UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Pursuant to Sections 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 13th, 1997
WAVERIDER COMMUNICATIONS INC.
(Exact name of registrant as specified in charter)
NEVADA
(State or other jurisdiction of incorporation or organization)
0-25680 33-0264030
(Commission File Number) (I.R.S. Employer Identification Number)
700 - 555 West Hastings Street, Vancouver, BC., Canada, V6B 4N5
(Address of Principal Executive Offices and Zip Code)
(604) 482-1211
(Registrant's telephone number, including area code)
CHANNEL i INC.
(Former name or former address, if changed since last report)
<PAGE>
Item 7. Financial Statements and Exhibits.
This report is for the purpose of filing the financial information required as a
result of the acquisition by the Company of all the issued and outstanding
shares of the capital stock of Major Wireless Communications Inc. which
acquisition was more particularly disclosed on Form 8-K dated May 13th, 1997 and
previously filed. This filing is pursuant to Item 7 (a) and (b) of that Form.
The following documents are filed as exhibits to this report on Form 8-K:
27.1 Audited Balance Sheet and Statement of Loss and Deficit as of December
31st, 1996 this being the end of the first fiscal year of Major Wireless
Communications Inc. (In Canadian dollars).
27.2 Unaudited Interim Balance Sheet and Statement of Income for Major
Wireless Communications Inc. as of April 30th, 1997 being the closest immediate
month end date to the reported event. (In Canadian dollars).
27.3 Pro forma Consolidated Balance Sheet of the Company as of March 31st,
1997 being the latest quarterly fiscal period prior to the event and Pro forma
Consolidated Statement of Operations of the Company for the last fiscal year of
the Company being December 31st, 1996 and March 31st, 1997. (In United States
Dollars).
Signatures:
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this current report on Form 8-K to be signed on its
behalf by the undersigned thereunto duly authorized.
Dated: July 24th , 1997.
WaveRider Communications Inc.
Per: /s/ Robert Clarke
............................
ROBERT CLARKE, President
<PAGE>
EXHIBIT 27.1
MAJOR WIRELESS COMMUNICATIONS INC.
AUDITOR'S REPORT AND FINANCIAL STATEMENTS
DECEMBER 31, 1996
<PAGE>
Page 1
AUDITORS' REPORT
To the Shareholders of
MAJOR WIRELESS COMMUNICATIONS INC.
We have examined the balance sheet of MAJOR WIRELESS COMMUNICATIONS INC.
as at December 31, 1996 and the statement of loss and deficit for the
period then ended. These financial statements are the responsibility of
the company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to
obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation.
In our opinion, these financial statements present fairly in all
material respects, the financial position of the company as at December
31, 1996 and the results of its operations for the period then ended in
accordance with generally accepted accounting principles.
KPMG
July 15, 1997 CHARTERED ACCOUNTANTS
<PAGE>
Page 2
MAJOR WIRELESS COMMUNICATIONS INC.
BALANCE SHEET
DECEMBER 31, 1996
-----------------
ASSETS
$ -
======
LIABILITIES
ACCOUNTS PAYABLE $ 860
------
SHAREHOLDERS' EQUITY
SHARE CAPITAL (note 2) 480
LESS UNPAID SUBSCRIPTIONS (480)
-
DEFICIT (860)
------
$ -
======
ON BEHALF OF THE BOARD
/S/Rick Antoine
.................
Director
/s/Stephen Grant
.................
Director
<PAGE>
Page 3
MAJOR WIRELESS COMMUNICATIONS INC.
STATEMENT OF LOSS AND DEFICIT
FOR THE PERIOD OCTOBER 9, 1996 TO DECEMBER 31, 1996
---------------------------------------------------
REVENUE $ -
EXPENSES
Legal 860
------
LOSS FOR THE PERIOD 860
------
DEFICIT, END OF PERIOD $ 860
======
<PAGE>
Page 4
MAJOR WIRELESS COMMUNICATIONS INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
-----------------
1. NATURE OF ACTIVITIES
The company was incorporated October 9, 1996 under the Company Act,
Province of British Columbia, Canada. Operations, primarily scientific
research and experimental development, commenced in January, 1997.
2. SHARE CAPITAL
Authorized
10,000 Class A voting, non-participating shares
without par value
10,000 Class B non-voting, participating shares
without par value
2,000,000 Class C non-voting, participating shares
with a par value of $ 0.01 each
100,000 Class D non-voting, non-participating shares
with a par value of $ 0.01 each
100,000 Class E non-voting, non-participating shares
with a par value of $ 100.00 each
Issued
240 Class A shares $ 240
240 Class B shares 240
---------
$ 480
=========
<PAGE>
Exhibit 27.2
Unaudited Interim Balance Sheet and Statement of Income
MAJOR WIRELESS COMMUNICATIONS INC.
