<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JANUARY 31, 1999
Commission file number: 0-23598
NATIONAL WIRELESS HOLDINGS INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 13-3735316
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(State or other jurisdiction of incorporation) (IRS Employer Identification No.)
249 ROYAL PALM WAY, SUITE 301, PALM BEACH, FLORIDA 33480
- -------------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(561) 822-9933
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 |_|
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, $.01 par value: 3,283,000 shares as of March 12, 1999.
<PAGE>
NATIONAL WIRELESS HOLDINGS INC.
PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONTENTS
- --------------------------------------------------------------------------------
PAGE
Condensed Consolidated Balance Sheets as of January 31, 1999 and
October 31, 1998 2
Condensed Consolidated Statements of Operations for the three months ended
January 31, 1999 and 1998 3
Condensed Consolidated Statements of Comprehensive Income for the three
months ended January 31, 1999 and 1998 4
Condensed Consolidated Statements of Cash Flows for the three months ended
January 31, 1999 and 1998 5
Notes to Condensed Consolidated Financial Statements 6
<PAGE>
NATIONAL WIRELESS HOLDINGS INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
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<TABLE>
<CAPTION>
JANUARY 31, OCTOBER 31,
1999 1998
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $21,779,135 $27,359,353
Marketable securities 34,300,649 32,541,020
Trade and other receivables 828,742 751,413
Refundable income taxes 1,100,000 --
Prepaid expenses and other current assets 843,348 136,085
----------- -----------
TOTAL CURRENT ASSETS 58,851,874 60,787,871
Wireless frequency license and acquisition costs, net of
accumulated amortization of $153,879 and $144,336, respectively 227,832 237,375
Transmission and related equipment, net of accumulated
depreciation of $580,706 and $526,385, respectively 905,918 932,169
Leasehold improvements, office equipment and service vehicles,
net of accumulated depreciation of $685,576 and $607,921,
respectively 711,378 789,033
Intangible assets, net of accumulated amortization of $761,735
and $686,920, respectively 3,599,863 3,594,215
Investments and other assets 356,910 287,687
----------- -----------
TOTAL ASSETS $64,653,775 $66,628,350
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 5,179,651 $ 4,819,901
Current portion of long-term debt 88,449 88,449
Current income taxes -- 3,900,000
Deferred income taxes 12,300,000 10,930,000
----------- -----------
TOTAL CURRENT LIABILITIES 17,568,100 19,738,350
Long-term debt 316,709 334,967
Note payable to related party 200,000 200,000
----------- -----------
TOTAL LIABILITIES 18,084,809 20,273,317
----------- -----------
Stockholders' equity
Preferred stock, $.01 par value: 1,000,000 shares authorized;
no shares issued or outstanding -- --
Common stock, $.01 par value, 20,000,000 shares authorized;
3,283,000 shares issued and outstanding 32,830 32,830
Paid-in capital 22,647,372 22,647,372
Retained earnings 14,195,492 16,115,825
Unrealized gain on marketable securities, net 9,693,272 7,559,006
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 46,568,966 46,355,033
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $64,653,775 $66,628,350
=========== ===========
</TABLE>
2
See accompanying notes to unaudited condensed consolidated financial statements.
