<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999.
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
Commission File Number: 0-24858
WAVEPHORE, INC.
(Exact name of registrant as specified in its charter)
INDIANA 86-0491428
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3131 E. CAMELBACK ROAD, SUITE 320, PHOENIX, AZ 85016
(602) 952-5500
(Address, including zip code, and telephone number,
including area code, of registrant's
principal executive offices)
3311 N. 44th Street, Phoenix, AZ 85018
(Former name, former address and former fiscal year,
if changed since last report)
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 the filing
requirements for the past 90 days.
Yes X No
---- -------
The number of shares outstanding of the issuer's common stock, as of April 26,
1999:
COMMON SHARES, NO PAR VALUE: 28,606,458 SHARES
<PAGE> 2
WAVEPHORE, INC.
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
March 31, 1999 and December 31, 1998 3
Condensed Consolidated Statements of Operations -
Three months ended March 31, 1999 and 1998 4
Condensed Consolidated Statements of Cash Flows -
Three months ended March 31, 1999 and 1998 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 12
PART II OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
EXHIBIT INDEX 15
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
WavePhore, Inc.
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
---- ----
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $13,847,982 $17,719,042
Accounts receivable 3,743,798 3,999,076
Inventories 2,841,035 3,313,490
Other receivables -- 29,308
Prepaid expenses and other 1,510,293 976,933
----------- -----------
Total current assets 21,943,108 26,037,849
Property and equipment, net 5,766,463 4,761,827
Intangible assets of businesses acquired, net 20,281,565 20,616,693
Deposits and other assets 1,617,889 1,570,362
----------- -----------
Total assets $49,609,025 $52,986,731
=========== ===========
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 2,150,718 $ 1,073,214
Accrued expenses 3,250,237 2,938,371
Deferred revenue 1,989,619 1,873,618
Bank loans 1,983,408 2,000,000
Current portion of long-term debt 199,183 52,165
----------- -----------
Total current liabilities 9,573,165 7,937,368
Long-term debt, less current portion 79,847 39,563
Other long-term liabilities 285,570 379,342
Shareholders' equity 39,670,443 44,630,458
----------- -----------
Total liabilities and shareholders' equity $49,609,025 $52,986,731
=========== ===========
</TABLE>
See accompanying notes.
3
<PAGE> 4
WavePhore, Inc.
Condensed Consolidated Statements of Operations
March 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1999 1998
---- ----
<S> <C> <C>
Revenues:
Information delivery and
communication systems $ 3,961,096 $ 4,140,046
Subscription and fee services 1,717,773 1,274,653
------------ ------------
Total revenues 5,678,869 5,414,699
Cost of revenues 2,966,698 2,986,201
------------ ------------
Gross margin 2,712,171 2,428,498
Operating expenses:
Research and development 3,105,637 2,250,703
Sales and marketing 3,254,554 3,056,482
General and administrative 1,525,800 1,488,397
Amortization 399,194 622,884
------------ ------------
8,285,185 7,418,466
------------ ------------
Loss from operations (5,573,014) (4,989,968)
Other (income) expense:
Interest expense 56,983 52,630
Interest income (213,094) (215,340)
Other 11,668 (3,750)
------------ ------------
(144,443) (166,460)
------------ ------------
Net loss $ (5,428,571) $ (4,823,508)
============ ============
Less: Preferred stock dividends 138,039 576,806
------------ ------------
Net loss after preferred stock dividends $ (5,566,610) $ (5,400,314)
============ ============
Basic and dilutive net loss per common share $ (0.19) $ (0.26)
============ ============
Basic and dilutive net loss per common share
after preferred stock dividends $ (0.19) $ (0.30)
============ ============
Number of shares used in per share
calculation 28,629,978 18,287,319
============ ============
</TABLE>
See accompanying notes.
4
<PAGE> 5
WavePhore,Inc.
