UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
FORM 10-Q/A
AMENDMENT NO. 1
_____________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended June 30, 1999
Commission file number 333-3856
__________________________________
WORLD WIRELESS COMMUNICATIONS, INC.
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(Exact name of registrant as specified in its charter)
Nevada 87-0549700
------------------------------- ------------------------
(State of other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
2441 South 3850 West, West Valley City, Utah 84120
----------------------------------------------------------------
(Address of principal executive offices (Zip Code)
Registrant's telephone number (801) 575-6600
--------------
Indicate by check mark whether registrant (1) filed all reports
required to be filed by Section 13 or 15 (d) of the Exchange Act
during the preceding 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 June 30, 1999 there were 17,492,939 shares of the
Registrant's Common Stock, par value $0.001, issued and
outstanding.
<PAGE>
TABLE OF CONTENTS
PART 1. Financial Information
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets (Unaudited) - as of
June 30, 1999 and December 31, 1998 . . . . . . . . . . . . 1
Condensed Consolidated Statements of Operations (Unaudited)
- for the Three and Six Months Ended June 30, 1999 and
June 30, 1998 . . . . . . . . . . . . . . . . . . . . . . . 3
Condensed Consolidated Statements of Cash Flows (Unaudited)
- for the Six Months Ended June 30, 1999 and June 30, 1998. 4
Notes to Condensed Consolidated Financial Statements
(Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operation . . . . . . . . . . . . . . . . . 9
PART II. Other Information
Item 1. Legal Proceedsings . . . . . . . . . . . . . . . . . . . . 17
Item 2. Changes in Senior Securities . . . . . . . . . . . . . . . 18
Item 3. Default Upon Senior Securities. . . . . . . . . . . . . . . 18
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . 19
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . 20
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
WORLD WIRELESS COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
June 30, December 31,
1999 1998
----------- ----------
Current Assets
Cash and cash equivalents $ 675,916 $ 614,897
Investment in securities available-for-sale 137,648 137,648
Trade receivables, net of allowance for
doubtful accounts 193,568 327,387
Other receivables 93,698 77,005
Inventory 626,577 550,239
Prepaid expenses 20,269 18,594
----------- ----------
Total Current Assets 1,747,676 1,725,770
----------- ----------
Equipment 2,153,035 2,085,930
Less accumulated depreciation (1,507,999) (1,047,285)
----------- -----------
Net Equipment 645,036 1,038,645
----------- ----------
Goodwill, net of accumulated amortization 857,596 957,794
----------- ----------
Other Assets, net of accumulated amortization 377,169 414,381
----------- ----------
Total Assets $ 3,627,477 $4,136,590
=========== ==========
(CONTINUED)
[FN]
The accompanying notes are an integral part of these condensed
consolidated financial statements.
</FN>
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<PAGE>
WORLD WIRELESS COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY(DEFICIT)
June 30, December 31,
1999 1998
----------- -----------
Current Liabilities
Trade accounts payable $ 491,877 $ 982,506
Accrued liabilities 998,554 880,638
Notes payable 2,609,857 2,992,858
Obligation under capital leases -
current portion 162,797 197,626
----------- -----------
Total Current Liabilities 4,263,085 5,053,628
----------- -----------
Long-Term Obligation Under Capital Leases 45,281 84,968
----------- -----------
Mandatorily Redeemable Preferred Stock
Liquidation Preference of $650,000 650,000 -
Stockholders' Equity (Deficit)
Common stock - $0.001 par value; 50,000,000
shares authorized; issued and outstanding:
17,492,939 shares at June 30, 1999 and
13,920,400 shares at December 31, 1998 17,492 13,920
Additional paid-in capital 29,594,486 25,419,026
Unrealized gain on marketable equity securities 62,648 62,648
Unearned compensation (38,500) (70,518)
Receivable from shareholder (66,828) (66,828)
Accumulated deficit (30,900,187) (26,360,254)
----------- -----------
Total Stockholders' Equity (Deficit) (1,330,889) (1,002,006)
----------- -----------
Total Liabilities and Stockholders'
Equity (Deficit) $ 3,627,477 $ 4,136,590
=========== ===========
[FN]
The accompanying notes are an integral part of these condensed consolidated
financial statements.
</FN>
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<PAGE>
WORLD WIRELESS COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
------------------------ ------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales $ 639,624 $ 1,058,074 $ 1,672,999 $ 2,366,957
Cost of Sales 559,586 900,129 1,381,271 1,556,577
----------- ----------- ----------- -----------
Gross Profit 80,038 157,945 291,728 810,380
----------- ----------- ----------- -----------
Expenses
Research and development
expense 428,805 1,272,763 670,070 1,936,512
General and administrative
expenses 1,196,978 1,269,140 2,329,736 2,654,236
Amortization of goodwill 50,099 401,495 100,198 802,990
Interest income (5,924) - (10,606) -
Interest expense 617,292 201,076 1,092,086 225,657
----------- ----------- ----------- -----------
Total Expenses 2,287,250 3,144,474 4,181,484 5,619,395
----------- ----------- ----------- -----------
Loss From Operations (2,207,212) (2,986,529) (3,889,756) (4,809,015)
Other Income - - - 319,528
----------- ----------- ----------- -----------
Net Loss $(2,207,212) $(2,986,529) $(3,889,756) $(4,489,487)
Preferred Stock Dividend 650,000 - 650,000 -
----------- ----------- ----------- -----------
Net Loss Applicable to
Common Stockholders $(2,857,212) $(2,986,529) $(4,539,756) $(4,489,487)
=========== =========== =========== ===========
Basic and Diluted Loss Per
Common Share $ (0.17) $ (0.27) $ (0.28) $ (0.42)
=========== =========== =========== ===========
Weighted Average Number of
Common Shares Used in Per
Share Calculation 17,135,024 11,141,692 16,081,399 10,807,073
=========== =========== =========== ===========
<FN>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
</FN>
</TABLE>
-3-
<PAGE>
WORLD WIRELESS COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Six
Months Ended
June 30,
-------------------------
1999 1998
----------- -----------
Cash Flows From Operating Activities
Net Loss $(3,889,756) $(4,489,487)
Adjustments to reconcile net loss
to net cash used by operating activities:
Amortization of goodwill 100,198 802,990
Depreciation and amortization 497,926 374,429
Amortization of debt discount 325,448 144,628
Purchased research and development - 300,000
Amortization of unearned compensation 57,936 -
Compensation for stock options 21,540 506,890
Stock issued for interest 93,698 -
Stock issued for services 231,616 -
Valuation allowance on inventory and
other assets - 239,066
Gain on sale of business assets - (319,528)
Changes in operating assets and liabilities:
