<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>d10q.txt
<DESCRIPTION>FORM 10-Q PERIOD ENDED MARCH 31, 2001
<TEXT>
<PAGE>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
______________
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of The Securities
Exchange Act of 1934
For the Period Ended March 31, 2001
or
[_] Transition Report Pursuant to Section 13 or 15(d) of The Securities
Exchange Act of 1934
Commission File No. 0-19923
__________________
STM WIRELESS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 95-3758983
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification number)
One Mauchly, Irvine, California 92618
(Address of principal executive offices) (Zip code)
(949) 753-7864
(Registrant's telephone number, including area code)
__________________
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the last 90 days. Yes [X] No [_]
As of May 14, 2001, there were 7,248,325 shares of Common Stock, $0.001 par
value per share, outstanding.
================================================================================
<PAGE>
STM Wireless, Inc.
Index
Page
----
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at March 31, 2001 and
December 31, 2000............................................ 3
Condensed Consolidated Statements of Operations for the three
month periods ended March 31, 2001 and March 31, 2000........ 4
Condensed Consolidated Statements of Cash Flows for the three
month periods ended March 31, 2001 and March 31, 2000........ 5
Notes to Condensed Consolidated Financial Statements......... 6-9
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................... 9-11
Item 3. Quantitative and Qualitative Disclosures About
Market Risk.................................................. 11
Part II. Other Information................................................. 12
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
2
<PAGE>
PART I - FINANCIAL INFORMATION (Item 1 - Financial Statements)
STM WIRELESS, INC
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
ASSETS
March 31, December 31,
2001 2000
---------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents.............................. $ 2,732 $ 2,903
Short-term investments................................. 109 --
Restricted cash and short-term investments............. 2,150 2,250
Accounts receivable, net............................... 6,260 7,014
Inventories, net....................................... 8,822 8,355
Prepaid expenses and other current assets.............. 412 405
-------- -------
Total current assets................................. 20,485 20,927
Property & equipment, net................................ 8,094 8,266
Equity and other investments............................. -- 157
Other assets............................................. 102 116
-------- -------
$ 28,681 $29,466
======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings.................................. $ 4,826 $ 4,588
Current portion of long-term debt...................... 146 192
Accounts payable....................................... 4,862 5,941
Accrued liabilities.................................... 2,491 2,552
Customer deposits and deferred revenue................. 2,174 1,224
Income taxes payable................................... 541 541
-------- -------
Total current liabilities............................ 15,040 15,038
Long-term debt........................................... 6,826 6,848
Other long-term liabilities.............................. 32 33
Stockholders' equity:
Preferred stock, $0.001 par value; 5,000,000 shares
authorized, none issued or outstanding................ -- --
Common stock, $0.001 par value; 20,000,000 shares
authorized; issued and outstanding 7,248,325 shares
at March 31, 2001 and 7,248,075 at December 31, 2000.. 7 7
Additional paid in capital............................. 39,287 39,287
Accumulated deficit.................................... (32,211) (31,447)
Receivable from stockholder............................ (300) (300)
-------- -------
Total stockholders' equity........................... 6,783 7,547
-------- --------
$ 28,681 $ 29,466
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements
3
<PAGE>
STM WIRELESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2001 2000
---- ----
<S> <C> <C>
Revenues:
Products.............................................. $5,565 $ 3,233
Services.............................................. 669 584
------ -------
Total revenues...................................... 6,234 3,817
Cost of revenues:
Products.............................................. 3,589 2,019
Services.............................................. 644 394
------ -------
Total cost of revenues.............................. 4,233 2,413
Gross profit............................................ 2,001 1,404
Operating costs and other operating items:
Selling, general & administrative expenses............ 1,215 1,347
Research & development................................ 1,375 1,372
Recovery of note receivable from affiliate............ -- (3,175)
------ -------
Total............................................... 2,590 (456)
Operating income (loss)................................. (589) 1,860
Other income (expense)................................ -- --
Gain on disposal of affiliate......................... -- 575
Foreign currency devaluation costs.................... -- 6
Interest income....................................... 97 257
