UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20659
FORM 10-QSB/A
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
Commission File Number 0-24742
U.S. WIRELESS CORPORATION
(Exact name of registrant as specified in is charter)
Delaware 13-3704059
(State or other jurisdiction of incorporation or (I.R.S. Employer
organization) Identification No.)
2694 Bishop Drive, San Ramon, California 94583
(Address of principal executive offices) (Zip Code)
(510)830-8801
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year if changed from last report)
Check whether the issuer (1) has filed all documents and 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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Common stock, par value $.01 per share: 10,031,250 shares outstanding as of
December 31, 1996.
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U.S. WIRELESS CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated condensed balance sheet as of September 30, 1996
(unaudited) 3
Consolidated condensed statements of operations (unaudited) for
the three and six months ended September 30, 1996 and 1995 4
Consolidated condensed statements of cash flows (unaudited) for
the six months ended September 30, 1996 and 1995 6
Notes to consolidated condensed financial statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSES OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 10
PART II. OTHER INFORMATION
ITEM 5. Other information 12
Signatures 13
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3
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U.S. WIRELESS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
As of December 31, 1996
(Unaudited )
ASSETS
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<CAPTION>
Current Assets:
<S> <C>
Cash $6,046,903
Other current assets 3,500
Total current assets $6,050,403
Equipment, improvements and fixtures, net of
accumulated depreciation and amortization 122,799
Due from stockholder 112,818
Investment in common stock, net (Note 6) 774,800
Excess of cost over basis of net assets acquired,
net of accumulated amortization 2,187,500
Other assets 4,667
Total assets $9,252,987
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $18,236
Total current liabilities 18,236
Minority interest 1,244,306
Stockholders' equity:
Common stock 127,132
Additional paid-in capital 18,456,989
Unrealized loss on investment available for
sale (Note 6) (1,025,200)
Accumulated deficit (9,568,476)
Total stockholders' equity 7,990,445
Total liabilities and stockholders' equity $9,252,987
</TABLE>
See accompanying notes to consolidated condensed financial statements
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U.S. WIRELESS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
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Three Months Ended Nine Months Ended
Dec 31, Dec 31, Dec 31, Dec 31,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net sales $ - $10,224,050 $5,024,338 $18,329,640
Costs and expenses:
Cost of sales - 6,853,745 3,429,395 12,282,324
Operating expenses 396,704 3,193,532 3,269,198 7,728,288
Common stock of subsidiary issued
for compensation - - 424,000 -
Amortization of excess cost over
basis of net assets acquired 37,500 - 69,042 -
Interest expenses and financing
costs net of interest income (43,258) 127,240 173,044 308,791
390,946 10,174,517 7,364,679 20,319,403
Income (Loss) before minority interest
and cumulative effect of a change in
accounting principle (390,946) 49,533 (2,340,341) (1,989,763)
Minority interest in net (income) losses
of subsidiaries 131,081 (57,420) 764,376 530,773
Loss before cumulative effect of a
change in accounting principle $(259,865) $(7,887) $(1,575,965) $(1,458,990)
Cumulative effect of a change a
change in accounting principle - - (459,435) -
Net loss $(259,865) $( 7,887) $(2,035,400) $(1,458,990)
</TABLE>
See accompanying notes to consolidated condensed financial statements
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U.S. WIRELESS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Dec 31, Dec 31, Dec 31, Dec 31,
1996 1995 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Income (Loss) per common equivalent share:
Income (Loss) before minority interest
and cumulative effect of a
change in accounting principle $( .04) $ .06 $(.35) $( 2.44)
Minority interest in net (income) loss .01 ( .07) .11 .65
Loss before cumulative effect of
a change in accounting principle ( .03) ( .01) (.24) (1.79)
Cumulative effect of a change in
accounting principle - - (.07) -
Net loss $( .03) $(.01) $(.31) $ (1.79)
Weighted average number of
common shares outstanding 9,037,931 871,078 6,601,940 816,564
Pro forma amounts assuming the new minority interest accounting method is
