UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20659
FORM 10-QSB/A-1
[ 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 June 30, 1997
--------------------------------------------------------------
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 Identification No.)
organization)
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 TO CORPORATE ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan conformed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Common stock, par value $.01 per share: 7,325,245 shares outstanding as of
June 30, 1997.
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U.S. WIRELESS CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
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Page
PART I .......FINANCIAL INFORMATION
ITEM 1 ......FINANCIAL STATEMENTS
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Consolidated condensed balance sheets as of June 30, 1997
(unaudited) and March 31, 1997 (audited) ...................... 3
Consolidated condensed statements of operations (unaudited) for
the three and six months ended June 30, 1997 and 1996 ......... 4
Consolidated condensed statements of cash flows (unaudited) for
the six months ended June 30, 1997 and 1996 ................... 5
Notes to consolidated condensed financial statements .......... 6
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSES OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS ................. 8
PART II ......OTHER INFORMATION
Signatures .................................................... 11
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U.S. WIRELESS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
As of June 30, 1997 and March 31, 1997
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<CAPTION>
June 30, March 31,
1997 1997
(Unaudited) Note 1
ASSETS
Current Assets:
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Cash and cash equivalents ....................................................... $ 4,521,628 $ 5,328,781
Other current assets ............................................................ 3,500 3,500
------------ ------------
Total current assets .................................................... 4,575,128 5,332,281
Equipment, improvements and fixtures, net
of accumulated depreciation and amortization .................................... 431,897 281,211
^^^^^^^^^^^^
Other assets ..................................................................... 4,667 4,667
------------ ------------
Total assets ............................................................ ^$4,$ 5,618,157
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses ........................................... $ 40,162 $ 140,550
Obligations under capital leases, current ....................................... 25,238 25,238
------------ ------------
Total current liabilities ............................................... 65,400 165,788
------------ ------------
Obligations under capital leases, noncurrent .................................... 39,118 45,427
------------ ------------
Total liabilities ....................................................... 104,518 211,215
------------ ------------
Minority interest in subsidiaries ................................................ ^1,516,706 1,529,534
Stockholders' equity:
Common stock,$.01 par value, 40,000,000 shares
authorized; issued and outstanding at June 30, 1997,
7,325,245 shares; at March 31, 1997, 10,031,250 shares ........................ 73,253 100,312
Additional paid-in capital ...................................................... ^18,950,838 20,493,262
Unearned compensation ........................................................... (1,148,798) (1,277,918)
Stock subscription receivable ................................................... -- (1,569,483)
Accumulated deficit ............................................................. ^(14,534,825) (13,868,763)
------------ ------------
Total stockholders' equity .............................................. 3,340,468 5,618,159
------------ ------------
Total liabilities and stockholders' equity .............................. ^$4, $ 3,877,410
============ ============
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See accompanying notes to consolidated condensed financial statements
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U.S. WIRELESS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended June 30, 1997 and June 30, 1996
(Unaudited)
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<CAPTION>
June 30, June 30,
1997 1996
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Net sales .................................................. $ -- $ --
----------- -----------
Costs and expenses:
^^^^^^^^^^^
Operating expenses ......................................... ^743,881 16,428
^^^^^^^^^^^
Total costs and expenses .......................... ^73,881 16,428
Loss before ^other income, minority interest,
discontinued operations and cumulative effect of a change in
accounting principle ^ ..................................... (743,881) (16,428)
Other income:
Interest income ........................................... 64,994 --
Minority interest in net ^ loss of subsidiaries ............ 12,825 --
----------- -----------
Loss before ^discontinued operations and
cumulative effect of a change in accounting principle ..... (666,062) (16,428)
Discontinued operations .................................... -- (708,952)
----------- -----------
Loss before cumulative effect
^of a change in accounting principle ....................... (666,062) (725,380)
Cumulative effect of change in accounting
principle .................................................. -- (459,435)
