<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
---------------------
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JUNE 30, 2000
Commission file number 333-38567
----------------------------------
WORLD WIRELESS COMMUNICATIONS, INC.
-----------------------------------
(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.)
5670 Greenwood Plaza Blvd. Suite 340 Englewood, CO 80111
--------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number (303) 221-1944
--------------
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 July 31, 2000 there were 31,208,847 shares of the Registrant's Common
Stock, par value $0.001, issued and outstanding.
<PAGE> 2
TABLE OF CONTENTS
PART I. Financial Information
<TABLE>
<S> <C>
Item 1. Financial Statements:
Statement Regarding Forward-Looking Disclosure.........................1
Condensed Consolidated Balance Sheets (Unaudited) - as of
June 30, 2000 and December 31, 1999....................................2
Condensed Consolidated Statements of Operations - (Unaudited)
for the Three Months Ended June 30, 2000 and June 30, 1999
and for the Six Months Ended June 30, 2000 and June 30, 1999...........4
Condensed Consolidated Statements of Cash Flow (Unaudited) -
for the Six Months Ended June 30, 2000 and June 30, 1999..............5
Notes to Condensed Consolidated Financial Statements (Unaudited).......7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operation..............................................12
PART II. Other Information
Item 1. Legal Proceedings.....................................................17
Item 2. Changes in Securities.................................................18
Item 6. Exhibits and Reports on Form 8-K......................................18
Signatures............................................................22
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
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.
-1-
<PAGE> 4
ITEM 1. FINANCIAL STATEMENTS
WORLD WIRELESS COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
---------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $7,089,012 $ 893,849
Investment in securities available-for-sale 107,748 130,403
Trade receivables, net of allowance for doubtful
accounts 457,038 723,355
Other receivables 96,482 584
Inventory 215,568 201,815
Prepaid expenses 48,930 10,924
---------- ----------
TOTAL CURRENT ASSETS 8,014,778 1,960,930
---------- ----------
EQUIPMENT, NET OF ACCUMULATED DEPRECIATION AND
IMPAIRMENTS 176,577 192,252
---------- ----------
GOODWILL, NET OF ACCUMULATED AMORTIZATION 300,002 385,718
---------- ----------
OTHER ASSETS, NET OF ACCUMULATED AMORTIZATION 25,159 39,314
---------- ----------
TOTAL ASSETS $8,516,516 $2,578,214
========== ==========
</TABLE>
(CONTINUED)
The accompanying notes are an integral part of these
condensed consolidated financial statements.
-2-
<PAGE> 5
WORLD WIRELESS COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
------------ ------------
<S> <C> <C>
CURRENT LIABILITIES
Trade accounts payable $ 270,734 $ 547,978
Accrued liabilities 226,980 338,112
Accrued lease obligation on abandoned office and
manufacturing facility -- 1,756,924
Notes payable 32,830 3,324,827
Obligation under capital leases - current portion 84,540 119,226
------------ ------------
TOTAL CURRENT LIABILITIES 615,084 6,087,067
------------ ------------
LONG-TERM OBLIGATION UNDER CAPITAL LEASES -- 21,459
------------ ------------
MANDATORILY REDEEMABLE 10% PREFERRED STOCK,
$0.001 par value; 1,000,000 shares authorized; 950 shares
designated mandatorily redeemable; 0 and 950 shares issued
and outstanding; liquidation preference of $1,000,658 -- 950,000
------------ ------------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock - $0.001 par value; 50,000,000
shares authorized; issued and outstanding:
31,208,847 shares at June 30, 2000 and
21,250,015 shares at December 31, 1999 31,192 21,250
Additional paid-in capital 48,750,562 35,242,864
Unrealized gain on marketable equity securities 48,813 55,403
Unearned compensation (32,183) (48,294)
Receivable from shareholder -- (66,828)
Accumulated deficit (40,896,952) (39,684,707)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 7,901,432 (4,480,312)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,516,516 $ 2,578,214
============ ============
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
-3-
<PAGE> 6
WORLD WIRELESS COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
SALES $ 455,425 $ 639,624 $ 966,239 $ 1,672,999
COST OF SALES 269,971 559,586 702,916 1,381,271
------------ ------------ ------------ ------------
GROSS PROFIT 185,454 80,038 263,323 291,728
------------ ------------ ------------ ------------
EXPENSES
Research and development expense 367,564 428,805 605,306 670,070
General and administrative expenses 1,470,510 1,196,978 2,543,671 2,329,736
Manufacturing activity exit costs (1,677,668) -- (1,677,668) --
Amortization of goodwill 42,858 50,099 85,716 100,198
------------ ------------ ------------ ------------
TOTAL EXPENSES 203,264 1,675,882 1,557,025 3,100,004
------------ ------------ ------------ ------------
LOSS FROM OPERATIONS (17,810) (1,595,844) (1,293,702) (2,808,276)
OTHER INCOME/(EXPENSE):
Interest income 112,151 5,924 188,123 10,606
Interest expense (5,243) (617,292) (112,731) (1,092,086)
Other income 3,405 -- 12,785 --
------------ ------------ ------------ ------------
NET INCOME/(LOSS) $ 92,503 $ (2,207,212) $ (1,205,525) $ (3,889,756)
