SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment No. 1 to Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 25, 1999
ADVANCED WIRELESS SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Alabama 0-26533 63-1205304
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation or organization)
927 Sunset Drive
Irving, Texas 75061
(Address of principal executive office)
Issuer's telephone number: 972-254-7604
We have previously reported the purchase of the assets of Dibbs Internet
Services, Inc., on Form 8-K dated August 25, 1999. This amendment to the
August 25, 1999, Form 8-K contains financial statements for the acquired
business and pro forma financial information for our Company reflecting
this acquisition, as required by Item 7 of Form 8-K.
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Item 7. Financial Statements and Exhibits
Financial Statements
For a list of financial statements, see "Index to Financial Statements which
is part of the Financial Statements which follow page 2 and incorporated
herein by reference.
Exhibits
2.1 Agreement to Purchase Assets between Advanced Wireless Systems,
Inc,and Dibbs Internet Services, Inc. (incorporated by reference to
Exhibit 2.1 to the Form 8-K dated August 25, 1999).
2.2 Bill of Sale from Dibbs Internet Services, Inc., to Advanced Wireless
Systems, Inc. (incorporated by reference to Exhibit 2.2 to the
Form 8-K dated August 25, 1999).
27.1 Financial Data Schedule.
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 hereunto duly authorized.
ADVANCED WIRELESS SYSTEMS, INC.
Date: November 30, 1999 /s/
----------------------------------
Monte Julius, President
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ADVANCED WIRELESS SYSTEMS, INC.
AUDIT OF HISTORICAL REVENUES
AND DIRECT OPERATING EXPENSES
OF DIBBS INTERNET SERVICES, INC.
INDEX TO FINANCIAL STATEMENTS
Page
FINANCIAL STATEMENTS OF THE ACQUIRED BUSINESS:
Independent Auditor's Report F-1
Statement of Historical Revenues and Direct Operating Expenses for
the Years Ended December 31, 1997 and 1998, and for the six months
ended June 30, 1999 F-3
Notes to Statement of Historical Revenues and Direct Operating
Expenses F-4
PRO FORMA FINANCIAL INFORMATION
Pro Forma Consolidated Balance Sheet of Advanced Wireless
Systems, Inc. as of June 30, 1999 - Unaudited P-1
Pro Forma Consolidated Statements of Operations of Advanced
Wireless Systems, Inc. for the Year Ended December 31, 1998 and
for the six months ended June 30, 1999 - Unaudited P-3
Notes to Consolidated Pro Forma Financial Statements P-
INDEPENDENT AUDITOR'S REPORT
The Board of Directors
Advanced Wireless Systems, Inc.
We have audited the accompanying statement of historical revenues and direct
operating expenses of Dibbs Internet Services, Inc. (the acquired business)
for the years ended December 31, 1998 and 1997, and for the six months ended
June 30, 1999, acquired by Advanced Wireless Systems, Inc. This financial
statement is the responsibility of Advanced Wireless Systems, Inc.'s
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of revenues and
direct operating expenses is free of material misstatement. An audit of the
statements of revenues and direct operating expenses includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit of statements of revenues and direct
operating expenses also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit of the
statement of revenues and direct operating expenses provides a reasonable
basis for our opinion.
The accompanying statement was prepared as described in Note 1 for the
purpose of complying with certain rules and regulations of the Securities
and Exchange Commission (SEC) for inclusion in certain SEC regulatory reports
and filings are not intended to be a complete presentation of the revenues
and direct operating expenses of the acquired business.
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In our opinion, the statement of historical revenues and direct operating
expenses referred to above presents fairly, in all material respects, the
revenues and direct operating expenses of the acquired business described in
Note 1 for the years ended December 31, 1998 and 1997, and for the six months
ended June 30, 1999, in conformity with generally accepted accounting
principles.
