SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A
AMENDMENT NO. 1
TO
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 2000
Commission File No. 0-25680
WaveRider Communications Inc.
(Exact name of registrant as specified in its charter)
Nevada 33-0264030
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
255 Consumer Road, Suite 500
Toronto, Ontario Canada M2J 1R4
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (416) 502-3200
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock par value $.001
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 ___
Indicate by checkmark if disclosure of delinquent filers pursuant to
item 405 of Regulation S-K is not herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K/A or any amendment to
this Form 10-K/A. ____ [ X ]
State the aggregate market value of the voting stock held by
non-affiliates of the registrant was approximately $101,531,895 as of June 1,
2001 (based on the closing price for such stock as of June 1, 2001).
As of June 1, 2001, there were 66,269,108 shares of the registrant's
common stock, par value $.001 per share, outstanding.
TABLE OF CONTENTS
PART I Page
Item 1. Description of Business 3
PART II
Item 7. Management's Discussion and Analysis or Plan of Operation 7
PART III
Item 10. Directors and Executive Officers of the Registrant 12
Item 11. Executive Compensation 15
Item 12. Security Ownership of Certain Beneficial Owners and
Management 17
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K 18
2
PART I
Item 1 of the registrant's annual report on Form 10-K is hereby amended by
deleting the text thereof in its entirety and substituting therefor the
following:
ITEM 1. DESCRIPTION OF BUSINESS
Background WaveRider Communications Inc. ("WaveRider" or the "Company" and
collectively referred to as we, us or our) commenced activities in the wireless
industries through its acquisition of Major Wireless Communications Inc. in May
1997.
Major Wireless was organized in British Columbia, Canada, as a private company
in 1996 to address an existing and growing market need to provide
cost-effective, high-speed wireless Internet links. In May 1997, Major Wireless
consummated the business combination with Channel i Inc., pursuant to which
Channel i Inc., a company trading on the OTC-BB, issued stock to the
stockholders of Major Wireless, Major Wireless became a subsidiary of the
Company, and the Company changed its name to WaveRider Communications Inc. The
Company then completed the private placement of common and preferred share units
for $1.5 million (U.S.) On June 11, 1999, the Company acquired Transformation
Techniques, Inc (TTI) through a merger with its newly created subsidiary
WaveRider Communications (USA) Inc.
On October 1, 2000, the Company acquired ADE Network Technology Pty Ltd. (ADE)
of Melbourne, Australia, a privately-held wireless infrastructure company. ADE
operates offices in Melbourne, Sydney, Canberra, Brisbane and Perth in Australia
and provides professional planning, installation and maintenance services to
wireless Internet Service Providers throughout Australia. The Company undertook
this acquisition to provide a sales presence in Australia and South East Asia.
The Company was originally incorporated under the laws of the State of Nevada on
August 6, 1987, as Athena Ventures Inc. From 1987 until its acquisition of
Channel i PLC in November 1993, Athena Ventures had no activities or operations.
From November 1993 until May 1997, the Company operated under the names Channel
i Limited and Channel i Inc. and was in the business of developing an
interactive multimedia kiosk network to provide consumers with convenient access
to an array of products and services. Prior to its acquisition of Major Wireless
Communications Inc. (now "WaveRider Communications (Canada) Inc.") in May 1997,
the Company had become inactive. WaveRider's executive offices are located at
255 Consumers Road, Suite 500, Toronto, Ontario, Canada, M2J 1R4. Our telephone
number is (416) 502-3200 and our Web Site address is www.waverider.com.
WaveRider Communications Inc. - Our Business
WaveRider designs, develops, markets and supports fixed wireless Internet access
products. WaveRider's products are designed to deliver efficient, reliable, and
cost-effective solutions to bringing high-speed Internet access to markets
around the world.
WaveRider is focused on providing the solution to the `last mile' problem faced
by traditional wired telecommunications services: how to profitably build out a
network that provides the level of services demanded by end users. In medium to
small markets, and in areas of the world with limited or no existing
telecommunications infrastructure, the cost to install or upgrade wired services
to provide the level of access customers need can be prohibitive.
We believe that WaveRider's fixed wireless Internet access products are faster
and less expensive to deploy than traditional wired services, with a lower
cost-per-user to install, deploy and manage.
WaveRider's wireless network products are designed to operate in the
license-free ISM radio spectrum, which facilitates a more rapid and low-cost
market introduction for service providers than for licensed or hardwire
solutions. Our products utilize direct sequence spectrum (DSS) communications,
which ensures reliable, secure, low-interference communications.
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WaveRider's Products
WaveRider's existing product portfolio includes the Last Mile Solution(R) (LMS)
product line and the Network Communications Links (NCL) families. These product
families are designed to deliver high-speed, fixed wireless Internet access to
all sizes of businesses, home offices and residential users.
Both the LMS and NCL product families include proprietary WaveRider technologies
developed or under development at its research and development facility in
Calgary, Alberta.
Last Mile Solution(R) (LMS)
The LMS product family includes the LMS2000 and LMS3000 wireless networks. The
LMS family is designed to enable service providers to deliver high-speed
Internet access to both business and residential customers. The LMS series
supports a variety of services including Internet access for e-mail, large file
transfers, web browsing, and streaming audio and video. All LMS products are
optimized for IP networks
The LMS products enable wireless connectivity to the Internet via
point-to-multipoint communications. Each LMS network includes a Network Access
Point (NAP), that transmit data to a network of Communications Access Points
(CAPs) within the service provider's service area - similar to a cellular
network. The network are designed to be highly scalable, allowing service
providers to begin with a small initial network and gradually build out a larger
network with more users over time.
Connectivity is provided to the end-users via an LMS end-user modem designed
specifically for business or residential use.
LMS2000
The LMS2000 was the first of WaveRider's Last Mile Solution(R) products to
be released and enables service providers to deliver high-speed Internet
access to business customers. Operating in the license-free 2.4 GHz
spectrum, the LMS2000 delivers raw data throughput speeds of up to 11
megabits per second (Mbps) via line-of-sight connectivity.
LMS3000
WaveRider's LMS3000 is designed to deliver high-speed wireless Internet
access to small business and residential users. The LMS3000 operates in the
license-free 900 MHz spectrum and delivers data throughput speeds up to 1
Mbps. The LMS3000 delivers non-line-of-sight communication between the CAP
and the end-user modem, which eliminates the need for an external antenna.
The LMS3000 modem has its own antenna and can be easily installed by the
end-user.
The Last Mile Solution(R) wireless networks include a Network Management System
(NMS) which features subscriber management, data distribution and bandwidth
management, interface to the service provider's network, user authentication and
network security management. The NMS enables service providers to offer varying
levels of services to its customers via a single network, monitor their network
from a single location and to implement detailed customer billing systems.
NCL Products
The NCL product family is a series of wireless bridges and routers designed
specifically for use by ISPs, network managers and IT managers. Offering
point-to-point and point-to-multipoint line of sight wireless connectivity in
the 2.4 to 2.485 GHz license-free frequency band, WaveRider's NCL products can
be used to establish wide area networks and building-to-building links. The NCL
can connect a single computer or computer network to another single computer or
computer network.
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The operating system built into the NCL products incorporates a complete Simple
Network Management Protocol (SNMP) compliant managed routing solution, which
facilitates the installation and use of these products. The operating system
also integrates IP (Internet Protocol), which provides a variety of network
routing capabilities.
