-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RtmvYrKmYzTKj2QNZEaNCua3N2/GE8EPLjII2iSLxt11rIE1r8uQc+uIwxdXq6aF DQqLuvVH8Vd0DI0YHy23gw== 0001035704-02-000039.txt : 20020413 0001035704-02-000039.hdr.sgml : 20020413 ACCESSION NUMBER: 0001035704-02-000039 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20020114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WORLD WIRELESS COMMUNICATIONS INC CENTRAL INDEX KEY: 0001031744 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATION SERVICES, NEC [4899] STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-15837 FILM NUMBER: 2508996 BUSINESS ADDRESS: STREET 1: 5670 GREENWOOD PLAZA BLVD STREET 2: SUITE 340 CITY: ENGLEWOOD STATE: CO ZIP: 80111 BUSINESS PHONE: 8015756600 MAIL ADDRESS: STREET 1: 5670 GREENWOOD PLAZA BLVD STREET 2: SUITE 340 CITY: ENGLEWOOD STATE: CO ZIP: 80111 10-Q/A 1 d93272a1e10-qa.txt AMENDMENT NO. 1 TO FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A Amendment No. 1 --------------- QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED MARCH 31, 2001 Commission file number 001-15837 ---------------------------------- WORLD WIRELESS COMMUNICATIONS, INC. ----------------------------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Nevada 87-0549700 ------------------------------------ ------------------------------------ (State of other jurisdiction of (I.R.S. employer incorporation or organization) identification No.) 5670 Greenwood Plaza Boulevard, Penthouse Greenwood Village, Colorado 80111 ---------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number (303) 221-1944 -------------- Indicate by check mark whether registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 . ---- ---- As of April 30, 2001 there were 31,222,181 shares of the Registrant's Common Stock, par value $0.001, issued and outstanding. Explanatory Note: This amendment on Form 10-Q/A amends the registrant's quarterly report on Form 10-Q for the three months ended March 31, 2001 as filed by the registrant on May 15, 2001, and is being filed to reflect the restatement of the registrant's unaudited consolidated financial statements. See Note 7 to the unaudited consolidated financial statements. TABLE OF CONTENTS
PART I. Financial Information Item 1. Financial Statements: Statement Regarding Forward-Looking Disclosure..............................................1 Unaudited Condensed Consolidated Balance Sheets - as of March 31, 2001 and December 31, 2000........................................................2 Unaudited Condensed Consolidated Statements of Operations - for the Three Months Ended March 31, 2001 and March 31, 2000 ...............................4 Unaudited Condensed Consolidated Statements of Cash Flow - for the Three Months Ended March 31, 2001 and March 31, 2000................................5 Notes to Unaudited Condensed Consolidated Financial Statements .............................7 Item 2. Management's Discussion and Analysis of Results of Operation and Financial Condition....................................................................11 PART II. Other Information Item 1. Legal Proceedings..........................................................................15 Item 2. Changes in Securities and Use of Proceeds..................................................15 Item 6. Exhibits and Reports on Form 8-K...........................................................15 Signatures.................................................................................16
PART I - FINANCIAL INFORMATION - ------------------------------ STATEMENT REGARDING FORWARD-LOOKING DISCLOSURE This report includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Act" or the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which represent the expectations or beliefs of World Wireless Communications, Inc. and our subsidiaries (collectively the "Company", "we" or "us") concerning future events that involve risks and uncertainties, including and without limitation, (i) those associated with the ability of the Company to obtain financing for our current and future operations, to manufacture (or arrange for the manufacturing of) our products, to market and sell our products, and our ability to establish and maintain our sales of X-traWeb(TM) products, (ii) general economic conditions and (iii) technological developments by us, our competitors and others. All statements other than statements of historical facts included in this Report including, without limitation, the statements under "Management's Discussion and Analysis of Results of Operations and Financial Condition" and elsewhere herein, are forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot assure you that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from our expectations ("Cautionary Statements") are disclosed in this Report, including, without limitation, in connection with the forward-looking statements included in this report. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the Cautionary Statements. -1- ITEM 1. FINANCIAL STATEMENTS WORLD WIRELESS COMMUNICATIONS, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS
MARCH 31, DECEMBER 31, 2001 2000 ---------- ------------ (As Restated, see Note 7) CURRENT ASSETS Cash and cash equivalents $ 988,063 $ 3,097,624 Investment in securities available-for-sale 30,015 19,109 Trade receivables, net of allowance for doubtful accounts 381,031 347,218 Other receivables 54,669 57,345 Inventory 608,672 558,076 Prepaid expenses 346,694 71,891 ---------- ------------ TOTAL CURRENT ASSETS 2,409,144 4,151,263 ---------- ----------- EQUIPMENT, NET OF ACCUMULATED DEPRECIATION AND IMPAIRMENTS 581,039 575,475 ---------- ------------ GOODWILL, NET OF ACCUMULATED AMORTIZATION 171,428 214,286 ---------- ------------ OTHER ASSETS, NET OF ACCUMULATED AMORTIZATION 54,536 28,863 ---------- ------------ TOTAL ASSETS $3,216,147 $ 4,969,887 ========== ============
(CONTINUED) The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. -2- WORLD WIRELESS COMMUNICATIONS, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED) LIABILITIES AND STOCKHOLDERS' EQUITY
MARCH 31, DECEMBER 31, 2001 2000 (As Restated, see Note 7) (As Restated, see Note 7) ------------------------- ------------------------- CURRENT LIABILITIES Trade accounts payable $ 531,038 $ 540,899 Accrued liabilities 211,046 371,149 Other liabilities 35,668 13,077 Notes payable 58,580 -- Obligation under capital leases - current portion 6,453 19,374 ------------ ------------ TOTAL CURRENT LIABILITIES 842,785 944,499 ------------ ------------ LONG-TERM OBLIGATION UNDER CAPITAL LEASES 9,081 9,633 ------------ ------------ STOCKHOLDERS' EQUITY Common stock - $0.001 par value; 50,000,000 shares authorized; issued and outstanding: 31,222,181 shares at March 31, 2001 and 31,208,847 shares at December 31, 2000 31,221 31,209 Additional paid-in capital 46,472,425 46,500,157 Accumulated other comprehensive loss (65,113) (56,764) Accumulated deficit (44,074,252) (42,458,847) ------------ ------------ TOTAL STOCKHOLDERS' EQUITY 2,364,281 4,015,755 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,216,147 $ 4,969,887 ============ ============
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. -3- WORLD WIRELESS COMMUNICATIONS, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, ---------------------------------------------------- 2001 2000 (As Restated, see Note 7) (As Restated, see Note 7) ------------------------- ------------------------- REVENUES: Services $ 19,000 $ 71,545 Royalties 9,379 213,084 Product sales 230,112 226,186 ----------- ----------- TOTAL REVENUE 258,491 510,815 COST OF SALES: Services 16,347 362,166 Products 114,124 65,940 ----------- ----------- TOTAL COST OF SALES 130,471 428,106 GROSS PROFIT 128,020 82,709 ----------- ----------- EXPENSES Research and development expense 153,799 237,742 Selling, general and administrative expenses 1,569,362 2,226,849 Amortization of goodwill 42,858 42,858 ----------- ----------- TOTAL EXPENSES 1,766,019 2,507,449 ----------- ----------- LOSS FROM OPERATIONS (1,637,999) (2,424,740) OTHER INCOME/(EXPENSE): Interest expense (1,452) (107,483) Other income 24,045 157,976 ----------- ----------- NET LOSS (1,615,406) (2,374,247) Preferred Stock Dividend -- (6,720) ----------- ----------- NET LOSS APPLICABLE TO COMMON STOCKHOLDERS $(1,615,406) $(2,380,967) =========== =========== Basic and Diluted Net Loss Per Common Share $ (0.05) $ (0.10) =========== =========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES USED IN PER SHARE CALCULATIONS 31,213,292 24,124,702
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. -4- WORLD WIRELESS COMMUNICATIONS, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, ---------------------------------------------------- 2001 2000 (As Restated, see Note 7) (As Restated, see Note 7) ------------------------- ------------------------- CASH FLOW FROM OPERATING ACTIVITIES Net Loss $(1,615,406) $(2,374,247) Adjustments to reconcile net loss to net cash used in operating activities: Amortization of goodwill 42,858 42,858 Depreciation 32,507 23,447 Compensation expense from stock options (45,185) 1,091,437 Loss on sale of securities 2,167 -- Provision for doubtful accounts receivable -- 93,304 Changes in operating assets and liabilities: Accounts receivable (31,137) 132,379 Inventory (50,596) 153,637 Prepaid expenses/other assets (300,476) (27,986) Accounts payable (9,861) (230,948) Accrued liabilities (137,512) 4,254 ----------- ----------- NET CASH USED IN OPERATING ACTIVITIES (2,112,641) (1,091,865) ----------- ----------- CASH FLOW FROM INVESTING ACTIVITIES Payments for the purchase of property and equipment (38,071) (22,769) Proceeds from sale of property and equipment - 93,997 Proceeds from sale of securities 4,564 - ----------- ----------- NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES (33,507) 71,228 ----------- -----------