Condensed Consolidated Statements of Cash Flows
March 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31, March 31,
1999 1998
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (5,428,571) $ (4,823,508)
Adjustments to reconcile net loss to cash
used in operating activities:
Depreciation and amortization 980,280 1,033,516
Provision for doubtful accounts 60,000 60,000
Changes in operating assets and liabilities 1,512,049 2,952,828
------------ ------------
Net cash used in operating activities (2,876,242) (777,164)
INVESTING ACTIVITIES:
Purchase of property and equipment (1,567,642) (402,405)
Purchase of business, net of cash acquired (49,067) --
Other (15,000) --
------------ ------------
Net cash used in investing activities (1,631,709) (402,405)
FINANCING ACTIVITIES:
Issuance of common stock, net 589,974 1,338,606
Borrowings from bank and other 240,000 200,000
Payments on debt and capital lease obligations (69,290) (491,822)
Purchase of treasury shares (58,566) --
Gain (loss) on foreign currency translation (10,710) --
Other (54,517) (36,038)
------------ ------------
Net cash provided by financing activities 636,891 1,010,746
------------ ------------
Net decrease in cash and cash equivalents (3,871,060) (168,823)
Cash and cash equivalents at beginning of period 17,719,042 11,552,646
------------ ------------
Cash and cash equivalents at end of period $ 13,847,982 $ 11,383,823
============ ============
</TABLE>
See accompanying notes.
5
<PAGE> 6
WavePhore, Inc.
Notes to Condensed Consolidated Financial Statements
March 31, 1999
(Unaudited)
(1) BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles, pursuant
to the rules and regulations of the Securities and Exchange Commission. In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Certain
information and footnote disclosures normally included in financial statements
have been condensed or omitted pursuant to such rules and regulations. These
financial statements should be read in conjunction with the financial statements
and the notes thereto included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1998. The results of operations for the period ended
March 31, 1999 are not necessarily indicative of the results to be expected for
the entire year.
(2) RECLASSIFICATIONS
Certain amounts presented for the three months ended March 31, 1998
have been reclassified to conform to March 31, 1999 presentation.
(3) INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
Finished goods $ 487,937 $ 555,321
Work-in-process 1,123,453 1,016,123
Raw materials 1,229,645 1,742,046
---------- ----------
$2,841,035 $3,313,490
========== ==========
</TABLE>
6
<PAGE> 7
(4) SEGMENT INFORMATION
<TABLE>
<CAPTION>
Business
Products and
Three Months Ended March 31, 1999 WaveTop Services Other Total
- --------------------------------- ------- -------- ----- -----
<S> <C> <C> <C> <C>
Revenues from external customers $ -- $ 5,679,000 $ -- $ 5,679,000
Interest revenue -- 9,000 204,000 213,000
Interest expense -- 4,000 53,000 57,000
Depreciation and Amortization expense 108,000 842,000 30,000 980,000
Segment profit (loss) (1,889,000) (2,060,000) (1,480,000) (5,429,000)
Segment assets 1,352,000 32,326,000 15,931,000 49,609,000
Expenditures for long-lived assets 20,000 1,474,000 74,000 1,568,000
</TABLE>
<TABLE>
<CAPTION>
Business
Products and
Three Months Ended March 31, 1998 WaveTop Services Other Total
- --------------------------------- ------- -------- ----- -----
<S> <C> <C> <C> <C>
Revenues from external customers $ -- $ 5,415,000 $ -- $ 5,415,000
Interest revenue -- -- 215,000 215,000
Interest expense -- 51,000 2,000 53,000
Depreciation and Amortization expense 78,000 934,000 21,000 1,033,000
Segment assets 1,098,000 33,705,000 14,467,000 49,270,000
Expenditures for long-lived assets 103,000 286,000 13,000 402,000
</TABLE>
The Company evaluates performance and allocates resources based on profit or
loss from operations before income taxes. There are no intersegment sales or
transfers.
7
<PAGE> 8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
WavePhore, Inc. (the "Company") partners with providers of news,
business data, Internet-based content and multimedia programming in order to
deliver customized information and quality content to an information-dependent
society. The Company enables people and enterprises to more efficiently receive,
manage and productively use all types of urgent, insightful, and relevant
information. The Company's technologies and services aggregate, filter,
customize and distribute digital content (text, graphics, music and video) using
a wide range of reliable, low-cost broadcast, satellite and Internet-based
delivery systems. It has technology sourcing and strategic alliances with
Microsoft, Intel, and PBS National Datacast, among others, in addition to
information service agreements with approximately two hundred Fortune 1000
companies worldwide.
