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, 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, 14,527,608 shares outstanding as of February 4, 2000.
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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 December 31, 1999 (unaudited)
and March 31, 1999 3
Consolidated statements of operations (unaudited) for the three and nine months
ended December 31, 1999 and December 31, 1998 4
Consolidated statements of cash flows (unaudited) for the nine months
ended December 31, 1999 and December 31, 1998 5
Notes to financial statements 6-8
ITEM 2 - Plan of Operation 9-11
PART II - OTHER INFORMATION 12
ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K 12
Signature 13
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<PAGE>
U.S. WIRELESS CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
As of December 31, 1999 and March 31, 1999
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Dec. 31, March 31,
1999 1999
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(Unaudited) (Note 1)
ASSETS (Restated)
CURRENT ASSETS:
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Cash and cash equivalents $ 7,029,819 $5,788,288
Stock subscription receivable -- 2,300,000
Due from employees (Note 5) 243,197 --
Due from affiliate 89,203 --
Investment in joint venture 110,526 58,630
Investment in affiliate 132,028 --
Other current assets 600 2,323
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Total Current Assets 7,605,373 8,149,241
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EQUIPMENT, IMPROVEMENTS AND FIXTURES, net of accumulated
depreciation and amortization (Note 3) 319,244 381,617
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OTHER ASSETS
Software 36,250 --
Security deposits 25,035 25,035
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Total assets $ 7,985,902 $8,555,893
============ ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 232,824 $ 335,543
Obligations under capital leases, current 7,044 34,486
Total current liabilities 239,868 370,029
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Obligations under capital leases, noncurrent 4,632 4,632
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Total liabilities 244,500 374,661
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MINORITY INTEREST IN SUBSIDIARY
-- 76,434
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STOCKHOLDERS' EQUITY:
Series A preferred stock convertible, $.01 par value, 300,000 shares authorized; 70,000
shares issued and outstanding at December 31, 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 at December 31, 1999 and March 31, 1999 600 500
Common stock, $.01 par value, 40,000,000 shares authorized; issued and outstanding at
December 31, 1999 14,414,749 shares and March 31, 1999, 13,556,188 shares 144,148 135,563
Additional paid-in capital 38,531,633 32,504,598
Unearned Compensation -- (244,958)
Common stock subscribed (Note 6) 143,334 --
Accumulated deficit (31,079,013) (24,291,605)
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TOTAL STOCKHOLDERS' EQUITY 7,741,402 8,104,798
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7,985,902 $ 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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Nine Months Ended Three Months Ended
-------------------------------- -----------------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1999 1998 1999 1998
---------------- ---------------- ---------------- ----------
(Restated) (Restated)
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Net sales .......................................................... $ -- $ 39,729 $ -- $ 39,729
------------ ------------ ------------ ------------
Costs and expenses:
Research & Development ........................................... 2,267,582 2,332,986 870,949 875,867
Operating expenses ............................................... 1,230,489 1,006,081 545,151 375,371
Stock based compensation ......................................... 1,093,226 387,360 59,021 129,120
------------ ------------ ------------ ------------
Total Costs and Expenses ........................................... 4,591,297 3,726,427 1,475,121 1,380,358
------------ ------------ ------------ ------------
Loss before other income and minority interest in net loss
of continuing subsidiaries ......................................... (4,591,297) (3,686,698) (1,475,121) (1,340,629)
Other income (expense):
Interest income .................................................. 372,683 233,468 127,706 65,610
Equity in loss of investment in joint venture .................... (279,682) -- (169,156) --
Equity in loss of investment in Mantra ........................... (95,427) -- (31,809) --
------------ ------------ ------------ ------------
Loss before minority interest in net loss of
Subsidiaries .................................................. (4,593,723) (3,453,230) (1,548,380) (1,275,019)
Minority interest in net income (loss) of subsidiaries ............. -- 4,541 -- (20,315)
------------ ------------ ------------ ------------
Net loss ........................................................... (4,593,723) (3,448,689) (1,548,380) (1,295,334)
Deemed dividend for Series B Preferred Stock ....................... (2,670,000) -- (890,000) --
------------ ------------ ------------ ------------
Net loss attributable to common shares ............................. $ (7,263,723) $ (3,448,689) $ (2,438,380) $ (1,295,334)
============ ============ ============ ============
Basic and diluted loss per common equivalent share:
