10QSB 1 v095196_10qsb.htm

SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 
Form 10-QSB
 
x
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
 
For the quarterly period ended September 30, 2007 or
 
o
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Commission File Number: 000-52015
 
URON Inc.

(Exact Name of Registrant as Specified in its Charter)
 
Minnesota
47-0848102
 
(State or Other Jurisdiction of Incorporation or Organization)
 (I.R.S. Employer Identification Number)
 
 
9449 Science Center Drive, New Hope, MN 55428
(Address of Principal Executive Offices) (Zip Code)

 
Registrant’s telephone number, including area code: (763) 504-3000
 
N/A

  (Former name, former address and former fiscal year, if changed since last report)

 
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
 
Yes x No o
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
Yes x No o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer o
Accelerated filer o
Non-accelerated filer x




APPLICABLE ONLY TO CORPORATE ISSUERS
 
As of November 19, 2007, the following securities of the Registrant were outstanding: 7,510,255 shares of common stock, no par value per share.
 
Transitional Small Business Disclosure Format (Check One): Yes o No x
 





URON Inc.
 
 
4
Item 1. Financial Statements
 
4
Item 2. Management’s Discussion and Analysis or Plan of Operation
 
14
Item 3. Controls and Procedures
 
19
PART II. OTHER INFORMATION
20
Item 1. Legal Proceedings
 
20
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 
20
Item 3. Defaults upon Senior Securities Securities
 
20
Item 4. Submission of Matters to a Vote of Security Holders
 
20
Item 5. Other Information
 
20
Item 6. Exhibits
 
20
SIGNATURES
21
   
EXHIBIT 31.1 - Certification Pursuant to Section 302  
 
EXHIBIT 32.1 - Certification Pursuant to Section 906  





PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

URON INC.
BALANCE SHEETS

ASSETS
 
CURRENT ASSETS
 
September 30, 2007
(unaudited)
 
December 31, 2006
(audited)
 
  Cash
 
$
2,785
 
$
1,523
 
Accounts receivable, net
   
67
   
1,551
 
Related party receivable
   
11,550
   
-
 
Other current assets
   
11,250
   
67,958
 
Total current assets
   
25,652
   
71,032
 
               
TOTAL ASSETS
 
$
25,652
 
$
71,032
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
CURRENT LIABILITIES
             
Short-term debt, net of discount
 
$
16,373
 
$
14,000
 
Accounts payable
   
16,158
   
10,401
 
Deferred revenue
   
1,681
   
2,167
 
Accrued interest
   
600
   
167
 
Related party payable
   
-
   
4,914
 
 Total current liabilities
   
34,812
   
31,649
 
               
               
STOCKHOLDERS’ EQUITY (DEFICIT)
             
Common stock, no par value (200,000,000 shares authorized, 7,510,255 and 4,710,255 shares issued and outstanding)
   
369,919
   
234,800
 
Accumulated deficit
   
(379,079
)
 
(195,417
)
Total stockholders’ equity (deficit)
   
(9,160
)
 
39,383
 
               
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
 
$
25,652
 
$
71,032
 
 
 
See accompanying notes to financial statements.




URON INC.
STATEMENTS OF OPERATIONS



   
Three Months Ended
 
Nine Months Ended
 
   
September 30, 2007
(unaudited)
 
September 30, 2006
(unaudited)
 
September 30, 2007
(unaudited)
 
September 30, 2006
(unaudited)
 
                   
REVENUES
 
$
12,592
 
$
16,076
 
$
43,017
 
$
77,287
 
                           
COSTS AND EXPENSES
                         
Cost of products and services (exclusive of
   
466
   
3,344
   
2,011
   
21,152
 
amortization and depreciation)
                         
Selling, general and administrative
   
51,476
   
24,910
   
216,650
   
64,698
 
                           
Total Costs and Expenses
   
51,942
   
28,254
   
218,661
   
85,850
 
                           
LOSS FROM OPERATIONS
   
(39,350
)
 
(12,178
)
 
(175,644
)
 
(8,563
)
                           
OTHER EXPENSE
                         
Interest expense
   
(5,621
)
 
-
   
(8,018
)
 
-
 
LOSS BEFORE EXPENSE FROM INCOME TAXES
   
(44,971
)
 
(12,178
)
 
(183,662
)
 
(8,563
)
                           
INCOME TAX BENEFIT
   
-
   
(1,445
)
 
-
   
-
 
                           
NET LOSS
 
$
(44,971
)
$
(10,733
)
$
(183,662
)
$
(8,563
)
                           
BASIC AND DILUTED - LOSS PER COMMON SHARE
 
$
(0.01
)
$
(0.00
)
$
(0.03
)
$
(0.00
)
                           
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC AND DILUTED
   
7,396,125
   
5,506,522
   
5,951,281
   
8,485,714
 
 
 
See accompanying notes to financial statements.





