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 June 30, 1999
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)
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Delaware 13-3704059
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(State of Incorporation) (I.R.S. Employer Identification No.)
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2303 Camino Ramon, Suite 200, San Ramon, California 94583
(Address of Principal Executive Offices)
(925) 327-6200
(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 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, 14,110,613 shares outstanding as of June 30, 1999.
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U.S. WIRELESS CORPORATION AND SUBSIDIARY
CONTENTS
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Page
Number
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
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Consolidated balance sheets as of June 30, 1999 (unaudited)
and March 31, 1999 3
Consolidated statements of operations (unaudited) for the three months
ended June 30, 1999 and June 30, 1998 4
Consolidated statements of cash flows (unaudited) for the three months
ended June 30, 1999 and June 30, 1998 5
Notes to financial statements 6-9
ITEM 2 - MANANGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 10-11
PART II - OTHER INFORMATION 12
ITEM 6. Exhibits and Reports on Form 8-K. 12
Signature 13
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U.S. WIRELESS CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
As of June 30, 1999 and March 31, 1999
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June 30, March 31,
1999 1999
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(Unaudited) (Note 1)
(Restated)
ASSETS
CURRENT ASSETS:
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Cash and cash equivalents ............................................................... $ 8,104,738 $ 5,788,288
Funds held in escrow .................................................................... 200,000 --
Stock subscription ...................................................................... -- 2,300,000
Other receivables (Note 3) .............................................................. 120,675 --
Investment in joint venture ............................................................. 58,630 58,630
Investment in affiliate ................................................................. 141,426 --
Other current assets
-- 2,323
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Total Current Assets .................................................................... 8,625,469 8,149,241
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EQUIPMENT, IMPROVEMENTS AND FIXTURES, net of accumulated
depreciation and amortization (Note 4)
397,639 381,617
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OTHER ASSETS
Security deposits
25,035 25,035
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Total other assets
25,035 25,035
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Total assets .................................................................. $ 9,048,143 $ 8,555,893
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses ................................................... $ 323,833 $ 335,543
Obligations under capital leases, current ............................................... 34,486 34,486
Due to affiliate ........................................................................ 27,110 --
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Total current liabilities ..................................................... 385,429 370,029
Obligations under capital leases, noncurrent ............................................ 4,632 4,632
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Total liabilities ............................................................. 390,061 374,661
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MINORITY INTEREST IN SUBSIDIARY
STOCKHOLDERS' EQUITY:
Series A preferred stock convertible, $.01 par value, 300,000 shares authorized; 70,000
shares issued and outstanding at June 30, 1999 and March 31, 1999 ....................... 700 700
Series B preferred stock, $.01 par value, 60,000 and 50,000 shares authorized and issued
and outstanding respectively at June 30, 1999 and March 31, 1999 ........................ 600 500
Common stock, $.01 par value, 40,000,000 shares authorized; issued and outstanding at
June 30, 1999 14,110,613 shares and at March 31, 1999, 13,556,188 shares ................ 141,107 135,563
Additional paid-in capital .............................................................. 35,042,061 32,504,598
Common stock subscribed ................................................................. 200,000 --
Unearned compensation ................................................................... (115,838) (244,958)
Accumulated deficit ..................................................................... (26,610,548) (24,291,605)
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TOTAL STOCKHOLDERS' EQUITY .................................................... 8,658,082 8,104,798
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .................................... $ 9,048,143 $ 8,555,893
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See accompanying notes to consolidated condensed financial statements
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U.S. WIRELESS CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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Three Months Ended
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June 30, June 30,
1999 1998
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(Restated)
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Net sales ............................................................... $ -- $ --
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Costs and expenses:
Operating expenses ................................................... 1,922,822 1,118,604
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Loss before other income and minority interest in
net loss of continuing subsidiaries .................................. (1,922,822) (1,118,604)
Other income (expense):
Interest income ...................................................... 117,126 34,405
Equity in loss of Mantra0 (31,809) --
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Loss before minority interest in net loss of
subsidiary ............................................................ (1,837,505) (1,084,199)
