SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] Annual Report pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934
For the fiscal year ended: December 31, 1998
or
[] Transition report pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934
For the transition period from: to
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Commission file number: 33-5902-NY
SUPERIOR WIRELESS COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Nevada 22-2774460
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
210 South Main Street, Suite 900, Salt Lake City, Utah 84111
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (801) 595-0104
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $0.001
Class A Preferred Stock, Par Value $0.001
(Title of Each Class)
Indicate by check mark whether the registrant (1) has filed all reports
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 such filing
requirements for the past 90 days. Yes No X
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best or registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ X ]
The aggregate market value of voting stock held by non-affiliates of
the registrant on August 24, 1999 was $451,067 based on an average bid and ask
price of $0.28125.
The number of shares outstanding of the registrant's Common Stock on
August 24, 1999 was 2,952,229.
DOCUMENTS INCORPORATED BY REFERENCE
None
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INDEX
Page
Number
PART I.
Item 1. Business. 3
Item 2. Properties. 11
Item 3. Legal Proceedings. 11
Item 4. Submission of Matters to a Vote of Security Holders. 11
PART II.
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters. 11
Item 6. Selected Financial Data. 13
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 13
Item 8. Financial Statements and Supplementary Data. 15
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. 15
PART III.
Item 10. Directors and Executive Officers of the Registrant. 15
Item 11. Executive Compensation. 16
Item 12. Security Ownership of Certain Beneficial Owners and Management. 16
Item 13. Certain Relationships and Related Transactions. 16
PART IV.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. 17
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PART I.
Our Annual Report on form 10-KSB ("10-KSB") contains forward-looking
statements made within the meaning of Section 27A of the Securities Act of 1933,
as amended (the "Act") and Section 21E of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). Such statements are not based on historical
facts and are based on current expectations, including, but not limited to,
statements regarding the Company's plans for future development and the
operation of its business. Words such as "anticipates," "expects," "intends,"
"plans," "believes," "seeks," "estimates," and similar expressions identify such
forward-looking statements. These statements are not guarantees of future
performance and are subject to certain risks and uncertainties that could cause
actual results to differ materially from those expressed or forecasted. Among
the factors that could cause actual results to differ materially are the
following: a lack of sufficient capital to finance our business plan on
commercially acceptable terms; changes in labor, equipment and capital costs;
our inability to attract strategic partners; general business and economic
conditions; and the other risk factors described from time to time in our
reports filed with the Securities and Exchange Commission ("SEC"). You should
not rely on these forward-looking statements, which reflect only our opinion as
of the date of this 10-KSB. We do not assume any obligation to revise
forward-looking statements. You should also carefully review the risk factors
set forth in other reports or documents we file from time to time with the
Securities and Exchange Commission, particularly the quarterly reports on Form
10-QSB and any current reports on Form 8-K.
ITEM 1. BUSINESS
The Company
Superior Wireless Communications, Inc. (hereinafter referred to as the
"Company" or "Superior") had been engaged in the business of accumulating
wireless cable licenses. This business included the accumulation of certain
Multipoint Distribution Service (hereinafter referred to as "MDS"), Multichannel
Multipoint Distribution Service (hereinafter referred to as "MMDS"),
Instructional Television Fixed Service (hereinafter referred to as "ITFS") and
Low-Power Television Station (hereinafter referred to as "LPTV") rights
(collectively MDS, MMDS, ITFS and LPTV are sometimes hereinafter referred to as
"Wireless Cable Rights" or "Wireless Cable Channels"). The Company had obtained
these rights through purchases, leases and lease-purchase agreements.
As of December 31, 1998, the Company was seeking to finance the
entrance into the Internet industry. All plans to continue with wireless cable
development plans have been abandoned. It is the management's position that
under the current industry environment, wireless cable does not have the ability
to attract capital. The Company explored alternate uses for the Wireless Cable
Rights, but the small to mid-sized nature of the Company's markets did not
appear to support such uses.
Subsequent Events
As of March 31, 1999, the Company sold substantially all of its
Wireless Cable Rights to assist it in paying off certain debt and enabling the
Company to pursue alternative ventures in the Internet industry.
On August 1, 1999, in accordance with the terms and provisions of a
certain Purchase Agreement dated as of June 1, 1999, by and between the Company
and Media Rage of Utah, Inc., a Utah corporation ("Media Rage"), 325,000 shares*
of the Company's Common Stock, $.001 par value per share ("Common Stock"), were
issued to former shareholders of Media Rage in consideration of their sale,
assignment and transfer to the Company of all of the outstanding shares of
capital stock of Media Rage. The Company also agreed to issue 50,000 shares* of
its Common Stock to a third party for services in connection with such
transaction. As a result of this acquisition and the issuance of 375,000 shares*
of the Company's Common Stock, the Company had issued and outstanding total
number of 2,952,229 shares of Common Stock as of August 16, 1999.
* Reflects the effects of a reverse 1 for 20 stock split of the
Company's Common Stock. See "Business -- Background."
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Media Rage provides customers with user friendly software solutions to
design and operate E-commerce web sites, including shopping cart technology.
Media Rage also offers custom website design and provides marketing information
and support services for its clients.
The Company will pursue additional acquisition opportunities to
facilitate the expansion of its Internet business. The Company currently has
made no commitments or agreements with respect to any such other acquisition
transaction. There is no guarantee that the Company will be able to identify
another suitable acquisition target or consummate any such acquisition in the
future.
Background
On December 12, 1991, Marrco Communications, Inc. (hereinafter referred
to as "Marrco") was founded for purposes of accumulating Wireless Cable Rights
in domestic markets.
On March 14, 1994, in accordance with the terms of a certain Purchase
Agreement dated as of March 14, 1994, by and between the Company and Marrco,
6,500,000 shares of the Company's Common Stock were issued to Marrco or its
nominees in consideration of Marrco's sale, assignment and transfer to the
Company of all rights, title and interest of Marrco in and to all inventory,
contract rights, license rights, accounts, furniture, equipment, goods,
documents, instruments, money, marketable securities and all intangible assets
of every kind and description of Marrco, without exception, subject to the
assumption by the Company of all debts and liabilities of Marrco. Pursuant to
the Agreement, the business of the Company that existed on March 13, 1994, was
distributed to Monroe Arndt, the President and a director of the Company, prior
to his resignation on March 14, 1994.
On October 25, 1996, the name of the Company was changed to Superior
Wireless Communications, Inc. and each of the 6,004,836 shares of then issued
and outstanding common stock of the Company were exchanged for one share of
Class A Convertible Cumulative Preferred Stock, par value of $.001 per share
(the "Class A Preferred Stock"). Pursuant to the terms of the Class A Preferred
Stock, each share of Class A Preferred Stock outstanding as of October 16, 1998
(the "Automatic Conversion Date"), was automatically converted into five shares
of the Company's Common Stock on the Automatic Conversion Date. Holders of an
additional 3,767,501 shares of Class A Preferred Stock that were issued after
the Automatic Conversion Date agreed to convert their shares into shares of the
Company's Common Stock at the same conversion rate.
Effective August 16, 1999, the Company effectuated a reverse 1 for 20
stock split of the Common Stock. In connection with the reverse stock split, all
previously outstanding shares of Class A Preferred Stock were converted into
shares of Common Stock. With the issuance of 375,000 shares of Common Stock in
connection with the Media Rage acquisition, the Company had a total of 2,952,999
shares of Common Stock outstanding and no shares of Preferred Stock outstanding,
following the reverse stock split as of August 16, 1999.
Industry Overview
General.
The Internet, a network of hundreds of interconnected, separately
administered public and commercial networks, has emerged as a global
communications medium enabling millions of people to share information and
conduct business electronically. During the past few years, the number of
Internet users, advertisers and content developers and businesses online has
grown dramatically. With readily available, low-cost Internet access, consumers
and businesses are making increased use of Web browsers, electronic mail,
corporate intranets, telecommuting, online advertising and electronic commerce.
The Company is specifically targeting E-commerce as its industry within
the Internet. Through the Media Rage acquisition, the Company believes that it
can position itself to provide inexpensive E-commerce solutions to businesses.
According to Forrester Research, within the next five years, online commerce
will exceed $340 billion. The Company believes that this growth in the number of
users will drive more substantial increases in Internet advertising, which
International Data Corporation ("IDC") estimates will grow to $2.9 billion in
2000.
Internet usage continues to be stimulated by a number of factors,
including the emergence of the World Wide Web, the increasing sophistication of
Internet browsers and Web-enabled software, the availability of low-cost,
flat-rate pricing for Internet access and online services, and the wealth of
increasingly useful information published
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on the Internet. Increased Internet usage and the availability of powerful new
tools for the development and distribution of Internet content have led to a
proliferation of Internet-based services, such as advertising, online magazines,
specialized news feeds, interactive games and educational and entertainment
applications, that are increasingly incorporating multimedia information such as
video and near-CD-quality audio clips. The Internet has the potential to become
a platform through which consumers and businesses easily access rich multimedia
information and entertainment, creating new sources of revenue for advertisers,
content providers and businesses. The growth of Internet advertising and
commerce depends, in part, on the ability of advertisers and online merchants to
deliver a compelling multimedia message to attract viewers and potential
customers.
