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 MAY 31, 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 MAY 31, 1998, THERE WERE 11,605,334 SHARES OF COMMON STOCK OUTSTANDING
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<PAGE>
EAGLE WIRELESS INTERNATIONAL, INC.
INDEX
PART 1 - FINANCIAL INFORMATION
PAGE
Item 1. Financial Statements (Unaudited)
Balance Sheets at May 31, 1998 and August 31, 1997.........3
Statements of Income for the three and nine months
ended May 31, 1998 and 1997...............................4
Statements of Cash Flows for the nine months ended
May 31, 1998 and 1997.....................................5
Statements of Changes In Shareholders' Equity for
the nine months ended May 31, 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
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<PAGE>
EAGLE WIRELESS INTERNATIONAL, INC.
BALANCE SHEETS
(dollars in thousands)
May 31, 1998 August 31, 1997
ASSETS (unaudited) (audited)
Current Assets
Cash and cash equivalents .................. $ 1,331 $ 2,895
Accounts receivable ........................ 4,328 2,895
Inventories ................................ 1,079 1,012
Prepaid expenses ........................... 67 57
------- -------
Total current assets .................... 6,805 6,859
------- -------
Property and equipment
Operating equipment ........................ 913 591
Less accumulated depreciation (190) (112)
------- -------
Total property and equipment ........... 723 479
------- -------
Other assets .................................. 52 42
------- -------
Total assets .................................. $ 7,580 $ 7,380
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable ........................... $ 194 $ 180
Accrued expenses ........................... 126 138
Shareholder's advances ..................... 72 129
Current maturities of capital lease
obligations ............................... 8 32
Federal income and other taxes payable ..... 234 281
Deferred taxes ............................. 9 9
------- -------
Total current liabilities ............. 643 769
------- -------
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 .......................... 6,914 6,592
------- -------
Total liabilities and shareholders' equity .... $ 7,580 $ 7,380
======= =======
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<PAGE>
EAGLE WIRELESS INTERNATIONAL, INC
STATEMENTS OF INCOME - UNAUDITED
(dollars in thousands)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS NINE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED
MAY 31, 1998 MAY 31, 1997 MAY 31, 1998 MAY 31, 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales ................................. $ 1,246 $ 683 $ 2,867 $ 3,060
Costs of goods sold
Materials and supplies ................ 375 38 613 853
Direct labor and related costs ........ 61 33 227 407
Depreciation and amortization ......... 18 12 53 33
Other manufacturing costs ............. 106 42 315 10
----------- ------------ ----------- ----------
Total costs of goods sold ................. 560 125 1,208 1,303
----------- ------------ ----------- ----------
Gross profit .............................. 686 558 1,659 1,757
----------- ------------ ----------- ----------
Operating expenses
Selling, general and
administrative:
Salaries and related
costs .............................. 173 249 563 556
Advertising and promotion ........... 58 71 173 161
Depreciation and amortization ....... 15 8 27 23
Other support costs ................. 227 259 508 500
Research and development ............ 115 -- 273 --
----------- ------------ ----------- ----------
Total operating expenses ............ 588 586 1,544 1,240
----------- ------------ ----------- ----------
Income from operations .................... 98 (28) 115 517
Other income
Interest income (net) .................. 105 77 298 238
Gain/loss on affiliate investments ..... -- -- (10) --
----------- ------------ ----------- ----------
Total other income .................. 105 77 288 238
----------- ------------ ----------- ----------
Income before income taxes ................ 203 49 403 755
Provisions for income taxes ............... 80 17 160 257
----------- ------------ ----------- ----------
Net income ................................ $ 123 $ 32 $ 243 $ 498
=========== ============ =========== ===========
Net earnings per common share
Basic .................................. $ 0.011 $ 0.003 $ 0.021 $ 0.047
Diluted ................................ $ 0.005 $ 0.001 $ 0.009 $ 0.021
=========== ============ =========== ===========
Weighted average basic common
shares outstanding ........................ 11,605,334 11,510,334 11,573,667 10,521,778
weighted average diluted common
shares outstanding ........................ 25,972.002 25,877.002 25,940,335 23,814.001
</TABLE>
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<PAGE>
EAGLE WIRELESS INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS - UNAUDITED
(dollars in thousands)
NINE NINE
MONTHS MONTHS
ENDED ENDED
MAY 31, MAY 31,
1998 1997
------- -------
Cash flows from operating activities
Net income ........................................ $ 243 $ 499
Adjustment to reconcile net earnings to net cash
Used by operating activities:
Loss on sales of asset ....................... (3) --
Depreciation and amortization ................ 80 55
(Increase) / Decrease in accounts
receivable ................................. (1,433) (1,987)