The NCL1155 bridge/router was launched by WaveRider in November, 2000 and
delivers high-speed wireless connections for LAN-to-LAN and LAN-to-Internet
connectivity. The NCL1155 delivers throughput speeds up to 7.75 mbps, using
proprietary WaveRider radio technology that uses an 11 mbps channel. The product
can be used for point-to-point and point-to-multipoint applications and to
extend Ethernet networks without additional telephone lines.
Target Markets
Surveys of businesses and telecommunications carriers indicate the major source
of telecommunications market growth is expected to be in the data services
segment. It is anticipated the growth will be fueled by businesses extending
their local and wide area networks to more locations worldwide and using
telecommunications network services to support an increasing number and variety
of business applications.
The Internet has become and we expect it will continue to grow as a critical
business tool as the market demand for networks that support data services
grows. It is being used by all areas of businesses, from product and marketing
support to information provision and e-commerce transactions.
At the same time, there is increasing competition in the Internet Service
Provider (ISP) industry, which is forcing many to seek alternate access options,
such as wireless networks, to improve their revenue and profitability. WaveRider
expects this increased competition will drive demand for its wireless Internet
access products. We believe that our existing product offerings, ongoing product
development and experience with the initial deployments of our wireless networks
positions WaveRider to capture an early leadership position in the fixed
wireless Internet industry. WaveRider is focused on establishing and building
our presence throughout North America and key international markets.
Sales Strategy
In North America, WaveRider has established a direct sales organization to
market its LMS and NCL product families to the almost 5,000 ISPs in this market.
WaveRider's North American sales team is also targeting major telecommunications
service providers who are looking for a cost-effective, carrier-class solution
to expand their markets and generate additional revenues.
In addition, WaveRider is working with Value Added Resellers (VARs) and Systems
Integrators to develop package solutions and reach more customers in this
market.
WaveRider's international sales team is focused on securing agreements with
Telecommunications Service Providers, Telecommunications Distributors and large
regional ISPs, which dominate the international Internet access market, to
distribute its products around the world.
WaveRider's Web Site and Internet presence has also provided an ongoing source
of potential customers, investors, business partners and employees from around
the world. We plan to continue to enhance our website to serve as a more
effective sales tool and to provide information and support to our customers.
Professional Services
WaveRider has established a Professional Services Group (PSG), which provides
pre- and post-sales engineering support to WaveRider's customers. We believe the
PSG offering distinguishes WaveRider from our competitors in the evolving fixed
wireless Internet market and will provide a significant source of revenue as we
work with customers around the world to plan, install and manage their wireless
networks.
WaveRider's PSG is involved in each phase of the sales process, from initial
site surveys to determine which WaveRider solution is most appropriate for the
customer's service area, to post-sales customer support and maintenance.
5
Manufacturing and Distribution
WaveRider has entered into long term manufacturing agreements with C-MAC
Electronic Systems Inc. (C-MAC) and Electronic Manufacturing Group (EMG) to
manufacture, package and distribute WaveRider products.
C-MAC - Headquartered in Montreal, Quebec, Canada, C-MAC employs more than 7,500
employees and operates 44 manufacturing facilities internationally, including
sites in Belgium, Canada, China, France, Germany, India, Mexico, the United
Kingdom and the United States. C-MAC is a leading internationally diversified
designer and manufacturer of integrated electronic manufacturing solutions, from
components to full systems, primarily serving the communications, automotive,
instrumentation, defense and aerospace equipment markets worldwide. C-MAC
services include product design, supply chain management and assembly and
testing.
Electronics Manufacturing Group - EMG is an ISO 9002 registered Electronics
Manufacturing Services company that provides a complete range of integrated
product development and delivery services to the global technology and
electronics industry. Such services include design, rapid prototyping,
manufacturing and assembly, testing, product assurance, supply chain management,
worldwide distribution and after-sales service. Headquartered in Calgary,
Alberta, Canada, EMG has three manufacturing facilities located in Canada and
employs 355 people. EMG brings extensive insight to the principles of wireless
manufacturing and production.
Through WaveRider's association with C-MAC and EMG, the Company has the
capability to meet the demands of a rapidly growing Internet market, with high
quality efficiently manufactured products.
Competition
There is intense competition in the data communications industry. WaveRider
competes not only with other fixed wireless Internet companies, but also with
companies that deliver hard-wired technologies (wire or fiber optic cable).
Competition is based on design and quality of the products, product performance,
price and service, with the relative importance of each factor varying among
products and markets.
WaveRider competes against companies of various sizes in each of the markets we
serve. Many of these companies have much greater financial and other resources
available to help them withstand adverse economic or market conditions. These
factors, in addition to other influences such as increased price competition and
market and economic conditions could potentially impair WaveRider's ability to
compete.
Regulation of Wireless Communications
Currently, the WaveRider technology is deployed in the highly regulated license
free frequency bands. As such, the WaveRider products are not subject to any
wireless or transmission licensing in the United States, Canada and many other
jurisdictions worldwide. The products do, however, have to be approved by the
Federal Communications Commission, for use in the United States, Industry
Canada, for use in Canada, and other regulator bodies for use in other
jurisdictions, to ensure they meet the rigorous requirements for use of these
bands.
Continued license-free operation will be dependent upon the continuation of
existing government policy and, while we are not aware of any policy changes
planned or expected, this cannot be assured. License-free operation of the
WaveRider products in the 902 to 928 MHz band is subordinate to certain licensed
and unlicensed uses of the band and WaveRider products must not cause harmful
interference to other equipment operating in the band and must accept
interference from any of them. If the Company should be unable to eliminate any
such harmful interference, or should our products be unable to accept
interference caused by others, the Company or our customers could be required to
cease operations in the band in the locations affected by the harmful
interference. Additionally, in the event the 902 to 928 MHz band becomes
unacceptably crowded, and no additional frequencies are allocated, the Company's
business could be adversely affected.
Research and Development
The Company intends to continue to invest heavily in research and development to
expand the capabilities of both the NCL and LMS product families. Investments in
the future will focus around three development areas:
6
1. increasing the speed and user capacity of the networks to allow more users at
greater throughput speeds
2. expanding the product offerings into other licensed and unlicensed bands, to
address additional international markets; and
3. further enhancing the network capabilities of the systems to support new
developing applications
The markets in which the Company participates and intends to participate are
characterized by rapid technological change. As such, the Company believes that,
for the foreseeable future, it will be required to make significant investments
in research and development in order to achieve its market objectives. Research
and development expenses, net of employee stock-based compensation but including
depreciation and amortization, were $8,239,597, $3,021,548, and $1,814,617 in
2000, 1999, and 1998 respectively. The Company expects research and development
expenses to decline in absolute dollars in future periods as the Company
completes the commercial deployment of the LMS2000 and LMS3000 products.
WaveRider's Staff
The Company, through its subsidiaries, WaveRider Communications (Canada) Inc.,
ADE Network Technology Pty. Ltd. and JetStream Internet Services Inc. currently
has approximately 139 full-time employees, 56 in the Toronto head office and
satellite sales offices, 25 in ADE's 5 Australian offices and the rest directly
involved in or supportive of R&D activities in Calgary and the provision of
Internet Services in the Salmon Arm, British Columbia area. The Company is
actively recruiting additional staff to support its projected growth and to
enhance its research and development activities.
Financial information about geographic areas can be found on page 49 of the
financial statements of the Annual Report on Form 10-K.
