<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 MARCH 31, 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 April 30, 2000 there were 30,205,705 shares of the Registrant's Common
Stock, par value $0.001, issued and outstanding.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
PART I. Financial Information
Item 1. Financial Statements:
Statement Regarding Forward-Looking Disclosure..............................................1
Condensed Consolidated Balance Sheets (Unaudited) - as of
March 31, 2000 and December 31, 1999........................................................2
Condensed Consolidated Statements of Operations - (Unaudited)
for the Three Months Ended March 31, 2000 and
March 31, 1999..............................................................................4
Condensed Consolidated Statements of Cash Flows (Unaudited) -
for the Three Months Ended March 31, 2000 and March 31, 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..........................................................................15
Item 2. Changes in Securities......................................................................15
Item 6. Exhibits and Reports on Form 8-K...........................................................22
Signatures.................................................................................23
</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.
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<PAGE> 4
ITEM 1. FINANCIAL STATEMENTS
WORLD WIRELESS COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
--------------- ---------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 9,112,713 $ 893,849
Investment in securities available-for-sale 195,605 130,403
Trade receivables, net of allowance for doubtful
accounts 440,726 723,355
Other receivables 57,530 584
Inventory 48,178 201,815
Prepaid expenses 65,180 10,924
--------------- ---------------
TOTAL CURRENT ASSETS 9,919,932 1,960,930
--------------- ---------------
EQUIPMENT, NET OF ACCUMULATED DEPRECIATION AND
IMPAIRMENTS 108,320 192,252
--------------- ---------------
GOODWILL, NET OF ACCUMULATED AMORTIZATION 342,860 385,718
--------------- ---------------
OTHER ASSETS, NET OF ACCUMULATED AMORTIZATION 51,051 39,314
--------------- ---------------
TOTAL ASSETS $ 10,422,163 $ 2,578,214
=============== ===============
</TABLE>
(CONTINUED)
The accompanying notes are an integral part of these condensed
consolidated financial statements.
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<PAGE> 5
WORLD WIRELESS COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
------------ ------------
<S> <C> <C>
CURRENT LIABILITIES
Trade accounts payable $ 317,029 $ 547,978
Accrued liabilities 374,268 338,112
Accrued lease obligation on abandoned office and
manufacturing facility 1,674,364 1,756,924
Notes payable 43,333 3,324,827
Obligation under capital leases - current portion 86,775 119,226
------------ ------------
TOTAL CURRENT LIABILITIES 2,495,769 6,087,067
------------ ------------
LONG-TERM OBLIGATION UNDER CAPITAL LEASES 17,394 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 $1,007,378 -- 950,000
------------ ------------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock - $0.001 par value; 50,000,000
shares authorized; issued and outstanding:
31,208,847 shares at March 31, 2000 and
21,250,016 shares at December 31, 1999 31,192 21,250
Additional paid-in capital 48,846,562 35,242,864
Unrealized gain on marketable equity securities 120,605 55,403
Unearned compensation (40,239) (48,294)
Receivable from shareholder (66,828) (66,828)
Accumulated deficit (40,982,292) (39,684,707)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 7,909,000 (4,480,312)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 10,422,163 $ 2,578,214
============ ============
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
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<PAGE> 6
WORLD WIRELESS COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
--------------------------------
2000 1999
------------ ------------
<S> <C> <C>
SALES $ 510,815 $ 1,033,375
COST OF SALES 428,106 821,685
------------ ------------
GROSS PROFIT 82,709 211,690
------------ ------------
EXPENSES
Research and development expense 237,742 241,265
General and administrative expenses 1,143,467 1,132,758
Manufacturing activity exit costs (72,624) --
Amortization of goodwill 42,858 50,099
------------ ------------
TOTAL EXPENSES 1,351,443 1,894,234
------------ ------------
LOSS FROM OPERATIONS (1,268,734) (1,682,544)
OTHER INCOME/(EXPENSE):
Interest income 75,972 (4,682)
Interest expense (107,483) 474,794
Other income 9,380 --
------------ ------------
NET LOSS $ (1,290,865) $ (1,682,544)
PREFERRED STOCK DIVIDEND (6,720) --
------------ ------------
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS $ (1,297,585) $ (1,682,544)
------------ ============
BASIC AND DILUTED LOSS PER COMMON SHARE $ (0.05) $ (0.10)
------------ ------------
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES USED IN PER SHARE CALCULATION 24,124,702 16,474,289
============ ============
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
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<PAGE> 7
WORLD WIRELESS COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
-------------------------------
2000 1999
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $(1,290,865) $(1,682,544)
Adjustments to reconcile net loss
to net cash used by operating activities:
Amortization of goodwill 42,858 50,099
Depreciation and amortization 23,447 247,848
Amortization of debt discount -- 216,963
Amortization of unearned compensation 8,055 38,686
Compensation for stock options -- 21,540
Stock issued for interest -- 93,698
Stock issued for services -- 172,466
Valuation allowance on inventory (72,624) --
Provision for doubtful accounts receivable 93,304 --
Changes in operating assets and liabilities:
Accounts receivable 132,379 (218,576)
Inventory 226,261 73,239
Prepaid expenses/other assets (27,986) (3,671)
Accounts payable (230,948) (504,133)
Accrued liabilities 4,254 14,446
----------- -----------
NET CASH AND CASH EQUIVALENTS USED BY OPERATING
ACTIVITIES (1,091,865) (1,479,939)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for the purchase of property and equipment (22,769) (7,378)
Proceeds from sale of property and equipment 93,997 --
----------- -----------
NET CASH AND CASH EQUIVALENTS PROVIDED BY
(USED BY) INVESTING ACTIVITIES 71,228 (7,378)
----------- -----------
</TABLE>
(CONTINUED)
The accompanying notes are an integral part of these condensed
consolidated financial statements.
