================================================================================
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 MARCH 31, 2004
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to _______________
Commission File Number: 0-20999
CHADMOORE WIRELESS GROUP, INC.
--------------------------------
(Exact name of small business issuer as specified in its charter)
COLORADO 84-1058165
---------------------------- --------------
(State of other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
2458 EAST RUSSELL ROAD, SUITE B, LAS VEGAS, NEVADA 89120
--------------------------------------------------------
(Address of principal executive offices)
(702) 740-5633
--------------
(Issuer's telephone number)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports 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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required by Section
12, 13 or 15(d) of the Exchange Act after the distribution of securities under a
plan confirmed by a court.
Yes [ ] No [ ]
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:
1
AS OF MAY 12, 2004 ISSUER HAD 47,736,006 SHARES OF COMMON STOCK, $.001 PAR
VALUE, OUTSTANDING.
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE): Yes [ ] No [X]
================================================================================
2
================================================================================
INDEX
PART I - FINANCIAL INFORMATION PAGE
ITEM 1. FINANCIAL STATEMENTS
Consolidated Statement of Net Assets in Liquidation as of March 31, 2004 and December 31, 4
2003
Consolidated Statement of Changes in Net Assets in Liquidation for the Three Months Ended 5
March 31, 2004 and 2003
Condensed Notes to Unaudited Interim Consolidated Financial Statements 6-12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF LIQUIDATION 12-13
ITEM 3. CONTROLS AND PROCEDURES 13
PART II - OTHER INFORMATION 14
ITEM 1. LEGAL PROCEEDINGS 14
ITEM 2E. DISCLOSURE OF ANY REPURCHASE OF COMPANY STOCK 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 15
SIGNATURES 16
CERTIFICATIONS 17-19
3
CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
Consolidated Statement of Net Assets in Liquidation
as of March 31, 2004 and December 31, 2003
(amounts in thousands)
March 31, Dec. 31,
2004 2003
(unaudited)
--------------- ------------------
ESTIMATED VALUES OF ASSETS OF THE COMPANY
Cash and cash equivalents 14,367 18,341
Accounts receivable, net 7 17
Other receivables, net 766 760
Other assets, net 182 250
Estimated proceeds from sale of partnerships -- 100
Estimated future interest income 310 349
--------------- ------------------
Total estimated assets 15,632 19,817
--------------- ------------------
ESTIMATED LIABILITIES OF THE COMPANY
Notes payable 433 3,199
Accounts payable and accrued liabilities 345 305
Federal income taxes payable -- 1,137
--------------- ------------------
Total estimated liabilities 778 4,641
--------------- ------------------
ESTIMATED FUTURE OPERATING COSTS and SETTLEMENT
RESERVES DURING LIQUIDATION PERIOD 9,132 9,084
--------------- ------------------
NET ASSETS IN LIQUIDATION $ 5,722 $ 6,092
=============== ==================
See accompanying condensed notes to unaudited interim consolidated
financial statements.
4
CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Changes in Net Assets in Liquidation
For the Three Months Ended March 31, 2004 and 2003
(amounts in thousands)
For the three months
ended
--------------------------------
March 31, March 31,
2004 2003
---------------- ---------------
Estimated net assets in liquidation
as of December 31, 2003 and 2002
respectively $ 6,092 $ 14,229
Net loss from operations during
liquidation (98) (46)
Settlement of litigation 29 --
Adjustment for minority interests -- 7
Change in Estimate of:
Other assets, net (53) --
Future operating costs during
liquidation period (248) (51)
Value of assets held for sale -- 13
Cash distribution to shareholders -- (4,219)
---------------- ---------------
Net Assets in Liquidation $ 5,722 $ 9,907
--------------- ---------------
See accompanying condensed notes to unaudited interim consolidated
financial statements.
5
CHADMOORE WIRELESS GROUP, INC. AND SUBSIDIARIES
Condensed Notes to Unaudited Interim Consolidated Financial Statements
March 31, 2004
NOTE 1 - BASIS OF PRESENTATION
Chadmoore Wireless Group, Inc. ("Chadmoore") was a holder of frequencies in the
United States in the 800 megahertz band for commercial specialized mobile radio
service.
