-----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, TCjmWvWFZkElL76+MfqCdDtVcYnC+gcN9sZoLkpBgvFC/7H0nq7x5Agsw5TSxnfY VIAX00JByf6qY8m+ktG0DA== 0001017062-97-002062.txt : 19971117 0001017062-97-002062.hdr.sgml : 19971117 ACCESSION NUMBER: 0001017062-97-002062 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PORTACOM WIRELESS INC/ CENTRAL INDEX KEY: 0000907166 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATIONS EQUIPMENT, NEC [3669] IRS NUMBER: 330650673 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-23228 FILM NUMBER: 97719139 BUSINESS ADDRESS: STREET 1: 10061 TALBERT AVENUE SUITE 200 CITY: FOUNTAIN VALLEY STATE: CA ZIP: 92708 BUSINESS PHONE: 7145933234 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 10-Q 1 FORM 10-Q FOR PERIOD ENDING 09-30-1997 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 1997 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 Registrant as specified in its Charter) Delaware 33-0650673 (State or other Jurisdiction of (IRS Employer Identification No.) Incorporation or Organization) 10061 Talbert Avenue, Suite 200 Fountain Valley, California 92708 (Address of principal executive offices) Registrant's telephone number: (714) 593-3234 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 X No --- --- 2.Yes X No --- --- As of October 31, 1997, there were 13,576,970 shares of Common Stock issued and outstanding. INDEX
PART I. FINANCIAL INFORMATION PAGE NO. ITEM 1. Statement Regarding Financial Information i Condensed Consolidated Balance Sheet at September 30, 1997 (Unaudited) and December 31, 1996 (Derived from audited financial statements) 1 Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 1997 and 1996 (Unaudited) 2 Condensed Consolidated Statements of Cash Flows for the three and nine months ended September 30, 1997 and 1996 (Unaudited) 3 Notes to Condensed Consolidated Financial 4 Statements (Unaudited) ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 PART II. OTHER INFORMATION ITEM 1. Legal Proceedings 20 ITEM 2. Changes in Securities 20 ITEM 3. Defaults Upon Senior Securities 21 ITEM 4. Submission of Matters to a Vote of Security Holders 22 ITEM 5. Other Information 22 ITEM 6. Exhibits and Reports on Form 8-K 22
PORTACOM WIRELESS, INC. AND SUBSIDIARIES Quarter Ended September 30, 1997 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"), 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-K for the year ended December 31, 1996, in the Company's Form 10-Q for the quarter ended March 31, 1997, and in the Company's Form 10-Q for the quarter ended June 30, 1997 as filed with the SEC (file number 0-23228). -i- PORTACOM WIRELESS, INC. Consolidated Balance Sheets (Unaudited and expressed in U.S. dollars) September 30, 1997 and December 31, 1996
- --------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------- September 30, 1997 December 31, 1996 - --------------------------------------------------------------------------------------------------- Assets Current assets: Cash and cash equivalents $ 3,227 $ 114,275 - --------------------------------------------------------------------------------------------------- 3,227 114,275 Equipment, net 72,053 12,427 Refundable deposits (note 3) 200,000 -- Other assets (note 3) 99,500 -- Investments (note 3) 8,000,000 8,099,500 - --------------------------------------------------------------------------------------------------- Total Assets $ 8,374,780 $ 8,226,202 =================================================================================================== Liabilities and Stockholders' Equity Current liabilities: Accounts payable and accrued liabilities $ 2,925,387 $ 650,133 Notes payable 276,585 -- Convertible promissory notes payable (note 4) -- 150,000 - --------------------------------------------------------------------------------------------------- Total liabilities 3,201,972 800,133 Stockholders' equity: Share capital (note 5) Issued: Common stock (Sept. 30, 1997 - 13,576,970; 13,630 13,118 December 31, 1996 - 13,118,181) Other paid-in capital 18,426,845 17,193,178 Accumulated deficit (13,267,667) (9,780,227) - --------------------------------------------------------------------------------------------------- Total stockholders' equity 5,172,808 7,426,069 - --------------------------------------------------------------------------------------------------- Total Liabilities and Stockholders' Equity $ 8,374,780 $ 8,226,202 ===================================================================================================
On behalf of the Board: /s/ Stephen Leahy Director ---------------------------------- Stephen Leahy /s/ Douglas MacLellan Director ---------------------------------- Douglas MacLellan See accompanying notes to condensed consolidated financial statements. Page 1 PORTACOM WIRELESS, INC. Condensed Consolidated Statements of Operations (Unaudited and expressed in U.S. dollars)
Three and nine months ended September 30, 1997 and 1996 - ------------------------------------------------------------------------------------------------------------------------------------ Three Months Nine Months ------------------------------------------------------------- 1997 1996 1997 1996 - ----------------------------------------------------------------------------------------------------------------------------------- Income: Sales $ -- $ 10,000 $ -- $ 10,000 Cost of sales -- -- -- -- - ----------------------------------------------------------------------------------------------------------------------------------- -- 10,000 -- 10,000 Other income -- 9,000,179 -- 9,003,906 - ----------------------------------------------------------------------------------------------------------------------------------- -- 9,010,179 -- 9,013,906 Operating expenses: Advertising and promotion $ -- $ -- $ 2,599 $ 3,500 Bad debt -- -- -- 2,513 Consulting fees 99,627 72,436 815,062 537,688 Depreciation and amortization 532 1,595 1,782 1,595 General and administrative 80,306 80,930 336,196 222,712 Interest, bank and financing charges 403 139,670 171,296 431,731 Legal and accounting 296,732 141,360 1,190,277 459,178 Management fees 20,467 22,633 76,868 62,876 Placement fees -- -- -- 106,000 Rent 23,698 9,232 65,104 34,904 Travel and entertainment 32,719 72,179 480,106 208,276 Wages and benefits 114,791 167,235 348,151 343,345 - ----------------------------------------------------------------------------------------------------------------------------------- 669,275 707,270 3,487,441 2,414,318 - ----------------------------------------------------------------------------------------------------------------------------------- Income (loss) before debt settlement (669,275) 8,302,909 (3,487,441) 6,599,588 - ----------------------------------------------------------------------------------------------------------------------------------- Gain (loss) on settlement of debt -- 210,750 -- (163,856) ================================================================================================================================== Net income (loss) for the period $ (669,275) $ 8,513,659 $(3,487,441) $ 6,435,732 ================================================================================================================================== Net income (loss) per share ($0.05) $0.72 $(0.23) $0.47 ================================================================================================================================== Weighted average number of common shares outstanding 12,976,970 11,903,947 15,480,402 13,642,462 ==================================================================================================================================
