SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
Form 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31ST, 1997.
Commission file number 0-25680
CHANNEL i INC.
(Exact name of small business issuer as specified in its charter)
NEVADA 33-0264030
(State or other jurisdiction of (IRS Employer
incororation or organization) Identification Number)
700 - 555 West Hastings St., Vancouver, BC.,
Canada, V6B 4N5 (Address of principal executive
offices and Zip (Postal) Code)
(604) 482-1211
(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 for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirement for the past 90 days. Yes...X; 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[GRAPHIC OMITTED]:
May 16th, 1997 - 7,877,559 Common shares, $.001 par value.
<PAGE>
CHANNEL i INC
FORM 10 - QSB
For the Period Ended March 31st, 1997
INDEX
Page
PART I. FINANCIAL INFORMATION................................... 3
Item 1. Financial Statements.................................... 3
Balance Sheets.......................................... 3
Statement of Operations................................. 4
Statement of Cash Flows................................. 5
Notes to Financial Statements........................... 6
Item 2. Management's Discussion and Analysis or Plan of
Operation
PART II OTHER INFORMATION...................................... 9
Item 6. Exhibits and Reports on Form 8-K
Signature.................................... 9
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
The financial statements for Channel i Inc., (the "Company"), for the three
months ended March 31st, 1997 and 1996 include, in the opinion of the Company,
all adjustments, (which consist only of normal recurring adjustments), necessary
to present fairly the results of operations for such periods. Results of
operations for the three months ended March 31st, 1997 are not necessarily
indicative of results of operations which will be realized for the year ending
December 31st, 1997. The financial statements should be read in conjunction with
the Company's form 10-KSB for the year ended December 31st, 1996.
<PAGE>
<TABLE>
<CAPTION>
CHANNEL i INC.
(A Development Stage Company)
Balance Sheet
As at March 31
1997 1996
---- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash ........................................................... $ 58,059 $ 3,435
Deposit ........................................................ -- 5,500
Accounts Receivable ............................................ 52,500 --
Trade Name ..................................................... -- 22,189
Other .......................................................... 99,719 18,620
----------- ----------
Total Current Assets ........................................... 210,278 49,744
----------- ----------
EQUIPMENT
Equipment and Fixtures ......................................... -- 96,709
Less Accumulated depreciation .................................. -- (43,376)
----------- -----------
Net Equipment .................................................. -- 53,333
----------- -----------
Total Assets ................................................... $ 210,278 $ 103,077
----------- ===========
LIABILITIES
CURRENT LIABILITIES
Accounts Payable ............................................... $ 46,260 $ 65,675
Accrued Liabilities ............................................ 58,239 58,538
Loan payable - Affiliate ....................................... -- 2,658
Advance on sale of stock ....................................... 84,376 498,540
Capitalized leases payable - current ........................... -- 3,338
----------- -----------
Total Current Liabilities ...................................... 188,875 628,749
----------- -----------
LONG TERM LIABILITIES
Capitalized leases payable ..................................... -- 7,007
----------- -----------
Total Liabilities .............................................. 188,875 635,756
----------- -----------
STOCKHOLDERS EQUITY
Preferred stock, $.00001 par value: authorized 5,000,000 shares: -- --
----------- -----------
issued and outstanding 0 shares as if March 31, 1997 and 1996
Common Stock, $.001 par value: authorized 50,000,000 shares: ... 7,478 4,606
----------- -----------
issued and outstanding 7,377,559 and 4,606,601 shares at
March 31, 1997 and 1996 respectively ...........................
Paid in capital ................................................ 2,615,781 1,998,612
Accumulated deficit ............................................ (2,601,856) (2,535,897)
----------- -----------
Total Stockholder's Equity ..................................... 21,403 (532,679)
----------- -----------
Total Liabilities and Stockholder's Equity ..................... $ 210,278 $ 103,077
=========== ===========
1
<PAGE>
CHANNEL i INC.
