UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934
For the quarter period ended: September 30, 1997
or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934
For the transition period from: to
Commission file number: 33-5902-NY
SUPERIOR WIRELESS COMMUNICATIONS, INC.
(Exact name of small business issuer 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
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
The number of shares outstanding of the issuer's Preferred Class A
Stock on March, 19, 1999 was 7,533,227.
1
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements.
The following Financial Statements of the Company and its subsidiaries
and related notes are included herein:
Balance Sheet as of September 30, 1997 and December 31, 1996;
Statements of Income for the three months ended September 30, 1997 and 1996;
Statements of Income for the nine months ended September 30, 1997 and 1996;
Statements of Income for the three and nine months ended September 30, 1997
Statement of Cash Flows for the nine months ended September 30, 1997 and 1996;
Notes to Financial Statements.
2
<PAGE>
SUPERIOR WIRELESS COMMUNICATIONS, INC.
(A Development Stage Company)
Balance Sheets
September 30, 1997 and December 31, 1996
<TABLE>
<CAPTION>
(Unaudited)
September 30, December 31,
ASSETS 1997 1996
- ------ ----------------- -----------------
Current Assets
<S> <C> <C>
Cash $ 859 $ 1,197
Accounts Receivable & Prepaids 29,000 417
----------------- -----------------
Total Current Assets 29,859 1,614
Property, Plant, & Equipment 37,141 105,803
Other Assets
Deposits 2,825 2,825
Licenses and Other 1,178,438 1,250,263
----------------- -----------------
1,181,263 1,253,088
----------------- -----------------
TOTAL ASSETS $ 1,248,263 $ 1,360,505
================= =================
LIABILITIES & SHAREHOLDERS EQUITY
Current Liabilities
Accounts Payable $ 114,363 $ 152,419
Accrued Liabilities 1,009,400 814,992
Note Payable 748,500 907,800
Income Taxes Payable 800 1,800
Current Portion of Long-Term Debt 9,516 11,627
Payable - Related Parties 770,031 621,798
----------------- -----------------
Total Current Liabilities 2,652,610 2,510,436
Long-Term Debt 0 0
----------------- -----------------
Total Liabilities 2,652,610 2,510,436
Shareholders Equity Preferred Series A, $.001 par value:
Authorized 15,000,000
Issued and Outstanding 6,004,836 at March 31, 1997
and December 31, 1996 6,005 6,005
Additional Paid-in Capital 2,110,925 2,110,925
Retained Earnings (Deficit) (3,521,277) (3,266,861)
----------------- -----------------
Total Shareholder's Equity (1,404,347) (1,149,931)
----------------- -----------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 1,248,263 $ 1,360,505
================= =================
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
SUPERIOR WIRELESS COMMUNICATIONS, INC.
(A Development Stage Company)
Condensed Consolidated Statements of Income
Three Months Ended September 30, 1997 and 1996
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1997 1996
----------------- -----------------
<S> <C> <C>
Revenues from License Sales $ 0 $ 0
Cost of Licenses 0 0
----------------- -----------------
Gross Profit 0 0
Other Income 8,659 (2,500)
----------------- -----------------
Total Revenues 8,659 (2,500)
General & Administrative Expenses
Brochures & Marketing 0 206
Travel & Auto 602 23,174
Postage & Delivery 0 5,934
Payroll Taxes 622 5,393
Office 0 3,364
Outside & Professional Services 1,000 64,282
Rent 0 10,278
Salaries - Officers 18,000 48,750
Salaries - Others 0 42,566
Depreciation & Amortization 29,858 35,555
Bank Charges 86 69,757
Insurance 514 5,585
Seminars & Conventions 0 1,517
MMDS Lease Payments 0 7,650
Tower Lease Payments 0 2,385
FCC Filing Fees 0 5,750
Telephone 1,040 9,990
Computer 0 1,481
Other Taxes & Licenses 456 10
Miscellaneous 0 1,302
----------------- -----------------
Total General & Administrative Expenses 52,178 344,929
----------------- -----------------
Net Loss Before Interest and Taxes (43,519) (347,429)
Interest Expense 17,480 0
State Income Taxes 0 0
----------------- -----------------
Net Income (Loss) $ (60,999) $ (347,429)
================= =================
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
SUPERIOR WIRELESS COMMUNICATIONS, INC.
