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, 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 (IRS 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 September 30, 1998 and December 31, 1997;
Statements of Income for the three months ended September 30, 1998 and for
the three months ended September 30, 1997;
Statements of Income for the nine months ended September 30, 1998 and for
the nine months ended September 30, 1997;
Statements of Income for the three and nine months ended September 30, 1998
Statement of Cash Flows for the nine months ended September 30, 1998 and
September 30, 1997;
Notes to Financial Statements.
2
<PAGE>
SUPERIOR WIRELESS COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------------ ------------------
ASSETS
Current Assets:
<S> <C> <C>
Cash $ 1,232 943
Accounts Receivable & Prepaids 0 0
------------------ ------------------
Total Current Assets 1,232 943
Property, Plant, & Equipment 22,741 31,548
Other Assets:
Deposits 0 0
Licenses & Other 693,586 978,239
------------------ ------------------
693,586 978,239
------------------ ------------------
TOTAL ASSETS $ 717,559 $ 1,010,730
================== ==================
LIABILITIES & STOCKHOLDERS EQUITY Current Liabilities:
Accounts Payable $ 120,642 $ 120,642
Accrued Liabilities 318,846 687,177
Note Payable 955,306 875,066
Income Taxes Payable 600 900
Payable - Related Parties 1,094,655 906,846
------------------ ------------------
Total Current Liabilities 2,490,049 2,590,631
Long-Term Debt 0 175,832
------------------ ------------------
Total Liabilities 2,490,049 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 6,541,656 at 9/30/98 6,532 5,995
Additional Paid-in Capital 2,487,282 2,101,684
Retained Earnings (Deficit) (4,266,304) (3,863,412)
------------------ ------------------
Total Stockholders Equity (1,772,490) (1,755,733)
------------------ ------------------
TOTAL LIABILITIES &
STOCKHOLDERS EQUITY $ 717,559 $ 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
September 30,
1998 1997
------------------ ------------------
<S> <C> <C>
Revenues From License Sales $ 0 $ 0
Cost of Licenses Sold 0 0
------------------ ------------------
Gross Profit 0 0
Other Income 5,000 8,659
General & Administrative Expenses:
Travel & Auto Expense 2,536 602
Postage & Delivery 99 0
Payroll Taxes 0 622
Office Expenses 1,024 0
Outside & Professional Services 0 1,000
Rent 2,000 0
Salaries - Officers 18,000 18,000
Director's Fees 18,000 0
Depreciation & Amortization 26,054 29,858
Bank Charges 56 86
Insurance 1,626 514
Telephone Expense 1,174 1,040
Computer Expense 264 0
Other Taxes & Licenses 601 456
Miscellaneous Expense 328 0
------------------ ------------------
Total General & Administrative Expenses 71,762 52,178
------------------ ------------------
Net Loss Before Interest and Taxes (66,762) (43,519)
Interest Expense 53,902 17,480
State Income Taxes 0 0
------------------ ------------------
NET INCOME (LOSS) $ (120,664) $ (60,999)
================== ==================
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
SUPERIOR WIRELESS COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1998 1997
------------------ ------------------
<S> <C> <C>
Revenues From License Sales $ 0 $ 0
Cost of Licenses Sold 0 0
------------------ ------------------
Gross Profit 0 0
Other Revenues 7,000 12,242
Loss on Abandonment (44,168) 0
------------------ ------------------
Total Revenues (37,168) 12,242
General & Administrative Expenses:
Brochures & Marketing 0 662
Travel & Auto Expense 7,403 14,200
Postage & Delivery 493 1,263
Payroll Taxes 0 660
Office Expenses 2,263 325
Outside & Professional Services 3,743 31,085
Rent 7,000 750
Salaries - Officers 54,000 54,000
Directors Fees 18,000 0
Depreciation & Amortization 78,308 97,197
Bank Charges 179 389
Insurance 2,686 514
Seminars & Conventions 1,250 1,904
Telephone Expense 3,323 3,558
Computer Expense 264 226
Other Taxes & Licenses 687 455
Miscellaneous 1 2,060
------------------ ------------------
Total General & Administrative Expenses 179,600 209,248
------------------ ------------------
Net Loss Before Interest and Taxes (216,768) (197,006)
Interest Expense 186,123 56,610
State Income Taxes 0 800
------------------ ------------------
NET INCOME (LOSS) $ (402,891) $ (254,416)
================== ==================
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
SUPERIOR WIRELESS COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
September 30, 1998
Three Months Nine Months
------------------ ------------------
<S> <C> <C>
Revenues From License Sales $ 0 $ 0
Cost of Licenses Sold 0 0
------------------ ------------------
