UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-KSB
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ending December 31, 2003
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 000-27045
INTERNATIONAL WIRELESS, INC.
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(Name of Small Business Issuer in Its Charter)
Maryland 36-4286069
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(State or other jurisdiction (IRS Employer
of Incorporation) Identification No.)
25 Mound Park Drive
Springboro, Ohio 45066
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(Address of principal executive offices) (Zip Code)
(937) 748-4217
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(Issuer's telephone number,
including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, 0.009
par value.
Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934
during the preceding 12 months (or 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 [ ]
1
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained herein, and will not be contained, to the
best of issuer's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]
Issuer's revenues for its most recent fiscal year were: none
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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the Issuer filed all documents and reports required to be filed by
Section 12, 13, or 15(d) of the Exchange Act after distribution of securities
under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE TO CORPORATE ISSUERS
On May 25, 2004, the Issuer had 13,353,606 outstanding shares of its $.009 par
value common stock. The aggregate market value of the Registrant's voting stock
held by non-affiliates of the Registrant was approximately $30,982,372 at the
closing quotation for the Registrant's common stock of $4.00 as of May 25, 2004.
Transitional Small Business Disclosure Format Used (check one):
Yes [ ] No [X]
Documents incorporated by reference: None.
2
INTERNATIONAL WIRELESS, INC.
TABLE OF CONTENTS
PAGE
PART I
Item 1. Business of the Company . . . . . . . . . . . . . . . . . 4
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . 9
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . 9
Item 4. Submission of Matters to a Vote of Securities Holders . . 10
PART II
Item 5. Market for the Issuer's Common Equity and Related
Shareholder Matters . . . . . . . . . . . . . . . . . . 11
Item 6. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . 17
Item 7. Financial Statements . . . . . . . . . . . . . . . . . . 22
Item 8. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosures . . . . . . . . 32
PART III
Item 9. Directors, Executive Officers, Promoters
and Control Persons; Compliance with
Section 16(a) of the Exchange Act . . . . . . . . . . . 32
Item 10. Executive Compensation . . . . . . . . . . . . . . . . . 36
Item 11. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . . . . . . . 38
Item 12. Certain Relationships and Related Transactions . . . . . 39
Item 13. Exhibits, and Reports on Form 8-K . . . . . . . . . . . . 40
Signatures . . . . . . . . . . . . . . . . . . . . . . . 42
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PART I
ITEM 1. BUSINESS OF THE COMPANY
FORWARD-LOOKING STATEMENTS. This annual report contains certain
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. In addition, the Company
(International Wireless, Inc., a Maryland corporation), may from time to time
make oral forward-looking statements. Actual results are uncertain and may be
impacted by many factors. In particular, certain risks and uncertainties that
may impact the accuracy of the forward-looking statements with respect to
revenues, expenses and operating results include without imitation; cycles of
customer orders, general economic and competitive conditions and changing
customer trends, technological advances and the number and timing of new product
introductions, shipments of products and components from foreign suppliers, and
changes in the mix of products ordered by customers. As a result, the actual
results may differ materially from those projected in the forward-looking
statements.
Because of these and other factors that may affect the Company's operating
results, past financial performance should not be considered an indicator of
future performance, and investors should not use historical trends to anticipate
results or trends in future periods.
(A) THE COMPANY
The Company was incorporated in the State of Maryland on April 6, 1999 as
Origin Investment Group, Inc. ("Origin"). On December 27, 2001, the Company went
through a reverse merger with International Wireless, Inc. ("International
Wireless"). Thereafter on January 2, 2002, the Company changed its name from
Origin to our current name, International Wireless, Inc.
The Company was originally formed as a non-diversified closed-end
management investment company, as those terms are used in the Investment Company
Act of 1940 ("1940 Act"). The Company at that time elected to be regulated as a
business development company under the 1940 Act. The 1940 Act defines a business
development company (a "BDC") as a closed-end management investment company that
provides small businesses that qualify as an "eligible portfolio company" with
investment capital and also significant managerial assistance. A BDC is required
under the 1940 Act to invest at least 70% of its total assets in "qualifying
assets" consisting of (a) "eligible portfolio companies" as defined in the 1940
Act and (b) certain other assets including cash and cash equivalents.
The Company's original investment strategy had been, since inception, to
invest in a diverse portfolio of private companies that in some way build the
Internet infrastructure by offering hardware, software and/or services which
enhance the use of the Internet. Prior to it's reverse merger with International
Wireless, the Company identified two eligible portfolio companies within which
they entered into agreements to acquire interests within such companies and to
further invest capital in these companies to further develop their business.
However, on each occasion and prior to each closing, the Company was either
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unable to raise sufficient capital to consummate the transaction or discovered
information which modified its understanding of the eligible portfolio company's
financial status to such an extent where it was unadvisable for it to continue
and consummate the transaction. During the 2002 fiscal year, the Company entered
into a definitive share exchange agreement and investment agreement with
Vivocom, Inc., a San Jose, California based software company that had developed
a proprietary all media switching system which enables all forms of data to be
sent over a single IP channel. The Company intended on investing a minimum of
three million two hundred and fifty thousand dollars ($3,250,000) within Vivocom
over several months. Due to the Company's inability to raise this money, the
share exchange never took place and the agreement terminated.
On December 7, 2001, the Company held a special meeting of its shareholders
in accordance with a filed Form DEF 14A with the Securities and Exchange
Commission whereby the shareholders voted on withdrawing the Company from being
regulated as a business development company and thereby no longer be subject to
the Investment Company Act of 1940 and to effect a one-for-nine reverse split of
its total issued and outstanding common stock. On December 14, 2001 the Company
filed a Form N-54C with the Securities and Exchange Commission formally
notifying its withdrawal from being regulated as a business development company.
The purpose of the withdrawal of the Company from being regulated as a business
development company and the one-for-nine reverse split of its total issued and
outstanding common stock was to allow the Company to merge with a potential
business in the future. By withdrawing from its status as a business development
company, the Company chose to be treated as a publicly traded "C" corporation.
On December 27, 2001, the Company went through a reverse merger whereby it
acquired all the outstanding shares of International Wireless. Under the said
reverse merger, the former Shareholders of International Wireless ended up
owning a 88.61% interest in the Company. Thereafter on January 2, 2002, the
Company changed its name from Origin to our current name, International
Wireless, Inc.
From December 27, 2001 through June 2003, the Company attempted to develop
its bar code technology and bring it to market. To that extent, the Company
moved its operations to Woburn, Massachusetts, hired numerous computer
programmers, developers and sales people in addition to support staff. Due to
the Company's inability to raise sufficient capital, the Company was unable to
pay current operating expenses and by June, 2003 shut down its operations
entirely.
On August 29, 2003, a change in control of the Company occurred in
conjunction with naming Attorney Jerry Gruenbaum of First Union Venture Group,
LLC as attorney of record for the purpose of overseeing the proper disposition
of the Company and its remaining assets and liabilities by any means
appropriate, including settling any and all liabilities to the U.S. Internal
Revenue Service and the Commonwealth of Massachusetts' Attorney General's office
for unpaid wages.
In conjunction with naming Attorney Jerry Gruenbaum of First Union Venture
Group, LLC as attorney of record for the purpose of overseeing the proper
disposition of the Company and its remaining assets and liabilities, the Company
issued First Union Venture Group, LLC, a Nevada Limited Liability Company,
Thirty Million (30,000,000) newly issued common shares as consideration for
their services. In addition, the Company canceled any and all outstanding
options, warrants, and/or debentures not exercised to date. The Company further
nullified any and all salaries, bonuses, and benefits including severance pay
and accrued salaries to Stanley A. Young and Michael Dewar.
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On November 12, 2003, the Company approved the spin-off of the two
subsidiaries of the Company and any and all remaining assets of the Company,
including any intellectual property, to enable the Company to pursue a suitable
merger candidate. In addition, the Company approved a 30 to 1 reverse split of
all existing outstanding common shares of the Company.
On November 15, 2003, a change in control of the Company occurred whereby
the Company entered into an Acquisition Agreement to acquire one hundred percent
(100%) of PMI Wireless, Inc., a Delaware corporation with corporate headquarters
located in Cordova, Tennessee. The acquisition, in the form of a reverse merger,
took place on December 1, 2003 for the aggregate consideration of $50,000 in
cash, all of which was paid to the U.S. Internal Revenue Service for the
Company's prior obligations, plus assumption of the Company's existing debts,
for 9,938,466 newly issued common shares of the Company.
On December 10, 2003, the Company entered into an Acquisition Agreement to
acquire one hundred percent (100%) of Mound Technologies, Inc. ("Mound"), a
Nevada corporation with its corporate headquarters located in Springboro, Ohio.
The acquisition was a stock for stock exchange in which the Company acquired all
of the issued and outstanding common stock of Mound in exchange for 1,256,000
newly issued shares of its common stock. As a result of this transaction, Mound
became a wholly owned subsidiary of the Company.
(B) BUSINESS OF THE ISSUER
The Company is in the early stages of business formation and operation. In
its present form, the Company's mission is to become a leading diversified
company with business interests in well established service organizations and
capital goods manufacturing companies. The Company plans to successfully grow by
acquiring companies with historically profitable results, strong balance sheets,
high profit margins, and solid management teams in place. By providing access to
financial markets, expanded marketing opportunities and operating expense
efficiencies, the Company expects to become the facilitator for future growth
and higher long-term profits. In the process, the Company expects to develop new
synergies among the acquired companies, which should allow for greater cost
effectiveness and efficiencies, and thus further enhancing each individual
company's strengths. To date, the Company has completed company acquisitions in
the wireless technology, steel fabrication and heavy machinery industries.
(1) PMI WIRELESS, INC.
PMI Wireless, Inc. is an emerging technology company, incorporated in
September 2003, which plans to deliver Customer Premise Equipment (CPE) for
Broadband Wireless Access Systems in the ISM, WLL, MMDS and UNII frequency
bands. PMI expects to provide a reduction of build-out costs for Broadband
Wireless Access Systems while accelerating the speed of deployment. PMI also
expects to deliver next-generation wireless services that support expanded
coverage, seamless global roaming, higher voice quality, high-speed data and a
full range of broadband multimedia services, including full motion video, video
conferencing, and high-speed Internet access. Additional services are expected
to include on-demand medical imaging, real-time road maps, and anytime, anywhere
video conferencing.
6
PMI is also a licensed reseller for Turbowave, Inc. Turbowave develops,
manufactures, and markets certain hardware, software, and related materials for
use with certain personal computers, wireline and wireless devices. PMI expects
to utilize the Turbowave manufactured products in developing and marketing its
products and services.
To date, PMI has not produced or sold any products or services.
(2) MOUND TECHNOLOGIES, INC.
Mound was incorporated in the state of Nevada in November of 2002, with its
corporate offices located in Springboro, Ohio. Mound is actively involved in the
fabricated metals industry as well as property management. This business
includes two divisions and Freedom Products of Ohio ("Freedom"), a wholly owned
subsidiary.
The Steel Fabrication Division is located in Springboro, Ohio. This
division is a full service structural and miscellaneous steel fabricator. It
also manufactures steel stairs and railings, both industrial and architectural
quality. The present capacity of the facility is 6000 tons per year of
structural and miscellaneous steel. This division had been previously known as
Mound Steel Corporation which was started at the same location in 1964.