Accounts receivable 117,126 (250,904)
Inventory (76,338) (158,647)
Prepaid expenses/other assets (1,675) (2,406)
Accounts payable (490,629) (37,055)
Accrued liabilities 117,916 207,025
----------- -----------
Net Cash and Cash Equivalents Used By
Operating Activities (2,894,994) (2,682,999)
----------- -----------
Cash Flows From Investing Activities
Payments for the purchase of property
and equipment (67,105) (141,231)
Proceeds from sale of business assets
and property - 372,499
Proceeds from receivable from shareholder - 10,000
Loan to a related company - (56,410)
----------- -----------
Net Cash and Cash Equivalents Provided
by (Used by) Investing Activities (67,105) 184,858
----------- -----------
(Continued)
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-4-
<PAGE>
WORLD WIRELESS COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
For the Six
Months Ended
June 30,
-------------------------
1999 1998
----------- -----------
Cash Flows From Financing Activities
Proceeds from issuance of common stock 2,356,083 1,047,407
Proceeds from issuance of preferred stock 400,000 -
Proceeds from borrowings, net of discounts 1,600,000 2,900,000
Principal payments on notes payable (1,258,449) (389,665)
Principal payments on obligation under
capital lease (74,516) (126,634)
----------- -----------
Net Cash and Cash Equivalents Provided
By Financing Activities 3,023,118 3,431,108
----------- -----------
Net Increase In Cash and Cash Equivalents 61,019 932,967
Cash and Cash Equivalents - Beginning of Period 614,897 218,234
----------- -----------
Cash and Cash Equivalents - End of Period $ 675,916 $ 1,151,201
=========== ===========
Supplemental Cash Flow Information -
Cash paid for interest was $472,890 and $35,306 for the six months ended
June 30, 1999 and 1998, respectively.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-5-
<PAGE>
WORLD WIRELESS COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Interim Condensed Consolidated Financial Statements - The accompanying
condensed consolidated financial statements are unaudited. In the opinion
of management, all necessary adjustments (which include only normal
recurring adjustments) have been made to present fairly the financial
position, results of operations and cash flows for the periods presented.
Certain information and note disclosure normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed consolidated financial statements be read in conjunction with the
financial statements and notes thereto included in the December 31, 1998
annual report on Form 10-K/A. The results of operations for the six month
period ended June 30, 1999 are not necessarily indicative of the operating
results to be expected for the full year.
NOTE 2 - COMMON STOCK
During February 1999, the Company issued 2,040,000 common shares for cash
in the amount of $2,040,000 received in a private placement offering. In
connection with the offering, the Company granted options to purchase
200,000 common shares at $1.75 per share within 5 years, and issued 8,000
shares of common stock as finder's fees. The Company also paid $163,200 as
finder's fees.
During June 1999, the Company issued 510,000 common shares for cash in the
amount of $510,000 received in a private placement offering. In connection
with this offering, the Company paid $30,000 as a finders fee.
During March 1999, note holders converted two unsecured promissory notes
totaling $800,000, together with accrued interest, into 893,698 common
shares at $1.00 per share under the terms of a conversion privilege granted
to the note holders in December 1998.
During the first and second quarter of 1999, the Company issued 120,841
restricted common shares for services valued at $231,499, or $1.92 per
share.
NOTE 3 - MANDATORILY REDEEMABLE PREFERRED STOCK AND WARRANTS
On May 14, 1999 the Company offered to issue 650 shares of senior
liquidating mandatorily redeemable 10% preferred stock with a liquidation
preference of $1,000 per share and detachable five-year warrants to purchase
3,250,000 common shares at $0.25 per share, and issued such shares of
preferred stock on July 1, 1999. The preferred shares must be redeemed on
or before May 14, 2000 at their par value plus accrued dividends. The
preferred stock cash dividend requirement is $65,000 annually. The
preferred stock was issued for $650,000 consisting of $400,000 cash and the
deemed payment of $250,000 principal amount of 1998 bridge loan notes. The
issuance of the preferred stock with warrants was accounted for as the
granting of a favorable conversion feature to the preferred stock holders.
The value assigned to the warrants was based on their intrinsic value but
was limited to the cash proceeds and the amount of the notes converted.
Since the warrants were immediately exercisable, the resulting discount to
the preferred stock of $650,000 was recognized on the date granted as a
preferred dividend.
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<PAGE>
WORLD WIRELESS COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 4 - NOTES PAYABLE
On May 14, 1999 the Company issued $2,600,000 of senior secured 16% notes
payable which mature in one year. The notes were issued for $2,600,000
consisting of $1,600,000 in cash and the deemed payment of $1,000,000
principal amount of 1998 Bridge Loan notes. The remaining 1998 bridge
loan notes, after this payment and the payment from the proceeds of the
preferred stock, were renewed with terms equivalent to the senior secured
16% notes payable, which are as follows: The notes payable are secured by
substantially all the Company's assets. Interest on the notes is payable
quarterly. The notes will be in default if the reported loss before
interest, depreciation, amortization and taxes exceeds $1,000,000 for the
quarter ended June 30, 1999 or if income as computed above is less than
$250,000 or $1,000,000 for the quarters ended September 30, 1999 and
December 31, 1999 respectively. If the notes are determined to be in
default for a quarter the Company could be required to issue five-year
warrants to purchase 300,000 shares of common stock at $0.25 per share as
compensation for the default with respect to such quarter. For the quarter
ended June 30, 1999, the Company accrued $431,250 of interest expense for
the potential default and issuance of warrants.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
Legal Proceedings - The Company leased computer-aided design software which
did not perform as specified; the software, which cost $550,887, was
returned to the seller. The Company requested a cancellation of the $735,207
debt including a technical support agreement in the amount of $184,320. The
software vendor, Mentor Graphics, Inc., commenced a lawsuit against the
Company seeking damages of approximately $485,000 plus interest, legal fees
and expenses arising out of the Company's alleged breach of contract for the
purchase of software and related items. The Company settled this claim for
$100,000 during the quarter ended June 30, 1999.
