U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 12 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____ TO _____ .
Commission file number 21143
WIRELESS CABLE & COMMUNICATIONS, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 87-0545056
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
102 West 500 South, Suite 320
Salt Lake City, Utah 84101
(Address of Principal Executive Offices) (Zip Code)
(801) 328-5618
(Issuer's telephone number)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
As of August 15, 1998, 8,209,900 shares of registrant's Common Stock, par value
$.01 per share, 3,257,490 shares of the registrant's Series A Preferred Stock,
par value $.01 per share, and 354,825 shares of the registrant's Series B
Preferred Stock, par value $.01 per share, were outstanding.
<PAGE>
PART I : FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS REQUIRED BY FORM 10-QSB
The accompanying unaudited consolidated financial statements have been
prepared by Wireless Cable & Communications, Inc. (the "Company") pursuant to
the rules and regulations of the Securities and Exchange Commission. They do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. These consolidated
financial statements should be read in conjunction with Note 1 herein and the
consolidated financial statements and notes thereto included in the Company's
annual report on Form 10-KSB for the year ended December 31, 1997, as amended,
which are incorporated herein by reference. The accompanying consolidated
financial statements have not been examined by independent accountants in
accordance with generally accepted auditing standards, but in the opinion of
management, all adjustments (consisting of normal recurring entries) necessary
for the fair presentation of the Company's results of operations, financial
position and changes therein for the periods presented have been included. The
results of operations for the three and six months ended June 30, 1998 may not
be indicative of the results that may be expected for the year ending December
31, 1998.
[THIS SPACE INTENTIONALLY LEFT BLANK]
<PAGE>
<TABLE>
<CAPTION>
WIRELESS CABLE & COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1998 AND DECEMBER 31, 1997
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
June 30, December 31,
1998 1997
---------------- ----------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 8,770,012 $ 6,171,515
Accounts receivable - net 479 9,754
Due from affiliaties 39,071 36,950
Inventory 24,395 32,074
Prepaid license fees 201,751 186,982
Other current assets 9,170 18,007
---------------- ----------------
Total current assets 9,044,878 6,455,282
INVESTMENT IN CENTURION 845,955 845,955
EQUIPMENT - net 1,049,682 421,944
LICENSE RIGHTS - net 749,167 807,167
CONTRACT RIGHTS - net 8,247,042 8,916,587
OTHER ASSETS 181,796 42,171
---------------- ----------------
TOTAL ASSETS $ 20,118,520 $ 17,489,106
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 1,058,707 $ 640,164
Note payable 350,000 350,000
Accrued license lease fees 142,594 121,621
Accrued consulting fees (payable to related party) 100,000 100,000
Due to affiliates 810,224 709,558
Customer deposits 36,030 40,070
---------------- ----------------
Total current liabilities 2,497,555 1,961,413
LONG-TERM LIABILITIES:
Long-term debt (owed to related party) 1,176,263 1,130,660
MINORITY INTEREST IN SUBSIDIARIES 9,991 18,067
---------------- ----------------
Total liabilities 3,683,809 3,110,140
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Series "A" Preferred stock; $0.01 par value; 4,250,000 shares authorized:
3,257,490 and 2,938,355 shares issued and outstanding in 1998
and 1997, respectively (10-1 liquidation preference over common) 32,575 29,384
Series "B" Preferred stock; $0.01 par value; 750,000 shares authorized:
354,825 shares issued and outstanding in 1998 and 1997. 3,548 3,548
Common stock; $0.01 par value; 15,000,000 shares authorized:
8,209,900 and 6,108,132 shares issued and outstanding in
1998 and 1997, respectively. 82,099 61,081
Additional paid-in capital 24,473,111 19,540,694
Deficit accumulated during the development stage (8,156,622) (5,255,741)