BROWN ARMSTRONG RANDALL
REYES PAULDEN & McCOWN
ACCOUNTANCY CORPORATION
Bakersfield, California
November 15, 1999
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DIBBS INTERNET SERVICES, INC.
STATEMENT OF HISTORICAL REVENUES
AND DIRECT OPERATING EXPENSES
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
AND FOR THE SIX MONTHS ENDED
JUNE 30, 1999
Six Months
Ended Years Ended December 31,
June 30,
1999 1998 1997
------------------ ------------ --------------
Internet Revenues $ 98,710 $ 175,254 $ 140,003
------------------ ------------ --------------
Direct Operating Expenses
Phone lines 35,213 63,855 41,877
Port charges 13,856 27,467 23,194
Direct labor - 5,539 1,950
Contract services 3,966 4,426 650
Other operating expense - 3,483 2,852
------------------ ------------ --------------
Total Direct Operating
Expenses 53,035 104,770 71,263
------------------ ------------ --------------
Excess of revenues over
direct operating expenses $ 45,675 $ 70,484 $ 68,740
------------------ ------------ --------------
------------------ ------------ --------------
(See accompanying notes to statement of revenues and direct operating
expenses)
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DIBBS INTERNET SERVICES, INC.
NOTES TO STATEMENT OF HISTORICAL REVENUES
AND DIRECT OPERATING EXPENSES
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
AND FOR THE SIX MONTHS ENDED
JUNE 30, 1999
NOTE 1 - BASIS OF PRESENTATION
On August 25 ,1999, Advanced Wireless Systems, Inc. (the Company) purchased
all of the assets of Dibbs Internet Services, Inc. (Dibbs), an Alabama
corporation, an Internet service provider in Mobile, Alabama, for a purchase
price of $225,000. Dibbs provided Internet services to approximately 730
Internet customers in the Mobile metropolitan area via dial-in telephone line
access. The Company acquired the Dibbs assets used in the operation of its
Internet service, including its equipment, software, and the right to use the
Dibbs trade name, for $225,000 cash, paid in full on August 25, 1999, to
Dibbs and its sole shareholder and president, Diane Summers.
The accompanying financial statement presents the historical revenues and
direct operating expenses of Dibbs (the Acquired Business) for the years
ended December 31, 1998 and 1997, and for the six months ended June 30, 1999.
The accompanying statement of historical revenues and direct operating
expenses of the business does not include general and administrative
expenses, interest expense, depreciation, or any provision for income taxes
since historical expenses of this nature incurred by Dibbs are not
necessarily indicative of the costs to be incurred by the Company.
Revenues and direct operating expenses, as set forth in this financial
statement, include Internet service revenues and associated direct operating
expenses related to the operation of the telephonic Internet service.
Historical financial information reflecting financial position, results of
operations, and cash flows of the business is not presented because the
purchase price was assigned to the Dibbs assets used in the operation of its
Internet service, including its equipment, software, and the right to use
the Dibbs trade name. Other assets acquired and liabilities assumed were not
material. Accordingly, the historical statement of revenues and direct
operating expenses of Dibbs Internet Services, Inc. is presented in lieu of
the financial statements required under Item 3-05 of the Securities and
Exchange Commission Regulations S-X.
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
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ADVANCED WIRELESS SYSTEMS, INC.
PRO FORMA BALANCE SHEET
(UNAUDITED)
AS OF JUNE 30, 1999
As of
June 30, 1999 Pro Forma
Advanced As of
Wireless Pro Forma June 30,
Systems Adjustments 1999
------------------ ------------ --------------
Assets
Current assets
Cash and cash equivalents $ 374,598 $ (225,000)(a) $ 149,598
Accounts receivable, net 2,608 - 2,608
Inventory 45,964 - 45,964
Employee Advances 375 - 375
Prepaid expenses 24,600 - 24,600
------------------ ------------ --------------
Total current assets 448,145 (225,000) 2,232,348
------------------ ------------ --------------
Fixed Assets, net of
depreciation 98,098 45,250 (a) 143,348
------------------ ------------ --------------
Other assets
Deposits 300 - 300
License Acquisition Costs,
net 204,842 - 204,842
Organization costs, net 5,094 - 5,094
Goodwill - 177,250 (a) 177,250
Other intangible - 2,500 (a) 2,500
------------------ ------------ --------------
Total Other Assets 210,479 179,750 389,986
------------------ ------------ --------------
TOTAL ASSETS $ 756,479 $ - $ 756,479
------------------ ------------ --------------
------------------ ------------ --------------
(See Notes to Pro Forma Financial Statements)
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ADVANCED WIRELESS SYSTEMS, INC.
