UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUATERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30,2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________ to______________
Commission File No. 33-55254-01
W-WAVES USA, INC.
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(formerly Arrow Management, Inc.)
(Exact name of Registrant as specified in its charter)
NEVADA 87-0467339
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(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2620 TransCanada Highway
Pointe-Claire (Quebec) Canada H9R 1B1
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(Address of principal executive offices) (Postal Code)
Registrant's telephone number. Including area code (514) 697-9966 ext. 230
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Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
Class Outstanding as of November 6, 2000
$.001 PAR VALUE CLASS A COMMON STOCK 11,030,700 SHARES
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
BASIS OF REPRESENTATION
General
The accompanying unaudited consolidated financial statements include the
following corporations: W-Waves USA, Inc.(Nevada), W-Waves USA, Inc. (Delaware),
XD-Lab R&D Inc., White Wolf Audio Video Electronic Systems Inc. and its
wholly-owned subsidiary Radison Acoustique Ltee. They have been prepared in
accordance with the instructions to Form 10-Q and therefore, do not include all
information and footnotes necessary for a complete presentation of financial
position, results of operations, cash flows and stockholder's equity in
conformity with generally accepted accounting principles. In the opinion of
management, all adjustments considered necessary for a fair presentation of the
results of operations and financial position have been included and all such
adjustments are of a normal recurring nature. Operating results for the quarter
ended June 30, 2000, are not necessarily indicative of the results that can be
expected for the year ending December 31, 2000.
Due to the Plan of Reorganization made in November 19, 1999 and the
Development Stage of the company, no comparative figures are presented as it
would not provide valuable information for decision making.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Nature of business
W-Waves USA, Inc. is focused on the development and commercialization of
innovative sound enhancement technologies and products which are currently the
subject of patent pending applications. The Company operates primarily through
two wholly-owned Canadian subsidiaries, White Wolf Audio Video Electronic
Systems Inc. and Radison Acoustique Ltee., a subsidiary of White Wolf. Both are
located in Pointe-Claire, Quebec, Canada, and are engaged in complementary
aspects of audio and video research and engineering. W-Waves USA Inc. shares are
traded on the NASDAQ Bulletin Board under the symbol WAVSA.
Forward-looking Statements
The management strongly believes in the business potential of the new
products developed by W-Waves USA Inc. for the electronic markets, either for
new products or for products that enhance the installed base of stereophonic
equipment. However, due to the early stage of W-Waves USA Inc. technology and to
the competition, the management cannot assure the financial success of this
operation.
Results of Operations
The Company had net loss of $639,884 for the three-month period ended June
30, 2000. During that period, the company was still improving its range of
products in order to be marketable and produced at the lowest possible cost. The
range of products was also presented in trade shows and to specific
manufacturers where it received favorable evaluation. Total costs and operating
expenses in the amount of $639,761 include research and development, intensive
marketing efforts and relocation expenses to its new principal office located in
Pointe-Claire, Quebec, Canada. No deferred tax assets have been accounted
because of uncertainties to assure its realization.
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Liquidity and Capital Resources
Net current assets as at June 30, 2000 were $(685,608). The deficit is
explained by the accumulated loss of the startup phase and the acquisition of
Radison, a wholly-owned subsidiary of White Wolf Inc. It is financed mainly by
the accounts payable and by Bear Bay Management (Caribbean) Inc. under an
agreement to lend money to W-Waves USA Inc. up to 1,000,000 USD, at an annual
interest rate of 6% with a maturity date of October 31st, 2000. The default
clause for not repaying the due amount on said maturity includes the issuance of
new shares to Bear Bay Management Caribbean (Inc.) at a fixed price of US $2.00
(two dollars US). As a penalty, W-Waves USA Inc. will also have the obligation
to issue as many warrants as shares to be issued with the following attached
characteristics:
Strike Price 1 new share at a fixed price of US $ 2.50 (two dollars
and fifty cents US ) for 1 warrant.
Payment: In cash
Availability of shares: at any times on warrants holder decision but not later
than December 31st, 2005
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company has no market risk sensitive instruments or market risk
exposures.