PART II
Item 7 of the Registrant's annual report on Form 10-K is hereby amended by
deleting the text thereof in its entirety and substituting therefor the
following:
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Liquidity and Capital Resources.
We have funded our operations for the most part through equity financing and
have had no line of credit or similar credit facility available to us. The
Company's outstanding shares of Common Stock, par value $.001, are traded under
the symbol "WAVC" on the NASDAQ National Market System.
In 2000, the Company issued 10,318,753 shares of Common Stock and 1,240,740
Common Stock Purchase Warrants, net of cancellations, for cash consideration,
net of cash expenses, of $16,757,800. 6,423,872 shares of Common Stock were
issued pursuant to exercises of warrants, net of 42,478 warrants that were
cancelled through a cashless exercise. The private and public sale of shares and
attached warrants accounted for the issue of 1,437,036 shares of Common Stock
and 940,740 Common Stock Purchase Warrants. 1,693,845 shares of Common Stock
were issued pursuant to exercises under the Company's employee option plans. In
addition, the Company issued 764,000 shares of Common Stock pursuant to the
conversion of shares of Series C Preferred Shares.
In 2000, the Company also sold convertible promissory notes and warrants, for
net cash proceeds, of $4,818,000.The promissory notes plus accrued interest will
be convertible to common stock of the Company upon the effective date of a
registration statement filed with the Security and Exchange Commission on
December 28, 2000. Included with the promissory notes were 2,461,538 Series J
warrants, exercisable at $3.35 per share for 5 years, and 5,607,692 Series L
warrants, exercisable at $2.539 for one year. As part of the agreement, the
Company also issued 25,000 Series M warrants, exercisable at $3.05 for 5 years,
as a finder's fee.
In 1999, the Company issued 11,951,664 shares of Common Stock and 4,309,629
Common Stock Purchase Warrants for cash considerations, net of cash expenses, of
$10,909,353. The private and public sale of shares and attached warrants
accounted for the issue of 10,857,766 shares of Common Stock and 4,309,629
Common Stock Purchase Warrants. 375,440 shares of Common Stock were issued
pursuant to exercises under the Company's employee option plans, 30,000 through
the exercise of warrants and 36,000 shares of Common Stock were issued pursuant
to the conversion of shares of Series C Preferred Stock. In addition, the
Company issued 384,588 shares of Common Stock pursuant to the acquisition of
Transformation Techniques, Inc. and a further 267,870 shares of Common Stock
were awarded pursuant to the Employee Stock Compensation (1997) Plan.
7
During 1998, the Company issued 4,583,100 shares of Common Stock and 800,000
shares of Preferred Stock and 2,850,000 warrants to purchase common shares for
cash proceeds of $6,350,833, net of cost of $348,419. Private placements and the
exercise of attached warrants accounted for the issue of 3,629,038 shares of
Common Stock and 800,000 shares of Preferred Stock. 951,562 shares of the Common
Stock were issued pursuant to exercises under the Employee Stock Option (1997)
Plan, and 2,500 shares of the Common Stock were awarded under the Employee Stock
Compensation (1997) Plan. In addition, the Company converted the 4,000,000
Series B convertible Preferred Stock, issued in 1997, into 10,000,000 common
shares.
The details of these offerings were disclosed in previous filings. The proceeds
from these issues have and will continue to be used to continue the on-going
expansion of the operations of the Company and the development of the
WaveRider(R) product families.
General
The Company reported a net loss for the year ended December 31, 2000, of $31.5
million on revenues of $4.1 million, compared to a net loss for the year ended
December 31, 1999 of $7.4 million on revenues of $1.7 million and a net loss for
the year ended December 31, 1998 of $4.5 million on revenues of $0.2 million.
The Company's reported results for 2000 include one-time non-cash charges, for
the extension of the Company's Employee Stock Option (1997) Plan, of $11.1
million and non-cash accounting charges of $1.3 million related to the release
of shares from escrow.
In the fourth quarter, management determined that the Transformation Techniques
Inc. (TTI) technology could not operate to customer expectations in certain
operating conditions and that the technologies could not be remedied to overcome
the issues. As a result, included in the 2000 loss is the write-off of the
Company's investment in acquired core technology and goodwill, in the amount of
$1,028,430, which was recorded as a result of the purchase of TTI in 1999. In
addition, the Company wrote off inventories and recorded warranty provisions, in
the amount of $1,568,739, related to the TTI technologies, including the amounts
recorded related to the impairment.
The Company's cash balance increased to $7.7 million at December 31, 2000,
compared to $5.5 million at December 31, 1999 and $3.0 million at December 31,
1998. Increases in cash balances are the result of the Company's additional
capital placements. See "Liquidity and Capital Resources" for fuller discussion
of the Company's equity financings.
Revenue
Total revenue increased 141% in 2000, compared to 1999, primarily due to the
commercial release of the Company's LMS2000 network system and to the expansion
of the Company's sales and marketing. Revenues increased 733% in 1999, compared
to 1998, primarily due to the commercial release of the Company's first product
offering, the NCL 135, during the first quarter of 1999 and the acquisition of
TTI in June 1999
Cost of Product and Internet Sales
Cost of Product and Internet Sales in 2000 was adversely affected by the
$1,568,739 write-off of TTI technology related inventories. As a result, the
Company recorded a gross margin deficiency in 2000 of $1,106,056 compared to
gross margins of $421,230 and $130,415 in 1999 and 1998, respectively.
With the introduction of the new NCL 1155 product, which utilizes new
replacement technology at a significantly lower cost, in the fourth quarter of
2000, the Company anticipates significantly higher margins on its NCL wireless
bridging revenues. In addition, the margins related to the Company's LMS
wireless network products have historically been, and are anticipated to be,
greater than the NCL product line. As the LMS network products take on a greater
proportion of the Company's sales, margins will increase.
8
Expenses
The Company continued to invest heavily in the development of its NCL and LMS
product families, with Research and Development costs, excluding stock related
expenses, depreciation and amortization, in 2000 amounting to $6,127,360 (1999 -
$2,319,707, 1998 - $1,545,510).
The extension of the Company's 1997 Option Plan and the release of shares from
the escrow plan resulted in non-cash accounting charges in 2000 in the amount of
$12,365,177 (1999 - $489,770, 1998 - $0). As of December 31, 2000, the Company
had achieved the first two performance events in the escrow agreement resulting
in the release of 1,350,000 shares of Common Stock orF 15% of the escrow shares.
The Company expects that the remaining 7,650,000 shares will be released from
escrow during 2001 and the value of the shares will be recorded at the date the
respective performance events occur.
Selling, general and administrative expenses, excluding non-cash stock related
charges, increased to $8,605,887 in 2000 (1999 - $4,634,505, 1998 - $2,800,209).
Throughout the year, the Company expanded its sales operations in the United
States and Internationally and, in the fourth quarter, acquired ADE Technologies
in Australia. The additions were put in place to provide the Company with the
trained sales and support representatives required to sell and service the LMS
network products.
Certain factors that may affect future results.
Following are certain risk factors associated with our Company and with
ownership of our stock.
We have a limited operating history, therefore there is a high degree of
uncertainty whether our business plans or our products will be successful.
Up to the beginning of the year 2001, our company had been mainly focused on the
research and development of our products and as a result had limited sales or
revenues. There can be no assurance that the products that we offer will meet
with wide market acceptance. In addition, there is no guarantee that even if
there proves to be a wide market for our products, such market will be able to
sustain our profitability requirements.