<PAGE>
NATIONAL WIRELESS HOLDINGS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
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For the Three Months
Ended January 31,
1999 1998
Revenue
Services $ 1,070,332 $ 1,071,735
Interest income 315,879 380,429
Dividend income 165,292 171,836
----------- -----------
TOTAL REVENUE 1,551,503 1,624,000
----------- -----------
Expenses
Cost of services 347,144 383,593
Professional fees 137,396 135,404
General and administrative 940,623 728,918
Depreciation and amortization 251,819 178,118
Interest 11,971 53,547
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TOTAL EXPENSES 1,688,953 1,479,580
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Income (loss) from operations (137,450) 144,420
Minority interest -- (30,000)
Gain (loss) on securities transactions, net (3,082,883) 248,194
----------- -----------
Income (loss) before provision for income taxes (3,220,333) 362,614
Provision (benefit) for income taxes (1,300,000) 150,000
----------- -----------
NET INCOME (LOSS) $(1,920,333) $ 212,614
=========== ===========
Net income (loss) per common share
Basic $ (0.58) $ 0.06
=========== ===========
Diluted $ (0.58) $ 0.06
=========== ===========
Weighted average number of common shares outstanding
Basic 3,283,000 3,283,000
=========== ===========
Diluted 3,283,000 3,318,752
=========== ===========
3
See accompanying notes to unaudited condensed consolidated financial statements.
<PAGE>
NATIONAL WIRELESS HOLDINGS INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
- --------------------------------------------------------------------------------
For the Months Ended
January 31,
1999 1998
Net income (loss) $(1,920,333) $ 212,614
Other comprehensive income, net of tax:
Net holding gain on marketable securities arising
during the period 1,357,410 3,280,307
Reclassification adjustment for (gains) losses
recognized in net income (loss) 776,856 (248,194)
----------- -----------
2,134,266 3,032,113
----------- -----------
Comprehensive income $ 213,933 $ 3,244,727
=========== ===========
4
See accompanying notes to unaudited condensed consolidated financial statements.
<PAGE>
NATIONAL WIRELESS HOLDINGS INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
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<TABLE>
<CAPTION>
For the Three Months
Ended January 31,
1999 1998
<S> <C> <C>
Cash flows from operating activities
Net income (loss) $ (1,920,333) $ 212,614
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization 251,819 178,118
Gain (loss) on securities transactions, net 3,082,883 (248,194)
Deferred income taxes (550,000) --
Minority interest -- 30,000
Change in assets and liabilities
Trade and other receivables (77,329) (11,012)
Refundable income taxes (1,100,000) --
Prepaid expenses and other current assets (787,777) (13,633)
Other assets -- (127,395)
Accounts payable and accrued expenses 17,471 (290,247)
Current income taxes payable (3,900,000) 150,000
------------ ------------
NET CASH USED IN OPERATING ACTIVITIES (4,983,266) (119,749)
------------ ------------
Cash flows from investing activities
Acquisition of transmission and related equipment (33,505) (40,000)
Acquisition of leasehold improvements, office equipment
and service vehicles -- (18,196)
Acquisition of marketable securities (6,450,102) (2,941,973)
Proceeds of marketable securities 6,004,134 5,231,586
Proceeds of marketable securities - short sale -- 12,132,047
Investments (99,222) (52,500)
Advances to related party -- --
------------ ------------
NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES (578,695) 14,310,964
------------ ------------
Cash flows from financing activities
Proceeds of long-term debt 215,813 --
Principal payments of long-term debt (234,070) (88,390)
------------ ------------
NET CASH USED IN FINANCING ACTIVITIES (18,257) (88,390)
------------ ------------
Net increase in cash and cash equivalents (5,580,218) 14,102,825
Cash and cash equivalents, beginning of year 27,359,353 21,256,356
------------ ------------
Cash and cash equivalents, end of year $ 21,779,135 $ 35,359,181
============ ============
Supplemental disclosure of cash flow information
Cash paid for interest $ 11,971 $ 53,547
Cash paid for income taxes 4,250,000 --
</TABLE>
5
See accompanying notes to unaudited condensed consolidated financial statements.
<PAGE>
NATIONAL WIRELESS HOLDINGS INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
JANUARY 31, 1999
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1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
of National Wireless Holdings Inc. (the "Company") have been prepared
in accordance with generally accepted accounting principles for interim
financial statements and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments, consisting solely of normal recurring
accruals necessary for a fair presentation of the financial statements
for these interim periods, have been included. Operating results for
the interim period are not necessarily indicative of the results that
may be expected for a full year. For further information, refer to the
financial statements and footnotes thereto included in the Company's
Annual Report on Form 10-K for the fiscal year ended October 31, 1998
(File No. 0-23598) as filed with the Securities and Exchange
Commission.
