SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDING JUNE 30, 2001
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO ____________
COMMISSION FILE NUMBER 0-21061
SPEEDCOM WIRELESS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 58-2044990
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
7020 PROFESSIONAL PARKWAY EAST
SARASOTA, FL 34240
(941) 907-2300
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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) Yes[x] No[_], 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 issuer's classes of
common stock as of the last practicable date: July 27, 2001 - 9,648,113 common
shares, $.001 par value.
Transitional small business disclosure format (check one): Yes [_] No [x]
SPEEDCOM WIRELESS CORPORATION
FORM 10-QSB/A FOR THE PERIOD ENDED JUNE 30, 2001
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of June 30, 2001 and December 31, 2000 3
Statements of Operations for the three and six months ended
June 30, 2001 and 2000 4
Statements of Cash Flows for the six months ended
June 30, 2001 and 2000 5
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 13
PART II. OTHER INFORMATION
Item 2. Recent Sales of Unregistered Securities 21
Item 4. Submission of Matters to a Vote of Security Holders 22
Item 6. Exhibits and Reports on Form 8-K 22
Signatures 22
Exhibit Index 23
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SPEEDCOM WIRELESS CORPORATION
BALANCE SHEETS
June 30, December 31,
2001 2000
----------------------------------------
(unaudited)
Assets
Current assets:
Cash $ 89,256 $ 227,066
Accounts receivable, net of allowances of $456,411 and $296,330 in 2001
and 2000, respectively 2,403,788 1,788,206
Leases receivable 722,166 43,389
Inventories, net 1,323,078 2,388,283
Prepaid expenses and other current assets 688,685 732,753
Net assets held for sale 38,966 --
------------------------------------
Total current assets 5,265,939 5,179,697
Accounts receivable -- 586,578
Property and equipment, net 1,124,173 956,133
Leases receivable 869,602 36,157
Other assets, net 168,080 158,405
Investments 89,370 76,994
Intellectual property 1,239,988 --
------------------------------------
Total assets $ 8,757,152 $ 6,993,964
====================================
Liabilities, redeemable preferred stock and stockholders' equity
Current liabilities:
Accounts payable $ 1,574,844 $ 2,673,570
Accrued expenses 942,663 700,815
Current portion of loans from stockholders 2,592,564 336,780
Current portion of deferred revenue 89,580 90,047
Current portion of notes and capital leases payable 119,604 52,901
------------------------------------
Total current liabilities 5,319,255 3,854,113
Loans from stockholders, net of current portion -- 203,733
Deferred revenue, net of current portion 27,492 50,141
Notes and capital leases payable, net of current portion 30,992 57,294
Common stock to be issued 96,000 --
------------------------------------
Total liabilities 5,473,739 4,165,281
Redeemable preferred stock, 10,000,000 shares authorized, 955,146 and 0 922,231 --
shares issued and outstanding in 2001 and 2000, respectively
Stockholders' equity:
Common stock, $.001 par value, 30,000,000 shares authorized,
9,533,113 and 9,289,529 shares issued and outstanding in 2001 and
2000, respectively 9,533 9,289
Additional paid-in capital 11,539,384 7,889,817
Accumulated deficit (9,187,735) (4,995,423)
Notes receivable - related party -- (75,000)
------------------------------------
Total stockholders' equity 2,361,182 2,828,683
------------------------------------
Total liabilities, redeemable preferred stock and stockholders' equity $ 8,757,152 $ 6,993,964
====================================
See accompanying notes.
3
SPEEDCOM WIRELESS CORPORATION
STATEMENTS OF OPERATIONS
(unaudited)
Three months ended June 30, Six months ended June 30,
2001 2000 2001 2000
---------------------------------- ----------------------------------
Net revenues $ 4,035,298 $ 2,154,383 $ 8,052,573 $ 4,000,982
Operating costs and expenses:
Cost of goods and services 2,348,202 1,238,973 4,582,693 2,083,178
Salaries and related 1,695,971 888,842 3,011,377 1,571,716
General and administrative 1,224,808 248,763 2,075,790 600,543
Selling expenses 431,356 242,375 950,078 375,037
Provision for bad debt 185,400 24,478 187,074 24,478
Depreciation and amortization 152,197 15,000 259,397 30,000
--------------------------------- ----------------------------------
6,037,934 2,658,431 11,066,409 4,684,952
--------------------------------- ----------------------------------
Loss from operations (2,002,636) (504,048) (3,013,836) (683,970)
Other (expense) income:
Interest expense, net (677,156) (6,733) (837,922) (8,209)
Other income, net 3,406 10,257 5,819 13,479
--------------------------------- ----------------------------------
(673,750) 3,524 (832,103) 5,270
Net loss before extraordinary items (2,676,386) (500,524) (3,845,939) (678,700)
Extraordinary loss from early (346,373) -- (346,373) --
extinguishment of debt
--------------------------------- ----------------------------------
Net loss $ (3,022,759) $ (500,524) $ (4,192,312) $ (678,700)
================================= ==================================
Net loss before extraordinary items
per common share:
Basic and diluted $ (0.28) $ (.06) $ (0.41) $ (0.09)
================================= ==================================
Net loss per common share:
Basic and diluted $ (0.32) $ (.06) $ (0.44) $ (0.09)
================================= ==================================
Shares used in computing basic and
diluted net loss before extraordinary
items per common share and net loss per
common share 9,497,426 7,977,218 9,450,350 7,820,841
================================= =================================
See accompanying notes.
