UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended 31 March 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from -- N/A
Commission file number: 0-28002
WideBand Corporation
(Exact name of small business issuer as specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
87-0363656
(IRS Employer Identification No.)
401 West Grand, Gallatin, Missouri 64640
(Address of principal executive offices)
(660)663-3000
(Issuer's telephone number)
Vis Viva Corporation, 124 South 600 East Suite 100,
Salt Lake City, UT 84102 - 6/30
(Former name, former address and former fiscal year,
if changed since last report)
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section l2, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ] [Not Applicable.]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
March 31, 2000 13,122,345
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
INDEX
Page
PART I. Financial Information
Item 1. Financial Statements. . . . . . . . . . . . . . . . . . 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . 3
PART II.
Item 2. Changes in Securities -- Sale of Securities Not
Registered Under the Securities Act . . . . . . . . . . 4
Item 4. Submission of Matters to a Vote of Security Holders . . 5
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . 6
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The Financial Statements of the Registrant required to be filed with this
10-QSB Quarterly Report were prepared by management, together with Related
Notes. In the opinion of management, the Financial Statements fairly present
the financial condition of the Registrant. The Financial Statements of
Registrant are appended hereto.
Item 2. Management's Discussion and Analysis or Plan of Operation
WideBand Corporation has set out to develop a new, high-speed networking
technology that will compete in the top end of the market with other
high-performance computer networking devices. WideBand Networking was
developed as an alternative to Ethernet. Although the packet structure of
Ethernet and other similarities have been maintained in WideBand to assure
compatibility with existing computers and operating systems, WideBand has
several important enhancements that are intended to solve serious problems that
have developed in Ethernet systems over the past 15 years.
As a start-up company, a considerable amount of investment has been
required to develop the initial family of products, set up manufacturing
facilities, and test the market's acceptance of those products. WideBand's
financial statements show losses from operations because WideBand has been in
the start-up phase, with low sales volume and large amounts of money spent on
product research and development. Management expects this trend to continue
throughout the year 2000.
Net sales for the six month and three month periods ended March 31, 2000
were $186,817 and $97,392. Net sales during these periods increased by $98,230
or 53% and $78,355 or approximately 80% as compared to net sales for the
comparable periods during the prior fiscal year. This increase in both the six
month and three month periods was primarily due to the continuing increase in
market acceptance of WideBand products. However, management does not expect to
see large increases in sales until the Company begins its major advertising
campaign.
General and administrative expenses for the six month and three month
periods ended March 31, 2000 was $126,376 and $91,132. General and
administrative expenses during the six and three month periods ended March 31,
2000 increased by $93,536 or 74% and $77,882 or 85% as compared to general and
administrative expenses for comparable periods during the prior fiscal year.
The increases in both the six month and three month periods primarily relate to
the costs incurred as part of the merger of Vis Viva Corporation and WideBand
Corporation.
Plan of Operation
WideBand Networking was developed to satisfy emerging needs for better
performance and higher bandwidth in networking products. It is the strategy of
the Company to manufacture and market products based on WideBand Networking
while also licensing the technology to other networking product manufacturers.
It is intended that eventually the primary revenues to WideBand will come from
such licensing agreements and arrangements. To bring the WideBand technology to
the forefront and aid in establishing it as a de facto networking standard,
WideBand has assisted in the formation of the WideBand Gigabit Networking
Alliance (WGNA).
3
WGNA is a not-for-profit organization that manages the WideBand Networking
technology open standard. Utilizing the original design developed by WideBand,
nearly 60 companies and organizations have joined together to participate in the
process of making the WideBand Networking technology a standard whereby products
manufactured by companies can operate together to accomplish successful
networking for the customer. The emergence of WideBand as an open standard is
an important step towards market acceptance of the technology since today's
users do not wish to be dependent on a single supplier for their networking
products. WideBand has been manufacturing and shipping product to customers for
over three years.
The corporate objective is to create a family of advanced products that can
be marketed with adequate margins due to technological advantages and features.
With these products, it is the intention of WideBand to build a sales
organization and the brand recognition necessary to successfully compete in
today's competitive marketplace.
