SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
[(AMENDMENT NO. 3)]
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use for the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
World Wireless Communications, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies: Common
Stock, par value $.001 per share
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing of registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registrant Statement No.:
(3) Filing Party:
(4) Date Filed:
World Wireless Communications, Inc.
NOTICE OF THE SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 15, 2002
Greenwood Village, Colorado
February 18, 2002
To the Stockholders of
World Wireless Communications, Inc.:
NOTICE IS HEREBY GIVEN that the Special Meeting of the Stockholders of
World Wireless Communications, Inc. (the "Company") will be held on March 15,
2002 at 9 A.M., Central Standard Time, at 5670 Greenwood Plaza Boulevard,
Penthouse, Greenwood Village, Colorado 80111, for the following purposes:
1. To approve (a) the mandatory conversion of up to $5,000,000 in
principal amount of the Company's Senior Secured Notes
issuable to a group comprising the Company's largest
stockholder, Michael Lauer, Lancer Offshore, Inc. and Lancer
Partners L.P., and their affiliates (including the Senior
Secured Notes dated May 17, 2001, August 7, 2001, September 6,
2001, September 17, 2001, October 3, 2001, October 9, 2001,
October 29, 2001, November 14, 2001, January 25, 2002 and
February 8, 2002 totaling $3,810,000 in principal amount
issued to such group as of February 8, 2002), into up to
100,000,000 shares of the Company's Common Stock and (b) the
issuance of up to 2,500,000 shares of the Company's Common
Stock pursuant to the exercise of the warrants which may be
granted to such creditors in connection with such financing
(including the warrants to purchase 1,905,000 shares
outstanding as of February 8, 2002);
2. To approve (a) the mandatory conversion of the Company's
shares of Senior Preferred Stock potentially issuable in a
financing into up to 16,666,667 shares of the Company's Common
Stock and (b) the potential issuance of up to 8,333,333 shares
of the Company's Common Stock pursuant to the exercise of the
warrants issued to the holders of the Senior Preferred Stock;
3. To approve the potential issuance of up to 20,000,000 shares
of the Company's Common Stock pursuant to the Company's
financing agreement with Cornell Capital Partners LP;
4. To approve an amendment to the Company's Articles of
Incorporation increasing the Company's authorized capital
stock from 50,000,000 shares of Common Stock, $.001 par value,
to 225,000,000 shares of Common Stock, $.001 par value; and
5. To consider and act upon any other matters which may properly
come before the meeting or any adjournment or postponement
thereof.
Stockholders of record at the close of business on January 29, 2002
will be entitled to notice of and to vote at the meeting or any adjournment
thereof.
By Order of the Board of Directors
David D. Singer
President
- --------------------------------------------------------------------------------
IF YOU ARE UNABLE TO BE PRESENT AT THE MEETING, YOU ARE REQUESTED TO
COMPLETE, DATE, AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
World Wireless Communication, Inc.
PROXY STATEMENT
RECORD DATE, SOLICITATION, VOTING AND REVOCABILITY OF PROXIES, VOTING RIGHTS
This Proxy Statement and the accompanying Notice of Special Meeting and
form of proxy are being furnished to the holders of the Common Stock of World
Wireless Communications, Inc. (the "Company") in connection with the
solicitation by the Board of Directors of the Company of proxies to be used at
the Special Meeting of Stockholders to be held on March 15, 2002 at 9 A.M.,
Central Standard Time, at 5670 Greenwood Plaza Boulevard, Penthouse, Greenwood
Village, Colorado 80111, and at any adjournment of postponement thereof (the
"Special Meeting"). The close of business on January 29, 2002 is the record date
for the determination of stockholders entitled to notice of and to vote at the
Special Meeting.
This Proxy Statement and proxies for use at the meeting will be mailed
to stockholders on or about February 18, 2002, and such proxies will be
solicited chiefly by mail, but additional solicitations may be made by telephone
or in person by the officers, directors or regular employees of the Company. The
Company may enlist the assistance of brokerage houses in soliciting proxies. All
solicitation expenses, including costs of preparing, assembling and mailing
proxy material, will be borne by the Company.
A form of proxy for use at the meeting and a return envelope for the
proxy are enclosed. Stockholders may revoke the authority granted by their
execution of proxies at any time before their effective exercise by filing with
the Secretary of the Company a written revocation or a duly executed proxy
bearing a later date or by voting in person at the meeting. Shares represented
by executed and unrevoked proxies will be voted in accordance with the choice or
instructions specified thereon. If no instructions are given, the proxies intend
to vote the shares represented thereby for all of the Proposals No. 1, 2, 3 and
4 as set forth in the accompanying Notice of Special Meeting of Stockholders,
and in accordance with their best judgment on any other matters that may
properly come before the meeting.
As the close of business on January 31, 2002, the Company had
31,387,087 shares of Common Stock, $.001 par value, issued and outstanding. Each
share of Common Stock is entitled to one vote on all matters presented at the
Special Meeting. The presence, whether in person or by duly executed proxy, of
the holders of one-third of outstanding shares of Common Stock entitled to vote
at a meeting is necessary to constitute a quorum. Shares that reflect
abstentions or "broker non-votes" (i.e., shares held by brokers that are
represented at the meeting but as to which such brokers have not received
instructions from the beneficial owners and with respect to one or more but not
all issues, such brokers do not have discretionary voting power to vote such
shares) will be counted for purposes of determining whether a quorum is present
for the transaction of business at the meeting but will not be counted as votes
on any proposals at the meeting. Accordingly, abstentions and broker non-votes
will have no impact on the outcome of the vote on all of the Proposals No. 1, 2,
3 and 4. The affirmative vote of the holders of a plurality of the shares of
Common Stock present or represented and actually voted at the meeting is
required for the approval of each of the Proposals.
The Board of Directors knows of no matters, other than stated above, to
be presented for consideration at the Special Meeting. If, however, any other
matters properly come before the Special Meeting or any adjournment or
postponement thereof, it is the intention of the persons named in the enclosed
proxy to vote the shares represented by the proxy in accordance with their
judgment on any such matters. The persons named in the enclosed proxy may also,
if a quorum is not present, vote such proxy to adjourn the Special Meeting from
time to time.
PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of January 31, 2002 by (i) each
person or group who is known by the Company to own beneficially more than five
percent (5%) of the issued and outstanding shares of Common Stock, (ii) each
director of the Company and (iii) all directors and executive officers of the
Company as a group. The beneficial ownership reflected in columns 1 and 2
reflects beneficial ownership prior to the impact of any stockholder vote on
Proposals No. 1, 2 and 3 hereof; columns 3, 4, 5 and 6 reflect the impact of any
stockholder vote on Proposals No. 1, 2 and 3 hereof under the assumptions
reflected in footnotes (3) and (4) of such table; and columns 7, 8, 9, 10, 11
and 12 reflect the impact of any stockholder vote on Proposals No. 1, 2 and 3
under the assumptions reflected in footnotes (5), (6) and (7) of such table.
