SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the quarterly period ended March 31, 2001.
or
/_/ Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
Commission file number: 0-25940
WIRE ONE TECHNOLOGIES, INC.
(Exact Name of registrant as Specified in its Charter)
Delaware 77-0312442
(State or other Jurisdiction of (I.R.S. Employer Number)
Incorporation or Organization)
225 Long Avenue, Hillside, New Jersey 07205
(Address of Principal Executive Offices)
973-282-2000
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes [X] No [_]
The number of shares outstanding of the registrant's Common Stock as of May
10, 2001 was 17,349,144.
WIRE ONE TECHNOLOGIES, INC
Index
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements *
Consolidated Balance Sheets
March 31, 2001 and December 31, 2000 1
Consolidated Statements of Operations
For the Three Months ended March 31, 2001 and 2000 2
Consolidated Statements of Cash Flows
For the Three Months ended March 31, 2001 and 2000 3
Notes to Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 6
PART II. OTHER INFORMATION
Legal Proceedings 11
Changes in Securities and Use of Proceeds 11
Defaults Upon Senior Securities 11
Submission of Matters to a Vote of Security Holders 11
Other Information 12
Exhibits and Reports on Form 8-K 12
Signatures 13
* The Balance Sheet at December 31, 2000 has been taken from the audited
financial statements at that date. All other financial statements are
unaudited.
WIRE ONE TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2001 2000
------------ ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 243,011 $ 1,870,573
Accounts receivable-net 26,475,603 27,614,169
Inventory 10,424,474 10,751,344
Deferred income taxes 200,000 200,000
Other current assets 1,518,064 1,315,432
------------ ------------
Total current assets 38,861,152 41,751,518
Furniture, equipment and leasehold improvements-net 8,546,212 6,726,562
Goodwill-net 35,532,042 36,065,945
Other assets 352,431 341,813
------------ ------------
Total assets $ 83,291,837 $ 84,885,838
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 10,620,790 $ 11,804,298
Accrued expenses 1,560,547 2,568,627
Deferred revenue 7,798,863 7,287,690
Customer deposits -- 68,150
Current portion of capital lease obligations 86,858 101,643
------------ ------------
Total current liabilities 20,067,058 21,830,408
------------ ------------
Noncurrent liabilities:
Bank loan payable 5,012,849 3,000,000
Capital lease obligations, less current portion 2,045 26,067
------------ ------------
Total noncurrent liabilities 5,014,894 3,026,067
------------ ------------
Total liabilities 25,081,952 24,856,475
Commitments and Contingencies
Preferred stock, $.0001 par value; 5,000,000 shares authorized,
Series A mandatorily redeemable convertible preferred stock,
2,115 shares issued and outstanding 10,765,061 10,371,096
Stockholders' Equity:
Common stock, $.0001 par value; 100,000,000 authorized;
17,349,144 and 17,299,725 shares outstanding, respectively 1,735 1,730
Additional paid-in capital 66,644,778 66,436,353
Accumulated deficit (19,201,689) (16,779,816)
------------ ------------
Total stockholders' equity 47,444,824 49,658,267
------------ ------------
------------ ------------
Total liabilities and stockholders' equity $ 83,291,837 $ 84,885,838
============ ============
See accompanying notes to consolidated financial statements.
1
Wire One Technologies, Inc.
