<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended September 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-27024
METRO ONE TELECOMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
OREGON 93-0995165
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8405 SW NIMBUS AVENUE, BEAVERTON, OREGON 97008
(Address of principal executive offices)
(503) 643-9500
(Issuer's telephone number)
Check whether the issuer (1) filed all 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
--- ---
Number of shares of common stock outstanding as of November 11, 1998:
11,126,059 shares, no par value per share
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<PAGE>
METRO ONE TELECOMMUNICATIONS, INC.
INDEX TO FORM 10 - QSB
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
Part I Financial Information
- ----------------------------------
Item 1. Financial Statements
Condensed Statements of Operations (Unaudited) for
the three and nine months ended September 30, 1998 and 1997 1
Condensed Balance Sheets as of
September 30, 1998 (Unaudited) and December 31, 1997 2
Condensed Statements of Cash Flows (Unaudited) for
the nine months ended September 30, 1998 and 1997 3
Notes to Condensed Financial Statements 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6
Part II Other Information
- ------------------------------
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
</TABLE>
<PAGE>
METRO ONE TELECOMMUNICATIONS, INC.
<TABLE>
<CAPTION>
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
----------------------------------- ---------------------------------
1998 1997 1998 1997
---------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Revenues $ 11,312,476 $ 7,054,748 $ 31,279,744 $ 17,008,742
---------------- --------------- --------------- ---------------
Costs and expenses:
Direct operating 5,786,388 3,419,412 16,104,067 8,549,814
General and administrative 4,622,270 2,952,458 13,098,868 8,158,878
---------------- --------------- --------------- ---------------
10,408,658 6,371,870 29,202,935 16,708,692
---------------- --------------- --------------- ---------------
Income from operations 903,818 682,878 2,076,809 300,050
Other income 101,873 138,856 248,429 332,513
Interest expense and loan fees (75,097) (77,405) (254,871) (262,324)
---------------- --------------- --------------- ---------------
Income before income taxes 930,594 744,329 2,070,367 370,239
Income tax expense 14,800 - 44,300 -
---------------- --------------- --------------- ---------------
Net income $ 915,794 $ 744,329 $ 2,026,067 $ 370,239
---------------- --------------- --------------- ---------------
---------------- --------------- --------------- ---------------
Income per common share
Basic and diluted $ .08 $ .07 $ .18 $ .03
</TABLE>
The accompanying notes are an integral part of this statement.
1
<PAGE>
METRO ONE TELECOMMUNICATIONS, INC.
<TABLE>
<CAPTION>
CONDENSED BALANCE SHEETS
- --------------------------------------------------------------------------------------------------------------------------
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------------ -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 8,247,530 $ 8,554,301
Accounts receivable 5,458,912 4,628,992
Prepaid costs and other 735,054 694,025
------------------ -----------------
Total current assets 14,441,496 13,877,318
Furniture, fixtures and equipment, net 17,348,580 14,632,340
Other assets 618,510 615,737
------------------ -----------------
$ 32,408,586 $ 29,125,395
------------------ -----------------
------------------ -----------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,892,213 $ 1,302,372
Accrued liabilities 1,007,200 991,743
Accrued payroll and related costs 1,874,221 1,022,708
Current portion of capital lease obligations 341,789 638,200
Current portion of long-term debt 240,108 78,161
------------------ -----------------
Total current liabilities 5,355,531 4,033,184
Capital lease obligations 202,514 548,620
Long-term debt 683,247 867,641
------------------ -----------------
6,241,292 5,449,445
------------------ -----------------
Commitments and contingencies - -
Shareholders' equity:
Preferred stock, no par value; 10,000,000 shares
authorized, no shares issued or outstanding - -
Common stock, no par value; 50,000,000 shares
authorized, 11,126,059 and 10,925,676 shares,
respectively, issued and outstanding 37,979,773 37,514,496
Accumulated deficit (11,812,479) (13,838,546)
------------------ -----------------
Net shareholders' equity 26,167,294 23,675,950
------------------ -----------------
$ 32,408,586 $ 29,125,395
------------------ -----------------
------------------ -----------------
</TABLE>
The accompanying notes are an integral part of this statement.