Except as otherwise indicated below, to the knowledge of the Company, all
persons listed below have sole voting and investment power with respect to their
shares of Common Stock shown as of January 31, 2002, except to the extent
authority is shared by spouses under applicable law.
2
Amount and Nature of Beneficial
Ownership
<Table>
<Caption>
Col. 1 Col. 2 Col. 3 Col. 4 Col. 5 Col. 6
Assuming
Only Loans Assuming
of $3,810,000 All 20 Units of
From Existing Senior Preferred Stock and
Shareholders(3) Warrants are Sold(4)
------------------------- --------------------------
Name and Address As of Percent Percent Percent
Beneficial Owner January 31, 2002 of Class(2) Number of Class Number of Class
- ---------------- -------------------- ----------- ----------- ----------- ----------- -----------
(1) MORE THAN 5%
BENEFICIAL OWNERS
Michael Lauer 7,295,853(8)(9) 23.4 85,400,853 78.0 85,400,853 63.5
c/o Lancer Group
375 Park Avenue
New York, New York 10166
Lancer Offshore Inc. 4,880,662(9) 15.6 69,660,669 63.6 69,660,669 51.8
c/o Lancer Group
375 Park Avenue
New York, New York 10166
Lancer Partners, LP 2,305,650(9) 7.4 15,630,643 14.3 15,630,643 11.6
c/o Lancer Group
375 Park Avenue
New York, New York 10166
Orbiter Fund Ltd. 109,541(9) * 109,541 * 109,541 *
375 Park Avenue
New York, New York 10166
Ferruccio Commetto 3,500,000(10)(11) 11.2 3,500,000 3.2 3,500,000 2.6
c/o Rusp Holdings S.A.
O.S Dante,
Turin, Italy
RUSP Holdings S.A 2,500,000(10) 2.3 2,500,000 1.9 2,500,000 1.9
C.So. Dante, Turin, Italy
Elkron International S.p.A 650,000(10) 2.1 650,000 * 650,000 *
Via Carducci
Turin, Italy
Tanalux S.A 350,000(10) 1.1 350,000 * 350,000 *
5 Rue Emil
Bian L-1235
Luxembourg
<Caption>
Col. 7 Col. 8 Col. 9 Col. 10 Col. 11 Col. 12
Assuming Assuming
Loans of All 20 Units Assuming
$5,000,000 of Senior Preferred $10,000,000 of
From Existing Stock and Warrant Shares of Common
Shareholders(5) Are Sold(6) Stock are Sold(7)
------------------------- ------------------------- -------------------------
Name and Address Percent Percent Percent
Beneficial Owner Number of Class Number of Class Number of Class
- ---------------- ----------- ----------- ----------- ----------- ----------- -----------
(1) MORE THAN 5%
BENEFICIAL OWNERS
Michael Lauer 109,795,853 82.0 109,795,853 65.0 85,400,853 66.0
c/o Lancer Group
375 Park Avenue
New York, New York 10166
Lancer Offshore Inc. 57,360,650 42.8 57,360,650 34.0 69,660,669 53.8
c/o Lancer Group
375 Park Avenue
New York, New York 10166
Lancer Partners, LP 52,325,662 39.1 52,325,662 31.0 15,630,643 12.0
c/o Lancer Group
375 Park Avenue
New York, New York 10166
Orbiter Fund Ltd. 109,541 * 109,541 * 109,541 *
375 Park Avenue
New York, New York 10166
Ferruccio Campetto 3,500,000 2.6 3,500,000 2.0 3,500,000 2.7
c/o Ruso Holding St.
O.S Dante,
Turin, Italy
RUSP Holdings S.A 2,500,000 1.9 2,500,000 1.5 2,500,000 1.9
C.So. Dante, Turin, Italy
Elkron International S.p.A 650,000 * 650,000 * 650,000 *
Via Carducci
Turin, Italy
Tanalux S.A 350,000 * 350,000 * 350,000 *
5 Rue Emil
Bian L-1235
Luxembourg
</Table>
3
<Table>
(1) DIRECTORS AND EXECUTIVE OFFICERS *
David D. Singer, 519,500(11) 1.6 519,500 * 519,500 *
World Wireless Communications, Inc.
5670 Greenwood Plaza Boulevard, Penthouse
Glenwood Village, Colorado 80111
Charles Taylor 10,000(12) * 10,000 * 10,000 *
World Wireless Communications, Inc.
5670 Greenwood Plaza Boulevard, Penthouse
Glenwood Village, Colorado 80111
Malcolm P. Thomas 12,000(12) * 12,000 * 12,000 *
Building Technology Engineers
1560 Brookhollow Drive
Suite 220
Santa Ana, California 92705
M. Robert Carr 20,000(13) * 20,000 * 20,000 *
815 Connecticut Avenue N.W.
Washington, D.C.
Robert Hathaway 1,050(14) * 1,050 * 1,050 *
World Wireless Communications, Inc.
5670 Greenwood Plaza Boulevard, Penthouse
Glenwood Village, Colorado 80111
(2) ALL DIRECTORS AND OFFICERS 562,550 1.8 562,550 1.2 562,550 *
AS A GROUP
(1) DIRECTORS AND EXECUTIVE OFFICERS *
David D. Singer, 519,500 * 519,500 * 519,500 *
World Wireless Communications, Inc.
5670 Greenwood Plaza Boulevard, Penthouse
Glenwood Village, Colorado 80111
Charles Taylor 10,000 * 10,000 * 10,000 *
World Wireless Communications, Inc.
5670 Greenwood Plaza Boulevard, Penthouse
Glenwood Village, Colorado 80111
Malcolm P. Thomas 12,000 * 12,000 * 12,000 *
Building Technology Engineers
1560 Brookhollow Drive
Suite 220
Santa Ana, California 92705
M. Robert Carr 20,000 * 20,000 * 20,000 *
815 Connecticut Avenue N.W
Washington, D.C.
Robert Hathaway 1,050 * 1050 * 1,050 *
World Wireless Communications, Inc.
5670 Greenwood Plaza Boulevard, Penthouse
Glenwood Village, Colorado 80111
(2) ALL DIRECTORS AND OFFICERS 562,550 * 562,550 * 562,550 *
AS A GROUP
</Table>
4
- ----------
* Donald I. Wallace, our executive Vice President of the Company and the
President of X-traWeb, Inc., a wholly owned subsidiary of the Company, resigned
as of August 31, 2001 for personal reasons.
- ----------
* Less than one percent.
(1) Unless otherwise indicated, this column reflects shares owned
beneficially and of record and as to which the named party has sole
voting power and sole investment power. This column also included
shares issuable upon the exercise of options or similar rights which
are exercisable within 60 days from January 31, 2002.
(2) In computing the percentage of shares beneficially owned by any
person, shares which the person has the right to acquire upon the
exercise of options or other rights held by such person within 60 days
from January 31, 2002 are deemed outstanding. Such shares are not
deemed to be outstanding in computing the percentage ownership of any
other person.
(3) Assumes (i) Lancer Offshore, Inc. and Lancer Partners L.P., only
make loans to the Company totaling $3,810,000, (ii) the shares of the
Company's common stock issuable upon the conversion of the loans and
the exercise of the warrants issuable to such creditors are issued and
(iii) no units of the Company's offering of units consisting of shares
of Senior Preferred Stock and detachable warrants are sold in the
current offering thereof.
