ITEM 6. MANAGEMENT’S DISCUSSION AND ANALYSIS.

Below, we discuss certain aspects of our past financial performance and make certain forward-looking statements. We also refer you to the “Other Risk Factors” in Itme 1 of this Report for a discussion of certain risks, including, among others, risks relating to our business as a mobile telephone rental company targeting U.S. travelers abroad, our lack of a significant operating record and the fact that we have had operating losses, our risks relating to seasonality, our dependence on key suppliers of airtime and equipment, our limited managerial resources, our commercialization of our current and future products and applications and risks relating to our common stock and its market value.

We have been operating our business only since 2000. In view of our relatively limited operating history, we have limited experience forecasting our revenues and operating costs. Furthermore, our limited operating history provides only a limited basis for our business, strategy, management and products to be evaluated. Our business and market is also novel, and we cannot be certain that we will succeed in gaining market acceptance of our products in the marketplace, that we will be able to operate our business profitably, or that, if attained, profitability will be maintained. Accordingly, we believe that period-to-period comparisons of financial results are not necessarily meaningful and should not be relied upon as an indication of future performance.

The following narrative discussion should be read in conjunction with our audited consolidated financial statements and the notes thereto appearing elsewhere in this Report.

Overview

Our business is providing mobile telephone services to U.S. travelers going overseas. Many U.S.-based travelers are unable to use their own mobile phones while overseas because these phones are not compatible with mobile services available overseas. We currently offer wireless phone, fax, data and internet communication services to business travelers, leisure travelers and students traveling to over 140 foreign countries. Providing mobile telephone services to U.S. travelers abroad is a niche market in its fledgling stage, with very little market penetration at present. Our objective is to develop this market and become a leading provider of international mobile phone services to U.S.-based international travelers. We anticipate expanding our product line as we grow, both to adapt to changing technology and to add products which will complement and expand our core business.

Our sales revenues consist of charges to customers for rental of telephone equipment and for cellular airtime usage overseas. We recognize revenues as our services are provided. We have minimal staff and rely on advertising and referrals from our strategic partners to generate leads to customers. Substantially all of our revenues are generated in the U.S.

Our cost of sales consists primarily of costs we incur for our telephone equipment and the cost of airtime and network expense for overseas usage, as well as shipping and handling costs incurred in connection with delivery and return of rented equipment to and from our customers. As the volume of our rentals grows, UniverCell expects that its cost of revenues will decrease as a percentage of net sales in light of its ability to negotiate better terms with sellers of airtime and other vendors. We do not anticipate that future decreases, if any, in our cost of net sales will be proportionately related to increasing volumes, but that, as our rental volumes increases to levels we cannot now predict with specificity, we may be able to negotiate lower prices for airtime and equipment. Our ability to negotiate decreases in our costs of net sales will depend both on competitive conditions that prevail at the time among those vendors who sell telephone equipment and airtime (bundled together or sold separately), the extent of our market which we have been able to penetrate by that time and the strength of our financial condition at that time. If we are not able to improve the cost of the equipment and airtime that we purchase then our margins may not improve, and we will need to effect alternative plans if we are to improve our profitability and the rate of return on our stockholders' equity. There is no assurance that we will be able to develop alternative plans.

Our operating expenses include selling and marketing expenses, consisting primarily of advertising, commissions paid to corporate partners for customer referrals, public relations, customer service costs and general and administrative expenses. These general and administrative expenses in turn consist primarily of personnel costs, consulting fees and other professional fees. UniverCell Holdings does not maintain any material inventories, other than approximately 200 chips, each of which, when activated in a compatible mobile phone, will provide UniverCell with an additional telephone line on O2, our airtime supplier, based in the U.K. UniverCell also maintains approximately 400 mobile telephones, as well as the related accessories.

During during 2003 we experienced a decline in the volume of our rental business. We believe this was due in substantial part to reduced travels by potential customers to the areas where we provide service. In response to out reduced revenue, we took steps to further reduce our overhead. These steps included moving our headquarters operations into our President’s residence, and reducing the amount of space we rent in Florida. We cannot give any assurance that revenue will recover to a level that will make us profitable.

Results of Operations

Net Sales

Net sales for the year ended December 31, 2003 were approximately $913,000, a decrease of approximately $41,000, or 4%, of net sales of approximately $954,000 the year ended December 31, 2002. This decrease was primarily due to a decrease in the number of our customers who rented cell phones in 2003 compared to 2002.

Cost of Sales

Cost of sales for the year ended December 31, 2003 was approximately $337,000, a decrease of approximately $196,000, or 36%, from approximately $533,000 for the year ended December 31, 2002. This decrease in costs of sales was primarily due to the costs of volume of air time that we resold to our customers. A significant (higher than average) amount of airtime was sold in countries where we have a higher than average markup.

Gross Profit

Gross profit for the year ended December 31, 2003 was approximately $575,000, an increase of approximately $154,000, or 36% from approximately $421,000 of gross profit the year ended December 31, 2002. The Company believes that the volume of gross profit is sufficiently small that the increase in percentage is not indicative of any particular trend.

Operating Expenses

Operating expenses for the year ended December 31, 2003 were approximately $575,000, a decrease of approximately $277,000, or 33% over operating expenses of approximately $852,000 during the year ended December 31, 2002. The largest components of this decrease in operating expenses were fees paid to consultants, lawyers and other professional advisors. Since the fees paid to these individuals were fees paid for the filing and capital raise of the $650,000 of convertible debentures in 2002 that is now complete, we believe that these components of our operating expenses may not decrease further.

Interest Expense, Net

For the year ended December 31, 2003 our interest expense increased to approximately $282,000 from approximately $211,000 for the year ended December 31, 2002. The increase in interest expense reflects higher loan balances during 2003.

Income Taxes

We recorded no provision for foreign, federal or state income taxes for either 2003, 2002 or 2001.

Liquidity and Capital Resources

As of December 31, 2003, our cash on hand was approximately $448,000, whereas we had cash on hand of approximately $80,000 as of December 31, 2002. This increase in cash on hand was largely due to the collection of accounts receivables and the renegotiation of debt and accounts payable.