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<PAGE> 8
WORLD WIRELESS COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
---------------------------------
2000 1999
------------ ------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from issuance of common stock $ 12,265,217 $ 1,876,800
Proceeds from exercise of warrants 1,348,422 --
Redemption of preferred stock (950,000) --
Principal payments on notes payable (3,330,244) (108,697)
Principal payments on obligation under capital lease (36,516) (34,386)
Payment of preferred dividends (57,378) --
------------ ------------
NET CASH AND CASH EQUIVALENTS PROVIDED BY
FINANCING ACTIVITIES 9,239,501 1,733,717
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 8,218,864 246,400
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 893,849 614,897
------------ ------------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 9,112,713 $ 861,297
============ ============
</TABLE>
SUPPLEMENTAL CASH FLOW INFORMATION-
Cash paid for interest was $183,577 and $100,828.
NON-CASH INVESTING AND FINANCING ACTIVITIES - NOTES 3 AND 5
The accompanying notes are an integral part of these condensed
consolidated financial statements.
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<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
three month period ended March 31, 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 only within the United States. 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, accrued lease obligation on abandoned office and
manufacturing facility, 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 March 31, 2000 and 1999 are as follows: Customer "A" represented
48.0% and 21.1% of sales, respectively; Customer "B" represented 0% and 28.9% of
sales respectively; and Customer "C" represented 0% and 23.2%, 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 March 31, 2000 and December 31, 1999, an allowance for doubtful accounts of
$8,686 and $190,328, respectively, was provided against trade and other
receivables. The Company charged off a total of $274,946 for the three months
ended March 31, 2000. The charge offs were in settlement
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<PAGE> 10
WORLD WIRELESS COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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. 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 $12,705 and $228,344, for of the three
months ended March 31, 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.
INVESTMENTS - At March 31, 2000, investment in securities consisted of common
stock of customers classified as available-for-sale and stated at quoted fair
value of $195,605. The cost of the securities was $75,000. The unrealized gain
as of March 31, 2000 was $120,605 which is shown as a separate component of
stockholders' deficit. The change in net unrealized gains on securities during
the three
-8-
<PAGE> 11
WORLD WIRELESS COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
months ended March 31, 2000 and 1999, was an increase in the holding gain of
$65,202 and $ -, 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 March
31, 2000 and 1999, respectively, would have decreased the loss per share and
have been excluded from the calculation.
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 loss for the three months ended March 31, 2000 and 1999,
respectively is as follows:
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
-------------------------------
2000 1999
----------- -----------
<S> <C> <C>
Net Loss $(1,290,865) $(1,682,544)
Increase in Unrealized Gain on Marketable Equity
Securities 65,202 --
----------- -----------
Comprehensive Loss for the Period $(1,225,663) $(1,682,544)
=========== ===========
</TABLE>
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
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<PAGE> 12
WORLD WIRELESS COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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.
The Company completed its relocation to the Denver, Colorado area in March,
2000. As discussed in Note 6 - Subsequent Events, the Company expects to
terminate its lease obligation for the Salt Lake City facilities effective May
1, 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
$1,302,223 were incurred as placement costs.
In addition, the Company paid placement costs in the amount of $78,560 related
to 1999 offerings during the first quarter of 2000.
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 by the deemed payment by reduction 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.
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 to
the placement agents. The Company also paid $163,200 in issuance costs.
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 quarter of 1999, the Company issued 88,757 restricted common
shares for services valued at $172,466, or $1.74 per share.
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
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<PAGE> 13
WORLD WIRELESS COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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.
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.
NOTE 6 - SUBSEQUENT EVENTS
Pursuant to a letter of understanding, dated May 1, 2000, the Company has agreed
to make a $75,000 settlement payment and transfer its security deposit in the
amount of $27,742 to the benefit of a proposed new tenant in the Salt Lake City
Utah manufacturing and office facilities currently leased by the Company as
discussed in Note 2. The new tenant's Board of Directors has authorized the
commencement of lease negotiations with the landlord. With the execution of a
new lease agreement, dated May 1, 2000, by the landlord and proposed new tenant
and the settlement of the above funds by the Company, a lease termination
agreement of the Company's lease agreement, dated July 29, 1998, will be
executed by the landlord and the Company.
Upon lease termination, the settlement funds described above would be charged to
the outstanding lease liability on the Company's balance sheet with the
remaining $1,544,902 recorded as a liability in the balance sheet will be
released to income at that time. There is, however, no assurance that this lease
termination will be completed as described herein.
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<PAGE> 14
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 MARCH 31, 2000 AND THREE MONTHS ENDED MARCH 31, 1999
Results of Operations
The Company incurred a net loss of $1,290,865 for the three months ended March
31, 2000, or $.05 loss per share, compared to a net loss of $1,682,544, or $.10
loss per share, for the three months ended March 31, 1999. This represents an
improvement in 2000 of $391,679, or 23.3%, over 1999 quarterly financial
results.
Sales in the three-month period ended March 31, 2000 totaled $510,815 compared
to $1,033,375 during the three-month period ended March 31, 1999, or a decrease
of 50.6%. During the comparative first quarter of 2000 and 1999, the Company
derived its revenue as follows:
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
----------------------------------------
Summary of Revenue by Product: 2000 1999
--------------- ---------------
<S> <C> <C>
Engineering Services $ -- $ 644,818
Royalties 213,084 --
Branded Products 188,360 114,097
Contract and Cable Manufacturing 71,545 274,460
XtraWeb 37,826 --
--------------- ---------------
Total Revenue $ 510,815 $ 1,033,375
=============== ===============
</TABLE>
During the first 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 first quarter of 2000 compared to $644,818 in the first quarter of
1999. In addition, contract and cable manufacturing revenues decreased by
$202,915, or 73.9%, for the three months ended March 31, 2000 compared to the
three months ended March 31, 1999.