4
SPEEDCOM WIRELESS CORPORATION
STATEMENTS OF CASH FLOWS
(unaudited)
Six Months Ended June 30,
2001 2000
---------------------------------
Operating activities
Net loss $ (4,192,312) $ (678,700)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 259,397 30,000
Provision for bad debt 187,074 24,478
Provision for inventory obsolescence 14,768 11,000
Common stock issued for services 206,450 5,000
Amortization of original issue discount 405,856 --
Extraordinary charge for early extinguishment of debt 283,556 --
Changes in operating assets and liabilities:
Restricted cash -- 35,671
Accounts receivable (1,617,297) (487,148)
Leases receivable (179,222) --
Inventories 1,016,394 (534,184)
Prepaid expenses and other current assets 134,739 (154,140)
Intellectual property (360,000) --
Other assets (22,051) (3,229)
Accounts payable and accrued expenses (165,641) 331,870
Deferred revenue (23,116) (22,865)
---------------------------------
Net cash used in operating activities (4,051,405) (1,442,247)
Investing activities
Purchases of equipment (401,962) (478,470)
---------------------------------
Net cash used in investing activities (401,962) (478,470)
Financing activities
Net payments from factor -- (111,731)
Net proceeds from sale of common stock and warrants 3,731 2,476,350
Proceeds from loans from stockholders 6,560,000 (45,639)
Proceeds from issuance of notes and capital leases 12,206 40,000
Payments of loans from stockholders, notes and capital leases (2,260,380) (218,291)
Purchase of treasury stock -- (223,510)
---------------------------------
Net cash provided by financing activities 4,315,557 1,917,179
---------------------------------
Net decrease in cash (137,810) (3,538)
Cash at beginning of period 227,066 108,564
---------------------------------
Cash at end of period $ 89,256 $ 105,026
=================================
See accompanying notes.
5
SPEEDCOM WIRELESS CORPORATION
STATEMENTS OF CASH FLOWS (CONTINUED)
(unaudited)
Six Months Ended June 30,
2001 2000
------------------------------
Supplemental disclosure of noncash activities
Conversion of accounts receivable to lease receivable $1,333,000 --
Conversion of accounts payable to notes payable $ 558,442 --
Conversion of accounts payable to redeemable preferred stock $ 25,000 --
Common stock issued for services $ 206,450 $ 5,000
Common stock issued for note -- $95,000
Common stock issued for intellectual property $ 972,500 --
Conversion of debt to common stock $ 40,000 --
Conversion of debt to redeemable preferred stock $1,473,305 --
See accompanying notes.
6
SPEEDCOM WIRELESS CORPORATION
NOTES TO FINANCIAL STATEMENTS
(unaudited)
1. Business
SPEEDCOM Wireless Corporation (SPEEDCOM or the Company) was incorporated in
Florida on March 16, 1994 and reincorporated in Delaware on September 26, 2000.
The Company manufactures and installs custom broadband wireless networking
equipment for business and residential customers internationally. Through its
Wave Wireless Networking division, the Company manufactures a variety of
broadband wireless products, including the SPEEDLAN family of wireless Ethernet
bridges and routers. Internet service providers, telephone company operators and
private organizations in over 60 countries use SPEEDCOM products to provide
"last-mile" wireless connectivity between multiple buildings at speeds up to 155
Megabits per second and distances up to 25 miles. SPEEDCOM Wireless Corporation
is an ISO 9001 registered company.
2. Basis of Presentation
On September 26, 2000, SPEEDCOM Wireless International Corporation merged with
LTI Holdings, Inc. (LTI). The parties renamed the combined company SPEEDCOM
Wireless Corporation and continued the business of SPEEDCOM Wireless
International Corporation (Old SPEEDCOM).
Since LTI was a non-operating shell company, the merger was treated as a
recapitalization of the Company for accounting purposes. As a result, the
Company recorded the transaction as the issuance of common stock for the net
monetary assets of LTI (principally cash), accompanied by a recapitalization of
equity. The Company recorded a net increase in equity of $1,215,937, which
represented the total net assets of LTI. The Company has recorded the
transaction to reflect the shares outstanding under the current structure. There
has been no change in the basis under which the assets and liabilities of the
Company are recorded. Accordingly, except as specifically noted to the contrary,
(1) the financial information herein that predates the merger consists of
information about Old SPEEDCOM, and (2) all references to SPEEDCOM or the
Company refer to Old SPEEDCOM before the merger and to the combined company
after the merger. The financial statements presented in this Form 10-QSB/A
reflect the financial position of the remaining legal entity, LTI, which
subsequently changed its name to SPEEDCOM Wireless Corporation. All shares,
options and warrants issued by SPEEDCOM prior to the merger have been
retroactively restated for all periods presented.
The accompanying financial statements have been prepared pursuant to the rules
and regulations of the Securities and Exchange Commission (SEC). Certain
information and footnote disclosures normally included in annual financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to those rules
7
and regulations. The accompanying financial statements should be read in
conjunction with the Company's annual financial statements and notes thereto
included in the Company's Form 10-KSB.
In the opinion of management, the financial statements reflect all adjustments
(consisting of only normal and recurring adjustments) necessary to present
fairly the financial position, results of operations and cash flows for those
periods presented. Operating results for the six months ended June 30, 2001 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 2001.
3. Inventories
A summary of inventories at June 30, 2001 and December 31, 2000 is as follows:
2001 2000
-----------------------------------
(unaudited)
Component parts $ 768,488 $1,156,966
Completed assemblies 554,590 1,231,317
-----------------------------------
$1,323,078 $2,388,283
===================================
4. Net Assets Held for Sale
A summary of net assets that were held for sale by the Company as of June 30,
2001 is as follows:
2001
----------
(unaudited)
Cash $ 4,749
`Accounts receivable, net of allowances of $5,857 68,218
Inventories, net 34,043
Prepaid expenses and other current assets 5,329
Property and equipment, net 62,288
Accounts payable (26,340)
Accrued expenses (81,454)
Notes and capital leases payable (27,867)
-----------
Net assets held for sale $ 38,966
===========
The net assets listed above represent the property of the InstallGuys division
of SPEEDCOM.
8
5. Property and Equipment
A summary of property and equipment at June 30, 2001 and December 31, 2000 is as
follows:
2001 2000
------------------------------------
(unaudited)
Computer and office equipment $1,106,120 $ 822,006
Automobiles 26,063 51,737
Leasehold improvements 98,665 86,207
Furniture and fixtures 138,617 135,415
Store and warehouse 82,568 101,719
Construction in progress 82,337 49,244
------------------------------------
1,534,370 1,246,328
Less accumulated depreciation and amortization (410,197) (290,195)
------------------------------------
$1,124,173 $ 956,133
====================================
Property and equipment included computer and office equipment of $67,797 at June
30, 2001 and December 31, 2000 acquired under capital lease arrangements.