Since inception through December 31, 2003, we have operated with a cumulative loss of approximately $987,000 and we may continue to incur operating losses in the future, dependent upon the degree of commercial acceptance of our services. To date, we have financed our operations primarily through a combination of a loan from our principal stockholder, private placements of equity and convertible debentures and our operating income. Since our inception through December 31, 2003, we have received:

•

aggregate gross proceeds from the sale of equity securities and convertible debt of $790,000 ($100,000 from the sale of equity in 2000 and $650,000 from the sale of convertible debentures during the first half of 2002 and a $40,000 convertible debenture in 2003 that was later redeemed);

•

a capital contribution in connection with the Isralink transaction valued at $21,500; and

•

an interest-free line of credit from our principal stockholder in the amount of $150,000 (this line of credit was paid in full during the first quarter of 2002 and has now expired).

During the first quarter of 2002, we raised gross proceeds of $315,000 (approximately $274,000 net of commissions to our placement agent), from the private placement sale of convertible debentures on March 27, 2002. We continued this offering into the second quarter of 2002, and we subsequently raised additional gross proceeds of $335,000 (approximately $291,000 net of commissions to our placement agent) from the sale of convertible debentures with the same terms as those sold on March 27, 2002 in subsequent closings under the same private placement offering. After closing on a total of $650,000 in principal amount of convertible debentures, we terminated this offering.

We anticipate that a combination of cash from operations and funds raised in our private placement will be sufficient to fund our operations and expansion during 2004. If we are unable to achieve our business plan, we may need to continue to rely on external sources of funding to meet our cash needs and, if necessary, defer discretionary expenditures to continue operations. Additional financing, through subsequent public offerings or private offerings or private equity or debt financings, may not, however, be available to us on acceptable terms or at all.

During 2003, we moved from our former corporate headquarters in Pikesville, Maryland as the result of a dispute with the landlord over theft of some of our equipment by one of the landlord's employees. While we believe that this termination was legally justified, if we are incorrect we may be liable for the rental payments called for under the lease to the end of the lease term, a total of approximately $58,000.

During 2004, intend to introduce sim card rentals in order to offset the decline we have experienced in rental activity (as compared to prior periods). The introduction of these cards could result in our consuming cash at a greater rate than that at which we have previously consumed.

Our auditors’ report for the fiscal year ended December 31, 2003 included an explanatory statement indicating that our recurring losses from operations and our dependence on financing to continue operations raise substantial doubt about our ability to continue as a going concern. Our most aggressive plan calls for cost to raise approximately $5,000,000 in additional investment capital during the next three years. We do not have any current commitments for any additional investment capital, and we cannot give any assurances that we will be able to raise this amount or any additional investment capital. We anticipate that we will need approximately $600,000 to fund our operations through the end of 2004 at their existing level, assuming modest growth. We believe that our current assets and future revenue earned during 2003 will be sufficient to fund our operations during this period. To the extent that we are unable to generate sufficient cash from our existing operations, we will require additional investment capital in order to maintain our current level of operations. Recently, the capital markets have not been hospitable towards small, new ventures such as ours and we therefore may be unable to procure additional desired or necessary investment capital on favorable terms or at all. If our cash flow from operations and new investment capital is not sufficient to fund our operations for the balance of 2004, then we will need to reduce our expenses, which may entail curtailing our operations and activities.

Capital Transactions

During 2003, we engaged certain consultants and professional advisors to assist us in the preparation of our planning for the SIM card reseller program. These consulting and advisory services ceased as of August 31, 2003. In September 2003, we issued 4,000,000 shares of our common stock to pay certain consulting and other fees incurred in this connection, which were valued at $20,000 in the aggregate. The shares issued were valued at $0.005 per share.

During 2001, we engaged certain consultants and professional advisors to assist us in the preparation of our business plan. These consulting and advisory services ceased as of December 31, 2001. In March 2002, we issued 175,000 shares of our common stock to pay certain consulting and other fees incurred in this connection, which were valued at $43,750 in the aggregate. The shares issued were valued at $0.25 per share.

During the six months ended June 30, 2002, we conducted a private placement offering of convertible debentures, and we sold an aggregate principal amount of $650,000 of these debentures, $315,000 on March 27, 2002, $285,000 on April 30, 2002 and $50,000 on May 7, 2002. After the sale of these convertible debentures that closed on May 7, 2002, we terminated this private placement offering. The debentures were purchased by individual purchasers, each of which were accredited investors and none of which were affiliates of the Company.

In connection with the sale of these convertible debentures, we paid commissions in cash to our placement agent of 13% of the principal amount of debentures sold ($84,500). As additional compensation to our placement agent, we also issued warrants to purchase up to 1,300,000 shares of common stock. We issued these warrants to placement agent (H&W) and certain of its employees, designated by the placement agent as the salespersons who sold the convertible debentures. On August 22, 2002, the 1,300,000 warrants were exercised on a cashless basis, and accordingly, we issued 583,408 shares of our common stock as a result of the exercise of the warrants.

We have agreed to register for resale all securities issuable upon conversion of the debentures and exercise of the warrants.

During 2001, Robert Esposito, who then owned approximately 84% of our issued and outstanding common stock, transferred 33,000,000 shares of common stock of UniverCell Holdings to the stockholders of UniverCell Global, and the stockholders of UniverCell Global transferred all of the then-issued and outstanding shares of UniverCell Global stock to UniverCell Holdings, thereby rendering UniverCell Global a wholly-owned subsidiary of UniverCell Holdings.

In June 2000, we issued 3,300,000 shares of our common stock to one purchaser in a private placement transaction for $100,000 in cash. In connection with this sale, we also issued 660,000 shares of common stock to a finder, in payment of a finder’s fee.

ITEM 7. FINANCIAL STATEMENTS.

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INDEPENDENT AUDITORS’ REPORT

To the Board of Directors and Stockholders of

UniverCell Holdings, Inc.

We have audited the accompanying consolidated balance sheets of UniverCell Holdings, Inc. as of December 31, 2003 and 2002 and the related consolidated statements of operations, stockholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consoldiated financial statements referred to above present fairly, in all material respects, the financial position of UniverCell Holdings, Inc. as of December 31, 2003 and 2002 and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring losses from operations and is dependent on financing to continue operations, which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Chisholm, Bierwolf & Nilson, LLC

Bountiful, Utah

February 27, 2004

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UniverCell Holdings, Inc.

