U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 10-QSB/A
Amendment No. 2
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended February 28, 1998.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from ________________ to _______________.
Commission File Number 0-15482
WAVETECH INTERNATIONAL, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 86-0916826
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5210 E. WILLIAMS CIRCLE, SUITE 200
TUCSON, ARIZONA 85711
(Address of principal executive offices)
(520) 750-9093
(Issuer's telephone number)
WAVETECH, INC., FORMERLY INCORPORATED IN THE STATE OF NEW JERSEY
(Former name, former address, formal fiscal year, if changed from last report)
The undersigned Registrant hereby amends, in its entirety, its Quarterly Report
on Form 10-QSB for the Quarter Ended February 28, 1998, as follows:
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 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.
[X] Yes [ ] No
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: April 6, 1998.
-------------
Class No. of Shares Outstanding
----- -------------------------
Common Stock. Par Value $.001 16,203,095
Transitional Small Business Disclosure Format (Check One): [ ] Yes [X] No
<PAGE>
INDEX
WAVETECH INTERNATONAL, INC. AND SUBSIDIARIES
Page
----
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets
February 28, 1998 (Unaudited) and August 31, 1997
(Audited) . . . . . . . . . . . . . . . . . . . . . . . . . 3
Condensed Consolidated Statement of Operations for
the Six Month Periods Ended February 28, 1998 and
February 28, 1997 (Unaudited) . . . . . . . . . . . . . . . 4
Condensed Consolidated Statements of Operations for
the Three Month Periods Ended February 28, 1998 and
February 28, 1997 (Unaudited) . . . . . . . . . . . . . . . 5
Condensed Consolidated Statements of Cash Flows for
the Six Month Periods Ended February 28, 1998 and
February 28, 1997 (Unaudited) . . . . . . . . . . . . . . . 6
Notes to Condensed Consolidated Financial Statements -
February 28, 1998 and February 28, 1997
(Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . 7
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . 9
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . 12
ITEM 2. Change in Securities. . . . . . . . . . . . . . . . . . . . 12
ITEM 3. Defaults upon Senior Securities . . . . . . . . . . . . . . 12
ITEM 4. Submission of Matters to a Vote of Security Holders . . . . 12
ITEM 5. Other Information . . . . . . . . . . . . . . . . . . . . . 12
ITEM 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . 13
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2
<PAGE>
WAVETECH INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
FEBRUARY 28, 1998 (UNAUDITED) AND AUGUST 31, 1997
ASSETS
February 28 August 31
1998 1997
Current assets: ----------- -----------
Cash and cash equivalents $ 46,265 $ 13,329
Accounts receivable, net of allowance of $527 46,237 26,273
Prepaid expenses and other assets 10,547 9,725
----------- -----------
Total current assets 103,049 49,327
Property and equipment, net 333,782 410,182
Noncurrent assets:
Investment in Switch Telecommunications Pty Ltd 2,316,165 2,316,165
Intangibles, net 27,455 29,489
Deposits and other assets 80,083 35,633
----------- -----------
Total noncurrent assets 2,423,703 2,381,287
----------- -----------
Total assets $ 2,860,534 $ 2,840,796
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 457,507 $ 395,222
Accrued interest payable 5,355 5,248
Deferred revenue, current 71,428 71,428
Notes payable, current portion 273,000 172,071
Capital leases payable, current portion 56,119 56,119
----------- -----------
Total current liabilities 863,409 700,088
Noncurrent liabilities:
Capital leases payable 35,624 53,892
Unearned revenue - license fee 39,287 75,001
----------- -----------
Total liabilities 938,320 828,981
Stockholders' equity:
Common stock, par value
$.001 per share; 50,000,000 shares
authorized, 16,203,095 and 15,076,807 shares
issued and outstanding 16,203 15,077
Additional paid in capital 7,525,921 7,024,823
Accumulated deficit (5,619,910) (5,028,085)
----------- -----------
Total stockholders' equity 1,922,214 2,011,815
----------- -----------
Total liabilities and stockholders' equity $ 2,860,534 $ 2,840,796