On January 28, 2002, holders of Chadmoore common stock approved the asset sale
to Nextel Communications, Inc. ("Nextel"), the dissolution of Chadmoore and a
Plan of Liquidation (the "Plan"). On February 8, 2002, Chadmoore closed the sale
of substantially all of its assets to Nextel for $130 million in cash. Net
proceeds to Chadmoore were approximately $108 million after the payoff of
Barclays Bank debt. On February 22, 2002, Chadmoore filed its Articles of
Dissolution, closed its stock transfer record book, de-listed its shares from
the over-the-counter bulletin board and began an orderly wind-up of its business
operations. The key features of the Plan are
o the conclusion of all business activities, other than those related to
the execution of the Plan
o the sale or disposal of all of Chadmoore's non-cash assets
o the establishment of reasonable reserves to be sufficient to satisfy
the liabilities, expenses and obligations of Chadmoore not otherwise
paid, provided for or discharged
o the periodic payment of per share liquidating distributions to
shareholders; and
o the authorization of the filing of a Certificate of Dissolution with
the State of Colorado.
As a result of the adoption of the Plan, Chadmoore adopted the liquidation basis
of accounting effective January 29, 2002. This basis of accounting is considered
appropriate when, among other things, liquidation of a company is probable and
the net realizable value of assets are reasonably determinable. Under this basis
of accounting, assets are valued at their estimated net realizable value, and
liabilities are stated at their estimated settlement amounts. The ongoing
application of the liquidation basis of accounting requires management to make
significant estimates and judgments. The amount and timing of future liquidating
distributions will depend upon a variety of factors including, but not limited
to, the ultimate settlement amounts of Chadmoore's liabilities and obligations,
actual costs incurred in connection with carrying out the Plan including
administrative costs during the liquidation period, and the time frame it takes
to complete the liquidation.
The accompanying financial statements, notes and discussions should be read in
conjunction with the consolidated financial statements, related notes and
discussions contained in Chadmoore's annual report on Form 10-KSB for the year
ended December 31, 2003.
The interim financial information contained herein is unaudited; however, in the
opinion of management, all adjustments necessary for the fair presentation of
such financial information on a liquidation basis have been included.
6
NOTE 2 - LIQUIDATION BASIS OF ACCOUNTING
Immediately following the sale of substantially all of its assets on February 8,
2002, Chadmoore began an orderly wind-down of its operations. The conversion
from the going concern to liquidation basis of accounting has required
management to make significant estimates and judgments. In order to record
assets at estimated net realizable value and liabilities at estimated settlement
amounts under liquidation basis accounting, Chadmoore recorded the following
adjustments to record its assets and liabilities at fair value as of January 29,
2002, the date of adoption of liquidation basis accounting (all values in
thousands).
Assets held for sale adjusted to estimated fair value $ 76,912
Estimated future interest income 1,719
Expected proceeds from sale of partnerships
net of minority interests 2,315
Adjust notes payable to expected payment amount 500
Accrual of cumulative preferred dividends (574)
Estimated future operating costs and settlement
reserves during liquidation (23,877)
------------
$ 56,995
============
No adjustments have been recorded for future estimated operating results of the
remaining partner markets due to the inherent uncertainties. Actual operating
results are recorded as a change in net assets in liquidation when earned or
incurred. Based on these adjustments, net assets increased by $56,995.
The preparation of financial statements requires management to make certain
estimates and assumptions that affect the net realizability of assets and
estimated costs to be incurred during the liquidation period and disclosure of
contingent assets and liabilities at the date of the financial statements. These
estimates are imprecise and subject to change, among other things, the estimates
may be based on assumption about future conditions, transactions, or events
whose outcome is uncertain. It is likely, therefore, that the actual outcome and
settlement of assets and liabilities through completion of the Plan will differ
from management's estimates, and those differences may be significant.
ESTIMATED VALUES OF ASSETS OF THE COMPANY
The estimated assets of Chadmoore that are set forth in the March 31, 2004
"Consolidated Statement of Net Assets in Liquidation" have been presented on the
following basis:
(a) Chadmoore classifies as cash and cash equivalents amounts on
deposit in banks and cash invested temporarily in various
instruments, with maturities of three months or less at time of
purchase. Cash and cash equivalents are stated at fair value.
7
Generally, cash balances held in financial institutions may be in
excess of federally insured amounts.
(b) Estimated future interest income was estimated by management based
upon future expected cash flows. Actual interest income will
likely differ from management's current estimate.
(c) The estimated proceeds from sale of partnerships represent the
amount of net proceeds expected from the sale of the partnership
interests. All partnership interests have been sold as of March
31, 2004.
