UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 6-K
Report of Foreign issuer
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
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For the Month of November 2003
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(Commission File. No 0-30718).
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SIERRA WIRELESS, INC., A CANADA CORPORATION
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(Translation of registrant's name in English)
13811 Wireless Way
Richmond, British Columbia, Canada V6V 3A4
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(Address of principal executive offices and zip code)
Registrant's Telephone Number, including area code: 604-231-1100
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F:
Form 20-F X 40-F
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Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934:
Yes: No: X
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AIRPRIME, INC.
STATEMENTS OF OPERATIONS AND DEFICIT
(Expressed in thousands of United States dollars, except per share amounts)
(Prepared in accordance with United States
generally accepted accounting principles (GAAP))
(Unaudited)
Six months ended June 30, 2003 2002
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Revenue............................................... $ 15,248 $ 7,483
Cost of goods sold.................................... 9,963 4,562
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Gross margin.......................................... 5,285 2,921
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Expenses
Sales and marketing................................. 724 1,410
Research and development, net....................... 4,209 7,250
Administration...................................... 1,555 2,768
Amortization........................................ 1,100 1,014
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7,588 12,442
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Loss from operations.................................. (2,303) (9,521)
Other income (expense)................................ (1,340) 139
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Net loss.............................................. (3,643) (9,382)
Dividends on preferred stock.......................... -- (755)
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Net loss allocable to common shareholders............. (3,643) (10,137)
Deficit, beginning of period.......................... (87,908) (70,188)
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Deficit, end of period................................ $(91,551) $(80,325)
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See accompanying notes to financial statements.
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AIRPRIME, INC.
BALANCE SHEET
(Expressed in thousands of United States dollars)
(Prepared in accordance with United States GAAP)
June 30,
2003
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(Unaudited)
ASSETS
Current assets
Cash and cash equivalents..................................... $ 1,105
Restricted cash............................................... 1,000
Accounts receivable........................................... 3,313
Inventories................................................... 406
Other current assets.......................................... 197
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6,021
Fixed assets.................................................... 1,571
Intangible assets............................................... 329
Other........................................................... 2,187
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$ 10,108
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable.............................................. $ 4,061
Accrued liabilities........................................... 2,202
Deferred revenue.............................................. 200
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6,463
Long-term liabilities........................................... 6,139
Shareholders' equity
Share capital................................................. 89,057
Deficit....................................................... (91,551)
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(2,494)
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$ 10,108
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Contingencies (note 3).
See accompanying notes to financial statements.
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AIRPRIME, INC.
STATEMENT OF SHAREHOLDERS' EQUITY
(Expressed in thousands of United States dollars)
(Prepared in accordance with United States GAAP)
Additional Accumulated
Junior Common Stock Paid-in Capital Deficit Total
------------------- --------------- ----------- -------
Shares Amount
Balances at December 31, 2002...... 19,759 $-- $89,057 $(87,908) $ 1,149
Net loss......................... -- -- -- (3,643) (3,643)
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Balances at June 30, 2003.......... 19,759 $-- $89,057 $(91,551) $(2,494)
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See accompanying notes to financial statements.
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AIRPRIME, INC.
STATEMENTS OF CASH FLOWS
(Expressed in thousands of United States dollars)
(Prepared in accordance with United States GAAP)
(Unaudited)
Six months ended June 30, 2003 2002
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Cash flows from operating activities:
Net loss for the period.............................. $(3,643) $ (9,382)
Adjustments to reconcile net loss to net
cash provided by operating activities
Amortization....................................... 1,100 1,014
Series C preferred stock issued for services....... -- 20
Common stock issued for services................... -- 15
Changes in operating assets and liabilities
Accounts receivable................................ (1,356) (1,921)
Inventories........................................ 397 (1,077)
Other current assets............................... (52) (99)
Accounts payable................................... 1,355 3,054
Accrued liabilities................................ 3 (1,829)
Deferred revenue and credits....................... (985) --
Other assets....................................... 603 (38)
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Net cash used in operating activities................ (2,578) (10,243)
Cash flows from investing activities:
Purchase of fixed assets........................... (83) (1,019)
Decrease in restricted cash........................ -- 2,200
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Net cash provided by (used in) investing activities.. (83) 1,181
Cash flows from financing activities:
Proceeds from borrowing............................ 1,729 --
Proceeds from issuance of preferred stock.......... -- 2,206
Proceeds from issuance of common stock............. -- 1
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Net cash provided by financing activities............ 1,729 2,207
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Net decrease in cash and cash equivalents.............. (932) (6,855)
Cash and cash equivalents, beginning of period......... 2,037 9,102
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Cash and cash equivalents, end of period............... $ 1,105 $ 2,247
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See supplementary cash flow information (note 4).
See accompanying notes to financial statements.
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AIRPRIME, INC.
NOTES TO FINANCIAL STATEMENTS
(Expressed in thousands of United States dollars, except per share amounts)
(Prepared in accordance with United States GAAP)
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying financial information does not include all disclosures
required under United States generally accepted accounting principles for
annual financial statements. The accompanying financial information reflects
all adjustments, consisting primarily of normal recurring adjustments, which
are, in the opinion of management, necessary for a fair presentation of
results for the interim periods. These financial statements should be read in
conjunction with the financial statements and notes thereto included in our
fiscal 2002 audited financial statements.
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As shown in the financial
statements, we have incurred recurring net losses. This, among other factors,
may indicate that we will be unable to continue as a going concern for a
reasonable period of time.
2. SIGNIFICANT ACCOUNTING POLICIES
These interim financial statements follow the same accounting policies and
methods of application as our annual financial statements, except for 2(b).
