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 2001
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _________________ to _________________
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, Mo 64640
(Address of principal executive offices)
(660) 663-3000
(Issuer's telephone number)
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:
As of 30 April 2001 WideBand Corporation had 13,122,345 shares of Common
Stock outstanding.
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 . . . . . . . . . . . . . 4
2
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements.
See the Company's financial statements attached to this 10-QSB report.
Item 2. Management's Discussion and Analysis of Financial Condition and Result
of Operations.
THE FOLLOWING DISCUSSION OF THE COMPANY'S FINANCIAL CONDITION AND RESULTS OF
OPERATIONS INCLUDES CERTAIN FORWARD-LOOKING STATEMENTS. WHEN USED IN THIS FORM
10-Q, THE WORDS "ESTIMATE," "PROJECTION," "INTEND," "ANTICIPATES" AND SIMILAR
TERMS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS THAT RELATE TO THE
COMPANY'S FUTURE PERFORMANCE. SUCH STATEMENTS ARE SUBJECT TO SUBSTANTIAL
UNCERTAINTY. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THE
FORWARD-LOOKING STATEMENTS SET FORTH BELOW. THE COMPANY UNDERTAKES NO
OBLIGATION TO PUBLICLY UPDATE OR REVISE ANY OF THE FORWARD-LOOKING STATEMENTS
CONTAINED HEREIN.
OVERVIEW
WideBand Corporation was formed in 1994 as a manufacturer and marketer of
high-performance networking products. These products are based on the WideBand
and Enhanced Ethernet networking technologies, whose features are designed to
support demand for an affordable way to send multiple feeds of high-quality
video over computer networks. The company generates revenue primarily through
the sale of these products to educational institutions. The company has also
started to license its patented technology to generate royalty income.
The Company is focused on sales to the education market but also plans to
market to government and private industry. In generating sales and licensing
leads, WideBand exhibits its technology and offers its network training courses
at several large international and a number of smaller regional computer shows
throughout the year. The Company also participates in special educational
programs such as NEAP (National Education Acceleration Program) to promote its
products within the education community.
The Company recognizes revenues upon delivery and acceptance of the
products or services by the customer. Costs associated with the manufacture of
products are included in inventory and expensed to cost of goods sold as the
respective revenue is recognized.
COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2001 TO THE THREE MONTHS ENDED
MARCH 31, 2000, AND THE SIX MONTHS ENDED MARCH 31, 2001 TO THE SIX MONTHS
ENDED MARCH 31, 2000
Research and development costs increased for the three-month and the
six-month periods ending March 31, 2001, compared with the three and six-month
periods ending March 31, 2000 as part of the continuing commitment of the
Company to stay on the cutting edge of product development and enhancement.
3
Selling and general and administrative expenses decreased for the three-month
period ending March 31, 2001 compared with the same three-month period for 2000,
but were up slightly for the six-month period ending March 31, 2001, as compared
with the six months ending March 31, 2000, reflecting fluctuations in marketing
costs associated with trade show exhibits and the periodic printing of new
literature.
SOURCES OF CASH
The Company generates cash primarily through the sale of its networking
products. Cash decreased as of March 31, 2001 compared to September 30, 2000 in
part due to the purchase of new manufacturing equipment. Cash was also used to
increase inventory as of March 31, 2001 compared with September 30, 2000 as the
Company prepared to boost production.
The Company has no financing through borrowings and as such has no
long-term debt or associated interest expense.
USES OF CASH
The Company requires funds for continuing research and development. This
requirement will continue as the Company is committed to the research and
development of new products to keep the Company vital. The Company also uses
cash to fund production of its networking products.
Property and Equipment increased as a result of the purchase in March 2001
of new manufacturing equipment that will increase the production capacity of the
WideBand manufacturing plant. The equipment was purchased to expand and
capability of the Company to support new marketing programs.
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(b) Reports on Form 8-K.
WideBand Corporation filed a Form 8-K report on March 30, 2001 reporting
the expanding of the Board of Directors from three members to five with the
appointment of Sharla Riead and Jean Kaiser to the Board. The new Directors
will also serve as members of the Audit Committee.
There were no financial statements issued as part of this Form 8-K report.
