U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended September 30, 1999
Commission File No. 33-55254-39
SKYNET TELEMATICS INC.
(Exact name of Small Business Issuer as specified in its charter)
NEVADA 87-0485315
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Link House, 259 City Road London, England EC1V 1JE (Address of principal
executive offices)
Issuer's telephone number, including area code: 44 (171)490-7900
Check whether the issuer: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: 24,104,088 shares of $.001 par value
class A common stock outstanding as of September 30, 1999.
Transitional Small Business Disclosure Format (check one): Yes No X
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SKYNET TELEMATICS INC.
FORM 10-QSB FOR QUARTER ENDED
September 30, 1999
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION Page No.
Item 1 Financial Statements
<S> <C>
Balance Sheets as of September 30, 1999 and December 31, 1998 4
Statements of Operations for the three and nine month periods ended
September 30, 1999 and 1998 5
Statements of Cash Flows for the nine month periods ended
September 30, 1999 and 1998 6
Selected Notes to Unaudited Financial Statements 7
Item 2 Management's Discussion and Analysis
and Plan of Operations 8
PART II - OTHER INFORMATION
Item 1 Legal Proceedings 10
Item 2 Changes in Securities 10
Item 3 Defaults Upon Senior Securities 11
Item 4 Submission of Matters to a Vote of Security Holders 11
Item 5 Other Information 11
Item 6 Exhibits and Reports on Form 8-K 11
</TABLE>
2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
In the opinion of the management of Skynet Telematics Inc. (the
Company) the accompanying unaudited financial statements contain all adjustments
(consisting only of normal recurring adjustments) necessary to present fairly
the financial position as of September 30, 1999, the results of operations for
the three and nine month periods ended September 30, 1999 and 1998, and the cash
flows for the nine month periods ended September 30, 1999 and 1998.
While the Company believes that the disclosures presented are adequate
to make the information not misleading, it is suggested that these condensed
financial statements be read in conjunction with the financial statements and
the notes included in the Company's latest annual report on Form 10-KSB.
The statements of operations include the activities of the Company, its
United Kingdom subsidiary Netking Limited ("Netking") and Netking's subsidiary
Skynet Telematics Ltd ("STL") (formerly Skynet 2001 Limited), its 51% owned
United Kingdom subsidiary, Skamp International Ltd ("Skamp International") which
was organized on August 27, 1999, and Skynet Satellite Communication Corporation
("SSCC") which is owned by the Company's U.S. subsidiary Peripheral Canada, Inc.
which is currently inactive. The accounting records for Netking, STL, and Skamp
International are denominated in British pounds and translated to U.S. dollars
for the financial statements.
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SKYNET TELEMATICS INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
(Unaudited) (Audited)
------------------ ------------------
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash in bank $ 23,945 $ 20
Accounts receivable 95,433 23,473
Inventory 239,319 830
Prepaid expenses 119,338 37,453
------------------ ------------------
TOTAL CURRENT ASSETS 478,035 61,776
OTHER ASSETS
Furniture and equipment 446,770 75,984
Vehicles 67,465 0
Software and intellectual property rights 6,389,439 6,810,446
------------------ ------------------
6,903,674 6,886,430
------------------ ------------------
$ 7,381,709 $ 6,948,206
================== ==================
LIABILITIES & EQUITY
CURRENT LIABILITIES
Bank overdraft $ 27,370 $ 41,742
Accounts payable 346,514 249,765
Accrued expenses 51,053 161,423
Current portion of loans 1,021,656 886,652
Interest payable 91,637 23,500
------------------ ------------------
TOTAL CURRENT LIABILITIES 1,538,230 1,363,082
Long-term portion of loans 323,552 282,709
------------------ ------------------
TOTAL LIABILITIES 1,861,782 1,645,791
STOCKHOLDERS' EQUITY
Preferred Stock $.001 par value:
Authorized 20,000,000 shares
Issued 0 shares 0 0
Common Stock $.001 par value:
Authorized - 75,000,000 shares
Issued and outstanding 24,104,088 shares (21,944,416 in 1998) 24,104 21,944
Additional paid-in capital 11,010,237 8,092,172
Deficit accumulated during the development stage (5,595,594) (2,902,565)
Accumulated other comprehensive income 81,180 90,864
------------------ ------------------
TOTAL STOCKHOLDERS' EQUITY 5,519,927 5,302,415
