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U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-28783
FIVE STAR BROADBAND WIRELESS, INC.
(Exact name of small business issuer as specified in its charter)
State of Kansas 48-1207793
(State or other jurisdiction of (IRS Employer
incorporation or organization) I. D. Number)
8136 S. Harvard, Tulsa, Oklahoma 74137
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (918) 499-1600
Check whether the issuer (1) filed all reports required to be filed by
Sections 13 or 15(d) of the Securities Exchange Act during the past 12
months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
There were 41,980,661 shares of common stock, No Par Value,
outstanding as of March 31, 2000.
Transitional Small Business Disclosure Format (check one); Yes [ ] No [X]
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
REPORT ON REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Five Star Broadband Wireless, Inc.
Tulsa, Oklahoma
We have reviewed the accompanying balance sheet of Five Star Broadband
Wireless, Inc. (a development stage enterprise) (the "Company") as of
March 31, 2000, and the related statements of operations, stockholders'
equity, and cash flows for the three and six months ended March 31, 2000
and 1999. These financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical review
procedures to financial data and making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope
than an audit conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly, we do
not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet as of September 30, 1999, and the related
statements of operations, stockholders' equity and cash flows for the year
then ended (not presented herein); and, in our report dated November 12,
1999, we expressed an unqualified opinion on those financial statements.
In our opinion, the information set forth in the accompanying balance
sheet as of September 30, 1999 is fairly stated in all material respects
in relation to the balance sheet from which it has been derived.
/s/ Robert Early & Company
ROBERT EARLY & COMPANY, P.C.
Abilene, Texas
May 17, 2000
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FIVE STAR BROADBAND WIRELESS, INC.
(A Development Stage Enterprise)
Balance Sheets
March 31 September 30
1999 1999
---------- ----------
Unaudited
ASSETS
Current Assets:
Cash $ 109,969 $ 91,274
Marketable securities (net) 11,250 70,456
Income taxes receivable 11,486 -
Deferred tax benefit 5,682 2,853
---------- ----------
Total Current Assets 138,387 164,583
---------- ----------
Other Assets:
Investment in subsidiary 136,000 -
Nonmarketable securities 34,596 28,596
---------- ----------
TOTAL ASSETS $ 308,983 $ 193,179
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accrued expenses $ - $ 3,000
Payable to officer - 5,037
Income taxes payable - 5,556
---------- ----------
Total Liabilities - 13,593
---------- ----------
Stockholders' Equity:
Common stock, no par value (1,000,000,000
shares authorized, 41,980,661 and 9,203,161
outstanding) 338,915 167,665
Earnings accumulated during the development stage (17,220) 11,921
Unrealized gain/(loss) on nonmarketable
securities (net) (12,712) -
---------- ----------
Total Stockholders' Equity 308,983 179,586
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 308,983 $ 193,179
========== ==========
See accompanying selected information and accountants' report.
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<TABLE>
FIVE STAR BROADBAND WIRELESS, INC.
(A Development Stage Enterprise)
Statements of Operations
For the Three and Six Months Ended March 31, 2000 and 1999
(Unaudited)
<S> <C> <C> <C> <C> <C>
Cumulative
During the
Three Months Six Months Development
2000 1999 2000 1999 Stage
---------- --------- ---------- --------- ---------
Revenues $ - $ - $ - $ - $ -
Operating Expenses:
Director and officer compensation 9,000 9,000 18,000 13,000 58,000
Rent - 1,800 1,800 1,800 5,400
Legal and professional 1,988 - 2,428 - 5,828
Office expenses and other 2,063 - 2,636 75 3,531
---------- --------- ---------- --------- ---------
Total Operating Expenses 13,051 10,800 24,864 14,875 72,759
---------- --------- ---------- --------- ---------
Income from Operations (13,051) (10,800 (24,864) (14,875) (72,759)
Other Income and Expenses:
Interest income 695 - 1,627 28 2,089
Interest expense - - (85) - (85)
Gain on sale of marketable securities (13,112) 450 (7,321) (3,374) 69,890
Unrealized loss on marketable
securities (4,808) 10,397 (11,616) 10,397 (26,770)
---------- --------- ---------- --------- ---------
Income Before Income Taxes (30,276) 47 (42,259) (7,824) (27,635)
Income tax expense/(benefit) (7,821) (3,414) (11,577) (3,414) (6,021)
Deferred tax expense/(benefit) (530) 1,948 (1,541) 1,948 (4,394)
---------- --------- ---------- --------- ---------
NET INCOME $ (21,925) $ 1,513 $ (29,141) $ (6,358) $ (17,220)
========== ========= ========== ========= =========
Earnings per Share $ (0.00) $ 0.00 $ (0.00) $ (0.00) $ (0.00)
========== ========= ========== ========= =========
Weighted Average Shares
Outstanding 14,027,584 4,325,320 12,455,401 3,800,320 7,504,544
========== ========= ========== ========= =========
</TABLE>
See accompanying selected information and accountants' report.
