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SCHEDULE 13D

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CUSIP No. 917296204

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1	NAMES OF REPORTING PERSONS
	I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
	M3C Holdings LLC 20-6116984
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP			(a)	☐
				(b)	☒
3	SEC USE ONLY
4	SOURCE OF FUNDS (SEE INSTRUCTIONS)
	OO
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(D) OR 2(E)				☐
6	CITIZENSHIP OR PLACE OF ORGANIZATION
	Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER
			450,000 shares of Common Stock(1)
		8	SHARED VOTING POWER
			-0-
		9	SOLE DISPOSITIVE POWER
			450,000 shares of Common Stock(1)
		10	SHARED DISPOSITIVE POWER
			-0-
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
	450,000 shares of Common Stock(1)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)				☒
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
	1.6% of outstanding shares of Common Stock(2)
14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
	OO

 

(1)  See Item 2 and Item 5.  Includes (i) 300,000 Shares and (ii) 150,000 Shares issuable under warrants that are immediately exercisable.

 

SCHEDULE 13D

Preliminary Note. Pursuant to Rule 13d-2 promulgated under the Act, this amendment to Schedule 13D (this "Amendment No. 3") amends the Schedule 13D filed on December 30, 2016 (the "Original Schedule 13D"), as amended on June 2, 2017 ("Amendment No. 1") and November 22, 2017 ("Amendment No. 2").  The Original Schedule 13D, Amendment No.1, Amendment No. 2 and this Amendment No. 3 are collectively referred to herein as the "Schedule 13D".  Capitalized terms used but not defined in this Amendment No. 3 shall have the meanings given to them in the Original Schedule 13D (as amended by Amendment No. 1 and Amendment No. 2).  The Original Schedule 13D (as amended by Amendment No. 1 and Amendment No. 2) remains in full force and effect, except as specifically amended by this Amendment No. 3.

Item 2.     Identity and Background.

Item 2(b)(i) of the Schedule 13D is hereby amended and restated in its entirety to read as follows:

The address of the Trust is:

c/o Norton Rose Fulbright (US) LLP

1301 Avenue of the Americas

New York, New York 10019

Attention: Frank S. Vellucci

Item 3.     Source and Amount of Funds or Other Consideration.

Item 3 of the Schedule 13D is hereby amended and restated in its entirety to read as follows:

As of October 26, 2018, the Reporting Persons had collectively purchased an aggregate of 6,957,837 Shares (which includes Shares that can be purchased pursuant to certain warrants and options, as described below) over the course of various transactions for consideration totaling approximately $6.4 million.

On October 24, 2018, Piton and Brian Tepfer, Chief Executive Officer of We Sell Cellular LLC (which is a subsidiary of the Company) and a director and Executive Vice President of the Company, signed an amendment (the "Amendment") to their 2016 Purchase Agreement (defined in Item 6) to reduce the exercise price of the options granted by Brian Tepfer to Piton (the "Brian Tepfer Options") under their 2016 Purchase Agreement from $1.00 per share to $0.20 per share from October 24, 2018 until 11:59 PM on December 16, 2018.  On October 24, 2018, Piton exercised the Brian Tepfer Options in full by delivering written notice to Brian Tepfer pursuant to their 2016 Purchase Agreement and will therefore acquire 500,000 Shares from Brian Tepfer for $100,000 on October 31, 2018 (such transaction, the "2018 Option Exercise").  A copy of the Amendment is attached hereto as Exhibit K and incorporated herein by reference.

The Trust has the right to acquire 275,000 Shares under previously issued warrants that are immediately exercisable, and M3C has the right to acquire 150,000 Shares under previously issued warrants that are immediately exercisable (the "Warrants").  The issuance of the Warrants

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was reported in a Form 8-K filed by the Company on August 15, 2014 (File No. 000-50494), with the form of the Warrants attached thereto as Exhibit 4.1.  Additionally, Piton has the right to acquire 500,000 Shares under options it acquired on December 20, 2016 from Scott Tepfer, President of We Sell Cellular LLC (which is a subsidiary of the Company) and an Executive Vice President of the Company, pursuant to their 2016 Purchase Agreement (the "Scott Tepfer Options").  The Scott Tepfer Options grant Piton the right to acquire up to 500,000 Shares from Scott Tepfer for $1.00 per share.  The Scott Tepfer Options expire on December 20, 2021 and may be exercised by Piton immediately in one or more transactions.

