-----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, JRLOC203WrlHk/MSbMn6vlWvy7iYlv1XnoB5lk03f1f2d8fFb1ltkcPMdXI+mTxY mndiPB8wIvMll6robYYlWA== 0001050234-99-000086.txt : 19991110 0001050234-99-000086.hdr.sgml : 19991110 ACCESSION NUMBER: 0001050234-99-000086 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19991109 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: 99744779 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 PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended June 30, 1999 Commission file number 333-3856 __________________________________ 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.) 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 June 30, 1999 there were 17,492,939 shares of the Registrant's Common Stock, par value $0.001, issued and outstanding. TABLE OF CONTENTS PART 1. Financial Information Item 1. Financial Statements: Condensed Consolidated Balance Sheets (Unaudited) - as of June 30, 1999 and December 31, 1998 . . . . . . . . . . . . 1 Condensed Consolidated Statements of Operations (Unaudited) - for the Three and Six Months Ended June 30, 1999 and June 30, 1998 . . . . . . . . . . . . . . . . . . . . . . . 3 Condensed Consolidated Statements of Cash Flows (Unaudited) - for the Six Months Ended June 30, 1999 and June 30, 1998. 4 Notes to Condensed Consolidated Financial Statements (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation . . . . . . . . . . . . . . . . . 9 PART II. Other Information Item 1. Legal Proceedsings . . . . . . . . . . . . . . . . . . . . 17 Item 2. Changes in Senior Securities . . . . . . . . . . . . . . . 18 Item 3. Default Upon Senior Securities. . . . . . . . . . . . . . . 18 Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . 19 Signatures. . . . . . . . . . . . . . . . . . . . . . . . . 20 PART I FINANCIAL INFORMATION Item 1. Financial Statements WORLD WIRELESS COMMUNICATIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) ASSETS June 30, December 31, 1999 1998 ----------- ---------- Current Assets Cash and cash equivalents $ 675,916 $ 614,897 Investment in securities available-for-sale 137,648 137,648 Trade receivables, net of allowance for doubtful accounts 193,568 327,387 Other receivables 93,698 77,005 Inventory 626,577 550,239 Prepaid expenses 20,269 18,594 ----------- ---------- Total Current Assets 1,747,676 1,725,770 ----------- ---------- Equipment 2,153,035 2,085,930 Less accumulated depreciation (1,507,999) (1,047,285) ----------- ----------- Net Equipment 645,036 1,038,645 ----------- ---------- Goodwill, net of accumulated amortization 857,596 957,794 ----------- ---------- Other Assets, net of accumulated amortization 377,169 414,381 ----------- ---------- Total Assets $ 3,627,477 $4,136,590 =========== ========== (CONTINUED) [FN] The accompanying notes are an integral part of these condensed consolidated financial statements. -1- WORLD WIRELESS COMMUNICATIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED) (UNAUDITED) LIABILITIES AND STOCKHOLDERS' EQUITY(DEFICIT) June 30, December 31, 1999 1998 ----------- ----------- Current Liabilities Trade accounts payable $ 491,877 $ 982,506 Accrued liabilities 998,554 880,638 Notes payable 2,609,857 2,992,858 Obligation under capital leases - current portion 162,797 197,626 ----------- ----------- Total Current Liabilities 4,263,085 5,053,628 ----------- ----------- Long-Term Obligation Under Capital Leases 45,281 84,968 ----------- ----------- Mandatorily Redeemable Preferred Stock Liquidation Preference of $650,000 650,000 - Stockholders' Equity (Deficit) Common stock - $0.001 par value; 50,000,000 shares authorized; issued and outstanding: 17,492,939 shares at June 30, 1999 and 13,920,400 shares at December 31, 1998 17,492 13,920 Additional paid-in capital 29,594,486 25,419,026 Unrealized gain on marketable equity securities 62,648 62,648 Unearned compensation (38,500) (70,518) Receivable from shareholder (66,828) (66,828) Accumulated deficit (30,900,187) (26,360,254) ----------- ----------- Total Stockholders' Equity (Deficit) (1,330,889) (1,002,006) ----------- ----------- Total Liabilities and Stockholders' Equity (Deficit) $ 3,627,477 $ 4,136,590 =========== =========== [FN] The accompanying notes are an integral part of these condensed consolidated financial statements. -2- WORLD WIRELESS COMMUNICATIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Three For the Six Months Ended Months Ended June 30, June 30, ------------------------ ------------------------ 1999 1998 1999 1998 ----------- ----------- ----------- ----------- Sales $ 639,624 $ 1,058,074 $ 1,672,999 $ 2,366,957 Cost of Sales 559,586 900,129 1,381,271 1,556,577 ----------- ----------- ----------- ----------- Gross Profit 80,038 157,945 291,728 810,380 ----------- ----------- ----------- ----------- Expenses Research and development expense 428,805 1,272,763 670,070 1,936,512 General and administrative expenses 1,196,978 1,269,140 2,329,736 2,654,236 Amortization of goodwill 50,099 401,495 100,198 802,990 Interest income (5,924) - (10,606) - Interest expense 617,292 201,076 1,092,086 225,657 ----------- ----------- ----------- ----------- Total Expenses 2,287,250 3,144,474 4,181,484 5,619,395 ----------- ----------- ----------- ----------- Loss From Operations (2,207,212) (2,986,529) (3,889,756) (4,809,015) Other Income - - - 319,528 ----------- ----------- ----------- ----------- Net Loss $(2,207,212) $(2,986,529) $(3,889,756) $(4,489,487) Preferred Stock Dividend 650,000 - 650,000 - ----------- ----------- ----------- ----------- Net Loss Applicable to Common Stockholders $(2,857,212) $(2,986,529) $(4,539,756) $(4,489,487) =========== =========== =========== =========== Basic and Diluted Loss Per Common Share $ (0.17) $ (0.27) $ (0.28) $ (0.42) =========== =========== =========== =========== Weighted Average Number of Common Shares Used in Per Share Calculation 17,135,024 11,141,692 16,081,399 10,807,073 =========== =========== =========== =========== The accompanying notes are an integral part of these condensed consolidated financial statements.