Preferred Stock Dividend -- 650,000 -- 650,000
------------ ------------ ------------ ------------
NET INCOME/(LOSS) APPLICABLE TO
COMMON STOCKHOLDERS $ 92,503 $ (2,857,212) $ (1,205,525) $ (4,539,756)
============ ============ ============ ============
Basic and Diluted Income/(Loss) Per
Common Share $ 0.003 $ (0.17) $ (.04) (0.28)
------------ ------------ ------------ ------------
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES USED IN PER SHARE
CALCULATION 32,582,416 17,135,024 27,666,774 16,081,399
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
-4-
<PAGE> 7
WORLD WIRELESS COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
-----------------------------
2000 1999
----------- -----------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net Loss $(1,205,525) $(3,889,756)
Adjustments to reconcile net loss
to net cash used by operating activities:
Amortization of goodwill 85,716 100,198
Depreciation 86,431 497,926
Amortization of debt discount -- 325,448
Amortization of unearned compensation 16,111 57,936
Compensation for stock options -- 21,540
Stock issued for interest -- 93,698
Stock issued for services -- 231,616
Valuation allowance on inventory (72,624) --
Provision for doubtful accounts receivable 93,304 --
Changes in operating assets and liabilities:
Accounts receivable 77,115 117,126
Inventory 58,871 (76,338)
Prepaid expenses/other assets 3,323 (1,675)
Accounts payable (277,244) (490,629)
Accrued liabilities (1,734,505) 117,916
----------- -----------
NET CASH AND CASH EQUIVALENTS USED BY OPERATING
ACTIVITIES (2,869,027) (2,894,994)
----------- -----------
CASH FLOW FROM INVESTING ACTIVITIES
Payments for the purchase of property and equipment (68,092) (67,105)
Proceeds from sale of property and equipment 18,912 --
----------- -----------
NET CASH AND CASH EQUIVALENTS PROVIDED BY
(USED BY) INVESTING ACTIVITIES (49,180) (67,105)
----------- -----------
</TABLE>
(CONTINUED)
The accompanying notes are an integral part of these
condensed consolidated financial statements.
-5-
<PAGE> 8
WORLD WIRELESS COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
-------------------------------
2000 1999
------------ ------------
<S> <C> <C>
CASH FLOW FROM FINANCING ACTIVITIES
Net proceeds from issuance of common stock $ 12,169,217 $ 2,356,083
Proceeds from exercise of warrants 1,348,423 --
Proceeds from the issuance of preferred stock -- 400,000
Redemption of preferred stock (950,000) --
Proceeds from borrowings, net of discounts -- 1,600,000
Principal payments on notes payable (3,340,747) (1,258,449)
Principal payments on obligation under capital lease (56,145) (74,516)
Payment of preferred dividends (57,378) --
------------ ------------
NET CASH AND CASH EQUIVALENTS PROVIDED BY
FINANCING ACTIVITIES 9,113,370 3,023,118
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 6,195,163 61,019
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 893,849 614,897
------------ ------------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 7,089,012 $ 675,916
============ ============
SUPPLEMENTAL CASH FLOW INFORMATION -
Cash paid for interest was $188,575 and $472,890.
NON-CASH INVESTING AND FINANCING ACTIVITIES - NOTES 3 AND 5
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
-6-
<PAGE> 9
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,
1999 annual report on Form 10-K. The results of operations for the six month
period ended June 30, 2000 are not necessarily indicative of the operating
results to be expected for the full year.
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include the
accounts of World Wireless Communications, Inc. and its wholly owned
subsidiaries. Intercompany accounts and transactions have been eliminated in
consolidation.
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts in these financial statements
and accompanying notes. Actual results could differ from those estimates.
CONCENTRATION OF RISK AND SEGMENT INFORMATION - The Company operates solely in
the electronics industry and has assets primarily within the United States. The
Company opened a new office in Milan, Italy during June, 2000. The concentration
of business in one industry subjects the Company to a concentration of credit
risk relating to trade accounts receivable. The Company generally does not
require collateral from its customers with respect to trade receivables.
FINANCIAL INSTRUMENTS - The Company has a concentration of risk from cash in
banks in excess of insured limits. The amounts reported as cash, investments in
securities available-for-sale, other receivables, trade accounts payable,
accrued liabilities, notes payable and obligations under capital lease are
considered to be reasonable approximations of their fair values. The fair value
estimates presented herein were based on market information available to
management at the time of the preparation of the financial statements.
TRADE ACCOUNTS RECEIVABLE AND MAJOR CUSTOMERS - Sales to major customers are
defined as sales to any one customer which exceeded 10% of total sales in any of
the two reporting periods.
Sales to the major customers during each of the three months ended June 30, 2000
and 1999 are as follows: Customer "A" represented 44.3% and 0% of sales,
respectively; Customer "B" represented 0% and 22.6% of sales respectively;
Customer "C" represented 0% and 21.5%, respectively; and Customer "D"
represented 0% an 11.8%, respectively.