Certain Shares reported herein as beneficially owned by the Trust, M3C and Piton may be held from time to time in margin accounts established with such Reporting Persons' prime broker(s).  Therefore, a portion of the purchase price for the Shares may have been obtained through margin borrowing (including the $100,000 exercise price for the 2018 Option Exercise, which will be obtained through margin borrowing).  The Shares are held by the applicable Reporting Person in one or more commingled margin account(s), which may extend margin credit to the Reporting Person from time to time subject to applicable federal margin regulations, stock exchange rules and the prime brokers' credit policies. Certain positions held in the margin account are then pledged as collateral for the repayment of debit balances in the account. Each Reporting Person used cash on hand to fund the portion of the purchase price for the Shares that were not obtained through margin borrowing.

Item 4.     Purpose of Transaction

Item 4 of the Schedule 13D is hereby amended and restated in its entirety to read as follows:

The Reporting Persons acquired the Shares because they believe the Shares are undervalued and represent an attractive investment opportunity.

Robert Averick and other representatives and advisers of Kokino, which provides investment management services to the Reporting Persons, continue to engage in ongoing discussions with management of the Company, other shareholders of the Company and other persons concerning the Company's finances, capitalization, strategy, business (including potential commercial opportunities) and operations.  Mr. Averick and other representatives and advisers of Kokino intend to continue to engage in such discussions with the Company (including its officers and directors), other shareholders of the Company and other relevant parties concerning such matters.  Mr. Averick works closely with the Company to provide his perspective on any matter that the Company and its representatives present to him or bring to his attention as a large shareholder of the Company.  Kokino has executed a Confidentiality and Non-Disclosure Agreement with the Company to facilitate this work.

Mr. Averick frequently speaks with the Company about its capital needs and sources and intends to continue such discussions.  Based on such discussions, the Reporting Persons may take a number of actions to maximize the value of their investment, including increasing the size of their investment in the Company.  From time to time, Mr. Averick also intends to provide his perspectives to the Company and other relevant parties on matters that may result in the

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Reporting Persons reducing or exiting their respective investments in the Company, including through a sale of all or part of the Company.  Ultimately, a Reporting Person's decision to increase or decrease the size of its investment in the Company will depend upon numerous factors deemed important by Mr. Averick, including, among other things, the price and availability of securities of the Company; subsequent developments affecting the Company; the Company's business and prospects; general stock market and economic conditions; tax considerations; ongoing evaluation of the Company's business, financial condition, operations, prospects and strategic alternatives; the relative attractiveness of alternative business and investment opportunities; the attitudes and actions of the Board of Directors and management of the Company; and other factors deemed relevant by Mr. Averick.

Mr. Averick and Kokino's other representatives and advisers may, on behalf of the Reporting Persons, consider, formulate, discuss and seek to cause the Company to implement other plans or proposals intended to enhance shareholder value, including plans or proposals that may involve changes to board structure and composition, capital allocation, portfolio diversification and strategic transactions (including joint ventures).  Any such actions or transactions may be taken, advocated by, or involve Mr. Averick acting on behalf of the Reporting Persons alone or in conjunction with other shareholders, financing sources and/or other third parties, and could include proposing or considering one or more of the actions described in subsections (a) through (j) of Item 4 of Schedule 13D.

Notwithstanding anything to the contrary herein, the Reporting Persons specifically reserve the right to exercise any and all of their respective rights as shareholders of the Company in a manner consistent with their equity interests, including, without limitation, those matters described in subparagraphs (a) through (j) of Item 4 of Schedule 13D, namely: (i) the acquisition by any person of any additional securities of the Company, or the disposition of securities of the Company; (ii) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries; (iii) the sale or transfer of a material amount of assets of the Company or any of its subsidiaries; (iv) any change in the present board of directors or management of the Company, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board; (v) any material change in the present capitalization or dividend policy of the Company; (vi) any other material change in the Company's business or corporate structure; (vii) changes in the Company's charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Company by any person; (viii) causing a class of securities of the Company to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (ix) a class of equity security of the Company becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934; or (x) any action similar to any of those enumerated above.

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The 2018 Option Exercise and the other matters contemplated thereby as described in this Amendment No. 3 are hereby incorporated by reference to the extent that they constitute plans or proposals of any of the Reporting Persons with respect to the acquisition of additional securities of the Issuer, a material change of the capitalization or as otherwise required to be described in Item 4.

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		Shares Beneficially Owned	Percent of Class1
	Shared Dispositive Power	-0-	0%
	Aggregate Voting and Dispositive Power	5,358,837	18.9%

 

 

 

 

 

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each Tepfer Seller (each, a "June 2017 Purchase Agreement" and collectively the "June 2017 Purchase Agreements").