URON INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)

   
NINE MONTHS ENDED
SEPTEMBER 30,
 
   
2007
 
2006
 
           
OPERATING ACTIVITIES
         
           
Net loss
 
$
(183,662
)
$
(8,563
)
Adjustments to reconcile net loss to cash flows from operating activities:
             
Provision for doubtful accounts receivable
   
(2,700
)
 
(6,330
)
Amortization of original issue discount
   
2,992
   
-
 
Changes in operating assets and liabilities:
             
Accounts receivable
   
4.184
   
9,622
 
Prepaid expenses
   
101,708
   
(97,083
)
Accounts payable
   
5,757
   
1,555
 
Deferred revenue
   
(486
)
 
(1,826
)
Accrued interest
   
433
   
-
 
Related party receivable/payable
   
(16,464
)
 
102,625
 
Net cash flows from operating activities
   
(88,238
)
 
-
 
               
FINANCING ACTIVITIES
             
Proceeds from notes payable
   
89,500
   
-
 
Net cash flows from financing activities
   
89,500
   
-
 
               
INCREASE IN CASH
   
1,262
   
-
 
               
CASH, BEGINNING OF PERIOD
   
1,523
   
-
 
               
CASH, END OF PERIOD
 
$
2,785
 
$
-
 
CASH PAID FOR INTEREST
 
$
4,593
 
$
-
 
               
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES
             
Increase in related party receivable for repurchase of stock
 
$
-
 
$
1,000
 
Common stock issued in lieu of cash for prepaid management services
 
$
45,000
 
$
-
 
Common stock issued as payment on debt
 
$
73,500
 
$
-
 


See accompanying notes to financial statements.
 

 

URON INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2007 AND 2006

Note 1 - Summary of Significant Accounting Policies
 
Presentation
 
The accompanying financial statements were prepared by URON Inc. (“URON” or the “Company”) without an audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes the disclosures made herein are adequate to make the information presented not misleading.
 
In the opinion of management, the financial statements include all adjustments (consisting only of normal recurring adjustments) necessary to fairly present the financial condition, results of operations, and cash flows for the periods presented. Results of operations for the periods presented are not necessarily indicative of results to be expected for any other interim period or for the full year. These financial statements should be read in conjunction with the Company’s financial statements for the year ended December 31, 2006 and notes thereto in its Form 10-KSB for the year ended December 31, 2006.
 
Nature of business - URON Inc. (the Company or URON) was incorporated on November 4, 2001 in the State of Minnesota. The Company provides dial-up internet services to a business enterprise and to subscribers in multi-dwelling units in Texas, Illinois, Florida, Massachusetts, Minnesota, Michigan and South Carolina.
 
Prior to August 10, 2006, URON was wholly-owned by Multiband Corporation ("Multiband"). On August 10, 2006, Multiband distributed approximately 49% of its ownership to the holders of Multiband's common stock and certain other contingent rights holders, pro rata based on their ownership (the "Spin-Off").
 
On August 10, 2006, certain Multiband shareholders of record and certain contingent right holders were issued a stock dividend of URON common stock based on the holders’ ownership of Multiband shares or rights as of May 1, 2006. The holders received .05 shares of URON common stock for each share or right to a share of Multiband common stock held on the record date. This stock dividend (the "Spin-Off") was equal to approximately 49% of Multiband’s ownership in URON, and included 581,609 shares ("Contingent Shares") which continue to be held in trust by Multiband for the benefit of certain Multiband warrant holders as of December 31, 2006. The Contingent Shares will be delivered to these persons if and when the warrants are exercised. If the warrants expire unexercised, the Contingent Shares will default to Multiband. Prior to the Spin-Off, Multiband redeemed 5.3 million of the 10 million shares of URON stock outstanding as of June 30, 2006, resulting in 4.7 million shares outstanding as of the date of the Spin-Off.
 
On August 11, 2006, Multiband sold its remaining approximate 51% interest in URON to Lantern Advisers, LLC for $75,000 in cash. URON also signed a one-year management agreement with Multiband effective August 1, 2006. This agreement called for a fixed payment of $116,500 plus additional fees for specified services as described in the agreement.
 
During all periods presented, URON was provided certain services from Multiband and a related Multiband subsidiary, including general bookkeeping and customer services.
 




 
URON INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2007 AND 2006
 
The selling, general and administrative expense on the statement of operations includes $16,232 and $22,286 related to these services for the three months ended September 30, 2007 and 2006, respectively. For the nine months ended September 30, 2007 and 2006 the charges for services reflected in the statement of operations is $90,351 and $37,712, respectively.
 
The financial information included herein does not necessarily reflect what the financial position and results of operations of URON would have been had it operated as a stand-alone entity during the three and nine months ended September 30, 2007, and may not be indicative of future operations or financial position.
 
