DELAWARE
|
87-0419571
|
(State
or Other Jurisdiction of
|
(IRS.
Employer
|
Incorporation
or Organization)
|
Identification
No.)
|
6701
Democracy Boulevard, Suite 202, Bethesda,
Maryland
|
20817
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
ITEM
NUMBER AND CAPTION
|
PAGE
|
||
PART
I
|
|
||
Item
1.
|
Business
|
1
|
|
Item
1A.
|
Risk
Factors
|
31
|
|
Item
1B.
|
Unresolved
Staff Comments
|
37
|
|
Item
2.
|
Properties
|
37
|
|
Item
3.
|
Legal
Proceedings
|
38
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
40
|
|
PART
II
|
|||
Item
5.
|
Market
for Registrant’s Common Equity and Related Stockholder
Matters
|
40
|
|
Item
6.
|
Selected
Financial Data
|
44
|
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operation
|
46
|
|
Item
7A.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
64
|
|
Item
8.
|
Financial
Statements
|
64
|
|
Item
9.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
64
|
|
Item
9A.
|
Controls
and Procedures
|
64
|
|
Item
9B.
|
Other
Information
|
66
|
|
PART
III
|
|||
Item
10.
|
Directors,
Executive Officers and Corporate Governance
|
66
|
|
Item
11.
|
Executive
Compensation
|
66
|
|
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
66
|
|
Item
13.
|
Certain
Relationships and Related Transactions, and Director
Independence
|
66
|
|
Item
14.
|
Principal
Accountant Fees and Services
|
66
|
|
Item
15.
|
Exhibits
and Financial Statement Schedules
|
67
|
Wireless
Networks
|
Our
broadband wireless network deployment efforts are being conducted
by our
wholly owned subsidiary, NeoReach, Inc., (“NeoReach”), and its subsidiary,
Kite Networks, Inc. (“Kite Networks,” formerly, NeoReach Wireless, Inc.).
This segment also includes the operations of Kite Broadband, LLC
(“Kite
Broadband”), a wireless broadband Internet service provider located in
Ridgeland, Mississippi.
|
Voice Services
|
Our
voice services segment is led by CloseCall America, Inc. (“CloseCall”), a
competitive local exchange carrier (“CLEC”, which is a term applied under
the Telecommunications Act of 1996 to local telephone companies which
compete with incumbent local telephone companies) based in Stevensville,
Maryland; American Fiber Network, Inc. (“AFN”), a CLEC based in Overland
Park, Kansas; and Davel Communications, Inc. (“Davel”), an independent
payphone provider based in Cleveland, Ohio. CloseCall offers our
customers
a full array of telecommunications products and services including
local,
long-distance, 1-800-CloseCall anytime/anywhere calling, digital
wireless,
high-speed telephone (voice over IP), and dial-up and DSL Internet
services. AFN is licensed to provide local access, long distance
and/or
Internet services throughout the United States. Davel is one of the
largest independent payphone operators in the United
States.
|
|
Internet Services
|
Our
Internet services segment includes DFW Internet Services, Inc. (“DFW”,
doing business as Nationwide Internet), an Internet services provider
(“ISP”) based in Irving, Texas, its acquired Internet service provider
subsidiaries and InReach Internet, Inc. (“InReach”), a full service ISP
located in Stockton, California that we acquired on November 1, 2005.
Our
Internet services segment provides dial-up and broadband Internet
access, web-hosting services, and related Internet services to business
and residential customers in many states.
|
|
Corporate
|
Our
corporate reporting segment serves as the holding company of the
operating
subsidiaries that are divided among the other three business reporting
segments, provides senior executive and financial management, and
performs
corporate-level accounting, financial reporting, and legal functions.
Occasionally, its employees may provide services to customers resulting
in
the recognition of consulting service revenues. This segment also
includes
our Internet gaming subsidiary, ProGames Network, Inc. (“ProGames”) that
we founded in December 2005.
|
Business
Segment
|
2007
|
2006
|
2005
|
|||||||
|
||||||||||
Voice
Services
|
$
|
62,559,069
|
$
|
72,356,453
|
$
|
32,009,084
|
||||
Internet
Services
|
15,030,633
|
16,940,513
|
13,884,060
|
|||||||
Wireless
Networks
|
11,499,521
|
9,716,501
|
-
|
|||||||
Corporate
|
105
|
-
|
615,000
|
|||||||
Total
Revenues
|
$
|
89,089,328
|
$
|
99,013,467
|
$
|
46,508,144
|
|
||||||||||
Business
Segment
|
2007
|
2006
|
2005
|
|||||||
|
||||||||||
Voice
Services
|
70.2
|
%
|
73.1
|
%
|
68.8
|
%
|
||||
Internet
Services
|
16.9
|
17.1
|
29.9
|
|||||||
Wireless
Networks
|
12.9
|
9.8
|
-
|
|||||||
Corporate
|
0.0
|
-
|
1.3
|
|||||||
Total
Revenues
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
·
|
create
a standard regulatory scheme for all public payphone service
providers;
|
·
|
establish
a per call compensation plan to ensure that all payphone service
providers
are fairly compensated for each and every completed intrastate and
interstate call, except for 911 emergency and telecommunications
relay
service calls;
|
·
|
terminate
subsidies for LEC payphones from LEC regulated rate-base
operations;
|
·
|
prescribe,
at a minimum, nonstructural safeguards to eliminate discrimination
between
LECs and IPPs and remove the LEC payphones from the LEC’s regulated asset
base;
|
·
|
provide
for the RBOCs to have the same rights that IPPs have to negotiate
with
Location Owners over the selection of interLATA carrier services,
subject
to the FCC’s determination that the selection right is in the public
interest and subject to existing contracts between the Location Owners
and
interLATA carriers;
|
·
|
provide
for the right of all PSPs to choose the local, intraLATA and interLATA
carriers subject to the requirements of, and contractual rights negotiated
with, Location Owners and other valid state regulatory
requirements;
|
·
|
evaluate
the requirement for payphones which would not normally be installed
under
competitive conditions but which might be desirable as a matter of
public
policy, and establish how to provide for and maintain such payphones
if it
is determined they are required;
and
|
·
|
preempt
any state requirements which are inconsistent with the FCC’s regulations
implementing Section 276.
|
Finance,
accounting legal and administration
|
15
employees
|
|||
Retail
operations (includes CloseCall America, Inc. and the
call centers)
|
162
employees
|
|||
Wireless
networks (includes Kite Broadband, LLC and NeoReach
Wireless, Inc.)
|
65
employees
|
|||
Business
operations (includes Davel Communications, Inc and American Fiber
Network, Inc.)
|
45
employees
|
·
|
It
is traded at a price of less than $5.00 per share;
|
|
|
|
|
·
|
It
is not traded on a “recognized” national exchange;
|
|
|
|
|
·
|
Its
price is not quoted on the Nasdaq automated quotation system
(Nasdaq-listed stock must still have a price of not less than $5.00
per
share); or
|
|
|
|
|
·
|
Its
issuer has net tangible assets less than $2.0 million (if the issuer
has
been in continuous operation for at least three years) or $5.0 million
(if
in continuous operation for less than three years), or has average
annual
revenues of less than $6.0 million for the last three years.
|
|
1)
|
At
the time that we acquired Davel, there was existing litigation brought
against Davel and other defendants regarding a claim associated with
certain alleged patent infringement. Davel has been named as a defendant
in a civil action captioned Gammino v. Cellco Partnership d/b/a Verizon
Wireless, et al., C.A. No. 04-4303 filed in the United States District
Court for the Eastern District of Pennsylvania. The plaintiff claims
that
Davel and other defendants allegedly infringed its patent involving
the
prevention of fraudulent long-distance telephone calls. The plaintiff
is
seeking monetary relief of at least $7,500,000. Davel does not believe
that the allegations set forth in the complaint are valid and 2007
Davel
filed a Motion for Summary Judgment, which is pending before the
court. In
a similar action filed by the plaintiff in the United States District
Court of Texas against Southwestern Bell Telephone, LP and SWBT Texas,
LLC
the Court recently granted the defendants’ Motion for Summary Judgment and
dismissed the case with prejudice based upon that court’s finding that the
Gammino Patents were invalid.
|
2)
|
On
September 10, 2004, CloseCall was served with a complaint in an action
captioned Verizon Maryland Inc., Verizon New Jersey Inc., and Verizon
Delaware Inc. in the Circuit Court for Montgomery County, Maryland.
Verizon sued for “in excess of $1,000,000” based on alleged unpaid
invoices for services provided to CloseCall. Verizon asserted that
CloseCall underpaid the Federal Subscriber Line Charges billed by
Verizon,
by applying an uncollectible factor to the amounts charged by Verizon.
In
addition, Verizon contended that CloseCall underpaid the amounts
owed to
Verizon by misapplying the terms of the “merger discount” offered to
CLECs, including CloseCall, as a result of the merger between Bell
Atlantic and GTE.
|
3) |
On
August 6, 2006, we were served with a summons and complaint filed
in the
Superior Court of the State of Arizona in Maricopa County in the
matter
captioned Michael V. Nasco, et. al. vs. MobilePro Corp., et. al.
which
makes claims arising out of the acquisition by the Company of Transcordia,
LLC. The plaintiff alleges breach of contract, fraud, relief rescission,
failure to pay wages and unjust enrichment and seeks damages in excess
of
$3 million. On or about November 7, 2006, we filed a motion to dismiss
arguing lack of standing and corporate existence. The motion to dismiss
was subsequently denied by the Court and the matter is in the initial
stages of discovery. We believe that we have meritorious defenses
to the
alleged claims and intend to vigorously defend ourselves in this
matter.
In the event that our defenses were not successful, we believe that
any
potential exposure related to the claims alleged against the Company
is
not likely to be material.
|
4) |
On
April 17, 2007 the Supreme Court of the United States issued an opinion
in
the case captioned Global Crossing Telecommunications, Inc. v. Metrophones
Telecommunications, Inc. on Certiorari from the United States Court
of
Appeals for the Ninth Circuit (the "Ninth Circuit" and the "Metrophones
Case"), No. 05-705, in which it upheld the Ninth Circuit's decision
that
independent payphone providers have a private right of action to
pursue
recovery in federal court from telecommunication carriers who fail
to pay
dial around compensation. The ruling in the Metrophones Case permits
litigation to resume that has been pending in federal district court
against AT&T Corporation, Sprint Communications Company, LP and Qwest
Communications, Inc. (the "Defendants") for non-payment of dial around
compensation. Davel Communications, Inc. and certain of Davel's
subsidiaries (collectively, the "Davel Entities") are directly or
indirectly plaintiffs in the federal district court cases against
the
Defendants. Although the federal district court case has been pending
since 1999, the litigation remains in its preliminary phases. As
a result,
the Registrant cannot predict the likelihood of success on the merits,
the
costs associated with the pursuit of the claims, the timing of any
recovery or the amount of recovery, if any. However, the industry
representing a group of independent payphone providers, including
the
Davel Entities, has recently prevailed in a similar Federal Communications
Commission administrative proceeding against another carrier for
non-payment of dial-around compensation using a similar damages model
which was accepted and pursuant to which the Federal Communications
Commission assessed pre-judgment interest (the "Similar Litigation").