The Property Management Division is also located in Springboro, Ohio. This
division presently owns two properties and manages three other properties, all
in Ohio, which includes 37,000 square feet of light and heavy manufacturing
buildings on approximately 6 acres. An additional 33 acres of industrial
property is managed but not owned, all in Ohio.
Freedom is a wholly owned subsidiary of Mound. Freedom manufactures
products for the heavy machinery industry and has the ability to do complete
assembly and testing if required. This includes machine bases, breeching,
pollution control abatement fabrications and material handling fabrications.
Freedom has the capacity to fabricate weldments and assemblies up to 50 tons
total weight. Freedom is located in Middletown, Ohio.
(3) STEEL FABRICATION DIVISION:
The Steel Fabrication Division is focused on the fabrication of metal
products. This Division produces structural steel, miscellaneous metals, steel
stairs, railings, bar joists, metal decks and the erection thereof. This
Division produced net sales of $4.4 million in 2003.
The State of Ohio is the second largest producing state for fabricated
metal products in the country. The fabricated metal component of the Ohio Gross
State Product was $8.995 million for 2001. Over the past three years, from the
first quarter of 2001 to the first quarter of 2003, the economic downturn has
hit this manufacturing segment hard. A substantial number of factory jobs have
been lost in this Division's operating region. During this time, nearly 60% of
the durable goods manufacturers were concentrated in these two struggling
industries - fabricated metal and machinery manufacturing. Along with the
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economic manufacturing downturn, intense competition from China also contributed
to the challenging economic climate of this industry. With the economy emerging
out of its doldrums in late 2003, coupled with steel tariffs being ended,
business prospects for the metal fabrication industry have improved. For the
first quarter of 2004, this Division has approximately $3,300,000 in order
backlog.
This Division's customers are typically U.S. based companies that require
large structural steel fabrication, with needs such as building additions, new
non-residential construction, etc. Customers are typically located within a
one-day drive from the Company's facilities. The Company is able to reach 70% of
the U.S. population, yielding a significant potential customer base. Marketing
of our products is done by advertising in industry directories, word-of-mouth
from existing customers, and by the dedicated efforts of in-house sales staff
monitoring business developments opportunities within the Company's region.
Large clients typically work with the Company on a continual basis for all their
fabricated metal needs.
Competition overall in the U.S. steel fabrication industry has been reduced
by approximately 50% over the last few years due to economic conditions leading
to the lack of sustained work. The number of regional competitors has gone from
ten down to three over the past five years. Larger substantial work projects
have declined dramatically with the downturn in the economy. Given the
geographical operating territory of the Company, foreign competition is not a
major factor. In addition to competition, steel pricing represents another
significant challenge. The cost of steel, our highest input cost, has seen
significant increases in recent years. The Company will manage this challenge by
stockpiling the most common steel component products and incorporating price
increases in job pricing as deemed appropriate.
(4) PROPERTY MANAGEMENT DIVISION:
The Property Management Division is focused on the ownership and management
of industrial property, principally in Ohio. This Division owns two properties
and manages three other properties, which include 37,000 square feet of light
and heavy manufacturing buildings on approximately 6 acres. An additional 33
acres of industrial property is managed but not owned. All properties owned
and/or managed are in the State of Ohio.
The real estate component of the Ohio Gross State Product was $33.251
million for 2001. With the downturn in the economic climate in the most recent
years, the volume of vacant industrial space has edged up slightly. As the
economy rebounds, industrial construction is expected to improve as companies
begin to occupy space in existing buildings. Increased construction is also
expected for growing companies seeking improved facilities that include taller
ceilings and other operating features.
This Division faces competition from real estate investment trusts
(REIT's), which are already among the largest commercial property owners in the
United States. With over 300 public and private REIT's in the United States,
they have slowly been growing their holdings through acquisitions. Most REIT's,
however, do not specialize in industrial and office properties.
8
(5) FREEDOM PRODUCTS OF OHIO, INC.:
Freedom Products of Ohio ("Freedom") is a wholly owned subsidiary of Mound.
Freedom manufactures products for the heavy machinery industry and has the
ability to do complete assembly and testing if required. This includes machine
bases, breeching, pollution control abatement fabrications and material handling
fabrications. Freedom has the capacity to fabricate weldments and assemblies up
to 50 tons total weight. Freedom is located in Middletown, Ohio.
(6) EMPLOYEES
As of May 25, 2003, the Company, including its subsidiaries has forty-five
employees, consisting of full-time officers and in-house-counsel The Company
believes that our relationship with our current employees is good. The Company
is however in dispute with former employees as to back salaries and severance
pay. The Company's success is dependent, in part, upon our ability to attract
and retain qualified management and technical personnel. Competition for these
personnel is intense, and the Company will be adversely affected if it is unable
to attract key employees. The Company presently does not have a stock option
plan for key employees and consultants.
(7) GOING CONCERN QUALIFICATION BY INDEPENDENT AUDITORS
The Company's independent auditors have reported that the Company has
suffered recurring net operating losses and has a working capital deficit and a
shareholders' deficit that raises substantial doubt about our Company's ability
to continue as a going concern. As shown in the accompanying financial
statements, the Company incurred a net loss of $809,596 during the year ended
December 31, 2003 resulting in a deficit accumulated during the development
stage of $9,907,926. Failure to raise capital or generate revenue in the future
may result in the Company depleting its available funds, being unable to fund
its investment pursuits and cause it to curtail or cease operations.
Additionally, even if the Company does raise sufficient capital or generate
revenue, there can be no assurances that the net proceeds or the revenue will be
sufficient to enable it to develop business to a level where it will generate
profits and cash flows from operations.
ITEM 2. PROPERTIES
The Company's executive offices are located at 25 Mound Park Drive,
Springboro, Ohio which is the office of Mound Technologies, Inc. the operating
subsidiary of the Company. The Company does not pay any rent to Mound
Technologies, Inc. for the space it utilizes and shares with Mound. Mound
Technologies pays rent for the entire manufacturing facility and general office
space.
ITEM 3. LEGAL PROCEEDINGS
On November 20, 2001 a judgment in the amount of $10,497 was entered
against the Company, and Omar A. Rizvi, the former Chairman of the Board of
Directors of Origin, by the Labor Commissioner in the State of California for
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past wages, interest and penalties owed to a former employee of the Company who
alleged to have performed paralegal and bookkeeping services in California for
Origin. To date the judgment has not been paid.
In December, 2002 the Company was sued by Greg Laborde in U.S. District
Court for the District of New Jersey for Breach of Employment Contract and
Defamation seeking monetary damages including additional stocks and warrants.
The Company has settled the dispute in May 2004 for 170,000 newly issued shares
of the Company.
On February 20, 2003 a judgment in the amount of $28,750 was entered
against the Company for unpaid rent on behalf of Graham Paxton, the former
President and CEO of the Company as part of his employee benefit plan. To date
the judgment has not been paid.
On March 20, 2003 a judgment in the amount of $2,000 was entered against
the Company by Beyond Words Communication, Inc. for prior unpaid marketing
services rendered to the Company. To date the judgment has not been paid.
On March 31, 2003 a judgment in the amount of $99,090 was entered against
the Company for breach of contract for non payment of rent on the Company's
former office facility in Woburn, Massachusetts. To date the judgment has not
been paid.
In May, 2003 certain former employees filed complaints with the
Commonwealth of Massachusetts Attorney General's office for unpaid salaries and
accrued vacation pay. In accordance with Company's records, the Company owes a
total of approximately $73,000 for back fees, gross salaries and accrued
vacation. From its records, which the employees dispute, the Company owes the
following to individuals who filed a complaint with the Attorney General's
Office:
Thomas C. Antognini $12,273.03
John Poupolo $14,344.44
James K. Levinger $11,454.31
Tom Gosselin $ 5,332.40
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Total $41,404.18
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In April 2004, a judgment was obtained against Mound Technologies, Inc., a
newly acquired subsidiary, in the amount of $175,000 by a vendor. The Company
has recently negotiated a settlement agreement with payment of a reduced amount
due by July 12, 2004.
Other than the matters above, there is no other past, pending or, to the
Company's knowledge, threatened litigation or administrative action which has or
is expected by the Company's management to have a material effect upon our
Company's business, financial condition or operations, including any litigation
or action involving our Company's officers, directors, or other key personnel.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On August 29, 2003, a majority of the shareholders of record by special
meeting of the shareholders approved a change in control of the Company in
conjunction with naming Attorney Jerry Gruenbaum of First Union Venture Group,
LLC as attorney of record for the purpose of overseeing the proper disposition
of the Company and its remaining assets and liabilities by any means
appropriate, including settling any and all liabilities to the U.S. Internal
Revenue Service and the Commonwealth of Massachusetts' Attorney General's office
for unpaid wages.
In conjunction with naming Attorney Jerry Gruenbaum of First Union Venture
Group, LLC as attorney of record, the Company issued First Union Venture Group,
LLC, a Nevada Limited Liability Company, Thirty Million (30,000,000) newly
issued common shares as consideration for their services. In addition, the
Company canceled any and all outstanding options, warrants, and/or debentures
not exercised to date. The Company further nullified any and all salaries,
bonuses, and benefits including severance pay and accrued salaries of Stanley A.
Young and Michael Dewar.
On November 12, 2003, at a Special meeting of the Shareholders, a majority
of the Shareholders of the Company being present, approved the spin-off of the
two subsidiaries of the registrant and any and all remaining assets of the
registrant, including any intellectual property, to enable the registrant to
pursue a suitable merger candidate. Also approved was a 30 to 1 reverse split of
all existing outstanding common shares of the corporation.
On November 15, 2003, a change in control of the Company occurred whereby
the Company entered into a reverse merger Acquisition Agreement to acquire one
hundred percent (100%) of PMI Wireless, Inc., a Delaware corporation with
corporate headquarters located in Cordova, Tennessee. The acquisition, took
place on December 1, 2003 for the aggregate consideration of $50,000 in cash,
all of which was paid to the U.S. Internal Revenue Service for the Company's
prior obligations, plus assumption of the Company's existing debts, for
9,938,466 common shares of the Company.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUIY AND RELATED SHAREHOLDER MATTERS
The Company common stock is currently trading on the Pink Sheet as a result
of its failure to timely file its required annual and quarterly reports which it
is now correcting. The Company was formed on April 6, 1999. In April 1999, the
Company's common stock had been listed for trading on the OTC Bulletin Board
under the symbol "OGNI." The trading market for the Company's stock is limited
and sporadic and should not be deemed to constitute an "established trading
market". In connection with the change of the Company's name to International
Wireless, Inc., the Company's symbol was changed to "IWIN" on January 2, 2002.
As a result of the 30-1 reverse split of the shares outstanding, the Company's
symbol was changed to "IWLJ.PK" on November 12, 2003.
11
The following table sets forth the range of bid prices of the Company's
common stock during the periods indicated. Such prices reflect prices between
dealers in securities and do not include any retail markup, markdown or
commission and may not necessarily represent actual transactions. The
information set forth below was provided by NASDAQ Trading & Market Services.
These quotations have not been adjusted for the December 7, 2001, one for nine
reverse stock split.
