<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(MARK ONE)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _________ TO ______
0-23228
(COMMISSION FILE NO.)
PORTACOM WIRELESS, INC.
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
BRITISH COLUMBIA, CANADA N/A
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
8055 W. MANCHESTER AVENUE, SUITE 730
PLAYA DEL REY, CALIFORNIA 90293
(Address of principal executive offices)
ISSUER'S TELEPHONE NUMBER: (310) 448-4140
Check whether the issuer: (1) has filed all reports required to be filed by
Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the past 12
months and (2) has been subject to such filing requirements for the past 90
days.
1.YES ___ NO X
---
2.YES X NO ___
---
AS OF JULY 31, 1996, THERE WERE 11,892,382 SHARES OF COMMON STOCK ISSUED AND
OUTSTANDING.
Transitional Small Business Disclosure Format (Check One):
1.YES ___ NO X
---
<PAGE>
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
NO.
<S> <C> <C>
ITEM 1. Statement Regarding Financial Information 1
Condensed Consolidated Balance Sheet at
March 31, 1996 and 1995 (Unaudited) 2
Condensed Consolidated Statements of Operations
for the three months ended March 31,
1996 and 1995 (Unaudited) 3
Condensed Consolidated Statements of Cash Flows
for the three months ended March 31,
1996 and 1995 (Unaudited) 4
Notes to Condensed Consolidated Financial 5
Statements (Unaudited)
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 13
ITEM 2. Changes in Securities 13
ITEM 3. Defaults Upon Senior Securities 13
ITEM 4. Submission of Matters to a Vote of Security Holders 13
ITEM 5. Other Information 13
ITEM 6. Exhibits and Reports on Form 8-K 13
</TABLE>
-2-
<PAGE>
PORTACOM WIRELESS, INC. AND SUBSIDIARIES
QUARTER ENDED MARCH 31, 1996
PART I. FINANCIAL INFORMATION
The financial statements included herein have been prepared by PortaCom
Wireless, Inc. (formerly known as "Extreme Technologies, Inc." and defined
herein in the alternative as the "Company" or the "Registrant"), and without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission (the "SEC"). As contemplated by the SEC under Rule 10-01 of
Regulation S-X (as amended by Regulation S-B), the accompanying financial
statements and footnotes have been condensed and therefore do not contain all
disclosures required by generally accepted accounting principles. However, the
Company believes that the disclosures are adequate to make the information
presented not misleading. Except where otherwise specified, all dollar amounts
referenced in this document are denominated in United States dollars. It is
suggested that the financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's Form 10-KSB for
the nine month transition period ended December 31, 1995 as filed with the SEC
(file number 0-23228).
1
<PAGE>
PORTACOM WIRELESS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited and expressed in U.S. dollars)
<TABLE>
<CAPTION>
March 31, 1996 and March 31, 1995
- -----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
MARCH 31, 1996 MARCH 31, 1995
- ----------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 557,290 $ 73,384
Accounts receivable, net of reserve 13,563 40,433
Notes receivable 890,830 ---
Inventory --- 58,852
Prepaid expenses --- 6,680
- -----------------------------------------------------------------------------------------------------------------------------------
Total current assets 1,461,683 179,349
Equipment, net 6,703 106,541
Patents, trademarks and other assets --- 51,037
- -----------------------------------------------------------------------------------------------------------------------------------
$ 1,468,386 $ 336,927
- ----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable (note 6) $ 1,191,129 $ 2,083,431
Accrued liabilities 45,703 168,727
Convertible promissory notes payable (note 3) 1,380,000 ---
Notes payable 431,000 1,584,508
- ----------------------------------------------------------------------------------------------------------------------------------
Total current liabilities 3,047,833 3,836,666
Shareholders' equity (deficiency):
Share capital (note 4) 13,965,400 10,085,670
Accumulated deficit (15,544,847) (13,585,409)
- ---------------------------------------------------------------------------------------------------------------------------------
(1,579,447) (3,499,739)
- ---------------------------------------------------------------------------------------------------------------------------------
$ 1,468,386 $ 336,927
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
2
<PAGE>
PORTACOM WIRELESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited and expressed in U.S. dollars)
<TABLE>
<CAPTION>
Three month periods ended March 31, 1996 and 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MARCH 31, 1996 MARCH 31, 1995
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME
Sales $ --- $ 97,449
Cost of sales --- 568,899
- -----------------------------------------------------------------------------------------------------------------------------------
(471,450)
OPERATING EXPENSES:
Advertising and promotion --- (61,388)
Bad debt --- 571,003
Consulting fees 264,137 1,175,758
