-----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, LEK8JDcDRRsfoasi2roWJwJlziQNPmqDFA4mEOvFt/fE86TpS759Vn0gMI16DG31 cioF12rbPRRKCMzW2LO3Qw== 0000898430-96-003905.txt : 19960816 0000898430-96-003905.hdr.sgml : 19960816 ACCESSION NUMBER: 0000898430-96-003905 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960815 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PORTACOM WIRELESS INC/ CENTRAL INDEX KEY: 0000907166 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATIONS EQUIPMENT, NEC [3669] FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-23228 FILM NUMBER: 96615834 BUSINESS ADDRESS: STREET 1: 8055 W MANCHESTER AVE STREET 2: SUITE 730 CITY: PLAYA DEL REY STATE: CA ZIP: 90293 BUSINESS PHONE: 3104484410 MAIL ADDRESS: STREET 1: 8055 W MANCHESTER AVE STREET 2: SUITE 730 CITY: PLAYA DEL REY STATE: CA ZIP: 90293 FORMER COMPANY: FORMER CONFORMED NAME: EXTREME TECHNOLOGIES INC DATE OF NAME CHANGE: 19950127 FORMER COMPANY: FORMER CONFORMED NAME: INTERNATIONAL PCBX SYSTEMS INC DATE OF NAME CHANGE: 19940119 10QSB 1 QUARTERLY REPORT DATED 3/31/96 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (MARK ONE) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) of THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) of THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________ TO ______ 0-23228 (COMMISSION FILE NO.) PORTACOM WIRELESS, INC. (EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER) BRITISH COLUMBIA, CANADA N/A (STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.) INCORPORATION OR ORGANIZATION) 8055 W. MANCHESTER AVENUE, SUITE 730 PLAYA DEL REY, CALIFORNIA 90293 (Address of principal executive offices) ISSUER'S TELEPHONE NUMBER: (310) 448-4140 Check whether the issuer: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the past 12 months and (2) has been subject to such filing requirements for the past 90 days. 1.YES ___ NO X --- 2.YES X NO ___ --- AS OF JULY 31, 1996, THERE WERE 11,892,382 SHARES OF COMMON STOCK ISSUED AND OUTSTANDING. Transitional Small Business Disclosure Format (Check One): 1.YES ___ NO X --- INDEX
PART I. FINANCIAL INFORMATION PAGE NO. ITEM 1. Statement Regarding Financial Information 1 Condensed Consolidated Balance Sheet at March 31, 1996 and 1995 (Unaudited) 2 Condensed Consolidated Statements of Operations for the three months ended March 31, 1996 and 1995 (Unaudited) 3 Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 1996 and 1995 (Unaudited) 4 Notes to Condensed Consolidated Financial 5 Statements (Unaudited) ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II. OTHER INFORMATION ITEM 1. Legal Proceedings 13 ITEM 2. Changes in Securities 13 ITEM 3. Defaults Upon Senior Securities 13 ITEM 4. Submission of Matters to a Vote of Security Holders 13 ITEM 5. Other Information 13 ITEM 6. Exhibits and Reports on Form 8-K 13
-2- PORTACOM WIRELESS, INC. AND SUBSIDIARIES QUARTER ENDED MARCH 31, 1996 PART I. FINANCIAL INFORMATION The financial statements included herein have been prepared by PortaCom Wireless, Inc. (formerly known as "Extreme Technologies, Inc." and defined herein in the alternative as the "Company" or the "Registrant"), and without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). As contemplated by the SEC under Rule 10-01 of Regulation S-X (as amended by Regulation S-B), the accompanying financial statements and footnotes have been condensed and therefore do not contain all disclosures required by generally accepted accounting principles. However, the Company believes that the disclosures are adequate to make the information presented not misleading. Except where otherwise specified, all dollar amounts referenced in this document are denominated in United States dollars. It is suggested that the financial statements be read in conjunction with the financial statements and notes thereto included in the Company's Form 10-KSB for the nine month transition period ended December 31, 1995 as filed with the SEC (file number 0-23228). 1 PORTACOM WIRELESS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited and expressed in U.S. dollars)
March 31, 1996 and March 31, 1995 - ----------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- MARCH 31, 1996 MARCH 31, 1995 - ---------------------------------------------------------------------------------------------------------------------------------- ASSETS Current assets: Cash and cash equivalents $ 557,290 $ 73,384 Accounts receivable, net of reserve 13,563 40,433 Notes receivable 890,830 --- Inventory --- 58,852 Prepaid expenses --- 6,680 - ----------------------------------------------------------------------------------------------------------------------------------- Total current assets 1,461,683 179,349 Equipment, net 6,703 106,541 Patents, trademarks and other assets --- 51,037 - ----------------------------------------------------------------------------------------------------------------------------------- $ 1,468,386 $ 336,927 - ---------------------------------------------------------------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable (note 6) $ 1,191,129 $ 2,083,431 Accrued liabilities 45,703 168,727 Convertible promissory notes payable (note 3) 1,380,000 --- Notes payable 431,000 1,584,508 - ---------------------------------------------------------------------------------------------------------------------------------- Total current liabilities 3,047,833 3,836,666 Shareholders' equity (deficiency): Share capital (note 4) 13,965,400 10,085,670 Accumulated deficit (15,544,847) (13,585,409) - --------------------------------------------------------------------------------------------------------------------------------- (1,579,447) (3,499,739) - --------------------------------------------------------------------------------------------------------------------------------- $ 1,468,386 $ 336,927 - ---------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to condensed consolidated financial statements. 2 PORTACOM WIRELESS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited and expressed in U.S. dollars)