For the six months ended June 30, 2000 and 1999 sales to major customers were:
Customer "A" represented 42.9% and 0% of sales, respectively; Customer "B"
represented 0% and 21.8% of sales respectively; Customer "C" represented 0% and
24.6% of sales, respectively; and Customer "D"
-7-
<PAGE> 10
WORLD WIRELESS COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
represented 0% and 11.9% of sales, respectively. Sales to major customers
subject the Company to the risk that the Company may not be able to continue the
current level of sales if there were a loss of a major customer.
At June 30, 2000 and December 31, 1999, an allowance for doubtful accounts of
$16,086 and $190,328, respectively, was provided against trade and other
receivables. The Company recorded net recoveries of $7,400 for the three months
ended June 30, 2000 with net charge offs of $267,546 for the six months ended
June 30, 2000. The charge offs were in settlement of outstanding issues that had
been evaluated in determining the allowance for doubtful accounts as of December
31, 1999. Provisions for doubtful accounts charged to expense for the three
months ended March 31, 2000 and 1999 were $93,304 and $0, respectively. For the
six months ended June 30, 2000 and 1999, provisions for doubtful accounts
charged to expense totaled $93,304 and $0, respectively. Trade receivables and
the allowance for doubtful accounts are reviewed periodically and adjusted,
accordingly.
INVENTORY - Inventory is stated at the lower of cost or market. Cost is
determined using the first-in, first-out method. In connection with the exit
from contract and in-house manufacturing, the Company recognized a write-down of
inventory of $405,466 to its liquidation value that was charged to operations as
of December 31, 1999. Reserves for inventory valuation are periodically reviewed
for adequacy and adjusted, accordingly.
RESEARCH AND DEVELOPMENT EXPENSE - Current operations are charged with all
research, engineering and product development expenses.
GOODWILL AND LONG-LIVED ASSETS - Goodwill and other long-lived assets are
evaluated periodically for impairment when indicators of impairment are present
and undiscounted cash flows estimated to be generated by those assets are less
than their carrying amounts. Goodwill is included along with other assets
acquired as a group when evaluating their recoverability. Impairment losses are
recognized to the extent estimated discounted net future cash flows expected to
be generated from those assets are less than their carrying amounts. Goodwill is
further evaluated separately and impairment losses are recognized for the excess
of the carrying amount of goodwill over management's estimation of the value and
future benefits expected to be realized from the goodwill.
The Company evaluated the recoverability of the long-lived assets and goodwill
for all acquisition during the fourth quarter of 1999, and determined that
circumstances indicate an inability to recover their carrying amount.
Accordingly, an impairment loss of $641,679 was recognized during 1999 to adjust
the carrying amount of the long-lived assets and goodwill to their estimated
expected discounted net future cash flows.
The remaining balance of goodwill is being amortized over a 5-year period from
the original acquisition dates, on a straight-line basis.
EQUIPMENT - Equipment is stated at cost. Depreciation, including amortization of
leased assets, is computed using the straight-line method over the estimated
useful lives of the equipment, which are three to seven years. Leased equipment
is amortized over the shorter of the useful life of the equipment or the term of
the lease. Depreciation expense was $52,150 and $228,000, for of the three
-8-
<PAGE> 11
WORLD WIRELESS COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
months ended June 30, 2000 and 1999, respectively and $64,854 and $456,344 for
the six months ended June 30, 2000 and 1999, respectively. Maintenance and
repair of equipment are charged to operations and major improvements are
capitalized. The cost of equipment was reduced, as of December 31, 1999, by a
$359,822 write-down reserve attributable to the exit from manufacturing
activities.
During the three months ended June 30, 2000, the Company recorded a total of
$79,326 as write- down recoveries income related to the 1999 reserve established
and the sale of excess furniture and equipment during 2000.
INVESTMENTS - At June 30, 2000, investment in securities consisted of common
stock of customers classified as available-for-sale and stated at quoted fair
value of $107,748. The cost of the securities was $58,935. The unrealized gain
as of June 30, 2000 was $48,813 which is shown as a separate component of
stockholders' deficit. The change in net unrealized gains on securities during
the three months ended June 30, 2000 and 1999, was a decrease in the holding
gain of $71,792 and $0, respectively. For the six months ended June 30, 2000 and
1999, the unrealized holding loss totaled $6,590 and $0, respectively.
SALES RECOGNITION - Sales are recognized upon delivery of products or services
and acceptance by the customer. As a result of design and technology contracts,
the Company has a right to receive royalties which will be recognized upon the
related sales by customers.
STOCK-BASED COMPENSATION - Stock-based compensation to employees is measured by
the intrinsic value method. This method recognizes compensation expense related
to stock options granted to employees based on the difference between the fair
value of the underlying common stock and the exercise price of the stock option
on the date granted. Stock-based compensation to non-employees, including
directors after 1998, is measured by the fair value of the stock options and
warrants on the grant date as determined by the Black-Scholes option pricing
model.
LOSS PER SHARE - Basic loss per common share is computed by dividing net loss by
the weighted- average number of common shares outstanding during the period.