Loss before minority interest in net loss of subsidiaries ....... $ (.86) $ (.40) $ (.20) $ (.14)
Minority interest in net loss of subsidiaries -- -- -- --
------------ ------------ ------------ ------------
Basic and diluted net loss ......................................... $ (.86) $ (.40) $ (.20) $ (.14)
============ ============ ============ ============
Weighted average number of common shares outstanding ............... 8,453,462 8,673,022 12,057,133 9,058,045
============ ============ ============ ============
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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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Nine Months Ended
------------------------------------
Dec. 31, Dec. 31,
1999 1998
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CASH FLOWS FROM OPERATING ACTIVITIES: (Restated)
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Net loss ............................................................................................. $(4,593,723) $(3,448,689)
Adjustments to reconcile net loss to cash (used) for operating activities:
Depreciation ...................................................................................... 257,666 190,000
Minority interest in net losses of subsidiaries ................................................... -- (4,541)
Stock based compensation .......................................................................... 1,093,226 387,360
Equity in loss of Mantra .......................................................................... (50,698) --
Equity in loss of joint venture ................................................................... 279,682 (400,000)
Stock option forfeiture ........................................................................... 165,467 --
Increase (Decrease) from changes in assets and liabilities:
(Increase) in inventory ............................................................................ -- (50,756)
Decrease in other current assets ................................................................... 1,723 --
(Increase) in due from affiliate ................................................................... (170,533) --
Software ........................................................................................... (36,250) --
Accounts payable and accrued expenses .............................................................. (139,674) 90,828
Decrease in minority interest 76,434 --
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Net cash (used) for operating activities ................................................... (3,116,680) (3,235,798)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of equipment, improvements and fixtures ............................................... (195,293) (320,766)
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Net cash provided by investing activities .................................................. (195,293) (320,766)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on capital lease obligations ............................................................. (27,442) (15,192)
Receipt of stock subscription ..................................................................... 2,443,334 --
Proceeds from issuance of preferred stock ......................................................... 1,000,000 1,400,000
Net proceeds from issuance of common shares ....................................................... 1,137,612 4,014,671
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Net cash provided by financing activities ............................................................ 4,553,504 5,399,479
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ................................................. 1,241,531 1,842,915
Cash, beginning of period ............................................................................ 5,788,288 2,285,750
----------- -----------
Cash, end of period .................................................................................. $ 7,029,819 $ 4,128,665
=========== ===========
Supplemental disclosure of cash flow information:
Interest paid ..................................................................................... $ -- $ --
Taxes paid ........................................................................................ $ -- $ 1,248
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See accompanying notes to consolidated condensed financial statements
<PAGE>
U.S. WIRELESS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED 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 nine months ended December 31, 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 RPEVIOUSLY 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 nine
months ended December 31, 1999 was an increase in the net loss
of $1,168,114. The adjustments related to the net loss
primarily consists of (i) stock compensation of $848,268; (ii)
reversal of costs related to the issuance of common stock of
$(149,425); (iii) recognition of equity in loss of the joint
venture and Mantra aggregating to $316,479; (iv) forfeiture of
stock options of $165,467; (v) depreciation expense of
$119,166 and (vi) other miscellaneous adjustments of
$(131,841).
There was an additional adjustment of $2,670,000 related to
the beneficial conversion feature of the Series B Preferred
Stock (see Note 9), which decreased the accumulated deficit
and increased the additional paid-in capital balances.
NOTE 3 - ORGANIZATION
Consolidation of Labyrinth Communication Technologies Group,
Inc. ("Labyrinth")
In January 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.
