UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2006

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-28362

ClearComm, L.P.

(Exact name of registrant as specified in its charter)

Delaware	66-0514434
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

City View Plaza-Suite 700 No. 48 of Road 165 Guaynabo, Puerto Rico	00918-1929
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (787) 810-5757

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months 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 an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

ClearComm, L.P.

INDEX

PART I		FINANCIAL INFORMATION

Item 1.		Financial Statements

		Consolidated Statements of Assets, Liabilities and Partners’ Deficit as of June 30, 2006 (unaudited) and December 31, 2005 (audited)

		Consolidated Statements of Revenues and Expenses for the three-month and six-month periods ended June 30, 2006 and 2005 (unaudited).

		Consolidated Statements of Changes in Partners’ Deficit for the six-month period ended June 30, 2006 (unaudited)

		Consolidated Statements of Cash Flows for the six-month period ended June 30, 2006 and 2005 (unaudited)

		Notes to Interim Consolidated Financial Statements as of June 30, 2006 (unaudited)

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.		Quantitative and Qualitative Disclosure About Market Risk

Item 4.		Controls and Procedures

PART II		OTHER INFORMATION

Item 1.		Legal Proceedings

Item 4.		Submission of Matters to a Vote of Limited Partners

Item 6.		Exhibits and Reports on Form 8-K

Signatures.

Exhibit Index.

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ClearComm, L.P.

CONSOLIDATED STATEMENTS OF ASSETS, LIABILITIES
AND PARTNERS’ DEFICIT

	June 30			December 31,
	2006			2005
	(Unaudited)			(Audited)
ASSETS:
Cash and cash equivalents	$	4,690,758		$	6,609,074
Accounts receivable, net	6,258,414			6,127,025
Accounts receivable, other	1,202,596			1,851,278
Inventories, net	2,139,104			2,953,707
Prepaid expenses	1,262,140			1,389,516
Leasehold rights, net	3,716,893			3,465,685
PCS licenses, net	46,750,449			46,750,449
Deferred financing costs	803,288			658,660
Property and equipment, net	60,987,095			68,676,259

	$	127,810,737		$	138,481,653

LIABILITIES AND PARTNERS’ DEFICIT:
Accounts payable and accrued liabilities	$	32,385,320		$	37,256,948
Notes payable — short-term	132,200,789			14,162,119
Notes payable — long-term	32,890,079			143,705,806

Unitholders’ capital (deficit) 2,768.20 Units in 2006 and 2005 and 1 General partnership interest.	(69,665,451		)	(56,643,220		)

Total liabilities and partner’s deficit	$	127,810,737		$	138,481,653

BOOK VALUE (DEFICIT) PER UNIT	$	(25,166	)	$	(20,462	)

The accompanying notes are an integral part of these consolidated statements.

ClearComm, L.P.

CONSOLIDATED STATEMENTS OF REVENUES AND EXPENSES
(UNAUDITED)

	Three-Month Periods Ended June 30						Six-Month Periods Ended June 30
	2006			2005			2006			2005

Revenues:
Service revenues	$	16,793,646		$	22,686,968		$	34,269,470		$	45,565,488
Handset and accessories sales	1,504,873			1,169,624			3,156,001			1,907,084

	18,298,519			23,856,592			37,425,471			47,472,572

Operating Cost and Expenses:
Cost of handset and accessories	3,069,195			4,362,624			6,822,385			9,047,636
Interconnection expense	73,120			807,907			699,157			1,603,484
Sales and dealers commissions	1,206,131			1,891,224			2,352,013			3,925,924
Salaries and benefits	3,408,346			3,859,776			7,363,951			7,773,695
Depreciation	4,696,195			4,524,200			9,387,588			9,095,338
Advertising expense	424,118			1,382,099			720,198			2,092,602
Legal and professional services	836,601			287,520			1,384,454			679,302
Provision for doubtful accounts	909,352			3,293,557			2,308,384			5,482,126
Rent expense	2,119,792			1,824,870			4,238,824			3,617,963
Taxes other than income	751,782			529,874			1,718,196			1,572,106
Network Operation and Maintenance	2,029,605			2,011,529			3,984,441			3,952,237
Other expenses	1,610,897			-136,634			3,126,416			1,396,574
Management fee to General Partner	125,000			68,750			250,000			137,500
Services rendered by related parties	17,315			626,235			33,262			1,418,851

	21,277,449			25,333,531			44,389,269			51,795,338

Income (Loss) from Operations	(2,978,930		)	(1,476,939		)	(6,963,798		)	(4,323,096		)

Other Income (Expense)
Interest income	21,503			75,134			70,533			408,160
Other Income	(50		)	—			—			32,644
Interest expense	(4,106,158		)	(2,913,539		)	(8,128,965		)	(5,968,121		)

	(4,084,705		)	(2,838,405		)	(8,058,432		)	(5,527,317		)

Net Income (Loss)	$	(7,063,635	)	$	(4,315,344	)	$	(15,022,230	)	$	(9,850,413	)

Net Income (Loss) Attributable to General Partner	$	(7,063,635	)	$	(4,315,344	)	$	(15,022,230	)	$	(9,850,413	)

Net Income (Loss) Attributable to Limited Partners	$	—		$	—		$	—		$	—

The accompanying notes are an integral part of these consolidated financial statements.

