<PAGE>
U.S. SECURITIES EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
( ) TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarter Ended: Commission File Number:
June 30, 2000 0-25963
INFORETECH WIRELESS TECHNOLOGY INC.
-------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
NEVADA 88-0350120
--------- ----------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
Suite 214, 5500 - 152nd Street
Surrey, British Columbia V35-8E7
-------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(604) 576-7442
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 filing requirements
for the past 90 days.
Yes X No
---- ----
The number of shares of Common Stock, par value $ .001 per share, outstanding as
of June 30, 2000 is 10,989,522
Transitional Small Business Disclosure Format (check one): Yes No X
--- ---
<PAGE>
INFORETECH WIRELESS TECHNOLOGY INC.
INDEX TO FORM 10-QSB
June 30, 2000
<TABLE>
Page #
<S> <C> <C>
PART I. Financial Information
Item 1 Financial Statements -
Consolidated Balance Sheets (Unaudited)
for June 30, 2000 and December 31, 1999 3
Consolidated Statement of Operations and Deficit for 4
the three months ended June 30, 2000 and 1999; six
months ended June 30, 2000 and 1999 and Inception to
June 30, 2000
Consolidated Statement of Stockholders' Equity 5
(Unaudited) for the six months ended June 30, 2000
Consolidated Statement of Cash Flows (Unaudited) for 6
the three months ended June 30, 2000 and 1999; six
months ended June 30, 2000 and 1999 and Inception to
June 30, 2000
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial 10
Condition and Results of Operation
PART II. Other Information
Item 1. Legal Proceedings 12
Item 2. Changes in Securities and Use of Proceeds 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 12
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INFORETECH WIRELESS TECHNOLOGY INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
JUNE 30, 2000 AND DECEMBER 31, 1999
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Amounts receivable $ 37,105 $ 83,507
Deposits and prepaid expenses 56,368 47,786
---------------------------------------------------------------------------------------------------------------------------------
93,473 131,293
PROPERTY AND EQUIPMENT, net 255,986 204,068
---------------------------------------------------------------------------------------------------------------------------------
$ 349,459 $ 335,361
=================================================================================================================================
LIABILITIES
CURRENT LIABILITIES
Bank indebtedness $ 212,580 $ 4,214
Accounts payable and accrued liabilities 701,754 526,261
Loans payable 300,000 1,500,000
Convertible promissory notes - Series A 100,000 100,000
- others 279,951 834,759
Promissory notes payable, related parties 817,969 869,746
-------------------------------------------------------------------------------------------------------------------------------
2,412,254 3,834,980
-------------------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Common stock, $.001 par value.
Authorized 100,000,000 Class A, voting, participating shares;
Issued: 2000-10,989,522; 1999-2,173,917 10,989 2,174
Special voting stock, $.001 par value.
Authorized 10,000,000 Class B, voting, convertible, non-participating shares;
Issued: 2000-6,902,030; 1999-7,095,750 6,902 7,096
Additional paid-in capital 6,539,057 1,737,732
Deficit accumulated during development stage (8,619,743) (5,246,621)
--------------------------------------------------------------------------------------------------------------------------------
(2,062,795) (3,499,619)
--------------------------------------------------------------------------------------------------------------------------------
$ 349,459 $ 335,361
================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
INFORETECH WIRELESS TECHNOLOGY INC.
CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999
AND INCEPTION TO JUNE 30, 2000
<TABLE>
<CAPTION>
Total from
For the 3 months ended For the 6 months ended inception to
June 30, June 30, June 30, June 30, June 30,
2000 1999 2000 1999 2000
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
EXPENSES
Administration $ 381,629 $ 233,961 $ 837,709 $ 342,057 $ 1,963,317
Depreciation 7,355 2,891 27,909 5,781 60,735
Finance costs 388,281 91,044 415,578 157,360 970,812
Marketing 438,377 121,331 538,473 186,982 1,089,076
Research and development 1,138,505 197,404 1,553,453 468,133 3,480,685
------------------------------------------------------------------------------------------------------------------------
NET LOSS AND COMPREHENSIVE LOSS (2,354,147) (646,631) (3,373,122) (1,160,313) (7,564,625)
DEFICIT ACCUMULATED DURING
DEVELOPMENT STAGE, BEGINNING (6,265,596) (2,550,932) (5,246,621) (2,037,250) -
Deficiency on acquisition of subsidiary
company acquired in a related party
transaction - - - - (1,055,118)
------------------------------------------------------------------------------------------------------------------------
DEFICIT ACCUMULATED DURING
DEVELOPMENT STAGE, ENDING $(8,619,743) $(3,197,563) $(8,619,743) $(3,197,563) $(8,619,743)
========================================================================================================================
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 10,924,687 3,308,582 10,426,602 3,308,582
------------------------------------------------------------------------------------------------------------------------
LOSS PER COMMON SHARE $(0.22) $(0.20) $(0.32) $(0.35)
========================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
INFORETECH WIRELESS TECHNOLOGY INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED JUNE 30, 2000
----------------------------------------------------------------------------------------------------------------------------------
Common stock Special voting stock
-------------------- ----------------------
Additional Total
Number Number paid-in Accumulated stockholders'
of shares Amount of shares Amount capital deficit equity
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Deemed common shares issued to
founders for cash - $ - 1 $ - $ 1 $ - $ 1
Deemed common shares issued for
purchase of InForetech Golf
Technology Inc. - - 5,250,000 5,250 (5,249) (1,055,118) (1,055,117)
Deemed common shares issued for
services 404,250 404 - - - - 404
Deemed common shares issued for cash 225,000 225 1,845,749 1,846 224,774 - 226,845
Deemed common shares issued on
conversion of convertible
promissory notes 300,000 300 - - 299,702 - 300,002
Deemed common shares issued for
services 40,000 40 - - 39,960 - 40,000
Deemed common shares issued for cash 399,667 400 - - 324,350 - 324,750
Deemed common shares issued on
exercise of stock purchase warrants 50,000 50 - - 99,950 - 100,000
Deemed common shares issued on
conversion of promissory notes 125,000 125 - - 124,874 - 124,999
Deemed common shares issued to
settle debt 600,000 600 - - 599,400 - 600,000
Deemed common shares issued for
interest 30,000 30 - - 29,970 - 30,000
Net loss - - - - - (4,191,503) (4,191,503)
----------------------------------------------------------------------------------------------------------------------------------
Deemed balance, December 31, 1999 2,173,917 2,174 7,095,750 7,096 1,737,732 (5,246,621) (3,499,619)
Deemed common shares issued for
services 174,333 174 - - 69,076 - 69,250
Deemed common shares issued to
settle debt 960,332 960 - - 349,040 - 350,000
-----------------------------------------------------------------------------------------------------------------------------------
Deemed outstanding as at February
2, 2000 3,308,582 3,308 7,095,750 7,096 2,155,848 (5,246,621) (3,080,369)
Acquisition of InForetech Wireless
Technology Inc. by InForetech Golf
Technology 2000 Inc. 6,156,000 6,156 - - (6,156) - -
Common stock issued for cash 775,000 775 - - 3,101,225 - 3,102,000
Common stock issued for services 262,500 262 - - 224,741 - 225,003
Common stock issued on conversion
of Class B shares 193,720 194 (193,720) (194) - - -
Common stock issued to settle debt 193,720 194 - - 193,526 - 193,720
Common stock issued on exercise
of stock options 100,000 100 - - 99,900 - 100,000
Compensation related to stock
options - - - - 381,173 - 381,173
Conversion benefit related to
convertible loan - - - - 388,800 - 388,800
Net loss - - - - - (3,373,122) (3,373,122)
-----------------------------------------------------------------------------------------------------------------------------------
Balance, June 30, 2000 10,989,522 $10,989 6,902,030 $6,902 $6,539,057 $(8,619,743) $(2,062,795)
==================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
INFORETECH WIRELESS TECHNOLOGY INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999
AND INCEPTION TO JUNE 30, 2000
<TABLE>
<CAPTION>
Total from
For the 3 months ended For the 6 months ended inception to
