-----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, JivRNfUbau0W6LPo4EjHzRpMKGBL673LeDczT/E0PKhid4n6dPd2CoZ1vCHdez0S 7KCYELEZQVfYpNr8SzBaoQ== 0001050234-98-000035.txt : 19981106 0001050234-98-000035.hdr.sgml : 19981106 ACCESSION NUMBER: 0001050234-98-000035 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19981105 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: SEC FILE NUMBER: 333-38567 FILM NUMBER: 98738011 BUSINESS ADDRESS: STREET 1: 150 WRIGHT BROS DR STREET 2: # 570 CITY: SALT LAKE CITY STATE: UT ZIP: 84116 BUSINESS PHONE: 8015756600 MAIL ADDRESS: STREET 1: 150 WRIGHT BROTHERS DR SUITE 570 CITY: SALT LAKE CITY STATE: UT ZIP: 84116 10-Q/A 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A AMENDMENT NO. 1 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended June 30, 1998 Commission file Number 333-38567 WORLD WIRELESS COMMUNICATIONS, INC. (Exact name of registrant as specified in its charter) Nevada 87-0549700 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2441 South 3850 West, West Valley City, Utah 84120 (Address of principal executive offices) (Zip Code) Registrant's telephone number (801) 575-6600 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 July 30, 1998, there were 11,237,144 shares of the registrant's Common Stock, par value $0.001, issued and outstanding. PART I. FINANCIAL INFORMATION Item 1. Financial Statements WORLD WIRELESS COMMUNICATIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) ASSETS June 30, December 31, 1998 1997 ----------- ----------- Current Assets Cash and cash equivalents $ 1,151,201 $ 218,234 Investment in securities available for sale 170,242 188,354 Trade receivables, net allowance 607,584 345,433 Other receivables 119,371 49,208 Inventory 490,658 496,432 Prepaid expenses 232,143 232,143 ----------- ----------- Total Current Assets 2,771,199 1,529,804 ----------- ----------- Equipment 2,620,749 1,589,248 Less accumulated depreciation (823,939) (455,985) ----------- ----------- Net Equipment 1,796,810 1,133,263 ----------- ----------- Goodwill, net of accumulated amortization 6,969,602 7,214,066 ----------- ----------- Other Assets, net of accumulated amortization 444,083 535,154 ----------- ----------- Total Assets $11,981,694 $10,412,287 =========== =========== The accompanying notes are an integral part of these condensed financial statements. WORLD WIRELESS COMMUNICATIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED) (UNAUDITED) LIABILITIES AND STOCKHOLDERS' EQUITY June 30, December 31, 1998 1997 ----------- ------------ Current Liabilities Trade accounts payable $ 487,038 $ 524,093 Accrued liabilities 660,804 466,183 Notes payable - current portion 2,557,523 814,925 Capital lease obligation - current portion 381,917 - ----------- ----------- Total Current Liabilities 4,087,282 1,805,201 ----------- ----------- Long-Term Liabilities Notes payable 7,041 34,977 Capital lease obligation 433,018 - ----------- ----------- Total Liabilities 4,527,341 1,840,178 ----------- ----------- Stockholders' Equity Preferred stock - $0.001 par value; 1,000,000 shares authorized; no shares issued - - Common stock - $0.001 par value; 50,000,000 shares authorized; issued and outstanding: 11,235,186 shares at June 30, 1998 and 10,225,260 shares at December 31, 1997 11,300 10,225 Additional paid-in capital 22,373,489 20,915,068 Unearned compensation - (1,410,509) Receivable from shareholder (57,097) (18,409) Accumulated deficit (14,968,581) (11,037,620) Accumulated other comprehensive income 95,242 113,354 ----------- ----------- Total Stockholders' Equity 7,454,353 8,572,109 ----------- ----------- Total Liabilities and Stockholders' Equity $11,981,694 $10,412,287 =========== =========== The accompanying notes are an integral part of these condensed financial statements. WORLD WIRELESS COMMUNICATIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Three Months For the Six Months Ended June 30, Ended June 30, ------------------------- ------------------------- 1998 1997 1998 1997 ----------- ----------- ----------- ----------- Sales $ 1,058,074 $ 1,183,167 $ 2,366,957 $ 1,875,494 Cost of Sales 900,129 626,449 1,556,577 1,070,097 ----------- ----------- ----------- ----------- Gross Profit 157,945 556,718 810,380 805,397 ----------- ----------- ----------- ----------- Expenses Research and development 1,272,763 424,417 1,936,512 1,846,938 Selling, general & administrative 1,269,140 696,254 2,654,236 1,380,840 Amortization of goodwill 122,232 396,482 244,464 602,996 Interest expense 201,076 13,606 225,657 22,597 ----------- ----------- ----------- ----------- Total Expenses 2,865,211 1,530,759 5,060,869 3,853,371 ----------- ----------- ----------- ----------- Gain from Sale of SecuriKey Business - - 319,528 - ----------- ----------- ----------- ----------- Net Loss $(2,707,266) $ (974,041) $(3,930,961) $(3,047,974) =========== =========== =========== =========== Basic and Diluted Loss Per Common Share $ (0.24) $ (0.10) $ (0.36) $ (0.36) =========== =========== =========== =========== Weighted Average Number of Common Shares Used in Per Share Calculation 11,141,692 9,398,213 10,807,073 8,440,219 =========== =========== =========== ===========
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)
For the Three Months For the Six Months Ended June 30, Ended June 30, ------------------------- ------------------------- 1998 1997 1998 1997 ----------- ----------- ----------- ----------- Net Loss $(2,707,266) $ (974,041) $(3,930,961) $(3,047,974) Other Comprehensive Income Unrealized loss on investments in securities available- for-sale (18,112) - (18,112) - ----------- ----------- ----------- ----------- Comprehensive Loss $(2,725,378) $ (974,041) $(3,949,073) $(3,047,974) =========== =========== =========== ===========
WORLD WIRELESS COMMUNICATIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Six Months Ended June 30, ------------------------ 1998 1997 ----------- ----------- Cash Flows From Operating Activities Net loss $(3,930,961) $(3,047,974) Adjustments to reconcile net loss to net cash used by operating activities: Amortization of goodwill 244,464 413,003 Depreciation and amortization of other assets and debt discount 519,057 91,341 Purchased research and development 300,000 1,258,000 Compensation from stock options granted 506,890 265,500 Valuation allowance on inventory and other assets 239,066 - Gain on sale of SecuriKey business (319,528) - Changes in operating assets and liabilities, net of effects of business acquired: Accounts receivable, net of allowance (250,904) (380,126) Inventory (158,647) (5,840) Other assets (2,406) 1,792 Accounts payable (37,055) (92,413) Accrued liabilities 207,025 (405,111) ----------- ----------- Net Cash and Cash Equivalents Used By Operating Activities (2,682,999) (1,901,828) ----------- ----------- Cash Flows From Investing Activities Payments for the purchase of property and equipment (141,231) (404,381) Proceeds from sale of SecuriKey business 372,499 - Advance payments to affiliates to be acquired - (133,764) Loan to a related company (56,410) - Proceeds from receivable from