The
Similar Litigation is being appealed to the U.S. Court of Appeals
for the
District of Columbia. Based upon our damages model in the Similar
Litigation, we estimate that the amount in controversy for the Davel
Entities against the Defendants extends well into the eight figures,
but
any recovery is conditioned on, among other things (i) prevailing
on the
merits at trial; (ii) having the Davel Entities' damages model and
other
claims approved in whole or in large part; and (iii) prevailing on
any
appeals that the Defendants may make. As evidenced by the eight years
that
this litigation has been in process, the Defendants have shown an
interest
in stretching the duration of the litigation and have the means to
do so.
Although the Davel Entities could ultimately benefit (in an absolute
sense, although not necessarily on a present value basis) from this
delay
in the event that pre-and/or post-judgment interest (awarded at 11.25%
per
annum in the Similar Litigation) is assessed against the Defendants
and
the potential award of attorneys' fees and/or other remedies (in
addition
to compensatory damages) if the Davel Entities prevail, such delay
will
result in a deferral of the receipt of any cash to the Davel Entities.
|
|
Price
Per Share
|
||||||
|
High
|
Low
|
|||||
2004
|
|
|
|||||
April
1, 2004 - June 30, 2004
|
$
|
0.28
|
$
|
0.10
|
|||
July
1, 2004 - September 30, 2004
|
$
|
0.27
|
$
|
0.14
|
|||
October
1, 2004 - December 31, 2004
|
$
|
0.24
|
$
|
0.15
|
|||
2005
|
|||||||
January
1, 2005 - March 31, 2005
|
$
|
0.24
|
$
|
0.17
|
|||
April
1, 2005 - June 30, 2005
|
$
|
0.38
|
$
|
0.15
|
|||
July
1, 2005 - September 30, 2005
|
$
|
0.36
|
$
|
0.24
|
|||
October
1, 2005 - December 31, 2005
|
$
|
0.26
|
$
|
0.17
|
|||
2006
|
|||||||
January
1, 2006 - March 31, 2006
|
$
|
0.30
|
$
|
0.18
|
|||
April
1, 2006 - June 30, 2006
|
$
|
0.24
|
$
|
0.18
|
|||
July
1, 2006 - September 30, 2006
|
$
|
0.19
|
$
|
0.11
|
|||
October
1, 2006 - December 31, 2006
|
$
|
0.14
|
$
|
0.07
|
|||
2007
|
|||||||
January
1, 2007 - March 31, 2007
|
$
|
0.07
|
$
|
0.03
|
|||
April
1, 2006 - June 5, 2007
|
$
|
0.04
|
$
|
0.02
|
Fiscal
Years
Ended
|
||||||||||||||||
March
31,
|
March
31,
|
March
31,
|
March
31,
|
March
31,
|
||||||||||||
|
2007
|
2006
|
2005
|
2004
|
2003
|
|||||||||||
Statement
of Operations Data (1)
|
||||||||||||||||
|
||||||||||||||||
Revenues
|
$
|
89,089,328
|
$
|
99,013,467
|
$
|
46,508,144
|
$
|
311,355
|
$
|
-
|
||||||
Operating
Costs and Expenses (2)(4)
|
132,247,292
|
106,238,075
|
50,029,303
|
2,211,856
|
9,771,389
|
|||||||||||
|
||||||||||||||||
Operating
Income/(Loss)
|
(43,157,964
|
)
|
(7,224,608
|
)
|
(3,521,159
|
)
|
(1,783,152
|
)
|
(9,771,389
|
)
|
||||||
Interest
and Other Expense, net
|
(2,330,723
|
)
|
(2,838,394
|
)
|
(1,838,563
|
)
|
(374,692
|
)
|
(101,849
|
)
|
||||||
Loss
on Extinguishment of Debt
|
(409,601
|
)
|
-
|
-
|
-
|
-
|
||||||||||
Minority
Interests
|
-
|
(113,405
|
)
|
-
|
-
|
-
|
||||||||||
|
||||||||||||||||
Net
Loss
|
$
|
(45,898,288
|
)
|
$
|
(10,176,407
|
)
|
$
|
(5,359,722
|
)
|
$
|
(2,157,844
|
)
|
$
|
(9,771,389
|
)
|
|
|
||||||||||||||||
Net Loss
per Common Share
|
||||||||||||||||
Basic
|
$
|
(0.0760
|
)
|
$
|
(0.0248
|
)
|
$
|
(0.0185
|
)
|
$
|
(0.0193
|
)
|
$
|
(0.4482
|
)
|
|
Diluted
|
$
|
(0.0760
|
)
|
$
|
(0.0248
|
)
|
$
|
(0.0185
|
)
|
$
|
(0.0193
|
)
|
$
|
(0.4482
|
)
|
|
March
31,
2007
|
March
31,
2006
|
March
31,
2005
|
March
31,
2004
|
March
31,
2003
|
|||||||||||
Balance
Sheet Data
|
||||||||||||||||
Assets
|
||||||||||||||||
Cash
and Cash Equivalents
|
$
|
3,430,844
|
$
|
5,397,881
|
$
|
4,669,787
|
$
|
1,955,607
|
$
|
6,715
|
||||||
|
||||||||||||||||
Total
Current Assets
|
$
|
16,272,723
|
$
|
19,631,577
|
$
|
20,269,751
|
$
|
2,106,143
|
$
|
16,233
|
||||||
Total
Non-Current Assets (3)
|
53,036,198
|
74,359,476
|
52,553,180
|
1,252,030
|
-
|
|||||||||||
|
||||||||||||||||
Total
Assets
|
$
|
69,308,921
|
$
|
93,991,053
|
$
|
72,822,931
|
$
|
3,358,173
|
$
|
52,702
|
||||||
|
||||||||||||||||
Liabilities
and Stockholders’ Equity
|
||||||||||||||||
Current
Portion of Debentures and Note Payables
|
$
|
17,144,675
|
$
|
8,464,959
|
$
|
25,535,263
|
$
|
1,863,633
|
$
|
584,500
|
||||||
Total
Current Liabilities
|
$
|
41,389,629
|
$
|
30,516,184
|
$
|
48,869,082
|
$
|
2,511,654
|
$
|
1,819,380
|
||||||
Long-Term
Debt, less current portion
|
5,961,024
|
10,645,662
|
999,196
|
560,200
|
343,117
|
|||||||||||
|
||||||||||||||||
Total
Liabilities
|
47,350,653
|
41,161,846
|
49,868,278
|
3,071,854
|
2,162,497
|
|||||||||||
Minority
Interests
|
-
|
-
|
600,000
|
-
|
-
|
|||||||||||
Total
Stockholders’ Equity
|
21,958,268
|
52,829,207
|
22,354,653
|
286,319
|
(2,109,795
|
)
|
||||||||||
|
||||||||||||||||
Total
Liabilities and Stockholders’ Equity
|
$
|
69,308,921
|
$
|
93,991,053
|
$
|
72,822,931
|
$
|
3,358,173
|
$
|
52,702
|
Business
Segment
|
2007
|
2006
|
2005
|
|||||||
|
||||||||||
Voice
Services
|
$
|
62,559,069
|
$
|
72,356,453
|
$
|
32,009,084
|
||||
Internet
Services
|
15,030,633
|
16,940,513
|
13,884,060
|
|||||||
Wireless
Networks
|
11,499,521
|
9,716,501
|
-
|
|||||||
Corporate
|
105
|
-
|
615,000
|
|||||||
Total
Revenues
|
$
|
89,089,328
|
$
|
99,013,467
|
$
|
46,508,144
|
|
||||||||||
Business
Segment
|
2007
|
2006
|
2005
|
|||||||
|
||||||||||
Voice
Services
|
70.2
|
%
|
73.1
|
%
|
68.8
|
%
|
||||
Internet
Services
|
16.9
|
17.1
|
29.9
|
|||||||
Wireless
Networks
|
12.9
|
9.8
|
-
|
|||||||
Corporate
|
0.0
|
-
|
1.3
|
|||||||
Total
Revenues
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
Company
|
2007
|
2006
|
Change
|
|||||||
Davel
|
$
|
30,028,114
|
$
|
40,305,697
|
$
|
(10,277,583
|
)
|
|||
CloseCall
(includes TCS contracts and Affinity)
|
24,469,280
|
27,029,378
|
(2,560,098
|
)
|
||||||
Kite
Broadband
|
11,198,478
|
9,687,560
|
1,510,918
|
|
||||||
DFW
(Nationwide)
|
10,424,855
|
14,660,523
|
(4,235,668
|
)
|
||||||
AFN
(includes US1)
|
8,061,675
|
5,021,378
|
3,040,297
|
|||||||
InReach
|
4,605,778
|
2,279,990
|
2,325,788
|
|||||||
Kite
Networks
|
301,043
|
28,941
|
272,102
|
|||||||
ProGames
Network
|
105
|
-
|
105
|
|||||||
Total
Revenues
|
$
|
89,089,328
|
$
|
99,013,467
|
$
|
(9,924,139
|
)
|
Fiscal
Quarter
|
2007
|
2006
|
Decrease
|
|||||||
|
|
|
|
|||||||
First
|
$
|
8,197,498
|
$
|
11,138,906
|
$
|
(2,941,408
|
)
|
|||
Second
|
8,564,757
|
11,059,855
|
(2,495,098
|
)
|
||||||
Third
|
7,228,699
|
10,084,268
|
(2,855,569
|
)
|
||||||
Fourth
|
6,037,160
|
8,022,668
|
(1,985,508
|
)
|
||||||
Total
Davel Revenues
|
$
|
30,028,114
|
$
|
40,305,697
|
$
|
(10,277,583
|
)
|
|
For
the Year Ended March 31, 2007
|
|||
Net
Loss (before inter-company fees)
|
$
|
(6,206,156
|
)
|
|
Inter-company
management fees, net
|
921,000
|
|||
Add
non-EBITDA items included in net results:
|
||||
Depreciation
and amortization
|
3,116,956
|
|||
Interest
income, net
|
(83,157
|
)
|
||
Asset
impairment charges
|
1,573,795
|
|||
Adjusted
EBITDA loss for Davel
|
$
|
(677,562
|
)
|
Type
of Debt
|
2007
|
2006
|
|||||
|
|
|
|||||
Convertible
debentures (at stated rates)
|
$
|
1,332,439
|
1,045,295
|
||||
Convertible
debentures (debt discount amortization)
|
893,322
|
348,443
|
|||||
Convertible
debentures (stock issuance discounts)
|
367,443
|
-
|
|||||
SEDA
draw discounts
|
137,795
|
410,016
|
|||||
Notes
payable to Cornell Capital
|
25,074
|
705,396
|
|||||
Other,
net
|
(425,350
|
)
|
329,244
|
||||
Interest
and Other Expense, net
|
$
|
2,330,723
|
$
|
2,838,394
|
|
2007
|
2006
|
|||||
|
|
|
|||||
Net
loss
|
$
|
(45,898,288
|
)
|
$
|
(10,176,407
|
)
|
|
Add
non-EBITDA items included in net results:
|
|||||||
Depreciation
and amortization
|
5,976,395
|
4,310,742
|
|||||
Interest
and other expense, net
|
2,330,723
|
2,838,394
|
|||||
Loss
on extinguishment of debt
|
409,601
|
-
|
|||||
Stock
compensation
|
1,623,714
|
-
|
|||||
Asset
impairment, litigation settlement and restructuring
charges
|
27,559,826
|
6,349,247
|
|||||
Adjusted
EBITDA (loss)
|
$
|
(7,998,029
|
)
|
$
|
3,321,976
|
Acquired
Company
|
2006
|
2005
|
Increase
|
|||||||
|
|
|
|
|||||||
Davel
|
$
|