The final components of the initial family of products are expected to hit
the market by Fall of the year 2000. Initially emphasis will be upon regional
test marketing to vertical market segments. Based on the success and
information gleaned from these studies, the sales campaigns will be launched
nationwide and internationally.
Substantial funding will be required by WideBand Corporation to finance the
completion of the initial research and development projects, and then to launch
the marketing studies and eventually the sales campaigns. It is anticipated
that these funds will be obtained through equity investments in WideBand
Corporation. Substantial losses are expected during these developmental stages.
A private placement offering, which raised $1 million, was completed on
March 31, 2000. (See Part II, Item 2(c) in this filing).
PART II - OTHER INFORMATION
Item 2. Changes in Securities - Sale of Securities Not Registered Under the
Securities Act
(c) During the period from March 20, 2000, to March 31, 2000, the
registrant sold an aggregate of 80,000 common shares to 27 persons. All of the
purchasers are "accredited investors" as that term is defined in Rule 501 of
Regulation D under the Securities Act of 1933. The offer and sale was conducted
under Rule 506 of Regulation D and a Form D was filed with the Securities and
Exchange Commission reflecting the transactions. No underwriters or other
salespersons were utilized in the offering and no commissions or other
remuneration was paid or given, directly or indirectly, to any person. The
shares were offered for sale for $12.50 per share and the registrant received an
aggregate of $1,000,000 cash consideration for the shares. As stated, the
registrant is relying on Rule 506 and Section 4(2) under the Securities Act of
1933 for exemption from registration of the offer and sale thereunder.
4
Item 4. Submission of Matters to a Vote of Security Holders
Special meetings of the shareholders of pre-merger WideBand Corporation and
Vis Viva Corporation were held February 7, 2000, and February 18, 2000,
respectively, to vote on approval of the following items:
A. To approve, authorize, and adopt the Agreement and Plan of Merger
of 6 September 1999, as amended (the Agreement), by and between Vis
Viva Corporation and WideBand Corporation and all of the related
and consequent transactions contemplated thereby. (A copy of the
Agreement and Plan of Merger was filed with the Commission as
Exhibit A to Vis Viva's definitive Information Statement on January
26, 2000, and is incorporated herein by reference.)
In addition to the above, Vis Viva shareholders voted on the
following items:
1. The re-capitalization of the Company's 1,375,000 issued and
outstanding shares of common capital stock on the basis of a
1-for-7 reverse-split
2. Amendments to the Articles of Incorporation
a. To Change the name of the Company from Vis Viva
Corporation to WideBand Corporation
b. To Increase the authorized common capital shares of the
Company from 15 million to 20 million shares
c. To otherwise streamline and amend the corporate purposes,
specifically, Article Three, to reflect that the Company
is generally or broadly authorized to engage in any
lawful business activity recognized under Nevada law.
3. The issuance of 55,000 post-split restricted shares of the
Company common capital stock as finder's, agent's or
consultant's shares, as provided for in the Agreement and Plan
of Merger
4. The election of Dr. Roger E. Billings, Mr. Donald N. Fenn, and
Dr. Maria Sanchez as directors of the Company until the next
annual meeting or until their resignations are tendered and
duly accepted by the Company
B. Voting in favor of the Agreement were holders of 12,032,519 (94%)
of the shares of WideBand common stock, and in favor of the
Agreement and the additional items 1-4 above were holders of
808,475 (58.8%) of the pre-split shares of Vis Viva common stock.
There were no dissenting votes or abstentions. (The remaining
shares not accounted for were not represented at the meetings.)
The Special Meetings summarized above were also reported on Form 8-K, Item
1, filed with the SEC on March 6, 2000, and incorporated herein by reference.
5
Item 6. Exhibits and Reports on Form 8-K.
(a) Index of Exhibits:
2. Articles of Merger
3. Amended Articles of Incorporation
27. Financial Data Schedule
(b) Reports on Form 8-K
WideBand Corporation filed a Form 8-K report on March 6, 2000 reporting a
change in control of Registrant due to the merger of Registrant (Vis Viva
Corporation, a reporting Nevada Corporation) with WideBand Corporation, a
private Missouri corporation. This report, having previously been filed with
the Securities and Exchange Commission, is incorporated herein by reference.