shareholder 10,000 - ----------- ----------- Net Cash and Cash Equivalents Provided By (Used By) Investing Activities 184,858 (538,145) ----------- ----------- Cash Flows From Financing Activities Proceeds from issuance of common stock 1,047,407 3,195,251 Proceeds from borrowings, net of discount 2,900,000 50,000 Principal payments on notes payable (389,665) (135,436) Principal payments on capital lease obligation (126,634) - ----------- ----------- Net Cash and Cash Equivalents Provided By Financing Activities 3,431,108 3,109,815 ----------- ----------- Net Increase In Cash and Cash Equivalents 932,967 669,842 Cash and Cash Equivalents- Beginning of Period 218,234 37,278 ----------- ----------- Cash and Cash Equivalents - End of Period $ 1,151,201 $ 707,120 =========== =========== (Continued) WORLD WIRELESS COMMUNICATIONS, INC AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (UNAUDITED) Supplemental Cash Flow Information - For the Six Months Ended June 30, ------------------------- 1998 1997 ----------- ----------- Interest Paid $ 35,306 $ 8,186 Noncash Investing and Financing Activities - During the six months ended June 30, 1997, $1,970 in long-term debt was converted into 5,630 shares of common stock at $0.35 per share. The Company issued 1,798,100 shares of common stock and 201,900 stock options in exchange for all of the issued and outstanding common stock of Digital Radio. In January and February 1997, which was prior to the effective date of the merger, the Company advanced $118,764 to Digital Radio. In conjunction with the merger, liabilities were assumed as follows: Fair value of assets acquired $ 1,112,399 Purchased research and development 1,258,000 Goodwill 7,885,075 Common stock issued and stock options granted (8,674,062) ----------- Liabilities Assumed $ 1,581,412 =========== During the six months ended June 30, 1998, the Company entered into certain capital leases for computer equipment and related software valued at $900,993. The Company issued a total of 98,926 shares of common stock of which 10,000 shares, valued at $75,000, or $7.50 per share, were issued as a preliminary cost towards obtaining a manufacturing contract, 60,000 shares, valued at $300,000, or $5.00 per share, were issued as payment for radio technology, 5,000 shares, valued at $25,000, or $5.00 per share, were issued in exchange for a note receivable, and 256,926 shares were issued on the exercise of stock options by an employee, for which the Company received a note in the amount of $47,852. WORLD WIRELESS COMMUNICATIONS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 - INTERIM CONDENSED FINANCIAL STATEMENTS The accompanying 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 condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the December 31, 1997 annual financial statements of the Company. The results of operations for the six month period ended June 30, 1998 are not necessarily indicative of the operating results to be expected for the full year. NOTE 2-COMMON STOCK During the second quarter of 1998, the Company issued 176,000 shares on the exercise of options for which the Company received $62,170 in cash, with an average exercise price of $0.35 per share. NOTE 3-ACQUISITION OF PURCHASED RESEARCH & DEVELOPMENT In May 1998, the Company acquired proprietary and intellectual property rights in and to spread spectrum radio technology which has been accounted for as purchased research and development. The acquisition of this technology provides the Company with the ability to modify and update the technology for use in its other radio products. The purchase price was $305,651, of which $300,000 was paid by the issuance of 60,000 common shares valued at $5.00 per share, with the balance being paid in cash for closing and related costs. Additionally, the Company loaned $66,450 to the seller to retire certain business debts. Of this amount, $41,450 was paid in cash and carries simple interest at 10%. The balance of $25,000 was advanced through the issuance of 5,000 common shares, valued at $5.00 per share, to two creditors of the seller. The seller executed an unsecured promissory note which is due on demand after the earlier of (1) registration by the Company of the 60,000 shares of common stock or (2) June 22, 1999. NOTE 4-BRIDGE LOANS In May 1998, the Company executed certain bridge loans, in the amount of $2,500,000. The notes were initially issued with interest at 10%, and later the notes were modified, retroactively, to bear interest at 16%. The interest is payable quarterly, commencing on August 15, 1998. The notes are due on May 15, 1999 and are secured by substantially all of the assets of the Company. The notes become due earlier on a pro-rated basis if the Company receives proceeds from issuance of equity securities. Proceeds from additional issuances to the Company's principal shareholders are exempt from this requirement. The notes may be voluntarily prepaid, without penalty or premium, in whole or in part, at any time. Any prepayment must include all accrued interest on the principal being prepaid, through the date of prepayment. In conjunction with these notes, the Company issued warrants to purchase 250,000 shares of common stock at an exercise price of $3.00 per share, which was later reduced to $0.75 per share. The warrants expire on May 15, 2003. The quantity of warrants are subject to adjustment under certain circumstances, such as stock splits. In the event the Company fails to repay the notes at their maturity, the Company can be required to issue warrants to purchase up to an additional 333,333 shares common stock, exercisable for up to five years at an exercise price of $2.50 per share, payable at the rate of 83,333 shares of common stock for each 90-day period during which the default continues. The Company is obligated to register the underlying shares and bear the cost burden of such registration. The detachable warrants had a fair value of $867,856, or $3.47 per warrant on the date issued, which has been accounted for as a discount of the related notes and was credit to additional paid-in capital. The remaining $1,632,144 of the proceeds was allocated to notes payable. The fair value of the warrants was estimated on the date issued using the Black-Scholes option-pricing model with the following assumptions: dividend yield of 0.0%, expected volatility of 64.0%, risk-free interest rate of 5.0% and expected life of the warrants of 5 years. Interest expense from the amortization of the discount on the notes payable was $108,482 during the three months ended June 30, 1998. NOTE 5-REPURCHASE OF UNVESTED EMPLOYEE STOCK OPTIONS In April 1998, the Board of Directors approved the repurchase of 638,236 unvested employee stock options which were for $6,382, or $0.01 per share granted during the fourth quarter of 1997. The Company has recognized compensation expense, relating to these options, of $412,005 in the first quarter of 1998 and $94,886 in April 1998. As a result of the repurchase, the Company eliminated $903,619 of unrecognized deferred compensation. NOTE 6-SUBSEQUENT EVENTS In July 1998, the Company entered into a building lease and will bring together, its corporate headquarters, manufacturing facilities and its main engineering facilities. The Company anticipates moving into these new facilities in October 1998. The lease is for a period of seven years with a monthly lease payment of $23,922 and annual increases of 2.5%. Total future minimum lease payments are $2,166,588. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 Form 10-Q. Three Months Ended June 30, 1998 and 1997 ----------------------------------------- Sales in the six-month period ended June 30, 1998, were $2,366,957 compared to sales of $1,875,494 during the six-month period ended June 30, 1997. The Company's principal source of revenue for the six months ended June 30, 1998, was a design and development contract with Williams Telemetry, a Williams company, in the amount of $1,766,073. Other significant revenues include contract manufacturing of $283,660 and sales of the Company's own branded goods of $219,625. Significant revenues for 1997 were derived from an engineering contract with Kyushu Matsushita Electric Co. ("KME") in the amount of $1,164,000 and contract manufacturing services, including sales of SecuriKey products, of $711,494. The SecuriKey business was sold to a prior employee/shareholder an no revenues were recorded in 1998. Cost of sales for the six months ended June 30, 1998, were $1,556,577 compared to cost of sales for the six-month period ended June 30, 1997, of $1,070,097. Cost of sales as a percentage of sales increased from 57% to 66% in the current period. The related gross profit for the six months ended June 30, 1998 was $810,380 or 34% of sales compared to $805,397 or 43% of sales for the six-month period ended June 30, 1997. The decline in gross profit resulted from a change in the mix of revenues (fee for services versus contract manufacturing) and costs charged to engineering contracts that were not billable. The Company incurred research and development costs of $1,936,512 during the six months ending June 30, 1998, relating to the development of existing proprietary technology that the Company believes it will be able to sell to existing customers and subsequently modify at the customers' expense. Additionally, resources were expended for the development of the Company's proprietary radios. Included in the $1,936,512 is $305,651 of purchased research and development expense arising out of the acquisition of radio technology in May 1998. The amount spent on research and development for the current period was greater than the amount spent for the six month period ended June 30, 1997 of $1,846,938, of which $1,258,000 was for purchased research and development expense arising out of the acquisition of Digital Radio in February 1997. The Company's selling, general and administrative expenses for the six months ended June 30, 1998 increased to $2,654,236 from $1,380,840 for the six-month period ended June 30, 1997. Included in the $2,654,236 is $410,582 of non-cash compensation relating to the grant of stock options in December 1997. Such increase also reflected a substantial increase in the number of employees of the Company to approximately 90 in the current year as compared to approximately 50 employees at June 30, 1997. Subsequent to June 30, 1998, the Company reduced its employees by approximately 20%. In addition, the Company increased the number of its higher paid employees as a result of acquisitions in 1997. The Company also increased staffing in anticipation of the launch of the Company's proprietary radio products. The increase in costs was also attributable to its maintenance of duplicate administrative facilities and related administrative expenses by virtue of its two business locations in Utah. management anticipates the elimination of duplicate administrative efforts by consolidating into one facility during October 1998. Interest expense for the six months ended June 30, 1998, increased to $117,175 from $22,597 for the six-month period ended June 30, 1997, which increase was attributable to the greater amount of the Company's outstanding borrowings during the current year. The Company's net loss of $3,822,479 for the six months ended June 30, 1998, represents an increase from the net loss of $3,047,974 for the six months ended June 30, 1997, as a result of the above items. During April 1998, the Board of Directors approved the repurchase of unvested employee stock options at a price of $0.01 per share. These options were granted during the fourth quarter of 1997. The repurchase enables the Company to discontinue charging the difference between fair market value in the stock at the time of option grant and the option exercise price to operations. Liquidity and Capital Resources ------------------------------- The Company's liquidity at June 30, 1998 decreased compared to June 30, 1997. Current assets increased by $815,901, although, short term borrowings increased by $3,284,583. In order to sustain operations, the Company borrowed $2,500,000 pursuant to an offering of units consisting of (a) its Senior Secured Notes, maturing on or around May 15, 1999 and bearing simple interest at the rate of 16% per annum, payable quarterly (the "Notes") and (b) warrants to purchase 250,000 shares of the Common Stock exercisable for up to five years from the date of issuance at an excise price of $2.50 per share (subject to adjustment under certain circumstances, such as stock splits). Moreover, in the event the Company fails to pay the Notes at their maturity date, the Company can be required to issue warrants to purchase up to an additional 333,333 shares of the Company's common stock exercisable for up to five years at an exercise price of $2.50 per share (subject to adjustment under certain circumstances), payable at the rate of 83,333 shares of Common Stock for each 90-day period thereafter during which such default continues. Such offering was made in a private placement transaction exempt from registration under the Securities Act of 1933, as amended. Nevertheless, in management's opinion, the Company will not be able to satisfy its needs for additional capital through borrowing, but will be able to meet these needs only by issuing additional equity securities. Thus, the Company anticipates obtaining additional financing of at least $5,000,000 through the sale of its equity securities but no such financing has been consummated. Moreover, there can be no assurance that the Company will be able to obtain any additional capital or, if so, on terms acceptable to it. On December 19, 1997, the Company received initial orders for equipment from Williams Telemetry, a Williams company. The orders cover a variety of products, such as the WinGate(TM), radio transmitters and receivers and spread spectrum transceivers. These radio products were designed by, and with the WinGate, will be manufactured by the Company and will be used by Williams Telemetry through its information gathering system. Initial shipments began during July, 1998 and are anticipated