It is estimated that approximately 45% of US households have personal
computers and that 70% of businesses already have Internet access.
The Company believes that through the acquisition of Media Rage and
other potential acquisition targets, it can exploit the growth of the Internet,
and specifically that of commerce conducted online. The Company currently has
made no commitments or agreements with respect to any such other acquisition
transaction. There is no guarantee that the Company will be able to identify
another suitable acquisition target or consummate any such acquisition in the
future.
The Internet and Internet Access.
The growth of the Internet is well documented.
o Growth in the Internet is about 10% per month.
o Every two seconds the Internet has a new subscriber.
o Use of the Internet file search and retrieving tool is
currently growing at 1,000 percent annually.
o There are more than 10 million host computer systems connected
to the Internet.
o Transactional commerce on the Internet is estimated at $8
billion today, and by the year 2002 will be at $300 billion.
o User population of the Internet is approaching over 1000
million people.
Business Integration in a World of Wireless E-commerce.
Global villages, virtual communities, information superhighways, and
gigabit networks have been used to describe the world where teleconferencing,
interactive television, traditional on-line information services, and public
telephone systems converge. The U.S. information services market is huge, and
its shift toward digital media is a change of monumental proportions. Today's
communication networks are not ready to meet the demands being placed upon them.
The trend towards digital delivery will require improvements to the underlying
communication infrastructure.
The World Wide Web.
The World Wide Web is the multimedia part of the Internet. It is the
primary system used on the Internet to find and transfer information. It has,
moreover, become (with the exception of e-mail) the most popular and the most
promising and active source for business use.
The Web offers incredible diversity for business, education,
communication, and entertainment. Web pages are available on the Internet in
tens of thousands of styles and subjects, with almost as many reasons for
posting them on the Web. For example, there are thousands of sites in each of
these subject areas:
o Commercial, Shareware, Freeware software
o Business, marketing, commerce
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o Finance, stock market, corporate information
o K-12 education
o Online books
o Online magazines
o Government sites and information
o Legal information
o Health and medical information
o Daily and categorized news
o Travel/booking/ticketing information and purchase
o Reference books
o Scientific sites covering archeology through zoology
o History
o Museums and libraries
Virtually all knowledge in the history of mankind may someday soon be
on the Web. For example, the Vatican has started to download images of 150,000
original documents dating from as early as the second century A.D. on the
Internet. The Securities and Exchange Commission also maintains free Internet
access to its library of corporate records.
Business Opportunity
The Company will initially market its products and services to small
and home-based businesses. The Company believes that there is increasing demand
for low-cost, E-commerce solutions among small businesses with limited capital
resources that seek to capitalize on E-commerce opportunities.
It is the Company's belief that small businesses are the last business
sector to tap into the explosive Internet industry with E-commerce.
Many of the existing Web sites do not have an effective marketing plan
to drive traffic to their Web site. Small businesses that do set up a Web site,
generally pay a large up-front fee for the website design; the designer
generally provides very little additional marketing support. Small businesses
are starving for information on how to market their sites and exploit
opportunities for commerce through the Internet.
Business Objective
Through its marketing plan, the Company is focused on attracting a high
volume of relatively low-end E- commerce Web sites. The target market is small
businesses that may otherwise not have E-commerce Web sites or shopping carts.
By making the process simple, including effective marketing tools for business
subscribers to use and through strategic alliances with trade groups such as the
National Association of the Self-employed, the Company can tap into a new group
of E-commerce businesses.
The Company plans to grow through the acquisition of additional small
profitable Internet businesses, primarily those involved in Web site hosting.
The Company currently has made no commitments or agreements with respect to any
such other acquisition transaction. There is no guarantee that the Company will
be able to identify another suitable acquisition target or consummate any such
acquisition in the future.
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Competition
The markets for consumer and business Internet services are extremely
competitive, and the Company expects that competition will intensify in the
future. The Company competes primarily with other providers of E-commerce Web
site solutions, such as Yahoo Store, Shopbuilder and Shopsite (recently acquired
by Gateway). Although many of these competitors have larger customer bases and
greater resources than the Company, their products are limited in functionality
as compared to the Company's products. As of the date of this Annual Report, the
Company is unaware of any competing E-commerce design solutions that provide a
comprehensive, online marketing tutorial system.
The Company also competes with content aggregators that seek to provide
a "one-stop" shop for Internet and online users. Their success depends on
capturing audience flow, providing ease-of-use and offering a range of content
that appeals to a broad audience. Their business models are predicated on
attracting and retaining an audience for their set of offerings. Leading
companies in this area include America Online, CompuServe, Excite, Inc.
("Excite"), Microsoft and Yahoo! Inc.("Yahoo!"). In this market, competition
occurs in acquiring both content providers and subscribers. The principal bases
of competition in attracting content providers include quality of demographics,
audience size, cost- effectiveness of the medium and ability to create
differentiated experiences using aggregator tools. The principal bases of
competition in attracting subscribers include richness and variety of content
and ease of access to the desired content. The proprietary online services such
as America Online, CompuServe and MSN have the advantage of a large customer
base, industry experience, many content partnerships and significant resources.
Many of the Company's competitors and potential competitors have
substantially greater financial, technical and marketing resources, larger
subscriber bases, longer operating histories, greater name recognition and more
established relationships with advertisers and content and application providers
than the Company. Such competitors may be able to undertake more extensive
marketing campaigns, adopt more aggressive pricing policies and devote
substantially more resources to developing Internet services or online content
than the Company. There can be no assurance that the Company will be able to
compete successfully against current or future competitors or that competitive
pressures faced by the Company will not materially adversely affect the
Company's business, operating results or financial condition. Further, as a
strategic response to changes in the competitive environment, the Company may
make certain pricing, service or marketing decisions or enter into acquisitions
or new ventures that could have a material adverse effect on the Company's
business, operating results or financial condition.
Government Regulation
The Federal Government and state governments generally have not heavily
regulated business on the Internet, as a whole. There has been talk of new
legislation, on both a Federal and state level, to increase regulation of the
Internet and potentially exploit new taxation revenue sources. The Company
cannot predict the impact, if any, that future regulation or regulatory changes
might have on its business.
In the United States, the Company is not currently subject to direct
regulation other than pursuant to laws applicable to businesses generally.
Adverse changes in the legal or regulatory environment relating to the
interactive online services and Internet industry in the United States could
have a material adverse effect on the Company's business, financial condition
and operating results. A number of legislative and regulatory proposals from
various international bodies and foreign and domestic governments in the areas
of telecommunication regulation, access charges, encryption standards, content
regulation, consumer protection, advertising, intellectual property, privacy,
electronic commerce, and taxation, among others, are now under consideration.
The Company is unable at this time to predict which, if any, of such proposals
may be adopted and, if adopted, whether such proposals would have an adverse
effect on the Company's business, financial condition and operating results.
Year 2000 Implications
Many currently installed computer systems and software products are
coded to accept only two-digit entries in the date code field and cannot
distinguish 21st century dates from 20th century dates. These date code fields
will need to distinguish 21st century dates from 20th century dates and, as a
result, many companies' software and computer systems may need to be upgraded or
replaced in order to comply with such "Year 2000" requirements. The Company is
in the process of assessing the Year 2000 issue. The Company believes that it
can protect itself from the Year 2000 issue by purchasing only certified "Y2K"
compliant hardware and software. The Company has not incurred material costs to
date in this process, and currently does not believe that the cost of additional
actions will
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have a material effect on its results of operations or financial condition.
Although the Company currently believes that its systems are Year 2000 compliant
in all material respects, its current systems and products may contain
undetected errors or defects with Year 2000 date functions that may result in
material costs. Although the Company is not aware of any material operational
issues or costs associated with preparing its internal systems for the Year
2000, the Company may experience serious unanticipated negative consequences
(such as significant downtime for one or more of its media properties) or
material costs caused by undetected errors or defects in the technology used in
its internal systems. In addition, the Company utilizes third-party equipment,
software and content, including non- information technology systems ("non-IT
systems"), such as its security system, building equipment and non-IT systems
embedded microcontrollers that may not be Year 2000 compliant. The Company is in
the process of developing a plan to assess whether these third parties are
adequately addressing the Year 2000 issue and whether any of its non-IT systems
have material Year 2000 compliance problems. Failure of such third-party
equipment, software or content to operate properly with regard to the year 2000
and thereafter could require the Company to incur unanticipated expenses to
remedy any problems, which could have a material adverse effect on its business,
results of operations, and financial condition. Finally, the Company is also
subject to external forces that might generally affect industry and commerce,
such as utility or transportation company Year 2000 compliance failures and
related service interruptions. Furthermore, the purchasing patterns of
advertisers may be affected by Year 2000 issues as companies expend significant
resources to correct their current systems for Year 2000 compliance. See Item 7,
Management's Discussion and Analysis of Financial Condition and Results of
Operation.