Consolidated Balance Sheet


ASSETS

December 31,

2003


Current Assets

Cash
$447,989

Accounts Receivables(Net of Allowance of $0)
42,811


Total Current Assets
490,800


Property & Equipment (Net)
38,976


Other Assets

Deferred Financing Costs
30,990

Deferred Beneficial Conversion Costs
60,500

Deposits
7,688


Total Other Assets
99,178


Total Assets
$628,954

The accompanying notes are an integal part of these financial statements.

#

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UniverCell Holdings, Inc.

Consolidated Balance Sheet




LIABILITIES AND STOCKHOLDERS' EQUITY


December 31,

2003

Current Liabilities

Accounts Payable
$360,820

Accrued Expenses
58,541

Current Portion of Long -Term Debt
267,697


Total Current Liabilities
687,058


Long-Term Debt

Convertible Debentures
252,933

Capital Lease Payable
14,764

Current Portion of Long -Term Debt
(267,697)


Total Long-Term Debt
-


Total Liabilities
687,058


Stockholders' Equity

Common Stock, Authorized 200,000,000 Shares, $.0001 Par Value,

Issued and Outstanding 86,862,882 shares
8,685

Additional Paid in Capital
920,687

Accumulated Deficit
(987,476)


Total Stockholders' Equity
(58,104)


Total Liabilities and Stockholders' Equity
$628,954

The accompanying notes are an integal part of these financial statements.

#

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UniverCell Holdings, Inc.

Consolidated Statements of Operations


For the Years Ended

December 31,

2003
2002



Revenues
$912,691
$953,905


Cost of Sales
337,323
532,886


Gross Profit (Loss)
575,368
421,019


Operating Expenses

Bad Debt Expense
7,879
258,923

General & Administrative
567,416
593,568


Total Operating Expenses
575,295
852,491


Net Operating Income (Loss)
73
(431,472)


Other Income(Expense)

Interest Income
435
2,208

Interest Expense
(281,783)
(211,408)

Gain (Loss) on Disposal of Assets
(7,165)
-


Total Other Income(Expense)
(288,513)
(209,200)


Net Income (Loss)
$(288,440)
$(640,672)


Net Income (Loss) Per Share
$(0.00)
$(0.02)


Weighted Average Shares Outstanding
59,466,719
40,088,949

The accompanying notes are an integal part of these financial statements.

#

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#

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UniverCell Holdings, Inc.

Consolidated Statements of Stockholders' Equity


Additional

Common Stock
Paid-In
Accumulated

Shares
Amount
Capital
(Deficit)


Balance December 31, 2001
39,142,096
$3,914
$77,586
$(58,364)


March 2002 - Shares issued for services at $0.25 per share
175,000
18
43,732
-


March 2002 - Shares issued for exercise of warrants at $.05 per share
583,408
58
29,112
-


Beneficial Conversion Feature
-
-
363,000


Offering Costs
-
-
(49,115)
-


Net Loss for the year ended December 31, 2002
-
-
-
(640,672)


Balance December 31, 2002
39,900,504
3,990
464,315
(699,036)


February 2003 - Shares issued for conversion of debentures at $0.01 per share
12,301,876
1,230
166,293
-


September 2003 - Shares issued for services at $0.005 per share
3,000,000
300
14,700
-


October 2003 - Shares issued for services at $0.005 per share
1,000,000
100
4,900
-


October 2003 - Shares issued for exercise of options at $0.005 per share
2,300,000
230
11,270
-


October 2003 - Shares issued for conversion of debentures and interest at $0.01 per share
12,204,755
1,220
46,830
-


December 2003 - Shares issued for conversion of debentures and interest at $0.01 per share
16,155,747
1,615
212,379
-


Net Loss for the year ended December 31, 2003
-
-
-
(288,440)


Balance December 31, 2003
86,862,882
$8,685
$920,687
$(987,476)

The accompanying notes are an integal part of these financial statements.

#

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#

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UniverCell Holdings, Inc

Consolidated Statements of Cash Flows


For the Years Ended

December 31,


2003
2002

CASH FLOWS FROM OPERATING ACTIVITIES:


Net Income (Loss)
$(288,440)
$(640,672)

Adjustments to Reconcile Net Loss to Net Cash Provided by Operations:

Depreciation
13,860
20,680

Amortization
274,290
182,890

Shares issued for Services
20,000
43,750

Bad Debt Expense
-
258,923

Loss on Disposal of Assets
7,165
-

Change in Assets and Liabilities

(Increase) Decrease in Accounts Receivable
337,986
(323,841)

(Increase) Decrease in Other Current Assets
-
824

Increase (Decrease) in Deposits and Prepaids
63,468
(69,707)

Increase (Decrease) in Accounts Payable/ Accrued Expenses
(62,279)
73,900


Net Cash Provided(Used) by Operating Activities
366,050
(453,253)


CASH FLOWS FROM INVESTING ACTIVITIES:


Redemption of Certificate of Deposit
10,070
24,930

Purchases of Property and Equipment
(209)
(11,111)


Net Cash Provided (Used) by Investing Activities
9,861
13,819


CASH FLOWS FROM FINANCING ACTIVITIES:


Proceeds from Exercise of Stock Options
11,500
-

Cash Paid for Deferred Financing Costs
-
(156,500)

Offering Costs
-
(49,115)

Payments for Stockholder Loan
-
(1,874)

Proceeds from Convertible Debentures
40,000
650,000

Principal Payments for Convertible Debentures
(40,000)
-

Principal Payments for Capital Leases
(19,090)
(13,969)


Net Cash Provided(Used) by Financing Activities
(7,590)
428,542


NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS
368,321
(10,892)


CASH AND EQUIVALENTS AT BEGINNING OF PERIOD
79,668
90,560


CASH AND CASH EQUIVALENTS AT END OF PERIOD
$447,989
$79,668

The accompanying notes are an integal part of these financial statements.

#

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UniverCell Holdings, Inc

Consolidated Statements of Cash Flows (Continued)


For the Years Ended

December 31,


2003
2002

Cash Paid For:

Interest
$22,001
$156,500

Taxes
$ -
$ -


Non-Cash Activities:

Shares Issued for Services
$20,000
$43,750

Shares Issued for Warrant Conversion
$ -
$29,170

Shares Issued for Conversion of Debentures and Accrued Interest
$429,567
$ -

#

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UniverCell Holdings, Inc.