to increase significantly during calendar 1999. Total shipments under the contract are expected to be completed in full by the end of the year 2000. If all expectations are met, sales under the orders would potentially reach $70 million. Order quantities and shipping dates, however, are subject to adjustment by Williams upon 90-day notice prior to the scheduled delivery date, if its customers or other factors beyond its control make such adjustment necessary. At the present time, therefore, orders can be considered "firm" as to quantities and delivery dates only with respect to units scheduled for shipment in the following quarter. The Company also contracted with Williams for project management and engineering design and support services relative to the Williams Telemetry network on a fee-for-service basis. Outlook ------- The statements contained in this Outlook are based on current expectations. These statements are forward looking and actual results may differ materially. Management believes that, as deregulation of natural gas and other utilities continues, multiple utility suppliers will be serving a given city, neighborhood, or industrial park. Consequently, it will become more difficult and time consuming for utility companies to read meters as they will generally not be the provider to every user in the city or neighborhood which will increase the cost effectiveness of reading utility meters remotely. Management believes that the Williams Telemetry Network, described in detail in the Prospectus dated February 17, 1998, is a viable alternative to the current practice of manually reading meters. Additionally, management believes that William's position as an affiliate of a major transporter of natural gas in the United States positions it to successfully market its telemetry network, which currently is designed to use collector and repeater radios supplied by the Company to gather and transmit data. Management believes that the Company's relationship with Williams will result in significant increases in sales of its radio products for use in the Williams Telemetry Network. Significant increases in sales, however, would lead to working capital requirements which would not be provided for from funds generated by the initial sales of the products. The Company is currently investigating the prospects of a private placement and ultimately a secondary public offering to meet its working capital and operating needs. However, there is no assurance that sufficient capital or any capital will be raised from such endeavors. The Company entered into a 7-year lease for a 34,000 square foot facility in West Valley City, Utah. Occupancy date is October 15, 1998. The Company will consolidate its American Fork, Utah and Salt Lake City, Utah operations and staff into the new facility. Management expects the new facility to provide sufficient manufacturing and office space for the foreseeable future. However, if additional capacity were required, management would consider out sourcing a portion of the manufacturing overload. If a portion of manufacturing is out-sourced, the Company may lose some control over the following areas: cost, timeliness of deliveries and quality. However, by out-sourcing a portion of its manufacturing, the Company could avoid delays and costs associated with the expansion of its own facilities. The magnitude of any expansion of the Company's manufacturing capabilities that is required would be a direct function of the sales increase and manufacturing overload, both of which are unknown at this time. The Company anticipates an increase in revenues from the sale and manufacturing of the Company's proprietary radio products. The Company will market a line of radios to OEM that incorporate them into products such as wireless smoke and security alarm systems, ambulatory patient wireless monitoring systems, retail point-of-sale systems, and the like. The Company has begun providing initial sales samples, and believes there is strong customer interest for the products; however, there can be no assurance that the Company will be able to manufacture or sell sufficient quantities at adequate gross margins to achieve profitability. The Company completed development under a contract with (KME) that calls for royalty payments upon shipment of certain KME products. Management believes shipments of KME products containing the company's technology will begin during the third quarter of 1998, and that royalty payments from the contract will begin during the fourth quarter of 1998. Additionally, management intends to enter into follow-on contracts with KME , whereby the Company receives fees during the early stages of the agreement and is entitled to royalties or gross profit splits based upon its customers' sales of products into which the technology has been incorporated. It is management's intent that the fees received will cover the Company's costs. However, these fixed fee arrangements may not cover all of the Company's costs incurred in fulfilling any such contract. Royalties or gross profit splits resulting from sales of products using the technology developed under the contract would enhance the Company's profitability if and when received. In anticipation of obtaining additional design and development contracts, management must continually recruit and hire additional RF (radio frequency), software, firmware and digital engineers. It is extremely difficult, time-consuming and expensive to find engineers qualified in those fields. There is no assurance the Company will be able to locate and hire such qualified engineers. Associated with the hiring of each engineer is the need for test and development equipment, software and work stations, which increases the Company's cash requirements. In summary, while management is optimistic about the Company's future, it is fully aware that anticipated revenue increases from product sales, design and development contracts and royalty income are by no means assured, and that if such increases do materialize, the requirements for capital are substantial, for which there is no present commitment. Moreover, there can be no assurance that such capital or other financing will be obtained when needed, or, if so, on terms acceptable to the Company. Impact of the Year 2000 ----------------------- Many computer systems experience problems handling dates beyond the year 1999. The Company continues to evaluate its computer systems and believes, based upon representations from its software suppliers, that its operating systems are substantially year 2000 compliant. In addition, the Company is implementing validation procedures designed to evaluate the year 2000 exposure of its significant suppliers, other vendors and customers whose systems may impact the Company's operations. However, it is impossible for the Company to monitor the systems of all with whom it interacts, and there can be no assurance that the failure of their systems would not have material adverse impacts on the Company's business and operations. PART II. OTHER INFORMATION Item 5. Other Information (a) During the second quarter James L. O'Callaghan joined the Company as Chief Financial Officer. Item 6. Exhibits and Reports on Form 8-K EXHIBITS The following exhibits are included as part of this report: SEC Exhibit Reference Number Number Title of Document -------------------------------------------- 1 (10) Loan Agreement dated as of May 15, 1998 2 (10) Letter agreement dated August 7, 1998 Re: Waiver and Amendment of Agreements 3 (10) Letter agreement dated September 11, 1998 Re: Waiver and Amendment of Agreements 4 (27) Financial Data Schedule REPORTS ON FORM 8-K The Company did not file any reports on Form 8-k during the quarter ended June 30, 1998. 