ClearComm, L.P.

CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS’ DEFICIT
(Unaudited)
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2006

	Limited Partners		General
	Units	Amount	Partner			Total


BALANCES, December 31, 2005	2,768.2	—	$	(56,643,220	)	$	(56,643,220	)

DILUTION GAIN			2,000,000			2,000,000

Net loss for the three months period ended March 31, 2006		—	(7,958,596		)	(7,958,596		)

Net loss for the three months period ended June 30, 2006			(7,063,635		)	(7,063,635		)

BALANCES, June 30, 2006	2,768.2	—	$	(69,665,451	)	$	(69,665,451	)

The accompanying notes are an integral part of these consolidated financial statements.

ClearComm, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

	Six-Month Periods Ended
	June 30,			June 30,
	2006			2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(15,022,230	)	$	(9,850,413	)
Adjustments to reconcile net loss to net cash provided by operating activities-
Depreciation and amortization	8,778,883			9,095,668
Equity in losses of unconsolidated subsidiary	—			30,000
Inventory Reserve	63,000			172,033
Bad debt expense	2,308,383			5,482,126
Amortization of deferred financing costs	608,705			—
FCC interest paid directly by ABN AMRO	513,317			—
Gain from sale of vehicles	(60,361		)	(432,527		)
Capitalized interest	1,584,413			102,761
Other non-cash items	(247,000		)	—
Changes in operating assets and liabilities-
Increase in accounts receivable, before write-offs	(1,791,092		)	(6,968,218		)
Decrease in insurance claim receivable	—			403,657
Decrease (increase) in inventories	751,603			1,541,022
Increase in prepaid expenses	18,373			(107,080		)
Decrease in accounts payable and accrued liabilities	(5,528,845		)	2,000,205
Decrease in accounts payable to related parties	699,998			(3,196,515		)
(Decrease) Increase in accrued interest	162,207			565,151
(Decrease) increase in deferred income	371,237			66,460
Total adjustments	8,232,821			8,754,743
Net cash provided by operating activities	(6,789,409		)	(1,095,670		)

CASH FLOWS FROM INVESTING ACTIVITIES:
Redemption of investment securities
Proceeds from the sale of vehicle	—			483,161
Proceeds from sale of accounts receivable	—			455,890
Acquisition of property and equipment	(967,044		)	(1,279,113		)

Net cash provided by (used in) investing activities	(967,044		)	(340,062		)

CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments of capital leases	(222,501		)	(104,297		)
Proceeds from issuance of preferred stock	2,000,000
Proceeds from issuance of note payable	5,000,000
Payment for deferred financing costs	(653,333		)	(117,091		)
Proceeds of issuance of subordinated loan	—			11,743,256
Principal payments of long term debt	(286,029		)	(10,698,408		)

Net cash used in financing activities	5,838,137			823,460

NET INCREASE IN CASH AND CASH EQUIVALENTS	(1,918,316		)	(612,272		)
CASH AND CASH EQUIVALENTS, beginning of period	6,609,074			10,612,430
CASH AND CASH EQUIVALENTS, end of period	$	4,690,758		$	10,000,158

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:
INTEREST PAID	$	6,382,344		$	4,349,229

The accompanying notes are an integral part of these consolidated financial statements.

CLEARCOMM, L.P.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2006 (UNAUDITED)

1. BASIS OF PRESENTATION AND INTRODUCTION

The unaudited interim consolidated financial statements presented herein have been prepared in accordance with accounting principles generally accepted in the United States for interim financial statements and with the instructions to Form 10-Q and Regulation S-X pertaining to interim financial statements. Accordingly, they do not include all information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The unaudited interim consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments and accruals which, in the opinion of management, are considered necessary for a fair presentation of the Partnership’s financial position at June 30, 2006 and results of operations and cash flows for the six-month periods ended June 30, 2006 and 2005. The unaudited interim consolidated financial statements should be read in conjunction with the summary of significant accounting policies and notes to consolidated financial statements included in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2005. Results of operations for interim periods are not necessarily indicative of the results that may be expected for the full year.

The reporting entity for purposes of this 10-Q is ClearComm, L.P. (the “Partnership”), a limited partnership organized on January 24, 1995 under the laws of the State of Delaware, which together with its majority-owned subsidiary, NewComm Wireless Services, Inc., a Puerto Rico corporation (“NewComm” and, together with the Partnership, the “Company”), owns and operates a state-of-the-art PCS network in Puerto Rico (the “Puerto Rico Network”). The Partnership directly or indirectly, through NewComm, owns two 15 MHz C-Block PCS licenses covering the entire island of Puerto Rico (the “Puerto Rico Licenses”) and owned four 15 MHz licenses in California (the “California Licenses”) which were sold in a transaction approved by the FCC.