See accompanying notes to condensed consolidated financial statements. Page 2 PORTACOM WIRELESS, INC. Condensed Consolidated Statements of Cash Flows (Unaudited and expressed in U.S. dollars)
Three and nine months ended September 30, 1997 and 1996 - ------------------------------------------------------------------------------------------------------------------------------- Three Months Nine Months ------------------------------------------------------ 1997 1996 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------- Operations: Net income (loss) for the period $(669,275) $ 8,513,659 $(3,487,441) $ 6,435,732 Depreciation and amortization 532 1,595 1,782 1,595 Fair value of investments received on settlement -- -- -- (8,000,000) Income from AAT transaction -- (8,000,000) -- -- Net changes in working capital relating to operations: Accounts and notes receivable -- 1,806,337 -- 376,082 Accounts payable and accrued liabilities 580,934 (503,355) 2,275,254 (702,432) - ------------------------------------------------------------------------------------------------------------------------------- Net cash used by operating activities (87,809) 1,818,236 (1,210,405) (1,889,023) Financing: Issue of and subscription for common shares for cash -- 133,250 1,234,180 553,145 Issue of and to be issued for common shares on -- -- -- 277,630 settlement of debt and as non-cash consideration Value assigned to warrants -- -- -- 250,000 Loans payable -- (1,229,000) -- 1,434,000 Notes payable 90,000 -- 126,585 -- - ------------------------------------------------------------------------------------------------------------------------------- Net cash generated by financing activities 90,000 (1,095,750) 1,360,765 2,514,775 Investing: Acquisition of equipment, net (8,027) (1,027) (61,408) (14,554) Investment -- -- -- (25,000) Other assets -- (25,000) (200,000) - ------------------------------------------------------------------------------------------------------------------------------- Net cash generated (used) by investing activities (8,027) (26,027) (261,408) (39,554) - ------------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents (5,836) 696,459 (111,048) 586,198 Cash and cash equivalents, beginning of period 9,063 55,404 114,275 165,665 - ------------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents, end of period $ 3,227 $ 751,863 $ 3,227 $ 751,863 - -------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to condensed consolidated financial statements. Page 3 PORTACOM WIRELESS, INC. Notes to Condensed Consolidated Financial Statements (Unaudited and expressed in U.S. dollars) Three and nine months ended September 30, 1997 - ------------------------------------------------------------------------------ 1. Basis of presentation: The condensed consolidated financial statements include the accounts of PortaCom Wireless, Inc. (the "Company") and its wholly owned and majority- 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 and nine months ended September 30, 1997. The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue to operate as a going concern which requires the realization of assets and settlement of liabilities in the ordinary course of business. The Company's viability as a going concern is dependent upon the continued restructuring of its asset base, the financial support of shareholders and creditors and, ultimately, the generation of profitable operations. Although it is management's intention to pursue these options, there can be no assurance that these events will or can occur. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. 2. Use of estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and to the reported amounts of revenues and expenses during the reporting period. With respect to the Company's operations, these estimates primarily relate to the underlying value of investments which will only be determinable based on future events. Management has applied its judgment to the information available to the date of the issuance of these condensed consolidated financial statements in making such judgment. Actual results could differ from estimates made in preparing these condensed consolidated financial statements. 3. Investments and Other assets: a. Metromedia Asia Corporation: As previously reported in prior periods, the Company, in consideration for agreeing to the termination of a proposed business combination with Asian American Telecommunications Corporation ("AAT"), received 2,000,000 common shares of AAT (presently held in escrow), warrants to acquire 4,000,000 common shares of AAT for a period of three years at a price of $4.00 per share, and cash consideration of -4- PORTACOM WIRELESS, INC. Notes to Condensed Consolidated Financial Statements (Unaudited and expressed in U.S. dollars) Three and nine months ended September 30, 1997 - ------------------------------------------------------------------------------ $1,000,000. In February, 1997, the Company agreed to exchange its shares and warrants of AAT for equivalent shares and warrants of Metromedia Asia Corporation ("MAC") in connection with a business combination between AAT and MAC and a related exchange offer by MAC. On October 8, 1997, the Company signed a letter of intent with VDC Corporation Ltd. ("VDC") to sell its interest in MAC to VDC for 5.3 million shares of VDC common stock and up to $700,000 in cash. The letter of intent is subject to completion of definitive agreements which will be subject to shareholder consent, the completion of due diligence, regulatory approvals and filings and other necessary conditions, including resolving a majority of the Company's current debts and obligations. There is no assurance that definitive agreements for either transaction will be reached or that either transaction will be consummated in accordance with the terms set forth in the letter of intent, or at all. b. American Cambodian Telecom Ltd.: On December 26, 1996, the Company acquired an 86% interest in American Cambodian Telecom Ltd. ("ACT"), a newly formed Cambodian limited liability company under the consent of the Ministry of Posts and Telecommunications in Cambodia. ACT had been inactive to December 31, 1996. Under the Joint Venture agreement, the Company was required to contribute capital to ACT of at least 50 million Cambodian Riel (approximately $20,000) and to provide a refundable deposit of $200,000 within 45 business days of December 31, 1996. As of the date of this report, the required capital had been contributed and the refundable deposit had been made. In addition, by December 26, 1997, the Company is required to purchase the remaining 14% interest in ACT from Khmer Sameky Telecom Company, Ltd. for the sum of $1,400,000, to subsequently grant a 25% interest in ACT to the Ministry of Posts and Telecommunications of the Kingdom of Cambodia, and to increase the share capital of ACT to $5,000,000. As of the date of this report, the Company had not complied with these requirements. The Company reviews the underlying value of all investments on an ongoing basis and provides for declines in value that are other than temporary as they are identified. Any impairments are charged to earnings and a new cost basis for the security is established. 