-3- WORLD WIRELESS COMMUNICATIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Six Months Ended June 30, ------------------------- 1999 1998 ----------- ----------- Cash Flows From Operating Activities Net Loss $(3,889,756) $(4,489,487) Adjustments to reconcile net loss to net cash used by operating activities: Amortization of goodwill 100,198 802,990 Depreciation and amortization 497,926 374,429 Amortization of debt discount 325,448 144,628 Purchased research and development - 300,000 Amortization of unearned compensation 57,936 - Compensation for stock options 21,540 506,890 Stock issued for interest 93,698 - Stock issued for services 231,616 - Valuation allowance on inventory and other assets - 239,066 Gain on sale of business assets - (319,528) Changes in operating assets and liabilities: Accounts receivable 117,126 (250,904) Inventory (76,338) (158,647) Prepaid expenses/other assets (1,675) (2,406) Accounts payable (490,629) (37,055) Accrued liabilities 117,916 207,025 ----------- ----------- Net Cash and Cash Equivalents Used By Operating Activities (2,894,994) (2,682,999) ----------- ----------- Cash Flows From Investing Activities Payments for the purchase of property and equipment (67,105) (141,231) Proceeds from sale of business assets and property - 372,499 Proceeds from receivable from shareholder - 10,000 Loan to a related company - (56,410) ----------- ----------- Net Cash and Cash Equivalents Provided by (Used by) Investing Activities (67,105) 184,858 ----------- ----------- (Continued) The accompanying notes are an integral part of these condensed consolidated financial statements. -4- WORLD WIRELESS COMMUNICATIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (UNAUDITED) For the Six Months Ended June 30, ------------------------- 1999 1998 ----------- ----------- Cash Flows From Financing Activities Proceeds from issuance of common stock 2,356,083 1,047,407 Proceeds from issuance of preferred stock 400,000 - Proceeds from borrowings, net of discounts 1,600,000 2,900,000 Principal payments on notes payable (1,258,449) (389,665) Principal payments on obligation under capital lease (74,516) (126,634) ----------- ----------- Net Cash and Cash Equivalents Provided By Financing Activities 3,023,118 3,431,108 ----------- ----------- Net Increase In Cash and Cash Equivalents 61,019 932,967 Cash and Cash Equivalents - Beginning of Period 614,897 218,234 ----------- ----------- Cash and Cash Equivalents - End of Period $ 675,916 $ 1,151,201 =========== =========== Supplemental Cash Flow Information - Cash paid for interest was $472,890 and $35,306 for the six months ended June 30, 1999 and 1998, respectively. The accompanying notes are an integral part of these condensed consolidated financial statements. -5- WORLD WIRELESS COMMUNICATIONS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Interim Condensed Consolidated 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, 1998 annual report on Form 10-K/A. The results of operations for the six month period ended June 30, 1999 are not necessarily indicative of the operating results to be expected for the full year. NOTE 2 - COMMON STOCK During February 1999, the Company issued 2,040,000 common shares for cash in the amount of $2,040,000 received in a private placement offering. In connection with the offering, the Company granted options to purchase 200,000 common shares at $1.75 per share within 5 years, and issued 8,000 shares of common stock as finder's fees. The Company also paid $163,200 as finder's fees. During June 1999, the Company issued 510,000 common shares for cash in the amount of $510,000 received in a private placement offering. In connection with this offering, the Company paid $30,000 as a finders fee. During March 1999, note holders converted two unsecured promissory notes totaling $800,000, together with accrued interest, into 893,698 common shares at $1.00 per share under the terms of a conversion privilege granted to the note holders in December 1998. During the first and second quarter of 1999, the Company issued 120,841 restricted common shares for services valued at $231,499, or $1.92 per share. NOTE 3 - MANDATORILY REDEEMABLE PREFERRED STOCK AND WARRANTS On May 14, 1999 the Company offered to issue 650 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 3,250,000 common shares at $0.25 per share, and issued such shares of preferred stock on July 1, 1999. The preferred shares must be redeemed on or before May 14, 2000 at their par value plus accrued dividends. The preferred stock cash dividend requirement is $65,000 annually. The preferred stock was issued for $650,000 consisting of $400,000 cash and the deemed payment of $250,000 principal amount of 1998 bridge loan notes. The issuance of the preferred stock with warrants was accounted for as the granting of a favorable conversion feature to the preferred stock holders. The value assigned to the warrants was based on their intrinsic value but was limited to the cash proceeds and the amount of the notes converted. Since the warrants were immediately exercisable, the resulting discount to the preferred stock of $650,000 was recognized on the date granted as a preferred dividend. -6- WORLD WIRELESS COMMUNICATIONS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 4 - NOTES PAYABLE On May 14, 1999 the Company issued $2,600,000 of senior secured 16% notes payable which mature in one year. 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 1998 Bridge Loan notes. The remaining 1998 bridge loan notes, after this payment and the payment from the proceeds of the preferred stock, were renewed with terms equivalent to the senior secured 16% notes payable, which are as follows: The notes payable are secured by substantially all the Company's assets. Interest on the notes is payable quarterly. The notes will be in default if the reported loss before interest, depreciation, amortization and taxes exceeds $1,000,000 for the quarter ended June 30, 1999 or if income as computed above is less than $250,000 or $1,000,000 for the quarters ended September 30, 1999 and December 31, 1999 respectively. If the notes are determined to be in default for a quarter the Company could be required to issue five-year warrants to purchase 300,000 shares of common stock at $0.25 per share as compensation for the default with respect to such quarter. For the quarter ended June 30, 1999, the Company accrued $431,250 of interest expense for the potential default and issuance of warrants. NOTE 5 - COMMITMENTS AND CONTINGENCIES Legal Proceedings - The Company leased computer-aided design software which did not perform as specified; the software, which cost $550,887, was returned to the seller. The Company requested a cancellation of the $735,207 debt including a technical support agreement in the amount of $184,320. The software vendor, Mentor Graphics, Inc., commenced a lawsuit against the Company seeking damages of approximately $485,000 plus interest, legal fees and expenses arising out of the Company's alleged breach of contract for the purchase of software and related items. The Company settled this claim for $100,000 during the quarter ended June 30, 1999. An investment banking firm commenced