None of our current products has achieved widespread distribution or customer
acceptance. Although, some of our products haveF passed the development stage,
we have not yet established a commercially viable market for them. Although we
believe that we have the expertise to commercialize our products and establish a
market for them, there is no assurance that we will be successful or that such
products will prove to have widespread customer appeal.
We have a history of losses, and our future profitability is uncertain.
Due to our limited operating history, we are subject to the uncertainties and
risks associated with any new business. Until recently we had no product that
could be commercialized, and therefore we experienced significant operating
losses every year since incorporation. We incurred a net loss of $31,472,615 for
the year ended December 31, 2000 (1999 - $7,447,850 and 1998 - $4,477,518) and
reported an accumulated deficit at that date of $49,414,508 (1999 -
$17,910,784). We incurred a net loss of $7,916,708 for the quarter ended March
31, 2001. We expect to continue to incur losses for the foreseeable future.
There can be no assurance that we will ever generate an overall profit from our
products or that we will ever reach profitability on a sustained basis.
Competition in the data communication industry is intense and there is
uncertainty that given our new technology and limited resources that we will be
able to succeed.
Although our products are based on a wireless technology, we compete not only
against companies that base their products on wireless technology, but also
against companies that base their products on hard-wired technology (wire or
fiber optic cable).
9
There can be no assurance that we will be able to compete successfully in the
future against existing or new competitors or that our operating results will
not be adversely affected by increased price competition. Competition is based
on design and quality of the products, product performance, price and service,
with the relative importance of such factors varying among products and markets.
Competition in the various markets we serve comes from companies of various
sizes many of which are larger and have greater financial and other resources
than we do and, thus, can withstand adverse economic or market conditions better
than we can.
Our future operating results are subject to a number of risks, including our
ability or inability to implement our strategic plan, to attract qualified
personnel and to raise sufficient financing as required. Inability of our
management to guide growth effectively, including implementing appropriate
systems, procedures and controls, could have a material adverse effect on our
business, financial condition and operating results.
The data communication industry is in a state of rapid technological change and
we may not be able to keep up.
We may be unable to keep up with technological advances in the data
communications industry. As a result, our products may become obsolete or
unattractive. The data communications industry is characterized by rapid
technological change. In addition to frequent improvements of existing
technology, there is frequent introduction of new technologies leading to more
complex and powerful products. Keeping up with these changes requires
significant management, technological and financial resources. As a small
company, we do not have the management, technological and financial resources
that larger companies in our industry may have. There can be no assurance that
we will be able or successful in enhancing our existing products, or in
developing, manufacturing and marketing new products. An inability to do so
would adversely affect our business, financial condition and results of
operations.
We have limited intellectual property protection and there is risk that our
competitors will be able to appropriate our technology.
Our ability to compete depends to a significant extent on our ability to protect
our intellectual property and to operate without infringing the intellectual
property rights of others. We regard our technology as proprietary. We have no
issued patents or pending patent applications, nor do we have any registered
copyrights with respect to our intellectual property rights. We rely on employee
and third party non-disclosure agreements and on the legal principles
restricting the unauthorized disclosure and use of trade secrets. Despite our
precautions, it might be possible for a third party to copy or otherwise obtain
our technology, and use it without authorization. Although we intend to defend
our intellectual property, we cannot assure you that the steps we have taken or
that we may take in the future will be sufficient to prevent misappropriation or
unauthorized use of our technology. In addition, there can be no assurance that
foreign intellectual property laws will protect our intellectual property
rights. There is no assurance that patent application or copyright registration
that may be filed will be granted, or that any issued patent or copyrights will
not be challenged, invalidated or circumvented. There is no assurance that the
rights granted under patents that may be issued or copyrights that may be
registered will provide sufficient protection to our intellectual property
rights. Moreover, we cannot assure you that our competitors will not
independently develop technologies similar, or even superior, to our technology.
Use of our products is subordinated to other uses and there is risk that our
customers may have to limit or discontinue the use of our products.
License-free operation of our products in certain radio frequency bands is
subordinated to certain licensed and unlicensed uses of these bands. This
subordination means that our products must not cause harmful interference to
other equipment operating in the band, and must accept potential interference
from any of such other equipment. If our equipment is unable to operate without
any such harmful interference, or is unable to accept interference caused by
others, our customers could be required to cease operations in some or all of
these bands in the locations affected by the harmful interference. As well, in
the event these bands become unacceptably crowded, and no additional frequencies
are allocated to unlicensed use, our business could be adversely affected.
10
Currently, our products are designed to operate in frequency bands for which
licenses are not required in the United States, Canada and other countries that
we view as our potential market. Extensive regulation of the data communications
industry by U.S. or foreign governments and, in particular, imposing license
requirements in the frequency bands of our products could materially and
adversely affect us through the effect on our customers and potential customers.
Continued license-free operation will depend upon the continuation of existing
U.S., Canadian and such other countries' government policies and, while no
planned policy changes have been announced or are expected, this cannot be
assured.
We may suffer dilution if we issue substantial shares of our common stock:
o upon conversion of notes issued to Capital Ventures International;
o upon conversionF of shares of the Series D 5% convertible preferred stock;
o upon exercis of the outstanding warrants;
o upon sale of shares of our common stock to Crescent International; and
o upon issuance of shares to ADE NetworkTechnology Pty. Ltd.
We are obligated to issue a substantial number of shares of common stock upon
the conversion of our convertible notes issued to Capital Ventures International
and Series D 5% convertible preferred stock and exercise of our outstanding
warrants. The price, which we may receive for the shares of common stock, that
are issuable upon conversion or exercise of such securities, may be less than
the market price of the common stock at the time of such conversions or
exercise. Should a significant number of these securities be exercised or
converted, the resulting increase in the amount of the common stock in the
public market could have a substantial dilutive effect on our outstanding common
stock.
In addition, a condition of the agreement to acquire ADE Network Technology Pty
Ltd allows us to pay the remaining consideration payable in the form of cash,
stock or a combination of each. Should we pay the remainder of the consideration
through the issuance of shares of common stock, the resulting increase in the
amount of the common stock in the public market could have a substantial
dilutive effect on our outstanding common stock.
Our common stock is subject to further dilution upon the sale of shares of our
common stock to Crescent International. This could occur if we require Crescent
International to purchase additional shares of our common stock worth up to $7
million. Our agreements with Crescent International obligate us to register any
shares of our common stock that we require Crescent International to purchase.
The sale of common stock offered by this prospectus, or merely the possibility
that these sales could occur, could have an adverse effect on the market price
of our common stock.
The conversion and exercise of all of the aforementioned securities or the
issuance of new shares of common stock may also adversely affect the terms under
which we could obtain additional equity capital.
We may be subject to product liability claims and we lack product liability
insurance.
We face an inherent risk of exposure to product liability claims in the event
that the products designed and sold by us contain errors, "bugs" or defects.
There can be no assurance that we will avoid significant product liability
exposure. We do not currently have product liability insurance and there can be
no assurance that insurance coverage will be available in the future on
commercially reasonable terms, or at all. Further, there can be no assurance
that such insurance, if obtained, would be adequate to cover potential product
liability claims, or that a loss of insurance coverage or the assertion of a
product liability claim or claims would not materially adversely affect our
business, financial condition and results of operations.
