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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ________________ to ______________
Commission file number: 0-20999
CHADMOORE WIRELESS GROUP, INC.
(Exact name of small business issuer as specified in its charter)
COLORADO 84-1058165
- ----------------------------------- -------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization No.) Identification No.)
4720 POLARIS STREET, LAS VEGAS, NEVADA 89103
---------------------------------------------
(Address of principal executive offices)
(702) 891-5255
-----------------------------
(Issuer's telephone number)
--------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or 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 [X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:
AS OF JULY 31, 1996 13,099,065 SHARES OF COMMON STOCK, $.001 PAR VALUE,
OUTSTANDING.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
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INDEX
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ITEM 1. FINANCIAL STATEMENTS.
Unaudited Consolidated Financial Statements of Chadmoore
Wireless Group, Inc. and Subsidiaries (Formerly CapVest Internationale, Ltd.):
Consolidated Balance Sheets:
As of June 30, 1996 and December 31, 1995 1-2
Consolidated Statements of Operations:
For the Six Months Ended June 30, 1996 and 1995 and Cumulative
from January 1, 1994 to June 30, 1996 3
For the Three Months Ended June 30, 1996 and 1995 4
Consolidated Statements of Cash Flows:
For the Six Months Ended June 30, 1996 and 1995 and Cumulative
from January 1, 1994 to June 30, 1996 5-6
Consolidated Statement of Changes in Shareholders' Equity
For the Six Months Ended June 30, 1996
For the Twelve Months Ended December 31, 1995 and 1994 7-8
Notes to Unaudited Consolidated Financial Statements 9-28
ITEM 2. PLAN OF OPERATION 29-31
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 31
ITEM 2. CHANGES IN SECURITIES 31
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 31
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS 31
ITEM 5. OTHER INFORMATION 31
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 32-33
SIGNATURES 34
</TABLE>
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PART I. ITEM I. FINANCIAL STATEMENTS
CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30,1996 December 31,
ASSETS (Unaudited) 1995
------ ----------- ----------
<S> <C> <C>
Current assets:
Cash $ 2,158,323 $ 188,029
Amounts held for shares issued (note 4) 250,000 675,000
Stock subscriptions receivable (note 5) 227,890 287,000
Accounts receivable 255,260 -
Inventory 190,202 -
Due from General Communications - 76,252
Prepaid property management rights (note 13) 100,453 117,813
Deposits 16,826 16,742
Other 26,641 7,813
Total current assets 3,225,595 1,368,649
----------- ----------
Investment in JJ & D LLC (note 3) 600,000 -
Property and equipment, net (note 6) 1,695,059 353,942
FCC licenses, net (note 7) 1,433,601 1,321,336
Organization costs, net of accumulated amortization of $7,056 and $5,370, respectively 9,803 11,489
Debt issuance costs, net (note 12 ) 414,167 -
Management Agreements (note 3, 10) 29,780,631 -
Customer Lists, net (note 3) 43,807 -
Other Receivable 20,000 20,000
Investment in license options (note 8) 2,926,976 2,007,958
Investment in options to acquire stock (note 3, 9) 3,342,113 -
Non-competition and consulting agreements, net of accumulated amortization $-0- and $94,838, - 258,121
respectively ----------- ----------
$43,491,752 $5,341,495
=========== ==========
</TABLE>
1
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CHADMOORE WIRELESS GROUP, INC.
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Balance Sheets
(Concluded)
<TABLE>
<CAPTION>
June 30,1996 December 31,
LIABILITIES AND SHAREHOLDERS' EQUITY (Unaudited) 1995
------------------------------------ ------------ ------------
<S> <C> <C>
Liabilities:
Current installments of long-term debt $ 196,632 $ 337,255
Accounts payable and accrued liabilities 587,186 361,641
Customer Deposits 700 -
Licenses - options payable 347,100 448,350
License option commission payable (note 8) 524,800 349,200
Capital lease obligations 25,630 -
Notes payable 100,000 -
Non-compete and consulting agreement - current - 119,225
Accrued interest 23,189 54,490
----------- -----------
Total current liabilities 1,805,237 1,670,161
Non compete and consulting agreements, excluding current installments (note 12) - 108,840
Capital lease obligations 29,201 -
Convertible notes payable (note 12) 4,000,000 -
Long term debt, excluding current installments, net 1,113,109 524,868
----------- -----------
Total Liabilities 6,947,547 2,303,869
----------- -----------
Commitments and contingencies (note 16)
Shareholders' equity:
Preferred stock, $.001 par value. Authorized 40,000,000 shares;
issued and outstanding -0- shares - -
Common stock, $.001 par value. Authorized 100,000,000 shares issued and outstanding;
11,479,398 shares at June 30, 1996 and 8,387,064 shares at December 31,1995 11,480 8,387
Additional paid-in capital 45,015,575 10,564,852
Stock subscribed (note 5) 1,466,140 324,807
Deficit accumulated during the development stage (9,948,990) (7,860,420)
----------- -----------
Total shareholders' equity 36,544,205 3,037,626
----------- -----------
$43,491,752 $ 5,341,495
=========== ===========
</TABLE>
See accompanying notes to unaudited consolidated financial statements
2
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CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Operations
For the Six Months Ended June 30, 1996 and June 30, 1995
<TABLE>
<CAPTION>
Period from
January 1,
1994
through
June 30, 1996 June 30, 1995 June 30, 1996
(Unaudited) (Unaudited) (Unaudited)
------------ ----------- ---------------
<S> <C> <C> <C>
Revenues
Radio services $ 98,166 $ - $ 98,166
Equipment sales 381,308 - 381,308
Maintenance and installation 296,869 - 296,869
Other 67,618 - 67,618
----------- ----------- -----------
843,961 - 843,961
Costs and expenses
Cost of sales 409,543 - 409,543
Salaries, wages and benefits 876,639 224,008 1,749,520
General and administrative 1,428,854 919,834 8,709,182
Depreciation and amortization 124,830 103,453 367,143
----------- ----------- -----------
2,839,866 1,247,295 11,235,388
----------- ----------- -----------
Loss from operations (1,995,905) (1,247,295) (10,391,427)
----------- ----------- -----------
Other income (expense)
Management fees (notes 2,3) 100,198 87,528 472,611
Interest expense (76,038) (78,383) (234,365)
Gain on sale of assets - - 330,643
Loss on retirement of note payable - - (32,404)
Other, net (116,825) - (94,048)
----------- ----------- -----------
(92,665) 9,145 442,437
----------- ----------- -----------
Net loss ($2,088,570) ($1,238,150) ($9,948,990)
=========== =========== ===========
Weighted-average number of common shares outstanding 9,700,120 4,750,715 9,700,120
=========== =========== ===========
Net loss per share ($0.22) ($0.26) ($1.03)
=========== =========== ===========
</TABLE>
See accompanying notes to unaudited consolidated financial statements
3
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CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Operations
For the Three Months Ended June 30, 1996 and June 30, 1995
<TABLE>
<CAPTION> June 30, 1996 June 30, 1995
(Unaudited) (Unaudited)
------------- -------------
<S> <C> <C>
Revenues
Radio services $ 78,881 $ -
Equipment sales 200,170 -
Maintenance and installation 296,869 -
Other 67,618 -
----------- ----------
643,538 -
----------- ----------
Costs and expenses
Cost of sales 361,089 -
Salaries, wages and benefits 625,509 123,258
General and administrative 845,208 554,161
Depreciation and amortization 72,793 47,301
----------- ----------
1,904,599 724,720
----------- ----------
Loss from operations (1,261,061) (724,720)
----------- ----------
Other income (expense)
Management fees (notes 2,3) - 27,841
Interest expense (53,990) (32,368)
Gain on sale of assets 12,599 -
Other, net (118,700) -
----------- ----------
(160,091) ( 4,527)
----------- ----------
Net loss ($1,421,152) ($727,247)
=========== ==========
Weighted-average number of common shares outstanding 10,294,494 5,014,553
=========== ==========
Net loss per share ($0.14) ($.15)
=========== ==========
</TABLE>
See accompanying notes to unaudited consolidated financial statements
4
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CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 1996 and June 30, 1995
<TABLE>
<CAPTION>
Period from
January 1,
1994
through
June
June 30,1996 June 30,1995 30,1996
(Unaudited) (Unaudited) (Unaudited)
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities
Net loss ($2,088,570) ($1,238,150) ($9,948,990)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Depreciation and amortization 124,830 93,449 351,117
Amortization of debt discount 63,372 - 63,372
Gain on sale of assets held for resale - - (330,643)
Expense associated with:
Stock issued for services 62,500 287,084 2,364,542
Options issued for services - - 2,841,788
Change in operating assets and liabilities:
Decrease in stock subscriptions receivable, net of stock
subscribed (146,848) - (784,041)
Increase in Accounts receivable (76,891) - (76,891)
Increase in inventory (112,218) - (112,218)
Decrease Due from General Communications, Inc. 76,252 - -
Increase in Amounts Held for shares issued (250,000) (250,000)
Increase (decrease) in prepaids 17,360 (10,000) 17,360
Increase in other receivable (9,907) - (29,907)
Increase in deposits (84) - (16,826)
Increase (decrease) in other current assets (18,828) - (26,641)
Increase (decrease) in Accounts payable 215,030 (137,643) 576,671
Increase in commission payable 175,600 - 524,800
Increase in accrued interest 39,559 59,798 94,049
---------- ------------ ----------
Net cash used in operating activities (1,928,843) (384,862) (4,742,457)
---------- ------------ ----------
Cash flows from investing activities
Purchase of assets from General Communications (345,609) - (345,609)
20% Investment in JJ&D, LLC (100,000) (100,000)
Purchase of Airtel Communications Assets (50,000) (50,000)
Purchase of CMRS and 800 (3,547,000) (3,547,000)
Purchase of SMR station licenses - (20,450) (1,398,575)
Purchase of license options 701,848 (703,950) 2,498
Increase in deposits on licenses (11,570) (11,570)
