As filed with the Securities and Exchange Commission on June 30, 2000
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Registration No. 333-95341
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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PRE-EFFECTIVE AMENDMENT NO. 8 TO
FORM SB-2
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
WORLD WIDE WIRELESS COMMUNICATIONS, INC.
(Name of small business issuer in its charter)
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Nevada 4812 860887822
(State or jurisdiction of (Primary Standard Industrial (IRS Employer
incorporation or organization) Identification No.) Classification Code No.)
DOUGLAS P. HAFFER
520 Third Street, Suite 101
Oakland, CA 94607
(510) 839-6100
(Name, Address and Telephone Number of Agent for Service)
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Copies to:
WILLIAM D. EVERS, ESQ.
Evers & Hendrickson LLP
155 Montgomery, 12th Floor
San Francisco, CA 94104
Phone No.: (415) 772-8102
Fax No.: (415) 772-8101
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462 (b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462 (c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462 (d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434
check the following box. / /
CALCULATION OF REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------------
Title of each class of Proposed maximum Amount of
securities to be Amount to be Proposed maximum aggregate offering registration
registered registered (1) offering price per unit price (2) fee
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Common, $ .001 par per share 9,780,916 $4.50 $44,014,122 $11,620
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<FN>
(1) Includes 5,780,916 shares owned by certain current shareholders of World
Wide Wireless Communications, Inc. World Wide Wireless Communications, Inc. will
not receive any of the proceeds of such sales.
(2) Estimated pursuant to Rule 457(a) under the Securities Act of 1933, as
amended, solely for purposes of calculating the registration fee.
</FN>
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is prohibited.
Initial Public Offering Prospectus
Subject to Completion, dated June 30, 2000
World Wide Wireless
Communications, Inc.
4,000,000 shares of Common Stock
This is our initial public offering. We are offering the shares at a
price of $2.75 per share. This price may not reflect the market price of our
shares after this offering. We intend to directly place these shares without the
use of an underwriter. There are no escrow arrangements pertaining to this
offering and there is no minimum amount we are required to raise in this
offering before we may have access to funds received from investors. The minimum
subscription is 1,000 shares and investors who meet the qualification
requirements set forth in this prospectus may purchase the shares from us. Our
shares are currently traded on the OTC Bulletin Board under the trading symbol
WLGSE.
----------------------
Investing in our common stock involves a great amount of risk.
See "Risk Factors" beginning on page 5.
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Per Share Total
Public Offering Price.......................... $2.75 $11,000,000
Underwriting Discounts and Commissions ........ $ 0 $ 0
Proceeds Before Expenses....................... $2.75 $11,000,000
The proceeds before expenses are calculated before deducting estimated
expenses of $60,000, including registration fees and other offering costs, in
addition to legal and accounting fees.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is _________, 2000
The information in this prospectus is not complete and may be changed. Selling
shareholders may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and it is not soliciting an offer to
buy these securities in any state where the offer or sale is prohibited.
Selling Shareholder Prospectus
Subject to Completion, dated June 30, 2000
World Wide Wireless
Communications, Inc.
5,780,916 shares of Common Stock
Certain of our shareholders named on page 32 of this prospectus are
offering to sell up to 5,780,916 shares of our common stock which they presently
own. We will not receive any of the proceeds from the sale of these shares by
the selling shareholders. We will receive proceeds of $750,000 from one of the
selling shareholders from the exercise of outstanding options to purchase
securities covered by this prospectus if that selling shareholder exercises his
options in full.
The selling shareholders may offer and sell some, all or none of their
common stock under this prospectus. The selling shareholders may determine the
prices at which they will sell their shares, which may be at market prices
prevailing at the time of the sale or some other price. The selling shareholders
may use brokers or dealers to assist them in selling their shares, who may
receive compensation or commissions for such sales.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is _________, 2000
TABLE OF CONTENTS
Page Page
---- ----
Reference Data....................... 2 Executive Compensation............... 30
Prospectus Summary................... 3 Principal and Selling Shareholders.. 32
Summary of Financial Data ........... 4 Certain Transactions................. 36
Risk Factors......................... 5 Description of Securities............ 39
Forward-Looking Statements .......... 11 Price Range of Common Stock.......... 39
Dividend Policy...................... 12 Plan of Distribution................. 41
Use of Proceeds...................... 12 Legal Matters........................ 42
Management's Discussion and Analysis. 15 Experts.............................. 42
Business............................. 16 Additional Information............... 42
Management........................... 27 Financial Statement.................. F-1
Until 90 days after the effective date of this prospectus all dealers
effecting transactions in the registered securities, whether or not
participating in this distribution, may be required to deliver a prospectus.
This is in addition to the obligation of dealers to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
You should rely only on the information contained in this prospectus.
We have not authorized any person to provide you with different information. If
anyone provides you with different or inconsistent information, you should not
rely on it. We are not making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. The information in this
document may only be accurate on the date date of this document.
2
PROSPECTUS SUMMARY
World Wide Wireless Communications, Inc.
We provide high-speed broadband wireless Internet service in the United
States and internationally. We are also developing a new technology, named the
distributed wireless call processing system, which we believe will significantly
enhance wireless communications in the future. We intend to license this
technology to third parties in the future.
We are incorporated under the laws of the State of Nevada. Our offices
are located at 520 Third Street, Suite 101, Oakland, CA 94607. Our telephone
number is (510) 839-6100.
Summary of the offering
Type of security................................ Common stock
Common stock registered by company.............. We are registering and selling
4,000,000 shares of common
stock on behalf of our company.
We will also register another
5,780,916 shares of common
stock for existing shareholders
with registration rights. We
will not sell the 5,780,916
shares owned by the existing
shareholders with registration
rights.
Common stock offered for sale
by our company in this offering ............ 4,000,000 shares
Common stock to be outstanding after
this offering .............................. 87,545,517
Use of proceeds................................ For expansion of our sales
force, marketing and
distribution activities,
expansion of both our domestic
and international business
operations, for acquiring
spectrum, and for general
corporate purposes.
We intend to offer all of the shares directly to the public without the
use of an underwriter. There is no minimum number of shares that must be sold.
There can be no assurance that all of the shares offered will be sold.
Funds from this offering will not be placed in an escrow or trust
account and will be available for use as the funds are received. The minimum
investment per shareholder is 1,000 shares. There is no maximum investment per
shareholder.
This offering will begin as of the effective date of this prospectus
and continue for 12 months or such earlier date as we may terminate the
offering. If this offering terminates, all subscription payments received after
termination will be promptly returned.
3
SUMMARY OF FINANCIAL DATA
The summary financial data for the years ended September 30, 1998 and
1999 have been derived from the Financial Statements and Notes to Financial
Statements, audited by Reuben E. Price & Co., San Francisco independent
auditors. The summary financial data for the six months ended March 31, 2000 and
1999 is derived from our unaudited financial statements which, in the opinion of
management, includes all adjustments, none of which were other than normal
recurring adjustments necessary for a fair presentation of the financial
position and results of operations for such periods. The financial information
for the six months ended March 31, 2000 and 1999 is not necessarily indicative
of the results of operations for subsequent periods or a full fiscal year. The
selected financial data should be read in conjunction with the Financial
Statements and Notes thereto included elsewhere in this prospectus.
Statements of Income Data:
Cumulative
from inception
Year ended Year ended on Sept 1, 1994 Six Months Ended Six Months Ended
Sept. 30, 1998 Sept. 30, 1999 to Sept. 30 1999 Mar. 31, 2000 Mar. 31, 1999
Audited Audited Audited Unaudited Unaudited
Revenue $ -- $ -- $ -- $ 141,268 $ --
Gen. & Adm. Expenses (353,075) (2,383,330) (6,765,842) (2,345,196) (594,650)
Total Operating Expenses (353,075) (2,383,330) (6,765,842) (2,345,196) (594,650)
Operating loss (353,075) (2,383,330) (6,765,842) (2,203,928) (594,650)
Rental income 6,701 0 6,701 0 0
Interest Income 0 0 0 174 0
Net loss (346,374) (2,383,330) (6,759,141) (2,217,484) (594,650)
Sept. 30, 1999 March 31, 2000 March 31, 1999
Audited Unaudited Unaudited
Balance Sheet Data:
Working capital (153,646) 76,215
Total assets 1,180,777 6,206,693
Long-term debt,
less current portion 328,000 740,000
Shareowners' equity 361,309 4,910,887
4
RISK FACTORS
An investment in our common stock is very risky. You should be aware
that you could lose the entire amount of your investment. You should carefully
consider the following risks before you decide to buy our common stock.
Risks Related to Our Business
We have a history of losses and there is significant doubt about our ability to
continue as a going concern
We are a development stage company and our revenues for the foreseeable
future will not be sufficient to attain profitability. In the two years since we
began operations, we have generated virtually no revenues and have incurred
substantial expenditures. We expect to continue to experience losses from
operations while we develop and expand our wireless Internet service system and
other technologies. In view of this fact, our auditors have stated in their
report for the period ended September 30, 1999 that our ability to meet our
future financing requirements, and the success of our future operations, cannot
be determined at this time.
We may not have enough capital to remain a going concern, especially if we do
not sell a significant amount of securities offered by this prospectus
We will require substantial outside investment on a continuing basis to
finance the acquisition of additional spectrum licenses, capital expenditures
and operations. Although we believe that the proceeds from this offering,
together with nominal funds expected to be generated from operations, will be
sufficient to finance our working capital requirements for at least twelve
months following completion of this offering, there can be no assurances that we
will generate sufficient funds from this offering to fund our operations. We do
not have a bank line of credit and there can be no assurance that any required
or desired financing will be available through bank borrowings, debt, or equity
offerings, or otherwise, on acceptable terms. To the extent that future
financing requirements are satisfied through the issuance of equity securities,
investors may experience significant dilution in the net book value per share of
common stock.
We do not know how many of the shares offered will be sold. Therefore,
investors will bear the risk that we will accept subscriptions for a nominal
number of shares and then be unable to exist as a going concern or accomplish
our plans as discussed in the Use of Proceeds in this prospectus. If no shares,
or a nominal number of shares are sold, our financial condition and our ability
to continue as a going concern could suffer.
We may not be able to obtain permission to use two-way transmission for our
wireless service, thereby making our services significantly less attractive to
potential customers
We believe that it is important for us to obtain the right to conduct
two-way transmissions through the radio transmission frequencies for which we
acquire licenses. None of our present channel leases in the United States allow
for two-way transmissions. Permission to conduct two-way transmissions must be
obtained from the Federal Communications Commission, and the rules of the FCC
require that we file applications with the FCC to receive permission to conduct
two-way transmissions through these frequencies. The FCC has announced that the
first opportunity to file these applications will occur from July 3 through 10,
2000. The application process will require us to engineer a network
configuration and channel-use plan for these frequencies in each market where we
intend to launch a two-
5
way system. The applications must meet FCC interference protection rules or
contain the consent of other licensees in these markets and adjacent markets. We
cannot be certain that:
o We will be able to complete the necessary processes to enable us
to complete and file two-way applications for each of our
markets.
o We will be able to obtain the necessary cooperation and consents
from licensees in our markets or adjacent markets to enable us
to use our spectrum for two-way communication services.
o The FCC will approve our applications.
If we do not receive the required consents from the FCC and other
licensees within a market, or we are not able to design a two-way system that
will meet the FCC's interference protection rules, we will be unable to obtain
authorization to implement a two-way system in that market. If we are unable to
obtain such an authorization, we will be forced to operate our service as a
one-way transmission service, which we believe would make our Internet access
services significantly less attractive to prospective customers than two-way
transmission services.
We are subject to other substantial governmental regulations which could
adversely affect our business
Our services are subject to current regulations of the FCC with respect
to the use of our wireless access. We are required to use and maintain our
licenses for certain frequencies and file reports with the FCC. If we fail to
comply with these requirements, we may lose our licenses to operate such
frequencies. The loss of licenses to operate our frequencies could lead to
interruption of our wireless access services and materially adversely affect our
business.
In addition, changes in the regulatory environment relating to the
Internet access could affect the prices at which we may sell our services. These
include regulatory changes that, directly or indirectly, affect
telecommunications costs, limit usage of subscriber-related information or
increase the likelihood or scope of competition from the regional Bell operating
companies or other telecommunications companies. For example, regulations
recently adopted by the FCC are intended to subsidize Internet connectivity
rates for schools and libraries, which could affect demand for our services. The
FCC has also stated its intention to consider whether to regulate certain
transmission services over the Internet as "telecommunications," even though
Internet access itself would not be regulated. Additionally, a number of state
and local government officials have also asserted the right or indicated a
willingness to impose taxes on Internet-related services, including sales, use
and access taxes. We cannot predict the impact that future laws and regulations
may have on our business.
Our new technology is unproven and may not function as anticipated
Our distributed wireless call processing system technology remains in
the development phase and we have not yet developed a fully functional prototype
of that technology. We cannot be certain when we will be able to complete
development of that system and whether that system will work in the manner
anticipated when development is completed. Furthermore, we cannot be certain
whether the system will receive substantial market acceptance assuming that it
is developed. For these reasons, although we believe that our distributed
wireless call processing system is promising, an investor should not assume that
the system will be available or will contribute positively to our business
prospects or financial condition.
6
We are subject to the requirements that we receive regulatory approvals from
those countries in which we do business, the delay or denial of which can reduce
our revenues and adversely affect our foreign operations.
We anticipate that a substantial percentage of our revenues will be
derived from operations outside of the United States. Our reliance on
international operations to obtain consents of local regulatory authorities,
some of which may significantly delay or deny permitting us to operate in those
jurisdictions. For example, we will not be able to generate revenues from our
operations in Argentina until such time as the governmental regulatory
authority, the CNC, approves our application to acquire licenses. In early 2000,
the government of Argentina announced that it was placing a freeze on all
license transfer applications from foreign-owned firms, which has effectively
delayed consideration of our application. A denial of our application or a
significant delay in consideration of our application could either prevent us
from conducting our planned operations in Argentina or materially adversely
affect our ability to do so. Our prospective operations in Peru and other
jurisdictions are also subject to receipt of government approval, which we
cannot assure you that we will receive at this time.
Problems with telecommunications infrastructure in countries in which we do
business may substantially limit the effectiveness of our Internet services,
thereby making those services less attractive
The Internet access services we intend to conduct will require that
there be a modern telecommunications infrastructure which allows for the fast
and efficient transfer of data from the source of the data to the transmission
towers we lease. Many countries in which we are conducting or intend to conduct
business lack the high speed cable, satellite or fiber optic wiring systems
necessary for high speed data transmission and in many of those countries it is
not economically viable to install that infrastructure. This limits our ability
to provide high-speed Internet services efficiently, thereby making our services
in those countries less attractive.
Because we operate internationally, our operations are subject to unexpected
political changes, changes in legal requirements and fluctuations in exchange
rates, all of which may substantially increase our operating costs or make it
difficult to do business there
In addition to these international risks, we are also subject to the
following risks in connection with our international operations that may
substantially reduce our revenues, increase our operating and capital expenses,
and otherwise materially affect our ability to conduct business:
o unexpected changes in regulatory requirements, taxes, trade laws
and tariffs, which can substantially increase the costs of doing
business in other jurisdictions;
o changes in a specific country's or region's political or economic
conditions which may make it difficult or impossible to conduct
business there;
o lack of clear rules and regulations governing the issuance of
licenses and standards for their operation; and
o fluctuating exchange rates.
By way of illustration, the regulatory authority in Ghana with
responsibility for telecommunications licenses, the National Communications
Agency, has invalidated certain license transfers which its predecessor agency
made several years earlier. These licenses include those which we wish to use
for our operations in that country. Although we intend to pursue our application
for a license to use those frequencies, there can be no assurance that we will
obtain the desired license or that the
7
license might be subsequently revoked due to further changes in the regulatory
requirements. We cannot assure you that we will be able to conduct our
operations profitably in these jurisdictions in view of these risks and cannot
quantify the impact which these risks may have on our operations.
We are inexperienced in operating a business internationally, which could cause
us to fail to develop our international operations successfully
We intend to expand our international sales efforts in the future. We
have very limited experience in marketing, selling and supporting our products
and services abroad. There is a risk that we will not be able to expand due to
this inexperience. If we are unable to grow our international operations
successfully and in a timely manner, our business and operating results could be
seriously harmed. This could be reflected in a loss in your investment.
If we do not develop system features in response to customer requirements,
customers may not wish to use our services, which would seriously harm our
business
The broadband wireless access industry is rapidly evolving and is
subject to technological change and innovation. These changes are requiring that
providers of broadband services adopt new technologies quickly or modify
existing technologies to maintain service and market products. Compliance with
these changes may cause us to incur unexpected expenses or lose revenues. If we
are unable to comply with diverse new or varying governmental regulations or
industry standards in each of the many worldwide markets in which we compete, we
may not be able to respond to customers in a timely manner or market our
products, which could seriously harm our business.
We are dependent on the services of key individuals and the loss of any of these
individuals could significantly affect our ability to operate our business
Our development and success is significantly dependent upon Douglas P.
Haffer, Chairman, President and Chief Executive Officer; Wayne Caldwell, Vice
President and General Counsel; and Dana Miller, Vice President of Licensing and
Systems Expansion. We do not currently have key man insurance for any of these
officers. Any loss of the services of these members of our senior management
personnel could seriously harm our business.
We may be unable to protect our intellectual property rights
Our success depends in part on our ability to protect our proprietary
technologies. We rely on a combination of patent, copyright and trademark laws,
trade secrets and confidentiality and other contractual provisions to establish
and protect our proprietary rights. We have received one patent from the United
States Patent and Trademark Office pertaining to the distributed wireless call
processing system and may file for additional patents in the future. However,
our patents may not be of sufficient scope or strength, others may independently
develop similar technologies or products, duplicate any of our products or
design around our patents, and the patents may not provide us competitive
advantages. Litigation, which could result in substantial costs and diversion of
effort by us, may also be necessary to enforce any patents issued or licensed to
us or to determine the scope and validity of third-party proprietary rights. Any
such litigation, regardless of outcome, could be expensive and time consuming,
and adverse determinations in any such litigation could seriously harm our
business.
We have not yet sought patent protection for the distributed wireless
call processing system in any country other than the United States, nor have we
sought to register our trademarks in those countries in which we currently do or
intend to do business. The laws of other countries vary with respect to
8
intellectual property protection, and some jurisdictions may provide
substantially less protection than those of the United States. As a consequence,
our ability to protect our intellectual property and prevent competitors from
using our intellectual property may be much more limited.
Risks Related to this Offering
The market price may drop below the offering price, or the selling shareholders
may sell shares at below the offering price, which could render us unable to
sell shares in this offering
We are offering to sell shares at the price on the cover page of this
prospectus, whereas the market price for our stock may vary significantly.
Furthermore, the selling shareholders may sell their shares at any price they
deem acceptable, regardless of the price at which we are offering to sell our
shares, and we have no control over the price at which they may sell their
shares. If the market price for the shares drops below the offering price, or
the selling shareholders decide to sell their shares at below our offering
price, prospective investors will likely choose to purchase shares from the
selling shareholders or on the open market rather than directly from us. If this
happens, the amount of financing we receive from this offering will be
significantly reduced and we may be unable to raise any funds from this
offering.
Our stock may not meet the requirements to continue to be listed on the
Over-the-Counter Bulletin Board, which may make it more difficult for
shareholders to sell their shares and expose us to claims for liquidated damages
This is our initial public offering. Some of our shares that we
initially sold as restricted securities are now freely trading on the
Over-the-Counter Bulletin Board, or OTCBB. The National Association of
Securities Dealers, Inc., or NASD, which administers the OTCBB, implemented
regulations in 1999 which require that all companies listed on the OTCBB have a
class of securities registered under the Securities Exchange Act of 1934 and
file periodic reports with the Securities and Exchange Commission, or SEC. We
have also requested from the SEC and have received on May 16, 2000 an interim
order staying the delisting of our common stock from the OTCBB. Our case is now
pending before the SEC. There can be no assurance that we will ultimately be
able to prevail before the NASD or SEC and prevent the delisting of our shares.
If we do not prevail and the SEC does not approve the registration of our common
stock, it is possible that our shares may be delisted from the OTCBB. Should we
be able to maintain the listing of our shares on the OTCBB, we will be required
to continue to file our periodic reports with the SEC in order to maintain our
listing. Although trading quotations for the shares could remain available
through the "pink sheets" maintained by the National Quotation Service Bureau,
Inc., management believes that a delisting of the shares from the OTCBB may
reduce the trading volume of the shares and may result in a reduction in the
market price for the shares.
We may be subject to claims for liquidated damages if our shares are
delisted from the OTCBB. Under the terms of a Registration Rights Agreement into
which we entered with various investors, we will be liable for the payment of
liquidated damages equal to 2% per month of the face amount of subordinated
debentures and stated value of series A preferred stock that we sold to those
investors during that period that our shares not listed on the OTCBB. The
aggregate principal amount of the subordinated debentures is currently
$3,280,000, and we are contractually obligated to issue additional subordinated
debentures or series A preferred stock with a principal amount or stated value
of $1,312,000. If our shares are delisted, the amount of these liquidated
damages could have a material adverse affect upon our financial condition and
business prospects.
9
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. We intend to
identify forward-looking statements in this prospectus using words such as
"believes," "intends," "expects," "may," "will," "should," "plan," "projected,"
"contemplates," "anticipates," or similar statements. These statements are based
on our beliefs as well as assumptions we made using information currently
available to us. Because these statements reflect our current views concerning
future events, these statements involve risks, uncertainties and assumptions.
Actual future results may differ significantly from the results discussed in the
forward-looking statements. Some, but not all, of the factors that may cause
these differences include those discussed in the Risk Factors section beginning
on page 5 of this prospectus. You should not place undue reliance on these
forward-looking statements, which apply only as of the date of this prospectus.
10
DIVIDEND POLICY
We have never declared or paid any cash dividends on our capital stock
and do not intend to pay dividends in the foreseeable future. We intend to
invest our future earnings, if any, to fund our growth.