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 thereunto duly authorized. World Wireless Communications Date: October 30, 1998 By: /S/ David D. Singer --------------------------- David D. Singer President and Chief Executive Officer Date: November 2, 1998 By: /S/ James L. O'Callaghan --------------------------- James L. O'Callaghan Chief Financial Officer EX-10 2 APPENDIX C LOAN AGREEMENT This Loan Agreement dated as of the 15th day of May, 1998 by and between each party hereto making a loan pursuant to this Agreement (individually "each Lender" and collectively the "Lender") and World Wireless Communications, Inc., a Nevada corporation, having an address at 150 Wright Brothers Drive, Suite 560, Salt Lake City, Utah 84116 (the "Borrower"). WHEREAS, each Lender is willing to lend to Borrower funds to enable Borrower to conduct its business operations; and WHEREAS, Borrower wishes to borrow funds from Lender in order to conduct such operations; NOW, THEREFORE, the parties agree as follows: ARTICLE I OBLIGATIONS ----------- 1.1 Simultaneously with the execution and the delivery of this Agreement, Lender agrees to lend to Borrower the aggregate sum of $2,500,000, in the amounts set forth on the signature page hereto, which is to be used solely by Borrower in the operation of its business as determined by the Board of Directors of Borrower in accordance with the business plan previously delivered to Lender, which amount shall be repaid on May 15, 1999 (the "Loan"). 1.2 The Loan shall bear simple interest at the rate of 10% per annum payable quarterly as provided in, and shall include any additional expenses payable hereunder or under, the Note (as defined in Section 1.3 hereof). 1.3 Simultaneously with the execution and delivery of this Agreement, Borrower shall deliver to each Lender an executed original of the note in the form of Exhibit A attached hereto for the amount loaned to Borrower by such Lender (the "Note"). 1.4 Simultaneously with the execution and the delivery of this Agreement, Borrower shall deliver to each Lender an executed original of the warrants in the form of Exhibit B attached hereto representing its pro rata share thereof in consideration for the amount loaned to Borrower by such Lender (the "Warrants"). 1.5 Simultaneously with the execution and the delivery of this Agreement, each Lender and Borrower will execute and deliver the Pledge/Security Agreement attached hereto as Exhibit C (the "Pledge/Security Agreement"). 1.6 Simultaneously with the execution and the delivery of this Agreement, each Lender and Borrower will execute and deliver the Registration Rights Agreement attached hereto as Exhibit D (the "Registration Rights Agreement"). 1.7 Simultaneously with the execution and the delivery of this Agreement, each Lender will execute and deliver the Pledgee Representative Agreement attached to the Loan Agreement as Exhibit E. ARTICLE II REPRESENTATIONS AND WARRANTIES OF EACH LENDER --------------------------------------------- Each Lender represents and warrants to Borrower that: 2.1 Power and Authority. Each Lender which is a corporation, limited liability company or partnership is a duly organized, validly existing entity in good standing under the laws of its respective state of formation; each Lender has all requisite power and authority to carry on the business in which it is engaged; each owns its assets; and each has the power and authority to execute and deliver this Agreement and to perform all of its respective obligations hereunder. 2.2 Authorization. This Agreement has been duly and validly authorized, executed and delivered by each of them; and this Agreement constitutes the valid and binding obligation of each and is enforceable against each in accordance with its terms except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and other similar laws affecting creditors' rights generally and by general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law). 2.3 No Violations. Neither the execution and delivery of this Agreement, nor the performance of any of their respective obligations hereunder will violate (or, with the passage of time, will violate) any material term, covenant, condition, or provision of any contract (written or unwritten) or any document, certificate of incorporation, by-law, judgment, decree, order, or regulation of any court or governmental or regulatory authority by which any Lender is bound or subject. 2.4 Brokers and Finders. Neither any Lender nor any of its officers, directors or employees has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finders' fees in connection with the transactions contemplated by this Agreement. ARTICLE III REPRESENTATIONS AND WARRANTIES OF BORROWER ------------------------------------------ 3.1 Corporate Organization; Power and Authority. Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada and has full corporate power and authority to carry on its business as it is now being conducted and to own the properties and assets it now owns; is duly qualified or licensed to do business as a foreign corporation in good standing in each jurisdiction in which Borrower's failure to qualify to do business will have a material adverse effect on the business, prospects, operations, properties, assets or condition (financial or otherwise) of Borrower. The copies of the Certificate of Incorporation and By-Laws of Borrower heretofore delivered to Acquiror are complete and correct copies of such instruments as presently in effect. 3.2 Authorization Borrower has full corporate power and authority to enter into this Agreement and to carry out the transactions contemplated hereby. The Board of Directors of Borrower has taken all action required by law, Borrower's Certificate of Incorporation, its By-Laws or otherwise to be taken by them to authorize the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, including, without limitation, the issuance of the Notes and the Warrants, and this Agreement is a valid and binding agreement of Borrower enforceable in accordance with its terms, except that such enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights. 3.3 No Violations. Neither the execution and delivery of this Agreement, nor the performance of any of their respective obligations hereunder will violate (or, with the passage of time, will violate) any material term, covenant, condition, or provision of any contract (written or unwritten) or any document, certificate of incorporation, by-law, judgment, decree, order, or regulation of any court or governmental or regulatory authority by which Borrower is bound or subject. 