Three month periods ended March 31, 1996 and 1995 - ----------------------------------------------------------------------------------------------------------------------------------- MARCH 31, 1996 MARCH 31, 1995 - ----------------------------------------------------------------------------------------------------------------------------------- INCOME Sales $ --- $ 97,449 Cost of sales --- 568,899 - ----------------------------------------------------------------------------------------------------------------------------------- (471,450) OPERATING EXPENSES: Advertising and promotion --- (61,388) Bad debt --- 571,003 Consulting fees 264,137 1,175,758 Depreciation and amortization --- 174,410 General and administrative 41,031 190,106 Interest and bank charges 190 35,702 Legal and accounting 43,764 343,407 Management fees 5,129 329,005 Rent 14,426 89,065 Research and development --- (245,283) Travel and entertainment 86,551 213,191 Wages and benefits 79,716 728,096 - ----------------------------------------------------------------------------------------------------------------------------------- 534,943 3,543,072 - ----------------------------------------------------------------------------------------------------------------------------------- Loss before debt settlement 534,943 4,014,522 - ---------------------------------------------------------------------------------------------------------------------------------- Loss on settlement of debt 90,015 --- - ---------------------------------------------------------------------------------------------------------------------------------- Net loss for the period 624,958 4,014,522 - ----------------------------------------------------------------------------------------------------------------------------------- Deficit, beginning of period 14,919,889 9,570,887 - ----------------------------------------------------------------------------------------------------------------------------------- Deficit, end of period $ 15,544,847 $ 3,585,409 - ----------------------------------------------------------------------------------------------------------------------------------- Loss per share $ .04 $ .13 - ----------------------------------------------------------------------------------------------------------------------------------- Weighted average number of common shares outstanding 16,271,108 14,524,845 - -----------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to condensed consolidated financial statements. 3 PORTACOM WIRELESS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited and expressed in U.S. dollars)
Three months ended March 31, 1996 and 1995 - ------------------------------------------------------------------------------------------------------------------------------------ - ----------------------------------------------------------------------------------------------------------------------------------- MARCH 31, 1996 MARCH 31, 1995 - ----------------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net loss for the period $ (624,958) --- Depreciation and amortization --- --- Net changes in working capital relating to operations: Accounts receivable (6,470) --- Notes receivable (75,430) --- Accounts payable 129,406 --- - ----------------------------------------------------------------------------------------------------------------------------------- Net cash used by operating activities 577,451 (1,487,369) FINANCING: Issue of and subscription for common shares 135,785 307,908 Payment against promissory note payable --- (12,500) Convertible promissory notes payable 780,000 --- Notes payable 60,000 892,500 - ------------------------------------------------------------------------------------------------------------------------------------ Net cash generated by financing activities 975,785 1,187,908 INVESTING: Acquisition of equipment, net (6,708) (28,081) Patents, trademarks and other assets --- 313,203 - ----------------------------------------------------------------------------------------------------------------------------------- Net cash generated (used) by investing activities (6,708) 285,116 - ---------------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 391,625 (14,345) - ----------------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents, beginning of period 165,665 87,729 - ----------------------------------------------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 557,290 $ 73,384 - -----------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to condensed consolidated financial statements. 4 PORTACOM WIRELESS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited and expressed in U.S. dollars) Three months ended March 31, 1996 - ------------------------------------------------------------------------------ 1. MANAGEMENT OPINION: The condensed consolidated financial statements include the accounts of PortaCom Wireless, Inc. (the "Company") and its wholly-owned subsidiaries from the dates of acquisition or formation. All material intercompany balances and intercompany transactions have been eliminated. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments (which include only normal recurring adjustments) and reclassifications for comparability necessary to present fairly the financial position and results of operations as of and for the three months ended March 31, 1996. 2. CHANGE IN FISCAL YEAR: During the previous reporting period, the Company changed the date on which its fiscal year ends from March 31, 1996 to December 31, 1995. Accordingly, results of operations reported herein are as of and for the three months ended March 31, 1996. 3. CONVERTIBLE PROMISSORY NOTES PAYABLE: Between December 19, 1995 and May 7, 1996, the Company has arranged, subject to regulatory approval, private placements of convertible promissory notes having an aggregate principal amount of $1,805,000. Of this amount, $780,000 represents funds received in the current period. The promissory notes are due and payable after two years, or after six months upon demand of the holder. The promissory notes bear interest at an annual rate of 10%, payable upon maturity or conversion. The promissory notes are convertible into shares of common stock of the Company at conversion prices ranging from $1.49 to $3.25 per share. The Company will also issue to the investors non- transferable warrants to purchase up to an aggregate of 297,948 shares of common stock of the Company for a period of two years at a price equal to the conversion price of the notes. 4. SHARE CAPITAL: (a) Authorized: 100,000,000 common shares without par value 100,000,000 class "A" preference shares with a par value of C$10 each 100,000,000 class "B" preference shares with a par value of C$50 each 5 PORTACOM WIRELESS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited and expressed in U.S. dollars) Three months ended March 31, 1996
- ----------------------------------------------------------------------------------------------------------------------------------- (b) Issued common shares: - ----------------------------------------------------------------------------------------------------------------------------------- Number of Per share Total consideration shares consideration - ---------------------------------------------------------------------------------------------------------------------------------- Balance issued and subscribed, 16,239,963 $11,316,500 December 31, 1995 Issued in settlement of debt 96,560 1.25 120,780 Issued for cash on exercise of stock options 16,800 .89 15,000 - ---------------------------------------------------------------------------------------------------------------------------------- Balance issued, March 31, 1996 16,353,323 11,452,280 To be issued on settlement of debt (f) 1,256,561 2.00 2,513,121 To be canceled (e) (5,950,000) --- - ---------------------------------------------------------------------------------------------------------------------------------- Balance issued and to be issued 11,659,884 13,965,401 - ----------------------------------------------------------------------------------------------------------------------------------
(c) Stock options: As at December 31, 1995, the Company had common shares of the Company reserved for issuance on exercise of incentive stock options to 1999. Option changes for the period January 1, 1996 to March 31, 1996 were as follows: - --------------------------------------------------------------------------------------------------------------------------------- Outstanding and exercisable as at December 31, 1995 617,433 - ---------------------------------------------------------------------------------------------------------------------------------- Exercised at C$1.25 per share 16,800 Canceled at C$1.25 per share (33,200) - --------------------------------------------------------------------------------------------------------------------------------- Outstanding and exercisable as at March 31, 1996 567,433 - ---------------------------------------------------------------------------------------------------------------------------------
Stock options are issued at the average market price per share for the ten trading days prior to the date of issuance. (d) Warrants: No warrants were issued during the three months ended March 31, 1996. None of the outstanding warrants previously disclosed were exercised in the current period. 6 PORTACOM WIRELESS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited and expressed in U.S. dollars) Three months ended March 31, 1996 - ------------------------------------------------------------------------------- (e) Performance shares: Included in the issued and outstanding common shares are 6,550,000 common performance shares subject to an escrow agreement. These shares are releasable from escrow on satisfaction of certain predetermined tests set out by regulatory authorities related to the generation of positive cash flow from operations. Shares not released from escrow by September 9, 2002 will be canceled. Pursuant to the escrow agreement, holders of the performance shares may exercise all voting rights attached thereto except on a resolution to cancel any of the shares, and have waived their rights to receive dividends or to participate in the assets and property of the Company on a winding-up or dissolution of the Company. Subsequent to the end of the period, regulatory approval was received and 5,950,000 of these performance shares were canceled. (f) Shares to be issued on settlement of debt: During the nine months ended December 31, 1995, the Company entered into agreements to issue 1,256,561 common shares at their estimated value of $2.00 per share to settle outstanding liabilities aggregating $2,513,121. Filings to obtain regulatory approval were made prior to December 31, 1995 and regulatory approval was received on May 16, 1996. (g) List of Directors: Robert Alexander, Robert Flitton, Howard Frantom, Keith Hay, Stephen Leahy, Douglas MacLellan, Stephen Stephens 5. INCOME TAXES: As at December 31, 1995, the Company had carryforward income tax losses in Canada and the United States in excess of $14,000,000 available to reduce future income taxes payable, the benefit of which has not been recorded in the accounts. These loss carryforwards expire at various times through the year 2005. 