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 June 30,2000
[ ] 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)
N/A
(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 [ ] N/A
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:
There were 13,122,345 shares of common stock issued and outstanding as of
30 June 2000
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X ]
TABLE OF CONTENTS
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. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 7
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The financial statements of WideBand Corporation that are required to be
filed with this Quarterly Report on Form 10-QSB were prepared by management,
together with the related notes. In the opinion of management, all necessary
adjustments (which include only normal recurring adjustments) have been made in
order to fairly present the financial condition of WideBand and the results of
its operations and its cash flows for the periods presented. The financial
statements of WideBand Corporation are appended hereto.
Item 2. Management's Discussion and Analysis or Plan of Operation.
The following discussion and analysis provides information which
management believes is relevant to an assessment and understanding of WideBand's
results of operations and financial condition. The discussion should be read in
conjunction with the unaudited condensed consolidated financial statements as of
June 30, 2000, together with the annual financial statements as of September 30,
1999, which were included in the definitive Information Statement that was filed
with the Securities and Exchange Commission on 26 January 2000.
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.
Financial Position
Wideband Corporation had $1,112,709 in cash as of June 30, 2000. This
represents an increase of $1,028,807 from September 30, 1999. The increase is
primarily due to proceeds received from the issuance of common stock in a
private placement offering in March 2000. Working capital, as of June 30, 2000,
increased to $1,267,991 compared to working capital of $146,906 at September 30,
1999. The Company had an accumulated deficit of $2,790,809 at June 30, 2000,
most of which had been funded out of proceeds received from the issuance of
stock.
Net sales for the nine-month and three-month periods ended June 30, 2000
were $295,225 and $108,408. Net sales during these periods increased by
$127,929 or 76% and $29,699 or approximately 38% as compared to net sales for
the comparable periods during the prior fiscal year. This increase in both the
nine-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.
3
General and administrative expenses for the nine-month and three-month
periods ended June 30, 2000 were $169,485 and $43,109. General and
administrative expenses during the nine and three-month periods ended June 30,
2000 increased by $117,829 or 228% and $24,293 or 129% as compared to general
and administrative expenses for comparable periods during the prior fiscal year.
The increases in both the nine-month and three-month periods primarily relate to
the costs incurred as part of the ongoing increases in expenses of a new public
company.
Liquidity and Capital Resources
WideBand Corporation used net cash of $186,977 in operating activities
during the nine months ended June 30, 2000. As of June 30, 2000, WideBand had no
long-term liabilities and had current liabilities of $85,421. The Company had
working capital of $1,267,991 as of June 30, 2000.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
When used in this Form 10-QSB and in other filings by WideBand Corporation
with the SEC, in WideBand's press releases or other public or stockholder
communications, or in oral statements made with the approval of an authorized
executive officer of WideBand Corporation, the words or phrases "would be,"
"will allow," "intends to," "will likely result," "are expected to," "will
continue," "is anticipated," "estimate," "project," or similar expressions are
intended to identify "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995, although their absence does
not mean a statement is not forward-looking.
WideBand cautions readers not to place undue reliance on any
forward-looking statements, which speak only as of the date made, are based on
certain assumptions and expectations which may or may not be valid or actually
occur, and which involve various risks and uncertainties, including but not
limited to risk of product demand, market acceptance, economic conditions,
competitive products and pricing, difficulties in product development,
commercialization, and technology, and other risks. In addition, sales and
other revenues may not commence and/or continue as anticipated due to delays or
otherwise. As a result, WideBand's actual results for future periods could
differ materially from those anticipated or projected.
Unless otherwise required by applicable law, WideBand Corporation does not
undertake, and specifically disclaims any obligation, to update any
forward-looking statements to reflect occurrences, developments, unanticipated
events or circumstances after the date of such statements.
PLAN OF OPERATION
WideBand Corporation is in the business of developing, manufacturing, and
marketing computer networking products based on WideBand networking technology.
The Company's plans for its current and future developmental program have been
broken down into three independent stages or phases.
Phase 1 - WideBand - The first phase constitutes the development of a
high-performance networking technology in an attempt to leapfrog the current
evolutionary development and deployment of Ethernet. It is WideBand's
objective that its technology resolve difficulties in current Ethernet
installations resulting from inadequate bandwidth and from data collisions. A
further objective is to provide a secondary delivery mechanism, which will
greatly facilitate the distribution of multiple channels of high-performance
video throughout the network.
4
Though the products developed during Phase 1 utilize conventional Ethernet
packet structures for compatibility, WideBand's higher data rate and other
feature enhancements make the two technologies' hardware incompatible. It is
not possible to plug a conventional Ethernet adapter into a WideBand
Concentrator. Such an interface connection can only be accomplished via
additional equipment such as a WideBand Ethernet Router.