=========== ===========
3
<PAGE>
WAVETECH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTH PERIODS ENDED FEBRUARY 28, 1998 AND FEBRUARY 28, 1997
(UNAUDITED)
1998 1997
----------- -----------
Revenues $ 114,389 $ 522,639
Expenses:
Cost of sales (exclusive of depreciation
and amortization shown separately below) 75,189 515,413
General and administrative 440,816 807,475
Depreciation and amortization 78,434 97,759
----------- -----------
Total expenses 594,439 1,420,647
Net loss from operations (480,050) (898,008)
Other income and expense:
Interest income 52 8,105
Interest expense (18,931) (5,838)
Debt conversion expense (92,894)
----------- -----------
Total other income and expense (111,773) 2,267
Net loss (591,823) (895,741)
=========== ===========
Net loss per common share, basic $ (0.04) $ (0.06)
=========== ===========
Net loss per common share, diluted $ (0.04) $ (0.06)
=========== ===========
Weighted average number of shares
outstanding, basic 15,276,641 14,228,728
=========== ===========
Weighted average number of shares
outstanding, diluted 15,276,641 14,228,728
=========== ===========
4
<PAGE>
WAVETECH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIODS ENDED FEBRUARY 28, 1998 AND FEBRUARY 28, 1997
(UNAUDITED)
1998 1997
------------ ------------
Revenues $ 45,502 $ 514,240
Expenses:
Cost of sales (exclusive of depreciation
and amortization shown separately below) 22,619 464,184
General and administrative 232,037 404,377
Depreciation and amortization 39,217 48,740
------------ ------------
Total expenses 293,873 917,301
Net loss from operations (248,371) (403,061)
Other income and expense:
Interest income 50 1,555
Interest expense (6,121) (3,538)
------------ ------------
Total other income and expense (6,071) (1,983)
Net loss (254,442) (405,044)
============ ============
Net loss per common share, basic $ (0.02) $ (0.03)
============ ============
Net loss per common share, diluted $ (0.02) $ (0.03)
============ ============
Weighted average number of shares
outstanding, basic 15,406,797 14,314,442
============ ============
Weighted average number of shares
outstanding, diluted 15,406,797 14,314,442
============ ============
5
<PAGE>
WAVETECH INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX-MONTH PERIODS ENDED FEBRUARY 28, 1998 AND 1997 (UNAUDITED)
1998 1997
------------ ------------
Cash flows from operating activities:
Net Loss $ (591,823) $ (895,741)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 78,434 97,759
Common stock issued for services and accrued
interest 50,196 23,333
Debt conversion expense 92,894 --
Changes in assets and liabilities:
(Increase) in other current assets (20,786) (23,084)
Decrease in inventory deposit -- 241,037
(Increase) in intangibles due to asset purchase
of Telplex, Inc. -- (25,000)
Increase in accounts payable and accrued expenses 62,282 160,108
Increase in accrued interest payable 107 --
Decrease in unearned revenue (35,714) (299,985)
------------ ------------
Total Adjustments 227,413 174,168
------------ ------------
Net cash used in operating activities (364,410) (721,573)
Cash flows from investing activities:
Purchase of property and equipment -- (21,897)
Increase in other assets (44,450) --
------------ ------------
Net cash used in investing activities (44,450) (21,897)
Cash flows from financing activities:
Proceeds from notes payable 460,000 --
Payments on capital lease payable (18,268) (11,703)
Proceeds from sale of warrants -- 20,000
Proceeds from common stock issued 64 --
------------ ------------
Net cash provided by financing activities 441,796 8,297
Net increase (decrease) in cash 32,936 (735,173)
Cash and cash equivalents, beginning of period 13,329 857,488
------------ ------------
Cash and cash equivalents, end of period $ 46,265 $ 122,315
============ ============
6
<PAGE>
WAVETECH INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for a fair
presentation have been included. Operation results for the three-month and
six-month periods ended February 28, 1998 are not necessarily indicative of the
results that may be expected for the fiscal year ending August 31, 1998. For
further information, refer to the Company's financial statements for the year
ended August 31, 1997 included in its Form 10-KSB, as amended.