We depend upon third party manufacturers and there is risk that, if these
suppliers become unavailable for any reason, we may for an unknown period of
time have no product to sell.
11
We depend upon a limited number of third party manufacturers to make our
products. If our suppliers are not able to manufacture for us for any reason, we
would, for an unknown period of time, have difficulty finding alternate sources
of supply. Inability to obtain manufacturing capacity would have a material
adverse effect on our business, financial condition and results of operations.
Item 7A Of the registrant's annual report on Form 10-K has been deleted in its
entirety.
PART III
Item 10 of the registrant's annual report on Form 10-K is hereby amended by
deleting the text thereof in its entirety and substituting therefor the
following:
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
Executive Officers and Directors
The present directors and officers of the Company, their ages and their
positions held in the Company are listed below. Each director will serve until
the next annual meeting of the stockholders or until his successor has been
elected and duly qualified. Directors serve one year terms and officers hold
office at the pleasure of the Board of Directors, subject to employment
agreements. There are no family relationships between or among directors and
executive officers.
Name Age Position
D. Bruce Sinclair 50 Chief Executive Officer, President, Director
Charles W. Brown 45 Vice President, Sales and Marketing
James H. Chinnick 54 Vice President, Engineering
T. Scott Worthington 46 Vice President, Chief Financial Officer
Cameron A. Mingay (1) 49 Secretary, Director
Gerry Chastelet (1) 54 Director
John E. Curry (2) 54 Director
Guthrie J. Stewart (2) 45 Director
Dennis R. Wing (2) 52 Director
- ----------
(1) Member of the compensation committee
(2) Member of the audit committee
Gerry Chastelet has been a director of the Company since April 1999. Since
December 1998, Mr. Chastelet has been the President, Chairman and Chief
Executive Officer of Digital Lightwave, Inc., a leading provider of fiber optic
network analysis equipment. From December 1995 to October 1998, he served as
President and Chief Executive Officer of Wandel and Goltermann Technologies,
Inc., a global supplier of communication test and measurement equipment. From
June 1993 to November 1995, he served as Vice President Sales, Marketing and
Service - Americas and Asia Pacific for Network Systems Corporation, a supplier
of channel-attached communications solutions for large mainframe computers. From
1989 to 1993, he was Vice President Sales, Marketing and Service for
Infotron/Gandalf Systems Corporation. Mr. Chastelet holds a degree in
Electronics Engineering from Devry Institute of Technology and is a graduate of
the University of Toronto Executive MBA program.
John E. Curry was appointed a director of the Company in October 1999. Mr. Curry
has been President of Karina Ventures Inc., a venture capital consulting company
since September 1999. Prior, Mr. Curry was with Bedford Curry & Co., Chartered
Accountants, a Vancouver based firm specializing in public companies and
business financing, which he co-founded in 1985. Mr. Curry is a member of the
British Columbia Institute of Chartered Accountants and has a BA from the
University of Western Ontario.
12
Cameron A. Mingay has been a director of the Company since April 1999 and the
Secretary of the Company since May 1999. Since July 1999, Mr. Mingay has been a
partner at Cassels Brock & Blackwell LLP, Toronto, Ontario, Canada, specializing
in the areas of securities and corporate commercial law, with an emphasis on
public offerings, mergers and acquisitions, and corporate reorganizations. Prior
to July 1999, Mr. Mingay was a partner at Smith Lyons LLP, Toronto, Ontario,
Canada. He is currently on the board of Kinross Gold Corporation and is the
Corporate Secretary of Nextair Inc. He completed his undergraduate degree at the
University of Wisconsin and York University and his law degree from Queen's
University.
D. Bruce Sinclair has been a director and the President of the Company since
December 1997 and the Chief Executive Officer of the Company since November
1997. Mr. Sinclair is an experienced management professional with a Masters of
Business Administration from the University of Toronto. He has worked in sales
and management with companies including IBM Canada, Northern Telecom and Harris
Systems Limited. From 1988 to 1991, Mr. Sinclair was with Dell Computer
Corporation, a computer manufacturing company, where he held the office of
President of its Canadian subsidiary. In 1991 he was appointed Vice-President,
Europe for Dell Computer Corporation and subsequently head of Dell in Europe. He
resigned from Dell in 1995 and, until November 1997, he operated his own
independent consulting business.
Guthrie J. Stewart was appointed a director of the Company in October 1999. Mr.
Stewart acts as a Board member or consultant to emerging companies, since
October 2000. Prior, he was Executive Vice-President, Global Development for the
Teleglobe Group and Chairman and Chief Executive Officer of Teleglobe Media
Enterprises. Since 1992 until October 2000, he held various executive positions
within the Teleglobe Group including President and Chief Executive Officer of
Teleglobe Canada Inc., Canada's international telecommunications carrier.
Dennis R. Wing was appointed a director of the Company in November 1999. Mr.
Wing is Director of International Operations for Fahnestock & Co. Inc., a U.S.
investment bank. Previously, he was founding partner and Board Member of First
Marathon Securities Inc. and was its Director of International Operations for 18
years. His other Board memberships include Cryptologic Inc., Vengold Inc. and
the University of Waterloo. He holds a Bachelor of Arts degree in Economics from
University of Waterloo.
Charles W. Brown has been the Vice President, Marketing of the Company since
February 1998. Mr. Brown has a Masters in Business Administration from the
University of Western Ontario. From 1994 until February 1998, Mr. Brown was
Clearnet Communications' first Vice President and CIO. Prior to this Mr. Brown
has held numerous senior Sales and Marketing positions including Vice President,
Sales and Marketing for Trillium Communications (1993-1994) and Director,
Strategic Planning and Marketing for BCE Mobile (1990-1993).
James H. Chinnick has been Vice President, Engineering of the Company since
January 1999. From 1995 until 1998, Mr. Chinnick was vice president and general
manager of Harris Corporation's Wireless Access Division in Calgary, AB. Prior
to this, Mr. Chinnick held several senior positions with NovAtel (1988-1995),
Northern Telecom (1985-1988), Foundation Electronic Instruments (1980-1984) and
the Communications Research Centre in Ottawa (1971-1980). In addition to a B.Sc.
Engineering (Physics) from Queens University, he has a M.Sc. in Electrical
Engineering (Communications) from Queens University and a Diploma in Business
Administration from the University of Ottawa. He is a member of the Association
of Professional Engineers, Geologists and Geophysicists of Alberta.
T. Scott Worthington has been a Vice President and the Company's Chief Financial
Officer since January 1998. From 1988 to 1996, he worked at Dell Computer
Corporation, in Canada, where he held numerous positions including CFO of the
Canadian subsidiary. From October 1996 to January 1998, he was a financial and
business consultant. Mr. Worthington is a Chartered Accountant.
13
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, (the "Exchange
Act"), requires officers, directors and persons who beneficially own more than
10% of a class of the Company's equity securities registered under the Exchange
Act to file reports of ownership and changes in ownership with the Securities
and Exchange Commission. Based solely on a review of the forms it has received
and on representation from certain reporting persons, the Company believes that,
during the year ended December 31, 2000, all Section 16(a) filing requirements
applicable to its officers, directors and 10% beneficial owners were complied
with by such persons.