It is intended that the technology developed during Phase 1 will establish
WideBand Corporation and its technology in a respected leadership role within
the industry. Products based on this technology have been developed by the
Corporation and have been shipping to customers for over two years. These
products utilize three of the four pairs in a Category 5 cable to carry data at
a combined bit rate of 1 Gigabit per second. Taking into consideration the
overhead resulting from the 8B/10B coding scheme (a coding method which encodes
8-bit data transmissions into 10-bit transmissions and then back again to
improve the communication link and to aid in hardware error detection), the
useful data throughput over the three pairs is 800 Megabits per second.
In the WideBand technology, this data rate has been partitioned into three
separate segments, corresponding to each of the twisted pairs in use. The first
segment, which utilizes cable pair 1, is used to carry digital information from
the user's computer to the network. Therefore, a user can upload data onto the
network at a maximum data rate of 267 Megabits per second. This data rate
exceeds the capacity of today's computers for transferring data through the PCI
bus to the network under the control of conventional operating systems.
Cable pairs 3 and 4 are utilized to download information from the network
to the local computer. Cable pair 4 carries the conventional traffic from the
user's local segment at a maximum useful data rate of an additional 267 Megabit
per second. Since WideBand can receive data while simultaneously transmitting
data, the inbound and outbound channels have a combined simultaneous maximum
usable data rate of 534 Megabits per second. Cable pair 3 in WideBand is
reserved for bringing WideCast data to the local workstation. WideCast data is
typically streaming video, audio, or data from a connection to the Wide Area
Networks such as the Internet. This feature of a second delivery channel is the
reason WideBand is sometimes referred to as a "dual network". It is an
important distinguishing feature between WideBand and all other networking
technologies. The WideCast channel has an additional maximum useful throughput
of 267 Megabits per second. WideCast makes it possible for the user to download
multiple channels of full-motion, high-quality video without adding any traffic
burden to the Local Area Network.
WideBand products manufactured by WideBand Corporation include network
adapters, which are circuit boards that plug into the user's computer enabling
the computer to be connected to a WideBand network. They also include WideBand
Concentrators, which are the equipment installed in the center of a network to
which cables are connected running to all of the computers and servers on the
segment. The Concentrators can be cascaded as many times as necessary, thereby
enabling users to build networks of vast numbers of attached workstations.
Phase 2 - Enhanced Ethernet - During the Fall of 2000, WideBand Corporation
plans to announce an entire new networking product line which will be referred
to as Enhanced Ethernet (eE). The Enhanced Ethernet products are being
developed in order to provide an interface between the existing Ethernet world
and the higher performance WideBand products. This will be accomplished through
the development of eE Adapters, eE Switches, and the Ethernet Accelerator.
5
The WideBand Ethernet Accelerator is similar to a WideBand Concentrator in
that it utilizes Buffered Packet Synchronization to eliminate data collisions
and thereby increase the performance of the Local Area Network. The Accelerator
differs from the concentrator, however, in that it is designed to allow users to
directly connect conventional Ethernet adapters. The link channel on the
Accelerator is designed to connect to a WideBand network, providing users with a
way of interfacing their existing equipment to WideBand without the significant
front-end investment of buying all new network adapters and concentrators.
Through this evolutionary process, users may upgrade their legacy equipment to
WideBand one step at a time.
One of the main drawbacks of Ethernet is that when a local segment becomes
heavily loaded with traffic, it begins to experience data collisions. Data
collisions waste bandwidth, causing the network load to increase and slowing
down and hampering data transmissions. WideBand's patented method of
eliminating data collisions on Local Area Networks is one of the greatest
advantages of WideBand technology. By applying this same method to Ethernet
segments, much of the advantage of WideBand may be obtained without the
necessity of removing all the Ethernet adapters from the computers. The
WideBand Accelerator was designed to eliminate data collisions on Ethernet
segments merely by having the Ethernet computers plugged in. This may greatly
reduce congestion in very heavily loaded Ethernet segments. Since the
Accelerators also have a WideBand backbone, data flow between users in one
section of the network and users in another section of the network can be
significantly improved.
Over the past five years, most of the Ethernet networking adapters marketed
throughout the world have been combo adapters of the 10/100 variety. These
adapters have the feature of being able to be plugged either into an Ethernet
network operating at the conventional 10 Megabits per second or into a Fast
Ethernet segment operating at 100 Megabits per second. Furthermore, they have
the additional capability of operating in full duplex mode, which means they can
transmit at 100 Megabits per second at the same time they are receiving at 100
Megabits per second.