3.4 Capitalization. As of the date hereof, the authorized capital stock of Borrower consisted of 50,000,000 shares of common stock, $.001 par value per share, of which 11,077,110 shares were issued and outstanding, and, 1,000,000 shares of preferred stock, par value $.001 per share, of which no shares were issued and outstanding. All issued and outstanding shares of capital stock of Borrower are validly issued, fully paid and nonassessable, and all securities of the Borrower have been issued in compliance with all applicable state and federal securities laws. As of the date hereof, Borrower had outstanding (a) securities convertible into or exchangeable for Borrower common stock, (b) options, warrants or other rights to purchase or subscribe for common stock or securities convertible into or exchangeable for common stock of Borrower, or (c) contracts, commitments, agreements, understandings or arrangements of any kind relating to the issuance of any common stock of the Borrower, any such convertible or exchangeable securities or any such options, warrants or rights, totalling 1,327,495 shares. 3.5 Financial Statements; SEC Filings. (a) Borrower has heretofore delivered to Lender an audited financial statement of the Company and its subsidiaries for the year ended December 31, 1997 (the "Financial Statement"). The Financial Statement and the notes thereto are true, complete and accurate and fairly present the assets, liabilities and financial condition of Borrower as at the date thereof, and such statement of income and the notes thereto are true, complete and accurate and fairly present the results of operations for the period therein referred to all in accordance with generally accepted accounting principles consistently applied throughout the period involved. (b) Borrower has heretofore delivered to each Lender a copy of its Prospectus dated February 17, 1998 filed with the Securities and Exchange Commission and its Special Financial Report filed pursuant to Section 15(d)-2 of the Securities Exchange Act of 1934, receipt of which is acknowledged. 3.6 Title to Properties; Encumbrances. Borrower has good, valid and marketable title to all the properties and assets which it purports to own (real, personal and mixed, tangible and intangible), including, without limitation, all the properties and assets reflected in the Financial Statement and all the properties and assets purchased by Borrower since the date of the Financial Statement. Except as set forth in the Financial Statement or reflected therein as a capital lease, all such properties and assets are free and clear of all title defects or objections, liens, claims, charges, security interests or other encumbrances of any nature whatsoever, including, without limitation, leases, chattel mortgages, conditional sales contracts, collateral security arrangements and other title or interest retention arrangements, and are not, in the case of real property, subject to any rights of way, building use restrictions, exceptions, variances, reservations or limitations of any nature whatsoever except, with respect to all such properties and assets, (a) liens shown on the Financial Statement as securing specified liabilities or obligations and liens incurred in connection with the purchase of property and/or assets, if such purchase was effected after the date of the Financial Statement, with respect to which no default exists; (b) minor imperfections of title, if any, none of which is substantial in amount, materially detract from the value or impair the use of the property subject thereto, or impair the operations of Borrower and which have arisen only in the ordinary course of business and consistent with past practice since the date of the Financial Statement; and (c) liens for current taxes not yet due. With respect to the property and assets it leases, Borrower is in compliance with such leases, and Borrower holds valid leasehold interests in such property and assets free of any liens, encumbrances and security interests of any party other than the lessors of such property and assets. 3.7 Litigation. There is no action, suit, inquiry, proceeding or investigation by or before any court or governmental or other regulatory or administrative agency or commission pending or, to the best knowledge of Borrower, threatened against or involving Borrower, or which challenges the validity of this Agreement or any action taken or to be taken by Borrower pursuant to this Agreement or in connection with the transactions contemplated hereby; and Borrower does not know or have any reason to know of any valid basis for any such action, proceeding or investigation. 3.8 Consents and Approvals of Governmental Authorities. No consent, approval or authorization of, or declaration, filing or registration with, any governmental or regulatory authority is required to be obtained or made by Borrower in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby. 3.9 Brokers and Finders. Neither Borrower nor any of its officers, directors or employees has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finders' fees in connection with the transactions contemplated by this Agreement, except for any liability which Borrower has to Bruce D. Cowen and James Kelly relating thereto. 3.10 Subsidiaries. Borrower does not own, directly or indirectly, any capital stock or other equity securities of any other corporation or have any direct or indirect equity or ownership interest in any other business, except its wholly-owned subsidiaries and other entities listed in Section 3.10 of the Disclosure Schedule. 3.11 Taxes. Borrower has filed all tax returns that are required to have been filed in any jurisdiction, and has paid all taxes shown to be due and payable on such returns and all the taxes and assessments levied upon it or its properties, assets, income or franchises, to the extent such taxes and assessments have become due and payable and before they have become delinquent, except for taxes and assessments the amount, applicability or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which Borrower has established adequate reserves. To the best of Borrower's knowledge, there are no tax examinations in progress involving Borrower for any fiscal period or periods, and no notice of any claim for taxes, whether pending or threatened, has been received, and no requests for waivers of the time to assess any such taxes are pending. 