June 30, June 30, June 30, June 30, June 30,
2000 1999 2000 1999 2000
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss and comprehensive loss $(2,354,147) $(646,631) $(3,373,122) $(1,160,313) $(7,564,625)
Adjustment to reconcile net loss to
cash used in operating activities:
Compensation related to stock options 381,173 - 381,173 - 381,173
Conversion benefit related to
convertible loan 388,800 - 388,800 - 388,800
Depreciation 7,355 2,891 27,909 5,781 60,735
Expenses paid by issuance of stock - - 294,253 - 364,657
Changes in operating assets and liabilities:
Accounts receivable 26,896 (7,082) 46,402 (12,555) (37,105)
Deposits and prepaid expenses 393,408 (3,720) (8,582) (7,045) (56,368)
Accounts payable and accrued liabilities 262,686 25,840 175,493 147,008 701,753
-----------------------------------------------------------------------------------------------------------------------------
(893,829) (628,702) (2,067,674) (1,027,124) (5,760,980)
-----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (25,137) (20,530) (79,827) (43,438) (316,721)
Advances to related company - - - - (1,055,118)
-----------------------------------------------------------------------------------------------------------------------------
(25,137) (20,530) (79,827) (43,438) (1,371,839)
-----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issued for cash 100,000 477,251 3,202,000 477,251 3,853,599
Loan proceeds 300,000 500,000 300,000 500,000 2,500,000
Loan repayments - - (1,500,000) - (1,600,000)
Borrowings under line of credit 212,580 7,785 208,366 (6,539) 212,580
Promissory notes 49,151 (335,804) (62,865) 99,850 2,166,640
-----------------------------------------------------------------------------------------------------------------------------
661,731 649,232 2,147,501 1,070,562 7,132,819
-----------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH (257,235) - - - -
CASH, BEGINNING 257,235 - - - -
-----------------------------------------------------------------------------------------------------------------------------
CASH, ENDING $ - $ - - $ - $ -
=============================================================================================================================
NON-CASH FINANCING AND INVESTING ACTIVITIES
Common stock issued to settle debt $ - $ - $ - $ - $ 600,000
Common stock issued on conversion of
convertible notes - - 543,720 - 968,720
Common stock issued for interest - - - - 30,000
Common stock issued for services - - 294,253 - 364,657
Common stock issued on conversion of
Class B shares - - 193,720 - 193,720
-----------------------------------------------------------------------------------------------------------------------------
$ - $ - $ 1,031,693 $ - $ 2,157,097
=============================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
INFORETECH WIRELESS TECHNOLOGY INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
------------------------------------------------------------------------------
JUNE 30, 2000
1. UNAUDITED FINANCIAL STATEMENTS
The accompanying unaudited condensed financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with instructions for Form 10-QSB and Item 310 of
Regulation S-B. Accordingly, they do not include all 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 adjustments) considered necessary for a fair
presentation of results of operations have been included in the financial
statements. Results of operations for the six months ended June 30, 2000 are
not necessarily indicative of the results that may be expected for the fiscal
year ended December 31, 2000.
The balance sheet at December 31, 1999 has been derived from audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. A summary of the Company's significant
accounting policies and other information necessary to understand the
consolidated financial statements is included in the Company's audited
financial statements for the year ended December 31, 1999 and 1998 as
contained in the Company's Form 10-KSB for its year ended December 31, 1999.
Such financial statements should be read in connection with these financial
statements.
Since June 30, 2000 the Company has acquired additional financing of
$1,000,000 through the issuance of a convertible note. The Company has
historically relied upon sales of its common stock, debt instruments and
loans from its founder to finance research and development, marketing and
operations. Additional financing will be required for current and long-term
research and development, marketing and working capital. The Company
continues to pursue opportunities for a private equity offering and/or debt
financing. There can be no assurances that any additional financing will take
place or, if so the terms thereof. To the extent of any shortfall in
financing, the Company's product development and commercialization programs
will be delayed, curtailed or prevented, and the Company may be required to
suspend or substantially modify its operations.