Unfortunately for the computer industry, while most users have installed
the 10/100 adapters, only a small percent are actually utilizing the higher data
rates. Users purchased the 10/100 adapters preparing for future performance
expansion, but the cost of the network hubs and switches operating at 100
Megabits per second was so prohibitive that most users stayed with the 10
Megabits per second hubs and switches, hence, many of these adapters are still
operating at the 10 Megabit, half duplex data rate today.
WideBand Corporation has identified the current market situation as a
tremendous opportunity for implementing the Enhanced Ethernet technology. By
definition, Enhanced Ethernet is 100 Megabit-per-second Fast Ethernet operating
full duplex (transmitting and receiving at the same time) without collisions.
It is anticipated that users with the 10/100 Megabit cards installed, who are
accustomed to operating on busy Ethernet segments with data rates as low as 2.5
Megabits per second, will be able to install WideBand's Ethernet Accelerator in
their central wiring closets, plug the cables from their conventional Ethernet
hub into the Accelerator, and see a jump in their data rate from 2.5 Megabits
per second up to 200 Megabits per second - the full-duplex data rate without
collisions. By combining the above system with a WideBand backplane and
WideBand adapters installed in key servers, users can anticipate significant
performance improvement.
6
Phase 3 - next generation WideBand - Work has already begun on a next
generation WideBand, which is expected to increase the data rate to levels that
will be required by future data processing equipment. This future WideBand
technology is in the early stages of development in the laboratories at WideBand
Corporation. It is expected to appear in commercial products some time after
November 2001. Detailed information concerning data rates and feature
enhancements, which are still under development, is not available at this time.
It is anticipated that with the launch of the next generation of WideBand,
a comparable WideBand Accelerator product will be developed which will utilize
the future WideBand as a backplane for higher speed transfers between groups of
computers and workstations on WideBand and Enhanced Ethernet. Using these
components, networks could be built up that simultaneously utilize components of
Enhanced Ethernet, WideBand, and the next generation WideBand. Since the
networking adapters for Enhanced Ethernet include the conventional Ethernet
adapters already in use today, this technological approach may extend the life
of existing equipment for users while providing an incremental path towards
obtaining the enhancements and benefits of the WideBand networking system.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Index of Exhibits:
27. Financial Data Schedule
(b) Reports on Form 8-K.
There were no reports on Form 8-K filed during the quarter ended
June 30, 2000, for which this report is filed.
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 _______________________________ /s/ Roger E. Billings
Roger E. Billings, President, CEO, Director
Date _______________________________ /s/ Donald N. Fenn
Donald N. Fenn, CFO, Director
7
WIDEBAND CORPORATION
FINANCIAL STATEMENTS
TABLE OF CONTENTS
Condensed Consolidated Balance Sheets - June 30, 2000 and
September 30, 1999 (Unaudited) F-1
Condensed Consolidated Statements of Operations for the Three and
Nine Months Ended June 30, 2000 and 1999 (Unaudited) F-2
Condensed Consolidated Statements of Cash Flows for the
Nine Months Ended June 30, 2000 and 1999 (Unaudited) F-3
Condensed Consolidated Statement of Stockholders' Equity for the
Nine Months Ended June 30, 2000 (Unaudited) F-4
Notes to Condensed Consolidated Financial Statements F-5
WIDEBAND CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
June 30, September 30,
2000 1999
--------------- ---------------
ASSETS
Current Assets
Cash and cash equivalents $ 1,112,709 $ 83,902
Trade accounts receivable 63,179 7,003
Inventory 177,524 81,027
Related party receivable - 8,430
--------------- ---------------
Total Current Assets 1,353,412 180,362
Property and equipment 483,388 477,669
Less: accumulated depreciation (80,762) (69,020)
--------------- ---------------
Net Property and Equipment 402,626 408,649
Patents - net of accumulated amortization 69,062 60,285
--------------- ---------------
Total Assets $ 1,825,100 $ 649,296
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Trade accounts payable $ 66,397 $ 22,315
Related party payable - 8,873
Accrued liabilities 7,167 2,268
Unearned revenue 11,857 -
--------------- ---------------
Total Current Liabilities 85,421 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 (2,790,809) (2,569,756)
--------------- ---------------
Total Stockholders' Equity 1,739,679 615,840
--------------- ---------------
Total Liabilities and Stockholders' Equity $ 1,825,100 $ 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 Nine Months
Ended June 30, Ended June 30,
------------------------------- ------------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
Sales $ 108,408 $ 78,709 $ 295,225 $ 167,296
Cost of sales 87,387 22,575 182,227 77,285
------------ ------------ ------------ ------------
Gross Profit 21,021 56,134 112,998 90,011
------------ ------------ ------------ ------------
Expenses
Research and development 28,535 142,181 90,832 218,177
General and administrative 43,109 18,816 169,485 51,656
Sales and marketing 12,539 53,767 79,722 144,556
------------ ------------ ------------ ------------
Total Expenses 84,183 214,764 340,039 414,389
------------ ------------ ------------ ------------
Loss From Operations (63,162) (158,630) (227,041) (324,378)
Interest income 4,909 225 5,988 803
------------ ------------ ------------ ------------
Net Loss $ (58,253) $ (158,405) $ (221,053) $ (323,575)
============ ============ ============ ============
Basic and Diluted Loss Per Share $ (0.00) $ (0.01) $ (0.02) $ (0.03)
============ ============ ============ ============
Weighted Average Number of Common
Shares Used in Per Share Calculation 13,122,345 12,707,172 12,934,568 12,680,270
============ ============ ============ ============
See the accompanying notes to condensed consolidated financial statements.