(4) Assumes (i) Lancer Offshore, Inc. and Lancer Partners L.P. only
make loans to the Company totaling $3,810,000, (ii) the shares of the
Company's common stock issuable upon the conversion of the loans and
the exercise of the warrants issuable to such creditors are issued and
(iii) all units of the Company's offering of units consisting of shares
of Senior Preferred Stock and detachable warrants are sold in the
current offering thereof for a total of 25,000,000 shares of the
Company's Common Stock and are purchased by persons other than Michael
Lauer, Lancer Offshore, Inc. Lancer Partners L.P. and The Orbiter Fund,
Ltd.
(5) Assumes (i) Lancer Offshore, Inc. and Lancer Partners L.P. increase
their loans to the Company to a total of $5,000,000 with $2,560,000
originating from Lancer Offshore Inc. and $2,440,000 originating from
Lancer Partners L.P., (ii) the shares of the Company's common stock
issuable upon the conversion of the loans and the exercise of the
warrants issuable to such creditors are issued and (iii) no units of
the Company's offering of units consisting of shareholders Senior
Preferred Stock and detachable warrants are sold in the current
offering thereof.
(6) Assumes (i) Lancer Offshore, Inc. and Lancer Partners L.P. increase
their loans to the Company to a total of $5,000,000 with $2,560,000
originating from Lancer Offshore Inc. and $2,440,000 originating from
Lancer Partners L.P., (ii) the shares of the Company's common stock
issuable upon the conversion of the loans and the exercise of the
warrants issuable to such creditors are issued and (iii) 25,000,000
shares of the Company's Common Stock are issued pursuant to its
offering and sale of all 20 of the units consisting of shares of Senior
Preferred Stock and warrants and are purchased by persons other than
Michael Lauer, Lancer Offshore, Inc. Lancer Partners Inc. and The
Orbiter Fund Ltd.
5
(7) Assumes (i) Lancer Offshore, Inc. and Lancer Partners L.P., only
make loans to the Company totaling $3,810,000, (ii) the shares of the
Company's common stock issuable upon the conversion of the loans and
the exercise of the warrants issuable to such creditors are issued,
(iii) no units of the Company's offering of units consisting of shares
of Senior Preferred Stock and detachable warrants are sold in the
current offering thereof and (iv) the Company sells 20,000,000 shares
of its Common Stock pursuant to Proposal No. 3.
(8) Of these shares, none is owned of record by Mr. Lauer in street
name; 4,880,662 are held directly and of record by Lancer Offshore,
Inc.; 2,305,650 are held directly and of record by Lancer Partners,
LP.; and 109,541 are held directly and of record by the Orbiter Fund
Ltd. Mr. Lauer is believed to control the voting and disposition of
these shares by virtue of being the investment manager for these
entities. He is also the general partner of Lancer Partners L.P.
(9) Michael Lauer is deemed to be an indirect beneficial owner of these
shares.
(10) Of these shares, none is owned of record by Dr. Ferrucio Commetto.
Dr. Commetto is believed to control the voting and disposition of the
shares owned by the three corporations by virtue of his being the
president thereof.
(11) Dr. Ferruccio Commetto is deemed to be an indirect beneficial
owner of these shares.
(12) Includes 50,000 and 240,000 shares issuable upon
presently-exercisable and fully vested options granted under the
Company's 1997 and 1998 stock option plans, respectively, but excludes
237,500 shares transferred to his ex-wife in 1999 as part of a divorce
settlement.
(13) Includes 10,000 shares issuable upon the exercise of options
granted in January, 2000 in recognition of services as a director.
(14) Includes 10,000 shares issuable upon the exercise of options
granted in November, 2000 in recognition of services as a director.
(15) Includes 650 shares issuable upon the exercise of options granted
in October, 2000 in recognition of services as an officer.
PROPOSAL NO. 1 - APPROVAL FOR THE ISSUANCE OF UP TO 102,500,000 SHARES OF COMMON
STOCK TO AFFILIATES OF THE COMPANY'S LARGEST STOCKHOLDER.
Senior Secured Indebtedness Financing
(a) May 17, 2001 Financing
On May 17, 2001, the Company sold an investment unit consisting of
(a) $2,250,000 principal amount of its Senior Secured Convertible Notes (the
"2001 Notes") and (b) warrants to purchase 1,125,000 shares of Common Stock of
the Company to Lancer Offshore, Inc., an affiliate of the Company's largest
stockholder, in a private placement transaction exempt from registration under
the Securities Act of 1933, as amended (the "Act"), subject to the following
terms and conditions.
1. The 2001 Notes bear simple interest at the rate of 15% per
annum and were to mature on September 15, 2001, unless they
were mandatorily converted into shares of the Company's Common
Stock prior to such date.
2. Under the 2001 Notes, the Company received the principal
amount of $1,125,000 on May 17, 2001 and the holder agreed to
loan the additional amount of $1,125,000 on or before July 15,
2001,
6
provided that the Company raised a minimum of
$2,000,000 in equity from persons other than Michael
Lauer and his affiliates, including Lancer Offshore
Inc., Lancer Partners L.P., and The Orbiter Fund Ltd.
3. The 2001 Notes are secured by a first security
interest of substantially all of the Company's
assets, including its machinery, equipment,
automobiles, fixtures, furniture, accounts receivable
and general intangibles, including patents, patent
applications and any stock in any subsidiary.
4. Under the 2001 Notes, the Company and Lancer
Offshore, Inc. may jointly agree to increase the
amount of the loan to a total of $5,000,000 with a
pro rata increase in the amount of Warrants issuable
by the Company.
5. The 2001 Notes were mandatorily convertible into
shares of our Common Stock at the rate of $0.50 per
share (i.e. one share for each $0.50 of debt) upon
(i) our receipt of approval of our shareholders at a
meeting of such conversion and (ii) our receipt of
$2,000,000 in equity from persons other than Michael
Lauer and his affiliates on or before December 31,
2001.
6. The Company agreed to give Lancer Offshore, Inc.
registration rights with respect to the shares
issuable upon conversion of the 2001 Notes and upon
exercise of the warrants granted to it.
7. Any event of default under the 2001 Notes will
require the issuance of 1,000,000 shares of our
Common Stock commencing with the month in which such
default first occurs and thereafter in each such
month in which such default is not cured, up to a
maximum amount of 10,000,000 shares of our Common
Stock.
8. The warrants issued and potentially issuable to
Lancer Offshore Inc. had an exercise price of $0.50
per share, expire on the fifth anniversary date of
the date of issuance and may be exercised in whole or
in part, but the shares subject thereto are issuable
only upon the approval of such issuance by our
shareholders at a meeting. The Company issued a
warrant to purchase 562,500 shares of its Common
Stock, expiring on May 16, 2006, as a result of the
loan of $1,125,000 to us.
