U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-QSB
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED FEBRUARY 28, 1998
[ ] 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: 000-23163
EAGLE WIRELESS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
TEXAS 76-0494995
(State or other jurisdiction) (IRS Employer
of incorporation or organization Identification No.)
910 GEMINI AVENUE
HOUSTON, TEXAS 77058-2704
(Address of principal executive offices, including zip code)
(281) 280-0488
(Registrant's telephone number, including area code)
-------------
Indicate by check mark whether the registrant (I) has 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 (ii) has been subject to such filing requirements for the past 90
days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
AS OF FEBRUARY 28, 1998, THERE WERE 11,605,334 SHARES
OF COMMON STOCK OUTSTANDING
<PAGE>
EAGLE WIRELESS INTERNATIONAL, INC.
INDEX
PART 1 - FINANCIAL INFORMATION
PAGE
----
Item 1. Financial Statements (Unaudited)
Balance sheets at February 28, 1998 and August 31, 1997 ......... 3
Statements of Income and Retained Earnings for the
three and six months ended February 28, 1998 and 1997 .......... 4
Statements of Cash Flows for the six months ended
February 28, 1998 and 1997 ..................................... 5
Statements of Changes In Shareholders' Equity for the
six months ended February 28, 1998 and 1997 .................... 6
Notes to the financial statements .............................. 7-13
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ............................ 14
SIGNATURES ............................................................. 15
-2-
<PAGE>
EAGLE WIRELESS INTERNATIONAL, INC.
BALANCE SHEETS
(dollars in thousands)
February August 31,
28, 1998 1997
ASSETS (unaudited) (audited)
Current Assets:
Cash and cash equivalents ......................... $ 1,886 $ 2,895
Accounts receivable ............................... 3,501 2,895
Inventories ....................................... 1,095 1,012
Prepaid expenses .................................. 68 57
------- -------
Total current assets ........................... 6,550 6,859
------- -------
Property and equipment:
Operating equipment ............................... 910 591
Less accumulated depreciation ..................... (158) (112)
------- -------
Total property and equipment ................. 752 479
------- -------
Other assets ......................................... 69 42
------- -------
$ 7,371 $ 7,380
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable
Accrued expenses ................................. $ 166 $ 180
Shareholder's advances ........................... 136 138
Current maturities of capital lease .............. 77 129
obligations .......................................... 16 32
Federal income and other taxes payable ........... 156 281
Deferred taxes ................................... 9 9
------- -------
Total current liabilities .................... 560 769
------- -------
Long-term liabilities:
Long-term capital lease obligations, net of
current maturities .............................. 1 3
Deferred taxes .................................... 22 16
------- -------
Total long-term liabilities .................. 23 19
------- -------
Shareholders' equity ................................. 6,788 6,592
======= =======
Total liabilities and shareholders' equity ........... $ 7,371 $ 7,380
======= =======
-3-
<PAGE>
EAGLE WIRELESS INTERNATIONAL, INC.
STATEMENTS OF INCOME - UNAUDITED
(dollars in thousands)
<TABLE>
<CAPTION>
Three Three Six Six
months ended months ended months ended months ended
February 28, February 28, February 28, February 28,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net sales .................................. $ 1,064 $ 1,238 $ 1,622 $ 2,377
Costs of goods sold:
Materials and supplies ................. 203 330 237 611
Direct labor and related
costs ................................ 82 135 167 261
Depreciation and amortization .......... 18 12 35 21
Other manufacturing costs .............. 118 110 209 286
------------ ----------- ------------ -----------
Total costs of goods sold .................. 421 587 648 1,179
------------ ----------- ------------ -----------
Gross profit ............................... 643 651 974 1,198
------------ ----------- ------------ -----------
Operating expenses
Selling, general and
administrative:
Salaries and related
costs ............................ 220 170 375 307
Advertising and promotion .......... 64 33 182 90
Depreciation and
amortization ..................... 7 8 12 15
Other support costs ................ 140 134 229 241
Research and Development ........... 125 -- 159 --
------------ ----------- ------------ -----------
556 345 957 653
Total operating expenses ........... ------------ ----------- ------------ -----------
87 306 17 545
Income from operations .....................