The Company's business strategy continues to emphasize (1) the design and sales
of X-traWeb (TM) products, which contributed $37,826 in revenues during the
three months ended March 31, 2000 compared to $0 for the three months ended
March 31, 1999, and (2) the increased marketing of
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<PAGE> 15
branded products, including radio and antenna sales, which totaled $188,360 in
the first quarter of 2000 compared to $114,097 in the first quarter of 1999, an
increase of $74,263, or 65.1%.
Finally, royalties on products sold during the last half of 1999 by a major
customer contributed $213,084 during the three months ended March 31, 2000 and
are expected to continue throughout the remainder of the fiscal year 2000.
Cost of sales for the three months ended March 31, 2000 totaled $428,106
compared to $821,685 for the three months ended March 31, 1999, or a decrease of
47.9%.
Manufacturing activity exit costs in the amount of $72,624 were released to
income due to reduction of required inventory valuation level during the first
quarter of 2000.
The gross profits for the comparative quarters were $82,709, or 16.2% of sales,
in 2000 compared to $211,690, or 20.5% of sales for 1999. The decrease in gross
profit percentage for the three months ended March 31, 2000 vs. 1999 was
primarily due to the inclusion of $75,762 in costs associated with a bulk sale
of raw materials, completed in February, 2000, as part of its exit from
manufacturing activities. Gross profits resulting from ongoing sales activity
benefitted from an overall reduction in costs and decreases in personnel and
related expenses in the first quarter of 2000. The Company reduced total
employees from 61 as of March 31, 1999 to 35 as of March 31, 2000, or a 42.6%
reduction. The majority of this employee reduction was attributable to the exit
from manufacturing activities.
The Company incurred research and development costs of $237,742 for the three
months ended March 31, 2000 compared to $241,265 for the three months ended
March 31, 1999, or a decrease of $3,523, or 1.5%. These costs continue to relate
to the ongoing development of proprietary technology.
The Company's selling, general, and administrative expenses for the three months
ended March 31, 2000 totaled $1,143,467 compared to $1,132,758 for the three
months ended March 31, 1999, or an increase of $10,709, or .9%. The primary
reasons for this overall increase consisted of (1) reduction in Depreciation and
amortization from $247,848 for the three months ended March 31, 1999 to $23,447
for the three months ended March 31, 2000, or a decrease of $224,401 (90.5%) due
to the write-down of equipment in 1999 incident to the exit from manufacturing
activities, (2) decrease in facilities rent from $94,503 for the first quarter
ended March 31, 1999 to $31,031 for the first quarter ended March 31, 2000, or a
$63,472 (67.2%) savings resulting from Utah facilities rent being charged to the
accrued lease liability on the balance sheet for the first quarter of 2000, (3)
increased provision for doubtful accounts of $93,304, and (4) increases in
consulting fees of $124,939 and travel and promotional expenses of $102,297
during the three months ended March 31, 2000 vs. March 31, 1999 that were
incurred as part of the Company's marketing plan to promote X-traWeb (TM)
products and technology solutions.
Interest income increased to $75,972 in the first quarter of 2000 vs. $4,682 in
the first 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
$107,483 in the first quarter of 2000 from a total of $474,794 in the first
quarter of 1999 due to a decrease in average debt outstanding to $1,108,276 for
the first quarter of 2000 from $2,912,392 during the first quarter of 1999, and
the non-recurrence in 2000 of amortization of debt discount expense of $216,000
during the first quarter of 1999.
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Liquidity and Capital Resources
The Company's liquidity at March 31, 2000 consisting of cash and cash
equivalents was $9,112,713, which represented an increase of $8,218,864 over the
Company's cash and cash equivalents of $893,849 as of December 31, 1999. The
Company's current assets were $9,919,932 as of March 31, 2000, an increase of
$7,959,002 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 $1,302,223 in placement fees, amounted to
$12,343,777. 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 $12,265,217.
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.
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 $1,348,422.
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 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 also increased due to changes in operating assets and
liabilities during the first quarter, 2000. For the three months ended March 31,
2000, the net change in operating assets and liabilities provided a net increase
of cash flow of $103,960 compared to a net decrease of cash for the three months
ended March 31, 1999 of $638,695. The primary reasons for the net increase in
cash flow during the first quarter of 2000 were the reduction of inventory by
$226,261 and decrease in trade accounts receivable of $132,379, which were
partially offset by the cash flow used to reduce accounts payable of $230,948.
For the three months ended March 31, 1999, accounts receivable increased and
accounts payable decreased by $218,576 and $504,133, respectively, resulting in
total net cash flow used of $722,709. First quarter 1999 total cash flow used
was partially offset by cash flow provided from a decrease of inventory by
$73,239.
Summary
During the first quarter 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
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<PAGE> 17
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. 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 business expansion. 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 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. While Williams Wireless, Inc. paid
the sum due under the draft settlement agreement to the Company and the Company
delivered to Williams Wireless, Inc. all inventory of products for which it made
payment to the Company, the settlement agree has not yet been signed. Under the
draft agreement the Company had agreed also to grant Williams Wireless, Inc. a
perpetual non-exclusive royalty-free license to use one of the Company's radios
as a component in the Williams' telemetry systems or products. In the interim,
the Company believes that an unrelated party acquired the assets or stock of
Williams Wireless, Inc. While the Company expects that such settlement agreement
will be signed by such new owner in the foreseeable future, there can be no
assurance of such result.
This claim was first reported in the Company's10-K for the fiscal year ended
December 31, 1999.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
The Company made various sales of shares of its Common Stock during the
first quarter of 2000 as listed below which are exempt from registration as set
forth below:
1. In February, 2000, the Company sold 200,000 shares of its Common
Stock to The Pinnacle Fund L.P., at a price of $3.00 per share, in cash. 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 The Pinnacle Fund L.P. is an accredited investor.