The Partnership was formed to file applications with the Federal Communications Commission (“FCC”) under personal communications service (“PCS”) frequency Block C, originally restricted to minorities, small businesses and designated entities, to become a provider of broadband PCS.

On November 30, 2005, the Agreement of Limited Partnership of the Partnership (the “Partnership Agreement”) was amended to extend the date the Partnership will terminate to December 31, 2010. The Partnership will dissolve on such date (unless terminated earlier or unless the Partnership Agreement is amended to change such date). The Partnership Agreement also provides for a reasonable time to wind-up the affairs of the Partnership in case of termination.

SuperTel Communications Corp. (“SuperTel”), a Puerto Rico corporation, is the General Partner. Its total share of the income and losses of the Partnership is 25% in accordance with the Partnership Agreement. Approximately 1,600 limited partners also invested in the Partnership through a private placement.

NewComm Wireless Services, Inc.

The Partnership was the fifth entrant into the Puerto Rico wireless telecommunications market. It currently provides wireless coverage in the areas where 95% of the Puerto Rico wireless traffic occurs and is expanding. The Partnership has established points of sale in all major shopping districts and has over 200 points of sale throughout Puerto Rico. The Partnership believes that it currently has approximately 7% of the Puerto Rico wireless market.

The Partnership’s Puerto Rico Network operates under the image and brand name “MoviStar.” MoviStar is the PCS brand name of the Telefónica Group in Spain and certain other countries in Latin America.

The Puerto Rico Network is a state-of-the-art Code Division Multiple Access (“CDMA”) network. Pursuant to a roaming agreement with Sprint PCS, MoviStar customers have mainland U.S. coverage. Lucent Technologies, Inc. (“Lucent”) built the Puerto Rico Network on behalf of NewComm. The Partnership continues optimizing the network to maintain and offer better quality service to its customers.

In each of November 2000, December 2000, and March 2001, NewComm received $5,000,000 from Syndicated Communications Venture Partners IV, L.P. (“Syncom”), a third party, in exchange for approximately 4.92% ownership in NewComm. Syncom has contributed $25 million to NewComm in exchange for approximately 8.2% ownership interest in NewComm. The last $10 million installment was contributed in November 2002.

On March 2, 2002, the Partnership sold approximately 4.08% of NewComm to a group of investors led by Fleet Development Ventures (the “Fleet Group”) for $13 million. The Partnership and TEM contributed approximately $9 million each to NewComm in the form of equity and convertible debt, respectively. The Partnership and TEM have committed an additional $10 million each to close the Project Finance Facility.

Under the Partnership’s direction, the Board of Directors of NewComm terminated TEM as manager under the management agreement on October 28, 2004. TEM alleged unlawful and wrongful termination of the technology and management agreement. The Partnership on behalf of NewComm, was proactively seeking compensation for damages caused by the mismanagement of TEM either by settlement or within the arbitration process. On April 21, 2005, NewComm and its shareholders entered into a Settlement Agreement and Mutual Release with TEM (the “Settlement Agreement”) in which all the parties resolved all outstanding disputes. As a result, TEM no longer provides management services to NewComm but has extended significant financial support in the form of guarantees / lines of credit (see Part I, Item 2).

On April 21, 2005, NewComm reorganized its capital structure by collapsing its many classes of common stock into a single class of common stock.

On August 5, 2005, NewComm made effective a Series A Convertible Participating Preferred Stock purchase agreement between itself and its investors to fund cash flow deficiencies. On February 16 2006, NewComm made effective another Series A Convertible Participating Preferred Stock purchase agreement between itself and its investors to fund cash flow deficiencies.

Immediately after the February 16, 2006 closing, the authorized capital of NewComm is:

1. 50,024.695 shares of preferred convertible of which:

· 12.372 designated as Series A-1 convertible participating preferred

· 12.323 designated as Series A-2 convertible participating preferred

· 25,645.165 designated as Series A-3 convertible participating preferred

· 24,354.835 designated as Series A-4 convertible participating preferred

2. 52,044.142 shares of common stock, 2,019.447 of which are issued and outstanding and 50,024.695 are reserved for the issuance upon the conversion of the Series A Convertible Preferred Stock.

NewComm’s Shareholders possess the following ownership interests in NewComm, as of June 30, 2006:

	Common Shares	%	Shares Fully Diluted	%
ClearComm, L.P.	793.063	39.27%	30,804.147	59.19%
SynComm Venture Partners IV, L.P.	145.680	7.21%	13,921.050	26.75%
Fleet Development Ventures, LLC	28.077	1.39%	30.299	0.06%
Opportunity Capital Partners IV, L.P.	28.077	1.39%	3,852.772	7.40%
Power Equities, Inc.	16.846	0.83%	2,428.170	4.67%
TEM Puerto Rico Inc.	1,007.704	49.90%	1,007.704	1.94%

	2,019.447	100.00%	52,044.142	100.00%

Internet Surfing Stores of P.R., Inc. - (eMilios)

On April 16, 2002, the Partnership entered into a Shareholders’ Agreement to form a joint venture with eMilios International, L.L.C., a Florida limited liability company, to promote and establish in Puerto Rico the eMilios concept, which essentially provides internet access for the general public at a fee based by the hour. The joint venture was formed under a Puerto Rico corporation named Internet Surfing Stores of Puerto Rico, Inc. (“ISS”). The Partnership owns 49% and eMilios International owns 51% of ISS.