4
___________________________________________________________________
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: 2 May 2001 ___________/s/ Roger E. Billings_______________
Dr. Roger E. Billings, President, CEO, Director
5
WideBand Corporation
Condensed Financial Statements
Table of Contents
Condensed Balance Sheets -- March 31, 2001 and September 30, 2000
(Unaudited). . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
Condensed Statements of Operations for the Three and Six Months
ended March 31, 2001 and 2000 (Unaudited). . . . . . . . . . . . . F-2
Condensed Statements of Cash Flows for the Three and Six Months
ended March 31, 2001 and 2000 (Unaudited). . . . . . . . . . . . . F-3
Notes to Condensed Financial Statements. . . . . . . . . . . . . . . F-4
WIDEBAND CORPORATION
CONDENSED BALANCE SHEETS
(UNAUDITED)
March 31, September 30,
2001 2000
-------------- ---------------
ASSETS
Current Assets
Cash and cash equivalents $ 678,155 $ 988,310
Trade accounts receivable 8,232 1,373
Inventory 211,542 169,267
Prepaid expenses 23,823 66,865
------------ ------------
Total Current Assets 921,752 1,225,815
Property and Equipment 593,388 488,388
Less: accumulated depreciation (102,619) (88,350)
------------ ------------
Net Property and Equipment 490,769 400,038
Patents, Net of Amortization 69,163 69,758
------------ ------------
Total Assets $ 1,481,684 $ 1,695,611
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Trade accounts payable $ 25,433 $ 11,670
Accrued liabilities 5,131 11,229
------------ ------------
Total Current Liabilities 30,564 22,899
------------ ------------
Stockholders' Equity
Common Stock - $0.01 par value;
20,000,000 shares authorized;
13,122,345 shares outstanding 131,223 131,223
Additional paid-in capital 4,399,264 4,399,264
Accumulated deficit (3,079,367) (2,857,775)
------------ ------------
Total Stockholders' Equity 1,451,120 1,672,712
------------ ------------
Total Liabilities and Stockholders' Equity $ 1,481,684 $ 1,695,611
============ ============
See the accompanying notes to condensed financial statements.
F-1
WIDEBAND CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months For the Six Months
Ending March 31, Ending March 31,
--------------------------- ---------------------------
2001 2000 2001 2000
------------ ------------ ------------ ------------
Sales $ 38,191 $ 97,392 $ 189,756 $ 186,817
Cost of Sales 25,245 41,555 119,157 94,840
---------- ---------- ---------- ----------
Gross Profit 12,946 55,837 70,599 91,977
Expenses
Research and development 52,794 29,446 100,438 62,297
Selling and general and administrative 49,713 108,879 203,211 193,559
---------- ---------- ---------- ----------
Total Expenses 102,507 138,325 303,649 255,856
---------- ---------- ---------- ----------
Loss From Operations (89,561) (82,488) (233,050) (163,879)
Interest income 5,724 761 11,458 1,079
---------- ---------- ---------- ----------
Net Loss $ (83,837) $ (81,727) $(221,592) $(162,800)
========== ========== ========== ==========
Basic and Diluted Loss Per Share $ (0.01) $ (0.01) $ (0.02) $ (0.01)
========== ========== ========== ==========
Weighted Average Number of Common Shares
Used in Per Share Calculation 13,122,345 12,830,998 13,122,345 12,841,192
========== ========== ========== ==========
See the accompanying notes to condensed financial statements.
F-2
WIDEBAND CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the six For the six
months ended months ended
March 31, March 31,
2001 2000
------------- -------------
Cash Flows From Operating Activities
Net loss $ (221,592) $ (162,800)
Adjustments to reconcile net loss to net cash used by
operating activities:
Depreciation and amortization 15,652 5,709
Common stock issued for services - 77,000
Common stock received as reimbursement for legal expense - (9,000)
Services contributed by employees - 45,686
Changes in operating assets and liabilities:
Trade receivables (6,859) (45,846)
Prepaid expenses 43,042 -
Inventory (42,275) (27,229)
Accounts payable 13,763 (20,475)
Accrued liabilities (6,098) 112,413
----------- -----------
Net Cash and Cash Equivalents Used in Operating Activities (204,367) (24,542)
----------- -----------
Cash Flows From Investing Activities
Sale of securities - 5,088
Payments for patents (788) (8,210)
Purchase of equipment (105,000) (5,719)
----------- -----------
Net Cash and Cash Equivalents Used In Investing Activities (105,788) (8,841)
----------- -----------
Cash Flows From Financing Activities
Common stock issued - 1,000,000
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 Used In Financing Activities - 1,225,675
----------- -----------
Net Increase (Decrease) in Cash (310,155) 1,192,292
Cash and Cash Equivalents At Beginning of Period 988,310 83,902
----------- -----------
Cash and Cash Equivalents At End of Period $ 678,155 $1,276,194
=========== ===========
See the accompanying notes to condensed financial statements.
F-3
WIDEBAND CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1- INTERIM FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by WideBand
Corporation (the Company) and are unaudited. In the opinion of management, the
accompanying unaudited financial statements contain all necessary adjustments
for fair presentation, consisting of normal recurring adjustments except as
disclosed herein.
The accompanying unaudited interim financial statements have been condensed
pursuant to the rules and regulations of the Securities and Exchange Commission;
therefore, certain information and disclosures generally included in financial
statements have been condensed or omitted. These financial statements should be
read in connection with the Company's annual financial statements included in
the Company's annual report on Form 10-KSB as of September 30, 2000. The
financial position and results of operations of the interim periods presented
are not necessarily indicative of the results to be expected for the year ended
September 30, 2001.
F-4