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<PAGE> 18
2. In February, 2000, the Company sold 40,000 shares of its Common
Stock to John S. Lemak, at a price of $3.00 per share, in cash. 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 John S. Lemak is an accredited
investor.
3. In February, 2000, the Company sold 40,000 shares of its Common
Stock to Robert L. Swisher, Jr., at a price of $3.00 per share, in cash. 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 Robert L.
Swisher, Jr. is an accredited investor.
4. In February, 2000, the Company sold 10,000 shares of its Common
Stock to Stephen R. Field, Trustee of the Trust under Article Fourth of the Will
of Nathaniel Field, at a price of $3.00 per share, in cash. 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 Stephen R. Field, Trustee, is
an accredited investor.
5. In February, 2000, the Company sold 10,000 shares of its Common
Stock to Peter Rettman, at a price of $3.00 per share, in cash. 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 Peter Rettman is an accredited
investor.
6. In February, 2000, the Company sold 2,000 shares of its Common Stock
to Malcolm P. Thomas, at a price of $3.00 per share, in cash. 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 Malcolm P. Thomas is an
accredited investor.
7. In February, 2000, the Company sold 20,000 shares of its Common
Stock to Susan S. Oelsen, at a price of $3.00 per share, in cash. 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 Susan S. Olesen is an
accredited investor.
8. In February, 2000, the Company sold 10,000 shares of its Common
Stock to Tom S. Humse, at a price of $3.00 per share, in cash. 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 Tom S. Humse is an accredited
investor.
9. In February, 2000, the Company sold 20,000 shares of its Common
Stock to Barry Michael Kitt, at a price of $3.00 per share, in cash. 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 Barry Michael Kitt is an
accredited investor.
10. In February, 2000, the Company sold 650,000 shares of its Common
Stock to Elkron International S.p.A., at a price of $3.00 per share, in cash.
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 Elkron
International S.p.A. is an accredited investor.
11. In February, 2000, the Company sold 166,667 shares of its Common
Stock to Clinton A. Thomas Living Trust, at a price of $3.00 per share, in cash.
The shares were issued in reliance
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<PAGE> 19
upon Section 4(2) of the Act and Rule 506 of Regulation D promulgated
thereunder. The Company believes that Clinton A. Thomas Living Trust is an
accredited investor.
12. In February, 2000, the Company sold 500,000 shares of its Common
Stock to Kermit B. Thomas Living Trust, at a price of $3.00 per share, in cash.
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 Kermit B. Thomas
Living Trust is an accredited investor.
13. In February, 2000, the Company sold 666,667 shares of its Common
Stock to President & Fellows of Harvard College, at a price of $3.00 per share,
in cash. 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
President & Fellows of Harvard College is an accredited investor.
14. In February, 2000, the Company sold 10,000 shares of its Common
Stock to Alfred Lagana, at a price of $3.00 per share, in cash. 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 Alfred Lagana is an accredited
investor.
15. In February, 2000, the Company sold 3,334 shares of its Common
Stock to Eliane Reinhold, at a price of $3.00 per share, in cash. 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 Eliane Reinhold is an
accredited investor.
16. In February, 2000, the Company sold 20,000 shares of its Common
Stock to John A. and Maria Famiglietti, at a price of $3.00 per share, in cash.
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 John A. and Maria
Famiglietti are accredited investors.
17. In February, 2000, the Company sold 160,000 shares of its Common
Stock to Graham Properties, LP, at a price of $3.00 per share, in cash. 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 Graham
Properties, LP is an accredited investor.
18. In February, 2000, the Company sold 200,000 shares of its Common
Stock to West Core Select Funds, at a price of $3.00 per share, in cash. 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 West Core Select
Funds is an accredited investor.
19. In February, 2000, the Company sold 100,000 shares of its Common
Stock to Puglisi Capital Partners L.P., at a price of $3.00 per share, in cash.
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 Puglisi Capital
Partners L.P. is an accredited investor.
20. In February, 2000, the Company sold 4,000 shares of its Common
Stock to Richard T. Mallen, at a price of $3.00 per share, in cash. 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 Robert T. Mallen is an
accredited investor.
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<PAGE> 20
21. In February, 2000 and March, 2000, the Company sold a total of
20,000 shares of its Common Stock to Jonathan Merriman, at a price of $3.00 per
share, in cash. 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
Jonathan Merriman is an accredited investor.
22. In February, 2000, the Company sold 73,333 shares of its Common
Stock to Tiedemann Boltres, at a price of $3.00 per share, in cash. 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 Tiedemann Boltres is an
accredited investor.
23. In February, 2000, the Company sold 313,000 shares of its Common
Stock to Tiedemann Boltres Ptrs., at a price of $3.00 per share, in cash. 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 Tiedemann Boltres
Ptrs. is an accredited investor.
24. In February, 2000, the Company sold 3,000 shares of its Common
Stock to Apaquoque GP, at a price of $3.00 per share, in cash. 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 Apaquoque GP is an accredited
investor.
25. In February, 2000, the Company sold 73,334 shares of its Common
Stock to Canadian Imperial Holding, at a price of $3.00 per share, in cash. 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 Canadian Imperial
Holding is an accredited investor.
26. In February, 2000, the Company sold 153,333 shares of its Common
Stock to Ira Partners, at a price of $3.00 per share, in cash. 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 Ira Partners is an accredited
investor.
27. In February, 2000, the Company sold 100,000 shares of its Common
Stock to Treeline, at a price of $3.00 per share, in cash. 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 Treeline is an accredited
investor.
28. In February, 2000, the Company sold 100,000 shares of its Common
Stock to Steamers Partners, at a price of $3.00 per share, in cash. 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 Steamers Partners is an
accredited investor.
