0001579586-16-000025.txt : 20161219
0001579586-16-000025.hdr.sgml : 20161219
20161219155306
ACCESSION NUMBER: 0001579586-16-000025
CONFORMED SUBMISSION TYPE: 1-A POS
PUBLIC DOCUMENT COUNT: 2
FILED AS OF DATE: 20161219
DATE AS OF CHANGE: 20161219
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: Finger Lakes Region Rural Broadband Company, Inc.
CENTRAL INDEX KEY: 0001579586
STANDARD INDUSTRIAL CLASSIFICATION: RADIO TELEPHONE COMMUNICATIONS [4812]
IRS NUMBER: 463721414
STATE OF INCORPORATION: NY
FISCAL YEAR END: 1215
FILING VALUES:
FORM TYPE: 1-A POS
SEC ACT: 1933 Act
SEC FILE NUMBER: 024-10457
FILM NUMBER: 162058933
BUSINESS ADDRESS:
STREET 1: 1050 CONNECTICUT AVE., NW
STREET 2: 10TH FLOOR
CITY: WASHINGTON
STATE: DC
ZIP: 20036
BUSINESS PHONE: 2023217969
MAIL ADDRESS:
STREET 1: 1050 CONNECTICUT AVE., NW
STREET 2: 10TH FLOOR
CITY: WASHINGTON
STATE: DC
ZIP: 20036
FORMER COMPANY:
FORMER CONFORMED NAME: Mid-Hudson Region Rural Broadband Company, Inc.
DATE OF NAME CHANGE: 20130923
FORMER COMPANY:
FORMER CONFORMED NAME: Mid-Hudson Valley Rural Broadband Company, Inc.
DATE OF NAME CHANGE: 20130618
1-A POS
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Finger Lakes Region Rural Broadband Company, Inc.
NY
2013
0001579586
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46-3721414
1
9
1050 CONNECTICUT AVE. NW
10TH FLOOR
WASHINGTON
DC
20036
202-321-7969
Tony Ramos
Other
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Finger Lakes Region Rural Broadband Company, Inc.
common/voting
588238
0
3000000, based upon original project size issue to first shareholders/founders at par value
Regulation A, as amended
PART II AND III
2
flroffcirc2.txt
FLR OFF CIRC
AMENDED[1]JOBS ACT / REGULATION A, AS AMENDED - OFFERING CIRCULAR[2] THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION AND THE STATE OF NEW
YORK NEW YORK ATTORNEY GENERAL - INVESTOR PROTECTION BUREAU, DO NOT PASS
UPON THE MERITS OF OR GIVE APPROVAL TO ANY SECURITIES OFFERED OR THE
TERMS OF THE OFFERING, OR PASS UPON THE ACCURACY OR COMPLETENESS OF ANY
OFFERING CIRCULAR OR OTHER SELLING LITERATURE. THESE SECURITIES ARE
OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION
AND PURSUANT TO REGISTRATION WITH THE STATE OF NEW YORK; HOWEVER,
NEITHER THE COMMISSION NOR THE STATE OF NEW YORK HAVE MADE AN
INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED HEREUNDER ARE
EXEMPT FROM REGISTRATION.[3]
Issuing Company: Finger Lakes Region Rural Broadband Company, Inc.
Issuer's Representative: Tony Ramos, President
1050 Connecticut Ave., NW
Suite 500
Washington, D.C. 20036
202-236-3427
tramos@urbroadband.com
DATE OF OFFERING CIRCULAR: December 19, 2016
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALES TO THE PUBLIC: UPON
QUALIFICATION[4] DESCRIPTION OF SECURITIES: $6,000,000.00 common/voting
shares / Tier 1 Regulation A[5] MATERIAL RISK: THE COMPANY HAS NO
OPERATING HISTORY. SEE OTHER RISKS SHOWN IN THIS OFFERING CIRCULAR.
MITIGATION OF RISK FACTOR: THREE-DAY RIGHT OF WITHDRAWAL AFTER SIGNING
OF SALES
CONTRACTUNDERWRITERS: none.
DISTRIBUTION SPREAD TABLE*
Asking price to public: $100 per share
Underwriting discounts and commissions*: Finder - Taylor - 1.2%/broker-Wright-5%
Proceeds to Issuer or to other persons per unit: 100% to Issuing company[6]
Termination date: Four years after last qualification date
Total maximum securities offered: 400,000
Total minimum securities offered: 60,000
*Per Model B instructions, investors are advised as follows: as of the
date of qualification by the SEC, FLR has retained third-party sellers,
to whom commissions will be paid. Retainer agreements are posted in the
EDGAR file for this offering. This Offering Circular is amended, to add
a new section, entitled 'Third-Party Sellers,' and may be located in the
table of contents and in the text of this offering circular.
TABLE OF CONTENTS
TABLE OF CONTENTS....................................................i-ii
I. INTRODUCTION - FORWARD-LOOKING STATEMENT
DISCLAIMER AND OFFERING SUMMARY......................................1-10
II. ITEM 1. SUMMARY INFORMATION, RISK FACTORS AND DILUTION...........11-28
III. ITEM 2. PLAN OF DISTRIBUTION - ALL SALES
TO LAND IN THE HANDS OF THE INVESTOR.................................29-30
IV. ITEM 3. USE OF PROCEEDS TO ISSUER................................31-37
V. ITEM 4 DESCRIPTION OF BUSINESS....................................37-47
VI. ITEM 5. DESCRIPTION OF PROPERTY..................................47-50
VII. ITEM 6. DIRECTORS, EXECUTIVE OFFICERS
AND SIGNIFICANT EMPLOYEES............................................50-57
VIII. ITEM 7. REMUNERATION OF DIRECTORS AND OFFICERS.................58
IX. ITEM 8. SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN SECURITYHOLDERS..........................................58-61
i
X. ITEM 9. INTEREST OF MANAGEMENT AND OTHERS
IN CERTAIN TRANSACTIONS..............................................61-64
XI. ITEM 10. SECURITIES BEING OFFERED................................64-69
XII ITEM 11. THIRD-PARTY SELLERS.....................................69
XIII. ITEM 12. REQUEST FOR CONTINUING QUALIFICATION..................70
ii
I.
INTRODUCTION
A. FORWARD-LOOKING STATEMENT DISCLAIMER
This Offering Circular relates to the offer and sale of up to
$6,000,000.00[7] in JOBS Act Regulation A - Tier 1 common voting shares at
the asking price of $100.00 per share, to be issued by Finger Lakes
Region Rural Broadband Company, Inc. (hereinafter, FLR.) FLR's parent
company, Rural Broadband Company, Inc. (hereinafter, RBC), posts JOBS
ACT offerings on its website at www.urbroadband.com. The principal
offices are located at 1050 Connecticut Ave., NW, Suite 500, Washington,
D.C. 20036. The phone number for these offices is (202) 462-5238.
This forward-looking disclaimer is governed by 15 U.S.C SS
78u-5(c).
Statements in this offering circular may contain
'forward-looking statements.' Such statements relate to
future, not past, events. In this context, forward-looking
statements often address expected future business and
financial performance and financial condition, and often
contain words such as "expect," "anticipate," "intend,"
"plan," "believe," "seek," "see," "will," "would," or
"target." Forward-looking statements by their nature address
matters that are, to different degrees, uncertain, including
expected cash and non-cash charges, expected income,
earnings per share, revenues, organic growth, margins, cost
structure, restructuring charges, cash flows, return on
capital, capital expenditures, capital allocation or capital
structure, and dividends.
Particular uncertainties that could cause actual results to
be materially different than those expressed in these
forward-looking statements include obtaining any required
regulatory reviews or approvals, the ability to reduce costs
on installations, and/or variations in law, economic and
financial conditions, the impact of conditions in the
existing 'served' broadband market, and variable
conditions that may affect the user adoption rate for
broadband in the unserved areas where FLR plans to make
installations.
1
Further uncertainties may include FLR's ability to maintain a credit rating
and the impact on its funding costs and competitive position if it does not do
so, the adequacy of its cash flows and earnings and other conditions which
may affect FLR's ability to pay a dividend or to repurchase shares, which may
be affected by its cash flows and earnings, and other factors.
Other uncertainties may include, FLR's ability to convert
pre-order commitments into orders, the price it realizes on
orders since commitments are stated at list prices, customer
actions or developments such as cancellations and other
factors that may affect the level of demand and financial
performance of customers served, the effectiveness of its
risk management framework, the impact of regulation and
regulatory, investigative and legal proceedings and legal
compliance risks, including the impact of regulation and
litigation, FLR's capital allocation plans, as such plans
may change including with respect to the timing and size of
share repurchases, acquisitions, joint ventures,
dispositions and other strategic actions, FLR's success in
completing, including obtaining regulatory and zoning
approvals.
Further, uncertainties may limit FLR's success in
integrating acquired businesses and operating joint
ventures, its ability to realize anticipated earnings and
savings from transactions, acquired businesses and joint
ventures, the impact of potential information technology or
data security breaches, and the other factors that are
described throughout this offering circular. These or other
uncertainties may cause FLR's actual future results to be
materially different than those expressed in these
forward-looking statements. FLR does not undertake to update
these forward-looking statements.
FLR's public communications and SEC filings may include
certain forward-looking projected financial information that
is based on current estimates and forecasts. Actual results
could differ materially.
The securities offered herein are speculative securities.
Investment in the securities involves significant risk, and
investors are required to hold the investment for a definite
period of time. Investors should purchase these securities
only if the investor can afford a complete loss of the
investment.
2
No Federal or State securities commission has approved,
disapproved, endorsed, or recommended this offering.
Investors should make an independent decision whether this
offering meets the investor's investment objectives and
financial risk tolerance level. No independent person has
confirmed the accuracy or truthfulness of this disclosure,
nor whether it is complete. Any representation to the
contrary is illegal. Furthermore, these authorities have not
passed upon the accuracy or adequacy of this offering
circular. Any representation to the contrary is a criminal
offense. This offering circular contains all of the
representations by FLR concerning this offering, and no
person shall make different or broader statements than those
contained herein. Investors are cautioned not to rely upon
any information not expressly set forth in this offering
circular.
In making an investment decision investors must rely on
their own examination of the company and the terms of the
offering, including the merits and risks involved.
The securities being offered have not yet been qualified
under Federal or State law. FLR plans to qualify this
offering, initially, with the State of New York, as a
qualifying State, so that its offering with the Securities
and Exchange Commission may be qualified as a JOBS Act -
Regulation A - Tier 1 Offering.
FLR plans to require any third-party sellers to prove to
investors, their registration and qualification to sell
these securities in New York and other States, as allowed by
the regulations that govern this offering. FLR may also, as
the Issuer, offer or sell the offered securities in other
States or the District of Columbia upon further
qualification as required by law.
No person has been authorized to give any information or to
make any representations other than those contained in or
incorporated by reference in this offering circular, and, if
given or made, such information or representations must not
be relied upon as having been authorized by FLR.
3
RBC's website at www.urbroadband.com and its corporate
blog located thereon, as well as its Facebook, Tumblr and
Twitter accounts, contain a significant amount of general
information about RBC's companies and projects. FLR
encourages investors to visit these websites from time to
time, as information is updated and new information is
posted.
Investors should consult with their own attorneys,
accountants and other professional advisors as to the legal,
tax, accounting and other consequences of an investment in
FLR.
B. OFFERING CIRCULAR SUMMARY
This summary highlights information contained elsewhere in
this Offering Circular. This summary is not complete and
does not contain all of the information that the investor
should consider before investing. Investors should carefully
read the entire Offering Circular, especially concerning the
risks associated with the investment in the securities
covered by this Offering Circular discussed throughout this
document. The term 'FLR' refers to Finger Lakes Region
Rural Broadband Company, Inc., a New York corporation.
Statements in this offering circular are forward-looking
statements.
This Offering Circular relates to the Offering of up to
$6,000,000.00[8] in common voting shares at the asking price
of $100 per share.
FLR's business originally formed in order make application
for Federal grant funding for rural broadband, in 2009. RBC
is a group of companies that seeks funding from government
procurement opportunities, that is grants and bids, at the
Federal and State levels. With the advent of the JOBS Act,
in 2013, RBC added private equity funding to its portfolio
of funding sources. Upon funding, FLR will use the proceeds
from those sources to build interconnector broadband
infrastructure in what is known as the 'unserved rural
census blocks' and other such areas, in the rural United
States.
4
FLR was formally organized in New York after passage of the JOBS Act. Thus,
upon its effective date in 2013, FLR registered under JOBS Act, Rule 506, with
the filing of Form Regulation D, with the Securities and Exchange Commission
(hereinafter, the SEC).
In 2015, the SEC made applicable the second of three JOBS Act offering
opportunities, Regulation A, anecdotally known as Reg. A+. With the opening of
Reg. A+, FLR made its registration for qualification application to the SEC. FLR
has been notified by the SEC that, upon qualification by a State, as required
under the Reg. A+ Tier 1 rules, the SEC application will be qualified.
According to the Federal Communications Commission (hereinafter, the FCC),
there are a minimum of 84,000 census blocks that are unserved for broadband in
the rural United States. There are currently more than 46 million people living
in the rural United States. Thus, the task is quite large, the market vast.
Because certain rules concerning exempt limited offerings and transactions
govern the exemption, FLR started its Rule 506 JOBS Act offering with a 'one
class/one price' format of an asking price of $100 per share/common voting
stock. For consistency, FLR carries that scenario into its JOBS Act
Reg. A+ offerings, including in this offering circular.
When considering the extensive recitation as to forward-looking statements shown
above, as well as other significant risk factors discussed throughout this
offering circular, including in this summary, and as otherwise required by JOBS
Act rules, FLR includes in any investment contract, a 3-day 'cooling off' right
of withdrawal clause.