Pursuant to that certain Securities Purchase Agreement dated as of November 16, 2017 among the Company, Piton, Mr. Averick and other purchasers (the "November 2017 Purchase Agreement"), Piton acquired 2,000,000 Shares at $0.50 per share from the Company and Mr. Averick acquired 200,000 Shares at $0.50 per share from the Company at the initial closing on November 16, 2017.  The initial closing of this private placement (the "November 2017 Transaction") was reported in a Form 8-K filed by the Company on November 22, 2017 (File No. 000-50494).

References to, and descriptions of, each 2016 Purchase Agreement, each June 2017 Purchase Agreement, the November 2017 Purchase Agreement and the Amendment as set forth in this Schedule 13D are qualified in their entirety by the terms of such agreements, copies of which are filed herewith as Exhibit C, Exhibit D, Exhibit F, Exhibit G, Exhibit H and Exhibit K, respectively, and incorporated by reference herein.

As an inducement to Piton to enter into each 2016 Purchase Agreement, the Company granted "demand" and "piggy back" registration rights to Piton and the other Reporting Persons for as long as they qualify as clients of Kokino (the "Kokino Clients") pursuant to a Registration Rights Agreement, dated December 20, 2016 (the "December 2016 Registration Rights Agreement"). If the demand registration rights are exercised in accordance with the terms and conditions of the December 2016 Registration Rights Agreement, the Kokino Clients who participate in the registration will severally, not jointly, reimburse the Company for the Kokino Clients' pro rata portion of certain expenses incurred in connection with the demand registration based on the number of Shares held by the Kokino Clients that are included in the registration statement.  The Kokino Clients may only exercise their demand registration rights from time to time when the Company is obligated to file its Form 10-K or a Form 10-Q.  References to, and descriptions of, the December 2016 Registration Rights Agreement as set forth in this Item 6 are qualified in their entirety by the terms of the December 2016 Registration Rights Agreement, a copy of which is filed herewith as Exhibit E and incorporated by reference herein.

As an inducement to Piton and Mr. Averick to enter into the November 2017 Purchase Agreement, the Company, Piton, Mr. Averick and the other purchasers purchasing shares in the November 2017 Transaction (such shares, the "2017 USEL Purchased Shares") entered into a Registration Rights Agreement (the "November 2017 Registration Rights Agreement"), pursuant to which the Company agreed to file a registration statement under the Securities Act of 1933, as amended (the "Securities Act") on Form S-1 by November 30, 2017 to register the resale of the 2017 USEL Purchased Shares.  The Company also agreed, subject to certain conditions and exclusions, to include the resale of the 2017 USEL Purchased Shares in any registration statement that the Issuer files under the Securities Act.  References to, and descriptions of, the November 2017 Registration Rights Agreement as set forth in this Item 6 are qualified in their entirety by the terms of the November 2017 Registration Rights Agreement, a copy of which is filed herewith as Exhibit I and incorporated by reference herein.

In connection with the November 2017 Transaction, the Company requested Piton to execute a letter (the "Deferral Letter") which immediately defers its "demand" and "piggy back"

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registration rights under the December 2016 Registration Rights Agreement.  This deferral will terminate six months after the earlier of (i) the date the Form S-1 being filed in connection with the November 2017 Transaction is declared effective and (ii) the date the Form S-1 is required to be declared effective under the November 2017 Registration Rights Agreement (the "Deferral Period").  However, if the Company does not file the Form S-1 by January 5, 2018 or if the Company does not consummate the Initial Closing by the latest permissible date under the November 2017 Purchase Agreement, this deferral shall terminate. Additionally, the Company agreed to not file any registration statements (other than a Form S-8) unrelated to the November 2017 Transaction during the Deferral Period.  References to, and descriptions of, the Deferral Letter as set forth in this Item 6 are qualified in their entirety by the terms of the Deferral Letter, a copy of which is filed herewith as Exhibit J and incorporated by reference herein.

As disclosed in Item 3, the Trust and M3C currently hold Warrants to acquire additional Shares which are immediately exercisable.  The issuance of the Warrants was reported in a Form 8-K filed by the Company on August 15, 2014 (File No. 000-50494), with the form of the Warrants attached thereto as Exhibit 4.1.

From time to time, the Trust, M3C and Piton may hold a portion of their assets, which may include some of the Issuer's securities, in prime brokerage accounts at one or more institutions, which accounts may provide the Trust, M3C and Piton with access to margin or other financing. The customer and related agreements governing such accounts generally provide the broker counterparty with security, collateral or similar rights of possession, sale or offset with respect to such account assets in the event of a customer default. Such agreements generally also provide the counterparty with rights to lend assets held in such account, in some cases without advance or other notification to the customer. To the extent the Issuer's securities owned by the Trust, M3C or Piton are held from time to time in such prime broker accounts, they may be subject to such counterparty rights.