F-2
WIDEBAND CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Nine Months Ended
June 30,
--------------------------------
2000 1999
-------------- --------------
Cash Flow From Operating Activities
Net loss $ (221,053) $ (323,575)
Adjustments to reconcile net loss to net cash used
by operating activities:
Depreciation and amortization 12,226 38,040
Stock issued for services 77,000 -
Common stock received as reimbursement for legal expense (9,000) -
Services contributed by employees 45,686 89,747
Loss on disposal of assets - 7,423
Changes in operating assets and liabilities:
Trade accounts receivable (56,176) 15,678
Inventory (96,497) 35,021
Trade accounts payable and unearned revenue 55,938 (61,771)
Accrued liabilities 4,899 (118,697)
-------------- --------------
Net Cash and Cash Equivalents Used in Operating Activities (186,977) (318,134)
Cash Flows From Investing Activities
Proceeds from sale of securities 5,088 -
Payments for patents (9,260) (20,716)
Purchase of equipment (5,719) (372,953)
-------------- --------------
Net Cash and Cash Equivalents Used In Investing Activities (9,891) (393,669)
-------------- --------------
Cash Flows From Financing Activities
Common stock issued for cash 1,000,000 804,090
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 1,225,675 804,090
-------------- --------------
Net Increase (Decrease) in Cash 1,028,807 92,287
Cash and Cash Equivalents At Beginning 83,902 23,309
-------------- --------------
Cash and Cash Equivalents At End of Period $ 1,112,709 $ 115,596
-------------- --------------
See the accompanying notes to condensed consolidated financial statements.
F-3
WIDEBAND CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(UNAUDITED)
Additional Total
Common Stock Paid-In Accumulated Stockholders'
Shares Amount Capital Deficit Equity
-------------- -------------- -------------- -------------- --------------
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 - - - (221,053) (221,053)
-------------- -------------- -------------- -------------- --------------
Balance -- June 30, 2000 13,122,345 $ 131,223 $ 4,399,265 $(2,790,809) $ 1,739,679
-------------- -------------- -------------- -------------- --------------
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, the common shares
issued were recorded at the fair value of the Vis Viva 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 number of authorized
shares of common stock 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.
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, which were included in the registrant's definitive information
statement that was filed with the Securities and Exchange Commission on 26
January 2000.
Revenue Recognition Policy - WideBand Corporation had $11,857 of unearned
revenue as of June 30, 2000. This revenue has been recognized as a liability,
and will be considered sales revenue after the product has been shipped.
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 60,000 and 100,000
potentially issuable common shares at June 30, 2000 and 1999, respectively,
would have decreased diluted loss per share and have been excluded from the
calculation.
F-5
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 of common stock 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. After the test was completed, certain of these
employees agreed to continue employment with the Company without compensation.
These individuals were added to the payroll April 1, 2000. 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 $0 and $29,347, for the three months ended June 30, 2000 and 1999,
respectively. The related expense was $45,686 and $89,747 for the nine months
ended June 30, 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 nine months ended June 30, 2000 and 1999 of $31,542 and
$43,923, 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 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.
NOTE 4- NONCASH INVESTING AND FINANCING ACTIVITIES
In June 1999, the Company issued 88,218 shares of common stock to a
director for the following: 1) settlement of a $60,550 capital lease obligation
related to equipment, 2) purchase of land for $71,540 and 3) purchase of a
building for $330,000. The total value of the items settled and received was
$441,090, or $5.00 per share.
F-6