Notes to the Consolidated Financial Statements

December 31, 2003 and 2002

NOTE 1 - DESCRIPTION OF BUSINESS

a. The Company and Nature of Business

UniverCell Holdings, Inc., (the “Company”) was incorporated in California in August 1989 under the corporate name Hypermedia Communications, Inc.,(“Hypermedia”) and became a Florida Corporation through the filing of a certificate of domestication dated August 17, 2001. In connection with this filing, the Company also changed the par value of its common stock to $.0001 per share. Immediately prior to December 14, 2001, the Company was a public shell with no material assets or capital, and no operations or income.

UniverCell Global Phone Rentals, Inc., (“UniverCell” or the “Company”) was formed in March 1999 under the laws of the State of Illinois and commenced operations in January 2000. The Company is the successor entity to Isralink Communications, Inc., (“Isralink”).

On December 31, 1999, the Company issued 27,390,000 shares of its $0.001 par value common stock to the sole stockholder of Isralink in exchange for Isralink’s accounts receivable, cellular telephones, certain liabilities, and assigned a cellular service contract with an Israeli cellular service provider. This transaction was recorded as a transfer and exchange of entities under common control and accordingly there was no step up in basis of assets acquired or liabilities assumed by the Company.

The net assets to the Company on December 31, 1999 were as follows:

Accounts Receivable
$
11,000

Cellular equipment
15,500

Accounts payable
(5,000)


Net Assets Assigned
$
21,500

On December 14, 2001, the Company acquired 100% of the outstanding capital stock of UniverCell Global Phone Rentals, Inc (UniverCell). In connection with this acquisition, UniverCell became a wholly-owned subsidiary and UniverCell’s directors and officers replaced all of the Company’s directors and officers. The stockholders of UniverCell were issued 33,000,000 shares of the Company’s common stock, in exchange for their shares, or 84.3% of the Company’s total outstanding common shares. Accordingly, a change in control of the Company occurred in connection with the acquisition, and the acquisition was deemed a “reverse acquisition” for accounting purposes. The acquisition of Hypermedia was recorded based on the fair value of Hypermedia’s net tangible liabilities, which consisted of $40,000 of current liabilities.

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UniverCell Holdings, Inc.

Notes to the Consolidated Financial Statements

December 31, 2003 and 2002

NOTE 1 - DESCRIPTION OF BUSINESS (Continued)

The reverse acquisition was accounted for as a recapitalization and the stockholders equity was retroactively restated to January 1, 2000. The historical financial statements prior to the reverse merger are those of UniverCell.

The Company focuses on the international travel market and serves business, leisure and student travelers by providing international cellular telephone rentals. The Company provides these services to people traveling from the United States of America to any destination outside of the United States of America.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Cash and Cash Equivalents

For purposes of the consolidated statement of cash flows, the Company considers all short-term investments purchased with a remaining maturity of three months or less to be cash equivalents.

At various times throughout the year the Company had cash deposits at a bank in excess of the maximum amounts insured by the FDIC.

b. Consolidated Financial Statements

The consolidated financial statements include the Company and its wholly owned subsidiary. All significant intercompany transactions and balances have been eliminated in consolidation.

c. Property and Equipment

Property and equipment are stated at cost less accumulation depreciation. Depreciation is provided for an amount sufficient to relate the cost of depreciable assets to operations over their estimated service lives, principally on a straight line-basis. Maintenance and repairs are charged to expenses as incurred, costs of major additions and betterments are capitalized.

d. Advertising Costs

Advertising costs are expensed as incurred. Total advertising costs charged to expense for the years ended December 31, 2003 and 2002 were $56,925 and $60,106, respectively.

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UniverCell Holdings, Inc.

Notes to the Consolidated Financial Statements

December 31, 2003 and 2002

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

e. Use of Estimates in the Financial Statements

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 effect 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 reported period. Actual results could differ from those estimates.

f. Earnings Per Share

The Company adopted the provisions of Statement of Financial Accounting Standards, SFAS No. 128, “Earnings Per Share”. SFAS No. 128 requires the presentation of basic and diluted earnings per share (EPS). Basic EPS is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS includes the potential dilution that could occur if options or other contracts to issue common stock were exercised or converted. The Company has not included the outstanding common stock equivalents because the effects are anti-dilutive. Accordingly, basic and diluted earnings per share are identical.

For the Years Ended December 31,

2003
2002

Income (Loss) (numerator)
$
(288,440)
$
(640,672)

Shares (denominator)
59,466,719
40,088,949

Per Share Amount
$
(0.00)
$
(0.02)

g. Income Taxes

The Company accounts for income taxes using the liability method, which requires the determination of deferred tax assets and liabilities based on the difference between the financial and tax bases of assets and liabilities using enacted tax rates in effect for the year in which differences are expected to reverse. Deferred tax assets are adjusted by a valuation allowance, if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

No provision for income taxes has been recorded due to net operating loss carryforwards totaling approximately $987,000 that will be offset against future taxable income. Theses net operations loss carryforwards begin to expire in the year 2021.

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UniverCell Holdings, Inc.

Notes to the Consolidated Financial Statements

December 31, 2003 and 2002

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

g. Income Taxes (Continued)

Deferred tax assets and liabilities consist of the following:

For the Years Ended

December 31,

2003
2002

Current deferred tax assets:

Net operating loss
$
330,000
$
300,000

Less valuation allowance
(330,000)
(300,000)

Total deferred tax asset
$
-
$
-

h. Concentration of Credit Risk

The Company extends credit to customers which result in accounts receivable arising from its normal business activities. The Company does not require collateral or other security to support financial instruments subject to credit risk. The Company routinely assesses the financial strength of its customers and based upon factors surrounding the credit risk of the customers believes that its accounts receivable credit risk exposure is limited.

i. Fair Value of Financial Instruments

SFAS No. 107, “Disclosures about Fair Value of Financial Instruments” requires that the Company disclose estimated fair values of financial instruments. The carrying amounts reported in the statement of financial position for current assets and current liabilities qualifying as financial instruments are a reasonable estimate of fair value.

j. Impairment of Long-Lived Assets

The Company reviews long-lived assets held and used for possible impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

k. Revenue Recognition

Revenues consist of charges to customers for rental charges and cellular airtime usage. Revenues are recognized as services are provided.

