<PAGE> 1
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 March 31, 1997
[ ] Transition Report Under Section 13 or 15(d) of the Exchange Act
Commission file number 0-26110
AMERICAN PHOENIX GROUP, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE
(State or Other Jurisdiction of
Incorporation or Organization)
13-3768554
(IRS Employer Identification No.)
930 EAST ARQUES AVENUE, SUNNYVALE, CALIFORNIA 94086-4552
(Address of principal executive offices)
(Zip Code)
(408) 523-8000
(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, and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
The number of shares of Common Stock outstanding was 29,576,301 shares as of May
15, 1997
Transitional Small Business Disclosure Format: Yes [ ] No [X]
<PAGE> 2
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
AMERICAN PHOENIX GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, June 30,
1997 1996
------------ -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 219,542 $ 187,957
Inventory 1,481,115 592,482
Accounts receivable 204,140 112,719
Prepaid expenses 29,848
Notes receivable, net of allowance of $4,378,000 5,000,000
------------ -----------
TOTAL CURRENT ASSETS 6,904,797 923,006
------------ -----------
PROPERTY AND EQUIPMENT, Net 695,533 311,515
------------ -----------
OTHER ASSETS
Investment at cost 300,000
Deposits and other assets 404,647 220,584
------------ -----------
704,647 220,584
------------ -----------
$ 8,304,977 $ 1,455,105
------------ -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable - stockholders $ 4,105,731 $
Accounts payable and accrued expenses 1,387,911 500,788
Reserve for rescission/guarantee 526,000
------------ -----------
TOTAL CURRENT LIABILITIES 6,019,642 500,788
------------ -----------
STOCKHOLDERS' EQUITY
Preferred stock - authorized 10,000,000 shares, $.01 par value,
issued and outstanding - 8,000,000 shares at March 31, 1997
1996 and June 30, 1996 80,000 80,000
Common stock - authorized 50,000,000 shares, $.001 par value,
issued and outstanding - 28,846,076 shares at March 31,
1997 and 4,000,000 at June 30, 1996 28,846 4,000
Additional paid-in capital 18,727,681 7,315,280
Subscriptions receivable (266,240)
Accumulated deficit (16,284,952) (6,444,963)
------------ -----------
2,285,335 954,317
------------ -----------
$ 8,304,977 $ 1,455,105
------------ -----------
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
2
<PAGE> 3
AMERICAN PHOENIX GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
March 31, 1997 March 31, 1996
-------------- --------------
<S> <C> <C>
REVENUES $ 405,626 $ 334,133
------------ -----------
COSTS AND EXPENSES
Cost of sales 337,309 248,442
Selling, general and administrative 5,680,978 2,863,033
------------ -----------
TOTAL COSTS AND EXPENSES 6,018,287 3,111,475
------------ -----------
LOSS BEFORE OTHER INCOME (EXPENSE) (5,612,661) (2,777,342)
------------ -----------
OTHER INCOME (EXPENSE)
Provision for losses on notes receivable (4,306,649)
Interest income 142,339 6,571
Interest expense (63,018)
------------ -----------
(4,227,328) 6,571
------------ -----------
NET LOSS $ (9,839,989) $(2,770,771)
------------ -----------
NET LOSS PER SHARE $ (0.51) $ (0.69)
------------ -----------
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 19,271,816 4,000,000
------------ -----------
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
3
<PAGE> 4
AMERICAN PHOENIX GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 1997 March 31, 1996
-------------- --------------
<S> <C> <C>
REVENUES $ 53,362 $ 92,740
------------ -----------
COSTS AND EXPENSES
Cost of sales 43,000 83,987
Selling, general and administrative 2,862,066 1,278,526
------------ -----------
TOTAL COSTS AND EXPENSES 2,905,066 1,362,513
------------ -----------
LOSS BEFORE OTHER INCOME (EXPENSE) (2,851,704) (1,269,773)
------------ -----------
OTHER INCOME (EXPENSE)
Provision for losses on notes receivable (4,306,649)
Interest income 230 2,172
Interest expense (4,170) 0
------------ -----------
(4,310,589) 2,172
------------ -----------
NET LOSS $ (7,162,293) $(1,267,601)
------------ -----------
NET LOSS PER SHARE $ (0.25) $ (0.32)
------------ -----------
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 28,846,076 4,000,000
------------ -----------
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
4
<PAGE> 5
AMERICAN PHOENIX GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
March 31, 1997 March 31, 1996