Due to lack of support of eMilios International and lack luster results in Puerto Rico, the Partnership wrote off its investment in the project in 2005 and closed ISS operations during June, 2006.

2. FINANCING REQUIREMENTS

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Partnership commenced operations in September 1999 and has incurred losses amounting to $15.0 million for the six-month period ended June 30, 2006 and incurred operating losses of $9.9 million for the six-month period ended June 30, 2005. It also has working capital deficits and partners’ capital deficit of $149 million and $69.7 million, respectively, as of June 30, 2006. The Partnership is likely to continue incurring losses until such time as its subscriber base generates revenue in excess of the Partnership’s expenses. Development of a significant subscriber base is likely to take time, during which the Partnership must finance its operations by means other than its revenues.

As part of an agreement with TEM, NewComm entered into a contract with Lucent that required Lucent to build a network that uses the CDMA protocol. The total cost of the network was approximately $125 million. During June 2003, NewComm and Lucent entered into a Senior Credit Agreement (the “Senior Credit Agreement”) which refinanced the existing promissory note balance due under the CDMA network construction payable. The interest rate was set at 8% per annum and the maturity date was extended to September 2009. The note payable is guaranteed by a security agreement covering most of NewComm’s assets, as defined.

On July 1, 2005, Lucent assigned and transferred to D.B Zwirn Special Opportunities Fund, LTD (“D.B Zwirn”) 100% of Lucent’s rights and obligations under the Senior Credit Agreement. On February 16, 2006, NewComm and D.B Zwirn amended and restated the Senior Credit Agreement. The new outstanding principal balance is $60,539,828, including some accrued and unpaid interest, and $5,000,000.00 in additional principal made available at the time of closing. The maturity date is March 31, 2007. The facility bears interest at a rate per annum equal to LIBOR + 700 basis points. Additionally, the facility accrues pay-in-kind (PIK) interest on the aggregate principal amount, payable upon maturity, acceleration or repayment. The PIK interest is based on a grid that ranges from 2% to 4%, depending on quarterly EBITDA results. The maturity date on the facility was January 31, 2006. The Senior Credit Agreement with D.B Zwirn includes various affirmative, negative and financial covenants. As of June 30, 2006, NewComm was in compliance with all the requirements under such covenants.

Pursuant to the Settlement Agreement, and with respect to the FCC debt, TEM has secured the repayment of this debt by means of a subordinated line of credit guaranteed as described in the Settlement Agreement. This debt relates to the Partnership acquisition of its PCS licenses. The Partnership owes the United States federal government approximately $10.7 million plus accrued interest at 6.5% as of June 30, 2006.

A total of $73.8 million in accounts payable to TEM and T-Móviles was converted into equity as a result of the Settlement Agreement on April 20, 2005. This conversion has significantly decreased the Partnership’s accounts payable by said amount and increased NewComm’s capital account from $44.5 million to $118 million.

Management believes that cash and cash equivalents on hand, anticipated growth in revenues, capital contributions and the additional indebtness incurred with D.B Zwirn will be adequate to fund its operations, at a minimum, through the end of 2006. However, in the absence of improved operating results and cash flows, the Company may face liquidity problems to fund its operations and meet its obligations. However, and because of the existence of these matters, substantial doubt exists as to the Company’s ability to continue operating as a going concern. The accompanying financial statements do not include any adjustments that might result should the Company face liquidity issues to fund its operations and meet its obligations.

3. RECENT ACCOUNTING PRONOUNCEMENTS

In May 2005, the FASB issued Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations (an interpretation of FASB Statement No. 143) (FIN 47). This Interpretation clarifies that the term conditional asset Retirement Obligations, refers to a legal obligation to perform an asset retirement activity in which the timing and (or) method of settlement are conditional on a future event that may or may not be within the control of the entity. The obligation to perform the asset retirement activity is unconditional even though uncertainty may exist about the timing and (or) method of settlement. Accordingly, an entity is required to recognize the fair value of a liability for the conditional asset retirement obligation when incurred and the uncertainty about the timing and (or method) of settlement should be factored into the measurement of the liability when sufficient information exists. This Interpretation is effective no later than December 31, 2005. Retrospective application of interim financial information is permitted but is not required. Additionally, companies shall recognize the cumulative effect of initially applying this Interpretation as a change in accounting principle. The Company adopted this new pronouncement effective December 31, 2005. The impact of the Company’s financial statements as a result of adopting this new statement is not material.