Depreciation and amortization --- 174,410
General and administrative 41,031 190,106
Interest and bank charges 190 35,702
Legal and accounting 43,764 343,407
Management fees 5,129 329,005
Rent 14,426 89,065
Research and development --- (245,283)
Travel and entertainment 86,551 213,191
Wages and benefits 79,716 728,096
- -----------------------------------------------------------------------------------------------------------------------------------
534,943 3,543,072
- -----------------------------------------------------------------------------------------------------------------------------------
Loss before debt settlement 534,943 4,014,522
- ----------------------------------------------------------------------------------------------------------------------------------
Loss on settlement of debt 90,015 ---
- ----------------------------------------------------------------------------------------------------------------------------------
Net loss for the period 624,958 4,014,522
- -----------------------------------------------------------------------------------------------------------------------------------
Deficit, beginning of period 14,919,889 9,570,887
- -----------------------------------------------------------------------------------------------------------------------------------
Deficit, end of period $ 15,544,847 $ 3,585,409
- -----------------------------------------------------------------------------------------------------------------------------------
Loss per share $ .04 $ .13
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted average number of common shares outstanding 16,271,108 14,524,845
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
PORTACOM WIRELESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and expressed in U.S. dollars)
<TABLE>
<CAPTION>
Three months ended March 31, 1996 and 1995
- ------------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MARCH 31, 1996 MARCH 31, 1995
- -----------------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net loss for the period $ (624,958) ---
Depreciation and amortization --- ---
Net changes in working capital relating to operations:
Accounts receivable (6,470) ---
Notes receivable (75,430) ---
Accounts payable 129,406 ---
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash used by operating activities 577,451 (1,487,369)
FINANCING:
Issue of and subscription for common shares 135,785 307,908
Payment against promissory note payable --- (12,500)
Convertible promissory notes payable 780,000 ---
Notes payable 60,000 892,500
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash generated by financing activities 975,785 1,187,908
INVESTING:
Acquisition of equipment, net (6,708) (28,081)
Patents, trademarks and other assets --- 313,203
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash generated (used) by investing activities (6,708) 285,116
- ----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 391,625 (14,345)
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, beginning of period 165,665 87,729
- -----------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 557,290 $ 73,384
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
PORTACOM WIRELESS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited and expressed in U.S. dollars)
Three months ended March 31, 1996
- ------------------------------------------------------------------------------
1. MANAGEMENT OPINION:
The condensed consolidated financial statements include the accounts of
PortaCom Wireless, Inc. (the "Company") and its wholly-owned subsidiaries
from the dates of acquisition or formation. All material intercompany
balances and intercompany transactions have been eliminated.
In the opinion of management, the accompanying condensed consolidated
financial statements reflect all adjustments (which include only normal
recurring adjustments) and reclassifications for comparability necessary to
present fairly the financial position and results of operations as of and
for the three months ended March 31, 1996.
2. CHANGE IN FISCAL YEAR:
During the previous reporting period, the Company changed the date on which
its fiscal year ends from March 31, 1996 to December 31, 1995. Accordingly,
results of operations reported herein are as of and for the three months
ended March 31, 1996.
3. CONVERTIBLE PROMISSORY NOTES PAYABLE:
Between December 19, 1995 and May 7, 1996, the Company has arranged, subject
to regulatory approval, private placements of convertible promissory notes
having an aggregate principal amount of $1,805,000. Of this amount, $780,000
represents funds received in the current period. The promissory notes are
due and payable after two years, or after six months upon demand of the
holder. The promissory notes bear interest at an annual rate of 10%, payable
upon maturity or conversion. The promissory notes are convertible into
shares of common stock of the Company at conversion prices ranging from
$1.49 to $3.25 per share. The Company will also issue to the investors non-
transferable warrants to purchase up to an aggregate of 297,948 shares of
common stock of the Company for a period of two years at a price equal to
the conversion price of the notes.