Investing in FLR is not without risks, and there is no guarantee of a return
on investment. The investment contract gives FLR the sole discretion in applying
any amounts that it receives from an investor. If FLR becomes subject to a
bankruptcy or similar proceeding, a holder of a security
will have a general unsecured claim against FLR that may or
may not be limited in recovery.
The intended focus of FLR's business is the 'last mile'
rural broadband interconnector sector. FLR has a focus on
rural census blocks that are deemed 'unserved' for
broadband by either the FCC, or any other Federal agency or
Department, or any State, or as result of any survey that
FLR may conduct where evidence suggests that, despite not
being on any Federal or State map, there is no broadband in
certain rural census block areas.
5
Proceeds from the investments typically will be applied towards the
installation, first, of the 'connector' or 'middle mile' infrastructure. The
'last mile' refers to not the actual 'last mile,' but more to the anecdotal, as
if crossing the finish line in a drawn out process. The 'last mile' is,
basically, the last part of the outside infrastructure, say on a residence. For
those who have cable of fiber in their home, the 'last mile' is where the
connection box on the outside of the home is located. For those who have a
wireless connection, the 'last mile' is where the receiving device is placed on
the home to receive the wireless signal from, say, a cell. tower. For those
homes that have satellite, the 'last mile' is basically the dish that is bolted
to the home. FLR's systems may include components of co-location with wireless,
cable, fiber or satellite as a 'last mile interconnector' company.
The 'last mile' 'interconnects' with a 'middle mile' infrastructure. That is the
infrastructure that is, for example, in a cable/fiber system, running along the
right-of-way out by the sidewalk on a residential street. In a satellite
connection, the 'middle mile' starts at the satellite. With wireless, the
'middle mile' starts at the place where the wireless signal is sent to the
residence, and could be a cell. tower, a sending radio bolted to a mast to a
barn, or a silo on a farm, as examples.
Interconnector companies like FLR do not provide actual program content to
residents. Residents are free to purchase all manner of retail convenience
products and services that make modern life on the internet more enjoyable.
Thus, residents can sign up with their own email accounts, or use, for example,
Gmail. While FLR will provide streaming video equipment, and provide a consumer
choice as to what any customer may want to watch, from Netflix, Hulu, Crackle,
HBO or any of the others, FLR does not provide content shows or any other
streaming service. Such distinction keeps separate the key function of the
interconnector sector, infrastructure, from the Broadband Internet Access
Service (hereinafter, BIAS) service provider sector, typically the local cable
company, or, as indicated, streaming video companies. This specific BIAS
definition was expanded in the FCC's most recent 'Open Internet' rules.
In the second instance, proceeds from the investment will be
applied towards the installation of 'last mile' outside
infrastructure components at the homes and residences of
customers. This function is much like installing the cable
box or satellite dish on the outside of the home, but
instead using, in some instances, wireless radios that have
been approved by the FCC under a technology called 'white
space.' In other areas,
6
however, more traditional wireless technology, known
anecdotally as 'microwave' will be utilized, in each case
depending on the terrain, among other factors. For areas
where the terrain completely prohibits those technologies,
FLR will make every attempt to provide satellite
interconnector service.
In the third instance, proceeds from the investment, will be
applied for the purchase, installation and customer use of
the 'kit' components inside the home. The 'kit' is
basically the same, at this stage of the installation, as
with any other residential service, and investors can
compare what is in their own homes with FLR's projected
system service. It will include a broadband, T.V., and a
smartphone service component. The 'kit' includes a tablet
device, a router for indoor WiFi, a streaming video kit for
T.V., and an app. that synchronizes the resident's
smartphone account with a voice-over-Internet-Protocol
account (VoIP), so that the user can use the smartphone at
home, where there typically is no cell. service.
Finally, proceeds from the investment will be applied for
customer acquisition and retention, sales and service. In
this regard, advertising will likely mirror what any
consumer views on the T.V. at any time with the broadband
and phone companies. Making sure that a professional
customer service, installation and repair team are in place
will be major factors towards achieving customer
acquisition. Customer satisfaction ratings must be a # 1
priority.
In order to achieve the investment proceeds, FLR will
utilize the services of professional third-party sellers.
The Reg. A+ rules allow for such sellers that include
underwriters, brokers, dealers, sellers and finders. The
rules provide guidance on 'cover' contracts that must be
signed by FLR and the third-party sellers. The 'cover'
contracts require certain disclosures, including commission
rates, that must be made public by posting of the contracts
on the SEC's electronic filing system, called EDGAR. Some
components, like commission rates, must be, and will be
posted on the cover of this offering circular, once such
sellers are retained.
FLR anticipates retaining such third-party sellers upon
qualification. Those sellers must satisfy registration
requirements of any State in which they will be selling. Reg
A+ allows for $6 million[9] of the $20 million Tier 1
offering amount to be sold by third-party sellers. Upon
qualification, FLR will only sell through the third-party
sellers, although the Issuer's representative, Mr. Ramos,
will be available to meet with prospective investors in
order to discuss and provide more detail as concerns
non-investment related issues.
7
For JOBS Act - Regulation A - Tier 1, SEC Rule 144 has been
amended to allow the investor to sell up to thirty percent
of shares purchased immediately, instead of waiting for the
one-year period, and further requires the investor to notify
FLR, so that FLR may keep accurate records.
The first $6 million[10] of this offering, as allowed by the
Tier 1 rules, is to be conducted by the third-party sellers.
In the case of underwriters, at the time of their retainer,
such will be retained on either a 'take and pay' basis, or
on a 'best efforts' basis, both as allowed by the JOBS Act
regulations. Under New York securities rules, for
broker-dealers on a 'best efforts' basis, this offering
circular is made in compliance with that section. If being
sold by broker-dealers on a 'firm commitment' basis,
further notice will be provided upon retainer of such
persons or companies. FLR will pay a commission or other
remuneration to the the third-party sellers. In the future,
FLR may conduct separate offerings of the remaining balance
of the $20 million offering, or $14 million, under JOBS Act,
Regulation A, Tier 1, and otherwise in compliance with
federal and state registration requirements.
This Offering Circular relates only to the offer and sale of up to $6
million[11] of common/voting shares at the asking price of $100 per share.
There is no other class of shares. There are no selling shareholders.
Although shares are being offered at the asking price of $100 per share,
market conditions and the efforts of third-party sellers will ultimately
determine the selling price of shares to any individual investor.
The table below identifies general information about the
breakdown of the proceeds. As an approximation, the scenario
presents a hypothetical project area of 1,500 homes that are
in contiguous unserved census blocks, where the 'middle
mile' 'interconnect' co-location point is also
contiguous to those blocks. In general, FLR considers the
'last mile' and customer install equipment inside the
residence costs, together, for an average of $3,000.00 per
residence just to be able to activate service, or $4.5
million, of the $6 million. In order to serve those 1,500
homes, FLR will need to install a minimum of 20 'middle
mile' transmitters, to receive the signal from the 'middle
mile' broadband connection, and then transmit it to the
'last mile' receiver at the residence. Based upon an
install already completed, FLR can approximate a sunk cost
expenditure, per location of $4,500.00, or $90,000.00 for
the 20 'middle mile' sites.
8
For those 20, locations, in order to be able to provide
broadband speeds that are in compliance with general
guidelines and also established rules in some states, but
typically with a capacity of no less than 100 mbps, FLR's
wholesale costs will be $1,200.00 per month, per location,
with a minimum of a three-year wholesale contract, so as to
be prepared for full service as each residence comes online,
or $518,400.00. The remaining proceeds, will be applied to
the customer acquisition and retention components, including
significant advertising and 'loss leader' component
offerings to new customers, as well as rents on sending
radio sites and, of significant importance, user adoption
rate and customer service programs and services.
For FLR's systems, streaming video is a feature that has
significant consumer appeal. Without deciding, or indicating
any set market price per month for service, and taking the
above amounts as sunk costs, and including providing the
'kit' package that will deliver in-home WiFi for data,
streaming video with a minimum of two prepaid programming
services of the customer's choice, plus Skype's app.
service that syncs the customer's smartphone account and
features to FLR's system, for a seamless smartphone
service where it did not exist before, FLR estimates a
conservative monthly net gain, per customer of $100 per
month, or $1,800,000.00 per year, or approximately 45 months
for a full return on investment time period.
In the event a customer fails to make payment on a due date,
FLR will have the option to pursue various remedies. When
considering that folks in the unserved areas will be
achieving broadband in the home for the first time, however,
FLR's policy will be to 'keep the customer instead of
cutting the service.' FLR may utilize an extension program
like that used by Verizon, for a short-term/no penalty
extension. In extreme cases, collection remedies could
imposing a late charge. As an example a late charge could be
equal to the lesser of (i) 4% of the unpaid payment amount
or (ii) the maximum amount permitted to be charged under
applicable law. FLR could, in the alternative, charge
interest at a default rate. Such a rate could be equal to
the lesser of (i) 20% per annum or (ii) the maximum rate
permitted to be charged under applicable law. Most broadband
providers also charge a 'disconnect and equipment return
fee.' FLR's research has indicated, however, that the
costs of acquiring a new customer, then disconnecting, then
reconnecting, may not be worth the effort of disconnecting.
For these reasons, FLR will want to do everything possible
to avoid a disconnect.
9
Any and all collection proceeds received by FLR will be
applied first, to all costs and expenses of any nature
whatsoever incurred by FLR for the maintenance,
preservation, defense, protection, sale, other disposition,
collection, including without limitation court costs and
reasonable attorneys' fees, expenses, including those
associated with the defense or any related action, claim or
demand, and disbursements, second, to accrued and unpaid
amounts owed, and third, to any further disconnect and
equipment pick up costs.
The statement of cash flow set forth below with respect to
the period from October 16, 2015 to July 6, 2016, based on a
calendar year reporting, is derived solely from FLR's
banking statements, which are not audited, and have not been
reviewed by any person
in the bookkeeping or accounting sectors. The amounts, as
shown are very small, and reflect only investment proceeds
from JOBS Act / Rule 506 investors, and were made for the
purposes of developing project areas in the FLR project
areas. Further, and importantly, FLR, as indicated above,
was formed specifically to qualify for JOBS Act / Rule 506
opportunities, and therefore, only in the year, 2013. Prior
to its formation for this purpose, however, the project
areas in the Finger Lakes region that were made a part of
government procurement funding applications, were funded by
private companies who paid fees for completing and
processing grant applications.
The current project areas are distributed throughout the
Finger Lakes region counties of Seneca and Cortland, and
among those, the following are in FCC Rural Broadband
Experiment zones: Tyre, Junius, Freetown, Varick and
Marathon. A sixth project area is in Waterloo.
The previous government procurement funding projects
throughout the Finger Lakes region, would, therefore, be the
beneficiaries of the funding proceeds by investors.
Statement of Cash Flows
For the Period 10/16/2015 to 7/6/2016
Cash flow from operating activities - net income -10,000.00
Cash provided by/used in operating activities -10,000.00
Net increase in cash -10,000.00
Cash at hand on July 6, 2016 0
10
ITEM 1.
SUMMARY INFORMATION, RISK FACTORS, RISK
MITIGATION FACTORS, DILUTION AND MATERIAL DISPARITIES
A. Summary Information:
Investing in FLR involves a high degree of risk. In deciding
whether to purchase shares, you should carefully consider
the following risk factors and additional information about
the risks associated with the investment that may be
contained throughout this offering circular. Any of the
following risks could have a material adverse effect on the
value of the shares purchased and could cause the investor
to lose all or part of the initial investment or could
adversely affect any future value which the investor expects
to receive on the shares. Only investors who can bear the
loss of their entire investment amount should purchase
shares. This Regulation A+ opportunity is for what is called
the 'interconnector' sector of the telecommunications
infrastructure industry. This sector provides the system
whereby broadband internet access service (BIAS) providers,
as currently defined by the FCC's rules, sell their retail
services to customers. These are BIAS companies like
Netflix, Hulu, Crackle, YouTube, Apple TV, as well as the
traditional content providers, like Comcast and Time Warner
Cable, and also companies like Google, Firefox and
Microsoft's Internet Explorer.
The official statutory language for the interconnector
sector may be found at 47 U.S.C. SS 251.
Interconnector companies are the independent companies that
provide the structure by which telecommunications and
broadband signal is transferred. Companies like American
Tower Company are interconnector companies for wireless
communications. That is to say, that American Tower itself,
does not generate any telephone or internet service or
content, but rather buys plots of land, builds towers on
them, brings signal to its tower, and then leases tower
space, like leasing an apartment, to telecommunications,
radio, T.V., broadband, and other companies. Companies like
American Tower are often referred to as 'vertical hotels,'
to describe their 'for rent' function.
11
Companies like Lightower, are fiber interconnector
companies. That is to say that Lightower will, based on its
market analysis and other issues, including customer needs,
lay fiber to certain sections, and then charge a fee to
anyone who wishes to use it, and charge a fee to make it
work for the customer. Companies like Lightower will connect
to a broadband trunk line, sometimes anecdotally known as
the 'first mile,' with a typical industry plug-in, then
wholesale the broadband service from a broadband broker,
then sell the connection as a part of its service. Like with
tower companies, however, Lightower and other fiber
companies, do not sell retail content, or any other end-user
services, like email or streaming video. Such companies are
strictly on the industrial side.
This being said, such companies as Verizon, Comcast and Time
Warner Cable, have some own their own infrastructure. In
this regard, they, too, could be considered, and are by FLR,
considered, interconnector companies. In some areas of its
projects, the closest connection where FLR could, achieve a
broadband connection, will be where the closest broadband
signal is located.
Companies like Verizon do not limit their business to just
selling wholesale to interconnector companies like FLR.
