U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 12 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
Commission file number 21143
WIRELESS CABLE & COMMUNICATIONS, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 87-0545056
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
102 West 500 South, Suite 320
Salt Lake City, Utah 84101
(Address of Principal Executive Offices) (Zip Code)
(801) 328-5618
(Issuer's telephone number)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
As of August 18, 1997, 5,222,833 shares of registrant's Common Stock, par value
$.01 per share, 2,397,732 shares of the registrant's Series A Preferred Shares,
par value $.01 per share, and 354,825 shares of the registrant=s Series B
Preferred Shares, par value $.01 per share, were outstanding.
1
PART I : FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS REQUIRED BY FORM 10-QSB
The accompanying unaudited consolidated financial statements have been
prepared by Wireless Cable & Communications, Inc. ("WCCI") pursuant to the rules
and regulations of the Securities and Exchange Commission. They do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. The consolidated financial
statements have been prepared using a reverse acquisition accounting treatment
due to a transaction where Telecom Investment Corporation ("TIC") merged with a
wholly owned subsidiary of WCCI and the financial statements presented for the
period from September 27, 1994 (date of TIC inception) through June 30, 1997 are
the financial statements of TIC and differ from the consolidated financial
statements of WCCI and its subsidiaries as previously reported (see Note 1). The
financial statements presented include the operations of TIC for the period from
September 27, 1994 (date of TIC inception) through June 30, 1997 and for the
full six months, and of WCCI and its subsidiaries for the period February 4,
1997 (effective date of the acquisition) to June 30, 1997. These financial
statements should be read in conjunction with Note 1 herein and the consolidated
financial statements and notes thereto included in the WCCI annual report on
form 10-KSB, as amended, for the year ended December 31, 1996, which are
incorporated herein by reference. The accompanying financial statements have not
been examined by independent accountants in accordance with generally accepted
auditing standards, but in the opinion of management, all adjustments
(consisting of normal recurring entries) necessary for the fair presentation of
the Company's results of operations, financial position and changes therein for
the periods presented have been included. The results of operations for the
three and six months ended June 30, 1997 may not be indicative of the results
that may be expected for the year ending December 31, 1997.
[THIS SPACE INTENTIONALLY LEFT BLANK]
2
WIRELESS CABLE & COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 AND DECEMBER 31, 1996
June 30, December 31,
1997 1996
ASSETS
CURRENT ASSETS:
Cash $ 78,409 $ 8,902
Prepaid license lease fees 157,272 -
Other current assets (owed by related parties) 970 14,778
---------------- -----------------
Total current assets 236,651 23,680
INVESTMENT IN CENTURION 788,424 -
LICENSE RIGHTS - Net 865,167 -
---------------- -----------------
TOTAL ASSETS $ 1,890,242 $ 23,680
================ =================
LIABILITIES AND STOCKHOLDERS= DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 519,505 $ 438,557
Accrued license lease fees 145,730 -
Accrued consulting fees 100,000 -
---------------- -----------------
Total current liabilities 765,235 438,557
LONG-TERM LIABILITIES:
Long-term debt (owed to related parties) 1,331,812 231,570
Note payable 746,095 -
MINORITY INTEREST IN SUBSIDIARY 25,649 -
---------------- -----------------
Total liabilities 2,868,791 670,127
---------------- -----------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS= DEFICIT:
Series A Preferred stock; $0.01 par value; 4,000,000
shares authorized and 2,397,732 and 0 shares issued
and outstanding 23,977 -
in 1997 and 1996, respectively
Common stock; $0.01 par value; 15,000,000 shares authorized:
3,645,833 and 1,500,000 shares issued and outstanding 36,458 15,000
in 1997 and 1996 respectively 41,555 -
Additional paid-in capital (1,080,539) (661,447)
Deficit accumulated during the development stage
---------------- -----------------
Total stockholders= deficit (978,549) (646,447)
---------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDERS= DEFICIT $ 1,890,242 $ 23,680
================ =================
See notes to consolidated financial statements.
