-----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, FPGf/U8sGU3gbJJcjhKYPE8WhnxEROge8wKdYKQ37EA/Vq198hQZtD5pkUqSeX3K ZVyP86v1lh3k/MHuPJ58Eg== /in/edgar/work/20000814/0001021890-00-000307/0001021890-00-000307.txt : 20000921 0001021890-00-000307.hdr.sgml : 20000921 ACCESSION NUMBER: 0001021890-00-000307 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TELEMETRIX INC CENTRAL INDEX KEY: 0000742814 STANDARD INDUSTRIAL CLASSIFICATION: [2400 ] IRS NUMBER: 593453156 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-14724 FILM NUMBER: 700610 BUSINESS ADDRESS: STREET 1: 1225 SAGE ST CITY: GERING STATE: NE ZIP: 69341 BUSINESS PHONE: 3033837610 MAIL ADDRESS: STREET 1: 1225 SAGE ST CITY: GERING STATE: NE ZIP: 69341 FORMER COMPANY: FORMER CONFORMED NAME: ARNOX CORP DATE OF NAME CHANGE: 19960612 10QSB 1 0001.txt QUARTERLY REPORT ON FORM 10-QSB-JUNE 30, 2000 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. FORM 10-QSB Quarterly Report pursuant to Section 13 of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2000 TELEMETRIX INC. (Exact Name of Registrant as Specified in its Charter) Delaware 0-14724 59-345-3156 --------------- ---------------------- ---------------------- (Jurisdiction of (Commission File Number) (I.R.S. Employer incorporation) Identification Number) Telemetrix Inc. c/o J. Doyle, Chief Financial Officer 1225 Sage Gering, Nebraska 69341 (308) 436-3453 ----------------------------------------------- (Address, including zip code, & telephone number, of Registrant's principal executive offices) Indicate by check mark whether the Registrant has: Yes [X] No [ ] (1) filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) been subject to such filing requirements for the past 90 days. On June 30, 2000, Registrant had 14,702,925 issued and outstanding common shares. Transitional Small Business Disclosure Format: Yes [ ] No [X] TELEMETRIX INC. (Commission File No. 0-14724) TABLE OF CONTENTS FOR FORM 10-QSB Page ---- PART I - FINANCIAL INFORMATION Item 1. Financial Statements.............................................. 3 Condensed Consolidated Balance Sheets............................. 3 Consolidated Statements of Operations............................. 4 Consolidated Statements of Cash flows............................. 5 Notes to Consolidated Financial Statements........................ 6 PART II - OTHER INFORMATION Item 2. Management's Discussion & Analysis of Financial Condition and Results of Operations............................................. 10 Item 1. Legal Proceedings................................................. 17 Item 2. Changes in Securities and Use of Proceeds......................... 17 Item 3. Defaults Upon Senior Securities................................... 17 Item 4. Submission of Matters to a Vote of Security Holders............... 17 Item 5. Other Information................................................. 17 Item 6. Exhibits and Reports on Form 8-K.................................. 18 SIGNATURES .................................................................. 19 NOTE CONCERNING FORWARD-LOOKING INFORMATION. This Quarterly Report on SEC Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties that constitute "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. Forward-looking terms such as "may", "might", "will", "should", "could", "expect", "plans", "anticipate", "believe", "estimate", "continue" or similar words identify such statements. Investors should read statements that contain these terms carefully because they: (1) discuss our future expectations; (2) project our future results of operations or financial condition; or (3) state other "forward-looking" information. Such statements do not recite historical facts; they merely explain our expectations about the future. We believe that it is important to communicate such future expectations to our investors. However, the accuracy of our expectations and forward-looking statements could be affected by: o our limited operating history and commercial experience; o market acceptance of T3000; o availability of additional capital; o protection of our intellectual property rights; o evolving technologies and markets; o competitive developments; o telecommunications regulatory environment; and o our ability to manage growth. These factors might cause actual results to differ materially from the forward-looking statements as well as materially & adversely affecting our business, operating results & financial condition. 2
CONDENSED CONSOLIDATED BALANCE SHEETS (Information as of June 30, 2000, is unaudited) June 30 December 31 2000 1999 ------- ----------- ASSETS Current assets: Cash ............................................................................ $ 56 $ 16 Accounts receivable, net of allowance for doubtful accounts ..................... 293 259 Note receivable-- related party ................................................. 369 348 Due from related companies ...................................................... 209 54 Prepaid expenses ................................................................ 2 3 -------- -------- Total current assets ......................................................... 929 680 Property & equipment, net .......................................................... 2,329 2,317 Intangibles ........................................................................ 7,661 8,545 -------- -------- Total assets .............................................................. $ 10,919 $ 11,542 ======== ======== LIABILITIES & STOCKHOLDERS' (EQUITY) DEFICIT Current liabilities Line of credit .................................................................. $ 200 $ 195 Accounts payable ................................................................ 1,870 709 Accrued expenses ................................................................ 1,326 1,264 Due to related companies ........................................................ 484 354 Current portion-- long term debt-- related parties .............................. 2,156 2,157 Current portion of long term debt ............................................... 202 8 -------- -------- Total current liabilities ..................................................... 6,238 4,687 -------- -------- Deferred rent liability ............................................................ 126 130 Long term debt ..................................................................... 643 836 Long term debt-- related party ..................................................... 4,480 4,588 -------- -------- Total long-term liabilities ................................................... 5,249 5,554 -------- -------- Total Liabilities ........................................................... 11,487 10,241 -------- -------- Stockholders' equity (deficit): Common stock .................................................................... 15 13 Additional paid-in capital ...................................................... 37,116 33,466 Foreign currency translation .................................................... (30) 31 Retained earnings (deficit) ..................................................... (37,669) (32,209) -------- -------- Total Stockholders' Equity (deficit) ........................................ (568) 1,301 -------- -------- Total Liabilities and Stockholders' Equity (deficit) ................... $ 10,919 $ 11,542 ======== ======== Financial data was rounded to the nearest thousand dollars. The accompanying notes are an integral part of these consolidated financial statement
3