<PAGE>
U.S. WIRELESS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 nine months
ended December 31, 1999 include the accounts of the Company as
well as the Company's wholly owned subsidiary U.S. Wireless
International, Inc., a foreign corporation ("USWI"). The
consolidated financial statements for the year ended March 31,
1999 include the accounts of the Company and Mantra
Technologies, Inc. All significant intercompany balances and
transactions have been eliminated in consolidation.
In July 1999, the Company formed USWI, 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. to USWI. 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
for development and testing activities and for marketing the
Company's wireless caller location system in Asia.
NOTE 4 - EQUIPMENT, IMPROVEMENTS AND FIXTURES
Equipment, improvements and fixtures, net at December 31, 1999
and March 31, 1999 consisted of the following:
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Dec. 31, March 31,
1999 1999
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Furniture, fixtures and equipment $ 1,013,115 $ 817,822
Less: accumulated depreciation and amortization (693,871) (436,205)
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$ 319,244 $ 381,617
================== ==================
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NOTE 5 - STOCK OPTIONS
As of December 31, 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 $15.80 per share. Options
granted to consultants have varied vesting provisions,
including deliverables and time. As of December 31, 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 approximately 3,900,000 shares were vested and
exercisable. Options to purchase 579,969 shares have been
exercised as of December 31, 1999.
<PAGE>
U.S. WIRELESS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - DUE FROM EMPLOYEES
In December 1999 certain employees exercised their option to
buy common stock at a price between $2 and $2.50. As of
December 31, 1999, 53,700 shares were issued for $118,383. The
purchase price of these shares was paid in January 1999 due
to the timing of the delivery of the shares and the
consummation of the sales. Additionally, the Company advanced
the employee's portion of taxes on the difference between the
strike price of the option and the current market price, in
the amount of $124,813 due to the timing of the delivery of
the shares and the consummation of the sales.
NOTE 7 - COMMON STOCK SUBSCRIBED
This represents monies received from a former employee for the
exercise of his options. The shares relating to this case were
issued in January 2000.
NOTE 8 - 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 September 30, 1999 the
Company raised proceeds of $6,905,000 through the sale of
60,000 shares of the Company's newly created Series B
Preferred Stock and an aggregate of 554,254 shares of Common
Stock to certain investors, of which 405,000 shares were sold
to the Company's officers, directors and employees.
NOTE 9 - 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 $2,670,000
for the nine months ended December 31, 1999.
NOTE 10 - YEAR 2000 UPDATE
Subject to continued monitoring of third party suppliers, U.S.
Wireless Corporation's year 2000 program ("Program") is
complete, and no material problems have arisen since the end
of calendar year 1999. The Program addressed the issue of
computer programs and embedded computer chips being unable to
distinguish between the year 1900 and the year 2000. All of
the Company's business computer systems are year 2000 ready.
<PAGE>
U.S. WIRELESS CORPORATION AND SUBSIDIARY
ITEM 2 - PLAN OF OPERATIONS
Results of Operations
Statements contained herein that 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.
Three months ended December 31, 1999 compared to the three months ended December
31, 1998:
Research and Development expenses were $870,949 for the three months ended
December 31, 1999 as compared to $875,867 for the three months ended December
31, 1998 an increase of 1%. Operating expenses were $545,151 in the three months
ended December 31, 1999 as compared to $375,371 in the period ended December 31,
1998, an increase of 45%. The increase in Research and Development and Operating
expenses is primarily attributable to additional costs incurred for engineering,
research and development related to the continued refinement, testing and
deployment of the Company's RadioCamera system and the commencement of the
Company's network build-out in the Baltimore, MD and Washington D.C. metro area.
Stock based compensation was $59,021 in the period ended December 31, 1999 as
compared to $129,120 in the period ended December 31, 1998. The deferred
compensation was written off in the quarter ended September 30, 1999.
The loss on investment represents the Company's recognition of its
subsidiary (U.S. Wireless International, Inc.) share of the loss on its joint
venture, WTI. The year to date loss at December 31, 1999 was large enough to
eliminate the investment in its entirety.