6. RELATED PARTY TRANSACTIONS: Related party transactions not disclosed elsewhere in these condensed consolidated financial statements include $168,917 in accounts payable at March 31, 1996 which is owing to related parties. Management and consulting fees have predominantly been charged by related parties. The Company has reimbursed expenses incurred by directors and officers on its behalf during the periods presented. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND --------------------------------------------------------------- RESULTS OF OPERATIONS --------------------- BACKGROUND The Company conducts business operations primarily through its wholly owned U.S. subsidiary, PortaCom International, Ltd. ("PIL"). The Company also has three inactive wholly owned U.S. subsidiaries; PCBX Systems, Inc. ("PCBX"), Extreme Telecom, Inc. ("Telecom"), Extreme Laboratories, Inc. (formerly known as Spheric Audio Laboratories, Inc.) ("Laboratories"), all of which ceased operations in August 1995, and presently have no active business operations. Since 1994, through its PIL subsidiary, the Company has engaged in initial stage efforts to evaluate the feasibility of, and attempt to secure, licensing and joint venture arrangements for the operation of wireless telephone networks, mobile radio communication systems and other telecommunications technologies. In September 1995, the Company announced that it intended to focus all of its future activities on the development of its prospective emerging market cellular and wireless interests. Although the establishment and operation of wireless telephone networks and other advanced communications systems will be investigated by the Company wherever strategic opportunities arise, its principal efforts are presently focused on certain Asian countries. The Company's wireless telecommunications operations are in the development stage, have produced no revenues to date and remain limited in scope. PCBX developed and was engaged in marketing a personal computer branch exchange which permitted the operation of a full-featured telephone network control system from a centrally-located personal computer. Telecom was engaged in distributing a line of telecommunications products manufactured by Nitsuko America Corporation. Laboratories developed and was engaged in marketing a line of audio speakers, as well as a proprietary audio recording and playback technology known as "SphericSound." PCBX, Telecom and Laboratories ceased operations in August 1995 and presently have no business operations. Since the commencement of operations, the Company's revenues have been principally derived from the sale of its PCBX systems and to a substantially lesser degree from sales of Telecom and Laboratories products. Due to significant ongoing losses and the Company's inability to successfully develop and carry out marketing and sales strategies, the operations of PCBX, Telecom and Laboratories were closed in August 1995. The Company also attempted to secure licensing arrangements or other means of commercial exploitation of its SphericSound technologies; however, to date, only limited sales revenues were realized from these efforts. Funding of the Company's operations since inception has been provided by: (i) revenues from the sale of PCBX systems; (ii) proceeds from the sale of securities undertaken in a series of private placement transactions; and (iii) completion of an initial public offering on the Vancouver Stock Exchange during October 1992. RESULTS OF OPERATIONS Quarter ended March 31, 1996 as Compared with Period Ended March 31, 1995. - ------------------------------------------------------------------------- For the quarter ended March 31, 1996, the Company incurred a loss of $624,958 with no sales occuring. This compares to a loss of $4,014,522 on sales of $97,449 for the comparable prior year quarter. The decrease in sales (to nil) was due to the fact that the Company's revenue-producing subsidiaries (which were also generating significant net losses) have been closed. Revenues are expected to be nil throughout the fiscal year. Virtually all of the Company's sales in the 1995 period were attributable to the Company's PCBX systems and related products, with a small percentage of such sales being attributable to Spheric Audio. No sales have been realized by PIL. The Company's loss for the quarter ended March 31, 1996 represents a loss of $.04 per common share, as compared to a loss per common share of $.13 for the comparable prior year quarter. There were no cost of sales in the quarter ended March 31, 1996, as compared with $568,899 or 584% of sales in the prior year quarter. The Company's cost of sales as a percentage of sales in the quarter ended March 31, 1996 is not comparable to the prior period due to (i) the closure of