PRO FORMA BALANCE SHEET
(UNAUDITED)
AS OF JUNE 30, 1999
As of
June 30, 1999 Pro Forma
Advanced As of
Wireless Pro Forma June 30,
Systems Adjustments 1999
------------------ ------------ --------------
Liabilities and Stockholders'
Equity
Current Liabilities
Debtor certificates $ 6,000 $ - $ 6,000
Notes payable, related
parties 250,000 - 250,000
Accrued payroll taxes 6,629 - 6,629
Accrued interest payable 50,097 - 50,097
------------------ ------------ --------------
Total Liabilities 312,726 - 312,726
------------------ ------------ --------------
Stockholders' Equity:
Common stock, $.01 par value, 50,000,000 shares
authorized; 4,559,263 and 3,658,518 shares
issued and outstanding
45,593 - 45,593
Additional paid in capital 2,729,433 - 2,729,433
Accumulated deficit (2,331,273) - (2,331,273)
------------------ ------------ --------------
Total Stockholders' equity 443,753 - 443,753
------------------ ------------ --------------
Total Liabilities and Stockholders'
Equity $ 756,479 $ - $ 756,479
------------------ ------------ --------------
------------------ ------------ --------------
(See Notes to Pro Forma Financial Statements)
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ADVANCED WIRELESS SYSTEMS, INC.
PRO FORMA STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(UNAUDITED)
As of
June 30, 1999 Pro Forma
Advanced As of
Wireless Pro Forma June 30,
Systems Adjustments 1999
------------------ ------------ --------------
Revenues
Service and other $ 42,490 $ 98,710(b) $ 141,200
------------------ ------------ --------------
Costs and Expenses
Operating 64,353 53,035(b) 117,388
General and administrative 325,424 - 325,424
Depreciation and amortization 94,908 12,598(c) 107,506
------------------ ------------ --------------
Total Costs and Expenses 484,685 65,633 550,318
------------------ ------------ --------------
Income (Loss) from Operations (442,195) 33,077 (409,118)
------------------ ------------ --------------
Other Income (Expense)
Interest Expense (11,250) - (11,250)
------------------ ------------ --------------
Net Income (Loss) $ (453,445) $ 33,077 $ (420,368)
------------------ ------------ --------------
------------------ ------------ --------------
Net Income (Loss) per Share
Basic $ (.11) $ .01 $ (.10)
------------------ ------------ --------------
------------------ ------------ --------------
Weighted Average Number of
Common Shares Outstanding 4,323,136 4,323,136 4,323,136
------------------ ------------ --------------
------------------ ------------ --------------
(See Notes to Pro Forma Financial Statements)
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ADVANCED WIRELESS SYSTEMS, INC.