2. EDSS
On February 24, 1999, the Company agreed to amend its loan agreement
with EDSS, a majority-owned subsidiary, to increase the limit to
$1,400,000 and advanced $200,000 under the loan agreement. After such
transaction, the Company has outstanding loans to EDSS of $1,088,000.
3. COMPREHENSIVE INCOME
The Company has adopted Statement of Financial Accounting Standards No.
130 "Reporting Comprehensive Income" as of November 1, 1998 which
requires new standards for reporting and display of comprehensive
income and its components in the financial statements; however, it does
not affect net income (loss) or consolidated stockholders' equity. The
components of accumulated other comprehensive income are as follows:
Unrealized gain on marketable securities, net of deferred income
taxes of $4,130,000 at October 31, 1998 $7,559,006
Unrealized gains arising during the period 2,134,266
----------
Unrealized gain on marketable securities net of deferred income
taxes of $6,050,000 at January 31, 1999 $9,693,272
==========
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Note 3
Unrealized gain on marketable securities, net of deferred income
taxes of $4,130,000 at October 31, 1998 $7,559,006
Unrealized gains arising during the period 2,134,266
----------
Unrealized gain on marketable securities net of deferred income
taxes of $6,050,000 at January 31, 1999 $9,693,272
==========
7
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
National Wireless Holdings Inc. ("NWH" or the "Company") is a
communications company focussing primarily on acquisition and operation of
telecommunications and other high tech businesses. The Company currently owns
and operates Electronic Data Submission Systems, Inc. ("EDSS"), an electronic
data interchange company, providing links between healthcare Providers and third
party Payors. In addition, the Company owns and operates a satellite programming
uplink facility, an educational programming distribution company and other early
stage businesses. In addition to these businesses, the Company continues its
business of acquiring controlling interests in telecommunications, media and
other high tech areas. The Company may acquire or invest in other businesses. In
June 1997, the Company sold its wireless cable assets in Miami, Florida in
exchange for common stock of BellSouth Corporation.
The Company was incorporated in Delaware on August 31, 1993. The
Company's fiscal year ends on October 31.
Certain statements contained in this Quarterly Report on Form 10-Q
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors that may cause
the actual results, performance or achievements of the Company, or industry
results, to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Given
these uncertainties, prospective investors are cautioned not to place undue
reliance on such forward-looking statements.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JANUARY 31, 1999 AS COMPARED TO THREE MONTHS ENDED JANUARY
31, 1998:
Services Revenue:
Services revenue decreased from $1,071,735 for the three months ended January
31, 1998 to $1,070,332 for the three months ended January 31, 1999. Increased
revenues of EDSS, a majority owned subsidiary acquired in December 1996, were
offset by completion of a consulting agreement with a subsidiary of BellSouth
Corporation.
Interest and Dividend Income:
Interest income decreased from $380,429 for the three months ended January 31,
1998 to $315,879 for the three months ended January 31, 1999 primarily as a
result of decreased cash, cash equivalents and treasury securities balances, and
dividend income decreased from $171,836 for the three months ended January 31,
1998 to $165,292 for the three months ended January 31, 1999 reflecting sales of
BellSouth common stock acquired in June 1997 and consequent reduction of
dividends.
8
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Cost of Services:
Cost of services decreased from $383,593 for the three months ended January 31,
1998 to $347,144 for the three months ended January 31, 1999 as a result of
decreased operating costs.
Professional Fees:
Professional fees increased from $135,404 in the three months ended January 31,
1998 to $137,396 in the three months ended January 31, 1999 as a result of
additional activity relating to subsidiaries and corporate actions.