Increase (decrease) in license options payable (66,850) 560,000 (66,850)
Purchase of property and equipment (837,165) (77,011) (1,389,597)
Purchase of assets held for resale - (149,650) (219,707)
Sale of assets held for resale - - 700,000
Increase in organization costs - (16,859)
Increase in customer deposits 700 - 700
Increase in deposit on sale - 325,000 -
---------- ------------ ----------
Net cash used in investing activities (4,255,646) (626,061) (6,442,569)
---------- ------------ ----------
</TABLE>
(Continued)
5
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CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Cash Flows - Concluded
For the Six Months Ended June 30, 1996 and June 30, 1995
<TABLE>
<CAPTION>
Period from
January 1, 1994
through
June 30,1996 June 30,1995 June 30,1996
(Unaudited) (Unaudited) (Unaudited)
------------ ------------ ---------------
<S> <C> <C> <C>
Cash flows from financing activities
Proceeds upon issuance of stock 3,593,654 1,069,655 5,965,256
Proceeds upon exercise of options - related 93,750 - 156,253
Proceeds upon exercise of options - unrelated 967,493 - 1,944,992
Purchase and conversion of CCI stock - - 45,000
Advances from related parties - 114,205 767,734
Payment of advances from related parties - (1,000) (73,000)
Payments of capital lease obligations (8,125) (8,125)
Repayment of long-term debt (71,990) (136,137) (374,761)
Proceeds from issuance of notes payable - - 375,000
Increase in debt issuance costs (420,000) - (420,000)
Proceeds from issuance of long-term debt 4,000,000 - 4,965,000
---------- ---------- -----------
Net cash provided by financing activities 8,154,785 1,046,723 13,343,349
---------- ---------- -----------
Net increase in cash 1,970,294 35,800 2,158,323
Cash at beginning of period 188,029 151,972 -
---------- ---------- -----------
Cash at end of period $2,158,323 $ 187,772 $ 2,158,323
========== ========== ===========
</TABLE>
See accompanying notes to unaudited consolidated financial statements
6
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CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statement of Changes in Shareholders' Equity (Deficiency)
For the Period from January 1, 1996 to June 30, 1996
<TABLE>
<CAPTION>
Deficit
Common Stock Accumulated
----------------------- Additional during the Common Total
Outstanding paid-in development Stock shareholders
Shares Amount capital stage Subscribed equity
----------- ------- ------------ ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1996 8,387,064 $ 8,387 $10,564,852 ($7,860,420) $ 324,807 $ 3,037,626
Shares issued in connection with the
private placement (note 13) 441,666 442 665,058 - (324,807) 340,693
Additional private placement shares (note 13) 107,751 108 (108) - - -
Shares issued to investors for cash (note 13) 1,407,057 1,407 2,914,550 - - 2,915,957
Shares issued for options exercised (note 13) 687,500 687 1,110,563 - - 1,111,250
Shares issued for legal fees (note 13) 62,500 63 62,437 - - 62,500
Shares issued for assets purchased from General 100,000 100 176,463 - - 176,563
Communications (Note 3, 13)
Shares issued to license holders (note 13) 285,860 286 821,564 - - 821,850
Options Exercised but not issued (note 5) 195,000 195,000
Options issued for 20% interest in JJ&D, LLC 400,000 400,000
Options Issued for CMRS and 800 Acquisition (note 28,300,196 28,300,196
Shares subscribed (note 5) - - - - 1,271,140 1,271,140
Net Loss - - - (2,088,570) - (2,088,570)
---------- ------- ----------- ----------- ---------- -----------
Balance at June 30, 1996 11,479,398 11,480 $45,015,575 ($9,948,990) $1,466,140 $36,544,205
========== ======= =========== =========== ========== ===========
</TABLE>
See accompanying notes to unaudited consolidated financial statements
7
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CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statement of Changes in Shareholders' Equity (Deficiency)
For the Twelve Months Ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
TOTAL
ADDITIONAL EQUITY (DEFICIT) COMMON SHAREHOLDERS'
OUT-STANDING COMMON PAID-IN ACCUMULATED DURING STOCK EQUITY
SHARES STOCK CAPITAL DEVELOPMENT STAGE SUBSCRIBED (DEFICIT)
------------ ------- ----------- ------------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1994 (notes 1
and 11) 325,000 $ 325 $ 146,546 $ (638,620) $ -- $ (491,749)
Net loss -- -- -- (35,383) -- (35,383)
----------- ------- ------------ ------------ --------- -----------
Balance at December 31, 1994, as previously
stated 325,000 325 146,546 (674,003) -- (527,132)
Effect of Plan of Reorganization:
Eliminate Capvest accumulated deficit -- -- -- 674,003 -- 674,003
Shares issued through
conversion of debt 175,000 175 538,134 -- -- 538,309
Shares issued to Chadmoore
Communications, Inc. 4,000,000 4,000 (589,180) (827,095) -- (1,412,275)
----------- ------- ------------ ------------ --------- -----------
As adjusted for reorganization with Chadmoore
Communication, Inc., the acquirer 4,500,000 4,500 95,500 (827,095) -- (727,095)
Shares of Chadmoore Communications, Inc.,
issued January 1995 -- -- 565,000 -- -- 565,000
Shares issued in exchange
for Chadmoore Communications,
Inc. shares 30,000 30 44,970 -- -- 45,000
Shares issued in connection with the private
placement 763,584 764 1,526,407 -- -- 1,527,171
Shares issued to investors for cash 400,000 400 399,200 -- -- 399,600
Shares issued under employee benefit and
consulting services plan 496,000 496 1,777,719 -- -- 1,778,215
Shares issued for legal fees 62,500 62 249,938 -- -- 250,000
Shares issued in conjunction with conversion
of advances 707,720 708 1,165,498 -- -- 1,166,206
Shares issued by license holders exercising
options 562,260 562 859,696 -- -- 860,258
Shares issued by option holders 865,000 865 1,039,136 -- -- 1,040,001
Options issued in lieu of cash payments for
legal, consulting and financing fees -- -- 2,841,788 -- -- 2,841,788
Shares subscribed (note 4) -- -- -- -- 324,807 324,807
Net loss -- -- -- (7,033,325) -- (7,033,325)
----------- ------- ------------ ------------ --------- -----------
$ 8,387,064 $ 8,387 $ 10,564,852 $ (7,860,420) $ 324,807 $ 3,037,626
=========== ======= ============ ============ ========= ===========
Balance at December 31, 1995
</TABLE>
See accompanying notes to consolidated financial statements.
8
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CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to Unaudited Consolidated Financial Statements
June 30, 1996 and 1995
(1) DESCRIPTION OF BUSINESS
THE COMPANY AND BASIS OF PRESENTATION
The accompanying financial statements include the accounts of Chadmoore
Wireless Group, Inc. and subsidiaries (the Company), which is a
development stage company. The Company commenced formal operations in the
state of Nevada on May 11, 1994 and was organized for the purpose of
acquiring and operating Specialized Mobile Radio (SMR) wireless
communication systems. The Company's current market area is primarily
located in Tennessee and Arkansas.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the rules and regulations of the Securities
and Exchange Commission Form 10-QSB. All material adjustments, consisting
only of normal recurring adjustments which are, in the opinion of
management, necessary to present fairly the financial condition and
related results of operations, cash flows and shareholders' equity for the
respective interim periods presented are reflected. The current period
results of operations are not necessarily indicative of results for the
full year ending December 31, 1996. These unaudited consolidated financial
statements should be read in conjunction with the audited consolidated
financial statements included in the annual report on form 10-KSB for the
year ended December 31, 1995 and the current reports on Form 8-K dated
March 22, 1996, May 14, 1996, June 28, 1996, and July 30, 1996.
In February 1995, the Company (formerly Capvest Internationale, Ltd.
(Capvest), a publicly held entity) entered into a Plan of Reorganization
(Plan) whereby the Company exchanged 89% of its issued and outstanding
stock for 85% of restricted common shares of Chadmoore Communications,
Inc. (CCI). Capvest has not had significant operations since its
inception in 1988. Pursuant to the Plan, Capvest changed its name to
Chadmoore Wireless Group, Inc.
The transaction has been accounted for under the purchase method of
accounting as a reverse purchase acquisition whereby Chadmoore Wireless
Group, Inc. is the remaining legal entity and CCI is the acquirer and
remaining operating entity. Pursuant to this structure, the consolidated
shareholders' equity (deficiency) of the legal entity has been adjusted
for the effect of the reorganization and to reflect the shareholders'
equity (deficiency) of the acquiring entity as of December 31, 1994.
In addition, a development stage company is required to report the results
of its operations and cash flow from inception to date. However, Capvest
has been dormant since 1988 and CCI began operations on May 11, 1994. As
a result, the statements of operations, shareholders' equity (deficiency)
and cash flows have been presented for the two years ending December 31,
1995.
9
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CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
DEVELOPMENT STAGE AND LIQUIDITY
Through June 30, 1996, the Company has been engaged primarily in the
identification, development and acquisition of SMR systems and SMR
Stations and has therefore not commenced normal operations nor generated
significant revenues. Accordingly, the Company has generated an
accumulated net loss during its development stage of approximately
$9,948,990 from operations as of June 30, 1996. Management believes its
acquisition of SMR Stations from CMRS Systems, Inc. (CMRS) and 800 SMR
Network, Inc. (800), consummated on June 14, 1996 and SMR systems and
other assets from General Communications, Inc. (General), which was
consummated on March 8, 1996 as described in Note 3, as well as other
associated system acquisitions, will provide the basis for the commencement
of normal operations towards the end of 1996. In order to provide the
funding necessary to complete the acquisition and development of the SMR
systems the Company entered into an asset purchase agreement with General.