CONSOLIDATED STATEMENTS OF OPERATIONS (Information relating to the three-month and six-month periods ended June 30, 1999 and 2000 is unaudited) Three Months Ended Six Months Ended June 30, June 30, 2000 1999 2000 1999 ---- ---- ---- ---- Revenue: Equipment sales & rental......................................... $ 68 $ -- $ 142 $ -- Service income .................................................. 112 499 219 499 ------------ ------------ ------------ ------------ Total revenue ............................................... 180 499 361 499 ------------ ------------ ------------ ------------ Expenses: Cost of revenue ................................................. 59 -- 122 -- Research & development .......................................... 1,668 252 2,692 252 Selling, general & administrative ............................... 1,392 2,688 2,732 2,688 ------------ ------------ ------------ ------------ Total operating expenses .................................... 3,119 2,940 5,546 2,940 ------------ ------------ ------------ ------------ Net loss from operations .......................................... (2,939) (2,441) (5,185) (2,441) ------------ ------------ ------------ ------------ Other Expense: Interest expense (income) ....................................... 186 53 325 53 Other expense (income) .......................................... -- -- (5) -- ------------ ------------ ------------ ------------ Total other expense (income) ................................ 186 53 320 53 ------------ ------------ ------------ ------------ Net (loss).......................................................... $ (3,125) $ (2,494) $ (5,505) $ (2,494) ============ ============ ============ ============ Weighted average shares outstanding during period .................. 14,192,147 7,289,381 13,755,064 3,832,129 Loss per share ......................................................... $ (0.22) $ (0.34) $ (0.40) $ (0.65) ============ ============ ============ ============ Financial data was rounded to the nearest thousand dollars. The accompanying notes are an integral part of these consolidated financial statement
4
CONSOLIDATED STATEMENTS OF CASH FLOWS (Information relating to the six month periods ended June 30, 1999 and 2000 is unaudited) Six Months Ended June 30, -------------------- 2000 1999 ---- ---- Cash flow from operating activities Net loss for the period........................................................ $ (5,505) $(2,494) Adjustments to reconcile net loss to cash used in operations Amortization & depreciation ................................................. 1,004 2,114 Changes in assets and liabilities In accounts receivable .................................................... (34) (78) In accounts payable ....................................................... 1,161 108 In other assets ........................................................... 1 -- In accrued liabilities .................................................... 62 -- ------- ------- Total adjustments ....................................................... 2,194 2,144 ------- ------- Net cash used in operating activities .............................. (3,311) (350) ------- ------- Cash flow from investing activities Increase in capital assets .................................................... (132) (102) ------- ------- Net cash used in investing activities ................................ (132) (102) ------- ------- Cash flow from financing activities Net activity on line-of-credit ................................................ 5 -- Advances on notes receivable .................................................. (21) -- Proceeds (payments) from long-term debt ....................................... 1 5 Proceeds (payments) from long-term debt - related party ....................... 920 -- Proceeds from issuance of share capital ....................................... 2,623 -- Advances to related parties ................................................... (155) -- Advances from related companies ............................................... 130 308 Change in deferred rent liability ............................................. (4) (4) ------- ------- Net cash from financing activities ................................... 3,499 309 ------- ------- Effect of foreign currency translation on cash ................................... (16) -- ------- ------- Net increase (decrease) in cash .................................................. 40 (143) ------- ------- Cash, beginning of period ........................................................ 16 140 ------- ------- Cash, end of period............................................................... $ 56 $ (3) ======= ======= Financial data was rounded to the nearest thousand dollars. The accompanying notes are an integral part of these consolidated financial statement
5 TELEMETRIX INC. (Commission File No. 0-14724) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Information as of and relating to the three-month and six-month periods ended June 30, 1999 and 2000, is unaudited) 1. Description of Business Telemetrix Inc. and its subsidiaries (collectively, the "Company") offer wireless paging service, PCS service, wireless telemetry systems (hardware and software) and communications software and technology to telecommunications carriers and other businesses. Wireless telemetry involves the use of wireless devices for remote data collection, distribution and monitoring. For example, a telemetry device in a vending machine can transmit the amount of cash receipts and a nightly inventory to the owner's monitoring computer. The owner can then decide whether to refill the machine, order more products and add that vending machine to the delivery truck's itinerary. Telemetry thus requires transceiver devices, transmission services, central control devices and management software. Businesses requiring telemetry applications include electric utilities, alarm companies and vending machine operations ("Telemetry Users"). Telecommunications carriers, such as Personal Communications Services ("PCS") carriers can use our technology to provide transmission services for Telemetry Users. With widespread coverage and easy mobility, wireless telecommunications are especially suitable for telemetry applications. Wireless telemetry thus presents a new and potentially significant revenue source for wireless communication service providers. The Company was formed through a series of corporate combinations during 1999 involving Arnox Corporation (an inactive public corporation) and three private corporations: o On January 2, 1999, Telemetrix Resource Group Inc., a Colorado corporation ("TRG--USA"), acquired Telemetrix Resource Group Limited, a Nova Scotia corporation ("TRG--Canada"), from Hartford Holdings Ltd. ("HHL", TRG--Canada's sole shareholder), pursuant to a share exchange and plan of reorganization. o On March 22, 1999, Arnox, TRG--USA and Tracy Corporation II d/b/a Western Total Communication ("WTC") executed a Plan of Reorganization for a share exchange and reorganization transaction (the "Combination"). o On April 5, 1999, the first phase of the Combination occurred, whereby Arnox acquired 100% of the issued and outstanding common shares of TRG--USA in exchange for 6,127,200 shares of Arnox's common stock. o On September 22, 1999, the Combination's final phase closed, whereby the Company acquired 100% of the issued and outstanding common shares of WTC in exchange for 5,372,800 shares of Arnox's common stock. Through the Combination, the stockholders of WTC and TRG--USA received a total of 11,500,000 shares of Arnox common stock (approximately 90%) and therefore acquired control of Arnox. 6 TELEMETRIX INC. (Commission File No. 0-14724) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued) (Information as of and relating to the three month periods ended June 30, 1999 and 2000, is unaudited) After the Combination, the companies changed their names to reflect their complementary businesses: -- Arnox became Telemetrix Inc. ("Telemetrix"; "Arnox"; we use "Arnox" and "Telemetrix" for activities before and after, respectively, the Combination); -- TRG-US will become Telemetrix Solutions Ltd. ("Telemetrix Solutions"; for the collective activities of both TRG-US and TRG--Canada, we use "TRG" and "TSI" for activities before and after, respectively, the Combination); -- WTC will become Telemetrix Technologies Inc. ("Telemetrix Technologies"; we use "WTC" and "Telemetrix Technologies" for activities before and after, respectively, the Combination). Arnox was inactive prior to the acquisition of TRG on April 5, 1999. As a result of the Combination, Arnox's historical financial statements became those of TRG--Canada, as TRG--Canada's operations were the ongoing operations of the combined companies (Arnox, TRG--USA & TRG--Canada). Consequently, TRG--Canada is treated as the "predecessor" to Telemetrix. Except for the acquisition of WTC, all transactions comprising the Combination were accounted for as reverse acquisitions and no goodwill was recorded. Arnox's assets were recorded at carryover basis and no goodwill was recorded on the transaction. The Company accounted for the WTC acquisition as a purchase at fair value; these financial statements include the activity of WTC only from the acquisition date (i.e., from September 22-30, 1999). 