29. In February, 2000, the Company sold 50,000 shares of its Common
Stock to Cooperative Holding Corporation, at a price of $3.00 per share, in
cash. 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
Cooperative Holding Corporation is an accredited investor.
30. In February, 2000, the Company issued 273,077 shares of its Common
Stock to James T. Kelly, pursuant to his exercise of certain warrants at an
exercise price of $0.25 per share, in cash. 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 James T. Kelly is an accredited investor.
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<PAGE> 21
31. In February, 2000, the Company issued 21,667 shares of its Common
Stock to Scott Ryan, pursuant to his exercise of certain warrants at an exercise
price of $0.25 per share, in cash. 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 Scott Ryan is an accredited investor.
32. In February, 2000, the Company issued 21,667 shares of its Common
Stock to Warren Palitz, pursuant to his exercise of certain warrants at an
exercise price of $0.25 per share, in cash. 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 Warren Palitz is an accredited investor.
33. In March, 2000, the Company sold 40,000 shares of its Common Stock
to Thomas E. Hodapp, at a price of $3.00 per share, in cash. 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 Thomas E. Hodapp is an
accredited investor.
34. In March, 2000, the Company sold 10,000 shares of its Common Stock
to Michael Seely, at a price of $3.00 per share, in cash. 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 Michael Seely is an accredited
investor.
35. In March, 2000, the Company sold 30,000 shares of its Common Stock
to Kevin Ketelsen, at a price of $3.00 per share, in cash. 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 Kevin Ketelsen is an
accredited investor.
36. In March, 2000, the Company sold 10,000 shares of its Common Stock
to Allan Lipton, at a price of $3.00 per share, in cash. 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 Allan Lipton is an accredited
investor.
37. In March, 2000, the Company sold 10,000 shares of its Common Stock
to Nancy Lipton, at a price of $3.00 per share, in cash. 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 Nancy Lipton is an accredited
investor.
38. In March, 2000, the Company sold 20,000 shares of its Common Stock
to Brian Manolis, at a price of $3.00 per share, in cash. 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 Brian Manolis is an accredited
investor.
39. In March, 2000, the Company sold 350,000 shares of its Common Stock
to Tanalux S.A., at a price of $3.00 per share, in cash. 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 Tanalux S.A. is an accredited
investor.
40. In March, 2000, the Company sold 30,000 shares of its Common Stock
to Lawrence S. Black, at a price of $3.00 per share, in cash. 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 Lawrence S. Black is an
accredited investor.
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<PAGE> 22
41. In March, 2000, the Company sold 20,000 shares of its Common Stock
to F. Van Kasper, at a price of $3.00 per share, in cash. 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 F. Van Kasper is an accredited
investor.
42. In March, 2000, the Company sold 20,000 shares of its Common Stock
to Alan Frost, at a price of $3.00 per share, in cash. 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 Alan Frost is an accredited investor.
43. In March, 2000, the Company sold 10,000 shares of its Common Stock
to Michael J. Joly, at a price of $3.00 per share, in cash. 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 Michael J. Joly is an
accredited investor.
44. In March, 2000, the Company sold 20,000 shares of its Common Stock
to Alex Brown CUST FBO Peter A. Massanisco Roth IRA, at a price of $3.00 per
share, in cash. 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
Alex Brown CUST FBO Peter A. Massanisco Roth IRA is an accredited investor.
45. In March, 2000, the Company sold 20,000 shares of its Common Stock
to Peter A. Massanisco, at a price of $3.00 per share, in cash. 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 Peter A. Massanisco is an
accredited investor.
46. In March, 2000, the Company sold 100,000 shares of its Common Stock
to Douglas and Laurie Moore, Trustees, at a price of $3.00 per share, in cash.
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 Douglas and
Laurie Moore, Trustees, are accredited investors.
47. In March, 2000, the Company sold 100,000 shares of its Common Stock
to Lodestone Capital Fund, at a price of $3.00 per share, in cash. 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 Lodestone Capital Fund is an
accredited investor.
48. In March, 2000, the Company sold 40,000 shares of its Common Stock
to Ponte Vedra Partners, L.P., at a price of $3.00 per share, in cash. 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 Ponte Vedra
Partners, L.P. is an accredited investor.
49. In March, 2000, the Company issued 302,538 shares of its Common
Stock to Sterling Technology Partners, upon the exercise of certain warrants at
an exercise price of $0.25 per share, in cash. 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 is an
accredited investor.
50. In March, 2000, the Company issued 310,604 shares of its Common
Stock to Kathryn Braithwaite, upon the exercise of certain warrants at an
exercise price of $0.25 per share, in cash. 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 Kathryn Braithwaite is an accredited
investor.
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51. In March, 2000, the Company issued 78,520 shares of its Common
Stock to DPM Investment Corp upon the deemed exercise of certain warrants at an
exercise price of $0.25 per share, which amount was treated as part payment of
the amount owed under the 16% Senior Secured Notes owned by such party. 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 DPM Investment
Corp. is an accredited investor.
52. In March, 2000, the Company issued 78,520 shares of its Common
Stock to Frying Pan Partners LLC upon the deemed exercise of certain warrants at
an exercise price of $0.25 per share, which amount was treated as part payment
of the amount owed under the 16% Senior Secured Notes owned by such party. 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 Frying Pan
Partners LLC is an accredited investor.
53. In March, 2000, the Company issued 863,727 shares of its Common
Stock to Thomas McCloskey, the Trustee of the McCloskey Trust, upon the deemed
exercise of certain warrants at an exercise price of $0.25 per share, which
amount was treated as part payment of the amount owed under the 16% Senior
Secured Notes owned by such party. 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 Thomas McCloskey, Trustee, is an accredited investor.