4. LEGAL PROCEEDINGS

From time to time the Partnership is involved in litigation arising from the ordinary course of business, some of which is ongoing. The General Partner does not believe that any litigation involving the Partnership will have a material adverse effect on the Partnership’s business or financial condition.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-looking Statements

This Quarterly Report on Form 10-Q and future filings by the Partnership on Form 10-Q, Form 10-K and Form 8-K and future oral and written statements by the Partnership may include certain forward-looking statements, including (without limitation) statements with respect to anticipated future operating and financial performance, growth opportunities and growth rates, acquisition and divestiture opportunities, and other similar forecasts and statements of expectation. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” and “should,” and variations of these words and similar expressions, are intended to identify these forward-looking statements. Forward-looking statements by the Partnership are based on estimates, projections, beliefs and assumptions of management and are not guarantees of future performance. The Partnership disclaims any obligation to update or revise any forward-looking statement based on the occurrence of future events, the receipt of new information, or otherwise.

Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements made by the Partnership as a result of a number of important factors. Examples of these factors include, without limitation: rapid technological developments and changes in the telecommunications industry; ongoing deregulation (and the resulting likelihood of significantly increased price and product/service competition) in the telecommunications industry as a result of the Telecommunications Act of 1996 and other similar federal and state legislation and the federal and state rules and regulations enacted pursuant to that legislation; regulatory limitations on the Partnership’s ability to compete in the telecommunications services industry; and continuing consolidation in the telecommunications services industry. In addition to these factors, actual future performance, outcomes and results may differ materially because of other, more general factors including, without limitation, general industry and market conditions and growth rates, domestic and international economic conditions, governmental and public policy changes and the continued availability of financing in the amounts, at the terms and on the conditions necessary to support the Partnership’s future business.

Introduction

The information contained in this Part I, Item 2 updates, and should be read in conjunction with information set forth in Part II, Items 7 and 8, in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005, in addition to the interim consolidated financial statements and accompanying notes presented in Part 1, Item 1 of this Quarterly Report on Form 10-Q.

The Partnership was formed on January 24, 1995 and is managed by its General Partner, SuperTel Communications Corp. The Partnership was organized to acquire, own, consult and operate personal communication services PCS licenses in the Block C band and to take advantage of the benefits that the FCC has set aside for entrepreneurs. The Partnership owns the Puerto Rico Licenses, which consist of two 15 MHz PCS licenses covering Puerto Rico. The California Licenses, which consist of four 15 MHz PCS licenses covering the California cities of Eureka, Redding, Modesto, and Merced were sold and transferred to Metro PCS on April 15, 2004 for $10,900,000 cash payment. The license covering Visalia-Porterville, California, had been previously sold and transferred to Leap Wireless on June 8, 2001 in exchange for $9,500,000 cash payment.

The Partnership commenced commercial operations of its PCS network in Puerto Rico on September 24, 1999 when it began offering wireless services in Puerto Rico to the public. Prior to that date, its income had consisted of interest earnings only.

The Partnership established its Puerto Rico network by forming a wholly owned subsidiary, NewComm, on January 29, 1999. On February 4, 1999, the Partnership and NewComm entered into an agreement with TEM, whereby the Partnership contributed its two Puerto Rico Licenses to NewComm and TEM provided NewComm a $19,960,000 loan to develop the Puerto Rico Licenses. TEM’s loan was made pursuant to a secured convertible promissory note (the “Note”) which would be convertible into 49.9% of NewComm’s equity. The Note, however, could not be converted until the FCC authorized TEM to hold more than a 25% equity interest in NewComm. By means of a Stock Purchase Agreement executed on March 12, 2002 (the “Stock Purchase Agreement”), the Partnership agreed to sell shares equal to 0.2% in NewComm to TEM conditioned to obtaining permanent financing and a clear exit path for the Partnership. This transaction was subsequently approved by the Department of Homeland Security and the FCC.

In August 2004, the Partnership retained the services of a consulting firm (other than its external auditors) to audit the operations and performance of NewComm under the management of TEM. The results of the audit were reported to the Board of Directors of NewComm on September 30, 2004, with the conclusion that TEM had not performed adequately. Under the Partnership’s direction, the Board of Directors of NewComm terminated TEM as manager under the management agreement on October 28, 2004. TEM alleged unlawful and wrongful termination of the technology and management agreement. The Partnership, on behalf of NewComm, was proactively seeking compensation for damages caused by the mismanagement of TEM either by settlement or within the arbitration process.

On April 21, 2005, NewComm and its shareholders entered into a Settlement Agreement and Mutual Release in which all the parties resolved all outstanding disputes. The parties agreed to:

– A mutual waiver and release between all parties.

– Payment of $4,392,978.55 in full satisfaction of the technology transfer fee due to TEM under the technology transfer agreement through issuance of a convertible promissory note and capitalization.

– Payment of $2,239,492.21 in full satisfaction of the management fee due to TEM under the management agreement through issuance of a convertible promissory note and capitalization.