USE OF PROCEEDS
If the entire offering is sold, the net proceeds from the sale of the
common stock, after deducting underwriting discounts and other expenses, are
estimated to be approximately $9,620,000. The net proceeds have been calculated
using an initial public offering price of $2.75 There is no guarantee that we
will receive any proceeds, the following table presents how we intend to use the
proceeds of 25%, 50%, 75% and 100% of the offering. We expect to use the net
proceeds over a 12-month period in approximately the following amounts and
percentages:
Percentage of Offering Raised
-------------------------------------------------------------------------------
25% 50% 75% 100%
--------- ---------- ----------- -----------
Expansion of Mt. Diablo, Ukiah, $ 236,000 $ 717,000 $ 1,440,000 $ 2,405,000
South Bend, Grand Rapids and (10%) (15%) (20%) (25%)
San Diego
Initiate Internet Access $ 47,200 $ 143,400 $ 360,000 $ 577,200
(2%) (3%) (5%) (6%)
Argentina Operations $1,062,000 $2,007,600 $ 2,880,000 $ 3,367,000
(45%) (42%) (40%) (35%)
Peru Operations $ 590,000 $1,195,000 $ 1,584,000 $ 1,924,000
(25%) (25%) (22%) (20%)
Working Capital $ 424,800 $ 717,000 $ 936,000 $ 1,346,800
(18%) (15%) (13%) (14%)
Total $2,360,000 $4,780,000 $ 7,200,000 $ 9,620,000
(100%) (100%) (100%) (100%)
* We intend to expand the Mount Diablo, Ukiah, South Bend, Grand Rapids
and San Diego systems through the purchase of digital compression
equipment in order to digitize the system and to add additional
subscribers through marketing and advertising and the upgrading of
available services. The amounts allocated to the expansion include the
hiring of additional installers and repair personnel as well as
anticipated installation costs.
* We intend to initiate and expand Internet access services through the
acquisition of Internet backbone connections, the purchase of
telecommunications equipment and outsource services, for marketing,
advertising and promotion and for the hiring of technical support
personnel.
* The amounts allocated to the Argentina operation include acquiring
spectrum, purchasing equipment, the hiring of additional installers and
repair personnel as well as anticipated installation costs and general
working capital.
* The amounts allocated to the Peru expansion include acquiring spectrum,
purchasing equipment, the hiring of additional installers and repair
personnel as well as anticipated installation costs and general working
capital.
* Proceeds allocated to working capital will be used to fund our general
operations.
11
In addition to the proceeds we receive from the sale of our shares, one
of the selling shareholders, Continental Capital & Equity Corporation, has
notified us that it wishes for us to register 100,000 shares of common stock
issuable upon exercise of a option at a price of $3.25 per share and another
100,000 shares at a price of $4.25 per share. If Continental Capital & Equity
Corporation exercises these warrants in full, we will receive proceeds of
$750,000. We have also received a request from Union Atlantic LC to register
shares issuable upon the exercise of a warrant to purchase 100,000 shares of
common stock at a price of $3.23 per share. If the warrant is exercised in full,
we will receive total proceeds of $323,000. We intend to allocate those proceeds
among the items in the table in accordance with the percentages set forth beside
each item. We do not know at this time whether either company will exercise any
of the warrants and therefore whether we will receive any proceeds from the
exercise of the warrants.
The above listed use of proceeds represents our best estimate of the
allocation of the net proceeds of this offering based upon the current status of
our business operations, our current plans and current economic conditions.
Future events, including the problems, delays, expenses and complications
frequently encountered by early stage companies as well as changes in
regulatory, political and competitive conditions affecting our business and the
success or lack thereof of our marketing efforts, may make shifts in the
allocation of funds necessary or desirable. Prior to expenditure, the net
proceeds will be invested in short-term interest bearing investment grade
securities or money market funds. Management believes that the funds received
from this offering will exceed our cash flow requirements for more than twelve
months.
No proceeds from this offering will be used to acquire assets or
finance other businesses. However, we hope to continue to acquire spectrum both
nationally and internationally consistent with its corporate objectives and
mission statement.
DILUTION
Our present common stockholders acquired their shares at a cost
substantially below the price at which the shares are being offered in this
offering. Investors purchasing the shares in this offering will, therefore,
incur an immediate and substantial dilution of their investment insofar as it
relates to our resulting net tangible book after completion of the offering.
Our net tangible book value as of March 31, 2000 was $0.0596 per share.
"Net tangible book value" per share represents our total tangible assets less
total liabilities divided by the number of shares outstanding of common stock.
Our net tangible book value after the offering on a pro-forma basis will be
$0.1681 per share assuming that we sell the full number of shares we are
offering. This represents an immediate dilution in net tangible book value per
share of $2.5819 if the entire offering is sold to new investors purchasing
shares at $2.75 per share.
The following table illustrates the per share dilution that you will
experience on a pro forma basis as if the shares offered herein were outstanding
as of March 31,2000. As there is no guarantee that we will receive any proceeds,
the table presents per share dilution assuming receipt of 25%, 50% and 100% of
the offering.
Percentage of offering received 25% 50% 100%
------- ------- -------
Offering price per share $2.7500 $2.7500 $2.7500
Net tangible book value after sales of common $0.0871 $0.1148 $0.1681
12
shares
Dilution to purchasers of shares $2.6629 $2.6352 $2.5819
This information is based on pro forma shares outstanding on March 31,
2000 and excludes all shares issuable upon exercise or conversion of warrants
and convertible securities and shares reserved for issuance pursuant to our 1998
Stock Plan.
13
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following should be read in conjunction with the "Risk Factors"
starting on page 5 of this prospectus and the "Financial Statements" and the
Notes thereto.
We did not generate any subscription revenues by providing wireless
cable services during fiscal 1998 and 1999 respectively. We did not have enough
subscribers in either period to generate revenues sufficient to cover our
operating expenses which totaled $353,075 and $2,383,330, respectively, in
fiscal 1998 and 1999. Our operating expenses included service costs, programming
and license fees, general and administrative expenses, and certain acquisition
expenses resulting from acquiring spectrum. Our expenses increased substantially
in 1999 over those in 1998 as we substantially increased the scope of our
business operations during that period.
During 1998 and 1999, we experienced continuing cash shortages due to
an insufficient subscriber base. The resulting cash shortages rendered us unable
to advertise and aggressively promote our services. Because we have received no
revenues from operations and do not anticipate receiving significant revenues
for the remainder of the year from operations, we have depended and will likely
continue to depend upon equity and debt financing to provide necessary working
capital for the foreseeable future. We have obtained financing primarily from
the following sources, and believe that our primary sources of financing during
the next 12 months will come from the following sources as well as the proceeds
from this offering.
o During the years ended September 30, 1999 and 1998, we received equity
investment of $2,614,074 and $295,000, respectively. This investment
was in the form of issuance of our common stock in various private
placements.
o In October 1999, we received financing of $740,000 from Credit Bancorp,
a Netherlands Antilles company, in the form of a convertible
subordinated debenture. Under the terms of the debenture, we are to pay
Credit Bancorp interest at a rate of 7% per annum over a period of
three years. Principal and accrued interest is convertible into common
stock at the option of Credit Bancorp. Credit Bancorp has notified us
that it has converted the debenture into common stock.
o On April 14, 2000, we entered into a Securities Purchase Agreement with
six investors, for the purchase of investment units, consisting of
common stock, common stock purchase warrants, 4% subordinated
debentures and preferred stock, all which are described below. We refer
to these investors as unit investors in this prospectus. Pursuant to
the Securities Purchase Agreement, the unit investors have purchased
760,000 shares of common stock, warrants to purchase 3,600,000 shares
of common stock and subordinated debentures with a principal amount of
$3,280,000 for a total price of $4,800,000. The unit investors have the
option to purchase additional shares of common stock, warrants and
series A preferred stock from us for a maximum amount of $1,920,000.
The unit investors will be required to purchase these securities if an
effective registration statement under the Securities Act is in effect
with respect to all the common stock issued and issuable upon the
exercise of the warrants and conversion of the subordinated debentures
and series A preferred stock.
During the next 12 months we intend to expand our existing licensed
operations in Mount Diablo, Ukiah, South Bend, Grand Rapids and San Diego,
initiate and expand our Internet service and expand our overseas operations,
primarily in Argentina, Peru and Ghana. We anticipate that our expansion will
14
involve the purchase of significant equipment in Argentina and Peru, and
estimate that the expenditure will be approximately $4,000,000 to $5,000,000. We
also intend to perform additional development on the distributed wireless call
processing system during this period and we anticipate that our expenditures may
be as high as $7,000,000 for research and development depending upon sources and
availability of financing. We currently have 11 full-time employees and
anticipate hiring more employees as we enter new markets. Based on our current
plans, we anticipate that the number of our employees will at least double
during the next 12 months.
As of March 31, 2000, our total working capital was $764,215. Based on
our current cash projections, we anticipate that we will be able to fund our
operations with available cash, cash we receive in this offering and the proceed
of the sale of the securities described above will be sufficient to fund our
operations for the next 12 months. We do not anticipate that we will raise
significant revenues from operations during the next 12 months. If we raise
substantially less than the maximum funding in this offering, or if expenditures
are greater than those which we presently anticipate, our available cash may not
be sufficient to finance our projected operations during this period.
BUSINESS
Introduction
In February of 1997, Worldwide Wireless, Inc., a Nevada corporation,
was formed to coordinate the operations of TSI Technologies, Inc., a Nevada
corporation, and National Micro Vision Systems, Inc., a Nevada corporation. Its
purpose was to complete the development of its patented advanced distributed
wireless telephone and network designs and to finance, manufacture, and market
these units and systems. TSI Technologies, Inc. was the research and development
company formed for the purpose of creating and developing the distributed
wireless call processing system. National Micro Vision Systems, Inc. was formed
to operate a network of wireless Internet sites. In April of 1998, World Wide
Wireless, Inc, TSI Technologies and National Micro Vision Systems, Inc. acquired
Upland Properties, Inc., a Nevada corporation, for stock and transferred their
assets to Upland Properties, Inc. Upland Properties then changed its name to
World Wide Wireless Communications, Inc. and is trading OTCBB under the symbol
WLGS. Both World Wide Wireless, Inc. and TSI Technologies, Inc. remain
significant shareholders in our company, but neither plays a role in our current
operations. National Micro Vision Systems, Inc. is now completely separate from
and unrelated to us.
We have purchased and currently lease a substantial number of
high-speed wireless Internet frequencies in the United States, Argentina, Peru
and Ghana. We are now attempting to market to our wireless Internet frequencies
directly to consumers for use in accessing the Internet and are considering the
possibility of entering into strategic alliances with other companies to market
access to our high-speed wireless Internet frequencies. We plan to purchase or
lease additional wireless Internet frequencies in the United States and abroad.
In addition to acquiring and developing wireless Internet frequencies,
we are also attempting to develop a new generation of wireless cellular
telephone technology that we have named the distributed wireless call processing
system. We believe that this technology may significantly enhance wireless
communications in the future by dramatically increasing cellular telephone
network capacity.
The Industry
Use of the Internet and private communications networks has expanded
and continues to expand rapidly. International Data Corporation estimates that
there were 142 million Internet subscribers at the
15
end of 1998, and projects that this number will grow to over 500 million
subscribers by 2003. Businesses increasingly depend upon data networks, not only
for communication within the office, but also to exchange information among
corporate sites, remote locations, telecommuting employees, business partners,
suppliers and customers. Consumers are also accessing the Internet to
communicate, collect and publish information and conduct retail purchases.
The growth in data traffic is resulting in an increase in the demand
for high-speed access. To accelerate the speed at which data can be transmitted,
service carriers are increasingly relying on broadband, which allows the
transmission of multiple data channels through a single medium. One broadband
medium consists of wireless frequencies which have large bandwidth, or an
ability to transmit large amounts of data in a short period of time.
The FCC has taken steps to increase the availability of frequencies and
bandwidth that may be used by wireless carriers in the United States for such
data transmission. In addition, an FCC ruling in September 1998 allowed license
holders of various frequencies within the band of 2.15 to 2.68 Gigahertz, or
GHz, to offer two-way broadband wireless data services. Previously, these
frequencies had been restricted to one-way video transmissions which limited
their effectiveness for data transmission. The FCC has also increased the
availability of various higher frequencies within the bands of 24 to 40 GHz.
Internationally, these frequencies vary slightly, with the lower frequency
services being between 2.5 to 4.0 GHz and the higher frequency-type services
being offered on frequencies similar to the higher frequencies used in the
United States.
The FCC has also adopted orders to allocate additional spectrum through
auctions during 2000 which can be used by high-speed data transmission service
providers. Opportunities in broadband wireless access are increasing globally as
Europe, Latin America, Asia Pacific and Canada join the United States in
promoting competition in the local communications services market by allocating
frequencies and bandwidth and issuing transmission licenses. In this regard, at
least 26 countries have allocated broadband wireless frequency bands for use or
trials in the last mile, according to Global Telephony.
Deregulation has been a significant catalyst for increased competition
in the long-haul segment of the market and massive spending on network
infrastructure, as incumbent and emerging carriers have sought to address the
growing demand for bandwidth. In the local access segment of the market,
deregulation has also been a significant catalyst for the growing interest in
providing broadband access directly to subscribers. Data services that
historically were offered only by a single provider for a region now may be
offered by a number of competing service providers. This increased competition
has given local service providers compelling incentives to improve data
transmission rates in order to offer additional value-added services to
subscribers. However, bandwidth limitations of the existing infrastructure for
the connection to the subscriber have constrained service providers from
exploiting these opportunities. Links to subscribers typically consist of copper
wires that operate at substantially lower transmission speeds than those offered
in the long-haul segment of a network, or by some available broadband
alternatives. These copper wires were originally intended to carry only analog
circuit-switched, voice signals. As a result, the connection to the subscriber
has become a bottleneck that limits high-speed data transmission.
Alternative technologies for broadband access include:
o Digital subscriber line, or DSL, technology improves the data
transmission rates of a telephone company's existing copper wire
network;
16
o Cable modems, which are designed to provide broadband Internet access
and are targeted primarily at the residential market;
o Fiber-Based Solutions and high-capacity leased lines, which offer the
highest data transmission rate of any of the alternative technologies
for broadband access;
o Point-to-point wireless technology enables data transmission using a
dedicated radio link between two locations; and
o Broadband point-to-multipoint wireless networks, which consist of a
wireless hub that communicates over radio frequencies to transmit and
receive network traffic to and from wireless modems installed at
multiple subscriber locations.
Both incumbent and emerging service providers are emphasizing broadband
wireless technologies for Internet access. Established carriers are expected to
use broadband wireless technology to reach new customers to whom they previously
could not provide access, fill coverage gaps in their existing networks and
deploy value-added services in a cost-effective manner. For example,
International Data Corporation reports that in 1999, Sprint and MCI WorldCom
spent over $1.5 billion to purchase companies holding licenses in these lower
frequencies within the 2.15 to 2.68 GHz range. Emerging carriers may use this
technology to bypass existing wire-based infrastructure and to compete with
incumbent carriers. In addition, this technology may be used to deploy broadband
services in regions where there is no wire-based communications infrastructure.
Estimates of the revenue which lower frequency licenses will generate vary
substantially, but International Data Corporation estimates that revenue
generated by basic services delivered via fixed, non-satellite based wireless
technologies will grow from $767 million last year to $7.4 billion in 2003.
Lower and Higher Frequency Wireless Transmission Systems
We have chosen to focus on acquiring licenses to transmit within the
lower frequency ranges approved by the FCC and used internationally, which are
generally between 2.15 and 2.68 GHz. Although the higher frequencies are large
enough to transmit large amounts of data at once, the higher frequencies have
severe limitations including high costs of build out, very short range of less
than 5 kilometers and severe problems with interference from weather and
atmospheric conditions. Even though they have these limitations, higher
frequency transmissions would appear to have major potential in wireless local
loops, internal wireless networks and intranets.
The lower frequencies approved by the FCC have less bandwidth than
those in the higher frequencies. Nonetheless, we believe that the lower
frequencies have more than enough bandwidth for the great majority of potential
business and residential users. In the United States, which allows 10 watts of
power in transmitting data, the range of the lower frequencies is at least 50
kilometers and transmissions within these frequencies are much less affected by
atmospheric and meteorological phenomena. It is also much less expensive to
install and operate lower frequency transmission services than at higher
frequencies, in part because the greater range of the lower frequencies require
the installation of fewer transmitters.
Both high and low frequency transmissions are transmitted over a
limited number of licensed frequencies that protect data from interference by
other forms of radio or microwave transmitters. It is critical, therefore, that
any company operating or attempting to develop a system of wireless Internet
over these frequencies acquire them as quickly and as inexpensively as possible
and for as many locations and as many channels/bands as possible in each
location.
17
Because of the limitations of higher frequencies as means of
transmissions for Internet access, and because we believe that the more viable
market for wireless high-speed services is in the small to medium-size business
and residential market, we have decided to concentrate exclusively on the lower
frequencies for our Internet access service. In that context, we have been
actively engaged in the acquisition of wireless Internet frequencies in the
United States and especially abroad.
One major technical problem with wireless transmissions within the
lower FCC-approved frequencies has traditionally been that a clear line of sight
was necessary between the transmission and the receiver. This limitation allowed
these frequencies to be used only in areas with even terrain and no
obstructions, insofar as buildings and hills would often disrupt transmissions.
Although these problems persist with the lower frequencies, there have been
recent developments which have shown a potential for reducing these problems.
Cisco Systems, Inc. has recently announced the development of Vector Orthogonal
Frequency Division Multiplexing, which purportedly has the ability to reassemble
multi-path signals at the receiving point so that they appear to arrive in a
single stream from one location, even if obstacles are in the path of the
original signal. (Communications Daily, MMDS Industry Gears Up on Standards
Issues, Spectrum Planning, April 3, 2000). This would have the effect of
significantly reducing the line of sight problem and, we believe, will enhance
lower frequency transmissions as a medium for Internet access.
A part of the spectrum which the lower frequencies occupy consist of
frequencies referred to as Instructional Television Fixed Service. These
frequencies are reserved by federal law to television broadcasting by religious,
educational or other nonprofit groups. An increasing number of providers of data
transmission are leasing transmission rights of the holders of Instructional
Television Fixed Service licenses. As we discuss below, we have leased a number
of these frequencies from a nonprofit organization.
International Broadband Use
We believe that international markets offer enormous potential for
growth. Although use of the Internet has grown substantially internationally, we
believe that the combination of obsolete equipment and newly privatized systems
in many countries provide us with great opportunity. The technology we employ
allows countries such as Ghana and Argentina to establish an up-to-date,
high-speed, broadband wireless Internet system equal to any on the most
developed nations with very little infrastructural costs. The same will be true
in the many other countries throughout Asia, Latin America, Africa, the Middle
East and Europe in which we are actively seeking wireless frequencies.
We believe that our approach to providing high-speed, broadband, fixed
wireless Internet service will make our service available to a broader customer
base than is possible with certain other fixed wireless services. By
concentrating on the acquisition of relatively low-frequency spectrum, we can
provide service over a substantially larger market of customers, with enhanced
propagation properties, and for substantially lower cost than can be offered by
higher-frequency wireless services. It is our belief that the bandwidth and
speed of our service will meet the requirements of at least 90% of the potential
high-speed wireless Internet customer base, and we hope to be able to provide
this service more economically and with greater reliability than our
competition. In the international market, we should be able to provide a quantum
leap in the quality of Internet service beyond that which currently exists and
at a price point similar to that being charged by providers of the current
service.
18
Our strategy
Our activities are currently divided into three categories:
o Acquisition of Wireless Internet Frequencies - Spectrum;
o Development of Wireless Frequencies - Build Out; and
o Development and Licensing of Distributed Wireless Call Processing
System.
Acquisition of Wireless Internet Frequencies - Spectrum
We have determined that our primary target for acquisition of wireless
frequencies will be in the frequency range within the United States of 2.5GHz to
3.0GHz and in similar frequency ranges up to around 5.0GHz internationally. With
these frequency ranges we believe that we will be able to provide the highest
quality, broadest band, and fastest service and the most reasonable costs to the
largest number of potential customers. By positioning ourselves to provide
enhanced connectivity to the largest number of people, we believe that we will
play a significant role in the expansion of this remarkable technological
development in both the short and long term.
Prior to 1999, we controlled licenses in only three locations - the
East Bay region of San Francisco, California, northern San Diego County,
California, and South Bend, Indiana. Since the beginning of 1999, we have
acquired rights - either through long-term leases with options to purchase or
outright purchases - to additional spectrum both in the United States and
elsewhere. As of the date of this offering, we lease, own or possess
reversionary rights to licensed frequencies in the following additional
locations:
Location State/Country
Grand Rapids Michigan
Vail Colorado
Aspen Colorado
Key West Florida
Ukiah California
La Grande Oregon
Pierre South Dakota
Casper Wyoming
Entire nation of Ghana, West Africa Ghana, West Africa
Buenos Aires Argentina, South America
Rosario Argentina, South America
Santa Fe Argentina, South America
Corrientes Argentina, South America
Mendoza Argentina, South America
Neuquen Argentina, South America
Cordoba Argentina, South America
Bahia Blanca Argentina, South America
Lima Peru, South America
The licenses in the United States listed in the above table are
currently leased from Shekinah Networks. Pursuant to an Option Agreement with
Shekinah Networks, we paid $500,000 to lease eight Instructional Television
Fixed Service channels for our high-speed wireless Internet connections, as
authorized by the FCC. This agreement also provides us an exclusive option to
lease excess capacity on Shekinah's remaining thirty-two channels, as they
become available. The monthly minimum
19
transmission fee to be paid to Shekinah for each license or application leased,
will be 5% of the gross system receipts or $500, whichever is greater. Each
lease has a term of five years, which may be renewed at our election for an
additional five-year term if the FCC renews the license.
All of the United States licenses described above allow us to broadcast
over frequencies using one-way transmissions only. With the exception of certain
limited provisional licenses granted in various parts of the country, the FCC
has not yet granted long-term two-way transmission licenses for the lower
frequencies. The FCC announced in March 2000 that it would begin to accept
applications for two-way licenses during the week of July 3 through July 10. We
are in the process of preparing our applications for two-way transmissions for
our existing licenses for submission to the FCC within this period.
Development of Wireless Frequencies - Build Out
As spectrum is acquired, we plan to provide high-speed Internet
services, including telephony and videoconferencing services. We plan to join
with local partners and other entities in the industry to form strategic
alliances in connection with the use and implementation of high-speed wireless
services. We may also provide services directly to users of Internet services.
As of the date of this prospectus, and except as described below, we have not
yet entered into any strategic alliances.