Minority interest in net income (loss) of
Net loss ................................................................ (1,837,505) (1,058,962)
Deemed dividend for Series B Preferred Stock ............................ (890,000) --
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Net loss attributable to common shares .................................. $ (2,727,505) $ (1,058,962)
============ ==============
Basic and diluted loss per common equivalent
Loss before minority interest in net loss of
Subsidiaries ................................................... $ (.23) $ (.13)
Minority interest in net loss of subsidiaries -- --
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Basic and diluted net loss .............................................. $ (.23) $ (.13)
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Weighted average number of common
shares outstanding ................................................... 11,996,280 7,902,863
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See accompanying notes to consolidated condensed financial statements
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U.S. WIRELESS CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Increase (Decrease) in Cash
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Three Months Ended
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June 30, June 30,
1999 1998
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(Restated)
CASH FLOWS FROM OPERATING ACTIVITIES:
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Net loss ............................................................................................ $(1,837,505) $(1,058,962)
Adjustments to reconcile net loss to cash (used) for operating activities:
Depreciation and amortization .................................................................... 85,222 60,000
Minority interest in net losses of subsidiaries .................................................. -- (25,237)
Stock based compensation ......................................................................... 821,808 129,120
Equity in loss of Mantra ......................................................................... 31,809 --
Increase (Decrease) from changes in assets and liabilities:
Increase in other receivables .................................................................... (120,675) --
Accounts payable and accrued expenses ............................................................ 2,854 (37,391)
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Net cash (used) for operating activities .................................................. (1,016,487) (932,470)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of equipment, improvements and fixtures .............................................. (101,243) (121,450)
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Net cash used for investing activities .................................................... (101,243) (121,450)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on capital lease obligations ............................................................ -- (6,309)
Receipt of stock subscription .................................................................... 2,300,000 --
Proceeds from issuance of preferred stock ........................................................ 1,000,000 4,989,312
Proceeds from issuance of common shares .......................................................... 134,180 25,359
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Net cash (used) for financing activities ............................................................ 3,434,180 5,008,362
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ................................................ 2,316,450 3,954,442
Cash, beginning of period ........................................................................... 5,788,288 2,285,750
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Cash, end of period ................................................................................. $ 8,104,738 $ 6,240,192
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Supplemental disclosure of cash flow information:
Interest paid .................................................................................... $ -- $ --
Taxes paid ....................................................................................... $ -- $ 1,248
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See accompanying notes to consolidated condensed financial statements
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U.S. WIRELESS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements
have been prepared in accordance with generally accepted
accounting principles for the 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, results of operations and cash flows for
the three months ended June 30, 1999. These statements are not
necessarily indicative of the results to be expected for the
full fiscal year. These statements should be read in
conjunction with the financial statements and notes thereto
included in the Company's annual report Form 10-KSB for the
fiscal year ended March 31, 1999 as filed with the Securities
and Exchange Commission.
NOTE 2 - RESTATEMENT OF AMOUNTS PREVIOUSLY REPORTED
During the course of the audit of the financial statements for
the year ended March 31, 2000, there were several non-cash
transactions identified which required adjustment to the
financial statements. Certain of these adjustments had a
significant impact on previously reported quarterly financial
statements and have been restated accordingly.
The net impact on the consolidated net loss for the three
months ended June 30, 1999 was an increase in the net loss of
$549,773. The adjustments related to the net loss primarily
consists of (i) stock compensation adjustments of $692,688;
(ii) reversal of costs related to the issuance of common stock
of $(149,425); (iii) recognition of equity in losses of Mantra
aggregating to $31,809; (iv) depreciation expense of $39,722
and (v) other miscellaneous adjustments of $(65,021).
There was an additional adjustment of $890,000 related to the
beneficial conversion feature of the Series B Preferred Stock
(see Note 8), which decreased the accumulated deficit and
increased the additional paid-in capital balances.
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U.S. WIRELESS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 3 - ORGANIZATION
Consolidation of Labyrinth Communication Technologies Group,
Inc.
