U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A-1
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1997
OR
[] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 0-24742
U.S. WIRELESS CORPORATION
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 13-3704059
(State of Incorporation) (I.R.S. Employer Identification No.)
2303 Camino Ramon, Suite 200, San Ramon, California 94583
(Address of Principal Executive Offices)
(925) 830-8801
(Issuer's Telephone Number, Including Area Code)
N/A
(Former Name, Former Address and Former Fiscal Year,
If Changed Since Last Report)
Check whether the issuer (1) 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 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
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: Common Stock, par value $.01
per share, 11,823,331 shares outstanding as of March 31, 1998.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>
U.S. WIRELESS CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
PART 1. FINANCIAL INFORMATION
ITEM 1- FINANCIAL STATEMENTS
<S> <C> <C> <C>
Consolidated balance sheets as of December 31, 1997 (Unaudited)
and March 31, 1997 3
Consolidated statements of operations (Unaudited) for the nine and three
months ended December 31, 1997 and December 31, 1996 4
Consolidated statements of cash flows (Unaudited) for the nine months ended
December 31, 1997 and December 31, 1996 5
Notes to financial statements (Unaudited) 6
ITEM 2- MANAGEMENT'S DISCUSSION AND ANALYSES OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9
PART II. OTHER INFORMATION 11
Signatures 13
</TABLE>
<PAGE>
U.S. WIRELESS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
December 31, March 31,
1997 1997
(Unaudited) (Note 1)
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents ....................................................... $ 3,071,256 $ 5,328,781
Other current assets ............................................................ 3,500 3,500
------------ ------------
Total current assets .................................................... 3,074,756 5,332,281
------------ ------------
Equipment, improvements and fixtures, net
of accumulated depreciation and amortization ................................... 440,063 281,211
Other assets ..................................................................... 4,667 4,667
------------ ------------
Total assets ............................................................ $ 3,519,486 $ 5,618,159
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses ........................................... $ 88,645 $ 140,550
Obligations under capital leases, current ....................................... 12,620 25,238
------------ ------------
Total current liabilities ............................................... 101,265 165,788
------------ ------------
Obligations under capital leases, non-current .................................... 39,118 45,427
------------ ------------
Total liabilities ....................................................... 140,383 211,215
------------ ------------
Minority interest in subsidiaries ................................................ 1,484,549 1,529,534
------------ ------------
Stockholders' equity:
Common stock, $.01 par value, 40,000,000 shares authorized; issued and
outstanding at Dec 31, 1997, 7,325,245 shares; at March 31, 1997, 10,031,250
shares ....................................................................... 73,252 100,312
Additional paid-in capital ...................................................... 18,950,839 20,493,262
Unearned compensation ........................................................... (890,558) (1,277,918)
Stock subscription receivable ................................................... -- (1,569,483)
Accumulated deficit ............................................................. (16,238,979) (13,868,763)
------------ ------------
Total stockholders' equity .............................................. 1,894,554 3,877,410
------------ ------------
Total liabilities and stockholders' equity .............................. $ 3,519,486 $ 5,618,159
============ ============
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
U.S. WIRELESS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
Dec 31, Dec 31, Dec 31, Dec, 31
1997 1996 1997 1996
----- ----- ------ -----
<S> <C> <C> <C> <C>
Net sales ............................... $ -- $ -- $ -- $ --
----------- ----------- ----------- -----------
COSTS AND EXPENSES:
Operating expenses ..................... 2,583,059 534,136 927,335 434,204
Interest income, net of interest expense (167,861) (65,127) (53,359) (43,258)
Common stock issued for services ....... 424,000
Write off of excess cost over basis of
net assets acquired ................. -- 2,250,000 -- ____-_____
----------- ----------- ----------- -----------
Total costs and expenses ....... 2,415,198 3,143,009 873,976 390,946
----------- ----------- ----------- -----------
Loss before minority interest,
discontinued operations and
change in accounting principle ........ (2,415,198) (3,143,009) (873,976) (390,946)
Minority interest in net
loss of subsidiaries ................. 44,985 389,856 18,438 131,081
----------- ----------- ----------- -----------
Net loss before discontinued operations
and change in accounting .............. (2,370,213) (2,753,153) (855,538) (259,865)
principle
Discontinued operations ................. -- (1,010,312) -- --
----------- ----------- ----------- -----------
Net loss before change
in accounting principle ............ (2,370,213) (3,763,465) (855,538) (259,865)
Change in accounting principle .......... -- (459,435) -- --
----------- ----------- ----------- -----------