----------- -----------
Net loss ................................................... ^$(666,062) $(1,184,815)
=========== ===========
Loss per common equivalent share:
Loss before discontinued operations and
cumulative effect of a change in accounting principle ...... $(. 09 $(. 01 )
^^^^^^^^^^^
Discontinued operations .................................... -- (.37)
Cumulative effect of a change in accounting
principle .................................................. -- (. 24 )
----------- -----------
Net loss ................................................... ^$(.09) $(. 62 )
=========== ===========
Weighted average number of common
shares outstanding ......................................... 7,325,245 1,929,330
=========== ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements
<PAGE>
U.S WIRELESS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Increase (Decrease) in Cash
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Three Months Ended
June 30, June 30,
1997 1996
------------ --------
CASH FLOWS FROM OPERATING ACTIVITIES:
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Net loss ............................................................ ^$(666,062) $(1,184,815)
Adjustments to reconcile net loss to cash (used)
provided for operating activities:
Cumulative effect of a change in accounting
principle ........................................................ -- 459,435
Loss on discontinued operations ..................................... -- 708,952
-- 459,435
Depreciation ...................................................... 36,205 ^
Amortization of excess of cost over net
assets acquired .................................................. -- 6,542
Minority interest in net losses of subsidiaries ................... ^(12,828) --
Amortization of unearned compensation ............................. 129,120 --
Increase (Decrease) from changes in assets and liabilities:
Deposits ................................................... -- (2,000)
Accounts payable and accrued expenses ...................... (100,388) ^-
Decrease in net assets--f isc (862,589)
Net cash (used) provided for operating activities .......... ^( 613,953) (874,475)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of equipment, improvements and fixtures ............... ^(186,891) --
Acquisition of equipment, discontinued operations ................. -- (86,907)
Net cash used for inventing activities .............. (186,891) (86,907)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of stockholder advances ................................ -- 6,250
Payments on capital lease obligations ............................. 6,309) --
Proceeds from affiliates .......................................... -- 12,500
^^^^^^^^^^^
^Net cash provided by financing activities of discontinued operations -- (1,100,089)
Net cash (used) provided by financing activities ........... ^(6,309) 1,118,839
NET INCREASE(DECREASE) IN CASH ...................................... ^(807,153) 157,457
Cash, beginning of period ......................................... 5,328,781 75,181
Cash, end of period ............................................... $ 4,521,628 $232,638
Supplemental disclosure of cash flow information:
Interest paid - by discontinued operations ....................... $ -- $ 91,838
Taxes paid ....................................................... $ 4,800 $ 800
</TABLE>
See accompanying notes to consolidated condensed financial statements
<PAGE>
U.S. WIRELESS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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
months ended June 30, 1997, 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 fiscal year ended March 31, 1997,
as filed with the Securities and Exchange Commission.
NOTE 2- ORGANIZATION:
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 $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 3- EQUIPMENT, IMPROVEMENTS AND FIXTURES:
Equipment, improvements and fixtures at June 30, 1997 and March 31, 1997
consisted of the following:
June 30, March 31,
1997 1997
Equipment ..................................... $ 442,941 $ 256,050
Furniture and fixtures ........................ 43,642 43,642
--------- ---------
486,583 299,692
Less: accumulated depreciation and amortization (54,686) (18,481)
--------- ---------
$ 431,897 $ 281,211
========= =========
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U.S. WIRELESS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 4- STOCK OPTIONS:
During the year ended March 31, 1997, the Company issued Common Stock
options to its employees and to various consultants performing services for the
Company. The options granted to employees vest over three years, expire five
years from the date of the grant and have exercise prices ranging from $2 to $5
per share. Substantially all of the options granted to consultants vest
immediately, expire five years from the date of grant and have exercise prices
ranging from $2 to $4 per share.
At June 30, 1997, there remained 4,191,500 options outstanding of
which, 1,550,000 options were exercisable.
The difference between the exercise price and the fair market value of the
options issued to employees on the dates of grant were accounted for as unearned
compensation and amortized to expense over the related vesting period. During
the fiscal year ended March 31, 1997, $1,549,453 of unearned compensation was
recorded, of which $271,535 was amortized to expense. During the three months
ended June 30, 1997, $129,120 of unearned compensation was amortized to expense.
The remaining unamortized balance of unearned compensation at June 30, 1997 was
$1,148,798 as reflected in the accompanying balance sheet.