(d) Other assets, net, represent primarily prepayments on future
operating costs and cash held in escrow. (e) Accounts and other
receivables, net, are carried at their expected collectible
amounts.
ESTIMATED LIABILITIES OF THE COMPANY
The estimated liabilities of Chadmoore that are set forth in the March 31, 2004
"Consolidated Statement of Net Assets in Liquidation" has been presented on the
following basis:
(a) Notes payable represent non-interest bearing amounts owed in
connection with license commissions, the purchase of assets and
the purchase of licenses from licensees and are recorded at their
estimated settlement amounts.
(b) Accounts payable and accrued liabilities include all amounts that
remain unpaid for liquidation activities and remaining partnership
operations.
(c) Federal income taxes payable represented taxes due for the year
ended December 31, 2002. Because of the continuing operating
expenses involved in managing the plan of liquidation, and
expectations of limited gains from operations and interest income,
Chadmoore does not believe that there will be future federal
income taxes due beyond the year ended December 31, 2002, and
believes that the amount of future minimum state taxes due will
not be significant. In addition, refunds, if any, resulting from
the carrying back of future taxable losses are not expected to be
significant. Accordingly, Chadmoore has not recorded a specific
accrual outside of a general reserve for known and unknown
obligations of the company or for proceeds due the company.
The amount and timing of future liquidating distributions will depend upon a
variety of factors including, but not limited to, the actual proceeds from the
realization of Chadmoore's assets, the ultimate settlement amounts of
Chadmoore's liabilities and obligations, actual costs incurred in connection
with carrying out the Plan, including salaries, administrative and operating
costs during the liquidation period, resolution of uncertainties and litigation,
and the timing of the liquidation and dissolution. A summary of significant
estimates and judgments utilized in preparation of the March 31, 2004
consolidated financial statements on a liquidation basis follows:
Estimated future interest income
8
At March 31, 2004, the estimated value of future interest income
represented about 5.4% of Chadmoore's estimated net assets in
liquidation. The estimated future interest income of $310,000 on
Chadmoore's cash holdings represents management's estimate of future
interest earnings based on current (1.00% annual rate at April 1, 2004)
market rates of interest over the remaining liquidation period.
Estimated future operating costs and settlement reserves during the
liquidation period.
Chadmoore recorded amounts for estimated future operating costs during
liquidation and for settlement reserves on January 29, 2002, when the
Company adopted the liquidation basis of accounting. The table
presented below summarizes the estimated amounts as of December 31,
2003 and changes in estimates and, the actual costs that have been
incurred and paid during the period from January 1, 2004 through March
31, 2004. During the quarter ended March 31, 2004, Chadmoore recorded a
change in estimate of $420,000 to compensation for liquidation
personnel to reflect an amendment to the employment contracts of key
executive officers and to record estimated additional personnel
expenses associated with researching background information for pending
litigation. In addition, Chadmoore reduced its estimated expenses for
insurance, utilities and facility expenses by $172,000 to reflect
anticipated expenses through completion of the liquidation period.
As of Change in Incurred As of
Dec. 31, 2003 estimates and paid Mar. 31, 2004
during period
----------------- ----------------- ------------- --------------
Compensation for
liquidation personnel $ 344 $ 420 $ (141) $ 623
Insurance, utilities and
facility expenses 291 (172) (34) 85
Legal, audit and other
professional fees 446 -- (25) 421
General contingency
reserve 8,003 -- -- 8,003
----------------- ----------------- ------------- --------------
Total estimated future
operating costs and
settlement reserves $ 9,084 $ 248 $ (200) $ 9,132
================= ================= ============= ==============
In view of the expected duration of the liquidation period until February 22,
2007, and the provision in Colorado law that Chadmoore maintain reserves
sufficient to allow for the payment of all its liabilities and obligations,
including all known and unknown contingent claims, Chadmoore established a
general contingency reserve upon the adoption of liquidation basis accounting on
January 29, 2002. The amount of the reserve initially established was $9.7
million and is $8.0 million at March 31, 2004.