Item 11 of the registrant's annual report on Form 10-K is hereby amended by
deleting the text thereof in its entirety and substituting therefor the
following:
ITEM 11. EXECUTIVE COMPENSATION
The following table describes the compensation earned in fiscal 2000 by the
Chief Executive Officer of the Company and all executives officer who received
compensation in excess of $100,000 in 2000, 1999 and 1998. The directors of the
Company received $1,000 per meeting attended during the year and in total were
awarded 375,000 options under the Employee Stock Option (2000) Plan for their
participation in the board of directors and each of its subcommittees.
SUMMARY COMPENSATION TABLE 2000
Annual Compensation
(dollar amounts in U.S. dollars)
Name and
Principal Position Year Salary Bonus Stock Options
Bruce Sinclair 2000 $235,627 $67,322 500,000
Pres./CEO/Director 1999 $204,730 $134,617 100,000
1998 $182,002 $155,038 Note 1
Charles Brown 2000 $138,683 $42,692 200,000
Vice Pres., Sales & Marketing 1999 $128,156 $50,885 535,000
1998 $101,112 $39,045 465,000
James Chinnick 2000 $97,482 $71,631 200,000
Vice Pres., Engineering 1999 $87,748 $76,732 630,000
Scott Worthington 2000 $111,665 $25,784 200,000
Vice President & CFO 1999 $103,863 $26,923 450,000
1998 $76,845 $15,369 550,000
(1) Mr. Sinclair's 1998 compensation was based on an annualized amount of
Can. $500,000 payable Can. $270,000 in cash salary with the balance
payable in shares out of the Employee Stock Compensation (1997) Plan
subject to certain performance criteria. Despite having achieved the
bonus requirements, Mr. Sinclair waived receipt of the $155,038 bonus
in conjunction with an agreement with other shareholders who returned
1,000,000 shares for cancellation. This agreement allowed the Company
to issue 1,495,000 options to the other senior executives without
significant further dilution for the shareholders.
14
The following table summarizes option grants during 2000 to the executive
officers named in the Summary Compensation Table (the "Named Executive
Officers")
Option/SAR Grants in Last Fiscal Year (Individual Grants)
Percent of total
Number of options Potential realizable value
securities granted to Exercise Market at assumed annual rates
underlying employees or base price on of stock price appreciation
options in fiscal price date of Expiration for option term
granted year ($/sh) grant date 0% 5%10%
-------------------------------------------------------------------------
Bruce Sinclair (1) 200,000 6.3% $9.03 $9.03 2/25/10 0 $90,300 $180,600
(2) 300,000 9.4% $9.03 $9.03 2/25/10 0 $135,450 $270,900
Charles Brown (3) 200,000 6.3% $9.03 $9.03 2/25/10 0 $90,300 $180,600
James Chinnick (3) 200,000 6.3% $9.03 $9.03 2/25/10 0 $90,300 $180,600
Scott Worthington (4) 200,000 6.3% $9.03 $9.03 2/25/10 0 $90,300 $180,600
(1) Options vested in fiscal 2000.
(2) 150,000 options vested in fiscal 2000 and the balance of 150,000
options vest in five years from award.
(3) Options will vest in five years from award.
(4) 100,000 options vested in fiscal 2000 and the balance of 100,000
options will vest in five years from award.
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
Number of securities Value of unexercised
underlying unexercised in-the-money
options/SARs at options/SARs at
Shares fiscal year end fiscal year end
acquired on value exercisable/ exercisable/
Name exercise (#) realized ($) unexercisable unexercisable (1)
- -------------------------------------------------------------------------------------------------------------
Bruce Sinclair 225,000 1,962,345 1,290,000 / 1,085,000 849,022 / 819,978
Charles Brown 125,400 881,013 419,850 / 654,750 45,702 / 0
James Chinnick 70,000 463,773 226,500 / 633,500 0 / 0
Scott Worthington 47,600 430,045 669,900 / 482,500 99,700 / 0
(1) Calculated based on the difference between the exercise price and the price
of a share of the Company's Common Stock on December 31, 1999. The Closing
sale price of the Common Stock was $2.25 on December 31, 1999.
Employment Agreements
D. Bruce Sinclair. On November 18, 1997, we entered into an employment agreement
for an initial term of one year subject to annual extensions thereafter. Under
this employment agreement, Mr. Sinclair serves as our President and Chief
Executive Officer at a base salary of Can. $500,000 . The base salary may be
increased from time to time in accordance with our regular administrative
practices as applied to our officers. In addition, Mr. Sinclair may participate
in our employee fringe benefit plans or programs generally available to
employees of comparable status and position. He was also granted options to
purchase 1,000,000 shares. The options vest on the basis of performance
objectives.
15
In the event that we terminate Mr. Sinclair without cause, we will pay him
severance pay in the amount equal to one year's salary plus one month's salary
for each year of employment in excess of twelve years service. Upon termination
of Mr. Sinclair's employment for cause, we will have no obligation to Mr.
Sinclair.
Under his employment agreement, Mr. Sinclair is subject to restrictive
covenants, including confidentiality provisions. Also, during his employment and
for 12 months after termination of employment with us, Mr. Sinclair is subject
to a non-competition provision.
Charles W. Brown. On February 16, 1998, we entered into an employment agreement
with Mr. Brown in substantially the same form as that described for Mr.
Sinclair. Mr. Brown serves as our Vice President of Marketing at a base annual
salary of Can. $240,000. He was also granted 240,000 shares. The options vested
in increments of 60,000 on March 31, June 30, September 30 and December 31,
1998.
James H. Chinnick. On January 4, 1999, we entered into an employment agreement
with Mr. Chinnick in substantially the same form as that described for Mr.
Sinclair. Mr. Chinnick serves as our Vice President of Technology at a base
annual salary of Can. $240,000. He was also granted 120,000 shares. The options
vested in increments of 30,000 on March 31, June 30, September 30 and December
31, 1999.
T. Scott Worthington. On January 5, 1998, we entered into an employment
agreement with Mr. Worthington in substantially the same form as that described
for Mr. Sinclair. Mr. Worthington serves as our Vice President of Finance and
Administration at a base annual salary of Can. $138,000. He was also granted
300,000 shares. The options vested in increments of 150,000 on the completion of
our then public financing and on December 31, 1998.
Compensation Committee Interlocks and Insider Participation
The Company's compensation committee is currently composed of Messrs. Chastelet
and Mingay. Messrs. Chastelet and Mingay are both non-employee directors. In
2000, no officer or employee of the Company participated in the deliberations of
the compensation committee concerning the compensation of the Company's
executive officers. No interlocking relationship existed between the Company's
Board or compensation committee and the board of directors or compensation
committee of any other company in 2000.
Item 12 of the registrant's annual report on Form 10-K is hereby amended by
deleting the text thereof in its entirety and substituting therefor the
following:
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following tables set forth, as of February 23, 2001, the stock ownership of
each officer and director of the Company, of all officers and directors of the
Company as a group, and of each person known by the Company to be a beneficial
owner of 5% or more of its Common Stock, $0.001 par value. Except as otherwise
noted, each person listed below is the sole beneficial owner of the shares and
has sole investment and voting power with respect to such shares. No person
listed below has any option, warrant or other right to acquire additional
securities of the Company, except as may otherwise be noted. The Company had
62,854,753 shares of Common Stock issued and outstanding as of such date, which
numbers do not include any options or warrants issued and outstanding.