Instead, all of those companies sell a wide variety of
retail products and services, like the 'triple-play' for
phone/data/T.V. This distinction, of these added services,
places them into a separate category for purposes of being
regulated by the FCC as Broadband Internet Access Service
(BIAS) providers.
On February 26, 2015, the FCC issued new rules that govern
both the interconnector sector and the BIAS providers. See,
In the Matter of Protecting and Promoting the Open Internet,
GN Docket No. 14-28.
Thus, for investor purposes, FLR is more like companies like
American Tower or Lightower. That is to say that FLR does
not sell retail content that it originates, and does not
sell retail services, like the 'triple-play.' Customers
wanting any of those services, instead, are free to go onto
FLR's system and decide what it is that they wish to
purchase. For example, with its installation in the
Mid-Hudson region project area, one of FLR's sister
companies co-locates with Time Warner Cable to supply,
wholesale, the internet service. Once customers begin using
that system, and paying a fee to do so, such customers may,
if they choose to do so, contact Time Warner Cable, and
purchase the retail package that is the 'triple-play.' Or,
they may choose not to do so, and instead purchase other
retail services, like streaming video content, or both.
12
To place in more focus, therefore, the actual
'on-the-ground' components of the 'interconnector'
concept, essentially, broadband comes from multiple sources
at a 'first mile.' In the FLR project area of New York,
for example, it comes, most likely from what is called,
anecdotally, 'New York's dark fiber' network. This is an
actual network of fiber, owned by the State of New York,
used by all of its own agencies, and then extra capacity is
sold to brokers, who, in turn, sell it to what are known as
'middle mile' companies. In all instances of stand-alone
or with additional service, 'middle mile' companies are
those, like the ones mentioned above, who have purchased
that signal from, for example the State of New York, to
resell it. Those companies either use it to sell services to
their own customers, or they resell it to companies like
FLR.
In the case of reselling the 'middle mile' broadband
service, those sellers will sell to 'last mile' companies,
like FLR. 'Last mile' refers simply to the end point where
the connection is made, typically to a business or a
residence, and not to an actual mile. Most of the larger
telecommunications companies that have their own
infrastructure, like Time Warner (now a part of Charter
Communications) Cable, Comcast and Verizon, to name a few,
are also last mile providers. That is to say, they sell
retail services, and provide installation and service inside
the building or residence. In this sense, those companies
are both 'middle mile' and 'last mile' providers. And,
they can be 'interconnector'- only providers, or they can
be 'BIAS' providers.
In order to bring the 'interconnector' function for rural
America more into focus, investors and regulators may know
that all of those large companies have drawn their own lines
as far as the rural edge of the internet world for
themselves. For a variety of reasons, primarily having to do
with the all-important cost/density cost ratio, they simply
will go no further, ever, under their present business
models, absent new incentives, of which there are very few
at the present time.
As both the federal government and the States, now tracking
internet connections since its usage began to be commonplace
some few decades ago, begin to grapple with how to make sure
that all areas of the country have internet, concerted
efforts are underway to define what is an 'unserved' area,
and how best to entice innovation and expansion from new
companies like FLR.
13
For example, the following statistics exist for 'unserved' census blocks
in the FLR investment project area:
SENECA COUNTY, NEW YORK
FCC Rural Broadband Experiment Unserved Census Blocks
Total: 172
Population: 2,158
Housing Units: 851
Eligible Locations: 789
10/01/14 SBI - New York State Broadband Data Unserved Census Blocks
Total: 730
Population: 2,929
Housing Units: 1,368
CORTLAND COUNTY, NEW YORK
FCC Rural Broadband Experiment Unserved Census Blocks
Total: 438
Population: 5,038
Housing Units: 2,199
Eligible Locations: 2,124
10/01/14 SBI New York State Broadband Data Unserved Census Blocks
Total: 796
Population: 5,689
Housing Units: 2,507
14
These vast amounts of unserved census blocks form the
foundation of new companies like FLR. That is to say that
companies like FLR, that specialize only in this large
market, represent the future that will allow for the
completion of broadband infrastructure in the United States.
At the same time, however, and now with the original
founders in their eighth year, FLR's analysis and,
therefore, development efforts have led it to the conclusion
that the best way forward, for the country, and for
investors, is to simply limit the expansion efforts to only
'interconnector' expansion. In other words, there is
enough 'middle mile' infrastructure, and there are enough
BIAS retail sellers in the contiguous areas so as to allow
for folks in rural America to very quickly ramp up and join
folks in urban and suburban areas to enjoy the benefits of
broadband once FLR installs the 'last mile' system.
Thus, this project is limited to unserved rural areas of the
Finger Lakes region in New York, and provides such
'interconnector' infrastructure for homes, businesses, and
rural cities.
B. Risk Factors:
1. Statements of future forecasts, projections and
expectations are not statements of returns on investment;
2. Market penetration may not be immediate.
There exists an issue of equal importance to infrastructure
expansion for resolution relative to the full expansion of
broadband in the rural United States, having to do with the
'user adoption' rate. FLR's research has led it to issue
this caution to investors as among the risk factors. FLR's
position, so as to best inform investors, is that this
factor weighs in as much as 50%, the other half being the
installation of the 'last mile' infrastructure, in its
potential success.
Among the references that have guided FLR in posting this
cautionary selection is the history of rural electrification
in America. For, although New Deal legislation solved the
problems of removing monopoly control of electricity, and
provided funding, not until a separate agency to improve the
user adoption rate was created, did the possibility of folk
actually using it, and therefore paying for it, result.
Among the most creative ways to
15
insure that, by having an electrical outlet in the home,
rural residents would actually plug something into it, was
the promotion, inexpensive sale of and financing of
appliances. After completing surveys, the three items chosen
as the most important to future rural consumers were the
electric iron, the washing machine and the refrigerator.
Thus, many more-senior investors in FLR may recall a time
when, before Sears, their parents went to the local electric
company to pay their bill, and also to buy appliances.
With history as a guide, therefore, FLR will seek to
minimize this risk, while, at the same time, cautioning
investors as to its existence. For FLR's projects, where
folk do not have any broadband on their smartphones when
they arrive home, and no internet at all in the home, there
will be incentives to use the system once up and running.
One such non-negotiable, and by comparison to the rural
electrification gadgets, is that a tablet will be provided
to each residence where service is established. Many
customers will already have a tablet, like an iPad, but for
FLR, providing one as part of its system guarantees, for FLR
and for the customer, the router connection, the smartphone
VoIP app., as well as the company app., where all billing
and feature changes can be made.
The second prong of FLR's user adoption rate mitigation
program will be constant and competitive advertising across
all media lines, targeted to the project area. FLR has
worked hard to arrive at a concept that brands its service,
while at the same time, conveys its message, and believes
that 'My First Car Club' conveys that message. Since there
was never even a word like 'Google' FLR believes that it
is not that far off the mark. Importantly, however, being a
member of a club is fun, 'members' can communicate on FLR
social media pages, and FLR can give its retail/customer
support outlets a matching name: 'The Shop.'
The advertising campaign will be a sustained effort,
tailored in each area to the local benefits of the
community, like the City of Binghamton's next 'July
Festival,' for example. Importantly is the fact that,
although suburban areas that are near the rural areas seem
to have a captive market for the BIAS companies, in fact,
advertising, especially on T.V. is non-stop. Such
advertising, which runs over into the rural areas, however,
can be of a huge benefit to FLR as complimentary
advertising. With the BIAS companies offering the types of
retail services that customers want, new customers will have
an even greater incentive to become FLR's customers, and
then become retail customers of those companies.
16
FLR cautions, however, that such market penetration may
take as long as 12-24 months before the critical mass of 'I
want to join the 'My First Car Club' as a customer
arrives.;
3. Zoning issues may delay the start of parts of the
project;
By and large, this cautionary section concerns parts of a
project area where a zoning change or variance may be
required. While such should be extremely rare, and any
delays short-lived, FLR mentions same here.
In the vast majority of FLR project areas where it would
begin operations for many years to come, existing assets,
like cell. towers which have already been through the zoning
process, or 'middle mile' cable hook ups, where the cable
company long ago resolved the zoning issue, will solve
FLR's 'last mile' zoning issues.
Further, and of extreme importance, by comparison, the
satellite service industry, which is very large in rural
areas for T.V., too, has solved many of the zoning issues
that would or could arise with the attachment of any
receiving 'last mile' device to a residence.
FLR raises this issue here, therefore, in the unlikely event
that there may be zoning ordinances, or community ordinances
that do not cover 'wireless receiving residential
equipment,' and for which FLR would retain local zoning
counsel, in order to either amend the ordinance or obtain a
variance.
4. Attracting broadband internet access service (BIAS)
providers to a carrier-neutral environment could result in
initial limited user expansion;
5. Local government needs could accelerate adoption, at a
short term financial loss;
Of a lesser priority than the absence of infrastructure and
the issue of the user adoption rate, is a caution here about
local government demands for service.
This caution is more one of a political one where being a
'good neighbor' can far outweigh any other local benefit.
Broadband infrastructure and service is no different to any
local government than is any other type of service, like
gas, water, electricity and
17
the like. As a part of the interconnector sector, FLR will
become involved in providing additional infrastructure,
either one of the 'middle' mile' radios, or, if in an
area where one exists, with the 'last mile' radios, say,
at the local government waste disposal plant in the project
area.
The caution becomes important because, in all likelihood,
being responsive to local government would lead FLR to want
to establish that service at that waste disposal plant, at
its initial expense, and also, to provide for the monthly
billing expense for the broadband signal, and provide for
gadgets and technical support to bring the plant current.
All at a short-term financial loss.
This being said, a given is that, upon the next budget
cycle, public hearings, discussion, and vote on the annual
budget, most if not all local governments are envisioned as
factoring in the recurring costs into the budget to be paid
for by the taxpayers. Thus, the initial sunk costs for the
equipment would be expensed by FLR's accountants as best
as possible.
6. The Company has no operating history;
7. Sales of shares will be restricted in accordance with
Regulation A, as amended, effective June 19, 2015;
FLR makes this offering consistent with Reg. A+ regulations
governing Tier 1 for third-party sellers:
a) Tier 1:
offering limit of $20 million, including up to $6
million[12] to be sold only by third-party sellers;
b) Limit re-sales by selling securityholders under amended
Rule 144.
18
8. Technology choice: there is no 'single technology
solution for rural broadband in America. In addition to
co-locating with fiber, wireless and satellite
infrastructure, white space infrastructure technology
provides another option. This technology was authorized by
the U.S. Federal Communications Commission (FCC), in 2012,
and thus, there is limited data on a national rollout of
this technology at the present time. This project would be
among the first for a consumer-ready rollout of the
technology infrastructure.
The year 2013, did, however, provide two significant boosts
for rural broadband. First, JOBS Act offerings present a
major new way to achieve funding that is scaled to project
areas and sizes. Second, the FCC authorized the commercial
use of the white space technology, and emphasized its
benefits for rural America.[13] These twin incentives drive
FLR's projects, but at the same time, investors must be
cautioned that, whereas white space technology is not new,
its application to rural areas is new.
As a thumbnail sketch, investors and regulators may know
that 'white space' refers to the location to capture radio
signal that is exactly 100 feet above ground level at any
given ground level point. It is at this point, and only at
this point, that, for decades, unlicensed television
channels have existed, these primarily in very small market
areas. In all other T.V. areas, and in fact, in all other
telecommunications areas, signal location in the air is
regulated and licensed.
As can be expected, if a T.V. station is not making money,
it would have no need to use one of the unlicensed channels
in its area, and that channel would be open for anyone to
use. In any given area, there may be many, many unused
channels. In the United States, there are millions, and
these are all identified by the FCC.
19
One technology issue with the 'white space' space refers
to the fact that, like smaller and local radio stations, the
signal is not that strong, and does not accommodate that
many users. This issue is resolved, however, since there are
many, many channels free-floating with each other in a given
area. This is where the FCC's white space technology
administrator authorization of 2013 comes in. Without white
space administration, there could be no white space
technology, because too many folk would be on one channel at
one time, causing system failure.
As the above FCC publication at footnote 7 indicates,
however, in 2013, the FCC authorized the commercial use of
white space, and authorized administrators to manage it. It
was this memo that opened the floodgates to white space
technology for rural America.
In other words, companies like Redline Communications, for
many years, installed, and continue to install white space
technology, private systems, mostly in very remote areas and
mostly in mining towns, or for municipalities. Those systems
would grab the white space signal, and its private
administrators would make sure that, if a channel began to
fill up, the administrator would switch them over to another
channel that was not being used, or not being used to
capacity. Thus, neither 'white space' nor 'white space'
technology are new. The FCC has authorized just five white
space administrator companies for the United States. Among
these is Spectrum Bridge, Inc., which is the company that
FLR's vendor, Redline Communications, Inc. uses. In other
words, with the purchase of the equipment, comes the
Spectrum Bridge service contract. One of the other five is
Google.
The promise that the FCC believes holds for white space in
rural America concerns its ability to 'see' through areas
where 'line-of-sight' microwave does not. For example, if
a sending microwave radio is set on a cell. tower and has a
certain range, say five miles, it can only send the signal
to a receiver that is within the line of sight of the cell.
tower. For most of rural America, the option of putting up
millions more cell. towers, and then expecting the sending
radios to reach into every terrain area, is not an option.
The chances of the cable companies running cable, at an
estimated $25,000.00 per mile, into rural areas with low
residential density, is, also, not an option. Those two
technologies, again, however, do provide extremely
cost-effective 'middle mile' connections and thus, a cost
savings that investors should know about.
20
As FLR has been developing its projects with white space
technology, therefore, since 2013, it has developed some
practical expertise, especially when considering that it has
one 'middle mile' white space technology installation now
completed. FLR can state, therefore, and this in conjunction
with Redline, that the key to a successful 'last mile'
connection for white space has to do with the height of the
radios. In fact, a good rule of thumb, as a practical
matter, that has developed is to have a good inverse
relationship between the 'middle mile' sending radio, the
'base station' and the residential housing unit. In this
manner, the resident will need the shortest mast upon which
to mount the receiving radio, and, therefore, the least
aesthetic intrusion.
