS ONLINE, INC.
PROFORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2002
ASSETS
U.S. Wireless
Online, Inc.
U.S. Wireless (formerly Cach Proforma
Online, Inc. Foods, Inc.) Proforma Consolidated
Balance Balance Adjustments Balance
12/31/02 12/31/02 DR CR 12/31/02
------------- -------------- -------- --------- --------------
(unaudited) (unaudited) (unaudited)
Current Assets
Cash and Cash Equivalents. $ 3,961 $ 14,137 $ 18,098
Accounts Receivable, Net . 80,858 - 80,858
Prepaid Expenses . . . . . 27,273 - 27,273
------------- -------------- --------------
Total Current Assets . . . 112,092 14,137 126,229
------------- -------------- --------------
Equipment, Net . . . . . . 874,966 - 874,966
------------- -------------- --------------
Other Assets
Deposits . . . . . . . . . 269 - 269
------------- -------------- --------------
Total Other Assets . . . . 269 - 269
------------- -------------- --------------
Total Assets . . . . . . . $ 987,327 $ 14,137 $ 1,001,464
============= ============== =============
The accompanying notes are an integral part of these financial statements.
18
U.S. WIRELESS ONLINE, INC.
PROFORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2002
LIBILITIES AND STOCKHOLDERS' EQUITY
U.S. Wireless
Online, Inc.
U.S. Wireless (formerly Cach Proforma
Online, Inc. Foods, Inc.) Proforma Consolidated
Balance Balance Adjustments Balance
12/31/02 12/31/02 DR CR 12/31/02
------------- -------------- -------- --------- ------------
(unaudited) (unaudited) (unaudited)
Current Liabilities
Accounts Payable & Accrued Expenses. . . $ 768,335 1,855 $ 770,190
Deferred Revenues. . . . . . . . . . . . 17,394 - 17,394
Current Portion of Long-Term Debt. . . . 490,649 - 490,649
------------- -------------- ------------
Total Current Liabilities. . . . . . . . 1,276,378 1,855 1,278,233
------------- -------------- ------------
Long-Term Liabilities
Convertible Debentures . . . . . . . . . 316,844 - 316,844
Notes Payable. . . . . . . . . . . . . . 514,438 - 514,438
Notes Payable - related party. . . . . . 76,635 76,635
Lease Obligation . . . . . . . . . . . . 72,620 72,620
Less: Current Portion of Long-Term Debt. (490,649) - (490,649)
------------- -------------- ------------
Total Long-Term Liabilities. . . . . . . 489,888 - 489,888
------------- -------------- ------------
The accompanying notes are an integral part of these financial statements.
19
U.S. WIRELESS ONLINE, INC.
PROFORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2002
LIBILITIES STOCKHOLDERS' EQUITY CONTINUED
U.S. Wireless
Online, Inc.
U.S. Wireless (formerly Cach Proforma
Online, Inc. Foods, Inc.) Proforma Consolidated
Balance Balance Adjustments Balance
12/31/02 12/31/02 DR CR 12/31/02
------------- -------------- -------- --------- ------------
(unaudited) (unaudited) (unaudited)
Stockholders' Equity
Preferred Stock, Authorized 5,000,000
Shares, $.001 Par Value, No Shares Issued
and Outstanding . . . . . . . . . . . . . . - - -
Common Stock, Authorized 100,000,000
Shares, $.001 Par Value, 15,485,806 Shares
Issued and Outstanding. . . . . . . . . . . 49,482 15,486 49,482 15,486
Additional Paid in Capital. . . . . . . . . 3,281,075 47,723 211,945 3,116,853
Subscription Receivable . . . . . . . . . . (210,500) - 210,500 -
Retained Earnings (Deficit) . . . . . . . . (3,898,995) (50,927) 50,927 (3,898,995)
------------- -------------- ------------
Total Stockholders Equity . . . . . . . . . (778,938) 12,282 (766,656)
------------- -------------- ------------
Total Liabilities and Stockholders Equity . $ 987,327 $ 14,137 $1,001,465
------------- -------------- ------------
The accompanying notes are an integral part of these financial statements.
20
U.S. WIRELESS ONLINE, INC.
PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS
DECEMBER 31, 2002
U.S. Wireless
Online, Inc.
U.S. Wireless (formerly Cach
Online, Inc. Foods, Inc.) Proforma
For January 1, For January 1,
2002 2002 Proforma Consolidated
through through Adjustments Balance
December 31, 2002 December 31, 2002 DR CR December 31, 2002
------------------- ------------------- ------------ --- -----------------
(unaudited) (unaudited) (unaudited)
Revenues . . . . . . . . . . . . . $ 1,996,106 $ - $ 1,996,106
Cost of Sales. . . . . . . . . . . 906,536 - 906,536
------------------- ------------------- -----------------
Gross Profit (Loss). . . . . . . . 1,089,570 - 1,089,570
------------------- ------------------- -----------------
Operating Expenses
Selling, General & Administrative. 2,192,993 15,904 2,208,897
------------------- ------------------- -----------------
Total Operating Expenses . . . . . (2,192,993) (15,904) 2,208,897
------------------- ------------------- -----------------
Income (Loss) from Operations. . (1,103,423) (15,904) (1,119,327)
Other Income (Expense) . . . . . . (94,846) (16) (94,862)
------------------- ------------------- -----------------
Net Income (Loss). . . . . . . . . $ (1,198,269) $ (15,920) $ (1,214,189)
=================== =================== =================
The accompanying notes are an integral part of these financial statements.
21
U.S. WIRELESS ONLINE, INC.
NOTES TO PROFORMA
CONSOLIDATED
FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE 1 - Summary of Transaction
On May 12, 2003, the Company completed an Agreement and Plan of
Reorganization between U.S. Wireless Online, Inc. (formerly Cach Foods, Inc.) a
public Nevada corporation (USWO) (the Company) and U.S. Wireless Online, Inc. a
private Georgia corporation (Wireless). Pursuant to the plan, the Company
effected a .48 for 1 reverse stock split and exchanged 13,472,846 shares of
common stock and a $250,000 promissory note for all of the outstanding common
stock of Wireless. The Company also changed its name to U.S. Wireless Online,
Inc. The reorganization was recorded as a reverse acquisition using the
purchase method of accounting.
NOTE 2 - Management Assumptions
The pro forma consolidated balance sheet and statements of operations
assumes that the entities were together as of December 31, 2002.
The pro forma consolidated balance sheet has been retroactively restated
for the reverse stock split and assumes the exchange of 13,472,846 shares of
common stock and a $250,000 promissory note and the elimination of the retained
deficit of USWO.
There are no proforma adjustments for the statement of operations.
22