HIGH LOW
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FISCAL YEAR ENDED DECEMBER 31, 2002
First Quarter 3.25 2.60
Second Quarter 1.42 1.10
Third Quarter 0.45 0.33
Fourth Quarter 0.15 0.14
FISCAL YEAR ENDING DECEMBER 31, 2003
First Quarter 0.04 0.04
Second Quarter 0.02 0.02
Third Quarter 0.02 0.02
Fourth Quarter 5.00 5.00
The closing bid price for the common stock as reported by the OTC Bulletin
Board on May 25, 2004 was $4.00.
As of May 25, 2004, there were approximately 557 holders of record of the
Company's common stock.
TRANSFER AGENT
The Company's transfer agent and registrar of the common stock is
Securities Transfer Corporation, 2591 Dallas Parkway, Suite 102, Frisco, Texas
75034.
DIVIDEND POLICY
The Company has never paid dividends on the common stock and does not
anticipate paying dividends on its common stock in the foreseeable future. It is
the present policy of the Board of Directors to retain all earnings to provide
for the future growth of the Company. Earnings of the Company, if any, are
expected to be retained to finance the expansion of the Company's business. The
payment of dividends on the Company's common stock in the future will depend on
the results of operations, financial condition, capital expenditure plans and
other cash obligations of the Company and will be at the sole discretion of the
Board of Directors.
RECENT SALES OF UNREGISTERED SECURITIES
The following is information for all securities that the Company has sold
since inception without registering the securities under the Securities Act.
These securities do not reflect a one-for-nine reverse split of the total issued
and outstanding common stock of the Company that took place in December 7, 2001,
or the thirty-for-one reverse split of the total issued and outstanding common
stock of the Company that took place November 12, 2003:
12
The Company sold 100,000 shares of common stock for $100,000 to an
accredited investor on January 18, 2000, and sold 21,390 shares of common stock
for $99,998.25 to another accredited investor on February 12, 2000. These
investors were individuals personally known to members of the Company's
management. Each of the sales was conducted in accordance with Rule 606 of
Regulation E of the Securities Act of 1933 (as amended, the "Act") exempt from
registration and free trading.
On April 14, 2000 the Company sold 50,000 shares of common stock to an
accredited investor for $50,000 or $1.00 per share. These shares were sold in
connection with a private offering pursuant to Section 4(2) of the Securities
Act and are restricted from resale pursuant to Rule 144 of the Act.
On May 8, 2000 the Company offered to sell and on May 24, 2000 completed
the sale of 142,000 units to private accredited investors for an aggregate of
$106,500 or $0.75 per unit. We received net proceeds totaling $96,500 after
payment of a 10% finder's fee to a non affiliated third party. Each Unit was
comprised of one share of common stock (free trading pursuant to Rule 606 of
Regulation E) and one Class A common stock purchase warrant. Each Class A common
stock purchase warrant is exercisable for one restricted common stock upon
payment of $.75 per warrant. The Class A warrants are exercisable for a five
year period.
On February 29, 2000 the Company offered for sale 16,000 shares of Series A
Convertible Preferred Stock for $4,600,000 or $287.50 per share. The Series A
Convertible Preferred Stock was convertible into common stock in stages
occurring at one months intervals over a ten month period. The Series A
Convertible provided for (a) a liquidation preference of $1.00 per share (plus
all declared but unpaid dividends); (b) full voting rights based upon the number
of shares of common stock into which each share is convertible; (c) no
conversion price per share of common stock; and (d) an automatic conversion into
common stock on specified dates. Class 1 Series A investors received the above
terms and had their funds placed into an escrow account which was set up where
the aggregate proceeds deposited in this account was to be released to the
Company when it reached $2,650,000. The use of proceeds was allocated for a
proposed acquisition of Encore/Sigma and for working capital. If the funds did
not reach that amount by a specified date, all principal and interest earned was
to be returned to the Class 1 Series A Preferred holders. Class 2 Series A
Convertible Preferred holders were offered one additional restricted common
stock for every $10.00 they invested if they agreed to allow the Company to use
their funds for current working capital rather than have their funds deposited
in the escrow account.
On June 6, 2000 the Company terminated the Series A Convertible Preferred
Stock offering, and on June 23, 2000, we returned to our Class 1 investors an
aggregate of $638,763 plus accrued interest which was previously recorded as
restricted cash. Also on June 6 we offered our Class 2 investors, in lieu of
each Series A Convertible Preferred Stock and restricted stock awarded, 383.33
Units. Each Unit was comprised of one share of common stock and one Common Stock
Purchase Warrant where each Common Stock Purchase Warrant is redeemable for one
share of common stock at an exercise price of $1.50 per share. As a result of
13
this exchange, we issued 324,999 shares of common stock for $243,750 or $0.75
per share along with 324,999 Common Stock Purchase Warrants. The warrants are
exercisable for a period of five years. The common stock was free trading based
on filing an offering circular pursuant to Rule 604 of Regulation E of the
Securities Act. No shares underlying the Common Stock Purchase Warrants are
restricted from resale pursuant to Rule 144 of the Act. Proceeds received from
the sale were used for working capital purposes and payment of the break up fee
paid to Encore/Sigma.
On June 12, 2000 the Company sold 20,000 shares of common stock to two
accredited investors for $25,000 or $1.25 per share. These shares are restricted
from resale pursuant to Rule 144 of the Act. Proceeds received from the sale
were used for working capital purposes.
On August 24, 2000 the Company sold an aggregate of 344,827 shares of
common stock to ten accredited investors for $100,000 or $0.29 per share. These
shares were sold in connection with a private offering pursuant to Rule 606 of
Regulation E and are free trading. Proceeds received from the sale were used for
working capital purposes.
On August 29, 2000 the Company offered to sell and on September 12, 2000
completed the sale of 350,000 shares of common stock to an accredited investor
for an aggregate of $507,500 or $1.45 per share. Net proceeds received were
$456,750, net of direct related costs of $50,750. These shares were sold in
connection with filing an offering circular pursuant to Rule 604 of Regulation E
of the Securities Act. Use of proceeds from this offering include payment of
accounting fees, legal fees associated the Alpha transaction and Vivocom
transaction, and with the evaluation of Vivocom's patent application, and for
general working and operating capital purposes.
On March 28, 2001 the Company sold 33,333 units to an investor for an
aggregate of $10,000 or $.30 per share. Each unit is comprised of one share of
common stock and one common stock warrant. Each warrant is redeemable for one
share of common stock upon the payment of $.40.
On April 4, 2001, the Company sold 100,000 units to an investor for an
aggregate of $30,000 or $.030 per unit. Each unit was comprised of one share of
common stock and one and one half common stock warrants, or 150,000 common stock
warrants. Each common stock warrant is redeemable for one share of common stock
upon payment of $.40 per warrant.
On May 9, 2001 the Company sold 50,000 units to an investor for an
aggregate of $20,000, or $0.40 per unit. Each unit is comprised of one share of
common stock and one common stock warrant. Each common stock warrant is
redeemable for one share of common stock upon the payment of $0.40 per warrant.
On May 15, 2001, the Company received $10,000 in the form of a short term
bridge loan from an investor. The duration of this loan is one month and has an
interest rate of 12% per annum. This investor also received common stock
warrants to purchase an aggregate of 15,000 shares of our common stock
exercisable at $.51 per share.
On May 17, 2001 the Company issued warrants to a non-affiliated consultant
to purchase an aggregate of 12,500 shares of common stock at an exercise price
of $0.40 per share.
14
On May 31, 2001 the Company sold 49,019.60 units to an investor for an
aggregate of $25,000, or $0.51 per unit. Each unit was comprised of one share of
common stock and six common stock purchase warrants. Each common stock warrant
is redeemable for one share of common stock upon the payment of $0.40 per
warrant.
On August 20, 2001 the Company offered to sell pursuant to a private
placement an aggregate of 5,400,000 shares of its common stock at $0.02 per
share for an aggregate of $108,000. Said shares shall be restricted pursuant to
Rule 144 of the Securities Act of 1933. Proceeds from the sale shall be used for
covering outstanding liabilities of the company and to pay for costs associated
with its continual listing on the NASDAQ OTC:BB exchange. At the time of filing
of this Form 10-K, One investor had purchased 1,500,000 of these shares for an
aggregate purchase price of $30,000.
On May 15, 2001, the Company received $10,000 in the form of a short-term
bridge loan from an investor. The duration of this loan is one month and has an
interest rate of 12% per annum. This investor also received common stock
warrants to purchase an aggregate of 15,000 shares of our common stock
originally exercisable at $.51 per share but adjusted to $0.40 per share and
also received an additional 10,000 common stock purchases warrants to purchase
an additional 10,000 shares of our common stock for extending the due date of
the note.
On May 17, 2001 the Company received $7,500 in the form of a short-term
bridge loan from an investor and on May 21, 2001 we received an additional
$2,500 from that investor as a short-term bridge loan. The duration of the loans
were 90 days and jointly due on August 21, 2001 and has an interest rate of 12%
per annum. This investor also received common stock purchase warrants to
purchase an aggregate of 25,000 shares of our common stock exercisable at $0.40
per share.
On May 21, 2001 the Company received $20,000 in the form of a short-term
bridge loan from an investor. The duration of the loan was 90 days and due on
August 21, 2001 and has an interest rate of 12% per annum. This investor also
received common stock purchase warrants to purchase an aggregate of 50,000
shares of our common stock exercisable at $0.40 per share.
On July 15, 2001 the Company received $12,000 in the form of a short-term
bridge loan from an investor. The duration of the loan was 60 days and due on
September 15, 2001 and has an interest rate of 12% per annum. This investor also
received common stock purchase warrants to purchase an aggregate of 50,000
shares of our common stock exercisable at $0.40 per share.
On August 20, 2001 the Company offered to sell five million four hundred
thousand shares (5,400,000) at a purchase price of $0.02 per share for an
aggregate of $108,000 ("Private Offering"). These shares are sold pursuant to an
exemption under the registration requirements of the Securities Act of 1933 (the
"Securities Act") and are restricted from resale pursuant to Rule 144 of the
Securities Act.
On August 29, 2001 the Company sold 1,500,000 shares of the Private
Offering to an investor for an aggregate of $30,000. The investor was an
accredited investor as that term is defined pursuant to Rule 501 of the
15
Securities Act of 1933. The offering was done pursuant to Rule 606 of Regulation
E.
On September 4, 2001 the Company sold 1,875,000 shares of the Private
Offering to an investor for an aggregate of $38,696 in the form of 101,834
shares of Telehublink, Inc. ("THLC") free trading common stock.
On September 19, 2001 the Company sold 525,500 shares of the Private
Offering to an investor for an aggregate of $10,500 in the form of 53,000 shares
of THLC free trading common stock at a value of $0.198 per share of THLC stock.