An investment banking firm commenced a lawsuit against the Company seeking
to recover damages of $231,129, plus legal fees and expenses. In this case,
the Company asserted a counterclaim seeking damages of approximately
$250,000. The Company anticipates that such lawsuit will be settled
although there can be no assurance of such result.
Unasserted Claim - The Company received a verbal request in 1998 from Mr.
and Mrs. Richard Austin to rescind the Company's acquisition of Austin
Antenna, Ltd., formerly known as TWC, Ltd., a Delaware corporation, by a
stock purchase which closed in 1997. In addition, Mr. Austin requested that
the Company bear the cost of (i) the legal fees and expenses in a litigation
commenced against Mr. Austin in a state court in Massachusetts brought by
Charles Rich seeking damages of approximately $50,000 for non-payment of
commissions arising out of the Company's purchase of Austin Antenna Ltd. and
(ii) the unpaid finder's fee that is the subject of the litigation. The
Company, in turn, has put Mr. and Mrs. Austin on notice of the Company's
claims that the Austins have failed to honor their agreements with Austin
Antenna and the Company by failing to make available engineering drawings
and other related data, proprietary to Austin Antenna and the Company by
virtue of the acquisition agreement, that would enable the Company to
consolidate antenna manufacturing in its Salt Lake City facility. The
Company is currently in negotiation with Mr. and Mrs. Austin and is working
on a belief that the claims between the parties may be resolved amicably.
However, there is no current assurance as to the ultimate outcome of those
efforts.
-7-
<PAGE>
Default On 1999 Notes - The Company would have been in default under a
Pledge/Security Agreement associated with the 1999 Notes on the date of the
filing of its Form 10-Q for the quarter ended June 30, 1999 because, among
other things, the Company had an operating loss in excess of that projected
for such quarter and because of its failure to make a mandatory prepayment
of principal, which failures would have each constituted an event of default
under the Loan Agreement between the Company and the holders of the 1999
Notes. Upon the occurrence of an event of default, the holders of the 1999
Notes have the right, among other things, to accelerate the due date of the
1999 Notes to the date of the default and to sell the assets of the Company
securing the debt as a means of repaying the debt.
However, the Company is in the process of obtaining separate waivers of the
default for the quarter ended June 30, 1999 from the holders of the 1999
Notes. In addition, the Company anticipates obtaining a deferral of any
payment of principal on the 1999 Notes until December 31, 1999 regardless of
any financing raised by the Company prior to such date through the sale of
its securities, and anticipates obtaining certain other changes in the loan
agreements. As a condition thereto, the Company anticipates agreeing, among
other things, (a) to grant the holders of the 1999 Notes additional warrants
to purchase 300,000 shares of the Company's common stock at an exercise
price of $0.25 per share, exercisable in whole or in part at any time for a
period of five years, and (b) to grant the holders of the 1999 Notes 200,000
shares of the Company's common stock, which shares would be subject to
applicable securities law restrictions. Although the Company believes that
it will obtain such waivers, there can be no assurance of such result.
Moreover, there can be no assurance that the Company will not commit a
default under the May 1999 transactions in the future. In the event that
the holders of the 1999 Notes sell the Company's assets securing the 1999
Notes following a current or future default, such sale would materially and
adversely affect the Company's business and financial condition.
-8-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
When used in this discussion, the words "expect(s)", "feel(s)",
"believe(s)", "will", "may", "anticipate(s)" and similar expressions are
intended to identify forward-looking statements. Such statements are
subject to certain risks and uncertainties, which could cause actual results
to differ materially from those projected. Readers are cautioned not to
place undue reliance on these forward-looking statements, and are urged to
carefully review and consider the various disclosures elsewhere in this Form
10-Q.
THREE MONTHS ENDED JUNE 30, 1999 AND THREE MONTHS ENDED JUNE 30, 1998
Sales in the three-month period ended June 30, 1999 were $639,624 compared
to $1,058,074 during the three-month period ended June 30, 1998. During the
second quarter of 1999 the Company derived its revenue as follows:
engineering services, $195,445; branded products, $124,328; and contract and
cable manufacturing, $319,851. During the second quarter of 1998 the
Company derived its revenue from engineering services, $758,738; branded
products, $219,625; and contract and cable manufacturing, $79,711. The
decrease in engineering services was due to the completion of the
development of products for Williams that will be used in their SCADA and
Automatic Meter Reading (AMR) applications. Gross profit in the three-month
period ended June 30, 1999 was $80,038 compared to $157,945 during the
comparable period during 1998, which represents 12.5% and 14.9% of sales
respectively.
The Company reduced its research and development costs by $843,958 from
$1,272,763 in the second quarter in 1998 to $428,805 in the second quarter
in 1999. Such saving was achieved primarily by the Company's reducing the
number of employees.
General and administrative expenses decreased $72,162 from $1,269,140 in
the second quarter of 1998 to $1,196,978 in the second quarter of 1999.
The decrease is due to cost cutting measures implemented during the first
and second quarters of 1999.
The amortization of goodwill decreased $351,396 from $401,495 for the
three-months ending June 30, 1998 to $50,099 for the three-months ending
June 30, 1999. The decrease was due to the impairment of goodwill the
Company recognized in the third quarter of 1998.
Interest income is due to the Company's investing idle cash in overnight
interest bearing accounts. Interest expense increased $416,216 from
$201,076 for the three-months ending June 30, 1998 to $617,292 for the
three-months ending June 30, 1999, primarily due to the recognition of
warrant interest expense and fees the Company bore in connection with the
obtaining of debt financing in the second quarter of 1999.
The Company issued 650 shares of senior liquidating mandatorily redeemable
10% preferred stock with a liquidation preference of $1,000 per share and
detachable five-year warrants to purchase 3,250,000 common shares at $0.25.
The issuance of the preferred stock with warrants has been accounted for as
the granting of a favorable conversion feature to the preferred
stockholders. The value assigned to the warrants was based on their
intrinsic value but limited to the cash proceeds and the amount of the notes
converted. Since the warrants were immediately exercisable, the resulting
discount to the preferred stock of $650,000 was recognized on the date
granted as a preferred dividend.
