1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
----------
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MARCH 31, 2001
Commission file number 001-15837
----------------------------------
WORLD WIRELESS COMMUNICATIONS, INC.
-----------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Nevada 87-0549700
------------------------------- -------------------
(State of other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
5670 Greenwood Plaza Boulevard Penthouse Greenwood Village, Colorado 80111
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number (303) 221-1944
--------------
Indicate by check mark whether registrant (1) filed all reports required to be
filed by Section 13 or 15 (d) of the Exchange Act during the preceding 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes X No .
--- ---
As of April 30, 2001 there were 31,222,181 shares of the Registrant's Common
Stock, par value $0.001, issued and outstanding.
2
TABLE OF CONTENTS
PART I. Financial Information
Item 1. Financial Statements:
Statement Regarding Forward-Looking Disclosure..............................................1
Condensed Consolidated Balance Sheets (Unaudited) - as of
March 31, 2001 and December 31, 2000........................................................2
Condensed Consolidated Statements of Operations - (Unaudited)
for the Three Months Ended March 31, 2001 and March 31, 2000 ...............................4
Condensed Consolidated Statements of Cash Flow (Unaudited) -
for the Three Months Ended March 31, 2001 and March 31, 2000................................5
Notes to Condensed Consolidated Financial Statements (Unaudited)............................7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operation...................................................................10
PART II. Other Information
Item 1. Legal Proceedings..........................................................................14
Item 2. Changes in Securities and Use of Proceeds..................................................14
Item 6. Exhibits and Reports on Form 8-K...........................................................14
Signatures.................................................................................15
3
PART I - FINANCIAL INFORMATION
STATEMENT REGARDING FORWARD-LOOKING DISCLOSURE
This report includes "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, which represent the expectations or beliefs of
World Wireless Communications, Inc. and our subsidiaries (collectively the
"Company", "we" or "us") concerning future events that involve risks and
uncertainties, including and without limitation, (i) those associated with the
ability of the Company to obtain financing for our current and future
operations, to manufacture (or arrange for the manufacturing of) our products,
to market and sell our products, and our ability to establish and maintain our
sales of X-traWeb (TM) products, (ii) general economic conditions and (iii)
technological developments by us, our competitors and others. All statements
other than statements of historical facts included in this Report including,
without limitation, the statements under "Management's Discussion and Analysis
of Results of Operations and Financial Condition" and elsewhere herein, are
forward-looking statements. Although we believe that the expectations reflected
in such forward-looking statements are reasonable, we cannot assure you that
such expectations will prove to have been correct. Important factors that could
cause actual results to differ materially from our expectations ("Cautionary
Statements") are disclosed in this Report, including, without limitation, in
connection with the forward-looking statements included in this report. All
subsequent written and oral forward-looking statements attributable to us or
persons acting on our behalf are expressly qualified in their entirety by the
Cautionary Statements.
-1-
4
ITEM 1. FINANCIAL STATEMENTS
WORLD WIRELESS COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
MARCH 31, DECEMBER 31,
2001 2000
------------ ------------
CURRENT ASSETS
Cash and cash equivalents $ 988,063 $ 3,097,624
Investment in securities available-for-sale 30,015 19,109
Trade receivables, net of allowance for doubtful
accounts 381,031 347,218
Other receivables 54,669 57,345
Inventory 608,672 558,076
Prepaid expenses 346,694 71,891
------------ ------------
TOTAL CURRENT ASSETS 2,409,144 4,151,263
------------ ------------
EQUIPMENT, NET OF ACCUMULATED DEPRECIATION AND
IMPAIRMENTS 581,039 575,475
------------ ------------
GOODWILL, NET OF ACCUMULATED AMORTIZATION 171,428 214,286
------------ ------------
OTHER ASSETS, NET OF ACCUMULATED AMORTIZATION 54,536 28,863
------------ ------------
TOTAL ASSETS $ 3,216,147 $ 4,969,887
============ ============
(CONTINUED)
The accompanying notes are an integral part of these condensed
consolidated financial statements.