Interest expense...................................... (272) (161)
------ -------
Income (loss) before income taxes....................... (764) 2,537
Income tax expense.................................... -- --
------ -------
Net income (loss)....................................... $ (764) $ 2,537
====== =======
Net income (loss) per common share:
Basic................................................. $(0.11) $0.36
====== =======
Diluted............................................... $(0.11) $0.33
====== =======
Common shares used in computing per share amounts:
Basic................................................. 7,248 7,095
Diluted............................................... 7,248 7,595
</TABLE>
See accompanying notes to condensed consolidated financial statements
4
<PAGE>
STM WIRELESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2001 2000
------ ------
<S> <C> <C>
Net cash provided by operations.......................... $ (164) $1,743
------ ------
Cash flows from investing activities:
Increase in short-term investments..................... (109) --
(Increase)/decrease in restricted assets............... 100 (92)
Acquisition of property and equipment.................. (168) (144)
Cash proceeds from disposal of affiliate............... -- 575
------ ------
Net cash provided by (used in) investing activities...... (177) 339
------ ------
Cash flows from financing activities:
Proceeds from exercise of stock options................ -- 644
Net increase in short-term borrowings.................. 238 1,497
Repayment of long-term debt............................ (68) (77)
------ ------
Net cash provided by financing activities................ 170 2,064
------ ------
Effect of exchange rate changes on cash and cash -- 6
equivalents............................................. ------ ------
Net increase (decrease) in cash and cash equivalents..... (171) 4,152
Cash and cash equivalents at beginning of period......... 2,903 4,441
------ ------
Cash and cash equivalents at end of period............... $2,732 $8,593
====== ======
</TABLE>
See accompanying notes to condensed consolidated financial statements
5
<PAGE>
STM WIRELESS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2001 and 2000
(Unaudited)
1. Basis of Presentation:
These financial statements are unaudited; however, the information
contained herein for STM Wireless, Inc. (the "Company" or "STM") gives effect to
all adjustments necessary (consisting only of normal accruals), in the opinion
of Company management, to present fairly the financial statements for the
interim periods presented.
The results of operations for the current interim period are not
necessarily indicative of the results to be expected for the current year.
Although the Company believes that the disclosures in these financial
statements are adequate to make the information presented not misleading,
certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
in the United States of America have been condensed or omitted pursuant to the
rules and regulations of the Securities and Exchange Commission (the "SEC"), and
these condensed consolidated financial statements should be read in conjunction
with the financial statements included in the Company's Annual Report on Form
10-K for the year ended December 31, 2000, which is on file with the SEC.
Certain reclassifications have been made to the 2000 condensed consolidated
financial statements to conform to the 2001 presentation.
2. Inventories:
Inventories are summarized as follows:
<TABLE>
<CAPTION>
March 31, December 31,
2001 2000
---------- ------------
<S> <C> <C>
Raw materials................................................... $5,432 $5,046
Work in process................................................. 947 1,275
Finished goods.................................................. 2,443 2,034
------ ======
$8,822 $8,355
====== ======
</TABLE>
3. Net Income (Loss) per Share:
<TABLE>
<CAPTION>
Three Months Ended March 31,
2001 2000
----------- ----------
<S> <C> <C>
Net income (loss)............................................... $ (764) $2,537
====== ======
Basic:
------
Weighted average common shares outstanding used 7,248 7,095
in computing basic net income (loss) per share................ ====== ======
Basic net income (loss) per share............................... $(0.11) $ 0.36
====== ======
Diluted:
--------
Weighted average common shares outstanding...................... 7,248 7,095
====== ======
Dilutive options outstanding.................................... -- 500
------ ------
Shares used in computing diluted net income (loss) per share.... 7,248 7,595
====== ======
Diluted net income (loss) per share............................. $(0.11) $ 0.33
====== ======
</TABLE>
Options to purchase 1,358,787 shares of common stock were outstanding at
March
6
<PAGE>
31, 2001, and were excluded from the computation of diluted net loss per share
as the effect would have been antidilutive. At March 31, 2000, options to
purchase 77,150 shares of common stock were not included in the computation of
diluted net income per share because the options' exercise price was greater
than the average market price of the common shares, and therefore, the effect
would be antidilutive.
4. New Accounting Standards:
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). SFAS 133, as amended by SFAS 137, is
effective for all fiscal quarters of fiscal years beginning after June 15, 2000.