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UniverCell Holdings, Inc.

Notes to the Consolidated Financial Statements

December 31, 2003 and 2002

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

l. Going Concern

The accompanying Consolidated Financial Statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring losses, negative working capital and is dependent upon raising capital to continue operations. The Consolidated Financial Statements do not include any adjustments that might result from the outcome of this uncertainty. It is management’s plan to raise additional capital in order to expand operations, liquidate debt and operate profitably.

m. Deferred Beneficial Conversion Feature

In connection with the issuance of the convertible debentures, the terms of the agreement provided for conversion of the debt into common stock at a beneficial rate. Pursuant to Emerging Issues Task force Issue 00-27: “Application of Issue No. 98-5 to Certain Convertible Instruments”, the Company recorded $363,000 of deferred beneficial conversion feature which will accrete over the two-year term of the debentures.

n. Stock Options and Warrants

As permitted by FASB Statement No. 123, “Accounting for Stock Based Compensation” (“SFAS 123”), and amended under FASB Statement No.148, “Accounting for Stock Based Compensation-Transition and Disclosure” (“SFAS 148”), the Company has elected to measure and record compensation cost relative to employee stock option costs in accordance with the Accounting Principles Board (“APB”) Opinion 25, “Accounting for Stock Issued to Employees”, and related interpretations and make pro forma disclosures of net income (loss) and basic earnings (loss) per share as if the fair value method of valuing stock options have been applied. Under APB Opinion 25, compensation cost is recognized for stock options granted to employees when the option price is less than the market price of the underlying common stock on the date of the grant.

For the purposes of the pro forma disclosures and to measure and record considerations paid to non-employees in the form of stock options or warrants, the Company applies “SFAS No. 123", as amended under SFAS 148 which requires the Company to estimate the fair value of each dilutive instrument (stock options and warrants) awarded at the grant date by using the Black-Scholes option pricing model.

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UniverCell Holdings, Inc.

Notes to the Consolidated Financial Statements

December 31, 2003 and 2002

NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment at December 31, 2003 consists of the following:

Estimated Life

Furniture and Fixtures
$
1,888
7 years

Computer Equipment
9,244
5 years

Leased Computer Equipment
10,556
5 years

Leased Phone Equipment
37,680
5 years

Property and equipment
59,368

Less accumulated depreciation
(20,392)

Property and equipment, net
$
38,976

Depreciation expense for the years ended December 31, 2003 and 2002 was $13,860 and $11,600, respectively.

NOTE 4 - COMMITMENTS AND CONTINGENCIES

Operating Leases

During 2002, the Company committed to an operating lease for office space. The lease requires a monthly payment of $2,683 and expires in 2005. Total rent expense for the years ended December 31, 2003 and 2002 was $36,618 and $11,832, respectively.

During 2002, the Company committed to an operating lease for an auto. The lease requires a monthly payment of $720 and expires in 2005. Lease expense for the years ended December 31, 2003 and 2002 was $8,640 and $9,470, respectively.

Future minimum operating lease payments are as follows at December 31, 2003:

2004
$40,832

2005
21,461

Total
$62,293

--------------------------------------------------------------------------------

UniverCell Holdings, Inc.

Notes to the Consolidated Financial Statements

December 31, 2003 and 2002

NOTE 5 - CONCENTRATION OF BUSINESS RISK

The Company acquired cellular airtime from two foreign vendors for the years ended December 31, 2003 and 2002. In the event the Company is unable to acquire airtime on favorable terms the result could have a significant impact on the Company’s operations and operating profits.

NOTE 6 - CONVERTIBLE DEBENTURES

During 2002, the Company issued $650,000 of convertible debentures. The debentures bear interest at 6% per annum and mature from March 2004 through April 2004. The conversion rate is based on the lesser of (a) 200% of the closing bid price per share of the Company’s common stock on the closing date and (b) 70% of the lowest closing bid price per share of the Company’s common stock for the twenty (20) trading days immediately preceding the date of conversion.

Attached to the $650,000 convertible debentures issued were 1,300,000 warrants. The warrants were exchanged during 2002 for 583,408 shares of common stock valued at $29,170. The warrant expense and the additional fees associated with the issuance of the debentures were deferred and are being amortized over the 2 year term of the debentures.

NOTE 7 - LONG-TERM LIABILITIES

Long-term liabilities consist of the following at December 31, 2003:

Capital Leases:
2003


Capital lease due a corporation, installments due monthly of $463, through July 2004 secured by computer equipment,
$3,033


Capital lease due a corporation, installments due monthly of $1,572.01, through June2004, secured by telephone equipment
11,731


Total Capital Leases
14,764

--------------------------------------------------------------------------------

UniverCell Holdings, Inc.

Notes to the Consolidated Financial Statements

December 31, 2003 and 2002

NOTE 7 - LONG-TERM LIABILITIES (Continued)

Convertible Debentures:
2003


Notes payable to various companies, bearing interest rates at 6%, principal and interest due at maturity, notes mature from March through April 2004 (See Note 6 for details of conversion rate)
252,932


Total Convertible Debentures
252,932


Total Long-Term Liabilities
267,696

Less Current Portion
(267,696)

Total Long-Term Liabilities
$ -


Future minimum payments at December 31, 2003 are as follows:


2004
$267,696

Total
$267,696

NOTE 8 - EMPLOYEE STOCK OPTIONS

The following tables summarize the information regarding employee stock options at December 31, 2003:

Options outstanding at December 31, 2001
-

Granted
-

Exercised
-

Forfeited
-

Balance, December 31, 2002
-

Granted
4,300,000

Exercised
(2,300,000)

Forfeited
-

Balance, December 31, 2003
2,000,000

Exercise

Price
Number of Options Outstanding December 31,

2003
Weighted Average Remaining Contractual Life (Years)
Weighted Average Exercise

Price
Number of Options Exercisable at December 31, 2003
Weighted Average Exercise

Price

$0.005
2,000,000
4.75
$0.005
2,000,000
$0.005

--------------------------------------------------------------------------------

UniverCell Holdings, Inc.