------------------ ------------------
$ 7,381,709 $ 6,948,206
================== ==================
</TABLE>
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SKYNET TELEMATICS INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
(Unaudited)
<TABLE>
<CAPTION>
3/14/90
For the three months For the nine months (Date of
ended September 30, ended September 30, inception) to
1999 1998 1999 1998 9/30/99
-------------- ------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Net sales $ 83,506 $ 70,464 $ 147,442 $ 149,647 $ 302,093
Cost of sales 190,690 172,482 419,239 427,410 889,474
-------------- ------------- ------------- -------------- -------------
GROSS LOSS (107,184) (102,018) (271,797) (277,763) (587,381)
Bad debt - related party 0 0 0 0 171,417
Depreciation and amortization 221,307 187,738 621,551 401,841 1,252,504
Research & development 53,730 0 150,860 0 272,989
Net interest expense 20,465 605 186,975 1,657 230,166
General & administrative expenses 515,446 390,315 1,462,650 733,614 2,831,401
-------------- ------------- ------------- -------------- -------------
810,948 578,658 2,422,036 1,137,112 4,758,477
-------------- ------------- ------------- -------------- -------------
NET LOSS BEFORE OTHER (918,132) (680,676) (2,693,833) (1,414,875) (5,345,858)
OTHER (EXPENSE)
Finder's fee related to subsidiary acquisition 0 0 0 (150,000) (250,540)
Minority interest 804 0 804 0 804
-------------- ------------- ------------- -------------- -------------
NET LOSS (917,328) (680,676) (2,693,029) (1,564,875) (5,595,594)
OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustments 13,592 0 (9,684) 0 81,180
-------------- ------------- ------------- -------------- -------------
TOTAL COMPREHENSIVE LOSS $ (903,736) $ (680,676) $ (2,702,713) $ (1,564,875) $ (5,514,414)
============== ============= ============= ============== =============
Net (loss) per weighted average share $ (.04) $ (.05) $ (.12) $ (.14)
============== ============= ============= ==============
Weighted average number of common shares used
to compute net (loss) per weighted average share 23,834,157 14,600,000 22,985,902 11,016,667
============= ============= ============== =============
</TABLE>
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SKYNET TELEMATICS INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
3/14/90
For the nine months (Date of
ended September 30, inception) to
OPERATING ACTIVITIES 1999 1998 9/30/99
----------------- ------------------ ------------------
<S> <C> <C> <C>
Net (loss) $ (2,693,029) $ (1,564,875) $ (5,595,594)
Adjustments to reconcile net (loss) to cash
used by operating activities
Stock issued for expenses 356,535 150,000 897,822
Depreciation and amortization 621,551 401,841 1,252,504
Foreign currency adjustments (9,684) (19,738) 81,180
Changes in assets and liabilities:
Accounts receivable (71,960) (41,845) (95,433)
Inventory (238,489) (1,710) (239,319)
Prepaid expenses (81,885) (70,917) (119,338)
Bank overdraft (14,372) 0 27,370
Accounts payable 96,749 178,678 346,514
Accrued expenses (110,370) 298,044 51,053
Accrued interest payable 68,137 0 91,637
----------------- ------------------ ------------------
NET CASH USED BY OPERATING ACTIVITIES (2,076,817) (670,522) (3,301,604)
INVESTING ACTIVITIES
Purchase fixed assets (312,322) (355,326) (721,322)
----------------- ------------------ ------------------
NET CASH (USED)
BY INVESTING ACTIVITIES (312,322) (355,326) (721,322)
FINANCING ACTIVITIES
Proceeds from sale of common stock 2,364,948 0 3,125,586
Proceeds from convertible debentures 0 0 400,000
Loans 0 1,261,609 434,134
Loan repayments (83,891) (349,297) (528,817)
Loans - shareholders 132,007 0 813,332
Cash from subsidiaries 0 445 445
Paid-in capital of subsidiary 0 2,194 2,191
Debenture repayments 0 0 (200,000)
----------------- ------------------ ------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 2,413,064 914,951 4,046,871
----------------- ------------------ ------------------
INCREASE (DECREASE)
IN CASH & CASH EQUIVALENTS 23,925 (110,897) 23,945
Cash & cash equivalents at beginning of year 20 10,965 0
----------------- ------------------ ------------------
CASH & CASH EQUIVALENTS AT END OF PERIOD $ 23,945 $ (99,932) $ 23,945
================= ================== ==================
Cash paid for interest $ 5,959 $ 0 $ 9,817
================= ================== ==================
</TABLE>
SUPPLEMENTAL ACTIVITIES
During 1997, 550,000 shares of restricted common stock were issued for services
of $55,000 and 2,300,000 shares of restricted stock were issued to cancel debt
of $200,000 and accrued interest of $30,000.