The satellite industry grappled with this aesthetic issue
for years, until it was finally able to make the dishes
smaller. FLR seeks, therefore, to go to sites, like barns,
or large industrial plants in rural areas, like cement
plants, but also water towers and large water tanks, in
addition, to cell. towers, where it can achieve an
installation for the base station radio at a height that is
as close to 100 feet, ten stories, at that location as
possible. At that height, that radio can clear any major
obstruction, and where smaller obstructions, like treetops,
or mountain peaks prevail, its signal, unlike line-of-sight,
will wrap over those obstructions to reach the residential
unit.
This being said, investors should know that there will be
circumstances where the residential unit must also go up a
substantial height, in order to breach any complete
obstruction from the 'middle mile' radio. FLR believers,
however, that because it will rely on significant and
existing 'middle mile' infrastructure, enormous savings
will result, savings which can be passed onto the consumer,
who, once signal is established, and gadgets being used,
will welcome the opportunity to use our service. In short,
FLR's message to investors is that it's hard, but it can
be done and, like any of the larger telecommunication
companies, FLR believes that it, too, can thrive;
9. There is an absence of profitable operations in recent
periods;
10. There is no current, defined method for determining
market price for the service, as the service has, as of yet,
not had a commercial rollout;
21
11. The project has not yet been completed and, accordingly;
has no operating history. FLR, therefore, has no operating
history of earnings and its operations will be subject to
all of the risks inherent in the establishment of a new
business enterprise. Accordingly the success of the business
is completely dependent upon financial, business,
competitive, regulatory and other general factors affecting
the rural broadband interconnector sector in general as well
as prevailing economic conditions.[14]
FLR addresses here further concerns of the regulators
concerning its current and projected competitive conditions.
Although discussed in parts above, both of the biggest
challenges come from within, and not from without the
interconnector sector. The biggest competitive hurdle, in
other words, is not competing with any other company, but
competing for existence, as concerns the user adoption rate
discussed above. Without customers actually signing up, FLR
cannot be successful. For these reasons, the advertising,
the giveaway of the tablet, the creation of the app. to
manage all aspects of the account with the customer, a
single payment platform, the opening of 'The Shop'
retail/customer service outlets, like 'the Apple Store, the
customer service, live phone/chat function and tech.
support, all, from the outset, must be in place, up and
running, before the first customer signs up.
The second competitive issue, also discussed above, is the
technology equipment selection, and then the install.
FLR's efforts have informed that, by being able to say to
a community that it is 'open for business' meaning having
the 'middle mile' base station installed and ready for
customers, is likely the best way to convince customers to
sign up. Customers can drive to the barn or silo or
wherever, and actually see the radio in place.
FLR says again to investors and regulators that all this is
hard, but it can be done because its focus is solely on
rural America.
FLR expands here as to the current and projected economic
conditions of FLR. As shown above, in just the FLR project
areas of Seneca and Cortland counties, there are as many as
3,500 housing units with no broadband. Thus, the economic
conditions for the company that conquers the cost/density
barrier, which FLR believes it has, stands to
22
capture that market, upon overcoming the user adoption rate
issue. The Finger Lakes region is vast, and includes the
counties of Seneca, Cayuga, Cortland, Livingston, Monroe,
Onondaga, Ontario, Oswego, Schuyler, Seneca,Steuben,
Tompkins, Wayne, and Yates.
For FLR, as its cash disclosures show, it cannot proceed
without either government procurement and/or JOBS Act
funding.
All this being said, FLR reiterates that there is a risk of
total loss from any investment.
12. Although, under Regulation A securities are
unrestricted, there is, for this offering, no opportunity to
achieve control securities;[15]
C. Risk Mitigation Factors:
l. 3-day 'cooling off' right of withdrawal
When beginning its JOBS Act research under Section 506,[16]
FLR reviewed the registration requirements, in survey form,
of a number of States. Its survey showed that, although
cancellation of any contract made is frowned upon, in fact,
by law, or by voluntary action, some may be cancelled.
FLR's surveys also showed that, with respect to contracts,
there is a range from zero cancellation time to as much as
five days. FLR found three days to be the average.
New York has a 3-day 'cooling off' rule for the
cancellation of contracts.
Sales of securities, however, are not subject to the rule in New York.
See, this link:
https://drive.google.com/file/d/0BxfFvX3PZFjzS21oRFFhYzNWYUU/view?usp=sharing
23
Notwithstanding that securities contracts in New York are
exempted from the 3-day 'cooling off' rule, FLR believes
that the 3-day 'cooling off' period provides a good and
additional benefit to the potential investor. For this
reason, FLR has maintained it as a part of this Regulation A
offering circular.
Although not expressly applicable, but as a good measurement
of investor protection, Section 4A (a) (1) G) of the 1933
Securities Act, as amended to reflect JOBS Act, provides,
specifically as to JOBS Act:
"(G) the price to the public of the securities or the method
for determining the price, provided that, prior to sale,
each investor shall be provided in writing the final price
and all required disclosures, with a reasonable opportunity
to rescind the commitment to purchase the securities);
(emphasis supplied)"
In order to further the spirit of JOBS Aact, for this
additional reason, FLR make this 3-day 'cooling off' rule a
part of this offering circular.
As new companies, further, FLR includes an additional
benefit to the potential investor by employing an escrow
agent. Here, similarly, New York does not require an escrow
agent for JOBS Act - Regulation A - Tier 1. FLR believes,
however that, for the 3-day 'cooling off' period, placing an
escrow agent between the investor and FLR, is of a benefit
to both parties. Among the conditions of the escrow contract
between FLR and the escrow agent, therefore, will be that
only the escrow agent and not FLR, will have access to
invested funds during the 3-day 'cooling off' period.
Investors are cautioned here, however, that any fees and
expenses by the escrow agent may be charged as against the
cancellation.
Despite the absence of any federal or state law as to any
financial consequences of such withdrawal by the investor,
FLR will not be charging a withdrawal fee of any type.
Investors are cautioned not to confuse this section with
certain rights that are provided to the Issuer and to the
escrow agent, concerning the fees and costs of the escrow
agent.
24
The federal Electronic Signatures in Global and National
Commerce Act ("E-SIGN") and similar state laws,
particularly the Uniform Electronic Transactions Act
("UETA"), authorize the creation of legally binding and
enforceable agreements utilizing electronic records and
signatures. E-SIGN and UETA require businesses that want to
use electronic records or signatures in consumer
transactions to obtain the consumer's consent to receive
information electronically. See, also 15 U.S.C. 96. Thus,
the investor will be able to make electronic signatures for
the sales contract and for the 3-day 'cooling off' waiver
form. All sales contracts, however, will need to be
'consummated' at the 'situs' of the contract, which will be
in New York, by the Issuer's representative, and such will
be signed by the representative only in New York.
2. Meetings with the Issuer's representative on matters
outside the offering circular and offering statement:
Investors should rely on the information contained in this
offering circular and in the offering statement, as well as
any information posted on EDGAR.
The investment opportunity aside, however, FLR states that
it must protect not only FLR, but also such investors whose
interest is in the investment opportunity, as opposed to an
interest in gaining a controlling interest in the company,
or in gaining access to information which has been developed
by FLR over the course of the past seven years, and for
which, FLR believes, offers not only the best technology
solution, but also the best investment return.
Thus, although Mr. Ramos, as the Issuer's representative,
will not engage in any selling with the third-party sellers,
it can be the case that his presentation as to the
proprietary technology solution could better help the
investor to make an investment decision. For those reasons,
Mr. Ramos has decided to make himself available to both the
third-party sellers and to the potential investors, for such
meetings, which can take place by video-conference or at a
mutually agreeable time and place between those parties. A
standard non-disclosure agreement must be signed by the
potential investor and by Mr. Ramos prior to any meeting;
25
3. Further discussion on the 3-day 'cooling off' period:
Although not applicable to Regulation A,[17] Section 4A (a)
(1) G) of the 1933 Securities Act, as amended to reflect
JOBS Act, provides:
'(G) the price to the public of the securities or the method
for determining the price, provided that, prior to sale,
each investor shall be provided in writing the final price
and all required disclosures, with a reasonable opportunity
to rescind the commitment to purchase the securities);
(emphasis supplied)."
FLR believes that this language complements its 3-day
'cooling off' benefit to the investor. Upon an election
within the 3-day 'cooling off' period, investor funds will
be returned to the investor, by the escrow agent, minus any
fees and costs that are authorized by the escrow agreement
to the escrow agent.
Further, the investor is advised that no shares will be
issued to the investor by FLR until such time as the Issuer
receives confirmation from the escrow agent, after the 3-day
'cooling off' period, that the investor has not made the
election to withdraw.
Finally, FLR believes that the investor may choose to waive
the 3-day 'cooling off' period, by signing the following
form that will become a part of the shares purchase
agreement:
WAIVER OF 3-DAY RIGHT OF WITHDRAWAL
I, (investor) hereby advise the escrow agent and the Issuer,
Finger Lakes Region Rural Broadband Company, Inc., that I waive the
3-day right of withdrawal as stated on the shares purchase agreement.
In other words, I wish for the purchase to be effectuated on the date of
the shares
26
purchase agreement, which is also the date on which payment for the
shares is made.
To make clear, therefor, I wish to have my shares issued to me on the
date that the escrow agent confirms to the Issuer that my funds have cleared.
I HEREBY WAIVE THE 3-DAY RIGHT OF WITHDRAWAL
________________________
Investor
________________________
Date
4. stock class: not restricted;
5. distribution: shares to land in the hands of the investor as of the
date of this amended document.[18]
D. Dilution:
The dilution formula that is utilized is taken from the
administrative code of the State of Florida. After a survey
of various dilution calculations from industry, as well as
research among different State Blue Sky laws, FLR found that
Florida's formula, as specifically codified, offers the best
transparency by which to calculate dilution, as follows:
"69W-200.001 Definitions.
(13) "Dilution" for purposes of paragraph 69W-700.015(2)(b),
F.A.C., shall be determined by subtracting the maximum sales
commissions and expenses set forth in the prospectus from
the gross proceeds of the offering and adding the net worth
prior to the offering. Divide this sum by the total number
of shares to be outstanding at the
27
conclusion of the offering to determine book value. Subtract
the book value from the proposed offering price and divide
the result by the proposed offering price to arrive at the
percentage of dilution. For the purpose of calculating
"dilution" or "book value", intangible assets such as
patents, copyrights, franchises, trademarks, operating
rights and goodwill are deducted from total assets.
Dilution Formula:
NP = Gross Proceeds minus Maximum Sales Commissions and Expenses
NW = Net Worth prior to the offering
TS = Total Number of shares to be outstanding after a successful offering
BV = Book Value
OP = Offering Price
Example:
NP + NW
________ = BV
TS
OP - BV
_________ = Dilution
OP
E. Material disparities:
There is no material disparity between the public offering
price and the effective cash cost to officers, directors,
promoters and affiliated persons as of the time of this
offering circular, and there has been none in the past three
years.
Further, the Issuer's representative, and its officers and
directors, which includes the Issuer's representative, do
not anticipate any such material disparity, or discount.
With respect to third-party sellers and affiliated persons,
the Issuer has not discussed this issue, and unless it is
raised by such persons, does not plan to so discuss. In this
manner, the Issuer may maintain clarity of the 'one class/
one price' formula.
28
III.
ITEM 2.
PLAN OF DISTRIBUTION - ALL SHARES TO LAND IN THE HANDS OF THE INVESTOR
A. Underwriters:
For this initial filing, there is only a primary
distribution, with all shares to land in the hands of the
investor directly from the Issuer.
There are no underwriters on this offering as of the
potential date of first public sale. Upon qualification,
however, the Issuer intends an aggressive push to retain
such, and also other third-party sellers. With respect to
underwriters, the Issuer will seek to retain same as 'take
and pay,' in which case distribution will land in the hands
of the investor from the underwriter. For any 'best efforts'
underwriters, and for all other third-party sellers, all
shares are to land in the hands of the investor from the
Issuer, FLR, subject to New York's rules on broker-dealers
'firm commitment' transactions, as set forth above.
B. Discounts and commissions:
There are no agreements for discounts and commissions as of the date of
qualification. This said, FLR understands that third-party sellers will
use their best efforts to secure the asking price for the shares.
All third-party sellers appear in Section XII of this offering circular,
together with their commission rates.
C. Plan of distribution:
All third-party sellers appear in Section XII of this offering circular,
together with their commission rates.
29
Distribution, except for 'take and pay' underwriters, of shares will
land in the hands of the investor upon a sale by such third-party
sellers, from WGR. In the case of 'take and pay' underwriters, shares
will land in the hands of the investor from the underwriter.
As of the date of qualification, there are no secondary offering
agreements, contracts, or any other relations with any persons or
companies for other than sales of up to the first $6 million[19] by such
third-party sellers.
D. No shares offered or sold on account of securities holders:
Consistent with Item 2. C, above, all shares will be sold
upon issuance only from the Issuer and to land in the hands
of the investor.
The only exception would be where an underwriter took the
shares on a 'take and pay' arrangement, or whether, under
New York law, a broker-dealer took the shares under a firm
commitment, in which case distribution would transfer title
from the Issuer to the underwriter or broker-dealer, to
distribute to the investor;
E. Restrictions on amounts of funds raised, threshold requirements
for achieving funds limit and requirements of return of funds:
FLR plans to sell $6 million[20] in FLR shares only through
third-party sellers.