3
WIRELESS CABLE & COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996
AND FROM SEPTEMBER 27, 1994 (DATE OF INCEPTION) TO JUNE 30, 1997
September 27,
Three Three 1994 (Date of
Months Months Inception) To
Ended Ended June 30,
June 30, June 30, 1997
1997 1996
--------------- ---------------- ----------------
REVENUES NONE NONE NONE
--------------- ---------------- ----------------
EXPENSES:
Professional fees $ 24,494 $ 20,475 $ 314,795
Depreciation and amortization 29,000 - 48,550
Lease expense 24,544 - 32,486
Consulting 23,200 36,000 339,278
General and administrative 81,178 34,889 246,202
--------------- ---------------- ----------------
Total 182,416 91,364 981,311
INTEREST EXPENSE 43,841 5,428 104,656
--------------- ---------------- ----------------
NET LOSS BEFORE MINORITY INTEREST 226,257 96,792 1,085,967
MINORITY INTEREST IN LOSS OF SUBSIDIARY 3,157 - 5,428
--------------- ---------------- ----------------
NET LOSS $ 223,100 $ 96,792 $ 1,080,539
=============== ================ ================
Net loss per Common Shares and
Common Share equivalent $ (0.08) $ (0.04)
=============== ================
Weighted average Common Shares and
Common Share equivalent 2,697,498 2,511,196
=============== ================
See notes to consolidated financial statements.
4
WIRELESS CABLE & COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
AND FROM SEPTEMBER 27, 1994 (DATE OF INCEPTION) TO JUNE 30, 1997
Six Six September 27,
Months Months 1994 (Date of
Ended Ended Inception) To
June 30, June 30, June 30,
1997 1996 1997
--------------- ---------------- ----------------
REVENUES NONE NONE NONE
--------------- ---------------- ----------------
EXPENSES:
Professional fees $ 90,652 $ 29,664 $ 314,795
Depreciation and amortization 48,550 - 48,550
Lease expense 32,486 - 32,486
Consulting 46,398 66,000 339,278
General and administrative 136,921 42,272 246,202
--------------- ---------------- ----------------
Total 355,007 137,936 981,311
INTEREST EXPENSE 69,513 10,076 104,656
--------------- ---------------- ----------------
NET LOSS BEFORE MINORITY INTEREST 424,520 148,012 1,085,967
MINORITY INTEREST IN LOSS OF SUBSIDIARY 5,428 - 5,428
--------------- ---------------- ----------------
NET LOSS $ 419,092 $ 148,012 $ 1,080,539
=============== ================ ================
Net loss per Common Shares and
Common Share equivalent $ (0.16) $ (0.06)
=============== ================
Weighted average Common Shares and
Common Share equivalent 2,695,187 2,498,011
=============== ================
See notes to consolidated financial statements.
5
WIRELESS CABLE & COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS= EQUITY (DEFICIT)
FOR THE SIX MONTHS ENDED JUNE 30, 1997,
THE YEAR ENDED DECEMBER 31, 1996,
AND FROM SEPTEMBER 27, 1994 (DATE OF INCEPTION) TO JUNE 30, 1997
Deficit
Accumulated
Additional During the
Preferred Stock Common Stock Paid-in Development
Shares Amount Shares Amount Capital Stage
Issuance of TIC stock to TIC
shareholders in October 1994 1,500,000 $15,000
Net loss for the period from
September 27, 1995 (date of
inception) to $(59,108)
December 31, 1994
----------- ----------- ------------- --------- ---------- --------------
BALANCE, DECEMBER 31, 1994 1,500,000 15,000 (59,108)
Net loss for the year ended
December 31, 1995 (179,771)
----------- ----------- ------------- --------- ---------- --------------
BALANCE, DECEMBER 31, 1995 1,500,000 15,000 (238,879)
Net loss for the year ended
December 31, 1996 (422,568)
----------- ----------- ------------- --------- ---------- --------------
BALANCE, DECEMBER 31, 1996 1,500,000 15,000 (661,447)
Reverse acquisition of TIC:
Exchange of TIC common
stock for 2,397,732 $23,977 (1,500,000) (15,000) $(8,977)
WCCI Series A Preferred
Shares
Addition of WCCI common 3,645,833 36,458 50,532
stock
Net loss for the six month
period (419,092)
ended June 30, 1997
----------- ----------- ------------- --------- ---------- --------------
BALANCE, JUNE 30, 1997 2,397,732 $23,977 3,645,833 $36,458 $41,555 $(1,080,539)
=========== =========== ============= ========= ========== ==============
See notes to consolidated financial statements.