The majority of this general reserve at March 31, 2004, $7.0 million, relates to
contingencies involving the resolution of various federal taxation issues. Other
matters covered by this reserve include existing litigation and claims,
settlement of existing liabilities, and a general reserve for
9
currently unidentified contingencies and unasserted claims. This reserve has
been established for matters for which there is insufficient information upon
which management can reasonably estimate a settlement amount, or where the
ultimate settlement amount will be based on future events which management
cannot reasonably predict at this time. The outcome of these contingencies may
involve litigation, the ultimate outcome of which cannot be determined at this
time. Accordingly, management has provided the reserve at the estimated maximum
possible settlement amount.
As a result of the uncertainty regarding the estimates associated with the
general contingency reserve, it is likely that the actual outcome of the
resolution of these contingencies will differ from management's estimates at
this time, and those differences may be significant. In addition, since the
resolution of these matters will inevitably involve procedural, and probably
judicial proceedings, it is likely that the resolution of the majority of these
contingencies will not occur in the near term. As more information becomes
available to management, and as future resolution of events regarding these
contingencies occur, management will adjust the general contingency reserve
appropriately, if needed. See Note 3 - Commitments and Contingencies for further
discussion.
NOTE 3 - COMMITMENTS AND CONTINGENCIES
In late September, 2002, Chadmoore received a letter from Cindy Ashcroft,
principal of Ashcroft ITV ("Ashcroft") seeking payment for licenses which
Ashcroft purports were transferred to Chadmoore. Ashcroft requested, through its
letter, a payment in excess of $4 million from Chadmoore for the subject
licenses, or alternatively a further explanation from the Company as to why such
a payment would not be forthcoming. Chadmoore has reviewed its files and
Chadmoore management, along with outside counsel, has analyzed the matter at
considerable length. Upon review of the evidence in the light most favorable to
Ashcroft, Chadmoore believes that it could potentially be liable to Ashcroft for
approximately $23,750 in license payments. On the other hand, the Company
believes it has a valid counterclaim for approximately $89,000 against Ashcroft
for interim management fees earned while the Company managed and operated
Ashcroft's licensed facilities in order to keep them in compliance with FCC
requirements. In late 2001, the Company suggested to Ms. Ashcroft that a direct
meeting between the parties take place as promptly as practicable to resolve
this matter. At this time, management has received no reply from Ms. Ashcroft.
While Chadmoore cannot forecast the ultimate outcome of this matter, based on
management's review of the files and Ashcroft's request, as well as internal
conferences and conferences with outside counsel regarding this matter, the
Company believes that the possibility that this matter will have a substantial
adverse impact on the Company is remote.
On March 13, 2003, American Tower Corporation ("American Tower") submitted to
Chadmoore a notice of default under several license agreements which existed
earlier between American Tower and Chadmoore. American Tower sought immediate
payment of an outstanding balance of approximately $234,000. On March 19, 2003,
Chadmoore formally responded to American
10
Tower's notice, rejected its demand, and indicated that Chadmoore believes it
has no legal duty to continue to make any payments to American Tower on the
basis of the agreements. Subsequently, on May 23, 2003, American Tower filed
suit in the Clark County Nevada District Court seeking redress for its claims of
breach of contract, without specifying the damages sought. Chadmoore timely
filed its answer on June 16, 2003 denying American Tower's claims. The parties
have exchanged pre-trial documentation and witness lists for discovery purposes.
Discovery is currently ongoing. A jury trial is set for the week of April 4,
2005. Currently, management cannot forecast the actual outcome of this item, nor
can it provide a timetable for when this matter will be concluded.
Chadmoore may also be subject to various legal proceedings and claims that may
arise during liquidation. Chadmoore currently believes that any such proceedings
and potential claims will not have a material adverse impact on Chadmoore's
estimate of net assets in liquidation.
NOTE 4- RELATED PARTY TRANSACTIONS
On January 15, 2003, Chadmoore entered into a two-year sublease with a limited
liability company owned by Robert W. Moore, president and chief executive
officer. Under the term of the sublease, Chadmoore will co-use with two other
tenants approximately 2,290 total square feet of rentable floor area at a base
rent of $1,035 per month plus one third of utilities and other normal and
ordinary expenses. The two-year sublease expires January 14, 2005.
During February 2004, the employment agreements for Robert W. Moore, Rick Rhodes
and Stephen K. Radusch were amended as the resolution of Chadmoore's outstanding
liabilities and the sale of partnership assets has taken longer than
anticipated. Additionally, Chadmoore remains subject to the reporting
requirements of the Securities Exchange Act of 1934. Accordingly, the board of
directors determined that the above employees' services would be needed for
longer than the initial employment agreements contemplated.