(CONTINUED) The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. -5- WORLD WIRELESS COMMUNICATIONS, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE THREE MONTHS ENDED MARCH 31, ----------------------------------- 2001 2000 ------------ ------------ CASH FLOW FROM FINANCING ACTIVITIES Net proceeds from issuance of common stock $ -- $ 12,265,217 Proceeds from exercise of options 17,467 -- Proceeds from exercise of warrants -- 401,220 Redemption of preferred stock -- (950,000) Proceeds from borrowings, net of discounts 65,600 -- Principal payments on notes payable (7,020) (2,383,042) Principal payments on obligation under capital lease (13,473) (36,516) Payment of preferred dividends -- (57,378) ------------ ------------ NET CASH PROVIDED BY FINANCING ACTIVITIES 62,574 9,239,501 ------------ ------------ EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS (25,987) -- ------------ ------------ NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (2,109,561) 8,218,864 CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 3,097,624 893,849 ------------ ------------ CASH AND CASH EQUIVALENTS - END OF PERIOD $ 988,063 $ 9,112,713 ============ ============
SUPPLEMENTAL CASH FLOW INFORMATION - Cash paid for interest was $1,452 and $183,577 in 2001 and 2000 respectively. NON-CASH INVESTING AND FINANCING ACTIVITIES - NOTES 3 AND 5 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. -6- WORLD WIRELESS COMMUNICATIONS, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - The accompanying unaudited condensed consolidated financial statements are unaudited. In the opinion of management, all necessary adjustments (which include only normal recurring adjustments) have been made to present fairly the financial position, results of operations and cash flows for the periods presented. Certain information and note disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these unaudited condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the December 31, 2000 annual report on Form 10-K/A. The results of operations for the three month period ended March 31, 2001 are not necessarily indicative of the operating results to be expected for the full year. MAJOR CUSTOMERS - Sales to major customers are defined as sales to any one customer which exceeded 10% of total sales in any of the two reporting periods. Sales to the major customers during each of the three months ended March 31, 2001 and 2000 are as follows: Customer "A" represented 0% and 48.8% of sales, respectively; Customer "B" represented 0% and 13.7% of sales respectively; Customer "C" represented 33.1% and 0%, respectively. INVENTORY - Inventory is stated at the lower of cost or market. Cost is determined using the first-in, first-out method. As of March 31, 2001 and December 31, 2000 inventory consisted of the following:
March 31, December 31, 2001 2000 --------- ------------ Materials $ 391,368 $ 297,147 Finished goods 217,304 260,929 --------- ------------ Total $ 608,672 $ 558,076 ========= ============
LOSS PER SHARE - Basic loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted loss per share reflects potential dilution which could occur if all potentially issuable common shares from stock purchase warrants and options or convertible notes payable and preferred stock resulted in the issuance of common stock. In the present position, diluted loss per share is the same as basic loss per share because the inclusion of potentially issuable common shares at March 31, 2001 and 2000, respectively, would have decreased the loss per share and have been excluded from the calculation. COMPREHENSIVE INCOME/(LOSS) - Comprehensive income/(loss) provides a measure of overall Company performance that includes all changes in equity resulting from transactions and events -7- WORLD WIRELESS COMMUNICATIONS, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS other than capital transactions. The Company's comprehensive income and loss for the three months ended March 31, 2001 and 2000 are as follows:
For the Three Months Ended March 31, 2001 2000 ----------- ----------- Net Loss $(1,615,406) $(2,374,247) Unrealized Gain on Marketable Equity Securities 17,638 65,202 Effect of foreign currency translation (25,987) -- ----------- ----------- Comprehensive Loss for the Period $(1,623,755) $(2,309,045) =========== ===========