6
WIRELESS CABLE & COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
AND FROM SEPTEMBER 27, 1994 (DATE OF INCEPTION) TO JUNE 30, 1997
Six Six September 27,
Months Months 1994 (Date of
Ended Ended Inception) To
June 30, June 30, June 30,
1997 1996 1997
CASH FLOWS FROM DEVELOPMENT ACTIVITIES:
Net loss $ (419,092) $ (148,013) $ (1,080,539)
Adjustments to reconcile net loss to net cash used in
development activities:
Depreciation and amortization 48,550 - 48,550
Minority interest in loss of subsidiary (5,428) - (5,428)
Change in assets and liabilities:
Prepaid license lease fees 16,940 - 3,162
Other assets 577,377 - 576,377
Accounts payable (282,646) 59,653 1,198
Accrued license lease fees 145,730 - 145,730
Accrued consulting fees 100,000 - 100,000
--------------- --------------- ----------------
Net cash generated (used) in development activities 181,431 (88,360) (210,950)
--------------- --------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in Centurion (788,424) - (788,424)
Reverse acquisition of WCCI 56,583 - 56,583
--------------- --------------- ----------------
Net cash used in investing activities (731,841) - (731,841)
--------------- --------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock - - 15,000
Proceeds from related party borrowings 49,141 89,115 435,424
Payments for related parties borrowings (175,319) - (175,319)
Borrowings through a promissory note 746,095 - 746,095
--------------- --------------- ----------------
Net cash generated by financing activities 619,917 89,115 1,021,200
--------------- --------------- ----------------
NET INCREASE IN CASH 69,507 755 78,409
CASH AT BEGINNING OF PERIOD 8,902 15,009 -
--------------- --------------- ----------------
CASH AT END OF PERIOD $ 78,409 $ 15,764 $ 78,409
=============== =============== ================
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:
Cash paid during the year for interest and income taxes
NONE NONE NONE
=============== =============== ================
See notes to consolidated financial statements.
7
WIRELESS CABLE & COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
(Unaudited)
1. Presentation
On January 31, 1997, Wireless Cable & Communications, Inc.
("WCCI") entered into a transaction with Telecom Investment
Corporation ("TIC"), pursuant to which TIC merged with a newly
formed wholly-owned subsidiary of WCCI, NewWCCI, Inc. (the
"Merged Companies" or the "Company"). The merger was effective
February 4, 1997. Under the terms of the merger, the former
shareholders of TIC received 2,397,732 shares of WCCI's newly
designated Series AA@ Preferred Shares and legally TIC became
a wholly-owned subsidiary of WCCI. Also, the former option
holders of TIC received options to purchase 199,811 shares of
WCCI=s Series AA@ Preferred Shares. As a result of the merger,
the former shareholders and option holders of TIC currently
hold approximately 87.7% of the voting power of the Merged
Companies on a common share equivalent basis. Generally
accepted accounting principles typically require that the
company whose shareholders retain the majority voting interest
in the combined business be treated as the acquiror for
accounting purposes. Accordingly, the merger has been
accounted for as a Areverse acquisition@ whereby TIC is deemed
to have acquired an 87.7% interest on a common share
equivalent basis in WCCI using the purchase method. However,
WCCI remains the legal entity and the Registrant for
Securities and Exchange Commission reporting purposes.
Consistent with the reverse acquisition accounting treatment,
the financial statements presented for the period from
September 27, 1994 (date of TIC inception) through June 30,
1997 are the financial statements of TIC and differ from the
consolidated financial statements of WCCI and its subsidiaries
as previously reported. The financial statements presented
include the operations of TIC for the period from September
27, 1994 (date of TIC inception) through June 30, 1997 and for
the full six months and of WCCI and its subsidiaries for the
period February 4, 1997 (effective date of the acquisition) to
June 30, 1997.
The consolidated financial statements also include the
accounts of WCCI and its subsidiaries, including Auckland
Independent Television Services, Ltd. (AAITS@), and Transworld
Wireless Television, Inc. (ATWTI@). All significant
intercompany accounts and transactions have been eliminated in
consolidation.
2. Net loss per common share and common share equivalent
Net loss per common share and common share equivalent is
calculated by dividing net loss by the weighted average number
of common shares and the common stock equivalent for the
Series A preferred stock outstanding during the period. Series
A Preferred shares are included in the calculation because of
the ten to one voting rights, dividend and liquidation
attributes of the preferred shares as compared to the common
shareholders.
8
3. Use of Estimates in Preparing Financial Statements
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
A. MATERIAL CHANGES IN FINANCIAL CONDITION
At June 30, 1997, the Company had current assets of $236,651,
compared to $23,680 at December 31, 1996, for an increase of $212,971.