We are currently operating a single system off of Mt. Diablo in
Concord, California, an area some thirty miles east of San Francisco. The
license at Mt. Diablo is one of only two one-channel licenses that we control,
with all the remaining ones being at least four channels. Revenue generating
service commenced in this location in December 1999. Because the high-speed
wireless component of the Mt. Diablo operations is only available in downlink
mode, we have been aware from the outset that the operations in the Concord area
would not be typical for the more conventional two-way systems. However, because
the FCC has not yet approved permit applications for two-way transmissions
within these frequencies and because of the specific demographics within the
potential Mt. Diablo transmission area, we determined to commence the
limited-type of service close to our headquarters in Oakland. We intend to use
this one-way wireless system in only one additional location - San Diego,
California. The Concord and San Diego operations will use high-speed wireless
transmissions to download information from the internet and similar data
sources, but will use telephone lines, either normal or high-speed, for the
uplink. While this one-way service will provide users with enhanced Internet
connections, it will not offer full-time, always on, high-speed two way wireless
service that our other locations will provide.
We intend to build-out our next domestic system in the small town of
Ukiah, California, some ninety miles north of San Francisco. The FCC has already
granted digital authorization for the Ukiah license and the remaining locations.
The proximity of Ukiah to the corporate headquarters and the relatively compact
demography and geography will provide us with a convenient platform to commence
full bi-directional wireless service. After Ukiah, the domestic build-out
program will include northern San Diego County, South Bend, Indiana, Grand
Rapids, Michigan, Vail and Aspen, Colorado, Key West, Florida, Pierre, South
Dakota and Casper, Wyoming.
We intend to commence operations in Buenos Aires, Argentina during the
first six months of 2000. Preparations have commenced to secure the necessary
backbone connections and transmitter locations in the Greater Buenos Aires
metropolitan area, which contains more than 12 million people. Our ability to
begin transmission over the frequencies is subject to approval of the Comision
Nacional de Communicaciones, or CNC, the governmental agency primarily
responsible for regulating telecommunications in Argentina. We have not yet
received approval by the CNC, and the Argentine government recently announced
that it was placing a freeze on the review of license transfer requests and
transfers of shares in entities holding these licenses. The CNC announced that
the freeze expires on June
20
22, 2000 and we believe that the CNC will ultimately approve our applications
and allow for us to commence offering our wireless services.
If the transfer is approved, we will commence transmitting in Buenos
Aires by as early as July of this year. Shortly thereafter, commencement of
service is planned in Cordoba and Mendoza, both cities with around 2 million
inhabitants. As an initial marketing approach, we expect to establish, jointly
with a current retail establishment, an Internet Cafe in Buenos Aires where we
intend to broadly expose our services to a large number of potential customers.
In Argentina, we will operate through our majority-owned subsidiary, Infotel
Argentina, S.A. We expect to be in operation in all eight cities in which we
have obtained licenses within eighteen months and hope to expand the number of
licenses currently owned. With the current licenses, our transmission range in
Argentina will cover approximately 50% of the country's 33 million inhabitants.
We do not have Internet access or other service agreements in Argentina with any
customers at this time.
We intend to begin operations in Peru this year. We have acquired all
of the shares of Digital Way, S.A., which presently owns a wireless transmission
license in Lima/Callao and is in the process of attempting to secure additional
licenses in that area as well as licenses for five different cities in Peru. We
have yet to receive governmental consent in Peru for the transfer of the control
of Digital Way's licenses. We will not be able to commence our Internet service
in Peru until we obtain that consent.
We intend to commence service in Ghana, West Africa this year. Although
Ghana has a much smaller economy than Argentina, fewer people and less computer
penetration, we believe that Ghana and other neighboring West African nations
provides us with significant revenue potential. Like Argentina, such public
locations for service such as Internet cafes and the country's Post Office
Department are likely starting places for revenue service. In addition, we
believe that the stable political situation in Ghana and the continuing
relatively fast-pace of economic growth bodes well for an ever-increasing demand
for Internet service. We have been informed that we need to reapply for the
licenses we acquired in Ghana on the ground that the original recipient of the
license never used the licenses. We are eligible to reapply for the license upon
the delivery of a development plan to the National Communications Authority in
Ghana and believe we will be granted the license, although we are not certain
whether we will receive that license.
We have entered into a letter of intent with El Salvador
Telecomuniciones S.A. de C.V. for the purpose of acquiring a 25% ownership
interest in that company in El Salvador. Pursuant to the terms of the letter of
intent, we have paid $1,000,000 to that company as an advance payment of the
purchase price, which was to total $3,500,000. The agreement provides that the
purchase was conditioned upon that company's acquisition of certain licenses and
the occurrence of certain other conditions which have not been met. As a result,
we believe that it is improbable that the sale will occur and we are seeking
return of the $1,000,000 payment.
We have applied for licenses in the 3.5 GHz range in Germany and the
Czech Republic. We are awaiting a definitive response on those applications. In
addition, we are exploring additional markets in Europe - including Portugal as
well as much of Eastern Europe - for expansion of our services.
We expect that, in the case of any future acquisition of licensed
frequencies, we will operate the systems alone, do so in joint ventures with
local entities, or transfer the licenses to third parties for significant
consideration.
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Development and Licensing of Distributed Wireless Call Processing System
We are completing the development of our distributed wireless call
processing system. The major feature of the system is that it allows individual
cell phones and other communications units to amplify signals, thereby reducing
the need for repeater stations. The system allows every handset itself serves as
a mobile, low-power repeater site, and each unit facilitates the operation of
the entire local network within a radius of 10-20 miles. A whole continent
populated with these units would theoretically have no need for infrastructure
support of any kind. In practice, we or parties to whom we license the system
will build widely scattered gateway sites that will serve to introduce local
signals into long lines, international and satellite service providers and
introduce data signals into destination networks while providing a medium for
our generation of an ongoing revenue stream.
We expect that there will be a dramatic increase in total network
capacity and in individual and traffic-form capacities resulting from the use of
the distributed wireless call processing system. This transmission technique,
implemented in the chipsets that are the core of the new technology, embodies
very low power transmissions along multiple routes between two mobile or
stationary points on the network. The result is a large group of transmission
paths blanketing the entire cell compared to the hub and spoke transmissions
between the central node and the multiple users of a traditional cellular
system. The multiplicity of routes between any two points that is possible with
this fabric generates an aggregate capacity for the network that far exceeds a
hub and spoke system, where multiple transmission paths converge on a single
hub, quickly consuming the available radio frequency in the cell.
The low transmission power needed for this system have the further
potential to allow this new technology to be overlaid on existing wireless
cellular installations without interfering with existing signals in the same
frequency. As a result, the new technology has the potential to provide
overbuild capacity, incremental returns on investments in frequency, and
introduction of new, high-value data and non-voice services on cellular
franchises already in place.
This new technology is currently being engineered to operate in, among
other frequencies, the PCS frequency bands and in so-called free or unlicensed
frequency bands in the United States. It is readily adapted to other frequencies
- - military frequencies and frequencies that may be allocated by foreign
governments.
By licensing or otherwise transferring this technology to third parties
and retaining a substantial royalty interest in it, we believe that we will be
able to concentrate on our core business while retaining the potential for a
significant revenue stream.
Investors should be aware that this system is largely untested and is
not widely used, and we cannot ensure that an increase in usage will actually
result. We are currently having feasibility studies conducted on the distributed
wireless call processing system to evaluate its capabilities and market
potential.
Acquisitions
On December 1, 1999, we signed an agreement to acquire 51% of Infotel
Argentina, S.A., the owner of wireless transmission licenses in eight of the
largest cities in Argentina, including Buenos Aires. Under the agreement, we
will appoint the majority of Infotel's directors and will be in charge of its
management. The purchase price for Infotel Argentina S.A. consisted of $900,000
in cash and 454,545 shares of common stock. The Agreement allows us to rescind
the purchase in the event that the CNC does not approve the sale of Infotel
Argentina S.A. to us and receive repayment of the purchase price.
22
On February 10, 2000, we signed an agreement to purchase Digital Way,
S.A., a Peruvian telecommunications company. Digital Way currently owns licenses
for spectrum in the 2.3 to 2.5 GHz range, has national and international
long-distance concessions as well as value added licenses for services in Peru.
This acquisition requires the approval of the relevant agencies of the Peruvian
government.
Business Locations
Our business headquarters is located at 520 Third Street, Oakland,
California, 94607. We also have offices located in Concord, California and
Buenos Aires, Argentina. Our office space at One Post Street, San Francisco, was
leased on a month-to-month basis. We vacated these offices on August 31, 1999.
The actual rent paid, for the fiscal year ended September 30, 1999, was $22,341.
In April 1999, we entered into a 5-year lease for approximately 6,000
square feet of office space in Jack London Square, Oakland, California. The
lease commenced on June 5, 1999. The triple net rental agreement is for $10,038
per month during the first year. The lease provides for an annual increase based
on the indexed cost of living adjustments. Additionally, the lease provides for
the landlord's participation in partial reimbursement over the terms of the
lease to us for leasehold improvements for which we pay. We began to occupy this
space on September 1, 1999. The minimum annual rent is $120,456 for the fiscal
years ended September 30, 2000, 2001, 2002 and 2003, and $81,642 for the period
October 1, 2003 to June 4, 2004.
We also entered into a lease for office space to operate its network
operation center at 2962 Treat Boulevard, Suite C, in Concord, California 94518.
The triple net rental agreement is for $1,890 per month. The lease provides for
an annual increase based on the indexed cost of living adjustments.
Additionally, the lease provides for the landlord's participation in partial
reimbursement over the terms of the lease to us for leasehold improvements we
make. We commenced its occupation of this 1680 square foot space on May 1, 1997.
The lease expired on April 30, 2000. We are now occupying the premises on a
month-to-month basis.
We have lease space by virtue of our acquisition of Infotel Argentina.
The lease is for approximately 1,500 square feet and is leased on a
month-to-month basis. The monthly rent is approximately $2,000 per month. The
lease started on January 1, 1999 and expires on December 31, 2003.
Regulation
We intend to offer our services exclusively over licensed frequencies
in each of the countries in which we operate. In the United States, our
frequencies are licensed by the Federal Communications Commission, in Argentina,
by the Comision Nacional de Comunicaciones, in Peru by the Telecommunications
Concessions Department of the Ministry of Transport, Communciations, Housing and
Construction and in Ghana by the National Communications Authority. We are
either applying directly for licenses in some countries or applying jointly with
local partners in others. Some countries require, for example, domestic control
of any entity licensed to use radio frequency within their territory.
Within the United States, we operate under licenses issued by the FCC.
These licenses are issued in the 2.5 GHz frequency range and can be revoked if
the licensee or its assignee is in violation of any of the operation provisions
under the license. The licenses are issued in the United States for a fixed
23
time period and can be renewed. Yearly reports are required to be filed with the
FCC to establish that the licensee or its assignee is complying with the
requirements of the license.
Outside the United States, rules and regulations are quite varied. In
Argentina, the proposed frequencies for licenses are between 2.4 GHz and 2.6 GHz
and are granted by the CNC. Licenses are granted for periods of 10 years, but
may be extended for lengthier periods at the discretion of the CNC. In Peru,
frequencies for licenses are also between 2.4 GHz and 2.6 GHz and are granted
for periods of 20 years and in Ghana licenses may be of unlimited duration. As
in the United States, licenses may be revoked if the licensee violates any of
the license provisions. There are significant differences in the clarity of
regulations as well as in the consistency of their enforcement by the regulatory
authorities, and changes in governments may result in substantial changes in the
enforcement of regulations. For example, in Ghana the National Communications
Authority has taken over responsibility for the issuance of licenses from the
Ghana Frequency Registration and Control Board. Several licenses which we have
acquired in that country were originally issued by the Frequency Registration
and Control Board, which subsequently sold licenses for the same frequencies to
third parties after that agency no longer had authority to regulate license
approvals. We are attempting to limit our involvement to countries in which,
historically, such changes in administration have not created disruptions for
license holders, although our experience has shown that it is not always
possible to do so.
In addition to these laws, our business operations also make us subject
to laws pertaining to transmitters of information over the Internet. The law
relating to liability of Internet service providers and online service providers
for information carried on or disseminated through their networks is currently
unsettled. A number of lawsuits have sought to impose liability for defamatory
speech and indecent materials. A recent federal statute seeks to impose
liability, in some circumstances, for transmission of obscene or indecent
materials. In one case, a court has held that an online service provider could
be found liable for defamatory matter provided through its service, on the
ground that the service provider exercised active editorial control over
postings to its service. Other courts have held that Internet service providers
and online service providers may, under certain circumstances, be subject to
damages for copying or distributing copyrighted materials. The
Telecommunications Act of 1996 prohibits, and imposes criminal penalties and
civil liability for using, an interactive computer service for transmitting
indecent or obscene communications. Although we intend to conduct our operations
in a manner which reduces the risk of liability under these laws, we cannot
assure you that we will avoid liability entirely under these laws.
Patents/Intellectual Property
We recently received from the United States Patent and Trademark Office
a patent pertaining to the distributed wireless call processing system, which
has been issued patent number 6,055,429. We do not have other patents pending
pertaining to other technologies.
We currently use the service mark "World Wide Wireless Communications"
and have applied to register the service mark consisting of both the name itself
and a design logo with the United States Patent and Trademark Office. We
presently intend to change our corporate name from World Wide Wireless
Communications, Inc. to another name in the near future.
Litigation
On August 26, 1999, we filed suit against Credit Bancorp, in U.S.
District Court in San Francisco, regarding improprieties on the part of Credit
Bancorp relating to the August loan. The case was settled on October 11, 1999.
As part of the settlement agreement, Credit Bancorp agreed to convert the
24
original loans granted to us to a convertible debenture in the amount of
$740,000. On October 11, 1999, we issued a convertible unsecured debenture for
$740,000 to Credit Bancorp in settlement of this obligation. The terms of this
convertible unsecured debenture are 7% interest per annum payable, semiannually
on the last day of February and September, with the principal due September 30,
2002. All amounts of unpaid principal and accrued interest of this debenture are
convertible at any time at the conversion price of $1.60 per share of
unregistered, restricted shares of our common stock. Credit Bancorp's receiver
has agreed to convert principal and accrued interest owing on the debenture into
482,734 shares of our common stock.
In November 1999, the SEC filed suit against Credit Bancorp alleging
violations of various securities laws in connection with its actions in relation
to us and others, and seeking various forms of relief including disgorgement of
its illegal gains. A receiver has been appointed to administer the affairs of
Credit Bancorp. At this time, management believes that if the suit is
successful, certain benefits may accrue to us, including monetary remuneration.
25
MANAGEMENT
Our executive officers and directors and their ages as of April 30,
2000 are as follows:
Name Age Position Period of Service
- ---- --- -------- -----------------
Douglas P. Haffer..... 52 Chairman of the board, April 1998 to present
CEO and CFO
Wayne Caldwell........ 48 Director, vice president November 1999 to present
and secretary
Dana Miller........... 40 Vice president May 1998 to present
Ramsey Sweis.......... 34 Director May 1998 to present
Robert Klein.......... 51 Director May 1998 to present
Douglas P. Haffer has practiced law in San Francisco, Beverly Hills,
and Washington D.C. for twenty-five years. During that time he has served as
general counsel and/or vice president, and on the Board of Directors, of several
corporations, including Commercial Bank of San Francisco, Aca Joe Inc., Finet
Holdings Corporation, Worldwide Wireless Inc. and Uniprise Systems,
Incorporated. His legal practice concentrated primarily on providing legal
counseling to small or start-up businesses. In addition, a significant part of
his practice contained an international aspect involving foreign investors
seeking investment platforms in the United States. Mr. Haffer attended the
University of Wisconsin, Madison from 1965 to 1969 where he received his
Bachelor of Arts degree with honors with a major in Latin American history, and
was elected to Phi Beta Kappa. He then attended the Harvard Law School from
which he graduated in 1972 with a Juris Doctor degree. Mr. Haffer lived in Latin
America for seven years and reads, writes and speaks Spanish fluently. He has
been a lecturer and adjunct professor of law at the University of San Francisco
Law School and at the Law School at the University of California at Davis.
Wayne Caldwell has served as Vice President and General Counsel since
November 1999. Mr. Caldwell is responsible for legal, governmental and
regulatory matters. Prior to joining World Wide Wireless Communications, Inc.,
Mr. Caldwell was in private practice for two decades specializing in business
and regulatory law. Mr. Caldwell is a graduate of Stanford University in
economics and received his law degree from the University of San Francisco.
Dana Miller was Director of Licensing and Acquisition for National
Micro-Vision Systems, Inc. from 1994 to 1996. He worked extensively with the
Federal Communications Commission and FCC legal counsel and was responsible for
compliance with all FCC regulations. Mr. Miller also coordinated acquisitions of
microwave television licenses throughout the United States. He has negotiated
FCC lease agreements with educational institutions and nonprofit organizations.
From 1996 to 1998 Mr. Miller was a self-employed telecommunications consultant.
He is an expert in FCC license application, FCC petition, and license
acquisition and maintenance. His accomplishments include resolution of a recent
long-term, complex conflict between us and a second national wireless firm,
freeing us up to implement high-speed wireless Internet operations in the San
Francisco metropolitan area.
Ramsey Sweis has had extensive experience in management and in the
product design industry. He has been a leader and developer of high performance
teams by enabling, training and motivating team members. In the recent past he
has provided computer and engineering services to General Motors and Chrysler
Corporation. In connection with those activities Mr. Sweis has developed designs
between engineering, prototype models, tooling and vendor sources. Mr. Sweis
resides in Roseville, Michigan. He has extensive experience in the product
design industry. He currently serves as a Program Manager for Hanke Training &
Design of Clawson Michigan. From 1997 to 1999 Mr. Sweis served as a designer
26
for Computer and Engineering Services of Auburn Hills, Michigan From 1991 to
1997, Mr. Sweis was a design leader for Megatech Engineering of Warren Michigan.
Robert Klein's experience includes an active twenty-year career in the
securities industry handling a wide range of duties including management roles
and institutional trading. For the past fifteen years a major emphasis has been
placed on packaging complex transactions on behalf of corporate clients
resulting in the creation and sale of marketable securities. The past five years
has been spent on public company development. Since 1992, Mr. Klein has been
self-employed through Weissgeld Capital Group, Ltd, a company he founded. In the
past, he served as a director for three brokerage firms, including Yorkton
Securities. He is currently a director of Spectrum Oil Corp. Mr. Klein has a
degree in Applied Mathematics from the University of Waterloo, and an FCSI
designation from the Canadian Securities Institute.
Director Compensation
Directors receive no compensation for serving as directors, except
that:
o Mr. Sweis received options to purchase 250,000 shares of common stock
on October 22, 1998, at an exercise price of $0.095 per share. All of
Mr. Sweis ' options vested immediately upon the date of grant. The
expiration date for Mr. Sweis to exercise the options is October 21,
2003. To date, Mr. Sweis has not exercised any options for shares of
common stock.
o Mr. Klein received options to purchase 250,000 shares of common stock
on October 22, 1998, at an exercise price of $0.095 per share. All of
Mr. Klein ' options vested immediately upon the date of grant. The
expiration date for Mr. Klein to exercise the options is October 21,
2003. To date, Mr. Klein has not exercised any options for shares of
common stock.
Employment Contracts
We have entered into an employment agreement with Mr. Haffer, which
provides for an initial term of three years commencing February 1, 2000 at an
initial annual base salary of $230,000 plus an annual performance bonus of not
less than $34,000. Any bonus in excess of $34,000 will be at the sole discretion
of our Board and will not be tied to a fixed set of objective criteria. Mr.
Haffer's employment agreement also contains a termination provision that
requires us to pay him his annual compensation and minimum bonus amounts
remaining on his three-year contract if he is terminated without cause.
In October of 1999, we entered into a three-year employment agreement
with Mr. Caldwell under which he will receive an annual salary of $48,000. Under
the terms of the agreement, on May 8, 2000, Mr. Caldwell's base salary will be
increased to $72,000 per year, and on November 8, 2000, Mr. Caldwell's salary
will be increased to $96,000 per year. The agreement also provides for an annual
performance bonus of not less than 5% of his base salary and not more than 100%
of his base salary. The decision to grant the bonus and the amount of the bonus
can be decided by management without the consent of our Board of Directors. We
have not established a fixed set of performance criteria on which to base Mr.
Caldwell's bonus amounts. Mr. Caldwell's employment agreement also contains a
termination provision that requires us to pay him his annual compensation and
minimum bonus amounts remaining on his three-year contract if he is terminated
without cause.
In May of 1999, we entered into a two-year employment agreement with
Mr. Miller under which he will receive an annual salary of $96,000. Mr. Miller
is not entitled to receive any bonuses. Under the
27
terms of the employment agreement, we issued Mr. Miller 179,000 shares of common
stock in lieu of payment of $17,000 towards a past obligation of $37,000 and the
company acknowledged that we paid Mr. Miller $20,000 for the balance of these
fees. Mr. Miller's employment agreement states that he is entitled to receive
stock options on the same terms as those granted to our management, although the
specific number of shares and other terms of the options are not specified. If
Mr. Miller is terminated without cause, he will be entitled to receive his
salary for a period of three months after termination.
28
EXECUTIVE COMPENSATION
The following table summarizes information regarding the salary and
bonus we paid to Mr. Haffer, our Chief Executive Officer, during the fiscal year
ended September 30, 1999. Mr. Haffer was the only officer who received a salary
plus bonus that exceeded $100,000 during that period.
Summary Compensation Table
Restricted Securities
stock Underlying
Name and Principal Position Salary Bonus award Options/SAR
- --------------------------- ------ ----- ----- -----------
Douglas P. Haffer 106,000 0 -- 800,000
Chairman, CEO and CFO
Option Grants
The following table sets forth information concerning grants of stock
options to each of our executive officers and directors for the fiscal year
ended September 30, 1999. All options were granted under the 1998 Stock Option
Plan. Shareholders never approved our 1998 Stock Option Plan, and therefore, all
incentive stock options granted under the 1998 Stock Option Plan are classified
and taxed as non-statutory stock options.