40,305,697
|
$
|
17,461,532
|
$
|
22,844,165
|
||||
CloseCall
(includes Affinity)
|
27,029,379
|
14,547,552
|
12,481,827
|
|||||||
Kite
Broadband
|
9,669,091
|
-
|
9,669,091
|
|||||||
AFN
|
6,229,981
|
-
|
6,229,981
|
|||||||
InReach
|
2,279,990
|
-
|
2,279,990
|
|||||||
Total
Revenues
|
$
|
85,514,138
|
$
|
32,009,084
|
$
|
53,505,054
|
Fiscal
Quarter
|
2006
|
2005
|
Decrease
|
|||||||
|
|
|
|
|||||||
First
|
$
|
11,138,906
|
$
|
14,137,713
|
$
|
(2,998,807
|
)
|
|||
Second
|
11,059,855
|
14,586,122
|
(3,526,267
|
)
|
||||||
Third
|
10,084,268
|
15,283,842
|
(5,199,574
|
)
|
||||||
Fourth
|
8,022,668
|
11,083,788
|
(3,061,120
|
)
|
||||||
Total
Davel Revenues
|
$
|
40,305,697
|
$
|
55,091,465
|
$
|
(14,785,768
|
)
|
|
For
the Year Ended March 31, 2006
|
|||
Net
income (before inter-company fees)
|
$
|
860,502
|
||
Add
non-EBITDA items included in net results:
|
||||
Depreciation
and amortization
|
2,830,662
|
|||
Interest
expense, net
|
-
|
|||
Goodwill
impairment and restructuring costs
|
-
|
|||
Adjusted
EBITDA for Davel
|
$
|
3,891,164
|
Type
of Debt
|
2006
|
2005
|
|||||
|
|
|
|||||
Notes
payable to Cornell Capital
|
$
|
705,396
|
$
|
310,060
|
|||
SEDA
draw discounts
|
410,016
|
375,150
|
|||||
Convertible
debenture (including discount amortization of $348,443)
|
1,393,738
|
—
|
|||||
Airlie
bridge loan
|
381,225
|
1,144,186
|
|||||
Other,
net
|
(51,981
|
)
|
9,167
|
||||
Interest
and Other Expense, net
|
$
|
2,838,394
|
$
|
1,838,563
|
|
2006
|
2005
|
|||||
|
|
|
|||||
Net
loss
|
$
|
(10,176,407
|
)
|
$
|
(5,359,722
|
)
|
|
Add
non-EBITDA items included in net results:
|
|||||||
Depreciation
and amortization
|
4,310,742
|
2,067,213
|
|||||
Interest
expense, net
|
2,838,394
|
1,838,563
|
|||||
Goodwill
impairment, litigation settlement and restructuring
charges
|
6,349,247
|
—
|
|||||
Adjusted
EBITDA
|
$
|
3,321,976
|
$
|
(1,453,946
|
)
|
Exhibit
No.
|
Description
|
|
Location
|
|
|
2.1
|
Agreement
and Plan of Merger, dated as of March 21, 2002, by and among Mobilepro
Corp., NeoReach Acquisition Corp. and NeoReach, Inc.
|
|
Incorporated
by reference to Exhibit 10.1 to the Registrant’s Current Report on Form
8-K filed on April 5, 2002
|
|
|
2.2
|
Agreement
and Plan of Merger, dated as of January 20, 2004, by and among
Mobilepro
Corp., DFWI Acquisition Corp., DFW Internet Services, Inc., Jack
W. Beech,
Jr. and Jack W. Beech, Sr.
|
|
Incorporated
by reference to Exhibit 99.1 to the Registrant’s Current Report on Form
8-K filed on February 4, 2004
|
|
|
2.3
|
Agreement
and Plan of Merger, dated as of March 1, 2004, by and among DFW
Internet
Services, Inc., DFW Internet Acquisition Corp., Internet Express,
Inc., J.
Glenn Hughes and Loretta Hughes
|
|
Incorporated
by reference to Exhibit 99.1 to the Registrant’s Current Report on Form
8-K filed on April 29, 2004
|
|
|
2.4
|
Agreement
and Plan of Merger, dated as of April 21, 2004, by and among DFW
Internet
Services, Inc., DFWA Acquisition Corp., August.Net Services, LLC,
Louis G.
Fausak, Andrew K. Fullford, John M. Scott, Dennis W. Simpson, Andrew
T.
Fausak, and Gayane Manasjan
|
|
Incorporated
by reference to Exhibit 99.1 to the Registrant’s Current Report on Form
8-K filed on April 29, 2004
|
|
|
2.5
|
Agreement
and Plan of Merger, dated as of June 3, 2004, by and among Mobilepro
Corp., DFW Internet Services, Inc., DFWS Acquisition Corp., ShreveNet,
Inc. and the stockholders identified therein
|
|
Incorporated
by reference to Exhibit 99.1 to the Registrant’s Current Report on Form
8-K filed on June 8, 2004
|
|
|
2.6
|
Asset
Purchase Agreement, dated as of June 21, 2004, by and between Crescent
Communications, Inc. and DFW Internet Services, Inc.
|
|
Incorporated
by reference to Exhibit 99.1 to the Registrant’s Current Report on Form
8-K filed on June 22, 2004
|
|
|
2.7
|
Agreement
and Plan of Merger, dated July 6, 2004, by and among the Company,
DFW
Internet Services, Inc., DFWC Acquisition Corp., Clover Computer
Corp. and
Paul Sadler
|
|
Incorporated
by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K
filed on July 8, 2004
|
|
|
2.8
|
Agreement
and Plan of Merger, dated July 14, 2004, by and among DFW Internet
Services, Inc., DFWT Acquisition Corp., Ticon.net, Inc. and the
stockholders identified therein
|
|
Incorporated
by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K
filed on July 15, 2004
|
|
|
2.9
|
Agreement
and Plan of Merger, dated July 30, 2004, by and among the Company,
Affinity Acquisition Corp., C.L.Y.K., Inc. and the stockholders
identified
therein
|
|
Incorporated
by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K
filed on August 20, 2004
|
|
2.10
|
Amendment
No. 1 to Agreement and Plan of Merger, dated December 28, 2004,
by and
among the Company, Affinity Acquisition Corp., C.L.Y.K., Inc. and
the
stockholders identified therein
|
|
Incorporated
by reference to Exhibit 10.1 to the Registrant’s Current Report on Form
8-K filed on January 21, 2005
|
|
|
2.11
|
Asset
Purchase Agreement, dated as of August 13, 2004, by and among Web
One,
Inc., DFW Internet Services, Inc. and Jeff McMurphy
|
|
Incorporated
by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K
filed on August 19, 2004
|
|
|
2.12
|
Agreement
and Plan of Merger, dated August 31, 2004, by and among the Company,
MVCC
Acquisition Corp. and CloseCall America, Inc.
|
|
Incorporated
by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K
filed on October 19, 2004
|
|
2.13
|
Amendment
No. 1 to Agreement and Plan of Merger, dated September 30, 2004,
by and
among the Company, MVCC Acquisition Corp. and CloseCall America,
Inc.
|
|
Incorporated
by reference to Exhibit 2.2 to the Registrant’s Current Report on Form 8-K
filed on October 19, 2004
|
|
|
2.14
|
Loan
Purchase Agreement and Transfer and Assignment of Shares, dated
September
3, 2004, by and among the Company, Davel Acquisition Corp., Davel
Communications, Inc. and certain stockholders identified
therein
|
|
Incorporated
by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K
filed on September 9, 2004
|
|
|
2.15
|
Agreement
and Plan of Merger, dated September 15, 2004, by and among the
Company,
DFWW Acquisition Corp., World Trade Network, Inc. and Jack
Jui
|
|
Incorporated
by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K
filed on September 15, 2004
|
|
|
2.16
|
Agreement
and Plan of Merger, dated September 16, 2004, by and among the
Company,
DFW Internet Services, Inc., DFWR Acquisition Corp., The River
Internet
Access Co. and the stockholders identified therein
|
|
Incorporated
by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K
filed on September 17, 2004
|
|
|
2.17
|
Agreement
and Plan of Merger by and among Registrant, NeoReach, Inc., Transcordia
Acquisition Corp., Transcordia, LLC and its Unit Holders, dated
April
2005
|
|
Incorporated
by reference to Exhibit 2.1 to the Registrant’s Form 10-QSB filed August
15, 2005
|
|
|
2.18
|
Agreement
and Plan of Merger by and among Registrant, NeoReach, Inc., NeoReach
Wireless, Inc., Evergreen Open Broadband Corporation, and Certain
Shareholders
|
|
Incorporated
by reference to Exhibit 2.1 to the Registrant’s Form 10-QSB filed August
15, 2005
|
|
|
2.19
|
Agreement
and Plan of Merger, dated June 30, 2005, by and among the Company,
AFN
Acquisition Corp., American Fiber Network, Inc. and the individuals
and
entities identified therein
|
|
Incorporated
by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K
filed on July 6, 2005
|
|
|
2.20
|
Agreement
and Plan of Merger, dated October 31, 2005, by and among the Company,
InReach Internet, Inc., InReach Internet, LLC, and Balco Holdings,
Inc.
|
|
Incorporated
by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K
filed on November 7, 2005
|
|
2.21
|
Form
of assignment of Limited Liability Company Interest/Release, dated
January
31, 2006
|
Incorporated
by reference to Exhibit 2.21 to the Registrant’s Quarterly Report on Form
10-Q for the quarter ended June 30, 2006
|
|||
2.22
|
Agreement
and Plan of Merger, dated January 31, 2006, by and among Mobilepro
Corp.,
Kite Acquisition Corp. and Kite Networks, Inc.