The accompanying financial statements have been prepared assuming the Company will continue as a going concern that contemplates the realization of assets and satisfaction of liabilities in the normal course of business. For the nine months ended September 30, 2007 and 2006, the Company reported a net loss of $183,662 and $8,563, respectively. At September 30, 2007, the Company had an accumulated deficit of $379,079. The Company intends to fund its short-term (i.e. next twelve months) capital needs, which it believes to be minor, from future stockholder loans or equity contributions.
 
 Accounts receivable - At September 30, 2007 and December 31, 2006, URON had allowances for doubtful accounts of $600 and $3,300, respectively. URON believes its accounts receivable are fully collectible, net of allowance. Accounts receivable over 60 days are considered past due. The Company accrues interest on past due accounts receivables. If accounts receivable are determined uncollectible, they are charged to expense in the year that determination is made. URON extends unsecured credit to customers in the normal course of business.
 
Related Party Receivable - There are no intercompany purchase or sale transactions between Multiband, URON, and other Multiband subsidiaries. Cash receipts from URON customers are collected by a wholly-owned subsidiary of Multiband, Multiband Subscriber Services, Inc. ("MSS"). Multiband is continuing to provide such services after the Spin-Off pursuant to a written agreement dated August 1, 2006. The original term of the agreement was for one year, ending on August 1, 2007. Since the expiration of the original term, Multiband is continuing to provide services pursuant to the agreement on a month to month basis. The agreement provides for the following charges: a customer service and billing charge of $3.25 per subscriber per month, a three percent charge on credit card processing and a $2.00 setup fee for new customers. Accounting and legal assistance procured by Multiband on behalf of the Company is billed at cost.
 
Cash receipts collected by MSS are netted with payments to URON's vendors, also made by MSS. These transactions are recorded as a related party receivable/payable. As of September 30, 2007, the outstanding balance of the related party receivable was $11,550 compared to a payable of $4,914 at December 31, 2006.
 
One of Multiband's subsidiaries provides bookkeeping and customer services to URON. For the period prior to the Spin-off, Multiband allocated its costs to URON based on actual time used for bookkeeping services and costs as a percentage of total subscribers serviced by the customer service department. For the period following the Spin-off, the Company pays Multiband as stated per the management agreement.
 



 
URON INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2007 AND 2006
 

Revenue Recognition - URON earns revenue through monthly user charges to its dial-up internet subscribers. URON recognizes revenue in accordance with the Securities Exchange Commission's Staff Accounting Bulletin No. 104 (SAB 104) "Revenue Recognition", which requires that four basic criteria

be met before revenue can be recognized: (i) persuasive evidence of a customer arrangement exists; (ii) the price is fixed or determinable; (iii) collectibility is reasonably assured; and (iv) product delivery has
occurred or services have been rendered.
 
URON's user charges are recognized as revenues in the period the related services are provided in accordance with SAB 104. Any amounts billed prior to services being provided are reported as deferred service obligations and revenues.
 
Deferred Revenue - URON bills for services in the month prior to providing the service. Deferred revenue is recognized as revenue in the period the related services are provided in accordance with SAB 104.
 
Costs of Products and Services - Costs of products and services consist of internet carrier circuit charges.
 
Selling, General and Administrative Expense - Selling, general and administrative expenses consist of payments to subcontractors, commission payments to owners of multi-dwelling-units and corporate parent expense allocations for the period from January 1, 2006 to the date of the spin off.
 
Net Loss per Common Share - Basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding for the reporting period. Diluted net loss per common share is computed by dividing net loss by the sum of the weighted average number of common shares outstanding. The Company did not have any common share equivalents during the three and nine months ended September 30, 2007 and 2006.
 
Financial Instruments - The carrying amounts for all financial instruments approximates fair value. The carrying amounts for accounts receivable and accounts payable approximate fair value because of the short maturity of these instruments.
 
Management's Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
 
Legal Proceedings - URON may, from time to time, be involved in litigation and claims arising out of its operations in the normal course of its business. As of November 19, 2007, URON is not a party to any material legal proceedings.
 
Recently Issued Accounting Pronouncements - In February 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment of FASB
 




 
URON INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2007 AND 2006
 
Statement No. 115” (“SFAS No. 159”). SFAS No. 159 permits entities to elect to measure many financial instruments and certain other items at fair value. Upon adoption of SFAS No. 159, an entity may elect the fair value option for eligible items that exist at the adoption date. Subsequent to the initial adoption, the election of the fair value option may only be made at initial recognition of the asset or
 
liability or upon a re-measurement event that gives rise to new-basis accounting. The decision about whether to elect the fair value option is applied on an instrument-by-instrument basis, is irrevocable and is applied only to an entire instrument and not only to specified risks, cash flows or portions of that
instrument. SFAS No. 159 does not affect any existing accounting literature that requires certain assets and liabilities to be carried at fair value nor does it eliminate disclosure requirements included in other
accounting standards. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact of adopting SFAS No. 159 on their respective financial position and results of operations.