Consolidated Statements of Operations
(Unaudited)
Three Months Ended March 31,
---------------------------
2001 2000
------------ -----------
Net revenues $ 18,743,522 $ 5,983,507
Cost of revenues 12,950,125 3,846,211
------------ -----------
Gross margin 5,793,397 2,137,296
Operating expenses:
Selling 5,782,039 1,418,693
General and administrative 1,327,122 583,681
Amortization of goodwill 628,196 --
------------ -----------
Total operating expenses 7,737,357 2,002,374
------------ -----------
Income (loss) from operations (1,943,960) 134,922
------------ -----------
Other (income) expense
Amortization of deferred financing costs 9,382 12,242
Interest income (15,940) (29,948)
Interest expense 90,507 23,483
------------ -----------
Total other expenses, net 83,949 5,777
------------ -----------
Income (loss) before income taxes (2,027,909) 129,145
Income tax provision -- 53,400
------------ -----------
Net income (loss) (2,027,909) 75,745
Deemed dividends on series A convertible preferred stock 393,964 --
------------ -----------
Net income (loss) attributable to common stockholders $ (2,421,873) $ 75,745
============ ===========
Net income (loss) per share:
Basic $ (0.14) $ 0.01
============ ===========
Diluted $ (0.14) $ 0.01
============ ===========
Weighted average number of diluted common shares
Basic 17,327,577 5,301,503
============ ===========
Diluted 17,327,577 8,997,654
============ ===========
See accompanying notes to consolidated financial statements.
2
Wire One Technologies, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended March 31,
---------------------------
2001 2000
------------ -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (2,027,909) $ 75,745
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization 1,356,518 95,413
Deferred income taxes -- 53,000
Non cash compensation 108,863 21,667
Increase (decrease) in cash attributable to changes in assets and
liabilities net of activity of acquired businesses:
Accounts receivable 1,138,566 1,348,539
Inventory 326,870 (677,280)
Other current assets (202,632) (26,541)
Other assets (20,000) (99,994)
Accounts payable (1,183,508) 156,848
Accrued expenses (1,008,080) (121,114)
Income taxes payable -- (124,372)
Deferred revenue 511,173 55,646
Customer deposits (68,150) 196,074
------------ -----------
Net cash provided by (used in) operating activities (1,068,289) 953,631
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of furniture, equipment and leasehold improvements (2,538,590) (93,614)
Costs related to acquisition of businesses including cash acquired (94,293) --
------------ -----------
Net cash used by investing activities (2,632,883) (93,614)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of warrants and options, net 99,568 8,395,312
Proceeds from bank loans 16,545,482 3,350,000
Payments on bank loans (14,532,633) (5,488,602)
Payments on capital lease obligations (38,807) (9,768)
------------ -----------
Net cash provided by financing activities 2,073,610 6,246,942
------------ -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,627,562) 7,106,959
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,870,573 60,019
------------ -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 243,011 $ 7,166,978
============ ===========
Supplemental disclosures of cash flow information: Cash paid during
the period for:
Interest $ 90,507 $ 23,483
============ ===========
Income taxes $ 11,330 $ 147,946
============ ===========
Non cash financing and investing activities:
During the quarter ended March 31, 2001, the Company recorded non-cash deemed
dividends on Series A mandatorily redeemable convertible preferred stock of
$393,964.
See accompanying notes to consolidated financial statements.
3
WIRE ONE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2001
Note 1 -- The Business and Merger with View Tech, Inc.
Wire One Technologies, Inc. ("Wire One" or the "Company") was formed by the
merger of All Communications Corporation ("ACC") and View Tech, Inc.
("VTI") on May 18, 2000, with the former directors and senior management of
ACC succeeding to the management of Wire One. In connection with the
merger, each former shareholder of ACC received 1.65 shares of Wire One
common stock for each share of ACC common stock held by them. The
transaction has been accounted for as a "reverse acquisition" using the
purchase method of accounting. The reverse acquisition method resulted in
ACC being recognized as the acquirer of VTI for accounting and financial
reporting purposes. As a result, ACC's historical results have been carried
forward and VTI's operations have been included in the financial statements
commencing on the merger date. Accordingly, the 2000 results through the
merger date are those of ACC only. Further, on the date of the merger, the
assets and liabilities of VTI were recorded at their fair values, with the
excess purchase consideration allocated to goodwill.
Wire One is engaged in the business of selling, installing and servicing
video and voice communications systems, as well as an
Internet-protocol-based network devoted to video communications, to
commercial and institutional customers located principally within the
United States. The Company is headquartered in Hillside, New Jersey.