Depreciation expense amounted to $166,885 and $30,000 for the six months ended
June 30, 2001 and 2000, respectively. Depreciation expense amounted to $92,185
and $15,000 for the three months ended June 30, 2001 and 2000, respectively.
Amortization of assets under capital lease arrangements is included in
depreciation expense.
6. Accrued Expenses
A summary of accrued expenses at June 30, 2001 and December 31, 2000 is as
follows:
2001 2000
-------------------------------
(unaudited)
Accrued payroll $343,430 $287,252
Accrued commissions 115,321 109,052
Other 483,912 304,511
-------------------------------
$942,663 $700,815
===============================
7. Loans from Stockholders
SPEEDCOM issued a $250,000 promissory note to the Company's President in
December 2000. The note bears an interest rate of the greater of 12% or DLJ's
standard margin rate plus 1.5%. The note is payable in December 2001 or at the
closing of an equity offering by the Company of at least $5,000,000, whichever
is earlier. The Company concurrently granted a total of 25,000 warrants with a
$3.60 strike price in connection with this note. The proportionate fair value of
9
the warrants amounted to $62,500 and has been recorded as an addition to paid-in
capital and as an original issue discount reducing the carrying value of the
note. The discount is being amortized to interest expense over the remaining
life of the note. The balance of the note at June 30, 2001 amounted to $222,774.
The Company issued a $252,000 non-interest bearing promissory note in December
2000, with beneficial conversion features. The note is due in December 2001,
payable in cash or 70,000 shares of common stock, at the holder's option. The
70,000 shares were worth $115,500 more than the face value of the note based on
the per-share value at the date of the note. This amount has been recorded as an
addition to paid-in capital and as an original issue discount reducing the
carrying value of the note. The discount is being amortized to interest expense
over the remaining life of the note. The balance of the note at June 30, 2001
amounted to $197,571.
In December 2000, the Company issued a $200,000 non-interest bearing promissory
note, with beneficial conversion features. The note was due in January 2002,
payable in cash or 50,000 shares of common stock, at the holder's option. The
50,000 shares were worth $37,500 more than the face value of the note based on
the per-share value at the date of the note. This amount has been recorded as an
addition to paid-in capital and as an original issue discount reducing the
carrying value of the note. The discount was being amortized to interest expense
over the life of the note. On June 29, 2001, this loan, along with a $25,000
trade payable, was converted to 100,000 shares of preferred stock at $2.25 per
share, 75,000 Series A Warrants and 100,000 Series B Warrants. The Series A
Warrants were valued at $90,000 based on the proportionate fair value of the
warrants at the date of the conversion. The Series B Warrants vest contingent
upon certain performance factors. The unamortized portion of the original issue
discount on the promissory note is recorded to interest expense.
Also in December 2000, the Company issued a $10,800 non-interest bearing
promissory note with beneficial conversion features. The note is due in December
2001, payable in cash or 3,000 shares of common stock, at the holder's option.
The 3,000 shares were worth $4,950 more than the face value of the note based on
the per-share value at the date of the note. This amount has been recorded as an
addition to paid-in capital and as an original issue discount reducing the
carrying value of the note. The discount is being amortized to interest expense
over the remaining life of the note. The balance of the note at June 30, 2001
amounted to $8,469.
During January 2000, the Company issued a 10% convertible subordinated
promissory note for $40,000, due for payment in January 2003. The note was
convertible into 10,000 shares of common stock at any time during its term. The
note was subordinate to all other debt instruments. The $40,000 note and accrued
interest was converted in January 2001.
In April 2001, SPEEDCOM borrowed $3,000,000 from an institutional investor. The
loan is due in April 2002 and bears interest at 9% for the first 90 days and 12%
thereafter. As part of the transaction, SPEEDCOM issued warrants to acquire
333,333 shares of SPEEDCOM common stock at $5.00 per share. The 333,333 warrants
were worth $930,000 more than the face value of the note based on the per-share
value at the date of the note. This amount has been recorded as an addition to
paid-in capital and as an original issue discount reducing the carrying value of
the
10
note. The discount is being amortized to interest expense over the remaining
life of the note. Additional warrants are issuable contingent upon the date on
which the loan is repaid. The holder of the loan has certain rights of first
refusal on subsequent financings. Interest is due under the loan in quarterly
installments with principal payable in total at the maturity date of the loan.
The $3,000,000 loan was not convertible into preferred stock per the original
loan agreement. On June 29, 2001, $1,000,000 of this loan was converted to
497,812 shares of preferred stock at $2.25 per share, 373,359 Series A Warrants
and 497,812 Series B Warrants. The Series A Warrants were valued at $448,030
based on the proportionate fair value of the warrants at the date of the
conversion utilizing the Black-Scholes pricing model. The Series B Warrants vest
contingent upon certain performance factors. The balance of the remaining note
at June 30, 2001 amounted to $1,505,722.
SPEEDCOM issued a $40,000 promissory note to the Company's Vice President of
Sales in May 2001. The note bears an interest rate of 9%. The note is payable in
August 2001.
In June 2001, SPEEDCOM issued a $250,000 promissory note to the Company's
President. The note bears an interest rate of 10% and is payable in April 2002.
The Company concurrently granted a total of 73,333 warrants with a $3.25 strike
price in connection with this note. The proportionate fair value of the warrants
amounted to $92,500 and has been recorded as an addition to paid-in capital and
as an original issue discount reducing the carrying value of the note. On June
29, 2001, this loan was converted to 111,667 shares of preferred stock at $2.25
per share, 83,751 Series A Warrants and 111,667 Series B Warrants. The Series A
Warrants were valued at $100,500 based on the proportionate fair value of the
warrants at the date of the conversion. The Series B Warrants vest contingent
upon certain performance factors. The unamortized portion of the original issue
discount on the promissory note is recorded as an extraordinary loss from the
early extinguishment of debt.
In June 2001, SPEEDCOM borrowed $1,500,000 from three institutional investors.