Other income
Interest income (net) .................. 93 139 193 162
Gain/Loss on affiliate investments ..... (5) -- (10) --
------------ ----------- ------------ -----------
Total other income ................. 88 139 183 162
------------ ----------- ------------ -----------
Income before income taxes ................. 175 445 200 707
Provisions for income taxes ................ 79 151 79 240
------------ ----------- ------------ -----------
Net income ................................. $ 96 $ 294 $ 121 $ 467
============ =========== ============ ===========
Net earnings per common share:
Basic ...................................... $ 0.008 $ 0.029 $ 0.010 $ 0.052
Diluted .................................... $ 0.004 $ 0.013 $ 0.005 $ 0.023
============ =========== ============ ===========
Weighted average basic common
shares outstanding ......................... 11,605,334 10,027,500 11,557,834 8,958,000
Weighted average diluted common
shares outstanding ......................... 25,972,002 22,782,501 25,924,502 20,422,550
</TABLE>
-4-
<PAGE>
EAGLE WIRELESS INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS - UNAUDITED
(dollars in thousands)
<TABLE>
<CAPTION>
Six months ended Six months ended
February 28, 1998 February 28, 1997
<S> <C> <C>
Cash flows from operating activities
Net income ........................................................ $ 121 $ 467
Adjustment to reconcile net earnings to net cash Used by operating
activities:
Depreciation and amortization ................................ 47 36
(Increase) / Decrease in accounts receivable ................. (606) (1,376)
(Increase) / Decrease in inventories ......................... (83) (43)
(Increase) / Decrease in prepaid expenses .................... (11) 16
Increase / (Decrease) in accounts payable and accrued expenses (16) (259)
Increase / (Decrease) in payroll taxes payable ............... -- 13
Increase / (Decrease) in customer deposits ................... -- (129)
Increase / (Decrease) in federal income taxes payable ........ (125) 5
Increase / (Decrease) in deferred taxes ...................... 6 235
------- -------
Total Adjustments ............................................ (788) (1,502)
------- -------
Net cash used by operating activities ............................. (667) (1,035)
Cash flows used in investing activities
Purchase of property and equipment ........................... (319) (107)
(Increase) in other assets ................................... (28) (64)
------- -------
Net cash used by investing activities ................................ (347) (171)
Cash flows from financing activities
Issuance of common stock .................................... 75 3,542
(Increase) / Decrease in notes payable and capital leases .... (18) (375)
(Increase) / Decrease in syndication costs ................... -- 3
(Increase) / Decrease in shareholder's advances .............. (52) (105)
(Increase) / Decrease in subscriptions payable ............... -- (97)
------- -------
Net cash provided by financing activities ......................... 5 2,968
Net increase(decrease) in cash .................................... (1,009) 1,762
Cash at the beginning of the period ................................... 2,895 2,104
======= =======
Cash at the end of the period ......................................... $ 1,886 $ 3,866
======= =======
</TABLE>
-5-
<PAGE>
EAGLE WIRELESS INTERNATIONAL, INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - UNAUDITED
(dollars in thousands)
<TABLE>
<CAPTION>
Preferred
stock $.001
Common stock par value
$.001 par value 5,000,000 Additional
100,000,000 shares shares paid Retained
authorized authorized in capital earnings Total
<S> <C> <C> <C> <C> <C>
Balance September 1, 1996 ............................. $ 7 $ -- $2,038 $ 32 $2,077
Net income for the six months ended
February 28, 1997 ................................. 467 467
Private placement ................................. 1 3,690 3,691
Syndication cost conversions ...................... 2 118 120
Notes payable conversions ......................... 0 369 369
Exercise of $0.01 warrants ........................ 1 6 7
Issuance of warrants for funding activities ....... 192 192
Syndication costs ................................. (837) (837)
------------ ------- ------ ---- ------
Balance February 28, 1997 ............................. $ 11 $ -- $5,576 $499 $6,086
============ ======= ====== ==== ======
Shares issued and outstanding ......................... 11,225,334 None -- -- --
============ =======
Balance, Sept. 1, 1997 ................................ $ 11 $ -- $5,820 $761 $6,592
Net income for the three months ended
February 28, 1998 ................................. 121 121
Stock issued to retire debt and acquire a
company ........................................... -- 74 75
------------ ------- ------ ---- ------
Balance February 28, 1998 ............................. $ 12 $ -- $5,894 $882 $6,788
============ ======= ====== ==== ======
Shares issued and outstanding ......................... 11,605,334 None -- -- --
============ =======
</TABLE>
-6-
<PAGE>
EAGLE WIRELESS INTERNATIONAL, INC.
NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED
NOTE 1 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES:
Eagle Wireless International, Inc., (the Company), incorporated as a Texas
corporation on May 24, 1993 and commenced business in April of 1996. The
Company is a worldwide supplier of telecommunications equipment and
related software used by service providers in the paging and other
wireless personal communications markets. The Company designs,
manufactures, markets and services its products under the Eagle name.
These products include transmitters, receivers, controllers, software and
other equipment used in personal communications systems (including paging,
voice messaging, cellular and message management and mobile data systems)
and radio and telephone systems.
A) Cash and Cash Equivalents
The Company had $1,886,073 and $3,865,865 invested in interest bearing
accounts at February 28, 1997 and 1996, respectively.
B) Property and Equipment
Property and equipment are carried at cost less accumulated depreciation.
Depreciation is calculated by using the straight-line method for financial
reporting and accelerated methods for income tax purposes. The recovery
classifications for these assets are listed as follows:
YEARS
-----
Machinery and equipment 7
Furniture and Fixtures 7
Expenditures for maintenance and repairs are charged against income as
incurred and major improvements are capitalized.
C) Inventories
Inventories are valued at the lower of cost or market. The cost is
determined by using the FIFO method. Inventories consist of the following
items:
February 28
1998 1997
---- ----
(in thousands)
Raw Materials $ 793 $ 325
Work in Process 297 243
Finished Goods 5 --
------ -----
$1,095 $ 568
====== =====
D) Organizational Costs
Organizational costs are amortized using the straight-line method over a
period of sixty (60) months. Accumulated amortization is $1,328 for the
period ended February 28, 1998.
-7-
<PAGE>
NOTE 1 -BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES: (continued)
E) Research and Development Costs
The Company's research and development costs occur as a result from
obligations to perform contractual services for outside parties. These
costs are expensed as contract revenues are earned.
F) Income Taxes
The Company adopted the provisions of Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes", which requires a
change from the deferral method to assets and liability method of
accounting for income taxes. Timing differences exist between book income
and tax income which relate primarily to depreciation methods.
G) Net Earnings Per Common Share
Net earnings per common share is shown as both basic and diluted. Basic
earnings per common share are computed by dividing net income less any
preferred stock dividends (if applicable) by the weighted average number
of shares of common stock outstanding. Diluted earnings per common share
are computed by dividing net income less any preferred stock dividends (if
applicable) by the weighted average number of shares of common stock
outstanding plus dilutive potential common shares.
H) Warrants for Funding Activities
To date, the Company has issued the following warrants: 5,033,334 Class A;
5,033,334 Class B; 1,050,000 Class C; 1,050,000 $.05; 1,375,000 $.50; and
425,000 $5.00. Certain of these warrants were issued to individuals and
trusts for their assistance in the fundraising activities.
I) Deferred Financing Fees
The deferred financing fees originated as a financing charge on a
non-interest bearing notes payable in the amount of $375,000. During
November 1996, the financing fees were expensed.
J) Advertising and Promotion
All advertising related costs are expensed as incurred. The Company does
not incur any cost for direct-response advertising. For the six months
ended February 28, 1998 and 1997, the Company had expensed $181,650 and
$89,837 respectively.
NOTE 2 - NOTES Payable:
At February 28, 1998 the Company borrowed from a corporation $22,378. This
unsecured note to an insurance company bears interest at 8% and is due
$2,042 monthly until January 1999.
-8-
<PAGE>
NOTE 3 - CAPITAL LEASE OBLIGATIONS:
FEBRUARY 28
-----------
1998 1997
---- ----
Equipment lease with Compix
bearing interest at 15%, payable in
monthly installments of $624; due
July 1998 ............................... $ 2,424 $ 9,572
Equipment lease with IFR bearing
interest at 15%, payable in monthly
installments of $1,427; due June 1998 ... 4,185 20,736
Equipment lease with Associates
Capital bearing interest at 7%,
payable in monthly installments
of $1,177; due September 1998.7,915 ...... 21,161
Equipment lease with IKON Office
Solutions bearing interest at 18%
payable in monthly installments of
$105; due March, 2000 ................... 2,170 --
------- -------
Total Obligations ..................... 16,694 51,469
Less Current Portion of
Lease Obligations .................. 15,549 34,851
------- -------
Total Long - Term Capital
Lease Obligations .................. $ 1,145 $16,618
======= =======
The capitalized lease obligations are collateralized by the related
equipment acquired with a net book value of approximately $ 46,902. The
future minimum lease payments under the capital leases at February 28,
1998 are $19,587 of which $2,893 represents interest.