The report details the change in control of Registrant (Item 1), the
Acquisition or Disposition of Assets (Item 2), the Resignation of Registrant's
Directors (Item 6), and a change in Registrant's fiscal year from June 30 to
September 30, as provided by the Agreement and Plan of Merger (Item 8).
The audited financial statements of WideBand Corporation referenced in the
Form 8-K of March 6, 2000 for the periods ending September 30, 1999 and December
31, 1998 (Item 7) were incorporated therein by reference from Exhibit C of the
Registrant's definitive Information Statement, filed with the Commission on
January 26, 2000.
Unaudited pro forma financial statements, prepared as though the Agreement
and Plan of Merger had been consummated on September 30, 1999, were incorporated
by reference in Form 8-K of March 6, 2000 from Exhibit D of the Registrant's
definitive Information Statement filed with the Commission on January 26, 2000.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
WideBand Corporation
(Registrant)
Date: 15 May 2000 /s/ Roger E. Billings
------------------------------------------------
Dr. Roger E. Billings, President, CEO & Director
Date: 15 May 2000 /s/ Donald N. Fenn
------------------------------------------------
Donald N. Fenn, CFO & Director
6
WIDEBAND CORPORATION
FINANCIAL STATEMENTS
TABLE OF CONTENTS
Page
Condensed Consolidated Balance Sheets - March 31, 2000 and
September 30, 1999 (Unaudited) . . . . . . . . . . . . . . . . . . . F-1
Condensed Consolidated Statements of Operations for the Three and
Six Months Ended March 31, 2000 and 1999 (Unaudited) . . . . . . . . F-2
Condensed Consolidated Statements of Cash Flows for the Six Months
Ended March 31, 2000 and 1999 (Unaudited). . . . . . . . . . . . . . F-3
Condensed Consolidated Statement of Stockholders' Equity for the
Six Months Ended March 31, 2000 (Unaudited). . . . . . . . . . . . . F-4
Notes to Condensed Consolidated Financial Statements . . . . . . . . F-5
WIDEBAND CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
March 31, September 30,
2000 1999
------------ ------------
ASSETS
Current Assets
Cash and cash equivalents $ 1,276,194 $ 83,902
Trade accounts receivable 52,849 7,003
Inventory 108,256 81,027
Related party receivable - 8,430
------------ ------------
Total Current Assets 1,437,299 180,362
Property and equipment 483,388 477,669
Less: accumulated depreciation (74,245) (69,020)
------------ ------------
Net Property and Equipment 409,143 408,649
Patents - net of accumulated amortization 68,011 60,285
------------ ------------
Total Assets $ 1,914,453 $ 649,296
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Trade accounts payable $ 1,840 $ 22,315
Related party payable - 8,873
Accrued liabilities 114,681 2,268
------------ ------------
Total Current Liabilities 116,521 33,456
Stockholders' Equity
Common Stock - $0.01 par value;
20,000,000 shares authorized;
13,122,345 and 12,801,819 shares
outstanding, respectively 131,223 128,018
Additional paid-in capital 4,399,265 3,057,578
Accumulated deficit (2,732,556) (2,569,756)
------------ ------------
Total Stockholders' Equity 1,797,932 615,840
------------ ------------
Total Liabilities and Stockholders' Equity $ 1,914,453 $ 649,296
============ ============
See the accompanying notes to condensed consolidated financial statements.
F-1
WIDEBAND CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months For the Six Months
Ending March 31, Ending March 31,
--------------------------- ---------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
Sales $ 97,392 $ 19,037 $ 186,817 $ 88,587
Cost of sales 41,555 11,697 94,840 54,710
------------ ------------ ------------ ------------
Gross Profit 55,837 7,340 91,977 33,877
Expenses
Research and development 29,446 40,993 62,297 75,996
General and administrative 91,132 13,250 126,376 32,840
Sales and marketing 17,747 13,009 67,183 90,789
------------ ------------ ------------ ------------
Total Expenses 138,325 67,252 255,856 199,625
------------ ------------ ------------ ------------
Loss From Operations (82,488) (59,912) (163,879) (165,748)
Interest income 761 578 1,079 578
------------ ------------ ------------ -----------
Net Loss $ (81,727) $ (59,334) $ (162,800) $ (165,170)
============ ============ ============ ============
Basic and Diluted Loss Per Share $ (0.01) $ ( - ) $ (0.01) $ (0.01)
============ ============ ============ ============
Weighted Average Number of Common
Shares Used in Per Share Calculation 12,830,998 12,688,601 12,841,192 12,666,819
============ ============ ============ ============
See accompanying notes to condensed consolidated financial statements.
