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: June 30, 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
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)
Registrant'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 registrant's Common Stock on
August 24, 1999 was 2,952,229.
1
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements.
The following Financial Statements of the Company and related notes are
included herein:
Balance Sheets as of June 30, 1998 and December 31, 1997;
Statements of Income for the three months ended June 30, 1998 and for
the three months ended June 30, 1997;
Statements of Income for the six months ended June 30, 1998 and for the
six months ended June 30, 1997;
Statements of Income for the three and six months ended June 30, 1998;
Statement of Cash Flows for the six months ended June 30, 1998 and
June 30, 1997;
Notes to Financial Statements.
2
<PAGE>
SUPERIOR WIRELESS COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
------------------ ------------------
ASSETS
Current Assets:
<S> <C> <C>
Cash $ 687 943
Accounts Receivable & Prepaids 0 0
------------------ ------------------
Total Current Assets 687 943
Property, Plant, & Equipment 23,729 31,548
Other Assets:
Deposits 0 0
Licenses & Other 715,803 978,239
------------------ ------------------
715,803 978,239
------------------ ------------------
TOTAL ASSETS $ 740,219 $ 1,010,730
================== ==================
LIABILITIES & STOCKHOLDERS EQUITY
Current Liabilities:
Accounts Payable $ 120,642 $ 120,642
Accrued Liabilities 679,862 687,177
Note Payable 935,026 875,066
Income Taxes Payable 0 900
Current Portion of Long-Term Debt 0 0
Payable - Related Parties 1,034,881 906,846
------------------ ------------------
Total Current Liabilities 2,770,411 2,590,631
Long-Term Debt 0 175,832
------------------ ------------------
Total Liabilities 2,770,411 2,766,463
Stockholders Equity:
Preferred Series A, $.001 par value;
Authorized 15,000,000 shares;
Issued and Outstanding 5,995,253 at 12/31/97
and 6,026,575 at 6/30/98 6,026 5,995
Additional Paid-in Capital 2,109,422 2,101,684
Retained Earnings (Deficit) (4,145,640) (3,863,412)
------------------ ------------------
Total Stockholders Equity (2,030,192) (1,755,733)
------------------ ------------------
TOTAL LIABILITIES &
STOCKHOLDERS EQUITY $ 740,219 $ 1,010,730
================== ==================
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
SUPERIOR WIRELESS COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
1998 1997
------------------ ------------------
<S> <C> <C>
Revenues From License Sales $ 0 $ 0
Cost of Licenses Sold 0 0
------------------ ------------------
Gross Profit 0 0
Other Income 2,000 0
General & Administrative Expenses:
Travel & Auto Expense 1,501 2,767
Postage & Delivery 225 0
Office Expenses 681 325
Outside & Professional Services 3,119 0
Rent 2,000 750
Salaries - Officers 18,000 18,000
Depreciation & Amortization 26,096 33,534
Bank Charges 43 112
Insurance 774 0
Telephone Expense 965 785
Miscellaneous Expense 0 0
------------------ ------------------
Total General & Administrative Expenses 53,404 56,273
------------------ ------------------
Net Loss Before Interest and Taxes (51,404) (56,273)
Interest Expense 77,136 18,501
State Income Taxes 0 0
------------------ ------------------
NET INCOME (LOSS) $ (128,540) $ (74,774)
================== ==================
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
SUPERIOR WIRELESS COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1998 1997
------------------ ------------------
<S> <C> <C>
Revenues From License Sales $ 0 $ 0
Cost of Licenses Sold 0 0
------------------ ------------------
Gross Profit 0 0
Other Revenues 2,000 3,583
Loss on Abandonment (44,168) 0
------------------ ------------------
Total Revenue (42,168) 3,583
General & Administrative Expenses:
Brochures & Marketing 0 662
Travel & Auto Expense 4,790 13,598
Postage & Delivery 376 1,263
Payroll Taxes 0 38
Office Expenses 1,006 325
Outside & Professional Services 3,744 30,085
Rent 5,000 750
Salaries - Officers 36,000 36,000
Depreciation & Amortization 52,255 67,339
Bank Charges 122 302
Insurance 1,060 0
Seminars & Conventions 1,250 1,904
Tower Lease Payments 0 2,060
Telephone Expense 2,150 2,518
Computer Expense 0 226
Other Taxes & Licenses 86 0
Miscellaneous 0 0
------------------ ------------------
Total General & Administrative Expenses 107,839 157,070
------------------ ------------------
Net Loss Before Interest and Taxes (150,007) (153,487)
Interest Expense 132,221 39,130
State Income Taxes 0 800
------------------ ------------------
NET INCOME (LOSS) $ (282,228) $ (193,417)
================== ==================
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
SUPERIOR WIRELESS COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
June 30, 1998
Three Months Six Months
------------------ ------------------
<S> <C> <C>
Revenues From License Sales $ 0 $ 0
Cost of Licenses Sold 0 0
------------------ ------------------
Gross Profit 0 0
Other Revenues 2,000 2,000
Loss on Abandonment 0 (44,168)
------------------ ------------------
Total Revenue 2,000 (42,168)
General & Administrative Expenses:
Travel & Auto Expense 1,501 4,790
Postage & Delivery 225 376
Office Expenses 681 1,006
Outside & Professional Services 3,119 3,744
Rent 2,000 5,000
Salaries - Officers 18,000 36,000
Depreciation & Amortization 26,096 52,255
Bank Charges 43 122
Insurance 774 1,060
Seminars & Conventions 0 1,250
Telephone Expense 965 2,150
Other Taxes & Licenses 0 86
Miscellaneous 0 0
------------------ ------------------
Total General & Administrative Expenses 53,404 107,839
------------------ ------------------
Net Loss Before Interest and Taxes (51,404) (150,007)
Interest Expense 77,136 132,221
State Income Taxes 0 0
------------------ ------------------
NET INCOME (LOSS) $ (128,540) $ (282,228)
================== ==================