The loan bears an interest rate of 10% and is payable in April 2002. The Company
concurrently granted a total of 440,000 warrants with a $3.25 strike price in
connection with this loan. The proportionate fair value of the warrants amounted
to $555,000 and has been recorded as an addition to paid-in capital and as an
original issue discount reducing the carrying value of the loan. On June 29,
2001, $550,000 of this loan was converted to 245,667 shares of preferred stock
at $2.25 per share, 184,251 Series A Warrants and 245,667 Series B Warrants. The
Series A Warrants were valued at $221,100 based on the proportionate fair value
of the warrants at the date of the conversion. The Series B Warrants vest
contingent upon certain performance factors. The balance of the remaining note
at June 30, 2001 amounted to $618,028. The unamortized portion of the original
issue discount related to the converted portion of this loan is recorded as an
extraordinary loss from the early extinguishment of debt.
SPEEDCOM recorded a loss from the early extinguishment of debt related to some
of the conversions discussed above. When the nonconvertible loans originated,
value was allocated to the Series A Warrants based on the Black-Scholes pricing
model. This value was being amortized over the maturity of the loan. When the
loan was converted to preferred stock, the
11
unamortized portion of this value was immediately expensed to loss from the
early extinguishment of debt.
8. Notes and Capital Leases Payable
A summary of notes and capital leases payable at June 30, 2001 and December 31,
2000 is as follows:
2001 2000
-----------------------------------
(unaudited)
10.5% bank note payable in monthly installments $ 39,937 $ 46,631
through June 2003, secured by equipment and
inventories
8%-16.8% automobile loans payable in monthly 7,269 29,460
installments through January 2003, secured by
equipment
Capital lease obligations 23,390 34,104
5% trade note payable in monthly installments through 80,000 --
August 2001
-----------------------------------
150,596 110,195
Less current portion (119,604) (52,901)
-----------------------------------
$ 30,992 $ 57,294
===================================
9. Redeemable Preferred Stock
On June 29, 2001, SPEEDCOM converted loans, accrued interest and trade payables
of $2,149,075 to 955,146 shares of $.001 par value preferred stock at $2.25 per
share, 916,361 Series A Warrants and 955,146 Series B Warrants. The Series A
Warrants were valued based on the proportionate fair value of the warrants at
the date of the conversion. The Series B Warrants vest contingent upon certain
performance factors. Each of the Series A Warrants are convertible into .75
shares of common stock and each of the Series B Warrants are convertible into
one share of common stock. This preferred stock is only redeemable upon the
occurrence of a Triggering Event as defined in the agreement, which is generally
a sale, merger or reorganization of the Company, failure of the Company to
maintain an effective Registration Statement related to the redeemable preferred
stock or failure to have the Company's common stock listed on certain exchanges.
10. Shareholder's Equity
In January 2001, SPEEDCOM acquired worldwide rights to PacketHop(TM), a
revolutionary wireless routing software developed by SRI International (SRI).
PacketHop(TM) overcomes the traditional need for a direct line of sight between
a base station and an end user's location. Under the terms of the agreement,
SPEEDCOM obtains worldwide rights to SRI's PacketHop(TM) technology in the fixed
wireless infrastructure market for the primary frequencies below 6 GHz. Per the
agreement, SRI International is entitled to receive a total of 325,000 shares of
common stock of SPEEDCOM to be issued in four traunches. Each traunch is
measured on the specific date that the stock is issued on. The first traunch was
due on signing the agreement. The three
12
remaining traunches are due on achievement of certain performance criteria. The
first traunch was granted in January for 100,000 shares at $6.50 per share. The
second traunch was granted in April for 75,000 shares at $4.30 per share. As of
June 30, 2001, the value of these shares at the date of grant were included in
Intellectual Property in the balance sheet. The third traunch was granted in
July for 75,000 shares at $2.36 per share. The remaining traunch is based on
certain performance criteria that have not been achieved and has not been
recorded. SPEEDCOM also has paid $360,000 in cash, included in Intellectual
Property in the balance sheet, which is being amortized over six years (the term
of the agreement barring default). For the three and six months ended June 30,
2001, $60,012 and $92,512 has been amortized of the Intellectual Property,
respectively.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The discussion in this document contains trend analysis and other forward-
looking statements within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended that involve risks and uncertainties, such as statements concerning
growth and future operating results; developments in markets and strategic
focus; new products and services and product technologies and future economic,
business and regulatory conditions. Such forward-looking statements are
generally accompanied by the words such as "plan", "estimate", "expect",
"believe", "should", "would", "could", "anticipate", "may" and other words that
convey uncertainty of future events or outcomes. These forward-looking
statements and other statements made elsewhere in this report are made in
reliance on the Private Securities Litigation Reform Act of 1995. The section
below entitled "Certain Factors That May Affect Future Results, Financial
Condition and Market Price of Securities" sets forth factors that could cause
actual results to differ materially from these statements.
Overview
SPEEDCOM is a multi-national company based in Sarasota, Florida. The Company
employs approximately 105 people. Through its Wave Wireless Networking division,
SPEEDCOM manufactures a variety of broadband wireless products, including its
SPEEDLAN family of wireless Ethernet bridges and routers. Through its
InstallGuys division, SPEEDCOM provides wireless installations and services.
Internet service providers, telephone company operators and private
organizations in more than 60 countries use SPEEDCOM products to provide "last-
mile" wireless connectivity between multiple buildings at speeds up to 155
Megabits per second and distances up to 25 miles.
13
Results of Operations
The following table sets forth the percentage of net revenues represented by
certain items in the Company's Statements of Operations for the periods
indicated.