4. Convertible promissory notes payable: Between December 19, 1995 and December 11, 1996, the Company arranged, subject to regulatory approval, private placements of convertible promissory notes having an aggregate principal amount of $2,417,000. As of December 31, 1996, convertible notes aggregating -5- PORTACOM WIRELESS, INC. Notes to Condensed Consolidated Financial Statements (Unaudited and expressed in U.S. dollars) Three and nine months ended September 30, 1997 - ------------------------------------------------------------------------------ $2,267,000 were converted to common stock. As of March 31, 1997, the remaining convertible notes aggregating $150,000 had also been converted to common stock. As of September 30, 1997, accrued interest on the convertible promissory notes aggregating $182,753 was payable by the Company. In addition, the Company has agreed to issue, subject to the removal of the Company from the jurisdiction of both the Vancouver Stock Exchange and the British Columbia Securities Commission, 115,296 "bonus" warrants to purchase shares of the Company's common stock, exercisable at $2.70, expiring between December 31, 1999 and February 14, 2000. 5. Share Capital: (a) Authorized: 100,000,000 shares of common stock with a par value of $0.001 per share 5,000,000 shares of preferred stock with a par value of $0.001 per share (b) Issued common stock:
- ------------------------------------------------------------------------------------------------ Number of Per share Total consideration shares consideration - ------------------------------------------------------------------------------------------------ Balance, December 31, 1996 13,064,506 $17,098,946 Issued for cash on private placement 190,388 3.035 577,750 Issued as consideration for loans (g) 42,757 3.960 169,301 Issued as consideration for conversion of convertible promissory notes payable 55,862 2.690 150,000 Issued for cash on exercise of warrants 223,457 1.509 337,128 - ------------------------------------------------------------------------------------------------ Balance, September 30, 1997 13,576,970 -- $18,333,125 To be issued on settlement of debt (f) 53,675 2.000 107,350 - ------------------------------------------------------------------------------------------------ Balance issued and to be issued 13,630,645 $18,440,475 - ------------------------------------------------------------------------------------------------
-6- PORTACOM WIRELESS, INC. Notes to Condensed Consolidated Financial Statements (Unaudited and expressed in U.S. dollars) Three and nine months ended September 30, 1997 - ------------------------------------------------------------------------------ (c) Stock options: As at December 31, 1996, the Company had common shares of the Company reserved for issuance on exercise of incentive stock options to 2002. Option changes for the period January 1, 1997 to September 30, 1997 were as follows: - ------------------------------------------------------------------------------ Outstanding and exercisable as at December 31, 1996 1,136,183 - ------------------------------------------------------------------------------ Granted at $3.61 per share 90,000 Canceled (125,000) Expired (296,183) - ----------------------------------------------------------------------------- Outstanding and exercisable as at September 30, 1997 805,000 - -----------------------------------------------------------------------------
Stock options are issued at the average market price per share for the ten trading days prior to the date of issuance. The Company applies APB No. 25 and related Interpretations in accounting for its option grants. Accordingly, no compensation cost has been recognized for options granted. (d) Warrants: During the three months ended March 31, 1997, the Company, in connection with a private placement, issued warrants to purchase 72,993 shares of common stock at $2.74 per share if exercised by January 28, 1998 and $3.15 if exercised thereafter to January 28, 1999. As of September 30, 1997, none of these warrants has been exercised. During the year ended December 31, 1996, the Company, in connection with private placements of common stock, issued warrants to purchase 97,500 shares of common stock at $1.11 per share if exercised by November 1996, and $1.28 if exercised thereafter to November 1997. Of these warrants, 30,000 were exercised during the three months ended March 31, 1997 and 67,500 remain outstanding. In addition, the Company issued 461,203 warrants attached to convertible promissory notes at prices ranging from $1.49 to $3.25 per share if exercised by dates ranging from December 19, 1997 to May 7, 1998. As of September 30, 1997, 161,073 of these warrants had been exercised at $1.49 per share and 15,384 of these warrants had been exercised at $1.95 per share. In addition, the Company has agreed to issue, subject to the removal of the Company from the jurisdiction of both the Vancouver Stock Exchange and the British Columbia Securities Commission, 115,296 "bonus" warrants to purchase shares of the Company's common stock, exercisable at $2.70, expiring between December 31, 1999 and February 14, 2000. The Company, has, in prior periods issued warrants to purchase up to 204,878 shares -7- PORTACOM WIRELESS, INC. Notes to Condensed Consolidated Financial Statements (Unaudited and expressed in U.S. dollars) Three and nine months ended September 30, 1997 - ------------------------------------------------------------------------------ of common stock at prices of between $1.28 and $1.47 per share. Of these warrants, 37,878 were exercised during 1996, 17,000 were exercised during the three months ended March 31, 1997, and the remaining 150,000 expired in the three months ended September 30, 1997. (e) Performance shares: Included in the issued and outstanding common stock are 600,000 shares which are 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 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. Upon release of the shares from escrow, compensation expense will be recorded. In October 1995, certain shareholders agreed to surrender their 5,950,000 escrowed shares which were then held under the escrow arrangement. In consideration therefor, the Company agreed to issue 314,762 shares of common stock at a deemed price of $2.00 per share. Although the escrowed shares have been irrevocably canceled by the Company during 1996, the issuance of the 314,762 shares continues to be subject to the removal of the Company from the jurisdiction of both the Vancouver Stock Exchange and the British Columbia Securities Commission. (f) Shares to be issued on settlement of debt: As of September 30, 1997 53,675 shares of the Company's common stock continue to be reserved for issuance, when allowable, related to prior period debt settlements. As of September 30, 1997, the outstanding accounts payable of the Company's closed subsidiaries accounts for approximately $90,000 of total accounts payable. The Company intends to continue attempting to settle the outstanding debt on terms favorable to the Company, although no assurances about such settlement terms can be given. (g) Securities to be issued for loans: 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, expiring