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
SUPERIOR WIRELESS COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1998 1997
------------------ ------------------
OPERATING ACTIVITIES
<S> <C> <C>
Net Income (Loss) $ (282,228) $ (193,417)
Adjustments:
Depreciation & Amortization 52,255 67,339
Changes in current accounts (714) (12,694)
(Increase) Decrease in Notes Receivable 0 0
------------------ ------------------
Net Cash Required by Operating Activities (230,687) (138,772)
FINANCING ACTIVITIES
Loans 187,995 139,751
Repayment of Loans (175,832) (2,111)
Liabilities Paid with Common Stock 0 0
Note Payable on Licenses Purchased 0 0
------------------ ------------------
Net Cash Provided (Required)
by Financing Activities 12,163 137,640
INVESTING ACTIVITIES
Disposal of Licenses 218,268 0
Purchase of Fixed Assets 0 0
------------------ ------------------
Net Cash Provided (Required)
By Investing Activities 218,268 0
------------------ ------------------
Increase (Decrease) in Cash and Cash Equivalents (256) (1,132)
Cash and Cash Equivalents at Beginning of Period 943 1,197
------------------ ------------------
Cash and Cash Equivalents at End of Period $ 687 $ 65
================== ==================
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
SUPERIOR WIRELESS COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1998 and 1997
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited 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 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"). The rate of this conversion was dependent on
the price of the Company's Common Stock prior to 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. 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 was effective simultaneous to the reverse stock split described
below.
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. (See PART II- Other Information). This resulted in
2,952,229 shares of common stock outstanding as of August 16, 1999.
8
<PAGE>
SUPERIOR WIRELESS COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (Continued)
SIX MONTHS ENDED JUNE 30, 1998 and 1997
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 June 30, 1998 the Company owed $1,034,879 to related parties for accrued
compensation, loans and sales to and payments made on behalf of the Company.
This balance was equal to $906,846 as of December 31, 1997.
NOTE 4: INCOME TAXES
The Company has available at June 30, 1998, net operating loss carryforwards of
approximately $4.2 million which may provide future tax benefits expiring in
June of 2008.
NOTE 5: WARRANTS
As of June 30, 1998, there were 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.
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 June 30, 1998 was equal to
$128,540 compared to a loss of $74,774 for the three months ended June 30, 1997.
The loss for the current quarter was attributable to the Company's continuing
General and Administrative Expenses, Interest as well as depreciation and
amortization. Of total expenses of $130,540, depreciation and amortization
totaled $26,096, salaries totaled $18,000 and interest expense for the quarter
equaled $77,136. None of the salaries or interest was paid during the quarter.
The interest is attributable to the convertible notes payable into which the
Company has entered. Expenses have increased from the same period a year ago,
primarily due to the increased interest expense. Losses are expected to continue
throughout the development stage of the Company.
The Company posted revenues of $2,000 in the quarter ended June 30, 1998.
These revenues were collections on the sale of fixed assets. The Company had no
revenues in the quarter ended June 30, 1997.
The Company has continued to operate with a working capital deficit through
the current quarter. As of June 30, 1998, the Company's current liabilities of
$2,770,411 exceeded its current assets of $687 by $2,669,754. Of this negative
working capital, $1,034,879 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.
As of August 1999, the Company has eliminated nearly all of its liabilities
through the issuance of additional shares of Series A Preferred stock and from
the proceeds of the sale of the majority of its assets. The Company has acquired
Media Rage of Utah, Inc., a Utah corporation. 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.
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
10
<PAGE>
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 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.
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 two quarters of 1999, the Company sold certain wireless cable
licenses in exchange for stock in another company. This stock along with
2,914,954 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 Item 5 below) 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, was 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.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Reports on Form 8-K.
None.
11
<PAGE>
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: August 24, 1999
SUPERIOR WIRELESS COMMUNICATIONS, INC.
Jon Richard Marple,
President, Chairman,
Chief Executive Officer and
Chief Financial Officer
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Superior Wireless Communications, Inc. June 30, 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 687
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 687
<PP&E> 83,666
<DEPRECIATION> (59,937)
<TOTAL-ASSETS> 740,219
<CURRENT-LIABILITIES> 2,770,411
<BONDS> 0
6,026
0
<COMMON> 0
<OTHER-SE> (2,036,218)
<TOTAL-LIABILITY-AND-EQUITY> 740,219
<SALES> 0
<TOTAL-REVENUES> 2,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 152,007
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 132,221
<INCOME-PRETAX> (282,228)
<INCOME-TAX> 0
<INCOME-CONTINUING> (282,228)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (282,228)
<EPS-BASIC> (.05)
<EPS-DILUTED> (.05)
</TABLE>