The Company provides wireless data broadcasting transmission services
and equipment to providers of financial data, news, and other information. The
Company's broadcast networks utilize established technologies, such as FM
subcarrier and small dish satellite broadcasting technologies, that are well
suited to the economical one-way transmission of time-sensitive data from one
central location to many remote sites. Those operations are established in 13
major United States markets that, combined with the Company's small dish
satellite coverage, enable the Company to service the continental U.S. and the
major population centers in Canada.
The Company's Newscast(TM) Today service allows business users to
create customized information profiles and have news and information matching
those profiles electronically "clipped" from a large variety of information
sources and delivered to the corporate users' PCs. The Newscast service, which
incorporates hardware and software elements, enables end-users to filter
real-time news and other data from information providers and allows integration
of this information into an organization's local area network or e-mail system
for delivery to persons who need timely access to such information. In April,
1999, the Company announced the availability of the beta release of WavePhore
NewsPak. NewsPak enables easy integration of streaming real-time news, selected
from more than 70 industry categories, into web sites.
The Company's WaveTop(TM) ("WaveTop") service is a wireless consumer
broadcast service medium for delivering entertainment, news and other
information to the home PC user. The WaveTop broadcast service delivers news,
sports and entertainment programming, utilizing the vertical blanking interval
("VBI") of existing analog TV broadcast signals, to broadcast ready PCs or
TV/PCs, without the bandwidth limitations associated with the Internet. WaveTop
leverages its partnership with PBS National Datacast, Inc., by broadcasting data
over the broadcast signals of 264 PBS member stations. The WaveTop service is
free of charge to the consumer. The Company is seeking to generate revenue from
advertisers and content-provider sponsors for the respective "channels". Through
a strategic partnership with Microsoft, Inc., the WaveTop software is included
within the Windows(R) 98 operating system. WaveTop software is bundled with TV
tuner boards of most of the manufacturers of such products, as well as with
several PC Original Equipment Manufacturers ("OEMs"). The tuner boards are an
integral piece of hardware, allowing the PC to be broadcast ready. The WaveTop
service, currently reaches the top 100 markets and is available in 99% of U.S.
households. In April, 1999, the Company introduced a new suite of applications,
the "WavePhore Digital Broadcast Suite", which will give broadcasters a
cost-effective end-to-end solution for sending Internet data over analog and
digital broadcast systems. The Company also announced an agreement with General
Instrument ("GI") which provides for the bundling of the WavePhore Digital
Broadcast Suite with GI's encoding equipment, and presents it to broadcasters
and cable systems in the U.S., as they make their transition to digital
television. Additionally the Company is developing a television-oriented version
of the WaveTop service for integration with digital television set-top boxes.
RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 1999 AND 1998
Revenues
Revenues are currently derived primarily from the following activities:
(i) information delivery services generate volume-based fees and revenues, and
from the sale or rental of communication systems; and (ii) subscriptions to
information services and related fee-based integration consulting services.
Revenues for the three months ended March 31, 1999 and 1998 were $5,679,000 and
$5,415,000, respectively. First
8
<PAGE> 9
quarter subscription and fee services increased 35% over the same prior year
period. Information delivery services and communication systems sales were
impacted by decreased overseas sales of communication systems, caused primarily
by economic turmoil in certain international markets.
Cost of Revenues
Cost of revenues consists primarily of costs associated with
transmitting news services to customer sites, royalties to information content
providers and costs of computer hardware and software sold to customers. Cost of
revenues for the quarters ended March 31, 1999 and 1998 were $2,967,000 and
$2,986,000, respectively. The decrease in costs corresponds to the decrease in
communication system sales as discussed above. Gross margins were 48% in 1999
and 45% in 1998. Margins have steadily improved as a larger percentage of the
Company's revenue is generated by higher margined products such as information
delivery and subscription services. The Company anticipates this trend will
continue.