-9-
<PAGE>
SIX MONTHS ENDED JUNE 30, 1999 AND SIX MONTHS ENDED JUNE 30, 1998
Sales in the six-month period ending June 30, 1999 were $1,672,999 compared
to $2,366,957 during the six-month period ending June 30, 1998. During the
first six months of 1999 the Company derived its revenue as follows:
engineering services, $840,263; branded products, $238,425; and contract and
cable manufacturing, $594,311. During the first six months of 1998, the
Company derived its revenue from engineering services, $1,863,672; branded
products, $219,625; and contract and cable manufacturing, $283,660. The
decrease in engineering services was due to the completion of the
development of products for Williams that will be used in their SCADA and
Automatic Meter Reading (AMR) applications.
Gross profit in the first six-month period ended June 30, 1999 was
$291,728 compared to $810,380 during the comparable period during 1998,
which represents 17% and 34% of sales, respectively. The decrease was due
primarily to two factors: during the first six months of 1998, 78% of the
Company's revenues were derived from the more profitable engineering services
segment of the business, compared to 50% in the first six months of 1999.
Also, in the first six months of 1998, the Company met certain design
and development contract milestones for efforts and costs incurred over
several preceding periods.
The Company reduced its research and development costs by $1,266,442 from
$1,936,512 in the first six-months of 1998 to $670,070 in the first six
months in 1999, primarily by reducing the number of its employees.
General and administrative expenses decreased $324,500 from $2,654,236 in
the first six months of 1998 to $2,329,736 in the first six months of 1999.
This decrease was due primarily to a reduction of employees and cost
cutting measures implemented during the first half of 1999.
The amortization of goodwill decreased $702,792 from $802,990 for the first
six-months ending June 30, 1998 to $100,198 for the first six-months ending
June 30, 1999. The decrease was due to the impairment of goodwill the
Company recognized in the third quarter of 1998.
Interest expense increased $866,429 from $225,657 for the first six-months
ending June 30, 1999 to $1,092,086 for the first six-months ending June 30,
1998. In May 1998, the Company executed certain bridge loans in the amount
of $2,500,000. The 1998 bridge loans had detachable warrants, which had
been accounted for as a discount of the related notes and was amortized to
interest expense over the life of the note. The amortization of this debt
discount was approximately $325,000 in the first half of 1999, compared to
$108,000 in the first half of 1998.
Interest income is due to the Company investing idle cash into overnight
interest bearing accounts.
The Company issued 650 shares of senior liquidating mandatorily redeemable
10% preferred stock with a liquidation preference of $1,000 per share and
detachable five-year warrants to purchase 3,250,000 common shares at $0.25.
The issuance of the preferred stock with warrants has been accounted for as
the granting of a favorable conversion feature to the preferred
stockholders. The value assigned to the warrants was based on their
intrinsic value but was limited to the cash proceeds and the amount of the
notes converted. Since the warrants were immediately exercisable, the
resulting discount to the preferred stock of $650,000 was recognized on the
date granted as a preferred dividend.
-10-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity at June 30, 1999 consisting of cash and cash
equivalents was $675,916, which represented an increase of $61,019 over the
Company's cash and cash equivalents of $614,897 as of December 31, 1998.
The Company's current assets were $1,747,676 as of June 30, 1999, which
represented an increase of $21,906 over the Company's current assets of
$1,725,770 as of December 31, 1998. In addition, the Company's current
liabilities were $4,263,085 as of June 30, 1999, a decrease of $790,543 from
the Company's current liabilities of $5,053,628 as of December 31, 1998.
The Company's cash and cash equivalents at June 30, 1999 of $675,916
represented a decrease of $185,381 from the Company's cash and cash
equivalents of $861,297 as of March 31, 1999. The Company's current assets
at June 30, 1999 of $1,747,676 represented a decrease of $373,502 from the
Company's current assets of $2,121,178 as of March 31, 1999. Also the
Company's current liabilities at June 30, 1999 of $4,263,085 represented an
increase of $402,772 from the Company's current liabilities of $3,860,313 as
of March 31, 1999.
In order to pay off the Company's Senior Secured Notes which had a maturity
date of May 15, 1998 (the "1998 Notes"), the Company raised financing in May
1999. Such financing involved the sale of separate units consisting of
$2,600,000 principal amount of the Company's Senior Secured Notes, bearing
interest at 16% per annum, payable quarterly and maturing on May 14, 2000
(the "1999 Notes"). The 1999 Notes are secured by a first security interest
in substantially all the assets of the Company, including its machinery,
equipment, automobiles, fixtures, furniture, accounts receivable and general
intangibles, including any stock in any subsidiary.
Also, the Company sold separate units consisting of 650 shares of the
Company's 10% Senior Preferred Stock* and detachable warrants to purchase
3,250,000 shares of the Company's Common Stock at an exercise price of
$0.25 per share, exercisable in whole or in part by the holder at any time
on or before May 14, 2004. Such sales by the Company occurred in a private
placement transaction exempt from registration made by the Securities Act
of 1933, as amended. **
____________________
* Each share of the Company's Senior Preferred Stock has the following
characteristics:
(a)has a 10% cumulative dividend;
(b)constitutes the senior series of any preferred stock the Company may
issue;
(c)is non-voting;
(d)is convertible into shares of the Company's Common Stock at the
conversion rate of 10,000 shares of Common Stock for each share of
Senior Preferred Stock (or $0.10 per share), if all the shares the
Company's Senior Preferred Stock are not redeemed by May 14, 2000 (for
up to a total of 6,500,000 shares of the Company's Common Stock based
on the 650 shares of the Company's Senior Preferred Stock which are
issued and outstanding);
(e)is mandatorily redeemable upon the earlier to occur of (i) May 14, 2000
or (ii) the Company's raising of gross proceeds of $5,500,000 from the
closing of one or more private placement transactions or secondary
offerings of its securities; and
(f)has a first priority in liquidation of $1,000 per share, plus the amount
of unpaid cumulative dividends, payable from the Company's assets after
its payment (or its making of adequate provision for the payment) of
all claims of its creditors.
**In May 1999, Lancer Offshore Inc. and the Orbiter Fund, who are
affiliates of the Company's largest shareholder group (consisting of such
entities, Michael Lauer, Lancer Partners LLC and Lancer Partners L.P.)
purchased $1,400,000 principal amount of the 1999 Notes and also acquired at
such time separate units consisting of 350 shares of the Company's Senior
Preferred Stock and warrants to purchase 1,750,000 shares of the Company's
Common Stock, for an aggregate investment of $1,750,000.