-2-
5
WORLD WIRELESS COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
MARCH 31, DECEMBER 31,
2001 2000
------------ ------------
CURRENT LIABILITIES
Trade accounts payable $ 531,038 $ 540,899
Accrued liabilities 211,046 371,149
Other liabilities 35,668 13,077
Notes payable 58,580 --
Obligation under capital leases - current portion 6,453 19,374
------------ ------------
TOTAL CURRENT LIABILITIES 842,785 944,499
------------ ------------
LONG-TERM OBLIGATION UNDER CAPITAL LEASES 9,081 9,633
------------ ------------
STOCKHOLDERS' EQUITY
Common stock - $0.001 par value; 50,000,000
shares authorized; issued and outstanding:
31,222,181 shares at March 31, 2001 and
31,208,847 shares at December 31, 2000 31,221 31,209
Additional paid-in capital 48,919,000 48,901,546
Accumulated other comprehensive loss (65,113) (56,764)
Unearned compensation (8,017) (16,072)
Accumulated deficit (46,512,810) (44,844,164)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 2,364,281 4,015,755
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,216,147 $ 4,969,887
============ ============
The accompanying notes are an integral part of these condensed
consolidated financial statements.
-3-
6
WORLD WIRELESS COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS
ENDED MARCH 31,
2001 2000
------------ ------------
SALES $ 258,491 $ 510,815
COST OF SALES 130,471 428,106
------------ ------------
GROSS PROFIT 128,020 82,709
------------ ------------
EXPENSES
Research and development expense 153,799 237,742
Selling, General and administrative
expenses 1,622,602 1,143,467
Manufacturing activity exit costs -- (72,624)
Amortization of goodwill 42,858 42,858
------------ ------------
TOTAL EXPENSES 1,819,259 1,351,443
------------ ------------
LOSS FROM OPERATIONS (1,691,239) (1,268,734)
OTHER INCOME/(EXPENSE):
Interest expense (1,452) (107,483)
Other income 24,045 85,352
------------ ------------
NET LOSS (1,668,646) (1,290,865)
Preferred Stock Dividend -- (6,720)
------------ ------------
NET LOSS APPLICABLE TO
COMMON STOCKHOLDERS $ (1,668,646) $ (1,297,585)
============ ============
Basic and Diluted Loss Per
Common Share $ (0.05) $ (0.05)
============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES USED IN PER SHARE
CALCULATION 31,213,292 24,124,702
The accompanying notes are an integral part of these condensed
consolidated financial statements.
-4-
7
WORLD WIRELESS COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTHS
ENDED MARCH 31,
------------------------------
2001 2000
------------ ------------
CASH FLOW FROM OPERATING ACTIVITIES
Net Loss $ (1,668,646) $ (1,290,865)
Adjustments to reconcile net loss
to net cash used by operating activities:
Amortization of goodwill 42,858 42,858
Depreciation 32,507 23,447
Amortization of unearned compensation 8,055 8,055
Loss on sale of securities 2,167 --
Valuation allowance on inventory -- (72,624)
Provision for doubtful accounts receivable -- 93,304
Changes in operating assets and liabilities:
Accounts receivable (31,137) 132,379
Inventory (50,596) 226,261
Prepaid expenses/other assets (300,476) (27,986)
Accounts payable (9,861) (230,948)
Accrued liabilities (137,512) 4,254
------------ ------------
NET CASH AND CASH EQUIVALENTS USED BY OPERATING
ACTIVITIES (2,112,641) (1,091,865)
------------ ------------
CASH FLOW FROM INVESTING ACTIVITIES
Payments for the purchase of property and equipment (38,071) (22,769)
Proceeds from sale of property and equipment -- 93,997
Proceeds from sale of securities 4,564 --
------------ ------------
NET CASH AND CASH EQUIVALENTS
PROVIDED (USED) BY INVESTING ACTIVITIES (33,507) 71,228
------------ ------------
The accompanying notes are an integral part of these condensed
consolidated financial statements.