2. INCOME TAXES
The Company has reviewed its net deferred tax asset for the six month period
ended June 30, 2000, together with net operating loss carryforwards, and
accordingly has not given recognition of potential tax benefits arising
therefrom. In making this determination, the Company has considered the
Company's history of tax losses incurred since inception and the fact that
the Company is still within the development stage. As a result, the Company's
net deferred tax has been fully reserved.
3. NEW ACCOUNTING STANDARD
In June 1998, the U.S. Financial Accounting Standards Board issued its
Statement of Financial Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities and in June 2000 the companion
statement No. 138 (collectively "SFAS 133"). SFAS 133, which will become
effective for all fiscal quarters for all fiscal years beginning after June
15, 2000, establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments on the balance sheet as
either assets or liabilities with measurement at fair value. Changes in the
fair value of derivatives are recorded each period in the current earnings or
other comprehensive income, depending on the intent and nature of the
derivative instrument. There are many complexities to this new standard and
the Company is currently evaluating the
7
<PAGE>
impact that SFAS 133 will have on its financial statements. The effects of
adopting the new standard are not reasonably determinable at this time, nor
has the Company determined how it will account for the transition provisions
contained in SFAS 133. The Company will adopt SFAS 133 on or before January
1, 2001.
4. RECLASSIFICATION
Certain reclassifications of prior year balances have been made to conform to
current year classifications.
5. REVERSE ACQUISITION OF INFORETECH GOLF TECHNOLOGY 2000 INC.
On February 2, 2000, the shareholders of InForetech Golf Technology 2000 Inc.
("IGT") sold their 100% interest in IGT to the Company in consideration for
3,308,582 Class A common shares and 7,095,750 units consisting of Class B
preference shares of InForetech Holdings Ltd. and Class B special voting
shares of the Company pursuant to a share exchange and finance agreement
dated December 16, 1999. As a result of the transaction, the former
shareholders of IGT held the majority of the shares of the Company.
Accordingly, this transaction is considered an acquisition of the Company
(the accounting subsidiary/legal parent) by IGT (the accounting parent/legal
subsidiary) and has been accounted for as a purchase of the net assets of the
Company by IGT in these consolidated financial statements. The Company had no
business operations at the time of the acquisition. The costs of
recapitalization have been recorded as additional paid-in capital.
These consolidated financial statements are issued under the name of the
Company, but are a continuation of the financial statements of the accounting
acquirer, IGT. IGT's assets and liabilities are included in the consolidated
financial statements at their historical carrying amounts. The comparative
figures presented in the consolidated financial statements are those of IGT.
6. PRIVATE PLACEMENTS
During the six months ended June 30, 2000, the Company completed two private
placements totaling 775,000 common shares. Proceeds from these placements
totaled $3,152,000. $1,500,000 of the proceeds were used to repay a loan from
Mercer Capital Corp.
See Part II "Other Information", Item 2 - Changes in Securities and Use of
Proceeds.
7. CONVERTIBLE LOAN AGREEMENT
Pursuant to a Convertible Loan Agreement dated May 9, 2000, the Company
borrowed $300,000. The loan is secured by a general security agreement over
the Company's assets and promissory note. The loan bears interest at 12% and
matures November 8, 2000.
The lender has the right, at any time prior to the maturity date, to convert
any or all of the balance outstanding into Units of the Company at $5.00 per
unit. Each unit is comprised of one Class A common share and one share
purchase warrant to purchase a Class A share at a price of $5.00 per share.
The warrants expire May 9, 2002.
8
<PAGE>
8. STOCK OPTION PLAN
Pursuant to the terms of the December 16, 1999 Share Exchange and Finance
Agreement the Company has created a stock option plan to allow key employees,
directors, advisors and representatives of the Company to acquire Company
common stock. The company has allocated a total of 4,000,000 options under
this plan.