---------------- ----------------
Total stockholders' equity 16,434,711 14,378,966
---------------- ----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 20,118,520 $ 17,489,106
================ ================
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
WIRELESS CABLE & COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997,
AND FROM SEPTEMBER 27, 1994 (DATE OF INCEPTION) TO JUNE 30, 1998
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Three Three September 27,
Months Months 1994 (Date of
Ended Ended Inception) To
June 30, June 30, June 30,
1998 1997 1998
-------------- -------------- ----------------
REVENUES $ 16,575 $ - $ 85,097
COST OF SERVICE 105,753 - 362,601
-------------- -------------- ----------------
GROSS MARGIN (89,178) - (277,504)
OPERATING EXPENSES:
Professional fees 383,205 47,694 1,807,470
Depreciation and amortization 436,658 29,000 1,484,737
Leased license expense 41,340 24,544 199,198
General and administrative 661,323 81,178 2,857,109
Stock option compensation expense - - 962,738
-------------- -------------- ----------------
Total 1,522,526 182,416 7,311,252
-------------- -------------- ----------------
OPERATING LOSS (1,611,704) (182,416) (7,588,756)
OTHER INCOME AND EXPENSES:
Interest income 107,834 - 310,522
Interest expense (24,857) (43,841) (899,475)
-------------- -------------- ----------------
Total 82,977 (43,841) (588,953)
-------------- -------------- ----------------
NET LOSS BEFORE MINORITY INTEREST (1,528,727) (226,257) (8,177,709)
MINORITY INTEREST IN LOSS OF SUBSIDIARIES 3,980 3,157 21,087
-------------- -------------- ----------------
NET LOSS $ (1,524,747) $ (223,100) $ (8,156,622)
============== ============== ================
Net loss per basic common share* $ (0.04) $ (0.01)
============== ==============
Net loss per diluted common share* $ (0.03) $ (0.01)
============== ==============
Weighted-average common shares*
Basic 41,139,625 27,623,153
============== ==============
Diluted 43,706,421 29,026,433
============== ==============
* Retroactively restated for the adoption of Statements of Financial Accounting Standards (SFAS) No. 128, "Earnings
Per Share," effective December 31, 1997.
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
WIRELESS CABLE & COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997,
AND FROM SEPTEMBER 27, 1994 (DATE OF INCEPTION) TO JUNE 30, 1998
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Six Six September 27,
Months Months 1994 (Date of
Ended Ended Inception) To
June 30, June 30, June 30,
1998 1997 1998
------------ ------------ --------------
REVENUES $ 44,911 $ - $ 85,097
COST OF SERVICE 197,553 - 362,601
------------ ------------ --------------
GROSS MARGIN (152,642) - (277,504)
OPERATING EXPENSES:
Professional fees 710,275 137,050 1,807,470
Depreciation and amortization 865,555 48,550 1,484,737
Leased license expense 83,037 32,486 199,198
General and administrative 1,234,474 136,921 2,857,109
Stock option compensation expense - - 962,738
------------ ------------ --------------
Total 2,893,341 355,007 7,311,252
------------ ------------ --------------
OPERATING LOSS (3,045,983) (355,007) (7,588,756)
OTHER INCOME AND EXPENSES:
Interest income 194,155 - 310,522
Interest expense (57,129) (69,513) (899,475)
------------ ------------ --------------
Total 137,026 (69,513) (588,953)
------------ ------------ --------------
NET LOSS BEFORE MINORITY INTEREST (2,908,957) (424,520) (8,177,709)
MINORITY INTEREST IN LOSS OF SUBSIDIARIES 8,076 5,428 21,087
------------ ------------ --------------
NET LOSS $ (2,900,881) $ (419,092) $ (8,156,622)
============ ============ ==============
Net loss per basic common share* $ (0.07) $ (0.02)
============ ============
Net loss per diluted common share* $ (0.07) $ (0.02)
============ ============
Weighted-average common shares*
Basic 39,501,975 22,571,715
============ ============
Diluted 42,068,771 23,714,108
============ ============
* Retroactively restated for the adoption of Statements of Financial Accounting Standards (SFAS) No. 128, "Earnings
Per Share," effective December 31, 1997.
