<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
[x] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934.
For the quarterly period ended March 31, 2000.
[ ] Transition report under Section 13 or 15 (d) of the Securities
Exchange Act of 1934.
For the transition period from to
Commission File Number: 0-27387
VOICE MOBILITY INTERNATIONAL, INC.
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(Exact name of small business issuer as specified in its charter)
Nevada 33-0777819
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
180-13777 Commerce Parkway, Richmond, British Columbia, Canada V6V 2X3
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(Address of principal executive offices)
(604) 482-0000
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(Issuer's telephone number)
<PAGE>
(Not Applicable)
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(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer: (1)filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date:
23,394,037 shares of Common Stock as of May 12, 2000
Transitional Small Business Disclosure Format: Yes [ ] No [X]
VOICE MOBILITY INTERNATIONAL, INC.
FORM 10-QSB
FOR THE QUARTER ENDED MARCH 31, 2000
INDEX
PART - I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
<PAGE>
VOICE MOBILITY INTERNATIONAL, INC.
A DEVELOPMENT STAGE COMPANY
CONSOLIDATED BALANCE SHEETS
(See Note 1 - Nature of Operations and Basis of Presentation)
(Expressed in U.S. Dollars)
<TABLE>
<CAPTION>
UNAUDITED AUDITED
AS AT MARCH 31, DECEMBER 31,
2000 1999
$ $
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT
Cash and cash equivalents 976,039 120,712
Accounts receivable [net of allowance for doubtful debts:
March 31, 2000 - $22,246; December 31, 1999 - $22,403] 12,087 16,541
Other receivables 119,829 63,024
Prepaid expenses 136,820 34,100
Inventory 132,368 93,107
- -------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 1,377,143 327,484
Equipment and leasehold improvements [net of accumulated
depreciation and amortization: March 31, 2000 - $248,668;
December 31, 1999 - $195,839] 729,502 524,180
- -------------------------------------------------------------------------------------------------------------
2,106,645 851,664
=============================================================================================================
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT
Accounts payable 393,487 318,169
Accrued liabilities 12,384 154,921
Employee related payables 97,242 75,093
Deferred revenue - 93,016
Notes payable - 812,070
- -------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 503,113 1,453,269
- -------------------------------------------------------------------------------------------------------------
Commitments and contingencies
STOCKHOLDERS' DEFICIENCY
Common stock, $0.001 par value, authorized 50,000,000
[1999 - 50,000,000], 16,605,321 and 10,959,420 shares
outstanding respectively 16,606 10,960
Shares to be issued, nil shares and 3,250,901 shares
outstanding respectively - 3,251
Series A Preferred stock, $0.001 par value, authorized 1,000,000
[1999 - 1,000,000], 1 share outstanding respectively 1 1
Additional paid-in capital 12,471,747 8,677,083
Deferred compensation (863,145) (1,106,656)
Accumulated development stage deficit (10,059,842) (8,221,746)
Other accumulated comprehensive income 38,165 35,502
- -------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' DEFICIENCY (1,603,532) (601,605)
- -------------------------------------------------------------------------------------------------------------
2,106,645 851,664
=============================================================================================================
</TABLE>
SEE ACCOMPANYING NOTES
<PAGE>
VOICE MOBILITY INTERNATIONAL, INC.