4. SHARE CAPITAL:
(a) Authorized:
100,000,000 common shares without par value
100,000,000 class "A" preference shares with a par value of C$10 each
100,000,000 class "B" preference shares with a par value of C$50 each
5
<PAGE>
PORTACOM WIRELESS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited and expressed in U.S. dollars)
Three months ended March 31, 1996
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
(b) Issued common shares:
- -----------------------------------------------------------------------------------------------------------------------------------
Number of Per share Total consideration
shares consideration
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance issued and subscribed, 16,239,963 $11,316,500
December 31, 1995
Issued in settlement of debt 96,560 1.25 120,780
Issued for cash on exercise of stock options 16,800 .89 15,000
- ----------------------------------------------------------------------------------------------------------------------------------
Balance issued, March 31, 1996 16,353,323 11,452,280
To be issued on settlement of debt (f) 1,256,561 2.00 2,513,121
To be canceled (e) (5,950,000) ---
- ----------------------------------------------------------------------------------------------------------------------------------
Balance issued and to be issued 11,659,884 13,965,401
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(c) Stock options:
As at December 31, 1995, the Company had common shares of the Company
reserved for issuance on exercise of incentive stock options to 1999.
Option changes for the period January 1, 1996 to March 31, 1996 were
as follows:
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Outstanding and exercisable as at December 31, 1995 617,433
- ----------------------------------------------------------------------------------------------------------------------------------
Exercised at C$1.25 per share 16,800
Canceled at C$1.25 per share (33,200)
- ---------------------------------------------------------------------------------------------------------------------------------
Outstanding and exercisable as at March 31, 1996 567,433
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Stock options are issued at the average market price per share for the
ten trading days prior to the date of issuance.
(d) Warrants:
No warrants were issued during the three months ended March 31, 1996.
None of the outstanding warrants previously disclosed were exercised
in the current period.
6
<PAGE>
PORTACOM WIRELESS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited and expressed in U.S. dollars)
Three months ended March 31, 1996
- -------------------------------------------------------------------------------
(e) Performance shares:
Included in the issued and outstanding common shares are 6,550,000
common performance shares subject to an escrow agreement. These shares
are releasable from escrow on satisfaction of certain predetermined
tests set out by regulatory authorities related to the generation of
positive cash flow from operations. Shares not released from escrow by
September 9, 2002 will be canceled. Pursuant to the escrow agreement,
holders of the performance shares may exercise all voting rights
attached thereto except on a resolution to cancel any of the shares,
and have waived their rights to receive dividends or to participate in
the assets and property of the Company on a winding-up or dissolution
of the Company.
Subsequent to the end of the period, regulatory approval was received
and 5,950,000 of these performance shares were canceled.
(f) Shares to be issued on settlement of debt:
During the nine months ended December 31, 1995, the Company entered
into agreements to issue 1,256,561 common shares at their estimated
value of $2.00 per share to settle outstanding liabilities aggregating
$2,513,121. Filings to obtain regulatory approval were made prior to
December 31, 1995 and regulatory approval was received on May 16,
1996.
(g) List of Directors:
Robert Alexander, Robert Flitton, Howard Frantom, Keith Hay, Stephen
Leahy, Douglas MacLellan, Stephen Stephens
5. INCOME TAXES:
As at December 31, 1995, the Company had carryforward income tax losses in
Canada and the United States in excess of $14,000,000 available to reduce
future income taxes payable, the benefit of which has not been recorded in
the accounts. These loss carryforwards expire at various times through the
year 2005.
6. RELATED PARTY TRANSACTIONS:
Related party transactions not disclosed elsewhere in these condensed
consolidated financial statements include $168,917 in accounts payable at
March 31, 1996 which is owing to related parties. Management and consulting
fees have predominantly been charged by related parties. The Company has
reimbursed expenses incurred by directors and officers on its behalf during
the periods presented.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
BACKGROUND
The Company conducts business operations primarily through its wholly owned
U.S. subsidiary, PortaCom International, Ltd. ("PIL"). The Company also has
three inactive wholly owned U.S. subsidiaries; PCBX Systems, Inc. ("PCBX"),
Extreme Telecom, Inc. ("Telecom"), Extreme Laboratories, Inc. (formerly known as
Spheric Audio Laboratories, Inc.) ("Laboratories"), all of which ceased
operations in August 1995, and presently have no active business operations.