|
Incorporated
by reference to Exhibit 2.22 to the Registrant’s Quarterly Report on Form
10-Q for the quarter ended June 30, 2006
|
|||
2.23
|
Asset
Purchase Agreement, dated as of December 29, 2006, by and among
TeleCommunication Systems, Inc., Mobilepro Corp., and CloseCall
America,
Inc.
|
Incorporated
by reference to Exhibit 10.01 to the Registrant’s Current Report on Form
8-K filed on January 10, 2007
|
|||
3.1
|
Certificate
of Incorporation, dated April 20, 2001, of Registrant
|
|
Incorporated
by reference to Exhibit 3.1 to the Registrant’s Registration Statement on
Form S-8 filed on May 11, 2001
|
|
|
3.2
|
Certificate
of Amendment of Certificate of Incorporation of Mobilepro Corp
dated
November 16, 2001.
|
|
Incorporated
by reference to Exhibit 3.1 to the Registrant’s Registration Statement on
Form S-8 filed on December 4, 2001
|
|
|
3.3
|
Certificate
of Amendment to Certificate of Incorporation of Mobilepro Corp.
dated
March 11, 2003
|
|
Incorporated
by reference to Exhibit 3.11 to the Registrant’s Registration Statement on
Form SB-2 filed on May 6, 2003
|
|
|
3.4
|
By-Laws
of Registrant
|
|
Incorporated
by reference to Exhibit 3.2 to the Registrant’s Registration Statement on
Form S-8 filed on May 11, 2001
|
|
|
4.1
|
2001
Equity Performance Plan
|
|
Incorporated
by reference to Exhibit 4.1 to the Registrant’s Registration Statement on
Form S-8 filed on December 4, 2001
|
|
|
4.2
|
Amended
and Restated 2001 Equity Performance Plan
|
|
Incorporated
by reference to Exhibit 4.2 to the Registrant’s Annual Report on Form
10-KSB filed on June 29, 2004
|
|
|
4.3
|
Registration
Rights Agreement, dated September 16, 2004, by and among the Company
and
the persons and entities identified therein
|
|
Incorporated
by reference to Exhibit 4.3 to the Registrant’s Annual Report on Form
10-KSB filed on June 28, 2005
|
|
|
4.4
|
Registration
Rights Agreement, dated November 15, 2004, by and among the Company
and
the persons and entities identified therein
|
|
Incorporated
by reference to Exhibit 10.3 to the Registrant’s Current Report on Form
8-K filed on November 17, 2004
|
|
|
4.5
|
Form
of Warrant issued on November 15, 2004
|
|
Incorporated
by reference to Exhibit 10.2 to the Registrant’s Current Report on Form
8-K filed on November 17, 2004
|
|
4.6
|
Registration
Rights Agreement, dated June 30, 2005, by and among the Company
and the
persons and entities identified therein
|
|
Incorporated
by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K
filed on July 6, 2005
|
|
|
4.7
|
Registration
Rights Agreement, dated November 1, 2005, by and among the Company
and the
persons and entities identified therein
|
|
Incorporated
by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K
filed on November 7, 2005
|
|
|
10.1
|
Executive
Employment Agreement, dated December 15, 2003, between Jay O. Wright
and
the Company
|
|
Incorporated
by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form
10-QSB filed on February 13, 2004
|
|
|
10.2
|
Executive
Employment Agreement, dated April 15, 2004 between Jay O. Wright
and the
Company
|
|
Incorporated
by reference to Exhibit 10.15 to the Amendment to Registrant’s
Registration Statement on Form SB-2 filed on May 14, 2004
|
|
|
10.3
|
Amended
and Restated Executive Employment Agreement, dated June 9, 2004
between
Jay O. Wright and the Company
|
|
Incorporated
by reference to Exhibit 10.1 to the Registrant’s Current Report on Form
8-K filed on June 15, 2004
|
|
|
10.4
|
Standby
Equity Distribution Agreement, dated May 13, 2004 between the Company
and
Cornell Capital
|
|
Incorporated
by reference to Exhibit 10.20 to the Registrant’s Registration Statement
on Form SB-2 filed on May 14, 2004
|
|
|
10.5
|
Registration
Rights Agreement, dated May 13, 2004 between the Company and Cornell
Capital
|
|
Incorporated
by reference to Exhibit 10.21 to the Registrant’s Registration Statement
on Form SB-2 filed on May 14, 2004
|
|
|
10.6
|
Escrow
Agreement, dated May 13, 2004 between the Company and Cornell
Capital
|
|
Incorporated
by reference to Exhibit 10.23 to the Registrant’s Registration Statement
on Form SB-2 filed on May 14, 2004
|
|
|
10.7
|
Consulting
Agreement by and among Mobilepro Corp., DFW Internet Services,
Inc., Beech
Holdings, Inc., and Jack W. Beech, Jr.
|
|
Incorporated
by reference to Exhibit 99.1 to the Registrant’s Current Report on Form
8-K filed on February 4, 2004
|
|
10.8
|
Executive
Employment Agreement by and among the Company, CloseCall America,
Inc. and
Tom Mazerski
|
|
Incorporated
by reference to Exhibit 10.1 to the Registrant’s Current Report on Form
8-K filed on October 19, 2004
|
|
|
10.9
|
Executive
Employment Agreement dated November 2, 2004, between Geoffrey Amend
and
the Company
|
|
Incorporated
by reference to Exhibit 10.8 to the Registrant’s Quarterly Report on Form
10-QSB filed on February 14, 2005
|
|
|
10.10
|
Credit
Agreement, dated November 15, 2004, by and among the Company, Davel
Acquisition Corp. and Airlie Opportunity Master Fund, Ltd.
|
|
Incorporated
by reference to Exhibit 10.1 to the Registrant’s Current Report on Form
8-K filed on November 17, 2004
|
|
|
10.11
|
Employment
Agreement dated February 28, 2005 between Davel Communications,
Inc. and
Tammy L. Martin
|
|
Incorporated
by reference to Exhibit 10.28 to the Registrant’s Annual Report on Form
10-KSB filed on June 28, 2005
|
|
10.12
|
Amendment
No. 1 to Employment Agreement between Davel Communications, Inc.
and Tammy
L. Martin, dated April 20, 2005
|
|
Incorporated
by reference to Exhibit 10.29 to the Registrant’s Annual Report on Form
10-KSB filed on June 28, 2005
|
|
|
10.13
|
Amendment
No. 2 to Employment Agreement between Davel Communications, Inc.
and Tammy
L. Martin, dated May 26, 2005
|
|
Incorporated
by reference to Exhibit 10.30 to the Registrant’s Annual Report on Form
10-KSB filed on June 28, 2005
|
|
10.14
|
Amended
and Restated Executive Employment Agreement, dated June 16, 2005
between
Jay O. Wright and the Company
|
|
Incorporated
by reference to Exhibit 10.1 to the Registrant’s Current Report on Form
8-K filed on June 20, 2005
|
|
|
10.15
|
Amended
and Restated Executive Employment Agreement, dated June 16, 2005
by and
among the Company, CloseCall America, Inc. and Tom
Mazerski
|
|
Incorporated
by reference to Exhibit 10.33 to the Registrant’s Annual Report on Form
10-KSB filed on June 28, 2005
|
|
|
10.16
|
Amended
and Restated Executive Employment Agreement, dated June 16, 2005,
between
Geoffrey Amend and the Company
|
|
Incorporated
by reference to Exhibit 10.34 to the Registrant’s Annual Report on Form
10-KSB filed on June 28, 2005
|
|
|
10.17
|
Securities
Purchase Agreement, dated as of May 13, 2005, by and between the
Company
and Cornell Capital
|
|
Incorporated
by reference to Exhibit 10.35 to the Registrant’s Annual Report on Form
10-KSB filed on June 28, 2005
|
|
|
10.18
|
Secured
Convertible Debenture, issued on May 13, 2005 by the Company to
Cornell
Capital
|
|
Incorporated
by reference to Exhibit 10.36 to the Registrant’s Annual Report on Form
10-KSB filed on June 28, 2005
|
|
|
10.19
|
Amended
and Restated Collateral Assignment of Intellectual Property Rights,
made
as of May 13, 2005, by and among the Company, the Company subsidiaries
identified therein and Cornell Capital
|
|
Incorporated
by reference to Exhibit 10.37 to the Registrant’s Annual Report on Form
10-KSB filed on June 28, 2005
|
|
|
10.20
|
Amended
and Restated Security Agreement, dated May 13, 2005, by and among
the
Company, the subsidiaries identified therein and Cornell
Capital
|
|
Incorporated
by reference to Exhibit 10.38 to the Registrant’s Annual Report on Form
10-KSB filed on June 28, 2005
|
|
|
10.21
|
Investor
Registration Rights Agreement, dated as of May 13, 2005 by and
between the
Company and Cornell Capital
|
|
Incorporated
by reference to Exhibit 10.39 to the Registrant’s Annual Report on Form
10-KSB filed on June 28, 2005
|
|
|
10.22
|
Amended
and Restated Guaranty Agreement, dated as of May 13, 2005, made
by each of
the direct and indirect subsidiaries of the Company in favor of
Cornell
Capital
|
|
Incorporated
by reference to Exhibit 10.40 to the Registrant’s Annual Report on Form
10-KSB filed on June 28, 2005
|
|
|
10.23
|
Warrant
issued by the Company to Cornell Capital
|
|
Incorporated
by reference to Exhibit 10.41 to the Registrant’s Annual Report on Form
10-KSB filed on June 28, 2005
|
|
10.24
|
Executive
Employment Agreement dated September 1, 2005, between James L.
Magruder,
Jr. and the Company
|
|
Incorporated
by reference to Exhibit 10.1 to the Registrant’s Current Report on Form
8-K filed September 9, 2005
|
|
|
10.25
|
Master
Agreement for Services between Sprint Communications Company L.P.
and Kite
Broadband, LLC, dated May 20, 2005*
|
|
Incorporated
by reference to Exhibit 2.1 to the Registrant’s Form 10-QSB filed November
14, 2005
|
|
|
10.26
|
Agreement
between the City of Tempe and NeoReach, Inc. for the Use of City
Property
in Connection with the Operation of a WiFi Network, dated August
17,
2005
|
|
Incorporated
by reference to Exhibit 10.48 to the Registrant’s Annual Report on Form
10-KSB filed on June ___, 2006
|
|
|
10.27
|
Executive
Employment Agreement dated February 1, 2006, between Jerry M.
