UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUATERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31,2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to______________
Commission File No. 33-55254-01
W-WAVES USA, INC.
(formerly Arrow Management, Inc.)
(Exact name of Registrant as specified in its charter)
NEVADA 87-0467339
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(State of other jurisdiction of (I.R.S. Employer
incorporation or organization)
Identification Number)
2500 Daniel-Johnson Blvd
Suite 1108
Laval (Quebec) Canada H7T 2P6
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(Address of principal executive offices) (Postal Code)
Registrant's telephone number. Including area code (514) 697-9966
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Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (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 for 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 registrant's classes of
common stock, as of the latest practicable date.
Class Outstanding as of October 31, 2000
$.001 PAR VALUE CLASS A COMMON STOCK 11,030,700 SHARES
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
BASIS OF REPRESENTATION
General
The accompanying unaudited consolidated financial statements include
the following corporations: W-Waves USA, Inc. (Nevada), W-Waves USA, Inc.
(Delaware), XD-Lab R&D Inc., White Wolf Audio Video Electronic Systems Inc. and
its wholly-owned subsidiary Radison Acoustique Ltee. They have been prepared in
accordance with the instructions to Form 10-Q and therefore, do not include all
information and footnotes necessary for a complete presentation of financial
position, results of operations, cash flows and stockholder's equity in
conformity with generally accepted accounting principles. In the opinion of
management, all adjustments considered necessary for a fair presentation of the
results of operations and financial position have been included and all such
adjustments are of a normal recurring nature. Operating results for the quarter
ended March 31, 2000, are not necessarily indicative of the results that can be
expected for the year ending December 31, 2000.
Due to the Plan of Reorganization made in November 19, 1999 and the
Development Stage of the company, no comparative figures are presented as it
would not provide valuable information for decision making.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Nature of business
W-Waves USA, Inc. is focused on the development and commercialization
of innovative sound enhancement technologies and products which are currently
the subject of pending patent applications. The company operates primarily
through two wholly-owned Canadian subsidiaries, White Wolf Audio Video
Electronic Systems Inc. and Radison Acoustique Ltee, a subsidiary of White Wolf.
Both are located in Pointe-Claire, Quebec, Canada, and are engaged in
complementary aspects of audio and video research and engineering. W-Waves USA
Inc. shares are traded on the NASDAQ Bulletin Board under the symbol WAVSA.
Forward-looking Statements
The management strongly believes in the business potential of the new
products developed by W-Waves USA Inc. for the electronic markets, either for
new products or for products that enhance the installed base of stereophonic
equipment. However, due to the early stage of W-Waves USA Inc. technologies and
to the competition, the management cannot assure the financial success of this
operation.
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Results of Operations
The Company had net loss of $270,328 for the three-month period ended
March 31, 2000. During that period, the company was still expanding its range of
products in order to be marketable and produced at the lowest possible cost. Two
new methods and products were filed for Patent Registration in the USA on
December 27th, 1999 and are now covered as Patent Pending. They are: 1) ESP-3D,
a processor that enhances stereo reproduction, and 2) VRH, a virtual reality
headset that creates a surround sound environment. These products were also
presented in trade shows and to specific manufacturers and received favorable
evaluation. Total costs and operating expenses in the amount of $262,443 include
research and development and intensive marketing efforts. No deferred tax assets
or tax credit for research and development have been accounted because of
uncertainties to assure its realization.
Liquidity and Capital Resources
Net current assets as at March 31, 2000 were ($13,561). The accumulated
deficit of $1,168,314 generated by the accumulated loss of the startup phase and
the acquisition of Radison, a wholly-owned subsidiary of White Wolf Inc. was
mainly offset by the additional paid-in capital in the amount of $1,050,000.
This transaction occurred on March 31, 2000 and was the result of continuous
discussions between shareholders whereas one shareholder has voluntarily and in
good faith accepted to increase the price paid for his capital stock by
$1,050,000.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company has no market risk sensitive instruments or market risk
exposures.