Note 2 -- Basis of Presentation
The accompanying unaudited financial statements of the Company have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and pursuant to
the rules and regulations of the Securities and Exchange Commission.
Accordingly, they do not include all of the information and footnotes
required by accounting principles generally accepted in the United States
of America for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for
the three months ended March 31, 2001 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2001. For
further information, refer to the financial statements and footnotes
thereto included in the Company's Annual Report for the fiscal year ended
December 31, 2000 as filed with the Securities and Exchange Commission.
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries, AllComm Products Corporation ("APC"),
VTC Resources, Inc. ("VTC") and Wire One Travel Services, Inc. ("WOTS").
All material intercompany balances and transactions have been eliminated in
consolidation. The Company does not segregate or manage its operations by
business segment.
Note 3 -- Income (loss) per share
Basic earnings (loss) per share is calculated by dividing net income (loss)
attributable to common stockholders by the weighted-average number of
common shares outstanding during the period (17,327,577 and 5,301,503
shares for the periods ended March 31, 2001 and 2000, respectively).
Diluted earnings (loss) per share is calculated by dividing net income
(loss) attributable to common stockholders by the weighted-average number
of common shares outstanding, plus the weighted average number of net
shares that would be issued upon exercise of stock options, warrants and
convertible preferred stock using the treasury stock method. Incremental
shares included in the diluted
4
computation were 3,696,151 for the period ended March 31, 2000. Diluted
loss per share for the period ended March 31, 2001 is the same as basic
loss per share, since the effects of the calculation for that period was
anti-dilutive.
Weighted average options and warrants to purchase 8,375,556 shares of
common stock during the period ended March 31, 2001 and preferred stock
convertible into 2,115,000 common shares, were not included in the
computation of diluted earnings per share because the Company reported a
net loss attributable to common stockholders for this period and their
effect would have been anti-dilutive.
Note 4 -- Bank Loan Payable
In June 2000, the Company entered into a $15,000,000 working capital credit
facility with its asset-based lender. Under terms of the two-year agreement
for this facility, loan availability is based on up to 75% of eligible
accounts receivable and 50% of eligible inventory, subject to an inventory
cap of $5,000,000. Borrowings bear interest at the lender's base rate plus
1/2% per annum. At March 31, 2001, the interest rate on the facility was
8.50%. The credit facility contains certain financial and operational
covenants. For the period from January 1, 2001 through March 31, 2001
("2001 First Quarter"), the Company was in violation of the earnings before
interest, taxes, depreciation and amortization ("EBITDA") and interest
coverage ratio covenants. On May 15, 2001, the Company received a waiver
from the lender regarding these requirements for the 2001 First Quarter. In
consideration for this waiver, the loan agreement was amended to require
that the borrowing base exceed the sum of all extensions of credit by the
lender by an amount equal to at least $5,000,000 at all times. At March 31,
2001, the loan has been classified as non-current in the accompanying
balance sheet because, in the opinion of management, it is probable that
these covenants will be satisfied for all periods going forward.
5
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following discussion should be read in conjunction with the Company's
consolidated financial statements and the notes thereto. The discussion of
results, causes and trends should not be construed to imply any conclusion that
such results or trends will necessarily continue in the future.
The statements contained herein, other than historical information, are or may
be deemed to be forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities and
Exchange Act of 1934, as amended, and involve factors, risks and uncertainties
that may cause the Company's actual results in future periods to differ
materially from such statements. These factors, risks and uncertainties, include
the relatively short operating history of the Company; market acceptance and
availability of new products and services; the terminable-at-will and
nonexclusive nature of reseller agreements with manufacturers; rapid
technological change affecting products and services sold by the Company; the
impact of competitive products, services, and pricing, as well as competition
from other resellers and service providers; possible delays in the shipment of
new products; and the availability of sufficient financial resources to enable
the Company to expand its operations.