on May 31, 1997. During 1996, regulatory approval was received for the issuance of 25,833 of these shares which were then issued by the Company. During the quarter ended March 31, 1997, regulatory approval was received for the issuance of 42,757 of these shares which were then issued by the -8- PORTACOM WIRELESS, INC. Notes to Condensed Consolidated Financial Statements (Unaudited and expressed in U.S. dollars) Three and nine months ended September 30, 1997 - ------------------------------------------------------------------------------ Company. Additionally, subject to the removal of the Company from the jurisdiction of both the Vancouver Stock Exchange and the British Columbia Securities Commission, the Company has agreed to extend the expiry date of the 166,667 share purchase warrants to May 31, 1998 from May 31, 1997. As of September 30, 1997, the issuance of the remaining 17,000 shares and 166,667 warrants continued to be subject to regulatory approval. In connection with the issuance of certain short term debt by the Company in February, 1997, the Company has agreed to issue, subject to the removal of the Company from the jurisdiction of both the Vancouver Stock Exchange and the British Columbia Securities Commission, 120,000 "bonus" warrants to purchase shares of the Company's common stock, exercisable at $2.75, expiring on February 19, 1999. (h) List of Directors: Howard Frantom, Keith Hay, Stephen Leahy, Douglas MacLellan. 6. Contingent liabilities: In the current period, one of the Company's vendors, JMS North America, Inc. ("JMS")filed a Motion for Judgment with the Circuit Court of the County of Fairfax, Commonwealth of Virginia, seeking $836,614 in allegedly due consulting fees, finance charges and travel expenses. JMS further seeks $2,250,000 for alleged breach of contract and $1,500,000 for alleged fraud. The Company has disputed and intends to dispute in trial a material portion of the amounts billed and or claimed by JMS for consulting fees, finance charges and travel expenses. Additionally, the Company believes that the claims of JMS with respect to alleged fraud and alleged breach of contract are without merit and will vigorously contest them. Any such dispute, contest or pursuit of defenses by the Company to the allegations set forth by JMS will be subject to receipt of sufficient financing. Subsequent to the end of the quarter ended September 30, 1997, J. Michael Christiansen ("Christiansen"), filed a Complaint with the Superior Court of the State of California, seeking in excess of $350,000 plus interest, costs and undetermined exemplary and punitive damages in connection with the alleged breach by the Company of a Release and Settlement Agreement dated October 2, 1996, pursuant to which the Company was to have issued Christiansen 75,000 shares of the common stock of the Company. The Company believes that the issuance of such shares to Christiansen has been necessarily delayed pursuant to certain regulatory constraints, the removal of which the Company has continued to seek without success. The Company is presently attempting to engage legal counsel to review and opine on the merit of Christiansen's claims and to vigorously pursue any and all defenses and counterclaims determined to be available to the Company with respect to certain of the allegations set forth by Christiansen and to certain past actions of Christiansen. Any such dispute, contest or pursuit of defenses or counterclaims by the Company to the allegations set forth by Christiansen will be subject to receipt of sufficient financing. -9- PORTACOM WIRELESS, INC. Notes to Condensed Consolidated Financial Statements (Unaudited and expressed in U.S. dollars) Three and nine months ended September 30, 1997 - ------------------------------------------------------------------------------ While the results of litigation and claims cannot be predicted with certainty, management believes that the final outcome of such matters, or the cost of pursuing a defense in such matters, could have a material adverse effect on the Company's ability to continue as a going concern. 7. Related party transactions: Related party transactions not disclosed elsewhere in these condensed consolidated financial statements include $287,462 in accounts payable and accrued liabilities at September 30, 1997 which is owing to related parties. In the three months ended September 30, 1997, approximately $54,480 of consulting fees were charged by related parties, while approximately $20,470 of management fees were charged by related parties The Company has reimbursed expenses incurred by directors and officers on its behalf during the periods presented. -10- ITEM 2. Management's Discussion and Analysis of Financial Condition and --------------------------------------------------------------- Results of Operations --------------------- Background The corporate objective of the Company is to become a leading independent provider of wireless and wireline telecommunications services in selected developing world markets. Subject to receipt of sufficient financing on terms acceptable to the Company, it intends to pursue opportunities to build, operate and actively participate in cellular, wireless, paging, PSTN and long-distance networks in order to provide coverage and high-quality service in these markets. The Company's current business is focused on concluding the previously disclosed asset sale transaction with VDC Corporation for the sale of the Company's interest in a telecommunications business based in the Peoples Republic of China (the "VDC Transaction"), the informal composition of its outstanding indebtedness, and upon the pursuit of opportunities to either finance or dispose of its interest in its joint venture in the Kingdom of Cambodia. Due to the lack of sufficient financial resources, the Company has elected to temporarily suspend its activities related to the pursuit of opportunities to develop new telecommunications operations. However, the Company is actively pursuing opportunities to merge with or acquire one or more businesses with existing revenue-producing telecommunications operations. The Company was formed as a British Columbia, Canada corporation in 1989. On December 23, 1996, the Company reincorporated from British Columbia to Wyoming pursuant to a procedure known as a "continuance", and on December 24, 1996, the Company merged with its wholly owned Delaware subsidiary and thereby reincorporated into Delaware. The Delaware subsidiary had been formed in 1994 for the purpose of the merger, which had been postponed for business reasons. The Company presently conducts business operations both directly and through one wholly owned U.S. subsidiary, PortaCom International, Ltd. ("PIL"). The Company also has three other wholly owned U.S. subsidiaries which are not presently operating: Extreme Telecom, Inc. ("Telecom"), PCBX Systems, Inc. ("PCBX"), and Extreme Laboratories, Inc., formerly known as Spheric Audio Laboratories, Inc. ("Laboratories"). Since 1994, both directly and through its PIL subsidiary, the Company has engaged in initial stage efforts to evaluate the feasibility of, and attempt to secure, licensing opportunities and joint venture arrangements for the operation of wireless telephone networks as well as other state-of-the-art mobile radio communication systems and new telephone