(A Development Stage Company)
Statement of Operations
For the three months ending March 31
Inception
August 6, 1987
1997 1996 to March 31, 1997
-------- ------- -----------------
<S> <C> <C> <C>
REVENUES
Administrative services ................... $ -- $ -- $ 25,304
Interest income ........................... -- -- 14,452
Other income .............................. 30,310 -- 34,122
-------- ------- ---------
Total Revenue ............................. 30,310 -- 73,878
-------- ------- ---------
EXPENSES
Salaries and benefits ..................... -- 1,239 327,706
Professional fees ......................... 13,000 16,712 247,000
Interest .................................. 13 -- 9,577
Consulting fees ........................... 6,250 23,406 944,874
Research and development .................. -- -- 85,698
Administrative costs ...................... 1,853 19,148 932,405
Depreciation / loss on sale of fixed assets 13,855 -- 128,477
-------- ------- ---------
Total Expenses ............................ 34,971 60,505 2,675,737
-------- ------- ---------
Net (Loss) ............................... $ (4,659) $(60,505) $ 2,601,859
-------- ------- ---------
(Loss) per share .......................... $(0.0008) $ (0.013) $ (1.713)
======== ======== =========
Weighted Average Number of
Common Shares Outstanding ................. 5,507,597 4,606,061 1,518,879
======== ======== =========
2
<PAGE>
CHANNEL i INC.
(A Development Stage Company)
Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
Inception
August 6, 1987
1997 1996 to March 31, 1997
-------- ------- -----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) .................................... $ (4,659) $(60,505) $ (2,601,859)
Adjustments to reconcile net (loss) to cash
Depreciation / loss on sale of fixed assets ... 13,855 9 159,473
Changes in Assets and liabilities
Accounts Receivable ......................... (52,500) -- (52,500)
Trade name .................................. 22,189 --
Other assets ................................ (101,170) 10,106 (101,527)
Accounts payable ............................ (27,341) (39,229) 46,260
Accrued liabilities ......................... -- 36,808 58,239
----------- ----------- ----------
Net Cash Flows Used for Operating Activities .. (149,626) (52,811) (2,491,914)
----------- ----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of equipment ...................... -- 3,218 (164,326)
Organizational costs .......................... -- -- (1,035)
----------- ----------- ----------
Net Cash Flows used for Investing ............. -- (3,218 (165,361)
----------- ----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Loans from affiliate .......................... -- -- 12,456
Payments of loans from affiliate .............. -- -- (9,799)
Proceeds from lease obligations ............... -- -- 58,822
Payments on lease obligations ................. -- (2,613) (55,589)
Advance on sale of stock ...................... 84,376 43,483 84,376
Sale of stock, net of offering costs .......... 121,500 -- 2,623,259
----------- ----------- ---------
Net Cash Flows Provided by Financing Activities 205,876 40,870 2,713,525
----------- ----------- ----------
Net increase in cash .......................... 56,250 (8,723) 56,250
Cash and cash equivalents - Beginning of period 1,809 12,158 1,809
-----------
Cash and cash equivalents - End of period ..... $ 58,059$ $ 3,435 $ 58,059
=========== =========== =========
</TABLE>
NON-CASH ACTIVITIES
1,988,000 shares of common stock have been issued for services performed since
inception. During the first quarter on 1997, the Company gave equipment with a
cost of $22,189 to former directors as compensation.
3
<PAGE>
CHANNEL i INC.
(A Development Stage Company)
Notes to Financial Statements
March 31, 1997 and March 31, 1996
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Channel i Inc. (formerly Channel i Limited and Athena Ventures, Inc.) (the
Company ) was incorporated on August 6, 1987 under the laws of the State of
Nevada. The Company is a development stage company. On November 4, 1993, the
Company acquired 100 percent of the issued and outstanding shares of Channel i
PLC (PLC), a public limited company incorporated under the laws of England and
Wales which resulted in PLC being a wholly owned subsidiary of the Company.
Basis of Accounting
The Company utilizes the accrual basis of accounting. PLC financial
statements have been prepared using accounting principles generally accepted in
England and Wales.
The Preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly,
actual results could differ from those estimates.
Equipment
Depreciation on equipment, furniture and fixtures is provided on the
straight-line method with asset lives of five to seven years for the assets
placed in service. Depreciation expense for the three months ended March 31,
1997 and 1996 was $nil an $9.00 respectively.
Principles of Consolidation
The consolidated financial statements for the three months ended March 31,
1997 and 1996 include the accounts of Channel i Inc. and Channel i PLC. All
significant intercompany transactions and account balances have been eliminated.
Research and Development
Research and development costs are expensed as incurred.
Foreign Currency Transactions
Assets and liabilities denominated in foreign currencies are translated
into United States dollars using the average exchange in effect at March 31,
1997 and 1996.
Revenue and expense transaction gains and losses are recorded at the
exchange rates prevailing at the time the transaction took place. Currency
transaction gain or losses are included in general and administration expenses.
Cash Equivalents
For purposes of the Statement of Cash Flows, cash equivalents are defined
as investments with maturities of three months or less.