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR MONTHS ENDED DECEMBER 31, 1998
(UNAUDITED)
As of
June 30, 1999 Pro Forma
Advanced As of
Wireless Pro Forma June 30,
Systems Adjustments 1999
------------------ ------------ --------------
Revenues
Service and other $ 106,602 $ 175,254(b) $ 281,856
------------------ ------------ --------------
Costs and Expenses
Operating 159,840 104,770(b) 264,610
General and administrative 359,920 - 359,920
Depreciation and amortization 252,396 25,196 277,592
------------------ ------------ --------------
Total Costs and Expenses 772,156 129,966 902,122
------------------ ------------ --------------
Income (Loss) from Operations (665,554) 45,288 (620,266)
------------------ ------------ --------------
Other Income (Expense)
Interest income 2,230 - 2,230
Interest Expense (20,447) - (20,447)
------------------ ------------ --------------
Net Income (Loss) $ (683,771) 45,288 (638,483)
------------------ ------------ --------------
------------------ ------------ --------------
Net Income (Loss) per Share
Basic $ (.20) $ .01 $ (.19)
------------------ ------------ --------------
------------------ ------------ --------------
Weighted Average Number of
Common Shares Outstanding 3,359,207 3,359,207 3,359,207
------------------ ------------ --------------
------------------ ------------ --------------
(See Notes to Pro Forma Financial Statements)
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NOTES TO UNAUDITED PRO FORMA
FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1998
AND FOR THE SIX MONTHS ENDED JUNE 30, 1999
NOTE 1 - BASIS OF PRESENTATION
On August 25 ,1999, Advanced Wireless Systems, Inc. (the Company) purchased
all of the assets of Dibbs Internet Services, Inc. (Dibbs), an Alabama
corporation, an Internet service provider in Mobile, Alabama, for a
purchase price of $225,000. Dibbs provided Internet services to
approximately 730 Internet customers in the Mobile metropolitan area via
dial-in telephone line access. The Company will continue offering Dibbs
customers the telephonic Internet service that they have now, and will also
offer them the opportunity to convert to use of high speed wireless Internet
service.
The Company acquired the Dibbs assets used in the operation of its Internet
service, including its equipment, software, and the right to use the Dibbs
trade name, for $225,000 cash, paid in full on August 25, 1999, to Dibbs and
its sole shareholder and president, Diane Summers. The Company did not
assume any liabilities of Dibbs in the transaction.
The assets purchased include the equipment necessary to service the Dibbs
subscribers, including three computers, two network hubs, a Cisco 2500
router, software, a backup power supply and other network accessories. Dibbs
services 730 subscribers, who use 56k, 64k or 128k ISDN telephone services
and e-mail dial-up services. The Dibbs basic service begins at $19.95 per
month. The subscriber base includes 58 domains and 47 commercial websites.
The asset purchase agreement includes a two year non-competition clause in
which Dibbs and Ms. Summers agree not to compete with our Company in
providing Internet services within a 75 mile radius of Mobile for two years.
Ms. Summers also agreed to provide consulting services to the Company, to
help it take over and operate the Dibbs business, for up to 60 days after the
purchase, for $1,200 per week.
The pro forma balance sheet at June 30, 1999, has been prepared assuming that
the business acquisition was consummated on June 30, 1999. The pro forma
statements of operations for the year and six months ended December 31, 1998,
and June 30, 1999, respectively, have been prepared assuming that the
Business Acquisition was consummated on January 1, 19998, and January 1,
1999, respectively.
The preparation of the pro forma financial statements is based on certain
adjustments to the historical financial statements of the Company and the
historical statements of revenues and direct operating expenses of the
acquired business and are not necessarily indicative of the financial
position or results of operations had the above-described business
acquisition occurred on the assumed date. These pro forma financial
statements should be read in conjunction with the financial statements of the
acquired business and of the Company contained in this registration
statement.
NOTE 2 - PRO FORMA ADJUSTMENTS
Pro forma entries necessary to adjust the historical financial statements are
as follows:
- Adjustment to record the acquisition of Dibbs assets at June 30,
1999, including fixed assets valued at $45,250, non-compete
agreement valued at $2,500, and purchased goodwill valued at
$177,250 for cash of $225,000.
- Adjustments to record historical revenues and direct operating
expenses of Dibbs Internet for the period indicated.
- Adjustments to record pro forma depreciation expense as follows:
Fixed Assets: 5 years straight line
Goodwill: 20 years straight line
Non-compete Agreement: 2 years straight line
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