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(9,839,989) $(2,770,771)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 208,017 61,065
Shares of common stock issued for services 725,854
Amortization of discount on notes receivable (132,053)
Provision for losses on notes receivable 4,306,649
Changes in operating assets and liabilities:
Inventory (888,633) (394,376)
Accounts receivable (91,421) (5,630)
Prepaid expenses 29,848 16,801
Accounts payable and accrued expense 140,268 267,554
----------- -----------
Net cash used in operating activities (5,541,460) (2,825,357)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease (increase) in other assets (53,929) (35,263)
Investment (300,000)
Collection of notes receivable 1,078,000
Purchases of property and equipment (544,003) (241,769)
----------- -----------
Net cash used in investing activities 180,068 (277,032)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash received on reverse merger 804,107
Proceeds from short-term borrowings 1,750,000
Sale of common stock 2,838,870 3,338,413
----------- -----------
Net cash provided by financing activities 5,392,977 3,338,413
----------- -----------
NET INCREASE IN CASH 31,585 236,024
CASH, beginning of period 187,957 333,574
----------- -----------
CASH, end of period $ 219,542 $ 569,598
----------- -----------
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
5
<PAGE> 6
AMERICAN PHOENIX GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. COMMENTS
The accompanying unaudited consolidated condensed financial statements,
which are for interim periods, do not include all disclosures provided in
the annual consolidated financial statements. These unaudited consolidated
condensed financial statements should be read in conjunction with the
consolidated financial statements and the footnotes thereto contained in
the Annual Report on Form 10-KSB for the year ended August 31, 1996 of
American Phoenix Group, Inc. (the "Company"), as filed with the Securities
and Exchange Commission.
In the opinion of the Company, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (which are of a
normal recurring nature) necessary for a fair presentation of the
financial statements. The results of operations for the three and nine
months ended March 31, 1997 are not necessarily indicative of the results
to be expected for the full fiscal year.
2. BASIS OF PRESENTATION
On October 24, 1996, the Company entered into a definitive Agreement and
Plan of Reorganization (the "TAAL Agreement"), by and among the Company,
TAAL, and other persons constituting holders of all of the issued and
outstanding capital stock of TAAL. The TAAL agreement was closed on
November 13, 1996. Consummation of the agreement has resulted in a change
of control of the Company. Under the terms of the TAAL agreement, the
Company acquired all of the outstanding capital of TAAL in exchange for
4,000,000 shares of the Company's common stock and 8,000,000 shares of the
Company's Preferred Stock comprised of four separate series denominated as
Series A through D. Each Series of the Preferred stock (comprised of
2,000,000 shares each) will be convertible into 6,000,000 shares of common
stock upon the expiration of the applicable periods. The conversion ratio
applied gives effect to a contemplated reverse split of 2:1 of the common
stock . The initial issuance of 4,000,000 shares of common stock at the
closing of the transaction represented pre-split shares. The transaction
was accounted for as a reverse acquisition whereby the Company which was
the legal acquirer was considered, for accounting purposes, to be the
acquiree since TAAL shareholders acquired majority control of the Company.
Subsequently, the Company adopted TAAL's fiscal year end of June 30.
In September 1996, TAAL foreclosed on delinquent obligations due from its
affiliate, Tetherless Access, Ltd. ("TAL USA"). Pursuant to the
foreclosure, TAAL succeeded to the assets and liabilities of TAL USA. The
objective of TAL USA was, and the objective of the Company is, the
creation of low cost medium speed wireless data communications by
obviating the need for wire lines in geographic locations, particularly in
developing economies outside the United States, where such lines are
either non-existent or costly to install. The historical financial
statements include the unaudited combined balance sheets of
6
<PAGE> 7
TAAL and TAL USA as of June 30, 1996, unaudited combined results of
operations for the three and nine months ended March 31, 1996 and cash
flows for the nine months ended March 31, 1996.