General and Administrative:
General and administrative expense increased from $728,918 in the three months
ended January 31, 1998 to $940,623 in the three months ended January 31, 1999
primarily as a result of increased business levels at EDSS.
Depreciation and Amortization:
Depreciation and amortization increased from $178,118 in the three months ended
January 31, 1998 to $251,819 in the three months ended January 31, 1999
primarily as a result of additional equipment acquisitions at EDSS.
Interest Expense:
Interest expense decreased from $53,547 in the three months ended January 31,
1998 to $11,971 in the three months ended January 31, 1999 due to reductions in
hedge positions and related charges.
Income (Loss) from Operations:
As a result of the foregoing events, income from operations decreased from
income of $144,420 in the three months ended January 31, 1998 to a loss of
($137,450) in the three months ended January 31, 1999.
Gain (Loss) on Securities Transactions:
Gain (loss) on securities transactions decreased from income of $248,194 for the
three months ended January 31, 1998 to a loss of $3,082,883 for the three months
ended January 31, 1999 primarily as a result of closing hedge positions on
BellSouth common stock acquired in June 1997.
Net Income (Loss):
Net income decreased from $212,614 for the three months ended January 31, 1998
to a loss of ($1,920,333) for the three months ended January 31, 1999 as a
result of the foregoing events.
EDSS RESULTS OF OPERATIONS:
The Company's results of operations reflect EDSS operating losses of
($455,290) on a cumulative basis, including break-even results in the recent
three month period. Based upon existing contracts with physicians and other
Providers and current expense levels, management believes that EDSS would
achieve positive cash flow from operations by the end of fiscal 1999. EDSS
may seek to obtain additional financing, and the Company may provide
additional funds, to accelerate EDSS' strategic business plan.
LIQUIDITY AND CAPITAL RESOURCES
The Company funds its operations with the net proceeds from its initial
public offering in 1994 of
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2,000,000 shares of Common Stock aggregating, after payment of offering costs,
approximately $22,000,000 and the June 1997 sale of its South Florida wireless
cable subsidiary for $48 million in BellSouth common stock. The proceeds have
been used for, and are currently reserved to fund acquisitions of, EDI
(electronic data interchange) investments, telecommunications assets, media
businesses, development of the Company's other businesses and development and
acquisition of new technologies and businesses in other areas. Such amount, with
interest thereon, is expected to be sufficient to implement this business plan
through October 2000, or for a shorter period if the Company determines to
invest a substantial portion of its assets in major acquisitions or equity
investments.
As of January 31, 1999, the Company had approximately $56 million in
cash and marketable BellSouth common stock, as well as its interest in EDSS, its
full-service teleport and satellite uplink facility in Miami, an educational
video programming distributor and investments in other early stage companies.
In the quarter ended January 31, 1999, the Company closed portions of
its hedge position in BellSouth common stock. While the Company continues to
review its position in BellSouth common stock and from time to time has sold and
purchased shares and options on the position, it has not yet determined whether
it will sell or hedge its remaining BellSouth securities in the near future or
how it will invest the proceeds of any such sale.
In July 1998 the Company completed its purchase of $1,200,000 of shares
of Series A Preferred Stock of Electronic Data Submission Systems, Inc.
("EDSS"), which when combined with its existing share ownership represents 58%
of the outstanding diluted common stock and, with additional voting rights, 82%
control of EDSS. The Company paid for such securities with $1,000,000 in cash
and $200,000 reduction in the principal amount of a note outstanding pursuant to
a loan agreement between EDSS and the Company, dated June 19, 1995. On February
24, 1999 the Company advanced an additional $200,000 to EDSS, for a total
outstanding loan of $1,088,000. The outstanding balance under this loan
agreement was eliminated from the balance sheet in consolidation. The Company
may invest additional amounts in EDSS to finance its sales growth. Operating
overhead costs of EDSS have increased in order to support its continued growth.