Cash increased by $69,507 from $8,902 to $78,409 during the six month
period, primarily as a result of the Company completing a merger
transaction whereby TIC merged with a newly formed wholly-owned
subsidiary of WCCI effective February 4, 1997 (see Item 5(A) in the
Company=s report on Form 10-QSB for the three month period ended March
31, 1997, which description is hereby incorporated by reference) (the
AMerger@) and the receipt of $650,000 of proceeds from the sale of
secured promissory notes (the ANotes@), which are more particularly
described in the Company=s report on Form 10-KSB, as amended, for the
fiscal year ended December 31, 1996, which description is hereby
incorporated by reference. The increase in cash was offset by a
decrease due to the payment of outstanding accounts payable. Current
liabilities as of June 30, 1997, were $765,235, compared to $438,557 as
of December 31, 1996, for an increase of $326,678, primarily as a
result of the Merger.
At June 30, 1997, total assets were $1,890,242, compared to
$23,680 as of December 31, 1996, for an increase of $1,866,562. The
increase in total assets was due primarily to the WCCI assets
associated with the Merger and the proceeds from the sale of additional
Notes. Total liabilities increased $2,198,664 from $670,127 as of
December 31, 1996 to $2,868,791 as of June 30, 1997. The increase in
total liabilities is a result of the additional current liabilities,
long-term debt and minority interest in subsidiary associated with the
WCCI liabilities from the Merger and the additional proceeds from the
sale of the Notes. Total stockholders' deficit increased by $332,102
from $646,447 at December 31, 1996, to $978,549 at June 30, 1997.
B. MATERIAL CHANGES IN RESULTS OF OPERATIONS
The Company did not have operating revenues for either of the
six months ended June 30, 1997 or 1996. During the six months ending
June 30, 1997, total operating expenses (and operating loss) were
$355,007, compared to $376,815 for the same three-month period a year
earlier, for a decrease of $21,808. The decrease was due to additional
administrative expenses incurred in 1996 for an equity offering which
did not close and was offset by the addition of depreciation and
amortization and lease expense associated with WCCI's assets and an
increase in administrative expenses and professional fees due to the
expenses incurred by the Company in conjunction with the Merger.
During the six months ending June 30, 1997, the Company had a
net loss of $419,092, compared to a net loss of $386,891 for the same
period a year earlier, for an increase of $32,201. The increase in net
loss is primarily a result of the addition of depreciation and
amortization, lease and interest expenses and the minority interest in
loss of subsidiary associated with WCCI's assets and an increase in
administrative expenses and professional fees due to the expenses
incurred by the Company in conjunction with the Merger. For the six
months ended June 30, 1997, there was a net loss per common share and
common share equivalent of $(0.16), compared to a net loss per common
share and common share equivalent of $(0.06) for the same period a year
earlier.
9
C. LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1997, the Company's current liabilities exceeded
its current assets by $528,584. The Company anticipates that it will
obtain the financing necessary to pay its liabilities and to fund its
future operations through loans, equity investments and other
transactions. While there can be no assurance that the Company will
secure such financing, the Company has negotiated a financing
commitment from Transworld Telecommunications, Inc., a related party,
for up to $1,000,000 in debt, and has secured additional funds from the
issuance of debt in the form of the Notes (up to $1,600,000), and as of
August 4, 1997, has secured $2,100,000 financing through the delivery
of an unsecured promissory note. These financing arrangements are all
more particularly described in the Company=s report on Form 10-KSB, as
amended, for the year ended December 31, 1996, which descriptions are
incorporated herein by reference. In the event that the Company is
unsuccessful in completing these financing arrangements or in obtaining
substitute funding commitments, the Company would have difficulty in
meeting its operating expenses, satisfying its existing or future debt
obligations, or succeeding in acquiring, developing or operating a
wireless telecommunications system or adding subscribers to such
systems. If the Company does not have sufficient cash flow or is unable
to otherwise satisfy its debt obligations, its ongoing growth and
operations could be restricted and the viability of the Company could
be adversely affected.
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MATTERS SUBMITTED TO A VOTE OF THE COMPANY'S
SHAREHOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS
ON FORM 8-K
A. EXHIBITS.
None
B. REPORTS ON FORM 8-K
None
10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
WIRELESS CABLE & COMMUNICATIONS, INC.
Date: August 18, 1997 BY /s/ ANTHONY SANSONE
Anthony Sansone
Chief Accounting Officer
11