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: NOVEMBER 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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)
-------------
Securities registered under Section 12(b) of the Exchange Act:
Name of Each Exchange
TITLE OF EACH CLASS ON WHICH REGISTERED
---------------------------------------
Common Stock, $.001 par value
OTC / ELECTRONIC BULLETIN BOARD
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 [ ]
As of November 30, 1996, 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 November 30, 1997 and 1996 .................. 3
Statements of Income and Retained Earnings for the Three
Months Ended November 30, 1997 and 1996 ....................... 4
Statements of Cash Flows for the Three Months Ended
November 30, 1997 and 1996 .................................... 5
Statements of Shareholders' Equity for the Three Months Ended
November 30, 1997 and 1996 .................................... 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-NOVEMBER 30, 1997 AND 1996
(UNAUDITED)
ASSETS
1997 1996
----------- -----------
Current Assets:
Cash and cash equivalents ............... $ 2,639,817 $ 2,456,098
Accounts receivable ..................... 2,701,365 870,530
Inventories ............................. 1,315,593 588,981
Prepaid expenses ........................ 52,920 6,048
----------- -----------
Total current assets ............... 6,709,695 3,921,657
----------- -----------
Property and equipment:
Operating equipment ..................... 674,868 507,764
Less accumulated depreciation ........... (134,179) (49,531)
----------- -----------
Total property and equipment ....... 540,689 458,233
----------- -----------
Other assets ............................... 92,265 13,394
----------- -----------
$ 7,342,649 $ 4,393,284
=========== ===========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable ....................... $ 123,449 $ 70,475
Accrued expenses ....................... 72,358 55,027
Customer deposits ...................... 125,857
Shareholder's advances ................. 125,871 290,000
Note payable ........................... 4,478
Current maturities of capital lease
obligations .......................... 24,416 33,896
Federal income taxes payable ........... 264,012 83,421
Deferred taxes ......................... 13,056 1,700
----------- -----------
Total current liabilities .......... 623,162 664,854
----------- -----------
Long-term liabilities:
Long-term capital lease obligations,
net of current maturities ............. 1,500 25,698
Deferred taxes .......................... 16,161 9,507
----------- -----------
Total long-term liabilities ........ 17,661 35,205
----------- -----------
Commitments and contingent liabilities
Shareholders' equity ....................... 6,701,826 3,693,225
----------- -----------
$ 7,342,649 $ 4,393,284
=========== ===========
-3-
<PAGE>
EAGLE WIRELESS INTERNATIONAL, INC.
STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED NOVEMBER 30, 1997 AND 1996
(UNAUDITED)
1997 1996
--------- ----------
Net sales ...................................... $ 557,898 $1,138,852
Costs of goods sold:
Materials and supplies ..................... 34,707 280,246
Direct labor and related costs ............. 84,246 125,628
Depreciation and amortization .............. 6,100 9,856
Other manufacturing costs .................. 91,389 138,762
Research and development ................... 33,306 36,585
--------- ----------
Total costs of goods sold .............. 249,748 591,077
--------- ----------
Gross profit ................................... 308,150 547,775
--------- ----------
Operating expenses
Selling, general and administrative:
Salaries and related costs ............. 113,329 137,238
Advertising and promotion .............. 214,956 56,790
Depreciation and amortization .......... 16,480 6,737
Other support costs .................... 33,033 107,930
--------- ----------
Total operating expenses ............... 377,798 308,695
--------- ----------
Income(loss) from operations before other
revenues/(expenses) and taxes .............. (69,648) 239,080
Other revenues/(expenses)
Interest income ............................ 96,011 22,524
Interest expense ........................... (1,075)
----------
Total other revenues ................... 94,936 22,524
--------- ----------
Income before income taxes ..................... 25,288 261,604
Provisions for income taxes .................... 8,600 88,945
Net income ..................................... 16,688 172,659
--------- ----------
Retained earnings - beginning of period ........ 760,698 32,204
--------- ----------
Retained earnings - end of period .............. $ 777,386 $ 204,863
========= ==========
Net earnings per common share:
Primary (note 1) ............................... $ .01 $ .03
Fully diluted (note 1) ......................... $ .01 $ .01
-4-
<PAGE>
EAGLE WIRELESS INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED NOVEMBER 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Cash flows from operating activities
Net income ......................................... $ 16,688 $ 172,658
Adjustment to reconcile net earnings to net
cash Used by operating activities:
Depreciation and amortization ................. 22,580 16,593
(Increase) / Decrease in accounts receivable .. 193,916 (511,597)
(Increase) / Decrease in inventories .......... (303,375) (63,670)
(Increase) / Decrease in prepaid expenses ..... 4,549 10,575
(Increase) / Decrease in accounts payable and
accrued expenses ........................... (141,362) (216,038)
(Increase) / Decrease in deferred taxes ....... 4,000
(Increase) / Decrease in customer deposits .... (85,926)
(Increase) / Decrease in federal income
taxes payable .............................. 3,100 88,945
----------- -----------
Total adjustments ............................. (216,592) (761,118)
----------- -----------
Net cash used by operating activities .............. (199,904) (588,460)
Cash flows used in investing activities
Purchase of property and equipment ............ (84,407) (82,029)
(Increase) / decrease in other assets ......... (50,758) 35,882
----------- -----------
Net cash used by investing activities ................. (135,165) (46,147)
Cash flows from financing activities
Issuance of common stock ..................... 142,528 1,443,561
(Increase) / Decrease in notes payable
and capital leases ......................... (8,924) (359,408)
(Increase) / Decrease in syndication costs .... (49,778)
(Increase) / Decrease in shareholder's advances (3,501)
(Increase) / Decrease in subscriptions payable (97,500)
----------- -----------
Net cash provided by financing activities .......... 80,325 986,653
Net increase(decrease) in cash ..................... (254,744) 352,046
Cash at the beginning of the period .................... 2,894,561 2,104,052
----------- -----------
Cash at the end of the period .......................... $ 2,639,817 $ 2,456,098
=========== ===========
</TABLE>
-5-
<PAGE>
EAGLE WIRELESS INTERNATIONAL, INC.
STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
FOR THE THREE MONTHS ENDED NOVEMBER 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Common Stock Preferred Stock Paid In Capital Retained Total
$.001 Par Value $.001 Par Value Earnings
Authorized Authorized
100,000,000 5,000,000
Shares Shares
<S> <C> <C> <C> <C> <C>
Balance, Sept. 1, 1996 ................... $ 6,946 $-- $ 2,037,856 $ 32,204 $ 2,077,006
Net income for the three months
ended Nov. 30, 1996 -- -- -- 172,659 172,659
Private placement ........................ 1,883 -- 1,670,956 -- 1,672,839
Syndication costs ........................ -- -- (229,279) -- (229,279)
---------------------------------------------------------------------------------
Balance Nov. 30, 1996 .................... $ 8,829 $-- $ 3,479,533 $ 204,863 $ 3,693,225
=================================================================================
Shares issued and outstanding ............ 8,829,000 None
=========================
Balance, Sept. 1, 1997 ................... $ 11,510 $-- $ 5,820,180 $ 760,698 $ 6,592,388
Net income for the three
months ended Nov. 30, 1997 ............. -- -- -- $ 16,688 $ 16,688
Stock issued to retire debt,
acquire a company and
provide employee compensation
95 -- 142,433 -- 142,528
Syndication costs ........................ -- -- (49,778) -- (49,778)
---------------------------------------------------------------------------------
Balance Nov. 30, 1997 .................... $ 11,605 $-- $ 5,912,835 $ 777,386 $ 6,701,826
=================================================================================
Shares issued and outstanding ............ 11,605,334 None
=========================
</TABLE>
-6-
<PAGE>
EAGLE WIRELESS INTERNATIONAL, INC.
NOTES TO THE FINANCIAL STATEMENTS
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 has $2,608,179 and $2,140,667 invested in interest bearing
accounts at November 30, 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:
NOVEMBER 30,
------------------------
1997 1996
---- ----
Raw Materials $ 702,107 $ 290,741
Work in Process 1,994,690 298,240
Finished Goods 4,568 - 0 -
----------- ---------
$ 2,701,365 $ 588,981
=========== =========
D) Organizational Costs
Organizational costs are amortized using the straight - line method
over a period of sixty (60) months. Accumulated amortization is $1,162
for the period ended November 30, 1997.
- 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 of
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 primary and fully
diluted. Primary 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 any
dilutive common stock equivalents. Fully 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 any dilutive and anti-dilutive common
stock equivalents
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. The Company has assigned a value of $280,343 as
compensation for services rendered and fund raising 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 three
months ended November 30, 1997 and 1996, the Company had expensed
$214,956 and $56,790 respectively.
NOTE 2 - NOTES PAYABLE:
At November 30, 1996 the Company borrowed from a corporation $4,478.
This unsecured note to an insurance company bears interest at 8.75% and
is due $2,265 monthly until January 1997.
- 8 -
<PAGE>
NOTE 3 - CAPITAL LEASE OBLIGATIONS:
NOVEMBER 30
-----------
1997 1996
---- ----
Equipment lease with Compix
bearing interest at 15%, payable in
monthly installments of $624; due
July 1998 ....................................... $ 4,147 $19,201
Equipment lease with IFR bearing
interest at 15%, payable in monthly
installments of $1,427; due June 1998 ........... 9,071 40,393
Equipment lease with Associates
Capital bearing interest at 7%,
payable in monthly installments
of $1,177; due Sept. 1998 ....................... 10,626
Equipment lease with IKON Office
Solutions bearing interest at 18%
payable in monthly installments of
$105; due March, 2000 ......................... 2,072
Total Obligations ........................... 25,916 59,594
Less Current Portion of
Lease Obligations ..................... 24,416 33,896
------- -------
Total Long - Term Capital
Lease Obligations ..................... $ 1,500 $25,698
======= =======
The capitalized lease obligations are collateralized by the related
equipment acquired with a net book value of approximately $ 34,000. The
future minimum lease payments under the capital leases and the net
present value of the future lease payments at November 30, 1997 are
$29,690 of which $3,774 represents interest.