F-2
WIDEBAND CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Six Months
Ended March 31,
---------------------------
2000 1999
------------ ------------
Cash Flow From Operating
Net loss $ (162,800) $ (165,170)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 5,709 33,178
Common stock issued for services 77,000 -
Common stock received as reimbursement for legal expense (9,000) -
Services contributed by employees 45,686 60,400
Loss on disposal of assets - 7,425
Changes in operating assets and liabilities:
Trade accounts receivables (45,846) 32,146
Inventory (27,229) (37,934)
Accounts payable (20,475) (81,470)
Accrued liabilities 112,413 (49,147)
------------ ------------
Net Cash and Cash Equivalents Used in Operating Activities (24,542) (200,572)
------------ ------------
Cash Flows From Investing Activities
Proceeds from sale of securities 5,088 -
Payments for patents (8,210) (20,592)
Purchase of equipment (5,719) (1,413)
------------ ------------
Net Cash and Cash Equivalents Used In Investing Activities (8,841) (22,005)
------------ ------------
Cash Flows From Financing Activities
Common stock issued for cash 1,000,000 238,000
Collections on notes receivable from related party 8,430 -
Payments on related party note payable (8,873) -
Net cash received in Vis Viva acquisition 226,118 -
------------ ------------
Cash and Cash Equivalents Provided By Financing Activities 1,225,675 238,000
------------ ------------
Net Increase in Cash and Cash Equivalents 1,192,292 15,423
Cash and Cash Equivalents at Beginning of Period 83,902 23,311
------------ ------------
Cash and Cash Equivalents at End of Period $ 1,276,194 $ 38,734
============ ============
See the accompanying notes to condensed consolidated financial statements.
F-3
WIDEBAND CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(UNAUDITED)
Common Stock Additional Total
------------------------------ Paid-In Accumulated Stockholders'
Shares Amount Capital Deficit Deficit
------------ ------------- ------------ ------------ ------------
Balance - September 30, 1999 12,801,819 $ 128,018 $ 3,057,578 $(2,569,756) $ 615,840
Shares returned in court settlement (11,000) (110) (8,890) - (9,000)
Shares issued for assets of Vis Viva 196,526 1,965 229,241 - 231,206
Shares issued for services 55,000 550 76,450 - 77,000
Shares issued for cash 80,000 800 999,200 - 1,000,000
Services contributed by employees - - 45,686 - 45,686
Net loss for period - - - (162,800) (162,800)
------------ -------------- ------------ ------------ ------------
Balance - March 31, 2000 13,122,345 $ 131,223 $ 4,399,265 $(2,732,556) $ 1,797,932
============ ============== ============ ============ ============
See the accompanying notes to condensed consolidated financial statements.
F-4
WIDEBAND CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1- NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization- Wideband Corporation was incorporated on September 23, 1994
under the laws of the State of Missouri.
On February 28, 2000, Wideband Corporation ('WideBand') entered into a
reorganization agreement with Vis Viva Corporation ('Vis Viva') whereby the
shareholders of WideBand exchanged all of the outstanding WideBand common shares
for 12,801,819 common shares of Vis Viva and WideBand became a wholly-owned
subsidiary of Vis Viva. The agreement was accounted for as the reorganization
of WideBand and the acquisition of Vis Viva's assets in exchange for 196,526
shares of common stock. Vis Viva did not have any operations and had only
investment assets at the date of the agreement. Accordingly, Vis Viva's assets
were recorded at the fair value of the assets at the time of the reorganization.