-5-
8
(CONTINUED)
WORLD WIRELESS COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
FOR THE THREE MONTHS
ENDED MARCH 31,
------------------------------
2001 2000
------------ ------------
CASH FLOW FROM FINANCING ACTIVITIES
Net proceeds from issuance of common stock $ -- $ 12,265,217
Proceeds from exercise of options 17,467 --
Proceeds from exercise of warrants -- 1,348,422
Redemption of preferred stock -- (950,000)
Proceeds from borrowings, net of discounts 65,600 --
Principal payments on notes payable (7,020) (3,330,244)
Principal payments on obligation under capital lease (13,473) (36,516)
Payment of preferred dividends -- (57,378)
------------ ------------
NET CASH AND CASH EQUIVALENTS PROVIDED BY
FINANCING ACTIVITIES 62,574 9,239,501
------------ ------------
EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS (25,987) --
------------ ------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (2,109,561) 8,218,864
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 3,097,624 893,849
------------ ------------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 988,063 $ 9,112,713
============ ============
SUPPLEMENTAL CASH FLOW INFORMATION -
Cash paid for interest was $1,452 and $183,577, in 2001 and 2000 respectively.
NON-CASH INVESTING AND FINANCING ACTIVITIES - NOTES 3 AND 5
The accompanying notes are an integral part of these condensed
consolidated financial statements.
-6-
9
WORLD WIRELESS COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1-- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - The accompanying condensed
consolidated financial statements are unaudited. In the opinion of management,
all necessary adjustments (which include only normal recurring adjustments) have
been made to present fairly the financial position, results of operations and
cash flows for the periods presented. Certain information and note disclosure
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. It is suggested
that these condensed consolidated financial statements be read in conjunction
with the financial statements and notes thereto included in the December 31,
2000 annual report on Form 10-K. The results of operations for the three month
period ended March 31, 2001 are not necessarily indicative of the operating
results to be expected for the full year.
MAJOR CUSTOMERS -Sales to major customers are defined as sales to any one
customer which exceeded 10% of total sales in any of the two reporting periods.
Sales to the major customers during each of the three months ended March 31,
2001 and 2000 are as follows: Customer "A" represented 0% and 48.8% of sales,
respectively; Customer "B" represented 0% and 13.7% of sales respectively;
Customer "C" represented 33.1% and 0%, respectively.
INVENTORY - Inventory is stated at the lower of cost or market. Cost is
determined using the first-in, first-out method. As of March 31, 2001 and
December 31, 2000 inventory consisted of the following:
March 31, December 31
2001 2000
------------ ------------
Materials $ 391,368 $ 297,147
Finished goods 217,304 260,929
------------ ------------
Total $ 608,672 $ 558,076
============ ============
LOSS PER SHARE - Basic loss per common share is computed by dividing net loss by
the weighted- average number of common shares outstanding during the period.
Diluted loss per share reflects potential dilution which could occur if all
potentially issuable common shares from stock purchase warrants and options or
convertible notes payable and preferred stock resulted in the issuance of common
stock. In the present position, diluted loss per share is the same as basic loss
per share because the inclusion of potentially issuable common shares at March
31, 2001 and 2000, respectively, would have decreased the loss per share and
have been excluded from the calculation.