Net loss ................................ $(2,370,213) $(4,222,900) $ (855,538) $ (259,865)
=========== =========== =========== ===========
Basic and Diluted loss per common share . $ (.32) $ (.64) $ (.12) $ (.03)
=========== =========== =========== ===========
Weighted average number of
common shares outstanding ............ 7,325,245 6,601,940 7,325,245 9,037,931
=========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
1
<PAGE>
U.S. WIRELESS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Increase (Decrease) in Cash
<TABLE>
<CAPTION>
Nine Months Ended
December 31, December 31,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss .................................................................................... $(2,370,213) $(4,222,900)
----------- -----------
Adjustments to reconcile net loss to cash used
for operating activities:
Cumulative effect of a change in accounting principle ..................................... -- 459,435
Loss on discontinued operations ............................................................. -- 1,010,312
Depreciation ................................................................................ 158,167 15,000
Write off of excess cost over basis of net assets acquired .................................. -- 2,250,000
Amortization of unearned compensation ....................................................... 387,360 --
Minority interest in net losses of subsidiaries ............................................. (44,985) (389,856)
Issuance of common stock for compensation
and financing costs ..................................................................... -- 440,000
Increase (Decrease) from changes in assets and
liabilities:
Deposits ........................................................................... -- (2,667)
Due from stockholder ............................................................... -- 104,905
Accounts payable and accrued expenses .............................................. (51,905) 62,144
Decreases in net assets of discontinued operations ................................. -- (1,329,318)
Total adjustments 448,637 2,619,955
----------- -----------
Net cash used by operating activities .............................................. (1,921,576) (1,602,945)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of equipment, improvements and fixtures ....................................... (317,022) (132,554)
Acquisition of equipment, improvements and fixtures
by discontinued operations ............................................................. -- (159,193)
----------- -----------
Net cash used by investing activities .............................................. (317,022) (291,747)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock .................................................... -- 6,398,483
Payments on capital lease obligations ..................................................... (18,927) --
Repayments of stockholder advances ........................................................ -- (494,248)
Net cash provided by financing activities of
discontinued operations ............................................................... -- 1,962,179
----------- -----------
Net cash (used) provided by financing activities ................................. (18,927) 7,866,414
----------- -----------
NET (DECREASE) INCREASE IN CASH ............................................................. (2,257,525) 5,971,722
Cash, beginning of period ................................................................... 5,328,781 75,181
----------- -----------
Cash, end of period ......................................................................... $ 3,071,256 $ 6,046,903
=========== ===========
Supplemental disclosure of cash flow information:
Interest paid ............................................................................... $ -- $ 122,107
Taxes paid .................................................................................. $ 4,800 $ 800
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
U.S. WIRELESS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. BASIS OF PRESENTATION
The accompanying unaudited consolidated 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 more 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 nine months ended December 31, 1997, and 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, and all amendments thereto, as
filed with the Securities and Exchange Commission.
The accompanying unaudited consolidated financial statements for the
nine months ended December 31, 1996 have been restated to reflect a write off of
excess cost over basis of net assets acquired in the amount of $2,250,000 that
resulted from the July 1996 acquisition of 51% of Labyrinth (Note 2) and to
correct amounts previously presented as loss from discontinued operations.
Note 2. ORGANIZATION
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 principal 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.
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 the exercise.
<PAGE>
U.S. WIRELESS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 3. EQUIPMENT, IMPROVEMENTS AND FIXTURES
December 31, March 31,
1997 1997
Equipment .................... $ 544,524 $ 256,050
---------
Furniture and fixtures ....... 72,187 43,642
--------- ---------
616,711 299,692
Less: accumulated depreciation
and amortization ............. (176,648) (18,481)
--------- ---------
$ 440,063 $ 281,211
========= =========
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 the grant, and have exercise
prices ranging from $2 to $4 per share. At December 31, 1997, there remained
4,752,500 options outstanding, 579,000 of which options were exercisable.