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FIVE STAR BROADBAND WIRELESS, INC.
(A Development Stage Enterprise)
Statements of Stockholders' Equity
For the Period from Inception to March 31, 2000
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C> <C>
Earnings/(Loss) Unrealized
Accumulated Gain/(Loss)
During the On Non-
Common Stock Development Marketable
Date Shares Amount Stage Securities
------ ---------- ---------- ------------ ----------
Stock issued for:
Services and expenses 10/98 475,320 $ 4,075 $ - $ -
Cash 11/98 50,000 500 - -
Marketable securities 11/98 3,800,000 34,500 - -
Officer compensation 04/99 621,034 7,924 - -
Marketable securities 04/99 68,966 880 - -
Officer compensation 05/99 767,967 23,039 - -
Marketable securities 08/99 3,219,874 90,747 - -
Marketable securities 09/99 200,000 6,000 - -
Net income for period - - 11,921 -
---------- ---------- ------------ ----------
Balances, September 30, 1999 9,203,161 167,665 11,921 -
Stock issued for:
Cash 10/99 100,000 10,000 - -
Marketable securities 10/99 200,000 20,000 - -
Marketable securities 11/99 437,500 43,750 - -
Cash 03/00 540,000 97,500 - -
Marketing contract 03/00 31,500,000 - - -
Net loss for period - - (29,141) (12,712)
---------- ---------- ------------ ----------
Balances, March 31, 2000 41,980,661 $ 338,915 $ (17,220) $ (12,712)
========== ========== ============ ==========
</TABLE>
See accompanying selected information and accountants' report.
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FIVE STAR BROADBAND WIRELESS, INC.
(A Development Stage Enterprise)
Statements of Cash Flows
Increases/(Decreases) in Cash and Cash Equivalents
For the Six Months Ended March 31, 2000 and 1999
(Unaudited)
Cumulative
During the
Development
2000 1999 Stage
---------- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ (29,141) $ (6,358) $ (17,220)
Adjustments to reconcile net income/
(loss) to net cash provided by operations:
(Gain)/loss on sales of assets 7,321 3,374 (69,890)
Unrealized (gain)/loss on marketable
securities 11,616 (10,397) 26,770
Services/expenses purchased with stock - 4,075 35,038
Deferred tax benefit (1,541) 1,948 (4,394)
Payables and accrued expenses (8,037) 10,800 -
Income taxes payable/receivable (17,042) (3,414) (11,486)
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NET CASH (USED) BY OPERATING ACTIVITIES (36,824) 28 (41,182)
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of marketable securities 130,121 6,976 247,873
Purchase of marketable securities (46,102) (7,241) (68,722)
Investment in subsidiary (136,000 - (136,000)
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NET CASH PROVIDED/(USED) BY INVESTING
ACTIVITIES (51,981) (265) 43,151
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock issuance 107,500 500 108,000
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Increase/(decrease) in cash for period 18,695 263 109,969
Cash, Beginning of period 91,274 - -
---------- ---------- ----------
CASH, END OF PERIOD $ 109,969 $ 263 $ 109,969
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Supplemental Disclosures:
Cash payments for:
Interest $ 85 $ - $ 85
Income taxes 4,274 - 4,274
Non-Cash Investing and Financing:
Stock issued to related parties:
In exchange for marketable securities $ 63,750 $ 34,500 $ 195,876
For services rendered - 4,000 34,963
For expenses - 75 75
See accompanying selected information and accountants' report.
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FIVE STAR BROADBAND WIRELESS, INC.
(A Development Stage Enterprise)
Selected Information
March 31, 2000
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions of Regulation S-B. They
do not include all information and footnotes required by generally
accepted accounting principles for complete financial statements.
However, except as disclosed herein, there has been no material change in
the information included in the Company's Annual Report on Form 10-SB for
the period from inception to September 30, 1999. In the opinion of
Management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. The
report of Robert Early & Company, P.C. commenting on their review
accompanies the condensed financial statements included in Item 1 of Part
1. Operating results for the six month period ended March 31, 2000, are
not necessarily indicative of the results that may be expected for the
year ending September 30, 2000.