2. Basis of Presentation of Interim Information The consolidated unaudited financial statements for June 30, 2000, include the accounts of Telemetrix Inc. (the parent company) and its wholly owned subsidiaries (Telemetrix Solutions and Telemetrix Technologies), while the consolidated unaudited financial statements for June 30, 1999, include only the activities of TRG because the Company accounted for the TRG combination as a continuation of interest. The results for three months and six months ended June 30, 2000, do not necessarily indicate the results of operations for the full year. These financial statements and related footnotes should be read in conjunction with the financial statements & footnotes included in the Company's 1999 Annual Report on SEC Form 10-KSB filed with the U.S. Securities & Exchange Commission. In Management's opinion, the accompanying unaudited interim financial statements include all normal adjustments necessary to present fairly the Company's financial position at June 30, 2000, and the results from operations for the three and six months ended June 30, 2000, and the cash flows for the six months ended June 30, 2000. 7 TELEMETRIX INC. (Commission File No. 0-14724) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued) (Information as of and relating to the three month periods ended June 30, 1999 and 2000, is unaudited) 3. Related Party Transactions HHL, the Company's largest shareholder, also controls Mondetta Telecommunications Inc., Web CCB Systems Inc., The Becker Group of Companies and Telemetrix Software Factory Inc. (collectively, "Affiliated Companies"). The Company advanced funds to certain Affiliated Companies and borrowed funds from HHL and other Affiliated Companies. Due from Related Companies Mondetta Telecommunications Inc. ................ $ 7,000 Web CCB Systems Inc. ............................ 26,000 Telemetrix Software Factory ..................... 176,000 ----------- $ 209,000 =========== Due to Related Companies Telemetrix Software Factory ..................... $ (217,000) Becker Group of Companies ....................... (267,000) ----------- $ (484,000) =========== The amounts due from related companies are non-interest bearing and due on demand. The amounts due to related companies are due on demand bearing interest at U.S. prime. HHL is the Parent of WEB, BGC, and Telemetrix Software Factory Inc., while Mondetta is controlled by a relative of HHL's sole shareholder. The Company has a note receivable from the Telemetrix Software Factory, which matured May 1999. The outstanding balance at June 30, 2000, was $348,000. The note accrues interest at 7.5% until maturity at which time the interest rate was adjusted to 15% and a penalty of 15% of the outstanding balance was incurred. In addition, the Company has a receivable from Mondetta of approximately $99,000 at June 30, 2000, for services rendered. The Company has a payable to Mondetta of approximately $23,000, at June 30, 2000 for rent and shared office expenses. An additional $20,000 is due to Telemetrix Software Factory for shared expenses at June 30, 2000. 4. Commitments & Contingencies The Company contracted with a vendor for research and development of software to be used in the Company's telemetry technology. The total contract amount was $2 million and is payable as (a) certain milestones in the project are completed and (b) in the form of royalties until the total contract amount has been paid. During the quarter ended June 30, 2000, the Company paid $65,000 to the vendor. 8 TELEMETRIX INC. (Commission File No. 0-14724) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued) (Information as of and relating to the three month periods ended June 30, 1999 and 2000, is unaudited) Manufacturing Design Agreements. The Company contracted with a third party for manufacturing design and implementation to be used in the Company's telemetry technology. At June 30, 2000, the Company had committed to pay $1,529,000, and had paid a total of $1.4 million. The balance is due upon completion of certain milestones. Legal Proceedings. The Company is party to various negotiations and legal proceedings regarding claims on contracts in the normal course of its business. Management believes that the outcome of such negotiations and legal proceedings, as well as commitments, will not have a material adverse effect on the Company's consolidated and combined financial statements. Employment Contracts. The Company is party to several employment contracts. These contracts indicate that options to purchase 225,000 shares of the Company's common stock were granted at exercise prices ranging from $4.69 to $10.00. Legal counsel is currently reviewing these contracts. Borrowings. During the quarter, the Company drew on its line of credit with Valley Bank, Scottsbluff, Nebraska, for a total of $200,000. The Company also borrowed $716,000 from two principal shareholders at interest rates ranging from 9% to 11%. All funds will be used for the continuation of the development of the T3000 technology. Private Placement. During the quarter ended March 31, 2000, the Company successfully completed a private placement of common stock. The Company sold 101 Units, each Unit consisting of 12,500 shares of Telemetrix common stock and a warrant to purchase 6,250 shares of Telemetrix common stock, for approximately $2.5 million. The Company used the proceeds of this private placement for pre-manufacturing design, manufacturing and working capital. Conversion of Debt to Equity. On June 30, 2000, the Becker Group of Companies converted notes payable totaling $1.03 million (including principal & accrued interest) into 510,778 shares of common stock. 9 TELEMETRIX INC. (Commission File No. 0-14724) Quarterly Report on SEC Form 10-QSB for the Quarter ended June 30, 2000 Item 2. Management's Discussion & Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with the unaudited Consolidated Financial Statements and related notes. The results presented in this Report do not necessarily indicate the results to be expected in any future periods. This discussion contains forward-looking statements based on our current expectations, which involve risks and uncertainties. These risks and uncertainties mean that future events could dramatically differ from our forward-looking statements. OVERVIEW. We offer telecommunications services and solutions for wireless telemetry to businesses and telecommunications carriers, utilizing wireless Personal Communications Services ("PCS"). We are developing the T3000 wireless telemetry product for data collection, system monitoring, and data distribution. The T3000 can be used in a wide variety of applications, such as automatic utility meter reading, home security, monitoring vending machines and other specialty applications. Our T3000 wireless telemetry system includes hardware (e.g., the COMM Center and Optical Reader), software, network monitoring services, and support services. We will provide each of these components of the T3000. We also provide wireless telecommunications services over our licensed wireless PCS and paging network (the "WTC Network"), which includes two separate wireless communication networks and the total coverage area encompasses portions of western Nebraska, northeastern Colorado and southeastern Wyoming. Telemetrix Solutions is located in Toronto and provides billing and customer management services for long distance carriers. Our operations consequently encompass research & development, product design, manufacturing, telecommunications services, data management and carrier support services. Management recently reviewed the business plan, decided to focus on the T3000 and downsized the Service Bureau operations. We entered the telecommunications industry through a corporate combination ("Combination") between Arnox Corporation, Telemetrix Resource Group, Inc. ("TRG", now renamed Telemetrix Solutions, Inc.) and Tracy II Corporation d/b/a Western Total Communications ("WTC", to be renamed Telemetrix Technologies Inc.) See "Corporate History". Before the Combination (when the companies operated separately), the only significant business activity was the WTC paging operations. Otherwise, Arnox was inactive, WTC was inventing T3000 and TRG was just commencing operations. At this early stage for the various businesses, these constituent companies spent over $30 million to acquire products & equipment (billing support software, the T3000 technology, international patent filings and PCS Licenses) and then refine and ready those products for sale. Funding for these development activities was provided by the Company's principal stockholders through loans ($5.4 million) and equity contributions ($25.5 million). As TRG launched its services, it incurred additional costs to set up corporate infrastructure and hire operations staff. Since our Company, products and services are innovative and relatively unknown, our market development activities are creating awareness of our products and services. The Toronto-based Service Bureau (Telemetrix Solutions) has commenced regular operations, but the T3000 system and our other wireless communications services require further development. 