a lawsuit against the Company seeking to recover damages of $231,129, plus legal fees and expenses. In this case, the Company asserted a counterclaim seeking damages of approximately $250,000. The Company anticipates that such lawsuit will be settled although there can be no assurance of such result. Unasserted Claim - The Company received a verbal request in 1998 from Mr. and Mrs. Richard Austin to rescind the Company's acquisition of Austin Antenna, Ltd., formerly known as TWC, Ltd., a Delaware corporation, by a stock purchase which closed in 1997. In addition, Mr. Austin requested that the Company bear the cost of (i) the legal fees and expenses in a litigation commenced against Mr. Austin in a state court in Massachusetts brought by Charles Rich seeking damages of approximately $50,000 for non-payment of commissions arising out of the Company's purchase of Austin Antenna Ltd. and (ii) the unpaid finder's fee that is the subject of the litigation. The Company, in turn, has put Mr. and Mrs. Austin on notice of the Company's claims that the Austins have failed to honor their agreements with Austin Antenna and the Company by failing to make available engineering drawings and other related data, proprietary to Austin Antenna and the Company by virtue of the acquisition agreement, that would enable the Company to consolidate antenna manufacturing in its Salt Lake City facility. The Company is currently in negotiation with Mr. and Mrs. Austin and is working on a belief that the claims between the parties may be resolved amicably. However, there is no current assurance as to the ultimate outcome of those efforts. -7- Default On 1999 Notes - The Company would have been in default under a Pledge/Security Agreement associated with the 1999 Notes on the date of the filing of its Form 10-Q for the quarter ended June 30, 1999 because, among other things, the Company had an operating loss in excess of that projected for such quarter and because of its failure to make a mandatory prepayment of principal, which failures would have each constituted an event of default under the Loan Agreement between the Company and the holders of the 1999 Notes. Upon the occurrence of an event of default, the holders of the 1999 Notes have the right, among other things, to accelerate the due date of the 1999 Notes to the date of the default and to sell the assets of the Company securing the debt as a means of repaying the debt. However, the Company is in the process of obtaining separate waivers of the default for the quarter ended June 30, 1999 from the holders of the 1999 Notes. In addition, the Company anticipates obtaining a deferral of any payment of principal on the 1999 Notes until December 31, 1999 regardless of any financing raised by the Company prior to such date through the sale of its securities, and anticipates obtaining certain other changes in the loan agreements. As a condition thereto, the Company anticipates agreeing, among other things, (a) to grant the holders of the 1999 Notes additional warrants to purchase 300,000 shares of the Company's common stock at an exercise price of $0.25 per share, exercisable in whole or in part at any time for a period of five years, and (b) to grant the holders of the 1999 Notes 200,000 shares of the Company's common stock, which shares would be subject to applicable securities law restrictions. Although the Company believes that it will obtain such waivers, there can be no assurance of such result. Moreover, there can be no assurance that the Company will not commit a default under the May 1999 transactions in the future. In the event that the holders of the 1999 Notes sell the Company's assets securing the 1999 Notes following a current or future default, such sale would materially and adversely affect the Company's business and financial condition. -8- 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, 1999 AND THREE MONTHS ENDED JUNE 30, 1998 Sales in the three-month period ended June 30, 1999 were $639,624 compared to $1,058,074 during the three-month period ended June 30, 1998. During the second quarter of 1999 the Company derived its revenue as follows: engineering services, $195,445; branded products, $124,328; and contract and cable manufacturing, $319,851. During the second quarter of 1998 the Company derived its revenue from engineering services, $758,738; branded products, $219,625; and contract and cable manufacturing, $79,711. The decrease in engineering services was due to the completion of the development of products for Williams that will be used in their SCADA and Automatic Meter Reading (AMR) applications. Gross profit in the three-month period ended June 30, 1999 was $80,038 compared to $157,945 during the comparable period during 1998, which represents 12.5% and 14.9% of sales respectively. The Company reduced its research and development costs by $843,958 from $1,272,763 in the second quarter in 1998 to $428,805 in the second quarter in 1999. Such saving was achieved primarily by the Company's reducing the number of employees. General and administrative expenses decreased $72,162 from $1,269,140 in the second quarter of 1998 to $1,196,978 in the second quarter of 1999. The decrease is due to cost cutting measures implemented during the first and second quarters of 1999. The amortization of goodwill decreased $351,396 from $401,495 for the three-months ending June 30, 1998 to $50,099 for the three-months ending June 30, 1999. The decrease was due to the impairment of goodwill the Company recognized in the third quarter of 1998. Interest income is due to the Company's investing idle cash in overnight interest bearing accounts. Interest expense increased $416,216 from $201,076 for the three-months ending June 30, 1998 to $617,292 for the three-months ending June 30, 1999, primarily due to the recognition of warrant interest expense and fees the Company bore in connection with the obtaining of debt financing in the second quarter of 1999. The Company issued 650 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 3,250,000 common shares at $0.25. The issuance of the preferred stock with warrants has been accounted for as the granting of a favorable conversion feature to the preferred stockholders. The value assigned to the warrants was based on their intrinsic value but limited to the cash proceeds and the amount of the notes converted. Since the warrants were immediately exercisable, the resulting discount to the preferred stock of $650,000 was recognized on the date granted as a preferred dividend. -9- SIX MONTHS ENDED JUNE 30, 1999 AND SIX MONTHS ENDED JUNE 30, 1998 Sales in the six-month