technologies. Although the establishment and operation of wireless telephone networks and other advanced communications systems will be investigated by the Company wherever strategic opportunities arise, upon resumption of its activities related to the pursuit of telecommunications opportunities (subject to financing), its principal efforts are expected to be focused upon certain Asia Pacific emerging markets, including Cambodia, India, China, Bangladesh and Vietnam. The Company, in December 1996, entered into a joint venture agreement through which it controls a limited liability company which holds a twenty-five (25) year renewable licence to -11- develop a digital mobile wireless system in the Kingdom of Cambodia. The Company has an interest through a shareholding in Metromedia Asia Corporation ("MAC") in a fixed line basic services license and a cellular service license in the People's Republic of China. The activities of the Company's PIL subsidiary to date have produced no licences or joint venture opportunities, and management does not believe that revenues will be realized by PIL in 1997. The Company formerly pursued a number of ventures in the consumer electronics and customer premise equipment sectors. PCBX developed and marketed a personal computer branch exchange which permitted the operation of a full- featured telephone network control system from a centrally located personal computer. Telecom entered into an agreement with Nitsuko America Corporation ("Nitsuko America") to distribute telecommunications products manufactured by Nitsuko America which were not then being distributed otherwise in the United States. Laboratories developed and marketed a line of audio speakers, as well as a proprietary audio recording and playback technology known as "SphericSound".(TM) Because of substantial losses, the associated costs of continued development, the lack of profitability by competitors and the uncertainty of marketing costs associated with commercializing both proprietary technologies and other manufacturers' products, management decided in 1995 to discontinue the development and marketing activities of PCBX, Telecom and Laboratories. Funding of the Company's operations since inception has been provided by: (i) revenues from the sale of PCBX products, and, to a significantly lesser extent, the products of Telecom and Laboratories; (ii) proceeds from the sale of equity and debt securities undertaken in a series of private placement transactions; (iii) completion of an initial public offering on the Vancouver Stock Exchange during October 1992; and (iv) revenues generated as a result of the receipt of cash and securities of Asian American Telecommunications Corporation ("AAT"), the securities of which were comprised of common shares (currently held in escrow) and warrants to purchase shares of AAT's common stock and which were subsequently exchanged for an equal number of common shares (currently held in escrow) and common share purchase warrants of MAC. Results of Operations Quarter and Nine Months ended September 30, 1997 as Compared with Quarter and - ----------------------------------------------------------------------------- Nine Months Ended September 30, 1996. - ------------------------------------- For the quarter and nine months ended September 30, 1997, the Company had no revenues and reported net losses from operations of $669,275 and $3,487,441, respectively. This compares to net income from operations of $8,513,659 and $6,435,732 for the respective comparable prior year periods. Net income in the prior year periods was solely and directly attributable to an agreement between the Company and AAT pursuant to which the Company received $1,000,000 in cash in addition to common stock (presently held in escrow) and warrants to purchase common stock at $4.00 per share valued at $8,000,000. There were no sales in either period due to the fact that the Company's revenue-producing subsidiaries (which were also generating significant net losses) were discontinued in 1995 and have remained inactive through the first three quarters of 1997. No sales are expected for the current year and the Company's current operations are not expected to generate revenues in the foreseeable future unless the Company earlier acquires one or more controlling interests in businesses which produce ongoing revenue from operations. No assurances can be given as to the conclusion of any future acquisitions of any such businesses. -12- The Company's losses for the quarter and nine months ended September 30, 1997 represent losses of $0.05 and $0.23 per common share, respectively, as compared to earnings per common share of $0.72 and $0.47 for the respective comparable prior year periods. Operating expenses decreased in the quarter ended September 30, 1997 to $669,275 from $707,270 in the quarter ended September 30, 1997. However, operating expenses increased in the nine months ended September 30, 1997 to $3,487,411 from $2,414,318 in the respective comparable prior year period. Of the increase in the comparable nine month periods, the most significant factor was an increase in legal and accounting expenses (discussed below). The increases in operating expenses were primarily related to the increase in activities of the Company with respect to investigating and negotiating agreements in principle (which have now been terminated due to the Company's inability to secure sufficient financing) to acquire a controlling interest in Microwave Communications, Ltd. ("MCL"), a paging telecommunications venture in the Republic of India (the "MCL Transactions"), the VDC Transaction, and related efforts to obtain financing, as well as expenses incurred related to the deployment by ACT of a digital wireless telecommunications system in Cambodia as compared with the increases in the comparable quarter in the prior year related to the activities of the Company with respect to the proposed acquisition of wireless interests in China, and to the other expenses discussed below. The overall decrease in operating expenses in the comparable quarters ended September 30, 1997 and 1996 resulted from a significant decrease in Interest, bank and financing charges to $403 in the current quarter from $139,670 reported in the comparable prior year quarter and a decrease in Wages and benefits to $114,791 (1996: $167,235) which decreases were partially offset by increases in Legal and accounting to $296,732 (1996: $141,360) and in Consulting fees to $99,627 (1996: $72,436). During the quarter and nine months ended September 30, 1997, legal and accounting expenses rose to $296,732 and $1,190,277, respectively, from $141,360 and $459,178 recorded in the respective comparable prior year periods. These increases were primarily related to the terminated MCL Transactions, the VDC Transaction and related transactions, due diligence work performed with respect to prospective transactions that were not consummated, the activities of ACT, as well as to the extensive preparation, review and revision of disclosure incorporated into the Company's public filings and other related disclosure documents. During the quarter and nine months ended September 30, 1997, consulting fees rose to $99,627 and $815,062, respectively, from $72,436 and $537,688 recorded in the respective comparable prior year periods. These increases were