10 TELEMETRIX INC. (Commission File No. 0-14724) Quarterly Report on SEC Form 10-QSB for the Quarter ended June 30, 2000 T3000. Telemetrix's immediate objective is transitioning T3000 into commercial design and production. We have been beta-testing the T3000 in western Nebraska for the past 18 months, and integrating the devices with the controlling software. We will soon execute Testing and Evaluation agreements in various locations including California, Florida, Minnesota and Nebraska. We also integrate a Telemetrix GSM-PCS radio module of our design and manufacture into the system and can add a "Subscriber Line Interface" for interconnecting the GSM-PCS radio module with household telephony wiring. Prototypes for the beta-testing now use Telemetrix GSM-PCS radio modules and pre-production circuitry. We have applied for the necessary type approvals, acceptances and certifications, such as FCC certification of the radio module, and demonstrate compliance with various technical standards (e.g., GSM, UL, ITU, ANSI). We have arranged commercial manufacturing processes and capability with industry-leading contractors and have identified and approved sources for components. We estimate that completing product development through commercial production will require approximately $8.0 million: $1.7 million for product development (both internal and by third parties), $1.0 million for technology licensing, $1.0 million for manufacturing, $1.8 million for development and testing applications, $0.9 million for testing & certification and $2.0 million for working capital. We have commercial orders for delivery in October 2000. This following schedule illustrates our product development activities. 2000
2000 Jan. Feb. March April May June July August Sept. Oct. | | | | | | | | | | | | Beta-testing on WTC Network | | | | Begin volume production Software integration & development | Build first production units. FCC/GSM certification.
After initial GSM deployment, T3000 development will focus on integrating other wireless technologies (CDMA & TDMA) to expand the coverage both in North America and around the world. Future T3000 enhancements provides additional applications, which can be quickly and easily integrated in the T3000. Wireless Services. Our wireless communications services currently consist of paging operations in Nebraska, Colorado and Wyoming over the WTC Network. These operations (paging services plus equipment sales, rentals and repairs) now generate approximately $30,000 in monthly revenue. Prior to 1997, monthly revenue was approximately $40,000, but WTC has concentrated on developing T3000, which sharply curtailed marketing of the paging operations and resulted in lower revenue. Also, the market penetration and decreasing subscriber cost of cellular service has affected the paging industry. We will not expand the paging operations but instead will integrate them into the PCS operations. We acquired the PCS licenses in 1996, began network deployment in late 1997 and finished network deployment in April 1999. Testing is underway, and we hope to commence commercial PCS operations in mid to late 2000. 11 TELEMETRIX INC. (Commission File No. 0-14724) Quarterly Report on SEC Form 10-QSB for the Quarter ended June 30, 2000 Service Bureau. TRG acquired its TRACCS software in April 1998, and completed development of that software ("Billing Software") in third quarter 1998. TRG began Service Bureau customer care operations (where TRG performs customer management services for long distance carrier customers) in late 1998. For Service Bureau activities, we charge a fee of 3%-5% of the customer's invoiced revenue (lower than the customary 4%-6% fee for telecommunications billing services). However, we are de-emphasizing the Service Bureau, so its activities will diminish during the next few quarters. DESCRIPTION OF FINANCIAL COMPONENTS Revenue and Cost of Sales: The following chart summarizes the anticipated components of revenue and the associated cost of sales (excluding depreciation) from our proposed operations:
Activity Revenue Source Costs of Sales (excluding depreciation) - -------- -------------- -------------------------------------- Service Bureau Service Bureau Compensation for Service Consulting income Representatives & fulfillment charges Wireless telecommunications PCS Services Carrier settlements for airtime charges Equipment sales Equipment costs Wireless Telemetry Licensing T3000 Manufacturing costs; license fees T3000 Equipment sales Manufacturing costs; license fees T3000 software sales License fees
Operating Expenses. As we develop our products and services and ready them for market, the operating expenses principally consist of research & development, pre-production, license and general & administrative costs. When we launch products and services, then sales & marketing expenses substantially increase, while research & development, pre-production and license costs decrease. After sales of products and services reach "regular" levels, the principal operating expenses will be research & development, sales & marketing, manufacturing, general & administrative. Since we are still in the initial stages of our business plan, we believe that operating expenses, particularly for wireless telemetry and wireless telecommunications, will continue to increase during the next year as we continue research & development, pre-production manufacturing and expanding our operations. Research & Development. Our research & development activities will principally focus on completing T3000 for general release in 2000. We expect research & development always will constitute a significant operating expense because we must continually enhance and upgrade our products & services. For example, we must enhance T3000 to integrate other wireless technologies such as TDMA and CDMA. We expect to spend about $2.4 million for those related research & development costs. Capital Expenditures. The most significant capital expenditure will be deploying and equipping the T3000 Network Operation Center ("T--NOC"). The T--NOC is the central repository of telemetry information and acts as the gateway between the PCS service providers and the Telemetry Users of T3000. We estimate that deployment of the T--NOC could require a total of $2.6 million. 