Management anticipates that this business combination will facilitate
future additional equity financing of SMR systems acquisition and
development (see Note 3).
In addition, the Company entered into an asset purchase, subscription and
financing agreement with Motorola subject to certain criteria.
In June 1996, the Company issued $4.0 million out of a $5.0 million
offering of 8%, three year, convertible notes. The Company received
3,585,833, net of placement fees of $414,167. In July 1996, the Company
placed the remaining $1.0 million and received $900,000, net of placement
fees of $100,000. In addition, the Company received $925,000 from the
exercise of options subsequent to June 30, 1996.
Accordingly, based on the plans and intentions set forth above and
assuming the additional capital infusion as described above, management
anticipates through the establishment of operational SMR systems in
conjunction with the ability to provide both short-term funding of
operations and long-term financing of acquisition and development
activities, that the Company expects to emerge from the development stage
and establish normal operations towards the end of 1996.
However, as of June 30, 1996, the success of achieving the objectives
discussed herein, as well as the ultimate profitability of the Company's
operations once the development stage has ended, cannot presently be
determined.
USE OF ESTIMATES
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results
could differ from those ESTIMATES.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the financial statements of
Chadmoore Wireless Group, Inc. and its subsidiaries CMRS Systems, Inc.
(CMRS), 800 SMR Network, Inc. (800), Chadmoore Construction Services, Inc.
(CCSI), and Chadmoore Communications, Inc. (CCI) and its wholly-owned
subsidiaries Chadmoore Communications of Tennessee (CCT) and Chadmoore
Communications of Memphis (a non-active entity). All significant
intercompany balances and transactions have been eliminated in
consolidation.
10
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CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
CASH AND CASH EQUIVALENTS
The Company considers all short-term highly liquid investments with
original maturities of three months or less cash equivalents.
DEPRECIATION AND AMORTIZATION
Property and equipment is stated at cost. Depreciation is calculated on
the straight-line method over the estimated useful lives of the assets,
generally 5-10 years.
FCC LICENSES
FCC licenses are recorded at cost and consist of agreements with the
Federal Communications Commission (FCC) which allow the use of certain
communications frequencies. FCC licenses have a primary term of five
years and are renewable for additional five year periods for a nominal
fee. Although there can be no assurance that the licenses will be
renewed, management expects that the licenses will be renewed as they
expire. FCC license costs and renewal fees are amortized using the
straight-line method over 20 years and 5 years, respectively. The Company
evaluates the recoverability of FCC licenses by determining whether the
unamortized balance of this asset is expected to be recovered over its
remaining life through projected undiscounted operating cash flows.
INTANGIBLE ASSETS
Organization costs are stated at cost, net of accumulated amortization and
amortized over a five year period using the straight line method.
Non-competition and consulting agreements are stated at cost, net of
accumulated amortization and amortized over a three to five year period
using the straight line method.
INCOME TAXES
The Company has adopted the provisions of Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes (SFAS 109),
whereby deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years
in which those temporary differences are expected to be recovered or
settled. Under SFAS 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date.
11
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CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONCLUDED
REVENUES
The Company's only source of revenue through March 7, 1996 was management
fee income from General Communications Radio Sales and Services, Inc. In
connection with these services, the Company records a management fee equal
to the net cash flows of General. This revenue has been included as part
of Other Income and Expense in the Statement of Operations through March
7, 1996. On March 8, 1996, the Company completed the asset purchase of
General's assets and in May 1996, the Company completed the acquisition of
Airtel Communications, Inc. and consummated Management and Option to
Acquire Agreements with Airtel SMR, Inc. (see note 3). As such, the
Company now recognizes revenue from monthly telephone interconnect and
dispatch services based on monthly access charges per radio, plus in the
case of telephone interconnect service, revenue is recognized based on
air time charges as used. Revenue is also recognized from equipment
service upon acceptance by the customer of the work completed. Revenue is
also recognized from the sale of equipment when delivered.
LOSS PER SHARE
Loss per share is computed by dividing the net loss by the weighted
average number of common shares outstanding at June 30, 1996 and 1995. The
inclusion of equivalent shares in the form of stock options and warrants
were not included in a computation of fully dilutive loss per share as the
results would be anti-dilutive.
(3) ACQUISITIONS
CMRS AND 800 STOCK PURCHASE AGREEMENT
On June 14, 1996, the Company executed a Stock Purchase Agreement with
Libero Limited ("Libero"). Pursuant to the agreement, the Company
acquired from Libero all the issued and outstanding common stock of CMRS
Systems, Inc. ("CMRS") and 800 SMR Network, Inc. ("800") (jointly the
"Management Companies"). The Management Companies intend to engage in the
business of constructing and managing multi-channel trunked 800 MHz
trunked Specialized Mobile Radio stations. The Management Companies have
entered into management agreements ("Management Agreements") with certain
companies (the "Companies"), pursuant to which CMRS or 800, as the case
may be, has agreed, in accordance with applicable Federal Communications
Commission ("FCC") rules, regulations and policies, to construct and
manage all of the Stations for which the Companies have received licenses
from the FCC. The respective shareholders of the Companies have granted
to CMRS or 800, as the case may be, options to acquire all of the stock of
the Companies ("Options"), at such time as all conditions of such transfer
of control have been met, as set forth in the FCC rules, regulations and
policies and as required by Section 310 of the Communications Act of 1934,
as amended by 47 U.S.C.Section 310.
12
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<PAGE> 15
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CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
CMRS AND 800 STOCK PURCHASE AGREEMENT - CONTINUED
The Company consummated such acquisition for combined consideration valued
at $33,085,446. The Company has accounted for the acquisition under the
purchase method of accounting. The purchase price was paid with (1) an
aggregate cash consideration of $3,547,000; (2) 508,000 shares of
the Company's restricted common stock valued at $1,238,250; and (3) a grant
of an option to purchase 8,323,857 shares of common stock for a period of
ten years at an exercise price of $.50 per share valued at $28,300,196.
Combined consideration of $29,776,901 was allocated to management
agreements held by CMRS and 800 and combined consideration of $3,308,545
was allocated to options to acquire the stock of the licensee corporations
also held by CMRS and 800. These allocations were based on management's
estimates of value. The Company will begin amortizing the cost allocated
to the management contracts over the useful lives commencing upon the
underlying Station being placed in service not to extend past June 2006.
The Company is seeking to obtain separate independent verifications of the
value of the Stations acquired and the value of the Securities issued in
connection with the acquisition. The Company had sufficient cash on hand
for the cash consideration paid.
GENERAL COMMUNICATIONS ASSET PURCHASE AGREEMENT
On March 8, 1996, the Company renegotiated and finalized the purchase of
phases 2-5 of the General Communications Asset Purchase Agreement. In
conjunction with the this transaction, the Company purchased certain SMR
equipment, land, building, other fixed assets, accounts receivable,
inventory and FCC licenses for SMR channels in Memphis, Tennessee from
General Communications Radio Sales and Service, Inc. ("General"). Prior to
the asset purchase and since November 1994, the Company was managing the
daily operations of General for a management fee equal to the net cash
flows of General.
The acquired assets were recorded at $834,569. The Company paid $345,609
in cash and issued 100,000 shares of restricted common stock with a fair
market value on March 8, 1996 of $176,563, based on the discounted
average closing bid and ask price of the Company's common stock trading on
the NASD Electronic Bulletin Board. The Company's non-competition,
consulting agreement and note payable liabilities to General with a
balance totaling $906,687, net of the corresponding non-competition and
consulting agreement asset of $244,571, were canceled and a new note
payable was issued. The new note is a 25 year, unsecured, noninterest
bearing, negotiable promissory note face amount of $4,110,000, scheduled
to be repaid in 300 monthly installments.
The note's monthly payments are subject to Consumer Price Index increases in
years three through thirteen. The Company has assumed a CPI increase of 2.5%
for recording purposes thereby reflecting the gross value of the note equal to
$5,024,198. Interest on the note has been imputed at 9% giving a net present
value of $1,208,869, net of unamortized discount of $3,815,329 amortized on the
straight line method over the term of the note.
The following unaudited pro forma results of operations assume the acquisition
occurred as of January 1, 1995:
- ---------------------------------
<TABLE>
<CAPTION>
Unaudited Pro Forma Information: Six Months Ended Year Ended
June 30, 1996 December 31, 1995
---------------- -----------------
<S> <C> <C>
Revenue Sales $ 1,216,361 $ 2,146,584
Net Loss (2,086,368) (7,098,494)
Net Loss per Common Share (0.23) (1.28)
</TABLE>
The pro forma financial information is not necessarily indicative of the
operating results that would have occurred had the General acquisition been
consummated as of January 1, 1995, nor are they necessarily indicative of future
operating results.