(Increase) / Decrease in inventories ......... (67) (237)
(Increase) / Decrease in prepaid expenses .... (10) (24)
Increase / (Decrease) in accounts payable
and accrued expenses ........................ 2 43
Increase / (Decrease) in customer deposits ... -- (161)
Increase / (Decrease) in federal income
taxes payable .............................. (46) 241
Increase / (Decrease) in deferred taxes ...... 6 5
------ ------
Total Adjustments ............................ (1,471) (2,075)
------ ------
Net cash used by operating activities ............. (1,228) (1,576)
Cash flows used in investing activities
Purchase of property and equipment ........... (322) (122)
(Increase) in other assets ................... (10) (64)
------ ------
Net cash used by investing activities ................ (332) (186)
Cash flows from financing activities
Issuance of common stock ..................... 79 3,860
(Increase) / Decrease in notes payable
and capital leases ......................... (26) (367)
(Increase) / Decrease in syndication
costs ...................................... -- (11)
(Increase) / Decrease in shareholder's
advances ................................... (57) (146)
(Increase) / Decrease in subscriptions
payable .................................... -- (98)
------ ------
Net cash provided by financing activities ......... (4) 3,238
Net increase (decrease) in cash ................... (1,564) 1,476
Cash at the beginning of the period ................... 2,895 2,104
======= =======
Cash at the end of the period ......................... $ 1,331 $ 3,580
======= =======
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<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
100,000.000 SHARES ADDITIONAL RETAINED
SHARES AUTHORIZED AUTHORIZED PAID IN CAPITAL EARNINGS TOTAL
----------------- ---------- --------------- -------- -----
<S> <C> <C> <C> <C> <C>
Balance September 1, 1996 .......... $ 7 $ -- $2,038 $ 32 $2,077
Net income for the nine months
ended, May 31, 1997 ............. 499 499
Private placement ................ 1 4,118 4,119
Notes payable conversions ........ 2 487 489
Exercise of $0.01
warrants ......................... 1 6 7
Issuance of warrants for
funding activities ............... 192 192
Syndication costs ................ (947) (947)
------------ ------ ------ ------ ------
Balance May 31, 1997 ............... $ 11 $ -- $5,894 $ 531 $6,436
============ ====== ====== ====== ======
Shares issued and
outstanding ...................... 11,510,334 None
============ ======
Balance. Sept. 1, 1997 ............. $ 11 $ -- $5,820 $ 761 $6,592
Net income for the nine
months ended May 31, 1998 ........ 243 243
Stock issued to retire
debt and acquire a
company .......................... -- 142 142
Syndication costs ................ (63) (63)
------------ ------ ------ ------ ------
Balance May 31, 1998 ............... $ 12 $ -- $5,887 $1,004 $6,914
============ ====== ====== ====== ======
Shares issued and
outstanding ...................... 11,605,334 None
============ ======
</TABLE>
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<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 $1,331,006 and $3,580,342 invested in interest and non
interest bearing accounts at May 31, 1998 and 1997, 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:
May 31
1998 1997
------- -------
(in thousands)
Raw Materials $ 789 $440
Work in Process 290 151
Finished Goods -- 10
------ ----
$1,079 $601
====== ====
D) Organizational Costs
Organizational costs are amortized using the straight-line method over a
period of sixty (60) months. Accumulated amortization is $1,494 for the
period ended May 31, 1998.
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<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 and as a
result of independent research. 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 nine months
ended May 31, 1998 and 1997, the Company had expensed $172,431 and
$160,499 respectively.
K) Reclassification
The Company has reclassified certain costs and expenses for the three and
nine months ended May 31, 1997 to facilitate comparison to the three and
nine months ended May 31, 1998.
NOTE 2 - NOTES Payable:
At May 31, 1998 the Company borrowed from a corporation $24,500. This
unsecured note to an insurance company bears interest at 9.6% and is due
$2,121.76 monthly until January 1999.
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<PAGE>
NOTE 3 - CAPITAL LEASE OBLIGATIONS:
MAY 31
1998 1997
------- -------
Equipment lease with Compix
bearing interest at 15%, payable in
monthly installments of $624; due
July 1998 ......................... $ 617 $ 8,016
Equipment lease with Associates
Capital bearing interest at 7%,
payable in monthly installments
of $1,177; due September 1998 ..... 6,541 17,966
Equipment lease with IKON Office
Solutions bearing interest at 18%
payable in monthly installments of
$105; due March, 2000 ............. 1,951 2,276
------- -------
Total obligations .............. 9,109 45,392
Less current portion of
lease obligations ........... 8,628 34,851
Total long - term capital
lease obligations ........... $ 481 $10,541
======= =======
The capitalized lease obligations are collateralized by the related
equipment acquired with a net book value of approximately $ 36,925. The
future minimum lease payments under the capital leases at May 31, 1998 are
$8,256 of which $1,219 represents interest.