(A Development Stage Company)
Condensed Consolidated Statements of Income
Nine Months Ended September 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1997 1996
----------------- -----------------
<S> <C> <C>
Revenues from License Sales $ 0 $ 300,000
Cost of Licenses 0 109,894
----------------- -----------------
Gross Profit 0 190,106
Other Revenue 12,242 600
----------------- -----------------
Total Revenues 12,242 190,706
General & Administrative Expenses
Brochures & Marketing 662 530
Travel & Auto 14,200 48,016
Postage & Delivery 1,263 13,468
Payroll Taxes 660 19,079
Office 325 5,167
Outside & Professional Services 31,085 143,910
Rent 750 27,843
Salaries - Officers 54,000 131,250
Salaries - Others 0 155,523
Depreciation & Amortization 97,197 111,947
Bank Charges 389 74,525
Insurance 514 16,063
Equipment Rental 0 2,381
Seminars & Conventions 1,904 3,470
MMDS Lease Payments 0 25,675
Tower Lease Payments 2,060 8,606
FCC Filing Fees 0 10,310
Telephone 3,558 27,152
Computer 226 3,251
Other Taxes & Licenses 455 1,548
Miscellaneous 0 952
----------------- -----------------
Total General & Administrative Expenses 209,248 830,666
----------------- -----------------
Net Loss Before Interest and Taxes (197,006) (639,960)
Interest Expense 56,610 0
State Income Taxes 800 800
----------------- -----------------
Net Income (Loss) $ (254,416) $ (640,760)
================= =================
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
SUPERIOR WIRELESS COMMUNICATIONS, INC.
(A Development Stage Company)
Condensed Consolidated Statements of Income
Three and Nine Months Ended September 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
September 30, 1997
Nine Months Three Months
Ended Ended
----------------- -----------------
<S> <C> <C>
Revenues from License Sales $ 0 $ 0
Cost of Licenses 0 0
----------------- -----------------
Gross Profit 0 0
Other Revenues 12,242 8,659
----------------- -----------------
Total Revenues 12,242 8,659
General & Administrative Expenses
Brochures & Marketing 662 0
Travel & Auto 14,200 602
Postage & Delivery 1,263 0
Payroll Taxes 660 622
Office 325 0
Outside & Professional Services 31,085 1,000
Rent 750 0
Salaries - Officers 54,000 18,000
Depreciation & Amortization 97,197 29,858
Bank Charges 389 86
Insurance 514 514
Seminars & Conventions 1,904 0
Tower Lease Payments 2,060 0
Telephone 3,558 1,040
Computer 226 0
Other Taxes & Licenses 455 456
----------------- -----------------
Total General & Administrative Expenses 209,248 52,178
----------------- -----------------
Net Loss Before Interest and Taxes (197,006) (43,519)
Interest Expense 56,610 17,480
State Income Taxes 800 0
----------------- -----------------
Net Income (Loss) $ (254,416) $ (60,999)
================= =================
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
SUPERIOR WIRELESS COMMUNICATIONS, INC.
(A Development Stage Company)
Statements of Cash Flow
Nine Months Ended September 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1997 1996
----------------- -----------------
OPERATING ACTIVITIES
<S> <C> <C>
Net Income (Loss) $ (254,416) $ (640,760)
Adjustments:
Depreciation and Amortization 97,196 111,947
Changes in current accounts (37,639) (21,471)
(Increase) Decrease in Notes Receivable 0 (95,746)
----------------- -----------------
Net Cash Required by Operating Activities (194,859) (646,030)
INVESTING ACTIVITIES
Use of Fixed Assets to pay 0 16,030
Purchase of Fixed Assets 2,050 0
----------------- -----------------
Net Cash Required by Investing Activities 2,050 16,030
FINANCING ACTIVITIES
Loans 194,582 647,234
Repayment of Loans (2,111) (63,066)
Use of Stock for Repayment of loans 0 60,994
----------------- -----------------
Net Cash Provide (Required) by Financing Activities 192,471 645,162
----------------- -----------------
Increase (Decrease) in Cash and Cash Equivalents (338) 15,162
Cash and Cash Equivalents at Beginning of Period 1,197 7,019
----------------- -----------------
Cash and Cash Equivalents at End of Period $ 859 $ 22,181
================= =================
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
SUPERIOR WIRELESS COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principals for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principals for complete
financial statements. In the opinion of the Company's management, all
adjustments (consisting of normal accruals) considered necessary for a fair
presentation of these financial statements have been included. The Company's
activities to date have been purely developmental and the Company has not yet
commenced significant commercial operations.
NOTE 2: CAPITALIZATION
The Company was incorporated in the State of Nevada on July 24, 1984 and
authorized 200,000,000 shares of $0.001 par value common stock. On March 16,
1994 the Company effected a 1 share for 30 share reverse stock split. The split
reduced the total outstanding shares from 32,272,000 to 1,075,807. On March 16,
1994 the Company issued 6,500,000 shares of post reverse-split stock to Marrco
Communications, Inc. in the conjunction with the purchase of all of Marrco's
assets and the assumption of all of Marrco's liabilities.
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 carries a ten percent (10%) dividend, which may be paid in
common stock, and is convertible into Common Stock of the Company as of October
25, 1998 (the "Conversion Date"). The rate of this conversion is dependent on
the price of the Company's Common Stock prior to the Conversion Date. Currently,
the Company has no common stock outstanding, therefore the conversion price will
most likely be based upon a price of $1.25 per share.
NOTE 3: 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 business
interests. The Company has not formulated a policy for the resolution of such
conflicts.
At September 30, 1997 the Company owed $770,031 to related parties for accrued
compensation, loans and sales to and payments made on behalf of the Company.
This balance was equal to $621,798 as of December 31, 1996. The Company also had
$29,000 receivable from a related party for sale of assets.