Individual Grants
Number of Percent of
Securities options Options
Fiscal Year Underlying granted to Exercise Exercised
Options Options employees Price as of Expiration
Granted Granted from 8/22/98 ($/Share) 4/30/00 Date
------- ------- ------------ --------- ------- ----
Douglas P. Haffer ................ 1998 800,000 43% $0.095 0 10/22/03
Chairman, CEO & CFO 2000 800,000 $1.62 0 2/1/05
Wayne Caldwell ................... 1999 800,000 21% $0.63 0 10/27/05
Vice Pres. & Secretary
Dana Miller ...................... 1998 800,000 21% $0.095 0 8/22/03
Vice President
Ramsey Sweis ..................... 1998 250,000 7% $0.095 0 10/22/03
Director
Robert Klein ..................... 1998 250,000 7% $0.095 0 10/22/03
Director
In October 1998, Mr. Haffer received an option to purchase 800,000
shares of our common stock at an exercise price of $0.095 per share. All 800,000
shares vested immediately. The expiration date is 5 years from the date of
grant. The grant of shares was intended to be an incentive stock option, but our
shareholders never approved the plan and; therefore, the options are being
classified as non-statutory stock options. On February 1, 2000, Mr. Haffer
received another option to purchase 800,000 shares of our common stock at an
exercise price "at the lowest price permitted under our 1998 Stock Option Plan
29
such that the grant or exercise of the options will not create a taxable event."
All 800,000 shares vested immediately. The expiration date of the option is 5
years from the date of grant. The option will be treated as non-statutory stock
options.
In October 1999, Mr. Caldwell was granted an option for 800,000 shares
of our common stock at an exercise price of $0.66 per share. All 800,000 shares
vested immediately. The expiration date is five years from the date of grant.
In October 1998, Mr. Miller received an option to purchase 800,000
shares of our common stock at an exercise price of $0.095 per share. All 800,000
shares vested immediately. The expiration date is five years from the date of
grant.
In October 1998, Mr. Sweis received an option to purchase 250,000
shares of our common stock at an exercise price of $0.095 per share. All 250,000
shares vested immediately. The expiration date is five years from the date of
grant.
In October 1998, Mr. Klein received an option to purchase 250,000
shares of our common stock at an exercise price of $0.095 per share. All 250,000
shares vested immediately. The expiration date is five years from the date of
grant.
1998 Stock Option Plan
Our Board of Directors adopted a 1998 Stock Incentive Plan in August
1998 reserving 3,000,000 shares for issuance. The Plan provides for the grant of
incentive stock options, as defined in Section 422 of the Internal Revenue Code,
to our officers and employees, and nonstatutory stock options to employees,
directors and consultants. It may be administered by the Board of Directors or
delegated to a committee. Shareholders never approved our 1998 Stock Option
Plan, and therefore, all incentive stock options granted under the 1998 Stock
Option Plan are classified and taxed as non-statutory stock options.
The exercise price of incentive stock options granted under the 1998
Stock Option Plan must be at least equal to the fair market value of our common
stock on the date of grant. However, for any employee holding more than 10% of
the voting power of all classes of our stock, the exercise price will be no less
than 110% of the fair market value on the date of grant. Nonstatutory stock
options granted to a person who at the time the option is granted does not hold
more than 10% of the voting power of all classes of our stock will have an
exercise price of no less than 85% of the fair market value of the stock on the
date of grant.
Options granted to our employees will become exercisable over a period
of no longer than 5 years, and no less than 20% of the shares covered will
become exercisable annually. No options will be exercisable prior to one year
from the date it is granted unless the Board specifically determines otherwise.
In no event will any option be exercisable after the expiration of 10 years from
the date it is granted, and no Incentive Stock Option granted to a holder of
more than 10% of the voting power of all classes of our stock will be
exercisable after the expiration of 5 years from the date it is granted.
If an optionee's status as an employee with us terminates for any
reason, other than death or disability, then the optionee may exercise Incentive
Stock Options in the three-month period following such cessation. The
three-month period is extended to 12-months for termination due to death or
disability. In the event of a merger or consolidation in which we are not the
surviving entity, or a sale of all or substantially all of our assets or capital
stock, if the surviving entity does not tender to the optionees stock options or
capital stock of substantially the same economic benefit as optionees
unexercised
30
options, then the Board may grant to optionees the right to exercise any
unexpired options for a period of thirty days.
The 1998 Stock Option Plan will terminate in July 2008, unless sooner
terminated by the Board of Directors.
PRINCIPAL AND SELLING SHAREHOLDERS
The following table sets forth the beneficial ownership of our common
stock as of April 30, 2000 and as adjusted to reflect the sale of the shares of
common stock offered hereby:
o the chief executive officer, each of the executive officers named in
the summary compensation table and each of our directors;
o all executive officers and directors as a group;
o each person or entity who we know beneficially owns more than 5% of our
outstanding shares of common stock; and
o each selling shareholder. We will not be selling the 5,780,916 shares
owned by those shareholders.
Except as otherwise indicated, and subject to applicable community
property laws, the persons named in the table have sole voting and investment
power with respect to all shares of common stock held by them.
Applicable ownership is based on 83,445,517 shares of common stock
outstanding as of April 30, 2000. Beneficial ownership is determined in
accordance with the rules of the SEC. Shares of common stock subject to options
or warrants that are presently exercisable or exercisable within 60 days of
April 30, 2000 are deemed outstanding for the purpose of computing the
percentage ownership of the person or entity holding options or warrants, but
are not treated as outstanding for the purpose of computing the percentage
ownership of any other person or entity. If any shares are issued upon exercise
of options, warrants or other rights to acquire our capital stock that are
presently outstanding or granted in the future or reserved for future issuance
under our stock plan, there will be further dilution to new public investors.
Selling shareholders are under no obligation to sell all or any portion
of their shares. Particular selling shareholders may not have a present
intention of selling their shares and may sell less than the number of shares
indicated. The following table assumes that the selling shareholders will sell
all of their shares.
Named Executive Officers and Directors (1)
Number of Percentage of Number of
Shares Shares Outstanding Shares
Beneficially Prior to After Being
Owned Offering Offering Offered
----- -------- -------- -------
Douglas P. Haffer (2)............. 8,511,073 10.01 9.56
Wayne Caldwell (3)................ 800,000 * *
Dana Miller (4)................... 1,229,000 1.46 1.39
Ramsey Sweis (5).................. 250,000 * *
31
Robert Klein (6) ................. 250,000 * *
Executive Officers and
Directors as a Group ........... 11,040,073 12.67 12.11
Name of Beneficial Owners
- -------------------------
World Wide Wireless, Inc. (7) 16,120,679 19.32 18.44
c/o Lofton & Associates
3233 East Broadway
Long Beach, CA 90803
Kenn Olson (8) 6,356,260 7.54 7.20
3233 East Broadway
Long Beach, CA 90803
TSI Technologies, Inc. 6,042,020 7.24 6.91
One Post Street, Suite 2600
San Francisco, CA 94104
Albert and Francis Kutcher 5,180,300 6.21 5.92
12052 Linda Flora Drive
Ojai, CA 93023
Name of Selling Shareholder
- ---------------------------
Patrick McCleary 350,000 * * 350,000
1215 Wildwood Road
Boulder, CA 80303
Darryl Pohl 1,400,000 1.68 * 1,400,000
c/o Solomon Smith Barney
2420 NW Professional Drive,
Suite 200
Corvallis, OR 97330
Ridge Capital Associates LLC 1,818,182 2.18 * 1,818,182
1688 Meridian Avenue, Suite 801
Miami Beach, FL 33139
Behrooz Sarafraz 2,182,500 2.62 1.42 1,000,000
2 Mariposa Court
Tiburon, CA 94920
Chalmers R. Jenkins (9) 400,000 * * 400,000
10727 E. San Salvador Drive
Scottsdale, AZ 85228
Joseph W. Hubbard 20,000 * * 20,000
26573 Basswood
Rancho Palos Verdes, CA 90274
32
Continental Capital & Equity
Corporation (10) 210,000 * * 210,000
195 Wekiva Springs Road, Suite 200
Longwood, FL 32779
Credit Bancorp (11) 482,734 * * 482,734
1144 Hooper Avenue Suite 203
Toms River, NJ 08753
Union Atlantic LC (12) 100,000 * * 100,000
3300 PGA Blvd., Suite 810
Palm Beach Gardens, FL 33410
<FN>
- ---------------
* Less than 1%.
(1) The address for each of the named executive officers and directors is
c/o World Wide Wireless Communications, Inc., 520 Third Street, Suite
101, Oakland, CA 94607.
(2) Includes 1,600,000 shares subject to options that are immediately
exercisable.
(3) Includes 800,000 shares subject to options that are immediately
exercisable.
(4) Includes 800,000 shares subject to options that are immediately
exercisable. In addition, we are informed that Mr. Miller is entitled
to receive 250,000 shares of our common stock which are presently held
by World Wide Wireless, Inc. and have included those shares in the
table.
(5) Includes 250,000 shares subject to options that are immediately
exercisable.
(6) Includes 250,000 shares subject to options that are immediately
exercisable.
(7) We believe that Michael Lynch is a majority owner of World Wide
Wireless, Inc. and TSI Technologies, Inc. Mr. Lynch is not an officer
or director of our company. No officer or director of either World Wide
Wireless, Inc. or TSI Technologies is an officer of our company.
(8) Includes 800,000 shares that Mr. Olson may be entitled to receive upon
the exercise of a stock option he was granted while he was an officer
and director.
(9) Consists of 400,000 shares issuable to Mr. Jenkins in connection with a
settlement agreement between Mr. Jenkins and us.
(10) Includes 100,000 shares issuable upon the exercise of options to
purchase shares at $3.25 per share and 100,000 shares issuable upon
options to purchase shares at a price of $4.25 per share.
(11) Consists of shares issuable upon conversion of principal and interest
owing under a convertible subordinated debenture. The operations of
Credit Bancorp have been suspended and a receiver has been appointed
for that corporation. The receiver has notified us that it wishes to
exercise Credit Bancorp's registration rights and thereby convert
principal and interest owing under the debenture.
33
(12) Consists of 100,000 shares of common stock issuable upon an exercise of
a warrant to purchase shares at a price of $3.23 per share.
</FN>
Mr. Jenkins was our Chief Operating Officer from May through November
1999. Behrooz Sarafraz has acted as an independent consultant for us
periodically during the previous three years. Continental Capital & Equity
Corporation has provided public relations services for us. Union Atlantic LC
assisted us in locating the investors who subsequently purchased the units in
the unit offering.
34
CERTAIN RELATED PARTY TRANSACTIONS
As of September 1999, other than employment agreements and stock option
plans, there have been no transactions to which we were a party involving
$60,000 or more and in which any director, executive officer or holder of more
than five percent of our capital stock had a material interest.
DESCRIPTION OF SECURITIES
Common Stock
Our articles of incorporation authorize us to issue a maximum of
100,000,000 shares of common stock, $0.001 par value. As of April 30, 2000,
there were 83,445,517 shares of common stock outstanding. Owners of common stock
are entitled to one vote for each share held of record on all matters to be
voted on by shareholders, except that, upon giving the legally required notice,
shareholders may cumulate their votes in the election of directors. Subject to
the rights of any holders of preferred stock, the owners of common stock are
entitled to receive dividends when, as and if declared by the Board of Directors
out of funds legally available therefore. In the event of a liquidation,
dissolution or winding up of our business, the common stock shareholders are
entitled to share ratably in all assets remaining which are available for
distribution to them after payment of liabilities and preferences to holders of
preferred stock. Holders of common stock have no conversion, preemptive or other
subscription rights, and there are no redemption provisions applicable to the
Common Stock.
We have reserved 3,000,000 shares of common stock that have been
reserved for issuance under our 1998 Stock Option Plan. In addition, we are
obligated to issue 3,600,000 shares of common stock pursuant to the terms of
common stock purchase warrants, dated April 14, 2000, 304,000 shares of common
stock pursuant to the terms of warrants to be issued as of the date of this
prospectus, and additional shares of common stock to be issued pursuant to 4%
Convertible Debentures described below to the unit investors.
Preferred Stock
Our certificate of incorporation does not presently authorize us to
issue any class of stock other than common stock. Pursuant to the terms of a
Securities Purchase Agreement, dated April 14, 2000, between us and various
investors to whom we refer as unit investors in this prospectus, we are required
to submit for shareholder approval an amendment to our certificate of
incorporation that authorizes us to issue preferred stock. The Securities
Purchase Agreement further states that our Board of Directors will authorize the
creation and issuance of a maximum of 1,310 shares of series A preferred stock
following the approval of that amendment by the shareholders and upon the our
receipt of payment of $1,000 per share from those investors listed in the
Securities Purchase Agreement. The unit investors may purchase the series A
preferred stock at any time after the date the series A preferred stock is
authorized, and must purchase the series A preferred stock after we a
registration statement is declared effective with regard to the shares of common
stock the unit investors may purchase pursuant to the Securities Purchase
Agreement.
The series A preferred stock will have a par value of $0.01 per share
and a stated value of $1,000 per share. The series A preferred stock will be
convertible at any time into a number of shares of common determined by dividing
the stated value of the series A preferred stock by the conversion price for
those shares. The conversion price shall be the lesser of 110% of the average of
the closing trading prices of the common stock per share for the five trading
days prior to the date on which the series A
35
preferred stock was originally issued or 85% of the average of the closing
trading prices of the common stock for five days immediately prior to the date
of conversion. If any shares of series A preferred stock have not been converted
prior to April 2005, then all remaining shares of series A preferred stock shall
be automatically converted on that date as if the holder voluntarily elected to
convert those shares.
Holders of the series A preferred stock shall be entitled to receive a
dividend, payable in cash at a rate of 4% per annum of the stated value of the
series A preferred stock. Dividends are payable semi-annually and accrue if not
paid. The liquidation preference on the series A preferred stock is equal to the
stated value per share. This payment shall be prior to any payment we make to
the holders of our common stock or other shares of stock which are junior to the
series A preferred stock.
We must receive approval of our shareholders before we can amend our
certificate of incorporation to allow for the creation of the series A preferred
stock. If we do not obtain that approval for any reason, the investors shall be
entitled to purchase additional 4% Convertible Debentures with an aggregate
principal amount of $1,310,000 instead of the series A preferred stock.
Warrants/Options
We have issued warrants to purchase an aggregate of 3,600,000 shares to
the unit investors. In addition, the unit investors the right to acquire
warrants to purchase an additional 1,440,000 shares of common stock as of the
date of this prospectus. The warrants allow the holders to purchase shares of
our common stock at a price of $3.23 per share. The warrants allow for the
holders to exercise their warrants without the payment of cash by surrendering
shares otherwise purchasable upon exercise of the warrant with a fair market
value equal to the exercise price for the shares they are purchasing. The
exercise price is subject to adjustments if we declare a stock split or dividend
of our common stock and will be adjusted lower on a weighted average basis if we
issue shares of our common stock at below the exercise price of the warrant then
in effect. The warrants are exercisable when issued and have a term of five
years.
We have also agreed to issue to Continental Capital & Equity
Corporation an option to purchase 100,000 shares of common stock at a price of
$3.25 per share and an option to purchase 100,000 shares at a price of $4.25 per
share pursuant to a letter agreement dated March 16, 2000. We have agreed to
issue to Union Atlantic LC a warrant to purchase 100,000 shares of common stock
at a price of $3.23 per share. Both Continental Capital & Equity Corporation and
Union Atlantic LC are selling shareholders.
Subordinated Debentures
We have issued 4% Convertible Subordinated Debentures to the unit
investors with a principal amount of $1,312,000. These debentures require the
payment of interest at a rate of 4% per annum, payable semi-annually, and
principal is due and payable on April 14, 2005. The unit investors may convert
principal and interest owing under the debentures at any time at a conversion
price equal to the lesser of 110% of the average of the closing trading prices
of the common stock per share for the five trading days prior to the date on
which the debentures were issued or 85% of the average of the closing trading
prices of the common stock for five days immediately prior to the date of
conversion. During the first six months after the debentures were issued, the
conversion price may not be less than $2.00 per share and, during the following
six months, will not be less than $1.27 per share. However, if our revenues for
the 12 month period ended December 31, 2000 are less than $13,500,000, there
will be no minimum exercise price. There will be no minimum exercise price
following the end of the second six-month period in any event.
36
The Securities Purchase Agreement provides that we must issue
additional debentures to the investors with the same terms if the investors make
a subsequent investment and if our shareholders do not approve the amendment to
our certificate of incorporation to allow for the creation of preferred stock.
If this occurs, we could be obligated to issue notes with an aggregate principal
amount of $1,312,000 to these investors.
Registration Rights
We have entered into a registration rights agreement, dated April 14,
2000, with the unit investors which requires that we file a registration
statement with the SEC to register under the Securities Act all shares of common
stock issued to them or issuable upon the conversion of the subordinated
debentures and the series A preferred stock (if any is issued) and exercise of
the common stock purchase warrants. We are obligated to file a registration
statement for the shares by May 29, 2000. The registration rights agreement
provides that we must pay all expenses incurred in the registration and certain
expenses of the selling shareholders, including up to $25,000 in the legal fees
of counsel the selling shareholders retain. We are obligated to keep the
registration statement effective with respect to those shares until those shares
are sold or until those shares may be sold pursuant to Rule 144(k) of the
Securities Act. Unless all shares are sold prior to that time, this will require
that the registration statement will need to remain effective for a period of at
least two years under present SEC rules.
The registration rights agreement provides that we must pay the unit
investors liquidated damages equal to 2% of the outstanding subordinated
debentures and series A preferred stock if certain events occur. Principal among
these events are:
o If the SEC does not declare the registration statement for the
registration of the unit investors' shares effective by August 12,
2000;
o If our common stock is delisted from the OTCBB;
o If the shareholders do not approve of the creation of the series A
preferred stock by July 15, 2000.
We have entered into a registration rights agreement with Credit
Bancorp pursuant to which we have agreed to register shares of common stock
issuable upon the conversion of a convertible subordinated debenture issued to
Credit Bancorp. The agreement grants Credit Bancorp so-called piggy-back
registration rights only, which means that we are obligated to include their
shares in registrations which we are filing for public offerings of securities
but does not otherwise require us to register their shares under the Securities
Act. The government appointed receiver of Credit Bancorp has notified us that it
wishes to exercise these registration rights in connection with this offering
and is one of the selling shareholder.
Pursuant to a settlement agreement into which we entered with Chalmers
R. "Bud" Jenkins, one of our former officers, we agreed to register the 400,000
shares issuable to him. Mr. Jenkins is included as a selling shareholder and he
may sell his shares under this prospectus. We have entered into written or oral
agreements with all of the other selling shareholders pursuant to which we have
agreed to register the shares they own or may purchase on the exercise of
outstanding options under the Securities Act.
Transfer Agent
The transfer agent for our common stock is Manhattan Transfer Register
Co., Post Office Box 361, Holbrook, New York, 11741-0361.
37
PRICE RANGE OF COMMON STOCK
Our common stock has been traded on the OTCBB from January 1998 to
present. The security traded under the symbol UPPI from October 1997 through
July 1998. However, there were no inside quotes reported for 1997. The market
for our common stock has often been sporadic and limited.
The following table sets forth in the periods indicated the range of
high and low bid prices per share of our common stock traded as reported by the
OTCBB.
Quarter End Low Bid High Bid
----------- ------- --------
3/31/98 0.25 1.31
6/30/98 0.25 2.05
9/30/98 0.11 0.60
12/31/98 0.09 0.51
3/31/99 0.12 0.51
6/30/99 0.25 3.97
9/30/99 0.875 1.73
12/31/99 0.62 2.01
3/31/00 1.06 7.78
Since our shares began trading on the OTCBB in 1997, the prices for our
shares have fluctuated widely. There may be many factors which may explain these
variations, but we believe that among these factors include the following:
o the demand for our common stock;
o the number of market makers for our common stock;
o developments in the market for broadband Internet access and wireless
transmission in particular; and
o changes in the performance of the stock market in general.
In recent years, the stock market has experienced extreme price and
volume fluctuations that have had a substantial effect on the market prices for
many telecommunications, Internet and emerging growth companies such as ours,
which may be unrelated to the operating performances of the specific companies.
Companies that have experienced volatility in the market price of their stock
have been the object of securities class action litigation. If we become the
object of securities class action litigation, it could result in substantial
costs and a diversion of our management's attention and resources and have an
adverse effect on our business, financial condition and results of operations.
In addition, holders of shares of our common stock could suffer substantial
losses as a result of fluctuations and declines in the stock price.
The trading of our shares is subject to limitations set forth in Rule
15g-9 of the Securities Exchange Act. This rule imposes sales practice
requirements on broker-dealers who sell so-called penny stocks to persons other
than established customers, accredited investors or institutional investors.
Accredited investors are generally defined to include individuals with a net
worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000
together with their spouses during the previous two
38
years and expected annual income of that amount during the current year. For
sales of shares to other persons broker-dealers must make special suitability
determinations, must obtain the written consent of the purchaser to the sale
prior to consummating the sale and is generally prohibited from making
cold-calls or other unsolicited inquiries to purchasers without complying with
these rules. These rules may adversely affect the ability broker-dealers and
others to sell our shares or to sell shares in the secondary market.
39
PLAN OF DISTRIBUTION
We are offering our shares directly to the public as direct placement
or distribution. There is no minimum number of shares that must be sold. There
can be no assurance that all of the shares offered will be sold. Accordingly,
investors will bear the risk that we will accept subscriptions for less than
4,000,000 shares and then be unable to successfully complete all of the
anticipated uses of the proceeds of this offering. If fewer than 4,000,000
shares are sold, our business, financial condition, and results of operations
could be adversely affected.
Funds from this offering will not be placed in an escrow or trust
account and will be available for use as the funds are received. The minimum
investment per shareholder is $4,500 for 1,000 shares of stock. There is no
maximum investment per shareholder. In order to purchase shares, you must
represent to us in writing that the amount of your investment does not exceed
10% of your net worth and you meet one of the following requirements:
o Your income last year was at least $50,000 and your net worth was at
least $75,000, or
o You net worth was at least $150,000, excluding the value of your home.
For the purpose of calculating your net worth, you should not take into
account the value of your home, automobiles or household furnishings.
The shares will initially be sold through our executive officers who
will not receive commissions and who will be registered as sales representatives
where required under state securities laws. We currently intend to solicit
prospective investors directly through in-person communications only. We
currently do not have a broker-dealer involved with the sale of our shares;
however, we anticipate obtaining a broker-dealer to sell our shares on a best
efforts basis. If we do determine to use a broker-dealer, we anticipate paying
that broker-dealer a commission of a maximum of 12% of the investment funds that
broker obtains. Any selected broker-dealer that sells securities in this type of
an offering would be deemed an underwriter as defined in Section 2(11) of the
Securities Act. Prior to the involvement of any broker-dealer in the offering,
that broker must obtain a no objection position from the NASD regarding the
contemplated underwriting compensation and arrangements.