Sullivan, Jr. and the Company
|
|
Incorporated
by reference to Exhibit 10.1 to the Registrant’s Current Report on Form
8-K filed February 13, 2005
|
|
|
10.28
|
Secured
Convertible Debenture, issued on June 30, 2006 by the Company to
Cornell
Capital
|
|
Incorporated
by reference to Exhibit 10.1 to the Registrant’s Current Report on Form
8-K filed July 7, 2006
|
||
10.29
|
Warrant
issued by the Company to Cornell Capital
|
Incorporated
by reference to Exhibit 10.40 to the Registrant’s Quarterly Report on Form
10-Q for the quarter ended June 30, 2006
|
|||
10.30
|
Master
Lease Agreement dated June 28, 2006 between JTA Leasing Co., LLC,
Mobilepro Corp., and NeoReach, Inc.
|
Incorporated
by reference to Exhibit 10.41 to the Registrant’s Quarterly Report on Form
10-Q for the quarter ended June 30, 2006
|
|||
10.31
|
Letter
Agreement between American Fiber Network, Inc. and FSH Communications
LLC,
dated June 30, 2006*
|
Incorporated
by reference to Exhibit 10.1 to the Registrant’s Current Report on Form
8-K, dated July 11, 2006
|
|||
10.32
|
Securities
Purchase Agreement, dated as of August 28, 2006, by and between
the
Company and Cornell Capital
|
|
Incorporated
by reference to Exhibit 10.1 to the Registrant’s Current Report on Form
8-K filed on August 30, 2006
|
||
10.33
|
Secured
Convertible Debenture, issued on August 28, 2006, by the Company
to
Cornell Capital
|
|
Incorporated
by reference to Exhibit 10.2 to the Registrant’s Current Report on Form
8-K filed on August 30, 2006
|
||
10.34
|
Investor
Registration Rights Agreement, dated as of August 28, 2006, by
and between
the Company and Cornell Capital
|
|
Incorporated
by reference to Exhibit 10.4 to the Registrant’s Current Report on Form
8-K filed on August 30, 2006
|
||
10.35
|
Irrevocable
Transfer Agent Instructions dated August 28, 2006 among the Company,
Interwest Transfer Company, Inc. and David Gonzalez, Esq., as Escrow
Agent
|
|
Incorporated
by reference to Exhibit 10.5 to the Registrant’s Current Report on Form
8-K filed on August 30, 2006
|
10.36
|
Warrant
issued by the Company to Cornell Capital
|
|
Incorporated
by reference to Exhibit 10.3 to the Registrant’s Current Report on Form
8-K filed on August 30, 2006
|
||
10.37
|
Amendment
No. 1 to the Securities Purchase Agreement, dated September 20,
2006,
between the Company and Cornell Capital, and the related Convertible
Debenture
|
|
Incorporated
by reference to Exhibit 10.1 to the Registrant’s Current Report on Form
8-K filed on September 21, 2006
|
||
10.38
|
Amendment
No. 2 to the Securities Purchase Agreement, dated October 23, 2006,
between the Company and Cornell Capital
|
|
Incorporated
by reference to Exhibit 10.1 to the Registrant’s Current Report on Form
8-K filed on October 24, 2006
|
||
10.39
|
Master
Equipment Lease dated September 27, 2006, between Data Sales Co.,
Mobilepro Corp., and Kite Networks, Inc.
|
Incorporated
by reference to Exhibit 10.46 to the Registrant’s Quarterly Report on Form
10-Q for the quarter ended September 30, 2006
|
|||
10.40
|
Amendment
No. 1 to Convertible Debentures issued to Cornell Capital, dated
January
17, 2007
|
Incorporated
by reference to Exhibit 10.01 to the Registrant’s Current Report on Form
8-K filed on January 23, 2007
|
|||
10.41
|
Amendment
No. 2 to Convertible Debenture
issued
to Cornell Capital, dated February 20, 2007
(the
$15,149,650 debenture)
|
Incorporated
by reference to Exhibit 10.01 to the Registrant’s Current Report on Form
8-K filed on February 26, 2007
|
|||
10.42
|
Amendment
No. 2 to Convertible Debentures
issued
to Cornell Capital, dated February 20, 2007
(the
$7,000,000 debentures)
|
Incorporated
by reference to Exhibit 10.02 to the Registrant’s Current Report on Form
8-K filed on February 26, 2007
|
|||
10.43
|
Amendment
No. 3 to Convertible Debentures
issued
to Cornell Capital, dated April 2, 2007
(the
$7,000,000 debentures)
|
Incorporated
by reference to Exhibit 10.02 to the Registrant’s Current Report on Form
8-K filed on April 5, 2007
|
|||
10.44
|
Consent
and Waiver Agreement dated March 30, 2007 with Cornel Capital
|
Incorporated
by reference to Exhibit 10.01 to the Registrant’s Current Report on Form
8-K filed on April 5, 2007
|
|||
10.45
|
Amendment
No. 4 to Convertible Debentures
issued
to Cornell Capital, dated May 11, 2007
(the
$7,000,000 debentures)
|
Incorporated
by reference to Exhibit 10.01 to the Registrant’s Current Report on Form
8-K filed on May 15, 2007
|
|||
10.46
|
Promissory
Note, dated May 11, 2007, issued to Cornell Capital
|
Incorporated
by reference to Exhibit 10.02 to the Registrant’s Current Report on Form
8-K filed on May 15, 2007
|
|||
21.1
|
Subsidiaries
of Registrant
|
|
Incorporated
by reference to Exhibit 10.48 to the Registrant’s Annual Report on Form
10-KSB filed on June 29, 2006
|
|
|
23.1
|
Consent
of Bagell, Josephs, Levine & Company, L.L.C.
|
|
Provided
herewith
|
|
31.1
|
Certification
by Jay O. Wright, Chief Executive Officer, pursuant to Rule
13a-14(a)
|
Provided
herewith
|
|||
31.2
|
Certification
by Richard H. Deily, Principal Financial Officer, pursuant to Rule
13a-14(a)
|
Provided
herewith
|
|||
32.1
|
Certification
by Jay O. Wright and Richard H. Deily, pursuant to 18 U.S.C. Section
1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002**
|
Provided
herewith
|
MOBILEPRO
CORP.
|
|
By:
/s/
Jay O. Wright
|
|
Name: Jay
O. Wright
|
|
Title: Chief
Executive Officer
|
|
Date: June
29, 2007
|
SIGNATURE
|
TITLE
|
DATE
|
||
/s/
Jay O. Wright
|
Chief
Executive Officer,
|
June
29, 2007
|
||
Jay
O. Wright
|
Principal
Executive Officer and Director
|
|||
/s/
Richard H. Deily
|
Chief
Accounting Officer, Principal
|
June
29, 2007
|
||
Richard
H. Deily
|
Financial
and Principal Accounting Officer
|
|||
/s/
Christopher W. MacFarland
|
Director
|
June
29, 2007
|
||
Christopher
W. MacFarland
|
||||
/s/
Michael O’Neil
|
Director
|
June
29, 2007
|
||
Michael
O’Neil
|
||||
/s/
Donald H. Sledge
|
Director
|
June
29, 2007
|
||
Donald
H. Sledge
|
||||
/s/
Jerry M. Sullivan, Jr. .
|
President,
Chief Operating Officer, and
|
June
29, 2007
|
||
Jerry
M. Sullivan, Jr.
|
Director
|
Page(s)
|
||||
Report
of Independent Registered Public Accounting Firm
|
F-1
to F-2
|
|||
Consolidated
Balance Sheets as of March 31, 2007 and 2006
|
F-3
to F-4
|
|||
Consolidated
Statements of Operations for the Years
|
|
|||
Ended March 31, 2007, 2006 and 2005
|
F-5
|
|||
Consolidated
Statements of Changes in Stockholders’ Equity
|
|
|||
for the Years Ended March 31, 2007, 2006 and 2005
|
F-6
|
|||
Consolidated
Statements of Cash Flows for the Years Ended
|
|
|||
March 31, 2007, 2006 and 2005
|
F-7
to F-8
|
|||
Notes
to Consolidated Financial Statements
|
F-9
to F-33
|
ASSETS
|
|||||||
2007
|
|
2006
|
|||||
CURRENT
ASSETS
|
|||||||
Cash
and cash equivalents
|
$
|
3,430,844
|
$
|
5,397,881
|
|||
Restricted
cash
|
1,136,200
|
352,200
|
|||||
Accounts
receivable, net
|
8,610,498
|
10,481,632
|
|||||
Prepaid
expenses and other current assets
|
3,095,181
|
3,399,864
|
|||||
Total
Current Assets
|
16,272,723
|
19,631,577
|
|||||
FIXED
ASSETS, NET OF ACCUMULATED DEPRECIATION
|
18,783,405
|
15,859,254
|
|||||
OTHER
ASSETS
|
|||||||
Goodwill,
net of impairment
|
29,547,074
|
47,788,167
|
|||||
Customer
contracts and relationships, net of amortization
|
1,927,250
|
8,777,502
|
|||||
Restricted
cash
|
1,062,000
|
-
|
|||||
Other
assets
|
1,716,469
|
1,934,553
|
|||||
34,252,793
|
58,500,222
|
||||||
TOTAL
ASSETS
|
$
|
69,308,921
|
$
|
93,991,053
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
2007
|
2006
|
||||||
CURRENT
LIABILITIES
|
|||||||
Current
portion of convertible debentures
|
$
|
15,101,081
|