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
WIRELESS CABLE & COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1998,
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995,
AND FROM SEPTEMBER 27, 1994 (DATE OF INCEPTION) TO JUNE 30, 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Deficit
Accumulated
Series "A" Preferred Series "B" Preferred Additional During the
Stock Stock Common Stock Paid-in Development
-------------------- -------------------- ----------------- ----------- -------------
Shares Amount Shares Amount Shares Amount Capital Stage
------- ------- -------- --------- ------- ------- ----------- -------------
Issuance of TIC stock to TIC
shareholders on
September 27, 1994 1,500,000 15,000
Net loss for the period from
September 27, 1994
(date of inception) to
December 31, 1994 $ (59,108)
--------- -------- ---------- --------- ---------- -------- ----------- -----------
BALANCE, DECEMBER 31, 1994 1,500,000 15,000 (59,108)
Net loss for the year ended
December 31, 1995 (179,771)
--------- -------- ---------- --------- ---------- -------- ----------- -----------
BALANCE, DECEMBER 31, 1995 1,500,000 15,000 (238,879)
Net loss for the year ended
December 31, 1996 (422,568)
--------- -------- ---------- --------- ---------- -------- ----------- -----------
BALANCE, DECEMBER 31, 1996 1,500,000 15,000 (661,447)
Reverse acquisition of TIC:
Exchange of TIC common
shares for WCCI Series
"A" Preferred shares 2,397,732 $ 23,977 (1,500,000) (15,000) $ (8,977)
Addition of WCCI common
stock 3,645,833 36,458 50,532
Exchange of CVV common stock
for WCCI common shares
and Series "B" Preferred
shares 354,825 $ 3,548 1,577,000 15,770 7,077,182
Issuance of WCCI common
stock and Series "A"
Preferred shares for cash 526,331 5,264 800,305 8,003 9,986,733
Issuance of warrants below
fair value 657,143
Issuance of WCCI common stock
and Series "A" Preferred
shares for cash 14,292 143 84,994 850 299,007
Issuance of options for
common shares and Series
"A" Preferred shares below
fair value 1,479,074
Net loss for the year ended
December 31, 1997 (4,594,294)
--------- -------- ---------- --------- ---------- -------- ----------- -----------
BALANCE, DECEMBER 31, 1997 2,938,355 29,384 354,825 3,548 6,108,132 61,081 19,540,694 (5,255,741)
Issuance of WCCI common stock
and Series "A" Preferred
shares for cash 319,135 3,191 2,101,768 21,018 4,932,417
Net loss for the six months
ended June 30, 1998 (2,900,881)
--------- -------- ---------- --------- ---------- -------- ----------- -----------
BALANCE, JUNE 30, 1998 3,257,490 $ 32,575 354,825 $ 3,548 8,209,900 $ 82,099 $ 24,473,111 $(8,156,622)
========= ======== ========== ========= ========== ======== =========== ===========
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
WIRELESS CABLE & COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997,
AND FROM SEPTEMBER 27, 1994 (DATE OF INCEPTION) TO JUNE 30, 1998
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Six Six September 27,
Months Months 1994 (Date of
Ended Ended Inception) To
June 30, June 30, June 30,
1998 1997 1998
----------- ----------- -------------
CASH FLOWS FROM DEVELOPMENT ACTIVITIES:
Net loss $ (2,900,881) $ (419,092) $ (8,156,622)
Adjustments to reconcile net loss to net cash used in
development activities:
Depreciation and amortization 865,555 48,550 1,484,737
Minority interest in loss of subsidiaries (8,076) (5,428) (21,087)
Issuance of stock options below fair value - - 1,479,074
Issuance of warrants below fair value - - 657,143
Change in assets and liabilities:
Accounts receivable 9,275 - 10,234
Prepaid license fees (14,769) 16,940 (26,538)
Inventory 7,679 - 40,904
Other current assets 8,837 - 49,281
Due from affiliates (2,121) - 225,525
Other assets (139,625) 577,377 (148,469)
Accounts payable and accrued liabilities 418,543 (282,645) 414,498
Due to affiliates 100,666 100,000 (97,476)
Accrued license lease fees 20,973 145,730 33,196
Customer deposits (4,040) - (3,723)
----------- ----------- -------------
Net cash provided by (used in)
development activities (1,637,984) 181,432 (4,059,323)
----------- ----------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in Centurion - (788,424) (805,955)
Reverse acquisition of WCCI - 56,582 56,582
Acquisition of CVV (net of cash acquired) - - (387,318)
Purchase of minority interest in CVV - - (800,000)
Purchases of equipment (765,748) - (894,527)
----------- ----------- -------------
Net cash used in investing activities (765,748) (731,842) (2,831,218)
----------- ----------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 3,161,661 - 5,144,606
Proceeds from issuance of Series A preferred stock 1,794,965 - 10,127,020
Proceeds from related party borrowings 45,603 49,141 1,351,220
Payments on related parties borrowings - (175,319) (962,293)
Proceeds from promissory notes - 746,095 2,300,000
Payments on promissory notes - - (2,300,000)
----------- ----------- -------------
Net cash provided by financing activities 5,002,229 619,917 15,660,553
----------- ----------- -------------
NET INCREASE IN CASH 2,598,497 69,507 8,770,012
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 6,171,515 8,902 -
----------- ----------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 8,770,012 $ 78,409 $ 8,770,012
=========== =========== =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for interest $ - $ - $ 30,996
=========== =========== =============
See notes to consolidated financial statements.