Stock options outstanding under this plan are summarized as follows:
<TABLE>
<CAPTION>
Option price Stock options
per share outstanding
-----------------------------------------------------------------------------
<S> <C> <C>
$1.00 1,710,000
$3.00 250,000
$7.00 285,000
-----------------------------------------------------------------------------
$1.00 - $7.00 2,245,000
=============================================================================
</TABLE>
The stock options vest over the next 1 to 3 years and the stock option plan
expires on February 1, 2005.
9. STOCK PURCHASE WARRANTS
At June 30, 2000, Class A share purchase warrants were outstanding as
follows:
<TABLE>
<CAPTION>
Number of Class A Exercise Month
Shares Issuable Price of Expiry
------------------------------------------------------------------------
<S> <C> <C>
75,000 $2.00 January 2001
150,000 2.00 February 2001
150,000 2.00 March 2001
100,000 2.00 May 2001
125,000 2.00 June 2001
200,000 2.00 September 2001
120,000 2.00 October 2001
530,000 2.00 December 2001
274,000 2.00 January 2002
62,500 4.00 January 2002
------------------------------------------------------------------------
1,786,500
========================================================================
</TABLE>
No warrants were exercised during the quarter.
10. AMALGAMATION OF SUBSIDIARY COMPANIES
Effective June 30, 2000, the Company's subsidiaries, InForetech Golf
Technology 2000 Inc., InForetech Golf Technology, Inc. and InForetech
Holdings Inc. were amalgamated into one company which continues under the
name InForetech Golf Technology 2000 Inc.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
OVERVIEW
Inforetech Wireless Technology Inc. (the "Company") is a development stage
company, which through its subsidiary Inforetech Golf Technology 2000 Inc.
("IGT") has created a wireless pace of play information system for golf courses
under the name "Informer 2000". The Informer 2000 system uses data from global
positioning satellites (GPS) managed and communicated through a variety of
advanced technologies.
In February, 2000, the Company completed its acquisition of IGT. Pursuant to the
terms of a Share Exchange and Finance agreement dated December 16, 1999, the
Company issued 3,308,582 Class A common shares and 7,095,750 units consisting of
Class B preference shares of Inforetech Holdings Ltd. and Class B special voting
shares of the Company, in exchange for all the issued and outstanding shares of
IGT. As a result of this transaction, the former shareholders of IGT held the
majority of the shares of the Company and accordingly, the business combination
has been accounted for as a reverse takeover with IGT as the deemed acquiror.
These consolidated financial statements reflect the acquisition of IGT by the
Company and are deemed to be a continuation of IGT. As a consequence, the
comparative figures presented in the consolidated financial statements are those
of IGT.
Since inception, IGT has been engaged in research and development of the
Informer 2000 system. During the latter half of 1999, IGT brought in house a
considerable portion of the research and development that it had formerly sub-
contracted. This strategic decision enabled the Company to better monitor the
integration of the various technologies and to position itself for the
transition from prototype to commercial production. This decision also resulted
in a sharp increase in payroll costs as employees replaced sub-contractors.
The Company is currently conducting product evaluations. Early results from
these evaluations indicate that the product is performing well in a number of
respects; the results also indicate the need for further modifications in order
to meet the Company's product performance expectations. The Company anticipates
that its product evaluations and modifications will continue into the third
quarter of 2000 and intends to commercialize the system following their
successful completion.
Over the next twelve months, the Company is projecting a substantial increase in
its workforce as the development of the first product reaches completion and the
product is commercialized.
The forward looking statements in this Item 2 reflect assumptions made by
management and management's beliefs based on information currently available to
it. The Company's future operations, liquidity and capital resources will be
impacted by the Company's ability to timely and successfully complete product
development and testing, the outcome of end-user product evaluations, the
available supply of units to meet anticipated market demand and obtaining
additional financial resources.
RESULTS OF OPERATIONS
Six-month periods Ended June 30, 2000 and 1999.