The Company anticipates related increased revenues at EDSS in the next three to
nine months.
Following completion of the sale of its South Florida wireless cable
assets, the Company has allocated its capital to development of its other
businesses and to acquisitions; and the Company actively seeks to acquire or
invest in other businesses in telecommunications, media or in unrelated areas.
The Company has no specific arrangements with respect to any such acquisitions
or investments at the present time. There can be no assurance that any such
acquisitions or investments will be made.
YEAR 2000 ISSUES
INTRODUCTION
Many existing computer systems and software products use only two
digits to represent a year. Time/date-sensitive software or hardware written or
developed in this fashion may not be able to distinguish between 1900 and 2000,
and programs written in this manner that perform arithmetic operations,
comparisons or sorting of date fields may yield incorrect results when
processing a Year 2000 ("Year 2K") date.
THE COMPANY'S STATE OF READINESS
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The Company has analyzed Year 2K issues in four areas: (i) financial
and information technology ("IT") systems, (ii) non-IT network systems, (iii)
third party vendors and suppliers, and (iv) EDSS' proprietary software products.
The Company believes that its financial and information technology systems and
its non-IT systems are Year 2K compliant. In addition, the Company believes that
EDSS' proprietary software products are Year 2K compliant.
The Company's survey is also assessing the Company's vulnerability to
the Year 2K problems of third-party service suppliers. The Company relies on
third-party suppliers to deliver fiber telecommunications links, Internet
access, banking services, payroll services and electricity. The Company also
intends to develop new relationships with several providers of fiber-optic
telecommunications service, Internet service providers, telecommunications
resellers, and other companies in the telecommunications industry. The Company
intends to continuously identify and prioritize critical suppliers and
communicate with them about their plans and progress in addressing the Year 2K
problem.
THE COMPANY'S YEAR 2K RISK
GENERAL
The Company currently believes that its systems and those of its
subsidiaries are Year 2K compliant. However, there can be no assurance that all
potential Year 2K problems will be successfully identified, or that the
necessary corrective actions will be completed in a timely manner. Failure to
successfully identify and remediate such Year 2K problems in a timely manner
could have a material adverse effect on the Company's results of operations,
financial position or cash flow.
In addition, the Company believes that there is a risk relating to
significant service suppliers' failure to remediate their Year 2K issues in a
timely manner. Although the Company is communicating with its suppliers
regarding the Year 2K problem, the Company does not know whether these
suppliers' systems will be Year 2K compliant in a timely manner. If one or more
significant suppliers are not Year 2K compliant, this could have a material
adverse effect on the Company's results of operations, financial position or
cash flow. In considering acquisitions, the Company reviews Year 2K compliance
of its targets.
EDSS
EDSS faces Year 2K risks in addition to and/of a greater magnitude than
those discussed generally above.
Although the Company believes that EDSS' proprietary software products
are Year 2K compliant, EDSS believes that it is impossible to predict with
complete certainty that all potential Year 2K problems that may affect such
products have been identified due to the complexity of the products and the fact
that these products interact with other third party vendor products and operate
on computer systems that are not under EDSS' control.
In addition, EDSS is communicating with certain of its customers,
including major payors and vendors, and suppliers as to their progress in
identifying and addressing problems that their computers will face in correctly
processing date information as the Year 2K approaches and is reached. Because of
the complexity of the Year 2K issue and the differing stages of readiness of
these third parties EDSS expects these discussions to continue throughout 1999.
Furthermore, because of the nature of EDSS' business, the success of EDSS'
efforts may depend on the success of Payors, Providers, vendors and other third
parties in dealing with the Year 2K issue. Failure to address appropriately the
Year 2K issue by a
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major customer or supplier or a material percentage of EDSS' smaller customers
could have a material adverse impact on the financial condition and results of
operations of EDSS.