Diluted loss per share reflects potential dilution which could occur if all
potentially issuable common shares from stock purchase warrants and options or
convertible notes payable and preferred stock resulted in the issuance of common
stock. In the present position, diluted loss per share is the same as basic loss
per share because the inclusion of potentially issuable common shares at June
30, 2000 and 1999, respectively, would have decreased the loss per share and
have been excluded from the calculation.
For the three months ended June 30, 2000, the Company recognized net income for
the quarter. Accordingly, potentially issuable common shares from stock purchase
warrants and options have been included in the weighted average number of shares
outstanding for the quarter only.
COMPREHENSIVE INCOME/(LOSS) - Comprehensive income/(loss) provides a measure of
overall Company performance that includes all changes in equity resulting from
transactions and events other than capital transactions. The Company's
comprehensive income and loss for the three months ended June 30, 2000 and 1999
and the comprehensive loss six months ended June 30, 2000 and 1999, respectively
are as follows:
-9-
<PAGE> 12
WORLD WIRELESS COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
----------------------------- -----------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Income/(Loss) $ 92,503 $(2,857,212) $(1,205,525) $(4,539,756)
Unrealized Gain/(Loss)
on Marketable Equity Securities (71,792) -- (6,590) --
----------- ----------- ----------- -----------
Comprehensive Income/(Loss)
for the Period $ 20,711 $(2,857,212) $(1,212,115) $(4,539,756)
=========== =========== =========== ===========
</TABLE>
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
The Securities and Exchange Commission issued Staff Accounting Bulletin No. 101,
Revenue Recognition in Financial Statements on December 3, 1999. This bulletin
requires the application of specific criteria in determination of the timing of
revenue recognition in financial statements and is effective for all fiscal
years beginning after December 16, 1999. The Company has not determined the
effect, if any, that this bulletin may have on its financial statements for the
current fiscal year ending December 31, 2000..
The Financial Accounting Standards Board issued FASB No. 133-Accounting for
Derivative Instruments and Hedging Activities in June, 1998 to be effective for
all fiscal years beginning after June 15, 1999. The statement establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging activities.
The implementation of this pronouncement has been deferred to all fiscal
quarters of fiscal years beginning after June 15, 2000. The Company has not
determined the effect, if any, that this pronouncement may have on its financial
statements for the current fiscal year ending December 31, 2000.
NOTE 2 -- EXIT FROM MANUFACTURING ACTIVITIES
During the fourth quarter of 1999, the Company executed a plan to focus its
efforts primarily on enhancing and marketing its X-traWeb (TM) products whereby
all contract manufacturing was discontinued, all in-house production would be
outsourced and the Company would move its executive offices to Denver, Colorado.
The plan also involved liquidating the Company's raw materials and work in
process inventory and selling all equipment used in production and contract
manufacturing. The Company recognized as exit costs the related non-cancelable
obligation under a lease agreement for office and manufacturing facilities in
Salt Lake City, Utah through 2005. Future minimum lease payments of $1,756,924
under the lease were charged to operations during the year ended December 31,
1999.
-10-
<PAGE> 13
WORLD WIRELESS COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The Company completed its relocation to the Denver, Colorado area in March,
2000. Pursuant to a Lease Termination Agreement, dated May 1, 2000, the Company
paid a $75,000 settlement payment and transferred its security deposit in the
amount of $27,742 to the benefit of a new tenant in the Salt Lake City Utah
manufacturing and office facilities and the lease agreement was terminated as of
the May 1, 2000 date.
Incident to the lease termination, the settlement funds described above were
charged to the outstanding lease liability on the Company's balance sheet
resulting in a remaining liability balance of $1,598,342. This balance was
reversed and credited to operations as manufacturing exit recoveries income
during the three months ended June 30, 2000.
NOTE 3 -- STOCKHOLDERS' EQUITY
During the first quarter of 2000, the Company issued 4,548,557 common shares for
gross cash proceeds of $13,646,000 received from 45 accredited investors in a
private placement offering, at $3.00 per share. These securities are exempt from
registration under the Act. In connection with the offering, a total of
$1,476,783 was incurred as placement costs.
During March, 2000, the Company issued a total 5,393,690 common shares related
to the exercise of warrants to purchase common stock at $.25 per share. The
Company received $401,218 in cash and recorded $947,204 related to the cashless
exercise of warrants as a deemed payment of the principal of 1999 Notes, as
defined in Note 5 - Notes Payable. The warrants exercised totaled $1,348,422.
In March of 2000, the Company issued 16,474 shares of common stock upon the
cashless exercise of 18,333 stock options.
NOTE 4 -- MANDATORILY REDEEMABLE PREFERRED STOCK
On May 14, 1999 the Company authorized 950 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 4,750,000 common
shares at $0.25 per share, and issued such 950 shares of preferred stock and the
related warrants between May 15, 1999 and October 5, 1999. By their terms, the
preferred shares had to be redeemed within one year at their par value plus
accrued dividends. The preferred stock cash dividend requirement was $95,000
annually. The preferred stock was issued for proceeds of $950,000 consisting of
$700,000 cash and the deemed payment of $250,000 principal amount of 1998 bridge
loan notes.
