10-Q/A 1 d10871ae10vqza.txt FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A (Mark One) [X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2003. [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ___________ to ___________. COMMISSION FILE NUMBER 000-26153 ---------- HIGH SPEED ACCESS CORP. (Exact name of Registrant as specified in its charter) DELAWARE 61-1324009 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 9900 CORPORATE CAMPUS DRIVE, SUITE 3000 LOUISVILLE, KENTUCKY 40223 (Address of principal executive offices, including zip code) 502/657-6340 (Registrant's telephone number, including area code) FORMER NAME, FORMER ADDRESS, AND FORMER YEAR, IF CHANGED SINCE LAST REPORT: NOT APPLICABLE Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). YES [ ] NO [X] Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] Number of shares of Common Stock outstanding as of August 1, 2003...40,294,783 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Quarterly Report on Form 10-Q contains certain statements of a forward-looking nature relating to future events or the future financial performance of the Company. Such statements are only predictions, involve risks and uncertainties, and actual events or results may differ materially from the results discussed in the forward-looking statements. Factors that could cause or contribute to such differences include those discussed under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations - Risk Factors" as well as those discussed in other filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2002. OVERVIEW High Speed Access Corp. (hereinafter referred to as the Company, we, us or our) formerly provided high speed Internet access and related services to residential and commercial customers primarily via cable modems and international ISP infrastructure services. On August 13, 2002, our Board concluded that the liquidation of the Company was the best alternative available for maximizing stockholder value and adopted a Plan of Liquidation and Dissolution (the "Plan"). The Plan was approved by the holders of a majority of the Company's shares on November 27, 2002. The key features of the Plan are (1) filing a Certificate of Dissolution with the Secretary of State of Delaware and thereafter remaining in existence as a non-operating entity for three years; (2) winding up our affairs, including the settlement of any then-outstanding issues with Charter relating to the Asset Sale, selling any remaining non-cash assets of the Company, and taking such action as may be necessary to preserve the value of our assets and distributing our assets in accordance with the Plan; (3) paying our creditors; (4) terminating any of our remaining commercial agreements, relationships or outstanding obligations; (5) resolving our outstanding litigation; (6) establishing a Contingency Reserve for payment of the Company's expenses and liabilities; and (7) preparing to make distributions to our stockholders. In connection with the adoption of the Plan and the anticipated liquidation, the Company adopted the liquidation basis of accounting effective November 27, 2002, and has valued its assets at their estimated net realizable cash values and has stated its liabilities, including costs to liquidate, at their estimated settlement amounts, all of which approximate their estimated fair values. Uncertainties as to the value to be realized from the disposal of the Company's assets (other than cash), and the ultimate amount paid to settle its liabilities make it impracticable to predict the aggregate net value that may ultimately be distributable to stockholders. Claims, liabilities and future expenses of liquidation (including salaries, payroll and local taxes, professional fees, and miscellaneous office expenses), although currently declining in the aggregate, will continue to be incurred with execution of the Plan. Although we do not believe that a precise estimate of the Company's net assets can currently be made, we believe that available cash and cash equivalent investments and amounts received from the sale of office furniture will be adequate to provide for the Company's obligations, liabilities, operating costs and claims (including contingent liabilities), and to make future cash distributions to stockholders. Under Delaware law, the Company will remain in existence as a non-operating entity until December 4, 2005 and is required to maintain a certain level of liquid assets and reserves to cover any remaining liabilities and pay operating costs during the wind-up period. During the wind-up period, the Company will attempt to convert its remaining assets to cash and settle its liabilities as expeditiously as possible. CRITICAL ACCOUNTING POLICIES AND ESTIMATES Liquidation Basis of Accounting. As of November 27, 2002, all activities of the Company are presented under the liquidation basis of accounting. Inherent in the liquidation basis of accounting are significant management estimates and judgments. Under the liquidation basis of accounting, assets have been valued at their estimated net realizable values and liabilities are stated at their anticipated settlement amounts, all of which approximate their estimated fair values. The estimated net realizable values of assets and settlement amounts of