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W-WAVES USA, INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET (UNAUDITED)
AS AT JUNE 30, 2000
June 30 December 31
2000 1999
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ASSETS
CURRENT ASSETS
Cash and cash equivalent $ 4,098 $ 27,197
Accounts receivable 13,399 19,752
Inventory 45,784 37,686
Prepaid expenses and other current assets 37,684 3,090
Goodwill, net 149,115 169,624
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250,080 257,349
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BUILDING AND EQUIPMENT, net 112,687 82,407
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OTHER ASSETS
Trade marks, patents 9,037 2,154
Advance on royalties 23,086 9,373
Organization costs 1,786 1,815
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33,909 13,342
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$ 396,676 $ 353,098
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June 30 December 31
2000 1999
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LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities 773,495 $ 102,564
Income taxes payable 1,568 1,561
Current portion of long-term obligations 1,000 1,636
Note payable - Acquisition 91,259 131,242
Note payable - related corporation 68,366 792,957
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935,688 1,029,960
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LONG-TERM DEBT OBLIGATIONS 48,941 50,879
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MINORITY INTEREST IN SUBSIDIARY 159,214 159,214
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STOCKHOLDER'S EQUITY
Common stock 11,031 11,031
Additional paid-in-capital 1,050,000 --
Accumulated deficit (1808,198) (897,986)
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(747,167) (886,955)
396,676 $ 353,098
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W-WAVES USA, INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT (UNAUDITED)
FOR THE PERIOD JANUARY 1, 2000 TO JUNE 30,2000
From April 1 From January 1
2000 2000
To June 30 to June 30
2000 2000
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REVENUE $ 17,967 $ 31,276
COST OF SALES 18,090 39,284
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(123) (8,008)
COSTS AND OPERATING EXPENSES 639,761 902,204
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LOSS FROM OPERATIONS (639,884) (910,212)
INCOME TAXES 0 0
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NET LOSS (639,884) (910,212)
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DEFICIT - BEGINNING OF YEAR 897,986
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DEFICIT - END OF YEAR $ (1,808,198)
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NET LOSS PER WEIGHTED AVERAGE COMMON SHARE (0.08)
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WEIGHTED AVERAGE NUMBER OF COMMON SHARES
USED TO COMPUTED NET LOSS 11,030,700
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W-WAVES USA, INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
(UNAUDITED)
FOR THE PERIOD JANUARY 1, 2000 TO JUNE 30, 2000
Common Stock
Par Value $0.001
Shares Amount
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Balance 12/31/1999 11,030,700 $ 11,031
Balance 06/30/2000 11,030,700 $ 11,031
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NET CHANGE 0 0
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W-WAVES USA, INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE PERIOD JANUARY 1 TO JUNE 30, 2000
From April 1 From January 1
2000 2000
To June 30 to June 30
2000 2000
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OPERATING ACTIVITIES
NET LOSS $ (639,884) $ (910,212)
ADJUSTMENT TO RECONCILE NET INCOME LOSS TO
NET CASH PROVIDED BY OPERATING ACTIVITIES
DEPRECIATION AND AMORTIZATION 12,958 35,194
ACCOUNTS RECEIVABLE (1,772) 6,353
OTHER ASSETS (50,661) (56,376)
FOREIGN EXCHANGE IMPACT ON GOODWILL 2,596 (657)
ACCOUNTS PAYABLE AND OTHER LIABILITIES 710,016 670,302
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33,253 (255,396)
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INVESTING ACTIVITIES
ACQUISITION OF EQUIPMENTS AND LEASEHOLDS (27,230) (38,325)
TRADE MARKS AND PATENTS (2,119) (12,866)
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(29,349) (51,191)
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FINANCING ACTIVITIES
LONG TERM DEBT (3,503) (1,938)
NOTE PAYABLE -
ACQUISITION (1,620) (39,983)
NOTE PAYABLE - RELATED CORPORATIONS (12,943) (724,591)
ADDITIONAL PAID-IN CAPITAL ON COMMON SHARES 1,050,000
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(18,066) 283,488
NET CHANGE IN CASH AND CASH EQUIVALENT (14,162) (23,099)
CASH AND CASH EQUIVALENTS
BEGINNING OF PERIOD 18,260 27,197
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END OF PERIOD $ 4,098 $ 4,098
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
W-WAVES USA, INC.
/s/ Victor Lacroix
Dated November 6, 2000 ------------------------------------------
Victor Lacroix, President CEO and Director