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 December 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 31 December 2001 WideBand Corporation had 13,122,345 shares of
Common Stock outstanding.
Transitional Small Business Disclosure Format: 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 . . . . . . . . . . . . . . 5
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
Results 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-QSB, 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 is a public company that develops, manufactures, and
markets standards-based Gigabit Networking products. The Company's objective
is to create high-quality products specifically designed to meet the demand for
high-bandwidth networking solutions at an affordable price. The Company's
flagship product line, its Professional Series of Gigabit Ethernet adapters and
switches, are 100% designed and manufactured in the United States and deliver
Gigabit Ethernet over the current installed base of Category 5 cable on
segments of up to 100 meters without rewiring. WideBand generates revenue
primarily through the sale of its products to the Company's expanding network
of Authorized Solution Providers and Direct Marketing Resellers.
The Company is focused on sales to Authorized Solution Providers and
Direct Marketing Resellers - who sell WideBand products into the government,
industry and education markets. In generating sales leads, the Company
exhibits its products at several large international, and a number of smaller
regional, computer shows throughout the year.
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.
In November 2001, Jay Potter of Independence, Missouri joined the WideBand
Board of Directors - replacing Sharla Riead who was appointed to the Board, but
unable to serve due to other obligations. Mr. Potter is a shareholder and has
been involved with the company in an engineering advisory capacity for the past
two years. Also, at this time, Joseph Billings was appointed as the Company's
new Vice President of Marketing. Joseph has served as the WideBand National
Sales Manager for the past two years.
WideBand stock is traded on the OTC.BB Market (ZWBC), and on the Frankfurt
Exchange (Stock symbol WBD; German Security No. WKN-764536).
3
COMPARISON OF THE THREE MONTHS ENDED DECEMBER 31, 2001 TO THE THREE MONTHS
ENDED DECEMBER 31, 2000
Sales decreased due to the general slump in the technology market.
Research and development costs decreased for the three-month period ending
December 31, 2001, compared with the three month period ending December 31,
2000 as the Company put most of its focus into tooling up manufacturing for the
new, standards-based Gigabit Ethernet products which were announced at COMDEX
in November.
Selling and general and administrative expenses decreased for the
three-month period ending December 31, 2001 compared with the same three-month
period for 2000, reflecting fluctuations in marketing costs associated with
trade show exhibits.
LIQUIDITY AND CAPITAL RESOURCES
The Company generates cash through the sale of its networking products and
its securities.
During the quarter ended December 31, 2001, the Company began a private
placement offering of its common stock. As of the end of the quarter, this
private placement had resulted in $50,000 inflow of cash. Since the stock is
to be issued during the quarter ending March 31, 2002, there is an offsetting
50,000 of Deposits received on private placement. Proceeds from this private
placement offering will be used to ramp up sales and manufacturing.
The Company has no financing through borrowings and as such has no
long-term debt or associated interest expense.
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. Cash was also used to
increase inventory as of December 31, 2001 compared with September 30, 2001 as
the Company prepares to ramp-up production.
SUBSEQUENT EVENTS
In January, WideBand Corporation appointed Jamie Stack as the Vice
President of Sales. Before joining the WideBand team, Mr. Stack served as
SMC's President of the Americas. Mr. Stack has been retained by the
Corporation in a temporary consulting capacity to launch the international
sales program.
On January 24th, WideBand announced the launch of the WideBand
Professional Series Gigabit Ethernet products. The "soft launch" began
February 1st and the "hard launch" is scheduled for May 2002. The Professional
Series is a new family of standards-based Gigabit Ethernet products targeting
the Tier-1 market segment. Professional Series adapters and switches are
designed and manufactured in the United States and deliver Gigabit Ethernet
over the current installed base of Category 5 cable on segments of up to 100
meters without rewiring. During the hard launch, the Company expects to
significantly increase the funds spent on product advertising and building name
recognition.
4
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(b) Reports on Form 8-K.
There were no Form 8-K reports filed this quarter.
- -------------------------------------------------------------------------------
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.