12 TELEMETRIX INC. (Commission File No. 0-14724) Quarterly Report on SEC Form 10-QSB for the Quarter ended June 30, 2000 Licensing. Some products and services utilize the intellectual property of other parties, which may requires us to pay license fees. Such license fees can take the form of initial payments, continuing royalties or both types of payments. Our current license fees include a lump sum payment to Plextek Inc. for the right to use their GSM-PCS 1900 radio design and a royalty to The Technology Partnership ("TTP") to use their GSM protocol software in that embedded radio. We also must reserve funds to pay licenses on "essential patents" on the GSM radio and protocols, which is a standard practice in the industry. Pre-Production. Pre-production costs include certification by the FCC, Underwriters Laboratory, Canadian Standards Association ("CSA") and GSM standards organizations, to prove that our T3000 device complies with standards for electronic emissions, safety and system interoperability. Principal pre-production expenses are the costs incurred to develop manufacturing processes & custom test equipment, as well as the cost of customized manufacturing test equipment for radio components. We expect to spend about $900,000 for pre-production and compliance testing costs. Sales & Marketing. Sales & Marketing expenses include salaries and commissions for sales staff, trade show expenses, consulting fees and advertising. Since our Company, products and services are innovative and relatively unknown, we must conduct considerable initial marketing to create awareness of our products and services. Manufacturing. The largest manufacturing expense will be carrying manufactured equipment & component inventory on the T3000 units. Since T3000 will include some specific use customized components, we must commit to large volume purchases to ensure timely delivery and to lower costs. In a similar manner, large production runs avoid multiple set-up charges and therefore are more economical, especially since third parties manufacture the T3000 units for us. We anticipate building to both inventory and actual orders, which should satisfy our shipping commitments while stabilizing the demand on our manufacturer. We will maintain an inventory of finished products to ensure a reliable flow of T3000 units to customers. We expect to spend about $3.6 million for inventory costs during the second year of T3000 sales. General & Administrative. General & administrative expenses primarily consist of salaries and related expenses of management, support personnel, occupancy fees, professional fees, non-capitalized research & development, general corporate and administrative expenses. As the size and scope of our business grow, we may expand our corporate and administrative staff, especially accounting and contract management. Depreciation and Amortization. These non-cash expenses include depreciation of tangible property, networks and equipment plus amortization of intangible assets (such as FCC Licenses and patents) and goodwill. The goodwill resulted from our acquisition of WTC and therefore should not increase. Depreciation will increase due to the increase in capital equipment needed for the T--NOC. 13 TELEMETRIX INC. (Commission File No. 0-14724) Quarterly Report on SEC Form 10-QSB for the Quarter ended June 30, 2000 Interest Expense. Interest expense includes interest incurred from debt. Our principal interest expense results from amounts we borrowed from our principal shareholders, which incur interest at annual rates ranging from 7.5% to 9.5%. RESULTS OF OPERATIONS Three & six months ended June 30, 2000, compared to the three & six months ended June 30, 1999 During the quarter ended June 30, 2000 ("Recent Quarter") and the six months ended June 30, 2000 ("Recent Period"), our prime focus was manufacturing design, testing and pre-production manufacturing of the T3000 technology. With our decision to focus on the T3000, we are downsizing the Service Bureau operations. During the quarter ended June 30, 1999 ("Prior Quarter") and the six months ended June 30, 1999 ("Prior Period"), TRG began marketing Billing Software licenses and Service Bureau operations. All significant intercompany transactions and balances have been eliminated. The following discussion contains only minimal comparisons between the Recent Quarter & Period (collectively, "Latest Periods") and the Prior Quarter & Period (collectively, "Past Periods"). The financial statements for the Past Periods include only TRG because WTC was not acquired until September 1999; however, the financial statements for the Latest Periods include Telemetrix, TSI and Telemetrix Technologies. Since the Past Periods did not include any operations of WTC, the results of operations for the Latest Periods are not comparable to the Past Periods. We expect that this situation will continue until first quarter 2001, when both periods being compared will contain WTC's operations. Revenue totaled $180,000 & $361,000 during the Latest Period (Recent Quarter & Recent Period, respectively) compared to $499,000 during both Past Periods; this decrease primarily results from our decision to de-emphasize the Service Bureau and reduced paging revenues. During the Latest Periods, we received $68,000 & $142,000 from equipment sales & rentals and $112,000 & $219,000 from Service Bureau clients. We expect revenue to increase substantially over the next 12 to 18 months as we launch the T3000 system. Operating expenses were $3.1 million & $5.5 million during the Latest Periods. These expenses are primarily due to design and pre-manufacturing costs for the T3000 technology, marketing and sales expense for the T3000 and the operations of the Service Bureau. Costs of Revenue was approximately $59,000 & $122,000 for the Latest Periods. These expenses primarily consist of salaries and wages for the sales staff. Research & Development expenses were approximately $1.7 million & $2.7 million for the Latest Periods. The primary component of this expense is the $1.4 million paid to an outside company for manufacturing design & pre-manufacturing setup costs for the T3000. Additionally, two other companies were paid for software licensing and development of the wireless GSM-related technology used by the T3000. We expect licensing fees to increase when we commence producing and selling the T3000. Research & development expenses will continue to be substantial until the third quarter of 2000. 14 TELEMETRIX INC. (Commission File No. 0-14724) Quarterly Report on SEC Form 10-QSB for the Quarter ended June 30, 2000 Manufacturing expenses were not incurred during the Latest Periods or the Past Periods. We will start incurring manufacturing expenses for the T3000 in the third quarter of 2000. Selling, General & Administrative expenses were $1.4 million & $2.7 million for the Latest Periods. The primary component of the SG& A expense is depreciation and amortization; $1.0 million & $2.1 million for the Latest Periods. Amortization includes the amortization of goodwill from the acquisition of WTC and amortization of patents and FCC licenses. SG&A expenses also include marketing costs for the T3000 and salaries and administrative costs of Telemetrix Solutions and Technologies. The $2.7 million SG&A expenses for the Prior Period were primarily salaries in the Service Bureau operations and the amortization of the Billing Software (which we wrote off in late 1999). Interest expenses were $186,000 & $325,000 for the Latest Periods. This expense represents primarily the interest charges on related party loans, principally the loans from HHL. Interest expense for the Prior Period was $53,000, which also was interest on loans from HHL. Net loss. We reported a net loss of $3.1 million & $5.5 million for the Latest Periods. The principal components of this net loss were the research & development expense for the T3000 as well as operating costs. We did not reflect any benefit for income taxes due to the uncertainty surrounding the realization of the favorable tax attributes in future tax returns. Accordingly, we recorded a valuation allowance against its total net deferred tax assets. LIQUIDITY AND CAPITAL RESOURCES. TRG's principal stockholders have financed our activities through loans (approximately $7.7 million) and equity contributions ($37.0 million). The Service Bureau operations have also provided some funding for operations and development. During the Recent Period, we used $3.3 million in cash for operations, primarily research & development. We used $121,000 of cash for investment purposes primarily to develop WTC's PCS network in western Nebraska. During the Recent Period we generated cash flow from financing activities of $3.5 million. During the Recent Period, we completed a private placement of Shares that raised proceeds of $2.5 million, which we are using for developing the T3000 technology and for working capital. We must obtain additional financing in order to fund our operations and would require even more financing if we fail to operate within the planned operational budget or fail to obtain revenue from operations. We are also pursuing additional lines of credit and other debt financing. No assurance can be given that additional financing will be available or that such funds would be available on acceptable terms or in the amounts or time periods we require. 