In March 1998, the Company consummated the consolidation of
its subsidiary, Labyrinth with and into the Company. In
accordance with exchange offers submitted to the stockholders
of Labyrinth representing 49% minority interest in Labyrinth,
the Company exchanged 4,498,200 shares of its common stock for
490,000 shares of common stock of Labyrinth. The shares of
Common Stock issued in accordance with the exchange, are
subject to a vesting schedule.
In accordance with the provisions of Accounting Principles
Board ("APB") Opinion No. 16 and interoperations thereof, this
acquisition of minority interest was accounted for using the
purchase method of accounting.
Principles of Consolidation
The consolidated financial statements for the year ended June
30, 1999 include the accounts of the Company. The consolidated
financial statements for the year ended March 31, 1999 include
the accounts of the Company and Mantra. All significant
intercompany balances and transactions have been eliminated in
consolidation.
NOTE 4 - OTHER RECEIVABLES
During the quarter ended June 30, 1999 the Company issued
405,000 shares of its common stock to its officers, directors
and employees in accordance with its private placement.
Payment of these shares were made to the Company through
direct payments and payroll deductions. The amount due the
Company for this issuance was $120,675 at June 30, 1999.
NOTE 5 - EQUIPMENT, IMPROVEMENTS AND FIXTURES
Equipment, improvements and fixtures, net at June 30, 1999
and March 31, 1999 consisted of the following :
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June 30, June 30,
1999 1999
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Furniture, fixtures and equipment $ 919,066 $ 817,822
Less: accumulated depreciation and amortization (521,427) ( 436,205)
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$ 397,639 $ 381,617
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U.S. WIRELESS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 6 - STOCK OPTIONS
As of June 30, 1999 the Company has granted options to
purchase shares of Common Stock to officers, directors,
employees and consultants. The options granted to officers,
directors and employees for the most part vest over three
years, expire five years from the date of the grant and have
exercise prices ranging from $2 to $5 per share. Options
granted to consultants have varied vesting provisions,
including deliverables and time. Some do not have any vesting
provisions. As of June 30, 1999, there were options to
purchase up to an aggregate of approximately 5,000,000 shares
of Common Stock granted to executive officers, directors,
employees and consultants, subject to various vesting
schedules of which the right to purchase 3,900,000 shares were
vested and exercisable. Options to purchase 203,000 shares
have been exercised as of June 30, 1999.
The value of the options granted was established by the
difference between the exercise price and the fair market
value of the options issued on the dates of grant, were
accounted for as unearned compensation and amortized and
expensed over the related vesting periods. During each of the
three month periods ended June 30, 1999 and 1998, $821,808 of
unearned compensation was amortized to expense. The remaining
unamortized balance of unearned compensation at June 30, 1999
was $115,838 as reflected in the accompanying balance sheet.
NOTE 7 - PRIVATE PLACEMENT
In March 1999, the Company commenced an undertaking to raise
additional capital in a private placement offering of its
securities. In April 1999, the Company received stockholders
approval for the offering. As of June 30, 1999 the Company
raised proceeds of $6,405,000 through the sale of 60,000
shares of the Company's newly created Series B Preferred Stock
to certain investors and 405,000 shares of Common Stock to the
Company's officers, directors and employees. In July the
Company consummated a placement of an additional $500,000
through the sales of shares of Common Stock.
NOTE 8 - BENEFICIAL CONVERSION FEATURE OF SERIES B PREFERRED STOCK
The Company's Series B Preferred Stock includes a beneficial
conversion feature in that the conversion price to common
stock is $1.00 per share, which is at a discount from the
trading price of the Company's common stock at the date of
investment. Accordingly, the Company has recorded in the
accompanying statement of operations a deemed dividend for
this beneficial conversion feature in the amount of $890,000
for the three months ended June 30, 1999.
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U.S. WIRELESS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 9 - YEAR 2000 COMPUTER ISSUE
The Company does not believe that the impact of the year 2000
computer issued will have a significant impact on its
operations of financial position. Furthermore, the Company
does not believe that it will be required to significantly
modify its internal computer systems or products currently
under development. However, if internal systems do not
correctly recognize date information when the year changes to
2000, there could be adverse impact on the Company's
operations. Furthermore, there can be no assurance that
another entity's failure to ensure year 2000 capability would
not have an adverse effect on the Company.