2
<PAGE>
METRO ONE TELECOMMUNICATIONS, INC.
<TABLE>
<CAPTION>
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
- ---------------------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------------
1998 1997
------------------ -----------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,026,067 $ 370,239
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,706,011 1,555,820
Loss on disposal of fixed assets 31,637 84,692
Changes in certain assets and liabilities:
Accounts receivable (829,920) (937,584)
Prepaid expenses and other assets (126,221) (177,537)
Accounts payable and accrued expenses 1,456,811 1,144,198
------------------ -----------------
Net cash provided by operating activities 5,264,385 2,039,828
------------------ -----------------
Cash flows from investing activities:
Capital expenditures (5,371,469) (4,944,546)
------------------ -----------------
Net cash used in investing activities (5,371,469) (4,944,546)
------------------ -----------------
Cash flows from financing activities:
Repayment of capital lease obligations (642,517) (539,115)
Repayment of debt (22,447) -
Proceeds from issuance of common stock upon exercise
of warrants and options 465,277 680,360
------------------ -----------------
Net cash provided by (used in) financing activities (199,687) 141,245
------------------ -----------------
Net decrease in cash and cash equivalents (306,771) (2,763,473)
Cash and cash equivalents, beginning of period 8,554,301 14,136,574
------------------ -----------------
Cash and cash equivalents, end of period $ 8,247,530 $ 11,373,101
------------------ -----------------
------------------ -----------------
</TABLE>
The accompanying notes are an integral part of this statement.
3
<PAGE>
METRO ONE TELECOMMUNICATIONS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
- -------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
The accompanying interim condensed financial statements have been prepared by
Metro One Telecommunications, Inc. (the "Company") without audit and in
conformity with generally accepted accounting principles for interim financial
information. Accordingly, certain financial information and footnotes have been
omitted or condensed. In the opinion of management, the condensed financial
statements include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair statement of the results for the interim
periods. These condensed financial statements and notes thereto should be read
in conjunction with the Company's audited financial statements included in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 1997. The
results of operations for the interim period shown in this report are not
necessarily indicative of results for any future interim period or the entire
fiscal year.
RECLASSIFICATION. Certain balances in the 1997 financial statements have
been reclassified to conform with 1998 presentation. Such reclassifications
have no effect on results of operations or shareholders' equity.
2. EARNINGS PER SHARE
Effective for the year ended December 31, 1997, the Company adopted SFAS No.
128, Earnings Per Share. SFAS No. 128 established new standards for computing
and presenting earnings per share. The per share amounts are based on the
weighted average number of common and dilutive common equivalent shares assumed
to be outstanding during the period of computation. Net income for the
calculation of both basic and diluted earnings per share is the same for all
periods.
The calculation of weighted-average outstanding shares is as follows:
<TABLE>
<CAPTION>
AVERAGE SHARES
----------------------------------------------------------------------
THREE MONTHS ENDED SEPT. 30, NINE MONTHS ENDED SEPT. 30,
-------------------------------- ---------------------------------
1998 1997 1998 1997
---------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
For basic earnings per share 11,061,777 10,822,233 11,039,124 10,789,337
Common stock equivalents - 142,116 189,917 136,762
---------------- --------------- --------------- ----------------
For diluted earnings per share 11,061,777 10,964,349 11,229,041 10,926,099
---------------- --------------- --------------- ----------------
---------------- --------------- --------------- ----------------
</TABLE>
3. COMMITMENTS AND CONTINGENCIES
The Company is party to various legal actions and administrative proceedings
arising in the ordinary course of business. The Company believes that the
disposition of these matters will not have a material adverse effect on its
financial position, results of operations or net cash flows.
4. SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-----------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
Cash paid for interest expense $ 245,943 $ 250,706
Cash paid for income taxes 55,262 1,300
Stock issued in settlement of litigation - 270,000
</TABLE>
4
<PAGE>
5. INCOME TAXES
At December 31, 1997, the Company had approximately $15.4 million of net
operating loss carryforwards expiring during the years 2005 to 2010. Ownership
changes as defined by section 382 of the Internal Revenue Code could limit the
amount of net operating loss carryforwards used in any one year or in the
aggregate.