primarily related to engineering consulting services incurred with respect to the deployment by ACT of a digital wireless telecommunications system in Cambodia Also related to the deployment by ACT of a digital wireless telecommunications system in Cambodia, and to the terminated MCL Transactions, were increases in travel and entertainment, which increased in the nine months ended September 30, 1997 to $480,106 from the $208,276 recorded in the comparable prior year period. These expenses are expected to decrease significantly throughout the remainder of 1997. -13- Liquidity and Capital Resources In the nine months ended September 30, 1997, the Company realized net proceeds of $1,234,179 from the issuance of shares of common stock ($nil in the quarter ended September 30, 1997) in a private placement and exercise of share purchase warrants. The Company also issued a non convertible promissory notes for $276,585 These activities contributed to a net working capital (deficit) position as of September 30, 1997 of ($3,198,745), which is up $(2,512,887) from ($685,858) at December 31, 1996. The Company has incurred cumulative losses from inception through September 30, 1997 of $12,967,666 and has not yet achieved revenues sufficient to offset direct expenses and corporate overhead. As of September 30, 1997, management does not believe that revenues will likely be realized by the Company for the near term or in the foreseeable future; however, the Company expects that it will need to expend significant funds in order to conclude an informal composition of its outstanding indebtedness, develop the Cambodian Licence (which may be sold at the best terms available to the Company should management determine that substantially no prospects exist for obtaining financing in sufficient time, and in amounts sufficient, to meet the contractual financial obligations necessary for ACT to maintain the Cambodian Licence), to fund the VDC Transaction, and to obtain additional licenses and to form additional joint ventures necessary for the Company or PIL to provide wireless communications services in other markets where such opportunities are being sought. The Company would not generate any revenues, however, until such licenses are obtained and such joint ventures are operational. Furthermore, the continuing activities associated with pursuing new opportunities would necessitate an immediate and continuing material increase in general office overhead and other costs such as general and administrative and travel and entertainment. Additionally, the Company will be required to conclude an informal composition of its outstanding indebtedness before developing future projects. Since inception, a substantial portion of the Company's operating capital has been provided through financing activities which have included an initial public offering and a series of private placements of common shares and convertible promissory notes. During the nine months ended September 30, 1997, the Company sold 413,845 shares of common stock and 190,388 common stock purchase warrants in private placement transactions and upon the exercise of outstanding stock options and warrants. The Company, as of the date of this report, is actively seeking additional financing through the private placement of equity or debt securities Although no assurances can be given as to the success of any financing through future offerings of securities, such financing will be necessary for the Company to continue as a going concern. Between December 19, 1995 and December 11, 1996, the Company arranged, subject to regulatory approval, private placements of convertible promissory notes having an aggregate principal amount of $2,417,000. As of December 31, 1996, convertible notes aggregating $2,267,000 were converted to common stock. As of September 30, 1997, the remaining convertible notes aggregating $150,000 had also been converted to common stock. As of September 30, 1997 accrued interest on the convertible promissory notes aggregating $182,753 was payable by the Company. In addition, the Company has agreed to issue, subject to the removal of the Company from the jurisdiction of both the Vancouver Stock Exchange and the British Columbia Securities -14- Commission, 115,296 "bonus" warrants to purchase shares of the Company's common stock, exercisable at $2.70, expiring between December 31, 1999 and February 14, 2000. As of September 30, 1997, the Company had 1,347,634 (805,000 options and 542,634 warrants) options and warrants outstanding which upon exercise would yield to the Company additional proceeds in excess of $3.5 million. The exercise of existing options or 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 options or warrants, or whether such will be exercised at all. Rental expense accounts for approximately $530 of fixed expenses on a monthly basis. Personnel costs presently account for approximately $35,000 of fixed expenses on a monthly basis, although a substantial portion of such costs have been accrued and not paid since April 1, 1997. 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 between approximately $30,000 and $50,000 per month. In addition to fixed rental and certain personnel expenses, as of September 30, 1997, the Company (subject to financing) anticipates capital expenditures of approximately $6 million during the remainder of 1997 and approximately $25 million in 1998 in connection with the establishment and expansion of ACT's operations. The Company may also elect to exercise some or all of its MAC share purchase warrants (in the unlikely event of non-completion of the VDC Transaction) during the first six months of 1998, the purchase price for which would be $16 million assuming the exercise of all of its warrants. Accordingly, consistent with the Company's objective of continuing as a going concern able to develop opportunities to build, operate and actively participate in cellular, wireless, paging, PSTN and long distance networks, the Company has significant additional capital requirements. There can be no assurance that the Company will be able to obtain financing in order to satisfy its present obligations and future requirements. Failure to obtain financing sufficient to fund current liabilities and short-term fixed expenses will have a material adverse effect upon the Company and its operations. Management does not believe that in the foreseeable future, and in any event not within the next 12 months, the Company's operations will generate sufficient cash flow to finance its working capital and capital expenditure requirements. 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). In particular, since the Company does not currently have any sources of revenues from operations, and as a result of continuing general and administrative expenses (including legal and accounting and including costs associated with the general administration and regulatory compliance), and ongoing funding requirements of the build out of ACT's operations, the Company is unable to meet any of its obligations to creditors at this time. At present, the Company has approximately $2.9 million in accounts payable and accrued liabilities, is a defendant in two litigation matters (See "Part II, Item 1. Legal Proceedings"), and certain other vendors have threatened suit to collect claims asserted against the Company. The Company is also presently unable to fund certain short term obligations of ACT, including required deposits for frequency allocations, prefix assignments, site leases, legal and accounting services, architectural and -15- engineering design work, the required purchase of the remaining 14% interest in ACT, and the required capital infusion of $5,000,000. Accordingly, management has determined that the Company will be required in the near term to obtain debt or equity financing. The Company has been able to secure financing in the past through loans from certain stockholders; however, although management may endeavor to make similar arrangements, it has no reason to believe that these will be available in the near term or in the future. 