On February 25, 2000, the Company redeemed the mandatorily redeemable preferred
stock for cash of $950,000 for the principal balance and $57,378 for the accrued
preferred dividends accrued to date.
-11-
<PAGE> 14
NOTE 5 - NOTES PAYABLE
On May 14, 1999 the Company issued $2,600,000 of senior secured 16% notes
payable ("the 1999 Notes") which were to mature in one year and bore interest at
the rate of 16% annually and payable quarterly. 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 the 1998 bridge loan notes. The 1999 Notes were secured by
substantially all the Company's assets.
In March, 2000, the Company paid off the 1999 Notes outstanding with cash in the
amount of $2,377,623 and with the deemed proceeds from the exercise of warrants
to purchase 3,788,813 common shares at $.25 per share. The portion of the 1999
Notes paid by the exercise of warrants was $947,204. The warrants exercised are
included in the total warrants issued during the three months ended March 31,
2000 as discussed in Note 3. The Company also paid $35,059 in accrued interest
related to the 1999 Notes.
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, 2000 AND THREE MONTHS ENDED JUNE 30, 1999
Results of Operations
The Company recognized net income of $92,503 for the three months ended June 30,
2000, or $.003 income per share, compared to a net loss of $2,857,212, or $.17
loss per share, for the three months ended June 30, 1999.
Sales in the three month period ended June 30, 2000 totaled $455,425 compared to
$639,624 during the three month period ended June 30, 1999, or a decrease of
28.8%. During the comparative second quarter of 2000 and 1999, the Company
derived its revenue as follows:
<TABLE>
<CAPTION>
For the Three Months Ended June 30,
-----------------------------------
Summary of Revenue by Product: 2000 1999
-------- --------
<S> <C> <C>
Engineering Services $ -- $195,445
Royalties 201,730 --
Branded Products 224,558 124,328
Contract and Cable Manufacturing 2,004 319,851
XtraWeb 27,133 --
-------- --------
Total Revenue $455,425 $639,624
======== ========
</TABLE>
-12-
<PAGE> 15
During the second quarter of 2000, the Company continued to implement its plan
to focus its efforts on the X-traWeb (TM) product line and abandon its contract
and in-house manufacturing activities. Accordingly, engineering service revenue
was $0 in the second quarter of 2000 compared to $195,445 in the second quarter
of 1999. In addition, contract and cable manufacturing revenues decreased by
$317,847, or 99.4%, for the three months ended June 30, 2000 compared to the
three months ended June 30, 1999.
The Company's business strategy continues to emphasize (1) the design and sales
of X-traWeb (TM) products, which contributed $27,133 in revenues during the
three months ended June 30, 2000 compared to $0 for the three months ended June
30, 1999, and (2) the increased marketing of branded products, including radio
and antenna sales, which totaled $224,558 in the second quarter of 2000 compared
to $124,328 in the second quarter of 1999, an increase of $100,230, or 80.6%.
Finally, royalties on products sold during the second quarter of 2000 by a major
customer contributed $201,730 during the three months ended June 30, 2000 and
are expected to continue throughout the remainder of the fiscal year 2000.
Cost of sales for the three months ended June 30, 2000 totaled $269,971 compared
to $559,586 for the three months ended June 30, 1999, or a decrease of 51.8%.
The gross profits for the comparative quarters were $185,454, or 40.7% of sales,
in 2000 compared to $80,038, or 12.5% of sales for 1999. The increase in gross
profit percentage for the three months ended June 30, 2000 vs. 1999 was
primarily due to reduced cost of sales associated with outsourced manufacturing
of products sold in 2000 and the inclusion of $25,000 in X-traWeb design revenue
in the second quarter of 2000 with minimal direct costs. Gross profits resulting
from ongoing sales activity benefitted from an overall reduction in costs and
decreases in personnel and related expenses in the second quarter of 2000. The
Company reduced total employees from 80 as of June 30, 1999 to 39 as of June 30,
2000, or a 51.3% reduction. The majority of this employee reduction was directly
attributable to the exit from manufacturing activities.
The Company incurred research and development costs of $367,564 for the three
months ended June 30, 2000 compared to $428,805 for the three months ended June
30, 1999, or a decrease of $61,241, or 14.3%. These costs continue to relate to
the ongoing application development of the X- traWeb (Tm) proprietary technology
in 2000.
The Company's selling, general, and administrative expenses for the three months
ended June 30, 2000 totaled $1,470,510 compared to $1,196,978 for the three
months ended June 30, 1999, or an increase of $273,532, or 22.9%. The primary
reasons for this overall increase consisted of (1) reduction in depreciation
from $228,000 for the three months ended June 30, 1999 to $52,150 for the three
months ended June 30, 2000, or a decrease of $175,850 (77.1%) due to the
write-down of equipment in 1999 incident to the exit from manufacturing
activities, (2) decrease in facilities rent
-13-
<PAGE> 16
from $102,150 for the second quarter ended June 30, 1999 to $43,646 for the
second quarter ended June 30, 2000, or a $58,504 (57.3%) savings resulting from
Utah facilities rent being charged to the accrued lease liability on the balance
sheet for the first four months of 2000, (3) increases in consulting fees and
outside services of $50,477, and (4) increases in travel expenses of $180,830
during the three months ended June 30, 2000 vs. June 30, 1999 that were incurred
as part of the Company's marketing plan to promote X-traWeb (TM) products and
technology solutions and expand its operations to the European marketplace. In
addition, the Company substantially increased its advertising and promotional
expenses by $186,579 for the three months ended June 30, 2000 vs. June 30, 1999
as part of this business expansion marketing strategy in 2000.