During 1998, the Company issued 10,000,000 shares of Regulation S stock to
acquire a subsidiary, Netking. The Company also issued 750,000 shares of
Regulation S stock as a finder's fee valued at $150,000. The Company's
subsidiary acquired assets of $6,720,000 during the period by incurring a loan
payable in the same amount. The loan was converted into equity of $6,600,000.
The Company through a subsidiary purchased a subsidiary (SSCC) with net assets
of $424,063 by incurring a liability in the same amount. The liability will be
satisfied by issuing 500,000 shares of the Company's Regulation S stock on
December 31,1999, 2000, and 2001 (1,500,000 shares total). 172,920 shares were
issued in April, 1999 to reduce the debt by $48,886.
The Company will pay to the former owners of SSCC 10% of the consolidated gross
sales made in Canada and Hong Kong and 1% of the gross U.S. sales related to
SSCC's product from the closing date through December 31,1999 with payments due
within 30 days of December 31, 1999. For sales in the year 2000, the percent is
6 2/3% of the sales in Canada and Hong Kong and .66% of sales in the U.S. For
sales in the year 2001, the percent is 3 1/3% of sales in Canada and Hong Kong
and .33% of sales in the U.S.
During 1999, fixed assets of $176,617 were acquired by incurring loans of the
same amount.
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SKYNET TELEMATICS INC. AND SUBSIDIARIES
(A Development Stage Company)
SELECTED NOTES TO UNAUDITED FINANCIAL STATEMENTS
September 30, 1999
NOTE 1: PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
Net
Accumulated Book Value
Cost Depreciation 9/30/99
-------------- ----------------- --------------
<S> <C> <C> <C>
Furniture and equipment $ 499,377 $ 52,607 $ 446,770
Vehicles 74,617 7,152 67,465
Software and intellectual property rights 7,582,184 1,192,745 6,389,439
-------------- ----------------- --------------
$ 8,156,178 $ 1,252,504 $ 6,903,674
============== ================= ==============
</TABLE>
NOTE 2: LOANS PAYABLE
<TABLE>
<CAPTION>
Current Long-term
------------------ ------------------
<S> <C> <C> <C>
Payable to acquire SSCC (1) $ 125,059 $ 250,118
Payable - shareholder 12% 675,182 0
Payable - shareholder 12% 138,150 0
Payable - directors 1,225 0
Payable - equipment loans 82,040 73,434
------------------ ------------------
$ 1,021,656 $ 323,552
================== ==================
</TABLE>
(1) Will be paid by issuing 442,360 shares of the Company's
Regulation S common stock on December 31, 1999, and 442,360
shares on December 31, 2000 and 2001 (1,327,080 shares total).
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION.
This quarterly report on Form 10-QSB contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995,
particularly statements regarding opportunities for expansion, growth of sales,
new product sales, revenues from monitoring services, customer acceptance of new
products, and selling, general and administrative expenses. These
forward-looking statements involve risks and uncertainties, and the cautionary
statement set forth below, identifies important risk factors that could cause
actual results to differ materially from those predicted in any such
forward-looking statements. Such factors include, but are not limited to,
adverse changes in general economic conditions, including adverse changes in the
specific markets for the Company's products, adverse business conditions,
decrease or lack of growth in the automotive industry, adverse changes in
customer order patterns, increased competition, lack of acceptance of new
products, pricing pressures, lack of success in technological advancements,
risks associated with foreign operations, risks associated with the Company's
efforts to comply with the Year 2000 requirements, and other factors.