A DEVELOPMENT STAGE COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in U.S. Dollars)
UNAUDITED
<TABLE>
<CAPTION>
SEPTEMBER 15,
FOR THE THREE MONTHS ENDED, 1993 TO
MARCH 31, MARCH 31, MARCH 31,
2000 1999 2000
$ $ $
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SALES 93,016 27,385 1,196,689
Less cost of sales 32,620 23,424 726,477
- ------------------------------------------------------------------------------------------------------------
Gross Profit 60,396 3,961 470,212
- ------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Sales and marketing 403,149 129,893 2,015,998
Research and development 778,825 131,929 3,387,188
General and administrative 765,231 121,547 4,025,651
Acquisition fee on recapitalization - - 200,000
Interest expense (income), net (48,713) 21,872 111,216
- ------------------------------------------------------------------------------------------------------------
Loss before extraordinary items 1,838,096 401,280 9,269,841
Extraordinary loss on settlement of
debt - - 790,000
- ------------------------------------------------------------------------------------------------------------
Net loss for the period 1,838,096 401,280 10,059,841
Foreign currency translation gains (losses) 2,663 (18,846) 38,165
- ------------------------------------------------------------------------------------------------------------
Comprehensive loss for
the period 1,835,433 420,126 10,021,676
============================================================================================================
Loss per common share before
extraordinary loss - basic and
diluted (0.08) (0.06)
Loss per common share - basic and
diluted (0.08) (0.06)
============================================================================================================
Weighted average number of common
stock equivalents 22,907,903 6,600,000
============================================================================================================
</TABLE>
SEE ACCOMPANYING NOTES
<PAGE>
VOICE MOBILITY INTERNATIONAL, INC.
A DEVELOPMENT STAGE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in U.S. Dollars)
Unaudited
<TABLE>
<CAPTION>
SEPTEMBER 15,
FOR THE THREE MONTHS ENDED, 1993 TO
MARCH 31, MARCH 31, MARCH 31
2000 1999 2000
$ $ $
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss for the period (1,838,096) (401,280) (10,059,841)
Non-cash items included in net loss
Depreciation and amortization 49,829 14,673 255,426
Stock issued on settlement of amounts due to
Maritime Tel & Tel - - 500,000
Extraordinary loss on settlement of
Ibex Investment Inc. notes payable - - 790,000
Stock option compensation 792,487 - 3,703,067
Change in allowance for doubtful accounts (1,316) - 21,668
- --------------------------------------------------------------------------------------------------------------------------
(997,096) (386,607) (4,789,680)
Change in accounts receivable 4,337 (36,570) (33,502)
Change in prepaid expenses (102,959) 12,064 (135,897)
Change in inventory (39,914) (5,427) (130,379)
Change in accounts payable 77,556 43,163 386,696
Change in accrued liabilities (141,384) - 10,844
Change in other payables (57,248) (17,351) (118,484)
Change in employee payables 22,676 893 95,639
Change in deferred revenue (92,364) 25,806 (1,987)
- --------------------------------------------------------------------------------------------------------------------------
CASH USED IN OPERATING ACTIVITIES (1,326,396) (364,029) (4,716,750)
- --------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchase of equipment and leasehold improvements (258,837) (44,358) (1,002,187)
- --------------------------------------------------------------------------------------------------------------------------
CASH USED IN INVESTING ACTIVITIES (258,837) (44,358) (1,002,187)
- --------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Change in notes payable, net (624,360) (97,485) 448,614
Change in amounts due to Acrex Ventures, Inc. - 442,291 1,420,667
Change in amounts due from shareholders - 43,261 -
Cash proceeds on exercise of warrants 15,750 - 1,529,083
Cash proceeds from stock subscriptions 3,049,033 - 3,232,333
- --------------------------------------------------------------------------------------------------------------------------
CASH PROVIDED BY FINANCING ACTIVITIES 2,440,423 388,067 6,630,697
- --------------------------------------------------------------------------------------------------------------------------
Effect of foreign currency on cash 137 511 64,279
- --------------------------------------------------------------------------------------------------------------------------
INCREASE IN CASH AND CASH EQUIVALENTS 855,327 (19,809) 976,039
Cash and cash equivalents, beginning of period 120,712 37,113 -
- --------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD 976,039 17,304 976,039
==========================================================================================================================
SUPPLEMENT DISCLOSURES OF CASH INFORMATION
Cash paid during the period for interest 13,393 21,872
SUPPLEMENTAL DISCLOSURE OF NON CASH INVESTING
AND FINANCING ACTIVITIES
Stock issued on conversion of shareholder debt - - 250,000
Warrants issued on settlement of Ibex
Investment Inc. notes payable - - 167,000
Warrants issued on settlement of Ernest Gardiner notes payable - - 33,000
Stock and warrants issued to Acrex Ventures Inc. investors - - 1,220,667
Stock issued on settlement of amounts due to Maritime Tel & Tel - - 500,000
==========================================================================================================================
</TABLE>
SEE ACCOMPANYING NOTES
<PAGE>
VOICE MOBILITY INTERNATIONAL, INC.
