<PAGE>
U.S. 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 Quarter Ending September 30, 2000
Commission File Number #33-38119-C
-----------
VOICE AND WIRELESS CORPORATION
Formerly known as
Kensington International Holding Corporation
(Exact name of registrant as specified in its charter)
MINNESOTA
-------------------------
(State or other
jurisdiction of
incorporation)
41-1610632
(IRS Employer Identification No.)
SUITE 654, 600 SOUTH HIGHWAY 169, MINNEAPOLIS, MN
-------------------------------------------------------
(Address of principal executive offices)
55426
(Zip code)
Registrant's telephone number, (612) 546-2075
--------------
Indicate by Check mark whether the registration (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or of 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
------- ------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Outstanding shares are 8,977,367 of common stock no par value.
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Statements in this discussion which are not historical facts may be considered
"forward looking statements" within the meaning of
1
<PAGE>
Section 21E of the Securities Act of 1934, as amended, including projected sales
based upon orders, estimated cost savings and savings that may be generated from
restructuring. The words "believe", "expect", "anticipate", "estimate", and
similar expressions identify forward looking statements. Any forward looking
statement involves risks and uncertainties that could cause actual events or
results to differ, perhaps materially, from the events described in the forward
looking statements. Readers are cautioned not to place undue reliance on these
forward looking statements. The Company undertakes no obligation to publicly
update or revise any forward looking statement, whether as a result of new
information, future events or otherwise. The risks associated with the Company's
forward looking statements include, but are not limited to, risks associated
with the Company's history of losses and uncertain profitability, reliance on a
large customer, risks associated with competition, general economic conditions,
reliance on key management and production people, future capital needs,
dilution, effects of outstanding notes and convertible debentures, limited
public market, low stock price, and lack of liquidity.
The following discussion and analysis should be read in conjunction with the
consolidated financial statements, related notes and other information included
in this quarterly report on Form 10-QSB.
Part I. FINANCIAL INFORMATION
QUARTER ENDED SEPTEMBER 30, 2000
GENERAL
The following consolidated financial information is submitted in
response to the requirements of Form 10-QSB and is prepared in accordance with
generally accepted accounting principles. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted,
although the Company believes the disclosures that are made are adequate to make
the information presented not misleading. Further in the opinion of management,
the interim consolidated financial statements reflect fairly the financial
position and results of operations for the period indicated.
The results of operations for the quarter ended as stated above are not
necessarily indicative of results to be expected for the entire fiscal year
ending December 31st.
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheet of Voice and Wireless Corporation (the "Company")
as of the quarter ended September 30,2000 and the related consolidated
statements of operations and cash flows
2
<PAGE>
thereto are incorporated herein by reference to the Company's quarterly report.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
( in 000 except per share data)
<TABLE>
<CAPTION>
Highlights: QUARTER ENDED SEPTEMBER 30
2000 1999 CHANGE
--------- ------ --------
<S> <C> <C> <C>
Revenue $645 $820 (21.3%)
Gross Profit $191 $292 (34.6%)
Net Income (Loss) ($236) $ 30 (886.6%)
Earning (loss) per share ($0.03) $.01
</TABLE>
YEAR TO DATE ENDED SEPTEMBER 30
<TABLE>
<CAPTION>
2000 1999 CHANGE
--------- -------- --------
<S> <C> <C> <C>
Revenue (000's) $2,603 $2,835 (8.1%)
Gross Profit $ 877 $ 940 (6.7%)
Net Income (Loss) ($ 581) $ 119 (588.2%)
Earnings (Loss) per share ($0.07) $0.03
</TABLE>
Revenues for the quarter totaled $645k as compared to $820k for the same
quarter in 1999. The variance in revenue is due to a slow down in orders of
product and services. Year to date revenues for 2000 total $2,603k compared to
$2,835k for 1999. We appear to be seeing a slow down in the rate of orders for
our fixture business. Revenues for Mail Call, Inc. continue to be minimal and
below expectations. The Company is continuing to evaluate new options for
marketing Mail Call services but does not expect any significant revenues from
Mail Call in the last quarter of 2000.
Gross profit for the quarter ended September 30, 2000 totaled $191k compared to
$292k for the same quarter of 1999. The decrease in gross profit percentage is
due to lower revenue volume for our fixture business.
Operating expenses for the third quarter of 2000 totaled $431k as compared to
$239k for the second quarter of 1999. Operating expenses for Mail Call Inc. and
additional legal and professional
3
<PAGE>
services for the ear bud being developed by The Company accounted for the
majority of the increase in 2000.
LIQUIDITY AND CAPITAL RESOURCES
During the quarter The Company converted $104k of outstanding debentures to
common stock and paid off the remaining $21k.
INFLATION
The rate of inflation can have a significant impact on the Company's
operations because of increase in wood product costs. The Company bids most
projects and can not pass all of the cost increases to our customers.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities
During the quarter The Company issued 104,250 shares of common stock to various
individuals that had loaned the company money. The common stock was issued
pursuant to the conversion of the amounts owed by the Company to common stock at
a conversion rate of 1 share of common stock for each $1.00 owed by the Company.
In connection with this sale, the Company relied upon exemption from
registration provided by Sections 4(2) and 4(6) of the Securities Act.
The Company issued 270,000 shares of restricted common stock in exchange for the
remaining shares of stock in Mail Call Inc. thus creating a wholly owned
subsidiary. In conjunction with this transaction The Company received 135,000
shares of its common stock from a shareholder.