Notes to the Consolidated Financial Statements

December 31, 2003 and 2002

NOTE 8 - EMPLOYEE STOCK OPTIONS (Continued)

The Company applies APB Opinion 25, and related interpretations in accounting for its plan. No expense has been recognized for the employee stock option plan for the years ended December 31, 2003 and 2002. Had compensation cost for the Company’s stock-based compensation plan been determined based on the fair value at the grant dates for awards under such plan consistent with the method of “SFAS No. 123”, the Company’s net income (loss) and basic loss per common share would have been as indicated below:

For the Years Ended

December 31,


2003
2002

Net income (loss) as reported
$(288,440)
$(640,672)

Pro form net (loss)
(309,940)
(640,672)

Basic (loss) per share as reported
(0.00)
(0.02)

Pro form basic (loss) per share
(0.00)
(0.02)

The Company estimated the fair value of each stock option at the grant date by using the Black-Scholes option pricing model based on the following assumptions.

Risk free interest rate
5%

Expected life
5 Years

Volatility
100%

Dividend yield
0.0

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

On April 29, 2003, we dismissed Marcum & Kliegman LLP as our auditors and appointed Chisholm & Associates to audit our consolidated financial statements for the twelve months ended December 31, 2002. Our Board of Directors approved the change.

The independent auditor’s report of Marcum & Kliegman LLP on our financial statements for the year ended December 31, 2001 did not contain an adverse opinion or a disclaimer of opinion, and was not modified as to uncertainty, audit scope or accounting principles.

During our two most recent fiscal years and through the date of the change in auditors, we did not, to the knowledge of present management, have any disagreements with Marcum & Kliegman LLP on any matter of accounting principles or practice, financial statement disclosure, or auditing scope or procedure, which if not resolved to the satisfaction of Marcum & Kliegman LLP would have caused it to make reference to the subject matter thereof in connection with its independent auditor’s report.

ITEM 8A. CONTROLS AND PROCEDURES.

Based upon an evaluation performed within 90 days of this report, our chief executive officer and chief financial officer has concluded that our disclosure controls and procedures are effective to ensure that material information relating to our company is made known to management, including the chief executive officer and chief financial officer, particularly during the period when our periodic reports are being prepared, and that our internal controls are effective to provide reasonable assurance that our financial statements are fairly presented in conformity with generally accepted accounting principles.

The chief executive officer and chief financial officer notes that, since the date of his evaluation to the date of this Annual Report, there have been no significant changes in internal controls or in other factors that could significantly affect internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses.

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

The following tables set forth certain information concerning our executive officers and directors serving as of December 31, 2003. For information about ownership of our common stock by the officers and directors named below, see “Security Ownership of Certain Beneficial Owners and Management.”

Name

Age
Current Principal Position(s) and Office(s)

Sean Y. Fulda
27
Chairman of the Board of Directors, President, and Chief Executive Officer; Chief Financial Officer and Chief Accounting Officer

David M. Friedman
52
Director

Michael D. Fulda
53
Director

All directors of UniverCell Holdings were elected to hold office until our 2003 Annual Meeting of Stockholders or special meeting in lieu thereof (and thereafter until their successors have been duly elected and qualified). Michael D. Fulda is the father of Sean Y. Fulda. None of the other persons named above are related by blood, marriage or adoption to any of our other directors or executive officers. Executive officers are elected annually by the board of directors and serve at the discretion of the board.

Sean Y. Fulda, Chairman of the Board of Directors, President and Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer

Sean Y. Fulda became our president and chief executive officer and the chairman of the board of directors upon the consummation of the exchange transaction on December 14, 2001. The term of his directorship runs through the next annual meeting of UniverCell Holdings. Prior to joining UniverCell Holdings, Mr. Fulda was chief executive officer and the chairman of the board of directors of UniverCell Global since its founding in March 1999, and he remains acting in that capacity. Prior to the founding of UniverCell, Mr. Fulda founded and served as chief executive officer and chairman of the board of directors of Isralink since its founding in 1997. Prior to that time, in addition to being a full time student, Mr. Fulda was employed as telephone sales representative at Sturner and Klein Telemarketing Specialists, Inc. He was awarded a bachelor of arts in Hebrew Literature from Brisk Rabbinical College in June, 1999.

David M. Friedman, Director

David M. Friedman became a director as of June 15, 2002. Mr. Friedman has been an attorney and real estate investor and developer for over 25 years. Mr. Friedman is a principal in the Law Offices of David M. Friedman, Skokie, Illinois. He is also a real estate investor and developer, and the principal of F & F Realty, Ltd., a real estate management company in the Chicago metropolitan area. Mr. Friedman was awarded a Bachelor of Arts degree from Yeshiva University in 1972 and a Juris Doctor degree from Northwestern University in 1975.

Michael D. Fulda, Director

Michael D. Fulda, the father of Sean Y. Fulda, became a director as of June 15, 2002. Mr. Fulda is chief operating officer of Sturner and Klein, Inc., a privately-held corporation which specializes in telemarketing. Mr. Fulda has acted in this capacity since 1991. Mr. Fulda was awarded a Bachelor of Science degree from the City College of New York in 1972 and a Masters in Business Administration from Baruch College in 1980.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended requires our directors, executive officers and persons who own more than 10% of any class of our capital stock to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership and to provide copies of such reports to us. Based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required to be filed during the fiscal year ended December 31, 2003, we believe that none of the filing requirements applicable to its officers, directors and beneficial owners of greater than 10% of its common stock was not complied with during the most recent fiscal year.

Limitation on Liability and Indemnification of Directors and Officers

The Florida Business Corporation Act authorizes Florida corporations to indemnify any person who was or is a party to any proceeding other than an action by, or in the right of, the corporation, by reason of the fact that he is or was a director, officer, employee, or agent of the corporation. The indemnity also applies to any person who is or was serving at the request of the corporation as a director, officer, employee, or agent of another corporation or other entity. The indemnification applies against liability incurred in connection with such a proceeding, including any appeal thereof, if the person acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the corporation. To be eligible for indemnity with respect to any criminal action or proceeding, the person must have had no reasonable cause to believe his conduct was unlawful.

In the case of an action by or on behalf of a corporation, indemnification may not be made if the person seeking indemnification is found liable, unless the court in which the action was brought determines such person is fairly and reasonably entitled to indemnification.