</TABLE>
<PAGE>
WIRELESS CABLE & COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
(Unaudited)
1. Presentation
The consolidated financial statements include the accounts of the
Company's subsidiaries, including (i) a 78.14% interest in Caracas Viva Vision
TV, S.A. ("CVV"), a local multi-point distribution service wireless
communications system in Venezuela, (ii) a 94.9% interest in Auckland
Independent Television Services, Ltd., which holds license and lease rights for
a multi-point video distribution service and four multi-channel, multi-point
distribution service ("MMDS") channels in three New Zealand cities, (iii) a 100%
interest in Wireless Communications Holding - Guatemala, S.A. ("WCH -
Guatemala") and Wireless Communications License Holdings - Guatemala, S.A.,
corporations which have been formed to acquire and operate telecommunications
rights in Guatemala, (iv) a 100% interest in Sociedad Television Interactiva,
S.A., a corporation that has the right to manage and operate an LMDS system in
Costa Rica, (v) a 90% interest in Wireless Communications Panama, S.A., which
will act as the operating company for an LMDS system in Panama, (vi) an 80%
interest in WCI de Argentina, which holds a value added license to provide
telecommunications services in Argentina, and (vii) a 100% interest in
Transworld Wireless Television, Inc., a corporation that holds four MMDS
channels in Park City, Utah. The Company also has a 45% interest in LatinCom,
Inc. which has not engaged in any business activities. All significant
intercompany accounts and transactions have been eliminated in consolidation.
2. Net loss per common share and common share equivalent
Net loss per common share and common share equivalents is
computed by both the basic method, which uses the weighted average number of
common shares and the common stock equivalents on a voting basis for the Series
"A" and Series "B" preferred stock outstanding, and the diluted method, which
includes the dilutive common shares and Series "A" preferred shares from stock
options and warrants, as calculated using the treasury stock method.
3. Use of Estimates in Preparing Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
<PAGE>
4. New Accounting Standard
In June 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 130, "Reporting Comprehensive Income." SFAS No. 130 establishes
standards for reporting and display of comprehensive income and its components
(revenues, expenses, gains and losses) in a full set of general-purpose
financial statements. This statement requires that an enterprise (a) classify
items of other comprehensive income by their nature in a financial statement and
(b) display the accumulated balance of other comprehensive income separately
from retained earnings and additional paid-in-capital in the equity section of a
statement of financial position.