13
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<PAGE> 16
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CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
JJ&D, LLC INVESTMENT
On May 23, 1996 the Company purchased a 20% investment in JJ&D, LLC by
tendering $100,000 in cash, issuing a $100,000 noninterest bearing 120 day
note and issuing 298,507 options to purchase the Company's restricted
common stock. The options are exerciseable for three years at $1.00 per
share. JJ&D, LLC has obtained the exclusive rights from A Communications,
LLC to market, in the United States, A Communications' proprietary SMR
frequency agile quick start module. This investment is being accounted
for using the equity method of accounting. All significant intercompany
transactions have been eliminated. Condensed financial information of
JJ&D, LLC for the six months ended June 30, 1996 is summarized below:
---------------------------
Condensed Financial information:
Current Assets $ 115,408
Non-current Assets $ 400,000
Current Liabilities $ 15,000
Shareholders' Equity $ 500,408
Net Income $ 175,464
AIRTEL SMR, INC. MANAGEMENT AND OPTION TO ACQUIRE AGREEMENT
On May 11, 1996, the Company completed a Management and Option to Acquire
Agreement with Airtel SMR, Inc., an operator of SMR stations. The Company
assumed a $100,000 note payable, due May 1998 with interest at 12%. The
Company received SMR equipment valued at $62,702, Management
Agreements for one year valued at $3,730 and an Option to Acquire
the common stock of Airtel SMR, Inc. valued at $33,568. The allocated
valuations of the Management Agreement and Option to Acquire Agreement
based on management's estimates.
AIRTEL COMMUNICATIONS, INC. ASSET PURCHASE AGREEMENT
On May 11, 1996, the Company completed an Asset Purchase Agreement with
Airtel Communications, Inc., an SMR sales organization. The Company paid
$50,000 and received certain office equipment and rights to a customer
list valued at $47,788. The customer list will be amortized on a
straight-line basis over its useful life estimated to be two years. The
accumulated amortization at June 30, 1996 was $3,982.
(4) AMOUNTS HELD FOR SHARES ISSUED
During the second quarter of 1996, certain option holders exercised
options to purchase 100,000 shares of common stock at $2.50 per share.
The proceeds of $250,000 were held by the Company's corporate counsel at
June 30, 1996. In July 1996, the funds were received by the Company.
On December 29, 1995, certain option holders exercised options to purchase
450,000 shares of common stock at $1.50 per share. The proceeds of
$675,000 were held by the Company's corporate counsel at December 31,
1995. In January 1996, the funds were received by the Company.
14
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<PAGE> 17
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CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
(5) STOCK SUBSCRIPTIONS RECEIVABLE AND SUBSCRIBED
In the second quarter of 1996, the Company received $195,000 for the
purchase of 145,000 shares of common stock. The shares were not issued
until July 1996. As a result, the funds were held in an escrow account at
June 30, 1996. The Company received the funds when the shares were issued
in July 1996. In addition, the Company made a down payment on
approximately 8 of certain license options and agreed to issue 11,440
shares of its restricted common stock as payment of 40% of the purchase
price of these licenses valued at $32,890. The value of these shares is
recorded as Stock Subscriptions Receivable at June 30, 1996.
The 508,000 shares pursuant to the CMRS and 800 stock purchase agreement
(see note 3), valued at $1,238,250 were also unissued at June 30, 1996.
The value of the unissued shares has been combined with other
consideration and allocated to management agreements and options to
acquire stock.
The value of the above mentioned unissued shares is classified as common
stock subscribed in shareholders' equity at June 30, 1996.
In 1995, the Company received $287,000 for the sale by the Company of
191,333 shares of common stock. The shares were not issued until January
1996. As a result, the funds were held in an escrow account at December
31, 1995. The Company received the funds when the shares were issued in
January 1996.
In addition, in December 1995 the Company received cash of $37,807 for
17,500 shares that had not been issued at December 31, 1995.
The value of the unissued shares is classified as common stock subscribed
in shareholders' deficiency at December 31, 1995.
(6) PROPERTY AND EQUIPMENT
Property and equipment, which is recorded at cost and depreciated over
their estimated useful lives, generally 5-10 years, consists primarily of
SMR system components and related acquisition costs. The recorded amount
of property and equipment capitalized and related accumulated depreciation
is as follows
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
------------- -----------------
<S> <C> <C>
SMR systems and equipment $ 1,257,856 $ 292,901
Buildings and Improvements 345,665 109,870
Land 102,500 --
Furniture and office equipment 100,186 --
1,806,207 402,771
Less accumulated depreciation (111,148) (48,829)
------------- ---------------
$ 1,659,059 $ 353,942
============= ===============
</TABLE>
15
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<PAGE> 18
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CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
(7) FCC LICENSES
FCC licenses consist of the following:
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
------------- -----------------
<S> <C> <C>
FCC licenses $ 1,548,299 $ 1,398,574
Less accumulated amortization (114,698) (77,238)
----------- -------------
$ 1,433,601 $ 1,321,336
=========== =============
</TABLE>
(8) INVESTMENT IN LICENSE OPTIONS
The Company has entered into various option agreements to acquire FCC
radio licenses for SMR channels and also entered into management
agreements with the licensees of the SMR channels. Depending on the size
of the market in which the channel is located, the Company paid $100 to
$1,500 for each option. As of June 30, 1996, the Company has invested
$2,926,976 in license options. The total purchase price of the licenses
under option, including commissions, amount to approximately $32,802,931
and $43,000,000 at June 30, 1996 and December 31, 1995, respectively. The
agreements allow the Company to purchase licenses within a specified
period of time after the agreement is signed. On February 2, 1996, the
Company made a down payment on approximately 140 of certain license
options and issued 285,860 restricted shares of its common stock as
payment of 40% of the purchase price of these licenses (see Note 13). The
issuance of the stock valued, at $821,848, has been recorded as an
investment in license options on June 30, 1996. In addition, the Company
made a down payment on approximately 8 of certain license options and
agreed to issue 11,440 restricted shares of its common stock as payment of
40% of the purchase price of these licenses. The shares have been valued
at $32,890 and have been recorded as Stock Subscriptions Receivable at June
30, 1996.
In December 1995, the Company issued 562,260 restricted common shares as
down payment for the exercise of the option to purchase 347 licenses under
the license option agreements. The issuance of the stock represented 40%
of the purchase price. The amount capitalized as down payment of these
licenses was based on the fair market value of the stock on the date of
issuance and totaled $860,258.
Certain options required down payments in January 1996. The Company has
submitted an amendment to the option holders which would move the down
payment date to September 9, 1996 and increases the down payment. Of the
options the Company desires to amend, approximately 94% of the option
holders have executed the amendments. With respect to the remaining
options on which a holder has not executed an amendment, the Company is in
default of the terms thereof. The holders of such options have not yet,
however, elected to terminate the options based on this default.
Notwithstanding this failure to act, such holders may at any time
terminate their options or exercise other remedies with respect thereto,
unless the amendment is executed or the Company is able to meet its
monetary obligations thereon.
Upon entering into an option agreement, the Company also enters into a
management agreement with the licensee. The management agreements give
the Company the right to manage the SMR systems for the period stated in
the agreements, usually 2 to 5 years. During this period revenues
received are shared with the licensee after certain agreed upon costs to
construct the channels have been recovered. The Company has not
recognized any revenue from these agreements during the six months ended
June 30, 1996 and 1995, as none of the systems under option are revenue
producing.
16
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<PAGE> 19
================================================================================
CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
COMMISSION PAYABLE
In connection with the exercise of the options to purchase licenses, the
Company is required to pay an allocated portion of the payment to a
certain third party. As a result of the down payment made on December 29,
1995 to purchase 30% of licenses, the Company accrued $349,200 of
commissions payable which represents 40% of the total commission to be
paid when these licenses are fully paid for by the Company.
In connection with the exercise of the options to purchase licenses, the
Company is required to pay an allocated portion of the payment to a
certain third party. As a result of the down payment made on February 2,
1996 to purchase 140 of licenses, the Company accrued $175,600 of
commissions payable which represents 40% of the total commission to be
paid when these licenses are fully paid for by the Company.
(9) INVESTMENT IN OPTIONS TO PURCHASE STOCK OF UNDERLYING LICENSEE CORPORATION
The Company has allocated $3,308,545 of combined consideration tendered in
the acquisition of CMRS and 800 to the options to acquire the stock of the
licensee corporations (the "Companies") held by CMRS and 800. This
allocation was based on management's estimates of fair market value (see
Note 3). The respective shareholders of the Companies have granted to CMRS
or 800, as the case may be, options to acquire all of the stock of the
Companies, at such time as all conditions of such transfer of control have
been met, as set forth in the FCC rules, regulations and policies and as
required by Section 310 of the Communications Act of 1934, as amended by
47 U.S.C.Section 310.
(10) MANAGEMENT AGREEMENTS
The Company has allocated $29,776,901 of combined consideration tendered
in the acquisition of CMRS and 800 to the ten year Management Agreements
held by CMRS and 800. This allocation was based on management's estimates
of fair market value (see Note 3). The Management Companies have entered
into management agreements with certain companies, pursuant to which CMRS
or 800, as the case may be, has agreed, in accordance with applicable
Federal Communications Commission ("FCC") rules, regulations and policies,
to construct and manage all of the Stations for which the Companies have
received licenses from the FCC. The Company will begin amortizing the
cost allocated to the management contracts over the useful lives
commencing upon the underlying Station being placed in service not to
extend past June 2006.
17
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<PAGE> 20
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CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
(11) NOTES PAYABLE
Notes payable consists of the following at:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
---------- ------------
<S> <C> <C>
Note payable to JJ&D, LLC, noninterest
bearing, due September 8, 1996. 100,000 --
(see note 3) ---------- ------------
$ 100,000 $ --
========== ============
</TABLE>
In connection with the note payable to a third party, in 1995 the Company
paid cash of $75,000 and issued 171,917 shares of restricted common stock.
In addition, the Company issued warrants to purchase 35,000 shares of
restricted common stock at an exercise price of $5 per share. These
warrants expire December 29, 1998.
In connection with the note payable to an individual, in 1995 the Company
issued 16,667 shares of restricted common stock. In addition, the Company
issued warrants to purchase 16,667 shares of restricted common stock at an
exercise price of $5 per share. These warrants expire September 22, 1998.