NOTE 5- STOCKHOLDERS' EQUITY:
In April 1997, the Company and an unaffiliated company agreed to
rescind an agreement whereby that company had acquired 3,106,005 shares of the
Company's Common Stock in exchange for common shares of a third company that
were held by the Company. As a result, 2,706,005 shares of common stock were
returned to the Company and the shares of the third company were returned to the
rescinding party. This transaction was consummated in May 1997.
NOTE 6- RELATED PARTY TRANSACTIONS:
Employment and Consulting Agreements
In April 1997, the Company amended the five year employment agreement
it had entered into with its President. The agreement as amended, provides for
an annual salary of $160,000 and annual increases of 15% per annum. Upon the
execution of the original agreement, the President was granted an option to
purchase 1,500,000 shares of the Company's Common Stock at $2.00 per share. No
such options were exercised as of June 30, 1997. The agreement provides for a
two year non-compete period upon the termination of the President's employment
and provides for severance compensation in the amount of three times the
aggregate annual compensation paid to the President during the preceding
calendar year.
<PAGE>
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 former majority owned subsidiary, Play Co. Toys &
Entertainment Corp. (PCT). 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 changes its
business focus from that of a holding company for retail operations to that of 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 month period ending June
30, 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 month period ended June 30, 1997. The results from operations of PCT have
been restated and reflected as discontinued operations in the statement of
operations for the three months ended June 30, 1996.
RESULTS OF OPERATIONS:
Three Months Ended June 30, 1997 as compared to the Three Months Ended June 30,
1996:
The Company had no reportable sales during the three months ended June 30,
1997, 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 a
holding company for research and development.
The Company did report consolidated operating expenses of $781,381
during the three months ended June 30, 1997 which consisted primarily of
compensation and administrative expenses and the purchase of testing equipment
and component parts for the building of RadioCameras inherent in the start up of
operations in its new operating venue.
RESEARCH AND DEVELOPMENT-FUTURE OPERATIONS
Labyrinth anticipates that the research and development and testing
stages of its planned products will continue for approximately six to twelve
months. Therefore, Labyrinth does not anticipate receiving any revenues from
operations for between six to twelve months. The funds raised by Labyrinth
through private placement and its 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 and, eventually, the initial marketing of its planned
products.
Likewise, Mantra is also in the development stage and working on the
further development and testing of a software package that operates in the
background of the personal computer to access InterNet data and other databases,
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 and testing a prototype.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1997, the Company reported working capital of ^ $4,509,728.
At June 30, 1997, the Company had $4,521,628 in business checking and money
market accounts. The Company believes that its available cash as of
June 30, 1997 will be sufficient to fund its operating needs through the balance
of the fiscal year.
<PAGE>
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 and the purchase of equipment and
component parts. The Company anticipates needing additional financing in order
to commence production, marketing and sales activities. The Company anticipates
that its limited resources, in addition to its anticipated continued research,
development and testing shall be sufficient for approximately 24 months, though
it 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.
<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 Information: None
ITEM 6 - Exhibits and Reports on Form 8-K: None
<PAGE>
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)
September 15, 1997 By: /s/ Dr. Oliver Hilsenrath
- ------------------ -------------------------
Date Dr. Oliver Hilsenrath
Chief Executive Officer
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<ARTICLE> 5
<LEGEND>
U.S. WIRELESS CORPORATION AND SUBSIDIARIES
EXHIBIT
FINANCIAL DATA SCHEDULE
ARTICLE 5 OF REGULATION S-X
The schedule contains summary financial information extracted from the financial
statements for the three months ended June 30, 1997 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-END> jun-30-1997
<CASH> 4,521,628
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,575,128
<PP&E> 486,583
<DEPRECIATION> 54,686
<TOTAL-ASSETS> 4,961,692
<CURRENT-LIABILITIES> 65,400
<BONDS> 0
0
0
<COMMON> 64,994
<OTHER-SE> 3,267,215
<TOTAL-LIABILITY-AND-EQUITY> 4,961,692
<SALES> 0
<TOTAL-REVENUES> 64,994
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 781,381
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (666,062)
<INCOME-TAX> 0
<INCOME-CONTINUING> (666,062)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (666,062)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.09)
<PAGE>
</TABLE>