Effective January 1, 1998, the Company adopted the provisions of SFAS
No. 130. Accordingly, the Company determined that no Company transactions were
considered to be an additional component of comprehensive income. Therefore,
comprehensive loss equaled net loss for the three and six months ended June 30,
1998 and 1997.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
A. MATERIAL CHANGES IN FINANCIAL CONDITION
At June 30, 1998, the Company had current assets of $9,044,878,
compared to $6,455,282 at December 31, 1997, for an increase of $2,589,596. Cash
increased by $2,598,497 from $6,171,515 to $8,770,012 during the six month
period, as a result of the Company completing the sale of an aggregate of
1,402,073 shares of the Company's authorized but unissued Common Stock and
235,757 shares of the Company's authorized but unissued Series "A" Preferred
stock for a total purchase price of $4,948,795 to FondElec Essential Services
Fund, L.P. (the "FondElec Transaction"), which is more particularly described in
the Company's report on Form 10-KSB for the fiscal year ended December 31, 1997,
as amended, which description is hereby incorporated by reference. Current
liabilities as of June 30, 1998 were $2,497,555, compared to $1,961,413 as of
December 31, 1997, for an increase of $536,142. The increase was due to an
increase in accounts payable (primarily from equipment purchases), an increase
in accrued license lease fees and an increase in amounts due to affiliates
related to amounts due under a service contract.
<PAGE>
At June 30, 1998, total assets were $20,118,520, compared to
$17,489,106 as of December 31, 1997, for an increase of $2,629,414. The increase
in total assets was primarily due to the FondElec Transaction and purchases of
equipment. Total liabilities increased $573,669, from $3,110,140 as of December
31, 1997 to $3,683,809 as of June 30, 1998. The increase in total liabilities is
a result of an increase in related party long-term debt related to additional
accrued interest and the increase in current liabilities. Total stockholders'
equity increased during the period by $2,055,745, from $14,378,966 at December
31, 1997, to $16,434,711 at June 30, 1998.
B. MATERIAL CHANGES IN RESULTS OF OPERATIONS
For the six months ended June 30, 1998, the Company had revenues of
$44,911 from the multi-channel video services provided in Caracas, Venezuela by
CVV, which manages the Venezuelan network. The Company did not have revenues for
the six months ended June 30, 1997. The cost of service for CVV's revenues was
$197,553 for the six months ended June 30, 1998.
Operating expenses for the six months ended June 30, 1998 were
$2,893,341 compared to $355,007 for the same period in 1997, for an increase of
$2,538,334. This increase was due to costs incurred in obtaining equity capital,
start-up expenses associated with the Company's current wireless
telecommunications projects and the depreciation, amortization and lease expense
from the Company's New Zealand assets and the Venezuelan assets. The Company's
operating loss was $3,045,983 for the six months ended June 30, 1998, compared
to $355,007 for the same period in 1997.
Interest income for the six months ended June 30, 1998 was $194,155.
The Company had no interest income during the same period in 1997. Interest
expense decreased $12,384 from $69,513 for the six months ended June 30, 1997 to
$57,129 for the same period in 1998. The decrease was due primarily to
elimination of interest expense payable under secured promissory notes that were
retired in 1997.
Minority interest in loss of subsidiaries was $8,076 for the six months
ended June 30, 1998, compared to $5,428 for the same period in 1997, for an
increase of $2,648. The increase relates to the Company's New Zealand subsidiary
and is primarily due to the minority shareholders' portion of the increase in
license lease fees.
As a result of the foregoing, the Company's net loss for the six months
ended June 30, 1998 was $2,900,881, compared to $419,092 for the six months
ended June 30, 1997, for an increase of $2,481,789.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company has funded its cash requirements at the
parent company level through debt and equity transactions. The proceeds from
these transactions were primarily used to fund the Company's investments in and
acquisition of start-up network operations, to provide working capital and for
general corporate purposes, including the expenses incurred in seeking and
evaluating new business opportunities. The Company's foreign subsidiary
interests have been financed by the Company through a combination of equity
investments and shareholder loans.
The Company's principal sources of funds are its available resources of
cash and cash equivalents. At June 30, 1998, the Company had cash and cash
equivalents of $8.77 million. The cash flow generated by the Company's
operations and projected data services network launches will not be sufficient
to cover the Company's projected operating expenses, general and administrative
expenses and start-up costs. Accordingly, the Company's cash and cash
equivalents are being depleted under current operating conditions. Nevertheless,
the Company believes that its cash and cash equivalents, together with the
anticipated cash flow from the operations it brings on line, will be sufficient
to cover the Company's operating expenses through 1999.