18
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<PAGE> 21
================================================================================
CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
(12) LONG-TERM DEBT
<TABLE>
<CAPTION>
Long-Term debt consists of the following: June 30, December 31,
1996 1995
-----------------------------
<S> <C> <C>
Note payable in connection with the asset purchase of
General (see note 3), payable in monthly
installments of $12,500 through February 1997,
$13,750 through February 1998; thereafter, monthly
payments are subject to annual CPI increases
through February 2008 at which time the monthly
payments are capped through February 2021.
Management has assumed annual CPI increases to be
2.5%. Noninterest bearing with interest imputed
at 9%, net of unamortized discount of $3,764,451
as of June 30, 1996.
$1,209,741
Notes convertible to the Company's Common Stock,
principal due June 1999, interest due semi-
annually June and December at a rate of 8% . 4,000,000
Note payable to Bortex Trust in connection with asset
purchase (see note 3) payable in monthly
installments of $4,707 through May 1998, including
interest at 12%.
100,000
Note payable in connection with purchase of SMR
stations from General (see note 3), payable in
semi-annual installments of $146,303 through
November 1996, thereafter, $280,278 semiannually
through November 1997 including interest at 9%,
secured by stock pledge agreement. 862,123
$410,000 note payable associated with non-competition
and consulting agreements obligation from General
acquisition (see note 3), payable in 36 monthly
installments of $11,389 through November 1997,
noninterest bearing with interest imputed at 10%
net of discount of approximately $54,000. 228,065
------------------------------
$ 5,309,741 $ 1,090,188
Less current installments 196,632 456,480
------------------------------
$ 5,113,109 633,708
==============================
</TABLE>
19
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<PAGE> 22
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CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
(12) LONG-TERM DEBT - CONCLUDED
Aggregate maturity of debt for the next five years is as follows:
<TABLE>
<CAPTION>
Year ended June 30:
<S> <C>
1997 $ 297,882
1998 223,493
1999 4,170,534
2000 174,798
2001 179,168
-----------
$ 5,045,875
===========
</TABLE>
DEBT ISSUANCE
In June 1996, the Company issued $4 million out of a $5 million offering
of 8%, three year, convertible notes. The Company received $3,585,833,
net of placement fees of $414,167. In July 1996, the Company placed the
remaining $1 million convertible notes and received $900,000, net of
placement fees of $100,000.
LEASE COMMITMENT
Commencing in March 1995, the Company leases its corporate offices and
warehouse facilities in Las Vegas, Nevada under a noncancelable operating
lease agreement which expires in March 1997. Terms of the lease provide
for minimum monthly payments of $5,560 including operating expenses. The
agreement provides for one two year renewal period in which the lease
payment shall be adjusted for changes in the consumer price index as
defined therein.
The Company is obligated under a capital lease for various SMR equipment.
In addition, the Company leases certain antenna sites for transmission of
SMR services. The terms of these leases range from month to month to 5
years, with options to renew. Most of the leases provide for a
termination period of 30 to 60 days by the Company or the site owner.
20
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CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
LEASE COMMITMENT - CONCLUDED
Future minimum payments associated with the leases described herein including
renewal options are as follows:
<TABLE>
<CAPTION>
Six months ended June 30: CAPITAL OPERATING
LEASES LEASES
--------- ---------
<S> <C> <C>
1997 $25,630 $206,460
1998 28,420 94,918
1999 782 55,767
2000 - 34,582
2001 - 12,416
---------------------
$54,832 $404,143
=====================
Total minimum lease payments $61,249
Imputed interest 6,417
Present value of minimum capitalized -------
lease payments 54,832
Current portion 25,630
Long term capitalized lease -------
obligations $29,202
=======
</TABLE>
Total rent expense for the six months ended June 30, 1996 and 1995 amounted to
$33,364 and $66,726, respectively.
21
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<PAGE> 24
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CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
(13) EQUITY TRANSACTIONS
PREFERRED OFFERING
On April 4, 1996, the Company issued 250,000 shares of preferred stock in
exchange for $2,275,956, net of expenses of $224,044. In addition, no
later than April 15, 1996, the agreement calls for the Company to issue
warrants to purchase 50,000 shares of common stock.
PRIVATE PLACEMENT
In August 1995, the Company prepared a Private Placement Memorandum ("PPM")
and offered 1,000,000 units at a price of $2.00 per unit. Each unit
consisted of one share of the Company's common stock and one common stock
purchase warrant. One warrant entitles the holder to purchase one share
of common stock at $5.00 per share for a period of three years from the
date of issuance.
In October 1995, the Company reduced the price of the units in the PPM
offering to $1.50 per unit with the same warrant terms.
In connection with the PPM offering the Company issued 763,585 shares of
restricted common shares and received proceeds of $1,252,790 net of
issuance costs of $54,210.
Beginning in October 1995, 440,335 of the PPM offering units were sold at
a discount of $.50. As a result, the Company expensed $220,168 in
connection with the sale of these units and has included it in general
and administrative expense in the statement of operations at December 31,
1995.
The Company also sold 400,000 shares of restricted common stock to three
foreign investors and received proceeds of $399,000.
DEBT CONVERSIONS
RELATED PARTIES -- In connection with the Plan of Reorganization, the
Company issued to certain former Capvest officers, directors and creditors
175,000 shares of the Company's common stock in lieu of cash payments on
obligations of $538,309 owed by the Company. No gain or loss was
recognized in the transaction.
On March 9, 1995, a significant shareholder and officer of the Company
converted advances totaling $116,329 into 46,532 shares of the Company's
restricted common stock at a rate of $2.50 per share. In addition, 46,352
options were issued at an exercised price of $4 per share, exercisable for
three years from the date of grant. No gain or loss was recognized in
the transaction.
On March 24, 1995, a trust formed by a significant shareholder and officer
of the Company converted advances totaling $578,405 into 385,604 shares of
the Company's restricted common stock at a rate of $1.50 per share. In
addition, 385,604 options were issued at an exercise price of $4 per
share, exercisable for three years from the date of grant. No gain or
loss was recognized in the transaction.
22
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CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
DEBT CONVERSIONS - CONCLUDED
UNRELATED PARTIES -- In connection with a note payable to a third party
with a original balance of $350,000, the Company issued 171,917 shares of
restricted common stock in lieu of a cash payment of $275,000. The
Company recognized a loss of $20,904 as a result of this transaction based
on the fair market value of the stock at the date of conversion. The loss
is included in general and administrative expense in the statement of
operations at December 31, 1995.
In connection with a note payable with an original balance of $23,000 to
an individual, the Company issued 16,667 shares of restricted common
shares in lieu of a cash payment in full satisfaction of the debt. The
Company recognized a loss of $11,500 as a result of this transaction based
on the fair market value of the stock at the date of conversion. The loss
is included in general and administrative expense in the statement of
operations at December 31, 1995.
CONSULTING
RELATED PARTIES -- The Company issued 60,000 unrestricted shares to an
employee for consulting services valued at $.25 per share in lieu of cash
payment of $15,000. The expense associated with the shares was based on
the fair market value at the date of grant and totaled $285,000. This
amount has been included in general and administrative expense in the
statement of operations at December 31, 1995.
UNRELATED PARTIES -- The Company also issued 215,000 shares of
unrestricted common stock and 221,000 shares of restricted common stock
valued at $.25 per share in lieu of cash payment of $121,000 for
consulting services. The expense related to the shares was based on the
fair market value at the date of grant and totaled $1,493,215. This amount
was expensed during the year ended December 31, 1995 and is included in
the statement of operations as general and administrative expense.
PENALTY FEES
In connection with the note payable to the owner of General (see Notes 10
and 14), the Company issued 10,000 restricted shares of common stock as
late fee on their monthly payments of the note payable. The shares were
valued at $.25 per share. The fair market value at the date of grant
totaled $18,750 and is included in general and administrative expense in
the statement of operations at December 31, 1995.
PREPAID MANAGEMENT RIGHT FEES
On December 29, 1995, in connection with an agreement for the management
of certain SMR stations, the Company issued 77,002 shares of restricted
common stock valued at $1.50 per share. The agreement called for the
Company to receive a percentage of the net revenues generated over the
next five years. The number of shares issued was determined based on the
present value of an estimate of the future cash flows to be received under
the management agreement. The expense related to this transaction was
based on the fair market value of the stock at the date of grant and
totaled $117,813 at December 31, 1995. The total amount was capitalized
as prepaid expense in the consolidated balance sheet at December 31, 1995,
and will be amortized over the management agreement period.
23
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<PAGE> 26
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CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
LICENSE PURCHASE
During 1995, the Company purchased options to buy licenses from
individuals ranging between $100 to $1,500 per option. In February 1996,
the Company issued 285,860 restricted common shares as down payment for
the exercise of the option to purchase 140 licenses under the license
option agreements (see Note 8). The issuance of the stock represented 40%
of the purchase price. The amount capitalized as down payment of these
licenses was based on the fair market value of the stock on the date of
issuance and totaled $821,848.
OPTIONS
During 1996, the Company granted stock options to purchase 9,642,364
shares of the Company's restricted common stock. The options have been
issued to shareholders, consultants, investors and third parties through
acquisitions are exercisable for three to ten years from date of issuance.