– Payment to ClearComm and TEM of $11,447,758.28 and $11,396,338.88, respectively, in full satisfaction of the loans granted for purposes of meeting the matured portion of the FCC debt through issuance of a convertible promissory note and capitalization.

– In addition, $62.4 million in other notes and interest payable to TEM were converted to equity, for a total equity conversion of $ 80.5 million in accounts payable to TEM and TEM Puerto Rico, Inc. Upon conversion of all convertible promissory notes, TEM Puerto Rico, Inc. received an aggregate amount of shares of NewComm equal to 49.9% and the other stockholders hold an aggregate amount of shares of NewComm equal to 50.1%.

– Forgiveness from TEM of $1,859,068.97 corresponding to all amounts outstanding with TMmas (a TEM affiliate) under the SCL agreements.

– Agreement on premium to be paid by TEM/TEM Puerto Rico, Inc. to the other shareholders upon a potential liquidation or a change in control. TEM and/or TEM Puerto Rico, Inc. shall pay a premium from the liquidation/sale proceeds that in any event will not exceed 16.6% of the equity valuation.

– In the event that as of September 30, 2006, NewComm’s net income, as determined in accordance with U.S. generally accepted accounting principles and measured on the basis of EBITDA for the twelve-month period then ended, is less than $10,970,000, TEM may require that the Partnership, and NewComm’s shareholders, together with TEM Puerto Rico, Inc., sell their respective interests in NewComm to a third party.

– Amend the Stock Purchase Agreement in order to extend by 3 ½ years, to approximately October 2008, TEM Puerto Rico, Inc.’s option to buy a majority interest in NewComm and to clarify the procedures that would apply upon the sale of NewComm to a third-party purchaser in the event that neither TEM Puerto Rico, Inc. nor the Partnership exercised its rights under the Sale Agreement to purchase NewComm.

– Enter into a License Brand Agreement that allows the Partnership to use the MoviStar brand name free of cost for 5 years.

The effectiveness of the Settlement Agreement was conditioned upon the satisfaction of certain events, including the following:

– TEM Puerto Rico, Inc. becoming the holder of 49.9% of NewComm’s capital stock.

– The termination of the Joint Venture Agreement, the Management Agreement, and the Technology Transfer Agreement, each of which involved NewComm and included TEM as a party.

– The amendment of the Stock Purchase Agreement, the Sale Agreement, dated March 12, 2002 (the “Sale Agreement”), among NewComm, TEM Puerto Rico, Inc., the Partnership, and the other shareholders of NewComm, and the Shareholders Agreement, dated March 12, 2002 (the “Shareholders Agreement”), among the Partnership, NewComm, TEM Puerto Rico, Inc., and the other shareholders of NewComm.

– TEM’s entry into a line of credit to be used to pay the balance of NewComm’s indebtedness to the FCC; and an extension or refinancing of NewComm’s bridge loan from ABN Amro Bank, N.V.

On April 21, 2005, NewComm reorganized its capital structure by collapsing its many classes of common stock into a single class of common stock.

Subsequently, on August 5, 2005, NewComm made effective a Series A Convertible Participating Preferred Stock purchase agreement between itself and its investors to fund cash flow deficiencies. On February 16, 2006, NewComm made effective another Series A Convertible Participating Preferred Stock purchase agreement between itself and its investors to fund cash flow deficiencies.

Immediately after the February 16, 2006 closing, the authorized capital of NewComm is:

1. 50,024.695 shares of preferred convertible of which:

· 12.372 designated as Series A-1 convertible participating preferred

· 12.323 designated as Series A-2 convertible participating preferred

· 25,645.165 designated as Series A-3 convertible participating preferred

· 24,354.835 designated as Series A-4 convertible participating preferred

2. 52,044.142 shares of common stock, 2,019.447 of which are issued and outstanding and 50,024.695 are reserved for the issuance upon the conversion of the Series A Convertible Preferred Stock.

Results of Operations

Three-month period ended June 30, 2006 compared with three-month period ended June 30, 2005.

Set forth below is a summary of the results of operations before other income and expenses for the periods indicated:

	Three-Month Periods Ended
	June 30,
	2006			2005			Change
Revenues:
Service revenues	$	16,793,646		$	22,686,968		-26	%
Handsets and accessories sales	1,504,873			1,169,624			29	%

Total Revenues	18,298,519			23,856,592			-23	%
Expenses:
Operating expenses, excluding depreciation expense	16,581,254			20,809,331			-20	%

Income (loss) from operations	1,717,265			3,047,261			-44	%

Interest expense	(4,106,105		)	(2,913,539		)	41	%

Income (loss) before other income (expense)	$	(2,388,840	)	$	133,722		-1886	%

Revenues

The Partnership’s revenues for the three-month period ended June 30, 2006 decreased by 23% from $23.9 million to $18.3 million as compared to the same period in 2005. Total revenues include service as well as handset and accessories revenues. Service revenues for the three-month period ended June 30, 2006 decreased by 26% when compared to the same period in 2005 while handset and accessories sales increased by 29%. The increase in handsets and accessories revenues is mainly due to the shift from the handset subsidy policy whereby a customer is now required to purchase the handset at competitive prices under the new available plans. The decrease in service revenues is related to tighter credit policies and a reduction in the Partnership’s customer base during the second quarter of 2006.