$
|
4,500,000
|
|||
Notes
payable
|
2,043,594
|
3,964,959
|
|||||
Accounts
payable and accrued expenses
|
19,780,436
|
17,707,471
|
|||||
Deferred
revenue
|
4,464,518
|
4,343,754
|
|||||
Total
Current Liabilities
|
41,389,629
|
30,516,184
|
|||||
LONG-TERM
LIABILITIES
|
|||||||
Convertible
debentures, net of unamortized debt discount and
|
|||||||
current
portion
|
2,892,751
|
9,995,243
|
|||||
Notes
payable and other long-term liabilities, net of current
maturities
|
3,068,273
|
650,419
|
|||||
Total
Long-Term Liabilities
|
5,961,024
|
10,645,662
|
|||||
TOTAL
LIABILITIES
|
47,350,653
|
41,161,846
|
|||||
STOCKHOLDERS'
EQUITY
|
|||||||
Preferred
stock, $.001 par value, 20,035,425 shares authorized,
|
|||||||
35,378
shares issued and outstanding at March 31, 2007 and 2006
|
35
|
35
|
|||||
Common
stock, $.001 par value, 1,500,000,000 shares authorized,
|
|||||||
692,477,518
and 560,666,949 shares issued and outstanding
|
|||||||
at
March 31, 2007 and 2006
|
692,478
|
560,667
|
|||||
Additional
paid-in capital
|
98,537,000
|
83,641,462
|
|||||
Accumulated
deficit
|
(77,271,245
|
)
|
(31,372,957
|
)
|
|||
Total
Stockholders' Equity
|
21,958,268
|
52,829,207
|
|||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
69,308,921
|
$
|
93,991,053
|
2007
|
2006
|
2005
|
||||||||
REVENUES
|
$
|
89,089,328
|
$
|
99,013,467
|
$
|
46,508,144
|
||||
OPERATING
COSTS AND EXPENSES
|
||||||||||
Cost
of services (exclusive of depreciation and amortization)
|
51,848,059
|
49,082,244
|
22,551,240
|
|||||||
Payroll,
professional fees and related expenses (exclusive of stock
compensation)
|
33,286,967
|
32,490,449
|
17,594,068
|
|||||||
Advertising
and marketing expenses
|
2,959,128
|
3,067,702
|
1,610,285
|
|||||||
Office
rent and expenses
|
4,861,863
|
5,085,354
|
1,551,939
|
|||||||
Other
general and administrative expenses
|
4,131,340
|
5,852,337
|
4,654,558
|
|||||||
Depreciation
and amortization
|
5,976,395
|
4,310,742
|
2,067,213
|
|||||||
Asset
impairment charges
|
27,275,987
|
4,446,544
|
-
|
|||||||
Stock
compensation
|
1,623,714
|
-
|
-
|
|||||||
Settlement
of litigation and other claims
|
-
|
1,077,000
|
-
|
|||||||
Restructuring
charges
|
283,839
|
825,703
|
-
|
|||||||
Total
Operating Costs and Expenses
|
132,247,292
|
106,238,075
|
50,029,303
|
|||||||
OPERATING
LOSS
|
(43,157,964
|
)
|
(7,224,608
|
)
|
(3,521,159
|
)
|
||||
INTEREST
AND OTHER EXPENSE, NET
|
(2,330,723
|
)
|
(2,838,394
|
)
|
(1,838,563
|
)
|
||||
LOSS
ON EXTINGUISHMENT OF DEBT
|
(409,601
|
)
|
-
|
-
|
||||||
MINORITY
INTERESTS IN NET INCOME OF
|
||||||||||
CONSOLIDATED
SUBSIDIARIES
|
-
|
(113,405
|
)
|
-
|
||||||
NET
LOSS BEFORE PROVISION FOR INCOME TAXES
|
(45,898,288
|
)
|
(10,176,407
|
)
|
(5,359,722
|
)
|
||||
Provision
for Income Taxes
|
-
|
-
|
-
|
|||||||
NET
LOSS APPLICABLE TO COMMON SHARES
|
$
|
(45,898,288
|
)
|
$
|
(10,176,407
|
)
|
$
|
(5,359,722
|
)
|
|
NET
LOSS PER SHARE
|
||||||||||
Basic
|
$
|
(0.0760
|
)
|
$
|
(0.0248
|
)
|
$
|
(0.0185
|
)
|
|
Diluted
|
$
|
(0.0760
|
)
|
$
|
(0.0248
|
)
|
$
|
(0.0185
|
)
|
|
WEIGHTED
AVERAGE NUMBER OF COMMON
|
||||||||||
SHARES
OUTSTANDING
|
603,759,813
|
411,157,718
|
289,933,904
|
Additional
|
|
|
|
|
|
|||||||||||||||||
|
|
Preferred
Stock
|
|
Common
Stock
|
|
Paid-In
|
|
Accumulated
|
|
Stockholders'
|
|
|||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Deficit
|
|
Equity
|
||||||||
BALANCE
- MARCH 31, 2004
|
35,378
|
$
|
35
|
220,493,159
|
$
|
220,493
|
$
|
15,902,619
|
$
|
(15,836,828
|
)
|
$
|
286,319
|
|||||||||
Shares
issued under the $100 million Standby Equity Distribution
Agreement
|
-
|
-
|
65,000,000
|
65,000
|
9,282,366
|
-
|
9,347,366
|
|||||||||||||||
Shares
issued under the $10 million Equity Line of Credit
|
-
|
-
|
10,000,000
|
10,000
|
4,031,691
|
-
|
4,041,691
|
|||||||||||||||
Shares
issued in acquisition of subsidiaries and assets
|
-
|
-
|
47,378,815
|
47,379
|
12,026,121
|
-
|
12,073,500
|
|||||||||||||||
Shares
issued for services
|
-
|
-
|
8,600,000
|
8,600
|
1,782,400
|
-
|
1,791,000
|
|||||||||||||||
Shares
issued for cash
|
-
|
-
|
2,446,037
|
2,446
|
82,053
|
-
|
84,499
|
|||||||||||||||
Shares
issued pursuant to settlement agreement
|
-
|
-
|
2,000,000
|
2,000
|
88,000
|
-
|
90,000
|
|||||||||||||||
Net
loss for the year
|
-
|
-
|
-
|
-
|
-
|
(5,359,722
|
)
|
(5,359,722
|
)
|
|||||||||||||
BALANCE
- MARCH 31, 2005
|
35,378
|
35
|
355,918,011
|
355,918
|
43,195,250
|
(21,196,550
|
)
|
22,354,653
|
||||||||||||||
Shares
issued under the $100 million Standby Equity Distribution
Agreement
|
-
|
-
|
95,000,000
|
95,000
|
22,055,740
|
-
|
22,150,740
|
|||||||||||||||
Shares
issued in acquisition of subsidiaries and assets
|
-
|
-
|
104,423,419
|
104,423
|
17,884,983
|
-
|
17,989,406
|
|||||||||||||||
Conversion
of notes payable and debentures
|
-
|
-
|
4,046,732
|
4,047
|
900,487
|
-
|
904,534
|
|||||||||||||||
Exercise
of common stock warrant
|
-
|
-
|
831,615
|
832
|
(832
|
)
|
-
|
-
|
||||||||||||||
Financing
fee related to the issuance of a convertible debenture
|
-
|
-
|
-
|
-
|
(1,295,000
|
)
|
-
|
(1,295,000
|
)
|
|||||||||||||
Issuance
of warrant in connection with convertible debenture
|
-
|
-
|
-
|
-
|
853,200
|
-
|
853,200
|
|||||||||||||||
Shares
issued for consulting and investment banking services
|
-
|
-
|
447,172
|
447
|
82,053
|
-
|
82,500
|
|||||||||||||||
Common
stock registration costs
|
-
|
-
|
-
|
-
|
(34,419
|
)
|
-
|
(34,419
|
)
|
|||||||||||||
Net
loss for the year
|
-
|
-
|
-
|
-
|
-
|
(10,176,407
|
)
|
(10,176,407
|
)
|
|||||||||||||
BALANCE
- MARCH 31, 2006
|
35,378
|
35
|
560,666,949
|
560,667
|
83,641,462
|
(31,372,957
|
)
|
52,829,207
|
||||||||||||||
Shares
issued under the $100 million Standby Equity Distribution
Agreement
|
-
|
-
|
18,586,633
|
18,587
|
6,636,537
|
-
|
6,655,124
|
|||||||||||||||
Shares
issued in payment of convertible debentures and related
interest
|
-
|
-
|
93,177,199
|
93,177
|
5,154,755
|
-
|
5,247,932
|
|||||||||||||||
Shares
issued in connection with acquisition of TCS assets
|
-
|
-
|
9,079,903
|
9,080
|
665,920
|
-
|
675,000
|
|||||||||||||||
Exercise
of common stock options and warrants
|
-
|
-
|
6,822,620
|
6,823
|
3,177
|
-
|
10,000
|
|||||||||||||||
Shares
issued in acquisition of subsidiaries and assets
|
-
|
-
|
3,944,214
|
3,944
|
197,211
|
-
|
201,155
|
|||||||||||||||
Issuance
of warrants in connection with convertible debentures
|
-
|
-
|
-
|
-
|
1,090,499
|
-
|
1,090,499
|
|||||||||||||||
Financing
fees related to the issuance of convertible debentures
|
-
|
-
|
-
|
-
|
(505,000
|
)
|
-
|
(505,000
|
)
|
|||||||||||||
Shares
issued for consulting and investment banking services
|
-
|
-
|
200,000
|
200
|
35,800
|
-
|
36,000
|
|||||||||||||||
Common
stock registration costs
|
-
|
-
|
-
|
-
|
(10,189
|
)
|
-
|
(10,189
|
)
|
|||||||||||||
Shares
of ProGames issued for cash
|
-
|
-
|
-
|
-
|
3,114
|
-
|
3,114
|
|||||||||||||||
Stock
compensation expense
|
-
|
-
|
-
|
-
|
1,623,714
|
-
|
1,623,714
|
|||||||||||||||
Net
loss for the year
|
-
|
-
|
-
|
-
|
-
|
(45,898,288
|
)
|
(45,898,288
|
)
|
|||||||||||||
BALANCE
- MARCH 31, 2007
|
35,378
|
$
|
35
|
692,477,518
|
$
|
692,478
|
$
|
98,537,000
|
$
|
(77,271,245
|
)
|
$
|
21,958,268
|
2007
|
2006
|
2005
|
||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||||
Net
loss
|
$
|
(45,898,288
|
)
|
$
|
(10,176,407
|
)
|
$
|
(5,359,722
|
)
|
|
Adjustments
to reconcile net loss to net cash
|
||||||||||
provided
by (used in) operating activities:
|
||||||||||
Asset
impairment charges
|
27,275,987
|
4,446,544
|
-
|
|||||||
Depreciation
and amortization
|
5,976,395
|
4,310,742
|
2,067,213
|
|||||||
Stock
compensation
|
1,623,714