___________________
-11-
<PAGE>
As a result of such new financing, the Company paid off the principal amount
of the Notes of $2,395,528 outstanding and accrued interest of $96,355 in
full on or immediately after the maturity date of the 1998 Notes.
Accordingly, the Company believes that it satisfied all of its remaining
obligations under the 1998 Notes in full and it does not anticipate any
further claim with respect thereto.
The Company would have been in default under a Pledge/Security Agreement
associated with the 1999 Notes on the date of the filing of its Form 10-Q
for the quarter ended June 30, 1999 because, among other things, the Company
had an operating loss in excess of that projected for such quarter and
because of its failure to make a mandatory prepayment of principal, which
failures would have each constituted an event of default under the Loan
Agreement between the Company and the holders of the 1999 Notes. Upon the
occurrence of an event of default, the holders of the 1999 Notes have the
right, among other things, to accelerate the due date of the 1999 Notes to
the date of the default and to sell the assets of the Company securing the
debt as a means of repaying the debt.
However, the Company is in the process of obtaining separate waivers of the
default for the quarter ended June 30, 1999 from the holders of the 1999
Notes. In addition, the Company anticipates obtaining a deferral of any
payment of principal on the 1999 Notes until December 31, 1999 regardless of
any financing raised by the Company prior to such date through the sale of
its securities, and anticipates obtaining certain other changes in the loan
agreements. As a condition thereto, the Company anticipates agreeing, among
other things, (a) to grant the holders of the 1999 Notes additional warrants
to purchase 300,000 shares of the Company's common stock at an exercise
price of $0.25 per share, exercisable in whole or in part at any time for a
period of five years, and (b) to grant the holders of the 1999 Notes 200,000
shares of the Company's common stock, which shares would be subject to
applicable securities law restrictions. Although the Company believes that
it will obtain such waivers, there can be no assurance of such result.
Moreover, there can be no assurance that the Company will not commit a
default under the May 1999 transactions in the future. In the event that
the holders of the 1999 Notes sell the Company's assets securing the 1999
Notes following a current or future default, such sale would materially and
adversely affect the Company's business and financial condition.
OUTLOOK
The statements contained in this Outlook are based on current expectation.
These statements are forward looking and actual results may differ
materially.
X-traWeb(TM) PRODUCTS
The Company commenced the shifting of its strategic direction during the
first quarter of 1999. In early 1999, the Company successfully implemented
its proprietary X-traWeb(TM) network for integrating wireless solutions with
Internet technologies. The Company's X-traWeb(TM) network allows data from
a remote wireless radio frequency (RF) system to be accessed via a secure,
encrypted Internet connection using a standard Web browser located anywhere.
As a result, the data is available at an Internet-accessible remote
location to simplify the control, access and monitoring of those devices.
The Company's existing X-traWeb products currently offered for sale are
described below:
(a) X-Node is a small (approximately 1" x 1") embedded controller suitable
for mounting in existing equipment for the purpose of remotely monitoring
and controlling the equipment over the Internet. For example, a small,
embedded computer, called a micro-controller, controls many beverage vending
machines. This embedded controller has a serial port built-in to allow a
hand-held computer to configure the machine and obtain transaction
information. This information can now be collected, remotely, by fitting an
X-Node to this serial port. Two versions of the X-Node have been developed
and are fully operational; one has a serial interface and the other a
digital interface.
-12-
<PAGE>
(b) X-Gate is a small, rugged Internet gateway device that replaces the
more common gateway: the personal computer. The X-Gate is fully operational
at present.
(c) X-traWeb(TM) Internet Access Servers dedicated to remote monitoring
and control applications are available.
The Company formed X-traWeb, Inc. its wholly-owned Delaware subsidiary, on
May 12, 1999 to conduct the Company's X-traWeb(TM) business.
Applications for X-traWeb(TM) in addition to automatic meter reading (AMR),
include remote monitoring and control of wireless supervisory control and
data acquisition (SCADA)implementations in the oil and gas pipeline;
environmental control; water and wastewater management; and heating,
ventilation and air conditioning (HVAC) industries. Other applications
include data access and monitoring for vending machines, medical devices,
and security systems.
During the period from January 1, 1999 through June 30, 1999, the Company
received no revenues from, and had no sales of any of, its X-traWeb
products. As of July 31, 1999, the Company had submitted proposals to an
Italian telephone manufacturer, an Italian electrical utility, a California
utility and others. In addition, the Company received a purchase order for
the initial installation of an X-traWeb(TM) network for a vending machine
owner and operator in Pennsylvania and for a test site at a national fast
food chain site in Columbus, Ohio. While the Company believes that its
pending proposals will be accepted in whole or in part from these sources
and others, and that it will derive substantial revenues therefrom in 1999
and thereafter, there cannot be any assurance that any such sales will be
made or the amount thereof, although management anticipates that
X-traWeb(TM) product sales will constitute the bulk of its revenues over the
next 12-month period and thereafter.
PROPRIETARY RADIO PRODUCTS
The Company is currently offering for sale a total of four 900 MHZ and two
2.4 Ghz low speed digital radios ("LSDRs") which can be used in a variety of
industrial applications, including remote control, event detection, SCADA,
environmental monitoring, security and industrial control applications.
The Company only sold a limit quantity of these radio products to date since
the Company is awaiting Federal Communications Commission (FCC) clearance on
all of the above models (with the exception of 2.4 Ghz Hopper). The Company
expects to receive FCC approval of these LSDRs within the next 60 day
period, although there can be no assurance of such result. If such FCC
approval is obtained, the Company can then offer the LSDRs so approved for
sale in unlimited quantities for commercial application.
The Company believes that it will derive significant revenues from the sale of
its proprietary radio products in the future. However, there can be no
assurance as to the amount of such sales or when such sales will occur.