liabilities, including costs of liquidation, represent our best estimate of the recoverable value of the assets and settlement amounts of liabilities. There can be no assurance, however, that we will be successful in selling the assets at their estimated net realizable value or in settling the liabilities at their estimated amounts. The liquidation basis of accounting requires that we accrue an estimate for all liabilities related to expenses to be incurred during the wind-up period. While we believe our estimates are reasonable under the circumstances, if the length of our wind-up period were to change or other conditions were to arise, actual results may differ from these estimates and these differences may be material. The Company made an Initial Cash Distribution of $1.40 per share or $56.4 million to its stockholders on May 30, 2003. The Board of Directors also authorized a Subsequent Cash Distribution of $0.17 per share or $6.9 million on August 29, 2003, payable to shareholders of record as of August 22, 2003. The "per share" amounts are based on 40,294,783 shares of common stock outstanding as of August 1, 2003. Other than this Subsequent Cash Distribution, the Company does not expect to make any other liquidating distributions prior to the transfer of its remaining assets and liabilities to a liquidating trust on or before December 31, 2003. At such time, the Company will most likely deregister under the Securities Act of 1934, and will no longer be subject to its rules, including those relating to reporting and proxy solicitations. In addition, the Company expects to cancel its outstanding shares in exchange for illiquid beneficial interests in the liquidating trust. At such time, we expect to close our stock transfer books, after which you will no longer be able to transfer shares. After the stock transfer books have been closed, certificates representing shares of common stock will not be assignable or transferable on our books except by will, intestate succession or operation of law. After the final record date for the recording of stock transfers, we will not issue any new stock certificates, other than replacement certificates. Due to the duration of the wind-up period to December 4, 2005, and provision in Delaware law that the Company maintain reserves sufficient to allow for the payment of all its liabilities and obligations, including all contingent, conditional and unmatured claims, the Company established a Contingency Reserve upon the adoption of liquidation basis accounting on November 27, 2002. The amount of reserve initially established was $2.0 million and was unchanged as of March 31, 2003. At June 30, 2003, the Company lowered the established Contingency Reserve to $1,150,000 as a result of the receipt of the remainder of the Charter Holdback. At June 30, 2003, the Company has no known material claims against this reserve and will periodically assess whether maintenance of a lower or higher Contingency Reserve is required. In the event there are no claims against this reserve, then the amount of any future liquidating distributions and the Final Liquidation Payment on or before December 4, 2005 would include the full amount of the Contingency Reserve. The amount and timing of any future liquidating distributions by the trustee after January 1, 2004 will depend upon a variety of factors including, but not limited to, the actual proceeds from the realization of the Company's assets, the ultimate settlement amounts of the Company's liabilities and obligations and actual costs incurred in connection with carrying out the Plan, including salaries, administrative and operating costs during the wind-up period. A summary of significant estimates and judgments utilized in preparation of the June 30, 2003 condensed consolidated financial statements on a liquidation basis follows: Interest Receivable. At June 30, 2003, interest receivable of $65,000 represents the Company's estimate of future interest earnings on cash, cash equivalents and short-term investments over the wind-up period through December 4, 2005 and accounts for less than 1.0% of the Company's total assets. Furniture and Fixtures. At June 30, 2003, furniture and fixtures of $62,000 represents the Company's estimate of cash proceeds to be received on the sale of office furniture. Accounts Payable and Accrued Liabilities. At June 30, 2003, accounts payable and accrued expenses were $0.4 million. Included in this amount are accrued circuit termination charges of $0.2 million and $0.2 million for the expected payout on 2,862,174 stock options outstanding under the Company's stock option plans that were cancelled on March 3, 2003. Estimated Costs to be Incurred During The Wind-up Period. At June 30, 2003, the Company estimates that there are $0.6 million of costs to be incurred through December 4, 2005, including compensation for liquidation personnel ($0.2 million) and professional fees and other miscellaneous costs ($0.4 million). Contingency Reserve. In view of the duration of the wind-up period to December 4, 2005, and provision in Delaware law that the Company maintain reserves sufficient to allow for the payment of all its liabilities and obligations, including all contingent, conditional and unmatured claims, the Company established a Contingency Reserve upon the