Overview
Wire One is a leading single source provider of video communications solutions
that encompass the entire video communications value chain. We are a leading
integrator for major video communications equipment manufacturers, including the
number one and number two market share leaders, Polycom, Inc. ("Polycom") and
PictureTel Corporation ("PictureTel"), respectively, which together account for
over 50% of the installed videoconferencing endpoints in the United States. We
also offer voice communications products manufactured by Lucent Technologies,
Inc. ("Lucent") and the Business Telephone Systems Division of Panasonic
Communications and Systems Company ("Panasonic"), among others. In December
2000, we introduced our Glowpoint network service, providing our customers with
two-way video communications with high quality of service. With the introduction
of Glowpoint, we now offer our customers a single point of contact for all their
video communications requirements. Furthermore, we believe Glowpoint is the
first dedicated network to provide two-way video communications by utilizing a
dedicated internet protocol ("IP") backbone and broadband access.
The Company markets and sells its video and data products and services to the
commercial, federal and state government, medical and educational markets
through a direct sales force of account executives and telemarketers and through
resellers. These efforts are supported by sales engineers, a marketing
department, a call center and a professional services and engineering group. The
Company has sold its products and services to over 2,500 customers who
collectively have approximately 13,000 videoconferencing endpoints.
The Company was formed on May 18, 2000 by the merger of ACC and VTI. VTI was the
surviving legal entity in the merger. However, for financial reporting purposes,
the merger has been accounted for as a "reverse acquisition" using the purchase
method of accounting. Under the purchase method of accounting, ACC's historical
results have been carried forward and VTI's operations have been included in the
financial statements commencing on the merger date. Accordingly, all 2000
results through the merger date are those of ACC only. Further, on the date of
the merger, the assets and liabilities of VTI were recorded at their fair
values, with the excess purchase consideration allocated to goodwill.
In July 2000, the Company acquired the net assets of 2CONFER, LLC ("2CONFER"), a
Chicago-based provider of videoconferencing, audio and data solutions. The total
consideration was $800,000, consisting of $500,000 in cash and the remainder in
Company common stock valued at the time of acquisition of $300,000. On the date
of the acquisition, the assets and liabilities of 2CONFER were recorded at their
fair values, with the excess purchase consideration allocated to goodwill.
6
In October 2000, the Company acquired the assets and certain liabilities of the
Johns Brook Company ("JBC") videoconferencing division, a New Jersey-based
provider of videoconferencing solutions. The total consideration was $635,000,
consisting of $481,000 in cash and the remainder in Company common stock valued
at the time of acquisition of $154,000. On the date of the acquisition, the
assets and certain liabilities of the JBC videoconferencing division were
recorded at their fair values, with the excess purchase consideration allocated
to goodwill.
Results of Operations
The following table sets forth, for the periods indicated, information derived
from the Company's consolidated financial statements expressed as a percentage
of the Company's revenues:
Three Months Ended
March 31,
----------------
2001 2000
------ ------
Net revenues 100.0% 100.0%
Cost of revenues 69.1% 64.3%
------ ------
Gross margin 30.9% 35.7%
Operating expenses:
Selling 30.8% 23.7%
General and administrative 7.1% 9.7%
Amortization of goodwill 3.4% 0.0%
------ ------
Total operating expenses 41.3% 33.4%
------ ------
Income (loss) from operations (10.4)% 2.3%
------ ------
Other (income) expense
Amortization of deferred financing costs 0.1% 0.2%
Interest income (0.1)% (0.5)%
Interest expense 0.5% 0.4%
------ ------
Total other expenses, net 0.5% 0.1%
------ ------
------ ------
Income (loss) before income taxes (10.9)% 2.2%
Income tax provision 0.0% 0.9%
------ ------
Net income (loss) (10.9)% 1.3%
Deemed dividends on series A convertible preferred stock 2.1% 0.0%
------ ------
Net income (loss) attributable to common stockholders (13.0)% 1.3%
====== ======
Three Months Ended March 31, 2001 ("2001 period") Compared to Three Months Ended
March 31, 2000 ("2000 period").