Products and Services
E-commerce Solutions
The Company offers an instant E-commerce solution for existing or new
Web sites, which allows business customers to establish, operate and maintain
complete E-commerce Web sites. This systems allows simple point-and- click site
creation, catalog deployment and interfacing merchant accounts. A user simply
calls up a URL (internet address) that has been assigned, and by a simple, fill
in the blank procedure, builds Web pages with color backgrounds, images, titles,
text and forms, product descriptions, pricing.
The E-commerce shopping cart module can be added to any Web site within
minutes. The E-commerce shopping cart module gives small businesses control over
product inventory, tax information, shipping, product options, and pricing.
Company control is achieved because changes can be made easily from any Web
browser. The "fill in the blank" technology makes updates and changes as simple
as filling out a questionnaire. This makes the Company's E-commerce solution
possibly the most advanced and simple product to set up an online store. The
features of the Company's E-commerce system are as follows:
o Unlimited product inventory capabilities
o Secure ordering and order retrieval
o Complete customizable tax and shipping data base
o Ability to accept thousands of orders daily
o Add, Delete, or Modify any product from browser 24 hours a day
o E-mail notification of all orders
o Real time credit card processing available
o Java scripted up sale on each order to related product
o Self generating product index that changes instantly on all
product updates
o Template or custom HTML display of products
o Option capability for quantity, size, color, etc.
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o Help sections throughout the entire system
Company Owned Web Site Replication
Media Rage has also developed a self replicating Web site creation
system that allows customers to easily provide Web pages to their customers or
independent representatives. These sites can be owned and operated independently
or can be used as a storefront to a central store. The individually owned sites
promote their own products or services. Each individual Web page has its own
backroom or Web site administration section. The site's backroom can only be
accessed through the hosting company's main page driving repeat traffic to the
Company's Web site.
Having many Web sites or storefronts linked to a central store or site
is a model that is used by the most successful companies on the Internet.
Companies like Amazon.com and Geocities.com have used this model to attract
millions of customers to their sites. Any traffic generated from a storefront to
the central store is electronically tracked for use in affiliate programs or in
providing valuable knowledge about Web traffic.
Revenues to the Company are collected in several ways: set up fees,
hosting fees, and custom work. The Company performs the setup and hosting
services. We also assist in the customer service and custom design work. The
revenues generated in these areas are shared with the Company. Pricing and
revenue splits for the independent pages is negotiated and adjusted to meet the
goals and level of service required by each customer.
Merchant Accounts
The Company is a re-seller of merchant account leases provided to
business owners to facilitate their E- commerce transactions. The Company
collects revenues from reselling merchant accounts in the form of direct
payments from banks, transaction fees and a percentage of total sales generated
by the merchant account.
Marketing Tutorial Services
The Company has developed a marketing tutorial system that allows
customers to learn and implement proven methods of online marketing. Based on
management's experience and knowledge of the Internet industry, most companies
that sell shopping cart solutions do not provide their customers with the tools
and training necessary to market their products and services. On the other hand
sites that provide marketing information and know-how generally do not have the
technology in place to enable implementation of their marketing solutions. The
Company believes that its automated marketing tutorial system provides the
Company with a distinct advantage over its existing competitors.
Marketing Strategies
The Company will employ the following strategies to market its products
and services:
Outside Sales Representatives.
The Company intends to use outside sales representatives to generate
sales to large trade organizations. Sales representatives commonly and
extensively target members of trade organizations. The trade organization
receives a portion of the revenues derived from its members creating a "win-win"
for both the organization and its members. As of August 23, 1999, the Company
had two sales representatives.
Company Newsletter.
The Company intends to build an E-zine to market its products and
services to thousands of potential subscribers. This newsletter will include
helpful marketing and E-commerce information every week. The Company intends to
use its subscriber list to offer new services, upgrades, or related products
that all generate predictable monthly revenues for our company. The newsletter
will be used for personal calls, education courses and autoresponders to
encourage the free users to take advantage of our fee based upgrades and
services. The newsletter will also allow the Company to develop an ongoing
relationship with thousands of potential customers. The Company has not yet
prepared or published an E-zine yet and anticipates that the first publication
will be in October of 1999.
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Promotional Programs.
The Company intends to offer free Web pages and 10-day trial
subscriptions to promote its shopping cart system and technology. This is
another service that will give us a large database of potential paying customers
whom are using and testing our technology.
Channels of Distribution.
The Company will focus on large organizations such as trade
organizations, chambers of commerce, mortgage and real estate brokers, and
network marketing companies. Relationships within these organizations will allow
the Company to penetrate a large group of small businesses with fewer points of
sale.
Pricing.
The Company has developed a pricing structure that is designed to
facilitate entry and limit the customer's ability to "exit" the relationship
short term as each customer will sign a 12 month, exclusive hosting and
development contract.
The Company estimates that E-commerce sites will be sold at $120 each;
payable in $10 monthly payments. Secure hosting for the Web sites will be
charged at $39.95 monthly for 100 items or less. An additional $20 is billed
monthly for each 100 additional items added, i.e., 120 items would cost $59.95
monthly. Each site, even if paid in full upfront, comes with a minimum 12-month
contract for exclusive hosting and Web development for the site.
The Company will also charge a .5-2% volume fee on all commerce passing
through any sites it sells.
Advertising.
The Company will incorporate the following 6 avenues to drive traffic
to its site:
1. Submit articles for publication to e-zines. This method has
consistently proven to be one of the most effective methods of
driving qualified visitors to Web sites.
2. Run classified ads in targeted e-zines. Once again e-zine
advertising offers the best bang for the buck on the Internet.
The cost to advertise in most e-zines is 20 to 50 dollars per
week and the Company can reach several hundred thousand
potential customers at a very low cost.
3. Search engine optimization and doorway pages. The search
engines can still reach thousand of customers quickly and
inexpensively. Pages need to be optimized to target certain
keywords and the Company will create specialized pages that
will rank high in the different search engines under different
keyword phrases.
4. Private label our services to be offered through high traffic
sites with established customer base
5. Online press releases
6. Classified advertising and banners.
These marketing methods will provide the most exposure for the least
amount of money. The methods are proven and are used by some of the most
successful sites on the Internet. The back end education will position us as a
leader in the E-commerce movement. The ongoing support is what is most needed by
small businesses today.
Employees
As of December 31, 1998, the Company had only one employee. As of
August 24, 1999, the Company and its subsidiary had six employees.
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ITEM 2. PROPERTIES
The Company currently rents approximately 300 square feet of office
space for its corporate offices, under a rental arrangement with the Company's
President. The Company's office is located at 210 South Main Street, Suite 900,
Salt Lake City, Utah, 84111. The rent has been accrued at a rate of $500 per
month and was converted into stock of the Company in July of 1999.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The Company's Common Stock is trading on the Over-the-Counter Bulletin
Board under the symbol "SUWL." As of August 23, 1999, the Company had 748
holders of record. The following table sets forth, on a per share basis for the
period shown, the high and low prices of the Common Stock and the Preferred
Series A Stock as reported on the OTC Bulletin Board. The following quotations
reflect inter-dealer prices, without retail mark-up, mark-down or commission and
may not represent actual transactions, nor a liquid trading market.
Closing
Price
High Low
Fiscal Year Ended December 31, 1996
First Quarter $1.75 $0.375
Second Quarter $1.00 $0.375
Third Quarter $0.75 $0.25
Fourth Quarter $0.75 $0.25
Fiscal Year Ended December 31, 1997
First Quarter $0.50 $0.0625
Second Quarter $0.25 $0.0625
Third Quarter $0.25 $0.0625
Fourth Quarter $0.25 $0.03125
Fiscal Year Ended December 31, 1998
First Quarter $0.50 $0.03125
Second Quarter $0.25 $0.03125
Third Quarter $0.25 $0.03125
Fourth Quarter $0.25 $0.03125
Fiscal Year Ended December 31, 1999
First Quarter $0.05 $0.03125
Second Quarter $0.25 $0.05
Third Quarter (through August 16, 1999) $0.281 $0.187
The Company has never declared or paid any cash dividends on the Common
Stock and does not presently intend to pay cash dividends on the Common Stock in
the foreseeable future. The Company intends to retain any future earnings for
reinvestment in its business.
ITEM 6. SELECTED FINANCIAL DATA
The selected historical financial data presented below as of December
31, 1997 and 1998 and for the years ended December 31, 1997 and 1998 were
derived from the financial statements of the Company, which were audited by
Smith & Company, independent certified public accountants, and which are
included elsewhere in this Form 10- KSB. This selected financial data should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Company's financial statements
(including the notes thereto) included elsewhere in this Form 10-KSB.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
The Company was incorporated on July 24, 1984, in Nevada as Diversified
Ventures, Ltd. On March 27, 1987, the name was changed to M.V.I.D. International
Corporation. On April 6, 1994, the name was changed to Micro-Lite Television.