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. Failure to obtain such additional sources of financing will have a material adverse impact on the operations of ACT. Without significant positive business developments, such funding may be difficult or impossible to obtain. Furthermore, without such additional sources of financing in the near term, the Company will not be able to continue as a going concern. Many of the economies in which the Company expects to compete are weak, volatile and reliant on foreign assistance. The uncertainty in these markets is heightened because of the evolving political systems which are developing from legacies of totalitarianism or civil unrest. In particular, the political and socioeconomic systems of the Kingdom of Cambodia are presently in a state of unrest as a result of ongoing military activity between the two ruling parties of Cambodia's coalition government. As a result, there can be no assurance that a market will develop for what the Company expects to be its primary products of its joint ventures, cellular mobile communications systems and paging systems. There can be no assurance that such telecommunications services will achieve market acceptance similar to that which would be expected in similarly developed countries elsewhere. Even if products such as the Company's are accepted, there can be no assurance that any of the countries in which the Company is present will not experience political or economic instability in the future. The Company does not have political risk insurance in the countries in which it currently conducts business. The Company intends to acquire interests in wireless telephone licences around the world, and will be subject to government regulation in each market it enters. The governments of these countries differ widely with respect to structure, constitution and stability and some of the countries may lack developed legal and regulatory systems. To the extent the Company's operations depend on governmental approval and regulatory decisions, the operations may be adversely effected by changes in the political structure or government representatives in each of the markets in which the Company will operate. No assurance can be given that factors such as these will not have a material adverse effect of the Company's operations in particular countries. Government actions in the future could have a significant adverse effect on economic conditions in a developing country or may otherwise have a material adverse effect on the Company and its operating companies and developmental stage projects. Expropriation, confiscatory taxation, nationalization, political, economic or social instability or other developments could materially adversely affect the value of the Company's interests in operating companies and developmental stage projects in particular developing countries. The Company may also be adversely affected by -16- political or social unrest or instability in foreign countries. Such unrest or instability resulting from political, economic, social or other conditions in foreign countries could have a material adverse effect on the Company. Moreover, applicable agreements relating to the Company's interests in its operating companies are governed frequently by foreign law. As a result, in the event of a dispute, it may be difficult for the Company to enforce its rights. Accordingly, the Company may have little or no recourse upon the occurrence of any of these developments or if any of its partners seek to re-negotiate existing or future agreements. To the extent that any of the operating companies seeks to make a dividend or other distribution to the Company, or to the extent that the Company seeks to liquidate its investment in an operating company or developmental stage project and repatriate monies from a relevant country, local taxes, foreign exchange controls, or other restrictions may effectively prevent the transfer of funds to the Company or exchange of local currency for U.S. dollars. The Company's joint venture operations are and are expected to be outside the United States. Many developing countries have experienced substantial, and in some periods, extremely high, rates of inflation and resulting high interest rates for many years. Inflation and rapid fluctuations in inflation rates have had and may continue to have negative effects on the economies and securities markets of certain developing countries and could have an adverse effect on the operating companies and developmental stage projects in those countries, including an adverse effect on their ability to obtain financing. The value of the Company's investment in an operating company or developmental stage project will be affected by the currency exchange rate between the U.S. dollar and the applicable local currency. As a result, such operations are exposed to currency fluctuations and the need to comply with a variety of foreign laws, including laws that control currency exchanges and currency repatriation. The Company does not hedge its foreign currency risks as this is difficult or impossible in the markets in which it operates, but may do so of possible and economically justified. There can be no assurance that the Company's operations will not be adversely affected by such factors. In particular, as of the date of this report, the Kingdom of Cambodia is experiencing ongoing civil unrest and political instability related to a seizure of power by military police action by one of the political parties comprising Cambodia's coalition government. The difficulties related to the events unfolding in Cambodia have, in the opinion of management and as of the date of this report, delayed several of the Company's deployment-related activities, and have had and may continue to have a material adverse effect upon the Company's ability to develop the license in Cambodia. The preceding paragraphs contain certain forward looking statements that are subject to inherent uncertainties. Debt Settlements Subject to consummation of the VDC Transaction or receipt of other debt or equity financing, the Company intends to undertake an informal composition of its outstanding -17- indebtedness and intends to secure claim releases from creditors or other claimants representing substantially all of the Company's outstanding indebtedness. The Company intends to obtain settlements of the outstanding indebtedness on terms favorable to the Company, although no assurances about such settlements or about the final terms of such settlements can be given. Additionally, as of September 30, 1997, 53,675 shares continue to