Note 2 - Short-term Debt
 
In December 2006, the Company entered into short-term debt agreements with four of its shareholders. These unsecured notes amount to $3,500 each, due and payable in June 2007 with simple interest at 12.0%. One of the notes is with the CEO and director of the Company.
 
In March 2007, the Company borrowed $59,500 from certain shareholders. These notes are unsecured, due and payable in June 2007 with simple interest at 12%. $3,500 of the amount borrowed was from the Company’s CEO and director of the Company and $26,250 was borrowed from a greater than 5% shareholder.
 
On July 2, 2007, the Company offered 2,100,000 shares of the Company’s common stock in a private placement exempt from registration as payment in full of all outstanding debt agreements. The Company entered into a Conversion Agreement with each purchaser of the shares. In each Conversion Agreement, shares were offered and sold in full satisfaction of the Company’s outstanding principal balances on certain promissory notes aggregating $73,500, at the per-share price of $0.035. Prior to the conversions, the Company made cash payments that fully satisfied all accrued but unpaid interest owing under the promissory notes. In the transaction, Donald Miller, the Company’s Chief Executive Officer and a director of the Company, received 100,000 shares in satisfaction of a $3,500 promissory note held by him. Lantern Advisers, LLC, the holder of approximately 47.8% of the Company’s outstanding common stock, received 550,000 shares in satisfaction of a $19,250 promissory note. The terms and conditions of the Conversion Agreements entered into with Mr. Miller and Lantern Advisers were in all respects identical to those entered into with other holders of promissory notes.
 
On July 5, 2007, the Company entered into a $20,000 unsecured promissory note with Lantern Advisors, LLC, a shareholder of the company. The promissory note bears an interest rate of twenty-four (24)
percent per annum and matures on July 5, 2008. The note provides for interest to be paid on a monthly basis and for principal to be due and payable at the end of the one-year term. As further consideration for the financing, the Company issued a five-year warrant to purchase up to 200,000 shares of common stock with an exercise price of $0.15 per share, subject to adjustment as defined in the agreement.

On July 5, 2007, the Company entered into a $10,000 unsecured promissory note with Donald Miller, the Company’s Chief Executive Officer and a director of the Company. The promissory note bears an




URON INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2007 AND 2006
 

interest rate of twenty-four (24) percent per annum and matures on July 5, 2008. The note provides for interest to be paid on a monthly basis and for principal to be due and payable at the end of the one-year term. As further consideration for the financing, the Company issued a five-year warrant to purchase up

to 100,000 shares of common stock with an exercise price of $0.15 per share, subject to adjustment as defined in the agreement.

The proceeds of the loans were allocated based on the relative fair value of the loan and the warrants granted in accordance with APB 14, “Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants”. The portion of the proceeds allocated to the warrants was accounted for as additional paid-in-capital. The remainder of the proceeds was allocated to the debt portion of the transactions. This resulted in issuing the loans at a discount of $16,619, which will be amortized to interest expense, using the effective interest rate method, over the term of the loan. The amount of discount amortized during the three and nine months ended September 30, 2007 was $2,992.
 
Note 3 - Service Agreements
 
The Company entered into an employment agreement with Don Miller in February 2007. The Company issued 500,000 shares of common stock to Mr. Miller in consideration of services that have been and will be provided during 2007. The shares were valued at $25,000 using the fair market value of the stock on the date of the agreement.
 
In February 2007, the Company entered into an agreement with Lantern Advisers, LLC to issue 200,000 shares valued at $0.10 per share in consideration for services that have been and will be provided during 2007.
 
Note 4 - Income Taxes
 
URON utilizes the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to temporary difference between the financial statement and income tax reporting bases of assets and liabilities. Deferred tax assets are reduced by a valuation allowance to the extent that realization is not assured. For the period prior to the Spin-Off, URON has filed a consolidated tax return with the parent company, Multiband Corporation. All of the net operating losses prior to the spin-off were allocated to the parent company (Multiband) and no deferred tax assets or liabilities have been recorded. For the period following the Spin-Off, the Company has recorded a full valuation allowance against its deferred tax asset due to the uncertainty of realizing the related benefits.
 
Effective January 1, 2007, the Company adopted the provisions of FASB Interpretation No. 48 (FIN 48), “Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109”. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements
in accordance with FASB Statement 109, “Accounting for Income Taxes”, and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on de-recognition, classification, interest and penalties, accounting interim periods, disclosure and transition.