NET REVENUES. The Company reported net revenues of $18.7 million for the
2001 period, an increase of $12.7 million over the $6.0 million in revenues
reported for the 2000 period. Although the operations of acquired companies have
now been fully integrated into the Company, management estimates that revenues
from the core businesses in existence before contributions from VTI, 2CONFER and
JBC grew approximately 33%, with revenues from VTI, 2CONFER and JBC accounting
for the remainder of the growth.
7
Video communications -- Sales of video communications products and services
were $17.3 million in the 2001 period, an increase of $13.6 million over the
2000 period. Management estimates that revenues from the core video
communications integration business before contributions from its acquired
companies grew approximately 77%, with revenues from VTI, 2Confer and JBC
accounting for the remainder of the growth experienced. The growth experienced
in the 2001 period resulted from sales to both new and existing customers in the
commercial, government, medical and educational markets in each of the major
geographic regions in the United States in which the company operates.
Voice communications -- Sales of voice communications products and services
were $1.4 million in the 2001 period, a $0.9 million decrease from the 2000
period. This decline in the revenues of the voice communications division were
the result of declines in revenue from three significant customers and due to
revenues in the 2000 period related to Y2K telephone system upgrades that did
not recur in the 2001 period.
GROSS MARGINS. Gross profits were $5.8 million in the 2001 period, an
increase of $3.7 million over the 2000 period. Gross margins decreased in the
2001 period to 30.9% of net revenues, as compared to 35.7% of net revenues in
the 2000 period. The decrease is attributable to the gross margin in the voice
communications decreasing from 45% to 5%, as a result of high margin Y2K upgrade
jobs not recurring in the 2001 period and the fixed costs related to the
distribution and service components of this business being incurred during the
2001 period against a sharply lower amount of revenue. Gross margin in the video
communications business was 33.1% in the 2001 period as compared to the 29.5%
gross margin achieved in the 2000 period. The increase is attributable to
inventory purchase discounts negotiated with videoconferencing equipment
manufacturers and increases in higher margin revenue sources such as consulting
and technical services, video maintenance contracts and installation services.
SELLING. Selling expenses, which include sales salaries, commissions,
overhead, and marketing costs, increased $4.4 million in the 2001 period to $5.8
million from $1.4 million for the 2000 period. Increases in selling expenses are
attributable to increases in the number of sales personnel and their related
costs and the costs of additional sales offices brought about by the merger with
VTI and the acquisitions of 2CONFER and JBC. The increase in selling expenses as
a percentage of net revenues in the 2001 period resulted from the decline in
voice communications revenues combined with relatively fixed selling costs in
that division, as well as, from the continued expansion of the video
communications division on a national basis. Prior to the merger, ACC focused
its video communications business on customers in the Eastern United States.
This national expansion has resulted in increased rent and related office
expenses, depreciation, travel and delivery expenses as a percentage of revenue.
In addition, the Company has introduced its Glowpoint network and incurred $0.5
million in recurring costs in the 2001 period offset by minimal recognized
revenue from this new service offering.
GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
$0.7 million in the 2001 period to $1.3 million as compared to $0.6 million for
the 2000 period. The inclusion of VTI general and administrative expenses from
the merger date through the end of the reporting period was the significant
factor behind these increases. General and administrative expenses as a
percentage of net revenues for 2001 period declined as a percentage of revenues
from 9.8% in the 2000 period to 7.1% in the 2001 period. This relatively fixed
cost base was leveraged over a significantly higher revenue amount in the 2001
period.
AMORTIZATION OF GOODWILL. Amortization expense attributable to the VTI,
2CONFER and JBC acquisitions for the 2001 period totaled approximately $0.6
million, which is the expected quarterly amortization over the 15 year
amortization period.
OTHER (INCOME) EXPENSES. The principal component of this category, interest
expense, increased approximately $67,000 to $91,000 as a result of increased
borrowings under the Company's line of credit.