For JOBS Act - Regulation A - Tier 1, SEC Rule 144 has been
amended to allow the investor to sell up to thirty percent
of shares purchased immediately, instead of waiting for the
one-year period, and further requires the investor to notify
FLR, so that FLR may keep accurate records. For any return
of funds, please refer to the discussion concerning the
3-day 'cooling off' period above.
30
IV.
ITEM 3.
USE OF PROCEEDS TO ISSUER
In addition to the information provided in the tables above,
FLR provides more information on the 'impact of changing
conditions on the projected business operations.' In fact,
as with any technology business, 'changing conditions' are a
fact of life. For example, at the time when the founding
group first started, March, 2009, the iPad had not yet even
been introduced. Since then, however, tablets have become
commonplace, and, as indicated above, are a part of FLR's
standard 'kit' package to the new customer. Thus, FLR has
proceeded through a succession of re-calculations as to the
'middle mile' contact point and also, as to the 'last mile'
since the authorization of commercial white space
technology.
For the 'kits,' that is, the inside goodies and gadgets,
with the advent of such companies as Netflix, the
development of streaming video hardware has had a great
advance. That advance has been so great that the hardware is
not only affordable, but in extremely high demand by
consumers. This feature did not even exist as recently as
two years ago, and is now a standard part of our kit.
The smartphone has for all intents and purposes, replaced
the cell. phone, and with it, for the unserved areas, a lack
of access. With innovation by the company, Skype, however,
just in 2015, there is now 'Skype for Mobile,' which is an
app. that allows a smartphone user to achieve use of it in
an area where there is broadband, but not cell. service,
like in most of the unserved rural areas. Next to streaming
video, this app., and there will be other companies creating
it too, is a stunning leap of progress for the rural areas.
The app. service, just like the streaming services, do carry
an additional cost.
Thus, and in conclusion, for seven years now, FLR and its
parent and sister companies, have refused to be stuck in the
old 'broadband is coming to rural America' mode, where
single technology companies are content to offer just a
basic connection. FLR believes that everyone in rural
America should have the same service that anyone does who
lives in urban or suburban centers, and if the service
companies can bear the costs and expenses of making their
service better to customers at a good market price, so can
FLR.
31
In addition, for this section, FLR presents more information
'regarding the business operations of the Issuer and the
investment opportunity.' Taking into consideration that any
statements made here and throughout this offering circular
are forward-looking statements, with the appropriate
cautionary language as concerns same throughout, FLR may say
that, in simplest form, its business would be no different
than either the local cable or wireless Internet service
provider (WISP), or satellite T.V. company. All such
companies work according to the same basic model, in that
they are either interconnector companies, meaning that they
provide no original content, programming or services, or
they are broadband internet access service providers (BIAS).
FLR is the former, as described above.
Thus, upon funding, FLR would continue to bring under
contract sites where it would install the 'middle mile'
radios. FLR would install the radios, obtain a wholesale
contract for internet service at that location, and begin
the extensive marketing/customer acquisition effort
described above.
FLR would, upon acquiring a customer, as would any cable or
wireless installer, make an appointment to install the 'last
mile' equipment on the outside at the home of the new
customer.
FLR would, then, make a second appointment to connect the
router to the plug-in that is made a part of the inside
install, like a standard cable screw-on that any investor or
regulator has in his or her home. FLR would activate the
router by configuring it to the tablet, just like any
wireless company would activate a router with the customer's
computer in the residence.
For the streaming video, FLR would set it for 'wireless' and
would set up the set-top box on top of the T.V. just like
any other cable or streaming video set-top box, and would
activate the two choices that the new customer had already
made, for streaming video programming. Or, if near the T.V.
would would use one of the router ports to connect a cable
to the streaming kit, to activate it that way.
For the Skype app. FLR would configure the new customer's
smartphone to an individual Skype account that would be a
part of our wholesale commercial account with Skype.
32
The big moment would be when the customer can shout 'WOW' to
all of this working.
For folks living in served areas, especially those who have
had broadband for decades, much of this will likely seem
mundane. Investors, and regulators, however, simply must
place themselves in the position of the rural resident who
has never had broadband at their home. For them, nowadays,
their technology life begins once they get close enough to
the nearest cell. tower with service so that their
smartphone works.
For rural America, we at FLR say that this is no way to
live.
Thus, the 'investment opportunity' granted, is getting in at
an early stage, where there is a long history of the known
factors that need to be done and conquered, but where no
company, save for ours, has yet to have a focus on just the
national issue as to only rural unserved areas. Investors
can check with listed telecommunications companies to see
that the failure rate is very low, and their success has
been, in part, by keeping faithful to a strictly
market-driven business model that was never intended, or
written, to accommodate a serious concentration on the
unserved areas. FLR and its sister companies are the only
such companies, and thus investors may weigh the risks and
potential rewards in making a decision as to whether to
invest with FLR.
FLR provides here a primary list of vendors for the
projects. No persons have received any commissions in
connection with any acquisition, there have been no expenses
in connection with any acquisition, and there has been no
money borrowed to finance any acquisition.
Further, the costs shown for each category in the 'proceeds'
table include the global amounts for all of the components
for that particular phase of the install, and reflect
amounts that may be achieved as a result of bulk purchasing,
and thus, better pricing.
The primary vendors would be:
1. 'middle mile' lessors;
2. 'middle mile' equipment sellers and data administrators,
primarily Redline Communications, Inc. and Spectrum Bridge,
Inc.;
33
3. 'middle mile' broadband Internet service providers,
depending on the location of the project area, like Time
Warner Cable, Comcast, Verizon and others;
4. 'middle mile' and 'last mile' mast vendors like Rohn.
See, www.rohnet.com;
5. 'last mile' electrical supply sellers for lightning
protection copper cable. See, www.lightningrodparts.com ;
6. in-home wireless routers from the most competitive priced
seller at the time, to include, for example, Netgear and
Linksys, but also competitively priced routers on
www.alibaba.com;
7. streaming video kits from competitive priced ones like
Apple, Roku, and also comparable and competitively priced
ones on www.alibaba.com;
8. Skype's mobile app. service;
9. Various corporate accounts for various streaming
services, like Netflix, Hulu and others;
10. various competitively priced tablet vendors, but likely
from www.alibaba.com;
11. various retail pop up storefront lessors for 'The Shop'
retail/service centers, typically in a town center near
local government office, near a broadband provider's service
center, or possibly in a co-lease arrangement with a local
electrical appliance company on a main street of a small
town;
The order of priority of the use of the proceeds is, by and
large, reflected in this list, with number 1 being the first
priority.
C. Other funds to be used:
The FLR Tier 1 offering is intended to be extended to the
remaining $14 million, by qualification, over a five year
period.
34
D. No proceeds to be used to discharge indebtedness:
The project carries no debt, and therefore, no proceeds
would be used to discharge any indebtedness.
E. No proceeds to be used to acquire non-project assets:
With the exception of assets acquired in the ordinary course
of business for the project, there will be no other use of
the proceeds.
F. Reservation of right to change use of proceeds:
FLR reserves the right to change the use of proceeds
provided that such reservation is due to certain
contingencies which are adequately disclosed.
For example, the project may require the purchase of small
and insignificant tracts of real estate for the purposes of
positioning hardware, or structures upon which to mount such
hardware. Or, for co-location purposes, the project may
require the long-term leasing of space on certain rooftops,
again for the purposes of providing relay connector hardware
to the project area.
In all instances, however, the project plan is to avoid
either the purchase of any real estate or the necessity of
establishing such rooftop links. In other words, one of the
primary project goals is to have access to broadband
internet service utility connections that are a part of the
co-location of the sending radios, or in very close
proximity to such. In this manner, significant costs of such
real estate and other co-location items may be avoided, and
thus, the budget kept more efficient.
Avoiding unneeded expenses for co-location assets may be
accomplished by using existing assets. The interconnector
sector is one that is well-organized. A good example would
be where, say, American Tower would choose to place a tower
in an area. And, to complete the thought, assume that, in
that area, there are landowners who know that a part of
their land may be lucrative for a cell. tower location. In
those circumstances, the landowner could take two kinds of
action. He/she could contact American Tower, and negotiate a
deal, either for the purchase or lease of the land on which
to place the
35
tower. In the alternative, the owner could be more savvy and
contact a tower development company, like say Black Dot
Wireless. www.blackdotwireless.com. For a fee, Black Dot
will completely develop the tower site, including
installation, leases and service, so that, in effect, any
prospective tenant on the tower would be a lessee.
In fact, in any of the project areas, where there is a tower
anywhere within a five-mile range in our prospective service
area, FLR will seek space at the 100' level.
Other non-tower sites that will play key roles for the
'middle mile' interconnect are ones that have a tall
structure, and also an existing internet connection, or one
that is relatively close by, say within 200' of such a
connection. Such structures are all manner of shapes and
configurations, and so far, the best range has been large
and tall municipal water towers, private landowners where
there is a tall structure, like a silo, private landowners
where there is a building next to a highway where there is
an internet connection, like in the Mid-Hudson company
project area, as well as industrial sites, typically on the
outskirts of towns, like cement plants, as well as outlying
municipal plants, like waste management facilities. For all
of these sites, there is no possibility, or need, of owning
the land or the facility. Instead, FLR will simply treat
them like a company like Black Dot would treat any tower
site landowner, by entering into a lease that looks a lot
like, in fact, nearly identical to what the tower companies
use.
Thus, for 99.99% of FLR's business, FLR will not need to, or
want to, take an ownership stake, just like no typical
interconnector company wants to do. FLR will let the experts
for those sites do the work, and FLR will lease.
For that remaining.01%, FLR envisions a situation where, for
example, a municipality may own a parcel of land, and, for
its own purposes, may require that FlR purchase a site,
instead of leasing it. Further, there will always be
situations where, in an an area where FLR needs a 'middle
mile' site, there may be no other acceptable site available
other than one where the landowner insists, for his/her own
reasons, typically liability reasons, that FLR purchase the
site. Even in those exceptionally rare instances, however,
and although FlR would need to purchase the site, FLR would
not administer it, rather, signing it over to a company like
Black Dot, to handle it, turnkey for FLR. In that manner,
and in addition, there exists the likelihood that Black Dot
could achieve more customers for the site, thus turning it
into a revenue-maker for FLR.
36
In conclusion, therefore, the 'middle mile' site
development/ownership sector is extremely well developed in
the United States. See, www.wirelessestimator.com. For FLR's
purposes, FLR believes that investors would want FLR to take
advantage of this well-developed sector, so as to take
advantage of its benefits, and also to keep FLR's focus on
the task at hand, which is 'last mile' installs and consumer
benefits.
G. Compliance with 17 CFR 230.251[21], as amended:
FLR has no plans and no business plan, or intentions to
engage in a merger or acquisition with an unidentified
company, companies, entity or person.
V.
ITEM 4.
DESCRIPTION OF BUSINESS
A. Business done and intended to be done:
The project has consisted of the origination, organization,
design and development of a large-scale rural interconnector
infrastructure that will bring internet service to unserved
areas of rural America.
Such business has been conducted over a period in excess of
seven years.
The business to be done consists of utilizing the proceeds
to implement, fulfill, and make operational, such
infrastructure in a defined project area.
37
B. The principal products produced and services rendered and
the principal market for and method of distribution of such
products and services:
The principal 'product' produced consists of a
consumer-ready 'kit' that brings full internet service to
the unserved areas of rural America. The FCC has identified
84,000 unserved census blocks in rural America.[22]
The 'kit' concept was originated by the parent company[23]
in order to create a defined, consumer-ready system that can
be scaled from a small, to a massive project size, depending
on funding.
The principal 'service' that would be provided consists of
the permanent operation of the 'kit' over the entire rural
American landscape.[24]
C. The status of a product or service, if the issuer has
made public information about a new product or service which
would require the investment of a material amount of the
assets of the issuer or is otherwise material:
The issuer has made 'public' the 'product' by making JOBS
Act, Rule 506 notifications on the internet. The principal
'service' is identified on the main project website, at
www.urbroadband.com. Thus, there are no investment proceeds
which would require such new information, and saving,
therefore, the proceeds for use in project implementation.
38
D. The estimated amount spent during each of the last two
fiscal years on company-sponsored research and development
activities determined in accordance with generally accepted
accounting principles:
FLR, its parent, RBC, and its sister companies have spent
all of their time during the past seven years on research
and development activities. Regulators have asked us to
clarify 'costs associated with prior research and
development activities.' The interconnector 'service' does
not require any laboratory research. Nor is it different in
any material degree from any other interconnector service,
including cable/fiber or microwave wireless.
FLR does not develop the products, like the Redline radios,
or the Skype app., for example. FLR, RBC and its sister
companies have, however, invested seven years of time in
developing the system and the project areas. An investment
in the amount of $50,000.00 as a JOBS Act / Rule 506
investment for one of the sister companies has been made.,
The funds were used to further develop projects and sites in
each of the four subsidiary company JOBS Act companies,
three in New York and one in Arizona.[25] A a result, the
companies have no less than 20 areas where, upon funding, to
start 'middle mile' installations, immediately.
Instead, research and development has been on developing an
understanding of what are the major impediments to rural
broadband expansion in rural America. As indicated
throughout this offering circular, these include the absence
of any companies, like FLR, which have a sole national focus
on rural America, a considerable and unwarranted emphasis on
single-technology by the large telecommunications companies,
and a major issue of user adoption rate. By constantly
developing the projects to keep current with the technology
and consumer demands, and by solely focusing on rural
America, FLR believes that its best resources, its
dedication and time, have yielded the best possible current
technology solution.
39
FLR addresses here, the issues of 'selling expenses,
including but not limited to, legal, engineering, and
accounting charges.' Because regulators, and therefore,
investors, may not be familiar with broadband
infrastructure, 'engineering' is removed from the equation.