During the quarter, the Company reduced its deferred tax valuation allowance to
reflect deferred tax assets used to reduce current year income taxes. The
Company will continue to review the valuation allowance on a quarterly basis and
make adjustments as appropriate.
6. ACCOUNTING PRONOUNCEMENT
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." SFAS No. 131 establishes standards for
disclosure about operating segments in annual financial statements and selected
standards for related disclosures about products and services, geographic areas
and major customers. The Company believes the adoption of SFAS No. 131 will have
no material impact on current disclosures.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
All statements and trend analyses contained in this item and elsewhere
in this report on Form 10-QSB relative to the future constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements are subject to the business and
economic risks faced by the Company and the Company's actual results of
operations may differ materially from those contained in the forward looking
statements. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. The Company
undertakes no obligation to publicly release any revisions to these
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
Results of operations for the periods discussed below should not be
considered indicative of the results to be expected in any future period and
fluctuations in operating results may also result in fluctuations in the
market price of the Company's Common Stock. The Company's quarterly and
annual operating results have in the past and may in the future vary
significantly depending on factors such as changes in the telecommunications
market, the addition or expiration of Enhanced Directory
Assistance-Registered Trademark- ("EDA") contracts, changes in pricing
policies by the Company or its competitors, increased competition, lengthy
sales cycles, lack of market acceptance or delays in the introduction of new
versions of the Company's product or features, the timing of the initiation
of wireless services or their acceptance in new market areas by
telecommunications customers, the timing and expense of the Company's
expansion of its national call center network, general economic conditions
and other factors.
OVERVIEW
The Company is a leading provider of EDA for the telecommunications
industry and has thirteen significant EDA contracts with six different carriers
to provide EDA in numerous U.S. metropolitan markets. Over the last six quarters
the Company's operations have been characterized by rapid call volume and
revenue growth as well as growth in profits. Call volume and revenues increased
56.4% and 60.3%, respectively, from the third quarter of 1997 to the third
quarter of 1998, and profits grew from $744,000 to $916,000. Call volume and
revenues increased 78.2% and 83.9%, respectively, from the first nine months of
1997 to the first nine months of 1998, and profits grew from $370,000 to $2.0
million.
The Company expects to continue to increase its share of the directory
assistance market by expanding service to existing customers, adding new
customers and expanding the call center network into new geographic markets. The
Company has had ongoing business discussions about new contracts with other
telecommunications companies, and the Company anticipates that it will open
several new call centers during the remainder of 1998 and through 1999 to serve
wireless and landline customers. With its increasing size, the Company expects
that the costs of each new call center will have an increasingly smaller effect
on results of operations.
During the third quarter of 1998, the Company announced it had
signed new agreements to provide its EDA service to subscribers of Central
Wireless Partnership, Iowa Wireless Services, L.P. and TeleCorp
Communications, Inc, and the Company announced it had expanded its agreement
with Sprint PCS to provide service in markets served by Sprint PCS under new
licenses. The Company also announced the award of a U.S. patent for the
Company's StarBack-Registered Trademark- feature used to enhance its
directory assistance service available to callers.
In the second quarter of 1998, the Company announced that a portion of
its contract with Ameritech Cellular related to the Chicago market would not be
replaced upon its expiration in July 1998. This portion of the contract
accounted for approximately 3.1% and 7.8% of the Company's revenues for the
three and nine months ended September 30, 1998, respectively. In addition, the
portion of the contract with Ameritech Cellular related to the Detroit market is
not expected to be replaced upon its expiration in November 1998. This portion
of the contract accounted for approximately 6.3% and 6.2% of the Company's
revenues for the three and nine months ended September 30, 1998, respectively.
