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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 June 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 41-1610632
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(State or other (IRS Employer
jurisdiction of Identification No.)
incorporation)
Suite 654, 600 South Highway 169, Minneapolis, MN 55426
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(Address of principal executive offices) (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
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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 8,738,117 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
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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 JUNE 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 June 30,2000 and the related consolidated statements of
operations and cash flows thereto are incorporated herein by reference to the
Company's quarterly report.
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
Highlights: QUARTER ENDED JUNE 30
2000 1999 CHANGE
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<S> <C> <C> <C>
Revenue (000's) $859 $ 1,153 (25.4%)
Gross Profit+ $330 $ 345 (4.30%)
Net Income (Loss) ($191) $ 74 (358.1%)
Earning (loss) per share ($0.02) $ .02
<CAPTION>
YEAR TO DATE ENDED JUNE 30
2000 1999 CHANGE
-------- ------- --------
<S> <C> <C> <C>
Revenue (000's) $1,958 $ 2,015 (2.8%)
Gross Profit $ 686 $ 648 5.8%
Net Income (Loss) ($ 345) $ 89 (487.6%)
Earnings (Loss) per share ($ 0.04) $ 0.03
</TABLE>
Revenues for the quarter totaled $859k as compared to $1,153k for the same
quarter in 1999. The variance in revenue is due to the timing of delivery of
product and services to our customers. Year to date revenues for 2000 total
$1,958k compared to $2,015k for 1999. The back-log of customer orders for Ives
Design, although down from the previous quarter, continues to be strong.
Although revenues for Mail Call, Inc. continue to lag behind expectations, the
Company is continuing to evaluate new options for marketing Mail Call services.
Gross profit for the quarter ended June 30, 2000 totaled $330k compared to $345k
for the same quarter of 1999. Gross profit percentages should continue to run in
the 33-35% range in the future.
Operating expenses for the second quarter of 2000 totaled $517k as compared to
$243k for the second quarter of 1999. The major portion of this variance is due
to the addition of Mail Call Inc. and its related expenses in 2000.
LIQUIDITY AND CAPITAL RESOURCES
The Company is continuing to convert outstanding debentures to
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common stock. Of the $125k of debentures outstanding at June 30, 2000, the
Company has received notification of conversion of $81k. The Company has the
funds available to pay off the remaining debentures.
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 April 2000, the Company completed a sale of units consisting of the
Company's common stock and warrants to purchase common stock. The Company issued
87,500 shares of common stock and received proceeds of $175,000. In addition,
the Company issued 87,500 warrants to purchase common stock at $3.00 per share
that are exercisable for three years. The units were offered through officers
only to investors who are "accredited" as defined in Regulation D under the
Securities Act of 1933. 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 proceeds from this sale were loaned to Stroke of Fortune, a Minnesota
corporation, on a two-year note due on or before March 27, 2002. This note is
collateralized by the assets of Stroke of Fortune.
During the quarter ended June 30, 2000 the Company completed the issuance of
123,387 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.
Item 3. Defaults upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information
On April 27, 2000, the Company acquired 100% of the rights, title, and interest
to the patent pending, digital wireless earpiece, from Micro Talk Technologies,
Inc. through a Transfer of Inventions and Royalty Agreement. The digital
wireless earpiece, allows the user to listen and speak on their cellular phone
hands free and without wires. The wireless earpiece will work with phones,
multimedia computers, stereos, and most
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televisions on the market today. The Company hopes to start marketing the devise
during the fall of 2000.
During April, 2000, the Company loaned Stroke of Fortune, Inc. $175,000 to
complete the installations of four to five wide angle, wireless electronic
monitoring systems. The first commercial application is for golf courses and by
the end of July, 2000, systems had been installed on a course in Palm Springs
CA, another in Myrtle Beach NC, and two in the Orlando FL area using the
proceeds of the loan. A wireless camera is used to monitor and record a golfer's
tee shot, the golf ball's flight to the green and the place where the ball lands
on the green. The golfer receives a gift certificate for the pro shop if the
ball lands within ten feet of the pin or a cash prize for a hole-in-one. In
addition to Stroke of Fortune paying the loan back as described herein (SEE
"Changes in Securities and Use of Proceeds"), it is responsible for paying to
the Company seven percent (7%) of all future gross revenues generated under this
program.
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.
VOICE AND WIRELESS CORPORATION, formerly known as
KENSINGTON INTERNATIONAL HOLDING CORPORATION
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Mark Haggerty
Chief Executive Officer
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Jeff Etten, C.F.O.