This offering will begin as of the effective date of this prospectus
and continue for twelve months or such earlier date as we may terminate the
offering. If this offering terminates, all subscription payments that we have
not accepted will be promptly returned. Investors may subscribe for the shares
by executing a subscription agreement and delivering that agreement to us plus
the purchase price for the shares to World Wide Wireless Communications, Inc.,
520 Third Street, Suite 101, Oakland, California 94607.
We are not participating in the offering of any of the shares which the
selling shareholders are selling. None of the selling shareholders have informed
us of any arrangements into which they have entered with respect to the sale of
their shares. The selling shareholders are not limited to selling their shares
at the offering price set forth in this prospectus, but rather may sell their
shares at such prices as they choose in their discretion. The selling
shareholders are not obligated to sell any specific number of their shares in
this offering.
The selling shareholders may effect the sale or distribution of their
shares directly to purchasers from time to time on the OTCBB at prices and at
terms prevailing at the time of sale. The shares may be sold by one or more of
the following methods:
40
o a block trade in which the broker or dealer so engaged will attempt to
sell the shares of common stock as an agent, but may position and
resell a portion of the block as principal to facilitate the
transaction;
o purchases by a broker or dealer as principal and resales by that broker
or dealer for its own account pursuant to this prospectus;
o an over-the-counter distribution in accordance with the rules of the
OTCBB;
o in ordinary brokerage transactions or transactions in which the broker
solicits purchasers;
o in transactions otherwise than on any stock exchange or in the
over-the-counter market; or
o pursuant to Rule 144 of the SEC.
The selling shareholders may effect any of these transactions at market
prices prevailing at the time of sale, at prices related to the prevailing
market prices, at varying prices determined at the time of sale or at negotiated
or fixed prices, in each case as the selling shareholder determines, or by
agreement between the selling shareholder and underwriters, brokers, dealers or
agents, or purchasers. We can provide you with no assurance that any of the
selling shareholders will sell any or all of the shares they offer. In effecting
sales, brokers or dealers engaged by the selling shareholders may arrange for
other brokers or dealers to participate. Brokers or dealers may receive
commissions or discounts from the selling shareholders in amounts to be
negotiated prior to the sale. The selling shareholders, and any brokers, dealers
or agents that participate in the distribution of the shares may be deemed to be
underwriters, and any profit on the sale of the common stock by them and any
discounts, concessions or commissions received by any underwriters, brokers,
dealers or agents may be deemed to be underwriting discounts and commissions
under the Securities Act. Under the securities laws of certain states, the
shares may be sold in such states only through registered or licensed brokers or
dealers. In addition, in certain states the shares may not be sold unless they
have been registered or qualified for sale in that state or an exemption from
registration or qualification is available and is met.
LEGAL MATTERS
Certain legal matters in connection with the common stock being offered
hereby will be passed upon by Evers & Hendrickson LLP, 155 Montgomery Street,
12th Floor, San Francisco, California 94104.
EXPERTS
The summary financial data for the years ended September 30, 1998 and
1999 have been derived from the Financial Statements and Notes to Financial
Statements, audited by Reuben E. Price & Co., San Francisco, independent
auditors. These financial statements are included in reliance upon the authority
of that firm as an expert in accounting and auditing.
ADDITIONAL INFORMATION
A registration statement on Form SB-2, including amendments, relating
to the shares offered has been filed with the Securities and Exchange
Commission, Office of Small Business Policy, Washington,
41
D.C. This prospectus does not contain all of the information set forth in the
registration statement and the exhibits and schedules to the registration
statement. Statements made in this prospectus as to the contents of any contract
or other document are not necessarily complete and, in each instance, we refer
you to the copy of the contract or other document filed as an exhibit to the
registration statement. Each statement about those contracts and other documents
is qualified in all respects by that reference.
Following the offering, we will become subject to the reporting
requirements of the Securities Exchange Act of 1934. In accordance with that
law, we will be required to file reports and other information with the SEC. The
registration statement and exhibits and schedules, as well as those other
reports and other information when so filed, can be inspection without charge
and copies, at proscribed rates, at the public reference facilities maintained
by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain
information on the operation of the Public Reference Room by calling the
Securities and Exchange Commission at 1-800-SEC-0300. In addition the Commission
maintains a World Wide Web site on the Internet at http://www.sec.gov that
contains reports, proxy and information statements and other documents filed
electronically with the Commission, including the registration statement.
We intend to furnish our shareholders with annual reports containing
financial statements audited by our independent public accountants and quarterly
reports containing unaudited financial information for the first three quarters
of each fiscal year.
42
Reuben E. Price & Co.
Public Accountancy Corporation
703 Market Street
San Francisco, CA 94103
INDEPENDENT AUDITORS' REPORT
Board of Directors
World Wide Wireless Communications, Inc.
We have audited the accompanying balance sheet of World Wide Wireless
Communications, Inc. (A Development Stage Company), as of September 30, 1999,
and the related statements of operations, statements of cash flows, and
statements of stockholders' equity for the years September 30, 1999 and 1998,
and from inception on September 1, 1994 through September 30, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing standards
of the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of World Wide Wireless
Communications, Inc. as of September 30, 1999 and the results of its operations,
cash flows, and stockholder's equity for the years September 30, 1999 and 1998,
and from inception on September 1, 1994 through September 30, 1999 in conformity
with generally accepted accounting principles of the United States.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3, the Company
has been in the development stage since its inception on September 1, 1994, and
has suffered recurring losses and has a net capital deficiency that raise
substantial doubt about its ability to continue as a going concern. Realization
of a major portion of the assets is dependent upon the Company's ability to meet
its future financing requirements, and the success of future operations, the
outcome of which cannot be determined at this time. Management's plans in regard
to these matters are also described in Note 3. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Reuben E. Price & Co.
January 24, 2000
Except for Note 11 as to which the date is May 15, 2000.
F-1
World Wide Wireless Communications, Inc.
(A Development Stage Company)
Balance Sheet
Assets
------
September 30, 1999
------------------
Current Assets:
Cash and cash equivalents $ 275,082
Prepaid and other 62,740
Total Current Assets 337,822
-----------
Fixed Assets:
Furniture, fixtures and equipment 74,906
Leasehold improvements 261,478
Accumulated depreciation and amortization (13,506)
-----------
Total Fixed Assets 322,878
-----------
Other Assets:
Option on Frequency Licenses 500,000
Rental Deposit 20,077
Total Other Assets 520,077
-----------
Total Assets $ 1,180,777
===========
Liabilities and Stockholders' Equity
Current Liabilities:
Accrued expenses $ 491,468
-----------
Total Current Liabilities 491,468
-----------
Long-Term Liabilities:
Loan Payable 328,000
-----------
Total Long-Term Liabilities 328,000
-----------
Total Liabilities 819,468
-----------
Commitments and Contigencies --
Stockholders' Equity:
Common stock, par value $ .001 per share,
100,000,000 shares authorized, 71,183,943 issued
and outstanding at September 30, 1999 71,184
Additional paid-in capital 7,049,266
Deficit accumulated during development stage (6,759,141)
-----------
Total Stockholders' Equity 361,309
-----------
Total Liabilities and Stockholders' Equity $ 1,180,777
===========
The accompanying notes are an integral part of these financial statements
F-2
World Wide Wireless Communications Inc.
(A Development Stage Company)
Statements of Operations
Cumulative
from
Inception on
For the Year For the Year September 1, 1994
Ended Ended through
September 30, September 30, September 30,
1999 1998 1999
------------ ------------ ------------
Revenues $ -- $ -- $ --
------------ ------------ ------------
General & Administrative Expenses (2,383,330) (353,075) (6,765,842)
------------ ------------ ------------
Total Operating Expenses (2,383,330) (353,075) (6,765,842)
------------ ------------ ------------
Operating Loss (2,383,330) (353,075) (6,765,842)
Rental Income 0 6,701 6,701
------------ ------------ ------------
Net Loss $ (2,383,330) $ (346,374) $ (6,759,141)
============ ============ ============
Basic Loss Per Share $ (0.04) $ (0.01)
============ ============
Basic Weighted Average Shares Outstanding 56,113,645 39,330,520
============ ============
Diluted Loss Per Share $ (0.04) $ (0.01)
============ ============
Diluted Weighted Average Shares Outstanding 56,411,173 39,330,520
============ ============
<FN>
The accompanying notes are an integral part of these financial statements
</FN>
F-3
World Wide Wireless Communications, Inc.
(A Development Stage Company)
Statements of Cash Flows
Cumulative
From
For the Year For the Year Inception on
Ended Ended September 1, 1994
September 30, September 30, Through
1999 1998 September 30, 1999
---------------- ----------------- --------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(2,383,330) $ (346,374) $(6,759,141)
Adjustments to reconcile net loss from operations
to net cash used by operating activities:
Common stock issued for services 615,996 30,400 646,396
Depreciation and amortization expense 13,506 -- 13,506
Changes in operating assets and liabilities:
(Increase) in prepaid and other (62,740) 0 (62,740)
(Increase) in other assets (20,077) 0 (20,077)
Increase in accrued expenses 4,321 1,194 491,468
----------- ----------- -----------
Net Cash (Used) by Operating Activities (1,832,324) (314,780) (5,690,588)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
(Increase) in fixed assets (336,384) 0 (336,384)
(Increase) in option on frequency licenses (500,000) 0 (500,000)
----------- ----------- -----------
Net Cash (Used) by Investing Activities (836,384) 0 (836,384)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loan 328,000 0 328,000
Proceeds from issuance of common stock 2,614,074 316,451 6,474,054
----------- ----------- -----------
Net Cash Provided by Financing Activities 2,942,074 316,451 6,802,054
----------- ----------- -----------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 273,366 1,671 275,082
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 1,716 45 0
----------- ----------- -----------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 275,082 $ 1,716 $ 275,082
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION
Interest paid $ -- $ -- $ --
Income taxes paid $ -- $ -- $ --
<FN>
The accompanying notes are an integral part of these financial statements
</FN>
F-4
World Wide Wireless Communications, Inc.
(A Development Stage Company)
Statements of Shareholders' Equity
Common Stock (1) Deficit
---------------------------------------- Accumulated
Additional during
Paid-in Development Total
Shares Amount Capital Stage Equity
----------- ----------- ----------- ----------- -----------
Inception, September 1, 1994 -- -- $ -- $ -- $ --
Common stock issued to founders 33,774,781 33,775 -- -- 33,775
Net loss for the fiscal year ended
ended September 30, 1995 -- -- -- (5,721) (5,721)
----------- ----------- ----------- ----------- -----------
Balance September 30, 1995 33,774,781 33,775 0 (5,721) 28,054
Common stock issued for cash
at $2.65 a share 994,639 994 712,206 -- 713,200
Net loss for the fiscal year ended
September 30, 1996 -- -- -- (773,097) (773,097)
----------- ----------- ----------- ----------- -----------
Balance September 30, 1996 34,769,420 34,769 712,206 (778,818) (31,843)
Common stock issued for cash:
At $2.65 a share 61,610 62 44,138 -- 44,200
At $4.69 a share 2,168,963 2,169 2,747,831 -- 2,750,000
Net loss for the fiscal year ended
September 30, 1997 -- -- -- (3,250,619) (3,250,619)
----------- ----------- ----------- ----------- -----------
Balance September 30, 1997 36,999,993 37,000 3,504,175 (4,029,437) (488,262)
Issuance of common stock in
reorganization 8,024,000 8,024 15,781 -- 23,805
Common stock issued in private placement
between $.0667 and $.25 per share 2,100,000 2,100 292,900 -- 295,000
Common stock issued for services 218,000 218 30,182 -- 30,400
Net loss for the fiscal year ended
September 30, 1998 -- -- -- (346,374) (346,374)
----------- ----------- ----------- ----------- -----------
Balance September 30, 1998 47,341,993 47,342 3,843,038 (4,375,811) (485,431)
Common stock issued in private placement
between $.05 and $.435 per share 19,303,950 19,304 2,594,770 -- 2,614,074
Common stock issued for services 4,538,000 4,538 611,458 -- 615,996
Net loss for the fiscal year ended
September 30, 1999 -- -- -- (2,383,330) (2,383,330)
----------- ----------- ----------- ----------- -----------
Balance, September 30, 1999 71,183,943 $ 71,184 $ 7,049,266 $(6,759,141) $ 361,309
=========== =========== =========== =========== ===========
<FN>
(1) The common stock information has been retroactively restated to give effect
to the reorganization of May 7, 1998 (See Note 2 to the financial statements).
The accompanying notes are an integral part of these financial statements
</FN>
F-5
World Wide Wireless Communications, Inc.
(A Development Stage Company)
Notes to Financial Statements
September 30, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The financial statements presented are those of World Wide Wireless
Communications, Inc., (the Company) (a development stage company). The
Company, incorporated in Nevada, is engaged in activities related to
advanced wireless communications, including the acquisition of
radio-frequency spectrum both in the United States and internationally.
The Company also plans to license its Distributed Wireless Call
Processing System technology.
Basic and Diluted Net Loss Per Share
The calculation of basic and diluted net loss per share is in
accordance with Statement of Financial Accounting Standards No. 128,
"Earnings Per Share".
Cash Equivalents
For purposes of the Statement of Cash Flows, the Company considers all
highly liquid investments with an original maturity of three months or
less to be cash equivalents. Balances in bank accounts may, from time
to time, exceed federal insured limits.
Comprehensive Income, Statement of Financial Accounting Standards No.
130
The Company will account for components of other comprehensive income
in accordance with Statement of Financial Accounting Standards No. 130.
As of the statement date the Company has no material components of
other comprehensive income.
Income Taxes
The Company accounts for income taxes using Statement of Financial
Accounting Standards No.109, "Accounting for Income Taxes". Under this
statement, an assets and liability based approach is used in accounting
for income taxes. Deferred income tax assets and liabilities are
recorded to reflect the tax consequences on future years of temporary
differences of revenue and expense items for financial statement and
income tax purposes.
Fixed Assets
Furniture, fixtures and equipment are depreciated over their useful
lives of 5 to 10 years, using the straight-line method of depreciation.
Leasehold improvements are amortized over a 5-year period that
coincides with the initial period of the lease, using the straight-line
method of amortization.
Intangible assets are amortized over their useful lives, using the
straight-line method of depreciation.
F-6
World Wide Wireless Communications, Inc.
(A Development Stage Company)
Notes to Financial Statements
September 30, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Long-Lived Assets
The Company reviews its long-lived assets on an annual basis to
determine any impairment in accordance with Statement of Financial
Accounting Standards No. 121.
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 the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Fair Value of Financial Instruments
For cash and cash equivalents and accrued expenses, the carrying
amounts in the Balance Sheet represent their fair market value. The
carrying amount of the loan payable approximates fair value because of
similar current rates at which the Company could borrow funds with
consistent remaining maturities.
NOTE 2 - BASIS OF PRESENTATION
On May 7, 1998, the Company entered into a reverse merger transaction,
whereby it acquired control of a public shell. The reorganization
resulted in the issuance of 36,999,993 shares of common stock,
representing 82.2% of the total shares outstanding. The value of
$21,451 assigned to the 8,024,000 shares, or 17.8% retained by the
public shell shareholders, represents the net assets acquired from the
public shell. The reorganization was accounted for as a reverse merger
under the purchase method.
NOTE 3 - GOING CONCERN/DEVELOPMENT STAGE
The Company has been in the development stage since its formation on
September 1, 1994. It is primarily engaged in activities related to
advanced wireless communications, including the acquisition of
radio-frequency spectrum both in the United States and internationally.
The Company also plans to license its Distributed Wireless Call
Processing System technology.
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities
in the normal course of business.
The Company has experienced losses since inception, and had an
accumulated deficit of $6,759,141 at September 30, 1999. Net losses are
expected for the
F-7
World Wide Wireless Communications, Inc.
(A Development Stage Company)
Notes to Financial Statements
September 30, 1999
NOTE 3 - GOING CONCERN/DEVELOPMENT STAGE (CONT'D)
foreseeable future. Management plans to continue the implementation of
its business plan to place the Company's assets in service to generate
related revenue. Simultaneously, the Company is continuing to secure
additional capital through sales of common stock through the current
operating cycle.
NOTE 4 - COMMITMENTS AND CONTIGENCIES
Litigation
On April 12, 1999, the Company, under terms of a Settlement and General
Release, issued 825,000 shares of common stock to a former director and
a former employee for compensation, approximating $81,000, at a per
share price of $0.098. This per share price is in line with the sale of
common stock for cash at this period of time.
On May 25, 1999, the Company, under terms of a Compromise and
Settlement Agreement, issued 750,000 shares of common stock to cover
approximately $310,000 of various outstanding obligations of the
Company to Corporate Solutions, LLC for services rendered, at a per
share price of $0.40. This per share price is line with the sale of
common stock for cash at this period of time.
In November 1998, the Company and its predecessor affiliates filed an
action against the lessor of its leases for the Concord and San Diego,
California multipoint distribution service (MDS) channels. The
complaint alleged breach of contract as well as intentional and
negligent interference with prospective economic advantage. The Company
also sought a preliminary injunction as a result of the lessor's
assertion that the predecessor companies and the Company were in
default on said leases. The Superior Court of California for the County
of Los Angeles issued a preliminary injunction against the lessor to
restrain it from taking any further action against the Company and its
predecessors. Thereafter, the lessor cross-complained against the
Company and its predecessors alleging breach of contract. The
preliminary injunction of the Company against the lessor remained in
effect until December 9, 1999, when a settlement agreement was signed.
The settlement provided for the Company to pay $27,375 to the lessor,
relating to lease obligations. This amount is recorded as an expense in
the financial statements for the fiscal years ended September 30 1998
and 1999. The Company further agreed to sign a consulting agreement
with the lessor for one year, whereby the Company will issue the
equivalent of $20,000 of its restricted common stock, the value of
which is to be computed at 80% of the market value of the Company's
unrestricted shares. Additionally, under this consulting agreement, the
Company agreed to execute a promissory note in favor of the lessor in
the amount of $40,000, payable at $1,000 per month, commencing December
1, 1999, with a final payment of $28,000 on December 1, 2000.
The Company borrowed from Credit Bancorp $328,000 in August 1999 and
$412,000 in October 1999. The terms of this loan are 7% interest per
annum payable,
F-8
World Wide Wireless Communications, Inc.
(A Development Stage Company)
Notes to Financial Statements
September 30, 1999
NOTE 4 - COMMITMENTS AND CONTIGENCIES (CONT'D)
Litigation (Cont'd)
semiannually on the last day of February and September, with the
principal due September 30, 2002. On August 26, 1999, the Company filed
suit against Credit Bancorp, in U.S. District Court in San Francisco,
regarding improprieties on the part of Credit Bancorp relating to the
August 1999 loan. The case was settled on October 11, 1999. As part of
the settlement agreement, Credit Bancorp agreed to convert the original
loans granted to the Company to a convertible debenture in the amount
of $740,000. On October 11, 1999, the Company issued a convertible
unsecured debenture for $740,000 to Credit Bancorp in settlement of
this obligation. The terms of this convertible unsecured debenture are
7% interest per annum payable semiannually on the last day of February
and September, with the principal due September 30, 2002. All amounts
of unpaid principal and accrued interest of this debenture are
convertible at any time at the conversion price of $1.60 per share of
unregistered, restricted shares of the Company's stock, adjusted for
any stock splits.
In November 1999, the Securities and Exchange Commission (SEC) filed
suit against Credit Bancorp alleging violations of various securities
laws in connection with its actions in relation to the Company (and
others), and seeking various forms of relief including disgorgement of
its illegal gains. At this time, management believes that if the suit
is successful, certain benefits may accrue to the Company, including
the cancellation of the $740,000 convertible debenture.
Operating Leases
The Company's office space at One Post Street, San Francisco, was
leased on a month to month basis. The Company vacated these offices on
August 31, 1999. The actual rent paid, for the fiscal year ended
September 30, 1999, was $22,341.
In April 1999, the Company entered into a 5-year lease for
approximately 6,000 square feet of office space in Jack London Square,
Oakland, California. The lease commenced on June 5, 1999. The triple
net rental agreement is for $10,038 per month during the first year,
with a rental deposit of $20,077 shown as an Other Asset on the
financial statements. The lease provides for an annual increase based
on the indexed cost of living adjustments. Additionally, the lease
provides for the landlord's participation in partial reimbursement over
the terms of the lease to the Company for leasehold improvements paid
by the Company. The Company commenced its occupancy of this space on
September 1, 1999. The minimum annual rent is $120,456 for the fiscal
years ended September 30, 2000, 2001, 2002 and 2003, and $81,642 for
the period October 1, 2003 to June 4, 2004.
The Company leases (under assignment) all of the channel capacity for
certain multipoint distribution service (MDS) and multi-channel
multipoint distribution service (MMDS) channels from three carriers
that are licensed by the FCC as specified in 47 C.F.R. Paragraph
21.901(b). These MDS/MMDS leases provide for a monthly lease fee of 2%
of gross subscriber revenue or a minimum monthly rental aggregating
approximately $1,150. The minimum aggregate annual rent is $13,800 for
1999, $67,160 for 2000, and $9,500 for 2001, adjusted annually by
changes in the Consumer Price Index. Each of the leases contain three
ten-year renewal options,
F-9
World Wide Wireless Communications, Inc.
(A Development Stage Company)
Notes to Financial Statements
September 30, 1999
NOTE 4 - COMMITMENTS AND CONTIGENCIES (CONT'D)
Operating Leases(Cont'd)
and an option to purchase each license for $225,000, adjusted upon
changes in the Consumer Price Index since lease inception.
In conjunction with the MDS/MMDS licenses, the Company has acquired
(under assignment) transmission sites in the geographical areas covered
by the licenses. These site leases have varying terms and conditions,
and at September 30, 1999, the minimum annual rental is $42,000 per
fiscal year ending September 30, 2000 through 2004.
The company has based eight Instructional Television Fixed Service
channels for use as MMDS channels from the Shekinah Network, as
described more fully in Note 5 below. These leases provide for a
monthly lease fee of 5% of gross
system receipts, with a minimum of $500 per channel. The minimum
aggregate annual fee is $48,000 per fiscal year ending September 30,
2000 through 2004.