Four months ended April 30, 1997
<PAGE>
Major Wireless Communications Inc.
Balance sheet
April 30,1997
-------------
ASSETS
- ------
<TABLE>
<S> <C> <C>
Current assets
Cash in Bank
GS Tax Receivable $ 13,044
Notes Receivable 3,000
Lab Inventory 43,795 59,839
---------
Fixed assets
Equipment and Computer Software 121,752
Leasehold improvements 15,494
---------
137,246
Less accumulated depreciation and amortization NIL 137,246
--------- -------
Total Assets $197,085
LIABILITIES AND SHAREHOLDERS' DEFICIT
- -------------------------------------
Current Liabilities
Bank Overdraft $ 863
Accounts Payable 4,405
Employee Benefits Payable 7,037 12,305
----------
Long Term Debt
Advances from Shareholders and Related Parties 350,235
Shareholders' Deficit
Share Capital 3,200
Deficit, December 31, 1996 860
Loss for the period ending April 30, 1997 167,795 165,455
--------- --------
Total Liabilities and Shareholders' Deficit $197,085
</TABLE>
Interim financial statements, April 30, 1997: unaudited
See accompanying Notes to financial statements.
<PAGE>
Major Wireless Communications Inc.
Statement of Income
Four Months ending April 30, 1997
<TABLE>
<CAPTION>
REVENUE Nil
- -------
RESEARCH AND DEVELOPMENT EXPENSES
- ---------------------------------
<S> <C> <C>
Bank charges and interest $ 464
Consulting Fees 11,912
Investor Relations 16,182
Management Fees 20,000
Miscellaneous 10,129
Meals and Entertainment 241
Office Supplies 5,047
Postage and Courier 2,207
Rent, Utilities, Repair and Maintenance 20,952
Salaries and Benefits 22,818
Telephone 5,342
Travel 10,301
Wages - Contract 42,200 $167,795
--------- --------
Net Loss Before Income Taxes 167,795
Provision for Income Taxes -
Net Loss for the Period $167,795
</TABLE>
Interim financial statements, April 30, 1997: unaudited
See accompanying Notes to Financial Statements.
<PAGE>
Major Wireless Communications Inc.
April 30, 1997
Notes to Financial Statements
1. The Company was incorporated October 6,1996 under the Company Act,
Province of British Columbia, Canada. Operations of scientific research and
development for Wide Area Wireless Networks commenced January 1,1997. As of
April 30, 1997 all of the company's effort and activities have been for the
benefit of this project.
2. Significant Accounting Policies.
The Company utilizes the accrual basis of accounting, recorded in Canadian
dollars. United States dollar accounts are prepared using exchange rates
generally prevailing during the period.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make assumptions that affect
certain reported amounts and disclosures. Accordingly, actual results could
differ from these estimates.
Lab inventory consists of parts and expendables acquired for the Wide Area
Wireless Networks Project. They will be charged to the project as consumed,
based upon a year end physical count.
Equipment and computer software are recorded at cost. Depreciation will be
calculated following time in use based upon the estimated useful life of each
category of assets.
Office equipment $ 7,643
Computer equipment 24,227
Lab equipment and Tools 56,707
Computer software 33,175
---------
$121,752
Leasehold improvements will be amortized over the term of the lease.
3. An office research and development facility has been leased for two
years ending March 31, 1999 for an annual rent of $21,441.60 plus tenants share
of operating costs.
4. The Advances from Shareholders and Related Parties include purchases
made on behalf of the Company and bear no interest or fixed terms of repayment.
It is anticipated that no advances will be repaid within a year.
Interim financial statements, April 30, 1997: unaudited
<PAGE>
Major Wireless Communications Inc.
April 30, 1997
Notes to Financial Statements
Page 2
5. Share Capital
<TABLE>
<CAPTION>
Authorized Issued for Cash
--------------------------
number number $
------ ------ ------
<S> <C> <C> <C>
Class A shares without per value 10,000 1,600 1,600
Class B shares without per value 10,000 1,600 1,600
Class C shares with a per value of $0.01 per share 2,000,000 - -
Class D shares with a per value of $0.01 per share 100,000 - -
Class E shares with a per value of $100.00 per share 100,000 - -
</TABLE>
Interim financial statements, April 30, 1997: unaudited
July 24, 1997
<PAGE>
Exhibit 27.3
Unaudited Pro Forma Consolidated Financial Statements
WAVERIDER COMMUNICATIONS INC.
Year ended December 31, 1996 and quarter ended March 31, 1997
(Unaudited - see Compilation Report)
<PAGE>
COMPILATION REPORT
To the Board of Directors
Waverider Communications Inc.