In some instance, professional engineers may be consulted as
to parts of projects involving municipalities, but by and
large, all of the component products that FLR uses will
already have been 'engineered.' In other words, many of the
vendors, Redline for example, have their own internal
engineers, in fact, some Ph.D. engineers, who make strict
requirements as to installation, connections and other
quality control features. FLR could not interfere with those
functions by hiring a separate engineer, without losing its
support and warranty components with Redline.
As indicated above, however, the key 'selling' expenses have
to do with the major issue of 'user adoption rate,' and
investors are cautioned again here that this is a major
hurdle that must be overcome with the advertising campaigns,
community involvement, the opening of 'The Shop' stores,
like the 'Apple Store,' significant advertising on a long
term basis and the like.
In the table above are listed expenses for attorney's and
accounting fees. These fees would be spent, in the first
instance of accounting, to maintain rigid safeguards for
internal controls. In fact, several layers of internal
accounting controls will be implemented upon the advice and
service of the CPA/Auditing firm, BDO USA LLP. Secondly,
attorneys will handle ongoing reporting requirements for all
aspects of compliance.
Escrow agent fees would be deducted from the investor funds.
E. The estimated dollar amount spent during each of such
years on material customer-sponsored research activities
relating to the development of new products, services or
techniques or the improvement of existing products, services
or techniques:
For largely proprietary reasons, the company has avoided
such spending, and will continue to avoid such, for those
same reasons. Further, both the FCC and the United States
Department of Agriculture, among other Federal and State
agencies, have extensive public information available on
this issue.
40
FLR provides more detail on disclosure 'that explicitly
describes the cost of research activities and the impact on
business operations if anticipated costs change.' As FLR has
indicated, it does not conduct laboratory research. In this
regard, FLR's research consists of finding the best
current-technology solution from what are a known set of
technologies, to include cable/fiber, wireless and white
space technology. The costs of 'research' as to the best mix
of those technologies in any one given project area are a
part of FLR project development.
For example, in its MHR installation, in the Mid-Hudson
region of New York, a 'middle mile' Redline radio was
installed on a 40-foot mast that MHR had built from 3-inch,
inner diameter black pipe. MHR selected the project area
based upon information as to 'no broadband' that was
provided by local elected officials, MHR is able to scale
the project along a known area of a state road that has, as
two end points, a distance of approximately 5 miles. On
either side of the road, there exists internet service, so
that 'middle mile' radios may be placed at various
locations, and there is good residential housing density to
justify the installation of the 'middle mile' radios. What
was the unknown is the number of such radios that are
needed, and here again, Redline largely determines that,
with input from our GIS/ mapping vendor company, CN
Ventures. See, www.connectednation.org.
FLR simply feels that both investors and regulators may be
reminded that the founding group began its eighth year on
March 1, 2016. FLR envisions no major changes to its cost
structure as a result.
F. The number of persons employed by the issuer:
FLR here includes additional information regarding projected
number of employees for future operations, as well as any
detail that addresses how this information will change as
business operations grow, and disclosures that explicitly
addresses the employee expense and the impact on business
operations if anticipated expenses change.
41
FLR's business is, by and large, like any other
interconnector business, be it a fiber company, like
Lightower, or a wireless company, like American Tower, or
like a strictly interconnector component company, like Time
Warner Cable. The list of system components, to match the
hardware and software, is, thus, simplistic and reasonable:
1. 'middle mile' installation: all such companies have
installers, and FLR has at least one already, who installed
the mast on the Mid-Hudson project. These are typically
folks who have a lot of experience in construction and
carpentry;
2. 'last mile' installation: where, for example, the cable
guy brings the cable to the outside of the residence. There
is every chance that FLR will be hiring local independent
contractors who hire themselves out to the cable, wireless
and satellite companies to perform installations;
3. 'Inside' installers: like any of those companies, FLR
will have the same type folks. FLR will likely hire local
independent contractors who do cable or wireless or
satellite inside installations;
4. 'The Shop:' this should be like the 'Apple Store,' a nice
place to go to open an account, buy apparel, get tech.
support and the like. There will be a retail expert, as well
as a technology expert at these stores;
5. back office staff: like other companies, there will be
staff to help with billing, service calls, components
replacements and repairs and the like.
As operations grow, FLR anticipates, based on its own
internal research, that a typical team as shown above can
comfortably handle a customer account list of 500 customers.
After that, a new 'The Shop' would open, and the installers
would be shifted to the new area, and back office staff
would grow to accommodate the next 500 customers.
FLR believes it important that investors and regulators
know, however, that, throughout its operations, FLR intends
to hire professionals in the sectors of large-scale
installations, possibly with firms like Black & Veatch. See,
www.bv.com. In addition, FLR will hire supply chain
professionals to manage component purchases, deliveries and
replacements. Further, we will retain the services of a
professional advertising
42
company. FLR simply cannot leave the issue of the user
adoption rate to non-professionals. Instead, the 'My First
Car Club' brand will be developed to apply across all lines.
The 'The Shop' retail/service support facilities will have a
defined interior look, down to the last detail. FLR that we
may also attempt to develop podcasts and possibly a reality
T.V. show. FLR will make every attempt to have its mission
and service become a part of the permanent infrastructure
exhibit at the Smithsonian National Museum of American
History - Kenneth E. Behring Center.
G. The material effects of compliance with environmental
regulations:
As the interconnector sector, including FLR's projects, do
not discharge any waste of any type, there are no compliance
requirements with Federal, State and local provisions which
have been enacted or adopted regulating the discharge of
materials into the environment, that may have an impact upon
the capital expenditures, earnings and competitive position
of the issuer and its subsidiaries;
H. Distinctive or special characteristics of the issuer's
operation or industry which may have a material impact upon
the issuer's future financial performance:
1. There is no dependence on one or a few major customers or
suppliers which may have a material impact on the FLR's
future financial performance. As noted above in the list of
vendors, all of the components can be regularly purchased on
the open market at the best competitive pricing;
2. Existence of probable governmental regulation:
The definition of the interconnector sector was preserved in
the FCC's recent Open Internet rules, as cited above. To the
extent that broadband internet access service (BIAS)
provider retailers will sell their services on our system,
those providers will be regulated by the FCC. To the extent
that FLR's business remains as solely one of
43
interconnector, meaning to include 'middle mile' fiber or
wireless microwave, as well as 'last mile' fiber, wireless
microwave or wireless white space and satellite, FLR will
continue to fall within the existing regulations for the
sector. In other words, only if FLR were to cross over into
becoming a BIAS would FLR come under the additional
regulations of the Open Internet rules. The key to becoming
such would be, and the determinative factor is, whether FlR
were to take space on server at a datacenter, like say a
Google data center. See,
www.google.com/about/datacenters/gallery/#/. At that point,
FLR would be offering retail services, like email, search,
content and other features of retail. FLR has no plans to do
so;
3. Material terms of contracts:
As indicated above, with respect to projected labor
requirements, because investor funding has not yet been
achieved, FLR has not, and will not, enter into any material
labor contracts. Further, at the present time, FLR has no
patents, trademarks, licenses, franchises, concessions or
royalty agreements;
4. Unusual competitive conditions in the industry:
There are no known or anticipated unusual competitive
conditions in the industry, cyclicality of the industry or
anticipated raw material or energy shortages to the extent
management may not be able to secure a continuing source of
supply. The two primary challenges for broadband in rural
America are, as stated, building systems that reach into the
unserved areas using multi-technology solutions, ie. 'middle
mile' fiber, wireless or satellite, and 'last mile, ie.,
fiber, microwave wireless or white space wireless or
satellite, and then the great acceleration of the user
adoption rate, otherwise known as customer acquisition;
I. The issuer's plan of operation for the twelve months
following the commencement of the proposed offering:
Proceeds will be utilized, immediately, to achieve full
implementation of the projects. All planning is in place,
and there is, thus, nothing else to do other than proceed to
installation and activation.
44
As shown in the table of the use of proceeds, and also the
priority of the use of the proceeds listing, there is a
defined sequence that needs to take place. A description as
to the first 12 months, is as follows;
1. base station 'middle mile' location acquisitions;
2. base station installations;
3. base station Internet connection achieved;
4. 'The Shop' opens;
5. customer acquisition/branding/advertising program begins
in the project area;
6. first initial, approximately 15 residential installs, for
beta testing, per base station, are achieved and customer
accounts activated for the 20 base stations;
J. Proceeds from the offering to project cash requirements
and whether, in the next six months, it will be necessary to
raise additional funds:
FLR discusses, further, a detail of the equipment necessary
for business operations. There is a 'middle mile' sending/
receiving radio that is connected, like a cable connection,
to an internet company's line at that location, where the
company will supply to FLR, wholesale, an internet
connection that can handle the 80 accounts that each
sending/receiving radio can accommodate.
In a white space system configuration, there will be a white
space receiving radio mounted on a mast at the residence of
the customer. That radio will have the signal from the
'middle mile' beamed to it, will receive it, will read it as
belonging to that customer, and, using the same coaxial
cable that every telecommunications provider uses, will send
the signal through the cable, through to an install site on
the inside wall of the residence, just like any other
telecommunications service, and will be connected to a
router, just like any other service.
45
Once the router is connected, it will be configured to the
customer's account, just like any other telecommunications
service, but with FLR's service, will be configured to the
tablet that FLR will provide to the customer, and inside
WiFi will be achieved, as well as general broadband and data
service.
Once the router is configured, the streaming video kit will
be configured for wireless, and will be connected to the
customer's T.V., and activated. Or, the streaming kit could
be connected to the T.V. with a standard cable to a router
port, depending on the location of the T.V. and customer
preference.
Once the streaming video is activated, the Skype app. will
be configured to the resident's smartphone and activated.
At that point, the installer and the residents will reach
the 'WOW' point, jumping for joy!
Proceeds will be utilized in strict accordance with those
budget calculations and for install and activation.
Accordingly, as the budget may be measured by the amount of
any proceeds at any one given time, and then the project
sector may be scaled accordingly, there would be no need to
raise additional funds for that sector.
For example, if this offering raises just an initial
$600,000.00, then that amount would go towards the
installation of one of the big sending radios, and 80
receiving radios in homes. The only reason that the full 80
may not be installed at the outset would be the result of
needing a higher capacity hardware install at the peering
point. As these costs are generally known, and may be
calculated, in fact, whether such additional capacity will
be needed at any given sector would not be known until the
install begins.
All such calculations and variations of this theme have long
been worked out, and are overcome at a price/density ratio
point that would allow for the 80 customer accounts to be
placed on the big radio.
In terms of scaling, thus, if $6,000,000.00[26] from this
offering were achieved, for example, the number of pieces of
hardware would simply be multiplied to accommodate that
funding award, and so forth.
46
K. Any engineering, management or similar reports:
For the purposes of this offering circular, and the
requirements of inclusiveness in order to provide to the
potential investor with enough information by which to make
an investment decision, there have been no engineering,
management or similar reports which have which have been
prepared or provided for external use by FLR or by a
principal underwriter:
L. Segment Data:
FLR has no segment data. FlR reviewed the general
definitions of 'segment data,' and as a reference provides
this link:
http://www.investopedia.com/articles/stocks/06/segmentdata.asp.
FLR states here that, it is not yet a company of the size
that would yield such segment data at this time.
In addition, FLR does not yet have an operating history that
could provide the underlying information so as to calculate
for 'segment data.'
FLR would, however, anticipate achieving such valuable
information and calculations in the future.
VI.
ITEM 5.
DESCRIPTION OF PROPERTY
The location and general character of the principal plants,
and other materially important physical properties of the
issuer and its subsidiaries:
If any such property is not held in fee or is held subject
to any major encumbrance, so state and briefly describe how
held:
47
To the greatest extent possible, the FLR seeks to avoid
owning any property in fee simple. FLR elaborates on this in
other sections above. Such expenses, often promoted by
vendors of such components as cell. towers, have resulted,
historically, in both unnecessary and unsustainable, and
therefore, unprofitable results.
Once the basic 'middle mile' and 'last mile' outside
infrastructure are in place, FLR will implement a 'kit'
system that that, FLR believes, will result in the
successful end user consumer component of its business plan.
Since FLR will not be selling a product, like a car or a
bicycle, and since 'broadband' is invisible radio waves
configured to computers, FLR found that it needed a way to
brand its service and the consumer items that come with it.
Driving a lot of the discussion was FLR's research into the
issue of user adoption rates for rural electrification. By
comparison, since FLR would not be selling electric irons,
or refrigerators or washing machines, and since FLR is
branding its systems like a customer's 'first car,' FLR
arrived at the kit idea. A new first car owner, for example,
may want to buy a used car and install a new stereo system,
a 'kit.' Or, maybe a new set of wheels and tires, another
'kit.' Or, an engine upgrade, another 'kit.'
FLR wants something that will take the customer to 'The
Shop' like a car parts 'shop' to pick up items for their
'kit.' At the same time, however, upon activation of the
account, 'kit' parts are slated to arrive by overnight
courier, like FedEx, containing the first components, likely
an apparel set, and the tablet. Since the tablet can be used
anywhere, FLR will encourage the new customer to take it
anywhere where there is public WiFi, like a library or
Starbucks, and read the instructions and become comfortable
with it.
FLR thought to deliver the streaming video kits to the
customer as well, but, in the beginning, has decided that
having the customer 'come by 'The Shop' to pick up your
streaming video kit' will be the best way to show the
customer how to use it.
Similarly with the Skype app. FLR anticipates that, likely,
100% of the customers will come to 'The Shop' to 'pick up'
the Skype component of their 'kit.'
Thus, all of these items, plus the router, and the streaming
services that the customer selects, will be a part of the
framing and branding of the service that, for the customer,
48
begins with 'the kit.' FLR likes this idea and plans to
implement it, and expand upon it with, for example, holiday
'add-ons' like discount pricing on other tablets, or
upgrades to tablets and streaming kits and the like. FLR
will be no different than the other companies that offer the
same programs to customers in urban and suburban areas, and
does not want to be different. All persons in rural America
should be at the same level of technology access and
consumer benefits as those in the urban and suburban areas
of America.