3. NOTES RECEIVABLE
Notes receivable consisted of the following at March 31, 1997:
<TABLE>
<S> <C>
Non-interest bearing promissory note from the sale of a
loan portfolio payable as follows: $500,000 on December
1, 1996, $3,000,000 on December 15, 1996, $2,000,000
on January 31, 1997 and $3,100,000 on February 28, 1997
The December 1, 1996 installment was received. The
December 15, 1996 installment was subsequently extended
to January 31, 1997 with interest at 10% per annum
The note is in default. $ 8,100,000
Non-interest bearing promissory note due in various installments
as follows: $150,000 on November 30, 1996, $350,000 on December
31, 1996, $500,000 on January 31, 1997 and $500,000 on
February 28, 1997. The November 30 and December 31 installments
were received. The note is in default. 1,000,000
Promissory note due on November 11, 1996. The note
is in default. 200,000
Non-interest bearing promissory note of $156,000 payable in
two equal installments of $78,000 on November 21, 1996
and December 31, 1996. The November 21
installment was received. The note is in default. 78,000
-----------
$ 9,378,000
Less allowance for imputed interest (71,351)
Less allowance for losses (4,306,649)
-----------
$ 5,000,000
-----------
</TABLE>
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following discussion should be read in conjunction with the
Consolidated Financial Statements and related notes thereto included elsewhere
herein. As a result of the share exchange with the shareholders of Tetherless
Access Asia Limited ("TAAL") which for accounting purposes was treated as a
reverse acquisition, the Company adopted the fiscal year end of TAAL. As a
consequence, the results for the nine months ended March 31, 1997 and 1996 are
those of TAAL.
Overview
The Company is primarily engaged in providing, primarily through local
affiliates, wireless data communications services to customers who are located
principally in developing economies thereby taking advantage of the increasing
demand for alternatives to wire line services in those locations.
On October 24, 1996, the Company entered into an agreement to acquire all
of the capital stock of TAAL in exchange for shares of Common Stock and
Preferred Stock to be issued to the TAAL Shareholders. On a fully diluted basis,
the shareholders of TAAL are the beneficial owners of 60% of the Company's
Common Stock. The TAAL transaction was consummated on November 13, 1996. As a
condition to closing, the Company was required to sell its business assets and
make the proceeds generated from such disposition available to fund the business
of TAAL. As a result, the Company's MTA/Masling subsidiary and its Barlile and
note portfolio investments were sold for a total consideration of approximately
$10.3 million in promissory notes. To date, the Company has received
approximately $1.1 million. The notes are currently in default with respect to
the balance. The Company has commenced suit for payment of approximately $9.1
million due under the promissory notes.
TAAL had been formed in 1995 to market and distribute products
developed by Tetherless Access Limited, Inc., a California corporation ("TAL
US"), in Asia and Africa,. In addition, it provided most of the debt and
equity financing to fund TAL US's operations. TAL US had been formed in 1990 to
develop and manufacture wireless data communications products. The loans made
by TAAL were secured by all of the assets of TAL US. After it became apparent
that TAL US would be unable to meet its financial obligations to TAAL, in
September 1996, TAL US's assets and liabilities were transferred to TAAL, and
the operations of the two entities were subsequently consolidated.
Results of Operations for the three and nine month period ended March 31,
1997 and 1996
Total revenues during the three and nine months ended March 31, 1997, were
approximately $53,000 and $406,000, respectively, compared to $93,000 and
$334,000 in the comparable periods in 1996. TAAL's principal source of revenue
historically has been sales of wireless network hardware. The Company has
changed its mission to that of a network service provider. The Company derives
revenues from recurring fees charged to users of the Company's wireless network
systems. As a result, the Company's receipt of revenues from providing network
services will be delayed while the Company builds and installs networks and
obtains subscribers. In addition, the Company expects to allocate substantially
all available cash from revenues to business expansion. Consequently, due to
front end expenditures in building a network infrastructure, the Company's
management does not expect the Company to realize positive cash flow for several
years until the network infrastructure and the subscriber base have been
established.