54. In March, 2000, the Company issued 18,046 shares of its Common
Stock to James T. Kelly upon the deemed exercise of certain warrants at an
exercise price of $0.25 per share, which amount was treated as part payment of
the amount owed under the 16% Senior Secured Notes owned by such party. 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 James T. Kelly is
an accredited investor.
55. In March, 2000, the Company issued 2,250,000 shares of its Common
Stock to Lancer Offshore Inc. upon the deemed exercise of certain warrants at an
exercise price of $0.25 per share, which amount was treated as part payment of
the amount owed under the 16% Senior Secured Notes owned by such party. 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 Lancer Offshore
Inc. is an accredited investor.
56. In March, 2000, the Company issued 500,000 shares of its Common
Stock to Lancer Partners L.P. upon the deemed exercise of certain warrants at an
exercise price of $0.25 per share, which amount was treated as part payment of
the amount owed under the 16% Senior Secured Notes owned by such party. 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 Lancer Partners
L.P. is an accredited investor.
57. In March, 2000, the Company issued 675,324 shares of its Common
Stock to Capital Research, LTD., upon the exercise of certain warrants at an
exercise price of $0.25 per share, in cash. 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 Capital Research, LTD. is an accredited
investor.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(d) 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 ended March 31, 2000 and the
Exhibits which are listed on the Exhibit Index attached hereto.
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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: May 10, 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
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EXHIBIT INDEX
<TABLE>
<CAPTION>
No. 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>
-24-
<PAGE> 27
<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*
</TABLE>
-25-
<PAGE> 28
<TABLE>
<S> <C>
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.**
27 Financial Data Schedules**
</TABLE>
- -------------------
** 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 March 31, 2000.
-26-
<PAGE> 1
EXHIBIT 10.35
REGISTRATION RIGHTS AGREEMENT
OF
WORLD WIRELESS COMMUNICATIONS, INC.
Agreement made as of the 31st day of March, 2000, by and among World
Wireless Communications, Inc., a Nevada corporation currently having its office
and principal place of business at 2441 South 3850 West, West Valley City, Utah
84120 (the "Corporation"), and each party hereto who acquires shares of Common
Stock of the Corporation in the offering to purchase such securities made
pursuant to the Confidential Private Placement Memorandum of the Company dated
February 24, 2000 (the "Offering") (each of the last named persons shall
hereinafter be referred to individually as a "Shareholder" or "Seller" and
collectively as the "Shareholders" or "Sellers").
WHEREAS, upon the final closing of the offering of up to 13,646,000
shares of the Company's Common Stock pursuant to the Memorandum (the "Effective
Date"), as defined in the Offering, the Shareholders will collectively own up to
4,548,667 shares of Common Stock, $.001 par value per share, of the Corporation
(shares of such common stock, being referred to as the "Shares" and collectively
as the "Stock");
WHEREAS, as of the Effective Date, the Corporation and the Shareholders
desire to provide for certain registration rights for the Stock of the
Corporation or any interest therein now owned by the Shareholders;
NOW, THEREFORE, effective upon the Effective Date, in consideration of
the mutual covenants and conditions herein contained, each of the parties hereby
agrees as follows:
1. Registration Rights.
1.1 (a) The Corporation shall file a registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), on or
before December 31, 2000, covering, at a minimum, all of the shares of Common
Stock sold pursuant to the Offering. The Corporation shall give written notice
as promptly as possible of such proposed registration to each Shareholder.
(b) A registration filed pursuant to this Section
1.1(a) shall not be deemed to have been effected unless the registration
statement related thereto (i) has become effective under the Securities Act and
(ii) has remained effective for a period of at least nine months (or such
shorter period of time in which all of the
<PAGE> 2
Stock registered thereunder has actually been sold thereunder); provided,
however, that if, after any registration statement filed pursuant to Section
1.1(a) becomes effective and prior to the time the registration statement has
been effective for a period of at least nine months, such registration statement
is interfered with by any stop order, injunction or other order or requirement
of the Commission or other governmental agency or court solely due to actions or
omissions to act of the Corporation, such registration statement shall not be
considered one of the registrations applicable pursuant to Section 1.1(a).
1.2 Delay or Suspension of Registration. Notwithstanding any
other provision of this Section 1 to the contrary, if the Corporation shall
furnish to the Holder or Holders:
(a) a certificate signed by the President of the
Corporation stating that, in the good faith judgment of a majority of the
members of the entire Board of Directors of the Corporation, it would adversely
and materially affect the Corporation's ability to enter into an agreement with
respect to, or to consummate, a bona fide material transaction to which it is or
would be a party, or the Corporation has a plan to register Stock to be sold for
its own account within a 90-day period after the filing of the registration
statement under Section 1.1(a), for the Corporation to use its reasonable best
efforts to effect the registration of the Stock; or
(b) both (A) a certificate signed by the President of
the Corporation stating that, in the good faith judgment of a majority of the
members of the entire Board of Directors of the Corporation, a material fact
exists which the Corporation has a bona fide business purpose for preserving as
confidential and (B) an opinion of counsel to the Corporation to the effect that
the registration by the Corporation (following the offer or sale by the Holder
or Holders of the Stock pursuant to an effective registration statement) would
require disclosure of the material fact which is referenced in the President's
certificate required under Section 1.2(b)(A) and which, in such counsel's
opinion, is not otherwise required to be disclosed, then the Corporation's
obligations pursuant to Section 1.1 with respect to any such registration shall
be deferred or offers and sales of the Stock by the Holder or Holders shall be
suspended, as the case may be, until the earliest of: (1) the date on which, as
applicable (a) the Corporation's use of reasonable best efforts to effect the
registration of the Stock would no longer have such a material adverse effect or
(b) the material fact is disclosed to the public or ceases to be material; (2)
135 days from the date of receipt by the Holder or Holders of the materials
referred to in Section 1.2(a) and (b) above; and (3) such time as the
Corporation notifies the Holder or Holders that it has resumed use of its
reasonable best efforts to effect registration of the Stock or that offers and
sales of Stock pursuant to an effective registration statement may be resumed,
as the case may be.