Development Stage Enterprise -- The Company has been in the development
stage since its inception in October 1998. The Company acquired a 40%
interest in another entity and issued stock for rights under a marketing
contract during January through March 2000. Neither of these interests
have generated revenues for the Company through March 31, 2000. The
Company will continue to be considered a development stage enterprise
until such time as operating revenues are sufficient to sustain the
activities of the Company.
NOTE 2: STOCK TRANSACTIONS
As indicated in the Statement of Stockholders' Equity, the Company has
issued shares in payment of various expenses and for the acquisition of
stock investments during its first year. During the quarter ended
December 31, 1999, the Company continued issuing shares for investment in
marketable securities.
The investments during the current year, as presented below, include the
acquisition of 25,000 shares of Ness Energy International, Inc. and
200,000 shares of Golden Chief Resources, Inc.
During the quarter ended March 2000, the Company issued 540,000 new shares
in exchange for $97,500. The Company also issued 31,500,000 shares for
the right to provide marketing services under a contract. These shares
have been recorded without value because of accounting rules. These rules
require the Company to record assets in this type of transaction at their
basis in the hands of the transferor. Since the transferors had no
determinable basis in the contract, the Company's basis is limited to
zero.
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NOTE 3: INVESTMENTS
In November 1998, the Company acquired 100,000 shares of Ness Energy
International, Inc. from its president in exchange for 3,800,000 newly
issued shares. The Company continued exchanges similar to this during the
year ended September 30, 1999 and into the quarter ended December 31, 1999
with an exchange of 437,500 newly issued shares for 25,000 Ness Energy
shares. Ness Energy is a bulletin board stock that has traded in the
$1.06 to $2.00 price range during the quarter ended December 31, 1999.
The Company plans to hold or sell the stock as needed in order to pay
costs of restarting the Company. The exchanges have been valued at the
closing price of Ness Energy on the date of exchange. Valuation of the
issuance of the Company's common stock was in the range of $.01 to $.03
per share during the year ended September 30, 1999. During the quarter
ended December 31, 1999, the Company's stock was issued at $.10 per share.
The Company also acquired 200,000 shares of Golden Chief Resources, Inc.
GCRI is a fully reporting corporation that is in the process of acquiring
an existing business. This stock has begun trading subsequent to March
2000.
NOTE 4: CURRENT ACTIVITIES AND SUBSEQUENT EVENTS
On March 20, 2000, the Company acquired full interest in a Sales Agency
Agreement by issuing 31,500,000 shares to Jack R. Lindley, Dick D. Ikler,
and their assigns on March 20, 2000. The value assigned to the asset
acquired was placed at $158,000 for purposes of stock issuance. As
discussed above, the Company is not able to record this asset under the
accounting rules.
The Company had previously acquired 40% of U.S. Wireless, Inc. from
January 31, 2000 through March 9, 2000 for total consideration of
$136,000. U. S. Wireless, Inc. holds and owns a licensing and service
agreement between itself and GKD, Inc., d.b.a. TelCom One for the
marketing and sales of voice and data communications services (wired and
wireless) to be used for the TelCom One Phone Store located in Wichita,
Kansas.
An additional 9,500,000 shares have been reserved for management to
utilize in fund-raising and business development/acquisition activities.
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Item 2. Plan of Operation
On March 20, 2000, during a special joint meeting of the board of
directors and shareholders of Five Star Broadband Wireless, Inc., the
directors and shareholders voted to authorize issuance of 42,000,000
shares of the Company to Jack R. Lindley and Dick D. Ikler, or their
assigns, in exchange for all of their interest in the Sales Agency
Agreement executed between them and GKD, Inc., d.b.a. TelCom One, dated
March 15, 2000.Of the 42,000,000 shares authorized, only 31,500,000 shares
were issued. The remaining 9,500,000 shares have been reserved for
management to utilize in fund-raising and business development or
acquisition activities. The Company currently has sufficient cash
resources to meet its immediate needs, but anticipates generation of
additional capital through the sale of these reserved shares within the
next twelve months as its needs increase because of expanded functions.
The corporate officers and current board of directors tendered their
respective resignations, and a new President, Jack R. Lindley, and a new
Secretary, Deborah L. Hackler, were elected, and a new board of directors
was elected, namely: Jack R. Lindley, Dr. Bill Hill, Thomas D. Self,
Everett C. Fettis, and Deborah L. Hackler.