We have reviewed, as to compilation only, the accompanying pro forma
consolidated balance sheet of Waverider Communications Inc. as at March 31, 1997
and the pro forma consolidated statement of operations for the year ended
December 31, 1996 and the quarter ended March 31, 1997. These pro forma
consolidated financial statements have been prepared for inclusion in the filing
of Form 8-K with the Securities and Exchange Commission. In our opinion, the pro
forma consolidated balance sheet as at December 31, 1996 and the pro forma
consolidated statement of operations for the year ended December 31, 1996 and
quarter ended March 31, 1997 have been properly compiled to give effect to the
proposed transaction and assumption described in the notes thereto.
KPMG
Chartered Accountants
Vernon, Canada
July 23, 1997
Comments for United States readers on differences between
Canadian and United States reporting standards
The above report, provided solely pursuant to Canadian requirements, is
expressed in accordance with standards of reporting generally accepted in
Canada. Such standards contemplate the expression of an opinion with respect to
the compilation of pro forma financial statements. United States standards do
not provide for the expression of an opinion on the compilation of pro forma
financial statements. To report in conformity with United States standards on
the reasonableness of the pro forma adjustments and their application to the pro
forma financial statements requires an examination or review substantially
greater in scope than the procedures we have conducted. Consequently, we are
unable to express any opinion in accordance with standards of reporting
generally accepted in the United States with respect to the compilation of the
accompanying pro forma financial information.
KPMG
Chartered Accountants
Vernon, Canada
July 23, 1997
<PAGE>
WAVERIDER COMMUNICATIONS INC.
Pro Forma Consolidated Balance Sheet
(Unaudited - see Compilation Report)
(expressed in United States dollars)
As at March 31, 1997
<TABLE>
<CAPTION>
Waverider MWCI Consolidated
Pro forma Pro forma Pro forma
Waverider MWCI adjustments adjustments adjustments Combined
--------- ---- ----------- ----------- ----------- --------
Assets (note 2) (note 2)
<S> <C> <C> <C> <C>
Current assets:
Cash $ 58,059 $ $ $ 58,059
Accounts receivable 52,500 5,623 58,123
Inventory 11,110 11,110
Other 99,719 2,167 101,886
---------- --------- --------- ----------
210,278 18,900 229,178
Capital assets, at cost:
Equipment and computer
software 68,144 69,996 138,140
Leasehold improvements 1,262 1,262
---------- --------- --------- ----------
69,406 69,996 139,402
---------- --------- --------- ----------
$ 210,278 $ 88,306 $ 69,996 $ 368,580
========== ========= ========= ==========
Liabilities and Shareholders' Equity
Current liabilities:
Bank overdraft $ $ 8,119 $ $ 8,119
Accounts payable 46,260 3,710 2,678 52,648
Accrued liabilities 58,239 58,239
Advance on sale of stock 84,376 84,376
---------- --------- --------- ----------
188,875 11,829 2,678 203,382
Long-term debt:
Advances from shareholders and
related parties 143,795 143,795
Shareholders' equity:
Share capital:
Common shares,
par value 7,478 2,678 (2,678) 7,478
Paid in capital 2,615,781 2,615,781
---------- --------- --------- ----------
2,623,259 2,678 (2,678) 2,623,259
Deficit (2,601,856) (69,996) 69,996 (2,601,856)
---------- --------- --------- ----------
21,403 (67,318) 67,318 21,403
---------- --------- --------- ----------
$ 210,278 $ 88,306 $ 69,996 $ 368,580
========== ========= ========= ==========
</TABLE>
<PAGE>
WAVERIDER COMMUNICATIONS INC.
Pro Forma Consolidated Statement of Operations
(Unaudited - see Compilation Report)
(expressed in United States dollars)
<TABLE>
<CAPTION>
Year ended December 31, 1996
- ----------------------------
Waverider MWCI Adjustments Combined
--------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
(note 3)
Revenues:
Administrative Services $ 20,000 $ $ $ 20,000
----------- ----------- ----------- ----------
Expenses:
Salaries and benefits 1,239 1,239
Professional fees 26,176 632 26,808
Consulting fees 31,913 31,913
Administrative costs 77,227 77,227
Depreciation 5,221 5,221
Acquired research and development 69,996 69,996
----------- ----------- ----------- ----------
141,776 632 69,996 212,404
----------- ----------- ----------- ----------
Loss for the year $ 121,776 $ 632 $ 69,996 $ 192,404
=========== =========== =========== ==========
Loss per share .04
==========
Weighted average number of shares outstanding 5,113,041
==========
</TABLE>
<PAGE>
WAVERIDER COMMUNICATIONS INC.