Under the Florida Business Corporation Act, a director is not personally liable for monetary damages to a corporation or other person for any statement, vote, decision, or failure to act unless: (i) the director breached or failed to perform his duties as a director; and (ii) the director’s breach of, or failure to perform, those duties constitutes: (A) a violation of criminal law, unless the director had reasonable cause to believe his conduct was lawful or had no reasonable cause to believe his conduct was unlawful; (B) a transaction from which the director derived an improper personal benefit, either directly or indirectly; (C) a circumstance under which an unlawful dividend, redemption or other distribution is made; (D) in a derivative or shareholder proceeding, conscious disregard for the best interest of the corporation or willful misconduct; or (E) in a proceeding by another third party, recklessness or an act or omission which was committed in bad faith or with malicious purpose or in a manner exhibiting wanton and willful disregard of human rights, safety or property.

ITEM 10. EXECUTIVE COMPENSATION.

The following table sets forth certain information concerning the compensation that we paid for services rendered in all capacities to UniverCell for the fiscal years ended December 31, 2001, 2002, and 2003 and by all individuals serving as our CEO during 2003 and our other executive officers serving on December 31, 2003 whose salary and bonuses for 2003 exceeded $100,000. We refer to these officers of UniverCell as the Named Executive Officers.

SUMMARY COMPENSATION TABLE

Summary Compensation Table

Annual Compensation

Name and Principal Position
Year
Salary ($)
Annual Bonus ($)
Other Annual Compensation ($) 1

Sean Y. Fulda, CEO, Pres, CFO
2003
$125,000
$50,000

2002
$75,000
$ 0
$ 0

2001
$ 50,000
$ 0
$ 0

(1) Includes all other annual compensation and all other long-term compensation. Perquisites are not included if the aggregate amount is less than the lesser of $50,000 or 10% of salary and bonus.

(2) Effective January 1, 2004, Mr. Fulda’s salary was increased to $140,000 per annum, with certain annual increases to be implemented thereafter.

Employment Agreements

As of January 1, 2002, we entered into a written employment agreement with Sean Y. Fulda, under which his employment continues for a five-year term unless terminated in accordance with certain provisions of the agreement. Mr. Fulda founded our current business, and, due to the small size of our staff, is intimately involved in all aspects of our business on a daily basis. Mr. Fulda serves as our president, chief executive officer, principal accounting officer and chairman of the board of directors. His base salary is $75,000 for the year 2002, $125,000 for the year 2003, $140,000 for the year 2004, $160,000 for the year 2005 and $180,000 for the year 2006. The agreement provides for bonuses as determined by our board of directors, acting through an independent compensation committee which the directors have not yet established. The agreement also provides for participation in our generally available benefit plans and for vacation time, personal days and sick time in accordance with our policies.

Mr. Fulda’s employment agreement provides that if we terminate his employment without cause (as defined in the agreement), we remain obligated to pay his base salary through the end of the term of the agreement and to pay him a bonus for the year of such termination, and for each subsequent year remaining of the term of the agreement. These bonus amounts will be equal to the bonus paid to him in the year prior to the year in which his termination without cause occurs. This amount is subject to offset by the compensation paid to Mr. Fulda, if any, through an alternative comparable source of employment, which Mr. Fulda has an affirmative duty to seek.

Mr. Fulda’s employment agreement prohibits him from directly or indirectly competing with us during the term of the employment agreement and for a period of 12 months following termination of his employment, and from soliciting our employees and/or customers during the term of the employment agreement and for 12 months thereafter.

None of our other employees is under a written employment agreement with us. There are no collective bargaining agreements in effect. We believe the relations with our employees are good.

Director Compensation

Directors who are also our employees serve as directors without compensation. We may award stock options or other compensation to directors in our discretion. We have awarded each director a stock option for 1,200,000 shares in 2003.We may pay a stipend to non-employee directors from time to time. Directors may also be reimbursed for reasonable out-of-pocket expenses incurred in attending directors’ meetings and otherwise carrying out their duties as director.

Stock Option Plans

UniverCell Holdings currently has no stock option plans, although it may adopt such a plan in the future. Such a plan would be for the purpose of recruiting, retaining and motivating qualified personnel. Incentive compensation in the form of stock options is designed to provide long-term performance incentives to directors, executive officers and other employees, to encourage them to remain with us and to enable them to develop and maintain an ownership position in UniverCell Holdings.

Accordingly, UniverCell Holdings may determine that it is in the best interest of UniverCell Holdings to institute an incentive compensation plan.

Option Grants in Last Fiscal Year

UniverCell Holdings granted stock options in 2003,to employees to any of the Named Executive Officers or to any other person. There were stock options outstanding as of March 30, 2004.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following table sets forth information furnished us with respect to the beneficial ownership of our common shares by each executive officer named below, director and nominee, and by all directors and executive officers as a group, each as of March 30, 2004. Unless otherwise indicated, each of the persons listed has sole voting and dispositive power with respect to the shares shown as beneficially owned.

Name of Beneficial Owner
Amount and Nature of Beneficial Ownership
Percent of Ownership by Class

Sean Y. Fulda
22,239,349
21.4%

David M. Friedman
567,658
0.6%

Michael D. Fulda
213,500
0.2%

No other person who is not an executive officers, directors or nominees, is known by the Company to beneficially own more than five percent of our outstanding common stock as of March 30, 2004.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

This section of this Report discusses transactions that occurred during 2000 through December 31, 2003 between UniverCell Holdings and the following persons:

•

Sean Y. Fulda, the President, CEO and chairman of the board of directors of UniverCell Holdings after the exchange transaction, the controlling shareholder of UniverCell Global prior to the exchange transaction and the controlling shareholder of UniverCell Holdings after the exchange transaction;

•

Robert Esposito, the President, CEO and chairman of the board of directors, controlling shareholder of UniverCell Holdings before the exchange transaction and a shareholder of UniverCell Holdings after the exchange transaction;

•

Michael D. Fulda, the father of Sean Y. Fulda, a shareholder of UniverCell Global prior to the exchange transaction, a shareholder of UniverCell Holdings after the exchange transaction and a director of Univercell Holdings as of June 15, 2002;

•

David M. Friedman, a shareholder of UniverCell Global prior to the exchange transaction, a shareholder of UniverCell Holdings after the exchange transaction and a director of Univercell Holdings as of June 15, 2002; and

•

Nicole N. Fulda, the sister of Sean Y. Fulda who provided services to UniverCell Global prior to and after the exchange transaction and received shares of UniverCell Holdings after the exchange transaction in payment for those services.