Put another way, the era of 'cable is coming to my farm any
time now,' has largely ended. Further, the era of cell.
towers for rural areas, has also largely ended. Those two
self-limiting sectors never adjusted their business models
to suit the needs of rural America, and have, accordingly,
and for good and sound business reasons limited to their
narrow function, abandoned the rural sector.
As detailed in other sections of this offering circular,
however, the projects will rely for both 'middle mile' and
'last mile' on both fiber, wireless and satellite
'interconnector' points. For the reasons stated in those
other sections in this offering circular, because, those
sector companies already own their own assets, long term
leases make the best business sense.
FLR provides here further substantive disclosure concerning
the potential impact if the its current strategy is
unsuccessful. This should include, but is not limited to,
the effect to business operations if the FLR's projected
plan concerning physical property is unsuccessful.
FLR described in other sections of this offering circular
the extensive and well-defined market sector companies for
the interconnector industry. Thus, a recipe for failure
would be were FLR to go outside those well-known companies
that can be of the best help to FLR. By avoiding the
utilization of those unneeded companies and components, FlR,
by default, avoids making what could be a fatal decision to
incur unnecessary costs, such as would drive up the project
price with no corresponding benefit to the project, the
consumer or to the investors.
49
Thus, for example, if, instead of placing a 'middle mile'
base station at a location where there is an existing
broadband connection, for no apparent reason, FLR were to
place it at a location nearby that has no broadband
connection, FLR would have to absorb the cost of digging the
trench, laying the fiber and establishing the connection,
things that could have been avoided by simply using a
location that already has a connection.
Or, for example, in a case where there is a cell. tower
within a range where a 'middle mile' sending radio could be
placed under a standard lease with say, American Tower. If
FLR were to go through the expense of placing a new tower
nearby, for no apparent reason, FLR would, similarly
unreasonably spend investor funds to accomplish the same
objective that a simple lease with the tower company would
provide.
Thus, questions of physical property in the interconnector
sector are well-known, well-defined, and there is a robust
and competitive business sector already in place that can
accommodate all aspects of this component of FLR's business.
Were FLR to go outside of this well-known industry, which it
will not do, that is where the investor would be concerned.
VII.
ITEM 6.
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
A. DIRECTORS
Tony Ramos - Board Chair
Age: 61
Term of Service in Office: 3 years, but an original founding member since 2009
Procedure for selection: shareholder vote
David J. Karre, M.L.S., Vice Chair, but an original founding member since 2009
Age: 66
Term of Service in Office: 3 years
Procedure for selection: shareholder vote
50
Rex R. Helwig, an original founding member since 2009
Age: 56
Term of Service in Office: 3 years
Procedure for selection: shareholder vote
B. EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
Tony Ramos, President
Rex R. Helwig, Vice President & Secretary
David J. Karre, M.L.S., Secretary
C. FAMILY MEMBERS
There are no officers, directors or significant employees who have
family members in any such corresponding position, or who have any
controlling voting interest over such persons.
51
D. BUSINESS EXPERIENCE
Experience and principal occupations, employment and business experience:
Tony Ramos
Dates of employment: March 1, 2009-present
Title: Founder & President
Company: FLR & predecessors
Duties: Start up and run company
Supplemental: Leader. Third generation self-made entrepreneur. Member of
the elite professional political sector in Washington, D.C. of
originators of Congressional legislation. Veteran fundraiser. Member of
the elite professional political sector in Washington, D.C., of
originators of significant political policy/action campaigns. Writer and
Issuer of JOBS Act offerings, filings and shares.
In addition, regulators requested that the following additional
information be provided as to each officer and director:
a) the amount of securities of the Issuer held by the person as of the
thirtieth day before the filing of the registration statement:
Mr. Ramos holds no shares in FLR;
b) the amount of securities covered by the registration statement to
which the person has indicated an intention to subscribe:
Mr. Ramos intends no subscription to the shares;
52
c) a description of any material interest of the person in any material
transaction with the issuer or a significant subsidiary effected within
the previous three years or proposed to be effected:
Mr. Ramos has a significant material interest, as the majority
shareholder of the parent company, Rural Broadband Company, Inc. (RBC)
in all facets of FLR. He does not, however, hold any contracts with FLR,
and, in addition, RBC's shares are exactly like those of the other
shareholders: common/voting;
d) the estimated remuneration to be paid during the next 12 months,
directly or indirectly, by the Issuer and all predecessors, parents,
subsidiaries, and affiliates of the Issuer:
The Issuer, FLR, its parent, RBC, and its sister companies, all intend
to pay Mr. Ramos according to a formula that will be created by a
professional compensation specialist, reviewed and adopted by the boards
of all of the companies, and then disbursed according to that formula.
All of the founding members will participate, but, as of yet, no such
discussions have been held.
FLR and the other companies, do, however, wish to inform investors that
such compensation, in exchange for the seven years of dedicated, and
largely uncompensated service, will be made and is deserved by the
founders.
Rex R. Helwig
Dates of employment: March 1, 2009 - present
Title: Computer Network Services Manager
Company: Finger Lakes Library Manager
Duties: Computer Network Services Manager
Supplemental: Company pioneer. Founding member, 2009. Project leader and
liaison. Duties: Manage a support team of 3 people to provide all
aspects of technical support to 33 member Public Libraries, plan and
budget for department and System, System Administrator for the Public
Library Integrated Library Software and all servers used by the Finger
Lakes Library System.
53
In addition, regulators requested that the following additional
information be provided as to each officer and director:
a) the amount of securities of the Issuer held by the person as of the
thirtieth day before the filing of the registration statement:
Mr. Helwig holds 11,765 shares in FLR;
b) the amount of securities covered by the registration statement to
which the person has indicated an intention to subscribe:
Mr. Helwig intends no subscription to the shares;
c) a description of any material interest of the person in any material
transaction with the issuer or a significant subsidiary effected within
the previous three years or proposed to be effected:
Mr. Helwig has a significant material interest, as a founding
shareholder in all facets of FLR. He does not, however, hold any
contracts with FLR, and, in addition, his shares are exactly like those
of the other shareholders: common/voting;
d) the estimated remuneration to be paid during the next 12 months,
directly or indirectly, by the Issuer and all predecessors, parents,
subsidiaries, and affiliates of the Issuer:
The Issuer, FLR, its parent, RBC, and its sister companies, all intend
to pay Mr. Helwig according to a formula that will be created by a
professional compensation specialist, reviewed and adopted by the boards
of all of the companies, and then disbursed according to that formula.
All of the founding members will participate, but, as of yet, no such
discussions have been held.
FLR and the other companies, do, however, wish to inform investors that
such compensation, in exchange for the seven years of dedicated, and
largely uncompensated service, will be made and is deserved by the
founders.
54
David J. Karre, M.B.A., M.L.S.
Dates of employment: March 1, 2009-present
Title: CEO (now retired)
Company: Four County Library System
Duties: CEO
Supplemental:Company pioneer. Founding member, 2009. Leader. Former
Chief Executive Officer of large, rural library system in New York, 42
libraries. Project organizer and leader for rural city 'sidewalk
Internet' company projects. Highly experienced local, State and Federal
lobbyist. Veteran fundraiser. Master of Business Administration and
Master of Library Science degrees.
In addition, regulators requested that the following additional
information be provided as to each officer and director:
a) the amount of securities of the Issuer held by the person as of the
thirtieth day before the filing of the registration statement:
Mr. Karre holds 11,765 shares in FLR;
b) the amount of securities covered by the registration statement to
which the person has indicated an intention to subscribe:
Mr. Karre intends no subscription to the shares;
c) a description of any material interest of the person in any material
transaction with the issuer or a significant subsidiary effected within
the previous three years or proposed to be effected:
Mr. Karre has a significant material interest, as a founding shareholder
in all facets of FLR. He does not, however, hold any contracts with FLR,
and, in addition, his shares are exactly like those of the other
shareholders: common/voting;
55
d) the estimated remuneration to be paid during the next 12 months,
directly or indirectly, by the Issuer and all predecessors, parents,
subsidiaries, and affiliates of the Issuer:
The Issuer, FLR, its parent, RBC, and its sister companies, all intend
to pay Mr. Karre according to a formula that will be created by a
professional compensation specialist, reviewed and adopted by the boards
of all of the companies, and then disbursed according to that formula.
All of the founding members will participate, but, as of yet, no such
discussions have been held.
FLR and the other companies, do, however, wish to inform investors that
such compensation, in exchange for the seven years of dedicated, and
largely uncompensated service, will be made and is deserved by the
founders.
E. Involvement in certain legal proceedings
1. Bankruptcy or State insolvency:
There are no members of our group who have been involved in such
proceedings.
2. Criminal proceedings:
There are no members of our group who have been involved in any material
proceedings.
3. Other legal proceedings:
Investors are advised here that FLR, its parent company, RBC, and its
sister companies, will not hesitate to enter into legal proceedings in
matters that may affect their ability to secure funding for projects.
As an example, FLR, and its two New York sister companies, MHR and STR,
have filed administrative-level complaints under the Federal Sherman Act
and New York's Donnelly Act, alleging antitrust violations relative to a
$500 million broadband funding opportunity by the State of New York,
called the New NY Broadband Program. So as to avoid the companies
becoming embroiled in contentious litigation at this young stage of
56
their careers, the Issuer's representative, Mr. Ramos has filed a
Donnelly Act case in Ulster County, New York, in the Mid-Hudson region
of one of FLR's sister companies. The Index Number in the New York
Supreme Court for Ulster County is: 16-1135
Investors should also know that, at the federal level, certain
administrative and legal proceedings will take place in the future. This
is simply the nature of the funding sector for vast federal funds that
may be available to the companies. Among the likely actions that will be
taken are those surrounding antitrust and other rules issues concerning
the FCC's Rural Broadband Experiments program. The program, which was
begun in 2014, allocates significant funds to be spent in the 84,000
unserved census blocks that the FCC has designated as 'unserved.' The
program, which was brand new, however, contained certain rules that
blocked FLR and its sister companies, from competing for those funds.
Upon the re-opening of the program, if there are rules which block our
access to those funds, we will seek administrative and litigation
relief.
4. Policy proceedings:
Investor should also be made aware of RBC's robust policy shop in
Washington, D.C.
The path to rural broadband in America must, of necessity with such a
large national issue, run through Washington.
For this reason, FLR has already begun the long process of drafting
legislation that will direct all federal government rural infrastructure
components into one piece of legislation and just one government
department or agency. FLR callsl the project, The Rural Digital Data
Act, and it has a website at www.digeday.com.
In addition, and however, RBC and its subsidiaries make formal comments
to Federal and State agencies on issues of broadband, broadband in
libraries and in other community anchor institutions that serve
vulnerable populations.
Thus, its policy shop positions the companies to drive and keep the
focus on rural America, and they are fast becoming known as experts in
the field.
57
VIII.
ITEM 7.
REMUNERATION OF DIRECTORS AND OFFICERS
A. Annual remuneration:
As indicated above, FLR has not yet arrived at the point where it will
retain the services of a professional compensation expert to guide
it on this issue;
B. Proposed remuneration payments:
As we indicate above, FLR has not yet arrived at the point where it will
retain the services of a professional compensation expert to guide
it on this issue.
IX.
ITEM 8.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS
A. Voting securities and principal holders thereof:
1. By all officers individually:
David Karre Rex Helwig each own 11,765 common/voting shares of FLR.
Their shares will be increased in accordance with the dilution formula
shown above, upon qualification, and therefore, issuance of more
treasury shares.
Mr. Ramos owns no shares, individually, in FLR, but rather his ownership
interest is as a majority shareholder in RBC, which is the majority
shareholder of FLR.
58
2. All officers as a group:
David Karre and Rex Helwig own a combined, 35,295 common/voting shares
in FLR.
3. Each shareholder who owns more than 10% of any class of the issuer's
securities, including those shares subject to outstanding options, or
'any person, or entity, owning of record or owning beneficially, if
known, 10% or more of the outstanding shares of any class of equity
security of the Issuer,' in Item 6 D., above:
Rural Broadband Company, Inc., owns 55% of FLR.
Lusosystems, Inc. owns 10% of FLR.
B. Table of ownership:
1. Pre-offering shares:
Consistent with this Amended Offering Circular,[27] which is
incorporated into the Amended Offering Statement by reference, those
shareholders named therein all own shares of approximately 2% of shares
owned before the offering, and will own their same respective
percentages, according to the dilution formula, after the offering.[28]
Thus, in order to achieve a Regulation A funding offering of
$20,000,000.00, the additional amount of 200,000 shares will be issued,
and then an amount that, with the calculation of the dilution formula,
will keep those shareholders at the same percentage as before this
offering.
Thus, there will be no transfer of any 'pre-offering' shares. Upon
qualification, the new shares will be issued, and existing shareholders
will be issued such additional shares as are consistent with the
dilution formula set forth above. All dilution calculations are made by
a person who holds a Ph.D. in mathematics.
59
2. Control votes:
There are no persons who hold or share any voting power either
pre-offering, or post-offering;
3. 10% voting shares:
There are no persons who hold shares or the power to vote shares of 10%
or more of any shares other than direct owners of those shares.
C. Non-voting securities and principal holders thereof:
All shares are common/voting shares;
D. Options, warrants, and rights:
Consistent with the 'one class/ one price rule' there are no options,
warrants or rights;
E. List all parents of FLR, showing the basis of control and as to each
parent the percentage of voting securities owned or other basis of
control by its immediate parent, if any:
1. Parent:
Rural Broadband Company, Inc. is the parent and project organizing
company for its subsidiaries, which are the operating companies. The
company was previously incorporated in Washington, D.C. Upon renewal,
however, company officials learned that the District of Columbia had
repealed its incorporation statute and replaced it only with
incorporation language for not-for-profit companies. RBC, thus,
incorporated itself in the State of Delaware, in 2015.