NOTE 4: INCOME TAXES
The Company has available at September 30, 1997, net operating loss
carryforwards of approximately $3.8 million which may provide future tax
benefits expiring in June of 2008.
8
<PAGE>
SUPERIOR WIRELESS COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
NOTE 5: STOCK OPTION PLAN AND WARRANTS
Since the purchase of Marrco Communications, Inc., the Company has set aside
2,500,000 shares of its common stock for an incentive stock option plan that was
previously in place and fully-vested with certain employees of Marrco
Communications that continued their service in working for the Company. The
exercise is $.88 per share. All of the options are fully vested. None of the
stock options have been exercised. The options expired December 28, 1998. At
March 31, 1996, there are outstanding 66,667 warrants to purchase 66,667 shares
of common stock at $4.50 per share. The warrants expired on July 16, 1997. There
are also 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
expire March 31, 1999 and couldn't be exercised prior to June 16, 1994.
NOTE 6: SUBSEQUENT EVENTS
See "PART II - Item 5. Other Information".
9
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The Company's loss for the three months ended September 30, 1997 was
equal to $60,999 compared to a loss of $347,429 for the three months ended
September 30, 1996. The loss for the current quarter was attributable to the
Company's continuing general and administrative expenses, interest,
depreciation, and amortization. Of total expenses of $69,658, depreciation and
amortization totaled $29,858, and interest expense for the quarter equaled
$17,480. None of the interest was paid during the quarter, and the interest is
attributable to the convertible notes payable which the Company has entered into
over the past year. Expenses have decreased dramatically in the three month
period ended September 30, 1997, compared to the same quarter last year. Total
expenses declined from $344,929 to $69,658. This is a result of the Company's
lack of funding to continue as a wireless cable entity. The Company entered into
a period of virtual inactivity during 1997 and is planning on entering a new
industry. See Item 5 - Other Information. Losses are expected to continue
throughout the development stage of the Company.
The Company had no revenues in the quarters ended September 30, 1997 or
September 30, 1996.
The Company has continued to operate with a working capital deficit
through the third quarter of 1997. As of September 30, 1997, the Company's
current liabilities of $2,652,610 exceeded its current assets of $29,859 by
$2,622,751. Of this negative working capital, $770,031 represents amounts owed
to related parties. In the first quarter of 1999, the Company successfully
completed a plan whereby certain assets were sold to a third party in exchange
for that company's stock. This third party's stock in addition to the issuance
of Series A Preferred stock in the Company were used to satisfy the majority of
the Company's non-related party debt. See Part II - Other Information.
The Company believes that as a result of the satisfaction of most of
its note holders, it can successfully move forward in a new business enterprise.
The Company is currently seeking opportunities within the Internet industry that
would be less capital intensive than the wireless cable industry in which the
Company was never able to adequately finance development.
Should the Company be unable to satisfy its note holders and other
creditors through the issuance of stock, its ability to continue as a going
concern will be in doubt.
PART II - OTHER INFORMATION
ITEM 5. Other Information.
In 1998, the Company issued approximately 530,000 shares of its Series A
Preferred stock to satisfy debts and liabilities in the amount of $385,000.
In the first quarter of 1999, the Company sold certain wireless cable licenses
in exchange for stock in another company. This stock along with 804,061 shares
of the Company's Series A Preferred stock were used to satisfy notes which
totaled $491,112 and had accrued interest of nearly $150,000. The Company is in
negotiation with other note holders and believes that it can continue to satisfy
these obligations with the issuance of additional stock.
Should it be successful in continuing to satisfy its delinquent obligations
through the issuance of its stock, the Company anticipates moving forward with
plans in the Internet industry. Currently, the Company is in negotiations to
acquire a web hosting business that will bring immediate revenues to the
Company. Additionally, the Company is planning a launch of its own e-commerce
site through which certain merchandise will be sold and auctioned over the
Internet.
10
<PAGE>
ITEM 6. Exhibits and Reports on Form 8-K
(a) Reports on Form 8-K.
None.
SIGNATURES
Pursuant to the requirements 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.
Dated: March 19, 1999
SUPERIOR WIRELESS COMMUNICATIONS, INC.
Jon Richard Marple,
Acting President and Chairman,
Chief Executive Officer and
Chief Financial Officer
11
<TABLE> <S> <C>
<ARTICLE>
5
<LEGEND>
This schedule contains summary financial information extracted from
Superior Wireless Communications, Inc. September 30, 1997 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 859
<SECURITIES> 0
<RECEIVABLES> 29,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 29,859
<PP&E> 110,801
<DEPRECIATION> (73,660)
<TOTAL-ASSETS> 1,248,263
<CURRENT-LIABILITIES> 2,652,610
<BONDS> 0
6,005
0
<COMMON> 0
<OTHER-SE> (1,410,352)
<TOTAL-LIABILITY-AND-EQUITY> 1,219,463
<SALES> 0
<TOTAL-REVENUES> 12,242
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 209,248
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 56,610
<INCOME-PRETAX> (253,616)
<INCOME-TAX> 800
<INCOME-CONTINUING> (254,416)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (254,416)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