NOTE 2 - EXIT FROM MANUFACTURING ACTIVITIES During the fourth quarter of 1999, the Company executed a plan to focus its efforts primarily on enhancing and marketing its X-traWeb(TM) products whereby production of the Company's continuing products would be outsourced, contract manufacturing discontinued, and the Company would move its executive offices to the Denver, Colorado area. The plan also involved liquidating the Company's raw materials and work in process inventory and selling all equipment used in production and contract manufacturing. The exit was not considered the disposal of a segment because the change did not encompass a separate major line of business or class of customer, and because the Company only had one segment prior to 1999. The Company was able to effect the inventory liquidation under terms more favorable than previously estimated, resulting in a recovery of $72,624 of inventory impairment previously charged to operations. The recovery was recognized as other income during the three months ended March 31, 2000. The Company completed its relocation to the Denver, Colorado area in March 2000. NOTE 3 - STOCKHOLDERS' EQUITY During the first quarter of 2000, the Company issued 4,548,557 common shares for gross cash proceeds of $13,646,000 received from 45 accredited investors in a private placement offering, at $3.00 per share. These securities are exempt from registration under the Act. In connection with the offering, a total of $1,512,782 was incurred as placement costs. During March 2000, the Company issued a total 5,393,690 common shares related to the exercise of warrants to purchase common stock at $.25 per share. The Company received $401,220 in cash -8- WORLD WIRELESS COMMUNICATIONS, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS and recorded $947,203 related to the cashless exercise of warrants as a deemed payment of the principal of the 1999 Notes, as described in Note 5 - Notes Payable. In March 2000, the Company also issued 16,474 shares of common stock upon the cashless exercise of 18,333 stock options. Options for 13,334 shares were exercised in March 2001 at a price of $1.31 per share, for proceeds of $17,467. NOTE 4 - MANDATORILY REDEEMABLE PREFERRED STOCK On May 14, 1999 the Company authorized 950 shares of senior liquidating mandatorily redeemable 10% preferred stock with a liquidation preference of $1,000 per share and detachable five-year warrants to purchase 4,750,000 common shares at $0.25 per share, and issued such 950 shares of preferred stock and the related warrants between May 15, 1999 and October 5, 1999. By their terms, the preferred shares had to be redeemed within one year at their par value plus accrued dividends. The preferred stock cash dividend requirement was $95,000 annually. The preferred stock was issued for proceeds of $950,000 consisting of $700,000 cash and the deemed payment of $250,000 principal amount of 1998 bridge loan notes. On February 25, 2000, the Company redeemed the mandatorily redeemable preferred stock for cash of $950,000 for the principal balance and $57,378 for the accrued preferred dividends accrued to date. NOTE 5 - NOTES PAYABLE On May 14, 1999 the Company issued $2,600,000 of senior secured 16% notes payable ("the 1999 Notes") which were to mature in one year and bore interest at the rate of 16% annually and payable quarterly. The notes were issued for $2,600,000 consisting of $1,600,000 in cash and the deemed payment of $1,000,000 principal amount of the 1998 bridge loan notes. The 1999 Notes were secured by substantially all the Company's assets. In March 2000, the Company paid off the 1999 Notes outstanding with cash in the amount of $2,377,623 and with the deemed proceeds from the exercise of warrants to purchase 3,788,813 common shares at $.25 per share. The portion of the 1999 Notes paid by the exercise of warrants was $947,203. The warrants exercised are included in the total warrants issued during the three months ended March 31, 2000 as discussed in Note 3. NOTE 6 - BUSINESS SEGMENT INFORMATION As of March 31, 2001 the Company's operations are classified into two reportable business segments: X-traWeb products and radio products. Corporate includes income, expenses, and assets -9- WORLD WIRELESS COMMUNICATIONS, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS that are not allocable to a specific business segment, or relate to activities no longer being pursued. Segment operating income is total segment revenue reduced by operating expenses identifiable with or allocable to that business segment. The Company evaluates performance of its segments based on revenues and operating income.