COMPREHENSIVE INCOME/(LOSS) - Comprehensive income/(loss) provides a measure of
overall Company performance that includes all changes in equity resulting from
transactions and events other than capital transactions. The Company's
comprehensive income and loss for the three months ended March 31, 2001 and 2000
are as follows:
-7-
10
WORLD WIRELESS COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
For the Three Months
Ended March 31,
2001 2000
------------ ------------
Net Loss $ (1,668,646) $ (1,290,865)
Unrealized Gain
on Marketable Equity Securities 17,638 65,202
Effect of foreign currency translation (25,987) --
Comprehensive Loss ------------ ------------
for the Period $ (1,676,995) $ (1,225,663)
============ ============
NOTE 2 - EXIT FROM MANUFACTURING ACTIVITIES
During the fourth quarter of 1999, the Company executed a plan to focus its
efforts primarily on enhancing and marketing its X-traWeb (TM) products whereby
all contract manufacturing was discontinued, all in-house production would be
outsourced and the Company would move its executive offices to the Denver,
Colorado area. The plan also involved liquidating the Company's raw materials
and work in process inventory and selling all equipment used in production and
contract manufacturing. The Company was able to effect the inventory liquidation
under terms more favorable than previously estimated, resulting in a recovery of
$72,624 of inventory impairment previously charged to operations. The recovery
was recognized as a credit to manufacturing activity exit costs during the three
months ended March 31, 2000.
The Company completed its relocation to the Denver, Colorado area in March 2000.
NOTE 3 - STOCKHOLDERS' EQUITY
During the first quarter of 2000, the Company issued 4,548,557 common shares for
gross cash proceeds of $13,646,000 received from 45 accredited investors in a
private placement offering, at $3.00 per share. These securities are exempt from
registration under the Act. In connection with the offering, a total of
$1,512,782 was incurred as placement costs.
During March 2000, the Company issued a total 5,393,690 common shares related to
the exercise of warrants to purchase common stock at $.25 per share. The Company
received $401,220 in cash and recorded $947,203 related to the cashless exercise
of warrants as a deemed payment of the principal of the 1999 Notes, as described
in Note 5 - Notes Payable.
-8-
11
WORLD WIRELESS COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
In March 2000, the Company also issued 16,474 shares of common stock upon the
cashless exercise of 18,333 stock options.
Options for 13,334 shares were exercised in March 2001 at a price of $1.31 per
share, for proceeds of $17,467.
NOTE 4 - MANDATORILY REDEEMABLE PREFERRED STOCK
On May 14, 1999 the Company authorized 950 shares of senior liquidating
mandatorily redeemable 10% preferred stock with a liquidation preference of
$1,000 per share and detachable five-year warrants to purchase 4,750,000 common
shares at $0.25 per share, and issued such 950 shares of preferred stock and the
related warrants between May 15, 1999 and October 5, 1999. By their terms, the
preferred shares had to be redeemed within one year at their par value plus
accrued dividends. The preferred stock cash dividend requirement was $95,000
annually. The preferred stock was issued for proceeds of $950,000 consisting of
$700,000 cash and the deemed payment of $250,000 principal amount of 1998 bridge
loan notes.
On February 25, 2000, the Company redeemed the mandatorily redeemable preferred
stock for cash of $950,000 for the principal balance and $57,378 for the accrued
preferred dividends accrued to date.
NOTE 5 - NOTES PAYABLE
On May 14, 1999 the Company issued $2,600,000 of senior secured 16% notes
payable ("the 1999 Notes") which were to mature in one year and bore interest at
the rate of 16% annually and payable quarterly. The notes were issued for
$2,600,000 consisting of $1,600,000 in cash and the deemed payment of $1,000,000
principal amount of the 1998 bridge loan notes. The 1999 Notes were secured by
substantially all the Company's assets.
In March 2000, the Company paid off the 1999 Notes outstanding with cash in the
amount of $2,377,623 and with the deemed proceeds from the exercise of warrants
to purchase 3,788,813 common shares at $.25 per share. The portion of the 1999
Notes paid by the exercise of warrants was $947,203. The warrants exercised are
included in the total warrants issued during the three months ended March 31,
2000 as discussed in Note 3.
NOTE 6 - BUSINESS SEGMENT INFORMATION
As of March 31, 2001 the Company's operations are classified into two reportable
business segments: X-traWeb products and radio products. Corporate includes
income, expenses, and assets that are not allocable to a specific business
segment, or relate to activities no longer being pursued.