The Company recognized a recovery of manufacturing activity exit costs of
$1,677,668 during the three months ended June 30, 2000 due to the favorable
lease termination settlement of manufacturing and office facilities located in
the Salt Lake City area. The lease obligation for the abandoned Salt Lake City
facilities had been recorded as a liability and expense during the fiscal year
ended December 31, 1999.
Interest income increased to $112,151 in the second quarter of 2000 from $5,924
in the second quarter of 1999 due to increased available funds invested in
overnight interest bearing accounts provided by the $13.6 million private
placement securities issued in the first quarter of 2000. Interest expense
decreased to $5,243 in the first quarter of 2000 from a total of $617,292 in the
second quarter of 1999 due to the retirement of substantially all debt
outstanding in the first quarter of 2000, and the non-recurrence in the second
quarter, 2000 of amortization of debt discount and warrant interest expenses of
$108,485 incurred during the second quarter of 1999.
SIX MONTHS ENDED JUNE 30, 2000 AND SIX MONTHS ENDED JUNE 30, 1999
Results of Operations
The Company incurred a net loss of $1,205,525 for the six months ended June 30,
2000, or $.04. loss per share, compared to a net loss of $4,539,756, or $.28
loss per share, for the six months ended June 30, 1999. This represents an
improvement in 2000 of $3,334,231, or 86%, over 1999 year-to- date financial
results.
Sales for the six month period ended June 30, 2000 totaled $966,239 compared to
$1,672,999 during the six month period ended June 30, 1999, or a decrease of
42.2%. During the comparative two quarters of 2000 and 1999, the Company derived
its revenue as follows:
<TABLE>
<CAPTION>
For the Six Months Ended June 30,
---------------------------------
Summary of Revenue by Product: 2000 1999
---------- ----------
<S> <C> <C>
Engineering Services $ -- $ 840,263
Royalties 414,813 --
Branded Products 412,919 238,425
Contract and Cable Manufacturing 73,549 594,311
XtraWeb 64,958 --
---------- ----------
Total Revenue $ 966,239 $1,672,999
========== ==========
</TABLE>
-14-
<PAGE> 17
During the first quarter of 2000, the Company continued to implement its
strategic plan to focus its efforts on the X-traWeb (TM) product line and
abandon its contract and in-house manufacturing activities. Consequently, the
engineering and contract manufacturing revenue declined by $1,361,025, or 94.9%
during the six months ended June 30, 2000 compared to the six months ended June
30, 1999. Increased marketing of branded products, included radio and antenna
sales, increased by $174,494, or 73.2%, during the first two quarters of 2000
vs. 1999. In addition, the Company has recognized total revenues from the
X-traWeb (TM) product line of $64,958 during the first six months of 2000.
Finally, royalties contributed $414,813 in revenue during the six months ended
June 30, 2000 and is expected to continue for the remainder of the year 2000.
During June, 2000, the Company formed a new operating subsidiary, X-traWeb
Europe S.p.A., based in Milan, Italy. This subsidiary is responsible for the
development and sale of X-traWeb (TM) products through European markets,
commencing with the country of Italy. No revenue has been realized as of June
30, 2000.
Cost of sales for the six months ended June 30, 2000 compared to 1999 declined
to $702,916 in 2000 from a total of $1,381,271 in 1999, or a reduction of
$678,355 (49.1%). The resulting gross profit was $263,323, or 27.3% of sales,
for the six months ended June 30, 2000 compared to $291,728, or 17.4%, for the
six months ended June 30, 1999. This represents an improvement of 56.9% in gross
profit margin percentage for the comparable periods and is expected to continue
to increase as the Company shifts towards higher profit margin business.
Research and development expenses declined by $64,764, or 9.7%, for the
comparable six month periods ended June 30, 2000 vs. June 30, 1999.
Total selling, general, and administrative expenses amounted to $2,543,671 for
the six months ended June 30, 2000 compared to $2,329,736 for the six months
ended June 30, 1999, representing an increase of $213,935, or 9.2%. Selling and
marketing expenses increased by $249,748, or 49.9%, during the six months ended
June 30, 2000 over 1999 and represents a significant increase in advertising,
promotion, and sales related travel to market the Company's X-traWeb (TM)
products as discussed above. Total general and administrative expenses for the
comparable six months periods ended June 30, 2000 and 1999 decreased by $35,813,
or 2.0%, and resulted from (1) a decrease in depreciation of $411,495, or 82.6%,
and (2) a savings of $123,113, or 59.9%, in facilities rent due to the
termination of the Salt Lake City lease. These expense savings were
substantially offset by (1) and increase in corporate travel related expenses of
$214,518 for promotion of X- traWeb(TM) products, the opening of the X-traWeb
Europe offices, and other international business opportunities, and (2)
increases of $87,756 in compensation and benefits, an increase of $69,633 in
legal and accounting fees, new stock exchange fees expense for the American
Stock Exchange of $35,167, and an increase in the provision for doubtful
accounts receivable of $62,954.