SFAS 133 establishes accounting and reporting standards for derivative
instruments including derivative instruments embedded in other contracts and for
hedging activities. There was no transition adjustment upon adoption of SFAS 133
on January 1, 2001. Adoption of SFAS 133 had no impact on the Company's
consolidated financial position, results of operations or liquidity.
5. Geographic and Business Segment Information:
The Company operates in one principal industry segment: the design,
manufacture and provision of wireless-based satellite communications
infrastructures.
<TABLE>
<CAPTION>
Three Months Ended March 31,
Revenues by geographic area: 2001 2000
--------- --------
(dollars in thousands)
<S> <C> <C>
Total:
Latin & South America.................... $2,815 $ 732
United States............................ 1,015 1,486
Asia..................................... 919 1,035
Africa & Middle East..................... 948 401
Europe................................... 537 163
------ ------
Total revenues............................. $6,234 $3,817
====== ======
<CAPTION>
Three Months Ended March 31,
2001 2000
------------ -----------
(dollars in thousands)
<S> <C> <C>
Products:
Latin & South America.................... $2,764 $ 620
United States............................ 687 1,382
Asia..................................... 746 831
Africa & Middle East..................... 891 368
Europe................................... 477 32
------ ------
Total revenues............................. $5,565 $3,233
====== ======
<CAPTION>
Three Months Ended March 31,
2001 2000
----------------------------
(dollars in thousands)
<S> <C> <C>
Services:
Latin & South America.................... $ 51 $ 112
United States............................ 328 104
Asia..................................... 173 204
Africa & Middle East..................... 57 33
Europe................................... 60 131
----- -----
Total revenues............................. $ 669 $ 584
===== =====
</TABLE>
7
<PAGE>
Sales to Direc-To-Phone International, Inc. ("DTPI") for the three months
ended March 31, 2001, were approximately $625,000. Sales to DTPI for the three
months ended March 31, 2000, were approximately $1,013,000.
<TABLE>
<CAPTION>
Three Months Ended March 31,
2001 2000
----------- ----------
(dollars in thousands)
<S> <C> <C>
Operating income (loss) by geographic area:
Latin & South America............................... $ -- $ 60
United States....................................... (601) 1,759
Asia................................................ 12 41
Africa & Middle East................................ -- --
Europe.............................................. -- --
----- ------
Total operating income (loss)......................... $(589) $1,860
===== ======
</TABLE>
Operating income for the three months ended March 31, 2000 includes the
recovery of a note receivable of $3,175,000 that has been included as part of
operating income for the United States. See note 6.
<TABLE>
<CAPTION>
March 31, December 31,
2001 2000
--------- ------------
(dollars in thousands)
<S> <C> <C>
Identifiable assets by geographic area:
Latin & South America.................................. $ 164 $ 164
United States.......................................... 27,231 28,159
Asia................................................... 1,286 1,143
Africa & Middle East................................... -- --
Europe................................................. -- --
------- -------
Total assets............................................. $28,681 $29,466
======= =======
</TABLE>
6. Recovery of Note Receivable from Affiliate and Gain on Disposal of
Affiliate:
On March 28, 2000, DTPI completed a $45 million financing which reduced
STM's ownership to approximately 15% of DTPI on a fully diluted basis.
Coinciding with this financing, STM received $3,750,000 in cash from DTPI
representing a partial repayment of a $7,500,000 note receivable from DTPI. The
remaining balance of the note receivable, was converted into preferred stock of
DTPI. The preferred stock has no carrying value at March 31, 2001, due to
equity losses recognized in prior periods through June 17, 1999.
The $7,500,000 note receivable from DTPI was fully reserved through a
combination of the Company's equity interest in the losses of DTPI recorded
through June 17, 1999, and additional provisions effectively made at the date of
deconsolidation on June 17, 1999. The total recovery on the note of $3,750,000
is reflected on two line items condensed consolidated statements of operations:
$3,175,000 is shown in operating income as a "Recovery of note receivable from
affiliate; and $575,000 is reflected as non-operating income under the caption
"Gain on disposal of affiliate". The portion treated as "Gain on disposal of
affiliate" was the portion of the reserve that was effectively established at
the date of deconsolidation. The remaining portion was reported as operating
income as the reserve against the note through June 17, 1999, was originally
recorded through losses from operations.