16
Name and Address of Amt. Of Common % of Common Stock
Beneficial Owner Stock benef. Owned (1) outstanding
- ----------------------------------------------------------------------------------------------------------
Bruce Sinclair, Director, CEO, President, Director (2) 3,290,000 5.05%
Cameron A. Mingay, Secretary/Director (3) 127,500 0.20%
Gerry Chastelet, Director (3) 150,000 0.24%
John Curry, Director (3) 120,000 0.24%
Guthrie Stewart, Director (3) 100,000 0.16%
Dennis Wing, Director (3) 100,000 0.16%
Charles Brown, Vice President, Sales & Marketing (4) 422,826 0.67%
Scott Worthington, Vice-President & CFO (5) 672,249 1.06%
Jim Chinnick, Vice President, Engineering (6) 229,590 0.36%
------------ --------
All Directors and Executive Officers (9 persons) 5,212,165 7.77%
------------ --------
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission (the "SEC") that deem shares to be
beneficially owned by any person who has voting or investment power
with respect to such shares. Unless otherwise indicated below, the
persons and entities named in the table have sole voting and sole
investment power with respect to all shares beneficially owned, subject
to community property laws where applicable. Shares of Common Stock
subject to options that are currently exercisable or exercisable within
60 days of February 23, 2001 are deemed to be outstanding and to be
beneficially owned by the person holding such options for the purpose
of computing the percentage ownership of such person but are not
treated as outstanding for the purpose of computing the percentage
ownership of any other person.
(2) Consists of 2,000,000 shares of Common Stock, which are subject to an
Escrow Agreement, dated March 16, 1998, as amended September 27, 1999
and 1,290,000 shares issuable upon exercise of options that are
currently exercisable or exercisable within 60 days of February 23,
2001.
(3) Consists of shares issuable upon exercise of options that are currently
exercisable or exercisable within 60 days of February 23, 2001.
(4) Consists of 2,976 shares of Common Stock and 419,850 shares issuable
upon exercise of options that are currently exercisable or exercisable
within 60 days of February 23, 2001.
(5) Consists of 2,349 shares of Common Stock and 669,900 shares issuable
upon exercise of options that are currently exercisable or exercisable
within 60 days of February 23, 2001.
(6) Consists of 3,090 shares of Common Stock and 226,500 shares issuable
upon exercise of options that are currently exercisable or exercisable
within 60 days of February 23, 2001.
17
PART IV
Item 14 of the registrant's annual report on Form 10-K is hereby amended by
deleting the text thereof in its entirety and substituting therefor the
following:
ITEM 14. Exhibits and Reports on Form 8-K
(a) Exhibits. The exhibits below marked with an asterisk (*) are included
with and filed as part of this report. Other exhibits have previously
been filed with the Securities and Exchange Commission and are
incorporated by reference to another report, registration statement or
form. References to the "Company" below includes Channel i Inc., the
Company's previous name under which exhibits may have been filed.
Exhibit No. Description.
3.1 Articles of Incorporation of the Company, incorporated by reference to
Exhibit 3.1 registration statement on Form S-18, File no. 33-25889-LA.
3.2 Bylaws of the Company, incorporated by reference to Exhibit 3.2 to the
annual report on Form 10-KSB for the year ended December 31, 1996.
3.3 Certificate of Amendment to the Articles of Incorporation of the
Company filed with the Nevada Secretary of State on October 8th, 1993,
incorporated by reference to Exhibit 3.3 to the quarterly report on
Form 10-QSB for the period ended September 30th, 1994.
3.3 Certificate of Amendment to the Articles of Incorporation of the
Company filed with the Nevada Secretary of State on October 25th, 1993,
incorporated by reference to Exhibit 2(d) to the registration statement
on Form 8-A, File No. 0-25680.
3.5 Certificate of Amendment to the Articles of Incorporation of the
Company filed with the Nevada Secretary of State on March 25th, 1995,
incorporated by reference to Exhibit 2(e) to registration statement on
Form 8-A, File no. 0-25680.
3.6 Certificate of Amendment to the Articles of Incorporation of the
Company, designating the Series A Voting Convertible Preferred Stock,
filed with the Nevada Secretary of State on March 24th, 1997,
incorporated by reference to Exhibit 3.6 on Form 10KSB for the year
ended December 31, 1996.
3.8 Certificate of Amendment to the Articles of Incorporation of the
Company designating the Series B Voting Convertible Preferred Stock,
filed with the Nevada Secretary of State on May 16, 1997 incorporated
by reference to Exhibit 3.7 on Form 10KSB for the year ended December
31, 1997.
3.9 Certificate of Amendment to the Memorandum of the Company changing the
name to WaveRider Communications Inc., filed with the Nevada Secretary
of State on May 27, 1997 incorporated by reference to Exhibit 3.8 on
Form 10KSB for the year ended December 31, 1997.
3.10 Certificate of Amendment to the Certificate of Designation of the
Series B Voting Convertible Preferred Stock, filed with the Nevada
Secretary of State on May 16, 1997 incorporated by reference to Exhibit
99.1 on Form 8-K filed May 5, 1998.
3.11 Certificate of Amendment to the Articles of Incorporation of the
Company designating the Series C Voting 8% Convertible Preferred Stock,
filed with the Nevada Secretary of State on June 3, 1998 incorporated
by reference to Exhibit 4 on Form 8-K filed June 18, 1998.
3.12 Certificate of Amendment to the Articles of Incorporation of the
Company filed with the Nevada Secretary of State on July 17, 2000,
incorporated by reference to Appendix D on Form DEF 14A filed May 25,
2000 . 4.1 Specimen common stock certificate, incorporated by reference
to Exhibit 4.1 to registration statement on Form S-18, File no.
33-25889-LA.
4.2 Warrant Terms dated December 15, 1998, relating to the Class G Common
Stock Purchase Warrants, incorporated by reference to Exhibit 4.9 on
Form 10KSB for the year ended December 31, 1998.
4.3 Warrant Terms dated December 29, 1998, relating to the Common Stock
Purchase Warrants, incorporated by reference to Exhibit 4.10 on Form
10KSB for the year ended December 31, 1998.
18
4.4 Warrant Terms dated June, 1999, relating to the Class H Common Stock
Purchase Warrants, incorporated by reference to Exhibit 4.11 on a
registration statement on Form S-3, File no. 333-82855
4.5 Warrant Terms dated December 1999, relating to Common Stock Purchase
Warrants, incorporated by reference to Exhibit 4.13 on a registration
statement on Form S-3, File no. 333-92591.
4.6 Warrant Terms dated December 8, 2000, relating to the Class J Common
Stock Purchase Warrants, incorporated by reference to Exhibit 10.4 on
Form 8-K filed December 14, 2000.
4.7 Warrant Terms dated December 8, 2000, relating to the Class K Common
Stock Purchase Warrants, incorporated by reference to Exhibit 10.5 on
Form 8-K filed December 14, 2000.
4.8 Form of Warrant Terms dated December 8, 2000, relating to the Class L
Common Stock Purchase Warrants, incorporated by reference to Exhibit
10.6 on Form 8-K filed December 14, 2000.
4.9 Warrant Terms dated December 8, 2000, relating to the Class M Common
Stock Purchase Warrants, incorporated by reference to Exhibit 4.9 on
Form S-3 filed December 28, 2000.