Prior to March 14, 1994, the Company sold an automobile anti-theft protection
system to customers through an arrangement with dealerships, principally in New
Jersey. On March 16, 1994, the Company acquired the assets and liabilities of
Marrco Communications, Inc. ("Marrco") and is continuing the business activities
of Marrco. Prior business operations were assumed by the former President of the
Company. Marrco was founded on December 12, 1991, for purposes of accumulating
Wireless Cable Rights in domestic markets.
On October 25, 1996, the name of the Company was changed to Superior
Wireless Communications, Inc. and each of the 6,004,836 shares of then issued
and outstanding common stock of the Corporation were exchanged for one share of
preferred stock designated as Class A Convertible Cumulative Preferred Stock
(the "Class A Preferred Stock"), par value of $.001 per share. The Class A
Preferred Stock carried a ten percent (10%) dividend, which could be paid in
common stock, and was convertible into Common Stock of the Company as of October
25, 1998 (the "Conversion Date"). Under the terms of the Class A Preferred
Stock, all shares outstanding as of October 16, 1998, automatically converted
into common stock at a rate of five shares of common stock for every one share
of Class A Preferred Stock. This resulted in the automatic conversion of
6,541,416 shares of Class A Preferred Stock into 32,707,080 shares of common
stock. Simultaneously with the reverse stock split described below, the holders
of an additional 3,767,501 shares of Class A Preferred Stock that were issued
after October 16, 1998, converted their shares at the same rate of five shares
of common stock for every one share of Class A Preferred Stock.
Effective August 16, 1999, the Company effectuated a reverse stock
split at a rate of twenty-to-one. This resulted in 2,577,229 shares of common
stock being outstanding as of that date and no preferred shares are outstanding.
The Company issued 375,000 shares of its post reverse-split common stock for the
acquisition of Media Rage of Utah, Inc. This resulted in 2,952,229 shares of
common stock outstanding as of August 16, 1999.
Results of Operations for the Two Years Ended December 31, 1998
Revenues
The Company currently did not have any ordinary and significant source
of revenues during the 1998 or 1997 fiscal years. However, the Company did sell
some of its wireless cable channels rights and other assets. The Company
recorded revenues of approximately $7,000 for the year ended December 31, 1998
from sale of assets and licenses, as compared to sales of approximately $64,000
for the year ended December 31, 1997. The Company's revenue for the 1998 & 1997
fiscal year was derived from the sale of certain fixed assets to a related
party. The Company also recorded $27,616 in income for forgiveness of
indebtedness in the year ended December 31, 1998.
Cost of Sales
The net book value of the fixed assets sold for the period ended
December 31, 1998 was zero. This is compared to cost of sales of $45,341 in the
year ended December 31, 1997. The Company also abandoned assets with a book
value of $65,483 and wrote off licenses valued at $400,000 that had expired
during the current fiscal year.
Selling, General and Administrative Expenses
The Company incurred total selling, general and administrative expenses
("SG&A") of $228,038 for the year ended December 31, 1998 as compared to
$258,785 for the fiscal year ended December 31, 1997. This represents a decrease
of 12% of SG&A. The decrease was due to the Company's virtual inactivity. During
the 1998 and 1997 fiscal years, the Company had only one employee who accrued a
salary of $72,000 per year, none of which was paid.
11
<PAGE>
Depreciation and Amortization
Depreciation and amortization for the year ended December 31, 1998, was
equal to $104,487, as compared to depreciation and amortization of $101,195 for
the fiscal year ended December 31, 1997.
Interest Expense
The Company incurred interest expense of $240,099 in the fiscal year
ended December 31, 1998. This represented an increase of 28% from the interest
expense of $187,956 for the year ended December 31, 1997. The Company continues
to accrue interest on all notes payable and amounts due to related parties.
Income Tax Benefit
For the fiscal year ending December 31, 1998, the Company had net
operating loss carryforwards equal to approximately $4,200,000. Approximately
$1,000,000 of this net operating loss was carried forward from the business of
Marrco and is limited under Internal Revenue Code Section 381. This limits the
use of this portion of the Company's net operating loss carryforward to
approximately $70,000 per year. The Company has not recognized any of this tax
benefit as an asset due to uncertainty of future income.
Extraordinary Item
During 1998, the Company issued 134,145 shares of stock to retire
liabilities in the amount of $360,366 and pay for expenses in the amount of
$25,768. The fair market value of the stock given was $16,768, giving rise to
extraordinary gain of $369,366.
Net Loss
The Company recorded a net loss of $(530,139) for the fiscal year ended
December 31, 1998, as compared to a net loss of $(596,551) for the fiscal year
ended December 31, 1997.
Liquidity and Capital Resources
The Company had a working capital deficit of $2,538,779 as of December
31, 1998. Approximately $1,286,985 of its liabilities represented amounts owed
to related parties, in particular to the largest shareholder of the Company, the
Company's current President, another director of the Company and a wholly owned
corporation of the Company's largest shareholder. The Company currently has few
sources of working capital other than related parties and asset sales.
Certain Indebtedness
In 1994, the Company began a private placement of certain Convertible
Notes that entitled the purchasers to convert the notes into stock of the
Company at various terms. As of December 31, 1994, the Company had received
gross proceeds of $51,000 from one individual. During the first quarter of 1995,
the Company received an additional $150,000. During 1996, the Company received
additional proceeds of $566,100. All of these notes, including interest accrued
thereon, were converted into Class A Preferred Stock in 1999.
Income Tax Matters
The Company has had no material state or Federal income tax since its
inception. As of December 31, 1998, the Company had approximately $4.2 million
in net operating loss carryforwards for tax purposes, expiring in years 2006
through 2013. The Internal Revenue Code of 1986, as amended (the "Code"), limits
the amount of loss carryforwards that a company can use to offset future income
upon the occurrence of certain changes in ownership. As a result of the purchase
of Marrco and the subsequent issuance of shares of the Company's common stock,
the Company has undergone more than a 50% change in ownership and will therefore
be limited in its utilization of its tax loss carryforwards. About $1 million of
the net operating loss carryforward is subject to this limitation.
12
<PAGE>
Inflation
The Company's Management does not believe that inflation has had or is
likely to have any significant impact on the Company's operations. Management
believes that the Company will be able to increase subscriber rates after its
wireless systems are launched, if necessary, to keep pace with inflationary
increases in costs.
Other
The Company does not provide post-retirement or post-employment
benefits requiring charges under Statements of Financial Accounting Standards
Nos. 106 and 112.
Year 2000 Compliance; Year 2000 Readiness Disclosure
To the fullest extent permitted by law, the following discussion is a
"Year 2000 Readiness Disclosure" within the meaning of the Year 2000 Information
and Readiness Disclosure Act 105 P.L. 271.
Background
Many of the world's computer systems and programs currently record
years in a two-digit format. Such computer systems or programs that have
date-sensitive software or hardware may recognize a date using "00" as the year
1900 rather than the year 2000, and therefore may be unable to recognize,
interpret or use dates in and beyond the year 1999 correctly. Because the
activities of many businesses are affected by dates or are date-related, the
inability of these systems or programs to use such date information correctly
could result in system failures or disruptions and lead to disruptions of
business operations in the United States and internationally (the "Year 2000
Problem"). In the case of the Company, such disruptions may include, among other
things, an inability to process transactions, send invoices, or engage in
similar routine business activities.
Issues relating to the Year 2000 Problem arise in a number of different
contexts in which the Company and its operating subsidiary use or access
computer programming. In its operations, the Company uses both third-party and
internally developed software programs and relies on customary
telecommunications services, as well as building and property logistical
services, including, without limitation, embedded computer-controlled systems.
The Company generally will also rely heavily upon suppliers, as well as data
processing, transmission and other services provided by third-party service
providers, including, without limitation, Internet access, online content,
product distribution and delivery, and information services.
The Company and its operating subsidiary will rely upon independent
internal local access network (LAN) computer systems. In addition, the Company
and its subsidiaries lease a portion of their office space from third parties
and may conduct business through multiple locations in major cities. Although
the operating subsidiary will, for the most part, conduct business
independently, it will substantially use similar third-party software and have
common relationships and dependencies with third party service providers.
Assessing the Impact of the Year 2000 Problem on the Company's
Operations
The Company has reviewed its computer systems and programs, including
information technology ("IT") and non-IT systems, and has determined that they
are in compliance with the requirements of the Year 2000. The Year 2000 problem,
however, is pervasive and complex as virtually every computer operation will be
affected in some way by the rollover of the two digit year to 00. Failure of any
of the Company's third-party service providers to adequately address this issue
could result in a substantial interruption of the Company's normal plan of
operation and business affairs, and could result in significant losses from
operations. To the extent that the Company relies upon non-U.S. third-party
service providers who may be less capable or prepared than their U.S.
counterparts to address and resolve the Year 2000 problem, the Company's
operations may be subject to a greater level of risk with respect to Year 2000
compliance. Although the Company could incur substantial costs in connection
with the failure of third-party computing systems and software, such costs are
not sufficiently certain to estimate at this time.