The employment agreements for Messrs. Moore and Radusch were amended so that
each will continue as an executive officer of Chadmoore and continue to receive
75% of his annual salary until at least 30 days after the Securities and
Exchange Commission grants relief from making filings under the Securities
Exchange Act of 1934, unless the agreement is earlier terminated by either
party.
Once relief is granted by the Securities and Exchange Commission, this
employment agreement for Messrs. Moore and Radusch will be automatically
extended for a one-year period at the annual rate of $90,000. Upon expiration of
this one year term, the employment agreements will be automatically extended
until February 22, 2007, unless terminated by either party. During this final
stage of employment, Mr. Moore and Mr. Radusch will be paid $6,500 and $6,000
per month, respectively. Mr. Rhodes employment agreement was extended through
November 8, 2003, at which time he resigned from Chadmoore as Chief Regulatory
Officer and Secretary. Mr. Rhodes, per his employment agreement, will provide
services to Chadmoore on an as needed basis until November 8, 2004. For this, he
will receive $7,500 per month.
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND STATUS
OF LIQUIDATION
Statements contained herein that are not historical facts are forward-looking
statements as that term is defined by the Private Securities Litigation Reform
Act of 1995. These statements contain words such as "intends", "plan", "future",
"will", "anticipates", and "believes" and include statements regarding
Chadmoore's dissolution and liquidation. Although Chadmoore believes that the
expectations reflected in such forward-looking statements are reasonable, the
forward-looking statements are subject to risks and uncertainties that could
cause actual results to differ from those projected. Chadmoore cautions
investors that any forward-looking statements made by Chadmoore are not
guarantees of future performance and that actual results may differ materially
from those in the forward-looking statements. See Chadmoore's annual report on
Form 10-KSB for the year ended December 31, 2003.
PLAN OF OPERATIONS FOR DISSOLUTION
Chadmoore is continuing to wind up its affairs as quickly and as efficiently as
possible to maximize the liquidating distributions to all shareholders.
Chadmoore's goal is to minimize the length of time necessary to resolve or
satisfy its known liabilities while also minimizing the risks to shareholders by
conserving corporate assets.
In order to reduce liquidation costs, Chadmoore's full-time staff has been
reduced to two remaining officers who will handle all remaining liquidation
issues. Under Colorado law, Chadmoore will remain in existence as a
non-operating entity for five years from February 22, 2002 and will maintain
liquid assets to cover any remaining liabilities and pay operating costs during
the dissolution period. During the dissolution period, Chadmoore will attempt to
convert its remaining assets to cash and settle its liabilities as expeditiously
as possible.
STATUS OF LIQUIDATION
On February 8, 2002, Chadmoore sold substantially all of its assets to Nextel
Communications, Inc. ("Nextel") for $130 million in cash resulting in a gain of
about $88 million, terminated its operations and began an orderly liquidation of
Chadmoore, including laying off most of its employees. Chadmoore adopted the
liquidation basis of accounting effective January 29, 2002, whereby assets are
recorded at their estimated net realizable values, liabilities are recorded at
their estimated settlement amounts and a reserve has been provided for potential
claims. The valuation of assets and liabilities requires many estimates and
assumptions by management and actual values may vary greatly from estimates. The
majority of Chadmoore's assets have been liquidated and the amounts and timing
of future liquidating distributions will depend upon a variety of factors
including, but not limited to, the ultimate settlement amounts of Chadmoore's
liabilities and obligations, actual cost incurred in connection with carrying
out the Plan including administrative costs during the liquidation period, and
the time frame it takes to complete the liquidation.
12
LIQUIDITY AND CAPITAL RESOURCES
Chadmoore's primary objectives are to liquidate its assets in the shortest time
period possible while realizing the maximum values set these assets and to
settle all claims on terms most favorable to Chadmoore. The liquidation is
expected to be concluded prior to the fifth anniversary of the filing of the
Certificate of Dissolution in Colorado by a final liquidating distribution
directly to shareholders of record. The initial cash distribution to
shareholders under the Plan was made on July 12, 2002 in the aggregate amount of
$22.7 million, or about $.3323 per equivalent share. On February 28, 2003,
Chadmoore made a second distribution of cash to shareholders in the aggregate
amount of $4.2 million, or $.0620 per equivalent share, was initiated. On
December 5, 2003, a third distribution of cash in the aggregate amount of $7
million, or $.1014 per share, was made to shareholders of record. As of May 12,
2004, Chadmoore has distributed an aggregate of about $34 million, or $.4957 per
equivalent share. Remaining net assets available for distribution to
shareholders as of March 31, 2004 are currently estimated to be about $5.7
million.