On October 3, 2001 the Company sold 250,000 shares of the Private Offering
to an investor for an aggregate of $5,000. The investor was an accredited
investor as that term is defined pursuant to Rule 501 of the Securities Act of
1933. The offering was done pursuant to Rule 606 of Regulation E.
On October 4, 2001 the Company sold 250,000 shares of the Private Offering
to an investor for an aggregate of $5,000. The investor was an accredited
investor as that term is defined pursuant to Rule 501 of the Securities Act of
1933. The offering was done pursuant to Rule 606 of Regulation E.
On October 10, 2001 the Company sold 500,000 shares of the Private Offering
to an investor for an aggregate of $10,000. The investor was an accredited
investor as that term is defined pursuant to Rule 501 of the Securities Act of
1933. The offering was done pursuant to Rule 606 of Regulation E.
On October 12, 2001 the Company sold 375,000 shares of the Private Offering
to an investor for an aggregate of $7,500. The investor was an accredited
investor as that term is defined pursuant to Rule 501 of the Securities Act of
1933. The offering was done pursuant to Rule 606 of Regulation E.
On October 17, 2001 the Company sold 125,000 shares of the Private Offering
to an investor for an aggregate of $2,500. The investor was an accredited
investor as that term is defined pursuant to Rule 501 of the Securities Act of
1933. The offering was done pursuant to Rule 606 of Regulation E.
During the year ended December 31, 2002, $42,000 of loans payable at
December 31, 2001 were converted into the Company's common stock under a private
placement for 49,900 shares and the exercise of 50,000 warrants.
During the year ended December 31, 2002, $160,149 of notes payable to
related parties was converted into 1,550,414 shares of common stock under the
Company's private placement offering.
During the year ended December 31, 2002, 5,863,928 shares of common stock
were issued for $691,772 in connection with a private placement offering.
During the year ended December 31, 2002, 620,351 shares of the Company's
common stock were issued to consultants for services rendered at a value of
$364,545.
16
During the year ended December 31, 2002, 890,832 common stock warrants were
exercised for $385,983 at prices ranging from $0.00 to $0.10 per share.
During the year ended December 31, 2002, 510,107 shares of common stock
were issued for the exercise of stock options for a consideration of $204,050.
During the year ended December 31, 2003 the Company issued 220,080 shares
of the Company's common stock to a consultant for services provided at a price
of $0.15 per share. Stock based compensation expense of $34,555 was recorded in
connection with this issuance.
During the year ended December 31, 2003 the Company issued 500,000 shares
of common stock as payment of a loan payable to a related party. The shares were
valued at $0.01 per share and the outstanding loan was reduced by $50,000.
During the year ended December 31, 2003, 70,000 shares were issued in
connection with the exercise of 70,000 non-qualified stock options at an
exercise price of $0.01 per share. Total proceeds were $7,000.
During the year ended December 31, 2003, the company received proceeds of
$219,125 from the sale of 2,191,250 shares of its common stock under a private
placement at $0.10 per share.
During the year ended December 31, 2003, the Company issued 268,000 shares
to private placement holders who had subscribed to the private placement at
higher prices. The effect of this additional issuance was to reduce these
holders' purchase price basis to $0.10 per share.
In August, the Board of Directors issued 30,000,000 shares to First Union
Venture Group, LLC as consideration for their performance of duties related to
finalizing the Company's affairs.
The Company believes that the transactions described from inception through
January 3, 2001 above were exempt from registration under Regulation E
"Exemptions For Small Business Investment Companies" of the Securities Act of
1933 because the Company qualified at the time as a Small Business Investment
Company, the aggregate amount of the subject securities was not in excess of
$100,000 and the subject securities were sold to a limited group of persons,
each of whom was believed to have been a sophisticated investor. Restrictive
legends were placed, as applicable, on stock certificates evidencing the
securities.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS AND PLAN OF OPERATION
The following discussion and analysis provides certain information, which
the Company's management believes is relevant to an assessment and understanding
of the Company's results of operations and financial condition for the year
ended December 31, 2003. This discussion and analysis should be read in
conjunction with the Company's financial statements and related footnotes.
The Company's auditors have issued a going concern opinion. The Company's
auditors have reported that the Company has suffered net operating losses and
has a working capital deficit that raises substantial doubt about our Company's
ability to continue as a going concern.
17
The statements contained in this section that are not historical facts are
forward-looking statements (as such term is defined in the Private Securities
Litigation Reform Act of 1995) that involve risks and uncertainties. Such
forward-looking statements may be identified by, among other things, the use of
forward-looking terminology such as "believes," "expects," "may," "will,"
"should" or "anticipates" or the negative thereof or other variations thereon or
comparable terminology, or by discussions of strategy that involve risks and
uncertainties. From time to time, we or our representatives have made or may
make forward-looking statements, orally or in writing. Such forward-looking
statements may be included in our various filings with the SEC, or press
releases or oral statements made by or with the approval of our authorized
executive officers.
These forward-looking statements, such as statements regarding anticipated
future revenues, capital expenditures and other statements regarding matters
that are not historical facts, involve predictions. Our actual results,
performance or achievements could differ materially from the results expressed
in, or implied by, these forward-looking statements. We do not undertake any
obligation to publicly release any revisions to these forward-looking statements
or to reflect the occurrence of unanticipated events. Many important factors
affect our ability to achieve its objectives, including, among other things,
technological and other developments in the Internet field, intense and evolving
competition, the lack of an "established trading market" for our shares, and our
ability to obtain additional financing, as well as other risks detailed from
time to time in our public disclosure filings with the SEC.
The Company was incorporated in the State of Maryland on April 6, 1999 as
Origin Investment Group, Inc. ("Origin"). On December 27, 2001, the Company went
through a reverse merger whereby it acquired all the outstanding shares of
International Wireless, Inc. ("International Wireless"). Under the said reverse
merger, the former Shareholders of International Wireless ended up owning an
88.61% interest in the Company. Thereafter on January 2, 2002, the Company
changed its name from Origin to our current name, International Wireless, Inc.
The Company was originally formed as a non-diversified closed-end
management investment company, as those terms are used in the Investment Company
Act of 1940 ("1940 Act"). The Company at that time elected to be regulated as a
business development company under the 1940 Act. The 1940 Act defines a business
development company (a "BDC") as a closed-end management investment company that
provides small businesses that qualify as an "eligible portfolio company" with
investment capital and also significant managerial assistance. A BDC is required
under the 1940 Act to invest at least 70% of its total assets in "qualifying
assets" consisting of (a) "eligible portfolio companies" as defined in the 1940
Act and (b) certain other assets including cash and cash equivalents.
The Company's original investment strategy had been, since inception, to
invest in a diverse portfolio of private companies that in some way build the
Internet infrastructure by offering hardware, software and/or services which
enhance the use of the Internet. Prior to it's reverse merger with International
Wireless, the Company identified two eligible portfolio companies within which
they entered into agreements to acquire interests within such companies and to
further invest capital in these companies to further develop their business.
18
However, on each occasion and prior to each closing, the Company was either
unable to raise sufficient capital to consummate the transaction or discovered
information which modified their understanding of the eligible portfolio
company's financial status to such an extent where it was unadvisable for them
to continue and consummate the transaction. During the 2002 fiscal year, the
Company entered into a definitive share exchange agreement and investment
agreement with Vivocom, Inc., a San Jose, California based software company that
had developed a proprietary all media switching system which enables all forms
of data to be sent over a single IP channel. The Company intended on investing a
minimum of three million two hundred and fifty thousand dollars ($3,250,000)
within Vivocom over several months. Due to the Company's inability to raise this
money, the share exchange never took place and the agreement terminated.
On December 27, 2001, the Company went through a reverse merger whereby it
acquired all the outstanding shares of International Wireless. Under the said
reverse merger, the former Shareholders of International Wireless ended up
owning a 88.61% interest in the Company. Thereafter on January 2, 2002, the
Company changed its name from Origin to our current name, International
Wireless, Inc. The historical financial statements prior to December 27, 2001
are those of International Wireless, Inc. the Delaware corporation.
On January 15, 2002, the Company acquired Mitigo, Inc. a Delaware
corporation with its corporate headquarters located in Woburn, Massachusetts.
The Acquisition consisted of a stock for stock exchange in which the Company
acquired all of the issued and outstanding common stock of Mitigo in exchange
for the issuance of a total of 4,398,000 shares of its common stock. As a result
of this transaction, Mitigo became a wholly-owned subsidiary of the Company. On
November 12, 2003 Mitigo was spun out as a separate company to the existing
shareholders at that time.
From December 27, 2001 through June 2003, the Company attempted to develop
its bar code technology and bring it to market. To that extent, the Company
moved its operations to Woburn, Massachusetts, hired numerous computer
programmers, developers and sales people in addition to support staff. Due to
the Company's inability to raise sufficient capital, the Company was unable to
pay current operating expenses and by June, 2003 shut down its operations
entirely.
On August 29, 2003, a change in control of the Company occurred in
conjunction with naming Attorney Jerry Gruenbaum of First Union Venture Group,
LLC as attorney of record for the purpose of overseeing the proper disposition
of the Company and its remaining assets and liabilities by any means appropriate
including settling any and all liabilities to the U.S. Internal Revenue Service
and the Commonwealth of Massachusetts' Attorney General's office for unpaid
wages.
In conjunction with naming Attorney Jerry Gruenbaum of First Union Venture
Group, LLC as attorney of record for the purpose of overseeing the proper
disposition of the Company and its remaining assets and liabilities, the Company
issued First Union Venture Group, LLC, a Nevada Limited Liability Company,
Thirty Million (30,000,000) newly issued common shares as consideration for
their services. In addition, the Company canceled any and all outstanding
options, warrants, and/or debentures not exercised to date. The Company further
nullified any and all salaries, bonuses, and benefits including severance pay
and accrued salaries to Stanley A. Young and Michael Dewar.
19
On November 12, 2003, the Company approved the spin-off of the two
subsidiaries of the Company and any and all remaining assets of the Company
including any intellectual property, to enable the Company to pursue a suitable
merger candidate. In addition, the Company approved a 30 to 1 reverse split of
all existing outstanding common shares of the Company.
On November 15, 2003, a change in control of the Company occurred whereby
the Company entered into an Acquisition Agreement to acquire one hundred percent
(100%) of PMI Wireless, Inc., a Delaware corporation with corporate headquarters
located in Cordova, Tennessee. The acquisition, in the form of a reverse merger,
took place on December 1, 2003 for the aggregate consideration of $50,000 in
cash, all of which was paid to the U.S. Internal Revenue Service for the
Company's prior obligations, plus assumption of the Company's existing debts,
for 9,938,466 newly issued common shares of the Company.
On December 10, 2003, the Company entered into an Acquisition Agreement to
acquire one hundred percent (100%) of Mound Technologies, Inc., a Nevada
corporation with its corporate headquarters located in Springboro, Ohio. The
acquisition was a stock for stock exchange in which the Company acquired all of
the issued and outstanding common stock of Mound in exchange for 1,256,000 newly
issued shares of its common stock. As a result of this transaction, Mound became
a wholly owned subsidiary of the Company.
RESULT OF OPERATIONS FOR FISCAL YEARS ENDED 2003 AND 2002
We are a Development Stage Company, and had no revenues for the fiscal year
ended December 31, 2003. Our net loss for the year ended December 31, 2003 was
$809,596.
On December 10, 2003, the Company acquired 100% of the issued and
outstanding stock of Mound Technologies, Inc. ("Mound") for an aggregate
purchase price of 1,256,000 newly issued shares of the Company's common stock.
Mound, a Nevada corporation, is a steel fabricator meeting industrial and
architectural standards for commercial buildings. The acquisition is being
accounted for as a purchase under SFAS No. 141, Business Combinations. Since the
acquisition occurred on December 10, 2003, it was included in the Company's
financial statements as an investment in Mound and its financials were not fully
consolidated into the Company's financial statements on an item by item basis
since the period of inclusion was not deemed significant.