The difference between the exercise price and the fair market value of
the options issued to employees on the dates of the 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, $271,535 of which was amortized to expense. During the nine months
ended December 31, 1997, $387,360 of unearned compensation was amortized to
expense. The remaining unamortized balance of unearned compensation at December
31, 1997 was $890,558 as reflected in the accompanying balance sheet.
Note 5. STOCKHOLDERS' EQUITY
At the Company's annual meeting in December 1997, the Company's
stockholders voted to merge Labyrinth into the Company, whereby the Company
would be the surviving company. The Company proposed to issue an aggregate of
4,498,200 shares of Common Stock to Labyrinth stockholders, pro-rata, for the
remaining 490,000 (or 49%) of shares of Labyrinth, the exchange rate being 9.18
shares of the Company's Common Stock for each of the outstanding shares of
Labyrinth's common stock. The shares of the Company's Common Stock to be issued
to the Labyrinth stockholders are subject to a vesting schedule and subject to
the Company meeting certain quantitative goals. On January 12, 1998, Labyrinth
submitted an exchange offer to its stockholders, all of whom agreed to the
exchange. The Company estimates that the transaction shall be consummated within
the next 30 days.
3
<PAGE>
U.S. WIRELESS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 6. NEW ACCOUNTING PRONOUNCEMENT
For the quarter ended December 31, 1997, the Company adopted the
provisions of Statement of Financial Accounting Standards No. 128, "Earnings per
Share." Under this standard, the Company is required to report basic and diluted
earnings (loss) per share. Basis earnings (loss) per share is calculated by
dividing the net income (loss) for each period by the weighted average number of
common shares outstanding. Diluted earnings (loss) per share is similar in
calculation except that the weighted average number of common shares is
increased to reflect the effects of potential additional shares that would
result from the exercise of stock options or other convertible instruments. For
the three and nine month periods ended December 31, 1997 and 1996, there is no
difference between basic and diluted earnings (loss) per share as the inclusion
of additional potential shares is anti-dilutive due to the net loss presented in
each period.
<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 related primarily
to the business operations of a former subsidiary, the ownership of which was
distributed to the Company's shareholders on August 15, 1996. With the
acquisition of 51% of the common stock of Labyrinth Communication Technologies
Group, Inc. ("Labyrinth") and Mantra Technologies, Inc. ("Mantra") as of July
31, 1996, the Company changed its business focus to its current focus.
RESULTS OF OPERATIONS
Nine months ended December 31, 1997 compared to the nine months ended December
31, 1996
The Company had no reportable sales during the nine months ended December
31, 1997 and December 31, 1996 as during such periods, the Company was, and
still is, continuing the research, development, and testing of its products. The
Company reported consolidated operating expenses of $2,583,059 during the nine
months ended December 31, 1997: these expenses consisted primarily of
compensation and administrative expenses inherent in the commencement of
operations in its new operating venue. Also included in operating expenses for
the nine months ended December 31, 1997 is $387,360 of amortization of unearned
compensation resulting from the issuance of stock options and $158,167 of
depreciation and amortization of the Company's fixed assets.
Operating expenses for the nine months ended December 31, 1996 were
$534,136 and reflect the limited operations of Labyrinth and Mantra since their
acquisitions by the Company in July 1996. The Company also wrote off $2,250,000
of excess cost over basis of net assets acquired and recorded $424,000 of
compensation expense associated with the issuance of common stock during the
nine months ended December 31, 1996.
Three months ended December 31, 1997 compared to the three months ended
December 31, 1996
The Company had no reportable sales during the three months ended December
31, 1997 and December 31, 1996. The Company reported consolidated operating
expenses of $927,335 which consisted primarily of compensation and
administrative expenses inherent in the commencement of operations in its new
operating venue. Also included in operating expenses for the three months ended
December 31, 1997 is $129,120 of amortization of unearned compensation resulting
from the issuance of stock options and $45,000 of depreciation and amortization
of the Company's fixed assets.
For the three months ended December 31, 1996, operating expenses were
$434,204, primarily representing compensation and other administrative expenses
since the July 1996 acquisitions of Labyrinth and Mantra.