<TABLE>
<CAPTION>
Stock Options Number of shares
----------------------------------------------------------------
<S> <C>
Outstanding at December 31, 1994 -
Granted at $0.50-$5.50 per share 3,937,136
Less -
Exercised at $0.50-$1.50 per share 865,000
Lapsed or canceled -
--------------------------------------------------------------
Outstanding at December 31, 1995 3,072,136
Granted at $.50-$6.00 per share 9,642,364
Less -
Exercised at $0.50-$2.50 per share 895,000
Lapsed or canceled 205,000
--------------------------------------------------------------
Outstanding at June 30, 1996 11,604,000
</TABLE>
24
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<PAGE> 27
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CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
WARRANTS
During the six months ended June 30, 1996, the Company issued warrants in
conjunction with the following transactions:
# 549,471 issued in connection with the private placement unit sales
(see "private placement").
# 50,000 issued in connection with the Preferred Stock placement.
During the year ended December 31, 1995, the Company issued warrants in
conjunction with the following transactions:
# 972,417 issued in connection with the private placement unit sales
(see "private placement").
# 30,000 issued as part of the conversion of CCI common stock to CWG
common stock (see "conversion of CCI shares").
# 51,667 issued in addition to common shares issued lieu of cash payment
on notes payable (Note 9).
# 55,250 issued in lieu of cash payment for consulting services.
Each warrant can be exercised for one share of the Company's common stock.
The following is a summary of warrants outstanding and their terms as of
June 30, 1996:
<TABLE>
<CAPTION>
WARRANTS NUMBER OF SHARES
------------------------------------------------------
<S> <C>
Outstanding at December 31, 1994 -
Granted at $2.50-$5.00 per share 1,109,334
Less -
Exercised -
Lapsed or canceled -
--------------------------------------------------
Outstanding at December 31, 1995 1,109,334
Granted at $5.00 per share 599,417
Less -
Exercised -
Lapsed or canceled -
--------------------------------------------------
Outstanding at June 30, 1996 1,708,751
25
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</TABLE>
<PAGE> 28
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CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
MINORITY INTEREST
Prior to the reverse merger, the Company sold restricted common stock in
its subsidiary, CCI, to a third party totaling 700,000 shares. The holder
of such shares has not yet elected to convert these shares of CCI to
shares of Chadmoore Wireless Group, Inc. As per the amended and restated
stock subscription agreement dated January 13, 1995, the third party has
options to purchase 2,100,000 shares of restricted common stock of CCI.
The options are exercisable six months from the closing date of the
amended and restated stock subscription agreement through eight years from
this date. As such, by July 13, 1995, 700,000 options that were
exercisable at $1.50 per share were unexercised by the third party and
thus expired on that date. Options to purchase 1,400,000 shares of CCI
remained outstanding at June 30, 1996 at the following exercise
prices:
<TABLE>
<CAPTION>
NUMBER OF OPTION TYPE EXERCISE OPTION
--------- ----------- -------- ------
OPTIONS PRICE EXPIRATION DATE
------- ----- ---------------
<S> <C> <C> <C>
700,000 A $ 2.50 1/13/2000
700,000 B $ 4.00 1/13/2003
</TABLE>
In addition, subsequent to the merger, the Company sold common stock in
CCI to third parties totaling 30,000 shares with net proceeds of $45,000.
At December 31, 1995 these 30,000 shares of CCI's common stock were
converted to an equal number of Chadmoore Wireless Group, Inc.'s
restricted common stock and these shareholders were granted warrants to
purchase 30,000 shares of common stock at $5 per share.
As a result of the reverse purchase acquisition and Plan of Reorganization
as described in Note 1, the third party shareholders of CCI shares are not
considered a minority interest in the Company for accounting purposes as
CCI is treated as the acquiring entity.
However, for accounting purpose, the original shareholders of Capvest
would be a minority interest. Due to the net losses of the Company
incurred to date, no minority interest is presented in the accompanying
consolidated financial statements.
26
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<PAGE> 29
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CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
(14) INCOME TAXES
Since inception, the Company has incurred net operating losses for both
financial reporting and income tax purposes. As of June 30, 1996, the
Company has net operating loss carryforwards for income tax reporting
purposes totaling approximately $4,100,000. The deferred tax asset which
consists of employee stock option compensation expense for financial
reporting purposes in excess of amounts recognized for tax purposes
aggregates approximately $267,648. A deferred tax asset is provided
when, in management's opinion, it is more likely than not that the
deferred tax asset will be realized. To the extent the Company is not
able to determine that it is more likely than not that net deferred tax
assets will be realized prior to expiration, a valuation allowance is
recorded to reduce the net deferred tax asset to the amount which is more
likely than not to be realized. A valuation allowance has been provided
for 100% of such asset since the likelihood of realization cannot be
determined.
Total income tax expense (benefit) differed from the "expected" income tax
expense (benefit) determined by applying the statutory federal income tax
rate of 34% as follows:
<TABLE>
<S> <C>
"Expected" Statutory tax expense (benefit) $ (710,113)
Increase (reduction) in income taxes (benefit) resulting from: 1,370,095
Change in the beginning of year balance of the valuation allowance for
deferred tax assets allocated to income tax expense (benefit) (659,982)
-------------
$ --
=============
</TABLE>
(15) RELATED PARTIES TRANSACTIONS
Advances from related parties consist of the following at June 30:
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Advances from a significant shareholder and officer
of the Company, noninterest bearing and due on
demand. $ -- 22,000
Advance from a significant shareholder and officer of
the Company, interest at 7%, unsecured, principal
and interest due October 15, 1995.
-- 50,000
$ -- 72,000
</TABLE>
27
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<PAGE> 30
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CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
(15) RELATED PARTIES TRANSACTIONS - CONCLUDED
As of December 31, 1995, the advance of $23,000 was paid with cash in full.
On March 24, 1995, a trust created by a significant shareholder and
officer of the Company converted advances totaling $578,405 into 385,604
shares of the Company's restricted common stock at a rate of $1.50 per
share and options to purchase 385,604 shares at $4 per share, in
accordance with existing debt agreements, in full satisfaction of the
advances.
On March 9, 1995, a significant shareholder and officer of the Company
converted advances totaling $116,329 into 46,532 shares of the Company's
restricted common stock at a rate of $2.50 per share in full satisfaction
of the advances. In addition, 46,532 options were issued, exercisable at
$4 per share and expiring March 9, 1998.
(16) COMMITMENTS AND CONTINGENCIES
LICENSE OPTION CONTINGENCIES
Once an SMR channel is operating, the Company may exercise its option to
acquire the license at any time prior to the expiration of the option.
Although, the Company presently intends to exercise all options, the
exercise is subject to a number of contingencies. These contingencies
include constructing the license within the time period allotted by the
FCC, maintaining the channel once constructed, the Company having the
ability to purchase the license and the FCC approval of the transfer.
LEGAL PROCEEDINGS
The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on
the Company's consolidated financial position, results of operations or
liquidity.
28
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<PAGE> 31
================================================================================
CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
ITEM 2. PLAN OF OPERATION
The Company's objectives over the next 12 months are to construct analog
channels in selected markets, construct an initial digital SMR network,
establish distribution, institute its marketing plan, and increase recurring
revenues through the addition of subscribers in all markets. Through
acquisition and management of existing operating systems and construction of
newly licensed SMR stations, the Company intends to increase the customer base
and corresponding revenues within each market. The plan is to select markets
where the Company has adequate available channel density, lack of current
capacity with existing operations to serve market needs, and significant
population base to prove its operating capability and generate sufficient
revenues to justify the capital necessary to ultimately provide digital
wireless service on a wide scale.
To date, the Company's activities have been limited to raising capital for
operations and acquisitions, hiring a core team of employees, and managing and
acquiring an initial operating system. In March 1996, the Company acquired its
initial operating SMR system in Memphis, Tennessee which currently has
annualized gross revenues in excess of $2,000,000. The Company currently offers
two types of wireless communication services in Memphis, Tenn.: SMR dispatch
(two-way) and telephone interconnect. Both services utilize analog SMR
technology. The Company sells analog SMR equipment to subscribers and provides
the system and services on which customers can use their equipment. This
operation serves a population of approximately 1,100,000.
The Company has also entered into five year option to acquire and management
agreements with over 1,250 licensees, comprising over 2,300 channels licensed
by the FCC, in over sixty cities throughout the mid-South and mid-West regions
of the United States covering areas with a total combined population in excess
of 40,000,000.
In June, 1996, the Company acquired all the issued and outstanding common stock
of CMRS Systems, Inc. ("CMRS") and 800 SMR Network, Inc. ("800") (jointly the
"Management Companies"). The Management Companies have entered into management
agreements with certain companies ("Companies") pursuant to which CMRS or 800
have agreed to construct and manage all of the channels for which the Companies
have received licenses from the FCC. The respective shareholders of the
Companies have granted to CMRS or 800 options to acquire all of the stock of
the Companies, at such time as all conditions of such transfer of control have
been met, as set forth in the FCC rules, regulations and policies. The
Management Companies intend to engage in the business of constructing and
managing multi-channel trunked 800 MHz trunked Specialized Mobile Radio SMR
stations.
The acquisition is significant to the Company in that such acquisition
substantially increases the total number of channels under management to over
7,000 channels and expands the service footprint to over two hundred markets
located in forty-seven States and the U.S. Territories of Puerto Rico and the
Virgin Islands covering areas with a total combined population in excess of
60,000,000. Additionally, the Company has formed dealer agreements with
independent SMR operators, and has begun to develop, construct and market SMR
services.
The Company plans to offer analog and digital wireless communication services
ranging from two-way dispatch, and telephone interconnect, to services
comparable in quality to those provided by current cellular telephone
operators. In addition, the Company plans to offer in a single handset,
services and combinations of services currently not previously available in its
operating areas. These services will include combined mobile telephone,
dispatch and data transmission. The implementation of Motorola's integrated
Dispatch Enhanced Network ("iDEN") digital technology will afford the Company
the benefits of dramatically expanding existing system capacity and provide
advanced features, call clarity, and call security to its subscribers. As the
Company develops its digital wireless network, it intends to selectively
convert analog SMR channels to iDEN digital wireless service, described below,
as capacity shortfalls and marketplace demands for additional features dictate.