Three Months Ended June 30, Six Months Ended June 30,
2001 2000 2001 2000
----------------------------------------------------------------
Net revenues 100% 100% 100% 100%
Operating costs and expenses:
Cost of goods and services 58% 57% 57% 52%
Salaries and related 42% 41% 38% 39%
General and administrative 30% 12% 26% 15%
Selling expenses 11% 11% 12% 9%
Provision for bad debt 4% 1% 2% 1%
Depreciation and amortization 4% 1% 3% 1%
----------------------------------------------------------------
149% 123% 138% 117%
----------------------------------------------------------------
Loss from operations (49)% (23)% (38)% (17)%
Other (expense) income:
Interest expense, net (17)% 0% (10)% 0%
Other income, net 0% 0% 0% 0%
----------------------------------------------------------------
(17)% 0% (10)% 0%
Net loss before extraordinary (66)% (23)% (48)% (17)%
items
Extraordinary loss from early (9)% -- (4)% --
extinguishment of debt
----------------------------------------------------------------
Net loss (75)% (23)% (52)% (17)%
================================================================
Six Months Ended June 30, 2001 and June 30, 2000
Net revenues increased 101% from approximately $4,001,000 in the six months
ended June 30, 2000 to approximately $8,053,000 in the six months ended June 30,
2001. This increase was due to SPEEDCOM executing its business plan of
expanding the business in a growing market for broadband wireless in 2001. Cost
of goods and services increased 120% from approximately $2,083,000 for the six
months ended June 30, 2000 to approximately $4,583,000 for the six months ended
June 30, 2001, due primarily to increases in the Company's revenues and certain
purchasing inefficiencies due to lower cash balances associated with delays in
completing financings for the Company. Revenues from customers in foreign
geographic areas increased to 45% of revenues for the six months ended June 30,
2001 as compared to 27% of revenues the six
14
months ended June 30, 2000. The percentage of sales that are from international
customers is expected to increase slightly or remain stable throughout the year
ended December 31, 2001.
Salaries and related, general and administrative and selling expenses increased
by 137% from approximately $2,547,000 for the six months ended June 30, 2000 to
approximately $6,037,000 for the six months ended June 30, 2001. This increase
was primarily due to an increase in employee headcount, which increased salaries
and related expenses approximately $1,440,000, spending on investor relations of
approximately $146,000, increased spending on marketing and promotion, such as
attendance at industry trade shows, of approximately $162,000, severance and
other one-time expenses, as described below, and engineering related to the
PacketHop(TM) product of approximately $179,000. Additionally, SPEEDCOM
incurred substantially higher professional fees for legal and accounting
services due to the fact that the Company was a public entity in the first and
second quarters of 2001 and a private entity in the first and second quarter of
2000 and because of the debt financings completed by the Company in the first
half of 2001. As discussed above, SPEEDCOM incurred one-time charges in the
first half of 2001 related to severance of approximately $20,000, one-time
charges related to the termination of an investor relations contract of
approximately $214,000 and one-time investment banking charges of approximately
$306,000. Excluding such charges, total salaries and related, general and
administrative and selling expenses would have been approximately $5,497,000 for
the six months ended June 30, 2001.
Net interest expense increased from approximately $8,000 for the six months
ended June 30, 2000 to approximately $838,000 for the six months ended June 30,
2001. This increase was due to the addition of notes payable and loans from
stockholders during the fourth quarter of 2000 and the first and second quarters
of 2001.
Net loss increased 518% from approximately $679,000, or $.09 per share, in the
six months ended June 30, 2000 to approximately $4,192,000, or $.44 per share,
in the six months ended June 30, 2001, as a result of the foregoing factors.
Three Months Ended June 30, 2001 and June 30, 2000
Net revenues increased 87% from approximately $2,154,000 in the three months
ended June 30, 2000 to approximately $4,035,000 in the three months ended June
30, 2001. This increase was due to SPEEDCOM executing its business plan of
expanding the business in a growing market for broadband wireless in 2001. Cost
of goods and services increased 90% from approximately $1,239,000 for the three
months ended June 30, 2000 to approximately $2,348,000 for the three months
ended June 30, 2001, due primarily to increases in the Company's revenues and
certain purchasing inefficiencies due to lower cash balances associated with
delays in completing financings for the Company. Revenues from customers in
foreign geographic areas increased to 55% of revenues for the three months ended
June 30, 2001 as compared to 30% of revenues the three months ended June 30,
2000. The percentage of sales that are from international customers is expected
to increase slightly or remain stable throughout the year ended December 31,
2001.
15
Salaries and related, general and administrative and selling expenses increased
by 143% from approximately $1,380,000 for the three months ended June 30, 2000
to approximately $3,352,000 for the three months ended June 30, 2001. This
increase was primarily due to an increase in employee headcount which increased
salaries and related expenses approximately $808,000, spending on investor
relations of approximately $74,000 increased spending on marketing and
promotion, such as attendance at industry trade shows, of approximately $44,000,
severance and other one-time expenses, as described below, and engineering
related to the PacketHop(TM) product of approximately $114,000. Additionally,
SPEEDCOM incurred substantially higher professional fees for legal and
accounting services due to the fact that the Company was a public entity in the
second quarters of 2001 and a private entity in the second quarter of 2000 and
because of the debt financings completed by the Company in the second quarter of
2001. As discussed above, SPEEDCOM incurred one-time charges in the second
quarter of 2001 related to severance of approximately $20,000, one-time charges
related to the termination of an investor relations contract of approximately
$214,000 and one-time investment banking charges of approximately $156,000.
Excluding such charges, total salaries and related, general and administrative
and selling expenses would have been approximately $2,962,000 for the three
months ended June 30, 2001.
Net interest expense increased from approximately $7,000 for the three months
ended June 30, 2000 to approximately $677,000 for the three months ended June
30, 2001. This increase was due to the addition of notes payable and loans from
stockholders during the fourth quarter of 2000 and the first and second quarters
of 2001.
Net loss increased 504% from approximately $501,000, or $.06 per share, in the
three months ended June 30, 2000 to approximately $3,023,000, or $.32 per share,
in the three months ended June 30, 2001, as a result of the foregoing factors.
Taxes
At June 30, 2001, SPEEDCOM had net operating loss carryforwards (NOLs) for
federal income tax purposes of approximately $4,400,000. The NOLs expire at
various dates through the year 2020.
Liquidity and Capital Resources
During the six months ended June 30, 2001, SPEEDCOM used approximately
$4,051,000 of cash for its operating activities. This was primarily due to
increases in accounts receivable (due to increases in sales) and the net loss
for the period. SPEEDCOM purchased approximately $402,000 of fixed assets
during the six months ending June 30, 2001 as compared to approximately $478,000
during the same period in 2000. To fund this growth in assets and sales,
SPEEDCOM raised approximately $4,316,000 through the issuance of promissory
notes and loans from stockholders.
During the six months ended June 30, 2000 SPEEDCOM used approximately $1,442,000
for its operating activities. This was primarily due to increases in accounts
receivable and inventory
16
and its net loss for the period. SPEEDCOM's cash flow used for financing
activities increased due to the receipt of approximately $2,476,000 from the
sale of its common stock during the first six months of 2000.