Expenses

The following table shows the variances for the three-month period ended June 30, 2006 as compared to the same period in 2005.

Expenses	Three-months ended June 30,				%
	2006		2005		Change

Cost of handset and accessories	3,069,195		$	4,362,624	-30	%
Interconnection expense	73,120		807,907		-91	%
Sales and dealers commissions	1,206,131		1,891,224		-36	%
Salaries and benefits	3,408,346		3,859,776		-12	%
Depreciation	4,696,195		4,524,200		4	%
Advertising expense	424,118		1,382,099		-69	%
Legal and professional services	836,601		287,520		191	%
Provision for doubtful accounts	909,352		3,293,557		-72	%
Rent expense	2,119,792		1,824,870		16	%
Taxes other than income	751,782		529,874		42	%
Network Operation and Maintenance	2,029,605		2,011,529		1	%
Other expenses	1,610,897		-136,634		-1279	%
Management fee to General Partner	125,000		68,750		82	%
Services rendered by related parties	17,315		626,235		-97	%

Total expenses	$	21,277,449	$	25,333,531	-16	%

Expenses for the three-month period ended June 30, 2006 totaled $21,277,449 as compared to $25,333,531 for the same period in 2005. There was an overall reduction of 16% in operating expenses or $4 million during the second quarter of 2006.

The overall decrease in expenses is mainly due to decreases in the cost of handsets and accessories sold, interconnection expenses, sales and dealers commissions, advertising expense, and the provision for doubtful accounts. The increase in legal and professional fees is related to arbitration proceedings being currently held between the Partnership and Telefonica.

Income from Operations

Income from operations reflects the ability of the Partnership to generate positive cash flows from its operations, which does not take into consideration expenses such as amortization, depreciation and interest that must be reported for generally accepted accounting principles (GAAP) to arrive at the net income or loss.

Income from operations for the three-month period ended June 30, 2006 of $1,717,265 shows a significant decrease of 44% or $1.3 million as compared to the income from operations for the same period in 2005. This decrease in income from operations is related to overall 23% reduction in revenues.

Interest expense for the three month-period ended June 30, 2006 of $4.1 million ($2.9 million in 2005) reduce the income from operations and result in net loss before other income and expenses of $2.4 million for the second quarter of 2006 and a net income of $133,722 for the same period in 2005; an overall increase in net loss of 1886% when compared to 2005. Depreciation expense of $4.7million ($4.4 million in 2005), a non-cash item, further reduces the book income to $7.1 million in 2005 ($4.3 million in 2005).

Six-month period ended June 30, 2006 compared with six-month period ended June 30, 2005.

The following table summarizes changes in certain financial information for the period indicated:

	Six-Month Periods Ended
	June 30,
	2006			2005			Change
Revenues:
Service revenues	$	34,269,470		$	45,565,488		-25	%
Handsets and accessories sales	3,156,001			1,907,084			65	%

Total Revenues	37,425,471			47,472,572			-21	%
Expenses:
Operating expenses, excluding depreciation expense	35,001,681			42,670,000			-18	%

Income (loss) from operations	2,423,790			4,802,572			-50	%

Interest expense	(8,128,965		)	(5,968,121		)	36	%

Income (loss) before other income (expense), excluding depreciation expense	$	(5,705,175	)	$	(1,165,549	)	389	%

Revenues

The Partnership’s revenues for the six-month period ended June 30, 2006 totaled $37,425,471, as compared to $47,472,572 for the same period in 2005. Revenues for the six-month period ended June 30, 2006 included $34,269,470 in service revenues and $3,156,001 in handset and accessories sales generated from NewComm’s wireless operations, as compared to $45,565,488 and $1,907,084 respectively, for the same period in 2005. The 25% decrease in service revenues is consistent with a decrease in the Partnership’s customer base which was offset by an increase in airtime on contract subscribers. The increase in handset and accessories sales is related to the reduction on the handset subsidy on the handsets sold.

Expenses

The following table shows the variances for the six-month period ended June 30, 2006 as compared to the same period in 2005:

Expenses	Six-months ended June 30,				%
	2006		2005		Variances

Cost of handset and accessories	$	6,822,385	$	9,047,636	-25	%
Interconnection expense	699,157		1,603,484		-56	%
Sales and dealers commissions	2,352,013		3,925,924		-40	%
Salaries and benefits	7,363,951		7,773,695		-5	%
Depreciation	9,387,588		9,095,668		3	%
Advertising expense	720,198		2,092,602		-66	%
Legal and professional services	1,384,454		679,302		104	%
Provision for doubtful accounts	2,308,384		5,482,126		-58	%
Rent expense	4,238,824		3,617,963		17	%
Taxes other than income	1,718,196		1,572,106		9	%
Network Operation and Maintenance	3,984,441		3,952,237		1	%
Other expenses	3,126,416		1,396,574		124	%
Management fee to General Partner	250,000		137,500		82	%
Services rendered by related parties	33,262		1,418,851		-98	%