Mound's condensed results of operations for the year ended December 31,
2003 was as follows:
Net sales $ 4,428,836
Cost and expenses
Cost of good sold 4,055,404
Selling, general and administrative expenses 1,281,975
Depreciation and amortization 64,400
------------
Total Cash and Expenses 5,401,779
------------
Operating loss (972,943)
Non-operating expenses (537,507)
------------
Net Loss $(1,510,450)
============
20
LIQUIDITY AND CAPITAL RESOURCES
We are seeking to raise up to $10 million of additional capital from
private investors and institutional money managers in the next few months, but
there can be no assurance that we will be successful in doing so. If we are not
successful in raising any of this additional capital, our current cash resources
may not sufficient to fund our current operations. We intend to accelerate our
development and infrastructure spending in the coming calendar quarters if we
have sufficient capital resources available to do so, however, our ability to do
so is highly uncertain at this time. Our independent auditors have noted in
their report on our 2003 financial statements that there are existing uncertain
conditions that we face relative to our capital raising activities, and these
conditions raise substantial doubt as to our ability to continue as a going
concern.
RECENT ACCOUNTING PRONOUNCEMENTS:
In July 2001, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 141, "Business Combinations". SFAS No. 141 requires the purchase method of
accounting for business combinations initiated after June 30, 2001 and
eliminates the pooling-of-interests method.
In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets", which the Company adopted during 2003. SFAS No. 142 requires, among
other things, the discontinuance of goodwill amortization. In addition, the
standard includes provisions for the reclassification of certain existing
recognized intangibles as goodwill, reassessment of the useful lives of existing
recognized intangibles, reclassification of certain intangibles out of
previously reported goodwill and the identification of reporting units for
purposes of assessing potential future impairment of goodwill.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets". SFAS No. 144 changes the
accounting for long-lived assets to be held and used by eliminating the
requirement to allocate goodwill to long-lived assets to be tested for
impairment, by providing a probability weighted cash flow estimation approach to
deal with situations in which alternative courses of action to recover the
carrying amount of possible future cash flows and by establishing a
primary-asset approach to determine the cash flow estimation period for a group
of assets and liabilities that represents the unit of accounting for long-lived
assets to be held and used. SFAS No. 144 changes the accounting for long-lived
assets to be disposed of other than by sale by requiring that the depreciable
life of a long-lived asset to be abandoned be revised to reflect a shortened
useful life and by requiring the impairment loss to be recognized at the date a
long-lived asset is exchanged for a similar productive asset or distributed to
owners in a spin-off if the carrying amount of the asset exceeds its fair value.
SFAS No. 144 changes the accounting for long-lived assets to be disposed of by
sale by requiring that discontinued operations no longer be recognized on a net
realizable value basis (but at the lower of carrying amount or fair value less
costs to sell), by eliminating the recognition of future operating losses of
discontinued components before they occur and by broadening the presentation of
discontinued operations in the income statement to include a component of an
entity rather than a segment of a business. A component of an entity comprises
operations and cash flows that can be clearly distinguished, operationally, and
for financial reporting purposes, from the rest of the entity.
The Company has adopted SFAS No. 144 effective January 2, 2002. The
adoption of the new statement will not have a significant impact on the
Company's financial statements.
21
ITEM 7. FINANCIAL STATEMENTS
International Wireless, Inc. and Subsidiaries
Consolidated Financial Statements
December 31, 2003
22
Contents
--------------------------------------------------------------------------------
Independent Auditors' Report Page F 1
Consolidated Balance Sheet F 2
Consolidated Statement of Stockholders' Deficit F 3
Notes to Consolidated Financial Statements F 5
23
MEYLER & COMPANY, LLC
CERTIFIED PUBLIC ACCOUNTANTS
ONE ARIN PARK
1715 HIGHWAY 35
MIDDLETOWN, NJ 07748
Independent Auditors' Report
To the Board of Directors
International Wireless, Inc.
Springboro, Ohio
We have audited the accompanying consolidated balance sheet of International
Wireless, Inc. and subsidiaries as of December 31, 2003 and the related
consolidated statement of stockholders' deficit for the year then ended. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of International
Wireless, Inc. and subsidiary as of December 31, 2003 in conformity with
accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note A to the
consolidated financial statements, the Company has a negative working capital of
$704,512 and there are existing uncertain conditions which the Company faces
relative to its obtaining capital in the equity markets. These conditions raise
substantial doubt about its ability to continue as a going concern. Management's
plans regarding those matters also are described in Note A. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Meyler & Company, LLC
Middletown, NJ
April 11, 2004
F1
INTERNATIONAL WIRELESS, INC. AND SUBISDIARIES
CONSOLIDATED BALANCE SHEET
December 31, 2003
ASSETS
Investment in Mound Technologies, Inc. $ 12,560
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Bank overdraft $ 4,625
Accounts payable 427,228
Notes payable to related parties 77,188
Accrued salaries 73,242
Note payable to vendors 15,000
Accrued payroll taxes 71,103
Accrued income taxes 36,126
---------
Total Current Liabilities 704,512
STOCKHOLDERS'DEFICIT
Preferred stock $.001 par value, 5,000,000 shares
authorized, none issued and
outstanding
Common stock, $0.001 par value,
100,000,000 shares authorized;
13,077,758 at December 31, 2003 13,077
Paid-in-capital 11,304
Accumulated deficit (716,333)
---------
STOCKHOLDERS' DEFICIT (691,952)
---------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 12,560
=========
The accompanying notes are an integral part of these financial statements.
F2
INTERNATIONAL WIRELESS, INC. AND SUBISDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
For the Year Ended December 31, 2003
Capital Stock Additional
--------------------------- Paid - In Accumulated
Shares Capital Capital Deficit Total
-------------------------------------------------------------------------------
Balance December 31,
2002 23,249,442 $209,245 $8,612,489 $(9,098,330) $ (276,596)
Issuance of stock in
private placement at
$0.10 per share 1,166,250 10,497 106,128 116,625
Issuance of stock for
the exercise of non-
qualified stock options
at $0.01 per share 70,000 630 6,370 7,000
Issuance of stock to
consultants for services
provided at $0.15 per
share 220,080 1,981 32,574 34,555
Issuance of stock for
loan conversion at
$0.10 per share 500,000 4,500 45,500 50,000
Issuance of stock for
adjustments in private
placement 268,000 2,411 (2,411)
Issuance of stock for loan
conversion at $0.10 per
share 1,000,000 9,000 91,000 100,000
Issuance of stock in
private placement at
$0.10 per share 25,000 225 2,275 2,500
Issuance of stock to
investment banker as
fee to finalize company
affairs 30,000,000 270,000 (270,000)
Net loss for the year
ended December
31, 2003 ( 809,596) (809,596)
---------- -------- ---------- ---------- --------
Subtotal 56,498,772 508,489 8,623,925 (9,907,926) (775,512)
Reverse Merger:
Revenue 30 to 1
stock split, par
value increases to
$0.28 per share 54,615,480
Adjustment of par
value to $0.001 to
recapitalize com-
pany (506,606) 506,606
---------- -------- --------- ---------- --------
Subtotal 1,883,292 1,883 9,130,531 (9,907,926) (775,512)
The accompanying notes are an integral part of these financial statements.
F3
INTERNATIONAL WIRELESS, INC. AND SUBISDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT (CONTINUED) For the
Year Ended December 31, 2003
Capital Stock Additional
---------------------------- Paid - In Accumulated
Shares Capital Capital Deficit Total
---------------------------------------------------------------------------------
Balance carried forward 1,883,292 1,883 9,130,531 (9,907,926) (775,512)
Issuance of common
stock to PMI Wireless,
Inc. 9,938,466 9,938 61,062 71,000
Issuance of common
stock to acquire Mound
Technologies, Inc. 1,256,000 1,256 11,304 12,560
Recapitalization of
accumulated deficit
in Reverse Merger (9,191,593) 9,191,593
Balance, December
31, 2003 13,077,758 $13,077 $ 11,304 (716,333) $(691,952)
The accompanying notes are an integral part of these financial statements.
F4
INTERNATIONAL WIRELESS, INC. AND SUBISDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATMENTS
December 31, 2003
NOTE A - DESCRIPTION OF BUSINESS, GOING CONCERN UNCERTAINTY AND MANAGEMENT'S
PLANS
The Company and Nature of Business
International Wireless, Inc. a Maryland corporation was previously
involved with the development of wireless technology and acquisition
of companies developing wireless technology for cell phones. The
Company, after finding it difficult to obtain capital for its
development efforts, ceased operation in 2003.
Reverse Merger
On December 1, 2003, PMI Wireless, Inc., a private company, acquired
9,938,466 shares of International Wireless, Inc. common stock for
$50,000 cash and the assumption of the Company's liabilities, thereby
obtaining control of the company. Subsequent to the merger and prior
to December 31, 2003, an additional $21,000 was invested to liquidate
liabilities. Simultaneously, the Company authorized a 30 for 1 reverse
split. Subsequent to this split, PMI Wireless, Inc. controlled 84% of
the outstanding common stock of the Company. As a result of the
reverse merger, PMI Wireless, inc. became a wholly owned subsidiary of
the Company. Prior to the merger, International Wireless, Inc. was a
non-operating shell corporation. Pursuant to Securities and Exchange
Commission rules, the merger of a private operating company (PMI
Wireless, Inc.) into a non-operating public shell corporation with
nominal net assets (International Wireless, Inc.) is considered a
capital transaction. Accordingly, for accounting purposes, the merger
has been treated as an acquisition of PMI Wireless, Inc. by the
Company and a recapitalization of the Company. Since the merger is a
recapitalization of the Company and not a business combination,
pro-forma information is not presented.
Going Concern Uncertainty and Management's Plans
As reflected in the accompanying financial statements, the Company has
liabilities of 704,512 and no current assets. It has a negative
stockholder's equity of $691,952. Management's plans include the
raising of capital and acquiring other companies. On December 10,
2003, the Company acquired Mound Technologies, Inc. ("Mound"), a
structural steel fabricator. (See Note C to the financial statements.)
Failure to raise capital or generate sufficient revenues through Mound
will cause the Company to further increase its liabilities, negative
working capital and negative stockholders' equity ultimately resulting
in curtailment or ceasing of operations. Additionally, even if the
Company does raise sufficient capital or generate sufficient revenue
through Mound, there can be no assurances that the net proceeds or the
revenue will be sufficient to enable it to develop business to a level
where it will generate profits and cash flows from operations.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from
those estimates.
F5
INTERNATIONAL WIRELESS, INC. AND SUBISDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATMENTS
December 31, 2003
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Cash and Cash Equivalents
The company considers all highly-liquid investments, with a maturity
of three months or less when purchased, to be cash equivalents.
Net Loss Per Common Share
The Company computes per share amounts in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share".
SFAS No. 128 requires presentation of basic and diluted EPS. Basic EPS
is computed by dividing the income (loss) available to Common
Stockholders by the weighted-average number of common shares
outstanding for the period. Diluted EPS is based on the
weighted-average number of shares of Common Stock and Common Stock
equivalents outstanding during the periods.
Consolidated Financial Statements
The consolidated financial statements include the Company and its
investment in Mound Technologies, Inc. of $12,560 which was acquired
on December 10, 2003. The assets and liabilities acquired and the
results of operations have not been included in the accompanying
financial statements since the period of inclusion is not deemed
significant.