period ending June 30, 1999 were $1,672,999 compared to $2,366,957 during the six-month period ending June 30, 1998. During the first six months of 1999 the Company derived its revenue as follows: engineering services, $840,263; branded products, $238,425; and contract and cable manufacturing, $594,311. During the first six months of 1998, the Company derived its revenue from engineering services, $1,863,672; branded products, $219,625; and contract and cable manufacturing, $283,660. The decrease in engineering services was due to the completion of the development of products for Williams that will be used in their SCADA and Automatic Meter Reading (AMR) applications. Gross profit in the first six-month period ended June 30, 1999 was $291,728 compared to $810,380 during the comparable period during 1998, which represents 17% and 34% of sales, respectively. The decrease was due primarily to two factors: during the first six months of 1998, 78% of the Company's revenues were derived from the more profitable engineering services segment of the business, compared to 50% in the first six months of 1999. Also, in the first six months of 1998, the Company met certain design and development contract milestones for efforts and costs incurred over several preceding periods. The Company reduced its research and development costs by $1,266,442 from $1,936,512 in the first six-months of 1998 to $670,070 in the first six months in 1999, primarily by reducing the number of its employees. General and administrative expenses decreased $324,500 from $2,654,236 in the first six months of 1998 to $2,329,736 in the first six months of 1999. This decrease was due primarily to a reduction of employees and cost cutting measures implemented during the first half of 1999. The amortization of goodwill decreased $702,792 from $802,990 for the first six-months ending June 30, 1998 to $100,198 for the first six-months ending June 30, 1999. The decrease was due to the impairment of goodwill the Company recognized in the third quarter of 1998. Interest expense increased $866,429 from $225,657 for the first six-months ending June 30, 1999 to $1,092,086 for the first six-months ending June 30, 1998. In May 1998, the Company executed certain bridge loans in the amount of $2,500,000. The 1998 bridge loans had detachable warrants, which had been accounted for as a discount of the related notes and was amortized to interest expense over the life of the note. The amortization of this debt discount was approximately $325,000 in the first half of 1999, compared to $108,000 in the first half of 1998. Interest income is due to the Company investing idle cash into overnight interest bearing accounts. The Company issued 650 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 3,250,000 common shares at $0.25. The issuance of the preferred stock with warrants has been accounted for as the granting of a favorable conversion feature to the preferred stockholders. The value assigned to the warrants was based on their intrinsic value but was limited to the cash proceeds and the amount of the notes converted. Since the warrants were immediately exercisable, the resulting discount to the preferred stock of $650,000 was recognized on the date granted as a preferred dividend. -10- LIQUIDITY AND CAPITAL RESOURCES The Company's liquidity at June 30, 1999 consisting of cash and cash equivalents was $675,916, which represented an increase of $61,019 over the Company's cash and cash equivalents of $614,897 as of December 31, 1998. The Company's current assets were $1,747,676 as of June 30, 1999, which represented an increase of $21,906 over the Company's current assets of $1,725,770 as of December 31, 1998. In addition, the Company's current liabilities were $4,263,085 as of June 30, 1999, a decrease of $790,543 from the Company's current liabilities of $5,053,628 as of December 31, 1998. The Company's cash and cash equivalents at June 30, 1999 of $675,916 represented a decrease of $185,381 from the Company's cash and cash equivalents of $861,297 as of March 31, 1999. The Company's current assets at June 30, 1999 of $1,747,676 represented a decrease of $373,502 from the Company's current assets of $2,121,178 as of March 31, 1999. Also the Company's current liabilities at June 30, 1999 of $4,263,085 represented an increase of $402,772 from the Company's current liabilities of $3,860,313 as of March 31, 1999. In order to pay off the Company's Senior Secured Notes which had a maturity date of May 15, 1998 (the "1998 Notes"), the Company raised financing in May 1999. Such financing involved the sale of separate units consisting of $2,600,000 principal amount of the Company's Senior Secured Notes, bearing interest at 16% per annum, payable quarterly and maturing on May 14, 2000 (the "1999 Notes"). The 1999 Notes are secured by a first security interest in substantially all the assets of the Company, including its machinery, equipment, automobiles, fixtures, furniture, accounts receivable and general intangibles, including any stock in any subsidiary. Also, the Company sold separate units consisting of 650 shares of the Company's 10% Senior Preferred Stock* and detachable warrants to purchase 3,250,000 shares of the Company's Common Stock at an exercise price of $0.25 per share, exercisable in whole or in part by the holder at any time on or before May 14, 2004. Such sales by the Company occurred in a private placement transaction exempt from registration made by the Securities Act of 1933, as amended. ** ____________________ * Each share of the Company's Senior Preferred Stock has the following characteristics: (a)has a 10% cumulative dividend; (b)constitutes the senior series of any preferred stock the Company may issue; (c)is non-voting; (d)is convertible into shares of the Company's Common Stock at the conversion rate of 10,000 shares of Common Stock for each share of Senior Preferred Stock (or $0.10 per share), if all the shares the Company's Senior Preferred Stock are not redeemed by May 14, 2000 (for up to a total of 6,500,000 shares of the Company's Common Stock based on the 650 shares of the Company's Senior Preferred Stock which are issued and outstanding); (e)is mandatorily redeemable upon the earlier to occur of (i) May 14, 2000 or (ii) the Company's raising of gross proceeds of $5,500,000 from the closing of one or more private placement transactions or secondary offerings of its securities; and (f)has a first priority in liquidation of $1,000 per share, plus the amount of unpaid cumulative dividends, payable from the Company's assets after its payment (or its making of adequate provision for