The Company has completed its evaluation of the effects of FIN 48 and has concluded that there are no
 




 
URON INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2007 AND 2006
 
significant unrecognized tax contingencies. We do not believe there will be any material changes in our unrecognized tax positions over the next 12 months.
 
To the extent interest and penalties would be assessed by taxing authorities on any underpayment of income taxes, such amounts would be accrued and classified as a component of income tax expenses on the statement of operations. The Company is subject to federal tax examinations by tax authorities for the 2006 tax year. The Company is open to state tax audits until the applicable statute of limitations expires.

The Company has generated federal and state net operating losses of approximately $50,000 which, if not used, will begin to expire in 2026. Future changes in the stock ownership of the Company may place limitations on the use of these net operating loss carryforwards.
 
The Company recorded a provision for (benefit from) income taxes of $0 and ($1,445) for the three months ended September 30, 2007 and 2006, respectively. For the nine months ended September 30, 2007 and 2006, the provision for (benefit from) income taxes was $0.
 
Note 5 - Major Customer
 
The Company did not have a major customer for the three or nine months ended September 30, 2007. The Company had sales to one customer that accounted for 10.6% of total revenues for the three months ended September 30, 2006. For the nine months ended September 30, 2006 sales to that one customer as compared to total revenue was 21.9%. Accounts receivable from the same customer accounted for approximately 10% of total accounts receivable at September 30, 2006.
 
Note 6 - Subsequent Events
 
On October 5, 2007, the Company and Checkmate Consumer Lending Corporation (“Checkmate”) terminated their letter of intent dated August 10, 2007, respecting the potential acquisition by the Company of Checkmate in a reverse triangular merger. That same letter of intent also contemplated the Company’s acquisition of Wyoming Financial Lenders, Inc. (“Wyoming”), in a simultaneous reverse triangular merger transaction. The Company is continuing to work with Wyoming towards definitive documentation respecting that potential transaction. Wyoming’s unaudited 12-month trailing revenues for the period ended March 31, 2007 were approximately $9.7 million, with 12-month trailing net income of approximately $2.5 million for that same period.

On October 5, 2007, the Company entered into a letter of intent with Cash Time Title Loans, Inc., an Arizona corporation (“Cash Time”), and certain affiliated entities. The letter of intent contemplates that the Company would acquire all of the outstanding capital stock of Cash Time (and the ownership interests of such affiliated entities) for approximately $42 million, subject to certain conditions relating to the financial performance by Cash Time. As of the date of this report, the Company has taken steps to outline the terms of a potential financing transaction, the proceeds of which would be used to purchase the capital stock of Cash Time.
 
Cash Time is in the business of providing title loans and currently has approximately six stores in operation the State of Arizona, with another store soon to be opened. Cash Time’s unaudited 12-month trailing revenues for the period ended July 31, 2007 were approximately $14,182,000, with unaudited 12-month trailing net income for that same period of $6,365,000.




Item 2. Management’s Discussion and Analysis or Plan of Operation 
Forward Looking Statements
 
Except for the historical information contained herein, the matters discussed in this Report on Form 10-QSB are forward-looking statements involving risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. Numerous factors, risks and uncertainties affect the Company’s operating results and could cause the Company’s actual results to differ materially from forecasts and estimates or from any other forward-looking statements made by, or on behalf of, the Company, and there can be no assurance that future results will meet expectations, estimates or projections. Further information regarding these and other risks is included in the “Risk Factors” section of our annual report on Form 10-KSB, as well as the supplementary disclosures contained in our quarterly report on Form 10-QSB.
 
Overview
 
URON is a Minnesota corporation formed in 2001. Multiband, its former parent company, purchased the stock of the Company from the Company's prior owners in January 2004. URON has never filed for bankruptcy, receivership or similar proceeding, nor has the Company ever been involved in a merger, restructuring or sale of assets other than the aforementioned sale of its stock to Multiband.
 
On August 10, 2006, Multiband distributed URON common stock as a pro-rata dividend to all holders of Multiband common stock and certain contingent rights holders of Multiband as of May 1, 2006, as more fully described in the Information Statement distributed to the Multiband distributees (filed as Exhibit 99.1 to URON's Form 10-SB.)
 
URON’s business is comprised of approximately 600 customers using its dial up internet services and paying a monthly recurring fee for said services. The subscribers are generally located in multi-unit dwellings in the Midwest, Texas, South Carolina and Florida. URON provides ISP functionality for its customers by providing billing and technical call center support over the phone. URON's call center also monitors systems installed at multi-dwelling-units in the field to regulate customer bandwidth and supervise end-user activity. As the provision of Internet services is a largely unregulated activity, the Company does not presently require any government approval to provide its services. This may or may not change in the future, however, as various legislation continues to be preferred at state and Federal levels with regards to taxing and/or regulating internet services.
 