9. The Company agreed to pay a finder's fee to Capital
Research Ltd. and Sterling Technology Partners of a
total of 10% of the gross proceeds received by us on
the sale of the 2001 Notes payable on each closing of
a tranche of the financing under the 2001 Notes.
On May 17, 2001, the average of the high and low price per share of the
Company's Common Stock was $0.675, which was higher than the conversion rate of
one share for each $0.50 of debt and the exercise price of each warrant of $0.50
per share.
(b) August 7, 2001 Financing
The Company failed to meet the conditions described in item 2 above on
the May 17, 2001 financing by July 15, 2001. As a result, on August 7, 2001,
Lancer Partners L.P., another affiliate of our largest stockholder, agreed to
loan us an additional $875,000 as part of the 2001 Notes on the following terms
and conditions:
1. Lancer Partners L.P. agreed to loan the Company the
additional amount of $350,000 on August, 2001
provided our Board approved the terms of the August
7, 2001 financing (which it did). The Company issued
an additional 2001 Note for the $350,000 loan.
2. Lancer Partners L.P. agreed to loan the Company
$275,000 on or about September 15, 2001 and $250,000
on or about October 15, 2001, provided that the
Company raised a minimum of $1,500,000 in equity from
persons other than Michael Lauer and his affiliates,
including Lancer Offshore Inc., Lancer Partners L.P.
and The Orbiter Fund Ltd., on or before September 15,
2001.
7
Each of these additional loans would mature on
December 15, 2001 unless mandatorily converted into
shares of our Common Stock.
3. This tranche of $875,000 comprising the 2001 Notes is
mandatorily convertible into shares of our Common
Stock at the rate of $0.20 per share (i.e. one share
for each $0.20 of debt) upon (a) the receipt of
approval of our stockholders at a meeting of such
conversion and (b) our receipt of $2,000,000 of
equity from non-Lancer entities or affiliates by
December 31, 2001.
4. The Company agreed to issue additional warrants to
purchase up to an additional 562,500 shares of our
Common Stock if the entire $875,000 is loaned by
Lancer Partners L.P. to the Company. As a result of
the $350,000 loan made on August 7, 2001, the Company
issued a warrant to purchase an additional 225,000
shares of our Common Stock, expiring on August 6,
2006, at an exercise price of $0.30 per share.
5. The Company agreed as a condition to the August 7,
2001 financing to reduce its operating budget to a
monthly burn rate (i.e. the excess of its
expenditures over revenues received, in each case
determined on a cash basis) of not greater than
$250,000 effective September 1, 2001 and to curtail
all its discretionary spending of funds until
additional equity is raised.
6. The Company agreed to provide Lancer Partners L.P.
with fully executed loan agreements, Uniform
Commercial Code and other filings and warrant
agreements by August 15, 2001, which were executed
and delivered by both parties on August 21, 2001.
7. The terms set forth in the May 17, 200 financing
described in 1, 3, 4, 6, 7 and 9 apply with the same
force and effect to the August 7, 2001 financing.
In addition, under the August 7, 2001 financing, the Company
agreed to amend the May 17, 2001 financing as follows:
(i) The $1,125,000 principal amount comprising a
portion of the 2001 Notes became mandatorily convertible into shares of our
Common Stock at the rate of $0.20 per share (i.e. one share for each $0.20 of
debt);
(ii) The Company agreed to give Lancer Offshore Inc.
and Lancer Partners L.P. full anti-dilution protection in the event the Company
sold shares of its Common Stock at a price of less than $0.20 per share during
the one-year period commencing on May 12, 2001;
(iii) The exercise price of the warrant to purchase
562,200 shares of our Common Stock was reduced to $0.30 per share which term
will also apply to any additional warrants issued in such the financing
transactions; and
(iv) The maximum amount of shares of our Common Stock
issuable in the event of continuing monthly defaults was increased to 12,500,000
from 10,000,000.
On August 7, 2001, the average of the high and low price per share
of the Company's Common Stock was $0.38, which was higher than the conversion
rate of one share for each $0.20 of debt and the exercise price of each warrant
at $0.30 per share.
(c) September 2001 Financing
The Company failed to meet the condition described in Item 2 above on
the August 7, 2001 financing by September 15, 2001. Despite such failure, Lancer
Partners L.P. loaned the Company an additional $100,000 and $175,000 on
September 6, 2001 and September 18, 2001, respectively, which loans mature on
December 15, 2001. As a result thereof, the Company issued a separate note
comprising part of the 2001 Notes to such party (which collectively are
mandatorily convertible into 1,375,000 shares of our Common Stock at $0.20 per
share) and also issued a warrant to purchase 87,500 shares of our Common Stock
at $0.30 per share.
8
In addition, the parties amended the August 7, 2001 financing as
follows:
(i) The maturity date of the two tranches of the 2001 Notes
totaling $1,475,000 in principal amount was extended from September 15, 2001
until October 15, 2001; and
(ii) The creditors extended the time for the Company to raise
$1,500,000 until October 15, 2001 as a condition to the issuance of the $250,000
loan on or about October 15, 2001.
Also, the holders of the 2001 Notes acknowledged that there was no
default of any kind as of September 14, 2001.
On September 8, 2001 and September 16, 2001, the average of the high
and low price per share of the Company's Common Stock was $0.255 and $0.235,
respectively, which was higher than the conversion rate of one share for each
$0.20 of debt, but lower than the exercise price of each warrant at $0.30 per
share.
(d) October and November, 2001 Financing
The Company again failed to meet the condition to raise additional
equity financing of $1,500,000 on or before October 15, 2001. Despite such
failure, Lancer Partners L.P. loaned the Company an additional $25,000 (bringing
its total loan to the Company to $650,000 in principal amount) and Lancer
Offshore, Inc. loaned the Company an additional $85,000 on October 3, 2001,
$175,000 on October 9, 2001, $175,000 on October 29, 2001 and $1,000,000 on
November 14, 2001 (bringing its total loan to the Company to $2,560,000 in
principal amount), or a total loan from such parties of $3,210,000. As a result,
the Company issued separate notes comprising part of the 2001 Notes and issued
additional warrants to such parties to purchase 730,000 shares of the Company's
Common Stock at an exercise price of $0.30 per share, expiring in each case on a
date in 2006 five years after the date of their respective issuance.
In addition, the parties agreed on November 14, 2001 to amend the
entire 2001 Note financing as follows:
(i) The entire principal amount of $3,210,000 comprising the 2001 Notes
became mandatorily convertible into shares of our Common Stock at the rate of
one share for each $0.05 of debt (A) upon our receipt of approval of our
shareholders at a meeting of such conversion and (B) upon our receipt of
$3,210,000 in equity from sources other than Michael Lauer, Lancer Offshore,
Inc., Lancer Partners L.P. and The Orbiter Fund Ltd. on or before February 28,
2002.