applied retroactively:
Net loss $(259,865) $(7,887) $(1,575,965) $(1,458,990)
Net loss per common equivalent share $( .03) $( .01) $(.24) $( 1.68)
</TABLE>
See accompanying notes to consolidated condensed financial statements
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U.S. WIRELESS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
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Nine Months Ended
December 31, December 31,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $( 2,035,400) $(1,458,990)
Adjustments to reconcile net loss to cash
(used) provided for operating activities:
Cumulative effect of a change in accounting
principle 459,435 -
Depreciation and amortization 233,656 284,136
Amortization of excess of cost over net
assets acquired 69,042 58,881
Minority interest in net losses of subsidiaries (764,376) (530,773)
Issuance of common stock for compensation and
financing costs 440,000 153,600
Increase (Decrease) from changes in assets and liabilities,
net of effects of spin-off of subsidiary:
Accounts receivable (165,207) 175,461
Merchandise inventories (1,743,239) 1,839,510
Other current assets 183,810 (104,036)
Deposits 2,667 (12,444)
Accounts payable 1,945,363 (198,483)
Accrued expenses (207,873) (148,518)
Deferred rent liability (20,823) -
Total adjustments 432,455 1,517,334
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Net cash (used) provided for operating activities (1,602,945) 58,344
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of equipment, improvements and fixtures (291,747) (67,067)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 6,398,483 675,000
Repayments of stockholder advances (494,248) (343,553)
Proceeds from note payable 1,465,859 (374,491)
Payment on capital lease obligations - (42,045)
Proceeds from issuance of preferred stock 584,000
Redemption of Series B redeemable preferred stock (87,680) (155,403)
Net cash (used) provided by financing activities 7,866,414 (240,492)
NET INCREASE(DECREASE) IN CASH 5,971,722 (249,215)
Cash, beginning of period 75,181 401,010
Cash, end of period $6,046,903 $151,795
</TABLE>
See accompanying notes to consolidated condensed financial statements
<PAGE>
U.S. WIRELESS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION:
The accompanying unaudited consolidated condensed financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and the instructions to Form 10-QSB.
Accordingly, they do not include all the information and footnotes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, the interim financial statements include all
adjustments considered necessary for a fair presentation of the Company's
financial position and the results of its operations for the three and nine
month periods ended December 31, 1996, are not necessarily indicative of the
results to be expected for the full fiscal year. For further information, refer
to the Company's Annual Report on Form 10-KSB for the year ended March 31, 1996,
as filed with the Securities and Exchange Commission.
NOTE 2 - CHANGE IN ACCOUNTING PRINCIPLE:
During the first fiscal quarter of the fiscal year, the Company changed
its method of accounting for the minority shareholders interest in PCT. The
Company changed from one method of accounting which records the total amount of
the net proceeds received from PCT's equity transactions as the minority
interest to a more generally accepted method which reflects the minority
interest as a percentage of the net assets of PCT. The change in accounting for
minority interest is recorded as a cumulative effect of a change in accounting
principle, which had the effect of reducing minority interest by $2,413,973,
increasing additional paid-in capital by $2,873,408 and increasing the nine
month loss as of December 31, 1996 by $459,435. The condensed consolidated
financial statements have not been restated to reflect this accounting change;
however, pro forma information, as if the change were made retroactively, is
shown on the condensed consolidated statement of operations.
NOTE 3 - ACQUISITIONS:
Labyrinth Communications Technologies Group, Inc. (Labyrinth)
On July 31,1996, the Company consummated a stock purchase agreement and
acquired 51% of the outstanding shares of common stock of Labyrinth, whereby 20%
of the shares were acquired for
<PAGE>
$2,000,000 from Labyrinth and an additional 31% was acquired from the principle
stockholder of Labyrinth for 2,250,000 shares of the Company's common stock.
Upon consummation of this acquisition, the founding shareholder of Labyrinth,
Dr. Oliver Hilsenrath, was appointed the Company's President and Chief Executive
Officer. Labyrinth is a development stage company engaged in the research and
development of wireless communications technology.