Business Combinations and Goodwill
In July 2001, the Financial Accounting Standards Board ("FSAB") issued
SFAS NO. 141, "Business Combinations". SFAS No. 141 requires the
purchase method of accounting for business combinations initiated
after June 30, 2001 and eliminates the pooling-of-interests method.
In July 2001, the FASB issued SFAS NO. 142, "Goodwill and Other
Intangible Assets", which the company adopted during 2003. SFAS No.
142 requires, among other things, the discontinuance of goodwill
amortization. In addition, the standard includes provisions for the
reclassification of certain existing recognized intangibles as
goodwill, reassessment of the useful lives of existing recognized
intangibles, reclassification of certain intangibles out of previously
reported goodwill and the identification of reporting units for
purposes of assessing potential future impairment of goodwill.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets". SFAS No. 144 changes the
accounting for long-lived assets to be held and used by eliminating
the requirement to allocate goodwill to long-lived assets to be tested
for impairment, by providing a probability weighted cash flow
estimation approach to deal with situations in which alternative
courses of action to recover the carrying amount of possible future
cash flows and by establishing a primary-asset approach to determine
the cash flow estimation period for a group of assets and liabilities
that represents the unit of accounting for long-lived assets to be
held and used. SFAS No. 144 changes the accounting for long-lived
assets to be disposed of other than by sale by requiring that the
depreciable life of a long-lived asset to be abandoned be revised to
reflect a shortened useful life and by requiring the impairment loss
to be recognized at the date a long-lived asset is exchanged for a
similar productive asset or distributed to owners in a spin-off if the
carrying amount of the asset exceeds its fair value. SFAS No 144
changes the accounting for long-lived assets to be disposed of by sale
F6
INTERNATIONAL WIRELESS, INC. AND SUBISDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATMENTS
December 31, 2003
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Business Combinations and Goodwill (Continued)
by requiring that discontinued operations no longer be recognized in a
net realizable value basis (but at the lower of carrying amount or
fair value less costs to sell), by eliminating the recognition of
future operating losses of discontinued components before they occur
and by broadening the presentation of discontinued operations in the
income statement to include a component of an entity rather than a
segment of a business. A component of an entity comprises operations
and cash flows that can be clearly distinguished operationally and for
financial reporting purposes, from the rest of the entity.
NOTE C - ACQUISITION OF MOUND TECHNOLOGIES
On December 10, 2003, the Company acquired 100% of the issued and
outstanding stock of Mound Technologies, Inc. ("Mound") for an
aggregate purchase price of 1,256,000 shares of the Company's common
stock to be issued to the stockholders of Mound. Mound, a Nevada
corporation, is a steel fabricator meeting industrial and
architectural standards for commercial buildings. The acquisition is
being accounted for as a purchase under SFAS No. 141, Business
Combinations. Since the acquisition occurred on December 10, 2003, its
operations have not been included in the accompanying financial
statements since the period of inclusion was not deemed significant.
The allocation of the purchase price was as follows:
Value of 1,256,000 shares of common stock at $0.01 per share $ 12,560
===========
Fair value of net assets allowed as follows:
Cash $ 4,923
Marketable securities 3,020
Accounts receivable 1,120,182
Inventory 619,192
Equipment 982,502
Deposits 1,000
Liabilities assumed (3,304,315)
Goodwill 586,056
-----------
$ 12,560
===========
Condensed results of operations for the year ended December 31, 2003
of Mound are as follows:
Net sales $ 4,428,836
Cost and expenses
Cost of good sold 4,055,404
Selling, general and administrative expenses 1,281,975
Depreciation and amortization 64,400
-----------
Total Cash and Expenses 5,401,779
-----------
Operating loss (972,943)
Non-operating expenses (537,507)
-----------
Net Loss $(1,510,450)
===========
Pro forma:
Earnings per share (basic and diluted) $ (0.80)
===========
Average shares outstanding, after reverse split 1,891,367
===========
F7
INTERNATIONAL WIRELESS, INC. AND SUBISDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATMENTS
December 31, 2003
NOTE D - NOTES PAYABLE TO RELATED PARTIES
In 2002, a former President of International Wireless, Inc. loaned the
Company $125,545 including interest. During the first quarter of 2003,
he agreed to convert $50,000 of this debt into common stock of the
Company. The balance remaining at December 31, 2003 is $77,188
including interest.
NOTE E - STOCKHOLDERS' DEFICIT
PRE-STOCK SPLIT AND REVERSE MERGER (See Consolidated Statement of
Stockholders' Deficit)
During the three months ended March 31, 2003 the Company issued
220,080 shares of the Company's common stock to a consultant for
services provided at a price of $0.15 per share. Stock based
compensation expense of $34,555 was recorded in connection with this
issuance.
During the three months ended March 31, 2003 the Company issued
500,000 shares of common stock as payment of a loan payable to a
related party. The shares were valued at $0.01 per share and the
outstanding loan was reduced by $50,000.
During the three months ended March 31, 2003, 70,000 shares were
issued in connection with the exercise of 70,000 non-qualified stock
options at an exercise price of $0.01 per share. Total proceeds were
$7,000.
During the three months ended March 31, 2003, the company received
proceeds of $219,125 from the sale of 2,191,250 shares of its common
stock under a private placement at $0.10 per share.
During the nine months ended September 30, 2003, the Company issued
268,000 shares to private placement holders had who had subscribed to
the private placement at higher prices. The effect of this additional
issuance was to reduce these holder's purchase price basis to $0.10
per share.
In August 2003, the Board of Directors authorized an increase of the
Company's authorized shares from 50,000,000 to a maximum authorized of
100,000,000 shares and cancelled all outstanding options, warrants and
private placement offerings. The shareholders ratified the increase at
an August 29, 2003 shareholders' meeting.
In August, the Board of Directors issued 30,000,000 shares to First
Union Venture Group, LLC as consideration for their performance of
duties related to finalizing the Company's affairs.
Reverse Merger
On December 1, 2003, the Company reverse merged with PMF Wireless,
Inc., effected a 30 for 1 reverse split, readjusted the par value of
its common stock and simultaneously changed its name to International
Wireless, Inc. See Note A to the Financial Statements - reverse
Merger. In connection with the reverse merger, 9,938,466 shares of the
company's common stock were issued for $50,000 in cash and the
assumption of liabilities.
On December 10, 2003, the Company issued $1,256,000 shares of its
common stock, at a value of $0.01 per share, to acquire Mound
Technologies, Inc.
F8
INTERNATIONAL WIRELESS, INC. AND SUBISDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATMENTS
December 31, 2003
NOTE F - LITIGATION
On November 20, 2001, a judgment in the amount of $10,497 was entered
against the Company and Omar A. Rizvi, the former Chairman of the
Board of Directors of Origin (a predecessor company of International
Wireless, Inc.), by the Labor Commissioner in the State of California
for past wages, interest and penalties owed to a former employee of
the Company who claimed to have performed paralegal and bookkeeping
services in California for Origin. To date, this judgment has not been
paid.
In December 2002, the Company was sued by Greg Laborde in U.S.
District Court for the District of New Jersey for Breach of Employment
Contract and Defamation. The suit seeks monetary damages including
additional stocks and warrants. The Company, in response, has filed a
counter-claim against Mr. Laborde seeking damages relating to his
transaction selling Origin Investment Group, Inc., to International
Wireless in its reverse merger in January 2002. The company believes
the claim is without merit and has adequate defenses.
On February 20, 2003, a judgment in the amount of $28,750 was entered
against the Company for unpaid rent on behalf of Graham Paxton, the
former President and CEO of the Company as part of his employee
benefit plan.
On March 11, 2003, the Company received notice from Omar A. Rizvi, the
former Chairman of the Board of Origin, claiming breach of contract
for failure to deliver to him 100,000 shares for professional services
allegedly performed on behalf of the Company and wrongful cancellation
of additional warrants to purchase 200,000 shares of International
Wireless for which he claimed damages. No suit has been filed to date
and the Company believes that if such a suit is filed, the Company has
a good defense and proper grounds for a counter-suit.
On March 20, 2003, a judgment in the amount of $2,000 was entered
against the Company by Beyond Words Communication, Inc. for unpaid
marketing services rendered to the company.
On March 31, 2003, a judgment in the amount of $99,089, including
$50,000 security deposit replenishment, was entered against the
company for breach of contract for non-payment of rent on the
company's office facility in Woburn, Massachusetts. The company is
contingently liable for the balance of this lease in the total amount
of $428,000 through the lease expiration date of July 31, 2005.
In May 2003, certain former employees filed complaints with the
Commonwealth of Massachusetts Attorney General's office for unpaid
salaries and accrued vacation pay. The Company's records reflect a
liability of approximately $73,000 for back fees, gross salaries and
accrued vacation. Potential severance pay due to these employees in
accordance with their employment agreement totals an additional
$186,350 which the Company believes is not due.
In April 2004, a judgment was obtained against Mound Technologies,
Inc., a newly acquired subsidiary, in the amount of $175,000 by a
vendor. The Company has recently negotiated a settlement agreement
with payment of a reduced amount due by July 12, 2004.
F9
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III.
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
DIRECTORS AND EXECUTIVE OFFICERS
The following table and text sets forth the names and ages of all directors
and executive officers of the Company and the key management personnel as of
December 31, 2003. The Board of Directors of the Company is comprised of only
one class. All of the directors will serve until the next annual meeting of
stockholders and until their successors are elected and qualified, or until
their earlier death, retirement, resignation or removal. Executive officers
serve at the discretion of the Board of Directors and are appointed to serve
until the first Board of Directors meeting following the annual meeting of
stockholders. Also provided is a brief description of the business experience of
each director and executive officer and the key management personnel during the
past five years and an indication of directorships held by each director in
other companies subject to the reporting requirements under the Federal
securities laws.
32
NAME AGE POSITION
---- --- --------
Trent Sommerville 36 Chief Executive officer and
Chairman of the Board and Director
Jerry Gruenbaum 48 Secretary, General Counsel
and Director
Dr. Kenneth B. Farris 45 Director
Jeff Brandeis 49 President
Craig A. Pietruszewski 42 Chief Financial Officer
Dr. Ira W. Weiss 56 Chairman of the Board (resigned
August 29, 2003)
Stanley A. Young 77 Director (resigned August 29,
2003)
Michael Dewar 28 Chief Financial Officer and
Director (resigned August 29,
2003)
Adam Young 41 Director (resigned April 2003)
John B. Kelly 69 Director (resigned August 29,
2003)
Christien A. Ducker 52 President and Director
(resigned April 2003)
THE OFFICERS AND DIRECTORS OF THE COMPANY ARE SET FORTH BELOW.
TRENT SOMMERVILLE was elected as Director, Chairman of the Board and
appointed as Chief Executive Officer in December 1, 2003. Mr. Sommerville
attended Perkingston College. Mr. Sommerville worked at Anjet where he obtained
a NASD series 63 license. Following his experience there, Mr. Sommerville
started IGE Capital where he has been actively involved in many venture capital
opportunities including FYBX Corporation, Cyber Operations, WayCool 3D, and PMI
Wireless.