(ii) The maturity date of the entire principal amount of $3,210,000
comprising the 2001 Notes was extended until February 28, 2002 (unless
mandatorily converted into shares of the Company's Common Stock prior to such
date);
(iii) The amount of shares issuable in the event of a default was then
increased to 1,605,000 shares of our Common Stock for each month in which a
default exists and continuing until such default is cured, up to a maximum of
12,500,000 shares;
(iv) The Company agreed to give Lancer Offshore Inc. and Lancer
Partners L.P. full anti-dilution protection in the event the Company sold shares
of its Common Stock at a price less than $0.05 per share during the one-year
period commencing on November 14, 2001 (which was changed from May 12, 2001);
and
(v) The finders fee payable on the transaction was increased by
requiring the Company to issue a five-year warrant to Capital Research Ltd. to
purchase 2,000,000 shares of the Company's Common Stock at an exercise price of
$0.05 per share, which expires on November 13, 2006.
(e) January and February, 2002 Financing
9
Lancer Offshore, Inc. loaned the Company an additional $350,000 on
January 25, 2002 and $250,000 on February 8, 2002 (bringing its total loan to
the Company to $3,160,000 in principal amount). As a result, the Company issued
separate notes comprising part of the 2001 Notes and issued additional warrants
to Lancer Offshore, Inc. to purchase 300,000 shares of the Company's Common
Stock at an exercise price of $0.30 per share, expiring in each case on a date
in 2006 five years after the date of their respective issuance.
In addition, the parties agreed on January 25, 2002 to amend the entire
2001 Note financing as follows:
(i) The entire principal amount of $3,810,000 comprising the 2001 Notes
is now mandatorily convertible into shares of our Common Stock at the rate of
one share for each $0.05 of debt (A) upon our receipt of approval of our
shareholders at a meeting of such conversion and (B) upon our receipt of
$3,810,000 in equity from sources other than Michael Lauer, Lancer Offshore,
Inc., Lancer Partners L.P. and The Orbiter Fund Ltd. on or before February 28,
2002.
(ii) The amount of shares issuable in the event of a default is now
increased to 1,780,000 shares of our Common Stock for each month in which a
default exists and continuing until such default is cured, up to a maximum of
12,500,000 shares; and
(iii) The Company agreed to give Lancer Offshore Inc. and Lancer
Partners L.P. full anti-dilution protection in the event the Company sold shares
of its Common Stock at a price less than $0.05 per share during the one-year
period commencing on the date of the making of the last loan from such parties
to the Company (which was changed from November 14, 2001 to February 8, 2002).
On the date of the issuance of each of the additional Notes comprising
part of the 2001 Notes and the warrants to purchase shares of our Common Stock,
the average of the high and low price of a share of the Company's Common Stock
was higher than conversion rate of the Note in question and the exercise price
of each Warrant.
American Stock Exchange Rules
Under applicable American Stock Exchange Rules, the Company is required
to obtain the approval of its stockholders where the Company proposes to issue
shares of its common stock (i) to a controlling stockholder at a per share price
less than the market value thereof and (ii) such issuance involves an amount of
shares that is more than 5% of the number of the corporation's then issued and
outstanding shares of common stock in any one year. Such rule applies to the
Company's recent financing transaction with, and the loans made through February
8, 2002, by Lancer Offshore, Inc., and Lancer Partners L.P. Accordingly, the
approval of the Company's stockholders is required in order to permit the
mandatory conversion of the 2001 Notes owned by Lancer Offshore, Inc. and Lancer
Partners L.P. into shares of the Company's Common Stock at the conversion rate
of one share for each $0.05 amount of debt. The affirmative vote of a plurality
of the shares of Common Stock present at the Special Meeting in person or by
proxy is needed to approve the mandatory conversion of the shares of Senior
Secured Notes owned by Lancer Offshore, Inc. and Lancer Partners L.P. into
shares of Common Stock and the issuance of the shares of Common Stock upon the
exercise of the warrants granted to Lancer Offshore, Inc. and Lancer Partners
L.P. in connection with the above financing, which approval would satisfy only
one of the two conditions required for such mandatory conversion.
If Lancer Offshore Inc. and Lancer Partners L.P. (i) loan the Company a
total sum of $5,000,000 (which includes the principal sum of $3,810,000 loaned
to the Company as of February 8, 2002, leaving $1,190,000 potentially available
under the then existing financing agreement), (ii) the stockholders approve the
mandatory conversion of the 2001 Notes and (iii) if the Company receives
$3,810,000 in equity from sources other than Michael Lauer, Lancer Offshore,
Inc., Lancer Partners L.P. and The Orbiter Fund Ltd. on or before February 28,
2002, such parties would acquire, in the aggregate, an additional 100,000,000
shares of the Company's Common Stock as a result of and upon such mandatory
conversion, based upon the conversion rate of one share for each $0.05 of debt.
If Lancer Offshore, Inc. and Lancer Partners L.P. loan the Company a total of
$5,000,000, such parties would also be entitled, in the aggregate, to receive
warrants to purchase 2,500,000 shares of the Company's Common Stock, although
such parties could not exercise the warrants without prior stockholder approval.
If such approval is received and such parties exercise
10
all of the warrants at the exercise price of $0.30 per share, such parties would
acquire, in the aggregate, an additional 2,500,000 shares of the Company's
Common Stock.
In the case of the $5,000,000 loan analysis stated above, such
acquisitions (including the assumed exercise of the above-described warrants)
would increase the ownership of the group consisting of Michael Lauer, Lancer
Offshore, Inc., Lancer Partners L.P. and The Orbiter Fund Ltd. of the shares of
the Company's Common Stock from 23.4% to 82% (excluding the potential issuance
of 25,000,000 shares of the Company's Common Stock if Proposal No. 2 is approved
by the Company's stockholders and the Company sells none of the units of its
Senior Preferred Stock and warrants described in such Proposal) or from 23.4% to
65% (assuming the issuance of 25,000,000 shares of the Company's Common Stock if
Proposal No. 2 is approved by the Company's stockholders and the Company sells
all of the units of its Senior Preferred Stock and warrants described in
Proposal No. 2).
In the alternative, if Lancer Offshore, Inc. and Lancer Partners L.P.
(i) loan the Company the total sum of $3,810,000 out of the contemplated total
$5,000,000 financing, (ii) the stockholders approve the mandatory conversion of
the 2001 Notes and (iii) if the Company receives $3,810,000 in equity from
sources other than Michael Lauer, Lancer Offshore, Inc., Lancer Partners L.P.
and The Orbiter Fund Ltd. on or before February 28, 2002, such parties would
acquire, in the aggregate, an additional 76,200,000 shares of the Company's
Common Stock as a result of and upon such conversion, based upon the conversion
rate of one share for each $0.05 of debt. If Lancer Offshore, Inc. and Lancer
Partners L.P. loan the Company a total of $3,810.000, such parties would also be
entitled, in the aggregate, to receive warrants to purchase 1,905,000 shares of
the Company's Common Stock, although such parties could not exercise such
warrants without prior stockholder approval. If such approval is received and
such parties exercise the warrants at the exercise price of $.30 per share, such
parties would acquire, in the aggregate, an additional 1,905,000 shares of the
Company's Common Stock.