EDSS' business is heavily reliant upon external suppliers to provide
certain operating elements of its business. Some of these suppliers include
telecommunications providers, data processing service providers, utility
companies, key vendors and certain governmental agencies. EDSS also depends on
the operations of its customers, the Providers and Payors. EDSS exerts no
control over the efforts of these companies to become Year 2K compliant. The
services provided by these parties are critical to the operations of EDSS and
EDSS is heavily reliant upon these parties to successfully address the Year 2K
issue. Therefore, if any of these parties fail to provide EDSS with services,
EDSS' ability to conduct business could be materially impacted. The result of
such impact may have a material adverse effect on the financial condition and
results of operations of EDSS.
Worst case scenarios could be as insignificant as a minor interruption
in EDSS's ability to conduct business resulting from unanticipated problems
encountered in the IT and non-IT systems of EDSS or could be significant to the
extent any of the significant third parties such as Payors with whom EDSS does
business suffer major business interruption. The pervasiveness of the Year 2K
issue makes it likely that previously unidentified issues will require
remediation during the normal course of business. On the other hand, a worst
case Year 2K scenario could be as catastrophic as a complete, and long-term,
loss of telecommunications, data processing and utility services. In this
connection, an extended loss of telecommunication, data processing and utility
services could have a material adverse effect on the financial condition and
results of the operations of EDSS.
Although EDSS believes its Year 2K compliance efforts will address all
of the Year 2K issues for which EDSS is responsible, to the extent these efforts
are not successful, additional compliance efforts would be necessary together
with additional customer service efforts and expenditures. If third parties fail
in their compliance efforts, EDSS also could be impacted and required to provide
additional customer service efforts. In such an event, EDSS could incur
additional costs and experience a negative impact on its financial condition and
results of operations.
THE COMPANY'S CONTINGENCY PLANS
The Company has not created a formal contingency plan for Year 2K
problems. The Company intends to take appropriate actions to mitigate the
effects of third parties' failures to remediate their Year 2K issues and for
unexpected failures in its own systems. Such actions may include having
arrangements for alternate suppliers and using manual intervention where
necessary. If it becomes necessary for the Company to take these corrective
actions, it is uncertain whether this would result in significant interruptions
in service or delays in business operations or whether it would have a material
adverse effect on the Company's results of operations, financial position or
cash flow.
As risks are identified, contingency plans will be established and
additional steps will be taken to further minimize the risks associated with the
Year 2K issue. Those plans will focus on matters that appear to be the Company's
most likely Year 2K risks, such as possible additional customer support efforts
by the Company that would be necessary if customers, such as, in the case of
EDSS, Providers or Payors, or vendors are not Year 2K compliant, or if a Year 2K
issue should not be timely detected in the Company's own compliance efforts. In
the event that the Company's systems do not function as a result of a most
reasonably likely worst case scenario, the Company would make reasonable efforts
to enter into temporary alternative arrangements with third parties to service
the Company's customers, including routing transactions to the Company's
competitors. In addition, in the case of EDSS, in the event EDSS could not
process transactions electronically, either as a result of the failure of its
own systems or a loss of telecommunications, data processing or utility services
generally, EDSS or its customers could print
12
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transactions normally processed electronically to paper for manual processing
until such time as the Company's systems are functional.
COSTS OF YEAR 2K REMEDIATION
As of October 31, 1998, the Company has not incurred material costs
related to the Year 2K problem, and does not expect to incur material costs in
the future. The Company has not deferred other information technology projects
due to Year 2K expenses, and does not expect to defer such projects in the
future. However, due to the complexity and pervasiveness of the Year 2K issue,
and in particular the uncertainty regarding the compliance efforts of third
parties, there can be no assurance that the costs associated with the Year 2K
problem will not be greater than anticipated.
The Company has not yet estimated Year 2K costs for periods after 1999,
which may include costs of customer service efforts resulting from the failure
of third parties to be Year 2K compliant or other unforeseen problems.