-13-
<PAGE>
The Company had also developed for The Williams Companies, Inc. devices called
Telemetry Interfaces Modular, or TIM (TM)s, which operate at the point of
data origin and transmit date to a data collection and forwarding point
called a WinGate (TM) unit and the WinGate (TM) unit, in turn, forwards that
data to an operating center via a wide area network. These supervisory
control and data acquisition (SCADA) units use some of the Company's radio
products. However, market penetration in the automatic meter reading (AMR)
field has not occurred as anticipated, and, as a result, the Company's
contract with Williams has generated a substantially lower level of revenues
from that originally anticipated therefrom. Although there are current
negotiations in progress for firm commitments from Williams of TIM(TM)s and
WinGate (TM) for AMR and gas and oil pipeline applications, there can be no
assurance as to the outcome thereof.
CONTRACT MANUFACTURE AND ASSEMBLY; ANTENNAS
The Company is actively engaged in performing assembly and manufacturing
services for other manufacturers and vendors of medical, communications,
computer graphics and consumer electronic products at its Salt Lake City
manufacturing facility. The Company expects its level of manufacturing and
assembly activities to increase during the second half of 1999 and during
the year 2000. However, there can be no assurance as to the amounts to be
derived therefrom or the timing thereof.
In addition, while the Company is engaged in the manufacture and sales of
various antennas, it does not expect antenna products to contribute materially
to its consolidated net sales or income in the foreseeable future.
On October 15, 1998, the Company entered into a seven-year lease for a
34,000 square foot facility in West Valley City, Utah. The Company
consolidated its American Fork and Salt Lake City, Utah operations and staff
into the new facility. Management expects the new facility to provide
sufficient manufacturing and office space for the foreseeable future.
However, if additional capacity were required, management would consider
out-sourcing a portion of the manufacturing overload. If a portion of
manufacturing is out-sourced, the Company may lose some control over the
following areas: cost, timeliness of deliveries and quality. However, by
out-sourcing a portion of its manufacturing the Company could avoid delays
and costs associated with the expansion of its own facilities. The
magnitude of any expansion of the Company's manufacturing capabilities that
is required would be a direct function of the sales increase and
manufacturing overload, both of which are unknown at this time.
ENGINEERING SERVICES
While the Company does continue to provide design and development services
for various third parties, it has reduced its current level of activity
inthis area.
The Company completed development under a contract with Kyushu Matsushita
Electric Co., Ltd. (KME, which is also known as Panasonic)
that calls for royalty payments upon shipment of certain KME products.
Shipments of KME products containing the Company's technology began during
the third quarter of 1998. Management believes royalty payments from the
contract were earned during the fourth quarter of 1998, and first half of
1999, but were subject to recoupment by KME up to the first $600,000 of
royalties. Management further believes that the Company may become entitled
to royalty payments with respect to the third quarter of 1999 (which may be
paid during the fourth quarter of 1999), although there can be no assurance
of such result. The Company cannot predict the amount of the royalties to
be received from the future sale of such KME products.
-14-
<PAGE>
SUMMARY
Management believes that the potential growth of the Company's X-traWeb(TM)
business segment, proprietary radio products and manufacturing activities
require additional financing to sustain the Company's proposed operations in
these areas. It is anticipated that additional executive and marketing
personnel will be required for the X-traWeb(TM) business in advance of the
receipt of any substantial revenues from such source. There can be no
assurance that the Company will be able to locate and hire qualified
personnel for such functions; moreover, such a task is time-consuming.
Similarly, the Company's inventory needs are expected to increase if, as and
when orders are received for these new products. Thus, the Company is
currently engaged in seeking to raise additional financing (whether through
debt, equity or a combination thereof). The Company has private placement
transactions being undertaken in implementation of its fund-raising program.
While the Company believes that such additional financing can be obtained,
there can be no assurance that such financing will be achieved, or, if made
available, on terms acceptable to the Company.
In summary, while management is optimistic about the Company's future, it is
fully aware that anticipated revenue increases from sales of X-traWeb(TM)
products, proprietary radios and manufactures activities, design and
development contracts and royalty income are by no means assured, and that
if such increases do materialize, the requirements for capital are
substantial, for which there is no present commitment.
STATEMENT REGARDING FORWARD-LOOKING DISCLOSURE
This report includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act which
represent the Company's expectations or beliefs concerning future events
that involve risks and uncertainties, including those associated with the
ability of the Company to obtain financing for its current and future
operations, to manufacture (or arrange for the manufacturing of) its
products, to market and sell its products, and the ability of the Company to
establish and maintain its sales of X-traWeb(TM) products. All statements
other than statements of historical facts included in this Report including,
without limitation, the statements under "Management's Discussion and
Analysis of Results of Operations and Financial Condition" and elsewhere
herein, are forward-looking statements. Although the Company believes that
the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to
have been correct. Important factors that could cause actual results to
differ materially from the Company's expectations ("Cautionary Statements")
are disclosed in this Report, including without limitation, in connection
with the forward-looking statements included in this report. All subsequent
written and oral forward-looking statements attributable to the Company or
persons acting on its behalf are expressly qualified in their entirety by
the Cautionary Statements.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Mentor Graphics, Inc. commenced a lawsuit against the Company in 1998
in a State court in Utah, which was subsequently removed to the
United States District Court for the District of Utah, seeking
damages of approximately $485,000 plus interest, legal fees and
expenses arising out of the Company's alleged breach of contract
for the purchase of software and related items. The Company settled
such action in May, 1999 by paying $100,000 to the plaintiff.
PaineWebber Incorporated commenced a lawsuit against the Company in
the United States District Court for the Southern District of
New York in which the plaintiff seeks to recover damages of
approximately $231,000, plus legal fees and expenses of its counsel
in such action. In this case, the Company asserted a counterclaim
seeking damages of approximately $250,000. Plaintiff filed a motion
for summary judgment in the case in May, 1999 and the Company filed a
reply thereto in June, 1999. The Company anticipates that such
lawsuit will be settled, although there can be no assurance of
such result.
-15-
<PAGE>
The Company received an oral request in 1998 from Mr. and Mrs.
Richard Austin to rescind its purchase of the stock of Austin
Antenna Ltd. and related assets which closed in 1997. In addition,
Mr. Austin requested that the Company bear the cost of (i) the
legal fees and expenses in a litigation commenced against Mr. Austin
in a state court in Massachusetts brought by Charles Rich seeking
damages of approximately $50,000 for non-payment of commissions
arising out of the Company's purchase of Austin Antenna Ltd. and
related assets and (ii) the unpaid finder's fee that is the subject
of the litigation. The Company, in turn, advised Mr. and Mrs.