(a) STOCK-BASED COMPENSATION
We account for employee stock options using the intrinsic value method.
As we grant all stock options with an exercise price equal to the market
value of the underlying common shares on the date of the grant, no
compensation expense is required to be recognized. Had compensation cost
for our employee stock option plan been determined by the fair value
method, our net loss would have been as follows:
Six months ended June 30, 2003 2002
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Net loss:
As reported................................................ $(3,643) $(9,382)
Less: Total stock-based employee compensation expense
determined under fair value based method for all awards.. (124) (235)
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Pro forma.................................................... $(3,767) $(9,617)
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We recognize the calculated benefit at the date of granting the stock
options on a straight-line basis over the shorter of the expected
service period and the vesting period.
We have estimated the fair value of each option on the date of the grant
using the Black-Scholes option pricing model with the following
assumptions:
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Six months ended June 30, 2003 2002
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Expected dividend yield............................... -- --
Expected stock price volatility....................... 70% 70%
Risk-free interest rate............................... 3.00% 5.00%
Expected life of options.............................. 5 years 5 years
Weighted average fair value of options granted........ $5.75 $0.13
(b) RECENT ACCOUNTING PRONOUNCEMENTS
In May 2003, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("FAS") No. 150, "Accounting
for Certain Financial Instruments with Characteristics of both
Liabilities and Equity" ("FAS No. 150"), which establishes standards for
how an issuer classifies and measures certain financial instruments with
characteristics of both liabilities and equity. FAS No. 150 is effective
for financial instruments entered into or modified after May 31, 2003.
We have adopted FAS No. 150, which had no effect on our financial
statements.
In April 2003, the FASB issued FAS No. 149, "Amendment of Statement 133
on Derivative Instruments and Hedging Activities" ("FAS No. 149"), which
amends and clarifies financial accounting and reporting for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities under FAS No. 133. FAS No.149 is
to be applied prospectively for certain contracts entered into or
modified after June 30, 2003. We are currently evaluating the impact of
FAS No. 149 on our financial results.
In January 2003, the FASB issued FASB Interpretation No. 46,
"Consolidation of Variable Interest Entities" ("FIN 46"), which requires
the consolidation of a variable interest entity by the primary
beneficiary. FIN 46 also requires additional disclosure by both the
primary beneficiary and enterprises that hold a significant variable
interest in a variable interest entity. FIN 46 is applicable to variable
interest entities created after January 31, 2003. Entities created prior
to February 1, 2003 must be consolidated effective December 31, 2003.
However, because we do not have any variable interest entities, there is
no impact on our financial statements.
In November 2002, the FASB issued FASB Interpretation No. 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others" ("FIN 45"). FIN
45 expands on previously issued accounting guidance and requires
additional disclosure by a guarantor to recognize, at the inception of a
guarantee, a liability for the fair value of an obligation assumed by
issuing a guarantee. The provision for initial recognition and
measurement of the liability is applied on a prospective basis to
guarantees issued or modified after December 31, 2002. We have adopted
FIN 45 in our financial statements.
In November 2002, FASB issued Emerging Issues Task Force 00-21, "Revenue
Arrangements with Multiple Deliverables" ("EITF 00-21"). EITF 00-21
addresses certain aspects of the accounting by a vendor for arrangements
under which it will perform multiple revenue-generating activities. In
some arrangements, the different revenue-generating activities are
sufficiently separable, and there may be sufficient evidence of their
fair values to separately account for some or all of the deliverables.
In other arrangements, some or all of the deliverables are not
independently functional, or there is not sufficient evidence of their
fair values to account for them separately. EITF 00-21 is effective for
revenue arrangements entered into in fiscal periods beginning after June
15, 2003. We are currently evaluating the impact of this accounting
pronouncement on our financial results.
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3. CONTINGENCIES
(a) CONTINGENT LIABILITY ON SALE OF PRODUCTS
We accrue product warranty costs, when we sell the related products, to
provide for the repair or replacement of defective products. Our accrual
is based on an assessment of historical experience and estimates are made
by management. An analysis of changes in the liability for product
warranties follows:
2003 2002
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Balance, January 1................................. $174 $ 80
Provisions......................................... 252 56
Expenditures....................................... (42) --
Adjustment to provision............................ -- (79)
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Balance, June 30................................... $384 $ 57
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(b) LEGAL PROCEEDINGS
We are engaged in legal actions arising in the ordinary course of business
and believe that the ultimate outcome of these actions will not have a
material adverse effect on our operating results, liquidity or financial
position.
4. SUPPLEMENTARY CASH FLOW INFORMATION
2003 2002
Six months ended June 30, ---- ----
Cash received for interest......................... $ 14 $100
Cash paid for interest............................. 237 --
Non-cash investing and financing activities
Preferred stock dividends........................ -- 755
Common stock warrants issued to non-employees
in connection with notes payable............... -- 880
5. SUBSEQUENT EVENTS
On August 12, 2003, Sierra Wireless, Inc. ("Sierra") acquired 100% of the
outstanding securities of AirPrime in exchange for 3,708,521 common shares of
Sierra. Immediately prior to the acquisition, the convertible notes payable
of $6,139 were converted into common shares of AirPrime. Subsequent to the
acquisition date, AirPrime's name was changed to Sierra Wireless America, Inc.
6. COMPARATIVE FIGURES
We have reclassified certain of the figures presented for comparative
purposes to conform to the financial statement presentation we adopted for
the current period.
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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.
Sierra Wireless, Inc.
By: /s/ Peter W. Roberts
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Peter W. Roberts, Chief Financial Officer
Date: November 4, 2003
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