Segment operating income is total segment revenue reduced by operating expenses
identifiable with or allocable to that business segment. The Company evaluates
performance of its segments based on revenues and operating income.
-9-
12
For the Three months Ended
March
-----------------------------
2001 2000
------------ ------------
Revenues:
X-traWeb (TM) $ 104,162 $ 37,826
Radio products 144,950 188,360
Corporate 9,379 284,629
------------ ------------
Total sales $ 258,491 $ 510,815
============ ============
Operating loss:
X-traWeb (TM) $ 1,066,058 $ 432,965
Radio products 625,181 545,148
Corporate -- 290,621
------------ ------------
Total operating loss $ 1,691,239 $ 1,268,734
============ ============
As of
March 31, December 31,
2001 2000
------------ ------------
Assets:
X-traWeb (TM) $ 1,107,193 $ 1,324,821
Radio products 242,471 642,595
Corporate 1,866,483 3,002,471
------------ ------------
Total assets $ 3,216,147 $ 4,969,887
============ ============
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
When used in this discussion, the words "expect(s)", "feel(s)", "believe(s)",
"will", "may", "anticipate(s)" and similar expressions are intended to identify
forward-looking statements. Such statements are subject to certain risks and
uncertainties, which could cause actual results to differ materially from those
projected. Readers are cautioned not to place undue reliance on these forward-
looking statements, and are urged to carefully review and consider the various
disclosures elsewhere in this Report which discuss factors which affect our
business.
The following discussion should be read in conjunction with our Consolidated
Financial Statements and respective notes thereto, and Selected Consolidated Pro
Forma and Historical Financial Data.
RESULTS OF OPERATIONS
Three Months Ended March 31, 2001 and Three Months Ended March 31, 2000
We incurred a net loss of $1,668,646 for the three-month period ended March 31,
2001, or a $.05 loss per share, compared to a net loss of $1,297,585 or a $.05
loss per share, for the three months ended March 31, 2000. While our per share
loss remained the same during the two quarters ended March 31, 2001 and March
31, 2000, our net loss for the first quarter of 2001 increased by $371,061 due
-10-
13
to our increased amount of selling, general and administrative expenses incurred
in connection with the marketing of our X-traWeb(TM) products and services.
Sales for the three-month period ended March 31, 2001 totaled $258,491 compared
to $510,815 during the three months ended March 31, 2000, or a decrease of
$252,324 or 49%. During the comparative first quarter of 2001 and 2000, we
derived our revenue as follows:
For the Three Months Ended March 31,
------------------------------------
Summary of Revenue by Segment 2001 2000
------------ ------------
X-traWeb(TM) $ 104,162 $ 37,826
Radio products 144,950 188,360
Corporate 9,379 284,629
------------ ------------
Total Revenue $ 258,491 $ 510,815
============ ============
During the first quarter of 2001, we continued to implement our strategic plan
to focus our efforts on the X-traWeb(TM) product line, and our results reflect
that we abandoned our contract and in- house manufacturing activities. Of the
$104,162 in revenue derived from the X-traWeb(TM) product line, $19,000 resulted
from engineering revenue related to proof-of-concept and similar development
activities. In addition, contract manufacturing revenue, included in corporate
revenues, decreased by $71,545 or 100% as the result of our exit from this
activity.
Our business strategy continues to include revenue from the production of radio
products, which totaled $144,950 for the three-month period ended March 31,
2001, compared to $188,360 for the three months ended March 31, 2000, a decrease
of $43,410 or 23%. Finally, royalties contributed $9,379 in corporate revenues
during the three-month period ended March 31, 2001, compared to $213,084 for the
three months ended March 31, 2000, a decrease of $203,705 or 96%. Since the
license agreement with our primary customer expired by its terms in September,
2000, we received greatly reduced royalty income during the first quarter of
2001.