RESEARCH AND DEVELOPMENT - FUTURE OPERATIONS
Labyrinth anticipates that the research, development, and testing of
its products will continue for approximately six to twelve more months, though
the Company is currently marketing its products to the wireless community.
Labyrinth does not anticipate generating revenues from operations until the end
of calendar 1998 or beginning of calendar 1999. The Company's funding has been
and shall continue to be used for general corporate purposes including salaries,
fees, and expenses as well as for developing prototypes and producing a limited
quantity of RadioCameras for testing, evaluations with potential clients, and
for marketing operations. Mantra has completed the development of its technology
and is marketing its technology to the Internet community and providing
demonstrations and distributing prototypes for testing and evaluation by
potential customers.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1997, the Company reported working capital of
$2,973,491. As of this date, the Company had $3,071, 256 in business checking,
certificates of deposit, and money market accounts. The Company believes that
its available cash as of December 31, 1997 will be sufficient to fund its
operating needs through the balance of the 1999 fiscal year.
Trends Affecting Liquidity, Capital Resources and Operations
As the nature of the Company's operations has shifted to development
stage operations, management is 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 the Company's 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 six to twelve months, may cause
significant strain on the Company's management, technical, financial, and other
resources.
<PAGE>
PART II
Item 1. Legal Proceedings: None
Item 2. Changes in Securities and Use of Proceeds: None
Item 3. Defaults Upon Senior Securities: None
Item 4. Submission of Matters to a Vote of Security Holders
On December 5, 1997, the Company held an annual meeting of its
stockholders during which it proposed (i) the election of four (4) persons
nominated by the Board of Directors as Directors; (ii) ratification of the
proposal to approve the Corporation's Senior Management Incentive Plan; (iii)
ratification of the proposal to approve amendments to the Corporation's
Certificate of Incorporation and By-Laws regarding the indemnification rights of
the Corporation's Directors and Executive Officers; and (iv) ratification of the
proposal to merge Labyrinth with and into the Corporation.
The voting tabulations regarding the proposals before the stockholders
were as follows:
1. Election of the Board of Directors
Votes Cast Withhold
Nominees For Authority to Vote
- -------- ---------- -----------------
Dr. Oliver Hilsenrath 5,512,306 6,125
David Tamir ......... 5,512,381 6,050
Regina Gindin ....... 5,512,381 6,050
Dennis Francis ...... 5,512,381 6,050
2. Ratification of the Company's Senior Management Incentive Plan:
Votes Cast Votes Cast
For Against Abstain
-------------- --------- -------
5,500,438 13,893 4,100
3. Amendments to the Company's Certificate of Incorporation and By-Laws
regarding the indemnification rights of the Company's Directors and Executive
Officers:
Votes Cast Votes Cast
For Against Abstain
--------------------- ---------- -------
5,506,124 11,707 600
4. Proposal to merge Labyrinth into the Company:
Votes Cast Votes Cast
For Against Abstain
-------------- ---------- -------
5,515,556 950 1,925
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)
April 3, 1998 By: /s/ Oliver Hilsenrath
- ------------- ---------------------
Date Dr. Oliver Hilsenrath
Chief Executive Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27.01
FINANCIAL DATA SCHEDULE
This schedule contains summary information extracted from the Balance
Sheet, Statement of Operations, Statement of Cash Flows and Notes thereto
incorporated and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Mar-31-1998
<PERIOD-END> Dec-31-1997
<CASH> 3,071,256
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,074,756
<PP&E> 616,711
<DEPRECIATION> (176,648)
<TOTAL-ASSETS> 3,519,486
<CURRENT-LIABILITIES> 101,265
<BONDS> 0
0
0
<COMMON> 73,253
<OTHER-SE> 1,821,301
<TOTAL-LIABILITY-AND-EQUITY> 3,519,486
<SALES> 0
<TOTAL-REVENUES> 167,861
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,583,059
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,370,213)
<INCOME-TAX> (2,370,213)
<INCOME-CONTINUING> (2,370,213)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,370,213)
<EPS-PRIMARY> (.32)
<EPS-DILUTED> (.32)
</TABLE>