Mantra Technologies, Inc. (Mantra)
On July 31, 1996, the Company consummated an agreement and acquired 51%
of the outstanding common stock of Mantra Technologies, Inc. and an option to
acquire the remaining 49% of the outstanding shares of common stock for an
aggregate purchase price of $500,000. Pursuant to the terms of the agreement,
the Company has the right to acquire the remaining 49% of the outstanding shares
of common stock in exchange for an aggregate 1,000,000 shares of the Company's
common stock. In order for the Company to exercise its options, the closing bid
price of its common stock must have been at least $5.00 for the 30 trading days
prior to the date of exercise. Mantra is a development stage company which is
engaged in the development of an advanced user interface for the Internet and
other data bases.
NOTE 4 - INVESTMENT AVAILABLE FOR SALE:
In June 1996, the Company acquired 400,000 common shares of Multimedia
Concept International, Inc., as noted and referenced in Note 2, above, at an
acquisition value of $4.50 per share or an aggregate amount of $1,800,000. The
Company has classified these securities on the accompanying balance sheet as
"available for sale" as defined in SFAS-115.
At December 31, 1996, the fair market value of these shares was
$774,800, or $1.937 per share based upon the NASDAQ closing price on that date.
Accordingly, the Company has adjusted the carrying value of these shares to
their fair value at December 31, 1996, and recorded an unrealized holding loss
representing the net change in fair value as a separate component of
stockholders' equity.
NOTE 5 - CAPITAL TRANSACTIONS:
Private Placement Offerings
During July 1996, the Company commenced and completed a private
placement of its common stock, whereby it offered and sold 600,000 shares of its
common stock. The gross proceeds received from the sale was $1,500,000.
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Exercise of Options
Options held by the Company's former President and Director exercisable
to purchase 2,250,000 shares of Common Stock at $1.33 per share were exercised
in full whereby, in August 1996 and December 1996, 751,880 and 1,498,120 shares
were exercised for an aggregate of $2,992,483.
Increase in Authorized Shares of Common Stock
On October 21, 1996, the Company amended its Certificate of
Incorporation so as to increase the amount of authorized shares of its common
stock from 10,000,000 shares to 40,000,000 shares.
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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS
GENERAL:
The Company was originally organized in February 1993. Historically,
through August 15, 1996, the Company's results of operations have related
primarily to the Company's majority owned subsidiary, Play Co. Toys &
Entertainment Corp. ("PCT") . As discussed in the accompanying notes to the
financial statements, the Company's shares of PCT was spun-off to the Company's
stockholders and recorded as a dividend effective August 15, 1996. With the
acquisition of 51% of the common stock of each of Labyrinth Communications
Technologies Group, Inc. (Labyrinth) and Mantra Technologies, Inc. (Mantra) as
of July 31, 1996, the Company has changed its business focus from that of a
holding company for the retail operations for PCT to a holding company for
research and development in the technology industry, in particular, that related
to wireless communication and Internet and data base interface technology.
Therefore, the results of operations for the three and nine month periods
ending December 31, 1996 that the Company maintained its investment in PCT,
until its spin-off effective August 15, 1996 are not directly comparable to the
full three and nine month periods ended December 31, 1995. Additionally, as the
Company has divested itself of its investment in PCT, the results of operations
through December 31, 1996 are not an indication of any future results of
operations.
RESULTS OF OPERATIONS:
Three Months Ended December 31, 1996 as compared to the Three Months Ended
December 31, 1995:
The Company had no reportable sales during the three months ended December
31, 1996, as the Company has changed its business focus from that of a holding
company for the retail operations of PCT, referred to above to that of for
research and development.
The Company did report consolidated operating expenses of $396,704 during
the three months ended December 31, 1996 which consisted primarily of
compensation and administrative expenses inherent in the start up of operations
in its new operating venue.
For the three months ended December 31, 1996, the Company recorded $37,500
of amortization of the excess of cost over basis of the net assets acquired in
the Labyrinth acquisition.
As a result, the Company recorded a net loss, after adjustment for minority
interest in Labyrinth of $259,865, for the three months ended December 31, 1996.
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Nine Months Ended December 31, 1996 as compared to the Nine Months Ended
December 31, 1995:
As was noted in the Results of Operations, above, for the three months
ended December 31, 1996 the Company has changed its business focus from that of
a holding company for the retail operations of PCT, to that of a holding company
for research and development. For the nine months ended December 31, 1996, there
were only 138 days of activity as resulting in sales of $5,024,338 (thru the six
months ended August 15, 1996). Cost of sales of $3,429,395 are reflective of
activity through August 15, 1996. Operating expenses of $3,269,168 include
expenses of $396,704 incurred in the three months ended December 31, 1996,
inherent in the start up of operations in its new operating venue.