be reserved for issuance when allowable, related to prior period settlements of the outstanding indebtedness of the Company's inactive subsidiaries, the unresolved portion of which, at September 30, 1997 accounted for approximately $90,000 of total accounts payable. The Company intends to continue attempting to settle the outstanding debt on terms favorable to the Company, although no assurances about such settlement terms 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 Company agreed to issue 314,762 common shares at a deemed price of $2.00 per share. Although the performance shares have been irrevocably canceled by the Company, as of the date of this filing, the issuance of the 314,762 shares continues to be subject to the removal of the Company 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, expiring on May 31, 1997. During 1996, regulatory approval was received for the issuance of 25,833 of these shares which were then issued by the Company. During the quarter ended March 31, 1997, regulatory approval was received for the issuance of 42,757 of these shares which were then issued by the Company. Additionally, subject to the removal of the Company from the jurisdiction of both the Vancouver Stock Exchange and the British Columbia Securities Commission, the Company has agreed to extend the expiry date of the 166,667 share purchase warrants to May 31, 1998 from May 31, 1997. As of September 30, 1997, the issuance of the remaining 17,000 shares and 166,667 warrants continued to be subject to regulatory approval. In connection with the issuance of certain short term debt by the Company in February, 1997, the Company has agreed to issue, subject to the removal of the Company from the jurisdiction of both the Vancouver Stock Exchange and the British Columbia Securities Commission, 120,000 "bonus" warrants to purchase shares of the Company's common stock, exercisable at $2.75, expiring on February 19, 1999. Terminated Acquisitions -18- On October 20, 1995, the Company announced that it had agreed to acquire PortaCom Wireless Communications, Inc., a Delaware corporation ("PWC"), which had been developing new business opportunities in wireless telecommunications services in China, Burma, Laos, Bulgaria, Macedonia and certain other countries. The acquisition was approved by the shareholders on November 20, 1995 and remained subject to the approval of the Vancouver Stock Exchange ("VSE") and the receipt of an acceptable valuation of PWC. Upon closing, the Company was obligated to issue a total of 1,568,600 shares of common stock to the PWC shareholders. On July 18, 1996, the Company announced that it had terminated the acquisition as it had not yet received regulatory approval. The Company has determined, however, that it will issue shares of its common stock to Messrs. MacLellan and Stephens and to PJL, in the same amounts as previously provided in the PWC Agreement, in the event it is permissible to do so without receiving approval of the VSE. On May 9, 1997, the Company announced that it had signed, subject to certain conditions including regulatory approval, agreements in principle to acquire a controlling interest in Microwave Communications Limited ("MCL"), a paging telecommunications venture in the Republic of India (the "MCL Transactions"), which agreements were to have been consummated by July 15, 1997. As the Company was unable to secure financing sufficient to complete the MCL Transactions, the agreements were not consummated and have expired. Additionally, the Company was unsuccessful in its attempts to negotiate an extension to the acquisition agreements. 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. -19- PART II - OTHER INFORMATION Item 1. Legal Proceedings ----------------- In the current period, one of the Company's vendors, JMS North America, Inc. ("JMS")filed a Motion for Judgment with the Circuit Court of the County of Fairfax, Commonwealth of Virginia, seeking $836,614 in allegedly due consulting fees, finance charges and travel expenses. JMS further seeks $2,250,000 for alleged breach of contract and $1,500,000 for alleged fraud. The Company has disputed and intends to dispute in trial a material portion of the amounts billed and or claimed by JMS for consulting fees, finance charges and travel expenses. Additionally, the Company believes that the claims of JMS with respect to alleged fraud and alleged breach of contract are without merit and will vigorously contest them. Any such dispute, contest or pursuit of defenses by the Company to the allegations set forth by JMS will be subject to receipt of sufficient financing. Subsequent to the end of the quarter ended September 30, 1997, J. Michael Christiansen ("Christiansen"), filed a Complaint with the Superior Court of the State of California, seeking in excess of $350,000 plus interest, costs and undetermined exemplary and punitive damages in connection with the alleged breach by the Company of a Release and Settlement Agreement dated October 2, 1996, pursuant to which the Company was to have issued Christiansen 75,000 shares of the common stock of the Company. The Company believes that the issuance of such shares to Christiansen has been necessarily delayed pursuant to certain regulatory constraints, the removal of which the Company has continued to seek without success. The Company is presently attempting to engage legal counsel to review and opine on the merit of Christiansen's claims and to vigorously pursue any and all defenses and counterclaims determined to be available to the Company with respect to certain of the allegations set forth by Christiansen and to certain past actions of Christiansen. Any such dispute, contest or pursuit of defenses or counterclaims by the Company to the allegations set forth by Christiansen will be subject to receipt of sufficient financing. While the results of litigation and claims cannot be predicted with certainty, management believes that the final outcome of such matters, or the cost of pursuing a defense in such matters, could have a material adverse effect on the Company's ability to continue as a going concern. Item 2. Changes in Securities --------------------- None. -20- Item 3. Defaults Upon Senior Securities ------------------------------- -21- 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 Date of Report Subject Matter -------------- -------------- October 14, 1997 Letter of Intent for Asset Sale. -22- 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: November 14, 1997 By: /s/ Douglas C. MacLellan ------------------------------------- Douglas C. MacLellan President and Chief Executive Officer By: /s/ Michael A. Richard ------------------------------------- Michael A. Richard Vice President, Accounting (principal financial officer) -23- EX-27 2 ART 5 FDS
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED FINANCIAL STATEMENTS, PREPARED BY MANAGEMENT, AS AT AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS 9-MOS DEC-31-1997 DEC-31-1997 JUL-01-1997 JAN-01-1997 SEP-30-1997 SEP-30-1997 3,227 3,227 0 0 0 0 0 0 0 0 3,227 3,227 8,371,553 8,371,553 0 0 8,374,780 8,374,780 3,201,972 3,201,972 0 0 0 0 0 0 13,630 13,630 5,159,178 5,159,178 8,374,780 8,374,780 0 0 0 0 0 0 0 0 669,275 3,487,441 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 (669,275) (3,487,441) (0.05) (0.23) 0 0
-----END PRIVACY-ENHANCED MESSAGE-----