Research and Development
Product development expenses consist primarily of design, testing and
support of the Company's existing and developing hardware, software and
services. Research and development expenses for the quarter ended March 31, 1999
and 1998 were $3,106,000 and $2,251,000, respectively. The increase can be
attributed primarily to the acquisition of WavePhore Labs, Inc. in May of 1998
and eWatch, Inc. in November of 1998. The Company is integrating products
and services acquired, and is adding product offerings to its online news
delivery service in the business to business market. Additionally, the Company
continues to invest heavily in its WaveTop service to enhance and add to its
many features.
Sales and Marketing
Sales and marketing expenses for the first quarters of 1999
and 1998 were $3,255,000 and $3,056,000, respectively. Expenses for the quarter
increased, approximately $198,000 or 6% from 1998, which can be attributed
primarily to the WavePhore Labs and eWatch acquisitions.
General and Administrative
General and administrative expenses for the quarters ended March 31,
1999 and 1998 were comparable at $1,526,000 and $1,488,000 respectively.
Amortization
Amortization expense was $399,000 and $623,000 for the quarters ending
March 31, 1999 and 1998, respectively. During the fourth quarter of 1998, the
Company evaluated several aspects of its business and made strategic decisions
that affected portions of the Company's businesses. The Company moved to
consolidate separate and autonomous business units and related functional areas
into one centralized WavePhore operating company. The move has and will continue
to allow the Company to create and integrate new products and services for the
business marketplace, leverage key portions of various existing WavePhore
technologies, and emphasize a more narrow focus on key equipment customers and
equipment products. As a result, an evaluation and analysis of the Company's
intangible assets was conducted. Based on the projected earnings and
undiscounted cash flow analysis of the affected business activities, the Company
determined the fair value of certain intangibles should be adjusted.
Accordingly, intangibles were revalued, and $4,000,000 was recorded as a
nonrecurring, non-cash charge at that time. The nonrecurring charge in 1998
resulted in reduced amortization expense in the first quarter of 1999 compared
to the same quarter of the prior year.
Interest Expense and Interest Income
Interest expense for the first quarters of 1999 and 1998 were
comparable, as was interest income.
9
<PAGE> 10
LIQUIDITY AND CAPITAL RESOURCES
During the three months ended March 31, 1999 and 1998, the Company used
cash in its operations of $2,876,000 and $777,000, respectively. Cash used in
operations amounts are reduced by non-cash charges of depreciation and
amortization. Cash flows used in investing activities were $1,632,000 in 1999
and $402,000 in 1998. During 1999 and 1998, the Company's capital expenditures
totaled $1,568,000 and $402,000, respectively. Additionally, 10,000 treasury
shares were purchased for $58,600.
The Company received cash from financing activities of $637,000 in 1999
and $1,011,000 in 1998. The generation of cash in 1999 and 1998 was primarily
from the issuance of common shares in connection with the exercise of employee
stock options and from the exercise of Series B Preferred Share warrants. The
Board of Directors of the Company approved a stock repurchase program under
which the Company may purchase up to 1,000,000 shares of its Common Shares
through open market transactions at prevailing market prices.
Depending upon the pace of revenue growth during 1999, the Company may
need additional equity funding and/or credit facilities to support operating
activities late in 1999. If necessary, the Company believes that it will be able
to generate additional funding for operations and its accelerated internal
growth plans, through equity offerings similar to those it has completed in the
past. Additionally, the Company currently has credit facilities available
totaling $7,000,000.
The Company will continue to evaluate business acquisitions and the
development of strategic partnerships to help accelerate its growth. The pace at
which these acquisitions and strategic partnerships occur will have an impact on
the capital resources of the Company to the extent they are funded with cash and
may cause dilution of existing stockholder interests to the extent they are
funded through equity financings.
IMPACT OF YEAR 2000
The Year 2000 presents potential concerns for business computing due to
calculation problems from the general use of the two digit year format as the
year changes from 1999 to 2000. This problem may affect certain computer
software, hardware, and other systems containing processors and embedded chips.