the payment) of all claims of its creditors. **In May 1999, Lancer Offshore Inc. and the Orbiter Fund, who are affiliates of the Company's largest shareholder group (consisting of such entities, Michael Lauer, Lancer Partners LLC and Lancer Partners L.P.) purchased $1,400,000 principal amount of the 1999 Notes and also acquired at such time separate units consisting of 350 shares of the Company's Senior Preferred Stock and warrants to purchase 1,750,000 shares of the Company's Common Stock, for an aggregate investment of $1,750,000. ___________________ -11- As a result of such new financing, the Company paid off the principal amount of the Notes of $2,395,528 outstanding and accrued interest of $96,355 in full on or immediately after the maturity date of the 1998 Notes. Accordingly, the Company believes that it satisfied all of its remaining obligations under the 1998 Notes in full and it does not anticipate any further claim with respect thereto. The Company would have been in default under a Pledge/Security Agreement associated with the 1999 Notes on the date of the filing of its Form 10-Q for the quarter ended June 30, 1999 because, among other things, the Company had an operating loss in excess of that projected for such quarter and because of its failure to make a mandatory prepayment of principal, which failures would have each constituted an event of default under the Loan Agreement between the Company and the holders of the 1999 Notes. Upon the occurrence of an event of default, the holders of the 1999 Notes have the right, among other things, to accelerate the due date of the 1999 Notes to the date of the default and to sell the assets of the Company securing the debt as a means of repaying the debt. However, the Company is in the process of obtaining separate waivers of the default for the quarter ended June 30, 1999 from the holders of the 1999 Notes. In addition, the Company anticipates obtaining a deferral of any payment of principal on the 1999 Notes until December 31, 1999 regardless of any financing raised by the Company prior to such date through the sale of its securities, and anticipates obtaining certain other changes in the loan agreements. As a condition thereto, the Company anticipates agreeing, among other things, (a) to grant the holders of the 1999 Notes additional warrants to purchase 300,000 shares of the Company's common stock at an exercise price of $0.25 per share, exercisable in whole or in part at any time for a period of five years, and (b) to grant the holders of the 1999 Notes 200,000 shares of the Company's common stock, which shares would be subject to applicable securities law restrictions. Although the Company believes that it will obtain such waivers, there can be no assurance of such result. Moreover, there can be no assurance that the Company will not commit a default under the May 1999 transactions in the future. In the event that the holders of the 1999 Notes sell the Company's assets securing the 1999 Notes following a current or future default, such sale would materially and adversely affect the Company's business and financial condition. OUTLOOK The statements contained in this Outlook are based on current expectation. These statements are forward looking and actual results may differ materially. X-traWeb(TM) PRODUCTS The Company commenced the shifting of its strategic direction during the first quarter of 1999. In early 1999, the Company successfully implemented its proprietary X-traWeb(TM) network for integrating wireless solutions with Internet technologies. The Company's X-traWeb(TM) network allows data from a remote wireless radio frequency (RF) system to be accessed via a secure, encrypted Internet connection using a standard Web browser located anywhere. As a result, the data is available at an Internet-accessible remote location to simplify the control, access and monitoring of those devices. The Company's existing X-traWeb products currently offered for sale are described below: (a) X-Node is a small (approximately 1" x 1") embedded controller suitable for mounting in existing equipment for the purpose of remotely monitoring and controlling the equipment over the Internet. For example, a small, embedded computer, called a micro-controller, controls many beverage vending machines. This embedded controller has a serial port built-in to allow a hand-held computer to configure the machine and obtain transaction information. This information can now be collected, remotely, by fitting an X-Node to this serial port. Two versions of the X-Node have been developed and are fully operational; one has a serial interface and the other a digital interface. -12- (b) X-Gate is a small, rugged Internet gateway device that replaces the more common gateway: the personal computer. The X-Gate is fully operational at present. (c) X-traWeb(TM) Internet Access Servers dedicated to remote monitoring and control applications are available. The Company formed X-traWeb, Inc. its wholly-owned Delaware subsidiary, on May 12, 1999 to conduct the Company's X-traWeb(TM) business. Applications for X-traWeb(TM) in addition to automatic meter reading (AMR), include remote monitoring and control of wireless supervisory control and data acquisition (SCADA)implementations in the oil and gas pipeline; environmental control; water and wastewater management; and heating, ventilation and air conditioning (HVAC) industries. Other applications include data access and monitoring for vending machines, medical devices, and security systems. During the period from January 1, 1999 through June 30, 1999, the Company received no revenues from, and had no sales of any of, its X-traWeb products. As of July 31, 1999, the Company had submitted proposals to an Italian telephone manufacturer, an Italian electrical utility, a California utility and others. In addition, the Company received a purchase order for the initial installation of an X-traWeb(TM) network for a vending machine owner and operator in Pennsylvania and for a test site at a national fast food chain site in Columbus, Ohio. While the Company believes that its pending proposals will be accepted in whole or in part from these sources and others, and that it will derive substantial revenues therefrom in 1999 and thereafter, there cannot be any assurance that any such sales will be made or the amount thereof, although management anticipates that X-traWeb(TM) product sales will constitute the bulk of its revenues over the next 12-month period and thereafter. PROPRIETARY RADIO PRODUCTS The Company is currently offering for sale a total of four 900 MHZ and two 2.4 Ghz low speed digital