Between January and March 2000, Five Star Broadband Wireless, Inc.
obtained 40% of the outstanding shares of U.S. Wireless, Inc., which holds
the interest in TelCom One Wireless and Internet services, which will be
accomplished in part through the Sales Agency Agreement assigned to the
Company on March 20, 2000, and other similar agreements with various
providers, currently in negotiations. Five Star also anticipates
eventually expanding its scope beyond sales to providing equipment and
installation and technical support for the equipment required to support
the sales of wireless broadband internet services.
The Company has identified as major objective the marketing of
wireless broadband internet services, which will be accomplished in part
through the Sales Agency Agreement assigned to the Company on March 20,
2000, and other similar agreements with various providers, currently in
negotiations. Five Star also expects to eventually expand its scope
beyond sales in order to provide and sell equipment as well as
installation and technical support for the equipment required to support
the sales of wireless broadband internet services. The Company anticipates
that initially, when active marketing of wireless broadband internet
services commences, the sales agents engaged will operate on a straight
commission basis. It is possible that at a later time, the Company will
hire personnel as employees to supplement the straight commissioned sales
agents. Also at that time, it is reasonable to assume that a small number
of support staff will be hired to facilitate the business of the Company.
The Company continues to explore other investment opportunities
primarily in the area of related internet technology and services.
Disclosure Regarding Forward-Looking Statements - This Form 10Q-SB
includes "forward-looking" statements within the meaning of Section 27A of
the Securities Act and the Company desires to take advantage of the "safe
harbor" provisions thereof. Therefore, the Company is including this
statement for the express purpose of availing itself of the protections of
such safe harbor provisions with respect to all of such forward-looking
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statements. The forward-looking statements in this Form 10Q-SB reflect
the Company's current views with respect to future events and financial
performance. These forward-looking statements are subject to certain
risks and uncertainties that could cause actual results to differ from
those anticipated. In this Form 10Q-SB, the words "anticipates,"
"believes," "expects," "intends," "future" and similar expressions
identify forward-looking statements. The Company undertakes no obligation
to publicly revise these forward-looking statements to reflect events or
circumstances that may arise after the date hereof. All subsequent
written and oral forward-looking statements attributable to the Company or
persons acting on its behalf are expressly qualified in their entirety by
this section.
- ---------------------------------------------------------------------------
PART II: OTHER INFORMATION
Item 5: Other Information
On March 20, 2000, Art and Jareta Sykes resigned their respective
positions as officers and directors of the Company. A new board of
directors was elected consisting of Jack R. Lindley, Dr. Bill Hill, Thomas
D. Self, Everett C. Fettis, and Deborah L. Hackler. Jack R. Lindley and
Deborah L. Hackler were elected President and Secretary, respectively.
Item 6: Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit 27. Financial Data Schedule
b. Reports on Form 8-K
A report on Form 8-K dated March 20, 2000, reported a change
in control of the registrant.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIVE STAR BROADBAND WIRELESS, INC.
May 18, 2000 /s/ JACK R. LINDLEY
Jack R. Lindley, President and
Chief Financial Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The following schedule contains summary financial information which has
been extracted from the consolidated financial statements of FIVE STAR
BROADBAND WIRELESS, INC. for the interim financial statements filed on
Form 10-QSB for the periods indicated. These summary schedules are
qualified in their entirety by reference to such financial statements and
the notes thereto.
</LEGEND>
<CIK> 0001102053
<NAME> FIVE STAR BROADBAND WIRELESSS, INC.
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> SEP-30-2000 SEP-30-2000
<PERIOD-START> JAN-01-2000 OCT-01-1999
<PERIOD-END> MAR-31-2000 MAR-31-2000
<CASH> 109,969 109,969
<SECURITIES> 11,250 11,250
<RECEIVABLES> 11,486 11,486
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 138,387 138,387
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 308,983 308,983
<CURRENT-LIABILITIES> 0 0
<BONDS> 0 0
0 0
0 0
<COMMON> 338,915 338,915
<OTHER-SE> (29,932) (29,932)
<TOTAL-LIABILITY-AND-EQUITY> 308,983 308,983
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 13,051 24,864
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 85
<INCOME-PRETAX> (30,276) (42,259)
<INCOME-TAX> (1,351) (13,118)
<INCOME-CONTINUING> (21,925) (29,141)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (21,925) (29,141)
<EPS-BASIC> (0.00) (0.00)
<EPS-DILUTED> (0.00) (0.00)
</TABLE>