Consequently, information technology ("IT") systems and Non-IT systems
(collectively, "Business Systems") may not be able to accurately process certain
transactions or information before, during or after January 1, 2000. As a
result, users of IT systems and Business Systems are at risk for potential
disruption to their business from malfunctions or failures of such systems. This
is commonly referred to as the Year 2000 Issue.
The Company could be impacted by any failure of its own IT and Business
Systems, as well as that of its suppliers, customers and business partners. The
Company relies on computer hardware, software and related technology, together
with data, in the operation of its business. Such technology and data are used
in creating and delivering the Company's products and services, as well as the
Company's internal operations, such as billing and accounting. The Company has
implemented an enterprise-wide Year 2000 compliance program utilizing a Year
2000 team, including the executive officers of the Company, to identify and
evaluate its IT and Business Systems, to identify and assess Year 2000 issues
related thereto, and to develop and implement a testing, remediation, and
contingency plan. The Year 2000 program has compiled a detailed inventory of the
hardware and software used in the Company's IT and Business Systems operations
and has substantially completed testing the components for Year 2000 compliance.
The Company is using the results of such procedures to determine which systems
are compliant, and which will be replaced or remediated. The Company believes
that replacement or remediation of its critical IT and Business Systems will be
substantially completed by September 30, 1999.
The Year 2000 plan also includes resolving any Year 2000 issues that
are related to the Company's customers, suppliers and business partners.
Accordingly, the Company has sent correspondence to its information providers,
vendors and other suppliers requesting confirmation that they have a Year 2000
compliance program, the date they expect to be Year 2000 compliant, and to
warrant their products and services will function properly with respect to dates
after December 31, 1999. Because of the vast number of Business Systems used by
such third parties and their varying levels of Year 2000
10
<PAGE> 11
readiness, it is difficult to access the likelihood and impact of a malfunction
due to third party Year 2000 issues. The Company is not currently aware of any
business relationships with key third parties which it believes will be likely
to result in a significant disruption of its business. However, such a Year 2000
failure could occur and have a material adverse affect on the Company. The
Company currently believes that its greatest Year 2000 risk is with its utility
suppliers, information providers, financial institutions, and suppliers of
telecommunications services, in the United States and various other locations
throughout the world in which the Company operates. Potential consequences of
the failure of the Company or key third parties to have Year 2000 compliant
systems include the failure to operate due to an interuption of utility and
property services, disruption, delays or errors in information collection,
management and distribution, network operation failures, the inability to
deliver products and services to or for customers, and delays in receiving
inventory and supplies. If any of such events were to occur, the results could
have a material adverse impact on the Company and its operations.
Concurrent with the remediation and evaluation of the IP Systems and
Business Systems of the Company, and the Business Systems of key third parties,
the Company is developing contingency plans to mitigate the risks that could
occur in the event of a Year 2000 business disruption. These contingency plans
may include securing alternate sources of critical services and supplies, and
such other actions as the Company may deem prudent. The Company currently is
unable to estimate the costs associated with developing and implementing these
contingencies.
The Company estimates that the total cost of the Year 2000 Program will
be $100,000, which is being funded by available cash. To date, the Company has
incurred approximately $50,000 ($20,000 expensed and $30,000 capitalized for new
systems and equipment) related to all phases of the Year 2000 Program. The
Company believes that approximately 50% of its remaining estimated Year 2000
Program costs relate to remediation and will be expensed as incurred.
The Company believes it has an effective Year 2000 Program in place to
resolve Year 2000 issues in a timely manner. However, as noted above, the
Company has not yet completed all necessary phases of the Year 2000 Program. The
scheduled completion dates and costs associated with the various components of
the Company's Year 2000 program are estimates and are subject to change. The
failure of the Company to complete any additional phases could have a material
adverse impact on the Company and its operations. In addition, disruptions in
the economy generally resulting from Year 2000 issues could also materially
adversely affect the Company.