Contingency Planning
The Company has not developed any plan to address contingencies arising
from the inability of third-party service providers to become Year 2000
compliant in a timely manner. Consequently, no assurance can be given that
13
<PAGE>
the potential failure of third-party systems will not increase the Company's
operating costs or create uncertainties that may have an adverse effect on the
Company's operating results or financial condition.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS
SUPERIOR WIRELESS COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
PAGE
Independent Auditors Report.................................................F-1
Balance Sheets as of December 31, 1998 ....................................F-2
Statements of Operations for the years ended December 31, 1998 and 1997....F-3
Statements of Changes in Stockholders Equity for the years
ended December 31, 1998 and 1997.......................................F-4
Statements of Cash Flows for the years ended December 31, 1998 and 1997....F-5
Notes to the Financial Statements .........................................F-6
General and Administrative Expenses for the years ended
December 31, 1998 and 1997............................................F-13
PART III
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Name Age Position
Jon R. Marple 32 Interim Chairman and President.
Vice President, Chief Financial Officer
and Director since October 16, 1996.
Brooks M. Freeman 55 Director since October 16, 1996.
Dr. Charles Bartell 75 Director since March 14, 1994.
Director of Marrco since its
inception in 1991.
Jon Richard Marple, age 32, has served as a director of the Company
since 1996. Mr. Marple is currently serving as interim President and Chairman of
the Company. He has also been the Vice President, Treasurer and Chief Financial
Officer of the Company since 1996. Prior to that time, he was the Company's Vice
President of Wireless Operations overseeing the launch of the Company's first
wireless cable system in Beaumont, Texas. He has also been involved with
license/lease and purchase negotiations as well as assisting the Company in
obtaining interim financing. From 1989-1993, Mr. Marple was a tax manager with
the accounting firm of KPMG Peat Marwick. He worked in the firms Oakland,
Seattle and San Diego offices before resigning to pursue various wireless
telecommunications ventures. Mr. Marple has a Bachelors degree in Economics from
the University of California at Berkeley.
Dr. Charles Bartell, age 74, has been a director of the Company since
1994. Dr. Bartell graduated from the University of Kansas Medical School. He
fulfilled his internship at the U.S. Naval Hospital in Great Lake, Illinois
14
<PAGE>
and he fulfilled his surgical residence at Memorial Hospital Long Beach,
California. During the Korean War, Dr. Bartell was Lt. Commander and Regimental
Surgeon of the 5th Marine Regiment. Dr. Bartell subsequently served as Chief of
Surgery and Chief of Staff at Alondra Community Hospital in Bellflower,
California. He was also a former President of the Rocky Mountain Traumatic
Surgical Society. He retired from medical practice in 1985 and has since become
active in commercial real estate, operating offices in Newport Beach, California
and Aspen, Colorado, and investments in the United States and Russia. He brings
his experience in human relations, business management and personnel to the
Board.
Brooks M. Freeman, age 55, has been a director of the Company since
1996. Mr. Freeman is the Managing Partner of Freeman & Associates, a networking
consulting partnership. He also acts as the Managing Consultant of Caminito
Cellular Partnership, a cellular telephone business, and is a principle in a
wireless data services project. From 1992 to 1996, Mr. Freeman acted as General
Manger of Client/Server Computing for IBM's Asia Pacific Service Corporation in
Hong Kong, responsible for implementing wire and wireless network computing
systems, encompassing eleven Asian countries. He also was a North American
Director of Technical Computing at IBM (Engineering and Scientific Computing, a
$400 million business unit), and was instrumental in the development of IBM's
RISC System/6000 workstations. Mr. Freeman retires from IBM in 1998.
Board of Directors and Committees
The Board of Directors meets during its fiscal year to review
significant developments affecting the Company and to act on matters requiring
board approval. The Board of Directors met and acted by unanimous written
consent six (6) times during the 1998 fiscal year. During such period, all
members of the Board participated in 100% of all Board meetings.
As of the date of this Annual Report, the Board of Directors has not
established any Board committees to transact business on behalf of the Board.
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the annual and long-term cash and
non-cash compensation paid and payable by the Company for services rendered in
all capacities during the fiscal years ended December 31, 1998, 1997 and 1996,
to the Company's interim Chairman and President.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
Awards Payouts
Name and principal Salary Bonus Other annual Restricted Securities LTIP All other
position Year ($) ($) compensation stock Underlying payouts compensation
($) award(s) Options/ ($) ($)
($) SARs (#)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jon R. Marple, Interim 1998 72,000(1)
Chairman, President, Vice 1997 72,000(31 -0- $6,000(2) -0- -0- -0- -0-
President and Chief 1996 72,000(4) -0- $3,000 -0- -0- -0- -0-
Financial Officer
- ---------------------- -------- ----------- --------- ------------- ----------- ------------ ----------- ----------------
</TABLE>
(1) Represents accrued salary that was accrued and not paid as of December 31,
1998. This compensation and all other amounts owed to Mr. Marple were converted
into shares of Class A Preferred Stock in July, 1999.
(2) Represents changes for rent of home office space that is currently the
principle office of the Company. This entire amount was accrued and unpaid as of
December 31, 1998.
(3) Represents accrued salary that was accrued and not paid as of December 31,
1998. This compensation and all other amounts owed to Mr. Marple were converted
into shares of Class A Preferred Stock in July, 1999.
(4) Included $38,000 of accrued salary that was accrued and not paid as of
December 31, 1998.
15
<PAGE>
Directors of the Company who are also employees do not receive cash
compensation for their services as directors or members of the committees of the
Board of Directors. All directors may be reimbursed for their reasonable
expenses incurred in connection with attending meetings of the Board of
Directors or management committees.
The Company has not entered into any written employment agreement with
its President or any of its other officers or employees.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Certain Beneficial Owners and Management
The following tables set forth information, as of August 16, 1999,
concerning shares of the Company's Common Stock beneficially owned by (i) each
stockholder known by the Company to be the beneficial owner of more than five
percent (5 %) of the Company's Outstanding Common Stock, (ii) each stockholder
known by the Company to be the beneficial owner of more than five percent (5%)
of the Company's Preferred Stock, (iii) each director and officer of the
Company, and (iv) all officers and directors of the Company as a group. Unless
otherwise indicated, each person listed has sole voting and investment power
over the shares beneficially owned by him. Unless otherwise indicated, the
address of each named beneficial owner is the same as that of the Company's
principal executive offices located at 210 South Main Street, Suite 900, Salt
Lake City, Nevada 84111.
Shares of Percentage
Common Stock Common Stock
Beneficially Beneficially
Owned(1) Owned (2)
Jon H. Marple &
Mary E. Blake
3419 Via Lido, Suite 619
Newport Beach, CA 92663................. 855,544 29.0%
Jon R. Marple
1405 Crescent Road
Park City, UT 84060..................... 408,343 13.8%
Brooks M. Freeman
634 Cribbs Drive
Coppell, TX 75019....................... 100,192 3.4%
Charles Bartell
43 Canyon Drive
Newport Beach, CA 92663................. 7,000 -
Officers and Directors as a group
(3 individuals)......... 515,535 17.4%
------------ -----------
(1) Reflects the effects of the reverse 1 for 20 stock split which became
effective on August 16, 1999.
(2) Beneficial ownership is determined in accordance with the applicable
rules under the Securities Exchange Act of 1934 ("Exchange Act"). In
computing the number of shares beneficially owned by a person and the
percentage ownership of that person, shares of Common Stock subject to
options held by that person that are currently exercisable, or become
exercisable within 60 days from the date hereof, are deemed
outstanding. However, such shares are not deemed outstanding for
purposes of computing the percentage ownership of any other person.
Percentage ownership is based on 2,952,229 shares of Common Stock
outstanding as of August 16, 1999.
16
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain Relationships and Related Transactions
From 1994 through 1998, the Company borrowed funds from certain
officers, directors and related parties to finance the cost of its ongoing
operations. All such loans accrued interest at 12 percent per annum. Mr. Brooks
Freeman, a director of the Company, loaned a total principal amount of $101,000,
which had accrued interest approximately in the amount of $40,008 as of July 31,
1999. The Company has also borrowed $558,226 from 720 Wireless, Inc., a Nevada
corporation, which had accrued interest in the amount of $173,222, as of July
31, 1999. Mr. Jon H. Marple, one of the Company's largest shareholders, is also
the sole shareholder of 720 Wireless, Inc. In addition, Mr. Jon R. Marple, the
Company's President and Interim Chairman, has advanced $68,748 to pay for
certain expenses, which had accrued approximately $19,462 of interest as of July
31, 1999.
All such amounts owed to the Company's directors, officer and principal
shareholders were converted into 1,545,847 shares of Class A Preferred Stock as
of July, 1999.