Rents paid for fiscal years ended September 30, 1999 and 1998 are as
follows:
1999 1998
-------- --------
Former office location, San Francisco $ 22,341 $ 10,163
Current office location, Oakland 38,814 0
Distribution service channel leases 21,300 2,859
Transmission sites 42,000 10,406
-------- --------
Total $124,455 $ 23,428
======== ========
The minimum annual rentals under current lease obligations for future
fiscal years ended September 30 are as follows:
2000 2001 2002 2003 2004 Remainder
-------- -------- -------- -------- -------- ---------
Current office location, Oakland $120,456 $120,456 $120,456 $120,456 $ 81,842 None
Shekinah channels 48,000 48,000 48,000 48,000 48,000 None
Distribution service channel leases 67,160 9,500 0 0 0 None
Transmission sites 42,000 42,000 42,000 42,000 42,000 None
-------- -------- -------- -------- -------- ----
Total $277,616 $219,956 $210,456 $210,456 $171,842 None
======== ======== ======== ======== -------- ====
NOTE 5 - STOCKHOLDERS EQUITY
During the fiscal year ended September 30, 1999, the Company sold
19,303,950 shares of its common stock for net cash proceeds of
$2,614,074 and issued 4,538,000 shares of its common stock for services
at an aggregate value of $615,996. Stock issued for services was at the
cash price for the shares at the time of issuance.
During the fiscal year ended September 30, 1998, the Company sold
2,100,000 shares of its common stock for net cash proceeds of $295,000
and issued 218,000 shares of its common stock for services at an
aggregate value of $30,400. Stock issued for services was at the cash
price for the shares at the time of issuance.
F-10
World Wide Wireless Communications, Inc.
(A Development Stage Company)
Notes to Financial Statements
September 30, 1999
NOTE 6 - OPTION ON FREQUENCY LICENSES
On November 25, 1998, the Company entered into an option agreement with
Shekinah Network to pay $500,000 for a non-refundable option to lease
eight Instructional Television Fixed Service (ITFS) channels for the
Company's high-speed wireless internet connections, as authorized by
the Federal Communication Commission (FCC), as well as an exclusive
option to lease excess capacity on Shekinah's remaining thirty-two ITFS
channels, as they become available. The monthly minimum transmission
fee to be paid to Shekinah for each license or application optioned,
will be five percent (5%) of the gross system receipts or five hundred
dollars, whichever is greater. Amortization of the licenses will begin
when the available channels are placed in service, which management
expects to begin during the year 2000.
ITFS licenses can only be owned by FCC approved educational, religious
or non-profit entities. In the event FCC rules and regulations change
to allow commercial companies to own these licenses or the Company
establishes an educational, religious or non-profit affiliate, the
agreement also provides the Company an option to pay Shekinah $150,000
per-market or channel group on an individual basis or $3,500,000 for
all forty channels. The option period extends for ten years, with three
additional ten-year term renewals.
NOTE 7 - INCOME TAXES
A reconciliation between the actual income tax benefit and the federal
statutory rate follows:
Fiscal years ended September 30,
1999 1998
Amount % Amount %
Computed income tax benefit at
statutory rate $810,332 34% $117,767 34%
Valuation Allowances -810,332 -34% -117,767 -34%
----------------------------------
Income tax benefit None None
---- ----
At September 30 1999, the Company had a net operating loss carryforward
for federal tax purposes of approximately $6,760,000 which if unused to
offset future taxable income, will expire between the years 2010 to
2019, and approximately $2,154,000 for state tax purposes, which will
expire if unused in 2004 and 2005. A valuation allowance has been
recognized to offset the related deferred tax assets due to the
uncertainty of realizing any benefit therefrom. During 1999 and 1998,
no changes occurred in the conclusions regarding the need for a 100%
valuation allowance in all tax jurisdictions.
Under section 382 of the Internal Revenue Code, the utilization of net
operating loss carryforwards is limited after an ownership change, as
defined, to an annual amount equal to the market value of the loss
corporation's outstanding stock immediately before the date of the
ownership change multiplied by the highest Federal long-term tax exempt
rate in effect for any month in the 3 calendar month period ending in
the calendar month in which the ownership change occurred. Due to the
ownership
F-11
World Wide Wireless Communications, Inc.
(A Development Stage Company)
Notes to Financial Statements
September 30, 1999
NOTE 7 - INCOME TAXES (CONT'D)
changes as a result of the May 1998 reorganization and subsequent stock
issuances, any future realization of the Company's net operating losses
will be severely limited.
Significant components of the Company's deferred tax assets are as
follows:
Fiscal years ended September 30,
1999 1998
---- ----
Net operating loss carryforwards $2,383,330 $346,374
Valuation allowance (2,383,330) (346,374)
---------- --------
Net deferred tax assets None None
---------- --------
NOTE 8 - BASIC AND DILUTED NET LOSS PER SHARE
The following data show the amounts used in computing loss per share
and the effect on loss and the weighted average number of shares of
dilutive potential common stock.
Loss from continuing operations $ 2,383,330
=============
Weighted average number of common
shares used in basic loss per share 56,113,645
Effect of dilutive securities:
Stock options 297,528
-------------
Weighted average number of common
shares and dilutive potential
common stock used in diluted
loss per share 54,411,173
=============
The following transactions occurred after fiscal years ended September
30, 1999 and 1998, which, had they taken place during fiscal 1999 and
1998, would have changed the number of shares used in the computations
of loss per share:
1999 1998
---- ----
Common shares issued in
private placement 5,964,502 19,303,950
Common shares issued
for services 4,438,000
Debenture convertible into shares
issued in exchange for a
loan payable 462,250
Options 3,200,000
F-12
World Wide Wireless Communications, Inc.
(A Development Stage Company)
Notes to Financial Statements
September 30, 1999
NOTE 9 - ACCRUED EXPENSES
Accrued expenses consist of the following:
Professional fees $191,601
Payroll and related payroll taxes 104,986
Leasehold Improvements 55,288
Other 139,593
--------
Total $491,468
========
NOTE 10 - STOCK OPTION PLANS
Nonstatutory Stock Options
The Company has issued stock options under nonstatutory stock option
agreements. The options are granted at the fair market value of the
shares at the date the option is granted. The options are granted for
a period of 5 years, and are fully exercisable during the term of the
option period or within thirty (30) days of the participant's
resignation or termination.
Combined transactions in non-employee options for the fiscal years
ended September 30, 1999 and 1998 are as follows:
1999 1998
-----------------------------------
Number Average Number Average
of Exercise of Exercise
Shares Price Shares Price
Options outstanding October 1 -- -- -- --
Granted 500,000 0.095 -- --
Cancelled -- -- -- --
Exercised -- -- -- --
----------------------------------
Options outstanding September 30 500,000 0.095 -- --
======= ===== ====== =======
Combined transactions in employee options for the fiscal years ended
September 30, 1999 and 1998 are as follows:
1999 1998
-----------------------------------
Number Average Number Average
of Exercise of Exercise
Shares Price Shares Price
Options outstanding October 1 -- -- -- --
Granted 2,700,000 0.095 -- --
Cancelled -- -- -- --
Exercised -- -- -- --
----------------------------------
Options outstanding September 30 2,700,000 0.095 -- --
======== ===== ====== =======
F-13
World Wide Wireless Communications, Inc.
(A Development Stage Company)
Notes to Financial Statements
September 30, 1999
NOTE 10 - STOCK OPTION PLANS (CONTINUED)
Incentive Stock Plan
The Company adopted an incentive stock plan on August 5, 1998, which
has not yet been approved by the shareholders. The options are granted
at the fair market value of the shares at the date that the option is
granted. The options are granted for a period of 10 years, and are
exercisable after one year from the date of grant, at a vested rate of
20% per year during the term of the option period or within thirty
(30) days of the participant's resignation or termination. The Company
has limited the number of shares under this plan to 3,000,000 shares
of its capital stock for this plan. The number of shares of stock
covered by each outstanding option, and the exercise price per share
thereof set forth in each such option, shall be proportionately
adjusted for any stock split, and or, stock dividend. As of September
30, 1999, the Company did not issue any options under this plan;
however, subsequent to the date of this financial statement, options,
for 800,000 shares of common stock, were granted under the incentive
stock plan to an employee within his employment agreement, but are
being treated as nonstatutory stock options until the incentive stock
plan is approved by the shareholders.
Compensation Costs
The Company applies APB Opinion 25 in accounting for its stock
compensation plans discussed above. Accordingly, no compensation costs
have recognized for these plans in 1999 or 1998. Had compensation
costs been determined on the basis of fair value pursuant to FASB
Statement No. 123, net loss and loss per share would have been
increased as follows:
1999 1998
------------ ----------
Net loss:
As reported $(2,383,330) $(346,374)
============ ==========
Pro forma $(2,441,575) $(346,374)
============ ==========
Basic loss per share:
As reported $(0.04) $(0.01)
======= =======
Pro forma $(0.04) $(0.01)
======= =======
Diluted loss per share:
As reported $(0.04) $(0.01)
======= =======
Pro forma $(0.04) $(0.01)
======= =======
The fair value of each option granted is estimated on the grant date
using the Black-Scholls model. The following assumptions were made in
estimating fair value.
F-14
World Wide Wireless Communications, Inc.
(A Development Stage Company)
Notes to Financial Statements
September 30, 1999
NOTE 10 - STOCK OPTION PLANS (CONTINUED)
Compensation Costs (Continued)
Assumption Plans
Dividend yield 0 %
Risk-free interest rate 7 %
Expected life 5 years
Expected volatility 97 %
NOTE 11 - SUBSEQUENT EVENTS
Affiliations in new locations
Argentina
On December 31, 1999, the Company acquired a 51% interest in Infotel
Argentina S.A., a Buenos Aires based company which owns multi-channel
multipoint distribution service licenses in eight of the largest
Argentine cities including Buenos Aires. The purchase price was
$1,500,000, of which $600,000 was paid in cash and $600,000 was paid
in 454,545 shares of restricted stock of the Company. The final
$300,000 was paid during February 2000. Most of the purchase price is
attributable to the licenses.
Peru
On February 29, 2000, the Company purchased 100% of Digital Way S.A. a
Peruvian telecommunications company which owns licenses in Lima, Peru.
The purchase price was $1,300,000, of which $400,000 was paid in cash
and $900,000 was paid in 181,100 shares of restricted stock of the
Company. Most of the purchase price is attributable to the licenses.
El Salvador
On March 11, 2000, the Company entered into a letter of intent with El
Salvador Telecomuniciones S.A. de C.V. for the purpose of acquiring a
25% ownership interest in that company in El Salvador. Pursuant to the
terms of the letter of intent the Company paid $1,000,000 to that
company as an advance payment of the purchase price, which was to
total $3,500,000. The agreement provides that the purchase was
conditioned upon that company's acquisition of certain licenses and
the occurrence of certain other condition which have not been met. As
a result the Company believes that it is improbable that the sale will
occur and is seeking return of the $1,000,000 payment.
F-15
World Wide Wireless Communications, Inc.
(A Development Stage Company)
Notes to Financial Statements
September 30, 1999
NOTE 11 - SUBSEQUENT EVENTS (CONT'D)
Pro forma data
The following pro forma data is presented on a combined basis, as if
Infotel Agentina S.A. and Digital Way S.A.(Peru) had been acquired on
October 1, 1998:
September 30, 1999
------------------
Total Assets $ 1,472,125
Total Liabilities 979,553
Total Shareholders Equity 3,275,626
For the Year Ended
September 30, 1999
------------------
Revenues $ 135,690
Expenses 2,479,874
------------
Net (Loss) $ (2,344,184)
============
F-16
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders of Infotel Argentina S.A.
We have audited the accompanying balance sheet of Infotel Argentina S.A. as of
June 30, 1999 and the related statements of income, retained earnings, and cash
flows for the year then ended. Theses financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
of the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statements
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Infotel Argentina S.A. as of
June 30, 1999, and the results of its operations and its cash flows for the year
then ended in conformity with generally accepted accounting principles of the
United States.
Reinaldo Pietrantonio, Contador Publico Nacional
Buenos Aires, July 30, 1999
F-17
INFOTEL ARGENTINA S.A.
Balance Sheet
As of June 30, 1999
ASSETS
CURRENT ASSETS
Cash $110,861
Accounts receivable 30,707
Prepaid taxes 158,628
--------
Total Current Assets 300,196
Property and Equipment, net of depreciation 131,590
--------
Total Assets $431,786
========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable $249,642
Taxes payable 28,219
--------
Total Current Liabilities 277,861
STOCKHOLDERS' EQUITY
Common stock; $1 par value, issued and outstanding 12,000 shares 12,000
Additional paid-in capital 116,879
Retained Earnings 25,046
--------
Total Stockholders' Equity 153,925
--------
Total Liabilities and Stockholders' Equity $431,786
========
The accompanying notes are an integral part of the financial statements.
F-18
INFOTEL ARGENTINA S.A
Statement of Operations
From Inception, February 3, 1999, through June 30, 1999
REVENUE $214,203
COST OF GOODS SOLD 127,599
--------
GROSS PROFIT 86,604
--------
EXPENSES:
Sales and marketing 16,614
General and administrative 31,257
Financing 200
--------
Total Expenses 48,071
--------
INCOME FROM OPERATIONS 38,533
Less - Income tax 13,487
--------
NET INCOME $ 25,046
========
Net Income Per Share, Basic and Diluted $ 2.09
========
Weighted Average of Shares Outstanding 12,000
========
The accompanying notes are an integral part of the financial statements.
F-19
INFOTEL ARGENTINA S.A.
Statement of Cash Flows
From Inception, February 3, 1999, through June 30, 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 25,046
Adjustments to reconcile net income to net cash used by
operating activities:
Changes in:
Receivables (30,707)
Prepaid expenses (158,628)
Accounts payable 249,642
Taxes payable 28,219
---------
Net cash provided by operating activities 113,572
---------
CASH FLOWS FROM INVESTING ACTIVITES
Purchase of equipment (131,590)
---------
Net cash provided by (used for) investing activities (131,590)
---------
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock, net of stock offering costs 12,000
Proceeds from sale of stock in excess of par 116,879
---------
Net cash provided by financing activities 128,879
---------
NET INCREASE IN CASH 110,861
CASH, beginning of period --
---------
CASH, end of period $ 110,861
=========
The accompanying notes are an integral part of the financial statements
F-20
INFOTEL ARGENTINA S.A.
Statement of Shareowners' Equity
From Inception, February 3, 1999, through June 30, 1999
Common Stock
Balance at beginning of period $ --
Issuance of shares 12,000
--------
Balance at end of period 12,000
--------
Capital in Excess of Par
Balance at beginning of period --
Issuance of shares 116,879
--------
Balance at end of period 116,879
--------
Retained Earnings
Balance at beginning of --
Net Income 25,046
--------
Balance at end of period 25,046
--------
Stockholders' Equity at end of period $153,925
========
The accompanying notes are an integral part of the financial statements.
F-21
INFOTEL ARGENTINA S.A.
Notes to Financial Statements
June 30, 1999
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Infotel Argentina was formed on January 18, 1999, and began operation
on February 3, 1999.
Cash Equivalents
For purposes of the Statement of Cash Flows, the Company considers all
highly liquid investments with an original maturity of three months or
less to be cash equivalents.
Comprehensive Income, Statement of Financial Accounting Standards No.
130
The Company has no material components of other comprehensive income.
Income Taxes
The Company accounts for income taxes using Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes". Under
this statement, the liability method is used in accounting for income
taxes.
Fixed Assets
Fixed assets are recorded at cost. Depreciation is taken over the
estimated useful life of the assets.
Long-Lived Assets
The Company reviews its long-lived assets on an annual basis to
determine any impairment in accordance with Statement of Financial
Accounting Standards No. 121.
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 at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Fair Value of Financial Instruments
For cash and cash equivalents and accrued expenses, the carrying
amounts in the Balance Sheet represent their fair market value.
F-22
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders of Digital Way, S.A.
We have audited the accompanying balance sheet of Digital Way, S.A. as of
December 31, 1999 and the related statements of income, retained earnings, and
cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
of the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statements
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Digital Way, S.A. as of
December 31 1999, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles of
the United States.
Chavez y R.G. Auditores, Asociados S. Civil
April 19, 2000
F-23
Digital Way, S.A.
Balance Sheet
As of December 31, 1999
ASSETS
CURRENT ASSETS
Cash $ 163
Receivable from officer 21,000
Prepaid taxes 876
Other prepaid expenses and deposits 10,050
--------
Total Current Assets 32,089
PROPERTY AND EQUIPMENT, at cost 1,454
--------
Total Assets $ 33,543
========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable $ 32,995
--------
Total Liabilities 32,995
--------
STOCKHOLDERS' EQUITY
Common stock; $0.302 par value, issued
and outstanding 35,800 shares 10,826
Accumulated deficit (10,278)
--------
Total Stockholders' Equity 548
--------
Total Liabilities and Stockholders' Equity $ 33,543
========
The accompanying notes are an integral part of the financial statements.
F-24
Digital Way, S.A.
Statement of Operations
From Inception, March 28, 1999, through December 31, 1999
REVENUE $ --
EXPENSES
General and administrative 9,445
Miscellaneous 833
--------
Total Expenses 10,278
--------
INCOME (LOSS) FROM OPERATIONS $(10,278)
========
NET INCOME (LOSS) PER SHARE, BASIC
AND DILUTED $ (0.29)
========
WEIGHTED AVERAGE OF SHARES
OUTSTANDING 35,800
========
The accompanying notes are an integral part of the financial statements.
F-25
Digital Way, S.A.
Statement of Cash Flows
From Inception, March 28, 1999, through December 31, 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(10,278)
Adjustments to reconcile net loss to net cash used by
operating activities:
Changes in:
Receivables from officer (21,000)
Prepaid taxes (876)
Other prepaid expenses (10,050)
Accounts payable 32,995
--------
Net cash used by operating activities (9,209)
--------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment (1,454)
--------
Net cash provided by (used for) investing
activities (1,454)
--------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock, net of stock offering costs 10,826
--------
Net cash provided by financing activities 10,826
--------
NET INCREASE IN CASH 163
CASH, beginning of period --
--------
CASH, end of period $ 163
========
The accompanying notes are an integral part of the financial statements
F-26
Digital Way, S.A.
Statement of Shareowners' Equity
From Inception, March 28, 1999, through December 31, 1999
COMMON STOCK
Balance at beginning of period $ --
Issuance of shares 10,826
---------
Balance at end of period 10,826
---------
CAPTIAL IN-EXCESS OF PAR
Balance at beginning of period --
Issuance of shares --
---------
Balance at end of period --
---------
RETAINED EARNINGS
Balance at beginning of period --
Net income (loss) (10,278)
---------
Balance at end of period (10,278)
---------
Stockholders' Equity at end of period $ 153,925
=========
The accompanying notes are an integral part of the financial statements.
F-27
DIGITAL WAY, S.A.
Notes to Financial Statements
December 31, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Digital Way, S.A. (the Company) was formed on March 3, 1998, in order
to provide public telecommunication service as authorized by the
Peruvian Ministry of Transportation and Communication. The Company
became active on March 28, 1999. The Company is of indefinite
duration.
Cash Equivalents
For purposes of the Statement of Cash Flows, the Company considers all
highly liquid investments with an original maturity of three months or
less to be cash equivalents.
Comprehensive Income, Statement of Financial Accounting Standards No.
130
The Company has no material components of other comprehensive income.
Income Taxes
The Company accounts for income taxes using Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes". Under
this statement, the liability method is used in accounting for income
taxes.
Fixed Assets
No depreciation has been taken due to the fact that assets have not
been placed in service as of December 31, 1999.
Long-Lived Assets
The Company reviews its long-lived assets on an annual basis to
determine any impairment in accordance with Statement of Financial
Accounting Standards No. 121.
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 at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Fair Value of Financial Instruments
For cash and cash equivalents and accrued expenses, the carrying
amounts in the Balance Sheet represent their fair market value.
F-28
INFOTEL ARGENTINA S.A.
Balance Sheet
As of December 31, 1999
UNAUDITED
ASSETS
Current Assets
Cash $ 45,992
Accounts receivable 140,473
Prepaid taxes 100,661
Advances to officer 55,746
Other 22,715
--------
Total Current Assets 365,587
Fixed Assets
Property & equipment, net of depreciation 118,430
--------
Total Assets $484,017
========
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 31,174
Other payables 190,306
--------
Total Liabilities 221,480
--------
Stockholders' Equity
Common stock, $1par, 12,000 shares
issued & outstanding 12,000
Additional paid-in capital 116,879
Retained earnings 133,658
--------
Total Stockholders' Equity 262,537
--------
Total Liabilities & Stockholders' Equity $484,017
========
The accompanying notes are an integral part of the financial statements.
F-29
INFOTEL ARGENTINA S.A.
Statement of Operations
For the Six Months Ended December 31, 1999
UNAUDITED
REVENUE $835,888
Cost of Goods Sold 364,904
--------
GROSS PROFIT 470,984
--------
EXPENSES:
Sales and marketing 108,271
General and administrative 185,464
Financing 3,068
--------
Total Expenses 296,803
--------
INCOME FROM OPERATIONS 174,181
Less: Income tax 65,569
--------
NET INCOME $108,612
========
Net income per share, basic & diluted $ 9.05
========
Weighted average of shares outstanding 12,000
========
The accompanying notes are an integral part of the financial statements.
F-30
INFOTEL ARGENTINA S.A.
Statement of Cash Flows
For the Six Months Ended December 31, 1999
UNAUDITED
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 108,612
Adjustments to reconcile net income to net
cash used by operating activities:
Depreciation expense 13,160 Changes in operating
assets and liabilities:
(Increase) in receivables (188,227)
Decrease in prepaid expenses 57,967
(Decrease) in payables (56,381)
---------
Net Cash (Used) by Operating Activities (64,869)
CASH FLOWS FROM INVESTING ACTIVIES --
CASH FLOWS FROM FINANCING ACTIVITIES --
---------
NET (DECREASE) IN CASH (64,869)
CASH AT BEGINNING OF PERIOD 110,861
---------
CASH AT END OF THE PERIOD $ 45,992
=========
The accompanying notes are an integral part of the financial statements.
F-31
INFOTEL ARGENTINA S.A.
Notes to Financial Statements
December 31, 1999
UNAUDITED
NOTES 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Infotel Argentina was formed on January 18, 1999, and began
operation on February 3, 1999.