The consolidated financial statements include the accounts of Wavetech
International, Inc. (the Company), its wholly owned subsidiaries, Interpretel,
Inc. (Interpretel) and Telplex International Communications, Inc. (Telplex). All
material intercompany balances and transactions have been eliminated.
NOTE 2 - NOTES PAYABLE
During the three months ended November 30, 1997, the Company received
proceeds of $250,000 from the issuance of convertible notes payable. The notes
were issued with attached warrants (the "Warrants") to purchase an aggregate of
40,000 shares of the Company's Common Stock. Each of the Warrants is convertible
at any time prior to October 24, 1999 by the holder thereof at an exercise price
of $0.46 per share. The warrants were granted at the fair market value of the
Common Stock on the date of the grant. The warrants were valued at $18,400.
These warrants remained outstanding at February 28, 1998. The Notes accrue
interest at a rate of 12% per annum and principal and accrued interest thereon
is payable on or before April 24, 1998 in cash or, at the option of each holder,
in a number of shares of the Company's Common Stock equal to the aggregate
unpaid principal and accrued interest divided by a price per share equal to the
lesser of $0.35 or 80% of the closing bid price on the Nasdaq SmallCap Market on
the date of conversion. On November 30, 1997, $200,000 in notes payable along
with accrued interest of $2,067 was converted to 577,333 shares of Common Stock.
The beneficial conversion feature of $92,894 was charged to expense.
On November 30, 1997, the Company converted $165,335 in existing notes
payable plus accrued interest of $4,172 to 484,307 shares of Common Stock. The
notes accrued interest at 12% per annum.
In February, 1998, the Company established a $450,000 secured
line-of-credit with Imagitel, Inc. to facilitate interim financing needs. The
interest rate is 12 percent per annum. Interest and principal are due July 1,
1998. The note is secured by the assets of the Company. As of February 28, 1998,
the Company had total borrowings of $210,000 under the line-of-credit.
7
<PAGE>
NOTE 3 - PER SHARE DATA
In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings Per Share," ("SFAS 128") which revises the calculation and
presentation of earnings per share. SFAS 128 is effective for Wavetech's second
quarter ended February 28, 1998, and retroactive application is required.
Per share data is based on the weighted average number of shares
outstanding throughout the periods. For the three months and six months ended
February 28, 1998, earnings per share were calculated with a weighted average
number of common shares outstanding of 15,406,797 and 15,276,641 respectively.
At February 28, 1998, the Company had in existence 2,320,000 stock options (net
of cancelled grants) at exercise prices ranging from $0.375 to $0.81 per share
and 3,109,403 common stock warrants at exercise prices ranging from $0.38 to
$3.50 per share. At February 28, 1997, the Company had in existence 3,000,000
stock options at exercise prices ranging from $0.66 to $0.81 per share and
2,964,403 common stock warrants at exercise prices ranging from $1.00 to $3.50
per share. Since there is a loss from continuing operations inclusion of options
and warrants would have an anti-dilutive effect.
NOTE 4 - RESTATEMENT OF FINANCIAL STATEMENTS
Contained in the Company's financial statements for the quarter and the six
months ended February 28, 1998 was the recognition of revenue related to the
receipt of payment of licensing fee. The financial statements have been
corrected to recognize revenue from the licensing fee over the seven-year term
of the licensing agreement. Revenue previously recognized for the licensing fee
was zero. Revenue recognized for the licensing fee in the restated financial
statements is $17,857 and $35,714 for the quarter and the six months ended
February 28, 1998, respectively. The correction resulted in an increase in
revenue recognized in the amount of $17,857 and $35,714 for the quarter and the
six months ended February 28, 9198. The correction resulted in an decrease in
the net loss recognized in the amount of $17,857 and $35,714 for the quarter and
the six months ended February 28, 1998. This correction resulted in a change in
the net loss per common share from $(0.02) and $(0.03) per common share in the
previously issued financial statements to $(0.02) and $(0.04) per common share
in the restated financial statements for the quarter and the six months,
respectively.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
This quarterly report contains certain "forward-looking" statements,
including statements regarding, among other items, consummation of a
reorganization by the Company and Imagitel, Inc., and anticipated trends in the
Company's business. Actual results could differ materially from these
forward-looking statements as a result of a number of factors, including, but
not limited to, the need for additional financing, the Company's inability to
maintain the inclusion of its Common Stock on the Nasdaq SmallCap Market,
failure of the Company's stockholders to approve the contemplated
reorganization, intense competition in various aspects of the Company's
business, and other factors described herein as well as the Company's reports
and other documents filed from time to time with the U.S. Securities and
Exchange Commission.