adoption of liquidation basis accounting on November 27, 2002. The amount of reserve initially established was $2.0 million and was unchanged as of March 31, 2003. At June 30, 2003, the Company lowered the established Contingency Reserve to $1,150,000 as a result of the receipt of the remainder of the Charter Holdback. At June 30, 2003, the Company has no known material claims against this reserve and will periodically assess whether maintenance of a lower or higher Contingency Reserve is required. In the event there are no claims against this reserve, then the amount of any future liquidating distributions and the Final Liquidation Payment that may be paid to stockholders would include the full amount of the Contingency Reserve. STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION The condensed consolidated financial statements for the three and six months ended June 30, 2002 were prepared on the going concern basis of accounting, which contemplates realization of assets and satisfaction of liabilities in the normal course of business. The Company adopted the liquidation basis of accounting as of November 27, 2002. The decrease in net assets in liquidation during the six months ended June 30, 2003 is the result of the $56.4 million Initial Cash Distribution plus the following adjustments made during the six months ended June 30, 2003 (in thousands): ADJUST ASSETS AND LIABILITIES TO FAIR VALUE: Increase in estimated future interest income $ 28 Accounts payable and accrued expenses 633 ------ Total adjustments to fair value 661 ------ ACCRUE ADDITIONAL ESTIMATED COSTS DURING WIND-UP: Costs to be incurred during the wind-up period (56) ------ Total estimated costs during the wind-up period (56) ------ Total liquidation adjustments $ 605 ======
The decrease in accounts payable and accrued expenses is the result of the settlement of liabilities at less than the recorded amounts. The increase in estimated costs during the wind-up period is primarily the result of additional legal fees relating to the remaining $1.0 holdback from Charter. The Company made an Initial Cash Distribution of $1.40 per share or $56.4 million to its stockholders on May 30, 2003. The Board of Directors also authorized a Subsequent Cash Distribution of $0.17 per share or $6.9 million on August 29, 2003, payable to shareholders of record as of August 22, 2003. The "per share" amounts are based on 40,294,783 shares of common stock outstanding as of August 1, 2003. LIQUIDITY AND CAPITAL RESOURCES The Company's primary objectives are to liquidate its assets in the shortest time period possible while realizing the maximum values for such assets. The actual nature, amount, and timing of all future distributions will be determined by the Board in its sole discretion, and will depend in part upon the Company's ability to convert certain remaining assets into cash and settle certain obligations. Although the liquidation is currently expected to be concluded on December 4, 2005, the period of time to liquidate the assets and distribute the proceeds is subject to uncertainties and contingencies, many of which are beyond the Company's control (see Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Risk Factors"). The Company made an Initial Cash Distribution of $1.40 per share or $56.4 million to its stockholders on May 30, 2003. The Company has also announced that its Board of Directors authorized a Subsequent Cash Distribution of $0.17 per share or $6.9 million on August 29, 2003, payable to shareholders of record as of August 22, 2003. Other than this Subsequent Cash Distribution, the Company does not expect to make other liquidating distributions prior to the Final Liquidation Payment on or around December 4, 2005. The "per share" amounts are based on 40,294,783 shares of common stock outstanding as of August 1, 2003. These amounts do not include any benefit that might be realized if some or all of the Contingency Reserve is not required to pay claims. The Company currently intends to transfer its remaining assets and liabilities to a liquidating trust on or before December 31, 2003. At such time, the Company will most likely deregister under the Securities Act of 1934, and will no longer be subject to its rules, including those relating to reporting and proxy solicitations. In addition, the Company expects to cancel its outstanding shares in exchange for illiquid beneficial interests in the liquidating trust. At such time, we expect to close our stock transfer books, after which you will no longer be able to transfer shares. After the stock transfer books have been closed, certificates representing shares of common stock will not be assignable or transferable on our books except by will, intestate succession or operation of law. After the final record date for the recording of stock transfers, we will not issue any new stock certificates, other than replacement certificates. Due to the duration of the wind-up period to December 4, 2005, and provision in Delaware law that the Company maintain reserves sufficient to allow for the payment of all its liabilities and obligations, including all contingent, conditional and unmatured claims, the Company established a Contingency Reserve upon the adoption of liquidation basis accounting on November 27, 2002. The amount of reserve