JERRY GRUENBAUM, ESQ., is the Corporate Secretary, General Counsel and
member of the Board of Directors. He was appointed as Corporate Secretary and
General Counsel in December 2001 and was elected to the board on November 12,
2003. He has been admitted to practice law since 1979 and is a licensed attorney
in various states including the State of Connecticut where he maintains his
practice as a member of SEC Attorneys, LLC, specializing in Securities Law,
Mergers and Acquisitions, Corporate Law, Tax Law, International Law and
33
Franchise Law. He is the CEO of a licensed brokerage firm in New York City where
he maintains a Series 7, 24, 27 and 63 licenses. He is a former President and
Chairman of the Board of Directors of a multinational publicly-traded company
with operations in Hong Kong and the Netherlands. He worked for the tax
departments for Peat Marwick Mitchell & Co. (now KPMG Peat Marwick LLP) and
Arthur Anderson & Co. (now Arthur Anderson LLP). He has served as Compliance
Director for CIGNA Securities, a division of CIGNA Insurance. He has lectured
and taught at various Universities throughout the United States in the areas of
Industrial and financial Accounting, taxation, business law, and investments.
Attorney Gruenbaum graduated with a B.S. degree from Brooklyn College - C.U.N.Y.
Brooklyn, New York; has a M.S. degree in Accounting from Northeastern University
Graduate School of Professional Accounting, Boston, Massachusetts; has a J.D.
degree from Western New England College School of Law, Springfield,
Massachusetts; and an LL.M. in Tax Law from the University of Miami School of
Law, Coral Gables, Florida.
DR. KENNETH B. FARRIS was appointed a director of the Company on January 8,
2004. Dr. Farris, a resident of New Orleans, Louisiana is a graduate of Tulane
University's School of Medicine where he received his MD and MPH degrees in
1975. He is a graduate of Carnegie-Mellon University where he received his BS
degree in 1971. Dr. Farris is board certified in Pathology. He has been teaching
at Tulane University School of Medicine since 1975 where he has received
numerous awards for outstanding teaching. Since 1991 he has held the position of
Clinical Associate Professor, Department of Pathology and Clinical Associate
Professor Department of Pediatrics. In addition, Dr Ferris holds the position of
Director of Pathology at West Jefferson Medical Center in Marrero, Louisiana,
and Medical Director, Laboratory at Pendleton Memorial Methodist Hospital. Dr.
Farris is a member of various medical societies and has published extensively.
Among his many accomplishments in his field, as of 1982 he holds the position of
Laboratory Accreditation Program Inspector for the College of American
Pathologists. He is a founding member and past President of the Greater New
Orleans Pathology Society. He is currently a Delegate to the House of Delegates
to the American Medical Association. He has held various positions including
past President, Speaker to the House of Delegates, member of the Board of
Governors and a current Delegate to the House of Delegates to the Louisiana
State Medical Society. He has held the position of President, Vice President,
Secretary and Treasurer for the Tulane Medical Alumni Association. He is a
former Drug Control Crew Chief to the United States Olympic Committee.
JEFF BRANDEIS was appointed President of the Company on April 20, 2004. Mr.
Brandeis, a resident of Oldsmar, Florida, is a graduate of Baruch College in New
York City with a BBA degree, and a graduate of Long Island University - CW Post,
in New York with a MBA degree in Taxation. Mr. Brandeis worked five years
combined at KPMG Peat Marwick, LLP and Hertz Herson CPA's, a midsize CPA firm in
New York City in their tax departments. Over the past twenty 20 years, he has
had a very successful career in sales and sales management for a multi billion
dollar corporation. He has extensive experience managing and directing a sales
staff that sold tax software, Engagement software, Practice Management, along
with other financial accounting tools to major Accounting firms and
corporations. This includes not only managing their activities, but includes
budgeting, forecasting, planning, compensation plans.
34
CRAIG A. PIETRUSZEWSKI was appointed Chief Financial Officer of the Company
on April 20, 2004. Mr. Pietruszewski, a resident of Glen Allen, Virginia, is a
graduate of the University of North Dakota with a BSBA degree in Accounting. He
holds a license as a Certified Public Accountant and is a member of the
Minnesota Society of CPA's. From 1985 to 1991, he worked in the audit department
for KPMG Peat Marwick, LLP, ultimately managing audits primarily of insurance
and manufacturing companies. In 1991, he joined the W. R. Berkley Corporation
("Berkley"), where for eleven years he served as the Chief Financial Officer for
several different companies within Berkley's regional property and casualty
group. From 1991 to 1997, he worked as the CFO for American West Insurance
Company. From 1997 to 1999, he worked for the Presque Isle Insurance Division, a
start-up property and casualty insurance operation. From 1999 to 2002, he served
as the CFO of Berkley's Mid-Atlantic Group of Companies, participating in the
reorganization and restructuring of this group of four organizations that had
been previously run by separate management. Most recently in 2002, he joined The
Reciprocal Group as CFO in their malpractice insurance operations.
DR. IRA W. WEISS was appointed a director of the Company in January 2002 as
part of the reverse merger with International Wireless, Inc. He assumed the
position as Chairman of the Board from April 8, 2002 until August 29, 2003 when
he submitted his resignation. Since 1994, he has been the Dean of the College of
Business Administration of Northeastern University in Boston, Massachusetts.
From January 1992 to July 1994, Dr. Weiss was the Dean of the Madrid School of
Business, an education institution affiliated with the University of Houston, in
Madrid Spain. From 1989 to 1991, Dr. Weiss was the Vice President and Associate
Chancellor of Information Technology at the University of Houston. Dr. Weiss
holds a PhD with Distinction from the Graduate School of Management of the
University of California and has lectured and published widely in the areas of
management and information systems.
STANLEY A. YOUNG was appointed The Chief Executive Officer and the Chairman
of the Board of Directors of the Company in January 2002 as part of the reverse
merger with International Wireless, Inc. He resigned his position as Chairman of
the Board on April 8, 2002 and as a Director on August 29, 2003 when he
submitted his resignation. Mr. Young is a co-founder of International Wireless,
Inc. He is an accomplished entrepreneur and venture capitalist who over the past
40 years has founded, financed, and directed many successful companies in a
variety of industries. In 1996, Mr. Young was instrumental in the successful IPO
of Compressent Corporation and, in early 1997, successfully brought out SEEC,
Inc. through H.C. Wainwright. In 1994, he played a major role in the IPO of
Andyne Computing, a developer of precision support software for end-users. In
1990, as a director of Jet Form, Inc., he helped the company secure financing
and go public in 1993. In 1985, Mr. Young restructured and provided $700,000 of
new capital to a small, insolvent garment manufacturer. Nutmeg Mills Industries
went on to design and manufacture a popular line of apparel with valuable
licensing rights from colleges and professional sports franchises. The company
went public within a year of Mr. Young's involvement at a valuation of $16
million, besting even Microsoft's IPO performance that year. In 1991, Dow Jones
recognized Nutmeg as the second best NYSE stock. In 1994, Nutmeg was acquired
for $350 million. Also in 1985, Mr. Young invested the seed money and became a
Director of Parametric Technology, a developer of CAD/CAM software. The company
went public with Alex Brown in 1989 and today possesses a $1 billion market cap.
35
MICHAEL DEWAR was appointed The Chief Operating Officer and a director of
the Company in January 2002 as part of the reverse merger with International
Wireless, Inc until August 29, 2003 when he submitted his resignation. He is the
co-founder of International Wireless, Inc. Prior to his association with the
Company, Mr. Dewar funded several portfolio companies through debt-equity and
equity financing, as well as created a wide variety of offshore strategic
partnerships as a General Partner at Atlantic Ventures Management. He has acted
as a founder, financier and Director of several companies, particularly early
stage technology start-up situations. Prior to Atlantic Ventures Management, Mr.
Dewar spent several years working in Europe and Africa, where he continues to
serve as a Director for Mercury Inter-Trade Ltd. Mr. Dewar earned his Bachelor
of Arts from Rollins College, with a major in Economics, and his MBA in
Management and Finance from Northeastern University.
ADAM D. YOUNG was appointed to the Board of Directors in April 2002. He
resigned from the Board in April 2003. For the past five years, Mr. Young has
worked in the real estate investment and development field as President of Young
Development Corp. Previously, Mr. Young worked as a venture capitalist,
investing primarily in computer hardware, computer software and
telecommunications firms. Mr. Young continues to invest in high tech firms and
maintains an ownership position in many promising private companies. He is a
significant shareholder in SEEC, Inc. (NASDAQ: SEEC) which provides technologies
for using the internet to access legacy data from mainframe systems. Mr. Young
received an A.B. degree from Harvard College in 1986.
JOHN B. KELLY was appointed to the Board of Directors in April 2002 and
served in that position until August 29, 2003 when he submitted his resignation.
Mr. Kelly is currently a principal at Reid Eddison Inc., a Canadian technology
mentoring company. Throughout his career, Mr. Kelly has been a pioneer within
the Canadian high-technology industry. He was the President and CEO of JetForm
Corporation from 1995 until 1999. A global leader in providing open,
client/server and web-based E-Process software solutions, Jetform's revenues
increased tenfold from $10 million to $100 million under his leadership. Mr.
Kelly founded and was CEO of Why Interactive Inc., Canada's first interactive
multimedia development company. He was also founder, President and CEO at
Computer Innovation Distributors Inc. and Nabu Network Corporation, a
cable-based software and information distributor. A founder of SHL Systemhouse
Ltd., Canada's largest systems integrator, he served as Senior Vice-President
and COO from the company's inception in 1974 until 1980. In 1997, Mr. Kelly was
recognized as both the City of Ottawa's High Technology Citizen of the Year, and
the Province of Ontario's Master Entrepreneur of the Year. In 1998 he won the
Ottawa Business Journal's poll for the city's most respected CEO, and in 1999 he
was presented with the Ottawa Centre for Research and Innovation (OCRI) Civic
Entrepreneur of the Year Award. Mr. Kelly is Co-Chairman of the Board of
Directors of the Canadian Advanced Technology Alliance (CATA) and past Chair of
Innovators Alliance, an advisory council to the Government of Ontario with
members representing Ontario's fastest growing companies. He also serves on the
Boards of a number of private and public companies including AutoSkill
International Inc., Burntsand Inc., Impatica Inc. and NexInnovations Inc. He
holds an honors law degree and an honorary doctorate degree from the University
of Ottawa, and an honors B.B.A. degree (Finance) from Iona College in New
Rochelle, New York.
36
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers and persons who own more than 10%
of a registered class of the Company's equity securities to file various reports
with the Securities and Exchange Commission concerning their holdings of, and
transactions in, securities of the Company. Copies of these filings must be
furnished to the Company. The Company is in full compliance with Section 16(a).
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth the compensation paid during the fiscal
years ended December 31, 2003, 2002, and 2001 to the Company's Chief Executive
Officer. No officer of the Company received annual compensation in excess of
US$100,000 per annum during such years.
SUMMARY COMPENSATION TABLE
NAME AND PRINCIPAL POSITION YEAR SALARY
----------------------------------------- ---- --------
Trent Sommerville, Chairman and Chief 2003 US$nil
Executive Office
Christien A. Ducker 2003 US$nil
Graham F. Paxton (1) 2002 US$nil
Stanley A. Young(2), Chairman, and Chief 2001 $107,258
Executive Officer
Gregory H. Laborde(3), Director, and CEO 2001 US$nil
Omar A. Rizvi(4), Chairman, and 2001 US$nil
Chief Executive Officer
(1) On August 19, 2002 Graham Paxton by Agreement with the Company resigned as
Chief Executive Officer, President and a member of the Board of Directors.