15 TELEMETRIX INC. (Commission File No. 0-14724) Quarterly Report on SEC Form 10-QSB for the Quarter ended June 30, 2000 FUNDING REQUIREMENTS. In order to pay operating expenses and achieve self-sustaining operations, we expect to require substantial funding during the next two years of approximately $25.0 to $30.0 million. We will need funds for: Research and Development projects include completing the T3000 system, particularly a data solution for the utility markets and the integration of other PCS radio technologies to expand the potential markets for the T3000 product. We estimate that our research and development activity over the next two years will require $2.4 million. Working Capital. As demand for the T3000 product grows, we must build an inventory of equipment to allow for load balancing the manufacturing demand while maintaining a short delivery period. This inventory will also serve as a supply of spare units to cover immediate shipment for warranty purposes. We also will need working capital (between $10-$15 million) for developing our corporate infrastructure and paying T3000 marketing costs. Manufacturing capacity. Projected demand growth of T3000 units will require additional manufacturing capacity. We expect to contract with an outside vendor for the manufacturing of the hardware, licensing of the software and the compliance testing, at an expected cost of $7.0 million. T3000 Network Operation Center. Capital will be required to equip the T--NOC. The T--NOC is the central repository of telemetry information and acts as the gateway between the PCS service providers and the Telemetry Users of T3000 (e.g., utilities and alarm companies). We estimate that deployment of the T--NOC will require $2.6 million. Repay Loans from Related Parties. We plan to repay loans from related parties as soon as sufficient funding becomes available. The expected amount of loans that will be repaid is $3.0 million. 16 TELEMETRIX INC. (Commission File No. 0-14724) Quarterly Report on SEC Form 10-QSB for the Quarter ended June 30, 2000 PART II - OTHER INFORMATION Item 1. Legal Proceedings There are no pending legal proceedings against Registrant. Item 2. Changes in Securities and Use of Proceeds. (a) Not Applicable. (b) Not Applicable. (c) Issuance of Unregistered Securities. The following table summarizes all securities that we issued or sold during the quarter ended June 30, 2000, in unregistered offerings:
Deemed Per Date Title of Security Amount Class of Purchaser Exemption Share Price Proceeds ---- ----------------- ------ ------------------ --------- ----------- -------- 6/30/00 Common Stock(1) 510,778 Accredited Investor Sec. 4(2) $1.50-$3.02(2) $1,029,278 5/01/00 Options(3) 300,000 Affiliates Sec. 4(2) $4.69-$10.00(4) --
-------------------- 1 Conversion of existing debt into Common Stock. 2 The deemed per-Share prices reflect the trading price for the Common Stock when the loans were originally made. 3 Options to Officers & Directors pursuant to Company's Stock Option Plan. 4 Trading price of the Common Stock on date the Options were issued. (d) Not Applicable. Item 3. Defaults Upon Senior Securities. (a) Not Applicable. (b) Not Applicable. Item 4. Submission of Matters to a Vote of Security Holders. No matters were submitted for a vote of Security Holders. Item 5. Other Information In May 2000, Registrant executed a Teaming Agreement with Ericsson Messaging Systems Inc. Under that agreement, Registrant and Ericsson may refer customers to the other party and may submit proposals incorporating products and services of both companies. The agreement also specifies procedures when submitting joint bids or when a party provides products & services to the other party. 17 TELEMETRIX INC. (Commission File No. 0-14724) Quarterly Report on SEC Form 10-QSB for the Quarter ended June 30, 2000 Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. (10) Material Contracts. (10.1) Teaming Agreement dated May 2000, between Registrant and Ericsson Messaging Systems Inc. (27) Financial Data Schedules. (b) Reports on Form 8-K. On April 20, 2000, Registrant filed a Current Report on SEC Form 8-K that further amended its previous reports filed March 8, 2000 and amended March 21, 2000, which reported: Item 4: Changes in the Company's Certifying Accountants (see Item 8 above). The March 8, 2000, report explained that during the two most recent fiscal years and subsequent interim periods preceding the change in Auditors, the Company and the former Auditors did not disagree on any matter of accounting principle or practices, financial statement disclosure, or auditing scope or procedure that would have caused the former Auditors to refer to the subject matter of the disagreement(s) in connection with their report. The former Auditors' reports on the financial statements of Arnox, TRG and WTC for the past two years contained only a modification of their opinion as to the Company's ability to continue as a "going concern". The Company previously reported the change in Auditors on SEC Form 8-K and requested comments from the former Auditors. In their letters addressed to the SEC, the former Auditors did not disagree with the Company's disclosure. The March 21, 2000, and April 20, 2000, amendments included the comment letters from the former certifying accountants. 18 TELEMETRIX INC. (Commission File No. 0-14724) Quarterly Report on SEC Form 10-QSB for the Quarter ended June 30, 2000 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. TELEMETRIX INC., a Delaware corporation August 11, 2000 By: /S/ JAMES DOYLE ---------------------------------- James Doyle Signing for Registrant and as Chief Financial Officer 19 TELEMETRIX INC. (Commission File No. 0-14724) Quarterly Report on SEC Form 10-QSB for the Quarter ended June 30, 2000 INDEX TO EXHIBITS FILED WITH THIS QUARTERLY REPORT Exhibit Exhibit Page - ------- ------- (10) Material Contracts (10.1) Teaming Agreement dated May 2000, between Registrant and Ericsson Messaging Systems Inc. ........................... 2 (27) Financial Data Schedule ........................................... 7 EX-10.1 2 0002.txt TEAMING AGREEMENT TEAMING AGREEMENT THIS TEAMING AGREEMENT (this "Agreement"), effective as of May __, 2000 (the "Effective Date"), is entered into by and between Ericsson Messaging Systems Inc., a Delaware corporation ("Ericsson"), and Telemetrix, Inc., a ________________ corporation ("Telemetrix"). WHEREAS, Ericsson and Telemetrix each have unique capabilities which are complementary and desire to enter into this Agreement in order to develop an integrated solution to be offered to their respective potential or current customers (each, a "Customer"). NOW, THEREFORE, Ericsson and Telemetrix hereby agree as follows: 1. Scope of Joint Effort. --------------------- (a) From time to time during the term of this Agreement, each party may refer a Customer to the other party and may agree to submit a joint proposal (a "Proposal") to offer an integrated solution to such Customer that is comprised of the parties' respective products and services. In such Proposal, either party may be a prime contractor (the "Prime Contractor") while the other party may be a subcontractor (the "Subcontractor"). In connection therewith, the Subcontractor will use its commercially reasonable best efforts to assist the Prime Contractor in its preparation and submission of the Proposal, including, without limitation, management, technical and cost proposal materials and proposal clarifications, and other required supporting materials. The Prime Contractor will identify the Subcontractor as a proposed subcontractor and contributor to the proposal effort in the Proposal and in communications with such Customer. (b) Immediately following the Customer's award of the contract to the Prime Contractor for the products and services as a result of the Proposal (the "Prime Contract"), Ericsson and Telemetrix will commence good faith negotiations of a statement of work (each, a "Statement of Work") which will, in addition to those listed in Section 3 hereof, include such required terms and conditions as are contained in the Prime Contract, pricing which reflects the pricing data provided by the Subcontractor to the Prime Contractor in connection with the Proposal, and such other terms and conditions as may be mutually agreed upon. In the event that the terms and conditions of the Statement of Work cannot be negotiated by the parties within a reasonable time frame, and in any event not more than one month from award of the Prime Contract to the Prime Contractor or mutually agreed upon extensions, the Prime Contractor will have the right to enter into subcontracts with other business entities for the equivalent or substantially equivalent products and services which would have been covered by the Statement of Work. (c) With respect to a Proposal, unless the Customer determines, as evidenced in writing, that the products and services proposed by the Subcontractor in the Proposal do not meet the Customer's requirements, both Ericsson and Telemetrix will work together in good faith and will not seek to team or collaborate with any third party to submit a counter proposal to the Customer with respect to such products and services. 