3.12 Affiliate Transactions. Except as set forth on Section 3.12 of the Disclosure Schedule, Borrower is not party to any contract with any Affiliate of Borrower. "Affiliate" shall mean, with respect to Borrower, any person or entity that directly or indirectly controls, is controlled by, or is under common control with Borrower. For purposes of this definition, "control" of an entity shall mean the power, directly or indirectly, either to (i) vote 10% or more of the securities having ordinary voting power for the election of directors of such entity or (ii) direct or cause the direction of the management and policies of such entity, whether through the ownership of voting securities, by contract or otherwise. Section 3.12 of the Disclosure Schedule sets forth a complete and accurate list of all of the Affiliates of Borrower. ARTICLE IV MISCELLANEOUS PROVISIONS ------------------------ 4.1 Notices. All notices or other communications required or permitted to be given pursuant to this Agreement shall be in writing and shall be considered as duly given on (a) the date of delivery, if delivered in person, by nationally recognized overnight delivery service or by facsimile or (b) three days after mailing if mailed from within the continental United States by registered or certified mail, return receipt requested to the party entitled to receive the same, if to the Borrower, World Wireless Communications, Inc., 150 Wright Brothers Drive, Suite 560, Salt Lake City, Utah 84116, with a copy to Law Offices of Stephen R. Field, 620 Fifth Avenue, New York, New York, Attn: Stephen R. Field, Esq.; and if to a Lender, at his or its address as set forth in the books and records of the Lender. Any party may change his or its address by giving notice to the other party stating his or its new address. Commencing on the 10th day after the giving of such notice, such newly designated address shall be such party's address for the purpose of all notices or other communications required or permitted to be given pursuant to this Agreement. 4.2 Governing Law. This Agreement and the rights of the parties hereunder shall be governed by and construed in accordance with the laws of the State of Utah, without regard to its conflicts of law principles. All parties hereto (i) agree that any legal suit, action or proceeding arising out of or relating to this Agreement shall be instituted only in a federal or state court in Salt Lake City, Utah or in the State of Colorado, (ii) waive any objection which they may now or hereafter have to the laying of the venue of any such suit, action or proceeding, and (iii) irrevocably submit to the jurisdiction of any federal or state court in Salt Lake City, Utah or in the State of Colorado in any such suit, action or proceeding, but such consent shall not constitute a general appearance or be available to any other person who is not a party to this Agreement. All parties hereto agree that the mailing of any process in any suit, action or proceeding in accordance with the notice provisions of this Agreement shall constitute personal service thereof. 4.3 Entire Agreement; Waiver of Breach. This Agreement constitutes the entire agreement among the parties and supersedes any prior agreement or understanding among them with respect to the subject matter hereof, and it may not be modified or amended in any manner other than as provided herein; and no waiver of any breach or condition of this Agreement shall be deemed to have occurred unless such waiver is in writing, signed by the party against whom enforcement is sought, and no waiver shall be claimed to be a waiver of any subsequent breach or condition of a like or different nature. 4.4 Binding Effect; Assignability. This Agreement and all the terms and provisions hereof shall be binding upon and shall inure to the benefit of the parties and their respective heirs, successors and permitted assigns. This Agreement and the rights of the parties hereunder shall not be assigned except with the written consent of all parties hereto. 4.5 Captions. Captions contained in this Agreement are inserted only as a matter of convenience and in no way define, limit or extend the scope or intent of this Agreement or any provision hereof. 4.6 Number and Gender. Wherever from the context it appears appropriate, each term stated in either the singular or the plural shall include the singular and the plural, and pronouns stated in either the masculine, the feminine or the neuter gender shall include the masculine, feminine and neuter. 4.7 Severability. If any provision of this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render invalid or unenforceable any other severable provision of this Agreement, and this Agreement shall be carried out as if any such invalid or unenforceable provision were not contained herein. 4.8 Amendments. This Agreement may not be amended except in a writing signed by all of the parties hereto. 4.9 Survival of Representations and Warranties. The representations and warranties of each party hereto shall survive the execution and the delivery of this Agreement until one year from the date hereof. 4.11 Costs and Expenses. Upon Closing, Borrower shall pay or reimburse The McCloskey Trust for up to $2,500 of its costs and expenses incurred in entering into this transaction, including its reasonable attorneys fees, which amount may be deducted from the loan proceeds. After the Closing, in the event of any dispute arising under this Agreement, the prevailing party in such dispute shall be entitled to recover its costs and expenses, including attorneys fees, from the other. IN WITNESS WEREOF, each of the parties has signed this Agreement as of the date first written above. WORLD WIRELESS COMMUNICATIONS, INC. By: /S/ David Singer ---------------------------- David Singer, President BORROWER LOAN AMOUNT LENDER $1,100,000 THE McCLOSKEY TRUST ---------------------------- By: /S/ Thomas D. McCloskey, Jr. ------------------------------ Thomas D. McCloskey, Jr., Trustee $100,000 DPM INVESTMENT CORP. ------------------------------ BY: /S/Thomas D. McCloskey, Jr. ------------------------------ Thomas D. McCloskey, Jr., Vice President $100,000 FRYING PAN PARTNERS, LLC. ------------------------------ BY: /S/ David L. Marrs ------------------------------ David L. Marrs, Member $750,000 KATHRYN R. BRAITHWAITE ------------------------------ BY: /S/ Kathryn R. Braithwaite ------------------------------ Kathryn R. Braithwaite $200,000 CJL INVESTMENTS, LLC ------------------------------ BY: /S/ John H. Perry, III ------------------------------ John H. Perry, III, Managing - Member $125,000 SCOTT W. RYAN ------------------------------ BY: /S/ Scott W. Ryan ------------------------------ Scott W. Ryan $125,000 WARREN PALITZ ------------------------------ BY: /S/ Warren Palitz ------------------------------ Warren Palitz EX-10 3 August 7, 1998 TO: Purchasers of Units consisting of $100,000 principal amount of 10% Senior Secured Notes of World Wireless Communications, Inc. (The "Company") and one warrant to purchase 10,000 shares of Common Stock of the Company (individually each a "Lender" and collectively the "Lenders") Re: Waiver and Amendment of Agreements Ladies and Gentlemen: Reference is made to the Loan Agreement between the Lenders and the Company dated as of May 15, 1998 (the "Agreement"), including each note attached thereto as Exhibit A (the "Note"), each warrant attached thereto as Exhibit B (the "Warrant") and the Pledge/Security Agreement attached thereto as Exhibit C (the "Pledge/Security Agreement"). As