Total selling, general and administrative expenses were approximately
$2,862,000 and $5,681,000 for the three and nine months ended March 31, 1997,
compared to $1,279,000 and $2,863,000 in the
8
<PAGE> 9
comparable periods in 1996. The increase in selling, general and administrative
expenses reflect the expenses associated with the development of wireless
networks in the Company's operating locations and the addition of key personnel
at these locations as well as at the Company's corporate headquarters in
Sunnyvale, California.
The Company recorded interest income of approximately $142,000 during the
nine months ended March 31, 1997. This income reflects the amortization of the
present value discount recorded for certain non-interest bearing notes received
in payment of the Company's disposition of assets in November 1996.
During the nine months ended March 31, 1996, the Company incurred total
interest expense of approximately $63,000, reflecting accrued interest on a $2.2
million note payable in connection with the purchase of a note portfolio. The
Company may seek to convert this note into equity in the future. The Company
recorded a provision of $4.3 million for potential losses on notes receivable
during the three months ended March 31, 1997.
Liquidity and Capital Resources
The Company had working capital of approximately $885,000 at March 31,
1997, which represented an increase of $462,000 compared to working capital of
$423,000 at June 30, 1996 and a decrease of $9,058,000 compared to working
capital of $9,943,000 at December 31, 1996. The working capital decrease is
primarily due to the establishment of a $4,378,000 reserve against notes
receivable, as set forth below, and the reclassification of a $2.2 million note
to current liabilities, which previously was excluded from liabilities and
reflected as liabilities to be satisfied by the issuance of Common Stock. The
Company may seek to convert this obligation to equity in the future.
At March 31, 1997, the Company had total cash of approximately $220,000.
In February 1997, the Company received $750,000 in a private placement of
its Common Stock that has since been terminated. Accordingly, the Company has
classified the investment as a note payable. The Company intends to negotiate a
conversion of the note to equity on terms acceptable to both parties.
In March 1997, TAAL received a $2,000,000 loan commitment from a
commercial bank, the repayment of which is guaranteed by one of the Company's
stockholders. As of March 31, 1997, the Company had received $1 million under
this commitment. Subsequently, the Company received an additional $1 million as
well as a further $350,000 from the same stockholder. All of the funds received
were used to fund the Company's operations. The loan is due on June 15, 1997, at
which time the Company will likely seek an extension of the term of the loan.
There can be no assurance that the Company will succeed in negotiating an
extension of the loan. In consideration for guarantying the loan, the
stockholder was granted a security interest in all of the assets of TAAL. The
Company is negotiating an additional loan from another one of its stockholders.
The proceeds of this loan will be used to fund the Company's operations as well.
In consideration for the Company's sale of its note portfolio in
November 1996, the Company received a promissory note in the principal amount of
$8.6 million from Capital Finance Corporation Pty. Ltd. ("Capital Finance"). An
initial payment of $500,000 was made to the Company. After granting Capital
Finance two extensions, the note was declared in default with respect to the
balance. On May 14, 1997, the Company commenced suit against Capital Finance in
the Supreme Court of Victoria at Melbourne, Australia, for payment of $8.1
million plus interest and cost of collection.
In connection with the sale by the Company to Rubywell Pty. Ltd., a
principal stockholder of the Company ("Rubywell"), of its interest in Marine
Turbine Australia Pty. Ltd. in November 1996, Rubywell assigned to the Company a
promissory note made by Budbox, Inc. ("Budbox") in the principal amount of
$1,500,000 in satisfaction of its obligation to the Company. The Company
received payments totaling $500,000. The note is currently in default with
respect to the balance. On May 15, 1997, the Company commenced suit against
Budbox in the Supreme Court of Victoria at Melbourne, Australia, for payment of
$1 million plus interest and cost of collection.