Gross Profit 0 0
Other Revenues 7,000 5,000
Loss on Abandonment (44,168) 0
------------------ ------------------
Total Revenues (37,168) 5,000
General & Administrative Expenses:
Travel & Auto Expense 7,403 2,536
Postage & Delivery 493 99
Office Expenses 2,263 1,024
Outside & Professional Services 3,743 0
Rent 7,000 2,000
Salaries - Officers 54,000 18,000
Directors Fees 18,000 18,000
Depreciation & Amortization 78,308 26,054
Bank Charges 179 56
Insurance 2,686 1,626
Seminars & Conventions 1,250 0
Telephone Expense 3,323 1,174
Computer Expense 264 264
Other Taxes & Licenses 687 601
Miscellaneous 1 328
------------------ ------------------
Total General & Administrative Expenses 179,600 71,762
------------------ ------------------
Net Loss Before Interest and Taxes (216,768) (66,762)
Interest Expense 186,123 53,902
State Income Taxes 0 0
------------------ ------------------
NET INCOME (LOSS) $ (402,891) $ (120,664)
================== ==================
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
SUPERIOR WIRELESS COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1998 1997
------------------ ------------------
OPERATING ACTIVITIES
<S> <C> <C>
Net Income (Loss) $ (402,891) $ (254,416)
Adjustments:
Depreciation & Amortization 78,308 97,196
Changes in current accounts:
(Increase) Decrease in Notes Receivable (368,331) (37,639)
------------------ ------------------
Net Cash Required by Operating Activities (692,914) (194,859)
FINANCING ACTIVITIES
Loans 268,049 194,582
Repayment of Loans (175,832) (2,111)
Use of Stock for Debt Payments 316,079 0
------------------ ------------------
Net Cash Provided (Required)
by Financing Activities 408,296 192,471
INVESTING ACTIVITIES
Licenses Sold/Abandoned 284,653 0
Purchase of Fixed Assets 0 2,050
------------------ ------------------
Net Cash Provided (Required)
By Investing Activities 284,653 2,050
------------------ ------------------
Increase (Decrease) in Cash and Cash Equivalents 35 (338)
Cash and Cash Equivalents at Beginning of Period 1,197 1,197
------------------ ------------------
Cash and Cash Equivalents at End of Period $ 1,232 $ 859
================== ==================
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
SUPERIOR WIRELESS COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 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)
NINE MONTHS ENDED SEPTEMBER 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 September 30, 1998 the Company owed $1,094,655 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 September 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 September 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 September 30, 1998 was equal
to $120,664 compared to a loss of $60,999 for the three months ended September
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 $125,664, depreciation and amortization
totaled $26,054 and interest expense for the quarter equaled $53,902. None of
the interest was paid during the quarter and the interest is attributable to the
convertible notes payable that the Company has entered into over the past year.
Losses are expected to continue throughout the development stage of the Company.
The Company recorded $5,000 in revenues from the sale of certain licenses
in the quarter ended September 30, 1998. The Company had no revenues in the
quarter ended September 30, 1997.
The Company has continued to operate with a working capital deficit through
the current quarter. As of September 30, 1998, the Company's current liabilities
of $2,490,049 exceeded its current assets of $1,232 by $2,488,817. Of this
negative working capital, $1,094,655 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
processing, transmission and other services provided by third-party service
providers, including, without
10
<PAGE>
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.
11
<PAGE>
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.
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. September 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,232
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,232
<PP&E> 83,666
<DEPRECIATION> (60,925)
<TOTAL-ASSETS> 717,559
<CURRENT-LIABILITIES> 2,490,049
<BONDS> 0
6,532
0
<COMMON> 0
<OTHER-SE> (1,779,022)
<TOTAL-LIABILITY-AND-EQUITY> 717,559
<SALES> 0
<TOTAL-REVENUES> 7,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 216,768
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 186,123
<INCOME-PRETAX> (402,891)
<INCOME-TAX> 0
<INCOME-CONTINUING> (402,891)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (402,891)
<EPS-BASIC> (.06)
<EPS-DILUTED> (.06)
</TABLE>