2. Independent Efforts. From time to time during the term of this Agreement and independent of the parties' joint efforts relating to a Proposal, each party may purchase products and services from the other party in accordance with the terms and conditions of this Agreement, in which event the parties will execute a Statement of Work for such purchase. 3. Statement of Work. All products and services provided by one party (the "Seller") to the other party (the "Buyer") pursuant to this Agreement will be so provided in accordance with the Statements of Work entered into by the parties from time to time during the term of this Agreement, each of which will, at a minimum, including the following: (a) A reference to this Agreement, which reference will be deemed to incorporate all applicable provisions of this Agreement. (b) The date as of which the applicable Statement of Work will be effective, and, if applicable, the term or period of time during which the Seller will provide the applicable products and services to the Buyer pursuant to that Statement of Work. 1 (c) A description of the products and services to be provided by the Seller to the Buyer pursuant to that Statement of Work, including, but not limited to, the deliverables to be provided as part of the applicable products and services pursuant to that Statement of Work. (d) A designation of the individual who will have management responsibility for each party in connection with that Statement of Work. (e) The amounts payable to the Seller by the Buyer for the products and services to be provided under the applicable Statement of Work, the basis on which such amounts will be determined, and the schedule on which such amounts will be invoiced to the Buyer by the Seller. (f) Any additional provisions applicable to the products and services provided under that Statement of Work that are not otherwise set forth in this Agreement or that are exceptions to the provisions set forth in this Agreement. 4. Confidentiality. Each party agrees that all confidential documents, work product and information received or otherwise obtained from the other party pursuant to this Agreement, whether before or after the Effective Date, will be received in strict confidence and will be used only for the purposes of carrying out the obligations or, or as otherwise contemplated by, this Agreement. Without the other party's prior written consent, neither party will disclose any such information to any third party, and each party will disclose such information only to such of its officers, employees and agents that have a need to know such information for the purposes contemplated by this Agreement. However, this Section will not prevent a party from disclosing any such information that (i) is or becomes generally available to the public other than as a result of a disclosure by such party or by other persons to whom such party disclosed such information, (ii) is already in the possession of such party without being subject to another confidentiality obligation, (iii) is or becomes available to such party on a non-confidential basis from a third party, provided that such third party is not bound by a confidentiality obligation to the other party, (iv) is independently developed by such party without the use of the other party's confidential information, or (v) is required to be disclosed pursuant to a requirement of any governmental authority or any statute, rule or regulation, provided that such party gives the other party notice of such requirement prior to any such disclosure. 5. Term. The term of this Agreement will be for a period of three years commencing on the Effective Date, unless earlier terminated pursuant to the terms and conditions of this Agreement. This Agreement will automatically extend for successive one (1) year periods unless either party provides to the other party a written notice of termination no less than sixty (60) days prior to the expiration of the then existing term. 6. Termination. (a) Termination for Cause. Either party may terminate this Agreement or the applicable Statement of Work upon thirty days' written notice to the other party if such party breaches in any material respect any of the terms of this Agreement or the applicable Statement of Work and such breach remains uncured at the end of the thirty day notice period. (b) Termination for Change of Control. Each party shall have the right to terminate this Agreement by written notice to the other party if the other party shall have undergone a Change of Control. For purposes of this Agreement, a "Change of Control" means an event that will be deemed to have occurred if there shall be consummated (i) any consolidation, merger or other reorganization of a party in which such party is not the continuing or surviving entity, (ii) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of such party; (iii) any vote or other consent of the stockholders of such party to 2 approve any plan or proposal for the liquidation or dissolution of such party, or (iv) at any time during a period of twelve consecutive months, individuals who at the beginning of such twelve-month period constituted the board of directors of such party shall cease for any reason to constitute at least a majority thereof. The party having a Change of Control shall, within ten days following a Change of Control, provide written notice to the other party of the same, whereupon the other party may elect to terminate this Agreement during the subsequent ninety days, with no liability arising solely as a result of such termination. (c) Termination of a Proposal. Each party's obligations with respect to each Proposal will terminate upon the first to occur of one of the following events: (1) the execution of the Statement of Work by Ericsson and Telemetrix as contemplated by such Proposal. (2) the award of a contract for the products and services described in Proposal to other than the Prime Contractor. (3) the failure of the Customer to award a contract contemplated by the Proposal within six months from the submission of the Proposal by the Prime Contractor. (4) written determination by the Customer that the products and services proposed in the Proposal do not meet the Customer's requirements. 7. Expenses. Except as otherwise mutually agreed in writing by the parties, each party will bear all of its own expenses incurred in connection with the performance of its duties and obligations under this Agreement. 8. Ownership of Intellectual Property. Except as expressly provided in a Statement of Work, each party shall retain the exclusive right and ownership interest in and to any and all software, products, systems, methods, designs and other intellectual property developed, obtained, made or conceived by such party prior to the Effective Date or separate and apart from this Agreement, and the other party will obtain no rights or interests therein, whether patented or not. In the event that the parties joint develop any work product pursuant to this Agreement, the parties will negotiate in good faith and mutually agree in advance upon their respective rights and interests in and to such work product in a Statement of Work. 9. Infringement Indemnification. Each party shall defend, indemnify and hold harmless the other party and its employees, agents, affiliates and customers from and against any and all claims, actions, damages, or other liabilities (including reasonable attorneys' fees, court costs and other costs of defense) to the extent caused by or arising out of any allegation that any of the products, services and other materials provided by the indemnifying party pursuant to this Agreement (collectively, the "Materials") infringes or violates any copyright, trademark, patent, trade secret or other proprietary rights of any third party; provided that the indemnified party promptly notifies the indemnifying party in writing of any such allegation of which the indemnified party is aware and to provide the indemnifying party , at its expense, with the necessary cooperation and assistance in connection therewith. In the event that any of the Materials is held to infringe or violate any copyright, trademark, patent, trade secret or other proprietary rights of any third party, the indemnifying party shall, at its option, (i) procure the right for the indemnified party to continue using the Materials, or (ii) modify the Materials or part thereof to make them non-infringing (so long as such modification does not have a material negative effect on use or functionality). The provisions of this Section shall survive the expiration or termination of this Agreement for any reason. 