Notes to Interim Consolidated Financial Information
March 31, 2000
Unaudited
Note 1 - Nature of Operations and Basis of Presentation
Voice Mobility International, Inc., (the `Company') is a Nevada corporation
engaged in the development of unified voice messaging software through its
wholly owned subsidiary, Voice Mobility Inc. The Company is in its
development stage.
The accompanying unaudited interim consolidated financial statements have
been prepared by management in accordance with accounting principles
generally accepted in the United States for interim financial information and
with the instructions to Form 10-QSB and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended March 31,
2000 are not necessarily indicative of the results that may be expected for
the year ended December 31, 2000.
The interim consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the discharge
of liabilities in the normal course of business for the foreseeable future.
The Company incurred an operating loss of $1,838,096 for the three months
ended March 31, 2000 [March 31, 1999 - $401,280], and had a working capital
surplus of $874,030 as at March 31, 2000 [December 31, 1999 - deficiency of
$1,125,785]. Management expects to raise adequate capital to fund its
research, product development and administrative expenses. The ability of the
Company to continue as a going concern is dependent upon achieving a
profitable level of operations and, if necessary, on the ability of the
Company to obtain necessary financing to complete its research and
development.
These interim consolidated financial statements do not give effect to any
adjustments which would be necessary should the Company be unable to continue
as a going concern and therefore be required to realize its assets and
discharge its liabilities in other than the normal course of business and at
amounts different from those reflected in the accompanying consolidated
financial statements.
The interim consolidated financial statements should be read in conjunction
with the Company's Form 10-KSB for the year ended December 31, 1999.
<PAGE>
2. MAJOR CUSTOMERS AND SEGMENTED INFORMATION
The Company operates in one major line of business, the development,
manufacture and marketing of unified voice messaging systems. The Company
carried out its operations and has all its assets in Canada. Sales to one
customer comprise 100% of revenues for the three months ended March 31, 2000
and 1999.
3. NOTES PAYABLE
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
$ $
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Note payable to Ibex Investment Inc. ("Ibex") -
Interest at 10% per annum, due the earlier of
December 31, 2000 or the next equity financing
of VMII. The loan is denominated in Canadian
dollars and is collateralized by a general
security agreement over the assets of the
Company
- 628,770
Other advances are unsecured, non interest bearing
with no fixed repayment terms
- 183,300
- ------------------------------------------------------------------------------------------------
812,070
Less: current portion - 812,070
- ------------------------------------------------------------------------------------------------
- -
================================================================================================
</TABLE>
In March 2000, the Company repaid in full its notes payable to Ibex
Investments Ltd. from funds raised from its February 15, 2000 equity
financing. The Company also issued stock to investors pursuant to its
February 15, 2000 equity financing in exchange for the 183,300 in advances
made in December 1999.
4. SHARE CAPITAL
[a] AUTHORIZED
The Company is authorized to issue up to 50,000,000 shares of common stock,
par value $.001 per share, and 1,000,000 shares of preferred stock, par value
$.001 per share.
In connection with the recapitalization of Voice Mobility Inc. (VMI), Voice
Mobility Canada Limited (VM Canada) issued 6,600,000 VM Canada Exchangeable
Shares. VM Canada is a wholly owned subsidiary of VMII. Each VM Canada
Exchangeable Share is exchangeable for one VMII common share at any time at
the option of the shareholder, and will be exchanged no later than July 1,
2009, and has essentially the same voting, dividend and other rights as one
VMII common share. A share of Series A preferred voting stock, which was
issued to a trustee in trust for the holders of the VM Canada Exchangeable
Shares, provides the mechanism for holders of the VM Canada Exchangeable
Shares to voting rights in VMII. The Company considers each Exchangeable
Share as equivalent to a share of its common stock and therefore the
Exchangeable Shares are included in the computation of basic earnings per
share.