10.1 Share Exchange Agreement executed the 13th day of May, 1997 between the
Company and the shareholders of Major Wireless Communications Inc.,
("Major Wireless"), with respect to the purchase by the Company of all
the issued and outstanding shares in the capital stock of Major
Wireless, incorporated by reference to Exhibit 2.1 in Form 8-K filed
May 29, 1997
10.2 Agreement supplemental to the Share Exchange Agreement executed the
13th day of May, 1997 (see 10.6 supra) incorporated by reference to
Exhibit 10.1 in Form 8-K filed May 29, 1997.
10.3 Employee Stock Option (1997) Plan incorporated by reference to Exhibit
99 in Form S-8 filed August 29th, 1997.
10.4 Employment agreement between Mr. Bruce Sinclair and WaveRider
Communications Inc., dated November 18, 1997 incorporated by reference
to Exhibit 10.10 in Form 10KSB for the year ended December 31, 1997.
10.5 Amendment to the Share Exchange Agreement executed the 13th day of May,
1997 (see 10.6 supra) incorporated by reference to Exhibit 10.1 in Form
8-K filed May 4,1998.
10.6 Amendment to the Employee Stock Option (1997) Plan incorporated by
reference to Form S-8 filed May 13, 1998
10.7 Convertible Debenture Agreement between WaveRider and International
Advisory Services Ltd. and Wyndel Consulting Ltd. dated December 15,
1998 incorporated by reference to Exhibit 10.11 on Form S-3 filed
January 19, 1999.
10.8 Letter of termination of the Convertible Debenture, dated January 8,
1999, incorporated by reference to Exhibit 10.11 on Form S-3 filed
January 19, 1999.
10.9 Common Stock Purchase Agreement between WaveRider and Sovereign
Partners LP and Canadian Advantage Limited Partnership, dated December
31, 1998, including the exhibits to such agreement incorporated by
reference to Exhibit 10.13 on Form S-3 filed January 19, 1999.
10.10 Amendment to the Common Stock Purchase Agreement between WaveRider and
Sovereign Partners LP and Canadian Advantage Limited Partnership, dated
June 14, 1999, incorporated by reference to Exhibit 10.14 on Form S-3,
File No. 333-82855.
10.11 Merger Agreement between WaveRider Communications Inc and TTI Merger
Inc and Transformation Techniques, Inc. and Peter Bonk, incorporated by
reference to Exhibit 10.1 in Form 8-K filed June 30, 1999
10.12 Employment agreement between Mr. Peter Bonk and WaveRider
Communications (USA) Inc., dated June 11, 1999, incorporated by
reference to Exhibit 10.2 in Form 8-K filed June 30, 1999.
10.13 Loan Agreement between WaveRider Communications Inc. and AMRO
International, S.A. dated October 15, 1999, incorporated by reference
to Exhibit 10.1 in Form 10-Q for the quarter ended September 30, 1999.
10.14 Common Stock Purchase Agreement between WaveRider Communications Inc.
and Radyr Group Investments dated October 18, 1999, incorporated by
reference to Exhibit 10.2 in Form 10-Q for the quarter ended September
30, 1999.
10.15 Underwriting Agreement between WaveRider Communications Inc. and Groome
Capital.com Inc. dated December 17, 1999 incorporated by reference to
exhibit 10.19 on Form S-3A, File No. 333-92591.
10.16 Share Sale and Subscription Agreement between WaveRider Communications
Inc. and ADE Network Technology Pty Ltd. and Philip William Anderson,
Maureen Anderson and Wayne Anderson dated September 29, 2000,
incorporated by reference to exhibit 10.1 on Form 8-K filed October
16,2000.
19
10.17 Amendment #1 to Share Sale and Subscription Agreement between WaveRider
Communications Inc. and ADE Network Technology Pty Ltd. and Philip
William Anderson, Maureen Anderson and Wayne Anderson dated October 9,
2000, incorporated by reference to exhibit 10.2 on Form 8-K filed
October 16, 2000.
10.18 Security Purchase Agreement between WaveRider Communications Inc. and
Capital Ventures International dated December 8, 2000, incorporated by
reference to exhibit 10.1 on Form 8-K filed December 14, 2000.
10.19 *Employment agreement between Mr. T. Scott Worthington and WaveRider
Communications Inc., dated January 5, 1998.
10.20 *Employment agreement between Mr. Charles W. Brown and WaveRider
Communications Inc., dated February 16, 1998.
10.21 *Employment agreement between Mr. James H. Chinnick and WaveRider
Communications Inc., dated January 4, 1999.
21 *Subsidiaries
(b) Reports on Form 8-K
8-K Share Sale and Subscription Agreement between WaveRider Communications
Inc. and ADE Network Technology Pty Ltd. and Philip William Anderson,
Maureen Anderson and Wayne Anderson dated September 29, 2000, filed
October 16,2000.
8-K Security Purchase Agreement between WaveRider Communications Inc. and
Capital Ventures International dated December 8, 2000, filed December
14, 2000.
8-K/A Financial Statements required to be filed in connection with the Share
Sale and Subscription Agreement between WaveRider Communications Inc.
and ADE Network Technology Pty Ltd. and Philip William Anderson,
Maureen Anderson and Wayne Anderson dated September 29, 2000, filed
December 15, 2000.
8-K/A Amendment to the Financial Statements required to be filed in
connection with the Share Sale and Subscription Agreement between
WaveRider Communications Inc. and ADE Network Technology Pty Ltd. and
Philip William Anderson, Maureen Anderson and Wayne Anderson dated
September 29, 2000, filed December 27, 2000.
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Exhibit 21
SUBSIDIARIES
The company has a wholly-owned subsidiary, ADE Network Technologies Pty. Ltd.
ACN 006 395 026, incorporated under the laws of the State of Victoria, Australia
on April 1, 1985
The company has a wholly-owned subsidiary, WaveRider Communications (USA) Inc.
(formerly TTI Merger, Inc.), incorporated under the laws of the State of Nevada,
on May 19, 1999.
The company has a wholly-owned subsidiary, WaveRider Communications (Canada)
Inc. (formerly Major Wireless Communications Inc.), incorporated under the laws
of the Province of British Columbia, Canada the 9th day of October, 1996 under
no. 0528772.
WaveRider Communications (Canada) Inc. has a wholly-owned subsidiary, JetStream
Internet Services Inc., incorporated under the laws of the Province of British
Columbia, Canada the 29th day of July, 1997, under no. 0547668.
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SIGNATURES
In accordance with Section 13 or 15 (d) of the Securities Exchange Act
of 1934, the Registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: June 26, 2001 WAVERIDER COMMUNICATIONS INC.
By /s/ D. Bruce Sinclair
-----------------------------------
D. Bruce Sinclair, President, Chief Executive
Officer and Director
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the Company and in the capacities and on
the dates indicated.
Name Title Date
/s/ D. Bruce Sinclair President, Chief Executive June 26, 2001
- ---------------------
D. Bruce Sinclair Officer and Director
/s/ T. Scott Worthington Chief Financial Officer June 26, 2001
- ------------------------
T. Scott Worthington
/s/ Cameron A. Mingay Secretary/Director June 26, 2001
- ---------------------
Cameron A. Mingay
/s/ Gerry Chastelet Director June 26, 2001
- -------------------
Gerry Chastelet
/s/ John Curry Director June 26, 2001
- --------------
John Curry
/s/ Guthrie Stewart Director June 26, 2001
- -------------------
Guthrie Stewart
/s/ Dennis R. Wing Director June 26, 2001
- ------------------
Dennis R. Wing
22