|
-
|
-
|
|||||||
Noncash
interest expense
|
1,398,556
|
752,565
|
375,150
|
|||||||
Loss
on debt extinguishment
|
409,601
|
-
|
-
|
|||||||
Restructuring
charges
|
283,839
|
825,703
|
-
|
|||||||
Other
|
68,418
|
145,424
|
(419,000
|
)
|
||||||
Changes
in assets and liabilities
|
||||||||||
(Increase)
decrease in restricted cash
|
(758,035
|
)
|
77,754
|
(429,954
|
)
|
|||||
(Increase)
decrease in accounts receivable
|
2,932,582
|
2,356,109
|
(307,335
|
)
|
||||||
(Increase)
decrease in other current assets
|
787,307
|
(736,632
|
)
|
916,786
|
||||||
(Increase)
decrease in other assets
|
(407,378
|
)
|
(767,296
|
)
|
45,044
|
|||||
Increase
(decrease) in accounts payable and
|
||||||||||
and
accrued expenses
|
(54,947
|
)
|
(4,038,760
|
)
|
3,141,501
|
|||||
Increase
(decrease) in deferred revenue
|
(196,459
|
)
|
(54,635
|
)
|
609,979
|
|||||
39,339,580
|
7,317,518
|
5,999,384
|
||||||||
Net
cash provided by (used in) operating activities
|
(6,558,708
|
)
|
(2,858,889
|
)
|
639,662
|
|||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||||
Capital
expenditures, net
|
(6,514,360
|
)
|
(4,814,174
|
)
|
(2,109,338
|
)
|
||||
Proceeds
from the sale/leaseback of wireless network equipment
|
3,206,666
|
-
|
-
|
|||||||
Purchase
of restricted certificates of deposit
|
(1,062,000
|
)
|
-
|
-
|
||||||
Acquisition
of intangible assets
|
-
|
(6,778,129
|
)
|
(1,192,608
|
)
|
|||||
Cash
paid for acquisitions
|
-
|
(4,297,252
|
)
|
(32,960,500
|
)
|
|||||
Cash
received in acquisition of subsidiaries
|
-
|
314,124
|
5,827,223
|
|||||||
|
||||||||||
Net
cash (used in) investing activities
|
(4,369,694
|
)
|
(15,575,431
|
)
|
(30,435,223
|
)
|
||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||||
Proceeds
from common stock issuances
|
6,666,917
|
22,616,456
|
13,098,406
|
|||||||
Proceeds
from the issuance of convertible debentures
|
7,000,000
|
15,500,000
|
-
|
|||||||
Borrowings/(payments)
under other notes payable, net
|
(4,200,552
|
)
|
(8,271,567
|
)
|
19,411,335
|
|||||
Debt
financing fees
|
(505,000
|
)
|
(1,295,000
|
)
|
-
|
|||||
Retirement
of acquisition bridge loan
|
-
|
(13,000,000
|
)
|
-
|
||||||
Investment
by minority interests
|
-
|
3,612,525
|
-
|
|||||||
|
||||||||||
Net
cash provided by financing activities
|
8,961,365
|
19,162,414
|
32,509,741
|
2007
|
2006
|
2005
|
||||||||
NET
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
|
$
|
(1,967,037
|
)
|
$
|
728,094
|
$
|
2,714,180
|
|||
CASH
AND CASH EQUIVALENTS - BEGINNING OF YEAR
|
5,397,881
|
4,669,787
|
1,955,607
|
|||||||
CASH
AND CASH EQUIVALENTS - END OF YEAR
|
$
|
3,430,844
|
$
|
5,397,881
|
$
|
4,669,787
|
||||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW
|
||||||||||
INFORMATION:
|
||||||||||
Cash
paid during the year for interest
|
$
|
1,140,998
|
$
|
1,651,670
|
$
|
533,050
|
||||
SUPPLEMENTAL
DISCLOSURE OF NONCASH
|
||||||||||
ACTIVITIES:
|
||||||||||
Issuance
of Amended Debenture to Cornell Capital
|
$
|
15,149,650
|
$
|
-
|
$
|
-
|
||||
Retirement
of Debenture issued to Cornell Capital
|
$
|
15,000,000
|
$
|
-
|
$
|
-
|
||||
Capital
leases
|
$
|
5,174,173
|
$
|
-
|
$
|
-
|
||||
Debenture
maturities and accrued interest paid with common stock
|
$
|
4,880,489
|
$
|
-
|
$
|
-
|
||||
Goodwill
recorded in acquisitions
|
$
|
201,155
|
$
|
18,336,791
|
$
|
32,785,618
|
||||
Issuance
of common stock for acquisitions
|
$
|
675,000
|
$
|
18,326,406
|
$
|
-
|
||||
Amortization
of SEDA deferred financing fees
|
$
|
146,666
|
$
|
880,000
|
$
|
-
|
||||
Debt
financing fees paid in common stock
|
$
|
-
|
$
|
-
|
$
|
1,760,000
|
||||
Adjustment
to minority interest
|
$
|
-
|
$
|
150,000
|
$
|
-
|
||||
Issuance
of common stock for investment banker retainer fee
|
$
|
-
|
$
|
58,500
|
$
|
-
|
||||
Liability
for common stock to be issued
|
$
|
-
|
$
|
53,167
|
$
|
300,000
|
||||
Assignment
of bridge debentures receivable
|
$
|
-
|
$
|
-
|
$
|
1,000,000
|
|
Estimated
Useful
Lives
(in years)
|
2007
|
2006
|
|||||||
Furniture
and fixtures
|
7
|
$
|
785,208
|
$
|
698,828
|
|||||
Machinery
and equipment
|
5
|
26,316,912
|
20,561,029
|
|||||||
Leasehold
improvements
|
7
|
612,947
|
788,610
|
|||||||
Vehicles
|
5
|
200,383
|
204,205
|
|||||||
Subtotals
|
27,915,450
|
22,252,672
|
||||||||
Less
accumulated depreciation
|
(9,132,045
|
)
|
(6,393,418
|
)
|
||||||
Fixed
assets, net
|
$
|
18,783,405
|
$
|
15,859,254
|
|
2007
|
2006
|
|||||
|
|||||||
Accounts
payable
|
$
|
13,024,786
|
$
|
10,534,520
|
|||
Accrued
location usage fees
|
1,864,915
|
2,271,060
|
|||||
Accrued
restructuring costs
|
284,918
|
486,311
|
|||||
Accrued
compensation
|
1,176,919
|
1,048,027
|
|||||
Accrued
interest expense
|
161,885
|
873,206
|
|||||
Other
accrued liabilities
|
3,267,013
|
2,494,347
|
|||||
Totals
|
$
|
19,780,436
|
$
|
17,707,471
|
Amended
Debenture issued to Cornell Capital
|
$
|
12,649,650
|
$
|
-
|
|||
Secured
Debentures issued to Cornell Capital
|
5,500,000
|
-
|
|||||
Debenture
issued to Cornell Capital
|
-
|
15,000,000
|
|||||
Capital
leases
|
4,900,295
|
-
|
|||||
Notes
payable to Cornell Capital
|
-
|
3,600,000
|
|||||
Other
notes payable and long-term obligations
|
350,072
|
1,368,046
|
|||||
|
23,400,017
|
19,968,046
|
|||||
Less:
Unamortized debt discounts
|
(294,318
|
)
|
(504,756
|
)
|
|||
Less:
Amounts due within one year
|
(17,144,675
|
)
|
(8,817,628
|
)
|
|||
Long-term
portion of debt
|
$
|
5,961,024
|
$
|
10,645,662
|
The
twelve months ending --
|
|
|||
March
31, 2009
|
$
|
5,351,905
|
||
March
31, 2010
|
530,654
|
|||
March
31, 2011
|
36,225
|
|||
March
31, 2012
|
49,139
|
|||
|
5,967,923
|
|||
Less
- Unamortized debt discount
|
(6,899
|
)
|
||
Long-term
portion of debt
|
$
|
5,961,024
|
|
Years
Ended
March
31,
|
|||||||||
|
2007
|
2006
|
2005
|
|||||||
Statutory
federal income tax rate
|
(35.0
|
)%
|
(35.0
|
)%
|
(35.0
|
)%
|
||||
State
income taxes, net of federal benefit
|
(3.0
|
)
|
(3.0
|
)
|
(3.0
|
)
|
||||
Permanent
differences
|
12.7
|
16.9
|
0.2
|
|||||||
Tax
credits
|
-
|
-
|
-
|
|||||||
Change
in valuation allowance
|
25.3
|
21.1
|
37.8
|
|||||||
Effective
tax rate
|
-
|
%
|
-
|
%
|
-
|
%
|
|
March
31,
|
||||||
|
2007
|
2006
|
|||||
Net
operating loss carryforwards
|
$
|
24,735,619
|
$
|
16,542,398
|
|||
Asset
impairment charges
|
3,239,124
|
-
|
|||||
Restructuring
reserve
|
108,269
|
184,799
|
|||||
Deferred
revenue
|
(171,640
|
)
|
-
|
||||
Other
differences
|
271,631
|
(163,561
|
)
|
||||
Valuation
allowance
|
(28,183,003
|
)
|
(16,563,636
|
)
|
|||
Total
net deferred tax asset
|
$
|
-
|
$
|
-
|
|
Weighted-Average
|
||||||
Stock
Options --
|
Number
of Options
|
Exercise
Price
|
|||||
Outstanding
- March 31, 2004
|
4,171,037
|
$
|
0.0482
|
||||
Granted
|
5,225,000
|
$
|
0.1748
|
||||
Exercised
|
(446,037
|
)
|
$
|
0.0594
|
|||
Cancelled
|
(7,225,000
|
)
|
$
|
0.1047
|
|||
Outstanding
- March 31, 2005
|
1,725,000
|
$
|
0.1920
|
||||
Granted
|
9,351,000
|
$
|
0.2330
|
||||
Exercised
|
-
|
$
|
-
|
||||
Cancelled
|
-
|
$
|
-
|
||||
Outstanding
- March 31, 2006
|
11,076,000
|
$
|
0.2260
|
||||
Granted
|
750,000
|
$
|
0.1150
|
||||
Exercised
|
(300,996
|
)
|
$
|
0.0528
|
|||
Cancelled
|
(7,648,004
|
)
|
$
|
0.0232
|
|||
Outstanding
- March 31, 2007
|
3,877,000
|
$
|
0.2053
|
||||
Exercisable
- March 31, 2007
|
2,459,681
|
$
|
0.2170
|
|
Weighted-Average
|
||||||
Stock
Warrants --
|
Number
of Warrants
|
Exercise
Price
|
|||||
Outstanding
- March 31, 2004
|
7,000,000
|
$
|
0.0190
|
||||
Granted
|
61,732,500
|
$
|
0.1326
|
||||
Exercised
|
(2,500,000
|
)
|
$
|
0.0296
|
|||
Cancelled
|
(5,000,000
|
)
|
$
|
0.1900
|
|||
Outstanding
- March 31, 2005
|
61,232,500
|
$
|
0.1172
|
||||
Granted
|
36,700,000
|
$
|