Nine months ended December 31, 1999 compared to the nine months ended December
31, 1998:
Research and development expenses were $2,267,582 for the nine months ended
December 31, 1999 as compared to $2,332,986 for the nine months ended December
31, 1998 a decrease of 3%. Operating expenses were $1,230,489 in the nine months
ended December 31, 1999 as compared to $1,006,081 in the nine months ended
December 31, 1998, an increase of 22%. Research and development shows a decrease
of 3% resulting from a refund of R & D expenses in September from its
subsidiary's investment, WTI, otherwise the R & D expense for the year would
have exceeded the 1998 expense. The increase in operating expenses is primarily
attributable to additional cost incurred for engineering and research and
development related to the continued refinement, testing and deployment of the
Company's RadioCamera system and the commencement of the Company's network
build-out in the Baltimore, MD and Washington D.C. metro area.
<PAGE>
ITEM 2 - PLAN OF OPERATIONS (continued)
Results of Operations (continued)
Stock based compensation was $1,093,226 in the nine months ended December 31,
1999 as compared to $387,360 in the nine months ended December 31, 1998. The
amount charged off in 1999 was sufficient to write off the balance on the
deferred compensation account.
The loss on investment represents the Company's recognition of its
subsidiary's (U.S. Wireless International, Inc.) shares of the loss on its joint
venture, WTI. The year to date loss at December 31, 1999 was large enough to
eliminate the investment in its entirety.
Liquidity and Capital Resources
At December 31, 1999, the Company reported working capital of $7,306,875. The
Company had $7,029,819 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 $6,905,000. During the nine
months ended December 31, 1999, the Company earned no revenues from operations.
Although the Company incurred a net loss of $4,652,353 during the nine months
ended December 31, 1999, such amount includes $257,666 of depreciation expense.
The net loss was further reduced by deemed dividends on the Company's Series B
Preferred Stock of $2,670,000 resulting in a net loss attributable to common
shares of $7,322,353. As result of the above, the Company experienced a net
increase in cash of approximately $1,241,531 during the nine months ended
December 31, 1999.
Based on management's estimates, the Company's capital resources are expected to
meet cash requirements through at least March 31, 2001 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 and is conducting field trials in several major cities. The
Company is building its first market in the Maryland/Washington D.C. metro area.
The Company has received contracts to deploy its RadioCamera(TM) system in pilot
programs to deliver traffic information for certain portions of the Maryland and
Virginia highway systems. The Company's network will provide the Maryland State
Highway Administration and Virginia State etc. with accurate real-time analysis
of traffic speed and congestion, which will be used for traffic management and
planning. 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.
<PAGE>
ITEM 2 - PLAN OF OPERATIONS (continued)
Liquidity and Capital Resources (continued)
The Company's strategy is to build a nationwide network, which will require
additional financing, capital expenditures, management and employees. The
Company expects that it will be required to purchase significant equipment and
have a significant increase in the number of Company employees during the next
twelve months.
If the Company's timetable for the continued development, marketing, and
building of the Company's proposed nationwide location network exceeds current
estimates, the Company may require additional capital resources. The primary
continuing expenses associated with the testing and development of the
RadioCamera location systems are expected to include officer, employee and
consultant salaries, the costs associated with manufacturing prototypes and the
costs of the Company's field operations.
Year 2000 Update
Subject to continued monitoring of third party suppliers, U.S. Wireless
Corporation's year 2000 program ("Program") is complete, and no material
problems have arisen since the end of calendar year 1999. The Program addressed
the issue of computer programs and embedded computer chips being unable to
distinguish between the year 1900 and the year 2000. All of the Company's
business computer systems are year 2000 ready.
<PAGE>
PART II. Other Information
ITEM 6. Exhibits and Reports on Form 8-K:
Exhibit 27.01 - Financial Data Schedule
<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)
June 26, 2000 By: \s\ Dr. Oliver Hilsenrath
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Date Dr. Oliver Hilsenrath
Chief Executive OfficeR