The Company believes that current resources are sufficient to maintain its
business for 2001. However, the Company will seek additional capital to
continue growing its business and to take advantage of opportunities that may
arise. This additional capital could come from the sale of common or preferred
stock, the exercise of outstanding warrants, or from borrowings. Any material
acquisitions of complementary businesses, products or technologies could also
require additional equity or debt financing. There can be no assurance that
such financing will be available on acceptable terms, if at all.
Certain Factors That May Affect Future Results, Financial Condition and Market
Price of Securities
If we do not raise additional capital, we may not be able to fulfill our
business plan.
In order to take advantage of possible opportunities in 2001 and to execute our
business plan for 2002, we may need to raise additional financial capital. If
we are unsuccessful in raising that capital, we may not have sufficient funding
to purchase necessary goods and services to execute our business plan.
We may not be able to compete successfully in the fixed wireless broadband
market in view of rapid technological change and the resources required to deal
with technological change.
The markets for our products and the technologies utilized in the industry in
which we operate evolve rapidly and depend on key technologies, including
wireless local area networks, wireless packet data, modem and radio
technologies. SPEEDCOM is developing a series of next generation products,
which incorporates the PacketHop(TM) licensed technology from SRI. Delays in
developing these products could have a negative effect on our future
competitiveness as the industry is constantly changing as new technologies are
developed.
The fixed wireless broadband market is at an early stage of development and is
rapidly evolving. As is typical for a new and rapidly evolving industry, demand
and market acceptance for recently introduced wireless networking products and
services are subject to a high level of uncertainty. Market acceptance of
particular products cannot be predicted; however, it is likely that new products
will not be generally accepted unless they operate at higher speeds and are sold
at lower prices. While the number of businesses recognizing the value of
wireless solutions is increasing, we do not know whether sufficient demand for
our products will emerge and become sustainable. Prospects must be evaluated
due to the risks encountered by a company in the early stages of marketing new
products or services, particularly in light of the uncertainties relating to the
new and evolving markets in which we operate. There can be no assurance that we
will succeed in addressing any or all of these risks, and the failure to do so
would reduce demand for SPEEDCOM's products.
17
We could encounter future competition from larger wireless, computer and
networking equipment companies. We could also encounter additional future
competition from companies that offer products that replace or are alternatives
to radio frequency wireless solutions including, for example, products based on
infra-red technology or laser technology and systems that utilize existing
telephone wires (such as DSL) or cables within a building as a wired network
backbone or satellite systems outside of buildings.
Major changes could render products and technologies obsolete or subject to
intense competition from alternative products or technologies or by improvements
in existing products or technologies. For example, Internet access and wireless
local loop equipment markets may stop growing, whether as a result of the
development of alternative technologies, such as fiber optic, coaxial cable or
satellite systems. Also, new or enhanced products developed by other companies
may be technologically incompatible with SPEEDCOM's products and render our
products obsolete.
Many of SPEEDCOM's current and potential competitors have significantly greater
financial, marketing, technical and other resources and, as a result, may be
able to respond more quickly to new or emerging technologies or standards and to
changes in customer requirements, or to devote greater resources to the
development, promotion and sale of products or to deliver competitive products
at a lower end user price. Current and potential competitors have established
or may establish cooperative relationships among themselves or with third
parties to increase the ability of their products to address the needs of
SPEEDCOM's existing and prospective customers. Accordingly, it is possible that
new competitors or alliances among competitors may emerge and rapidly acquire
significant market share. Increased competition could result in price
reductions, reduced operating margins and loss of market share by SPEEDCOM.
SPEEDCOM's reliance on limited sources of wireless and computer components could
result in delayed product shipment and higher costs and could damage customer
relationships.
Many of the key hardware and software components necessary for the assembly of
SPEEDCOM's products are only available from a single supplier or from a limited
number of suppliers. Our reliance on sole or limited source suppliers involves
several risks, including:
. suppliers could increase component prices significantly, without
advance notice;
. suppliers could discontinue or delay delivery of product components for
reasons such as inventory shortages, new product offerings, increased
cost of materials, destruction of manufacturing facilities, labor
disputes and bankruptcy; and
. in order to compensate for potential component shortages or
discontinuance, in the future we may hold more inventory than is
immediately required, resulting in increased inventory costs.
If our suppliers are unable to deliver or ration components to us, we could
experience interruptions and delays in manufacturing and sales, which could
result in cancellation of orders for products or the need to modify products.
18
This may cause substantial delays in product shipments, increased manufacturing
costs and increased product prices. Further, we may not be able to develop
alternative sources for these components in a timely way, if at all, and may not
be able to modify our products to accommodate alternative components. These
factors could damage our relationships with current and prospective customers
lasting longer than any underlying shortage or discontinuance.
Expanding indirect distribution channels may result in increased costs and lower
margins.
To increase revenues, we believe that we must increase the number of our
distribution partners. Management's strategy includes an effort to reach a
greater number of end users through indirect channels. SPEEDCOM is currently
investing, and plans to continue to invest, significant resources to develop
these indirect channels. These efforts may not generate the revenues necessary
to offset such investments. We will be dependent upon the acceptance of our
products by distributors and their active marketing and sales efforts relating
to our products. The distributors to whom we sell products are independent and
are not obligated to deal with SPEEDCOM exclusively or to purchase any specified
amount of products. Because SPEEDCOM does not generally fulfill orders by end
users of its products sold through distributors, SPEEDCOM will be dependent upon
the ability of distributors to accurately forecast demand and maintain
appropriate levels of inventory. Management expects that SPEEDCOM's
distributors will also sell competing products. These distributors may not
continue, or may not give a high priority to, marketing and supporting our
products. This and other channel conflicts could result in diminished sales
through the indirect channels. Additionally, because lower prices are typically
charged on sales made through indirect channels, increased indirect sales could
adversely affect the average selling prices and result in lower gross margins.
Growth may divert management resources from current operations.