The Company had no revenue for the six months ended June 30, 2000 or six months
ended June 30, 1999.
The net loss for the 6 months ended June 30, 2000 was $3,373,122 compared with
a net loss of $1,160,313 for the 6 months ended June 30, 1999.
Administration expenses for the six months ended June 30, 2000 were $837,709
compared to $342,057 for the same period in 1999. The increase was primarily due
to a substantial increase in the amount of legal, audit and consulting fees
incurred. In addition, administrative salaries increased period over period as
the Company added to its administrative staff.
10
<PAGE>
Depreciation expense for the 6 months ended June 30, 2000 was $27,909, compared
to $5,781 for the same period in 1999. The increase was a result of an increase
in the property and equipment asset base.
Financing costs for the 6 months ended June 30, 2000 were $415,578 compared to
$157,360 for the same period in 1999. The primary reason for the increase was
the $388,800 beneficial conversion charge related to a convertible loan.
Marketing costs for the 6 months ended June 30, 2000 were $538,473 compared to
$186,982 for the same period in 1999. The primary reason for the increase was an
increase in both salaries and trade show expenses.
Research and development expenses for the 6 months ended June 30, 2000 were
$1,553,453 compared to $468,133 for the same period in 1999. The primary reasons
for the increase were (1) acceleration of the completion of the first stage of
development; (2) the bringing in house of a substantial part of the work that
was formerly undertaken by sub-contractors; (3) and an increase in payroll costs
as the Company undertook a major hiring program of engineers and other technical
staff.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2000 the Company had bank indebtedness of $212,580 compared to bank
indebtedness of $69,628 at June 30, 1999 and $4,214 at December, 31 1999.
For the six months ended June 30, 2000 operating activities used cash of
$2,067,674 compared to $1,027,124 for the same period in 1999. The principal
reason for the increase in cash usage in the current period was the increase in
the net loss as the Company expanded its administration, marketing and research
and development departments.
During the six months ended June 30, 2000 the Company purchased property and
equipment of $79,827 compared to $43,438 for the same period in 1999.
For the six months ended June 30, 2000 financing activities provided cash of
$2,147,501. The Company raised $3,102,000 of equity through a private placement
of common stock, $100,000 from the exercise of options and $300,000 from a
convertible loan, from which loans and promissory notes of $1,562,865 were
repaid.
For the six months ended June 30, 1999, financing activities provided cash of
$1,070,562.The Company raised $ 477,251 of equity and $599,850 in loans and
promissory notes.
For the six months ended June 30, 2000, $543,720, of convertible notes were
converted to shares of the Company's Class A Common Stock and shares of the
Company's Class A Common Stock were issued for $294,253 of services.
Since June 30, 2000 the Company has acquired additional financing of $1,000,000
through the issuance of a convertible note.
The Company has historically relied upon sales of its common stock, debt
instruments and loans from its founder to finance research and development,
marketing and operations. Additional financing will be required for current and
long-term research and development, marketing and working capital. The Company
continues to pursue opportunities for a private equity offering and/or debt
financing. There can be no assurances that any additional financing will take
place or, if so, the terms thereof. To the extent of any shortfall in financing,
the Company's product development and commercialization programs will be
delayed, curtailed or prevented, and the Company may be required to suspend or
substantially modify its operations.
11
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds.
In May 2000, the Company issued 100,000 shares of Class A Common Equity
Stock in connection with the exercise of an option. The Company received
$100,000 in payment of the exercise price. The shares were issued pursuant to
Section 4(2) of the Securities Act of 1933, as amended.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Financial Data Schedule
(b) Reports on Form 8-K:
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Dated: August 11, 2000
---------------
INFORETECH WIRELESS TECHNOLOGY INC.
By: /s/ Robert C. Silzer, Sr.
-------------------------
Robert C. Silzer, Sr., Chief Executive
Officer
(Duly authorized officer)
By: /s/ Robert C. Silzer, Jr.
-------------------------
Robert C. Silzer, Jr., President,
Secretary and Treasurer (Principal
financial officer)
12