During June 2000, we formed a new operating subsidiary, X-traWeb Europe S.p.A.,
based in Milan, Italy. This subsidiary is responsible for the development and
sale of X-traWeb(TM) products through European markets, commencing with the
country of Italy. No revenues had been realized from the European operation
during the quarter ended March 31, 2001. In addition, we formed two additional
operating subsidiaries, X-traWeb Services Corp. and X-traWeb Financial Corp. in
June 2000, which are designed to offer various services of X-traWeb products and
to provide financing capability of sales of X-traWeb products or services,
respectively, although neither entity derived any revenues as of March 31, 2001.
Our cost of sales for the three-month period ended March 31, 2001 declined to
$130,470 from a total of $428,106 for the three months ended March 31, 2000, or
a reduction of $297,636 or 70%. The resulting gross profit was $128,020, or
49.5% of sales, for the three-month period ended March 31, 2001 compared to
$82,709, or 16.2%, for the three months ended March 31, 2000. This represents
-11-
14
an improvement of 33.3% in gross profit margin percentage for the comparable
periods, attributable primarily to the exit from contract manufacturing.
Our research and development expenses decreased to $153,799 from $237,742, or by
$83,943, or 35.3%, for the comparable three month periods ended March 31, 2001
versus March 31, 2000. These costs continue to relate to the ongoing application
development of the X-traWeb(TM) propriety technology in 2001.
Our total selling, general, and administrative expenses amounted to $1,622,602
for the three-month period ended March 31, 2001 compared to $1,143,467 for the
three months ended March 31, 2000, representing an increase of $479,135, or
41.9%. Selling and marketing expenses increased by $26,300, or 10%, during the
three-month period ended March 31, 2001 over the three months ended March 31,
2000 and represents an increase in advertising, promotion, and sales related
travel to market our X-traWeb(TM) products as discussed above. Total general
and administrative expenses for the comparable March 31, 2001 and March 31, 2000
period increased by $452,835, or 51.6%, and resulted from (1) expenses of
$80,000 for the general operating expenses of the X-traWeb(TM) Europe offices,
(2) increases of $401,000 in compensation and benefits, (3) increases in rent
expense of $28,000, (4) increases in depreciation of $20,000, (5) increases in
accounting and audit fees of $19,000, and stock exchange fees expense for the
American Stock Exchange of $14,500. These expenses were partially offset by(1) a
decrease in bad debt expense of $93,000, and (2) a savings of $46,000 in
consulting and legal fees.
Our interest income for the three-month period ended March 31, 2001 was $24,045
compared to $75,972 for the three months ended March 31, 2000, with the decrease
of $51,927 directly attributable to decreased available funds in overnight
interest bearing accounts initially provided by the $13.6 million private
placement of shares of our Common Stock we sold in the first quarter of 2000.
Interest expense declined to $1,452 during the three-month period ended March
31, 2001 compared to $107,483 for the three months ended March 31, 2000, and
represents a decrease of $106,031, or 98.6%. This expense reduction is directly
related to our retirement of substantially all of our debt, and related debt
discount amortization, in the first quarter of 2000.
LIQUIDITY AND CAPITAL RESOURCES
Our liquidity at March 31, 2001 consisting of cash and cash equivalents was
$988,063, which represents a decrease of $2,109,561 over our cash and cash
equivalents of $3,097,624 as of December 31, 2000. Our current assets were
$2,409,144 as of March 31, 2001, a decrease of $1,742,119 from our current
assets of $4,151,263 as of December 31, 2000.
As of March 31, 2001, our total liabilities were $851,866, which was a decrease
of $102,266 from our total liabilities of $954,132 as of December 31, 2000.
In March 2001, we issued shares of our common stock related to the exercise of
an option to purchase 13,334 shares of common stock at $1.31 per share and
received cash proceeds of $17,467.
Our liquidity decreased significantly due to our net loss and due to changes in
operating assets and liabilities during the three-month period ended March 31,
2001. For the quarter ended March 31, 2001, the net change in operating assets
and liabilities generated a decrease of net cash flow of $529,582 compared to a
net increase of cash for the three months ended March 31, 2000 of $103,960.