Future obligations under the lease terms are:
PERIOD ENDING
AUGUST 31, AMOUNT
------ --- ------
1998 $ 28,010
1999 1,260
2000 420
---------
Total $ 39,690
==========
- 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:
AUGUST 31,
----------
1997 1996
---- ----
% %
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 November 30, 1997, 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 November 30, 1997, 14,875 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 November 30, 1997:
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
$7.50 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 NOV. 31, 1997 NOV. 31, 1996 NON-EXERCISABLE EXERCISE PRICE
-------- ------------- ------------- --------------- --------------
<S> <C> <C> <C>
$ .01 Exercised 700,000 -- $ .01
.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 -- -- 2.00
---------- ---------- ---------
Total 11,541,668 10,621,668 2,425,000
========== ========== =========
</TABLE>
NOTE 6 - SEGMENT INFORMATION:
The Company had gross revenues of $557,898 for the three months ended
November 30, 1997. The following customers individually represent a
greater than ten percent of these revenues.
NOVEMBER 30, 1997
CUSTOMER AMOUNT PERCENTAGE
-------- ------ ----------
A $ 195,115 34%
B $ 113,186 20%
C $ 75,268 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 November
30, 1997 and 1996, the Company had earned a 6.8% and 0%,respectively,
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
November 30, 1997, the Company has recorded it share of losses in this
unconsolidated affiliate. The loss for the three months ended November
30, 1997 totaled $5,000. 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 November 30, 1997, 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
November 30, 1997, 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
November 30, 1997 and 1996, the Company owes $125,871 and $290,000,
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 1.0 %
and 1.9% for the three months ended November 30, 1997 and 1996,
respectively.
NOTE 11 - COMMITMENTS AND CONTINGENT LIABILITIES:
The Company now leases its primary office space for $8,963 per month
under a non-cancelable lease expiring on March 31, 1999. For the period
ending November 30, 1997, rental expense of $28,088 was incurred.
Future obligations under the non-cancelable lease terms are:
PERIOD ENDING
NOVEMBER 30, AMOUNT
------------ ------
1998 $ 107,556
1999 35,852
-----------
Total $ 143,408
==========
NOTE 12 - SUBSEQUENT EVENTS:
During the quarter ended November 30, 1997, the Company acquired all of
the assets, net of liabilities, of W & H Development, Inc. for 40,000
shares of common stock. W & H is involved in the business of wireless
communications for oil and gas concerns. Subsequent to November 30,
1997, these shares of stock were issued.
Additionally, the Company has entered into an agreement with Houston
Research Consulting, Inc. to issue 55,000 shares of common stock as
full payment in lieu of an $82,500 debt. Subsequent to November 30,
1997, these shares of stock were issued.
- 13 -
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
During the quarter ended November 30, 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. Concurrent with these
activities, the Company acquired the assets of W & H Resources, a
company specializing in oil and gas well remote data acquisition and
control, in an effort to expand the sale of the Company's wireless
control products into the oil and gas industries.
The Company's sales for this quarter were $557,898 as compared to the
sales for the quarter ended November 30, 1996 of $1,138,852. This
decrease is attributed to a reduction in sales to the Company's largest
customer and the implementation of the Company's decision to use
established distributor networks to market its products in addition to
its primary direct sales avenues. The Company has recruited a new
Vice-President of sales, Mr. Rice, to direct these sales activities.
For the quarter ended November 30, 1997, net income was $16,688 as
compared to $172,659 for the quarter ended November 30, 1996. Current
assets for the quarter ended November 30, 1997 totaled $6,709,695 as
compared to $3,921,657 reported in the quarter ended November 30, 1996.
The Company's shareholders' equity for the quarter ended November 30,
1997 totaled $6,701,826 as compared to $3,693,225 reported in the
quarter ended November 30, 1996. Cash flows invested in operations
totaled $240,892 and financing activities provided cash flows of
$121,313 during the quarter ended November 30, 1997. For the comparable
period ended November 30, 1996, cash flows invested in operations
totaled $761,118 and financing activities provided cash flows of
$986,653.
- 14 -
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: 1-14-97 By: /s/ H. DEAN CUBLEY
Dr. H. Dean Cubley
President
/s/ RICHARD R. ROYALL
Richard R. Royall
Chief Financial Officer
- 15 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM EAGLE WIRELESS INTERNATIONAL, INC. FINANCIAL STATEMENTS (UNAUDITED) AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS FOR THE
THREE NOMTHS ENDED NOVEMBER 30, 1997 & 1996
</LEGEND>
<S> <C>
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