0.2458
|
||||
Exercised
|
(831,615
|
)
|
$
|
0.1700
|
|||
Cancelled
|
(2,168,385
|
)
|
$
|
0.0916
|
|||
Outstanding
- March 31, 2006
|
94,932,500
|
$
|
0.1669
|
||||
Granted
|
57,300,000
|
$
|
0.1847
|
||||
Exercised
|
(6,521,524
|
)
|
$
|
0.0182
|
|||
Cancelled
|
(22,805,342
|
)
|
$
|
0.3018
|
|||
Outstanding
- March 31, 2007
|
122,905,634
|
$
|
0.1597
|
||||
Exercisable
- March 31, 2007
|
110,651,227
|
$
|
0.1642
|
Outstanding
Stock Options
|
Exercisable
Options
|
|||||||||
Range
of
Exercise
Prices
|
Number
Outstanding
|
Weighted
Average
Remaining
Term
|
Weighted
Average
Exercise
Price
|
Number
Exercisable
|
Weighted
Average
Exercise
Price
|
|||||
$0.12
- $0.12
|
750,000
|
9.7
|
$0.12
|
208,333
|
$0.12
|
|||||
$0.22
- $0.22
|
2,547,000
|
8.7
|
0.22
|
1,864,682
|
0.22
|
|||||
$0.25
- $0.26
|
580,000
|
8.7
|
0.26
|
386,666
|
0.26
|
|||||
Total
Options
|
3,877,000
|
8.9
|
0.21
|
2,459,681
|
0.22
|
Outstanding
Warrants
|
Exercisable
Warrants
|
|||||||||
Range
of
Exercise
Prices
|
Number
Outstanding
|
Weighted
Average
Remaining
Term
|
Weighted
Average
Exercise
Price
|
Number
Exercisable
|
Weighted
Average
Exercise
Price
|
|||||
$0.01
- $0.04
|
29,382,500
|
7.7
|
$0.02
|
23,082,500
|
$0.02
|
|||||
$0.10
- $0.14
|
1,800,000
|
8.3
|
0.12
|
1,404,167
|
0.12
|
|||||
$0.15
- $0.16
|
8,900,217
|
7.5
|
0.16
|
8,900,217
|
0.16
|
|||||
$0.17
- $0.19
|
20,000,000
|
6.5
|
0.18
|
17,631,145
|
0.18
|
|||||
$0.20
- $0.20
|
41,900,000
|
3.6
|
0.20
|
41,900,000
|
0.20
|
|||||
$0.22
- $0.23
|
11,422,917
|
8.4
|
0.22
|
8,732,765
|
0.22
|
|||||
$0.30
- $0.35
|
9,500,000
|
3.2
|
0.31
|
9,000,000
|
0.31
|
|||||
Total
Warrants
|
122,905,634
|
5.7
|
0.16
|
110,651,207
|
0.16
|
|
2006
|
2005
|
|||||
Net
loss, as reported
|
$
|
(10,176,407
|
)
|
$
|
(5,359,722
|
)
|
|
Add:
Stock-based employee compensation expense included in net
loss
|
-
|
-
|
|||||
Deduct:
Total stock-based employee compensation expense determined under
fair
value based method for all awards
|
(5,467,232
|
)
|
(1,652,185
|
)
|
|||
Pro
forma net loss
|
$
|
(15,643,639
|
)
|
$
|
(7,011,907
|
)
|
|
Net
loss per share:
|
|||||||
As
reported
|
$
|
(0.0248
|
)
|
$
|
(0.0185
|
)
|
|
Pro
forma
|
$
|
(0.0380
|
)
|
$
|
(0.0242
|
)
|
|
2007
|
2006
|
2005
|
|||||||
Dividend
yield
|
-
|
%
|
-
|
%
|
-
|
%
|
||||
Expected
volatility
|
60
|
%
|
60
|
%
|
60
|
%
|
||||
Risk-free
interest rate
|
4.00
|
%
|
3.00
|
%
|
3.00
|
%
|
||||
Expected
term (in years)
|
10.00
|
10.00
|
10.00
|
Years
Ending
March
31,
|
Minimum
Lease
Payments
|
|||
2008
|
$
|
1,547,420
|
||
2009
|
906,358
|
|||
2010
|
609,379
|
|||
2011
|
456,591
|
|||
2012
|
145,138
|
|||
Thereafter
|
323,226
|
|||
Total Payments
|
$
|
3,988,112
|
Voice
|
Internet
|
Wireless
|
|
|
||||||||||||
2007
|
Services
|
Services
|
Networks
|
Corporate
|
Total
|
|||||||||||
Revenues
|
$
|
62,559,069
|
$
|
15,030,633
|
$
|
11,499,521
|
$
|
105
|
$
|
89,089,328
|
||||||
Cost
of revenues (excludes depreciation and amortization)
|
36,820,779
|
7,947,180
|
7,080,100
|
-
|
51,848,059
|
|||||||||||
Other
operating expenses
|
26,475,183
|
7,450,528
|
8,278,391
|
4,658,910
|
46,863,012
|
|||||||||||
Depreciation
and amortization
|
3,397,840
|
472,668
|
2,105,887
|
-
|
5,976,395
|
|||||||||||
Asset
impairment charges
|
1,573,795
|
6,474,889
|
19,227,303
|
-
|
27,275,987
|
|||||||||||
Restructuring
charges
|
-
|
97,871
|
-
|
185,968
|
283,839
|
|||||||||||
Interest
and other expense, net
|
(255,259
|
)
|
(24,952
|
)
|
(118,631
|
)
|
3,139,166
|
2,740,324
|
||||||||
Net
income (loss)
|
$
|
(5,453,269
|
)
|
$
|
(7,387,551
|
)
|
$
|
(25,073,529
|
)
|
$
|
(7,983,939
|
)
|
$
|
(45,898,288
|
)
|
|
|
||||||||||||||||
Segment
assets
|
$
|
44,940,071
|
$
|
10,956,358
|
$
|
11,444,595
|
$
|
1,967,897
|
$
|
69,308,921
|
||||||
Fixed
assets, net of accumulated depreciation
|
$
|
8,609,911
|
$
|
1,114,372
|
$
|
8,739,819
|
$
|
319,303
|
$
|
18,783,405
|
||||||
Goodwill,
net of impairment
|
$
|
20,531,278
|
$
|
9,015,796
|
$
|
-
|
$
|
-
|
$
|
29,547,074
|
Voice
|
Internet
|
Wireless
|
|
|
||||||||||||
2006
|
Services
|
Services
|
Networks
|
Corporate
|
Total
|
|||||||||||
Revenues
|
$
|
72,356,453
|
$
|
16,940,513
|
$
|
9,716,501
|
$
|
-
|
$
|
99,013,467
|
||||||
Cost
of revenues (excludes depreciation and amortization)
|
35,630,090
|
8,267,634
|
5,184,520
|
-
|
49,082,244
|
|||||||||||
Other
operating expenses
|
31,066,030
|
8,026,734
|
6,054,076
|
2,426,002
|
47,572,842
|
|||||||||||
Depreciation
and amortization
|
3,313,401
|
382,167
|
607,881
|
7,293
|
4,310,742
|
|||||||||||
Goodwill
impairment charges
|
1,818,910
|
2,627,634
|
-
|
-
|
4,446,544
|
|||||||||||
Restructuring
charges
|
-
|
825,703
|
-
|
-
|
825,703
|
|||||||||||
Interest
and other expense, net
|
(13,761
|
)
|
17,973
|
(48,773
|
)
|
2,882,955
|
2,838,394
|
|||||||||
Minority
interests
|
(71,037
|
)
|
-
|
184,442
|
-
|
113,405
|
||||||||||
Net
income (loss)
|
$
|
612,820
|
$
|
(3,207,332
|
)
|
$
|
(2,265,645
|
)
|
$
|
(5,316,250
|
)
|
$
|
(10,176,407
|
)
|
||
|
||||||||||||||||
Segment
assets
|
$
|
50,143,424
|
$
|
18,658,080
|
$
|
23,710,779
|
$
|
1,478,770
|
$
|
93,991,053
|
||||||
Fixed
assets, net of accumulated depreciation
|
$
|
11,200,715
|
$
|
1,532,494
|
$
|
3,126,045
|
$
|
-
|
$
|
15,859,254
|
||||||
Goodwill,
net of impairment
|
$
|
20,231,278
|
$
|
15,480,956
|
$
|
12,075,933
|
$
|
-
|
$
|
47,788,167
|
|
Voice
|
Internet
|
Wireless
|
|||||||||||||
2005
|
Services
|
Services
|
Networks
|
Corporate
|
Total
|
|||||||||||
Revenues
|
$
|
32,009,084
|
$
|
13,884,060
|
$
|
-
|
$
|
615,000
|
$
|
46,508,144
|
||||||
Cost
of revenues (excludes depreciation and amortization)
|
15,816,901
|
6,734,339
|
-
|
-
|
22,551,240
|
|||||||||||
Other
operating expenses
|
16,707,959
|
6,460,970
|
953,976
|
1,287,945
|
25,410,850
|
|||||||||||
Depreciation
and amortization
|
1,093,620
|
225,672
|
14,588
|
733,333
|
2,067,213
|
|||||||||||
Interest
and other expense, net
|
(87,566
|
)
|
113,944
|
43,927
|
1,768,258
|
1,838,563
|
||||||||||
Net
income (loss)
|
$
|
(1,521,830
|
)
|
$
|
349,135
|
$
|
(1,012,491
|
)
|
$
|
(3,174,536
|
)
|
$
|
(5,359,722
|
)
|
||
Segment
assets
|
$
|
35,166,195
|
$
|
18,119,944
|
$
|
14,240
|
$
|
19,522,552
|
$
|
72,822,931
|
||||||
Fixed
assets, net of accumulated depreciation
|
$
|
11,804,050
|
$
|
1,381,713
|
$
|
7,293
|
$
|
-
|
$
|
13,193,056
|
||||||
Goodwill,
net of impairment
|
$
|
18,543,703
|
$
|
14,035,396
|
$
|
-
|
$
|
-
|
$
|
32,579,099
|
|
June
30,
|
September
30,
|
December
31,
|
March
31,
|
Full
Year
|
|||||||||||
Fiscal
2007
|
||||||||||||||||
Total
revenues
|
$
|
23,342,786
|
$
|
23,410,650
|
$
|
21,038,684
|
$
|
21,297,208
|
$
|
89,089328
|
||||||
Operating
loss
|
(3,933,831
|
)
|
(3,583,974
|
)
|
(5,098,947
|
)
|
(30,541,212
|
)
|
(43,157,964
|
)
|
||||||
Net
loss
|
(4,737,507
|
)
|
(4,110,914
|
)
|
(6,027,734
|
)
|
(31,022,133
|
)
|
(45,898,288
|
)
|
||||||
Net
loss per share
|
||||||||||||||||
Basic
|
$
|
(0.0082
|
)
|
$
|
(0.0070
|
)
|
$
|
(0.0100
|
)
|
$
|
(0.0474
|
)
|
$
|
(0.0760
|
)
|
|
Diluted
|
$
|
(0.0082
|
)
|
$
|
(0.0070
|
)
|
$
|
(0.0100
|
)
|
$
|
(0.0474
|
)
|
$
|
(0.0760
|
)
|
|
Fiscal
2006
|
||||||||||||||||
Total
revenues
|
$
|
22,505,845
|
$
|
26,546,650
|
$
|
26,244,606
|
$
|
23,716,366
|
$
|
99,013,467
|
||||||
Operating
loss
|
1,351,366
|
1,364,944
|
(6,323,149
|
)
|
(3,617,769
|
)
|
(7,224,608
|
)
|
||||||||
Net
loss
|
419,191
|
523,900
|
(6.955,732
|
)
|
(4,163,766
|
)
|
(10,176,407
|
)
|
||||||||
Net
loss per share
|
||||||||||||||||
Basic
|
$
|
0.0012
|
$
|
0.0014
|
$
|
(0.0165
|
)
|
$
|
(0.0088
|
)
|
$
|
(0.0248
|
)
|
|||
Diluted
|
$
|
0.0010
|
$
|
0.0012
|
$
|
(0.0165
|
)
|
$
|
(0.0088
|
)
|
$
|
(0.0248
|
)
|