The Company plans to use leased facilities on existing towers wherever possible
to avoid the cost of tower and shelter construction. Management believes this
approach will also expedite the construction process and avoid time delays
associated with local zoning and permit issues. The Company expects
approximately 33% of the planned sites will need to be constructed. In the
cases where construction is necessary, the Company will be required to bear the
costs of constructing a site which may include: access road development, land
acquisition, shelter costs, foundation and tower construction.
29
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<PAGE> 32
================================================================================
CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
ITEM 2. PLAN OF OPERATION - CONCLUDED
Over the next 12 months, the marketing objective is to activate customers on
the Company's channels as constructed and position the Company as a leader in
new wireless communication technology and service. Management believes that
Motorola's brand name recognition, combined with the Company's targeted
marketing approach, will assist in developing customer interest in the analog
and digital wireless services offered. The strategy is to increase Company
revenues with the smallest possible incremental marketing expense, using
existing dealers and operators in its footprint.
It is anticipated that the Company's recurring revenues will consist primarily
of subscriber network usage revenues, which consist of monthly access fees per
unit, incremental charges based on minutes of use, and lease revenues from site
operations where the Company owns or manages a transmission facility and leases
space to a third party. Lease revenues, while not a primary source of revenue,
offer increased cash flow opportunities for little additional cost. From time
to time, changes in the Company's plans may dictate that facilities, originally
acquired to be included in an operating system, will be sold, traded or used in
partnership with existing service providers in a particular market to provide
either additional cash flow for growth or to begin or strengthen specific
strategic alliances.
The Company has elected to develop two channels of distribution: independent
agents and, to a lesser extent, direct sales representatives. Independent
agents will be established in each of the markets as available. The Company
intends to attract high quality agents through innovative compensation plans.
The Company will also establish a sales presence in markets where adequate
independent agents are not available. It is anticipated that each sales office
will have a minimal retail presence for walk-in customer traffic. In addition,
the Company's management team recognizes that additional staff will be required
to properly support marketing, sales, engineering, and accounting. It is
anticipated that approximately 50 more employees will be required to meet the
demands of the projected growth through the next six months.
LIQUIDITY AND CAPITAL RESOURCES
The Company's sources of capital are the proceeds from the sale of common stock
from private placement(s), registered offering(s) of stock to the general
public, vendor financing, debt or convertible debt and the anticipated cash
from future operating revenue and the possible receipt of proceeds from the
exercise of the Company's options and warrants. The Company does not intend to
incur any additional significant debt in the foreseeable future except for
equipment financing and a possible note offering as referenced below. There is
no assurance that the Company will be able to obtain such additional financing
or, if available, that the terms of the financing would be advantageous to the
Company or its shareholders.
On February 28, 1996, the Company executed with Motorola a purchase agreement
for its iDEN product. The agreement is conditional upon the Company acquiring
acceptable financing by August 1996. The Company intends to obtain the
required financing through Motorola's Financing Division. The Company has
delayed the implementation of its initial iDEN system, due to the need for
in-depth engineering and operational analysis of the market positions it now
controls as well as the impact of possible strategic relationships that are
currently under discussion.
In April 1996, the Company issued 250,000 shares of its Convertible Series A
Preferred Stock for net proceeds of $2,275,956. In June 1996, the Company
issued $4 million out of a $5 million offering of 8%, three year, convertible
notes, and received $3,585,833, net of placement fees of $414,167. In July
1996, the Company placed the remaining $1 million of convertible notes and
received $900,000, net of placement fees of $100,000.
During the next 12 months, the Company will require access to sufficient
capital to enable it to act quickly on opportunities that present themselves in
the Company's target markets. The Company believes that in the next 12 months
it will require approximately $19.4 million for capital expenditures associated
with the leased and capital assets necessary for the construction of systems.
In addition, the Company expects to require an additional $3.5 million to meet
operating expenses. When the Company commences the staged conversion of its
analog SMR systems to a Digital Mobile format, it will require significant
additional capital.
30
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<PAGE> 33
================================================================================
CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
LIQUIDITY AND CAPITAL RESOURCES - CONCLUDED
The Company intends to seek additional cash financing in exchange for one or
more of the following: financing provided by the vendor of the analog and
digital mobile equipment, incurring additional indebtedness, which may include
the issuance of debt securities convertible into shares of the Company's common
stock, issuing additional shares of preferred stock, which may include
preferred stock convertible into shares of the Company's common stock, and
issuing additional shares of common stock pursuant to one or more privately
negotiated transactions or public offerings. In the event that the Company
issues convertible debt securities or preferred stock convertible into shares
of its common stock, the effective price at which such shares of common stock
may be issued and sold by the Company may be lower than the prevailing market
prices for the Company's common stock at the time of such conversion and/or at
the time of issuance of such convertible debt or preferred stock.
Recently, the Company has held discussions with potential underwriters for a
potential public offering of the Company's securities. As of the date of this
report, however, the Company does not have a signed letter of intent from any
underwriter for a public offering of its securities, and there can be no
assurance that the Company will be able to obtain a signed letter of intent
from an underwriter or that it will be able to raise the capital necessary to
construct the channels for its proposed SMR network.
Accordingly, based on the plans and intentions set forth above, management
anticipates that through the establishment of operational SMR systems in
conjunction with the ability to provide both short term funding of operations
and long term acquisition and development activities, the Company expects to
emerge from the development stage and establish normal operations in 1996.
However, as of June 30, 1996, the success of achieving the objectives discussed
herein, as well as the overall profitability of the Company's operations once
the development stage has ended, cannot presently be determined.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As reported in the Company's Quarterly Report on Form 10-QSB for the
Quarterly Period Ended March 31, 1996, a lawsuit titled Key Communications
Group, Inc. v. Robert Moore, David Chadwick, Chadmoore Communications,
Inc. and Chadmoore Communications of Tennessee, Inc., Civil Action No.
94-CV-4196, was filed in the District Court, City and County of Denver, State
of Colorado, on August 31, 1994. This lawsuit was settled during the period
covered by this Report and was dismissed with prejudice pursuant to an order of
the Court dated July 9, 1996.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
31
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<PAGE> 34
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CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
PART II - OTHER INFORMATION - CONTINUED
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
2.1 Agreement and Plan of Reorganization dated February 2, 1995, by and
between the Company (f/k/a CapVest Internationale, Ltd.) and Chadmoore
Communications, Inc.(1)
2.2 Addendum to the Agreement and Plan of Reorganization, dated February 21,
1995, by and between the Company (f/k/a CapVest Internationale, Ltd.) and
Chadmoore Communications, Inc.(1)
2.3 Addendum No. 2 to the Agreement and Plan of Reorganization, dated March
31, 1995, by and between the Company (f/k/a CapVest Internationale, Ltd.)
and Chadmoore Communications, Inc.(1)
3.1 Articles of Incorporation(2)
3.2 Articles of Amendment to the Articles of Incorporation filed November 1,
1988(3)
3.3 Articles of Amendment to the Articles of Incorporation filed April 28,
1995(4)
3.4 Articles of Amendment to the Articles of Incorporation filed April 1,
1996(5)
3.5 Articles of Amendment to the Articles of Incorporation filed April 11,
1996(6)
3.6 Bylaws(2)
4.1 Form of Warrant Certificate, together with the Terms of Warrants(7)
4.2 Registration Rights Agreement(8)
4.3 Certificate of Designation of Rights and Preferences of Series A
Convertible Preferred Stock of the Company(9)
10.1 Amended Nonqualified Stock Option Plan dated October 12, 1995 (employee
stock option plan covering 1,500,000 shares)(10)
10.2 Employee Benefit and Consulting Services Plan dated July 7, 1995(11)
10.3 First Amendment to the Employee Benefit and Consulting Services Plan
dated December 8, 1995(12)
- ----------------------------------
1 Incorporated by reference to Exhibit 1 in the Company s Form 8-K, under Item
2, date of earliest event reported February 21, 1995
2 Incorporated by reference to Exhibit 3 to the Company s Registration
Statement on Form S-18 (33-14841-D)
3 Incorporated by reference to Exhibit 3.2 to the Company s Form 10-KSB for the
year ended December 31, 1995
4 Incorporated by reference to Exhibit 3.3 to the Company s Form 10-KSB for the
year ended December 31, 1995
5 Incorporated by reference to Exhibit 3.4 to the Company s Form 10-KSB for the
year ended December 31, 1995
6 Incorporated by reference to Exhibit 3.5 to the Company s Form 10-KSB for the
year ended December 31, 1995
7 Incorporated by reference to Exhibit 4.1 to the Company s Form 10-KSB for the
year ended December 31, 1995
8 Incorporated by reference to Exhibit 4.2 to the Company s Form 10-KSB for the
year ended December 31, 1995
9 Incorporated by reference to Exhibit 3.4 to the Company s Form 10-KSB for the
year ended December 31, 1995
10 Incorporated by reference to Exhibit 10.1 to the Company s Form 10-KSB for
the year ended December 31, 1995
11 Incorporated by reference to Exhibit 4.1 in the Registration Statement on
Form S-8 effective July 12, 1995 (file no.33-94508)
12 Incorporated by reference to Exhibit 4.1 in the Registration Statement on
Form S-8 effective December 14, 1995 (file no. 33-80405)
32
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<PAGE> 35
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(a) Exhibits - concluded
10.4 Employment Agreement between the Company and Robert W. Moore effective as
of April 21, 1995(13)
10.5 Employment Agreement between the Company and David J. Chadwick effective
as of April 21, 1995(14)
10.6 Employment Agreement between the Company and William C. Bossung
effective as of April 21, 1995(15)
10.7 Integrated Dispatched Enhanced Network ("iDEN") Purchase Agreement dated
February 28, 1996, by and between the Company and Motorola, Inc.(16)
10.8 Amendment Number 001 to the Integrated Dispatched Enhanced Network
("iDEN") Purchase Agreement dated March 25, 1996(17)
10.9 Asset Purchase Agreement dated November 2, 1994 by and between Chadmoore
Communications, Inc. and General Communications Radio Sales and Service,
Inc., General Electronics, Inc. and Richard Day with Exhibits(18)
10.10 Modification to Asset Purchase Agreement dated March 8, 1996, by and
between Chadmoore Communications, Inc., the Company and Chadmoore
Communications of Tennessee, Inc. and General Communications Radio Sales
and Service, Inc., General Electronics, Inc. and Richard Day with
Exhibits(19)
10.11 Stock Purchase Agreement dated June 14, 1996, by and between Chadmoore
Wireless Group, Inc. and Libero Limited(20)
11.1 Earnings Per Share (see notes to Consolidated Financial Statements)(21)
27.1 Financial Data Schedule
(b) Reports on Form 8-K
(i) Current Report Form 8-K filed March 22, 1996 reporting
consummation of the Modification to Asset Purchase Agreement
dated March 8, 1996 by and between Chadmoore Communications
of Tennessee, Inc. and General Communications Radio Sales and
Service, Inc., General Electronics, Inc. and Richard Day
with Exhibits
(ii) Current Report of Form 8-K filed May 14, 1996 reporting the
resignation, effective April 30, 1996, of David Chadwick as
Executive Officer and Director of the Company and similar
positions with affiliates of the Company with Exhibit.