In addition, since July 1997 the Company has been renting approximately
300 square feet of office space from the Company's President. The Company
accrued rent at $500. As of July 1999, the Company had accrued a total of
$12,000 in rental expenses. See Item 2. Properties.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents Filed as Part of the Report
1. Financial Statements
The following financial statements are filed as part of this Form 10-K:
PAGE
Independent Auditors Report.................................................F-1
Balance Sheets as of December 31, 1998......................................F-2
Statements of Operations for the years ended December 31, 1998 and 1997.....F-3
Statements of Changes in Stockholders Equity for the years ended
December 31, 1998 and 1997.............................................F-4
Statements of Cash Flows for the years ended December 31, 1998 and 1997.....F-5
Notes to the Financial Statements...........................................F-6
General and Administrative Expenses for the years ended
December 31, 1998 and 1997............................................F-13
2. Financial Statement Schedules
None
3. Exhibits
None
(b) Reports on Form 8-K
None
17
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 24th day of
August, 1999.
Superior Wireless Communications, Inc.
By:
Jon Richard Marple
Vice President,
Chief Financial Officer,
Treasurer and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed on the 24th day of August 1999, by the following
persons in the capacities indicated:
Signature Title
Chairman of the Board,
Jon Richard Marple Director and President
(Principal Executive Officer
and Principal Financial Officer)
Director
Brooks M. Freeman
Director
Charles Bartell
18
<PAGE>
Smith
&
Company
A Professional Corporation of Certified Public Accountants
Board of Directors
Superior Wireless Communications, Inc.
Salt Lake City, Utah
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheet of Superior Wireless
Communications, Inc. (a development stage company) as of December 31, 1998, and
the related statements of operations, changes in stockholders' equity (deficit),
and cash flows for the years ended December 31, 1998 and 1997, and for the
period of April 1, 1994 (date Company re-entered development stage) to December
31, 1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Superior Wireless
Communications, Inc. as of December 31, 1998, and the results of its operations,
changes in stockholders' equity (deficit), and its cash flows for the years
ended December 31, 1998 and 1997, and for the period of April 1, 1994 (date
Company re-entered development stage) to December 31, 1998 in conformity with
generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As shown in the consolidated
financial statements, the Company has a working capital deficiency of
$(2,538,778) at December 31, 1998, and a retained deficit of $(4,762,917). The
Company has suffered losses from operations and has a substantial need for
working capital. This raises substantial doubt about its ability to continue as
a going concern. Management's plans in regard to these matters are described in
Note 2 to the financial statements. The accompanying financial statements do not
include any adjustments that may result from the outcome of this uncertainty.
Our audit was made for the purpose of forming an opinion on the financial
statements taken as a whole. The information in Schedule 1 is presented for
purposes of additional analysis and is not a required part of the basic
financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements, and in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
Smith & Company
CERTIFIED PUBLIC ACCOUNTANTS
Salt Lake City, Utah
August 23, 1999
10 West 100 South, Suite 700 o Salt Lake City, Utah 84101-1554
Telephone: (801) 575-8297 o Facsimile: (801) 575-8306
E-mail: [email protected]
Members: American Institute of Certified Public Accountants
Utah Association of Certified Public Accountants
F-1
<PAGE>
SUPERIOR WIRELESS COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
<TABLE>
<CAPTION>
ASSETS
December 31,
1998
----------------
CURRENT ASSETS
<S> <C>
Cash in bank $ 2,131
----------------
TOTAL CURRENT ASSETS 2,131
PROPERTY AND EQUIPMENT (Notes 1 and 6) 19,622
OTHER ASSETS
Notes receivable - other (Note 7) 0
Licenses and other (Note 10) 330,053
----------------
TOTAL OTHER ASSETS 330,053
----------------
$ 351,806
================
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 93,026
Accrued liabilities 541,170
Notes payable (Note 11) 757,112
Income taxes payable 1,100
Payable - related parties (Note 4) 1,148,501
----------------
TOTAL CURRENT LIABILITIES 2,540,909
Minority interest in subsidiaries (Note 5) 0
STOCKHOLDERS' DEFICIT (Notes 3 and 14)
Common stock, $.001 par value;
Authorized 50,000,000 shares;
Issued and outstanding 1,679,895 shares 1,680
Class A Convertible Cumulative Preferred Stock,
$.001 par value:
Authorized 15,000,000 shares;
Issued and outstanding 0 shares 0
Additional paid-in capital 2,202,768
Retained earnings (deficit) (4,393,551)
----------------
TOTAL STOCKHOLDERS' DEFICIT (2,189,103)
----------------
$ 351,806
================
</TABLE>
See Notes to the Financial Statements.
F-2
<PAGE>
SUPERIOR WIRELESS COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Period from
Years ended December 31, 4-1-94 (A) to
1998 1997 12-31-98
------------- -------------- -------------
<S> <C> <C> <C>
Sales $ 7,000 $ 64,000 $ 931,521
Cost of sales 0 45,341 171,494
------------- -------------- -------------
GROSS PROFIT 7,000 18,659 760,027
Costs associated with abandoned projects 465,483 179,986 1,217,043
Loss on investments 0 0 125,689
Bad debt (Note 7) 0 0 267,858
General and administrative expenses (Schedule 1) 95,672 144,501 2,642,858
Depreciation and amortization (Notes 6 and 10) 104,487 101,195 629,589
Interest and bank charges (net of interest income) 240,363 188,428 637,406
------------- -------------- -------------
906,005 614,110 5,520,443
------------- -------------- -------------
Net income (loss) before other income taxes (899,005) (595,451) (4,760,416)
Income tax expense (benefit) (Note 9) 500 1,100 (22,600)
------------- -------------- -------------
Net (loss) before minority interest (899,505) (596,551) (4,737,816)
Minority interest in partnership losses (Note 5) 0 0 110,000
------------- -------------- -------------
NET (LOSS) BEFORE EXTRAORDINARY ITEM (899,505) (596,551) (4,627,816)
EXTRAORDINARY ITEM (Note 13)
Gain on extinguishment of debt 369,366 0 369,366
------------- -------------- -------------
NET (LOSS) $ (530,139) $ 596,551 $ 4,258,450
============= ============== =============
EARNINGS (LOSS) PER COMMON SHARE
(Loss) before other items $ (.33) $ (.40)
Income from discontinued operations .00 .00
Minority interest in losses .00 .00
------------- --------------
Net (loss) $ (.33) $ (.40)
============= ==============
Weighted average number of common shares used to
compute net income (loss) per weighted average share 1,589,355 1,498,815
============= ==============
</TABLE>
A Date company re-entered the development stage.
See Notes to the Financial Statements.
F-3
<PAGE>
SUPERIOR WIRELESS COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
December 31, 1998
<TABLE>
<CAPTION>
Common Stock Additional Retained
Par Value $.001 Paid-in earnings
Shares Amount Capital (deficit)
------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Balances at 12/31/93 (Note 3) 268,952 $ 269 $ 79,731 $ (106,670)
Net liabilities assumed by former officer 11,650
Issuance of common stock for new business at $1.05
per share 1,008,327 1,008 1,104,888 (43,451)
Issuance of common stock to settle debt at $16.00
per share 25,000 25 399,975
Issuance of common stock for services at $.004 per share 11,250 11 34
Sale of common stock at $8.00 per share 54,191 54 433,472
Issuance of common stock for stock subscription
$7.76 per share 250,000 250 1,939,750
Issuance of common stock for prepaid expense
$5.71 per share 17,500 18 99,982
Minority interest transactions 2,844,259
Net partnership distributions (3,134,180)
Stock canceled (267,500) (267) (2,039,733)
Stock canceled (14,615) (15) (79,818)
Net loss for year (1,195,064)
------------- ------------- -------------- -------------
Balances at 12/31/94 1,353,105 1,353 1,660,010 (1,345,185)
Stock canceled (1,688) (2) (4,277)
Issuance of common stock for expenses at $.037 per share 18,891 19 681
Issuance of common stock to settle debt at $4.75 per share 83,798 84 397,989
Minority interest transactions 200,000
Net partnership distributions (199,921)
Net loss for year (705,312)
------------- ------------- -------------- -------------
Balances at 12/31/95 1,454,106 1,454 2,054,482 (2,050,497)
Correction to number of shares issued
in 1994 for new business 16,009 16 (16)
Issuance of common stock for services at $.12 per share 18,750 19 2,231
Issuance of common stock for assets at $3.00 per share 6,333 6 18,994
Issuance of common stock for assets at $3.00 per share 1,667 2 4,999
Issuance of common stock for assets at $8.00 per share 4,343 4 34,739
Net loss for year (1,216,364)
------------- ------------- -------------- -------------
Balances at 12/31/96 1,501,208 1,501 2,115,429 (3,266,861)
Stock retired (2,393) (2) (9,248)
Net loss for year (596,551)
------------- ------------- -------------- -------------
Balances at 12/31/97 1,498,815 1,499 2,106,181 (3,863,412)
Issuance of common stock for services and interest at $1.00 7,768 8 963
Issuance of common stock for services and to settle debt at $3.07 123,312 123 15,674
Sale of common stock in private placement at $1.60 50,000 50 79,950
Net loss for year (530,139)
------------- ------------- -------------- -------------
Balances at 12/31/98 1,679,895 $ 1,680 $ 2,202,768 $ (4,393,551)
============= ============= ============== =============
</TABLE>
See Notes to the Financial Statements.