initially established was $2.0 million and was unchanged as of March 31, 2003. At June 30, 2003, the Company lowered the established Contingency Reserve to $1,150,000 as a result of the receipt of the remainder of the Charter Holdback. At June 30, 2003, the Company has no known material claims against this reserve and will periodically assess whether maintenance of a lower or higher Contingency Reserve is required. In the event there are no claims against this reserve, then the amount of any future liquidating distributions and the Final Liquidation Payment that may ultimately be paid to stockholders would include the full amount the Contingency Reserve. At June 30, 2003, the Company estimates that there is $0.6 million of operating costs to be incurred during the remaining wind-up period through December 4, 2005. The estimated liabilities of the Company at June 30, 2003 total $1.0 million. In addition, the Company has a Contingency Reserve of $1,150,000 (see Note 1 of "Notes to Condensed Consolidated Financial Statements"), equivalent to approximately $0.0285 per share. At June 30, 2003, net assets in liquidation were $8.0 million. We had cash and cash equivalents and short-term investments of $8.1 million and $0.9 million, respectively, compared to cash and cash equivalents and short-term investments of $63.6 million and $1.2 million, respectively, at December 31, 2002. The net decrease in cash, cash equivalents and short-term investments of $56.0 million is the result of the following: (in thousands): Receipt of Charter holdback $ 2,103 Interest received 344 Sale of furniture and fixtures 51 Initial cash distribution (56,413) Compensation and related expenses and severance (1,178) Property, income and franchise taxes (166) Legal settlement (167) Professional fees (218) Circuit termination charges (89) Other accrued expenses (219) ----------- Net decrease in cash, cash equivalents and short-term investments $ (55,952) ===========
We invest excess cash in money market accounts with the intent to make such funds readily available for future distributions to stockholders. The amount and timing of liquidating distributions will depend upon a variety of factors including, but not limited to, the actual proceeds from the realization of the Company's assets, the ultimate settlement amounts of the Company's liabilities and obligations and actual costs incurred in connection with carrying out the Plan, including salaries, administrative and operating costs during the wind-up period. INVESTMENT PORTFOLIO. Cash equivalents are highly liquid investments with insignificant interest rate risk and original maturities of 90 days or less and are stated at amounts that approximate fair value based on quoted market prices. Cash equivalents consist of investments in interest-bearing money market accounts with financial institutions. Short-term investments at June 30, 2003 are comprised solely of certificates of deposit. LEGAL PROCEEDINGS. The Delaware Class Action Lawsuits. The Company, our then directors, certain former directors as well as Charter and Paul Allen, were named as defendants in four putative class action lawsuits filed in the Court of Chancery of the State of Delaware (Denault v. O'Brien, et. al., Civil Action No. 19045-NC, Tesche v. O'Brien, et al., Civil Action No. 19046-NC, Johnson v. O'Brien, et. al., Civil Action No. 19053-NC, and Krim v. Allen, et al., Civil Action 19478-NC). All four lawsuits, which alleged breach of fiduciary duties by the individual defendants and Charter, were consolidated and settled with the approval of the Delaware Chancery Court on April 16, 2003. No objections or appeals to the settlement were filed. The Company paid its $166,500 portion of the $390,000 settlement amount required to reimburse plaintiffs' counsel for their fees and expenses incurred in the litigation. The IPO Litigation. Also, on November 5, 2001, the Company, our President and Chief Financial Officer (Mr. George Willett) and one of our former Presidents (Mr. Ron Pitcock), together with Lehman Brothers, Inc., J.P. Morgan Securities, Inc., CIBC World Markets Corp., and Banc of America Securities, Inc., were named as defendants in a purported class action lawsuit filed in the United States District Court for the Southern District of New York (Ruthy Parnes v. High Speed Access Corp., et. al., Index No. 01-CV-9743(SAS)). The lawsuit alleges that our Registration Statement, dated June 3, 1999, and Prospectus, dated June 4, 1999, for the issuance and initial public offering of 13,000,000 shares of our common stock to investors contained material misrepresentations and/or omissions. The purported class action alleges violations of Sections 11 and 15 of the Securities Act of 1933 (the "1933 Act") and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "1934 Act") and Rule 10b- promulgated thereunder. The essence of the complaints is that defendants issued and sold our common stock pursuant to the Registration Statement for the IPO without disclosing to investors that certain underwriters in the offering had solicited and received excessive and undisclosed commissions from certain investors. The complaints also allege that our Registration Statement for the IPO failed to disclose that the underwriters allocated Company shares in the IPO to customers in exchange