During the three months ended March 31, 2007, Subway discontinued its business with us. We anticipate that we will have difficulty replacing the Subway revenue in a short period of time. The loss of this customer accounted for approximately 15% of the customer base.
 
During third quarter 2007, the Company entered into a letter of intent with Checkmate Consumer Lending Corporation, a Delaware corporation, and Wyoming Financial Lenders, Inc., a Wyoming corporation. The letter of intent contemplates a reverse triangular merger in which the Company would acquire both Checkmate Consumer Lending Corporation and Wyoming Financial Lenders in exchange for the issuance, to the shareholders of those entities, of URON common and convertible preferred stock that equals approximately 95.7% of the capital stock of the Company on a fully diluted basis. After the consummation of the transaction, each of Checkmate Consumer Lending Corporation and Wyoming Financial Lenders would be wholly owned subsidiaries of the Company.

Subsequent to quarter end, the Company and Checkmate Consumer Lending Corporation terminated their letter of intent with respect to acquiring Checkmate in a reverse triangular merger. The Company is continuing to work with Wyoming Financial Lenders, Inc. toward a reverse triangular merger.
 




 
Also during the third quarter, the Company entered into a letter of intent with Cash Time Title Loans, Inc., an Arizona corporation (“Cash Time”), and certain affiliated entities. The letter of intent contemplates that the Company would acquire all of the outstanding capital stock of Cash Time (and the ownership interests of such affiliated entities) for approximately $42 million, subject to certain conditions relating to the financial performance by Cash Time. As of the date of this report, the Company has taken steps to outline the terms of a potential financing transaction, the proceeds of which would be used to purchase the capital stock of Cash Time.
 
Cash Time is in the business of providing title loans and currently has approximately six stores in operation the State of Arizona, with another store soon to be opened. Cash Time’s unaudited 12-month trailing revenues for the period ended July 31, 2007 were approximately $14,182,000, with unaudited 12-month trailing net income for that same period of $6,365,000.
URON has no full-time employees as of September 30, 2007. The Company utilizes billing and customer service personnel from its former parent, Multiband. Multiband is continuing to provide such services after the Spin-Off pursuant to a written agreement dated August 1, 2006.
 
URON does not own or lease any real or personal property. Instead, URON relies on Multiband, its former parent, for personnel and office support services pursuant to an agreement dated August 1, 2006, titled "URON Management Agreement." Under the terms of that agreement, Multiband provides telephone support services to Company customers, and sales fulfillment and support services for the Company with respect to prospective customers. In addition, Multiband processes and prepares invoices to Company customers. In exchange, Multiband charged the Company for fixed up-front fee of $116,500, in addition to the following charges: a customer service and billing charge of $3.25 per subscriber per month, a three percent change on credit card processing and a $2.00 setup fee for new customers. Accounting and legal assistance procured by Multiband on behalf of the Company is billed at cost. Charges for the above-described services were $16,232 and $22,286 for the three months ended September 30, 2007 and 2006, respectively. For the nine months ended September 30, 2007 and 2006 the charges for these services was $90,351 and $37,712, respectively.
 
An investment in the Company’s common stock is subject to significant risks. For a summary of these risks, please see the “Risk Factors” section of our annual report on Form 10-KSB.
 
Results of Operations
 
Three Months Ended September 30, 2007 versus Three Months Ended September 30, 2006
 
Revenues
 
URON Inc.'s revenues decreased from $16,076 in the third quarter of 2006 to $12,592 in the third quarter of 2007, reflecting the decline in subscribers of the Company's dial up internet services due to increased competition from high-speed internet providers and loss of our largest customers.
 
Cost of Products and Services
 
The Company's cost of products and services, which consist of internet carrier circuit charges, decreased by approximately 86% to $466 for the quarter ended September 30, 2007 compared to $3,344 for the same quarter last year. The decrease in costs is directly related to the decrease in customers and revenue. The disproportionate decrease in cost of products compared to the decrease in revenues is attributable to a change in the allocation of costs between Multiband and URON, which began during the fourth quarter of 2006.
 




 
Selling, General and Administrative Expenses
 
Selling, general and administrative expenses were $51,476 in the third quarter of 2007 versus $24,910 in the prior year period, reflecting increased legal and accounting costs, increased costs for call center billing and support pursuant to the August 2006 Multiband agreement, and additional costs related to service agreements entered into in the first quarter of 2007.
 
Income Tax
 
The Company recorded no income tax benefit in the third quarter of 2007 compared to an income tax benefit of $1,445 in the third quarter of 2006, reflecting adjustments to the valuation allowance of net deferred tax assets resulting from net operating loss carryforwards. For the period following the Spin-Off, the Company has recorded a full valuation allowance against its deferred tax asset due to the uncertainty of realizing the related benefits.
 