F-4
<PAGE>
SUPERIOR WIRELESS COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Period from
Years ended December 31, 4-1-94 (A) to
1998 1997 12-31-98
------------- -------------- -------------
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net (loss) $ (530,139) $ (596,551) $ (4,258,450)
Adjustments to reconcile net (loss) to net cash
(required) by operating activities:
Stock issued for expenses 0 0 2,945
Stock issued to retire debt 25,768 0 585,054
Deferred tax (decrease) 0 0 (19,600)
Bad debt 0 0 267,858
Depreciation and amortization 104,487 101,195 629,589
Book value of abandoned assets 0 175,000 265,025
Minority interest items 0 213 (109,708)
Gain on debt extinguishment (369,366) 0 (369,366)
Changes in assets and liabilities:
Prepaid expenses 0 417 2,430
Notes receivable - other 0 0 12,047
Related party receivables 0 0 344,142
Deposits 0 2,825 9,586
Accounts payable (27,616) (31,777) 56,610
Accrued liabilities 81,405 5,139 177,793
Income taxes 200 (900) (4,500)
------------- -------------- -------------
NET CASH (REQUIRED) BY
OPERATING ACTIVITIES (715,261) (344,439) (2,408,545)
INVESTING ACTIVITIES
Purchase of securities 0 0 (207,625)
Sale of securities 0 0 207,625
Sale (Acquisition) of licenses 559,315 24,986 529,204
Disposition of property, plant and equipment 0 44,885 1,162
Purchase of equipment (3,690) 0 (3,690)
------------- -------------- -------------
NET CASH PROVIDED (REQUIRED) BY
INVESTING ACTIVITIES 555,625 69,871 526,676
FINANCING ACTIVITIES
Loans - other 0 10,143 957,943
Loans - related parties 241,655 285,048 1,444,921
Loan repayments - other (160,831) (11,627) (246,940)
Loan repayments - related parties 0 0 (416,643)
Sale of common stock 80,000 0 105,247
Cash of business acquired 0 0 121,135
Net partnership distributions 0 0 (72,413)
Retirement of common stock 0 (9,250) (9,250)
------------- -------------- -------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 160,824 274,314 1,884,000
------------- -------------- -------------
(DECREASE) IN CASH AND
CASH EQUIVALENTS 1,188 (254) 2,131
Cash and cash equivalents at beginning of year 943 1,197 0
------------- -------------- -------------
CASH AND CASH EQUIVALENTS
AT END OF YEAR $ 2,131 $ 943 $ 2,131
============= ============== =============
A Date Company re-entered development stage
Supplemental Disclosures of Cash Flow Information Cash paid during the year for:
Interest $ 0 $ 155,333 $ 329,637
Income taxes 300 2,000 7,900
</TABLE>
Noncash Investing and Financing Activities
During 1998, the Company issued 134,145 shares of common stock to retire
liabilities in the amount of $360,366.
See Notes to the Financial Statements.
F-5
<PAGE>
SUPERIOR WIRELESS COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Activity:
The Company was incorporated on July 24, 1984 in Nevada as Ventures
Diversified, Ltd. On March 27, 1987 the name was changed to
M.V.I.D. International Corporation. On April 6, 1994 the name was
changed to Micro-Lite Television. Prior to March 14, 1994 the
Company sold an automobile anti-theft protection system to
customers through an arrangement with dealerships, principally in
New Jersey. On March 16, 1994 the Company acquired the assets and
liabilities of Marrco Communications, Inc. ("Marrco") and is
continuing the business activities of Marrco. Prior business
operations were assumed by the former President of the Company.
Since Marrco is a development stage company, the Company is once
again in the development stage effective April 1, 1994 when it
began continuing the operations of Marrco. On October 25, 1996 the
name was changed to Superior Wireless Communications, Inc.
Accounting Methods:
The Company recognizes income and expenses based on the accrual
method of accounting.
Revenue Recognition:
Revenue is recognized when cash or other value is actually
received. In the case of revenue recognition on the sale of
licenses or leases, revenue is recognized when the FCC grants
licenses and the Company has the right to receive the revenue.
Until the FCC approval is received, the Company reflects the
transaction as deferred revenue.
Earnings (Loss) Per Share
Earnings (loss) per share amounts are calculated based on the
weighted average number of shares outstanding during the periods.
Organization costs:
Organization costs were amortized over a five year period.
Property and Equipment
Property and equipment are depreciated over their estimated useful
lives. Assets financed under capital leases are amortized over
their estimated useful lives, or the lease term, whichever is
shorter. Depreciation and amortization are computed using
straight-line methods over an estimated life of five to seven
years.
Cash and Cash Equivalents
For financial statement purposes, the Company considers all highly
liquid investments with an original maturity of three months or
less when purchased to be cash equivalents.
Income Taxes:
The Company records the income tax effect of transactions in the
same year that the transactions enter into the determination of
income, regardless of when the transactions are recognized for tax
purposes.
Tax credits are recorded in the year realized.
The Company utilizes the liability method of accounting for income
taxes as set forth in Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes" (SFAS 109). Under the
liability method, deferred taxes are determined based on the
difference between the financial statement and tax bases of assets
and liabilities using enacted tax rates in effect in the years in
which the differences are expected to reverse. An allowance against
deferred tax assets is recorded when it is more likely than not
that such tax benefits will not be realized.
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 of
assets, liabilities, revenues, and expenses during the reporting
period. Estimates also affect the disclosure of contingent assets
and liabilities at the date of the financial statements. Actual
results could differ from these estimates.
NOTE 2: DEVELOPMENT STAGE COMPANY - MANAGEMENT'S PLANS
The Company has been in the development stage since the acquisition
of Marrco as described above. The Company intends, subject to
adequate financing, to engage primarily in the Internet industry.
Management feels that sales of the wireless cable and LPTV licenses
and rights, and loans from related parties and others will provide
sufficient working capital to enable the Company to continue as a
going concern and develop its intended operations. See Note 14
regarding subsequent events that have or will improve the Company's
working capital position.
F-6
<PAGE>
SUPERIOR WIRELESS COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1998
NOTE 3: CAPITALIZATION
On March 16, 1994 the Company effected a 1 share for 30 share
reverse stock split. The split reduced outstanding shares from
32,272,000 to 1,075,807. At May 31, 1994 the Company was owed
$2,000,000 for 1,000,000 shares of its common stock. An investment
certificate bearing interest at 5 and 3/4% due in April, 1999 had
been received to pay for the stock. The certificate was treated as
a stock subscription.
The stock subscription was canceled prior to December 31, 1994.
The Company is negotiating for the return of the 1,000,000 shares.
The 1,000,000 shares have been treated as canceled for accounting
purposes as of December 31, 1994. The Company recovered 650,000 of
the 1,000,000 shares and is prepared to take legal action if
necessary to recover the other 350,000 shares.
On October 25, 1996, each of the 6,004,836 shares of then issued
and outstanding common stock of the Corporation were exchanged for
one share of preferred stock designated as Class A Convertible
Cumulative Preferred Stock, par value $.001 per share, 10%
dividend, which may be paid in common stock.
On October 26, 1998, all outstanding shares of Class A Convertible
Cumulative Preferred Stock were redeemed for Common Stock at a 5 to
1 conversion factor.
On July 12, 1999 the Board of Directors and a majority of the
shareholders approved a 1 to 20 reverse stock split, effective
August 16, 1999. These financial statements have been adjusted to
reflect these stock changes as if they had been effective as of the
earliest date reported therein.
NOTE 4: RELATED PARTY TRANSACTIONS
The officers and directors of the Company are involved in other
business activities and may, in the future, become involved in
other business opportunities. If a specific business opportunity
becomes available, such persons may face a conflict in selecting
between the Company and their other business interests. The Company
has not formulated a policy for the resolution of such conflicts.
At December 31, 1998 the Company owed $1,148,501 to related parties
($906,846 at December 31, 1997) for loans and sales to and payments
made on behalf of the Company and accrued salaries.
NOTE 5: MINORITY INTEREST IN SUBSIDIARIES
The Company was the general partner in several limited
partnerships, one of which was still active as of December 31,
1994. The ownership interests vary. As general partner, the Company
controlled the partnerships. All partnerships were dissolved prior
to December 31, 1995. The Company is still a limited partner in
Micro-Lite Television of Beaumont, LLC.
NOTE 6: PROPERTY AND EQUIPMENT
Property and equipment as of December 31, 1998 and December 31,
1997 are summarized as follows:
<TABLE>
<CAPTION>
Net Book Value
Cost Depreciation 1998 1997
---------- ---------------- ---------- ----------
<S> <C> <C> <C> <C>
Equipment $ 7,426 $ 3,909 $ 3,517 $ 195
Transmission Equipment 76,240 60,135 16,105 31,353
---------- ---------------- ---------- ----------
$ 83,666 $ 64,044 $ 19,622 $ 31,548
========== ================ ========== ==========
</TABLE>
Depreciation expense for the period ended December 31, 1998 was
$15,616 ($29,370 in 1997).