NOTE 2: ACQUISITION
On November 4, 1993, the Company acquired 100 percent of the 1,000,000
shares of common stock outstanding of PLC in exchange for the Company issuing
400,000 shares of common stock valued at $2,500. The transaction was accounted
for as a purchase under Accounting Principles Board Opinion No. 16. As part of
the transaction, the parties agreed to place 400,000 shares of common stock into
an escrow account, whereby the escrowed shares would be released over a period
of time based upon performance. During 1994, 349.998 of the escrowed shares were
released. The remaining 50,002 shares were cancelled in 1996 because the
relevant conditions of the escrow agreement were not met.
On May 13, 1997, the Company entered into an agreement to acquire 100
percent of the 1,600 common stock and 1,600 preferred stock outstanding of Major
Wireless Communications Inc. (Major Wireless) in exchange for the Company
issuing 4,000,000 shares of voting, convertible preferred stock valued at
$4,000.00. As part of the transaction, the parties agreed that the said shares
would be released over a period of time based upon performance. No shares have
been released to date.
4
<PAGE>
NOTE 3: LOAN PAYABLE - AFFILIATE
Loan Payable - Affiliate represents the amount of unsecured loans
outstanding to the directors of PLC. As of March 31, 1997 and 1996, loans
payable totaled $2,657 and $2,657 respectively.
NOTE 4: CAPITALIZED LEASES PAYABLE
At March 31, 1996, PLC has the following capitalized lease obligations:
1996
---------
Total leases payable ......... $ 10,345
Less current maturities....... 3,338
Long-term portion............. $ 7,007
---------
NOTE 5: STOCKHOLDER'S EQUITY
Common Stock
On November 4, 1993 the Company issued 800,000 shares of common stock
valued at $5,000 to officers for prior services.
On November 15, 1993, the Company entered into a private placement to raise
at least $250,000 through the sale of 500,000 shares of its common stock.
During the year ended December 31, 1994, the Company issued 3,218,181
shares of common stock through three private placements in exchange for
$1,667,642, net of issuance costs of $34,858.
During the year ended December 31, 1995, the Company raised $200,000
through a private placement of 100,000 shares of its common stock. In addition,
cash was received in advance of stock sales totaling $455,057.
During the year ended December 31, 1996, the Company aided $43,484, in
addition to the previous advance, through a private placement of 628,500 shares
of its common stock.
During the three months ended March 31, 1997, the Company raised $89,250
through a private placement of 1,785,000 shares of its common stock.
Preferred Stock
In December, 1994, the Company authorized for issuance 5,000,000 shares of
9% Cumulative Convertible Preferred Stock.
During the first quarter, cash was received in advance of stock sales
totaling $84,376.
5
<PAGE>
NOTE 6: COMMITMENTS
Agreements
The Company has entered into employment and consulting agreements with
various parties. Under these agreements, the parties currently own options to
purchase 967,000 shares of the Company's common stock at $.0625 per share.
Option shares are exercisable until January 22, 2000. In addition, in January
and February, 1997, the Company issued 508,800 shares of common stock for
services rendered.
Stock Sales
In February, 1997, the Company offered for sale 1,785,000 shares of common
stock units, with four warrants attached and 596,250 preferred stock units, with
three common stock warrants attached. The 1,785,000 shares were issued March 24,
1997. The preferred offering was closed at 298,125 units.
NOTE 7: INCOME TAXES
Channel i Inc. incurred an operating loss for the three months ended March
31, 1997 and 1996 of $4,659 and $60,505, respectively. During the year ended
December 31,1993, the Company adopted FASB No. 109.
As of December 31, 1996 and 1995, the Company had net operation loss
carryforwards of $1,460,089 and $1,398,818, respectively, respectively, which
expire between the year 2005 - 2012.
NOTE 8: GOING CONCERN AND DISCONTINUED OPERATIONS
At March 31, 1997 and 1996, the Company has not generated revenues from
operations.
During 1997, management will review the operation potential of Channel i
PLC, a wholly owned English subsidiary.
Item 2. Management's Discussion and Analysis or Plan of Operation.
The following discussion is intended to assist in an understanding of the
Company's financial position and results of operations for the quarter ending
March 31st, 1997.
Forward-Looking Information.
This report contains certain forward-looking statements and information
relating to the Company that are based on the beliefs of its management as well
as assumptions made by and information currently available to its management.
When used in this report, the words "anticipate", "believe", "estimate",
"expect", "intend", "plan", and similar expressions as they relate to the
Company or its management, are intended to identify forward-looking statements.