Net Loss
 
URON had a net loss of $44,971 in the third quarter of 2007 versus a net loss of $10,733 in the prior year period. The loss in 2007 was primarily due to decreased revenues and increased selling, general, and administrative expenses.

Results of Operations
 
Nine Months Ended September 30, 2007 versus Nine Months Ended September 30, 2006
 
Revenues
 
URON Inc.'s revenues decreased from $77,287 in the first nine months of 2006 to $43,017 in the first nine months of 2007, reflecting the decline in subscribers of the Company's dial up internet services due to increased competition from high-speed internet providers and loss of our largest customer.
 
Cost of Products and Services
 
The Company's cost of products and services, which consist of internet carrier circuit charges, decreased by approximately 90% to $2,011 for the nine months ended September 30, 2007 compared to $21,152 for the first nine months of 2006. The decrease in costs is directly related to the decrease in customers and revenue. The disproportionate decrease in cost of products compared to the decrease in revenues is attributable to a change in the allocation of costs between Multiband and URON, which began during the fourth quarter of 2006.
 
Selling, General and Administrative Expenses
 
Selling, general and administrative expenses were $216,650 in the first nine months of 2007 versus $64,698 in the first nine months of 2006, reflecting increased legal and accounting costs, increased costs for call center billing and support pursuant to the August 2006 Multiband agreement, and additional costs related to service agreements entered into in the first quarter of 2007.
 
Income Tax
 
The Company recorded no income tax expense in the nine months ended September 30, 2007 and 2006. For the period following the Spin-Off, the Company has recorded a full valuation allowance against its deferred tax asset due to the uncertainty of realizing the related benefits.
 




 
Net Loss
 
URON had a net loss of $183,662 in the first nine months of 2007 versus a net loss of $8,563 in the first nine months of 2006. The loss in 2007 was primarily due to decreased revenues and increased selling, general, and administrative expenses.


Liquidity and Capital Resources

URON's working capital needs in the first nine months of 2006 were funded principally by its former parent, Multiband. Multiband funding ceased, effective August 11, 2006. The Company intends to fund its short term (i.e., next twelve months) capital needs, which it believes to be minor, from shareholder loans, or equity contributions. During the nine months ended September 30, 2007, the Company received $89,500 in proceeds of non-convertible shareholder notes.

We had a net loss for fiscal year 2006 in the amount of $52,539, or $0.01 per share, and we had an accumulated deficit as of December 31, 2006 of $195,417. We had a net loss for the nine months ended September 30, 2007 in the amount of $183,662 and had an accumulated deficit as of September 30, 2007 of $379,079. The financial statements for each of these periods were prepared assuming that we would continue as a going concern. In the view of our independent auditors, these conditions raise substantial doubt about our ability to continue as a going concern. We believe that our ability to continue as a going concern depends, in large part, on our ability to generate sufficient revenues and, if necessary, raise additional capital through subsequent financing transactions. If we are unable to raise additional capital, we may be forced to discontinue our business.
 
Financings and Anticipated Financing Needs

During 2006, the Company's working capital needs were funded by the sale of short-term debt to four shareholders in December 2006. In these transactions, the Company issued four unsecured promissory notes accruing simple interest at the rate of 12%. The Company issued additional identical promissory notes during the first quarter of fiscal 2007, for gross proceeds of $59,500. All of the notes (2006 and 2007 issuances) became due in June 2007. During third quarter, all of these existing notes were converted to common stock.

During the third quarter of 2007, the Company issued two additional unsecured promissory notes with two shareholders of the company, for gross proceeds of $30,000. These notes accrue simple interest at a rate of 24%. As further consideration for the financing, the Company issued five-year warrants to purchase additional shares of common stock.

The Company does not anticipate that it will require significant capital expenditures over the next 12 months. However, the Company will likely need additional financing to fund its net loss. In addition, the Company may incur expenses related to pursuing a merger transaction, which will likely require additional financing. The Company currently believes that its capital needs over the next 12 months can be funded by loans or the sale of equity. Nevertheless, the Company may not be able to secure financing, if at all, on favorable or acceptable terms. Any additional financing will likely result in dilution to existing shareholders, operational limitations, or both. In the absence of additional financing, the Company would likely be forced to consider a variety of strategic alternative, including but not limited to liquidating some or all of the Company's assets or discontinuing operations. If the Company is forced to liquidate its assets, it may not be able to realize the carrying value of those assets. Moreover, even if financing is obtained, the Company expects that its ability to continue operations in the future will be materially dependent on its ability to generate or raise sufficient additional working capital.