for the customers' promises to purchase additional shares in the aftermarket at pre-determined prices above the IPO price, thereby maintaining, distorting and/or inflating the market price for the shares in the aftermarket. The plaintiff asks to represent the interest of all holders of our common stock and seeks unspecified monetary damages. On July 15, 2002, the Company moved to dismiss all claims against it and Messrs. Willett and Pitcock. The allegations against Messrs. Willett and Pitcock were dismissed without prejudice on October 11, 2002 pursuant to a Reservation of Rights and Tolling Agreement dated as of July 20, 2002. On February 19, 2003, the Court denied the Company's motion to dismiss the alleged violations of Section 11 and 15 of the 1933 Act. However, the Court granted the Company's motion to dismiss the alleged violations of Sections 10(b) and 20(a) of the 1934 Act and Rule 10b- promulgated thereunder. On February 28, 2003, Charter notified the Company of its assertion of a potential claim for indemnity in respect of Charter being named as a "successor in interest" to the Company in the IPO Litigation and deferred release of half of the $2.0 million indemnity holdback. Charter was dismissed as a defendant in the IPO Litigation on May 28, 2003 and paid the remaining $1.0 million indemnity holdback to us on June 5, 2003. On June 26, 2003, the Plaintiffs' Executive Committee announced that a proposed settlement between the approximately 300 issuer defendants and their directors and officers and the plaintiffs has been structured in the IPO Litigation which would guarantee at least $1.0 billion to investors who are class members from the insurers of the issuers. The cases will continue against the 55 investment bank underwriter defendants. The Company had assented to participate in the settlement, which is subject to final documentation and review and consent of the Court. If final settlement occurs, the Company will be removed from the litigation without payment of any funds. With respect to the allegations against the Company, we believe this lawsuit is without merit and intend to continue to vigorously defend against the claims made therein. We express no opinion as to the allegations lodged against Lehman Brothers, Inc., J.P. Morgan Securities, Inc., CIBC World Markets Corp., and Banc of America Securities Inc. We do not believe that the IPO litigation will have a material adverse effect on our net assets in liquidation. RISK FACTORS You should carefully consider the following factors and other information in this Form 10-Q and other filings we make with the Securities and Exchange Commission before trading in our common stock. The Company's plan is to wind-up the Company's affairs and distribute its net assets to the stockholders. The timing and completion of these objectives are subject to a number of risks and uncertainties, including those set forth below: WE MAKE FORWARD-LOOKING STATEMENTS IN THIS FORM 10-Q THAT ARE SUBJECT TO RISKS THAT MAY CHANGE THE LIKELIHOOD OF THOSE STATEMENTS BEING REALIZED. This Form 10-Q, as well as other documents incorporated by reference herein and to which we refer in this Form 10-Q, describes many of the positive factors and assumed benefits of the Plan. You should also be aware of factors that could have a negative impact on the Plan and our ability to make distributions of net assets. When we use such words as "believes", "expects", "anticipates", or similar expressions, we are making forward-looking statements. In addition, we have made in this Form 10-Q certain forward looking statements, including statements concerning the timing and amount of distributions of cash to stockholders and other statements concerning the value of our net assets and the resultant liquidation value per share of common. All such forward-looking statements are necessarily only estimates of future results, and there can be no assurance that actual results will not materially differ from expectations. These statements are subject to many risks, including those set forth in each of the following paragraphs. YOU WILL NOT KNOW THE EXACT AMOUNT OR TIMING OF ANY FUTURE LIQUIDATING DISTRIBUTIONS. The methods used by the Board and management to estimate the value of our net assets do not result in an exact determination of value nor are they intended to indicate definitively the amount of cash you will receive during the winding up and liquidation of the Company. The Company has established reserves for known and unknown liabilities (see "Contingency Reserve" discussion below) and the adequacy of those reserves will be reviewed prior to making any future cash distributions to stockholders. We cannot assure you that the amount you will receive in liquidation will equal or exceed the price or prices at which the common stock has recently traded or may trade in the future. Any distributions to you may be reduced by additional liabilities we may incur, and the ultimate settlement amounts of our liabilities. Additionally, even though we are not aware of any other pending or threatened claims, a creditor of the Company or other party with a claim against us might file a new lawsuit or obtain an injunction against our making any further distributions to you under the Plan. In that event, either our Board, the liquidating