Future obligations under these non-cancelable leases are:
Period Ending
February 28, Amount
------------ ------
1999 $ 18,012
2000 1,575
-----------
Total $ 19,587
==========
-9-
<PAGE>
NOTE 4 - INCOME TAXES:
As discussed in note 1, the Company adopted the provisions of Statement
of Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes". Implementation of SFAS 109 did not have a material
cumulative effect on prior periods nor did it result in a change to the
current year's provision.
A) The effective tax rate for the Company is reconcilable to statutory tax
rates as follows:
February 28,
1998 1997
---- ----
% %
U.S. Federal Statutory Tax Rate 34 34
-- --
Effective Tax Rate 34 34
== ==
B) Deferred income taxes are provided for differences between financial
statement and income tax reporting. Principal difference is the manner in
which depreciation is computed for financial and income tax reporting
purposes.
NOTE 5 - PREFERRED STOCK, STOCK OPTIONS AND WARRANTS:
In July, 1996, the Board of Directors and majority shareholders authorized
5,000,000 shares of Preferred Stock with a par value of $.001. As of
February 28, 1998, no Preferred Stock has been issued.
In July, 1996, the Board of Directors and majority shareholders adopted a
stock option plan under which 400,000 shares of Common Stock have been
reserved for issuance. As of February 28, 1998, 20,875 options have been
granted pursuant to such plan. None of these options have been exercised.
In May of 1996, the Company received an aggregate of $375,000 in bridge
financing in the form of interest-free convertible notes from unaffiliated
individuals. Holders of $369,000 of these notes converted into 369,000
shares of Company common stock, and the balance of $6,000 was retired in
November of 1996. In conjunction with the issuance of such indebtedness,
the Company has issued such investors $.50 Warrants to purchase 375,000
shares of common stock, and $5.00 Warrants to purchase up to 375,000
shares of common stock.
Due to the lack of a public market, shareholders and warrant-holders are
inherently restricted from exercising their warrants. A minimal value has
therefore been assigned as compensation for these warrants and recorded as
syndication costs.
The Company has issued and outstanding the following warrants which have
not yet been exercised at February 28, 1998:
1,050,000 stock purchase warrants which expire July, 1999. These
warrants are subject to restrictions regarding the timing of
exercise, the ability of the Company to become a public company and
future marketability of the common stock. The warrants are to
purchase fully paid and non-assessable shares of the common stock,
par value $.001 per share at a purchase price of $.05 per share.
These warrants, however, are not exercisable until and unless the
shares of Common Stock trade at a minimum of $5.50 per share for
twenty consecutive trading days, yet still expire July, 1999 if not
exercised.
-10-
<PAGE>
NOTE 5 - PREFERRED STOCK, STOCK OPTIONS, AND WARRANTS: (continued)
1,375,000 stock purchase warrants which expire July, 1999. These
warrants are subject to restrictions regarding the timing of
exercise, the ability of the Company to become a public company and
future marketability of the common stock. The warrants are to
purchase fully paid and non-assessable shares of the common stock,
par value $.001 per share at a purchase price of $.50 per share.
These warrants, however, are not exercisable until and unless the
shares of Common Stock trade at a minimum of $5.50 per share for
twenty consecutive trading days, yet still expire July, 1999 if not
exercised.
425,000 stock purchases warrants which expire July, 1999. The
warrants are to purchase fully paid and non-assessable shares of the
common stock, par value $.001 per share at a purchase price of $5.00
per share. These warrants are subject to restrictions regarding the
timing of exercise. The underlying shares of common stock were
registered for resale on September 4, 1997 under the Securities Act
of 1933.
5,033,334 Class A stock purchase warrants which expire August 31,
2000. These warrants are subject to restrictions regarding the
timing of exercise, the ability of the Company to become a public
company and future marketability of the common stock. The warrants
are to purchase fully paid and non-assessable shares of the common
stock, par value $.001 per share at a purchase price of $4.00 per
share. If, however, the closing bid price of the Common Stock shall
have equaled or exceeded $5.50 per share for a period of twenty
consecutive trading days at any time, the Company may redeem the
Class A Warrants by paying holders $.05 per Class A Warrant. The
underlying shares of common stock were registered for resale on
September 4, 1997 under the Securities Act of 1933.