<PAGE>
As at March 31, 2000 the holders of the Exchangeable Shares are entitled to
6,600,000 individual votes in all matters of Voice Mobility International,
Inc. As the Exchangeable Shares are converted into common stock of the
Company, the voting rights attached to the share of Series A preferred voting
stock are proportionately reduced.
On February 15, 2000 the Company issued 2,250,000 units, at $2 per unit for
gross cash proceeds of $4,500,000. Each unit comprises one common share of
the Company and one warrant, entitling the holder to one common share,
exercisable at $5.50 at any time up to February 15, 2005. The Company paid
finders fees of $75,000 to Pacific Western Mortgage Corporation, a
shareholder of the Company and issued 100,000 common shares of the Company to
a third party. Net cash proceeds of $4,425,000 was receivable from the
issuance of the units. As at March 31, 2000 $3,300,000 was received pursuant
to the issuance of these units. No proforma earnings per share information
has been presented as the effect of the issuance is anti-dilutive.
In the first quarter of 2000, 45,000 Series A warrants were exercised for
$15,750, amounting to 45,000 common shares.
[b] STOCK OPTIONS
On June 29, 1999, a stock option plan was adopted by the Company authorizing
an aggregate amount of 5,000,000 common shares to be purchased pursuant to
the exercise of options.
The Stock Option Plan provides for the granting of options which either
qualify for treatment as incentive stock options or non-statutory stock
options and entitles directors, employees and consultants to purchase common
shares of the Company. Options granted are subject to approval of the Board
of Directors or the Stock Option Committee.
In March 2000 the Company authorized amendments to the 1999 Stock Option
Plan, subject to shareholder approval at the next Annual Shareholders
Meeting, which would increase the total number of shares authorized under
such plan from 5,000,000 shares of common stock to 10,000,000 shares of
common stock, and expands the range of grants to include stock appreciation
rights, stock purchase warrants, restricted shares, performance units and
other share based incentive awards.
The Company's 1999 Stock Option Plan and amended 1999 Stock Option Plan
requires the approval of the stockholders prior to June 28, 2000.
The total options outstanding as at March 31, 2000 were 5,219,912. During the
three months ended March 31, 2000 an additional 2,232,996 options were
granted at exercises prices ranging from $0.75 to $9.50 per share.
Accordingly, a stock option compensation expense of $740,644 was determined
in accordance with "APB 25" (Accounting Principles Board Opinion Number 25)
for options granted to employees, and $51,843 in stock option compensation
expense was determined in accordance with "SFAS 123" (Statement of Financial
Accounting Standards Number 123) for options granted to non-employees. No
stock options were exercised during the three months ended March 31, 2000.
<PAGE>
[c] WARRANTS
As at March 31, 2000, the Company has the following common stock warrants
outstanding:
<TABLE>
<CAPTION>
NUMBER OF COMMON EXERCISE PRICE
SHARES ISSUABLE $ DATE OF EXPIRY
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Series A warrants 1,155,000 0.35 December 29, 2000
Series B, C and D warrants 433,000 0.50 December 29, 2000
Series E warrants 601,000 0.35 December 29, 2000
Series F warrants 2,250,000 5.50 February 15, 2005
- ----------------------------------------------------------------------------------------------------
4,439,000
====================================================================================================
</TABLE>
[d] LOSS PER SHARE
The following table sets forth the computation of basic earnings (loss) per
share for the three months ended:
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
2000 1999
$ $
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Numerator
Loss before extraordinary loss (1,838,096) (401,280)
Loss for the period (1,838,096) (401,280)
Denominator
Weighted average number of common stock outstanding 16,307,903 -
Weighted average number of common stock issuable on
exercise of exchangeable shares 6,600,000 6,600,000
- ---------------------------------------------------------------------------------------------------
Average number of common stock
equivalents outstanding 22,907,903 6,600,000
- ---------------------------------------------------------------------------------------------------
Basic and diluted loss per share (0.08) (0.06)
===================================================================================================
</TABLE>
5. RECENT PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative
Investments and Hedging Activities" ("SFAS No. 133") which establishes
accounting and reporting standards requiring that every derivative instrument
be recorded in the balance sheet as either an asset or liability measured at
its fair value. The statement also requires that changes in the derivative's
fair value be recognized currently in earnings unless specific hedge
accounting criteria are met. SFAS No. 133 is effective for fiscal years
beginning after June 15, 2000. The Company has not considered the impact of
SFAS 133 at this time.