These statement reflect management's current view of the Company with respect to
future events and are subject to certain risks, uncertainties and assumptions.
Should any of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
described in this report as anticipated, estimated or expected. The Company's
realization of its business aims could be materially and adversely affected by
any technical or other problems in, or difficulties with, planned funding and
technologies, third party technologies which render the Company's technologies
obsolete, the unavailability of required third party technology licenses on
commercially reasonable terms, the loss of key research and development
personnel, the inability or failure to recruit and retain qualified research and
development personnel, or the adoption of technology standards which are
different from technologies around which the Company's business ultimately is
built. The Company does not intend to update these forward-looking statements.
Liquidity and Capital Resources.
The Company has funded its operations for the most part through equity
financing and has had no line of credit or similar credit facility available to
it. The Company raised a total of approximately $283,000.00, since the year
ended December 31st, 1996, from the sale of securities. The details of these
offerings were set out in a Form 8-K filed with respect to each. The proceeds
from these issues have and will continue to be used with respect to maintaining
the on-going operation of the Company and put toward acquiring all issued and
outstanding shares of Major Wireless Communications Inc., ("Major Wireless"), a
Canadian development stage company, incorporated under the laws of the Province
of British Columbia.
The Company currently has no full time employees and little in the way of
general or administrative overhead expenses. With the acquisition of Major
Wireless the Company will be endeavoring to assist Major Wireless in the
financing of its operations.
An agreement for the purchase of the said shares of Major Wireless was
executed on the 13th day of May, 1997 with closing expected to occur on or
before the 26th day of May, 1997. A current report with respect to this
agreement and acquisition is currently being prepared and will be filed on a
Form 8-K.
The Company's outstanding shares of Common stock, par value $.001 per
share, are traded under the symbol "CHLI" in the over-the-counter market on the
OTC Electronic Bulletin Board by the National Association of Securities Dealers,
Inc. The Company must rely on its ability to raise money through equity
financing to pursue any business endeavors and, at the present time, is working
exclusively on the acquisition of Major Wireless and its operations.
Results of Operations - First quarter 1997
During the first quarter of the year, the Company incurred a net loss of
$4,659. Expenses in the first quarter related primarily to miscellaneous
operating and professional costs. Activities in this quarter centered around the
preliminary steps required in the acquisition of Major Wireless. This included
the preliminary reservation of the name "WaveRider Communications Inc." with the
office of the Secretary of State, State of Nevada. It is the intention of the
Company to change its name to that so reserved, now that the agreement for the
acquisition of Major Wireless has been executed.
Results of Operations - First quarter 1996
During the quarter ended March 31st, 1996 the Company incurred a net loss
of $60,505 and as at March 31, 1996 had available cash of $3,435 and current
liabilities of $628,756. No income has been earned from operations nor was any
expected to be earned. Throughout the period the Company's focus was on the
securing of additional financing through the private placement of equity
securities and the negotiation of new business opportunities with other
companies and investors. For the period no results were achieved from these
efforts.
PART II. OTHER INFORMATION
Item 2. Changes in Securities.
a) On February 18th, 1997, by resolution of the Board of Directors a stock
reduction, (reverse split), of the Common stock of the Company at a ratio
of 5 to 1 was approved. This resolution was subject to the filing of a
Certificate of Amendment reflecting such reduction, with the Secretary of
State of the State of Nevada. Subsequently, after consultation with the
Investment community, the Directors decided not to proceed with such
reduction and at this time have no intention to so proceed.
c) On January 22nd, 1997, 308,000 shares of Common Stock were authorized to be
issued to Mr. Charlie Rodriguez, a Director of the Company, in lieu of
reimbursement for expenses incurred during 1996 and 1997 totaling $19,250.
On February 3rd, 1997, and again on March 24th, 1997, 100,000 shares of
Common Stock were issued to Mr. John D. Brasher, Attorney for the Company in
lieu of payment of legal fees.
The said issues were all based on a market value of $0.0625 per Common
Share of the Company's stock and were authorized pursuant to the 1994
Compensatory Stock Option Plan of the Company. These shares have been registered
on Form S-8 and are not restricted.
Item 6.Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
February 2nd, 1997 - Change of Directors.
February 3rd, 1997 - Sales of Equity Securities Pursuant to Regulation S.
February 6th, 1997 - Sales of Equity Securities Pursuant to Regulation S.
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,
Channel i Inc.
Date:
---------------------- Signature
Robert Clarke,
President, Chief Executive Officer and
Chief Financial Officer.
7
<PAGE>
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<NAME> Channel i Inc.
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<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
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