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 2002
[ ] 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
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(Exact name of small business issuer as specified in its charter)
Nevada 87-0363656
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
401 West Grand, Gallatin, Mo 64640
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(Address of principal executive offices)
(660) 663-3000
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(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 2002 WideBand Corporation had 13,238,595 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 2. Changes in Securities -- Sale of Securities Not
Registered Under the Securities Act. . . . . . . . . . . . 5
Item 4. Submission of Matters to a Vote of Security Holders. . . . 5
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-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 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 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.
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 MARCH 31, 2002 TO THE THREE MONTHS ENDED
MARCH 31, 2001, AND THE SIX MONTHS ENDED MARCH 31, 2002 TO THE SIX MONTHS
ENDED MARCH 31, 2001
Sales decreased for the six-months ended March 31, 2002 compared
with the same six-month period for 2001 due to the general slump in the
technology market. Sales were up slightly for the three-months ended
March 31, 2002, as compared with the three months ended March 31, 2001, as
WideBand increased it's marketing efforts and the market for technology
products began to recover.
Research and development costs decreased for the three-months and the
six-months ended March 31, 2002 compared with the three and six-months
ended March 31, 2001 as the Company continues to put significant effort
into ramping up manufacturing for its new products.
The increase experienced in selling and general and administrative
expenses is due to the Company's increased marketing efforts.
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, which was completed in February 2002.
This private placement resulted in an inflow of $225,000 cash during the six
months ended March 31, 2002. Proceeds from this private placement offering
will be used to support operations.
Cash decreased as of March 31, 2002 compared to September 30, 2001 in part
due to the purchase of new manufacturing equipment. Cash was also used to
increase inventory as of March 31, 2002 compared with September 30, 2001 as the
Company continues to ramp-up production.
Property and Equipment increased as a result of the purchase of additional
manufacturing equipment, which increases the production capacity of WideBand's
manufacturing plant. The equipment was purchased to expand the capability of
the Company to support its marketing programs.
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 WideBand Corporation is committed to the research
and development of new products to keep the Company vital.
4
PART II -- OTHER INFORMATION
Item 2. Changes in Securities - Sale of Securities Not Registered Under the
Securities Act
During the period from December 5, 2001, to February 28, 2002, the
registrant sold an aggregate of 56,250 common shares to 8 persons. 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 $4.00 per share and the
registrant received an aggregate of $225,000 cash consideration for the shares.
In February 2002, the company issued 60,000 shares of restricted common
stock, in exchange for advertising services, to Capital Research Group, Inc.
The transaction was valued at $4.00 per share.
Item 4. Submission of Matters to a Vote of Security Holders.
WideBand Corporation held its Annual Shareholders Meeting on March 15,
2002 in which it elected the following members of the Board of Directors:
Dr. Roger E. Billings, Chairman of the Board; Donald N. Fenn, Director;
Dr. Maria Sanchez, Director; Jean Kaiser, Director; and Dr. Jay Potter,
Director.
Shareholders also voted to ratify the appointment of Hansen, Barnett, and
Maxwell of Salt Lake City, Utah, to continue as independent auditors for
WideBand Corporation. There was no other business conducted at the meeting.
All voting was unanimous in the affirmative, for each director as well as
for the ratification of the appointment of the independent auditors, as
follows:
Total votes cast in person or by proxy. . . . 11,699,946
Votes approving each director . . . . . . . . 11,699,946
Votes disapproving each director. . . . . . . . . . . .0
Abstentions . . . . . . . . . . . . . . . . . . . . . .0
Votes approving ratification of auditors. . . 11,699,946
Votes disapproving ratification . . . . . . . . . . . .0
Abstentions . . . . . . . . . . . . . . . . . . . . . .0
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.