Future obligations under these non-cancelable leases are:
Period Ending
May 31, AMOUNT
---------
1999 $ 7,211
2000 1,045
---------
Total $ 8,256
=========
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<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:
MAY 31,
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 $.00l. As of May
31, 1998, no Preferred Stock has been issued.
In July, 1996, the Board of Directors and majority shareholders adopted an
employee stock option plan under which 400,000 shares of Common Stock have
been reserved for issuance. As of May 31, 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.
The Company has issued and outstanding the following warrants which have
not yet been exercised at May 31, 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 $.00l 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.
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<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 $.00l 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 purchase warrants which expire July, 1999. The
warrants are to purchase fully paid and non-assessable shares of
the common stock, par value $.00l 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 $.00l 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 $.00l 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 $.00l 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.
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<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>
EXERCISABLE
CLASS OF ---------------------------
WARRANTS MAY 31, 1998 MAY 31, 1997 NON-EXERCISABLE EXERCISE PRICE
-------- ------------ ------------ --------------- --------------
<S> <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 5,033,334 -- 4.00
B 5,033,334 5,033,334 -- 6.00
C 1,050,000 1,050,000 -- 2.00
---------- ----------
Total 11,541,668 10,405,002 2,425,000
========== ========== =========
</TABLE>
NOTE 6 - SEGMENT INFORMATION:
The Company had gross revenues of $2,866,860 for the three months ended
May 31, 1998. The following customers individually represent greater than
ten percent of these revenues.
MAY 31, 1998
CUSTOMER AMOUNT PERCENTAGE
-------- ------ ----------
A $ 741,807 60%
B $ 225,233 18%
C $ 162,205 13%
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 May 31, 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
May 31, 1998, the Company has recorded it share of losses in this
unconsolidated affiliate. The loss for the nine months ended May 31, 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 May 31, 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 May 31, 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 May 31,
1998 and 1997, the Company owed $71,896 and $143,998, 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 2.5% and
2.9% for the three months ended May 31, 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 nine months
ended May 31, 1998, rental expense of $63,448 was incurred under this
lease. Future obligations under the non-cancelable lease terms are
$79,310.
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 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.
The Company has provided a finance company a limited manufacturer's
guarantee for an amount not to exceed $910,845 for equipment and services
sold to a customer of the Company. In the event of default by the
customer, after a minimum period of ninety days from the date default is
declared and after having exhausted all available remedies against the
customer, the finance company may seek payment directly from the Company.
Under the guarantee, the Company may elect to assume the lease from the
finance company under the original terms and conditions or may elect to
pay all amounts due in arrears under the original agreement and pay-off
the lease through a one-time payment of the un-amortized balance.
-13-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
During the nine months ended May 31, 1998, the Company commenced installation of
a nationwide messaging system for one of its larger customers. This project is
expected to continue well into the next fiscal year. In addition to the pursuit
of larger projects into which the Company's main product lines can be sold, the
Company is working to expand its commercial sales activities through the
formation of longer-term customer relationships and the expansion of its
representative sales organization. The company is continuing to invest in
research and development in support of its core product lines and is generating
revenue through the performance of research development on a contract basis.
Savings have been realized through the relocation of resources from and the
closure of the Arlington sales office and the termination of a relationship with
a representative sales organization in Rio de Janeiro, Brazil.
The Company's sales for this quarter were $1.3 million as compared to the sales
for the quarter ended May 31, 1997 of $683 thousand. For the quarter ended May
31, 1998, net income was $203 thousand as compared to $49 thousand for the
quarter ended May 31, 1997. The increase in sales and net income in the quarter
ended May 31, 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 May 31, 1998 totaled $6,805,322 as compared
to $6,739,850 reported in the quarter ended May 31, 1997. The Company's
shareholders' equity for the quarter ended May 31, 1998 totaled $6,913,701 as
compared to $6,435,918 reported in the quarter ended May 31, 1998. Cash flows
invested in operations totaled $1,228,000 and financing activities consumed cash
flows of $4,000 during the quarter ended May 31, 1998. For the comparable period
ended May 31, 1997, cash flows invested in operations totaled $1,575,970 and
financing activities provided cash flows of $3,238,695.
-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: 07-13-98 By: /s/ H. DEAN CUBLEY
Dr. H. Dean Cubley
President
By: /s/ RICHARD R. ROYALL
Richard R. Royall
Chief Financial Officer
-15-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EAGLE WIRELESS INTERNATIONAL, INC. FINANCIAL STATEMENTS-FOR THE NINE MONTHS
ENDED MAY 31, 1998 (UNAUDITED)
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> MAY-31-1998
<CASH> 1,331
<SECURITIES> 0
<RECEIVABLES> 4,328
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0
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