SPEEDCOM has significantly expanded its operations in recent years, and
anticipates that further expansion will be required to address potential growth
in the customer base and market opportunities. This expansion has placed, and
future expansion is expected to place, a significant strain on our management,
technical, operational, administrative and financial resources. SPEEDCOM will
need to effectively manage any expansion, which could divert attention and
resources from current operations. The expansion and planned expansion may be
inadequate to support future operations. We may be unable to attract, retain,
motivate and manage required personnel, including finance, administrative and
operations staff, or to successfully identify, manage and exploit existing and
potential market opportunities because of inadequate staffing. We may also be
unable to manage further growth in our multiple relationships with original
equipment manufacturers, distributors and other third parties.
Our international operations and sales involve significant risks that could
reduce sales and increase expenses.
We anticipate that revenues from customers outside North America will continue
to account for a significant portion of our total revenues for the foreseeable
future. Expansion of international
19
operations has required, and will continue to require, significant management
attention and resources. In addition, we remain heavily dependent on
distributors to market, sell and support our products internationally.
International operations are subject to additional risks, including the
following:
. difficulties of staffing and managing foreign operations due to time
differences, language barriers and staffing constraints in the foreign
sales offices;
. longer customer payment cycles and greater difficulties in collecting
accounts receivable increase the amount of time that we have to fund
our purchase of the inventory sold;
. unexpected changes in regulatory requirements, exchange rates, trading
policies, tariffs and other barriers could increase our costs;
. uncertainties of laws and enforcement relating to the protection of
intellectual property could allow competitors to infringe on our
technology;
. limits on the ability to sue and enforce a judgment for accounts
receivable increase the risk of bad debt expense;
. potential adverse tax consequences could create additional expense; and
. political and economic instability in Latin America could limit our
sales in that region.
SPEEDCOM has a history of losses and may never achieve or sustain profitability.
We have incurred significant losses since our inception. SPEEDCOM intends to
decrease its operating expenses in an attempt to achieve profitability in the
fourth quarter of 2001, however revenues may not grow or even continue at their
current level. If revenues do not rapidly increase or if we are not able to
decrease expenses, we will never become profitable.
Our common stock price is volatile.
Our stock and the Nasdaq stock market in general have experienced significant
price and volume fluctuations in recent months and the market prices of
technology companies have been highly volatile. In the past, following periods
of volatility in the market price of a company's securities, securities class
action litigation has often been instituted against that company. Such
litigation could result in substantial costs and diversion of management's
attention.
Our manufacturing capabilities are limited and could prevent us from keeping up
with customer demand.
SPEEDCOM has no experience in large-scale manufacturing. If our customers were
to place orders substantially greater than current levels, SPEEDCOM's present
manufacturing abilities may not be adequate to meet such demand. There can be
no assurance that we will be able to contract additional manufacturing personnel
on a timely basis.
20
Our concentrated ownership structure means that our two controlling shareholders
can control the outcome of any shareholder vote.
A majority of SPEEDCOM's common stock is currently controlled by Michael W.
McKinney and Barbara McKinney (the McKinneys). Therefore, certain corporate
actions, which the Board of Directors may deem advisable for the shareholders of
SPEEDCOM as a whole, such as a business combination, may not be approved by the
common shareholders if submitted to a vote, unless the McKinneys approve the
potential transaction.
SPEEDCOM is subject to extensive and unpredictable government regulation, which
could make our products obsolete, raise our development costs and create
opportunities for other competitors.
SPEEDCOM is subject to various FCC rules and regulations in the United States
and to other government regulations abroad. There can be no assurance that new
FCC regulations will not be promulgated or that existing regulations outside of
the United States would not adversely affect international marketing of
SPEEDCOM's products.
Regulatory changes, including changes in the allocation of available frequency
spectrum, could significantly impact operations by restricting development
efforts, rendering current products obsolete or increasing the opportunity for
additional competition. In September 1993 and in February 1995, the FCC
allocated additional spectrum for personal communications services. In January
1997, the FCC authorized 300 MHz of additional unlicensed frequencies in the 5
Gigahertz frequency range. In 2000, the FCC modified the rules for "frequency
hopping spread spectrum" radios to allow greater power utilization in certain
circumstances. These changes in the allocation of available frequency spectrum
could create opportunities for other wireless networking products and services
or shift the competitive balance between SPEEDCOM and its competitors.
PART II. OTHER INFORMATION
Item 2. Recent Sales of Unregistered Securities
During the quarter ended June 30, 2001, the Company sold the following
securities which were not registered under the Securities Act. The purchases and
sales were exempt pursuant to Section 4(2) of the Securities Act (and/or
Regulation D promulgated thereunder) as transactions by an issuer not involving
a public offering , where the purchasers represented their intention to acquire
the securities for investment only, not with a view to distribution, and
received or had access to adequate information about the registrant.
1) A $3,000,000 promissory note and warrants to acquire 333,333 shares of
common stock to an institutional accredited investor. $1,000,000 of the
note was converted to 497,812 shares of Series A convertible preferred
stock, 373,357 Series A warrants and 497,812 contingent Series B warrants.
2) A $250,000 promissory note and warrants to acquire 73,333 shares of common
stock to Mr. Sanguinetti, our former president and an accredited investor.
The note was converted to 111,667 shares of Series A convertible preferred
stock, 83,751 Series A warrants and 111,667 contingent Series B warrants.
3) $1,500,000 promissory note and warrants to acquire 440,000 shares of common
stock to three institutional accredited investors. $550,000 of the note was
converted to 245,667 shares of Series A convertible preferred stock,
184,251 Series A warrants and 245,667 contingent Series B warrants.
4) 75,000 shares of common stock to SRI International, an accredited investor
and our licensor, pursuant to the terms of our license agreement.
5) 185,000 shares of common stock, 955,146 shares of Series A convertible
preferred stock, warrants to purchase 333,333 shares of common stock
(exercise price $5.00 per share), warrants to purchase 1,564,694 shares of
common stock (exercise price of $3.25 per share) and contingent warrants to
purchase up to 955,146 shares of common stock (exercise price $.001 per
share) were issued for a total of $4,750,000 cash, $25,000 of trade
payables, $2,000,000 principal amount of
21
surrendered indebtedness and services. These securities were issued to 10
investors, all of which were accredited investors and include the investors
described in items (1) through (3) above.