9
<PAGE> 10
In connection with the sale of the Company's interest in Barlile Corp.,
Ltd. to Clouden Pty. Ltd., as Trustee for Finance Investment Trust ("Clouden"),
the Company received a promissory note in the amount of $156,000, providing for
two payments of $78,000 each. To date, the second payment which was due on
February 28, 1997, has not been received. The Company is considering steps to
secure satisfaction of the note, including a possible lawsuit.
In September 1996, the Company loaned $200,000 to Vancouver Development
Company ("VDC") in exchange for which it received a promissory note from VDC
payable in November 1996. The loan is currently in default. The Company is
considering steps to secure satisfaction of the note, including a possible
lawsuit. The loan was made in connection with purported agreements entered into
in November 1995 which provided for the acquisition of VDC by the Company and
the employment of its principal. These purported agreements have since been
rescinded.
The Company has established a reserve against potential future losses in
connection with the defaults under the various promissory notes, as follows:
$3.1 million in connection with the Capital Finance note; $1 million in
connection with the Budbox note; $78,000 in connection with the Clouden note;
and $200,000 in connection with the VDC note.
The Company is in various stages of implementing, primarily through joint
ventures, wireless networks in Argentina, Australia, New Zealand, China,
Philippines and Alaska. The realization of its plans are contingent upon raising
large amounts of capital. Initially, upon the consummation of the TAAL
transaction, the Company assumed that the proceeds from the sale of the
Company's assets would be sufficient to continue its operations during the 12
months following the closing. This assumption was based upon full satisfaction
of the promissory notes that the Company received in consideration for the
assets sold. Most of theses notes are currently in default. The Company has
commenced suit in Australia for payment of two of the notes representing in the
aggregate $9.1 million. There can be no assurance that the Company will be able
to collect the amounts due under the notes.
As a result of the defaults under the promissory notes, the Company is
evaluating its capital requirements and the available options to raise funds.
The Company is currently primarily dependent on short term loans from its
stockholders to continue its operations. The Company is investigating the
possibility of raising capital through one or more private placements and other
sources. Although the Company is optimistic that it will be able to raise
sufficient capital, there can be no assurance that the Company will be
successful in its efforts to raise capital to fund its wireless network
operations. Failure by the Company to raise sufficient capital will have a
materially adverse impact on its operations.
10
<PAGE> 11
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
See the disclosures under "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital Resources"
contained in Part I of this report which are incorporated herein by reference
thereto.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
During the fiscal quarter ended March 31, 1997, holders of 15,289,551
shares of Common Stock and 5,221,463 shares of Preferred Stock (or 55.7% of the
total entitled to vote thereon), consented in writing without a meeting to a
change of the corporate name to "TAL Wireless Networks, Inc." It is anticipated
that the name change will become effective on or about May 23, 1997. Such
stockholders also consented to (i) effectuate a one for two reverse stock split,
(ii) increase the number of shares of Common Stock the Company is authorized to
issue to 100,000,000 and (iii) increase the number of shares of Preferred Stock
the Company is authorized to issue to 60,000,000. However, the Company will not
be able to implement these amendments to its certificate of incorporation until
it satisfies the applicable rules and regulations to clarify and update certain
disclosures and financial statements required to be included in an information
statement to be distributed to the Company's stockholders. The distribution of
such document is a pre-requisite to the implementation of the three corporate
actions set forth above.
ITEM 5. OTHER INFORMATION.
On March 17, 1997, the Company was notified that, pending complete review
of its initial listing application, effective March 18, 1997, the Company's
securities would not continue to be listed on the Nasdaq SmallCap Market
("Nasdaq") due to various concerns expressed in Nasdaq's notification to the
Company. As a result, the Company's securities are currently traded on the OTC
Bulletin Board.
In April 1997, John Davis resigned his position as the Company's Chairman
and Chief Executive Officer. Mr. Davis remains a member of the Board of
Directors. Richard Redett replaced John Davis as the Company's Chairman while
John Vargo was appointed the Company's Chief Executive Officer.