Item 3. Defaults upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports that have been filed since 1994 on Forms 8-KSB,
10-KSB, and 10-QSB, DEF 14A and the October 18, 1995 S-8 filing as described in
Item 2 herein.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
4
<PAGE>
VOICE AND WIRELESS CORPORATION, formerly known as
KENSINGTON INTERNATIONAL HOLDING CORPORATION
/s/ Mark Haggerty
Mark Haggerty
Chief Executive Officer
/s/ Jeff Etten
Jeff Etten, C.F.O.
Dated: November 13, 2000
Minneapolis, Minnesota
5
<PAGE>
VOICE AND WIRELESS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
----------------- ------------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 764,715 $ 1,026,036
Accounts receivable 438,076 491,631
Inventories 277,831 286,831
Other current assets 28,675 18,215
----------------- ------------------
Total current assets 1,509,297 1,822,713
================== ===================
OTHER ASSETS:
Note receivable 180,000 0
Investment in oil and gas properties, net 60,681 65,181
Property and equipment, net 307,341 275,803
Notes receivable - related parties, net 11,125 11,125
Intangibles, net 730,700 32,371
Investment in unconsolidated corporations 143,740 40,000
----------------- -----------------
Total other assets 1,433,587 424,480
------------------ -----------------
$ 2,942,884 $ 2,247,193
================== =================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable - related parties $ 2,500 $ 82,965
Current portion of long term debt 21,000 354,058
Current portion of capital lease obligations 631 5,913
Accounts payable 208,860 278,706
Accrued expenses 89,953 151,566
------------------ -----------------
Total current liabilities 322,944 873,208
LONG TERM DEBT, NET OF CURRENT PORTION 322,998 448,368
MINORITY INTEREST IN SUBSIDIARY 0 466,567
----------------- ----------------
Total liabilities 645,942 1,788,143
================= =================
STOCKHOLDERS' EQUITY:
Common stock 7,235,011 4,796,893
Stock subscriptions receivable 0 (62,797)
Accumulated deficit (4,938,069) (4,275,046)
----------------- ----------------
Total stockholders' equity 2,296,942 459,050
----------------- ----------------
$ 2,942,884 $ 2,247,193
================== =================
<CAPTION>
</TABLE>
<PAGE>
VOICE AND WIRELESS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
-------------------------------- -------------------------------
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2000 1999 2000 1999
--------------- --------------- -------------- --------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
REVENUES $ 644,849 $ 819,884 $ 2,602,915 $ 2,834,900
COST OF SALES 453,977 528,067 1,726,319 1,895,245
------- ------- --------- ---------
GROSS PROFIT 190,872 291,817 876,596 939,655
OPERATING EXPENSES 431,564 239,056 1,589,995 721,351
------- ------- --------- -------
INCOME (LOSS) FROM OPERATIONS (240,692) 52,761 (713,399) 218,304
OTHER INCOME (EXPENSE):
Interest income 30,104 20,118 70,437 21,032
Interest expense (23,317) (32,211) (79,491) (109,388)
Other income (2,174) 0 0 0
Minority interest in loss of subsidiary 0 (10,996) 141,763 (10,996)
------- ------- ------- -------
Total other income (expense) 4,613 (23,089) 132,709 (99,352)
-------- ------- ------- -------
Income (loss) before income taxes (236,079) 29,672 (580,690 118,952
Provision for income taxes 0 0 0 0
-------- -------- ------- ---------
NET INCOME (LOSS) $ (236,079) $ 29,672 $ (580,690) $ 118,952
========== ======== ========== =========
BASIC NET INCOME (LOSS) PER COMMON SHARE $ (0.03) $ 0.01 $ (0.07) $ 0.03
========= ========== =========== ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 8,937,601 3,557,115 8,172,294 3,557,115
========= ========== ========== ============
</TABLE>
<PAGE>
VOICE AND WIRELESS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-----------------
SEPTEMBER 30, SEPTEMBER 30,
2000 1999
---- ----
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (580,690) $ 118,952
Adjustments to reconcile net income (loss) to
cash flows from operating activities:
Depreciation, depletion and amortization 120,535 79,761
Minority interest in loss of subsidiary (141,763) 0
Changes in operating assets and liabilities:
Accounts receivable 53,555 56,374
Inventories 9,000 21,397
Other current assets (8,835) (24,160)
Accounts payable (69,846) (10,782)
Accrued expenses (52,988) (45,106)
------- -------
Cash flows from operating activities (671,032) 196,436
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Advances on note receivable (180,000) 0
Proceeds from notes receivable - related parties 0 4,500
Purchases of property and equipment (85,287) (3,101)
Investments in unconsolidated corporations (146,741) (164,616)
-------- --------
Cash flows from investing activities (412,028) (163,217)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in line of credit 0 (35,000)
Payments on notes payable - related parties 0 (38,304)
Payments on long-term debt (152,567) (66,816)
Payments on capital lease obligations (5,282) (5,530)
Proceeds from long term debt 80,000
Net proceeds from sale of common stock 798,025 33,695
Proceeds from exercise of stock options and warra 118,767 0
Collection on stock subscriptions receivable 62,797 44,881
------ ------
Cash flows from financing activities 821,740 12,926
------- ------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENS (261,320) 46,145
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,026,036 72,220
--------- ------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 764,716 $ 118,365
============= =================
NONCASH INVESTING AND FINANCING ACTIVITIES:
Debt converted to common stock 282,076 $ 0
Issuance of common stock for Mail Call stock $ 1,000,000 $ 0
</TABLE>