5,033,334 Class B stock purchase warrants which expire August 31,
2000. These warrants are subject to restrictions regarding the
timing of exercise, the ability of the Company to become a public
company, and future marketability of the common stock. The warrants
are to purchase fully paid and non-assessable shares of the common
stock, par value $.001 per share, at a purchase price if $6.00 per
share. If, however, the closing bid price of the Common Stock shall
have equaled or exceeded $7.50 per share for a period of twenty
consecutive trading days at any time, the Company may redeem the
Class B Warrants by paying holders $.05 per Class B Warrant. The
underlying shares of common stock and Class B Warrants were
registered for resale on September 4, 1997 under the Securities Act
of 1933.
1,050,000 Class C stock purchase warrants which expire August 31,
2000. These warrants are subject to restrictions regarding the
timing of exercise, the ability of the Company to become a public
company, and future marketability of the common stock. The warrants
are to purchase fully paid and non-assessable shares of the common
stock, par value $.001 per share, at a purchase price if $2.00 per
share. If, however, the closing bid price of the Common Stock shall
have equaled or exceeded $5.50 per share for a period of twenty
consecutive trading days at any time, the Company may redeem the
Class C Warrants by paying holders $.05 per Class C Warrant. The
underlying shares of common stock were registered for resale on
September 4, 1997 under the Securities Act of 1933.
-11-
<PAGE>
NOTE 5 - PREFERRED STOCK, STOCK OPTIONS, AND WARRANTS: (continued)
The warrants outstanding are segregated into two categories (exercisable
and non-exercisable). They are summarized as follows:
<TABLE>
<CAPTION>
CLASS OF EXERCISABLE
WARRANTS FEB 28, 1998 FEB 28, 1997 NON-EXERCISABLE EXERCISE PRICE
-------- ------------------------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
.05 -- -- 1,050,000 .05
.50 -- -- 1,375,000 .50
5.00 425,000 425,000 -- 5.00
A 5,033,334 4,748,334 -- 4.00
B 5,033,334 4,748,334 -- 6.00
C 1,050,000 483,334 -- 2.00
----------- ---------- -----------
Total 11,541,668 10,405,002 2,425,000
=========== ========== ===========
</TABLE>
NOTE 6 - SEGMENT INFORMATION:
The Company had gross revenues of $1,063,905 for the three months
ended February 28, 1998. The following customers individually
represent a greater than ten percent of these revenues.
FEBRUARY 28, 1998
CUSTOMER AMOUNT PERCENTAGE
-------- ------ ----------
A $ 267,700 25%
B $ 208,079 20%
C $ 170,806 16%
NOTE 7 - INVESTMENT IN LINK - TWO COMMUNICATIONS, INC.:
The Company and Link - Two Communications, Inc. (Link II) have executed an
agreement, whereby the Company would receive up to an eight percent equity
interest in Link II in lieu of accruing finance charges on the outstanding
balance owed by Link II to the Company. Under the agreement, equity in
Link II was earned at a rate of 0.2% per month per $100,000 payable and
outstanding for more than thirty days. At February 28, 1998 the Company
had earned a 7% minority equity interest in Link II. This is evidenced by
the issuance of 240,000 shares of Link II common stock to the Company. As
of February 28, 1998, the Company has recorded it share of losses in this
unconsolidated affiliate. The loss for the six months ended February 28,
1998 totaled $10,000. Certain principal stockholders (or affiliates
thereof) of the Company, including James Futer, executive vice president,
director, and chief operating officer, and A.L. Clifford, a director of
the Company, are also principal stockholders of Link II. Mr. Clifford is
also the chairman, president, and chief executive officer of Link II and
Dr. Cubley is a director of Link II.
NOTE 8 - RISK FACTORS:
At February 28, 1998, substantially all of the Company's business activity
has remained within the United States and has been extended to the
wireless infrastructure industry. Through the normal course of business,
the Company generally does not require its customers to post any
collateral. However, because Link-Two Communications, Inc. constitutes a
significant customer with respect to its current accounts receivable
balance, the two companies have reached an agreement whereby the Company
has received a minority interest in Link -Two Communications, Inc. as well
as interest computed at twelve percent on the monthly indebtedness to the
Company. Although the Company has concentrated its efforts in the wireless
infrastructure industry at February 28, 1998, it is management's belief
that the Company faces little credit or economic risk due to the
continuous growth the market is experiencing.