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with Interim
Consolidated Financial Statements and related notes.
Certain statements contained in this section and elsewhere in this
registration statement regarding matters that are not historical facts are
"forward-looking statements" (as defined in the Private Securities Litigation
Reform Act of 1995). Because such forward-looking statements include risks
and uncertainties, actual results may differ materially from those expressed
or implied by such forward-looking statements. All statements which address
operating performance, events or developments that our management expects or
anticipates to incur in the future, including statements relating to sales
and earnings growth or statements expressing general optimism about future
operating results, are forward-looking statements. These forward-looking
statements are based on our management's current views and assumptions
regarding future events and operating performance. Many factors could cause
actual results to differ materially from estimates contained in our
management's forward-looking statements. The differences may be caused by a
variety of factors, including but not limited to adverse economic conditions,
competitive pressures, inadequate capital, unexpected costs, lower revenues,
net income and forecasts, the possibility of fluctuation and volatility of
our operating results and financial condition, inability to carry out
marketing and sales plans and loss of key executives, among other things.
Voice Mobility International, Inc. is a Vancouver-based unified
messaging company focused on emergent technologies for telecommunications
providers. We are engaged in the development of unified voice messaging
software and introduced our first retail "e-go" 4.0 in August 1999.
We market our lead product, e-go, both to telephone companies and
Internet service providers. e-go allows subscribers to use a single
electronic mailbox to store and retrieve voicemail, faxes, and e-mail from
many types of devices, including wireline and wireless phones, e-mail or Web
browsers.
All references to "$" or "dollars" refer to U.S. Dollars.
Results of Operations for the three-month periods ended March 31, 2000 and
March 31, 1999:
- --------------------------------------------------------------------------------
Sales - Sales for the three month period ended March 31, 2000 was
$93,016, compared to $27,385 for the three month period ended March 31, 1999.
All sales for the three-month period ended March 31, 2000 is recognition of
deferred revenue from 1999. In March 1999 we signed a trial agreement with a
customer, and on October 2, 1999 completed the first delivery of our e-go 4.0
system to this customer. The revenue was deferred until the completion of the
contract term. All sales for the three-month period ended March 31, 1999 is
from the sale of 3rd party telephony hardware.
Cost of sales - Cost of sales is comprised of software licenses,
telephony hardware, data and voice transmission costs, and installation
costs. Cost of sales was $32,620 and $23,424 for the three month periods
ended March 31, 2000 and 1999 respectively.
<PAGE>
Operating Expenses
Sales & Marketing - Our sales and marketing costs consist primarily of
personnel, advertising, promotions, public relations, trade shows and
business development. Total costs were $403,149 and $129,893 for the three
months periods ended March 31, 2000 and March 31, 1999 respectively. The
increase of $273,256 reflects employee stock option compensation cost of
$35,573 that was determined using the intrinsic method in accordance with APB
25.
The additional increase of $237,683 in sales and marketing expense
between the two periods is a result of an increase of $103,264 in sales and
marketing personnel, $55,922 in advertising and promotions, $55,490 in travel
and participation in industry trade shows, $21,642 in consulting fees, and
$1,365 in general costs. These costs have been incurred as result of market
development efforts.