NOTE 10 - SUBSEQUENT EVENTS
In July 1999, the Company formed U.S. Wireless International,
Inc.("USWI"), a foreign corporation to develop and operate its
overseas operations. Upon the formation of USWI, the Company
transferred its ownership interest in the joint venture
company, Wireless Technologies, Inc. ("WTI") formed with Anam
Instruments, Inc. On July 19, 1999, the joint venture
consummated a $5 million investment from HanKang Restructuring
Fund, a Korean government-sponsored fund managed by Scudder
Kemper Investments. The WTI investment will be used to
complete the development and speed the U.S. deployment of
RadioCamera(TM), the Company's wireless caller location
system. WTI is a joint venture between U.S. Wireless and Anam
Instruments, Inc.
On July 19, 1999 the Company sold an additional 149,254 shares
of Common Stock for net proceeds of $500,000 in accordance
with its private placement.
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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS
Statements contained herein which are not historical facts may be considered
forward looking information with respect to plans, projections or future
performance of the Company as defined under the Private Securities Litigation
Reform Act of 1995. These forward looking statements are subject to risk and
uncertainties which could cause actual results to differ materially from those
projected.
Capital Resources
At June 30, 1999, the Company reported working capital of $8,181,410. The
Company had $8,104,738 in cash and cash equivalents. Such amounts resulted
primarily from sales of the Company's securities in its 1999 private placement
offering in which the Company raised an aggregate of $6,405,000. During the
three months ended June 30, 1999, the Company earned no revenues from
operations.
Although the Company incurred a net loss of $1,896,135 during the quarter ended
June 30, 1999, such amount includes $85,222 of depreciation expense. The net
loss was further reduced by deemed dividends on the Company's Series B Preferred
Stock of $890,000 resulting in a net loss attributable to common shares of
$2,786,135. As a result of the above, the Company experienced a net increase in
cash of approximately $2,316,450 during the quarter ended June 30, 1999.
Based on management's estimates, the Company's capital resources are expected to
meet cash requirements through at least March 31, 2000 for the continuation of
the Company's research, development and field trial operations. The Company will
require additional capital in order to implement its business strategy of
rolling out a nationwide network of the RadioCamera system. The Company is
assessing and evaluating the timing and resource requirements necessary to
implement this plan. Additionally, the Company continues the development of an
internet services platform that will interface with the nationwide location
"caches" enabling the Company and other vendors to build and offer applications
based on location sensitive applications.
The Company is presently engaged in the testing of its AMPS, TDMA CDMA and iDEN
RadioCamera systems. Further, the Company is conducting field trials in several
major cities for its RadioCamera System and the Company is scheduled to build
additional field trial operations during the balance of this year. In addition,
the Company is developing an internet services platform that would allow
potential customers to visually monitor, locate and track a group of
subscribers.
Notwithstanding the Company's strategy of building a nationwide network, which
will require financing, management does not expect that the Company will be
required to purchase significant equipment or expect significant changes in the
number of Company employees during the next twelve months. In the event the
Company undertakes the deployment of a nationwide network, it will require a
significant number of new employees as well as consulting, manufacturing, and
other services.
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If the Company's timetable for developing, marketing, and manufacturing the
RadioCamera exceeds current estimates, the Company may require additional
capital resources. The primary continuing expenses associated with the testing
and development of the RadioCamera are expected to include officer, key employee
and consultant salaries.
Year 2000
The Company does not believe that the impact of the year 2000 computer issue
will have a significant impact on its operations or financial position.
Furthermore, the Company does not believe that it will be required to
significantly modify its internal computer systems or products currently under
development. However, if internal systems do not correctly recognize date
information when the year changes to 2000, there could be an adverse impact on
the Company's operations. Furthermore, there can be no assurance that another
entity's failure to ensure year 2000 capability would not have an adverse effect
on the Company.
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PART II. Other Information
ITEM 6. Exhibits and Reports on Form 8-K:
Exhibit 27.01 - Financial Data Schedule
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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)
June 26, 2000 By: \s\ Dr. Oliver Hilsenrath
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Date Dr. Oliver Hilsenrath
Chief Executive Officer