Since 1994, through its PIL subsidiary, the Company has engaged in initial
stage efforts to evaluate the feasibility of, and attempt to secure, licensing
and joint venture arrangements for the operation of wireless telephone networks,
mobile radio communication systems and other telecommunications technologies. In
September 1995, the Company announced that it intended to focus all of its
future activities on the development of its prospective emerging market cellular
and wireless interests. Although the establishment and operation of wireless
telephone networks and other advanced communications systems will be
investigated by the Company wherever strategic opportunities arise, its
principal efforts are presently focused on certain Asian countries. The
Company's wireless telecommunications operations are in the development stage,
have produced no revenues to date and remain limited in scope.
PCBX developed and was engaged in marketing a personal computer branch
exchange which permitted the operation of a full-featured telephone network
control system from a centrally-located personal computer. Telecom was engaged
in distributing a line of telecommunications products manufactured by Nitsuko
America Corporation. Laboratories developed and was engaged in marketing a line
of audio speakers, as well as a proprietary audio recording and playback
technology known as "SphericSound." PCBX, Telecom and Laboratories ceased
operations in August 1995 and presently have no business operations.
Since the commencement of operations, the Company's revenues have been
principally derived from the sale of its PCBX systems and to a substantially
lesser degree from sales of Telecom and Laboratories products. Due to
significant ongoing losses and the Company's inability to successfully develop
and carry out marketing and sales strategies, the operations of PCBX, Telecom
and Laboratories were closed in August 1995. The Company also attempted to
secure licensing arrangements or other means of commercial exploitation of its
SphericSound technologies; however, to date, only limited sales revenues were
realized from these efforts.
Funding of the Company's operations since inception has been provided by:
(i) revenues from the sale of PCBX systems; (ii) proceeds from the sale of
securities undertaken in a series of private placement transactions; and (iii)
completion of an initial public offering on the Vancouver Stock Exchange during
October 1992.
RESULTS OF OPERATIONS
Quarter ended March 31, 1996 as Compared with Period Ended March 31, 1995.
- -------------------------------------------------------------------------
For the quarter ended March 31, 1996, the Company incurred a loss of
$624,958 with no sales occuring. This compares to a loss of $4,014,522 on sales
of $97,449 for the comparable prior year quarter. The decrease in sales (to
nil) was due to the fact that the Company's revenue-producing subsidiaries
(which were also generating significant net losses) have been closed. Revenues
are expected to be nil throughout the fiscal year. Virtually all of the
Company's sales in the 1995 period were attributable to the Company's PCBX
systems and related products, with a small percentage of such sales being
attributable to Spheric Audio. No sales have been realized by PIL.
The Company's loss for the quarter ended March 31, 1996 represents a loss
of $.04 per common share, as compared to a loss per common share of $.13 for the
comparable prior year quarter.
There were no cost of sales in the quarter ended March 31, 1996, as
compared with $568,899 or 584% of sales in the prior year quarter. The Company's
cost of sales as a percentage of sales in the quarter ended March 31, 1996 is
not comparable to the prior period due to (i) the closure of the Company's
revenue-producing subsidiaries in August 1995, and (ii) the Company's current
business development activities not generating revenue.
Operating expenses fell in the quarter ended March 31, 1996 to $534,943
from $3,543,072 in the comparable year-earlier quarter, a decrease of
$3,008,129, or 85%. Of this decrease, the most significant factors were a
reduction in workforce and the cessation of sales, marketing and product
development activities related to the closed PCBX, Telecom and Laboratories
subsidiaries.
During the quarter ended March 31, 1996, wages and benefits fell to $79,716
from $728,096, an decrease of 89% from the comparable year-earlier quarter,
primarily related to the cessation of sales, marketing and product development
activities related to the closed PCBX, Telecom and Laboratories subsidiaries.
Consulting fees decreased to $264,137 in the current quarter from
$1,175,758 recorded in the comparable prior year quarter. This reduction was
primarily related to the cessation of business activities related to the closed
PCBX, Telecom and Laboratories subsidiaries.