7. Short-Term Borrowings:
On March 27, 2000, the Company completed a new revolving line of credit for
approximately $3,300,000 of which $2,800,000 is available for on-going working
capital requirements.
8
<PAGE>
Availability to borrow the $2,800,000 is based upon a percentage of
eligible inventory and accounts receivable. Borrowings under the line of credit
at March 31, 2001, and March 31, 2000, were approximately $2,800,000 and
$1,500,000, respectively. The lender was granted a security interest in
substantially all of the Company's assets.
8. Subsequent Events:
On April 5, 2001, the Company sold 50% of its remaining common and
preferred shares in DTPI for cash totaling approximately $2,500,000. Under the
terms of the agreement with the buyer, the buyer has an option to acquire the
remaining 50% of the Company's ownership in DTPI for approximately $2,500,000
for a period of nine months through December 19, 2001.
Item 2 - Management's Discussion and Analysis of Results of Operations and
Financial Condition General:
STM Wireless, Inc. (the "Company" or "STM"), founded in 1982, is a
developer, manufacturer, supplier and provider of wireless-based satellite
communications infrastructure and user terminal products utilized in public and
private telecommunications networks for broadband and telephony applications.
These networks support IP based data, fax, voice and video communication and are
used to either bypass or extend terrestrial networks. The Company's product line
is based on proprietary hardware and software and primarily consists of two-way
earth stations sometimes referred to as VSATs (very small aperture terminals),
associated infrastructure equipment and software. The Company's proprietary
equipment and software are utilized by businesses, government agencies and
telephone companies in Europe, the Americas, Africa and Asia.
Results of Operations:
Total revenues were $6,234,000 for the three-month period ended March 31,
2001, compared to $3,817,000 for the corresponding period of 2000, an increase
of 63%. Product revenues were $5,565,000 for the three-month period ended March
31, 2001, compared to $3,233,000 for the corresponding period in 2000, an
increase of 72%. Service revenues were $669,000 for the three-month period ended
March 31, 2001, compared to $584,000 for the corresponding period of 2000, an
increase of 15%.
Total revenues for the three months ended March 31, 2001 included
approximately $625,000 of sales to DTPI, in which STM owns approximately 15% on
a fully diluted basis. Total revenues for the three months ended March 31, 2000
included sales of approximately $1,013,000 to DTPI.
The 63% increase in total revenues for the three months ended March 31,
2001 compared to the corresponding period in 2000 was attributed primarily to
increases of $2,083,000 and $547,000 in revenues for the Latin and South America
region and the Africa and Middle East region, respectively. These increases were
negatively offset by a $471,000 decline in revenues in the United States (see
note 5 to the condensed consolidated financial statements). Total revenues for
the three months ended March 31, 2001 are 21% greater than the total revenues
for the three-month period ended December 31, 2000 and 46% greater than the
average quarterly total revenues for the year ended December 31, 2000.
Management expects continued revenue growth in 2001 compared to 2000; however,
the Company's revenues in total and by region can vary significantly depending
on the timing of projects and the value of individual projects.
Gross margin in the three-month period ended March 31, 2001 was 32% versus
37% for the corresponding period ended March 31, 2000. Comparing the same
periods, gross margin for product revenues declined by 2% and gross margin for
service revenues declined from 33% to 4%. The decline in margin for service
revenues is due primarily to the expansion of network services revenues
requiring additional rental of satellite transponder capacity, depreciation
expense, and personnel costs.
Selling, general and administrative expenses ("SG&A") for the three-month
period ended March 31, 2001 decreased by $132,000 to $1,215,000 or 19% of
revenues, from $1,347,000, or 35% of revenues, in the corresponding period of
2000. The reduction in spending is attributed to reduced expenditures for
advertising and promotion programs and outside services related to sales and
marketing programs.
Research and development ("R&D") expenses for the three-month period ended
March 31, 2001 increased by $3,000 to $1,375,000, or 22% of revenues, from
$1,372,000, or 36% of revenues, in the corresponding
9
<PAGE>
period of 2000. Development efforts are focused on reducing unit product cost,
optimizing product design, and improving manufacturability. Management believes
that these efforts will yield future positive results in terms of higher gross
margins and improved inventory control.