an inducement for each Lender to waive the default of the Company under section4(e) of each note and Section 2.2(c)(v) of the Pledge/Security Agreement, the Company and each Lender agree to amend the above-referenced documents as described herein: 1. (a) The interest rate of each Note on the first page shall be changed to "16% per annum," effective as of May 15, 1998. (b) Section 3(b) of each Note shall be amended to read as follows, effective as of May 15, 1998: "Notwithstanding anything contained herein to the contrary, this Note shall be mandatorily prepaid in the event that the Maker closes an offering of its securities, whether through one or more private placement or secondary public offerings, in which the Maker raises gross proceeds from such transaction or transactions of at least $2,500,000, or, on a pro rata basis with the holders of identical notes of the Company, if less than $2,500,000 is so raised, excluding in any case any funds raised from Lancer Partners L.P., Lancer Offshore L.P., Michael Lauer and their affiliates." (c) Interest on each Note shall be paid commencing "August 15, 1998," effective as of may 15, 1998. 2. Each Warrant shall be amended to provide that the purchase price per share shall be "$2.50" in the first paragraph thereof, effective as of May 15, 1998. In consideration of the foregoing amendments, each Lender unconditionally and irrevocably waives the Company's default under Section 4(e) of each Note and Section 2.2(c)(v) of the Pledge/Security Agreement for the quarter ended June 30, 1998, including without limitation, any and all rights remedies set forth therein, effective as of August 7, 1998. Except as amended as set forth herein, the Agreement, each Note, each Warrant and the Pledge/Security Agreement shall continue in full force and effect. If this letter accurately sets forth our understanding, please sign your name below and return your signed original to us immediately. Very truly yours, WORLD WIRELESS COMMUNICATIONS, INC. By: /S/ David D. Singer ------------------------------ David D. Singer, President THE McCLOSKEY TRUST By: /S/ William R. Jordan /S/ Scott Ryan - -------------------------------- ----------------------------- William R. Jordan, IV Mr. Scott Ryan Trustee 111 Presidential Blvd. P.O. Box 7846 Suite 246 Aspen, CO 81612 Bala Cynwyd, PA 19004 DPM INVESTMENT CORP. By: /S/ David L. Marrs /S/ Warren Palitz - --------------------------- ----------------------------- Suite 246 Mr. Warren Palitz David L. Marrs, Sec/Treas 111 Presidential Blvd. P.O. Box 7846 Bala Cynwyd, PA 19004 Aspen, CO 81612 FRYING PAN PARTNERS, LLC. By: /S/David L. Marrs /S/ K. R. Braithwaite - ---------------------- ----------------------------- David L. Marrs, Member Ms. K.R. Braithwaite P.O. Box 7846 3267 Paseo Gallita Aspen, CO 81612 San Clemente, CA 92672-3514 CJL INVESTMENTS, LLC By: /S/ John H. Perry - ----------------------- John H. Perry, III, Managing-Member EX-10 4 September 11, 1998 TO: Purchasers of Units consisting of $250,000 principal amount of 10% Senior Secured Notes of World Wireless Communications, Inc. (The "Company") and one warrant to purchase 25,000 shares of Common Stock of the Company (individually each a "Lender" and collectively the "Lenders") Re: Waiver and Amendment of Agreements Ladies and Gentlemen: Reference is made to the Loan Agreement between the Lenders and the Company dated as of May 15, 1998 (the "Agreement"), including each note attached thereto as Exhibit A (the "Note"), each warrant attached thereto as Exhibit B (the "Warrant") and the Pledge/Security Agreement attached thereto as Exhibit C (the "Pledge/Security Agreement"), as amended by letter agreement dated August 7, 1998. As an inducement for the Company to consummate an offering of its common stock pursuant to the Confidential Private Placement Memorandum dated September 9, 1998 (the "Offering"), the Company and each Lender agree to amend the above-referenced documents as described herein: 1. Section 3(b) of each Note shall be amended to read as follows, effective as of May 15, 1998: "Notwithstanding anything contained herein to the contrary, this Note shall be mandatorily prepaid in the event that the Maker closes an offering of its securities, whether through one or more private placement or secondary public offerings, in which the Maker raises gross proceeds from such transaction or transactions of at least $2,500,000, or, on a pro rata basis with the holders of identical notes of the Company, if less than $2,500,000 is so raised, excluding in any case any funds raised from Lancer Partners L.P., Lancer Offshore L.P., Michael Lauer and their affiliates and except that only 50% of the first $2,500,000 of gross proceeds raised by the Maker in such transaction or transaction on or before October 12, 1998 (excluding any funds raised from Lancer Partners L.P., Lancer Offshore L.P., Michael Lauer and their affiliates) shall be used to prepay this Note." 2. Each warrant shall be amended to provide that the purchase price share of common stock of the Company shall be "$0.75" in the first paragraph thereof, effective as of May 15, 1998. In consideration of the foregoing amendments each Lender unconditionally and irrevocably waives the application of the anti-dilution provisions of each Warrant with respect to the Offering. Except as amended as set forth herein, the Agreement, each Note, each Warrant and the Pledge/Security Agreement shall continue in full force and effect. If this letter accurately sets forth our understanding, please sign your name below and return your signed original to us immediately. Very truly yours, WORLD WIRELESS COMMUNICATIONS, INC. By: /S/ David D. Singer ------------------------------ David D. Singer, President THE McCLOSKEY TRUST By: /S/ Thomas D. McCloskey, Jr. /S/ Scott Ryan - -------------------------------- ----------------------------- Thomas D. McCloskey, Jr., Mr. Scott Ryan Trustee 111 Presidential Blvd. P.O. Box 7846 Suite 246 Aspen, CO 81612 Bala Cynwyd, PA 19004 DPM INVESTMENT CORP. By: /S/ Thomas D. McCloskey, Jr. /S/ Warren Palitz - --------------------------- ----------------------------- Suite 246 Mr. Warren Palitz Thomas D. McCloskey, Jr. , V.P. 111 Presidential Blvd. P.O. Box 7846 Bala Cynwyd, PA 19004 Aspen, CO 81612 FRYING PAN PARTNERS, LLC. By: /S/David L. Marrs /S/ K.R. Braithwaite - ---------------------- ------------------------------ David L. Marrs, Member Ms. K.R. Braithwaite P.O. Box 7846 3267 Paseo Gallita Aspen, CO 81612 San Clemente, CA 92672-3514 CJL INVESTMENTS, LLC By: /S/ John H. Perry - ----------------------- John H. Perry, III, Managing-Member EX-27 5
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTRED FROM THE BALANCE SHEET AS OF JUNE 30, 1998, AND STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS DEC-31-1998 JUN-30-1998 1,151,201 170,242 756,955 (30,000) 490,658 2,771,199 2,620,749 (823,939) 11,981,694 4,087,282 440,059 0 0 11,300 7,443,043 11,981,694 2,366,957 2,686,485 1,556,577 1,556,577 4,835,212 0 225,657 0 0 (3,930,961) 0 0 0 (3,930,961) (0.36) (0.36)
-----END PRIVACY-ENHANCED MESSAGE-----