the Company's revenue-producing subsidiaries in August 1995, and (ii) the Company's current business development activities not generating revenue. Operating expenses fell in the quarter ended March 31, 1996 to $534,943 from $3,543,072 in the comparable year-earlier quarter, a decrease of $3,008,129, or 85%. Of this decrease, the most significant factors were a reduction in workforce and the cessation of sales, marketing and product development activities related to the closed PCBX, Telecom and Laboratories subsidiaries. During the quarter ended March 31, 1996, wages and benefits fell to $79,716 from $728,096, an decrease of 89% from the comparable year-earlier quarter, primarily related to the cessation of sales, marketing and product development activities related to the closed PCBX, Telecom and Laboratories subsidiaries. Consulting fees decreased to $264,137 in the current quarter from $1,175,758 recorded in the comparable prior year quarter. This reduction was primarily related to the cessation of business activities related to the closed PCBX, Telecom and Laboratories subsidiaries. The Company's operations have become more dependent on its wireless telecommunications business development activities. The Company expects that it will continue to expend significant funds in order to obtain the licenses and form the joint ventures necessary for the Company or PIL to provide wireless communications services in developing international markets, although no revenue will be generated until such licenses are obtained and such joint ventures are operational. This may necessitate a material increase in general office overhead and other general and administrative costs. LIQUIDITY AND CAPITAL RESOURCES In the quarter ended March 31, 1996, the Company realized net proceeds of $975,785 from the issuance of shares of common stock in a private placement and exercise of stock options. In the quarter, the Company also did not repay any loans outstanding. These activities contributed to a net working capital (deficit) position as of March 31, 1996 of ($1,586,150), which is up $2,071,167 from ($3,657,317) at March 31, 1995. The Company has incurred cumulative losses from inception through March 31, 1996 of $15,544,847 and has not yet achieved revenues sufficient to offset direct expenses and corporate overhead. Since inception, a substantial portion of the Company's operating capital has been provided through financing activities. Operations have provided gross revenues to the Company of $2,222,650 whereas financing has yielded the Company net proceeds of $15,176,456. The Company's financing has been provided by an initial public offering and a series of private placements of shares. The Company anticipates that it may seek additional financing through the private placement of equity or debt securities, although there can be no assurances as to the success of such anticipated placement. 8 Between January 5 and March 31, 1996, the Company has arranged, subject to regulatory approval, private placements of convertible promissory notes having an aggregate principal amount of $780,000. The promissory notes are due and payable after two years, or after six months upon demand of the holder. The promissory notes are convertible into shares of common stock of the Company at conversion prices ranging from $1.49 to $2.50 per share. The Company will also issue to the investors non-transferable warrants to purchase an aggregate of up to 154,990 shares of common stock of the Company for a period of two years at a price equal to the conversion price of the notes (see Subsequent Events). As of March 31, 1996, the Company had 1,467,268 (567,433 options and 899,835 warrants) options and warrants outstanding which upon exercise would yield to the Company additional proceeds in excess of $4.7 million. The exercise of existing warrants is impossible to predict with any certainty, accordingly, management can render no assurances that any material funds will be realized upon the exercise of such warrants, or whether such will be exercised at all. The Company has been able to secure financing in the past through loans from certain stockholders. Management has no reason to believe that similar arrangements will be available in the future. The Company's net working capital position increased approximately $319,518 from December 31, 1995 to March 31, 1996. Working capital levels have only been able to increase in the past by virtue of the Company's continued offerings of securities. With the exception of fixed rental and certain personnel expenses, the Company anticipates no significant capital expenditures within the short term. Rental expense accounts for approximately $5,000 of fixed expenses on a monthly basis. Personnel costs, which are expected to remain relatively stable within the short term, are likely to account for approximately $26,500 of fixed expenses on a monthly basis. Additional variable expenses, such as consulting fees, legal and accounting, travel and entertainment, utilities and miscellaneous equipment purchases (or rentals) are expected to account for approximately $132,000 per month. Management does not believe that in the near term the Company's operations will generate revenue or cash flow to finance its working capital or any capital expenditure requirements and the Company's operations will remain dependent on the Company's ability to obtain additional debt and equity financing (including from the exercise of existing warrants), as to which no assurance can be given. In the past, the Company has been able to secure financing through loans from certain stockholders. While the Company will continue to seek both debt and equity financing, there can be no assurance that any such financing will be available on terms acceptable to the Company or at all. Without such additional sources of financing, the Company will not be able to continue as a going concern. 