Dated: August 14, 2000
Minneapolis, Minnesota
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VOICE AND WIRELESS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
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(UNAUDITED)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,119,014 $ 1,026,036
Accounts receivable 447,070 491,631
Inventories 267,831 286,831
Other current assets 48,839 18,215
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Total current assets 1,882,754 1,822,713
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OTHER ASSETS:
Note receivable 175,000 0
Investment in oil and gas properties, net 62,181 65,181
Property and equipment, net 324,579 275,803
Notes receivable - related parties, net 11,125 11,125
Intangibles, net 759,082 32,371
Investment in unconsolidated corporations 115,741 40,000
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Total other assets 1,447,708 424,480
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$ 3,330,462 $ 2,247,193
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable - related parties $ 2,500 $ 82,965
Current portion of long-term debt 145,250 354,058
Current portion of capital lease obligations 1,531 5,913
Accounts payable 273,839 278,706
Accrued expenses 63,988 151,566
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Total current liabilities 487,108 873,208
LONG-TERM DEBT, NET OF CURRENT PORTION 386,954 448,368
MINORITY INTEREST IN SUBSIDIARY 80,297 466,567
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Total liabilities 954,359 1,788,143
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STOCKHOLDERS' EQUITY:
Common stock 6,995,761 4,796,893
Stock subscriptions receivable 0 (62,797)
Accumulated deficit (4,619,658) (4,275,046)
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Total stockholders' equity 2,376,103 459,050
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$ 3,330,462 $ 2,247,193
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</TABLE>
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VOICE AND WIRELESS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
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JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2000 1999 2000 1999
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(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
REVENUES $ 859,383 $ 1,153,123 $ 1,958,066 $ 2,015,016
COST OF SALES 528,944 807,980 1,272,342 1,367,178
---------- ----------- ----------- -----------
GROSS PROFIT 330,439 345,143 685,724 647,838
OPERATING EXPENSES 517,174 243,569 1,158,431 482,345
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INCOME (LOSS) FROM OPERATIONS (186,735) 101,574 (472,707) 165,493
OTHER INCOME (EXPENSE):
Interest income (3,966) 0 40,333 0
Interest expense (23,704) (28,610) (56,174) (77,127)
Other income 2,174 914 2,174 914
Minority interest in loss of subsidiary 21,429 0 141,763 0
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Total other income (expense) (4,067) (27,696) 128,096 (76,213)
---------- ----------- ----------- -----------
Income (loss) before income taxes (190,802) 73,878 (344,611) 89,280
Provision for income taxes 0 0 0 0
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NET INCOME (LOSS) $ (190,802) $ 73,878 $ (344,611) $ 89,280
========== =========== =========== ===========
BASIC NET INCOME (LOSS) PER COMMON SHARE $ (0.02) $ 0.02 $ (0.04) $ 0.03
========== =========== =========== ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 8,679,114 3,334,084 7,773,323 3,264,084
========== =========== =========== ===========
</TABLE>
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VOICE AND WIRELESS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
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JUNE 30, JUNE 30,
2000 1999
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(UNAUDITED) (UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (344,611) $ 89,280
Adjustments to reconcile net income (loss) to
cash flows from operating activities:
Depreciation, depletion and amortization 61,307 49,712
Minority interest in loss of subsidiary (141,763) 0
Changes in operating assets and liabilities:
Accounts receivable 44,561 226,071
Inventories 19,000 27,397
Other current assets (30,624) (31,507)
Accounts payable (4,867) 3,046
Accrued expenses (87,578) (38,375)
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Cash flows from operating activities (484,575) 325,624
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CASH FLOWS FROM INVESTING ACTIVITIES:
Advances on note receivable (175,000) 0
Proceeds from notes receivable - related parties 0 3,000
Purchases of property and equipment (78,302) (2,101)
Investments in unconsolidated corporations (75,741) 0
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Cash flows from investing activities (329,043) 899
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CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in line of credit 0 (35,000)
Payments on notes payable - related parties 0 (34,287)
Payments on long-term debt (68,611) (44,800)
Payments on capital lease obligations (4,382) (3,521)
Net proceeds from sale of common stock 798,025 24,704
Proceeds from exercise of stock options and warrants 118,767 0
Collection on stock subscriptions receivable 62,797 0
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Cash flows from financing activities 906,596 (92,904)
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INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 92,978 233,619
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,026,036 72,220
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,119,014 $ 305,839
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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>