(iii) Current Report on Form 8-K filed June 28, 1996, reporting the
execution of the Stock Purchase Agreement dated June 14, 1996 by
and between Chadmoore Wireless Group, Inc. and Libero Limited with
Exhibit and amendment there on Form 8-K/A-1 filed July 30, 1996
(iv) Form 8-A filed July 11, 1996, registering the Registrant's Common
Stock, $.001 par value per share, pursuant to section 12(g) of the
Securities Act of 1934, and declared effective by the SEC on July
12, 1996, file No. 0-20999.
- -----------------------------------
13 Incorporated by reference to Exhibit 10.4 to the Company s Form 10-KSB for
the year ended December 31, 1995
14 Incorporated by reference to Exhibit 10.5 to the Company s Form 10-KSB for
the year ended December 31, 1995
15 Incorporated by reference to Exhibit 10.6 to the Company s Form 10-KSB for
the year ended December 31, 1995
16 Incorporated by reference to Exhibit 10.7 to the Company s Form 10-KSB for
the year ended December 31, 1995
17 Incorporated by reference to Exhibit 10.8 to the Company s Form 10-KSB for
the year ended December 31, 1995
18 Incorporated by reference to Exhibit 2.2 in the Company s Form 8-K, under
Item 2, date of earliest event reported March 8, 1996
19 Incorporated by reference to Exhibit 2.1 in the Company s Form 8-K, under
Item 2, date of earliest event reported March 8, 1996
20 Incorporated by reference to Exhibit 2.2 in the Company s Form 8-K, under
Item 2, date of earliest event reported June 14, 1996
21 Incorporated by reference to Exhibit 11.1 to the Company s Form 10-KSB for
the year ended December 31, 1995
33
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<PAGE> 36
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CHADMOORE WIRELESS GROUP, INC.
By: /s/ Gary L. Killoran
-----------------------------------------
Gary L. Killoran, Chief Financial Officer
DATE: August 19, 1996
34
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<PAGE> 37
EXHIBIT INDEX
NO. DESCRIPTION
- ----- -----------
2.1 Agreement and Plan of Reorganization dated February 2, 1995, by and
between the Company (f/k/a CapVest Internationale, Ltd.) and Chadmoore
Communications, Inc.(1)
2.2 Addendum to the Agreement and Plan of Reorganization, dated February 21,
1995, by and between the Company (f/k/a CapVest Internationale, Ltd.) and
Chadmoore Communications, Inc.(1)
2.3 Addendum No. 2 to the Agreement and Plan of Reorganization, dated March
31, 1995, by and between the Company (f/k/a CapVest Internationale, Ltd.)
and Chadmoore Communications, Inc.(1)
3.1 Articles of Incorporation(2)
3.2 Articles of Amendment to the Articles of Incorporation filed November 1,
1988(3)
3.3 Articles of Amendment to the Articles of Incorporation filed April 28,
1995(4)
3.4 Articles of Amendment to the Articles of Incorporation filed April 1,
1996(5)
3.5 Articles of Amendment to the Articles of Incorporation filed April 11,
1996(6)
3.6 Bylaws(2)
4.1 Form of Warrant Certificate, together with the Terms of Warrants(7)
4.2 Registration Rights Agreement(8)
4.3 Certificate of Designation of Rights and Preferences of Series A
Convertible Preferred Stock of the Company(9)
10.1 Amended Nonqualified Stock Option Plan dated October 12, 1995 (employee
stock option plan covering 1,500,000 shares)(10)
10.2 Employee Benefit and Consulting Services Plan dated July 7, 1995(11)
10.3 First Amendment to the Employee Benefit and Consulting Services Plan
dated December 8, 1995(12)
- ----------------------------------
1 Incorporated by reference to Exhibit 1 in the Company s Form 8-K, under Item
2, date of earliest event reported February 21, 1995
2 Incorporated by reference to Exhibit 3 to the Company s Registration
Statement on Form S-18 (33-14841-D)
3 Incorporated by reference to Exhibit 3.2 to the Company s Form 10-KSB for the
year ended December 31, 1995
4 Incorporated by reference to Exhibit 3.3 to the Company s Form 10-KSB for the
year ended December 31, 1995
5 Incorporated by reference to Exhibit 3.4 to the Company s Form 10-KSB for the
year ended December 31, 1995
6 Incorporated by reference to Exhibit 3.5 to the Company s Form 10-KSB for the
year ended December 31, 1995
7 Incorporated by reference to Exhibit 4.1 to the Company s Form 10-KSB for the
year ended December 31, 1995
8 Incorporated by reference to Exhibit 4.2 to the Company s Form 10-KSB for the
year ended December 31, 1995
9 Incorporated by reference to Exhibit 3.4 to the Company s Form 10-KSB for the
year ended December 31, 1995
10 Incorporated by reference to Exhibit 10.1 to the Company s Form 10-KSB for
the year ended December 31, 1995
11 Incorporated by reference to Exhibit 4.1 in the Registration Statement on
Form S-8 effective July 12, 1995 (file no.33-94508)
12 Incorporated by reference to Exhibit 4.1 in the Registration Statement on
Form S-8 effective December 14, 1995 (file no. 33-80405)
<PAGE> 38
EXHIBIT INDEX - (concluded)
NO. DESCRIPTION
- ----- -----------
10.4 Employment Agreement between the Company and Robert W. Moore effective as
of April 21, 1995(13)
10.5 Employment Agreement between the Company and David J. Chadwick effective
as of April 21, 1995(14)
10.6 Employment Agreement between the Company and William C. Bossung
effective as of April 21, 1995(15)
10.7 Integrated Dispatched Enhanced Network ("iDEN") Purchase Agreement dated
February 28, 1996, by and between the Company and Motorola, Inc.(16)
10.8 Amendment Number 001 to the Integrated Dispatched Enhanced Network
("iDEN") Purchase Agreement dated March 25, 1996(17)
10.9 Asset Purchase Agreement dated November 2, 1994 by and between Chadmoore
Communications, Inc. and General Communications Radio Sales and Service,
Inc., General Electronics, Inc. and Richard Day with Exhibits(18)
10.10 Modification to Asset Purchase Agreement dated March 8, 1996, by and
between Chadmoore Communications, Inc., the Company and Chadmoore
Communications of Tennessee, Inc. and General Communications Radio Sales
and Service, Inc., General Electronics, Inc. and Richard Day with
Exhibits(19)
10.11 Stock Purchase Agreement dated June 14, 1996, by and between Chadmoore
Wireless Group, Inc. and Libero Limited(20)
11.1 Earnings Per Share (see notes to Consolidated Financial Statements)(21)
27.1 Financial Data Schedule
- --------------------------------
13 Incorporated by reference to Exhibit 10.4 to the Company s Form 10-KSB for
the year ended December 31, 1995
14 Incorporated by reference to Exhibit 10.5 to the Company s Form 10-KSB for
the year ended December 31, 1995
15 Incorporated by reference to Exhibit 10.6 to the Company s Form 10-KSB for
the year ended December 31, 1995
16 Incorporated by reference to Exhibit 10.7 to the Company s Form 10-KSB for
the year ended December 31, 1995
17 Incorporated by reference to Exhibit 10.8 to the Company s Form 10-KSB for
the year ended December 31, 1995
18 Incorporated by reference to Exhibit 2.2 in the Company s Form 8-K, under
Item 2, date of earliest event reported March 8, 1996
19 Incorporated by reference to Exhibit 2.1 in the Company s Form 8-K, under
Item 2, date of earliest event reported March 8, 1996
20 Incorporated by reference to Exhibit 2.2 in the Company s Form 8-K, under
Item 2, date of earliest event reported June 14, 1996
21 Incorporated by reference to Exhibit 11.1 to the Company s Form 10-KSB for
the year ended December 31, 1995
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0
0
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