Readers are cautioned that forward-looking statements contained in the
Year 2K Disclosure should be read in conjunction with the Company's disclosures
regarding forward-looking statements above.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Not applicable.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 5. Other Information.
On February 24, 1999, the Company agreed to amend its loan agreement
with EDSS to increase the limit to $1,400,000 and advanced $200,000 in
additional funds. After such transaction the Company will have outstanding loans
to EDSS of $1,088,000, which are eliminated from the balance sheet in
consolidation.
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Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
Exhibit 10.33(f) - Amendment No. 3 to Loan Agreement,
dated June 9, 1995, between the Company and EDSS
(b) Reports on Form 8-K:
None.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: March 12, 1999
NATIONAL WIRELESS HOLDINGS INC.
-------------------------------
(Registrant)
By: /s/ TERRENCE S. CASSIDY
----------------------------------------
Terrence S. Cassidy, President and Principal
Accounting Officer
15
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EXHIBIT 10.33(f)
Amendment No. 3 to Loan Agreement, dated June 5, 1995, between the Company and
EDSS.
16
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Exhibit 10.33(f)
AMENDMENT NO. 3
TO
LOAN AGREEMENT AND NOTE
THIS AMENDMENT NO. 3 ("Amendment") is entered into as of February 24,
1999, by and between Electronic Data Submission Systems, Inc., having its
principal place of business at 4575 Galley Road, Suite 100A, Colorado Springs,
Colorado 80915 ("Borrower") and National Wireless Holdings, a Delaware
corporation having its principal place of business at 249 Royal Palm Way, Suite
301, Balm Beach, FL 33480 ("Lender").
BACKGROUND
Borrower and Lender are parties to a Loan Agreement, dated as of June
9, 1995 (as amended, supplemented or otherwise modified from time to time, the
"Loan Agreement") pursuant to which Lender provided Borrower with certain
financial accommodations, and a Note dated as of the same date (as amended,
supplemented or otherwise modified from time to time, the "Note").
Borrower has requested that Lender amend the Note and Loan Agreement
and Lender is willing to do so on the terms and conditions hereafter set forth.
NOW, THEREFORE, in consideration of any loan or advance or grant of
credit heretofore or hereafter made to or for the account of Borrower by Lender,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS. All capitalized terms not otherwise defined herein
shall have the meanings given to them in the Loan Agreement.
2. AMENDMENT TO NOTE. Subject to satisfaction of the condition
precedent set forth in Section 4 below, the words "ONE MILLION DOLLARS
($1,000,000) or" in the Note are hereby deleted and the words "ONE MILLION FOUR
HUNDRED THOUSAND DOLLARS ($1,400,000) or" are hereby substituted therefor.
3. AMENDMENT TO LOAN AGREEMENT. Subject to satisfaction of the
condition precedent set forth in Section 4 below, the Loan Agreement is hereby
amended as follows:
<PAGE>
(a) The reference to "One Million ($1,000,000) Dollars" in the
first "WHEREAS" clause shall be deleted and a reference to
"One Million Four Hundred Thousand ($1,400,000)" substituted
therefor.
(b) The words "at any one time outstanding up to One Million
($1,000,000) Dollars" in the definition of "Commitment" shall
be deleted and the words "at any one time outstanding (x)
until and excluding March 24, 1999, up to $1,200,000; (y) from
March 24, 1999 to and excluding April 24, 1999, up to
$1,300,000; and (z) from and after April 24, 1999, up to
$1,400,000".
(c) Schedule A to the Loan Agreement is hereby amended by deleting
the reference to "$1,000,000" in line "1)" thereof and by
substituting, in lieu thereof, the following: "until and
excluding March 24, 1999, $1,200,000; (y) from March 24, 1999
to and excluding April 24, 1999, $1,300,000; and (z) from and
after April 24, 1999, $1,400,000".
