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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 JUNE 30, 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 June 30, 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 June
30, 2000, and the related statements of operations, stockholders' equity,
and cash flows for the three and nine months ended June 30, 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
August 11, 2000
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FIVE STAR BROADBAND WIRELESS, INC.
(A Development Stage Enterprise)
Balance Sheets
June 30, September 30,
2000 1999
------------ -----------
(Unaudited)
ASSETS
Current Assets:
Cash $ 89,601 $ 91,274
Marketable securities (net) 2,900 70,456
Income taxes receivable 5,465 -
Deferred tax benefit 7,877 2,853
------------ -----------
Total Current Assets 105,843 164,583
Other Assets:
Investment in subsidiary 136,000 -
Nonmarketable securities 34,596 28,596
------------ -----------
TOTAL ASSETS $ 276,439 $ 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
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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 (50,408) 11,921
Unrealized gain/(loss) on nonmarketable
securities (net) (12,068) -
------------ -----------
Total Stockholders' Equity 276,439 179,586
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 276,439 $ 193,179
============ ===========
See accompanying selected information and accountants' report.
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FIVE STAR BROADBAND WIRELESS, INC.
(A Development Stage Enterprise)
Statements of Operations
For the Three and Nine Months Ended June 30, 2000 and 1999
(Unaudited)
Cumulative
During the
Three Months Nine Months Development
2000 1999 2000 1999 Stage
---------- -------- --------- --------- ---------
Revenues $ - $ - $ - $ - $ -
Operating Expenses:
Director & officer
compensation 14,000 9,000 32,000 22,000 72,000
Rent - 900 1,800 2,700 5,400
Legal and professional 5,540 - 7,968 - 11,368
Other expenses 1,288 - 3,924 75 4,819
Total Operating Expenses 20,828 9,900 45,692 24,775 93,587
---------- -------- --------- --------- ---------
Income from Operations (20,828) (9,900) (45,692) (24,775) (93,587)
Other Income and Expenses:
Interest income 460 1 2,087 29 2,549
Interest expense - - (85) - (85)
Gain on sale of
marketable securities - - (7,321) (3,374) 69,890
Unrealized loss on
marketable securities (8,350) (3,666) (19,966) 6,731 (35,120)
---------- -------- --------- --------- ---------
Income Before Income Taxes (28,718) (13,565) (70,977) (21,389) (56,353)
Income tax expense/
(benefit) 6,021 (1,854) (5,556) (5,268) -
Deferred tax expense/
(benefit) (1,551) (687) (3,092) 1,261 (5,945)
---------- -------- --------- --------- ---------
NET INCOME $ (33,188) $(11,024) $ (62,329) $ (17,382) $ (50,408)
========== ======== ========= ========= =========
Earnings per Share $ (0.00) $ (0.00) $ (0.00) $ (0.00) $ (0.00)
========== ======== ========= ========= =========
Weighted Average Shares
Outstanding 41,980,661 5,142,294 21,855,396 4,294,731 12,622,532
========== ========= ========== ========= ==========
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 June 30, 2000
(Unaudited)
Earnings 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 - - (62,329) (12,068)
---------- --------- --------- ---------
Balances, June 30, 2000 41,980,661 $ 338,915 $ (50,408) $ (12,068)
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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 Nine Months Ended June 30, 2000 and 1999
(Unaudited)
Cumulative
During the
Development
2000 1999 Stage
--------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ (62,329) $ (17,382) $ (50,408)
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 19,966 (6,731) 35,120
Services & expenses purchased with stock - 27,115 35,038
Deferred tax benefit (3,092) 1,261 (5,945)
Payables and accrued expenses (8,037) (2,339) -
Income taxes payable/receivable (11,021) (5,268) (5,465)
--------- --------- ---------
NET CASH PROVIDED/(USED) BY OPERATING
ACTIVITIES (57,192) 30 (61,550)
--------- --------- ---------
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)
--------- --------- ---------
NET CASH PROVIDED/(USED) BY INVESTING
ACTIVITIES (51,981) (265) 43,151
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock issuance 107,500 500 108,000
--------- --------- ---------
Increase/(decrease) in cash for period (1,673) 265 89,601
Cash, Beginning of period 91,274 - -
--------- --------- ---------
CASH, END OF PERIOD $ 89,601 $ 265 $ 89,601
========= ========= =========
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 $ 35,380 $ 195,876
For services rendered - 24,340 34,963
For expenses - 2,775 75
See accompanying selected information and accountants' report.
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FIVE STAR BROADBAND WIRELESS, INC.
(A Development Stage Enterprise)
Selected Information
June 30, 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 nine
month period ended June 30, 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 June 30, 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 int 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
The Company has identified one of its major objectives as the marketing
fo wireless broadband internet services at 400 times the speed of dial=up
modems. It is expected that the Company will expand its scope beyond the
original plan for sales of the services to be able to provide and sell the
equipment, including installation and technical support, required to support
the delivery of the wireless broadband internet services sold. The Company
is currently working with several other companies to support this activity.
The Company is also exploring other investment opportunities primarily
in the area of related internet technology and services. One such area
currently being pursued involves entering rural area markets that are not
covered by cellular service. An emphasis is currently being placed upon
areas Management feels will most likely generate revenues for the Company,
in order to provide income for controlled expansion.
During the third fiscal quarter ended June 30, 2000, the Company has
engaged the services of Pat C. Eden of Oklahoma City to fill a new position
entitled Director of Technologies. His primary responsibility is to oversee
and coordinate all technical development aspects of the deployment of the
Company's services in the target market areas.
Finally, the Company plans to build a web site and has reserved domain
names for this purpose.
Disclosure Regarding Forward=Looking Statements = This Form 10=QSB
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
statements. The forward=looking statements in this Form 10=QSB 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 10=QSB, 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.
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PART II: OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8=K
a. Exhibits
Exhibit 27. Financial Data Schedule
b. Reports on Form 8=K
None
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.
August 14, 2000 /s/ JACK R. LINDLEY
Jack R. Lindley, President and
Chief Financial Officer
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