For the nine months ended December 31, 1996, the Company reported $69,042
of amortization of the excess of cost over basis of the net assets acquired in
the Labyrinth acquisition.
The Company recorded a net loss of $2,035,400 for the nine months ended
December 31, 1996, inclusive of the net affects of a change in accounting
principle of $459,435 which occurred in the first fiscal reporting quarter.
Research and Development-Future Operations
Labyrinth anticipates that the research and development stage of its
planned products will continue for approximately 12-18 months, while testing of
the planned products may require an additional 6-12 months. Therefore, Labyrinth
does not anticipate receiving any revenues from operations for a least 12-18
months. The funds raised by Labyrinth through private placement and the sale of
the 51% to the Company will be used for general corporate purposes including
salaries, fees and expenses, as well as for developing prototypes, testing and,
eventually, the initial marketing of its planned products.
Likewise, Mantra is also in the development stage and working on the
development of a software package that operates in the background of the
personal computer with its initial product to access Internet data which
correlates to the users' personality/profile and business objectives; which
service shall be designed to optimize search time and use on the Internet.
Mantra is currently developing the technology and working on the development of
a prototype.
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LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1996, the Company reported working capital of
$6,013,931. At December 31, 1996, the Company had $6,046,903 in business
checking and money market accounts. These funds resulted from the private
placement offering in July 1996 and the exercise of options to purchase an
aggregate of 3,250,000 shares.
The Company believes that its available cash as of December 31, 1996
will be sufficient to fund its operating needs through the balance of the fiscal
year.
Trends Affecting Liquidity, Capital Resources and Operations
As the nature of the Company's operations have shifted to development
stage operations, management is currently not aware of any trends that may
affect its liquidity, capital resources and operations.
The Company's future operations however, could be adversely affected if
the Company's timetable for the development, marketing and manufacturing of its
products exceeds the available capital resources. The primary initial expenses
of the new operations will include the salaries of some of its officers, who
comprise the research and development team. The Company may need additional
financing in order to complete its product development and testing for marketing
and sales. The Company's limited resources, in addition to its anticipated
continued research, development and testing for approximately 12-18 months or
until about January 1998, may cause significant strain on the Company's
management,
technical financial and other resources.
Inflation and Seasonality
Inflation and seasonality are currently not expected to have a material
effect on the Company's liquidity, capital resources and operating activities.
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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 Information
NONE
ITEM 6 - Exhibits and Reports on Form 8-K
NONE
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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.
U.S. Wireless Corporation
(Registrant)
February 13, 1997 /s/ Dr. Oliver Hilsenrath
Date Dr. Oliver Hilsenrath
Chief Executive Officer
President and Director
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<ARTICLE> 5
<LEGEND>
U.S. WIRELESS CORPORATION
EXHIBIT 27
FINANCIAL DATA SCHEDULE
ARTICLE 5 OF REGULATION S-X
The schedule contains summary financial information extracted from the
consolidated financial statements for the nine months ended December 31, 1996
and is qualified in its entirety by reference to such statements.
</LEGEND>
<CAPTION>
<S> <C>
<PERIOD-TYPE> 3-Mos
<FISCAL-YEAR-END> Mar-31-1997
<PERIOD-START> Apr-01-1996
<PERIOD-END> Dec-31-1996
<CASH> 6,046,903
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,050,403
<PP&E> 122,799
<DEPRECIATION> 0
<TOTAL-ASSETS> 9,252,987
<CURRENT-LIABILITIES> 18,236
<BONDS> 0
0
0
<COMMON> 127,102
<OTHER-SE> 7,990,445
<TOTAL-LIABILITY-AND-EQUITY> 9,252,987
<SALES> 5,024,338
<TOTAL-REVENUES> 0
<CGS> 3,429,395
<TOTAL-COSTS> 3,429,395
<OTHER-EXPENSES> 3,693,198
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 173,044
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,035,400)
<EPS-PRIMARY> (.24)
<EPS-DILUTED> (.24)
<PAGE>
</TABLE>