Research and Development - Our research and development costs consist
primarily of personnel, data and voice transmission, and related facility
costs. Research and development costs were $778,825 and $131,929 respectively
for the three months periods ended March 31, 2000 and March 31, 1999
respectively. The increase of $646,896 in research and development costs
reflects an employee stock option compensation cost of $461,313 that was
determined using the intrinsic method in accordance with APB 25.
The additional increase of $185,583 in research and development costs
between the two periods is the result of an increase of $158,371 in personnel
costs, $8,808 in leased office space and utility costs, $10,054 in data and
voice transmission costs and $8,350 in general research and development costs.
General and Administrative - Our general and administrative costs
consist primarily of personnel costs, professional and legal costs,
consulting fees, travel, and the lease of office space. General and
administrative costs were $765,231 and $121,547 for the three months periods
ended March 31, 2000 and March 31, 1999 respectively. The increase of
$643,684 reflects a stock option compensation cost of $243,758 that was
determined using the intrinsic method in accordance with APB 25. The increase
also reflects a stock option compensation cost of $51,843 that was determined
in accordance with SFAS 123.
The additional increase of $348,083 in general and administrative costs
between the two periods is the result of an increase of $47,478 in personnel
costs, $137,443 in professional and legal costs, $79,627 in consulting fees,
$35,155 in depreciation and amortization costs, $6,506 in lease of office
space, and $41,874 in general administrative costs. General and
administrative costs as a percentage of revenue increased between the two
periods as a result of increases in expenses over the same periods. We
anticipate that general and administrative costs will continue to grow in the
foreseeable future as we implement our market growth strategies.
Interest Expense (Income), Net - Our interest expense is primarily
related to short-term debt. Interest expense (income), net was ($48,713) and
$21,872 for the three month periods ended March 31, 2000 and March 31, 1999
respectively. The difference of ($70,585) in interest expense (income), net
between the two periods primarily resulted from the reversal of a $60,000
interest accrual made in 1999.
Income Taxes - At March 31, 2000 the Company had no US tax net operating
losses. Non capital losses of our operating subsidiary, Voice Mobility Inc.,
are
<PAGE>
restricted by Canadian Income Tax Law and may not be available entirely for
use in future years pursuant to Section 111(4) of the Canadian Income Tax
Act. As at December 31, 1999 the Company has Canadian tax net operating
losses of approximately $3,627,000 that will begin expiring in the year 2000
through to 2006.
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
For financial statement purposes, the Company has recognized a valuation
allowance equal to deferred tax assets for which realization is uncertain.
Fluctuations in Annual and Quarterly Results
Our annual and quarterly operating results may fluctuate significantly
in the future as a result of numerous factors, including:
1. the amount and timing of expenditures required to develop strategic
relationships to enhance sales and marketing;
2. changes in the growth rate of Internet usage and acceptance by consumers
of unified messaging systems;
3. emergence of new services and technologies in the market in which we
compete; and
4. fluctuations of foreign currency exchange rates.
We face foreign currency exchange risk as a majority of our revenue is
denominated in U.S. currency and a majority of operating costs are incurred
in Canadian currency. Significant fluctuations in the foreign exchange
between U.S. and Canadian currency will result in fluctuations in our annual
and quarterly results.
Liquidity and Capital Resources
We do not anticipate any significant sales revenue until the third
quarter of 2000. We also anticipate significant expenditures in the next
twelve months as we increase our research and development efforts, and our
international sales and marketing efforts. As a result, we anticipate our
cash outflows to continue to exceed our cash inflows over the next 12 months.
Our liquidity over the next 12 months is contingent on our raising money
through equity financings to meet our short term needs.
On February 15, 2000 we issued 2,250,000 units at $2.00 per unit for gross
cash proceeds of $4,500,000. Each unit comprised one common share and one
Series F warrant entitling the holder to one common share, exercisable at
$5.50 at any time up to February 15, 2005. As at March 31, 2000 we received a
total of $3,300,000 from the issuance of these units and had $1,200,000
receivable.