3 10. Limitation of Liability. In no event shall either party be liable for any special, incidental, indirect or consequential damages in connection with this Agreement, whether based on action or claim in contract, equity, indemnity, tort (including negligence), intended conduct, strict liability or otherwise, even if such damages are foreseeable. 11. Notice. Any notices pursuant to this Agreement shall be in writing and shall be sent to the parties at the following address or at such other addresses as shall be specified by the parties by like notice: If to Ericsson: If to Telemetrix: Ericsson Messaging Systems Inc. Telemetrix, Inc. 145 Crossways Drive West 1225 Sage Street Woodbury, NY 11797 Gering, NE 69341 Attention: President Attention: President With a copy to: Ericsson Messaging Systems Inc. 740 East Campbell Road Richardson, Texas 75081 Attention: Legal Department Such notices or other communications shall be deemed to have been duly given and received (i) on the day of sending if sent by personal delivery, cable, telegram, facsimile transmission or telex, (ii) on the next business day after the day of sending if sent by Federal Express or other similar express delivery service, or (iii) on the fifth calendar day after the day of sending if sent by registered or certified mail (return receipt requested). 12. Dispute Resolution. Any disputes arising under or relating to this Agreement shall be resolved in accordance with the Commercial Arbitration Rules of the American Arbitration Association. Arbitration shall be held in the City of New York, New York, or such other place as the parties may agree and shall include an award of attorneys' fees (and the amount of such fees) to the prevailing party. The arbitrators' award shall be final and binding, and judgment thereon may be entered in any court having jurisdiction over the party against which enforcement is sought; provided that any such award rendered by the arbitrators shall be strictly in conformance to and in accordance with the terms and conditions of this Agreement, including without limitation the limitation of liability provisions contained herein. Other than those matters involving injunctive relief as a remedy or any action necessary to enforce the award of the arbitrator, the parties agree that the provisions of this Section are a complete defense to any suit, action or other proceedings instituted in any court or before any administrative tribunal with respect to any dispute or controversy arising under or relating to this Agreement. Nothing in this Section shall prevent either party from exercising its rights to terminate this Agreement as specified herein. The provisions of this Section shall survive the expiration or termination of this Agreement for any reason. 13. Media Releases. All media releases, public announcements and public disclosures by either party relating to this Agreement or any Statement of Work or the subject matter of this Agreement or any Statement of Work, including, without limitation, promotional or marketing material but not including any announcement intended solely for internal distribution or any disclosure required by legal, accounting or regulatory requirements beyond the reasonable control of the party, will be coordinated with and subject to the prior written approval by both parties prior to release. 4 14. Force Majeure. Each party will be excused from performance hereunder (except for payment obligation) for any period and to the extent that it is prevented from such performance, in whole or in part, as a result of delays caused by the other party or an act of God, natural disaster, war, civil disturbance, court order, labor dispute, third party non-performance, or other cause beyond its reasonable control and which it could not have prevented by reasonable precautions, including failures or fluctuations in electrical power, heat, light, air conditioning or telecommunications equipment, and such non-performance will not be a default hereunder or a ground for termination hereof. 15. Relationship. The relationship between Telemetrix and Ericsson hereunder is that of independent contractor. This Agreement does not create any employer-employee, agency, joint venture, or partnership relationship between Telemetrix and Ericsson. Each party shall exercise control over the means and manner of its performance of services pursuant to this Agreement. No employee, agent, or assistant of one party, or other person participating on such party's behalf, shall be considered an employee of the other party or entitled to any employment fringe benefits of such other party. 16. Miscellaneous. This Agreement shall be governed by the laws of the State of New York, other than the choice of law rules. Neither party may assign this Agreement without the other party's prior written consent. The provisions of this Agreement shall be severable, and if any provisions shall be held unenforceable the remaining provisions shall remain in full force and effect. Expiration or termination of this Agreement for any reason shall not release either party from any liability or obligation set forth in this Agreement which (i) the parties have expressly agreed will survive any such expiration or termination, or (ii) remain to be performed or by their nature would be intended to be applicable following such expiration or termination. This Agreement, each Statement of Work, and all exhibits attached hereto or thereto, each of which is hereby incorporated herein or therein, as applicable, for all purposes, constitute, as of the Effective Date or the effective date of the applicable Statement of Work, as applicable, the entire agreement between Ericsson and Telemetrix with respect to the subject matter hereof and thereof, and there are no understandings or agreements relative hereto or thereto that are not fully expressed herein or therein. Any other terms or conditions included in any quotes, acknowledgements, bills of lading, purchase orders, invoices or other forms utilized or exchanged by the parties hereto that are in addition to or in conflict with those set forth in this Agreement or the applicable Statement of Work will be of no force or effect and will not be incorporated herein or be binding unless specifically and expressly agreed to in writing by both parties. No change, waiver or discharge will be valid unless in writing signed by an authorized representative of the party against whom such change, waiver or discharge is sought to be enforced. Each party, by executing this Agreement, represents and warrants that all necessary corporate or other authority to execute the Agreement has been obtained and that the person signing the Agreement is authorized to do so and thereby bind that party. IN WITNESS WHEREOF, the parties to this Agreement have caused their authorized representatives to execute this Agreement as of the Effective Date. ERICSSON MESSAGING SYSTEMS INC. TELEMETRIX, INC. By:/s/ Thomas Esposito By: /s/ Michael J. Tracy ------------------------------ --------------------------------- Name: Thomas Esposito Name: Michael J. Tracy Title:Vice-President Title: President 5 EX-27 3 0003.txt FINANCIAL DATA SCHEDULE
5 6-MOS DEC-31-2000 JUN-30-2000 56,000 0 293,000 0 0 929,000 3,457,000 1,128,000 10,919,000 6,238,000 643,000 0 0 15,000 (583,000) 10,919,000 142,000 361,000 122,000 5,546,000 (5,000) 0 325,000 (5,505,000) 0 0 0 0 0 (5,505,000) (.40) (.40)
-----END PRIVACY-ENHANCED MESSAGE-----