4. CONDITIONS OF EFFECTIVENESS. This Amendment shall become effective
upon satisfaction of the following condition precedent: Lender shall have
received four (4) copies of this Amendment executed by Borrower and each of the
guarantors, grantors of collateral security and subordinated creditors set forth
on the signature pages hereto.
5. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants as follows:
(a) This Amendment, and the Loan Agreement and the Note as
amended hereby, constitute legal, valid and binding obligations of
Borrower and are enforceable against Borrower in accordance with their
respective terms.
(b) Upon the effectiveness of this Amendment, Borrower hereby
reaffirms all covenants, representations and warranties made in the
Loan Agreement and the Note to the extent the same are not amended
hereby and agree that all such covenants, representations and
warranties shall be deemed to have been remade as of the effective date
of this Amendment.
(c) No Event of Default or Default has occurred and is
continuing or would exist after giving effect to this Amendment.
(d) Borrower has no defense, counterclaim or offset with
respect to the Loan Agreement or the Note.
6. EFFECT ON THE LOAN AGREEMENT AND LOAN DOCUMENTS.
(a) Upon the effectiveness of SECTION 2 hereof, each reference in the
Loan Agreement or the Note to "this Agreement," "hereunder," "hereof," "herein"
or words of like
<PAGE>
import shall mean and be a reference to the Loan Agreement or the Note as
respectively amended hereby.
(b) Except as specifically amended herein, the Loan Agreement, and all
other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect, and are hereby
ratified and confirmed. The obligations, liabilities and indebtedness under the
Loan Agreement as amended constitute senior indebtedness under all subordination
agreements relating thereto.
(c) The execution, delivery and effectiveness of this Amendment shall
not operate as a waiver of any right, power or remedy of Lender, nor constitute
a waiver of any provision of the Loan Agreement, or any other documents,
instruments or agreements executed and/or delivered under or in connection
therewith.
(d) Upon the effectiveness of SECTION 2 hereof, each reference in the
Loan Documents to the Loan Agreement and/or the Note or words of like import
shall mean and be a reference to the Loan Agreement or the Note as respectively
amended hereby
7. GOVERNING LAW. This Amendment shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns and
shall be governed by and construed in accordance with the laws of the State of
New York.
8. HEADINGS. Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
9. COUNTERPARTS. This Amendment may be executed by the parties hereto
in one or more counterparts, each of which shall be deemed an original and all
of which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, this Amendment has been duly executed as of the day
and year first written above.
ELECTRONIC DATA SUBMISSION SYSTEMS, INC.
By: /s/ Joseph D. Truscelli
-----------------------
Its:
NATIONAL WIRELESS HOLDINGS INC.
By: /s/ Terrence S. Cassidy
-----------------------
Its:
<PAGE>
CONSENTED AND AGREED TO:
/s/ Joseph D. Truscelli
- ------------------------
Joseph D. Truscelli
Subordinated Debt Holder
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-01-1998
<PERIOD-END> JAN-31-1999
<CASH> 21,779,135
<SECURITIES> 34,300,649
<RECEIVABLES> 828,742
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 58,851,874
<PP&E> 2,489,751
<DEPRECIATION> 839,455
<TOTAL-ASSETS> 64,653,775
<CURRENT-LIABILITIES> 17,568,100
<BONDS> 0
0
0
<COMMON> 32,830
<OTHER-SE> 46,536,136
<TOTAL-LIABILITY-AND-EQUITY> 64,653,775
<SALES> 1,070,332
<TOTAL-REVENUES> 1,551,503
<CGS> 347,144
<TOTAL-COSTS> 1,676,982
<OTHER-EXPENSES> (3,082,883)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,971
<INCOME-PRETAX> (3,220,333)
<INCOME-TAX> (1,300,000)
<INCOME-CONTINUING> (1,920,333)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,920,333)
<EPS-PRIMARY> (.58)
<EPS-DILUTED> (.58)
</TABLE>