OPERATIONS OVERVIEW
The Company specializes in creating interactive communication systems
through the application of "intelligent" call processing technology and
proprietary software to reflect or target the needs of an identified audience.
These systems are often used as privatized networks for organizations and their
members, companies and their suppliers and/or customers and special purpose
groups. During the three-month period ended February 28, 1998, the Company
continued to support its existing customer base.
On January 7, 1998, the Company announced that it signed a definitive
reorganization agreement with Imagitel, Inc., a privately held company
headquartered in Houston, Texas. Following the Reorganization, Wavetech shall
continue to exist, but do business under the name "Imagitel" and will continue
to offer enhanced telecommunications products and services. Under the terms of
the agreement, Imagitel, Inc. shall become a wholly-owned subsidiary of the
Company in exchange for all of the outstanding capital stock of Imagitel, Inc.
and former shareholders of Imagitel, Inc. will own approximately 82.6 percent of
the Company's Common Stock to be outstanding following the reorganization. The
merger has already been approved by the Board of Directors of both companies.
The agreement, which must be approved by Wavetech's shareholders and is subject
to certain adjustments for working capital and funded debt of the companies and
other terms, is expected to be completed in the second quarter of 1998.
Wavetech currently has 315 cardholders active on its system. Eleven new
customers subscribed during the quarter ended February 28, 1998. Although the
Company gained a few new customers, several existing customers were lost through
attrition.
RESULTS OF OPERATIONS
THREE MONTHS ENDED FEBRUARY 28, 1998 COMPARED TO
THREE MONTHS ENDED FEBRUARY 28, 1997
REVENUES. Revenues decreased to $45,502 for the three months ended February
28, 1998 from $514,240 for the three months ended February 28, 1997. The
decrease is due to revenue of $474,160 during the quarter ended February 28,
9
<PAGE>
1997 for the sale of the Interpretel System to Switch Telecommunications Pty Ltd
in Australia.
COST OF SALES. Cost of sales decreased to $22,619 for the three-month
period ended February 28, 1998 from $464,184 for the three-month period ended
February 28, 1997. $378,009 of the decrease was due to the cost of the
Interpretel System hardware and third party software that was sold to Switch in
1997. No direct mail promotions were created and mailed in the three-month
period ended February 28, 1998, which resulted in a decrease of $62,190 in
marketing and fulfillment expenses.
GENERAL AND ADMINISTRATIVE EXPENSES. Other costs decreased to $232,037 for
the three-month period ended February 28, 1998 from $404,377 for the three-month
period ended February 28, 1997. Payroll and related expenses decreased by
$118,359. This decrease was due largely to a reduction in the number of persons
employed by the Company. This reduction was implemented primarily to reduce the
Company's operating expenses, as current programs were not generating
significant revenues. Fees paid for legal and other professional services
decreased by $28,481. Marketing expenses for general Company collateral
decreased by $17,289.
DEPRECIATION AND AMORTIZATION EXPENSES. Depreciation and amortization
expenses decreased to $39,217 for the three month period ended February 28, 1998
from $48,740 for the three month period ended February 28, 1997.
INTEREST EXPENSE. Interest expense increased to $6,121 for the three-month
period ended February 28, 1998 from $3,538 for the three-month period ended
February 28, 1997. The increase in interest expense was related to interest from
existing notes payable and capital leases.
SIX MONTHS ENDED FEBRUARY 28, 1998 COMPARED TO
SIX MONTHS ENDED FEBRUARY 28, 1997
REVENUES. Total revenues decreased to $114,389 for the six months ended
February 28, 1998 from $522,639 for the six months ended February 28, 1997.
$474,160 of the decrease was related to revenue in the six month period ended
February 28, 1997 for the sale of the Interpretel System to Switch. Revenues
from resale of international minutes increased by $25,116.