Cash Equivalents
For purposes of the Statement of Cash Flows, the Company considers
all highly liquid investments with an original maturity of three
months or less to be cash equivalents.
Comprehensive Income, Statement of Financial Accounting Standards
No. 130
The Company has no material components of other comprehensive
income.
Income Taxes
The Company accounts for income taxes using Statements of
Financial Accounting Standards No. 109, "Accounting for Income
Taxes". Under this statement, the liability method is used in
accounting for income taxes.
Fixed Assets
Fixed Assets are recorded at cost. Depreciation is taken over the
estimated useful life of the assets.
Long-Lived Assets
The Company reviews its long-lived assets on an annual basis to
determine any impairment in accordance with Statement of Financial
Accounting Standards No. 121.
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 at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Fair Value of Financial Instruments
For cash and cash equivalents and accrued expenses, the carrying
amounts in the Balance Sheet represent their fair market value.
F-32
World Wide Wireless Communications, Inc. & Subsidiaries
(A Development Stage Company)
Balance Sheet
March 31, 2000
UNAUDITED
Assets
Current Assets:
Cash and cash equivalents $ 980,083
Prepaid and other 339,938
------------
Total Current Assets 1,320,021
------------
Fixed Assets:
Furniture, fixtures and equipment 299,502
Leasehold improvements 343,542
Accumulated depreciation and amortization (60,163)
Frequency licenses 2,783,064
------------
Total Fixed Assets 3,365,945
------------
Other Assets:
Prepaid lease expense 500,000
Deposit in acquisition 1,000,000
Rental deposit 20,727
------------
Total Other Assets 1,520,727
------------
Total Assets $ 6,206,693
============
Liabilities and Stockholders' Equity
Current Liabilities:
Accrued expenses $ 499,903
Accounts payable 55,903
------------
Total Current Liabilities 555,806
------------
Long-Term Liabilities:
Loan payable 740,000
------------
Total Long-Term Liabilities 740,000
------------
Total Liabilities 1,295,806
------------
Stockholders' Equity:
Common stock, par value $.001 per share 82,444
100,000,000 shares authorized, 82,443,816 issued
and outstanding at March 31, 2000
Additional paid-in capital 13,702,744
Deficit accumulated during development stage (8,874,301)
------------
Total Stockholders Equity 4,910,887
------------
Total Liabilities and Stockholders' Equity $ 6,206,693
============
The accompanying notes are an integral part of these financial statements.
F-33
World Wide Wireless Communications, Inc. & Subsidiaries
(A Development Stage Company)
Statement of Operations
March 31, 2000
UNAUDITED
Cumulative
For 6 Months For 6 Months from Inception on
Ended Ended September 1, 1994
March 31, 2000 March 31, 1999 to March 31, 2000
Revenues $ 141,268 $ 0 $ 141,268
------------ ------------ ------------
General & Administrative Expense (2,345,196) (594,650) (9,002,012)
------------ ------------ ------------
Total Operating Expense (2,203,928) (594,650) (8,860,744)
------------ ------------ ------------
Operating Income (Loss) (2,203,928) (594,650) (8,860,744)
Interest Income 174 0 174
------------ ------------ ------------
Tax Expense (13,731) 0 (13,731)
------------ ------------ ------------
Net Profit (Loss) $ (2,217,484) $ (594,650) $ (8,874,301)
============ ============ ============
Basic Loss Per Share $ (0.01)
============
Basic Weighted Average
Shares Outstanding 82,443,816
============
Diluted Loss Per Share $ (0.01)
============
Diluted Weighted Average
Shares Outstanding 85,993,816
============
The accompanying notes are an integral part of these financial statements.
F-34
World Wide Wireless Communications, Inc. & Subsidiaries
(A Development Stage Company)
Statements of Cash Flow
March 31, 2000
UNAUDITED
Cumulative from
Inception on
For 6 Months For 6 Months September 1, 1994
Ended Ended through
March 31,2000 March 31,1999 March 31,2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (2,217,485) $ (845,537) $ (8,976,626)
Adjustments to reconcile net loss from operations
to net cash used by operating activities:
Common stock issued for services 15,910 0 662,306
Depreciation and amortization expense 53,237 0 66,743
Changes in operating assets and liabilities:
(Increase)/decrease in prepaid and other (107,951) 0 (170,691)
(Increase)/decrease in prepaid lease expense -- (500,000) (500,000)
(Increase)/decrease in other assets (650) 0 (20,727)
Increase/(decrease) in accrued expenses (114,387) 272,219 377,081
------------ ------------ ------------
Net Cash (Used) by Operating Expenses (2,371,326) (1,073,318) (8,561,914)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
(Increase) in investments (2,279,699) 0 (2,279,699)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
(Increase) in fixed assets (241,456) 0 (577,840)
Proceeds from loan 740,000 0 740,000
Proceeds from issuance of common stock 4,857,482 5,492,672 11,659,536
------------ ------------ ------------
Net Cash Provided by Financing Activities 5,356,026 5,492,672 11,821,696
------------ ------------ ------------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 705,001 4,419,354 980,083
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 275,082 1,716 0
------------ ------------ ------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 980,083 $ 4,421,070 $ 980,083
============ ============ ============
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Interest paid $ 0 $ 0 $ 0
Income taxes paid $ 0 $ 0 $ 0
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
F-35
World Wide Wireless Communications, Inc. & Subsidiaries
(A Development Stage Company)
Notes to Financial Statements
March 31, 2000
Unaudited
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The financial statements presented are those of World Wide Wireless
Communications, Inc., (the Company) (A Development Stage Company)and
its subsidiaries. The Company is engaged in activities related to
advanced wireless communications, including the acquisition of
radio-frequency spectrum both in the United States and internationally.
The Company also plans to license its Distributed Wireless Call
Processing System technology.
On December 31, 1999, The Company acquired a 51% interest in Infotel
Argentina S.A., a Buenos Aires based company which owns multi-channel
multipoint distribution service licenses in eight of the largest
Argentine cities including Buenos Aires. The purchase price was
$1,500,000, of which $600,000 was paid in cash and $600,000 was paid in
454,545 shares of restricted stock of the Company on December 31, 1999.
The final $300,000 was paid during February 2000.
On February 29, 2000, the Company purchased 100% of Digital Way S.A. a
Peruvian telecommunications company. The purchase price was $1,300,000,
of which $400,000 was paid in cash and $900,000 was paid in 181,100
shares of restricted stock of the Company.
Basic and Diluted Net Loss Per Share
The calculation of basic and diluted net loss per share is in
accordance with Statement of Financial Accounting Standards No. 128,
"Earnings Per Share".
The following data show the amounts used in computing loss per share
and the effect on loss and the weighted average number of shares of
dilutive potential common stock.
Loss from continuing operations $ 2,217,484
===========
Weighted average number of common
Shares used in basic loss per share 82,443,816
Effect of dilutive securities:
Stock options 3,200,000
Convertible debentures 350,000
-----------
Weighted average number of common
Shares and dilutive potential
Common stock used in diluted
Loss per share 85,993,816
===========
F-36
World Wide Wireless Communications, Inc. & Subsidiaries
(A Development Stage Company)
Notes to Financial Statements
March 31, 2000
Unaudited
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(CONT'D)
The following transactions occurred after quarters ended March 31, 2000
and 1999, which, had they taken place during the 6 months ended March
31, 2000 and 1999, would have changed the number of shares used in the
computations of loss per share:
2000 1999
---- ----
Common shares issued in
private placement 760,000 3,259,742
Common shares issued
for services 0 0
Debentures/warrants convertible into
shares issued in exchange for a
loan payable 3,600,000 350,000
Options 0 3,200,000
Cash Equivalents
For purposes of the Statement of Cash Flows, the Company considers all
highly liquid investments with an original maturity of three months or
less to be cash equivalents. Balances in bank accounts may, from time
to time, exceed federal insured limits. The Company has never
experienced any loss, and believes its credit risk to be limited.
Comprehensive Income, Statement of Financial Accounting Standards No.
130
The Company has no material components of other comprehensive income.
Income Taxes
The Company accounts for income taxes using Statement of Financial
Accounting Standards No.109, "Accounting for Income Taxes". Under this
statement, the liability method is used in accounting for income taxes.
Fixed Assets
Furniture, fixtures and equipment are depreciated over their useful
lives of 5 to 10 years, using the straight-line method of depreciation.
Leasehold improvements are amortized over a 5-year period that
coincides with the initial period of the lease, using the straight-line
method of amortization.
Long-Lived Assets
The Company reviews its long-lived assets on an annual basis to
determine any impairment in accordance with Statement of Financial
Accounting Standards No. 121.
F-37
World Wide Wireless Communications, Inc. & Subsidiaries
(A Development Stage Company)
Notes to Financial Statements
March 31, 2000
Unaudited
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(CONT'D)
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 the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Fair Value of Financial Instruments
For cash and cash equivalents and accrued expenses, the carrying
amounts in the Balance Sheet represent their fair market value. The
carrying amount of the loan payable approximates fair value because of
similar current rates at which the Company could borrow funds with
consistent remaining maturities.
Segment Information
The Company adopted Statement of Financial Accounting Standards No.
131, "Disclosures about Segments of an Enterprise and Related
information" (SFAS No. 131) in 1999. This statement establishes
standards for the reporting of information about operating segments in
annual and interim financial statements and requires restatement of
prior year information. Operating segments are defined as components of
an enterprise for which separate financial information is available
that is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing performance. SFAS
No. 131 also requires disclosures about products and services,
geographic areas and major customers.
Consolidated Financial Statements
The accounts of the Company and its consolidated subsidiaries are
included in the consolidated financial statements after elimination of
significant intercompany accounts and transactions.
Foreign Currency Transaction
The financial statements of the Company's foreign subsidiaries are
measured using the local currency as the functional currency. Assets
and liabilities of these subsidiaries are translated at exchange rates
as of the balance sheet date. Revenues and expenses are translated at
average rates of exchange in effect during the year. The resulting
cumulative translation adjustments have been recorded as a separate
component of stockholder's equity. Foreign currency transaction gains
and losses are included in consolidated net income (loss).
F-38
World Wide Wireless Communications, Inc. & Subsidiaries
(A Development Stage Company)
Notes to Financial Statements
March 31, 2000
Unaudited
NOTE 2 - REORGANIZATION
On May 7, 1998, the Company entered into a reverse merger transaction,
whereby it acquired control of a public shell. The reorganization
resulted in the issuance of 36,999,993 shares of common stock,
representing 82.2% of the total shares outstanding. The value of
$21,451 assigned to the 8,024,000 shares, or 17.8% retained by the
public shell shareholders, represents the net assets acquired from the
public shell. The reorganization was accounted for as a reverse merger
under the purchase method.
The Company has been in the development stage since its formation on
September 1, 1994. It is primarily engaged in activities related to
advanced wireless communications, including the acquisition of
radio-frequency spectrum both in the United States and internationally.
The Company also plans to license its Distributed Wireless Call
Processing System technology.
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities
in the normal course of business.
The Company has experienced losses since inception, and had an
accumulated deficit of $8,874,301 at March 31, 2000. Net losses are
expected for the foreseeable future. Management plans to continue the
implementation of its business plan to place the company's assets in
service to generate related revenue. Simultaneously, the Company is
continuing to secure the additional required capital through sales of
common stock through the current operating cycle.
NOTE 3 - COMMITMENTS AND CONTIGENCIES
Litigation
In November 1998, the Company and its predecessor affiliates filed an
action against the lessor of its leases for the Concord and San Marcos,
California multipoint distribution service channels. The complaint
alleged breach of contract as well as intentional and negligent
interference with prospective economic advantage. The Company also
sought a preliminary injunction as a result of the lessor's assertion
that the predecessor companies and the Company were in default on said
leases. The Superior Court of California for the County of Los Angeles
issued a preliminary injunction against the lessor to restrain it from
taking any further action against the Company and its predecessors.
Thereafter, the lessor cross-complained against the Company and its
predecessors alleging breach of contract. The preliminary injunction of
the Company against the lessor remained in effect until December 9,
1999, when a settlement agreement was signed.
F-39
World Wide Wireless Communications, Inc. & Subsidiaries
(A Development Stage Company)
Notes to Financial Statements
March 31, 2000
Unaudited
NOTE 3 - COMMITMENTS AND CONTIGENCIES (CONTINUED)
The settlement provided for the Company to pay $27,375 to the lessor,
relating to lease obligations. This amount is recorded as an expense in
the financial statements for the fiscal years ended September 30 1998
and 1999. The Company further agreed to sign a consulting agreement
with the lessor for one year, whereby the Company will issue the
equivalent of $20,000 of its restricted common stock, the value of
which is to be computed at 80% of the market value of the Company's
unrestricted shares. Additionally, under this consulting agreement, the
Company agreed to execute a promissory note in favor of the lessor in
the amount of $40,000, payable at $1,000 per month, commencing December
1, 1999, with a final payment of $28,000 on December 1, 2000.
The Company borrowed from Credit Bancorp $328,000 in August 1999 and
$412,000 in October 1999. The terms of this loan are 7% interest per
annum payable, semiannually on the last day of February and September,
with the principal due September 30, 2002. On August 26, 1999, the
Company filed suit against Credit Bancorp, in U.S. District Court in
San Francisco, regarding improprieties on the part of Credit Bancorp
relating to the August 1999 loan. The case was settled on October 11,
1999. As part of the settlement agreement, Credit Bancorp agreed to
convert the original loans granted to the Company to a convertible
debenture in the amount of $740,000. On October 11, 1999, the Company
issued a convertible unsecured debenture for $740,000 to Credit Bancorp
in settlement of this obligation. The terms of this convertible
unsecured debenture are 7% interest per annum payable semiannually on
the last day of February and September, with the principal due
September 30, 2002. All amounts of unpaid principal and accrued
interest of this debenture are convertible at any time at the
conversion price of $1.60 per share of unregistered, restricted shares
of the Company's stock, adjusted for any stock splits.
In November 1999, the Securities and Exchange Commission (SEC) filed
suit against Credit Bancorp alleging violations of various securities
laws in connection with its actions in relation to the Company (and
others), and seeking various forms of relief including disgorgement of
its illegal gains. At this time, the suit remains pending.
Operating Leases
The Company's office space at One Post Street, San Francisco, was
leased on a month-to-month basis. The Company vacated these offices on
August 31, 1999. The actual rent paid, for the fiscal year ended
September 30, 1999, was $22,341.
F-40
World Wide Wireless Communications, Inc. & Subsidiaries
(A Development Stage Company)
Notes to Financial Statements
March 31, 2000
Unaudited
NOTE 3 - COMMITMENTS AND CONTIGENCIES (CONTINUED)
In April 1999, the Company entered into a 5-year lease for
approximately 6,000 square feet of office space in Jack London Square,
Oakland, California. The lease commenced on June 5, 1999. The triple
net rental agreement is for $10,038 per month during the first year.
The lease provides for an annual increase based on the indexed cost of
living adjustments. Additionally, the lease provides for the landlord's
participation in partial reimbursement over the terms of the lease to
the Company for leasehold improvements paid by the Company. The Company
commenced its occupancy of this space on September 1, 1999. The minimum
annual rent is $120,456 for the fiscal years ended September 30, 2000,
2001, 2002 and 2003, and $81,642 for the period October 1, 2003 to June
4, 2004.
The Company leases (under assignment) all of the channel capacity for
certain multipoint distribution service and multi-channel multipoint
distribution service channels from three carriers that are licensed by
the FCC as specified in 47 C.F.R. Paragraph 21.901(b). These service
leases provide for a monthly lease fee of 2% of gross subscriber
revenue or a minimum monthly rental aggregating approximately $1,150.
The minimum aggregate annual rent is $13,800 for 1999, $67,160 for
2000, and $9,500 for 2001, adjusted annually by changes in the Consumer
Price Index. Each of the leases contain three ten-year renewal options,
and an option to purchase each license for $225,000, adjusted upon
changes in the Consumer Price Index since lease inception.
In conjunction with the multipoint distribution service and
multi-channel multipoint distribution service licenses, the Company has
acquired (under assignment) transmission sites in the geographical
areas covered by the licenses. These site leases have varying terms and
conditions, and at September 30, 1999, the minimum annual rental is
$42,000 per fiscal year ending September 30, 2000 through 2004.
Rents paid for 6 months ended March 31, 2000 and 1999 are as follows:
6 Months 6 Months
March 31, 2000 March 31, 1999
--------------- --------------
Former office location, San Francisco $ 0 $ 11,080
Current office location, Oakland 62,229 0
Distribution service channel leases 43,433 0
Transmission sites 61,000 13,125
-------- --------
Total $166,662 $ 24,205
======== ========
The minimum annual rentals under current lease obligations for future
fiscal years ended September 30 are as follows:
2000 2001 2002 2003 2004 Remainder
---- ---- ---- ---- ---- ---------
Current office location, Oakland $120,456 $120,456 $120,456 $120,456 $ 81,842 None
Distribution service channel leases 67,160 9,500 0 0 0 None
Transmission sites 42,000 42,000 42,000 42,000 42,000 None
-------- -------- -------- -------- -------- ----
Total $229,616 $171,956 $164,456 $164,456 $123,842 None
======== ======== ======== ======== ======== ====
F-41
World Wide Wireless Communications, Inc. & Subsidiaries
(A Development Stage Company)
Notes to Financial Statements
March 31, 2000
Unaudited
NOTE 4- STOCKHOLDERS EQUITY
During the 6 months ended March 31, 2000, the Company sold 10,069,683
shares of its common stock for net cash proceeds of $4,857,482. The
Company also issued 635,645 shares of its common stock for an aggregate
value of $1,500,000 as a partial payment for investments in other
telecommunications companies. The Company issued 100,000 shares of its
common stock for services at an aggregate value of $15,910. Stock
issued for the investments was at the market price on the day of
issuance. Stock issued for services was at the cash price for the
shares at the time of issuance.
During the 6 months ended March 31, 1999, the Company sold 11,142,950
shares of its common stock for net cash proceeds of $4,442,409.
NOTE 5- PREPAID LEASE EXPENSE
On November 25, 1998, the Company entered into an option agreement with
Shekinah Network to pay $500,000 to lease eight Instructional
Television Fixed Service channels for the Company's high-speed wireless
internet connections, as authorized by the Federal Communication
Commission. This agreement also provides the Company an exclusive
option to lease excess capacity on Shekinah's remaining thirty-two
Instructional Television Fixed Service channels, as they become
available. The monthly minimum transmission fee to be paid to Shekinah
for each license or application optioned, will be five percent (5%) of
the gross system receipts or five hundred dollars, whichever is
greater. Amortization of the licenses will begin when the available
channels are placed in service, which management expects to begin in
approximately June 2000.
Instructional Television Fixed Service licenses can only be owned by
Federal Communication Commission approved educational, religious or
non-profit entities. In the event that the Federal Communication
Commission rules and regulations change to allow commercial companies
to own these licenses or the Company establishes an educational,
religious or non-profit affiliate, the agreement also provides the
Company an option to pay Shekinah $150,000 per-market or channel group
on an individual basis or $3,500,000 for all forty channels. The option
period extends for ten years, with three additional ten-year term
renewals.
NOTE 6- INCOME TAXES
A reconciliation between the actual income tax benefit and the federal
statutory rate follows:
6 Months ended March 31,
-------------------------------
2000 1999
Amount % Amount %
Computed income tax benefit at
statutory rate 753,945 34% 204,704 34%
Operating loss with no current
tax benefit -753,945 -34% -204,704 -34%
------------ --------------
Income tax benefit None None
----- ----
F-42
World Wide Wireless Communications, Inc. & Subsidiaries
(A Development Stage Company)
Notes to Financial Statements
March 31, 2000
Unaudited
NOTE 6- INCOME TAXES (CONTINUED)
At March 31 1999, the Company had a net operating loss carryforward for
federal tax purposes of approximately $8,874,301 which if unused to
offset future taxable income, will expire between the years 2010 to
2020, and approximately $2,860,000 for state tax purposes, which will
expire if unused in 2004 and 2006. A valuation allowance has been
recognized to offset the related deferred tax assets due to the
uncertainty of realizing any benefit therefrom. During 2000 and 1999,
no changes occurred in the conclusions regarding the need for a 100%
valuation allowance in all tax jurisdictions.
Under section 382 of the Internal Revenue Code, the utilization of net
operating loss carryforwards is limited after an ownership change, as
defined, to an annual amount equal to the market value of the loss
corporation's outstanding stock immediately before the date of the
ownership change multiplied by the highest Federal long-term tax exempt
rate in effect for any month in the 3 calendar month period ending in
the calendar month in which the ownership change occurred. Due to the
ownership changes as a result of the May 1998 reorganization and
subsequent stock issuances, any future realization of the Company's net
operating losses will be severely limited.
Significant components of the Company's deferred tax assets are as
follows:
6 Months ended March 31,
------------------------
2000 1999
---- ----
Net operating loss carryforwards $8,874,301 $602,071
Valuation allowance (8,874,301) (602,071)
---------- --------
Net deferred tax assets None None
==== ====
NOTE 7- DEPOSIT IN ACQUISITIONS
El Salvador
On March 11, 2000, the Company entered into a letter of intent with El
Salvador Telecomuniciones S.A. de C.V. for the purpose of acquiring a
25% ownership interest in that company in El Salvador. Pursuant to the
terms of the letter of intent the Company paid $1,000,000 to that
company as an advance payment of the purchase price, which was to total
$3,500,000. The agreement provides that the purchase was conditioned
upon that company's acquisition of certain licenses and the occurrence
of certain other conditions which have not been met. As a result, the
Company believes that it is improbable that the sale will occur and is
seeking return of the $1,000,000 payment.
F-43
World Wide Wireless Communications, Inc. & Subsidiaries
(A Development Stage Company)
Notes to Financial Statements
March 31, 2000
Unaudited
NOTE 8- SUBSEQUENT EVENTS
On April 14, 2000, the Company entered into a Securities Purchase
Agreement with six investors, for the purchase of investment units,
consisting of common stock, common stock purchase warrants, 4%
subordinated debentures and preferred stock. Pursuant to the Securities
Purchase Agreement, the investors have purchased 760,000 shares of
common stock, warrants to purchase 3,600,000 shares of common stock,
and subordinated debentures with a principal amount of $3,280,000, for
a total price of $4,800,000. The investors have the option to purchase
additional shares of common stock, warrants and series A preferred
stock (when authorized) from the Company for a maximum amount of
$1,920,000. The investors will be required to purchase these securities
if an effective registration statement under the Securities Act is in
effect with respect to all the common stock issued and issuable upon
the exercise of the warrants and conversion of the subordinated
debentures and series A preferred stock.