The Company has a short operating history. All risks inherent in a new and
inexperienced enterprise are inherent in the Company's business. The Company is
continuing the operations of a subsidiary which was acquired on April 9, 1998.
On April 9, 1998, the Company beneficially acquired all of the stock of Netking
Limited, an English private limited company ("Netking") from Tomas George Wilmot
("Seller"), who beneficially owned all of the stock of Netking. The title
holders of Netking were Local Protectors Limited and SNH Cooper, who held the
shares as nominees for Seller. The purchase price paid for the purchased stock
was 10,000,000 newly issued shares of the common stock of the Company, which is
approximately 68.5% of all of the outstanding stock of the Company after such
issuance. Tomas George Wilmot, individually, is the title holder of all of the
10,000,000 newly issued shares of the Company. There are no arrangements or
understandings among members of both the former and new control person or their
associates with respect to election of directors or other matters.
On April 9, 1998, the Company beneficially acquired all of the stock of Netking
from Seller, who beneficially owned all of the stock of Netking. There are two
shares of Netking outstanding. Because English law requires two shareholders,
the Company holds title to one share of stock of Netking and the Company and
Tomas Wilmot, as nominee for the Company, jointly hold title to the other share.
Netking is the beneficial owner of Skynet Telematics Ltd (formerly Skynet 2001
Limited), an English private limited company ("STL"). STL owns intellectual
property pertaining to all aspects of the Skynet 2000 in-vehicle system. The
Skynet 2000 system uses communications and security technology coupled with
proprietary software that provides in-vehicle protection, security and
information services using mobile cellular telecommunications. The Skynet 2000
system provides 24 hour monitoring of vehicle security, personal distress alarm,
and impact sensor and information services, as well as normal cellular telephone
capability. The purchase price paid for the purchased stock was 10,000,000
shares of newly issued common stock of the Company, which is approximately 68.5%
of all of the outstanding stock of the Company after such issuance. The
consideration was determined by arm's length negotiations between the Company
and Seller. Prior to the acquisition, there was no material relationship between
the Seller and the Company or any of its affiliates, any director or officer of
the Company, or any associate of any such director or officer.
A portion of the business of STL and Netking acquired by the Company constitutes
equipment and other physical property previously used in the business of the
Seller. The Company intends to continue to use such equipment and physical
property for the same purposes. STL now has the Irish license to distribute
Skynet products.
Skamp International is forming a subsidiary company in Slovenia which will set
up a monitoring station and market the Skamp range of products in Eastern
Europe.
The discussions below highlight certain of the more material changes in results
of operations and changes in financial condition for the fiscal nine month
period ended September 30, 1999.
Results of Operations.
The Company has generated revenues from operations since March 1998. The nine
months ended September 30, 1999 therefore incorporates the results for nine
months of operations compared to only seven months for the nine months ended
September 30, 1998.
The Company's consolidated sales for the quarter ended September 30, 1999 were
$83,506 compared to $70,464 in 1998. This is a slight increase over 1998 despite
the sales of the Skynet 2000 unit being reduced in order to focus the Company's
resources on developing the new Skamp range of products. The Skamp product range
is being modified to suit the Company's precise requirements and has undergone
extensive testing. Volume sales of the product are expected to commence in the
final quarter of 1999. STL has orders for 87,000 Skamp units that it
8
<PAGE>
anticipates will be provided to customers over the next 18 months. Revenue from
related services such as monitoring fees, airtime connections, airtime usage,
and information services should also add significantly to the Company's
revenues.
The Company's consolidated total cost of sales for the quarter ended September
30, 1999 was $190,690 compared to $172,482 in 1998. The largest component of the
total cost of sales was product purchases representing 52% of the total. In
1998, the comparative figure was 22%. This increase resulted mainly from the
growth in sales activity, particularly the supply in September 1999 of 60 Skamp
units, part of an order for 500, to Northgate Plc's fleet of rental vehicles.
The second largest component of the total cost of sales was wages, including
social security, for STL monitoring personnel, representing 38% of the total. In
1998, the comparative figure was 44% although payments to subcontractors for
technical support for the product, of which there are none in the quarter ended
September 30, 1999, made up another 29%. The actual monitoring personnel costs
varied only marginally from the quarter ended September 30, 1998. STL has
created a full scale operational monitoring facility in order to expand that
portion of its business and the current facility has the capability of handling
a six fold increase in its current monitoring business. STL anticipates that
revenue from monitoring services will provide a substantial portion of the
Company's future consolidated revenues.