(2) On April 5, 2002, Stanley A. Young retired as Chairman, and Chief Executive
Officer and Graham F. Paxton became Chief Executive Officer, President and
a member of the Board of Directors.
(3) On December 27, 2001, Gregory H. Laborde resigned as Chief Executive Office
of the Company as part of the reverse merger with International Wireless,
Inc.
(4) On August 11, 2001, Omar A. Rizvi resigned as President and Chairman of the
Board of the Company for personal reasons.
COMPENSATION AGREEMENTS
The Company has no employment agreement with employees and officers of the
company as of this date.
37
BOARD OF DIRECTORS
During the year ended December 31, 2003, all corporate actions were
conducted by unanimous written consent of the Board of Directors. Directors
receive no compensation for serving on the Board of Directors, but are
reimbursed for any out-of-pocket expenses incurred in attending board meetings.
The Company had no audit, nominating or compensation committees, or committees
performing similar functions, during the year ended December 31, 2003.
STOCK OPTION PLAN
The Company has no Stock Option Plan as of this date.
WARRANTS
The Company has no Warrants outstanding as of this date.
INDEMNIFICATION
Under the Company's Articles of Incorporation and its Bylaws, the Company
may indemnify an officer or director who is made a party to any proceeding,
including a law suit, because of his position, if he acted in good faith and in
a matter he reasonably believed to be in the Company's best interest. The
Company may advance expenses incurred in defending a proceeding. To the extent
that the officer or director is successful on the merits in a proceeding as to
which he is to be indemnified, the Company must indemnify him against all
expenses incurred, including attorney's fees. With respect to a derivative
action, indemnity may be made only for expenses actually and reasonably incurred
in defending the proceeding, and if the officer or director is judged liable,
only by a court order. The indemnification is intended to be to the fullest
extent permitted by the laws of the State of Maryland.
Regarding indemnification for liabilities arising under the Securities Act
of 1933, which may be permitted to directors or officers under Maryland law, the
Company is informed that, in the opinion of the Securities and Exchange
Commission, indemnification is against public policy, as expressed in the Act
and is, therefore, unenforceable.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of December 31, 2003
with respect to the beneficial ownership of the common stock of the Company by
each beneficial owner of more than 5% of the outstanding shares of common stock
of the Company, each director, each executive officer and all executive officers
and directors of the Company as a group, the number of shares of common stock
owned by each such person and group and the percent of the Company's common
stock so owned.
38
As used in this section, the term beneficial ownership with respect to a
security is defined by Rule 13d-3 under the Exchange Act as consisting of sole
or shared voting power (including the power to vote or direct the vote) and/or
sole or shared investment power (including the power to dispose of or direct the
disposition of) with respect to the security through any contract, arrangement,
understanding, relationship or otherwise, subject to community property laws
where applicable. Each person has sole voting and investment power with respect
to the shares of common stock, except as otherwise indicated. Beneficial
ownership consists of a direct interest in the shares of common stock, except as
otherwise indicated. The address of those persons for which an address is not
otherwise indicated is 25 Mound Park Drive, Springboro, Ohio 45066.
NAME OF BENEFICIAL OWNER NUMBER OF SHARES PERCENTAGE OF CLASS(1)
------------------------ ------------------- ----------------------
Trent Sommerville 3,000,100 22.94%
Kenneth B. Farris 50,000 0.38%
Jerry Gruenbaum, Esq. 500,000(2) 3.82%
Jeffrey Brandeis 230,000(3) 1.76%
Craig A. Pietruszewski -0- ---%
--------- ------
All Directors and Executive Officers
as a group (4 persons) 3,780,100 28.90%
========= ======
5% Beneficial Owners
--------------------
The Good One Inc. 1,500,000 11.47%
Thomas C. Miller 1,200,000(4) 9.18%
Lavonne Adams 1,000,000 7.65%
John Zavoral 1,000,000 7.65%
First Union Venture Group, LLC 1,000,000(5) 7.65%
(1) Calculations based upon 13,077,758 shares of common stock issued and
outstanding on December 31, 2003.
(2) Atty. Jerry Gruenbaum holds 500,000 shares as a result of a 50% interest in
First Union Venture Group, LLC.
(3) Jeffrey Brandeis had 230,000 shares as of December 31, 2003. As of May 19,
2004 Mr. Brandeis has an additional 70,000 shares which he purchased from
the Company, for a total of 300,000.
(4) Thomas C. Miller, President of Mound Technologies, Inc. a subsidiary of the
Company owns 800,000 directly and an additional 400,000 through relations
and shares under his control.
(5) First Union Venture Group, LLC is owned one half by Atty. Jerry Gruenbaum,
Secretary, General Counsel and Director of the Company and one half by
another individual who is not related to Atty. Gruenbaum or under his
control.
39
CHANGES IN CONTROL
On August 29, 2003, a change in control of the Company occurred in
conjunction with naming Attorney Jerry Gruenbaum of First Union Venture Group,
LLC as attorney of record for the purpose of overseeing the proper disposition
of the Company and its remaining assets and liabilities by any means appropriate
including settling any and all liabilities to the U.S. Internal Revenue Service
and the Commonwealth of Massachusetts' Attorney General's office for unpaid
wages.
In conjunction with naming Attorney Jerry Gruenbaum of First Union Venture
Group, LLC as attorney of record for the purpose of overseeing the proper
disposition of the Company and its remaining assets and liabilities, the Company
issued First Union Venture Group, LLC, a Nevada Limited Liability Company,
Thirty Million (30,000,000) newly issued common shares as consideration for
their services. In addition, the Company canceled any and all outstanding
options, warrants, and/or debentures not exercised to date. The Company further
nullified any and all salaries, bonuses, and benefits including severance pay
and accrued salaries to Stanley A. Young and Michael Dewar.
On November 15, 2003, a second change in control occurred when the Company
entered into an Acquisition Agreement to acquire one hundred percent (100%) of
PMI Wireless, Inc., a Delaware corporation with corporate headquarters located
in Cordova, Tennessee. The acquisition, in the form of a reverse merger, took
place on December 1, 2003 for the aggregate consideration of $50,000 in cash,
all of which was paid to the U.S. Internal Revenue Service for the Company's
prior obligations, plus assumption of the Company's existing debts, for
9,938,466 newly issued common shares of the Company.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit Number Document Description
-------------- --------------------
3.1 Certificate of Incorporation of Origin Investment Group,
Inc. as filed with the Maryland Secretary of State on April
6, 1999, incorporated by reference to the Company's
Registration Statement on Form 10-SB filed with the
Securities and Exchange Commission on August 16, 1999.
3.2 Amended Certificate of Incorporation of International
Wireless, Inc. as filed with the Maryland Secretary of State
on June 12, 2003, incorporated by reference to the Company's
Current Report on Form 8-K filed with the Securities and
Exchange Commission on June 12, 2003.
3.3 Bylaws of Origin Investment Group, Inc., incorporated by
reference to the Company's Registration Statement on Form
10-SB filed with the Securities and Exchange Commission on
August 16, 1999.
40
10.1 Acquisition Agreement between Origin Investment Group, Inc.
and International Wireless, Inc. to acquire International
Wireless, Inc. dated December 27, 2001, incorporated by
reference to the Company's Current Report on Form 8-K filed
with the Securities and Exchange Commission on January 17,
2002.
10.2 Acquisition Agreement between International Wireless, Inc.
and PMI Wireless, Inc. to acquire PMI Wireless, Inc. Dated
November 15, 2003, incorporated by reference to the
Company's Current Report on Form 8-K filed with the
Securities and Exchange Commission on November 17, 2003.
10.3 Acquisition Agreement between International Wireless, Inc.
and Mound Technologies, Inc. to acquire Mound Technologies,
Inc. date December 8, 2003, incorporated by reference to the
Company's Current Report on Form 8-K filed with the
Securities and Exchange Commission on December 12, 2003.
31.1 Certification of Chief Executive Officer pursuant to Section
302 of the Sarbanes Oxley Act.
31.2 Certification of Chief Financial Officer pursuant to Section
302 of the Sarbanes Oxley Act.
32.1 Certification of Chief Executive Officer Pursuant to 18
U.S.C. Section 1350 as adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
32.2 Certification of Chief Financial Officer Pursuant to 18
U.S.C. Section 1350 as adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K:
The Company filed a Form 8-K on March 4, 2003 relating to
adding additional members to the Board of Directors of
International Wireless, Inc.
The Company filed a Form 8-K on March 14, 2003 relating to
executing a Letter of Intent with Mitsubishi.
The Company filed a Form 8-K on March 14, 2003 relating
Appointment of Christien Ducker as President of the Company.
The Company filed a Form 8-K/A on March 18, 2003 relating to
Form 8-K filed on March 14, 2003, filing a conforming a PDA
file.
The Company filed a Form 8-K on May 23, 2003 relating to the
Letter of Intent with Scanbuy, Inc.
The Company filed a Form 8-K on June 2, 2003 relating to the
Merger Agreement with Scanbuy, Inc.
41
The Company filed a Form 8-K on June 2, 2003 relating to
Board of Directors Resolution approving the merger with
Scanbuy, Inc.
The Company filed a Form 8-K on June 12, 2003 relating to
the shareholder approval of the merger with Scanbuy, Inc.
The Company filed a Form 8-K on September 11, 2003 relating
to change in control with First Union Venture Group, LLC and
cancel the merger with Scanbuy.
The Company filed a Form 8-K on November 17, 2003 relating
to reversing the shares outstanding thirty-to-one and the
signing of a Letter of Intent with PMI Wireless.
The Company filed a Form 8-K on November 17, 2003 relating
to Acquisition with PMI Wireless.
The Company filed a Form 8-K on December 4, 2003 relating to
the Change in Control with PMI Wireless.
The Company filed a Form 8-K on December 11, 2003 relating
to the Acquisition of Mound Technologies, Inc.
The Company filed a Form 8-K on December 15, 2003 relating
to an Acquisition Agreement with Precision Metal Industries,
Inc.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
INTERNATIONAL WIRELESS INC.
--------------------------------------
(Registrant)
Date: 05/25/04 By: /s/ TRENT SOMMERVILLE
-----------------------------------
Trent Sommerville
Chief Executive Officer
Date: 05/25/04 By: /s/ JEFFREY BRANDEIS
-----------------------------------
Jeffrey Brandeis, President
Date: 05/25/04 By: /s/ JERRY GRUENBAUM
-----------------------------------
Jerry Gruenbaum, Esq.
Secretary and General Counsel
42
In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Date: 05/25/04 By: /s/ TRENT SOMMERVILLE
-----------------------------------
Trent Sommerville
Chief Executive Officer, and
Chairman of the Board
Date: 05/25/04 By: /s/ JEFFREY BRANDEIS
-----------------------------------
Jeffrey Brandeis, President
Date: 05/25/04 By: /s/ JERRY GRUENBAUM
-----------------------------------
Jerry Gruenbaum, Esq.
Secretary, General Counsel and
Director
Date: 05/25/04 By: /s/ CRAIG A.PIETRUSZEWSKI
-----------------------------------
Craig A. Pietruszewski,
Chief Financial Officer
Date: 05/25/04 By: /s/ DR. KENNETH B. FARRIS
-----------------------------------
Dr. Kenneth B. Farris, Director
43