6
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated the items of
the Company's statements of operations as a percentage of revenues.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPT. 30, NINE MONTHS ENDED SEPT. 30,
---------------------------- ---------------------------
1998 1997 1998 1997
---------- ------ ------- ------
<S> <C> <C> <C> <C>
Revenues 100.0% 100.0% 100.0% 100.0%
Direct operating costs 51.1 48.4 51.5 50.3
General and administrative costs 40.9 41.9 41.9 48.0
------ ------ ------ ------
Income from operations 8.0 9.7 6.6 1.7
Other income 0.9 2.0 0.8 2.0
Interest and loan fees (0.7) (1.1) (0.8) (1.5)
------ ------ ------ ------
Income before income taxes 8.2 10.6 6.6 2.2
Income tax expense 0.1 0.0 0.1 0.0
------ ------ ------ ------
Net income 8.1 10.6 6.5 2.2
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
COMPARISON OF THIRD QUARTER OF 1998 TO THIRD QUARTER OF 1997
Revenues increased 60.3% to $11.3 million from $7.1 million. Call
volume grew to over 17 million calls in the third quarter of 1998 from
approximately 11 million calls during the third quarter of 1997. This increase
was due primarily to increased call volumes under existing contracts. This
increase was partially offset by a decrease in call volumes resulting from the
expiration of three contracts.
Direct operating costs increased 69.2% to $5.8 million from $3.4
million. This increase was primarily due to increased call volumes and the cost
of operating additional call centers in 1998. As a percentage of revenues,
direct operating costs increased to 51.1% from 48.4%. This increase was due
primarily to increased personnel and data costs associated with the start-up of
new call centers.
General and administrative costs increased 56.6% to $4.6 million from
$3.0 million. This increase resulted primarily from the cost of operating
additional call centers in 1998, the investment in corporate services necessary
to support additional call centers and the increase in depreciation expense
associated with additional call centers. As a percentage of revenues, general
and administrative costs decreased to 40.9% from 41.9%. This decrease resulted
primarily from operating efficiencies associated with the expansion of the
Company's revenue base.
Depreciation and amortization increased by 67.4% to $971,000 from
$580,000 due primarily to the purchase of equipment for new call centers,
upgrades for existing call centers and corporate operations, and database
amortization.
Other income for the three months ended September 30, 1998 was $102,000
and consisted primarily of interest income. Other income for the three months
ended September 30, 1997 was $139,000 and consisted primarily of interest
income.
Interest expense and loan fees decreased 3.0% to $75,000 from $77,000.
This decrease was attributable to the decrease in the average interest rate paid
on outstanding debt, offset by the increase in average debt outstanding to $1.5
million from $1.4 million.
Income tax expense for the three months ended September 30, 1998 was
$14,800, for an effective tax rate of approximately 1.6%. This rate differs from
the combined federal and state statutory rate of approximately 39% due to the
use of net operating loss carryforwards. For the three months ended September
30, 1997, the Company did not recognize income tax expense.
7
<PAGE>
COMPARISON OF THE FIRST NINE MONTHS OF 1998 TO THE FIRST NINE MONTHS OF 1997
Revenues increased 83.9% to $31.3 million from $17.0 million. Call
volume grew to over 49 million calls in the first nine months of 1998 from
approximately 27 million calls during the first nine months of 1997. This
increase was due primarily to increased call volumes under existing contracts.
This increase was partially offset by a decrease in call volumes resulting from
the expiration of three contracts.
Direct operating costs increased 88.4% to $16.1 million from $8.5
million. This increase was primarily due to increased call volumes and the cost
of operating additional call centers in 1998. As a percentage of revenues,
direct operating costs increased to 51.5% from 50.3%. This increase was due
primarily to increased personnel associated with the start-up of new call
centers and increased data costs.
General and administrative costs increased 60.6% to $13.1 million from
$8.2 million. This increase resulted primarily from the cost of operating
additional call centers in 1998, the investment in corporate services necessary
to support additional call centers and the increase in depreciation expense
associated with additional call centers. As a percentage of revenues, general
and administrative costs decreased to 41.9% from 48.0%. This decrease resulted
primarily from operating efficiencies associated with the expansion of the
Company's revenue base.