In the case of the $3,810,000 loan analysis stated above, such
acquisitions (including the assumed exercise of the above-described warrants)
would increase the ownership of the group consisting of Michael Lauer, Lancer
Offshore, Inc., Lancer Partners L.P. and The Orbiter Fund Ltd. of the shares of
the Company's Common Stock from 23.4% to 78% (excluding the potential issuance
of 25,000,000 shares of the Company's Common Stock if Proposal No. 2 is approved
by the Company's stockholders and the Company sells none of the units of its
Senior Preferred Stock and warrants described in such Proposal) or from 23.4% to
63.5% (assuming the issuance of 25,000,000 shares of the Company's Common Stock
if Proposal No. 2 is approved by the Company's stockholders and the Company
sells all of the units of its Senior Preferred Stock and warrants described in
Proposal No. 2).
Under either the $5,000,000 or $3,810,000 loan scenarios described
above, such increase in ownership by the group consisting of Michael Lauer,
Lancer Offshore, Inc., Lancer Partners L.P. and The Orbiter Fund Ltd. would, in
either such case, give such group the most significant influence in the election
of all of the members of the Board of Directors of the Company and control of
all major corporate decisions involving the vote of stockholders of the Company.
The chart under "PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP"
discloses the current beneficial ownership of the Company as of February 8, 2002
and the revised beneficial ownership of the Company of such group of 82% if the
stockholders approve Proposals No. 1, 2 and 4, and if Lancer Offshore, Inc. and
Lancer Partners L.P. loan the Company a total of $5,000,000, as reflected in
columns 7 and 8 of such chart (excluding the potential issuance of 25,000,000
shares of the Company's Common Stock if Proposal No. 2 is not approved by the
Company's stockholders, or, if such Proposal is approved, the Company sells none
of the units thereunder). Such chart also discloses the revised beneficial
ownership of the Company of such group of 78% if the stockholders approve
Proposals No. 1 and 4 and if each of Lancer Offshore, Inc. and Lancer Partners
L.P. do not loan the Company any amount in excess of the current $3,810,000
principal amount of loans outstanding as of February 8, 2002 or do not loan the
Company a total of $5,000,000, as reflected in columns 3 and 4 of such chart
(excluding (i) the potential issuance of 25,000,000 shares of the Company's
Common Stock if Proposal No. 2 is not approved by the Company's stockholders,
or, if such Proposal is approved, the Company sells none of the units thereunder
and (ii) the potential issuance of up to 20,000,000 shares of the Company's
Common Stock if Proposal No. 3 is not approved by the Company's stockholders,
or, if such Proposal is approved, the Company does not sell any shares pursuant
thereto).
11
The Company has plans to raise up to $4,500,000 during the twelve-month
period ending December 31, 2002 as its minimum capital needs during such period
based on the restriction under its secured financing agreement that limits the
Company to a monthly burn rate (i.e. the excess of its expenditures over
revenues received, in each case determined on a cash basis) of not greater than
$375,000 while the 2001 Notes remain outstanding during such period. The Company
is currently seeking to raise such amount within the next 12 months and
currently has an offering to sell up to 20 units of its Senior Preferred Stock
and warrants described under Proposal No. 2 hereof and also has plans to use the
equity line of credit financing described under Proposal No. 3.
The Board of Directors of the Company has determined that the
transaction it engaged in with Lancer Offshore, Inc. and Lancer Partners L.P.
was in the best interest of all of the stockholders of the Company and was
necessary to fund the Company's operations and working capital needs.
The Board of Directors of the Company unanimously recommends a vote FOR
this Proposal No. 1.
PROPOSAL NO. 2 - APPROVAL FOR ISSUANCE OF UP TO 25,000,000 SHARES OF COMMON
STOCK IN CONNECTION WITH THE COMPANY'S CONTEMPLATED SENIOR PREFERRED STOCK /
WARRANT PRIVATE PLACEMENT TRANSACTION
The Company is currently attempting to raise up to $5,000,000 through
the sale of up to 20 units, each consisting of (i) 50 shares of the Company's 8%
Senior Cumulative Convertible Preferred Stock (the "Preferred Stock" or the
"Senior Preferred Stock") and (ii) a detachable one-year warrant to purchase
416,666.67 shares of the Company's Common Stock expiring on January 31, 2003, at
an exercise price of $0.30 per share, subject to certain adjustments
(individually, each a "Warrant" and collectively the "Warrants"), with the
purchase price for each unit of $250,000 payable in cash upon subscription. The
offering qualifies as a private placement exempt from registration under the
Securities Act of 1933, as amended. If the Company sells all of the units in the
offering, and if all the Warrants are exercised, the Company would be issuing an
additional 25,000,000 shares of its Common Stock.
As of January 31, 2002, the Company did not sell any of the units
described above but is currently engaged in seeking purchasers of the units.
Although no such units have yet been sold as of the date hereof, the Company
will continue to pursue such offering during the next 12 months as part of its
attempt to obtain additional financing to fund its operations.
Each share of the Company's new Senior Preferred Stock has been
designated to have the following characteristics:
(a) has a 8% cumulative dividend;
(b) constitutes the senior series of any preferred stock the
Company may issue;
(c) is non-voting;
(d) subject to the approval of the Company's stockholders at a
meeting, is mandatorily convertible into shares of the
Company's Common Stock at the conversion rate of 16,666.67
shares of Common Stock for each share of Senior Preferred
Stock (or $0.30 per share) (or up to a potential maximum total
of 16,666,667 shares of the Company's Common Stock if all
1,000 shares of the Company's Senior Preferred Stock are sold
in such private placement transaction);
(e) may be redeemed by the Company, at its option, between
February 1, 2002 and January 31, 2003 for the amount of the
liquidation preference and any deemed and upon cumulative
dividends; and
12
(f) has a first priority in liquidation of $5,000 per share, plus
the amount of unpaid cumulative dividends, payable from the
Company's assets after its payment (or its making of adequate
provision for the payment) of all claims of its creditors.
The Company agreed to give the holders of the Senior Preferred Stock
and the Warrants registration rights with respect to the shares issuable upon
the conversion of the shares of the Senior Preferred Stock and the exercise of
the Warrants.
Each Warrant entitles the holder to purchase 416,666.67 shares of the
Company's Common Stock at an exercise price of $0.30 per share, subject to
certain adjustments (such as stock splits, stock dividends or reverse stock
splits), exercisable in whole or in part by the holder at any time after the
date the stockholders of the Company at a meeting approve the issuance of the
shares of the Company's Common Stock issuable upon such exercise.
American Stock Exchange Rules
Under applicable American Stock Exchange Rules, the Company is required
to obtain the approval of its stockholders where the Company plans to sell,
issue or potentially issue an amount of shares equal to 20% or more of the
corporation's presently outstanding shares of its common stock for less than the
greater of book or market value of the stock. Such rule applies to the Company's
current preferred stock/warrant financing. Accordingly, the stockholders of the
Company must approve the mandatory conversion of each share of the Company's
Senior Preferred Stock into shares of the Company's Common Stock at the
conversion rate of 16,666.67 shares of Common Stock for each share of Senior
Preferred Stock as well as approve the issuance of the shares of Common Stock
upon the exercise of the Warrants held by the holders of the Senior Preferred
Stock. The affirmative vote of a plurality of the shares of Common Stock present
at the Special Meeting in person to by proxy is needed to approve the mandatory
conversion of the shares of Senior Preferred Stock and the issuance of the
shares of Common Stock issuable upon the exercise of the Warrants held by the
holders of the Senior Preferred Stock.