Related Transactions by Univercell Holdings Prior to the Exchange Transaction

In February 2001, the former principal stockholders, MK Global Ventures, MK Global Ventures II and MK GVD Fund sold their common stock, convertible preferred stock and notes payable to Robert Esposito, who, prior to that transaction, was an unrelated third party. Mr. Esposito then became President,

Secretary and sole director of Hypermedia. In connection with this transaction, on or about May 14, 2001, UniverCell Holdings issued 35,000,000 shares of common stock to Mr. Esposito in settlement of the notes payable and accrued interest due under these notes.

After Mr. Esposito joined Hypermedia, Hypermedia moved to 710 Oakfield Drive, Brandon, Florida 33511, at space leased by Mr. Esposito on a month to month basis. Mr. Esposito used this space for other businesses he operated. Hypermedia did not pay any rent for its use of this space.

Related Transactions by Univercell Prior to the Exchange Transaction

In February, 2001, Sean Y. Fulda, Chief Executive Officer and sole director of UniverCell and, after the exchange transaction, UniverCell Holdings, extended a one-year $150,000 non-interest bearing line of credit to UniverCell to assist in cash flow operations. As of December 31, 2003, there was outstanding under this line of credit. This line of credit expired in February 2002, at which time all balances were paid off, and the line of credit was not renewed.

Other Related Transactions

We engaged the services of certain persons as its consultants and professional advisors to prepare a business plan and to provide other services. We agreed to pay the fair value for these services, and we agreed that the fair value of these services was $43,750, in the aggregate. These consultants and advisors agreed to accept common stock in lieu of cash as payment for their services. Accordingly, we issued an aggregate of 175,000 shares of our common stock to satisfy our obligations in connection with these services.

Exchange Transaction

Robert Esposito delivered 33,000,000 shares of common stock in exchange for all outstanding shares of Univercell capital stock with UniverCell’s stockholders. These 33,000,000 shares of UniverCell Holdings common stock were allocated to the UniverCell stockholders as follows:

Stockholder
Number of UniverCell Holdings Shares Issued in Exchange Transaction


Sean Y. Fulda
27,720,000

David M. Friedman
1,650,000

Susan Friedman
1,650,000

Elisha Prero
660,000

Rivka Fulda
660,000

Michael D. Fulda
660,000

As of the effective time of the exchange transaction, we cancelled all of the previously issued preferred stock of UniverCell Holdings. After the exchange transaction, Mr. Esposito continued to hold 2,000,000 shares of our common stock, subject to a one-year lock-up whereby Mr. Esposito may not transfer more than 700,000 of such shares for one year after the exchange transaction (or, until December 14, 2002), and a further 18-month restriction on transfer precluding Mr. Esposito from selling any of his shares during any month where the number of shares sold exceeds 5% of the total trading volume of our

shares during the preceding month, for 18 months after the exchange transaction (or, until June 14, 2003). Additionally, 700,000 shares of common stock owned by Mr. Esposito are held in escrow until December 14, 2002, the first anniversary of the exchange transaction. If the closing bid price for our common stock has not remained above $1.50 for the 45 days preceding the anniversary date, then these 700,000 shares will be delivered to the former UniverCell Global stockholders.

Transactions with Affiliated Advertising Agency

During the first quarter of 2002, our chairman, chief executive officer and principal stockholder, Sean Y. Fulda, established an advertising agency as a separate company from UniverCell Holdings. International Media Group places advertisements on our behalf. This company generally uses separate resources from ours, although sometimes resources are shared, in which case they are billed at cost. The principal reason for establishing International Media Group was to allow us to receive the benefit of discounts for our advertising that many publishers afford to advertising agencies (either as an industry discount or due to negotiation). Typically, these discounts are approximately 10% to 20% on the rates that would otherwise be quoted to an advertiser who approached a media source directly instead of through an advertising agency. International Media Group bills us for ads it places on our behalf. The amount it bills us reflects a substantial part of these discounts, but International Media Group does retain part of the discount it negotiates with media outlets to fund its operations. International Media Group may also provide advertising agency services to third parties.

Transactions with Promoters

Because of their management positions, organizational efforts and/or percentage share ownership of our predecessor, Sean Y. Fulda, Robert Esposito and Hypermedia may be deemed to be parents and promoters of UniverCell Holdings, as the Securities Act and the rules thereunder define those terms. Accordingly, except for the exchange transaction (at the time of which, UniverCell Holdings and UniverCell Global were independent parties), any transaction among these parties should not be considered to be an arms-length transaction.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

The following documents are filed as part of this Report:

(a)

Exhibits: The exhibits listed in the accompanying index are filed as part of this report.

31

Chief Executive Officer and Chief Financial Officer - Rule 13a-14(a) Certification

32

Chief Executive Officer and Chief Financial Officer - Sarbanes-Oxley Act Section 906 Certification

(b)

We did not file any reports on Form 8-K during the fourth quarter of its fiscal year ended December 31, 2003.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Audit fees.

The aggregate fees billed for each of the last two fiscal years for professional services rendered by our principal accountant for the audit of our annual financial statements and review of financial statements included in our Forms 10-QSB were $107,000 for the fiscal year ended December 31, 2002 and $13,055 for the fiscal year ended December 31, 2003.

Audit-Related Fees

N/A

Tax Fees

$3,000 per year.

All Other Fees

N/A

Pre-approval Policies and Procedures

N/A

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

UNIVERCELL HOLDINGS, INC.

Date: April 30, 2004

By:

/s/ Sean Y. Fulda

Sean Y. Fulda

Chief Executive Officer and President

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Date: April 30, 2004

By:

/s/ Sean Y. Fulda

Sean Y. Fulda

Chief Executive Officer and President

Director

Date: April 30, 2004

By:

/s/ David M. Friedman

David M. Friedman

Director

Date: April 30, 2004

By:

/s/ Michael D. Fulda

Michael D. Fulda

Director

1106800

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