As at March 31, 2000 we had 4,439,000 warrants outstanding that would, upon
exercise, provide us a total of $13,206,100 in equity financing. As at May 8,
2000 we received a total of $34,018 from the exercise of 95,050 warrants. If
the remaining 4,343,950 warrants are exercised we will receive $13,172,082
which would be sufficient to provide us with the liquidity necessary to fund
our anticipated working capital and capital requirements for the next twelve
<PAGE>
months. However, there can be no assurance that the remaining warrants will
be exercised.
Our budgeted capital expenditures for the fiscal year ending December 31,
2000 is approximately $827,000 of which $258,000 has been spent. We are under
no legal obligation to purchase the remaining budgeted capital expenditures.
We currently anticipate that cash flow from operations will increase in
the long-term as we increase our sales and marketing activities and introduce
new versions of our software that are technologically feasible. However, we
also anticipate our operating expenses will also increase in the long-term as
a result of the increase in sales and marketing activities, research and
development activities, as well as general and administrative activities. To
the extent that available funds from operations are insufficient to fund our
activities, we may need to raise additional funds through public and private
financing. No assurance can be given that additional financing will be
available or that, if available, it an be obtained on terms favorable to us
and our stockholders. Failure to obtain such financing could delay or prevent
our planned expansion, which could adversely affect our business, financial
condition and results of operations. If additional capital is raised through
the sale of additional equity or convertible securities, dilution to our
stockholders could occur.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities
On February 15, 2000 the Company issued 2,250,000 units at $2.00 per
unit for gross cash proceeds of $4,500,000. Each unit comprises one share of
common stock of the Company and one warrant, entitling the holder to purchase
one share of common stock, exercisable at $5.50 per share at any time on or
before February 15, 2005. The Company paid consulting fees of (i) $75,000 to
Pacific Western Mortgage Corporation, a corporation owned by William E.
Krebs, an officer and director of the Company, and (ii) 100,000 shares of
common stock of the Company to Robin Relph, a third party. Net cash proceeds
of $4,425,000 was receivable from the issuance of the units. As at March 31,
2000 $3,300,000 was received pursuant to the issuance of these units. To the
extent that U.S. securities laws were applicable to the issuance, the
issuance was made in reliance of Section 4(2) of the Securities Act of 1933
and Regulation S thereunder.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security-Holders
None.
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
1) On January 3, 2000, we filed a report on Form 8-K relating to a
press release issued on December 20, 1999 announcing the appointment of Tom
O'Flaherty as President.
2) On March 16, 2000, we filed a report on Form 8-K relating to our
engagement of Ernst & Young LLP as our new independent accountant.
<PAGE>
SIGNATURES
In accordance with 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.
VOICE MOBILITY INTERNATIONAL, INC.
(Registrant)
By: /s/Thomas G. O'Flaherty
-------------------------------------
Thomas G. O'Flaherty,
President and Director
By: /s/James Hewett
-------------------------------------
James Hewett,
Chief Financial Officer and
Principal Accounting Officer
Dated: May 15,2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
Financial Data Schedule March 31, 2000
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 976,039
<SECURITIES> 0
<RECEIVABLES> 154,162
<ALLOWANCES> (22,246)
<INVENTORY> 132,368
<CURRENT-ASSETS> 1,377,143
<PP&E> 978,170
<DEPRECIATION> (248,668)
<TOTAL-ASSETS> 2,106,645
<CURRENT-LIABILITIES> 503,113
<BONDS> 0
0
1
<COMMON> 16,606
<OTHER-SE> 1,586,925
<TOTAL-LIABILITY-AND-EQUITY> 2,106,645
<SALES> 93,016
<TOTAL-REVENUES> 93,016
<CGS> 32,620
<TOTAL-COSTS> 1,947,205
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (48,713)
<INCOME-PRETAX> (1,838,096)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,838,096)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,838,096)
<EPS-BASIC> (0.08)
<EPS-DILUTED> (0.08)
</TABLE>