Total expenses	$	44,389,269	$	51,795,668	-14	%

Expenses for the six-month period ended June 30, 2006 totaled $44,389,269 as compared to $51,795,668 for the same period in 2005. During the six-month period ended June 30, 2006, the Partnership’s expenses decreased by 14% due to pricing adjustments which reduced the handset subsidy on the purchase of handsets and contributed to the 25% reduction in cost of handsets and accessories. The Partnership managed to reduce overall expenses by implementing new operations procedures and eliminating various outsourcing contracts related to inventory management and customer service. The increase in legal and professional services is related to the arbitration proceedings being currently held between the Partnership and Telefonica.

Income from Operations

Income from operations for the six-month period ended June 30, 2006 of $2.4 million shows a reduction of 50% as compared to the income from operations for the same period in 2005. This decrease in income from operations is mainly due to the overall decrease in revenues due to the reduction of the customer base.

Interest expense for the six-month period ended June 30, 2006 of $8.1 million ($6.0 million in 2005) reduce income from operations and result in a net loss before other income (expense) of $5.7 million for the second quarter of 2006 ($1.2 million in 2005); an overall reduction in net income before other income (expense) of 389% when compared to 2005. Depreciation expense of $9.4 million ($9.0 million in 2005) reduces the Partnership’s book income but as a non-cash item it does not represent additional disbursements for operations.

The increase in depreciation expense is related to the increase in the depreciable assets placed in service during the period.

Liquidity and Capital Resources

As of June 30, 2006, the Partnership had cash and cash equivalents amounting to $4,684,382, which are mostly related to proceeds from the sale of the Visalia-Porterville and California licenses in prior periods and the Fleet Transaction.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Partnership’s exposure to market risk through derivative financial instruments and other financial instruments is not material because the Partnership does not use derivative financial instruments and does not have foreign currency exchange risks. The Partnership invests cash balances in excess of operating requirements in short-term money market funds. As of June 30, 2006, the Partnership had cash equivalents and short-term investments of approximately $4,684,382 consisting of cash and highly liquid, short-term investments in money market funds.

The Partnership’s cash and cash equivalents will increase or decrease by an immaterial amount if market interest rates increase or decrease, and therefore, its exposure to interest rate changes has been immaterial. The Partnership’s loans payable to the FCC have a fixed interest rate of 6.5% and therefore are not exposed to interest rate risks. The TEM Note has been converted into equity as described on the Settlement Agreement.

ITEM 4. CONTROLS AND PROCEDURES

The Partnership’s Chief Executive Officer, Javier O. Lamoso, and the Partnership’s Chief Financial Officer, Edileen Salicrup, have evaluated the Partnership’s disclosure controls and procedures within 90 days of the filing of this report.

Mr. Lamoso and Ms. Salicrup have concluded that the Partnership’s disclosure controls and procedures provide reasonable assurance that the Partnership can meet its disclosure obligations. The Partnership’s disclosure controls and procedures are based upon a roll-up of financial and non-financial information concerning the Partnership and NewComm. The reporting process is designed to ensure that information required to be disclosed by the Partnership in the reports that it files or submits with the Commission is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.

PART II: OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Information regarding legal proceedings is disclosed in Part I, Item 1, Notes to Interim Consolidated Financial Statements (unaudited), Section 4, and is hereby incorporated into Part II, Item 1 by this reference.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF LIMITED PARTNERS

On September 16, 2005 the Partnership’s General Partner, SuperTel Communications Corp., initiated a consent solicitation among its partners proposing to extend the Partnership’s termination date until December 31, 2010. By November 30, 2005, the final day of the solicitation period, a total of 2,072.7 Partnership Units were voted representing 74.96% of the 2,765.20 Partnership Units outstanding and entitled to vote. Of the Partnership Units voted, 1,920.6 Partnership Units (92% of the participants) voted in favor of the extension, 129.3 Partnership Units voted against the extension and 22.8 abstained. As a result, the Partnership’s partners approved the amendment to the Partnership’s Agreement of Limited Partnership, as previously amended, to extend the latest date on which the Partnership will dissolve from December 31, 2005 to December 31, 2010.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) List of Exhibits

Exhibit 31.1: Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).

Exhibit 31.2: Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).

Exhibit 32.1: Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.

Exhibit 32.2: Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.

(b) No reports on Form 8-K have been filed during the quarter for which this report is filed.

ITEMS 2, 3 and 5 are not applicable and have been omitted.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ClearComm, L.P.


	By:	SuperTel Communications Corp.
	Its:	General Partner


Date: August 14, 2006	By:	/s/ Javier O. Lamoso
	Name:	Javier O. Lamoso
	Title:	President

CLEARCOMM L P 10-Q