<PAGE> 3
A particular material transaction to which the Corporation is or would be a
party or a particular material fact shall not give rise to more than one
deferral or suspension notice by the Corporation pursuant to the provisions of
this Section 1.2.
1.3 In connection with any registration or qualification
pursuant to the provisions of this Section 1, the Corporation shall, except as
prohibited under the blue sky or securities laws of any jurisdiction under which
a registration or qualification is being effected, pay all filing, registration
and qualification fees of the Securities and Exchange Commission, printing
expenses, fees and disbursements of legal counsel and all accounting expenses,
except that the Sellers shall bear the fees and expenses of their own legal
counsel, and the underwriting or brokerage discounts and commissions, expenses
of their brokers or underwriters and fees of the National Association of
Securities Dealers, Inc. attributable to their Stock; provided, however, that
the Corporation shall not be required in the case of any registration hereunder
to make blue sky filings in more than 15 states.
1.4 (a) In each case of registration of shares of Stock under
the Securities Act pursuant to these registration provisions, the Corporation
shall unconditionally indemnify and hold harmless each of the Sellers, each
underwriter (as defined in the Securities Act), and each person who controls any
such underwriter within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Securities Exchange Act of 1934 (the Sellers and each such
underwriter, and each such person who controls any such underwriter being
referred to for purposes of this Section 1.4, as an "Indemnified Person") from
and against any and all losses, claims, damages, liabilities and expenses
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in any registration statement under which such shares
of the Stock were registered under the Securities Act, any prospectus or
preliminary prospectus contained therein or any amendment or supplement thereto
(including, in each case, any documents incorporated by reference therein), or
arising out of any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
expenses arise out of any such untrue statement or omission or alleged untrue
statement or omission based upon information relating to any of the Sellers or
any underwriter and furnished to the Corporation or the Registering
Shareholders, as the case may be, in writing by any of the Sellers or such
underwriter expressly for use therein; provided that the foregoing
indemnification with respect to a preliminary prospectus shall not inure to the
benefit of any underwriter (or to the benefit of any person controlling such
underwriter) from whom the person asserting any such losses, claims, damages,
liabilities or
<PAGE> 4
expenses purchased shares of the Stock to the extent such losses, claims,
damages or liabilities result from the fact that a copy of the final prospectus
had not been sent or given to such person at or prior to written confirmation of
the sale of such shares to such person.
(b) In each case of a registration of shares of the
Stock under the Securities Act pursuant to these registration provisions, each
of the Sellers participating in the registration, severally and not jointly,
shall unconditionally indemnify and hold harmless the Corporation (and its
directors and officers) each underwriter and each person, if any, who controls
the Corporation or such underwriter within the meaning of Section 15 of the
Securities Act of Section 20(a) of the Securities Exchange Act of 1934, to the
same extent as the foregoing indemnity from the Corporation to the Sellers but
only with reference to information relating to such Seller and furnished to the
Corporation by such Seller for use in the registration statement, any prospectus
or preliminary prospectus contained therein or any amendment or supplement
thereto. Each Seller will use all reasonable efforts to cause any underwriters
of shares of Stock to be sold by any of the Sellers to indemnify the Corporation
on the same terms as the Sellers agree to indemnify the Corporation or the
Registering Shareholders, as the case may be, but only with reference to
information furnished in writing by such underwriter for use in the registration
statement.
(c) In case any action or proceeding shall be brought
against or instituted which involves any Indemnified Person, such Indemnified
Person shall promptly notify the person against whom such indemnity may be
sought (the "Indemnifying Person") in writing and the Indemnifying Person shall
retain counsel reasonably satisfactory to the Indemnified Person to represent
the Indemnified Person and any others the Indemnifying Person may designate in
such proceeding and shall pay the fees and disbursements of such counsel related
to such proceeding. In any such action or proceeding, any Indemnified Person
shall have the right to obtain its own counsel, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person has agreed to the retention of such counsel at its expense
or (ii) the named parties to any such action or proceeding include both the
Indemnifying Person and the Indemnified Person, and the Indemnified Person has
been advised by counsel that there may be one or more defenses available to such
Indemnified Person which are different from or additional to those available to
the Indemnifying Person (in which case, if the Indemnified Person notifies the
Indemnifying Person that it wishes to employ separate counsel at the expense of
the Indemnifying Person, the Indemnifying Person shall not have the right to
assume the defense of such action or proceeding on behalf of such Indemnified
Person). It is understood that the Indemnifying Person shall not be liable for
the fees and
<PAGE> 5
expenses of more than one separate firm of attorneys at any time for all such
similarly situated Indemnified Persons. The Indemnifying Person shall not be
liable for any settlement of any action or proceeding effected without its
written consent.
(d) In the event the indemnifications provided for in
this Section 1.4 are unavailable or insufficient, then the Sellers shall each
contribute to the amount paid or payable as a result of such losses, claims,
damages, liabilities, actions and expenses in such proportion as is appropriate
to reflect (A) the relative benefits received by each Seller and (B) the
relative fault of each Seller.
(e) Notwithstanding anything in this Section 1.4 to
the contrary, the Corporation shall not be liable to any Seller for any losses,
claims, damages or liabilities arising out of or caused by (A) any reasonable
delay (1) in filing or processing any registration statement or any preliminary
or final prospectus, amendment or supplement thereto after the inclusion of such
Seller's Stock in such registration statement, or (2) in requesting such
registration statement be declared effective by the Commission and (B) the
failure of the Commission for any reason to declare effective any registration
statement.