See the disclosures under "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital Resources"
contained in Part I of this report which are incorporated herein by reference
thereto.
11
<PAGE> 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Press Release issued by Registrant on May 16, 1997, is attached hereto
as Exhibit 1.
(b) On January 16, 1997, Registrant filed an amendment to a Current Report
on Form 8-K. The amendment contained financial statements required in connection
with the acquisition of Tetherless Access Asia Limited.
12
<PAGE> 13
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this Report to be signed on its behalf by the undersigned thereto duly
authorized.
Date: May 19, 1997
AMERICAN PHOENIX GROUP, INC.
By: /s/ Richard Redett
-----------------------
Richard Redett,
Chairman and Chief Financial and
Principal Accounting Officer
<PAGE> 1
AMERICAN PHOENIX GROUP, INC.
DECLARES DEFAULT ON NOTES
Sunnyvale, Calif., May 16, 1997 -- American Phoenix Group, Inc. (OTC:
APHX/APHXW), which intends to change its name to TAL Wireless Networks, Inc. on
or about May 20, 1997, today announced that after granting Capital Finance Corp.
(Capital) several extensions to pay the balance of $8.1 million due on Capital's
promissory note in favor of the company, the Company has declared the Capital
note in default. The Company also announced today that it has filed suit in
Australia against Capital. The Company will take steps to repossess the loan
portfolio sold to Capital.
The Company also announced today that after granting Budbox, Inc. (Budbox)
several extensions to pay the balance of $1 million due on Budbox's promissory
note in favor of the Company, the Company has declared the Budbox note in
default. The Company announced that it also commenced litigation against Budbox
to collect this sum.
Both notes were issued in connection with the Company's disposition of assets in
November 1996. The Company sold a loan portfolio to Capital which it had
acquired from P.R. Finance & Investment Ltd. in February 1996. As a condition to
closing the Company's acquisition of Tetherless Access Ltd. on November 13,
1996, the Company was required to have $10 million or more in cash or cash
equivalents. The Company sold substantially all of its assets for $10.3 million
in short-term notes.
The Company has held discussions regarding the possible sale of the loan
portfolio. The company will continue to evaluate its alternatives, but it cannot
predict the amount it may ultimately recover from the legal proceedings against
Capital and Budbox. Based on all information available to the Company at this
time, the Company intends to create a partial reserve of approximately $4.1
million against potential future losses. In the last several months the Company
received $2 million under a loan facility established by a major shareholder,
and recently received a commitment from another shareholder for additional
funding.
Through Tetherless Access Limited, its wholly owned operating subsidiary, the
Company is primarily engaged in providing wireless data communications services
to customers who are located principally in developing economies, capitalizing
on the increasing demand for alternatives to wire line services. TAL currently
has established operations in Alaska, Argentina, Australia, New Zealand, China
and the Philippines.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 219,542
<SECURITIES> 0
<RECEIVABLES> 204,140
<ALLOWANCES> 0
<INVENTORY> 1,481,115
<CURRENT-ASSETS> 6,904,797
<PP&E> 988,949
<DEPRECIATION> 293,416
<TOTAL-ASSETS> 8,304,977
<CURRENT-LIABILITIES> 6,019,642
<BONDS> 0
0
80,000
<COMMON> 28,846
<OTHER-SE> 2,176,489
<TOTAL-LIABILITY-AND-EQUITY> 8,304,977
<SALES> 405,626
<TOTAL-REVENUES> 405,626
<CGS> 337,309
<TOTAL-COSTS> 337,309
<OTHER-EXPENSES> 5,680,978
<LOSS-PROVISION> 4,306,649
<INTEREST-EXPENSE> 63,018
<INCOME-PRETAX> (9,839,989)
<INCOME-TAX> 0
<INCOME-CONTINUING> (9,839,989)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,839,989)
<EPS-PRIMARY> (0.51)
<EPS-DILUTED> 0.00
</TABLE>