Item 4. Submission of Matters to a Vote of Security Holders
The following proposals are described in the Notice and Proxy Statement filed by
SPEEDCOM with the SEC on April 25, 2001:
. Proposal 1: Election of two Directors to the Board
. Proposal 2: Approve the appointment of Ernst & Young LLP as SPEEDCOM's
independent certified public accountants
. Proposal 3: To approve the SPEEDCOM Wireless Corporation 2000 Equity
Incentive Plan
--------------------------------------------------------------
For Against Abstained
--------------------------------------------------------------
Proposal 1 6,333,474 -- 50,488
--------------------------------------------------------------
Proposal 2 6,332,314 1,000 50,648
--------------------------------------------------------------
Proposal 3 6,371,133 12,499 330
--------------------------------------------------------------
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The exhibits in the accompanying Exhibit Index are filed as part
of this Quarterly Report on Form 10-QSB/A.
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.
SPEEDCOM Wireless Corporation
/s/ Michael W. McKinney Chairman, Chief Executive November 16, 2001
--------------------------- Officer and Director
Michael W. McKinney
22
Exhibit Index
Number Description
2.1(1) Asset Purchase Agreement between Packaging Atlanta Corporation and
Laminating Technologies Inc. dated April 26, 1999
2.2 Agreement and Plan of Merger by and between SPEEDCOM Wireless
International Corporation and LTI Holdings, Inc., dated as of August 4, 2000
(included as Appendix A to the proxy statement/prospectus filed as part of Form
S-4 Registration Statement (File No. 333-43098) and incorporated herein by
reference)
3.1(8) Amended and Restated Certificate of Incorporation of SPEEDCOM
Wireless Corporation, as amended
3.2(4) Amended and Restated Bylaws
3.3(6) Amended and Restated Bylaws of SPEEDCOM Wireless Corporation
4.1(2) Form of Bridge Note
4.2(2) Form of Warrant Agreement
4.3(2) Form of Underwriter's Unit Purchase Option
4.4(6) Purchase Agreement, dated April 13, 2001, by and among SPEEDCOM
Wireless Corporation and the Purchasers, as defined therein
4.5(6) Registration Rights Agreement, dated April 13, 2001, by and among
SPEEDCOM Wireless Corporation and the Purchasers, as defined
4.6(6) Form of Warrant of SPEEDCOM Wireless Corporation, dated April 13,
2001
4.7(7) Note and Warrant Purchase Agreement by and among SPEEDCOM Wireless
Corporation, S.A.C. Capital Associates, LLC, SDS Merchant Fund, L.P., Oscar
Private Equity Investments, L.P. and Bruce Sanguinetti
4.8(7) Promissory Note for $500,000 issued to S.A.C. Capital Associates,
LLC
4.9(7) Promissory Note for $250,000 issued to SDS Merchant Fund, L.P.
4.10(7) Promissory Note for $750,000 issued to Oscar Private Equity
Investments, L.P.
4.11(7) Promissory Note for $250,000 issued to Bruce Sanguinetti
4.12(7) Warrant No. W-1 to Purchase 146,667 Shares of Common Stock issued
to S.A.C. Capital Associates, LLC
4.13(7) Warrant No. W-2 to Purchase 73,333 Shares of Common Stock issued
to SDS Merchant Fund, L.P.
4.14(7) Warrant No. W-3 to Purchase 220,000 Shares of Common Stock issued
to Oscar Private Equity Investments, L.P.
4.15(7) Warrant No. W-4 to Purchase 73,333 Shares of Common Stock issued
to Bruce Sanguinetti
4.16(8) Purchase Agreement, dated August 23, 2001, by and among SPEEDCOM
Wireless Corporation and the Purchasers, as defined herein
4.17(8) Registration Rights Agreement, dated August 23, 2001, by and among
SPEEDCOM Wireless Corporation and the Purchasers, defined herein
4.18(8) Form of Series A Warrant of SPEEDCOM Wireless Corporation dated
August 23, 2001
4.19(8) Form of Series B Warrant of SPEEDCOM Wireless Corporation dated
August 23, 2001
4.20(8) Settlement Agreement between SPEEDCOM Wireless Corporation and
I.W. Miller Group, Inc. dated June 25, 2001
10.1(3) Registration Rights Agreement between the registrant and Michael
E. Noonan
10.2(2)* Amended and Restated 1996 Stock Option Plan
10.3(2)* Form of Indemnification Agreement
10.4(4)* Executive Employment Agreement between SPEEDCOM Wireless
International Corporation and Jay O. Wright
10.5(4)* Executive Employment Agreement between SPEEDCOM Wireless
International Corporation and Bruce Sanguinetti
10.6(4)* Executive Employment Agreement between SPEEDCOM Wireless
International Corporation and Michael McKinney
10.7(4)* Non-Qualified Stock Option Agreement
10.8(4)* Non-Qualified Stock Option Plan
10.9(9) Promissory Note for $250,000 issued to Bruce Sanguinetti dated
December 6, 2000.
10.10(9) Promissory Note for $40,000 issued to Bill Davis dated May 11,
2001.
10.11(9) Lease Agreement between SPEECOM Wireless Corporation and Lakewood
Ranch Properties, LLC.
10.12(9) Intellectual Property License Agreement between SPEEDCOM Wireless
Corporation and SRI International
16.1(5) Letter on change of certifying accountant
23.1(5) Consent of Independent Certified Public Accountants
24.1(8) Powers of Attorney
------------
(1) Incorporated by reference to the registrant's Definitive Proxy
Statement dated May 27, 1999.
(2) Incorporated by reference to the registrant's Registration
Statement on Form SB-2 (File No. 333-6711) filed with the SEC on June 24, 1996.
23
(3) Incorporated by reference to Amendment No. 1 to the registrant's
Registration Statement on Form SB-2 (File No. 333-6711) filed with the SEC on
July 31, 1996.
(4) Incorporated by reference to the Form 8-K filed October 11, 2000.
(5) Incorporated by reference to the Form 10-KSB filed April 17, 2001.
(6) Incorporated by reference to the Form 10-QSB filed May 14, 2001.
(7) Incorporated by reference to the Form 8-K filed July 2, 2001.
(8) Incorporated by reference to the Form S-3 filed September 18,
2001.
(9) Incorporated by reference to the Form 10-QSB filed November 14,
2001.
* Management contract or compensatory plan.
24