For the Three Months Ended March --------------------------------- 2001 2000 ----------- ----------- Revenues: X-traWeb(TM) $ 104,162 $ 37,826 Radio products 144,950 188,360 Corporate 9,379 284,629 ----------- ----------- Total sales $ 258,491 $ 510,815 =========== =========== Operating income (loss): X-traWeb(TM) $(1,066,058) $ (432,965) Radio products (634,560) (545,148) Corporate 62,619 (1,446,627) ----------- ----------- Total operating loss $(1,637,999) $(2,424,740) =========== ===========
As of March 31, December 31, 2001 2000 ----------- ------------ Assets: X-traWeb(TM) $ 1,107,193 $ 1,324,821 Radio products 242,471 642,595 Corporate 1,866,483 3,002,471 ----------- ------------ Total assets $ 3,216,147 $ 4,969,887 =========== ============
NOTE 7 - RESTATEMENT OF FINANCIAL STATEMENTS Subsequent to the issuance of the Company's financial statements for the quarter ended March 31, 2001, the Company concluded that certain stock options granted under the Company's 1997 and 1998 Employee Incentive Stock Option Plans (the "Plans") should have been accounted for as variable plan options and determined that the unaudited condensed consolidated financial statements for the quarters ended march 31, 2001 and 2000 should be restated. In addition, the Company has made certain reclassifications to the statement of operations for 2000. These reclassifications did not effect net loss per share for any of the years presented. The balance sheet as of March 31, 2001 and the statement of operations for the three month periods ended March 31, 2001 and 2000 presented herein reflects the restatement as follows: -10-
As Previously Reported As restated -------------- ------------ Balance sheet: Additional paid-in capital $ 48,919,000 $ 46,472,425 Accumulated deficit (46,512,810) (44,074,252) Statement of operations: Three months ended March 31, 2001 Selling, general and administrative expenses 1,622,602 1,569,362 Net loss (1,668,646) (1,615,406) Loss per share - basic and diluted $ (0.05) $ (0.05) Three months ended March 31, 2000 Selling, general and administrative expenses 1,143,467 2,226,849 Net loss applicable to common shareholders (1,297,585) (2,380,967) Loss per share - basic and diluted $ (0.05) $ (0.10)
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Subsequent to the issuance of the Company's financial statements for the quarter ended March 31, 2001, the Company concluded that certain stock options granted under the Company's 1997 and 1998 Employee Incentive Stock Option Plans (the "Plans") should have been accounted for as variable plan options and determined that the unaudited consolidated financial statements for the quarters ended march 31, 2001 and 2000 should be restated. In addition, the Company has made certain reclassifications to the statement of operations for 2000. These reclassifications did not effect net loss per share for any of the years presented. When used in this discussion, the words "expect(s)", "feel(s)", "believe(s)", "will", "may", "anticipate(s)" and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward- looking statements, and are urged to carefully review and consider the various disclosures elsewhere in this Report which discuss factors which affect our business. The following discussion should be read in conjunction with our Consolidated Financial Statements and respective notes thereto. -11- RESULTS OF OPERATIONS Three Months Ended March 31, 2001 and Three Months Ended March 31, 2000 We incurred a net loss of $1,615,406 for the three-month period ended March 31, 2001, or a $.05 loss per share, compared to a net loss of $2,380,967 or a $.10 loss per share, for the three months ended March 31, 2000. This represents an improvement of $765,561, or 32.2%, and is the result of a decrease in compensation expense related to stock options accounted for as variable options totaling $1,136,622, partially offset by an increase of $371,061 in selling, general and administrative expenses incurred in connection with the marketing of our X-traWeb(TM) products and services. Sales for the three-month period ended March 31, 2001 totaled $258,491 compared to $510,815 during the three months ended March 31, 2000, or a decrease of $252,324 or 49%. During the comparative first quarter of 2001 and 2000, we derived our revenue as follows:
For the Three Months Ended March 31, ------------------------------------ Summary of Revenue by Activity 2001 2000 -------- -------- X-traWeb(TM) $104,162 $ 37,826 Radio products 144,950 188,360 Corporate 9,379 284,629 -------- -------- Total Revenue $258,491 $510,815 ======== ========