Depreciation and amortization increased by 73.9% to $2.7 million from
$1.6 million due primarily to the purchase of equipment for new call centers,
upgrades for existing call centers and corporate operations, and database
amortization.
Other income for the nine months ended September 30, 1998 was $248,000
and consisted primarily of interest income offset by losses upon the disposition
of assets. Other income for the nine months ended September 30, 1997 was
$333,000 and consisted primarily of interest income offset by losses upon the
disposition of assets.
Interest expense and loan fees decreased 2.8% to $255,000 from
$262,000. This decrease was attributable to the decrease in the average interest
rate paid on outstanding debt, offset by the increase in average debt
outstanding to $1.9 million from $1.6 million.
Income tax expense for the nine months ended September 30, 1998 was
$44,300, for an effective tax rate of approximately 2.1%. This rate differs from
the combined federal and state statutory rate of approximately 39% due to the
use of net operating loss carryforwards. For the nine months ended September 30,
1997, the Company did not recognize income tax expense.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents are recorded at cost which
approximates their fair market value. As of September 30, 1998, the Company had
$8.2 million in cash and cash equivalents compared to $8.5 million at December
31, 1997, a decrease of $306,000 primarily from the acquisition of capital
equipment and the repayment of debt, offset by cash provided by operations and
proceeds from the exercise of warrants and options.
Working capital was $9.1 million at September 30, 1998, compared to
$9.8 million at December 31, 1997. This decrease is due primarily to the use of
cash for capital expenditures and debt repayment, offset by working capital
provided by operations and proceeds from the exercise of warrants and options.
The Company has a $6.0 million secured operating line of credit with a
commercial bank. The line of credit expires in 2000. Availability under the line
of credit may be subject to borrowing base requirements and requires compliance
with loan covenants. Under the terms of the agreement, outstanding borrowings
bear interest at the prime rate and all assets of the Company, other than assets
previously pledged under existing lease agreements, are pledged to the bank as
collateral. The agreement contains minimum net worth, working capital and
profitability requirements as well as certain other restrictive covenants and
prohibits the payment of cash dividends by the Company without the bank's
consent. As of September 30, 1998, the Company had no borrowings against this
line of credit. The Company also has a credit facility under which the Company
may borrow up to $2.0 million to
8
<PAGE>
finance purchases of capital equipment. Borrowings bear interest at the prime
rate (8.5 percent at September 30, 1998) plus 0.25 percent and are secured by
the purchased equipment. As of September 30, 1998, the Company had no
borrowings against this credit facility.
As of September 30, 1998, the Company had $923,000 in borrowings with a
commercial bank in order to finance equipment purchases. This borrowing bears
interest at the prime rate plus 0.5 percent and is secured by the purchased
equipment. The terms of the loan call for an "interest only" accumulation period
through August 1998 followed by 42 monthly payments of principal plus interest.
The Company believes that current cash and cash equivalents, cash flows
from operations and available credit facilities are sufficient to meet current
and anticipated future capital requirements through 1998.
CASH FLOW FROM OPERATIONS. Net cash from operations for the nine months
ended September 30, 1998 was $5.3 million, resulting primarily from net income,
the effect of noncash depreciation and amortization and an increase in accounts
payable and accrued expenses, offset by an increase in accounts receivable.
CASH FLOW FROM INVESTING ACTIVITIES. Cash used in investing activities
was $5.4 million for the nine months ended September 30, 1998 and was related
primarily to capital expenditures for purchase of equipment for new call centers
and the upgrade and expansion of existing call centers.
CASH FLOW FROM FINANCING ACTIVITIES. Net cash used in financing
activities was $200,000 for the nine months ended September 30, 1998, resulting
from the net repayment of debt obligations totaling $665,000. Cash used in
financing activities was offset by the exercise of warrants and options to
purchase 200,383 shares of Common Stock and the receipt of cash proceeds by the
Company of $465,000.