FORWARD-LOOKING STATEMENTS
Certain statements contained in "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and otherwise in this Report
are forward-looking. These may be identified by the use of forward-looking words
or phrases such as "believe", "expect", "anticipated", "should", "planned",
"estimated" and "potential" among others. These forward-looking statements are
based on the Company's reasonable current expectations. A variety of factors
could cause the Company's actual results and experience to differ materially
from the anticipated results or other expectations expressed in such
forward-looking statements. The risk and uncertainties that may affect the
operations, performance, development and results of the Company include: the
complexity and uncertainty regarding the development and implementation of high
technology products and services; market acceptance of new products and
services; the introduction of competing products or technologies by other
companies; pricing pressures from competitors and/or customers; changes in the
information services and data broadcasting industries and markets; the Company's
ability to protect its proprietary information and technology or to obtain
necessary licenses on commercially reasonable terms; the dependence of the
Company's businesses upon a variety of suppliers and vendors; the ability to
maintain computer and telecommunications systems, essential to its business
operations; the integration and assimilation of acquisitions; the need for
future additional financing; the risks and uncertainties of expansion into
various international markets; the ability to retain key employees; dependence
upon strategic alliances or relationships with other parties; volatility of the
Company's Common Share price; the adoption of new or change in existing
governmental regulations affecting the Company's business; and the Company's
ability to complete the implementation of its Year 2000 plan timely.
11
<PAGE> 12
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
The Company's exposure to market risk relates primarily to fluctuations
in short-term interest rates. The Company has performed a sensitivity analysis
and determined that based on current economic conditions, changes in short-term
interest rates would not have a material affect on its operating results or
financial condition.
12
<PAGE> 13
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds.
On March 31, 1999, the Company issued 164,580 Common Shares to Paracel
Online Systems, Inc. ("Paracel Online") as additional consideration, based on
achieving certain financial performance, pursuant to an Agreement for the
Purchase and Sale of Assets among the Company, WavePhore Newscast, Paracel
Online and Paracel, Inc., dated May 29, 1997. The Common Shares issued to
Paracel Online were valued at $1,433,903. The Common Shares were issued pursuant
to the non-public offering exemption from registration in Section 4(2) of the
Securities Act of 1933, as amended. The resale of such Common Shares is covered
by a currently effective SEC Registration Statement.
Item 6. Exhibits and Reports on Form 8-K.
(a) The following exhibits are included herein:
27 Financial Data Schedule.
(b) Reports on Form 8-K.
On January 12, 1999, the Company filed a report on Form 8-K, reporting in Item 5
the issuance as of December 23, 1998 of 879,116 Common Shares and a Warrant to
purchase 250,000 Common Shares for total consideration of $7,500,000 in a
private placement to an institutional investor. The resale of such Common Shares
is covered by a currently effective SEC Registration Statement.
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WavePhore, Inc.
Date: May 14, 1999 By /s/ David E. Deeds
---------------------------------------
David E. Deeds,
President and Chief Executive Officer
(Duly Authorized Officer)
Date: May 14, 1999 By /s/ Kenneth D. Swenson
-----------------------------------------
Kenneth D. Swenson,
Executive Vice President, Chief Financial
Officer and Treasurer
(Principal Financial and Accounting Officer)
14
<PAGE> 15
EXHIBIT INDEX
<TABLE>
Exhibit Exhibit
Number Description
------ -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 13,848
<SECURITIES> 0
<RECEIVABLES> 4,191
<ALLOWANCES> 447
<INVENTORY> 2,841
<CURRENT-ASSETS> 21,943
<PP&E> 10,594
<DEPRECIATION> 4,827
<TOTAL-ASSETS> 49,609
<CURRENT-LIABILITIES> 9,573
<BONDS> 2,183
5,521
0
<COMMON> 139,949
<OTHER-SE> (105,800)
<TOTAL-LIABILITY-AND-EQUITY> 49,609
<SALES> 5,679
<TOTAL-REVENUES> 5,679
<CGS> 2,967
<TOTAL-COSTS> 2,967
<OTHER-EXPENSES> 8,285
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (144)
<INCOME-PRETAX> (5,429)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,429)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,429)
<EPS-PRIMARY> (.19)
<EPS-DILUTED> (.19)
</TABLE>