radios ("LSDRs") which can be used in a variety of industrial applications, including remote control, event detection, SCADA, environmental monitoring, security and industrial control applications. The Company only sold a limit quantity of these radio products to date since the Company is awaiting Federal Communications Commission (FCC) clearance on all of the above models (with the exception of 2.4 Ghz Hopper). The Company expects to receive FCC approval of these LSDRs within the next 60 day period, although there can be no assurance of such result. If such FCC approval is obtained, the Company can then offer the LSDRs so approved for sale in unlimited quantities for commercial application. The Company believes that it will derive significant revenues from the sale of its proprietary radio products in the future. However, there can be no assurance as to the amount of such sales or when such sales will occur. -13- The Company had also developed for The Williams Companies, Inc. devices called Telemetry Interfaces Modular, or TIM (TM)s, which operate at the point of data origin and transmit date to a data collection and forwarding point called a WinGate (TM) unit and the WinGate (TM) unit, in turn, forwards that data to an operating center via a wide area network. These supervisory control and data acquisition (SCADA) units use some of the Company's radio products. However, market penetration in the automatic meter reading (AMR) field has not occurred as anticipated, and, as a result, the Company's contract with Williams has generated a substantially lower level of revenues from that originally anticipated therefrom. Although there are current negotiations in progress for firm commitments from Williams of TIM(TM)s and WinGate (TM) for AMR and gas and oil pipeline applications, there can be no assurance as to the outcome thereof. CONTRACT MANUFACTURE AND ASSEMBLY; ANTENNAS The Company is actively engaged in performing assembly and manufacturing services for other manufacturers and vendors of medical, communications, computer graphics and consumer electronic products at its Salt Lake City manufacturing facility. The Company expects its level of manufacturing and assembly activities to increase during the second half of 1999 and during the year 2000. However, there can be no assurance as to the amounts to be derived therefrom or the timing thereof. In addition, while the Company is engaged in the manufacture and sales of various antennas, it does not expect antenna products to contribute materially to its consolidated net sales or income in the foreseeable future. On October 15, 1998, the Company entered into a seven-year lease for a 34,000 square foot facility in West Valley City, Utah. The Company consolidated its American Fork 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. ENGINEERING SERVICES While the Company does continue to provide design and development services for various third parties, it has reduced its current level of activity inthis area. The Company completed development under a contract with Kyushu Matsushita Electric Co., Ltd. (KME, which is also known as Panasonic) that calls for royalty payments upon shipment of certain KME products. Shipments of KME products containing the Company's technology began during the third quarter of 1998. Management believes royalty payments from the contract were earned during the fourth quarter of 1998, and first half of 1999, but were subject to recoupment by KME up to the first $600,000 of royalties. Management further believes that the Company may become entitled to royalty payments with respect to the third quarter of 1999 (which may be paid during the fourth quarter of 1999), although there can be no assurance of such result. The Company cannot predict the amount of the royalties to be received from the future sale of such KME products. -14- SUMMARY Management believes that the potential growth of the Company's X-traWeb(TM) business segment, proprietary radio products and manufacturing activities require additional financing to sustain the Company's proposed operations in these areas. It is anticipated that additional executive and marketing personnel will be required for the X-traWeb(TM) business in advance of the receipt of any substantial revenues from such source. There can be no assurance that the Company will be able to locate and hire qualified personnel for such functions; moreover, such a task is time-consuming. Similarly, the Company's inventory needs are expected to increase if, as and when orders are received for these new products. Thus, the Company is currently engaged in seeking to raise additional financing (whether through debt, equity or a combination thereof). The Company has private placement transactions being undertaken in implementation of its fund-raising program. While the Company believes that such additional financing can be obtained, there can be no assurance that such financing will be achieved, or, if made available, on terms acceptable to the Company. In summary, while management is optimistic about the Company's future, it is fully aware that anticipated revenue increases from sales of X-traWeb(TM) products, proprietary radios and manufactures activities, 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. STATEMENT REGARDING FORWARD-LOOKING DISCLOSURE This report includes "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act which represent the Company's expectations or beliefs concerning future events that involve risks and uncertainties, including those associated with the ability of the Company to obtain financing for its current and future operations, to manufacture (or arrange for the manufacturing of) its products, to market and sell its products, and the ability of the Company to establish and maintain its sales of X-traWeb(TM) products. 