The Company's consolidated overhead expenses, including selling and
administrative costs for the quarter ended September 30, 1999 were $810,948. The
comparative figure for 1998 was $578,658 which was significantly lower due to
very little interest expense and no costs associated with expanding operations.
The Company's infrastructure costs were higher in 1999 than 1998. Comparison of
individual figures is therefore not meaningful. Depreciation of $221,307 was
charged for the quarter to September 30, 1999, a non-cash item that represents
27% of total overhead. The largest element of this was the depreciation of STL's
intellectual property rights in the amount of $192,764. The depreciation amount
for 1998 was $187,738. Research and development expenditure of $53,730 was
incurred during the quarter representing costs associated with developing and
testing the new Skamp range of products and monitoring station software.
Interest charges were incurred of $20,465, of which $20,465 was payable to
shareholders in respect to loans made to the Company after March 31, 1998.
General and administrative expenses totaled $515,446 for the quarter ended
September 30, 1999, the largest component of which was wages and salaries,
including social security. This amounts to $176,179, or 22% of total overhead,
and represents the wages and salaries of all of STL's personnel, excluding
monitoring and development personnel. The Company and its subsidiaries have
created a management team and other personnel that they believe to be necessary
for the expected growth of the business. Other significant components of the
Company and its subsidiaries' overhead expenses were marketing costs,
professional fees, and facility costs such as rent and utilities. General and
administrative expenses for 1998 were $390,315, of which $135,917 related to
wages and salaries, including social security. This amounts to 24% of total
overhead.
The Company's consolidated net loss for the quarter ended September 30, 1999 was
$(917,328) and after foreign currency translation gains of $13,592, the total
comprehensive loss for the quarter was $(903,736). For the September 1998
quarter, the consolidated net loss was $(680,676) and there was no foreign
currency translation gain or loss. The loss in 1999 is higher mainly because of
more costs associated with expanding operations.
The consolidated net loss consisted of that of the Company $(68,731), Netking
$(823,926), SSCC $(21,419), and Skamp International $(3,252) for a total
consolidated net loss of $(917,328).
The Company's consolidated sales for the nine months ended September 30, 1999
were $147,442 compared to $149,647 in 1998. This decrease is the result of the
sales of the Skynet 2000 unit being reduced in order to focus the Company's
resources on developing the new Skamp range of products. The Skamp product range
is being modified to suit the Company's precise requirements and has undergone
extensive testing. Volume sales of the product are expected to commence in the
final quarter of 1999. STL has orders for 87,000 Skamp units that it anticipates
will be provided to customers over the next 18 months. Revenue from related
services such as monitoring fees, airtime connections, airtime usage, and
information services should also add significantly to the Company's revenues.
The Company's consolidated total cost of sales for the nine months ended
September 30, 1999 was $419,239 compared to $427,410 in 1998. The largest
component of the total cost of sales was wages, including social security, for
STL monitoring personnel, representing 56% of the total. In 1998, the
comparative figure was only 38% although payments to subcontractors for
technical support for the product, of which there are none in the nine months
ended September 30, 1999, made up another 27%. The increase in the cost of
personnel is exaggerated in this comparison as nine months of operations and
related costs are included this year compared to seven months of operations and
related costs in 1998 amounts. The actual increase in monthly monitoring
personnel costs is below 10%. STL has created a full scale operational
monitoring facility in order to expand that portion of its business and the
current facility has the capability of handling a six fold increase in its
current monitoring business. STL anticipates that revenue from monitoring
services will provide a substantial portion of the Company's future consolidated
revenues.
9
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The Company's consolidated overhead expenses, including selling and
administrative costs for the nine months ended September 30, 1999 were
$2,422,036. The comparative figure for 1998 was $1,137,112 which was
significantly lower as it only represented seven month's costs. Comparison of
individual figures is therefore not meaningful. Depreciation of $621,551 was
charged for the nine months to September 30, 1999, a non-cash item that
represents 26% of total overhead. The largest element of this was the
depreciation of STL's intellectual property rights in the amount of $570,863.