-15-
<PAGE> 18
Interest income for the six months ended June 30, 2000 was $188,123 compared to
$10,606 for the six months ended June 30, 1999, with the increase directly
attributable to increased available funds in overnight interest bearing accounts
provided by the $13.6 million private placement securities issued in the first
quarter of 2000. Interest expense declined to $112,731 during the six months
ended June 30, 2000 compared to $1,092,086 for the six months ended June 30,
1999, and represents a $979,355 decrease, or 89.7%. This expense reduction is
directly related to retirement of substantially all debt, and related debt
discount amortization, by the Company in the first quarter of 2000.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity at June 30, 2000 consisting of cash and cash equivalents
was $7,089,012, which represented an increase of $6,195,163 over the Company's
cash and cash equivalents of $893,849 as of December 31, 1999. The Company's
current assets were $8,014,778 as of June 30, 2000, an increase of $6,053,848
from the Company's current assets of $1,960,930 as of December 31, 1999.
During the first quarter of 2000, the Company raised $13,646,000 new capital in
private placement transactions from 45 accredited investors at $3.00 per share.
The proceeds of this offering, net of $1,398,223 in placement fees, amounted to
$12,247,777. The Company also paid a total of $78,560 in placement fees related
to 1999 offerings during this period. The net proceeds from issuance of common
stock were $12,169,217.
In February, 1999, the Company also issued common stock for cash in the amount
of $2,040,000 received in a private placement offering. The net proceeds from
issuance of common stock were $1,876,800. During the second quarter of 1999, the
Company also issued common stock for cash in the amount of $510,000. The net
proceeds from the issuance of the common stock was $479,283.
In May, 1999, the Company sold 650 shares of the Company's 10% Senior Preferred
Stock at a price of $1,000 per share with detachable warrants to purchase
3,250,000 shares of the Company's common stock at an exercise price of $.25 per
share, exercisable in whole or in part by the holder at any time on or before
May 14, 2004. The net proceeds from issuance of the preferred stock were
$400,000 in cash and the deemed payment of $250,000 of principal of the 1998
bridge loan notes outstanding at that time.
In May, 1999, the Company issued the 1999 Notes, bearing interest at 16% and
maturing on May 14, 1999, with interest payable quarterly. The 1999 Notes were
issued for $2,600,000 consisting of $1,600,000 in cash and the deemed payment of
$1,000,000 of principal of the 1998 bridge loan notes outstanding at that time.
In March, 2000, the Company also issued common stock related to the exercise of
5,393,690 warrants to purchase common stock at $.25 per share. Proceeds of
$401,218 were received in cash and $947,204 was recorded as capital related to
the cashless exercise of warrants by the deemed payment of principal by
reduction of the 1999 Notes. The warrants exercised totaled $1,348,423.
With the proceeds of the $13,646,000 private placement, the Company, in the
first quarter of 2000, redeemed the mandatorily redeemable 10% preferred stock
in the amount of $950,000 plus accrued dividends of $57,378. In addition, the
Company paid off the 1999 Notes outstanding with cash in
-16-
<PAGE> 19
the amount of $2,377,623 and the cashless exercise of warrants by deemed payment
of principal in the amount of $947,204, as discussed above, and accrued interest
of $35,059 thereby discharging such debt in full.
The Company's liquidity decreased due to changes in operating assets and
liabilities during the first six months of 2000. For the six months ended June
30, 2000, the net change in operating assets and liabilities utilized net cash
flow of $274,098 compared to a net decrease of cash for the six months ended
June 30, 1999 of $333,600. The primary reasons for the net decrease in cash flow
during the first two quarters of 2000 were increases in both inventory levels of
$58,871 and accounts receivable of $77,115, which were offset by cash flow used
to reduce accounts payable of $277,244 and other accrued liabilities (net of
accrued lease obligation terminated during the six months ended June 30, 2000)
of $136,163. For the six months ended June 30, 1999, accounts receivable
decreased and accounts payable decreased by $117,126 and $490,629, respectively,
resulting in total net cash flow used of $373,503.
SUMMARY
During the first six months of 2000, the Company has implemented its redirection
efforts to focus on the growth of its X-traWeb (TM) business segment and
proprietary radio products. Management has raised $13,646,000 million in new
equity capital, paid off substantially all outstanding debt, redeemed all
mandatorily redeemable preferred stock outstanding, relocated its corporate
headquarters to Denver, Colorado, and exited from all in-house manufacturing
activities, including termination of its lease obligation for facilities in
Utah. Management believes that the potential growth of current products will
require additional engineering and marketing personnel for the X- traWeb (TM)
business in advance of the receipt of substantial revenues from such source and
is actively recruiting such personnel.