The assets acquired were cash of $226,118 and investment in securities
available-for-sale of $5,088. In addition, Vis Viva changed its name to
WideBand Corporation. As part of the reorganization, the authorized common
shares were increased from 15,000,000 to 20,000,000 shares.
Nature of Business- Wideband is engaged in developing, manufacturing and
marketing high performance computer networking products and training personnel
to operate them.
Principles of Consolidation- The accompanying consolidated financial
statements include the accounts of WideBand Corporation and the accounts of Vis
Viva Corporation from the date of its acquisition for accounting purposes on
February 28, 2000. These entities are collectively referred to as 'the
Company'. All significant intercompany transactions and balances have been
eliminated in consolidation.
Interim Financial Statements - The accompanying consolidated financial
statements have been prepared by the Company and are unaudited. In the opinion
of management, all necessary adjustments (which include only normal recurring
adjustments) have been made to present fairly the financial position, results of
operations and cash flows for the periods presented. These financial statements
are condensed and, therefore, do not include all disclosures normally required
by generally accepted accounting principles. These financial statements should
be read in conjunction with the annual financial statements of Wideband
Corporation included in the current report on Form 8-K dated March 6, 2000.
Basic and Diluted Loss Per Share- Basic loss per common share is computed
by dividing net loss by the weighted-average number of common shares outstanding
during the period. Diluted loss per share reflects potential dilution which
could occur if all potentially issuable common shares from stock options
resulted in the issuance of common stock. In the present position, diluted loss
per share is the same as basic loss per share because 100,000 and 50,000
potentially issuable common shares at March 31, 2000 and 1999, respectively,
would have decreased diluted loss per share and have been excluded from the
calculation.
F-5
WIDEBAND CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 2- STOCKHOLDERS' EQUITY
In April 1999, the Company filed suit against a shareholder for attempting
to utilize the Company's proprietary technology. Subsequent to September 30,
1999, the court ordered the shareholder to pay the Company $9,000 for
reimbursement of attorneys fees incurred. Subsequent to the order, the Company
and the shareholder entered into a settlement agreement wherein the shareholder
returned 11,000 shares of the Company's common stock to the Company in
satisfaction of the $9,000 receivable at $0.82 per share. No unstated rights
were received or given in connection with the settlement agreement.
In connection with the reorganization with Vis Viva, the Company issued
55,000 shares as compensation to certain finders, agents and consultants in
February 2000. The 55,000 shares of common stock were valued at $77,000, or
$1.40 per share. The value per share was the market value of Vis Viva's common
shares on September 6, 1999, the date there was an agreement on the purchase
price and the proposed reorganization was announced.
During March 2000, the Company issued 80,000 shares of common stock for
$1,000,000 in cash, or $12.50 per share, in a private placement offering.
During 1997, the Company employed personnel to test market a preliminary
version of its product. Certain of these employees agreed to continue
employment with the Company without compensation. The Company was and is not
obligated to pay these individuals for services rendered from 1997 through March
31, 2000; however, the Company has recognized expense for these periods and has
recognized an equal amount as contributed capital. The related expense was
$19,036 and $24,277, for the three months ended March 31, 2000 and 1999,
respectively. The related expense was $45,686 and $60,400 for the six months
ended March 31, 2000 and 1999, respectively.
NOTE 3- RELATED PARTY TRANSACTIONS
The President of the Company is a member of the board of trustees of the
International Academy of Science. The Academy has a program to give their
students experience in industry and the Company participates in this program.
The Academy also performs research on behalf of the Company under normal
contract arrangements. The Company made payments for research services by the
Academy during the six months ended March 31, 2000 and 1999 of $31,542 and
$26,842, respectively. The Company is a steering committee member of WGNA which
is a special interest group established to administer WideBand Networking as an
industry standard. WGNA is hosted by the International Academy of Science.
The President of the Company owns a controlling interest in WideNet
Corporation (recently renamed FSIX Corporation). FSIX manufactures a line of
file server products most of which utilize WideBand adapters manufactured by the
Company. The Company also markets servers produced by FSIX through its dealer
organization. Payments to and from FSIX during all periods presented were
nominal.
F-6