2. MISCELLANEOUS.
2.1 Notices. All notices or other communications required or
permitted to be given pursuant to this Agreement shall be in writing and shall
be considered as duly given on (a) the date of delivery, if delivered in person,
by nationally recognized overnight delivery service or by facsimile or (b) three
days after mailing if mailed from within the continental United States by
registered or certified mail, return receipt requested to the party entitled to
receive the same, if to the Corporation, World Wireless Communications, Inc.,
2441 South 3850 West, West Valley City, Utah 84120, with a copy to Law Offices
of Stephen R. Field, 620 Fifth Avenue, New York, New York, Attn: Stephen R.
Field, Esq.; and if to any Shareholder, at his or its address as set forth in
the books and records of the Corporation. Any party may change his address by
giving notice to the other party stating his or its new address. Commencing on
the 10th day after the giving of such notice, such newly designated address
shall be such party's address for the purpose of all notices or other
communications required or permitted to be given pursuant to this Agreement.
2.2 Governing Law. This Agreement and the rights of the
parties hereunder shall be governed by and construed in accordance with the laws
of the State of Utah, determined without regard to its conflicts of law
principles. All parties hereto (i) agree that any legal suit, action or
proceeding arising out of or
<PAGE> 6
relating to this Agreement shall be instituted only in a federal or state court
in Salt Lake City, Utah, (ii) waive any objection which they may now or
hereafter have to the laying of the venue of any such suit, action or
proceeding, and (iii) irrevocably submit to the jurisdiction of any federal or
state court in Salt Lake City, Utah, in any such suit, action or proceeding, but
such consent shall not constitute a general appearance or be available to any
other person who is not a party to this Agreement. All parties hereto agree that
the mailing of any process in any suit, action or proceeding in accordance with
the notice provisions of this Agreement shall constitute personal service
thereof.
2.3 Entire Agreement; Waiver of Breach. This Agreement
constitutes the entire agreement among the parties and supersedes any prior
agreement or understanding among them with respect to the subject matter hereof,
and it may not be modified or amended in any manner other than as provided
herein; and no waiver of any breach or condition of this Agreement shall be
deemed to have occurred unless such waiver is in writing, signed by the party
against whom enforcement is sought, and no waiver shall be claimed to be a
waiver of any subsequent breach or condition of a like or different nature.
2.4 Binding Effect; Assignability. This Agreement and all the
terms and provisions hereof shall be binding upon and shall inure to the benefit
of the parties and their respective heirs, successors and permitted assigns.
This Agreement and the rights of the parties hereunder shall not be assigned
except with the written consent of all parties hereto.
2.5 Captions. Captions contained in this Agreement are
inserted only as a matter of convenience and in no way define, limit or extend
the scope or intent of this Agreement or any provision hereof.
2.6 Number and Gender. Wherever from the context it appears
appropriate, each term stated in either the singular or the plural shall include
the singular and the plural, and pronouns stated in either the masculine, the
feminine or the neuter gender shall include the masculine, feminine and neuter.
2.7 Severability. If any provision of this Agreement shall be
held invalid or unenforceable, such invalidity or unenforceability shall attach
only to such provision and shall not in any manner affect or render invalid or
unenforceable any other severable provision of this Agreement, and this
Agreement shall be carried out as if any such invalid or unenforceable provision
were not contained herein.
2.8 Amendments. This Agreement may not be amended except in a
writing signed by all of the parties hereto.
<PAGE> 7
2.9 Compliance with Securities Laws. Commencing with the
Effective Date, the Corporation will use its best efforts to comply thereafter
with the applicable provisions of the Securities Act and the Securities Exchange
Act of 1934.
2.10 Restrictions on Resale. Notwithstanding anything
contained herein to the contrary, each Seller agrees that, after the
registration statement described in Section 1.1(a) becomes effective, such
Seller will not sell, transfer, pledge or otherwise dispose of more than 15% of
the total number of shares of Common Stock purchased pursuant to the Offering
and owned by such Seller in any one calendar month, commencing with the month in
which such registration statement becomes effective.
2.11 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument. In addition, this Agreement may contain
more than one counterpart of the signature page and this Agreement may be
executed by the affixing of such signature pages executed by the parties to one
copy of the Agreement; all of such counterpart signature pages shall be read as
though one, and they shall have the same force and effect as though all of the
signers had signed a single signature page.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement on the date first above written.
WORLD WIRELESS COMMUNICATIONS, INC.
By: ________________________________
David D. Singer, President
Number of Shares Purchased Name of Holder
- ----------------------------- --------------------------------
- ----------------------------- --------------------------------
- ----------------------------- --------------------------------
- ----------------------------- --------------------------------
- ----------------------------- --------------------------------
<PAGE> 8
- ----------------------------- --------------------------------
- ----------------------------- --------------------------------
- ----------------------------- --------------------------------
- ----------------------------- --------------------------------
- ----------------------------- --------------------------------
- ----------------------------- --------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF MARCH 31, 2000, AND STATEMENTS OF OPERATIONS FOR THE THREE MONTHS
ENDED MARCH 31, 2000, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 9,112,713
<SECURITIES> 195,605
<RECEIVABLES> 449,412
<ALLOWANCES> (8,686)
<INVENTORY> 354,230
<CURRENT-ASSETS> 9,919,932
<PP&E> 1,672,336
<DEPRECIATION> (1,564,016)
<TOTAL-ASSETS> 10,422,163
<CURRENT-LIABILITIES> 2,495,769
<BONDS> 17,394
0
0
<COMMON> 31,192
<OTHER-SE> 7,877,808
<TOTAL-LIABILITY-AND-EQUITY> 10,422,163
<SALES> 510,815
<TOTAL-REVENUES> 510,815
<CGS> 428,106
<TOTAL-COSTS> 1,351,443
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 107,483
<INCOME-PRETAX> (1,290,865)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,290,865)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,290,865)
<EPS-BASIC> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