trustee or a court may decide that the amounts to be distributed are needed to provide for the payment of such liabilities and expenses, including unknown or contingent liabilities that may arise or be put in dispute at a later date. WE MIGHT MISCALCULATE OR FAIL TO ADEQUATELY RESERVE AN AMOUNT SUFFICIENT TO COVER OUR CONTINGENT LIABILITIES. On December 4, 2002 we filed a Certificate of Dissolution with the State of Delaware dissolving the Company. According to Delaware General Corporation Law, we will continue to exist for three years after the dissolution becomes effective (December 4, 2005) or for a longer period if the Delaware Court of Chancery requires us to, for the purpose of prosecuting and defending suits against us and enabling us to dispose of our property, discharge our liabilities and distribute to our stockholders any remaining assets. Under Delaware law, the Board established a reserve for known and unknown liabilities expected to be incurred through completion of our liquidation (the "Contingency Reserve"), and the adequacy of that reserve has been and will continue to be reviewed prior to making cash distributions to you. As of June 30, 2003, we set aside a $1,150,000 Contingency Reserve. However, we cannot assure you that such Contingency Reserve will be adequate to cover all of our expenses and liabilities expected to be incurred through completion of our liquidation. If the Contingency Reserve is insufficient for payment of our expenses and liabilities, you could be held liable for payment to our creditors of your proportional share of amounts owed to creditors in excess of the Contingency Reserve. In that regard, your liability would be limited to the amounts previously received by you from us or a liquidating trust established by the Company. Accordingly, you could be required to return some or all distributions previously made to you. In such an event, you could receive nothing from us under the Plan. Moreover, you could incur a net tax cost if you paid taxes on the amounts received from us and then have to repay such amounts back to our creditors. Unless you are able to get a corresponding reduction in taxes in connection with your repayment, you may end up having paid taxes on monies that you have had to return. YOU MAY NOT BE ABLE TO BUY OR SELL SHARES OF OUR COMMON STOCK IF WE CLOSE OUR STOCK TRANSFER BOOKS. We expect to close our stock transfer books on or before December 31, 2003, and in any event on the close of business on the date on which the remaining assets of the Company are transferred to a liquidating trust, after which you will no longer be able to transfer shares. After the stock transfer books have been closed, certificates representing shares of common stock will not be assignable or transferable on our books except by will, intestate succession or operation of law. After the final record date for the recording of stock transfers, we will not issue any new stock certificates, other than replacement certificates. OUR STOCK PRICE COULD BE HIGHLY VOLATILE AND OUR STOCK IS LIKELY TO BE THINLY TRADED. Our stock price has been trading at a discount to our net cash value per share. Even though we do not expect to make any additional cash distributions prior to the transfer of our remaining assets and liabilities to a liquidating trust on or before December 31, 2003, the announcement of additional cash distributions could cause our stock to fluctuate suddenly and widely depending on the amount and timing of such distributions and the amount of funds still retained by the Company, and these fluctuations may be unrelated to our performance or actions with respect to the Plan. General market price declines or market volatility in the future could adversely affect the price of the our common stock, and thus, the current market price may not be indicative of future market prices. In addition, at such time as the Company transfers its remaining assets and liabilities to a liquidating trust, the Company will most likely deregister and cancel its outstanding shares in exchange for illiquid beneficial interests in the liquidating trust. This deregistration and cancellation, or even the announcement of such a deregistration and cancellation could also adversely affect the price of our common stock. Moreover, if the number of the Company's shareholders of record drops below 300, the Company may deregister under the Securities Act of 1934 prior to December 31, 2003, and will no longer be subject to its rules, including those relating to reporting and proxy solicitations. Following our $0.17 per share distribution on August 29, 2003 and continuing until the closure of our stock transfer books on or about December 31, 2003, it is possible that our stock will be thinly traded on the over the counter electronic bulletin board and the Pink Sheets, which could affect a stockholder's ability to obtain price quotations and/or acquire or dispose of the Company's shares. THE TAX CONSEQUENCES OF OUR LIQUIDATION MAY NOT BE FAVORABLE TO YOU The following discussion is a general summary of what the Company believes are the material Federal income tax consequences of the Plan to its stockholders, but does not purport to be a complete analysis of all the potential tax effects: As a consequence of our liquidation, our stockholders will