By: _____/s/ Roger E. Billings_____________________ Date: February 13, 2002
Dr. Roger E. Billings, President, CEO, Director
5
WideBand Corporation
Financial Statements
Table of Contents
Balance Sheets - December 31, 2001 and September 30, 2001 (Unaudited). . . F-1
Statements of Operations for the Three Months Ended December 31, 2001 and
2000 (Unaudited). . . . . . . . . . . . . . . . . . . . . . . . . . . F-2
Statements of Cash Flows for the Three Months Ended December 31, 2001 and
2000 (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Notes to Condensed Financial Statements (Unaudited). . . . . . . . . . . . F-4
WIDEBAND CORPORATION
CONDENSED BALANCE SHEETS
(UNAUDITED)
December 31, September 30,
2001 2001
-------------- --------------
<s> <c> <c>
ASSETS
Current Assets
Cash and cash equivalents . . . . . . . . . . . . . $ 377,161 $ 502,359
Trade accounts receivables. . . . . . . . . . . . . 8,495 15,729
Inventory . . . . . . . . . . . . . . . . . . . . . 295,514 204,234
Prepaid expenses. . . . . . . . . . . . . . . . . . 285 631
------------ ------------
Total Current Assets . . . . . . . . . . . . . 681,455 722,953
Property and Equipment . . . . . . . . . . . . . . . . . 631,518 631,518
Less: accumulated depreciation. . . . . . . . . . . (122,387) (115,676)
------------ ------------
Net Property and Equipment . . . . . . . . . . 509,131 515,842
Patents, net of amortization of $6,225 and
$5,566, respectively . . . . . . . . . . . . . . . . . 71,763 70,850
------------ ------------
Total Assets . . . . . . . . . . . . . . . . . . . . . . $ 1,262,349 $ 1,309,645
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Trade accounts payable. . . . . . . . . . . . . . . $ 10,946 $ 6,269
Accrued liabilities . . . . . . . . . . . . . . . . 3,646 6,181
Deposits received on private placement offering . . 50,000 -
------------ ------------
Total Current Liabilities. . . . . . . . . . . 64,592 12,450
------------ ------------
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 . . . . . . . . . . . . . . . . (3,332,730) (3,233,292)
------------ ------------
Total Stockholders' Equity . . . . . . . . . . 1,197,757 1,297,195
------------ ------------
Total Liabilities and Stockholders' Equity . . . . . . . $ 1,262,349 $ 1,309,645
============ ============
See the accompanying notes to condensed financial statements.
F-1
WIDEBAND CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months Ended
December 31,
2001 2000
-------------- --------------
<s> <c> <c>
Sales. . . . . . . . . . . . . . . . . . . . . $ 12,535 $ 151,565
Cost of Sales. . . . . . . . . . . . . . . . . 5,653 93,912
------------ ------------
Gross Profit. . . . . . . . . . . . . . . 6,882 57,653
------------ ------------
Expenses
Research and development. . . . . . . . . 33,089 47,644
Selling and general and administrative. . 75,300 153,498
------------ ------------
Total Expenses. . . . . . . . . . . . . . 108,389 201,142
Loss From Operations . . . . . . . . . . . . . (101,507) (143,489)
------------ ------------
Interest Income. . . . . . . . . . . . . . . . 2,069 5,735
------------ ------------
Net Loss . . . . . . . . . . . . . . . . . . . $ (99,438) $ (137,754)
============ ============
Basic and Diluted Loss Per Share . . . . . . . $ (0.01) $ (0.01)
============ ============
Weighted Average Number of Common
Shares Used in Per Share Calculation . . . . 13,122,345 13,122,345
============ ============
See the accompanying notes to condensed financial statements.
F-2
WIDEBAND CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Three Months Ended
December 31,
2001 2000
-------------- --------------
<s> <c> <c>
Cash Flows From Operating Activities
Net loss. . . . . . . . . . . . . . . . . . . . . . . $ (99,438) $ (137,754)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization. . . . . . . . . . 7,370 9,629
Changes in operating assets and liabilities:
Trade accounts receivables . . . . . . . . . . . 7,234 (6,446)
Prepaid assets . . . . . . . . . . . . . . . . . 346 43,058
Inventory. . . . . . . . . . . . . . . . . . . . (91,280) (11,492)
Accounts payable . . . . . . . . . . . . . . . . 4,677 18,520
Accrued liabilities. . . . . . . . . . . . . . . (2,535) (2,035)
------------ ------------
Net Cash and Cash Equivalents Used in Operating
Activities . . . . . . . . . . . . . . . . . . (173,626) (86,520)
------------ ------------
Cash Flows From Investing Activities
Payments for patents and trademarks . . . . . . . . . (1,572) (110)
------------ ------------
Net Cash and Cash Equivalents Used In Investing
Activities . . . . . . . . . . . . . . . . . . (1,572) (110)
------------ ------------
Cash Flows From Financing Activities
Deposits received on private placement offering . . . 50,000 -
------------ ------------
Cash and Cash Equivalents Provided By Financing
Activities . . . . . . . . . . . . . . . . . . 50,000 -
------------ ------------
Net Decrease in Cash . . . . . . . . . . . . . . . . . . . (125,198) (86,630)
Cash and Cash Equivalents At Beginning of Period . . . . . 502,359 988,310
------------ ------------
Cash and Cash Equivalents At End of Period . . . . . . . . $ 377,161 $ 901,680
============ ============
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, 2001. 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, 2002.
NOTE 2 - DEPOSITS RECEIVED ON PRIVATE PLACEMENT
During the quarter ended December 31, 2001, the Company received a $50,000
deposit for a yet to be finalized private placement. The Company has
subsequently received an additional $175,000 for the same purpose. If the
private placement does not occur, the Company will be required to immediately
refund the $225,000. Accordingly, the $50,000 received as of December 31,
2001, has been classified in the accompanying balance sheet as a liability.
NOTE 3 - SUBSEQUENT EVENTS
As discussed in note 2 above, the Company has received a $175,000 deposit
for a private placement issuance of stock subsequent to the end of the quarter.
F-4