9 SUBSEQUENT EVENTS Convertible Promissory Notes - ---------------------------- Subsequent to March 31, 1996, the Company arranged, subject to regulatory approval, private placements of convertible promissory notes having an aggregate principal amount of $1,025,000 (for a total amount of $2,405,000 of such securities placed between December 19, 1995 and May 7, 1996). The promissory notes are due and payable after two years, or after six months upon demand of the holder. The promissory notes are convertible into shares of common stock of the Company at conversion prices ranging from $2.50 to $3.25 per share. The Company will also issue to the investors non-transferable warrants to purchase an aggregate of up to 142,958 shares of common stock of the Company for a period of two years at a price equal to the conversion price of the notes. As of July 31, 1996, the issuance of such securities remains subject to regulatory approval. Debt Settlements - ---------------- In October 1995 the Registrant began to enter into written agreements to settle indebtedness in the aggregate amount of approximately $2,809,000 for cash or share consideration. These agreements were subject to regulatory approval. In May 1996, the Registrant received regulatory approval and completed the settlement of $2,513,121 of such debt through the issuance of a total of 1,256,561 shares of Common Stock. As of July 31, 1995, 53,675 shares continue to be reserved for issuance when permissible. In December 1995, the Registrant agreed to the restructuring and settlement of claims of two parties related to each other, which settlement has subsequently been amended and partially paid. As of the July 31, 1996, the Registrant is obligated to make a final payment of $200,000 due December 31, 1996. Between October 10, 1995 and May 28, 1996, the Registrant had settled for cash approximately $1,090,000 of accounts payable owing by the Registrant and its closed subsidiaries. As of July 31, 1996, the outstanding accounts payable of the Registrant's closed subsidiaries is approximately $185,000, which management of the Registrant is continuing to attempt to settle on terms favorable to the Registrant, although no assurances about such settlements can be given. Cancellation of Performance Shares - ---------------------------------- In October 1995, certain shareholders agreed to surrender their 5,950,000 performance shares which were then held under an escrow arrangement. In consideration therefor, the Registrant agreed to issue 314,762 common shares at a deemed price of $2.00 per share. Although the performance shares have been irreversably canceled by the Registrant, as of July 31, 1996, the issuance of the 314,762 shares continues to be subject to the removal of the Registrant from the jurisdiction of both the Vancouver Stock Exchange and the British Columbia Securities Commission. Bonus Shares and Warrants - ------------------------- In connection with the issuance of certain short-term debt by the Company in January 1995 and May 1996, the Company has agreed to issue, subject to regulatory approval, 85,590 "bonus" shares of common stock and 166,667 share purchase warrants, exercisable at $3.30 per share, 10 expiring on May 31, 1997. As of July 31, 1996, the issuance of such shares and warrants remains subject to regulatory approval. EFFECTS OF INFLATION The Company does not expect inflation to materially affect its results of operations, however, it is expected that operating cost and the cost of capital equipment to be acquired in the future may be subject to general economic and inflationary pressures. 11 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS ----------------- None ITEM 2. CHANGES IN SECURITIES --------------------- None ITEM 3. DEFAULTS UPON SENIOR SECURITIES ------------------------------- None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS --------------------------------------------------- None ITEM 5. OTHER EVENTS ------------ None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K -------------------------------- (a) Exhibits 27 Financial Data Schedule (b) Reports on Form 8-K None. 12 SIGNATURE In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PORTACOM WIRELESS, INC. Date: August 7, 1996 By: /s/ Douglas C. MacLellan ----------------------------- Douglas C. MacLellan President and Chief Executive Officer By: /s/ J. Michael Christiansen -------------------------------- J. Michael Christiansen Executive Vice President (principal financial officer) 13 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION - ----------- ----------- 27 Financial Data Schedule* * Filed herewith EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS 3-MOS DEC-31-1996 MAR-31-1995 JAN-01-1996 JAN-01-1995 MAR-31-1996 MAR-31-1995 557,290 73,384 0 0 904,393 47,113 0 0 0 58,852 1,461,683 179,349 6,703 157,578 0 0 1,468,386 336,927 3,047,833 3,836,666 0 0 0 0 0 0 13,965,400 10,085,670 (15,544,847) (13,585,409) 1,468,386 336,927 0 97,449 0 97,449 0 568,899 0 568,899 624,958 3,543,072 0 0 0 0 (624,958) (4,014,522) 0 0 (624,958) (4,014,522) 0 0 0 0 0 0 (624,958) (4,014,522) (.04) (.13) 0 0
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