F-44
World Wide Wireless Communications, Inc. & Subsidiaries
(A Development Stage Company)
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The following Unaudited Pro Forma Condensed Combined Financial
Statements and related notes contain forward-looking statements that involve
risks and uncertainties. Our actual results may differ materially from those
discussed herein. We undertake no obligation to publicly release the result of
any revisions to these forward-looking statements that may be made to reflect
any future events or circumstances.
In the opinion of Management, all adjustments necessary to fairly
present this pro forma information have been made. The Unaudited Pro Forma
Condensed Combined Financial Statements are based upon, and should be read in
conjunction with, the historical financial statements of World Wide Wireless
Communications, Inc., Infotel Argentina, S.A. (Infotel), and Digital Way, S.A.
(Digital), and the respective notes to such financial statements presented
elsewhere in this Prospectus. The pro forma information is based upon tentative
allocations of purchase price for the acquisitions and may not be indicative of
the results that would have been reported had such events actually occurred on
the dates specified, nor is it indicative of the Company's future results.
Purchase accounting is based upon preliminary asset valuations, which are
subject to change.
The Unaudited Pro Forma Condensed Combined Statements of Operations for
the year ended September 30, 1999 and the six months ended March 31, 2000 are
presented as if World Wide Wireless Communications, Inc. had completed the
acquisitions of Infotel and Digital as of October 1, 1998.
Since our historical unaudited consolidated statements of operations
for the six months ended March 31, 2000 reflect the acquisitions of Infotel and
Digital, no pro forma adjustments are necessary for the six months ended March
31, 2000.
Since our historical unaudited consolidated balance sheets as of March
31, 2000 reflect the acquisitions of Infotel and Digital, no pro forma balance
sheet adjustments are necessary as of March 31, 2000.
F-45
World Wide Wireless Communications, Inc. & Subsidiaries
(A Development Stage Company)
Unaudited Pro-Forma Condensed Combined Balance Sheet
September 30, 1999
World Wide Infotel Digital Pro-Forma
Wireless Argentina Way Combined
Communications, S.A. S.A. Adjustments Company
Inc. Pro-Forma Pro-Forma at
Sept. 30, 1999 Sept. 30, 1999 Sept. 30, 1999 Sept. 30, 1999
Assets
Current Assets:
Cash and cash equivalents $ 275,082 $ 45,816 $ 150 $ 321,048
Prepaid and other 62,740 150,761 22,700 236,201
----------- ----------- ----------- -----------
Total Current Assets 337,822 196,577 22,850 557,249
----------- ----------- ----------- -----------
Fixed Assets:
Furniture, fixtures and equipment 74,906 70,467 1,454 146,827
Leasehold improvements 261,478 -- -- 261,478
Accumulated depreciation
and amortization (13,506) -- -- (13,506)
Frequency licenses -- -- -- 2,783,054 2,783,054
----------- ----------- ----------- ----------- -----------
Total Fixed Assets 322,878 70,467 1,454 2,783,054 3,177,853
----------- ----------- ----------- ----------- -----------
Other Assets:
Prepaid lease expense 500,000 -- -- 500,000
Rental Deposit 20,077 -- -- 20,077
----------- ----------- ----------- ----------- -----------
Total Other Assets 520,077 -- -- -- 520,077
----------- ----------- ----------- ----------- -----------
Total Assets $ 1,180,777 $ 267,044 $ 24,304 2,783,054 $ 4,255,179
=========== =========== =========== =========== ===========
Liabilities and Stockholders' Equity
Current Liabilities:
Accrued expenses $ 491,468 $ 121,339 -- $ 612,807
Accounts Payable -- 16,737 $ 22,009 38,746
----------- ----------- ----------- -----------
Total Current Liabilities 491,468 138,076 22,009 651,553
----------- ----------- ----------- -----------
Long-Term Liabilities:
Loan payable 328,000 -- -- 328,000
----------- ----------- ----------- -----------
Total Long-Term Liabilities 328,000 -- -- 328,000
----------- ----------- ----------- -----------
Total Liabilities 819,468 138,076 22,009 979,553
----------- ----------- ----------- -----------
Stockholders' Equity:
Common stock,
par value $.001 per share 71,184 6,120 10,826 (16,946) 71,184
Additional paid-in capital
7,049,266 -- -- 2,800,000 9,849,266
Deficit accumulated
during development stage (6,759,141) 122,848 (8,531) (6,644,824)
----------- ----------- ----------- ----------- -----------
Total Stockholders' Equity 361,309 128,968 2,295 2,783,054 3,275,626
----------- ----------- ----------- ----------- -----------
Total Liabilities and
Stockholders' Equity $ 1,180,777 $ 267,044 $ 24,304 $2,783,054 $ 4,255,179
=========== =========== =========== =========== ===========
<FN>
The accompanying notes are an integral part of these financial statements
</FN>
F-46
World Wide Wireless Communications, Inc. & Subsidiaries
(A Development Stage Company)
Unaudited Pro-Forma Condensed Combined Statements of Operation
For the Fiscal Year Ended September 30, 1999
World Wide Wireless Infotel Argantina Digital Way S.A. Combined Cumulative
Communications Pro-Forma from Pro-Forma from Pro-Forma for the
Fiscal Year Inception at Inception at Fiscal Year
Ended Feb. 3, 1999 to Mar. 28, 1999 to Ended
Sep. 30, 1999 Sep. 30, 1999 Sep. 30, 1999 Sep. 30, 1999
UNAUDITED. UNAUDITED UNAUDITED
Revenues $ -- $ 135,690 $ -- $ 135,690
------------ ------------ ------------ ------------
General & Admin 2,383,330 64,269 7,278 2,454,877
------------ ------------ ------------ ------------
Tot. Operating Exp 2,383,330 64,269 7,278 2,454,877
------------ ------------ ------------ ------------
Oper'ing Inc. (Loss) (2,383,330) 71,421 (7,278) (2,319,187)
Tax Expense -- 24,997 -- 24,997
------------ ------------ ------------ ------------
Net Profit (Loss) $ (2,383,330) $ 46,424 $ (7,278) $ (2,344,184)
============ ============ ============ ============
Basic Loss per share $ (0.4)
============
Basic Weighted Average Shares Outstanding 56,749,290
============
Diluted Loss Per Share $ (0.04)
============
Diluted Weighted Average shares Outstanding 57,046,818
============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
F-47
World Wide Wireless Communications, Inc. & Subsidiaries
(A Development Stage Company)
Unaudited Pro-Forma Condensed Combined Statements of Operation
For the Six Months Ended March 31, 2000
World Wide Wireless Infotel Argentina Digital Way S.A. Combined Cumulative
Comm. for the 6 Mo. Pro-Forma for the 6 Pro-Forma for the Pro-Forma for the 6
Ended March 31, Months Ended March 6 Months Ended Months Ended
2000 31, 2000 March 31, 2000 March 31, 2000
UNAUDITED UNAUDITED. UNAUDITED UNAUDITED
Revenues $ 141,268 $ 147,661 $ -- $ 288,929
------------ ------------ ------------ ------------
General & Admin 2,345,196 104,904 4,127 2,454,227
------------ ------------ ------------ ------------
Tot. Operating Exp 2,345,196 104,904 4,127 2454,227
------------ ------------ ------------ ------------
Oper'ing Inc. (Loss) (2,203,928) 42,757 (4,127) (2,165,298)
Interest Income 174 -- -- 174
Tax Expense (13,730) (14,964) -- (28,694)
------------ ------------ ------------ ------------
Net Profit (Loss) $ (2,217,484) $ 27,793 $ (4,127) $ (2,193,818)
============ ============ ============ ============
Basic Loss per share $ (0.01)
============
Basic Weighted Average Shares Outstanding 82,433,816
============
Diluted Loss Per Share $ (0.01)
============
Diluted Weighted Averag shares Outstanding 85,993,816
============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
F-48
World Wide Wireless Communications, Inc. & Subsidiaries
(A Development Stage Company)
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
Statement of Operations for the year ended September 30, 1999
(a) The results of operations for Infotel were included in the consolidated
results of operations as of January 1, 2000. This presentation shows the
pro forma effects of the operations of Infotel as if the acquisition
occurred on October 1, 1998.
(b) The results of operations for Digital were included in the consolidated
results of operations as of March 1, 2000. This presentation shows the pro
forma effects of the operations of Digital as if the acquisition occurred
on October 1, 1998.
(c) The weighted average common shares reflects shares of common stock
outstanding during the periods presented. Pro forma data includes common
stock issuable with respect to the acquisitions.
Statement of Operations for the six months ended March 31, 2000
(a) The results of operations for Infotel were included in the consolidated
results of operations as of January 1, 2000. This presentation shows the
pro forma effects of the operations of Infotel as if the acquisition
occurred on October 1, 1998.
(b) The results of operations for Digital were included in the consolidated
results of operations as of March 1, 2000. This presentation shows the pro
forma effects of the operations of Digital as if the acquisition occurred
on October 1, 1998.
(c) The weighted average common shares reflects shares of common stock
outstanding during the periods presented. Pro forma data includes common
stock issuable with respect to the acquisitions.
F-49
REFERENCE DATA
We have filed with the Securities and Exchange Commission a
registration statement on Form SB-2 under the Securities Act with respect to
this offering. This prospectus does not contain all the information set forth in
the registration statement and the exhibits and schedules thereto, as permitted
by the rules and regulations of the Commission. We will be subject to the
informational filing requirements of the Securities Exchange Act of 1934 upon
the effectiveness of the SB-2 and the Form 8-A. We intend to furnish our
shareholders with annual reports containing financial statements audited by our
independent public accountants and quarterly reports containing unaudited
financial information for the first three quarters of each fiscal year. Our
fiscal year ends on September 30.
World Wide Wireless Communications, Inc.
.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Our Bylaws provide that we may indemnify any director, officer, agent or
employee against all expenses and liabilities, including counsel fees,
reasonably incurred by or imposed upon them in connection with any proceeding to
which they may become involved by reason of their being or having been a
director, officer, employee or agent of our Company. Moreover, our Bylaws
provide that we shall have the right to purchase and maintain insurance on
behalf of any such persons whether or not we would have the power to indemnify
such person against the liability insured against. Insofar as indemnification
for liabilities arising under the Securities Act, we have been informed that, in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
Item 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Expenses of the Registrant in connection with the issuance and distribution of
the securities being registered are estimated as follows, assuming the Maximum
offering amount is sold:
Securities and Exchange Commission filing fee $ 4,752
Accountant's fees and expenses $10,000
Legal fees and expenses $25,000
Printing $ 5,000
Marketing expenses $10,000
Postage $ 5,000
Miscellaneous $ 1,000
-------
Total $60,752
The Registrant will bear all expenses shown above.
Item 26. RECENT SALES OF UNREGISTERED SECURITIES
The following is a list of our sales of our common stock during the
past three years which were not registered under the Securities Act. None of
these sales involved the use of or payments to an underwriter. In all instances
in which we issued shares under the exemption from the registration requirements
of the Securities Act under Section 4(2) of the Securities Act, all purchasers
had access to the type of information found in a registration statement and all
purchasers were sophisticated investors.
On July 21, 1998, as part of a corporate reorganization, we issued
1,724,138 shares of our common stock to TSI Technologies, Inc. and 5,275,662
shares to Worldwide Wireless, Inc., both at a per share price of $0.0947. We
raised $662,933 in this transaction. These shares were issued in reliance upon
the exemption from registration provided by Section 4(2) of the Securities Act.
No underwriters were involved in the issuance and no commissions were paid.
On October 15, 1998, under terms of a Settlement and General Release,
we issued 50,000 shares of common stock to a former consultant in compensation
for services rendered, approximating $2,450, at a per share price of $0.050. The
shares were issued in reliance upon the exemption from registration provided by
Section 4(2) of the Securities Act.
Also on October 15, 1998, as part of a corporate reorganization, we
issued 1,724,138 shares of our common stock to TSI Technologies, Inc. and
5,275,662 shares to Worldwide Wireless, Inc., both at a per share
price of $0.0947. We raised $662,933 in this transaction. These shares were
issued in reliance upon the exemption from registration provided by Section 4(2)
of the Securities Act.
On December 8, 1998, we completed a private placement of 16,285,000
shares of our common stock to a group of accredited investors. Our common stock
was sold for between $0.0027 and $0.1394 per share. In addition, approximately
1,543,000 shares of the total number of shares issued were granted to one
individual in consideration of consulting services. We raised approximately
$736,380. No underwriters were used in completing these transactions. We believe
that we have satisfied the exemption from the securities registration
requirements provided by Section 3(b) of the Securities Act and Rule 504 of
Regulation D promulgated thereunder in that offering. The aggregate offering
price received in the offering did not exceed $1,000,000 within the twelve
months before the start of and during the offering. The securities were sold in
a private placement to only accredited investors, all of whom had a pre-existing
personal or business relationship with us or our officers or directors and each
of whom provided representations that they were accredited investors and were
purchasing for investment and not with a view to resale in connection with a
public offering.
On April 2, 1999, under terms of a Settlement and General Release, we
issued 800,000 shares of common stock to a former employee in compensation for
services rendered, approximating $75,200, at a per share price of $0.095. This
per share price is in line with the sale of common stock for cash at this period
of time. The shares were issued in reliance upon the exemption from registration
provided by Section 4(2) of the Securities Act.
On April 2, 1999, under terms of a Settlement and General Release, we
issued 25,000 shares of common stock to another former employee in compensation
for services rendered, approximating $2,350, at a per share price of $0.095.
This per share price is in line with the sale of common stock for cash at this
period of time. The shares were issued in reliance upon the exemption from
registration provided by Section 4(2) of the Securities Act. No underwriters
were involved in the issuance and no commissions were paid.
On April 12, 1999, under terms of a Settlement and General Release, we
issued 825,000 shares of common stock to a former director and a former employee
in compensation for services rendered, approximating $81,000, at a per share
price of $0.098. This per share price is in line with the sale of common stock
for cash at this period of time. The shares were issued in reliance upon the
exemption from registration provided by Section 4(2) of the Securities Act. No
underwriters were involved in the issuance and no commissions were paid.
On May 6, 1999, as part of a corporate reorganization, we issued
2,593,744 shares of our common stock to TSI Technologies, Inc. and 8,969,355
shares to Worldwide Wireless, Inc., both at a per share price of $0.0947. We
raised $1,095,112 in this transaction. These shares were issued in reliance upon
the exemption from registration provided by Section 4(2) of the Securities Act.
No underwriters were involved in the issuance and no commissions were paid.
On May 14, 1999, under terms of a Compromise and Settlement Agreement,
we issued 600,000 shares of common stock to cover approximately $56,400 of
various outstanding obligations to Corporate Architects for consulting services
rendered, at a per share price of $0.095. The shares were issued in reliance
upon the exemption from registration provided by Section 4(2) of the Securities
Act. No underwriters were involved in the issuance and no commissions were paid.
On May 25, 1999, under terms of a Compromise and Settlement Agreement,
we issued 750,000 shares of common stock as settlement of obligations owing to
Corporate Solutions, LLC for consulting services rendered. The amount of the
outstanding claims was approximately $310,000, at a per share price of $0.40.
The shares were issued in reliance upon the exemption from registration provided
by Section 4(2) of the Securities Act.
On December 31, 1999, we completed a private placement of 19,164,452
shares of our common stock to a group of accredited purchasers as defined under
Rule 502 of Regulation D. Our common stock was sold for between $0.05 and $0.435
per share. No underwriters were used in completing these transactions. We raised
approximately $4,310,505. In addition, approximately 2,377,340 shares of the
total number of shares issued were granted to one individual in consideration of
consulting services. The shares were issued in reliance upon the
exemption to registration provided by section 4(2) of the Securities Act and
Rule 506 of Regulation D promulgated thereunder.
On March 1, 2000, we issued 181,100 shares of common stock to four
individuals in connection with the purchase of all outstanding shares of Digital
Way, S.A., a Peruvian company. These shares were issued in reliance upon the
exemption from registration provided by Section 4(2) of the Securities Act.
On March 17, 2000, we issued 1,763,372 shares of common stock to
Douglas Haffer. Mr. Haffer was entitled to receive a similar number of shares
for services rendered to Worldwide Wireless, Inc. in 1998. Mr. Haffer
transferred his right to receive those shares from Worldwide Wireless, Inc. to
us in exchange for the 1,763,372 shares of common stock we issued to him. We
retain the right to receive shares from Worldwide Wireless, Inc. - Worldwide
Wireless, Inc. has yet to satisfy this obligation. The shares we issued to Mr.
Haffer were issued in reliance upon the exemption from registration provided by
Section 4(2) of the Securities Act.
On March 21, 2000, we completed a private placement of 3,687,000 shares
of our common stock to a group of accredited investors. Our common stock was
sold for between $0.30 and $3.20 per share. We raised $3,861,280. We believe
that we have satisfied the exemption from the securities registration
requirements provided by section 4(2) of the Securities Act and Rule 506 of
Regulation D promulgated thereunder in this offering. The securities were sold
in a private placement to only accredited investors.
On April 14, 2000, we sold $1,312,000 of 4% convertible subordinated
debentures and related warrants to seven investors pursuant to the exemption
from the securities regulation requirement provided by section 4(2) of the
Securities Act. The convertible debentures are convertible at the election of
the holders into shares of common stock. In connection with this offering, the
seven investors also received warrants to purchase a total of 3,600,000 shares
of our common stock at an exercise price equal to 120% of the market price of
our common stock as of the date the warrants were issued. The warrants are
exercisable when issued and have a term of five years. The securities were sold
in a private placement to only accredited investors pursuant to 4(2) of the
Securities Act.
During the period from our incorporation through the present we have
granted options to purchase options to purchase common stock to our employees,
officers and consultants pursuant to our 1998 stock option plan. These options
were granted pursuant to the exemption from the registration requirements set
forth in Section 3(b) of the Securities Act and Rule 701 promulgated thereunder.
The option share exercise prices between $0.095 and $1.62 per share. No payment
was received by the company in connection with the grant of the options.
Item 27. EXHIBITS
ITEM (601) DOCUMENT
3.1 Articles of Incorporation
3.2 Amendment to Articles of Incorporation filed
3.3 Amendment to Articles of Incorporation filed
3.4 By-laws
4.1.1 Form of Certificate Evidencing shares of Common Stock of World Wide
Wireless Communications, Inc.
4.2 Convertible Unsecured Debenture for $740.000 issued by World Wide
Wireless Communications, Inc. to Credit Bancorp
5.1 Opinion of Evers & Hendrickson, LLP with respect to the legality of the
shares being registered
10.1 Lease Agreement Between World Wide Wireless Communications, Inc. and
Shekinah Network
10.2 South Bend MMDS Lease Agreement
10.3 Lease Agreement Between World Wide Wireless Communications, Inc. and
Shekinah Network Vail, Colorado
10.4 Lease Agreement Between World Wide Wireless Communications, Inc. and
Shekinah Network Aspen, Colorado
10.5 Lease Agreement Between World Wide Wireless Communications, Inc. and
Shekinah Network Casper, Wyoming
10.6 Lease Agreement Between World Wide Wireless Communications, Inc. and
Shekinah Network Grand Rapids, Michigan
10.7 Lease Agreement Between World Wide Wireless Communications, Inc. and
Shekinah Network La Grande, Oregon
10.8 Lease Agreement Between World Wide Wireless Communications, Inc. and
Shekinah Network Pierre, South Dakota
10.9 Lease Agreement Between World Wide Wireless Communications, Inc. and
Shekinah Network Ukiah, California
10.10 Lease Agreement Between World Wide Wireless Communications, Inc. and
Shekinah Network Key West, Florida
10.11 Stock Purchase Agreement dated November 30, 1999 Between Infotel
Argentina S.A. and World Wide Wireless Communications, Inc.
10.12 Agreement for Purchase of All Outstanding Shares of Digital Way, S.A.
by World Wide Wireless Communications, Inc., dated February 29, 2000
10.13 Letter of Intent dated March 11, 2000 Between SALTEL and World Wide
Wireless Communications, Inc.
10.14 Security Purchase Agreement Among World Wide Wireless Communications,
Inc. and the Purchasers Named Therein
10.15 Registration Rights Agreements Among World Wide Wireless
Communications, Inc. and the Purchasers Named Therein
10.16 Escrow Agreement Among the Purchasers Named Therein, the Representative
of the Purchasers and the Escrow Agent
10.17 Form of Debenture of World Wide Wireless Communications, Inc. with
Respect to the 4% Convertible Debenture Due 2005
10.18 Form of Warrant to Purchase Shares of World Wide Communications, Inc.
Issued in the Offering
10.19 Compromise and Settlement Agreement between World Wide Wireless
Communications, Inc. and Corporate Solutions LLC, dated May 25, 1999
23.1 Consent of Evers & Hendrickson, LLP
23.2 Consent of Reuben E. Price & Co.
27.1 Financial Data Schedule from September 30, 1999 Balance Sheet.
27.2 Financial Data Schedule from unaudited March 31, 2000 Balance Sheet.
99.1 Form of Subscription Agreement
Item 28. UNDERTAKINGS
a) The Registrant hereby undertakes that it will:
1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in
the information in the registration statement; and
(iii) Include any additional or changed material information on the
plan of distribution.
2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the bona fide
offering.
3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the Offering.
b) Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the small business issuer of expenses incurred or
paid by a director, officer or controlling person of the small business issuer
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
c) The Registrant hereby undertakes that:
1) For the purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and this offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe the registrant
meets all of the requirements of filing on Form SB-2 and authorized this
registration statement (pre-effective amendment no. 8) to be signed on its
behalf by the undersigned on June 30, 2000.
World Wide Wireless Communications, Inc.
By: Wayne Caldwell By: Douglas P. Haffer
---------------------------- ----------------------------
Wayne Caldwell Douglas P. Haffer
Vice President President and Chief Executive
Officer
In accordance with the requirements of the Securities Act of 1933, this
registration statement (pre-effective amendment no. 8) has been signed by the
following persons in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
Douglas P. Haffer President & CEO & Chairman June 30, 2000
- ---------------------------
Douglas P. Haffer
Wayne Caldwell Vice President and Director June 30, 2000
- ---------------------------
Wayne Caldwell