The Company's operations have become more dependent on its wireless
telecommunications business development activities. The Company expects that it
will continue to expend significant funds in order to obtain the licenses and
form the joint ventures necessary for the Company or PIL to provide wireless
communications services in developing international markets, although no revenue
will be generated until such licenses are obtained and such joint ventures are
operational. This may necessitate a material increase in general office overhead
and other general and administrative costs.
LIQUIDITY AND CAPITAL RESOURCES
In the quarter ended March 31, 1996, the Company realized net proceeds of
$975,785 from the issuance of shares of common stock in a private placement and
exercise of stock options. In the quarter, the Company also did not repay any
loans outstanding. These activities contributed to a net working capital
(deficit) position as of March 31, 1996 of ($1,586,150), which is up $2,071,167
from ($3,657,317) at March 31, 1995.
The Company has incurred cumulative losses from inception through March 31,
1996 of $15,544,847 and has not yet achieved revenues sufficient to offset
direct expenses and corporate overhead.
Since inception, a substantial portion of the Company's operating capital
has been provided through financing activities. Operations have provided gross
revenues to the Company of $2,222,650 whereas financing has yielded the Company
net proceeds of $15,176,456. The Company's financing has been provided by an
initial public offering and a series of private placements of shares. The
Company anticipates that it may seek additional financing through the private
placement of equity or debt securities, although there can be no assurances as
to the success of such anticipated placement.
8
<PAGE>
Between January 5 and March 31, 1996, the Company has arranged, subject to
regulatory approval, private placements of convertible promissory notes having
an aggregate principal amount of $780,000. The promissory notes are due and
payable after two years, or after six months upon demand of the holder. The
promissory notes are convertible into shares of common stock of the Company at
conversion prices ranging from $1.49 to $2.50 per share. The Company will also
issue to the investors non-transferable warrants to purchase an aggregate of up
to 154,990 shares of common stock of the Company for a period of two years at a
price equal to the conversion price of the notes (see Subsequent Events).
As of March 31, 1996, the Company had 1,467,268 (567,433 options and
899,835 warrants) options and warrants outstanding which upon exercise would
yield to the Company additional proceeds in excess of $4.7 million. The
exercise of existing warrants is impossible to predict with any certainty,
accordingly, management can render no assurances that any material funds will be
realized upon the exercise of such warrants, or whether such will be exercised
at all.
The Company has been able to secure financing in the past through loans
from certain stockholders. Management has no reason to believe that similar
arrangements will be available in the future.
The Company's net working capital position increased approximately $319,518
from December 31, 1995 to March 31, 1996. Working capital levels have only been
able to increase in the past by virtue of the Company's continued offerings of
securities.
With the exception of fixed rental and certain personnel expenses, the
Company anticipates no significant capital expenditures within the short term.
Rental expense accounts for approximately $5,000 of fixed expenses on a monthly
basis. Personnel costs, which are expected to remain relatively stable within
the short term, are likely to account for approximately $26,500 of fixed
expenses on a monthly basis. Additional variable expenses, such as consulting
fees, legal and accounting, travel and entertainment, utilities and
miscellaneous equipment purchases (or rentals) are expected to account for
approximately $132,000 per month.
Management does not believe that in the near term the Company's operations
will generate revenue or cash flow to finance its working capital or any capital
expenditure requirements and the Company's operations will remain dependent on
the Company's ability to obtain additional debt and equity financing (including
from the exercise of existing warrants), as to which no assurance can be given.
In the past, the Company has been able to secure financing through loans from
certain stockholders. While the Company will continue to seek both debt and
equity financing, there can be no assurance that any such financing will be
available on terms acceptable to the Company or at all. Without such additional
sources of financing, the Company will not be able to continue as a going
concern.
9
<PAGE>
SUBSEQUENT EVENTS
Convertible Promissory Notes
- ----------------------------
Subsequent to March 31, 1996, the Company arranged, subject to regulatory
approval, private placements of convertible promissory notes having an aggregate
principal amount of $1,025,000 (for a total amount of $2,405,000 of such
securities placed between December 19, 1995 and May 7, 1996). The promissory
notes are due and payable after two years, or after six months upon demand of
the holder. The promissory notes are convertible into shares of common stock of
the Company at conversion prices ranging from $2.50 to $3.25 per share. The
Company will also issue to the investors non-transferable warrants to purchase
an aggregate of up to 142,958 shares of common stock of the Company for a period
of two years at a price equal to the conversion price of the notes. As of July
31, 1996, the issuance of such securities remains subject to regulatory
approval.