-12-
15
SUMMARY
During 2000, we implemented our redirection efforts to focus on the growth of
our X-traWeb(TM) business segment and proprietary radio products. We raised
$13,646,000 million in new equity capital, paid off substantially all
outstanding debt, redeemed all mandatorily redeemable preferred stock
outstanding, relocated our corporate headquarters to the Denver, Colorado area,
and exited from all in-house manufacturing activities, including termination of
our lease obligation for facilities in Utah. During the first quarter of 2001,
we continued to focus on our sales of X-traWeb (TM) products and services.
Also, we realized revenues from the sales of our X-traWeb products for the first
time during 2000 and also signed various marketing alliance agreements during
the year. While we believe that (i) a number of our pending proposals for
projects or products will be accepted in whole or in part, (ii) we will develop
additional sources of sales in the United States, Italy and other foreign
countries and (iii) will derive substantial revenues therefrom in 2001 and
thereafter, we cannot assure you that any such sales will be made or the amount
thereof, although we anticipate that X-traWeb(TM) product sales will constitute
the bulk of our revenues during the year 2001 and thereafter. We also believe
that we will derive significant revenues from the sale of our proprietary radio
products in the future, but we cannot assure you as to the amount of such sales
or when such sales will occur. We do not expect the sales of our antenna
products to contribute materially to our consolidated net sales or income in the
foreseeable future.
While we recently hired additional engineering personnel, we believe that the
potential growth of current products will require additional engineering
personnel for our X-traWeb(TM) business in advance of the receipt of substantial
revenues from such source. As a result, we will continue to recruit such
personnel actively and expend funds for such purpose.
Based on our current cash position and our plans for 2001, we believe that
additional capital will be required by the end of May 2001. We have obtained a
financing commitment letter totaling $4,000,000, to be provided as private
equity placements, which management believes will be adequate to fund our
operations in 2001.
In summary, while we are optimistic about our future, we are fully aware that
anticipated revenue increases from sales of our X-traWeb(TM) products and our
proprietary radios are by no means assured, and that our requirements for
capital are substantial. If significant revenues with adequate margins are not
generated to supplement the additional financing, we have a contingency plan to
reduce overhead and other operating costs so as to remain a going concern. These
contingency plans, however, would require reductions in product development and
marketing costs, which could impact the timing and ultimate amount of future
revenues.
-13-
16
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On February 20, 2001 certain parties filed a lawsuit against us with respect to
the purchase of a total of 230,000 shares of our common stock at $3.00 per share
in a private placement transaction in February 2000. The plaintiffs seek
rescission of the transaction and/or damages, including treble damages, which
they allege arise out of our failure to file a registration statement on or
before December 31, 2000. We believe that we have meritorious defenses to such
action and intend to prosecute our defense of the action vigorously, but there
can be no assurance as to the outcome thereof.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
We made one sale of shares of our Common Stock during the first quarter of 2001
as listed below which is exempt from registration as set forth below:
In March, 2001, we issued 13,334 shares of our Common Stock to Charles G.
Sherwood, pursuant to his exercise of an employee stock option at an exercise
price of $1.31 per share, in cash. The shares were issued in reliance upon
Section 4(2) of the Act.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following reports on Form 8-K were filed by us during the quarter
ended March 31, 2001: We filed Form 8-K on February 26th, 2001 with
respect to Item 5 ("Other Events") describing the lawsuit filed against
us, which has been previously discussed in Part II, Item 1, Legal
Proceedings, above.
-14-
17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned,
there unto duly authorized.
DATE: May 15, 2001
WORLD WIRELESS COMMUNICATIONS, INC.
By: /s/ David D. Singer
---------------------------------------
David D. Singer
President, Chief Executive Officer
By: /s/ Robert Hathaway
---------------------------------------
Robert Hathaway
Vice President Finance and
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
-15-