NOTE 7: NOTES RECEIVABLE - OTHER
At December 31, 1994, the Company was owed $860,000 for the sale of
the MMDS (wireless cable) licenses and the assignment of ITFS
leases for Baton Rouge, Louisiana. Deferred revenue associated with
this receivable was $725,828 at December 31, 1994. The collection
of this note is contingent upon certain action by the Federal
Communications Commission ("FCC"). During 1995, the FCC did not
take the necessary action required for collection of the note. The
receivable and deferred revenue were charged to operations in 1995
as a bad debt. The Company will recognize revenue if the receivable
is collected in future years.
F-7
<PAGE>
SUPERIOR WIRELESS COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1998
NOTE 8: SALES CONCENTRATION AND REVENUE
During 1998, sales of assets to one entity accounted for 100% of
total sales (100% in 1997).
NOTE 9: INCOME TAXES
Income tax expense was $500 for the year ended December 31, 1998
($1,100 for 1997). Such amounts differ from the amounts computed by
applying the United States Federal income tax rate of 34% to loss
before income taxes as a result of the following:
<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
Computed "expected" tax benefit $ (305,662) $ (202,453)
Decrease (increase) in income tax benefit
resulting from:
Change in valuation allowance for
deferred federal, state, and local
income tax assets 345,084 251,221
State income taxes and other, net (38,922) (47,668)
------------- -------------
$ 500 $ 1,100
============= =============
</TABLE>
The tax effects of temporary differences that give rise to a
substantial portion of the deferred income tax assets are
presented below:
<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
Accrued officers' compensation and
related costs $ 128,978 $ 89,554
Net operating loss carryforwards 1,801,660 1,496,000
------------- -------------
Total gross deferred tax assets 1,930,638 1,585,554
Less valuation allowance (1,930,638) (1,585,554)
------------- -------------
Net deferred tax assets $ 0 $ 0
============= =============
</TABLE>
During the years ended December 31, 1998 and 1997, the Company
made no Federal income tax payments.
At December 31, 1998, the Company has approximately $5,300,000
available in net operating loss carryforwards for income tax
purposes. These carryforwards expire in 2006 through 2013. Due to
a change in control and business activity, the net operating loss
carryforwards will most likely never be realized.
NOTE 10: LICENSES AND OTHER
The Company owns and leases various MMDS, ITFS and LPTV (wireless
cable) licenses to operate in various cities. A summary is as
follows:
<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
License acquisition costs $ 306,163 $ 310,867
Engineering costs 4,950 4,950
Commercial channel licenses 19,153 243,320
ITFS licenses 0 19,315
LPTV rights and licenses 0 400,000
Investment in LLC (equity basis) (213) (213)
------------- -------------
$ 330,053 $ 978,239
============= =============
</TABLE>
The above amounts are net of amortization of $88,871 ($71,825 for
1997).
NOTE 11: NOTES PAYABLE
At December 31, 1998, the Company owed several individuals a total
of $757,112. The notes bear interest at 12% per year. The Company
is in arrears on the repayment terms. See Note 14 regarding
subsequent events relating to these notes.
F-8
<PAGE>
SUPERIOR WIRELESS COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1998
NOTE 12: STOCK OPTION PLAN AND WARRANTS
At December 31, 1996, the Company set aside 2,500,000 shares of its
common stock for an incentive stock option plan established by
Marrco in 1993. These options were fully vested as of the date of
the Company's acquisition of Marrco. The exercise price is $.88 per
share. None of the stock options have been exercised. The options
expired December 28, 1998. There were also outstanding 300,000
redeemable Class "B" common stock purchase warrants to purchase
common stock at a price of $2.00 per share and 25,000 redeemable
Class "C" common stock purchase warrants with a price of $4.00 per
share. These warrants expired March 31, 1999 and couldn't be
exercised prior to June 16, 1994.
NOTE 13: EXTRAORDINARY ITEM
During 1998, the Company issued 134,145 shares of stock to retire
liabilities in the amount of $360,366 and pay for expenses in the
amount of $25,768. The fair market value of the stock given was
$16,768, giving rise to extraordinary gain of $369,366.
NOTE 14: SUBSEQUENT EVENTS
Under the terms of the Class A Preferred Stock (See Note 3), all
shares outstanding as of October 16, 1998 automatically converted
into common stock at a rate of five shares of common stock for
every one share of Class A Preferred Stock. This resulted in the
automatic conversion of 6,541,416 shares of Class A Preferred Stock
into 32,707,080 shares of common stock. The holders of the
remaining shares of Class A Preferred Stock that were issued after
October 16, 1998, totaling 3,767,501 shares, agreed to convert at
the same rate of five shares of common stock for every one share of
Class A Preferred Stock. The latter conversion wasl be effective
simultaneous to the reverse stock split described below.
In 1998, the Company issued approximately 132,500 shares of its
Series A Preferred stock to satisfy debts and liabilities in the
amount of $385,000.
In the first two quarters of 1999, the Company sold certain
wireless cable licenses with book value at December 31, 1997 of
approximately $513,000 in exchange for stock in another company
valued at $500,000. This stock along with 728,738 shares of the
Company's Series A Preferred stock were used to satisfy notes and
other obligations that totaled approximately $1,450,000.
On August 1, 1999 in accordance with the terms and provisions of a
certain Purchase Agreement dated as of June 1, 1999 by and between
the Company and Media Rage of Utah, Inc., a Utah corporation
("Media Rage"), 325,000 post-reverse split (See Note 3) shares of
the Company's Common Stock, $.001 par value per share, were issued
to the shareholders of Media Rage in consideration of their sale,
assignment and transfer to the Company of all stock outstanding in
Media Rage. As a consequence of the foregoing transaction, combined
with the issuance of 50,000 post-reverse split shares of the
Company's Common Stock to a third party for services rendered in
connection with such transaction, the total number of shares of
Common Stock issued and outstanding, on a post-reverse split basis,
is 2,952,229 at August 16, 1999.
Media Rage provides customers with user friendly software solutions
to design and operate E-Commerce web sites, including shopping cart
technology. Media Rage also offers custom website design and
valuable marketing information and support for its clients.
The Company is currently exploring additional potential
acquisitions of companies within the Internet industry. These
include companies that are Internet Service Providers (ISPs), Web
Hosting companies, e-commerce sites and auction web sites. The
Company believes that with a substantial amount of its debt paid
off, it will be able to move forward with one or more of these
acquisitions.
Concurrent with the acquisition of Media Rage, the Company also
changed its name to JustWebit.com, Inc.
F-9
<PAGE>
SCHEDULE 1
SUPERIOR WIRELESS COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
GENERAL AND ADMINISTRATIVE EXPENSES
<TABLE>
<CAPTION>
Years ended Period from
December 31, 4-1-94 (A) to
1998 1997 12-31-97
------------------ ----------------- -----------------
<S> <C> <C> <C>
Accounting $ 2,500 $ 7,523 $ 62,058
Automobile expense 6,622 13,400 39,529
Bad debts 0 0 9,527
Debt forgiveness - related party (27,615) (3,582) (56,197)
Directors' Fees 18,000 0 18,000
Dues and subscriptions 1,943 3,309 15,387
Fees and commissions 1,594 7,781 79,518
Insurance 961 728 22,223
Legal 572 9,210 280,885
Marketing and advertising 0 662 20,543
Meals and entertainment 419 326 9,253
Office expense 2,187 1,065 42,979
Outside services 0 0 15,137
Payroll taxes and benefits 1,750 2,376 128,937
Postage 493 1,263 56,693
Professional 0 14,502 150,177
Relocation expense 0 0 19,091
Rent expense 8,000 4,060 218,425
Repairs and maintenance 0 0 5,086
Salaries 72,000 72,000 1,323,525
Taxes and licenses 697 457 9,755
Telephone 4,189 5,070 119,135
Travel 1,360 12,285 155,378
Miscellaneous 0 0 5,748
Overhead reimbursement 0 (7,934) (107,934)
------------------ ----------------- -----------------
$ 95,672 $ 144,501 $ 2,642,858
================== ================= =================
</TABLE>
A Date Company re-entered the development stage.
F-10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from Superior Wireless, Inc. December 31, 1998 financial
statements and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<CIK> 0000793986
<NAME> Superior Wireless Communications, Inc.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1999
<CASH> 2,131
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,131
<PP&E> 83,666
<DEPRECIATION> (64,044)
<TOTAL-ASSETS> 351,806
<CURRENT-LIABILITIES> 2,540,909
<BONDS> 0
0
0
<COMMON> 1,680
<OTHER-SE> (2,190,783)
<TOTAL-LIABILITY-AND-EQUITY> 351,806
<SALES> 7,000
<TOTAL-REVENUES> 7,000
<CGS> 0
<TOTAL-COSTS> 906,005
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 240,363
<INCOME-PRETAX> (899,005)
<INCOME-TAX> 500
<INCOME-CONTINUING> (899,505)
<DISCONTINUED> 0
<EXTRAORDINARY> 369,366
<CHANGES> 0
<NET-INCOME> (530,139)
<EPS-BASIC> (.33)
<EPS-DILUTED> (.33)
</TABLE>