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 the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the Company's 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 the Company or persons acting on its behalf are expressly qualified in their entirety by the Cautionary Statements. PART II. OTHER INFORMATION Item 1. Legal Proceedings Mentor Graphics, Inc. commenced a lawsuit against the Company in 1998 in a State court in Utah, which was subsequently removed to the United States District Court for the District of Utah, seeking damages of approximately $485,000 plus interest, legal fees and expenses arising out of the Company's alleged breach of contract for the purchase of software and related items. The Company settled such action in May, 1999 by paying $100,000 to the plaintiff. PaineWebber Incorporated commenced a lawsuit against the Company in the United States District Court for the Southern District of New York in which the plaintiff seeks to recover damages of approximately $231,000, plus legal fees and expenses of its counsel in such action. In this case, the Company asserted a counterclaim seeking damages of approximately $250,000. Plaintiff filed a motion for summary judgment in the case in May, 1999 and the Company filed a reply thereto in June, 1999. The Company anticipates that such lawsuit will be settled, although there can be no assurance of such result. -15- The Company received an oral request in 1998 from Mr. and Mrs. Richard Austin to rescind its purchase of the stock of Austin Antenna Ltd. and related assets which closed in 1997. In addition, Mr. Austin requested that the Company bear the cost of (i) the legal fees and expenses in a litigation commenced against Mr. Austin in a state court in Massachusetts brought by Charles Rich seeking damages of approximately $50,000 for non-payment of commissions arising out of the Company's purchase of Austin Antenna Ltd. and related assets and (ii) the unpaid finder's fee that is the subject of the litigation. The Company, in turn, advised Mr. and Mrs. Austin that Austin Antenna Ltd. has breached its agreement with the Company by, among other things, failing to furnish the Company with proprietary engineering drawings and related data that would enable the Company to manufacture the antennas now produced by the Austin Antenna division. The Company is currently negotiating with Mr. and Mrs. Austin and believes that the claims may be resolved amicably, although there can be no assurance as to the outcome thereof. Item 2. Changes in Securities and Use of Proceeds 1. During May, 1999, the Company authorized the issuance of up to 950 Senior shares of a series of preferred stock designated as its Senior Preferred Stock. Each share of the Company's Senior Preferred Stock has the following characteristics: (a) has a 10% cumulative dividend; (b) constitutes the senior series of any preferred stock the Company may issue; (c) is non-voting; (d) is convertible into shares of the Company's Common Stock at the conversion rate of 10,000 shares of Common Stock for each share of Senior Preferred Stock (or $0.10 per share), if all the shares the Company's Senior Preferred Stock are not redeemed by May 14, 2000 (or up to a total of 6,500,000 shares of the Company's Common Stock based on the 650 shares of the Company's Senior Preferred Stock which are issued and outstanding); (e) is mandatorily redeemable upon the earlier to occur of (i) May 14, 2000 or (ii) the Company's raising of gross proceeds of $5,500,000 from the closing of one or more private placement transactions or secondary offerings of its securities; and (f) has a first priority in liquidation of $1,000 per share, plus the amount of unpaid cumulative dividends, payable from the Company's assets after its payment (or its making of adequate provision for the payment) of all claims of its creditors. Thus, each share of such Senior Preferred Stock has a priority over the shares of Common Stock in the payment of dividends and upon the liquidation of the Company. 2. In April, 1999, the Company issued for cash 10,000 shares of its Common Stock to Richard Mallen at a price of $1.00 per share. The shares were issued in reliance upon Section 4(2) of the Securities Act of 1933, as amended (the "Act") and Rule 506 of Regulation D promulgated thereunder. The Company believes that Mr. Mallen is an accredited investor. -16- 3. In April, 1999, the Company issued 27,584 shares of its Common Stock to Murdock Capital Partners, Corp. for services valued at $51,692, or $1.88 per share. The shares were issued in reliance upon Section 4(2) of the Act and Rule 506 of Regulation D promulgated thereunder. Based on information obtained by the Company in connection with its business relationship with Murdock Capital Partners Corp., the Company believes, that Murdock Capital Partners Corp., through its representatives, has such knowledge on business and financial matters as to be able to evaluate the merits and risks of an investment in the Company. 4. In May, 1999, the Company issued 1,500 shares of its Common Stock to Sterling Technology Partners, LLC for services valued at $2,625 or $1.75 per share. The shares were issued in reliance upon Section 4(2) of the Act and Rule 506 of Regulation D promulgated thereunder. The Company believes that Sterling Technology Partners, LLC is an accredited investor. 5. On May 14, 1999 the Company issued $2,600,000 of senior secured 16% notes payable which mature in one year. 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 1998 Bridge Loan notes. The notes were issued to the nine purchasers listed and in the amounts set forth below: Name of Purchaser Principal Amount of Notes 1. Lancer Offshore, Inc. $800,000 2. The Orbiter Fund Ltd. $600,000 3. The McCloskey Trust $440,000 4. DPM Investments Corp. $ 40,000 5. Frying Pan Partners, LLC $ 40,000 6. CJL Investments, LLC $ 80,000 7. Sterling Technology Partners LLC $200,000 8. James T. Kelly $200,000 9. K.R. Braithwaite $200,000 The 1999 Notes were issued in reliance upon Section 4(2) of the Act and Rule 506 of Regulation D promulgated thereunder. The Company believes that each of the purchasers of the Notes is an accredited investor. 6. In May, 1999, the Company issued 650 shares of the Company's Senior Preferred Stock and warrants to purchase 3,250,000 shares of its Common Stock at an exercise price of $0.25 per share expiring on May 14, 2004. The preferred stock was issued for $650,000 consisting of $400,000 cash and the deemed payment of $250,000 principal amount of 1998 bridge loan notes. The Senior Preferred Stock and Warrants were issued to nine purchasers listed and in the amounts set forth below: -17- No. of Shares of No. of Shares Senior Preferred of Common Stock Name of Purchaser Stock Subject to Warrants - --------------------- -------- --------------------- Lancer Offshore, Inc. 200 1,750,000 The Orbiter Fund Ltd. 150 -0- The McCloskey Trust 110 550,000 DPM Investments Corp 10 50,000 Frying Pan Partners, LLC 10 50,000 CJL Investments, LLC 20 100,000 Sterling Technology Partners LLC 50 250,000 James T. Kelly 50 250,000 K.R. Braithwaite 50 250,000 7. In June, 1999, the Company issued for cash 500,000 shares of its Common Stock to RUSP Holding S.A at a price of $1.00 per share. The shares were issued in reliance upon Section 4(2) of the Act and Rule 506 of Regulation D promulgated thereunder. The Company believes that RUSP Holding S.A. is an accredited investor. 