COST OF SALES. Cost of sales decreased to $75,189 for the six months ended
February 28, 1998 from $515,413 for the six months ended February 28, 1997.
$378,009 of the decrease was attributable to the costs associated with the sale
of the Interpretel System during the quarter ended February 28, 1997. $67,556 of
the decrease was due to development and printing costs for marketing and
fulfillment collateral being produced during the six months period ended
February 28, 1997. Call center expenses decreased by $6,079 as customer service
calls were being answered in-house during the six months ended February 28,
1998, rather than use an outside call center. Costs associated with the resale
of international minutes increased by $20,810 during the six months ended
February 28, 1998.
GENERAL AND ADMINISTRATIVE EXPENSES. Expenses decreased to $440,816 for the
six months ended February 28, 1998 from $807,475 for the six months ended
February 28, 1997. $216,150 was due to a decreased in payroll and related
10
<PAGE>
expenses as the Company reduced its workforce during the six-month period ended
February 28, 1998. A decrease of $57,497 was related to expenses incurred in the
six months ended February 28, 1997 for creating general marketing materials for
the Company. Investor relations expenses decreased by $25,062, primarily due to
a Company decision not to attend a major investor relations conference during
the six months ended February 28, 1998. Travel and related expenses decreased by
$20,200 due to less travel for sales presentations. Professional fees decreased
by $14,555 due to using fewer outside consulting services during the six months
ended February 28, 1998.
DEPRECIATION AND AMORTIZATION EXPENSES. Depreciation and amortization
expenses decreased to $78,434 during the six month period ended February 28,
1998 from $97,759 for the six month period ended February 28, 1997.
INTEREST EXPENSE. Interest expense increased to $18,931 for the six months
ended February 28, 1998 from $5,838 for the six months ended February 28, 1997.
The increase in interest expense was related to interest from existing notes
payable and capital leases.
LIQUIDITY AND CAPITAL RESOURCES
As of February 28, 1998, the Company had cash of $46,265 and an additional
$240,000 available remaining on a line of credit, which is secured by the
Company's assets. The Company is continually negotiating agreements for
additional financing although it does not presently have any agreements, binding
or non-binding, with respect to any such financing.
INFLATION
Although the Company's operations are influenced by general economic trends
and technology advances in the telecommunications industry, the Company does not
believe that inflation has a material effect on its operations.
RISKS ASSOCIATED WITH YEAR 2000
Many computer programs were designed to recognize calendar years by their last
two digits. As a result, such programs are expected to misidentify dates
commencing in calendar year 2000. This problem is referred to as the "Year 2000
Issue." These errors are likely to lead to computer errors, miscalculations,
delays and business interruptions if not properly corrected in a timely manner.
The Company's main billing program was originally written to accept dates from
the year 2000 and beyond. However, the Company plans on having an independent
consultant review the billing system for the purpose of thoroughly testing its
operation for readiness associated with the Year 2000 Issue. Estimated costs for
the consultant and associated testing activities is $700. The Company
anticipates that such assessment activities will be completed by March 31, 1999.
The Company has completed an assessment of all other internal systems and has
determined that no modifications to such systems are necessary. Total costs
incurred to date by the Company in connection with its assessment of its
internal vulnerability to the Year 2000 Issue equal approximately $5,000.
11
<PAGE>
The Company has also contacted its major supplier, which handles the call
processing software and supports platform services. The Company's call
processing hardware and operating systems are not currently able to address the
Year 2000 Issue. Modifications to this system have begun and the host server's
operating system is expected to be compliant no later than the end of the first
quarter of calendar year 1999. The Company currently estimates that its costs to
be incurred with such modification will be approximately $50,000. The Company
does not have material relationships with any other third partners upon which
its business and operations are substantially dependent. However, it intends to
seek assurances from any third parties with which it enters into agreements in
the future that the systems are compliant with the Year 2000 Issue.
Presently, the Company does not have a contingency plan in the event it is
unable to correct any vulnerability to the Year 2000 Issue, but is reviewing
alternatives, such as using a service bureau to temporarily process calls and
run applications, should any problems arise in system operations.