The depreciation amount for 1998 was $401,841. Research and development
expenditure of $150,860 was incurred during the nine months representing costs
associated with developing and testing the new Skamp range of products and
monitoring station software. Interest charges were incurred of $186,975, of
which $66,213 was payable to shareholders in respect to loans made to the
Company after March 31, 1998. Interest expense included $113,659 paid with
common stock to the former shareholders of SSCC in connection with the purchase
of SSCC. General and administrative expenses, totaled $1,462,650 for the nine
months ended September 30, 1999, the largest component of which was wages and
salaries, including social security. This amounts to $451,092, or 19% of total
overhead, and represents the wages and salaries of all of STL's personnel,
excluding monitoring and development personnel. The Company and its subsidiaries
have created a management team and other personnel that they believe to be
necessary for the expected growth of the business. Other significant components
of the Company and its subsidiaries' overhead expenses were marketing costs,
professional fees, and facility costs such as rent and utilities. General and
administrative expense for 1998 were $733,614, of which $272,434 related to
wages and salaries which were 24% of total overhead.
The Company's consolidated net loss for the nine months ended September 30, 1999
was $(2,693,029) and after foreign currency translation losses of $9,684, the
total comprehensive loss for the nine months was $(2,702,713). For the 1998 nine
month period, the consolidated net loss was $(1,564,875) and there was no
foreign currency translation gain or loss. The loss in 1999 is higher mainly
because of more costs associated with expanding operations.
The consolidated net loss consisted of that of the Company $(463,155), Netking
$(2,159,308), SSCC $(67,314), and Skamp International $(3,252) for a total
consolidated net loss of $(2,693,029).
Financial Condition.
There were no significant changes to the net financial condition of the Company
in the nine month period ended September 30, 1999. The working capital deficit
decreased by about $240,000 mainly as a result of an increase in cash and
inventory. The Company continues to believe it has the support of its major
stockholders and that financing is available to meet all requirements. In 1999,
the Company raised $2,300,000 by issuing Regulation S shares. This extra working
capital will allow the Company to fully exploit the market potential for the new
Skamp range of products, and expand its business in a controlled but aggressive
manner.
Readiness for Year 2000
The Company has analyzed its Year 2000 risk and, although it is confident of
Year 2000 compliance, a process of checks is ongoing. The monitoring equipment
for the Skynet 2000 system has been upgraded to meet Year 2000 compliance.
ComROAD has confirmed that its products provided to STL are Year 2000 compliant
including all equipment purchased from ComROAD to monitor the Skamp products.
The Company does not expect any Year 2000 problems to have a material impact on
the Company's business.
Significant Subsequent Events
During October 1999, 250 Skamp units were fitted to an Avis fleet of rental
vehicles at Heathrow, London. Skamp is being marketed by Avis as "Rapid 247". On
October 14, 1999, the Company reached an agreement to buy 12.5% of West Country
Telecom Limited ("WCT") for a combination of cash and common stock. WCT is a
private company specializing in telecommunications and internet, and will give
the Company immediate access to a multilingual integrated voice recognition
platform and an internet service provider. Skamp Motorbike was launched at the
British Motor Cycle Show on November 3, 1999.
PART II
Other Information
Item 1. Legal proceedings: None
Item 2. Changes in Securities: Sale of Regulation S stock to offshore investors
In January 1999, the Company sold 65,000 shares at $2.00 per share for $130,000.