-12-
<PAGE>
NOTE 9 - SHAREHOLDERS' ADVANCES:
Certain officers and an employee advanced the Company $290,000. At
February 28, 1998 and 1997, the Company owes $77,046 and $185,000,
respectively. The shareholder advances are non-interest bearing and
payable upon demand.
NOTE 10 - FOREIGN OPERATIONS:
Although the Company is based in the United States, its product is sold on
the international market. Presently, international sales total 2.2% and
2.9% for the three months ended February 28, 1998 and 1997, respectively.
NOTE 11 - COMMITMENTS AND CONTINGENT LIABILITIES:
The Company now leases its primary office space for $7,931 per month under
a non-cancelable lease expiring on March 31, 1999. For the six months
ended February 28, 1998, rental expense of $47,586 was incurred under this
lease.
Future obligations under the non-cancelable lease terms are:
PERIOD ENDING
FEBRUARY 28, AMOUNT
------------ -------
1999 $95,172
2000 7,931
-------
Total $95,172
=======
The Company has been named as a defendant in a lawsuit involving a vendor
of the Company. Liability relating to this lawsuit has been accrued as of
the fiscal year ended August 31, 1997.
The Company has been named with another defendant in two lawsuits. These
suits orginate from former employees and a vendor of an affiliate. The
claims of these individuals are being investigated as no asserted monetary
damages have been stipulated. Management has not provided for any
settlement as it believes these allegations and claims against the Company
are without merit.
The Company has entered into an agreement with a financial consultant
whereby the financial consultant can receive options to purchase up to
400,000 shares of the company's common stock at various prices ranging
from $1.75 to $5.00 per share. The delivery of these options is contingent
upon the attainment of certain objective criteria outlined in a January
15, 1998 agreement between the Company and the financial consultant.
The Company has entered into an agreement with a financial consultant
whereby the financial consultant will receive options to purchase 500,000
shares and may receive options to purchase 800,000 shares of the Company's
common stock at prices ranging from $4.00 to $16.00 per share. The
delivery of the options to purchase 800,000 shares of the Company's common
stock is contingent upon the attainment of certain objective criteria
outlined in a January 27, 1998 agreement between the Company and the
financial consultant.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
During the six months ended February 28, 1997, the Company completed its plan to
take the Company public and shifted its primary focus to the completion of
certain research and development projects and the augmentation of its sales and
marketing efforts through the implementation of a representative sales
organization. Since the launch of the Company's operations in early 1996, the
Company has worked primarily with customers on a project basis. The Company is
now focusing on augmenting these activities through the formation of longer-term
customer relationships and the sale of products in mass to the wireless
communications marketplace.
The Company's sales for this quarter were $1.1 million as compared to the sales
for the quarter ended February 28, 1997 of $1.2 million. For the quarter ended
February 28, 1998, net income was $121,421 as compared to $466,470 for the
quarter ended February 28, 1997. The reduction in sales and net income in the
quarter ended February 28, 1998 is attributable to timing constraints on major
project shipments and is deemed normal and is expected to be ongoing.
Current assets for the quarter ended February 28, 1998 totaled $6,549,712 as
compared to $6,168,838 reported in the quarter ended February 28, 1997. The
Company's shareholders' equity for the quarter ended February 28, 1998 totaled
$6,787,589 as compared to $6,085,748 reported in the quarter ended February 28,
1997. Cash flows invested in operations totaled $667,000 and financing
activities provided cash flows of $5,000 during the quarter ended February 28,
1998. For the comparable period ended February 28, 1997, cash flows invested in
operations totaled $1,034,729 and financing activities provided cash flows of
$2,967,427.
-14-
<PAGE>
EAGLE WIRELESS INTERNATIONAL, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to signed on its behalf by the
undersigned thereunto duly authorized.
EAGLE WIRELESS INTERNATIONAL, INC.
(Registrant)
Date: 04-14-98 By: /s/ H. DEAN CUBLEY
Dr. H. Dean Cubley
President
By: /s/ RICHARD R. ROYALL
Richard R. Royall
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM EAGLE WIRELESS INTERNATIONAL, INC. FINANCIAL STATEMENTS (UNAUDITED) FOR THE
THREE MONTHS ENDED FEBRUARY 28, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
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