8
INCOME TAXES. The Company incurred no income tax expense in the 2001
period. The Company established a valuation allowance in the 2001 period to
offset the tax benefits of the current period operating loss because realization
is considered uncertain. The Company does, however, currently maintain a
$200,000 deferred income tax asset on its balance sheet which it does believe to
be realizable within the next twelve months. The Company incurred approximately
$53,000 in income tax expense in the 2000 period.
NET INCOME (LOSS). The Company reported a net loss attributable to common
stockholders for the 2001 period of $(2.4) million, or $(.14) per diluted share,
as compared to net income attributable to common stockholders of $0.1 million,
or $.01 per diluted share for the 2000 period. After giving effect to the $0.4
million in deemed dividends on series A preferred stock, the Company reported a
net loss of $(2.0) million for the 2001 period as compared to net income of $0.1
million for the 2000 period. The $(2.0) million net loss for the 2001 period
primarily results from depreciation and amortization charges totaling $1.5
million, net interest expense of $0.1 million and $0.5 million of costs related
to the Glowpoint network service offering. EBITDA for the 2001 period was $(0.4)
million.
9
Liquidity and Capital Resources
At March 31, 2001, the Company had working capital of $18.8 million
compared to $19.9 million at December 31, 2000, a decrease of approximately 6%.
In addition, the Company had $0.2 million in cash and cash equivalents compared
to $1.9 million at December 31, 2000. The decline in working capital resulted
from funding its operating activities out of working capital.
Net cash used in operating activities for the 2001 period was $(1.1)
million as compared to net cash provided by operations of $1.0 million during
the 2000 period. Sources of operating cash in 2000 included decreases in
accounts receivable and inventory and an increase in deferred revenue. Payments
on accounts payable balances with vendors of $1.2 million and of accrued
expenses of $1.0 million were the primary uses of operating cash in the 2001
period.
Investing activities for the 2001 period included purchases of $2.5 million
of network, bridging and computer equipment, primarily for the Glowpoint
division. In addition, cash costs incurred in connection with prior consummated
mergers and acquisitions totaled $0.1 million.
Financing activities in the 2001 period included net borrowings under the
Company's revolving credit line totaling $2.0 million.
The Company's credit facility contains certain financial and operational
covenants. For the 2001 period, the Company was in violation of the EBITDA and
interest coverage ratio covenants. On May 15, 2001, the Company received a
waiver from the lender regarding these requirements for the 2001 period. In
consideration for this waiver, the loan agreement was amended to require that
the borrowing base exceed the sum of all extensions of credit by the lender by
an amount equal to at least $5,000,000 at all times. At March 31, 2001, the loan
has been classified as non-current in the company's balance sheet because, in
the opinion of management, it is probable that these covenants will be satisfied
for all periods going forward.
Management believes, based upon current circumstances, that it has adequate
capital resources to support expected operating levels for the next twelve
months.
Inflation
Management does not believe inflation had a material adverse effect on the
financial statements for the periods presented.
10
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company has exposure to interest rate risk related to its cash equivalents
portfolio. The primary objective of the Company's investment policy is to
preserve principal while maximizing yields. The Company's cash equivalents
portfolio is short-term in nature, therefore changes in interest rates will not
materially impact the Company's consolidated financial condition. However, such
interest rate changes can cause fluctuations in the Company's results of
operations and cash flows.
The Company maintains borrowings under a $15 million working capital credit
facility with Summit Commercial Gibraltar Corp. that are not subject to material
market risk exposure except for such risks relating to fluctuations in market
interest rates. The carrying value of these borrowings approximates fair value
since they bear interest at a floating rate based on the "prime" rate. There are
no other material qualitative or quantitative market risks particular to the
Company.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
11
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
None.
12
Signatures
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WIRE ONE TECHNOLOGIES, INC.
Registrant
Date: May 15, 2001 By: /s/ Richard Reiss
----------------------------
Richard Reiss,
President and Chief Executive
Officer
Date: May 15, 2001 By: /s/ Christopher Zigmont
----------------------------
Christopher Zigmont
Chief Financial Officer
(principal financial and
accounting officer)
13