In addition, management is evaluating the need and availability of additional
capital to support its further business expansion in Europe and internationally.
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 and its proprietary radios and royalty income are by no means assured.
New capital and financing sources and availability may be limited. As a result,
there can be no assurance that management's efforts will be successful.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Williams Wireless, Inc. has raised a claim that the Company violated the
non-competition provisions of their agreements by allegedly marketing X-traWeb
(TM) products in the telemetry and meter
-17-
<PAGE> 20
reading applications. The company, in turn, claimed that Williams Wireless, Inc.
failed to satisfy all of its duties under its various agreements with the
Company. While the Company believes that Williams' claim is properly disputable,
the parties agreed orally to enter into a settlement agreement and mutual
release. On March 8, 2000, before such settlement agreement was concluded,
Williams sold substantially all of its assets and business, including its
agreements with the Company, to an unrelated party, Internet Telemetry Corp.
("Internet").
After the close of the quarter ended June 30, 2000, the Company and Internet
entered into a settlement agreement and mutual release, which contained the
following key elements:
(a) each party released the other of any claims under the Williams'
agreements with the Company, and the parties terminated such agreements in all
respects;
(b) the Company agreed to grant Internet a perpetual, non-exclusive
irrevocable royalty-free worldwide license to manufacture, use and sell the
Company's Microhopper radio, as presently configured, as a component of
Internet's telemetry systems or products, and to manufacture, use and sell such
radio only when incorporated into Internet's telemetry systems or products;
(c) each party agreed to allow the other party to resell the other's
products pursuant to a standard resellers agreement adopted by such party; and
(d) each party agreed to indemnify the other from any claims arising under
such agreement. The Company believes that such agreement will have no material
adverse effect on its business.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None reported
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(c) 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 three months and six months ended June 30, 2000 and the
Exhibits which are listed on the Exhibit Index attached hereto.
<TABLE>
<CAPTION>
No. Description
<S> <C>
3.1 Articles of Incorporation of the Company and all amendment thereto *
3.2 Bylaws of the Company*
</TABLE>
-18-
<PAGE> 21
<TABLE>
<S> <C>
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*
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*
</TABLE>
-19-
<PAGE> 22
<TABLE>
<S> <C>
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 Registrant's
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*
10.33 Two separate Agreements by and among the Registrant and the 1999 Bridge
Noteholders dated August 19, 1999*
10.34 Waiver Agreement by and among the Registrant and the Bridge Noteholders
dated as of December 7, 1999*
</TABLE>
-20-
<PAGE> 23
<TABLE>
<S> <C>
10.35 Registration Rights Agreement by and among the Registrant and the
purchasers of common stock issued pursuant to the Registrant's
Confidential Private Placement Memorandum dated January 12, 2000 as
amended.*
10.36 Settlement Agreement and Mutual Release between Internet Telemetry
Corp. and the Registrant, dated as of August 7, 2000.**
27 Financial Data Schedules**
</TABLE>
---------------
** Filed herewith
* Filed previously
+ Management contract or compensatory plan or arrangement filed previously
(b) The following reports on Form 8-K were filed by the Registrant during
the quarter ended June 30, 2000:
(4) Form 8K, dated April 27, 2000, Item #5 - Other Events: Filing of
the Company's unaudited balance sheet as of March 31, 2000
incident to the Company's application for listing on the American
Stock Exchange was filed on April 27, 2000.
(5) Form 8K, dated May 1, 2000, Item #4 - Change in Registrant's
Certifying Accountant was filed on May 8, 2000.
(6) Form 8K, dated May 2, 2000, Item #5 - Other Events: Listing of
the Company's common stock on the American Stock Exchange was
filed on May 3, 2000.
-21-
<PAGE> 24
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: August 11, 2000 WORLD WIRELESS COMMUNICATIONS, INC.
By: /s/ David D. Singer
----------------------------------
David D. Singer
President, Chief Executive Officer
By: /s/ Roger D. Leclerc
----------------------------------
Roger D. Leclerc
Vice President of Finance
Principal Financial Officer
-22-
<PAGE> 25
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
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*
10.14 Investment Banking Services Agreement dated November 19, 1997, between
The Company and PaineWebber Incorporated*
</TABLE>
<PAGE> 26
<TABLE>
<S> <C>
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 Registrant's
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*
10.33 Two separate Agreements by and among the Registrant and the 1999 Bridge
Noteholders dated August 19, 1999*
10.34 Waiver Agreement by and among the Registrant and the Bridge Noteholders
dated as of December 7, 1999*
10.35 Registration Rights Agreement by and among the Registrant and the
purchasers of common stock issued pursuant to the Registrant's
Confidential Private Placement Memorandum dated January 12, 2000 as
amended.*
10.36 Settlement Agreement and Mutual Release between Internet Telemetry
Corp. and the Registrant, dated as of August 7, 2000.**
27 Financial Data Schedules**
</TABLE>
---------------
** Filed herewith
* Filed previously
+ Management contract or compensatory plan or arrangement filed previously