The recovery of the note receivable from affiliate of $3,175,000 in the
three-month period ended March 31, 2000 relates to the $3,750,000 received from
DTPI as a result of DTPI's March 2000 financing (see note 6 to the condensed
consolidated financial statements). $3,175,000 of this recovery was classified
as part of operating income and the balance of $575,000 was classified as a gain
on disposal of affiliate in the accompanying condensed consolidated financial
statements for the period ended March 31, 2000.
Interest income decreased by $160,000 to $97,000 for the period ended March
31, 2001, compared to $257,000 for the period ended March 31, 2000. This decline
is primarily attributed to the settlement of a note receivable from DTPI during
2000, which resulted in a decline of interest earned and recognized in 2001 (see
note 6 to the condensed consolidated financial statements).
Interest expense increased by $111,000 to $272,000 for the period ended
March 31,2000, compared to $161,000 for the period ended March 31, 2000. This
increase of interest expense is primarily attributed to interest costs
associated with a new line of credit established on March 27, 2000 (see note 7
to the condensed consolidated financial statements). The average loan balance
during the three-months ended March 31, 2001 was approximately $2,683,000 with
an average interest rate of approximately 9.5%. Other interest expenses were
recognized in connection with this loan during the three-months ended March 31,
2001 for the amortization of loan arrangement expenses, annual facility fees,
and warrants issued to the lender at the time of the establishment of the loan
facility.
The absence of a tax provision in 2001 is due to continued prior year net
operating losses available to the Company to offset income. No tax provision was
recorded in 2001 due to losses in the period
Liquidity and Capital Resources:
For the first three months of 2001, the Company had negative cash flows
from operations of $164,000, compared to a positive $1,743,000 in the same
period of 2000. The negative cash flows in the first three-months of 2001 are
attributed to the losses for the period and a decrease of accounts payables, and
partially offset by a decrease in accounts receivable and an increase in
customer deposits. The positive cash flows for the three-month period ended
March 31, 2000 was primarily due to the $3,175,000 portion of the $3,750,000
note recovery from DTPI shown as operating income partially offset by a decrease
in accounts payable for the period.
Cash flows from investing activities in the first three months of 2001
totaled a negative $177,000, comprising an increase in short-term investments
and the acquisition of property, plant and equipment offset by a reduction in
restricted cash. For the corresponding period of 2000, cash flows from investing
activities totaled a positive $339,000, comprising an increase in restricted
cash and short-term investments, and the acquisition of property plant and
equipment offset by the $575,000 non-operating cash proceeds from DTPI.
Cash provided by financing activities during the first three months of 2001
totaled $170,000, comprising primarily of an increase in the line of credit (see
note 7 to the condensed consolidated financial statements). For the three months
ended March 31, 2000, cash provided by financing was $2,064,000, consisting
primarily of the borrowings under the new line of credit (see note 7 to the
condensed consolidated financial statements) and proceeds from the issuance of
stock upon the exercise of stock options.
Overall, the Company's cash and cash equivalents totaled $2,732,000 at
March 31, 2001 as compared to $2,903,000 at December 31, 2000.
The Company's cash reserves have been positively impacted by the receipt of
approximately $2,500,000 in cash in connection with the sale of 50% of the
Company's remaining shares in DTPI (see note 8 to the condensed consolidated
financial statements). In addition, management also expects improved experience
in 2001 with respect to inventory and accounts receivable performance. Also, the
Company may be able to establish an additional line of credit for domestic
receivables in 2001, which is not part of the Company's current credit
facilities. Management expects to have sufficient cash generated through
operations, through availability under
10
<PAGE>
current lines of credit, cash received from DTPI and through other sources to
meet the anticipated cash requirements for the next twelve months.
New Accounting Standards:
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). SFAS 133, as amended, is effective for all
fiscal quarters of fiscal years beginning after June 15, 2000. SFAS 133
establishes accounting and reporting standards for derivative instruments
including derivative instruments embedded in other contracts and for hedging
activities. There was no transition adjustment upon adoption of SFAS 133 on
January 1, 2001. Adoption of SFAS 133 had no impact on the Company's
consolidated financial position, results of operations or liquidity.