RBC owns 55% of FLR.
60
2. Basis of control:
majority ownership of shares;
3. Percentage of shares: 55%
X.
ITEM 9.
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
Brief description of any transactions during the previous two years or
any presently proposed transactions, to which FLR or any of its
subsidiaries was or is to be a party, in which any of the following
persons had or is to have a direct or indirect material interest, naming
such person and stating his relationship to FLR, the nature of the
interest in the transaction and, where practicable, the amount of such
interest:
A. Any director or officer of the issuer:
All of the officers and directors will have, in the future, material
interests in material transactions between FLR and any other companies
or persons, and will work to make sure that such material interests with
outsiders are in the best interests of FLR:
B. Any nominee for election as a director:
At the present time, there are no nominees for election as a director;
C. Any principal securityholder named in answer to Item 8 A., above:
There are no principal security holders who would hold any material
interest in any material transactions that differ from those mentioned
in Item 8 A, above;
61
D. If the issuer was incorporated or organized within the past three
years, any promoter of the issuer:
The Issuer's representative, Tony Ramos, is also the Issuer of JOBS
Act/Rule 506 securities, and notice of same was filed by the uploading
of Form Regulation D onto EDGAR upon the opening of that opportunity, in
September, 2013.
See, EDGAR filing at:
www.sec.gov/Archives/edgar/data/1587999/000158799915000003/0001587999-15
-000003.txt;
E. Any relative or spouse of any of the foregoing persons, or any
relative of such spouse, who has the same house as such person or who is
a director or officer of any parent or subsidiary of the issuer:
There are no relatives or spouses of any of the foregoing persons, or
any relative of such spouse, who has the same house as such person or
who is a director or officer of any parent of the issuer;
F. Material transactions involving bank depositary of funds, transfer
agent, registrar, trustee under a trust indenture, or similar services:
There are no such material transactions or services.
With the exception of the Issuer's representative, Mr. Ramos, there is
no 'registrar' for any such material transactions.
There is no trustee under a trust indenture, or any other material
transactions.
There are no further 'similar services.'
G. Material transactions or a series of similar transactions, including
all periodic installments in the case of any lease or other agreement
providing for periodic payments or installments that does not exceed
$50,000:
62
There are no material transactions or a series of similar transactions,
including all periodic installments in the case of any lease or other
agreement providing for periodic payments or installments that does not
exceed $50,000.00;
H. Where the interest of the specified person arises solely from the
ownership of securities of the issuer and the specified person receives
no extra or special benefit not shared on a pro-rata basis by all of the
holders of securities of the class:
There are no persons specified whose interest arises solely from the
ownership of securities of the issuer and where such specified person
receives any extra or special benefit not shared on a pro-rata basis by
all holders of securities of the class, the class being common/voting;
I. Material indirect relationships:
1. There are no material indirect relationships from such person's
position as a director of another corporation or organization which is a
party to the transaction;
2. There are no material indirect relationships from the direct or
indirect ownership by such person and all other persons specified in
subparagraphs (1) through (5) above, in the aggregate, of less than a 10
percent equity interest in another person which is a party to the
transaction;
3. There are no material indirect relationships where the interest of
such person arises solely from the holding of an equity interest
(including a limited partnership interest but excluding a general
partnership interest) or a creditor interest in another person which is
a party to the transaction with the issuer or any of its subsidiaries
and the transaction is not material to such other person;
4. There are no material indirect relationships for any material
underwriting discounts and commissions upon the sale of securities by
the issuer where any of the specified persons was or is to be a
principal underwriter or is a controlling person, or member, of a firm
which was or is to be a principal underwriter;
63
5. There are no material indirect relationships as to any transaction
involving the purchase or sale of assets by or to any issuer or any
subsidiary, otherwise than in the ordinary course of business, and thus,
no cost of the assets to the purchaser and, if acquired by the seller
within two years prior to the transaction, or costs thereof to the
seller;
6. There are no material indirect relationships involving any material
transactions which involve remuneration from the issuer or its
subsidiaries, directly or indirectly, to any of the specified persons
for services in any capacity unless the interest of such persons arises
solely from the ownership individually and in the aggregate of less than
10 percent of any class of equity securities of another corporation
furnishing the services to the issuer or its subsidiaries.
In addition, there are no persons on whose behalf any part of the
offering is to be made in a non-issuer distribution, except to the
extent that any authorized distributions by third-party sellers, who
have not yet been retained, are made.
XI.
ITEM 10.
SECURITIES BEING OFFERED
A. Capital stock:
l. title of class: common;
2. dividend rights: FLR has not yet discussed dividends, and plans to do
so only in the context of retaining a compensation expert to guide it on
this issue;
3. voting rights: common to all. All shareholders have one vote for each
share owned;
64
4. liquidation rights:
Shareholder liquidation rights have not been discussed as of yet.
Shareholder 'resale' rights are governed by the Reg. A+ rules within the
first 12 months of sale, and, in aggregate, cannot exceed 30% of the
total shares sold. Further, excepting this modification to Rule 144 of
the SEC, any such sellers must comply with the remaining portions of the
rule;
5. preemptive rights:
There are no preemptive rights, and no contracts for any preemptive
rights, and thus, the 'one class / one price' format is maintained. In
general, however, all shareholders will be issued additional shares with
each successive new issue, consistent with their amounts held and as
calculated using the dilution formula shown above;
6. conversion rights:
There are no conversion rights because there is only one class of stock:
common/voting;
7. redemption provisions:
There has been no discussion, yet, as to any redemption of shares, and
same will take place upon the retainer of a compensation and shares
expert in order to provide guidance;
8. sinking fund provisions:
As there are no bonds being sold in this offering, there are no sinking
fund provisions ;
9. liability to further calls or to assessment by the issuer:
Because the qualification application is limited to $6 million[29] to be
sold by third-party sellers, there will be no calls or assessments by
FLR, without further application and qualification;
65
B. debt securities are being offered:
There are no debt securities being offered as all shares in the offering
are 'one class/ one price.'
C. warrants, rights, or convertible securities:
There are no warrants, rights or convertible securities as all shares
are 'one class/ one price.'
D. Balance sheet[30]:
Assets
Current Assets[31] 2014 2015 2016
Cash 0 2,936.10 0
Accounts receivable 0 0 0
Inventory[32] 0 0 0
Prepaid expenses[33] 0 0 0
Short-term investments 0 0 0
Total current assets 0 0 0
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Fixed (long-term) Assets
Long-term investments 0 0 0
Property, plant &
equipment (less
accumulated depreciation)[34] 0 0 0
Intangible assets 0 0 0
Total fixed assets 0 0 0
Other Assets
Deferred income 0 0 0
Other 0 0 0
Total Other Assets 0 0 0
Total Assets 0 0 0
Liabilities & Owner's Equity
Current Liabilities
Accounts payable[35] 0 0 0
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Short-term loans 0 0 0
Income taxes payable 0 0 0
Accrued salaries & wages 0 0 0
Unearned income 0 0 0
Current portion of
long-term debt 0 0 0
Total current liabilities 0 0 0
Long-term Liabilities
Long-term debt 0 0 0
Deferred income tax 0 0 0
Other 0 0 0
Total long-term liabilities 0 0 0
Owner's[36] Equity
Owner's investment[37] 0 0 0
Retained earnings 0 0 0
Other 0 0 0
Total owner's equity 0 0 0
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Total Liabilities &
Owner's Equity 0 0 0
E. Statements of income, cash flows, and other stockholder equity:
Aside from the information provided in this offering circular, there are
no other statements of income, cash flows or other stockholder equity;
F. Financial Statements of Businesses Acquired or to be Acquired:
There are no businesses which have been acquired, and, at the present
time, no plans to acquire any businesses, and thus, there are no
financial statements other than any which are contained in this offering
circular.
This being said, in terms of future and long-term planning, FLR will
likely acquire certain businesses, for example, small, local broadband
companies, where existing middle mile infrastructure makes such
purchases feasible and also where such purchases, with an existing
customer base, may allow for ease of expansion into contiguous unserved
areas;
XII.
ITEM 11.
THIRD-PARTY SELLERS
A. Finders
1. Tom Taylor, V.P. at The Association for Project Management, is under
contract as a finder. His commission is 1.2% The contract is posted on
WGR's EDGAR file.
B . Broker/dealers
1. BrokerBank Securities, Inc. Philip Wright, President, CFA / FINRA /
SIPC. The commission to this company is 5%. The contract is posted on
WGR's EDGAR file.
69
XIII.
ITEM 12.
REQUEST FOR CONTINUING QUALIFICATION
Finger Lakes Region Rural Broadband Company, Inc., hereby requests
continuing qualification of this offering.
____________________________________________________________
Footnotes:
[1] Current amendments made after Blue Sky qualification by the State
of New York.
[2] Expenses of this Offering Circular are borne exclusively by the Issuer.
[3] 17 CFR 230.253
[4] All sales by the Issuer's representative to be concluded only in the
State of New York. Sales by third-party sellers to me be made pursuant to
their own registrations.
[5] The minimum for this offering is $5,000.00, and maximum for this offering
is $6 million.
[6] No shares offered on account of any securities holders.
[7] The minimum for this offering is $5,000.00, and maximum for this offering
is $6 million.
[8] The minimum for this offering is $5,000.00, and maximum for this offering
is $6 million.
[9] The minimum for this offering is $5,000.00, and maximum for this offering
is $6 million.
[10] The minimum for this offering is $5,000.00, and maximum for this offering
is $6 million..
[11] The minimum for this offering is $5,000.00, and maximum for this offering
is $6 million.
[12] The minimum for this offering is $5,000.00, and maximum for this offering
is $6 million.
[13] See, PUBLIC NOTICE, Federal Communications Commission, DA 13-324,
Released: March 1, 2013 Office of Engineering and Technology Authorizes
TV White Space Database Administrators to Provide Service to Unlicensed
Devices Operating on Unused TV Spectrum Nationwide,ET Docket No. 04-186.
[14] See, In Re Donald J. Trump Casino Securities Litigation - Taj
Mahal Litigation, 7 F.3d 357 (3rd Cir. 1993)
[15] See, Section 3 (b) (2) (C), SEC Rules, JOBS Act and Rule 405, SEC Rules
[16] During the course of that survey period, Mr. Ramos mistakenly
stated the effective date of JOBS Act/ Rule 506 in offering documents
being prepared in anticipation of being offered in the State of Florida.
He resolved the issue with a pledge to avoid any such misstatements in
the future. The matter is reported
here:http://www.flofr.com/StaticPages/documents/OFRMonthlyReport122013.pdf
[17] Confirmed by SEC counsel, Zach Fallon.
[18] Thus, no secondary sellers, including underwriters or brokers or
dealers, and therefore, no additional fees for this first offering.
Subject to change upon qualification and amendment of this offering
circular upon any new distribution plan, consistent with Regulation A
rules governing this offering circular.
[19] The minimum for this offering is $5,000.00, and maximum for this offering
is $6 million.
[20] The minimum for this offering is $5,000.00, and maximum for this offering
is $6 million.
[21] As amended, effective June 19, 2015.
[22] See, www.fcc.gov/encyclopedia/rural-broadband-experiments
[23] Rural Broadband Company, Inc.
[24] A useful analogy is with the earlier implementation of rural
electrification in the United States.
[25] All are making JOBS Act - Regulation A - Tier 1 application for
qualification. The other three, in addition to FLR are: Mid-Hudson
Region Rural Broadband Company, Inc. (MHR), Southern Tier Region Region
Rural Broadband Company, Inc., and Western Gateway Region Region Rural
Broadband Company, Inc.
[26] The minimum for this offering is $5,000.00, and maximum for this offering
is $6 million.
[27] An earlier version of this Amended Offering Circular was uploaded
onto EDGAR at the same time as the applicant's reply letter to the SEC.
[28] Similarly, an earlier version of the Amended Offering Statement was
uploaded to the EDGAR system as a part of FLR's compliance with the
SEC's letter dated July 24, 2015.
[29] The minimum for this offering is $5,000.00, and maximum for this offering
is $6 million.
[30] Form 1-A, Part F/S (a)(1) & (b)(1)(2) & (3)(A).
[31] The company was formed specifically to comply with both pre and
post-JOBS Act requirements for Rule 506.
[32] The company does not sell product, and thus would have no inventory.
[33] Prior to the formation of the company, so as to comply with JOBS
Act requirements, the project area that encopasses the company's reach,
together with other project areas, to include other applicant companies,
did achieve significant prepaid expense funding relative to the
applications for stimulus funding. All of this funding activity
pre-dated JOBS Act, and occurred largely in the years 2009-2010. That
original funding allowed for the initial development of the company's
project areas and initial designs.
[34] The company will make every effort to avoid owning property, such
as land sites for cell. towers, or buildings for base stations. Such
property has been shown to be of a loss nature for such projects, and,
in addition, there is already a well-developed industry for the cellular
tower sector that makes the ownership of property for the projects
largely unnecessary. Further, plant and equipment, for the most part,
will be owned by either the original equipment manufacturer and/or the
distributor, and leased to the company.
[35] There are no accounts
payable by the company. In the near future, however, consistent with its
corporate structure, the parent company will expend funds to prepay for
certain GIS mapping of one of the project areas within the company. This
project area will serve as the first defined area for funding for
Regulation A investors, upon approval of the Regulation A application.
[36] To the extent that this term describes the company. This as
opposed to shares owned by individuals.
[37] To say again, the project area did benefit from prepaid expense
funding that was provided in the beginning years for stimulus funding
grant applications.
70