5
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: May 13, 2002
Dr. Roger E. Billings, President, CEO, Director
6
WideBand Corporation
Condensed Financial Statements
Table of Contents
Condensed Balance Sheets - March 31, 2002 and
September 30, 2001 (Unaudited) . . . . . . . . . . . . . . . . . F-1
Condensed Statements of Operations for the Three and Six Months
ended March 31, 2002 and 2001 (Unaudited) . . . . . . . . . . . . F-2
Condensed Statements of Cash Flows for the Six Months ended March
31, 2002 and 2001 (Unaudited) . . . . . . . . . . . . . . . . . . . F-3
Notes to Condensed Financial Statements . . . . . . . . . . . . . . F-4
WIDEBAND CORPORATION
CONDENSED BALANCE SHEETS
(UNAUDITED)
March 31, September 30,
2002 2001
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<s> <c> <c>
ASSETS
Current Assets
Cash and cash equivalents. . . . . . . . . . . $ 294,915 $ 502,359
Trade accounts receivables . . . . . . . . . . 39,633 15,729
Inventory. . . . . . . . . . . . . . . . . . . 365,285 204,234
Prepaid expenses . . . . . . . . . . . . . . . 1,549 631
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Total Current Assets. . . . . . . . . . . 701,382 722,953
Property and Equipment. . . . . . . . . . . . . . . 658,518 631,518
Less: accumulated depreciation . . . . . . . . (129,799) (115,676)
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Net Property and Equipment . . . . . 528,719 515,842
Patents, Net of Amortization of $6,901
and $5,566, respectively . . . . . . . . . . . 72,032 70,850
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Total Assets. . . . . . . . . . . . . . . . . . . . $ 1,302,133 $ 1,309,645
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Trade accounts payable . . . . . . . . . . . . $ 5,036 $ 6,269
Accrued liabilities. . . . . . . . . . . . . . 5,320 6,181
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Total Current Liabilities . . . . . . . . 10,356 12,450
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Stockholders' Equity
Common Stock - $0.01 par value;
20,000,000 shares authorized;
13,238,595 and 13,122,345 shares outstanding,
respectively . . . . . . . . . . . . . . . . 132,386 131,223
Additional paid-in capital . . . . . . . . . . 4,863,102 4,399,264
Accumulated deficit. . . . . . . . . . . . . . (3,703,711) (3,233,292)
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Total Stockholders' Equity. . . . . . . . 1,291,777 1,297,195
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Total Liabilities and Stockholders' Equity. . . . . $ 1,302,133 $ 1,309,645
============= =============
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
Ended March 31, Ended March 31,
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2002 2001 2002 2001
------------ ------------ ------------ ------------
<s> <c> <c> <c> <c>
Sales . . . . . . . . . . . . . . . . . . $ 39,307 $ 38,191 $ 51,842 $ 189,756
Cost of Sales . . . . . . . . . . . . . . 30,895 25,245 36,548 119,157
------------ ------------ ------------ ------------
Gross Profit . . . . . . . . . . . . 8,412 12,946 15,294 70,599
Expenses
Research and development . . . . . . 40,201 52,794 73,289 100,438
Selling and general and administrative 340,383 49,713 415,683 203,211
------------ ------------ ------------ ------------
Total Expenses . . . . . . . . . . . 380,584 102,507 488,972 303,649
------------ ------------ ------------ ------------
Loss From Operations. . . . . . . . . . . (372,172) (89,561) (473,678) (233,050)
Interest income . . . . . . . . . . . . . 1,190 5,724 3,259 11,458
------------ ------------ ------------ ------------
Net Loss. . . . . . . . . . . . . . . . . $ (370,982) $ (83,837) $ (470,419) $ (221,592)
============ ============ ============ ============
Basic and Diluted Loss Per Share. . . . . $ (0.03) $ (0.01) $ (0.04) $ (0.02)
============ ============ ============ ============
Weighted Average Number of Common
Shares Used in Per Share Calculation. . 13,191,595 13,122,345 13,156,590 13,122,345
============ ============ ============ ============
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,
2002 2001
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<s> <c> <c>
Cash Flows From Operating Activities
Net loss . . . . . . . . . . . . . . . . . . . $ (470,419) $ (221,592)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization . . . . . . 15,458 15,652
Common stock issued for services. . . . . 240,000 -
Changes in operating assets and liabilities:
Trade receivables . . . . . . . . . . . . (23,904) (6,859)
Prepaid assets. . . . . . . . . . . . . . (918) 43,042
Inventory . . . . . . . . . . . . . . . . (161,051) (42,275)
Accounts payable. . . . . . . . . . . . . (1,232) 13,763
Accrued liabilities . . . . . . . . . . . (861) (6,098)
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Net Cash and Cash Equivalents Used in
Operating Activities. . . . . . . . . . (402,927) (204,367)
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Cash Flows From Investing Activities
Payments for patents . . . . . . . . . . . . . (2,517) (788)
Purchase of equipment. . . . . . . . . . . . . (27,000) (105,000)
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Net Cash and Cash Equivalents Used In
Investing Activities. . . . . . . . . . (29,517) (105,788)
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Cash Flows From Financing Activities
Common stock issued for cash . . . . . . . . . 225,000 -
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Cash and Cash Equivalents Provided by
Financing Activities. . . . . . . . . . 225,000 -
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Net Decrease in Cash. . . . . . . . . . . . . . . . (207,444) (310,155)
Cash and Cash Equivalents At Beginning of Period. . 502,359 988,310
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Cash and Cash Equivalents At End of Period. . . . . $ 294,915 $ 678,155
============== ==============
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 - STOCKHOLDERS' EQUITY
In February 2002, the Company issued 60,000 shares of restricted common
stock to Capital Research Group for advertising services. The 60,000 shares
were valued at $240,000 or $4.00 per share.
During March 2002, the Company made a private placement of 56,250 shares
of common stock. The shares were sold for a price of $4.00 per share,
resulting in $225,000 cash, which will be used to support operations. No
commissions were paid in connection with this offering.
F-4