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W-WAVES USA, INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET (UNAUDITED)
AS AT MARCH 31, 2000
ASSETS
CURRENT ASSETS
Cash and cash equivalent ................................ $ 18,260
Accounts receivable ..................................... 11,627
Inventory ............................................... 37,151
Goodwill, net ........................................... 159,636
Note receivable - related corporation 29,268
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255,942
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BUILDING AND EQUIPMENT, net ................................ 89,696
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OTHER ASSETS
Trade marks, patents .................................... 7,712
Advance on royalties .................................... 18,695
Organization costs ...................................... 1,833
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28,240
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$ 373,878
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LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities ................ $ 174,013
Income taxes payable .................................... 1,596
Current portion of long-term obligations ................ 1,015
Note payable - Acquisition .............................. 92,879
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269,503
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LONG-TERM DEBT OBLIGATIONS ................................. 52,444
MINORITY INTEREST IN SUBSIDIARY ............................ 159,214
STOCKHOLDER'S EQUITY
Common stock ............................................ 11,031
Additional paid-in-capital .............................. 1,050,000
Accumulated deficit ..................................... (1,168,314)
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(107,283)
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$ 373,878
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W-WAVES USA, INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT (UNAUDITED)
FOR THE PERIOD JANUARY 1, 2000 TO MARCH 31,2000
REVENUE ................................................... $ 13,309
COST OF SALES ............................................. 21,194
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(7,885)
COSTS AND OPERATING EXPENSES .............................. 262,443
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LOSS FROM OPERATIONS ...................................... (270,328)
INCOME TAXES .............................................. 0
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NET LOSS .................................................. (270,328)
DEFICIT - BEGINNING OF YEAR ............................... 897,986
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DEFICIT - END OF YEAR ..................................... $ (1,168,314)
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NET LOSS PER WEIGHTED AVERAGE COMMON SHARE ................ (0.11)
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WEIGHTED AVERAGE NUMBER OF COMMON SHARES
USED TO COMPUTED NET LOSS .............................. 11,030,700
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W-WAVES USA, INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
(UNAUDITED)
FOR THE PERIOD JANUARY 1, 2000 TO MARCH 31, 2000
Common Stock
Par Value $0.001
Shares Amount
------ ------
Balance 12/31/1999 ................... 11,030,700 $ 11,031
Balance 03/31/2000 ................... 11,030,700 $ 11,031
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NET CHANGE ........................... 0 0
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<TABLE>
<CAPTION>
W-WAVES USA, INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE PERIOD JANUARY 1 TO MARCH 31, 2000
OPERATING ACTIVITIES
<S> <C>
NET LOSS ......................................................... $ (270,328)
ADJUSTMENT TO RECONCILE NET INCOME LOSS TO
NET CASH PROVIDED BY OPERATING ACTIVITIES
DEPRECIATION AND AMORTIZATION ................................. 22,236
ACCOUNTS RECEIVABLE ........................................... 8,125
OTHER ASSETS .................................................. (5,715)
FOREIGN EXCHANGE IMPACT ON GOODWILL ........................... (3,253)
ACCOUNTS PAYABLE AND OTHER LIABILITIES ........................ 70,863
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(178,072)
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INVESTING ACTIVITIES
ACQUISITION OF EQUIPMENTS AND LEASEHOLDS ...................... (11,095)
TRADE MARKS AND PATENTS ....................................... (10,747)
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(21,842)
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FINANCING ACTIVITIES
LONG TERM DEBT ................................................ 1,565
NOTE PAYABLE - ACQUISITION .................................... (38,363)
NOTE PAYABLE - RELATED CORPORATIONS ........................... (822,225)
ADDITIONAL PAID-IN CAPITAL ON CAPITAL SHARES ISSUED 1999/11/19 1,050,000
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190,977
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NET CHANGE IN CASH AND CASH EQUIVALENT ........................... (8,937)
CASH AND CASH EQUIVALENTS
BEGINNING OF PERIOD ........................................... 27,197
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END OF PERIOD ................................................. $ 18,260
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</TABLE>
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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.
W-WAVES USA, INC.
/s/ Victor Lacroix
Dated October 31, 2000 ------------------------------------------
Victor Lacroix, President CEO and Director