During the first quarter of 2001, we continued to implement our strategic plan to focus our efforts on the X-traWeb(TM) product line, and our results reflect that we abandoned our contract and in-house manufacturing activities. Of the $104,162 in revenue derived from the X-traWeb(TM) product line in 2001, $19,000 resulted from engineering design services related to proof-of-concept and similar development activities contracted by customers interested in custom applications of our internet communications products and services, compared to $0 in 2000. In addition, contract manufacturing revenue, included in corporate revenues, decreased by $71,545 or 100% as the result of our exit from this activity. Revenues related to contract manufacturing, as well as royalties as discussed below, are reported under Corporate in the table above. The Corporate category represents revenue not directly attributable to a specific segment, or those business activities no longer being pursued. Our business strategy continues to include revenue from the production of radio products, which totaled $144,950 for the three-month period ended March 31, 2001, compared to $188,360 for the three months ended March 31, 2000, a decrease of $43,410 or 23%. Finally, royalties contributed $9,379 in corporate revenues during the three-month period ended March 31, 2001, compared to $213,084 for the three months ended March 31, 2000, a decrease of $203,705 or 96%. Since the license agreement with our primary customer expired by its terms in September 2000, we received greatly reduced royalty income during the first quarter of 2001. During June 2000, we formed a new operating subsidiary, X-traWeb Europe S.p.A., based in Milan, Italy. This subsidiary is responsible for the development and sale of X-traWeb(TM) products through European markets, commencing with the country of Italy. No revenues had been realized from the European operation during the quarter ended March 31, 2001. In addition, we formed two additional -12- operating subsidiaries, X-traWeb Services Corp. and X-traWeb Financial Corp. in June 2000, which are designed to offer various services of X-traWeb products and to provide financing capability of sales of X-traWeb products or services, respectively, although neither entity derived any revenues as of March 31, 2001. Our cost of sales for the three-month period ended March 31, 2001 declined to $130,470 from a total of $428,106 for the three months ended March 31, 2000, or a reduction of $297,636 or 70%. The resulting gross profit was $128,020, or 49.5% of sales, for the three-month period ended March 31, 2001 compared to $82,709, or 16.2%, for the three months ended March 31, 2000. This represents an improvement of 33.3% in gross profit margin percentage for the comparable periods, attributable primarily to the exit from contract manufacturing. Our research and development expenses decreased to $153,799 from $237,742, or by $83,943, or 35.3%, for the comparable three month periods ended March 31, 2001 versus March 31, 2000. These costs continue to relate to the ongoing application development of the X-traWeb(TM) propriety technology in 2001. Our total selling, general, and administrative expenses amounted to $1,569,362 for the three-month period ended March 31, 2001 compared to $2,226,849 for the three months ended March 31, 2000, representing a decrease of $657,487, or 29.5%. Selling and marketing expenses increased by $26,300, or 10%, during the three-month period ended March 31, 2001 over the three months ended March 31, 2000 and represents an increase in advertising, promotion, and sales related travel to market our X-traWeb(TM) products as discussed above. Total general and administrative expenses for the comparable March 31, 2001 and March 31, 2000 period decreased by $683,787, or 35.0%, and resulted from (1) expenses of $80,000 for the general operating expenses of the X-traWeb(TM) Europe offices, (2) increases of $401,000 in compensation and benefits, (3) increases in rent expense of $28,000, (4) increases in depreciation of $20,000, (5) increases in accounting and audit fees of $19,000, and stock exchange fees expense for the American Stock Exchange of $14,500. These expenses were offset entirely by (1) a decrease in compensation expense related to stock options accounted for as variable options of $1,136,622, (2) a decrease in bad debt expense of $93,000, and (3) a savings of $46,000 in consulting and legal fees. Our interest income for the three-month period ended March 31, 2001 was $24,045 compared to $75,972 for the three months ended March 31, 2000, with the decrease of $51,927 directly attributable to decreased available funds in overnight interest bearing accounts initially provided by the $13.6 million private placement of shares of our Common Stock we sold in the first quarter of 2000. Interest expense declined to $1,452 during the three-month period ended March 31, 2001 compared to $107,483 for the three months ended March 31, 2000, and represents a decrease of $106,031, or 98.6%. This expense reduction is directly related to our retirement of substantially all of our debt, and related debt discount amortization, in the first quarter of 2000. LIQUIDITY AND CAPITAL RESOURCES Our liquidity at March 31, 2001 consisting of cash and cash equivalents was $988,063, which represents a decrease of $2,109,561 over our cash and cash equivalents of $3,097,624 as of December 31, 2000. Our current assets were $2,409,144 as of March 31, 2001, a decrease of $1,742,119 from our current assets of $4,151,263 as of December 31, 2000. -13- As of March 31, 2001, our total liabilities were $851,866, which was a decrease of $102,266 from our total liabilities of $954,132 as of December 31, 2000. In March 2001, we issued shares of our common stock related to the exercise of an option to purchase 13,334 shares of common stock at $1.31 per share and received cash proceeds of $17,467. Our liquidity decreased significantly due to our net loss and due to changes in operating assets and liabilities