ITEM 3. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES.
Chadmoore, under the supervision and with the participation of its management,
including its Chief Executive Officer and Chief Financial Officer, carried out
an evaluation of the effectiveness of the design and operation of Chadmoore's
disclosure controls and procedures as of March 31, 2004 (the "Evaluation Date").
Based upon this evaluation, the Chief Executive Officer and Chief Financial
Officer concluded as of the Evaluation Date that Chadmoore's disclosure controls
and procedures were effective for purposes of recording, processing, summarizing
and timely reporting material information required to be disclosed in reports
that it files under the Exchange Act.
CHANGES IN INTERNAL CONTROLS.
There were no changes in our internal control over financial reporting that
occurred during our quarter ended March 31, 2004 that has materially affected or
is reasonably likely to materially affect, our internal control over financial
reporting.
13
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In late September, 2002, Chadmoore received a letter from Cindy Ashcroft,
principal of Ashcroft ITV ("Ashcroft") seeking payment for licenses which
Ashcroft purports were transferred to Chadmoore. Ashcroft requested, through its
letter, a payment in excess of $4 million from Chadmoore for the subject
licenses, or alternatively a further explanation from the Company as to why such
a payment would not be forthcoming. Chadmoore has reviewed its files and
Chadmoore management, along with outside counsel, has analyzed the matter at
considerable length. Upon review of the evidence in the light most favorable to
Ashcroft, Chadmoore believes that it could potentially be liable to Ashcroft for
approximately $23,750 in license payments. On the other hand, the Company
believes it has a valid counterclaim for approximately $89,000 against Ashcroft
for interim management fees earned while the Company managed and operated
Ashcroft's licensed facilities in order to keep them in compliance with FCC
requirements. In late 2001, the Company suggested to Ms. Ashcroft that a direct
meeting between the parties take place as promptly as practicable to resolve
this matter. At this time, management has received no reply from Ms. Ashcroft.
While Chadmoore cannot forecast the ultimate outcome of this matter, based on
management's review of the files and Ashcroft's request, as well as internal
conferences and conferences with outside counsel regarding this matter, the
Company believes that the possibility that this matter will have a substantial
adverse impact on the Company is remote.
On March 13, 2003, American Tower Corporation ("American Tower") submitted to
Chadmoore a notice of default under several license agreements, which existed
earlier between American Tower and Chadmoore. American Tower sought immediate
payment of an outstanding balance of approximately $234,000. On March 19, 2003,
Chadmoore formally responded to American Tower's notice, rejected its demand,
and indicated that Chadmoore believes it has no legal duty to continue to make
any payments to American Tower on the basis of the agreements. Subsequently, on
May 23, 2003, American Tower filed suit in the Clark County Nevada District
Court seeking redress for its claims of breach of contract, without specifying
the damages sought. Chadmoore timely filed its answer on June 16, 2003 denying
American Tower's claims. The parties have exchanged pre-trial documentation and
witness lists for discovery purposes. Discovery is currently ongoing. A jury
trial is set for the week of April 4, 2005. Currently, management cannot
forecast the actual outcome of this item, nor can it provide a timetable for
when this matter will be concluded.
Chadmoore may also be subject to various legal proceedings and claims that may
arise during liquidation. Chadmoore currently believes that any such proceedings
and potential claims will not have a material adverse impact on Chadmoore's
estimate of net assets in liquidation.
14
ITEM 2E. DISCLOSURE OF ANY REPURCHASE OF COMPANY STOCK
There were no repurchases of Chadmoore common stock during the three months
ended March 31, 2004.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
31.1 Certification of Chief Executive Officer pursuant to Rule
13a-14a and 15d-14a.
31.2 Certification of Chief Financial Officer pursuant to Rule
13a-14a and 15d-14a.
32.0 Certification pursuant to Section 1350
(b) None
15
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Chadmoore Wireless Group, Inc.
By: /s/ STEPHEN K. RADUSCH
-------------------------------------
Stephen K. Radusch
Chief Financial Officer
(Principal Financial and Accounting
Officer)
Date: May 12, 2004
16