If the stockholders approve the mandatory conversion of the Senior
Preferred Stock and the issuance of the shares issuable upon the exercise of the
Warrants held by the holders of the Senior Preferred Stock, and if all 20 units
of the preferred stock/warrant financing are sold, the Company would be issuing
an additional 16,666,667 shares of Common Stock, and if all the Warrants were
exercised, an additional 8,333,333 shares of Common Stock pursuant thereto. Such
issuance of 25,000,000 shares of Common Stock would also represent a 22.8%
increase in the number of shares of the Company which are issued and outstanding
(after taking into account the shares of Common Stock issuable based on the
$3,810,000 of the 2001 Notes outstanding as of February 8, 2002, assuming that
the conditions for the mandatory conversion of the 2001 Notes are satisfied, and
the exercise of the warrants to purchase 1,905,000 shares). The chart under
"PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP" discloses the potential
dilutive effect of this transaction on the principal stockholders of the Company
and on the officers and directors who are stockholders.
The Board of Directors of the Company has determined that the Senior
Preferred Stock/warrant private placement transaction is necessary to fund the
Company's operations and working capital needs.
The Board of Directors of the Company unanimously recommends a vote FOR
this Proposal No. 2.
PROPOSAL NO. 3 - TO APPROVE THE POTENTIAL ISSUANCE OF UP TO 20,000,000 SHARES OF
THE COMPANY'S COMMON STOCK PURSUANT TO THE COMPANY'S FINANCING AGREEMENT WITH
CORNELL CAPITAL PARTNERS LP.
The Company is also currently planning to raise up to $10,000,000
through the sale of shares of its Common Stock to Cornell Capital Partners LP
("Cornell"). Cornell is a New Jersey-based institutional investment firm which
provides finance to companies in emerging growth markets.
13
The Company signed a non-binding letter of intent with Cornell on
January 3, 2002 and plans to sign definitive agreements incorporating the terms
of the financing described below:
1. Cornell shall commit to purchase up to $10,000,000 of
freely tradeable shares of the Company's Common Stock
over a period of 24 months after the effective date
of a registration statement filed by the Company
covering such shares. The Company plans to file the
required registration statement shortly after the
parties sign and deliver the definitive agreements
for the contemplated financing.
2. The Company would be able to draw down the equity
line of credit by exercising a put, at its sole
discretion, up to a maximum of $500,000 per month,
although the Company is not obligated to exercise any
put.
3. The purchase price of the shares sold by the Company
pursuant to the put shall be fixed at 95% of the
market price of the shares of Common Stock, which is
defined as the lowest closing bid price of the shares
of the Common Stock during the five consecutive
trading day period commencing on the first trading
day after the put is sent by the Company.
4. (a) Upon the execution and delivery of the
definitive agreements encompassing the
contemplated equity line of credit, the
Company will issue to Cornell a certificate
for shares of the Company's Common Stock
with a value equal to $500,000, which will
be restricted securities subject to
applicable securities law restrictions, as a
fee for its financing services. The Company
agreed to give Cornell registration rights
with respect to such shares.
(b) In addition to the above fee, the Company
agreed to pay compensation to Cornell equal
to 5% of the gross proceeds of a put.
American Stock Exchange Rules
Under applicable American Stock Exchange Rules, the Company is required
to obtain the approval of its stockholders where the Company plans to sell,
issue or potentially issue an amount of shares equal to 20% or more of the
corporation's presently outstanding shares of its common stock for less than the
greater of book or market value of the stock. Such rule applies to the Company's
current equity line of credit financing with Cornell. Accordingly, the
stockholders of the Company must approve the issuance of the shares of the
Company's Common Stock potentially issuable to Cornell. The affirmative vote of
a plurality of the shares of Common Stock present at the Special Meeting in
person to by proxy is needed to approve the potential issuance of the shares of
Common Stock issuable to Cornell.
If the stockholders approve the issuance of the shares issuable
pursuant to the equity line credit to Cornell, and if the Company sold the
entire $10,000,000 of shares of its Common Stock, the Company would be issuing
an indeterminate number of shares of Common Stock but not in excess of
20,000,000 shares of its Common Stock. Assuming all the shares of the Company's
Common Stock were sold to Cornell based on the closing price of the Company's
Common Stock of $0.83 on January 3, 2002, the Company would be issuing an
additional 12,048,192 shares of its Common Stock. Such issuance of 20,000,000
shares of Common Stock would also represent an 20.66% increase in the number of
shares of the Company which are issued and outstanding (after taking into
account the shares of Common Stock issuable based on the $3,810,000 of the 2001
Notes outstanding as of February 8, 2002, assuming that the conditions for the
mandatory conversion of the 2001 Notes are satisfied, and the exercise of the
warrants to purchase 1,905,000 shares). The chart under "PRINCIPAL STOCKHOLDERS
AND MANAGEMENT OWNERSHIP" discloses in columns 11 and 12 the potential dilutive
effect of this transaction on the principal stockholders of the Company and on
the officers and directors who are stockholders.
The Board of Directors of the Company has determined that the equity
line of credit financing transaction with Cornell is necessary to fund the
Company's operations and working capital needs.
The Board of Directors of the Company unanimously recommends a vote FOR
this Proposal No. 3.
14
PROPOSAL NO. 4 - APPROVAL OF AMENDMENT TO ARTICLES OF INCORPORATION TO INCREASE
AUTHORIZED COMMON STOCK.
The Board of Directors of the Company has approved and, although not
required under applicable Nevada law, seeks the approval by the stockholders of
the Company of an amendment to the Company's Articles of Incorporation
increasing the number of shares of authorized Common Stock from 50,000,000
shares, $.001 par value per share, to 225,000,000 shares, $.001 par value per
share. The Company decided to obtain the approval of its stockholders because of
the potential increase in the number of shares that the Company might have
issued and outstanding.
The Company's amendment would change Article IV of its Articles of
Incorporation as shown below:
"ARTICLE IV - STOCK
The aggregate number of shares which this corporation shall have
authority to issue is 225,000,000 [50,000,000] shares of Common Stock having a
par value of $.001 per share. All common stock of the corporation shall be of
the same class, common, and shall have the same rights and preferences.
Fully-paid stock of this corporation shall not be liable to any further call or
assessment. The corporation shall also have authority to issue 1,000,000 shares
of Preferred Stock having a par value of $.001 per share and to be issued with
such rights, preferences and designations and in such series as determined by
the Board of Directors of the corporation." (Addition is showing by underlining;
deletion is shown by brackets.)
As of January 31, 2002, the Company had 31,387,087 shares issued
and outstanding and 5,582,475 reserved for issuance or a total of 36,969,562
shares of Common Stock. If the stockholders of the Company approve Proposals No.