Debt Settlements
- ----------------
In October 1995 the Registrant began to enter into written agreements to
settle indebtedness in the aggregate amount of approximately $2,809,000 for cash
or share consideration. These agreements were subject to regulatory approval.
In May 1996, the Registrant received regulatory approval and completed the
settlement of $2,513,121 of such debt through the issuance of a total of
1,256,561 shares of Common Stock. As of July 31, 1995, 53,675 shares continue
to be reserved for issuance when permissible.
In December 1995, the Registrant agreed to the restructuring and settlement
of claims of two parties related to each other, which settlement has
subsequently been amended and partially paid. As of the July 31, 1996, the
Registrant is obligated to make a final payment of $200,000 due December 31,
1996.
Between October 10, 1995 and May 28, 1996, the Registrant had settled for
cash approximately $1,090,000 of accounts payable owing by the Registrant and
its closed subsidiaries. As of July 31, 1996, the outstanding accounts payable
of the Registrant's closed subsidiaries is approximately $185,000, which
management of the Registrant is continuing to attempt to settle on terms
favorable to the Registrant, although no assurances about such settlements can
be given.
Cancellation of Performance Shares
- ----------------------------------
In October 1995, certain shareholders agreed to surrender their 5,950,000
performance shares which were then held under an escrow arrangement. In
consideration therefor, the Registrant agreed to issue 314,762 common shares at
a deemed price of $2.00 per share. Although the performance shares have been
irreversably canceled by the Registrant, as of July 31, 1996, the issuance of
the 314,762 shares continues to be subject to the removal of the Registrant from
the jurisdiction of both the Vancouver Stock Exchange and the British Columbia
Securities Commission.
Bonus Shares and Warrants
- -------------------------
In connection with the issuance of certain short-term debt by the Company
in January 1995 and May 1996, the Company has agreed to issue, subject to
regulatory approval, 85,590 "bonus" shares of common stock and 166,667 share
purchase warrants, exercisable at $3.30 per share,
10
<PAGE>
expiring on May 31, 1997. As of July 31, 1996, the issuance of such shares and
warrants remains subject to regulatory approval.
EFFECTS OF INFLATION
The Company does not expect inflation to materially affect its results of
operations, however, it is expected that operating cost and the cost of capital
equipment to be acquired in the future may be subject to general economic and
inflationary pressures.
11
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
-----------------
None
ITEM 2. CHANGES IN SECURITIES
---------------------
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
-------------------------------
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
None
ITEM 5. OTHER EVENTS
------------
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
None.
12
<PAGE>
SIGNATURE
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
PORTACOM WIRELESS, INC.
Date: August 7, 1996
By: /s/ Douglas C. MacLellan
-----------------------------
Douglas C. MacLellan
President and Chief Executive Officer
By: /s/ J. Michael Christiansen
--------------------------------
J. Michael Christiansen
Executive Vice President
(principal financial officer)
13
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
27 Financial Data Schedule*
* Filed herewith
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1996 MAR-31-1995
<PERIOD-START> JAN-01-1996 JAN-01-1995
<PERIOD-END> MAR-31-1996 MAR-31-1995
<CASH> 557,290 73,384
<SECURITIES> 0 0
<RECEIVABLES> 904,393 47,113
<ALLOWANCES> 0 0
<INVENTORY> 0 58,852
<CURRENT-ASSETS> 1,461,683 179,349
<PP&E> 6,703 157,578
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 1,468,386 336,927
<CURRENT-LIABILITIES> 3,047,833 3,836,666
<BONDS> 0 0
0 0
0 0
<COMMON> 13,965,400 10,085,670
<OTHER-SE> (15,544,847) (13,585,409)
<TOTAL-LIABILITY-AND-EQUITY> 1,468,386 336,927
<SALES> 0 97,449
<TOTAL-REVENUES> 0 97,449
<CGS> 0 568,899
<TOTAL-COSTS> 0 568,899
<OTHER-EXPENSES> 624,958 3,543,072
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (624,958) (4,014,522)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (624,958) (4,014,522)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (624,958) (4,014,522)
<EPS-PRIMARY> (.04) (.13)
<EPS-DILUTED> 0 0
</TABLE>