In January, 39,250 shares were sold at $1.50 per share for $58,875. In January,
75,000 shares were sold at $1.00 per share for $75,000. In February, 10,000
shares were sold at $2.00 per share for $20,000. In March, 375,000 shares were
sold at $.33 per
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share for $123,750. In March, 4,000 shares were sold at $3.50 per share for
$14,000. In April, 3,500 shares were sold at $1.50 per share for $5,250 and
2,860 shares were sold at $3.50 per share for $10,010. In May, 12,580 shares
were sold at $1.50 per share for $18,870, 600,000 shares were sold at $2.00 per
share for $1,200,000 and 63,024 shares were sold at $3.50 per share for
$220,584. In June, 50,000 shares were sold at $.82 per share for $41,000, 22,087
shares were sold at $1.50 per share for $33,131, 4,000 shares were sold at $2.50
per share for $10,000, 4,578 shares were sold at $3.50 per share for $16,023,
3,750 shares were sold at $3.62 per share for $13,575, 1,000 shares were sold at
$3.75 per share for $3,750, 6,000 shares were sold at $3.87 per share for
$23,220, and 1,500 shares were sold at $4.00 per share for $6,000. In July,
152,180 shares were sold at $2.75 per share for $418,495, 2,000 shares were sold
at $3.00 per share for $6,000, 1,500 shares were sold at $3.87 per share for
$5,805, 1,200 shares were sold at $3.92 per share for $4,704, and 3,200 shares
were sold at $4.00 per share for $12,800. In August, 18,352 shares were sold at
$1.50 per share for $27,528 and 4,042 shares were sold at $3.87 per share for
$15,643. In September, 2,000 shares were sold at $1.50 per share for $3,000,
4,000 shares were sold at $1.60 per share for $6,400, 172,635 shares were sold
at $2.75 per share for $474,746, 6,000 shares were sold at $3.00 per share for
$18,000, 13,099 shares were sold at $3.87 per share for $50,693, 2,000 shares
were sold at $4.00 per share for $8,000, and 1,270 shares were sold at $4.25 per
share for $5,398. There were capital raising costs, including commissions, of
$715,302 associated with the transactions which were paid in cash.
Issuance of Regulation S and 144 Stock
Regulation S:
During April 1999, the Company issued 172,920 shares of stock at $.94 per share
to pay principal of $48,886 and interest expense of $113,659 related to the SSCC
purchase. Also in April, the Company issued 7,500 shares of stock at $.82 per
share for interest expense of $6,150 and 3,750 shares at $3.52 per share for
expenses of $13,200. In June, the Company issued 97,536 shares at $1.00 per
share for expenses of $97,536 and 7,000 shares at $2.00 per share for expenses
of $14,000. In July, the Company issued 26,817 shares at $.82 per share for
expenses of $21,990. In September, the Company issued 10,000 shares of stock at
$2.00 per share for expenses of $20,000.
In September, the Company issued 78,050 shares of stock at $1.92 per share for
$149,856 for a license to distribute products in Ireland.
Regulation 144:
In April, the Company issued 35,000 shares of stock at $2.00 per share for
expenses of $70,000.
Summary of 1999 stock transactions:
<TABLE>
<CAPTION>
<S> <C>
1,726,607 shares of Regulation S stock were sold for cash $ 3,080,250
Less capital raising costs including commissions (715,302)
---------------
Net proceeds to Company $ 2,364,948
===============
</TABLE>
403,573 shares of Regulation S stock were issued for assets of
$149,856, principal reduction of $48,886 and expenses of $286,535.
35,000 shares of Regulation 144 stock were issued for expenses of
$70,000.
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 on Form 8-K
(a) Exhibits: None
(b) Reports on Form 8-K: None.
11
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities and Exchange Act,
the registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Skynet Telematics, Inc.
Dated: November 18, 1999
------------------------------------------
Tomas George Wilmot, President
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from Skynet Telematics, Inc. September 30, 1999 financial
statements and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000894557
<NAME> Skynet Telematics, Inc.
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1.00
<CASH> 23,945
<SECURITIES> 0
<RECEIVABLES> 95,433
<ALLOWANCES> 0
<INVENTORY> 239,319
<CURRENT-ASSETS> 478,035
<PP&E> 8,156,178
<DEPRECIATION> (1,252,504)
<TOTAL-ASSETS> 7,381,709
<CURRENT-LIABILITIES> 1,538,230
<BONDS> 0
0
0
<COMMON> 24,104
<OTHER-SE> 5,495,823
<TOTAL-LIABILITY-AND-EQUITY> 7,381,709
<SALES> 147,442
<TOTAL-REVENUES> 147,442
<CGS> 419,239
<TOTAL-COSTS> 419,239
<OTHER-EXPENSES> 2,422,036
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 186,975
<INCOME-PRETAX> (2,693,029)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,693,029)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,693,029)
<EPS-BASIC> (.12)
<EPS-DILUTED> (.12)
</TABLE>