If the Company elects to provide voice or video services using its
networks, the Company's current sources of funds are insufficient to fund the
buildout and launch of those service capabilities. The ability of the Company to
provide these services will be dependent upon the Company obtaining substantial
additional sources of funds to finance these projects. While the Company
believes that it may be able to obtain financing for new voice and video
launches through additional equity or debt financing or otherwise, no assurances
can be given that any such financing will be available, or that the Company
would be able to obtain any such financing on favorable terms.
Year 2000
The year 2000 issue is the result of potential problems with computer
systems or any equipment with computer chips that use dates where the data has
been stored as just two digits (e.g. 97 for 1997). On January 1, 2000, any clock
or date recording mechanism including data sensitive software which uses only
two digits to represent the year, may recognize a date using 00 as the year 1900
rather than the year 2000. This could result in a system failure or
miscalculations causing disruption of operations, including among other things,
a temporary inability to process transactions, send invoices, or engage in
similar activities.
The Company is converting its financial systems to year 2000 compliant
systems. The Company does not anticipate a significant cost to modify its
systems to accommodate the impact of the upcoming change in the century.
The Company also has third-party customers, financial institutions,
vendors and others with which it conducts business. While the Company believes
that these third-party vendors and customers will successfully address year 2000
issues in a timely manner, it is possible that a series of failures by third
parties could have a material adverse effect on the Company's results of
operations in future years.
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See the section entitled "Legal Proceedings" in the Company's report on
Form 10-KSB for the year ended December 31, 1997, as amended.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MATTERS SUBMITTED TO A VOTE OF THE COMPANY'S SHAREHOLDERS
None.
<PAGE>
ITEM 5. OTHER INFORMATION
In July 1998, the 28 GHz frequency rights in Guatemala were auctioned
by the Superintendency of Telecommunications, as provided under Guatemalan law.
At the auction, the Guatemalan telephone company acquired the entire 28 GHz
frequency range. The telephone company is scheduled to be privatized in the near
future. The Company and the Guatemalan telephone company subsequently entered
into an agreement under which WCH - Guatemala acquired the right to use the 28
GHz rights for a period of 60 days. During the 60 day period (which ends on
September 22, 1998), WCH - Guatemala and the Guatemalan telephone company have
agreed to negotiate in good faith the terms under which WCH - Guatemala can
acquire the 28 GHz frequency rights (or the rights to use those frequency
rights). If the Company is unable to negotiate a contract for the use of the 28
GHz rights on commercially acceptable terms, it intends to acquire the right to
use other frequency rights in Guatemala by (i) participating in auctions for
other frequencies, (ii) acquiring rights from currently existing rights holders,
or (iii) acquiring rights through Guatemala's non-auction license concession
procedures. There can be no assurance that the Company will be able to acquire
any long-term wireless network rights in Guatemala.
ITEM 6. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
A. EXHIBITS.
None
B. REPORTS ON FORM 8-K
On July 17, 1998, the Company filed a report on Form 8-K describing its
acquisition through a controlled subsidiary of a multi-channel cable television
system and MMDS channel rights in El Salvador.
<PAGE>
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.
WIRELESS CABLE & COMMUNICATIONS, INC.
Date: August 19, 1998 BY /s/ ANTHONY SANSONE
Anthony Sansone
Principal Accounting Officer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
EXHIBIT 27.1
FINANCIAL DATA SCHEDULE
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 8,770,012
<SECURITIES> 0
<RECEIVABLES> 479
<ALLOWANCES> 0
<INVENTORY> 24,395
<CURRENT-ASSETS> 9,044,878
<PP&E> 1,049,682
<DEPRECIATION> 0
<TOTAL-ASSETS> 20,118,520
<CURRENT-LIABILITIES> 2,497,555
<BONDS> 0
0
36,123
<COMMON> 82,099
<OTHER-SE> 16,316,489
<TOTAL-LIABILITY-AND-EQUITY> 20,118,520
<SALES> 44,911
<TOTAL-REVENUES> 44,911
<CGS> 197,553
<TOTAL-COSTS> 2,893,341
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 57,129
<INCOME-PRETAX> (2,900,881)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,900,881)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,900,881)
<EPS-PRIMARY> (0.07)
<EPS-DILUTED> (0.07)
</TABLE>