Item 3 - Quantitative and Qualitative Disclosures About Market Risk
To avoid the risk of fluctuating exchange rates associated with
international sales, the Company conducts most international sales in United
States currency. However, prior to the devaluation of the Brazilian currency in
January 1999, the Company had generated revenues in Brazil based in the local
currency of Brazil. While the contracts relating to such arrangements generally
contained provisions that called for payments to be adjusted to take into
account fluctuations in foreign currency exchange rates, the Company's customers
in Brazil have expressed an unwillingness to adjust contract amounts to fully
reflect the exchange rate fluctuations. Brazilian counsel has advised the
Company that there is uncertainty as to the enforceability of provisions that
tie payments to foreign currency rates. The Company, therefore, whenever
possible, negotiates sales from Brazilian customers in U.S. dollars to avoid any
uncertainty as to the value of receivables, although there are certain remaining
foreign currency denominated cash balances of approximately $14,000. The
Company's interest income and expense is sensitive to fluctuations in the
general level of U.S. interest rates. Changes in U.S. interest rates affect the
interest earned on the Company's cash and cash equivalents and the interest
expense on the Company's debt.
The Company does not use derivative financial instruments in its investment
portfolio.
Risk Factors and Forward Looking Statements:
THIS DOCUMENT CONTAINS CERTAIN FORWARD LOOKING STATEMENTS WITHIN THE
MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION
21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, THAT INVOLVE RISKS AND
UNCERTAINTIES. IN ADDITION, THE COMPANY MAY FROM TIME TO TIME MAKE FORWARD
LOOKING STATEMENTS, ORALLY OR IN WRITING. THE WORDS "ESTIMATE", "PROJECT",
"POTENTIAL", "INTENDED", "EXPECT", "BELIEVE" AND SIMILAR EXPRESSIONS OR WORDS
ARE INTENDED TO IDENTIFY FORWARD LOOKING STATEMENTS. ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THOSE PROJECTED OR SUGGESTED IN ANY FORWARD LOOKING STATEMENTS
AS A RESULT OF A WIDE VARIETY OF FACTORS AND CONDITIONS, AMONG OTHERS, LACK OF
LIQUIDITY AND WORKING CAPITAL, INABILITY TO RAISE DEBT OR EQUITY FINANCING, LONG
TERM CYCLES INVOLVED IN COMPLETING MAJOR CONTRACTS, PARTICULARLY IN FOREIGN
MARKETS, INCREASING COMPETITIVE PRESSURES, GENERAL ECONOMIC CONDITIONS,
TECHNOLOGICAL ADVANCES, THE TIMING OF NEW PRODUCT INTRODUCTIONS, POLITICAL AND
ECONOMIC RISKS INVOLVED IN FOREIGN MARKETS AND FOREIGN CURRENCIES AND THE TIMING
OF OPERATING AND OTHER EXPENDITURES. REFERENCE IS HEREBY MADE TO "RISK FACTORS"
IN THE COMPANY'S FOR 10-K FOR THE YEAR ENDED DECEMBER 31, 2000.
BECAUSE OF THESE AND OTHER FACTORS THAT MAY AFFECT THE COMPANY'S OPERATING
RESULTS, PAST FINANCIAL PERFORMANCE SHOULD NOT BE CONSIDERED AN INDICATOR OF
FUTURE PERFORMANCE, AND INVESTORS SHOULD NOT USE HISTORICAL TRENDS TO ANTICIPATE
RESULTS OR TRENDS IN FUTURE PERIODS.
11
<PAGE>
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
From time to time, the Company is involved in litigation relating to claims
arising out of its operations in the normal course of business. As of March 31,
2001, the Company was not engaged in any material legal proceedings which the
Company expects, individually or in the aggregate, will have a material adverse
effect on the Company's results of operations or its financial condition.
Item 6 - Exhibits and Reports on Form 8-K
None
Items 2, 3, 4 and 5 are not applicable and have been omitted.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STM Wireless, Inc.
Date: May 14, 2001 By: /s/ JOSEPH J. WALLACE
-------------------------------------
Joseph J. Wallace
Vice President, Finance and
Chief Financial Officer
(Principal Financial and Accounting
Officer and Duly Authorized Officer)
13
</TEXT>
</DOCUMENT>