Austin that Austin Antenna Ltd. has breached its agreement with
the Company by, among other things, failing to furnish the
Company with proprietary engineering drawings and related data
that would enable the Company to manufacture the antennas now
produced by the Austin Antenna division. The Company is currently
negotiating with Mr. and Mrs. Austin and believes that the claims
may be resolved amicably, although there can be no assurance as to
the outcome thereof.
Item 2. Changes in Securities and Use of Proceeds
1. During May, 1999, the Company authorized the issuance of
up to 950 Senior shares of a series of preferred stock designated as
its Senior Preferred Stock. Each share of the Company's Senior
Preferred Stock has the following characteristics:
(a) has a 10% cumulative dividend;
(b) constitutes the senior series of any preferred stock the
Company may issue;
(c) is non-voting;
(d) is convertible into shares of the Company's Common Stock at
the conversion rate of 10,000 shares of Common Stock for each share
of Senior Preferred Stock (or $0.10 per share), if all the shares
the Company's Senior Preferred Stock are not redeemed by May 14,
2000 (or up to a total of 6,500,000 shares of the Company's Common
Stock based on the 650 shares of the Company's Senior Preferred
Stock which are issued and outstanding);
(e) is mandatorily redeemable upon the earlier to occur of (i)
May 14, 2000 or (ii) the Company's raising of gross proceeds of
$5,500,000 from the closing of one or more private placement
transactions or secondary offerings of its securities; and
(f) has a first priority in liquidation of $1,000 per share,
plus the amount of unpaid cumulative dividends, payable from
the Company's assets after its payment (or its making of adequate
provision for the payment) of all claims of its creditors.
Thus, each share of such Senior Preferred Stock has a
priority over the shares of Common Stock in the payment of
dividends and upon the liquidation of the Company.
2. In April, 1999, the Company issued for cash 10,000
shares of its Common Stock to Richard Mallen at a price of $1.00
per share. The shares were issued in reliance upon Section 4(2)
of the Securities Act of 1933, as amended (the "Act") and Rule
506 of Regulation D promulgated thereunder. The Company believes
that Mr. Mallen is an accredited investor.
-16-
<PAGE>
3. In April, 1999, the Company issued 27,584 shares
of its Common Stock to Murdock Capital Partners, Corp. for services
valued at $51,692, or $1.88 per share. The shares were issued
in reliance upon Section 4(2) of the Act and Rule 506 of
Regulation D promulgated thereunder. Based on information
obtained by the Company in connection with its business
relationship with Murdock Capital Partners Corp., the
Company believes, that Murdock Capital Partners Corp.,
through its representatives, has such knowledge on
business and financial matters as to be able to evaluate
the merits and risks of an investment in the Company.
4. In May, 1999, the Company issued 1,500 shares
of its Common Stock to Sterling Technology Partners, LLC
for services valued at $2,625 or $1.75 per share. The
shares were issued in reliance upon Section 4(2) of the
Act and Rule 506 of Regulation D promulgated thereunder.
The Company believes that Sterling Technology Partners,
LLC is an accredited investor.
5. On May 14, 1999 the Company issued $2,600,000
of senior secured 16% notes payable which mature in one year.
The notes were issued for $2,600,000 consisting of $1,600,000
in cash and the deemed payment of $1,000,000 principal
amount of 1998 Bridge Loan notes. The notes were issued
to the nine purchasers listed and in the amounts set forth below:
Name of Purchaser Principal Amount of Notes
1. Lancer Offshore, Inc. $800,000
2. The Orbiter Fund Ltd. $600,000
3. The McCloskey Trust $440,000
4. DPM Investments Corp. $ 40,000
5. Frying Pan Partners, LLC $ 40,000
6. CJL Investments, LLC $ 80,000
7. Sterling Technology Partners LLC $200,000
8. James T. Kelly $200,000
9. K.R. Braithwaite $200,000
The 1999 Notes were issued in reliance upon Section 4(2) of the
Act and Rule 506 of Regulation D promulgated thereunder. The
Company believes that each of the purchasers of the Notes
is an accredited investor.
6. In May, 1999, the Company issued 650 shares of the
Company's Senior Preferred Stock and warrants to purchase 3,250,000
shares of its Common Stock at an exercise price of $0.25 per share
expiring on May 14, 2004. The preferred stock was issued for
$650,000 consisting of $400,000 cash and the deemed payment of
$250,000 principal amount of 1998 bridge loan notes. The
Senior Preferred Stock and Warrants were issued to nine
purchasers listed and in the amounts set forth below:
-17-
<PAGE>
No. of Shares of No. of Shares
Senior Preferred of Common Stock
Name of Purchaser Stock Subject to Warrants
- --------------------- -------- ---------------------
Lancer Offshore, Inc. 200 1,750,000
The Orbiter Fund Ltd. 150 -0-
The McCloskey Trust 110 550,000
DPM Investments Corp 10 50,000
Frying Pan Partners, LLC 10 50,000
CJL Investments, LLC 20 100,000
Sterling Technology Partners LLC 50 250,000
James T. Kelly 50 250,000
K.R. Braithwaite 50 250,000
7. In June, 1999, the Company issued for cash 500,000 shares
of its Common Stock to RUSP Holding S.A at a price of $1.00 per share.
The shares were issued in reliance upon Section 4(2) of the Act and Rule
506 of Regulation D promulgated thereunder. The Company believes that
RUSP Holding S.A. is an accredited investor.
8. In June, 1999, the Company issued 1,000 and 2,000 shares
of its Common Stock to Strategic Alliance Unlimited and Sterling
Technology Partners LLC, respectively, in connection with services
valued at $4,688, or $1.56 per share. The shares were issued by the
Company in reliance upon Section 4(2) of the Act and Rule 506
promulgated thereunder. The Company believes that Strategic Alliance
Unlimited and Sterling Technology Partners LLC are accredited investors.
Item 3. Defaults Upon Senior Securities
A description of certain of the potential defaults committed
by the Company under the Pledge/Security Agreement dated as of
May 15, 1999 is set forth on pages 11 and 12 of Part I of this
Form 10-Q and is hereby incorporated by reference.
Item 6. Exhibits and Reports on Form 8-K.
(a) The following documents are filed as part of this report:
Financial Statements of the Company (unaudited), including Condensed
Consolidated Balance Sheets, Condensed Consolidated Statements of
Operation, Condensed Consolidated Statements of Cash Flow and Notes
to Financial Statements as at and for the period ended June 30, 1999.