during the three-month period ended March 31, 2001. For the quarter ended March 31, 2001, the net change in operating assets and liabilities generated a decrease of net cash flow of $529,582 compared to a net increase of cash for the three months ended March 31, 2000 of $31,336. SUMMARY During 2000, we implemented our redirection efforts to focus on the growth of our X-traWeb(TM) business segment and proprietary radio products. We raised $13,646,000 million in new equity capital, paid off substantially all outstanding debt, redeemed all mandatorily redeemable preferred stock outstanding, relocated our corporate headquarters to the Denver, Colorado area, and exited from all in-house manufacturing activities, including termination of our lease obligation for facilities in Utah. During the first quarter of 2001, we continued to focus on our sales of X-traWeb(TM) products and services. Also, we realized revenues from the sales of our X-traWeb products for the first time during 2000 and also signed various marketing alliance agreements during the year. While we believe that (i) a number of our pending proposals for projects or products will be accepted in whole or in part, (ii) we will develop additional sources of sales in the United States, Italy and other foreign countries and (iii) will derive substantial revenues therefrom in 2001 and thereafter, we cannot assure you that any such sales will be made or the amount thereof, although we anticipate that X-traWeb(TM) product sales will constitute the bulk of our revenues during the year 2001 and thereafter. We also believe that we will derive significant revenues from the sale of our proprietary radio products in the future, but we cannot assure you as to the amount of such sales or when such sales will occur. We do not expect the sales of our antenna products to contribute materially to our consolidated net sales or income in the foreseeable future. While we recently hired additional engineering personnel, we believe that the potential growth of current products will require additional engineering personnel for our X-traWeb(TM) business in advance of the receipt of substantial revenues from such source. As a result, we will continue to recruit such personnel actively and expend funds for such purpose. Based on our current cash position and our plans for 2001, we believe that additional capital will be required by the end of May 2001. We have obtained a financing commitment letter totaling $4,000,000, to be provided as private equity placements, which management believes will be adequate to fund our operations in 2001. In summary, while we are optimistic about our future, we are fully aware that anticipated revenue increases from sales of our X-traWeb(TM) products and our proprietary radios are by no means assured, and that our requirements for capital are substantial. If significant revenues with adequate margins are not generated to supplement the additional financing, we have a contingency plan to -14- reduce overhead and other operating costs so as to remain a going concern. These contingency plans, however, would require reductions in product development and marketing costs, which could impact the timing and ultimate amount of future revenues. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS On February 20, 2001 the Pinnacle Fund L.P., Barry M. Kitt and Tom and Denise Hunse filed a lawsuit against us with respect to the purchase of a total of 230,000 shares of our common stock at $3.00 per share in a private placement transaction in February 2000. The plaintiffs seek rescission of the transaction and/or damages, including treble damages, which they allege arise out of our failure to file a registration statement on or before December 31, 2000. The lawsuit is currently pending in the United States District Court for the District of Utah. We believe that we have meritorious defenses to such action and intend to prosecute our defense of the action vigorously, but there can be no assurance as to the outcome thereof. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS We made one sale of shares of our Common Stock during the first quarter of 2001 as listed below which is exempt from registration as set forth below: In March, 2001, we issued 13,334 shares of our Common Stock to Charles G. Sherwood, pursuant to his exercise of an employee stock option at an exercise price of $1.31 per share, in cash. The shares were issued in reliance upon Section 4(2) of the Act. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) None EXHIBIT INDEX None (b) The following reports on Form 8-K were filed by us during the quarter ended March 31, 2001: We filed Form 8-K on February 26, 2001 with respect to Item 5 ("Other Events") describing the lawsuit filed against us, which has been previously discussed in Part II, Item 1, Legal Proceedings, above. -15- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, there unto duly authorized. DATE: January 9, 2002 WORLD WIRELESS COMMUNICATIONS, INC. By: /s/ David D. Singer --------------------------------------- David D. Singer President, Chief Executive Officer By: /s/ Robert Hathaway --------------------------------------- Robert Hathaway Vice President Finance and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) -16- -----END PRIVACY-ENHANCED MESSAGE-----