8. In June, 1999, the Company issued 1,000 and 2,000 shares of its Common Stock to Strategic Alliance Unlimited and Sterling Technology Partners LLC, respectively, in connection with services valued at $4,688, or $1.56 per share. The shares were issued by the Company in reliance upon Section 4(2) of the Act and Rule 506 promulgated thereunder. The Company believes that Strategic Alliance Unlimited and Sterling Technology Partners LLC are accredited investors. Item 3. Defaults Upon Senior Securities A description of certain of the potential defaults committed by the Company under the Pledge/Security Agreement dated as of May 15, 1999 is set forth on pages 11 and 12 of Part I of this Form 10-Q and is hereby incorporated by reference. Item 6. Exhibits and Reports on Form 8-K. (a) The following documents are filed as part of this report: Financial Statements of the Company (unaudited), including Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Operation, Condensed Consolidated Statements of Cash Flow and Notes to Financial Statements as at and for the period ended June 30, 1999. The Exhibits which are listed on the Exhibit Index attached hereto -18- EXHIBIT INDEX No. Description 3.1 Articles of Incorporation of the Company and all amendment thereto* 3.2 Bylaws of the Company* 4.1 Form of Common Stock Certificate* 4.2 Form of Subscription Agreement used in private financing providing for registration rights* 5. Opinion of Connolly Epstein Chicco Foxman Engelmyer & Ewing regarding the legality of securities being registered* 10.1 1997 Stock Option Plan* 10.2 DRCC Omnibus Stock Option Plan* 10.3 Development and License Agreement dated April 4, 1997, between DRCC and Kyushu Matsushita Electric Co., Ltd.* 10.4 Amended and restated Technical Development and Marketing Alliance Agreement dated September 15, 1997, between the Company and Williams Telemetry Services, Inc.* 10.5 Lease Agreement dated May 17, 1995, between DRCC and Pracvest Partnership relating to the Company's American Fork City offices and facility* 10.6 Lease Agreement dated February 12, 1996, between the Company the Green/Praver, et al., relating to the Company's Salt Lake City offices* 10.7 Shareholders Agreement dated May 21, 1997 between the Company, DRCC,Philip A. Bunker and William E. Chipman, Sr.* 10.8 Asset Purchase Agreement dated October 31, 1997, between the Company and Austin Antenna, Ltd.* 10.9 Stock Exchange Agreement dated October 31, 1997, between the Company, TWC, Ltd. and the shareholders of TWC, Ltd.* 10.10 Settlement Agreement, Mutual Waiver and Release of All Claims dated November 11, 1997 between Digital Radio Communications Corp. and Digital Scientific, Inc.* 10.11 Agreement (undated) between the Company, Xarc Corporation and Donald J. Wallace relating to the Company's acquisition of Xarc Corporation* 10.12 Promissory Note dated December 4, 1997, by the Company, payable to William E. Chipman, Sr. in the principal amount of $125,000* 10.13 Promissory Note dated November 13, 1997, by the Company, payable to T. Kent Rainey in the principal amount of $200,000* -19- 10.14 Investment Banking Services Agreement dated November 19, 1997, between The Company and PaineWebber Incorporated* 10.15 $400,000 Promissory Note dated December 24, 1997, payable to Electronic Assembly Corporation* 10.16 $400,000 Promissory Note dated January 8, 1998, payable to Tiverton Holdings Ltd.* 10.17 Loan Agreement by and among the Registrant and the Bridge Noteholders dated as of May 15, 1998* 10.18 Amendment and Waiver Agreement by and among the Registrant and the Bridge Noteholders dated August 7, 1998* 10.19 Amendment and Waiver Agreement by and among the Registrant and the Bridge Noteholders dated September 11, 1998* 10.20 Loan Agreement by and among the Registrant and the Bridge Noteholders dated as of May 15, 1998 (Previously filed), together with the Notes, Pledge/Security Agreement, Pledgee/Representative Agreement, Subordination, and Registration Rights Agreement* 10.21 Separation and Mutual Release Agreement between the Registrant and William E. Chipman, Sr. dated as of May 26, 1998*+ 10.22 Registration Rights Agreement by and among the Registrant and the purchasers of common stock issued pursuant to the Registrants Confidential Private Placement Memorandum dated September 9, 1998, as amended* 10.23 Employment Agreement between the Registrant and James O'Callaghan dated May 20, 1998*+ 10.24 Lease agreement between the Registrant and NP#2 dated as of July 29, 1998 relating to the premises at 2441 South 3850 West, West Valley City, Utah 84120* 10.25 Agreement between KME and the Registrant dated October 19, 1998 relating to the Registrant's providing of technical assistance and development relating to the Giarange telephone* 10.26 Agreement between KME and the Registrant dated as of March 1, 1998 relating to the Panasonic MicroCast System* 10.27 General and Mutual Release Agreement between the Registrant and Phil Acton dated November 2, 1998*+ 10.28 Agreement and Waiver Agreement by and among the Registrant and the Bridge Noteholders dated November 25, 1998* 10.29 1998 Employee Incentive Stock Option Plan*+ 10.30 1998 Non-qualified Stock Option Plan*+ 10.31 Amendment of Agreement by and among the Registrant and the Bridge Noteholders dated as of March 26, 1999* 10.32 Loan Agreement by and among the Registrant and the Senior Secured Noteholders dated as of May 14, 1999, together with the Notes, Pledge/Security Agreement, Pledgee Representative Agreement, Subordination and Registration Rights Agreement* 27 Financial Data Schedules** ** Filed herewith * Filed previously + Management contract or compensatory plan or arrangement filed previously (b) No reports on Form 8-K were filed by the Registrant during the quarter ended June 30, 1999. 19 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. Date: November 3, 1999 WORLD WIRELESS COMMUNICATIONS, INC. /s/ David D. Singer ---------------------------------- David D. Singer President, Chief Executive Officer and Principal Financial Officer -20- EX-27 2
5 This schedule contains summary financial information from the condensed balance sheet as of June 30, 1999, and the condensed statement of operations for the six months ended June 30, 1999, and is qualified in its entirety by reference to such financial statements. 6-MOS DEC-31-1999 JUN-30-1999 675,916 137,648 258,568 65,000 626,577 1,747,676 2,153,035 1,507,999 3,627,477 4,263,085 45,281 650,000 0 17,492 (1,313,397) 3,627,477 832,736 1,672,999 687,528 1,381,271 3,100,004 0 1,092,086 (3,889,756) 0 (3,889,756) 0 0 0 (3,889,756) (0.28) (0.28)
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