recognize gain or loss equal to the difference between (i) the sum of the amount of cash distributed to them and the fair market value (at the time of distribution) of any property distributed to them (net of their proportionate share of liabilities), and (ii) their tax basis for their shares of the common stock. A stockholder's tax basis in his or her shares will depend upon various factors, including the amount paid by the stockholder for his or her shares and the amount and nature of any distributions received with respect to those shares. A stockholder's gain or loss will be computed on a "per share" basis. We have made more than one liquidating distribution, and the amount of each such liquidating distribution will be allocated proportionately to each share of stock owned by a stockholder. Any gain will be recognized by reason of a liquidating distribution only to the extent that the aggregate value of such distributions received by a stockholder with respect to a share exceeds his, her or its tax basis for that share. Any loss will be recognized only if the aggregate value of the liquidating distributions with respect to a share is less than the stockholder's tax basis for that share. Any gain or loss recognized by a stockholder will be capital gain or loss provided the shares are held as capital assets. Gain resulting from distributions of cash or assets from a corporation pursuant to a plan of liquidation is, therefore, generally capital gain rather than ordinary income. If it were to be determined that distributions made pursuant to the Plan were not liquidating distributions, the result could be treatment of distributions as dividends, taxable at ordinary income rates. Upon any distribution of property, the stockholder's tax basis in such property immediately after the distribution will be the fair market value of such property at the time of distribution. The gain or loss realized upon the stockholder's future sale of that property will be measured by the difference between the stockholder's tax basis in the property at the time of the sale and the proceeds of the sale. After the close of each year, we will provide stockholders and the IRS with a statement of the amount of cash distributed to the stockholders and, if applicable, our best estimate as to the value of any property distributed to them during that year. There is no assurance that the IRS will not challenge such property valuation. As a result of such a challenge, the amount of gain or loss recognized by stockholders might be changed. Distributions to stockholders could result in tax liability to any given stockholder exceeding the amount of cash received, requiring the stockholder to meet the tax obligations from other sources or by selling all or a portion of the assets received. We intend to structure the transfer of our remaining assets and liabilities to the liquidating trust so that stockholders will be treated for tax purposes as having received their proportionate share of the property at the time it is transferred to the liquidating trust. In such event, the amount of the distribution deemed to have been received by a stockholder will be reduced by his or her proportionate share of known liabilities assumed by the liquidating trust or to which the property transferred is subject. Assuming such treatment is achieved, assets transferred to the liquidating trust will cause the stockholders to be treated in the same manner for Federal income tax purposes as if the stockholders had received a distribution directly from us and they may be subject to tax on their proportionate value of such transferred assets even though they will not have received any actual distributions from the Company or the liquidating trust with which to pay the tax. The liquidating trust itself should not be subject to tax. After formation of the liquidating trust, the stockholders will take into account for Federal income tax purposes their allocable portion of any income, gain or loss recognized by the liquidating trust. AS A RESULT OF THE ONGOING OPERATIONS OF THE LIQUIDATING TRUST, STOCKHOLDERS SHOULD BE AWARE THAT THEY MAY BE SUBJECT TO TAX, WHETHER OR NOT THEY HAVE RECEIVED ANY ACTUAL DISTRIBUTIONS FROM THE LIQUIDATING TRUST WITH WHICH TO PAY THE TAX. Stockholders may also be subject to state or local taxes and should consult their tax advisor with respect to the state and local tax consequences of the Plan. The foregoing summary of certain Federal income tax consequences is included for general information only and does not constitute legal advice to any stockholder. The tax consequences of the Plan may vary depending upon your particular circumstances. We recommend that you consult your own tax advisor regarding the specific tax consequences of the Plan to you. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 as amended, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. High Speed Access Corp. Date: November 24, 2003 By /s/ George E. Willett ------------------------------------- George E. Willett President and Chief Financial Officer EXHIBIT INDEX 31.1 Certification of President and CFO Pursuant to Securities Exchange Act Rules 13a-14 and 15d-14 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification Pursuant To 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002