The Company believes there exist multiple alternative suppliers for these
services. However, if it is unable to obtain such services and at terms
acceptable to it, it may be forced to interrupt or suspend its services. In
addition, even if available, the Company may be required to incur substantially
higher costs in order to provide such services. The Company has adequate
resources to complete its Year 2000 assessment and any necessary modifications.
PART II
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGE IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
On January 5, 1998, the Company executed a definitive reorganization
agreement with Imagitel, Inc. Pursuant to such agreement, Imagitel, Inc. will
become a wholly-owned subsidiary of the Company and the former shareholders
of Imagitel, Inc. will be issued a number of shares of the Company's Common
Stock equal to approximately 84 percent of the total Common Stock to be
outstanding following the reorganization. In addition, the Company will change
12
<PAGE>
its name to "Imagitel" following the reorganization. The Company intends to
solicit approval by its stockholders of the issuance of the shares to be held by
the former Imagitel, Inc. shareholders as a result of the reorganization. A vote
of the Company's stockholders shall be held at the 1998 Annual Meeting presently
scheduled to occur on or about May 18, 1998.
On January 12, 1998, the Company changed its corporate domicile from New
Jersey to Nevada. In connection with this change, the Company's name was
required to be changed from "Wavetech, Inc." to "Wavetech International, Inc."
This change of corporate domicile, and certain differences in the Company's
organizational documents resulting therefrom were previously approved by the
Company's stockholders at the 1997 Annual Meeting.
In order to maintain listing of its Common Stock on the Nasdaq SmallCap
Market, the Company is required to satisfy certain quantitative and qualitative
requirements. On February 27, 1998, The Nasdaq Stock Market, Inc. notified the
Company that it was out of compliance with the requirement to maintain a minimum
bid price of its Common Stock of $1.00 per share. If approved by the Company's
shareholders, the Company intends to effect a one for six reverse split of its
outstanding shares of Common Stock in order to, among other things, increase the
minimum bid price of its Common Stock sufficiently so as to satisfy the $1.00
requirement. If, however, the Company's Common Stock fails to satisfy the $1.00
minimum bid requirement for 10 or more consecutive trading days prior to May 28,
1998, the Common Stock shall be delisted from the Nasdaq SmallCap Market.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8K
a) Exhibits.
Number Description Method of Filing
- ------ ----------- ----------------
2 Reorganization Agreement, dated January 5, *
1998, among Wavetech Inc., Wavetech Interim,
Inc. and Imagitel, Inc.
3.1 Articles of Incorporation, as originally *
filed with the Nevada Secretary of State
on February 19, 1998, and as amended to date.
3.2 Bylaws of Wavetech International, Inc. *
27 Financial Data Schedule **
- --------------
* Incorporated by reference to the like numbered exhibit to the Company's
Form 10-QSB for the Quarter Ended February 28, 1998, filed on April 14,
1998
** Filed herewith
b) Reports on Form 8-K
None.
13
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act of 1934, the undersigned
caused this amended report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: December 4, 1998 WAVETECH INTERNATIONAL, INC.
By: /s/ Gerald I. Quinn
-------------------------------------
Gerald I. Quinn
President and Chief Executive Officer
By: /s/ Lydia M. Montoya
-------------------------------------
Lydia M. Montoya
Chief Financial Officer
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
Consolidated Balance Sheet and Consolidated Statements of Operations, ended
February 28, 1998 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
<CASH> 46,265
<SECURITIES> 0
<RECEIVABLES> 46,764
<INVENTORY> 0
<ALLOWANCES> 527
<CURRENT-ASSETS> 103,049
<PP&E> 788,110
<DEPRECIATION> (454,328)
<TOTAL-ASSETS> 2,860,534
<CURRENT-LIABILITIES> 863,409
<BONDS> 0
0
0
<COMMON> 16,203
<OTHER-SE> 1,906,011
<TOTAL-LIABILITY-AND-EQUITY> 2,860,534
<SALES> 114,389
<TOTAL-REVENUES> 114,389
<CGS> 75,189
<TOTAL-COSTS> 75,189
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</TABLE>