The Exhibits which are listed on the Exhibit Index attached hereto
-18-
<PAGE>
EXHIBIT INDEX
No. Description
3.1 Articles of Incorporation of the Company and all amendment thereto*
3.2 Bylaws of the Company*
4.1 Form of Common Stock Certificate*
4.2 Form of Subscription Agreement used in private financing providing
for registration rights*
5. Opinion of Connolly Epstein Chicco Foxman Engelmyer & Ewing
regarding the legality of securities being registered*
10.1 1997 Stock Option Plan*
10.2 DRCC Omnibus Stock Option Plan*
10.3 Development and License Agreement dated April 4, 1997, between
DRCC and Kyushu Matsushita Electric Co., Ltd.*
10.4 Amended and restated Technical Development and Marketing
Alliance Agreement dated September 15, 1997, between the Company
and Williams Telemetry Services, Inc.*
10.5 Lease Agreement dated May 17, 1995, between DRCC and Pracvest
Partnership relating to the Company's American Fork City offices and
facility*
10.6 Lease Agreement dated February 12, 1996, between the Company
the Green/Praver, et al., relating to the Company's Salt Lake City
offices*
10.7 Shareholders Agreement dated May 21, 1997 between the Company,
DRCC,Philip A. Bunker and William E. Chipman, Sr.*
10.8 Asset Purchase Agreement dated October 31, 1997, between the
Company and Austin Antenna, Ltd.*
10.9 Stock Exchange Agreement dated October 31, 1997, between the
Company, TWC, Ltd. and the shareholders of TWC, Ltd.*
10.10 Settlement Agreement, Mutual Waiver and Release of All Claims
dated November 11, 1997 between Digital Radio Communications Corp.
and Digital Scientific, Inc.*
10.11 Agreement (undated) between the Company, Xarc Corporation and
Donald J. Wallace relating to the Company's acquisition of Xarc
Corporation*
10.12 Promissory Note dated December 4, 1997, by the Company,
payable to William E. Chipman, Sr. in the principal amount of
$125,000*
10.13 Promissory Note dated November 13, 1997, by the Company,
payable to T. Kent Rainey in the principal amount of $200,000*
-19-
<PAGE>
10.14 Investment Banking Services Agreement dated November 19,
1997, between The Company and PaineWebber Incorporated*
10.15 $400,000 Promissory Note dated December 24, 1997, payable
to Electronic Assembly Corporation*
10.16 $400,000 Promissory Note dated January 8, 1998, payable
to Tiverton Holdings Ltd.*
10.17 Loan Agreement by and among the Registrant and the Bridge
Noteholders dated as of May 15, 1998*
10.18 Amendment and Waiver Agreement by and among the Registrant
and the Bridge Noteholders dated August 7, 1998*
10.19 Amendment and Waiver Agreement by and among the Registrant
and the Bridge Noteholders dated September 11, 1998*
10.20 Loan Agreement by and among the Registrant and the Bridge
Noteholders dated as of May 15, 1998 (Previously filed), together
with the Notes, Pledge/Security Agreement, Pledgee/Representative
Agreement, Subordination, and Registration Rights Agreement*
10.21 Separation and Mutual Release Agreement between the
Registrant and William E. Chipman, Sr. dated as of May 26, 1998*+
10.22 Registration Rights Agreement by and among the Registrant
and the purchasers of common stock issued pursuant to the Registrants
Confidential Private Placement Memorandum dated September 9, 1998,
as amended*
10.23 Employment Agreement between the Registrant and James
O'Callaghan dated May 20, 1998*+
10.24 Lease agreement between the Registrant and NP#2 dated as
of July 29, 1998 relating to the premises at 2441 South 3850 West,
West Valley City, Utah 84120*
10.25 Agreement between KME and the Registrant dated October
19, 1998 relating to the Registrant's providing of technical
assistance and development relating to the Giarange telephone*
10.26 Agreement between KME and the Registrant dated as of March 1,
1998 relating to the Panasonic MicroCast System*
10.27 General and Mutual Release Agreement between the Registrant and
Phil Acton dated November 2, 1998*+
10.28 Agreement and Waiver Agreement by and among the Registrant and
the Bridge Noteholders dated November 25, 1998*
10.29 1998 Employee Incentive Stock Option Plan*+
10.30 1998 Non-qualified Stock Option Plan*+
10.31 Amendment of Agreement by and among the Registrant and the Bridge
Noteholders dated as of March 26, 1999*
10.32 Loan Agreement by and among the Registrant and the Senior
Secured Noteholders dated as of May 14, 1999, together with the
Notes, Pledge/Security Agreement, Pledgee Representative Agreement,
Subordination and Registration Rights Agreement*
27 Financial Data Schedules**
** Filed herewith
* Filed previously
+ Management contract or compensatory plan or arrangement filed previously
(b) No reports on Form 8-K were filed by the Registrant during the quarter
ended June 30, 1999.
19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: November 3, 1999 WORLD WIRELESS COMMUNICATIONS, INC.
/s/ David D. Singer
----------------------------------
David D. Singer
President, Chief Executive Officer
and Principal Financial Officer
-20-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information from the condensed balance
sheet as of June 30, 1999, and the condensed statement of operations for the six
months ended June 30, 1999, and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 675,916
<SECURITIES> 137,648
<RECEIVABLES> 258,568
<ALLOWANCES> 65,000
<INVENTORY> 626,577
<CURRENT-ASSETS> 1,747,676
<PP&E> 2,153,035
<DEPRECIATION> 1,507,999
<TOTAL-ASSETS> 3,627,477
<CURRENT-LIABILITIES> 4,263,085
<BONDS> 45,281
650,000
0
<COMMON> 17,492
<OTHER-SE> (1,313,397)
<TOTAL-LIABILITY-AND-EQUITY> 3,627,477
<SALES> 832,736
<TOTAL-REVENUES> 1,672,999
<CGS> 687,528
<TOTAL-COSTS> 1,381,271
<OTHER-EXPENSES> 3,100,004
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,092,086
<INCOME-PRETAX> (3,889,756)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,889,756)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,889,756)
<EPS-BASIC> (0.28)
<EPS-DILUTED> (0.28)
</TABLE>