Pro Forma Consolidated Statement of Operations
(Unaudited - see Compilation Report)
(expressed in United States dollars)
<TABLE>
<CAPTION>
Quarter ended March 31, 1997
- ----------------------------
Waverider MWCI Adjustments Combined
--------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
(note 3)
Revenue $ 30,310 $ $ 30,310
Expenses:
Administrative costs 1,853 32,454 34,307
Bank charges and interest 13 98 111
Consulting fees 6,250 1,240 7,490
Depreciation and loss on
sale of fixed assets 13,855 13,855
Foreign exchange translation gain (2,495) (2,495)
Investor relations 9,468 9,468
Professional fees 13,000 13,000
Salaries and benefits 28,599 28,599
--------- ---------- ----------- ----------
34,971 69,364 104,335
--------- ---------- ----------- ----------
Loss for the quarter $ 4,661 $ 69,364 $ 74,025
========= ========== =========== ==========
Loss per share .01
==========
Weighted average number of shares outstanding 5,507,597
==========
</TABLE>
<PAGE>
WAVERIDER COMMUNICATIONS INC.
Notes to Pro Forma Consolidated Financial Statements
(Unaudited - see Compilation Report)
(expressed in United States dollars)
Year ended December 31, 1996 and quarter ended March 31, 1997
- -------------------------------------------------------------
1. Basis of presentation:
The pro forma consolidated financial statements of Waverider Communications
Inc. (the "Company") are based upon the historical financial statements of
the Company after giving effect to the transaction described in note 2.
These pro forma consolidated financial statements are not necessarily
indicative of the financial position and results of operations that would
have been attained had the transaction actually taken place at the dates
indicated and do not purport to be indicative of the effects that may be
expected to occur in the future.
The pro forma consolidated financial statements have been compiled from
financial information in the:
(a) audited consolidated financial statements of the Company and Major
Wireless Communications Inc. ("MWCI") as at and for the year ended
December 31, 1996;
(b) unaudited financial statements of the Company and MWCI as at March 31,
1997 and for the quarter then ended; and
(c) the additional information set out in note 2.
The Company's consolidated financial statements are prepared in accordance
with generally accepted accounting principles in the United States of
America.
2. Pro-forma transactions:
On February 7, 1997, as amended May 13, 1997, the Company, MWCI, and the
MWCI shareholders negotiated a share exchange agreement whereby the Company
agreed to purchase all of the issued and outstanding shares of MWCI in
exchange for the issuance of shares of the Company's capital stock. The
Board of Directors of the Company and the shareholders of MWCI have
approved this agreement and the execution thereof.
As consideration for the purchase of the shares of MWCI, the Company shall
issue and deliver 4,000,000 shares of the Company's authorized but unissued
Series B Voting Convertible Preferred Stock, with par value of $0.001 per
share (the "preferred shares"). The preferred shares shall be convertible
into common shares at a ratio of 10 common shares for each preferred share.
The preferred shares shall be held in escrow and shall be released to the
previous shareholders of MWCI on the occurrence of the events and in the
numbers shown below. In the event that any of the events have not occurred
by May 13, 2002, the remaining preferred shares shall be canceled by the
Company. This expiry date may be extended by up to two years at the
discretion of the Company's Board of Directors.
<PAGE>
WAVERIDER COMMUNICATIONS INC.
Notes to Pro Forma Consolidated Financial Statements, page 2
(Unaudited - see Compilation Report)
(expressed in United States dollars)
Year ended December 31, 1996 and quarter ended March 31, 1997
- -------------------------------------------------------------
2. Pro-forma transactions (continued):
Event % of shares
released
--------
Prototype development completed 5
Prototype operational in one community 10
25 Non-conditional license agreements signed with non-
refundable deposits received 15
25 licenses operational utilizing the system 15
Gross revenue exceeds $10 million 25
Gross revenue exceeds $25 million 30
The pro forma consolidated balance sheet gives effect to this acquisition
as if it had occurred on March 31, 1997.
The acquisition of MWCI has been accounted for in the accompanying pro
forma financial statements using the purchase method of accounting with the
purchase price assigned to the net assets acquired based on their fair
values at the date of acquisition. As none of the above events has occurred
at March 31, 1997 and their outcome cannot be considered to be known beyond
a reasonable doubt, the preferred shares issued are accounted for as
contingent consideration under United States accounting principles and no
value has been ascribed to as at March 31, 1997. As the shares become
releasable from escrow in the future, such shares will be recorded at their
fair value at the date the release test is met. This additional value
ascribed to the consideration will be allocated to the net assets acquired
and charged against earnings prospectively from the date of eligibility for
release. The carrying value of the deficit of MWCI, being the deemed excess
purchase price at the date of acquisition, has been assigned to acquired
research and development and will be immediately expensed for accounting
purposes.
3. Pro forma adjustments:
The pro forma consolidated statement of operations gives effect to this
acquisition as if it had occurred at the beginning of the year ended
December 31, 1996.The value ascribed to acquired research and development
has been expensed at the beginning of the earliest period presented. As he
value ascribed to the preferred shares has not been recognized at the date
of acquisition, there are no other pro forma adjustments to the financial
statements.