Item 7.

Material to be Filed as Exhibits.

The disclosure in Item 7 of the Schedule 13D is hereby supplemented by adding the following in appropriate alphabetical order:

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Dated:  October 26, 2018
	/s/ Frank S. Vellucci
	Frank S. Vellucci Attorney-in-Fact for Leslie J. Schreyer, in his capacity as trustee under Trust Agreement dated December 23, 1989 FBO the issue of Jonathan D. Sackler
	M3C Holdings LLC
	By:	/s/ Stephen A. Ives
		Stephen A. Ives Vice President
	/s/ Robert Averick
	Robert Averick
	Piton Capital Partners LLC   By: Piton Capital Management LLC, its managing member   By: Kokino LLC, its managing member
	By:	/s/ Stephen A. Ives
		Stephen A. Ives Vice President

 

 

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EXHIBIT K

AMENDMENT NO. 1 TO

 COMMON STOCK PURCHASE AND OPTION AGREEMENT

Amendment No. 1 to Common Stock Purchase and Option Agreement, dated as of October 24, 2018 (the "Amendment"), between Piton Capital Partners LLC, a Delaware limited liability company (the "Purchaser"), and Brian Tepfer (the "Seller", and together with the Purchaser, the "Parties", and each, a "Party").

WHEREAS, the Parties have entered into a Common Stock Purchase and Option Agreement, dated December 20, 2016 (as amended, amended and restated, supplemented or otherwise modified from time to time in accordance with its provisions, the "Existing Agreement"); and

WHEREAS, the Parties hereto desire to amend the Existing Agreement to modify the Option Price (as defined in the Existing Agreement) on the terms and subject to the conditions set forth herein; and

WHEREAS, pursuant to Section 8(g) of the Existing Agreement, the amendments contemplated by the Parties must be contained in a written agreement signed by each Party.

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

(a)	As of the Effective Date (defined below), Section 2(d) of the Existing Agreement is hereby deleted in its entirety and replaced with the following:

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immediately prior to such stock split, stock divided or other subdivision or consolidation of the Shares and participated in such stock split, stock dividend or other subdivision, consolidation or combination. Additionally, if at any time after the Agreement Date the Company distributes cash, securities, evidence of indebtedness or other assets or property (including, for example, a cash dividend) and such distribution is not contemplated by the second sentence of this Section 2(d), then the Option Price shall be automatically reduced by the fair market value of the cash, securities, evidence of indebtedness or other assets or property applicable to one share of the Shares to the extent such distribution is (or will be) received by Seller.

(b)	As of the Effective Date, all references to "Chadbourne & Parke LLP" in the Existing Agreement shall be replaced with "Norton Rose Fulbright (US) LLP".

(a)	It has the full right, power, and authority to voluntarily enter into this Amendment and to perform its obligations hereunder and under the Existing Agreement as amended by this Amendment.

(b)	The execution of this Amendment by the individual whose signature is set forth at the end of this Amendment on behalf of such Party, and the delivery of this Amendment by such Party, have been duly authorized by all necessary action on the part of such Party.

(c)	This Amendment has been executed and delivered by such Party and (assuming due authorization, execution, and delivery by the other Party hereto)

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constitutes the legal, valid, and binding obligation of such Party, enforceable against such Party in accordance with its terms.

(a)	This Amendment is governed by and construed in accordance with, the laws of the State of Delaware, without regard to the conflict of laws provisions of such State.

(b)	This Amendment shall inure to the benefit of and be binding upon each of the Parties and each of their respective successors and assigns.

(c)	The headings in this Amendment are for reference only and do not affect the interpretation of this Amendment.

(d)

This Amendment may be executed in counterparts, each of which is deemed an original, but all of which constitute one and the same agreement. Delivery of an executed counterpart of this Amendment electronically or by facsimile shall be effective as delivery of an original executed counterpart of this Amendment.

(e)	This Amendment constitutes the sole and entire agreement between the Parties with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings, agreements, representations, and warranties, both written and oral, with respect to such subject matter.

(f)	Each Party shall pay its own costs and expenses in connection with this Amendment (including the fees and expenses of its advisors, accountants, and legal counsel).

[Signature Page Follows]

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IN WITNESS WHEREOF, the Parties have executed this Amendment as of the date first written above.