FUTURE CAPITAL NEEDS AND RESOURCES. The primary uses of capital are
expected to be the build-out of new call centers, including initial operating
expenses, the payment of principal and interest on indebtedness and the purchase
of equipment and development of technology for the improvement of existing call
centers. The Company anticipates that its capital expenditures will be
approximately an additional $2.0 million to $4.0 million through the end of
1998, resulting primarily from the projected expansion and planned improvements.
The Company believes its existing cash and cash equivalents, credit facilities
and cash from operations will be sufficient to fund its operations through the
end of fiscal 1998.
YEAR 2000 COMPLIANCE. Certain technology hardware and software
systems use two-digit fields to score and recognize years, assuming the first
two digits of the year are "19" (e.g., the number "98" is recognized as
"1998"). This and certain similar protocols give rise to possible problems
related to the recognition of dates in years after 1999 - so-called "Year
2000" issues. The Company has commenced a program to identify, remediate, test
and develop contingency plans for the Year 2000 issue (the "Y2K Program").
Significant issues are expected to be identified by January of 1999. All
phases are expected to be completed prior to July 1999. The Y2K Program
includes a review of (1) information and other technology systems used in the
Company's internal business; (2) the Company's hardware and software products
delivered to customers; and (3) third party vendors, manufacturers and
suppliers. An assessment has been made of the key internal systems, and the
Company believes that systems that are not already Year 2000 ready will be
modified, upgraded or replaced. The Company is currently assessing its
products, and is working with third party vendors, manufacturers and suppliers
to identify and resolve Year 2000 issues. The Company does not believe that
the historical or anticipated costs of remediation have had, or will have, a
material effect on the Company's financial condition or results of
operations. However, because of the existence of numerous systems and related
components within the Company and the interdependency of these systems, it is
possible that certain systems at the Company, or systems at entities that
provide services or goods for the Company, may fail to operate in the Year
2000. The Company is continuing to evaluate the risks to the Company of
failure to be Year 2000 compliant and to develop a contingency plan. Although
it is not currently anticipated, the inability to complete the Company's Y2K
Program on a timely basis or the failure of a system at the Company or at an
entity that provides services or goods to the Company may have a material
impact on future operating results or financial condition.
9
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
--------
27.1 Financial data schedule
(b) Reports filed on Form 8-K
-------------------------
There were no reports filed on Form 8-K during the quarter ended
September 30, 1998.
10
<PAGE>
SIGNATURE
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.
Metro One Telecommunications, Inc.
----------------------------------
Registrant
Date: November 11, 1998
/s/ Stebbins B. Chandor, Jr.
-----------------------------
Stebbins B. Chandor, Jr.
Senior Vice President
Chief Financial Officer
/s/ R. Tod Hutchinson
------------------------------
R. Tod Hutchinson
Vice President
Controller
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF SEPT-30-1998 AND THE RELATED STATEMENTS OF OPERATIONS FOR THE THREE
AND NINE MONTH PERIODS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998
<PERIOD-START> JUL-01-1998 JAN-01-1998
<PERIOD-END> SEP-30-1998 SEP-30-1998
<CASH> 8,248 8,248
<SECURITIES> 0 0
<RECEIVABLES> 5,459 5,459
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 14,441 14,441
<PP&E> 24,997 24,997
<DEPRECIATION> 7,648 7,648
<TOTAL-ASSETS> 32,409 32,409
<CURRENT-LIABILITIES> 5,355 5,355
<BONDS> 886 886
0 0
0 0
<COMMON> 37,979 37,979
<OTHER-SE> (11,812) (11,812)
<TOTAL-LIABILITY-AND-EQUITY> 32,409 32,409
<SALES> 0 0
<TOTAL-REVENUES> 11,312 31,280
<CGS> 0 0
<TOTAL-COSTS> 5,786 16,104
<OTHER-EXPENSES> 4,622 13,099
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 75 255
<INCOME-PRETAX> 931 2,070
<INCOME-TAX> 15 44
<INCOME-CONTINUING> 916 2,026
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 916 2,026
<EPS-PRIMARY> $.08 $.18
<EPS-DILUTED> $.08 $.18
</TABLE>