 
On October 5, 2007, the Company entered into a letter of intent with Cash Time Title Loans, Inc., an Arizona corporation (“Cash Time”), and certain affiliated entities. The letter of intent contemplates that the Company would acquire all of the outstanding capital stock of Cash Time (and the ownership interests of such affiliated entities) for approximately $42 million, subject to certain conditions relating to the financial performance by Cash Time. As of the date of this report, the Company has taken steps to outline the terms of a potential financing transaction, the proceeds of which would be used to purchase the capital stock of Cash Time.
 
Cash Time is in the business of providing title loans and currently has approximately six stores in operation the State of Arizona, with another store soon to be opened. Cash Time’s unaudited 12-month trailing revenues for the period ended July 31, 2007 were approximately $14,182,000, with unaudited 12-month trailing net income for that same period of $6,365,000.
 
Except for certain provisions relating to confidentiality, exclusivity and the termination of the parties’ obligations to negotiate in good faith toward a definitive agreement, the letter of intent is not legally binding, and instead sets forth the current intent of the parties to negotiate a definitive agreement for the contemplated transaction. In addition, the letter of intent contemplates that each party will have the right to conduct a due-diligence investigation of the other parties prior to entering into a definitive agreement. The closing of any transaction will be subject to certain other conditions, including a financing contingency and certain other customary conditions, that are expected to be a part of any definitive agreement.


Accounting Pronouncements and Policies
 
Recently Issued Accounting Standards
 
In February 2007, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement No. 115" ("SFAS No. 159"). SFAS No. 159 permits entities to elect to measure many financial instruments and certain other items at fair value. Upon adoption of SFAS No. 159, an entity may elect the fair value option for eligible items that exist at the adoption date. Subsequent to the initial adoption, the election of the fair value option may only be made at initial recognition of the asset or liability or upon a re-measurement event that gives rise to new-basis accounting. The decision about whether to elect the fair value option is applied on an instrument-by-instrument basis, is irrevocable and is applied only to an entire instrument and not only to specified risks, cash flows or portions of that instrument. SFAS No. 159 does not affect any existing accounting literature that requires certain assets and liabilities to be carried at fair value nor does it eliminate disclosure requirements included in other accounting standards. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact of adopting SFAS No. 159 on their respective financial position and result of operations.
 



 
Application of Critical Accounting Policies
 
The Company's significant accounting policies are discussed in the Notes to the Consolidated Financial Statements that are included in the Company's Registration Statement Form 10-SB filed with the Securities and Exchange Commission. In most cases, the accounting policies utilized by the Company are the only ones permissible under Generally Accepted Accounting Principles for businesses in its industry. However, the application of certain of these policies requires significant judgments or a complex estimation process that can affect the results of operations and financial position of the Company, as well as the related footnote disclosures. The Company bases its estimates on historical experience and other assumptions that it believes are reasonable. If actual amounts are ultimately different from previous estimates, the revisions are included in the Company's results of operations for the period in which the actual amounts become known. The accounting policies and estimates that can have a significant impact on the operating results, financial position and footnote disclosures of the Company are described in the Management Discussion and Analysis of Financial Condition and Results of Operations in the Company's annual report on Form 10-KSB for the fiscal year ended December 31, 2006.
 
 
Evaluation of Disclosure Controls and Procedures.
 
On September 30, 2007, URON's Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Exchange Rule 13a-15(e)). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, except for the item noted below, URON's disclosure controls and procedures are effective.
 
During the course of their audit of our consolidated financial statements for fiscal 2006, our independent registered public accounting firm, Virchow, Krause & Company, LLP, advised management and the audit committee of our Board of Directors that they had identified a deficiency in internal control. The deficiency is considered to be a material weakness as defined under standards established by the American Institute of Certified Public Accountants. The material weakness relates to the lack of segregation of duties within the financial processes in the Company.
 
The Company periodically assesses the cost versus benefit of adding the resources that would remedy or mitigate this situation, and currently does not consider the benefits to outweigh the costs of adding additional staff in light of the limited number of transactions related to the Company's operations.
 
Changes in Internal Control over Financial Reporting.
 
There were no changes in URON's internal controls over financial reporting that occurred during its most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect such controls.
 



PART II. OTHER INFORMATION 
 
Item 1. Legal Proceedings 
 
None
 
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 
 
None
 
Item 3. Defaults upon Senior Securities
 
None
 
Item 4. Submission of Matters to a Vote of Security Holders 
 
None
 
Item 5. Other Information 
 
None
 
Item 6. Exhibits 
 
Exhibit
 
31.1
Certification 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.
 
 



 
SIGNATURES
 
Pursuant to the requirements of the Securities and Exchange Act, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
Dated: November 20, 2007
URON Inc.
(Registrant)
        
 
By:
/s/ Donald Miller
   
Donald Miller
   
Chief Executive Officer and Chief Financial Officer
   
(Signing as Principal Executive Officer, Principal Financial and Accounting Officer, and as Authorized Signatory of Registrant.)