1, 2 and 3 set forth herein, and the maximum number of shares issuable under
each such proposal is issued, the Company will exceed the number of authorized
shares of Common Stock available for issuance and, hence, recommends that the
increase in the number of shares of the Company's authorized stock occur.
Specifically, if Proposal No. 1 alone is approved by the stockholders at the
Special Meeting, and if the maximum number of shares issuable thereunder were
issued, the Company's issued and outstanding shares would increase from
31,387,087 to 133,887,087, an increase of 426.6%. If the stockholders only
approve Proposal No. 2 set forth herein, and the maximum number of shares
issuable under such proposal is issued, the Company's issued and outstanding
shares would increase from 31,387,087 to 56,387,087 an increase of 79.7%. If the
stockholders only approve Proposal No. 3 set forth herein, the Company's issued
and outstanding shares of Common Stock will increase from 31,387,087 to a
maximum of 51,387,087, an increase of 63.7% If the stockholders approve
Proposals No. 1, 2 and 3 set forth herein, and the maximum number of shares
issuable under each such Proposal is issued, the Company's issued and
outstanding shares would increase from 31,387,087 to 178,887,087, an increase of
570%.
If the amendment to the Company's Articles of Incorporation is
adopted, an additional 193,612,913 shares of Common Stock (less the amount to be
issued if Proposals No. 1, 2 and 3 are approved) would be available for future
issuance without further stockholder approval, except as required by applicable
law or regulation. If Proposals No. 1, 2 and 3 are approved by the stockholders,
and the maximum number of shares issuable under each such Proposal is issued,
the Company would have 46,112,913 shares of its Common Stock available for
future issuance (including the amount needed to cover the shares reserved for
issuance).
The increase in the Company's authorized shares of Common Stock
has a general effect of deterring a future tender offer or other takeover
attempt that some stockholders might view to be in the best interests at that
time. In addition, such increase may have the effect of assisting current
management to keep its position and place it in a better position to resist
changes which some stockholders may want to make if dissatisfied with the
conduct of the Company's business.
15
Except for the issuance or reservation of shares required if the
stockholders approve Proposals No. 1, 2 and 3 hereof, the Company has no present
plan, commitment or understanding for the issuance of any shares of the newly
authorized shares of Common Stock. However, such additional shares of Common
Stock would be available for future issuance by the Board of Directors for
general corporate purposes without further stockholder certain except as
required by applicable law or regulation, including future stock splits, stock
dividends, financings, acquisitions and compensation arrangements.
Each additional share of Common Stock authorized by the proposed
amendment will have the same rights and privileges as each share of the
outstanding Common Stock. The holders of Common Stock have no preemptive rights
to subscribe for any additional shares of Common Stock of the Company that may
be issued.
The Board of Directors unanimously recommends a vote FOR this
Proposal No. 4.
PROPOSALS BY STOCKHOLDERS
In order for a proposal of a stockholder to be included in the
Board of Directors' Proxy Statement for the Company's 2002 Special Meeting, it
must be received at the principal executive office of the Company on or before
April 1, 2002 pursuant to Rule 14a-8 under the Securities Exchange Act of 1934,
as amended, which the Board believes represents a reasonable period of time
prior to the date of such annual shareholders meeting which is now planned to be
held on a date near the end of May, 2002. Such a proposal must comply with the
requirements as to form and substance established by the Securities and Exchange
Commission in order to be included in the Proxy Statement. If the Company
receives a proposal from a stockholder for inclusion in such Proxy Statement
after April 1, 2002, such proposal will not be timely and, hence, will not be
included in such Proxy Statement.
OTHER MATTERS
The Board of Directors of the Company is not aware of other
matters which may come before the meeting. It is the intention of the persons
named in the enclosed proxy to vote the proxy in accordance with their best
judgment if any other matters should properly come before the meeting, including
voting for election of a Director in place of any person named in the proxy who
may not be available for election.
REGARDLESS OF WHETHER YOU PLAN TO BE PRESENT AT THE MEETING, IT
WOULD BE APPRECIATED IF YOU WOULD COMPLETE, DATE, AND SIGN THE ENCLOSED PROXY
AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. IF YOU ATTEND THE MEETING AND
WISH TO VOTE IN PERSON, YOUR PROXY WILL NOT BE USED.
David D. Singer,
President
February 18, 2002
16
WORLD WIRELESS COMMUNICATIONS, INC.
5670 Greenwood Plaza Boulevard, Penthouse
Greenwood Village, Colorado 80111
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints DAVID D. SINGER AND ROBERT HATHAWAY
as proxies, each with the power to appoint his substitute, and hereby authorizes
them, and each of them, to represent and vote, as designated below, all of the
shares of Common Stock of World Wireless Communications, Inc. held of record by
the undersigned on January 29, 2002, at the Special Meeting of Stockholders to
be held on March 15, 2002, or at any adjournment thereof. Management recommends
a vote FOR each of the following proposals:
1. To approve (a) the mandatory conversion of up to $5,000,000 in
principal amount of the Company's Senior Secured Notes issuable to a
group comprising the Company's largest stockholder, Michael Lauer,
Lancer Offshore, Inc. and Lancer Partners L.P., and their affiliates
(including the Senior Secured Notes dated May 17, 2001, August 7, 2001,
September 6, 2001, September 17, 2001, October 3, 2001, October 9,
2001, October 29, 2001, November 14, 2001, January 25, 2002 and
February 8, 2002 totaling $3,810,000 in principal amount issued to such
group as of February 8, 2002), into up to 100,000,000 shares of the
Company's Common Stock and (b) the issuance of up to 2,500,000 shares
of the Company's Common Stock pursuant to the exercise of the warrants
which may be granted to such creditors in connection with such
financing (including the warrants to purchase 1,905,000 shares
outstanding as of February 8, 2002):
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. To approve (a) the mandatory conversion of the Company's shares of
Senior Preferred Stock issuable in a financing into up to 16,666,667
shares of the Company's Common Stock and (b) the issuance of up to
8,333,333 shares of the Company's Common Stock pursuant to the exercise
of the warrants which may be issued to the holders of the Senior
Preferred Stock:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To approve the potential issuance of up to 20,000,000 shares of the
Company's Common Stock pursuant to the Company's financing agreement
with Cornell Capital Partners LP:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. To approve an amendment to the Company's Articles of Incorporation
increasing the Company's authorized capital stock from 50,000,000
shares of Common Stock, $.001 par value, to 225,000,000 shares of
Common Stock, $.001 par value:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Meeting.
This Proxy when properly executed will be voted in the manner
directed herein by the Stockholder. IF
NO CONTRARY INDICATION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS NO. 1, 2,
3 AND 4.
Please sign exactly as your name appears on this Proxy. When shares
are held by joint tenants, both should sign. When signing as attorney-in-fact,
executor, administrator, trustee or guardian, please give full title as such. If
a corporation, please sign in full corporate name by the President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
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Signature
Dated: , 2002
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Signature if held jointly
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Dated: , 2002
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By:
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Entity Authorized Person
Dated: , 2002
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PLEASE MARK, SIGN, DATE AND RETURN THE PROXY FORM PROMPTLY, USING THE ENCLOSED
ENVELOPE.