10QSB 1 doc1.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (X) QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003 ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER 0-11968 WORLDWIDE WIRELESS NETWORKS, INC. (NAME OF REGISTRANT IN ITS CHARTER) NEVADA 88-0286466 (STATE OF INCORPORATION) (I. R. S. EMPLOYER IDENTIFICATION NO.) 770 THE CITY DRIVE SOUTH, SUITE 3700 ORANGE, CALIFORNIA 92868 (714) 937-5500 (ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES AND PRINCIPAL PLACE OF BUSINESS) ---------------- SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE ---------------- SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: COMMON STOCK, PAR VALUE $.001 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No -- As of June 30, 2003, there were 43,555,358 shares of the registrant's Common Stock issued and outstanding. PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS The registrant represents that the Consolidated Financial Statements furnished herein have been reviewed by Chisholm & Associates, the Company's independent auditors, and prepared in accordance with generally accepted accounting principles applied on a basis consistent with prior years, and that such Consolidated Financial Statements reflect, in the opinion of the management of the Company, all adjustments (which include only normal recurring adjustments) necessary to present fairly the consolidated financial position of Worldwide Wireless Networks, Inc. and its subsidiaries (the "Company") as of June 30, 2003, and the results of its operations and its cash flows for the six months then ended. NOTICE OF FILING OF BANKRUPTCY PETITION AND SALE OF OPERATING ASSETS On September 11, 2002, the company filed a petition for protection under Chapter 11 of the United States Bankruptcy code in the U.S. Bankruptcy Court for the Central District of California. This allows Worldwide Wireless Networks, Inc to continue to operate while a plan of reorganization is finalized. On October 16, 2002 a motion was filed with the court for an emergency sale of the company's assets to protect their value. The motion was approved on October 16, 2002. The sale was completed on October 18, 2002. On this date the Company sold all of its operating assets. Worldwide Wireless Networks, Inc has also been seeking a buyer for the public shell without success. On July 30, 2003, the Company issued a press release and an 8K of its intent to liquidate the public shell as no party was able to provide an offer that was considered viable to the creditor's committee. Until the liquidation plans are approved the Company will continue to evaluate offers for the public shell that may arise. Whether the public shell is sold or not, management does not believe that any funds will be available for distribution to stockholders after all approved bankruptcy administration expenses have been paid and distributions have been made to the company's creditors whose claims of approximately $5,725,000 appear to exceed the company's potential resources from the sale of it's operating assets and public shell. If a buyer for the public shell is not negotiated within the near future, creditors may force a liquidation of the Company, thereby extinguishing any value for shareholders. In addition, even if a buyer for the shell is negotiated the outcome for current shareholders may still eliminate their continuing equity interest. All discussions regarding the financial condition and results of operations should be read in conjunction with this notice of sale of the operating assets on October 18, 2002. As of June 30, 2003, the company is working on a plan of reorganization to present to the U.S. Bankruptcy Court. All adjustments, if any, which may be required as a result of the approval of such a plan of reorganization, have been deferred until such time as the plan is confirmed and any such adjustments become known. Such adjustments may be material and affect the future existence of the company. WORLDWIDE WIRELESS NETWORKS, INC. Consolidated Financial Statements June 30, 2003
Worldwide Wireless Networks, Inc. (Development Stage Company) Consolidated Balance Sheets ASSETS ------ June 30, 2003 December 31, 2002 --------------- ------------------ (Unaudited) CURRENT ASSETS Restricted Cash $ 426,008 $ 513,734 Accounts Receivable 3,082 --------------- ------------------ Total Current Assets 426,008 516,816 --------------- ------------------ OTHER ASSETS Deposits 2,515 2,515 --------------- ------------------ Total Other Assets 2,515 2,515 --------------- ------------------ TOTAL ASSETS $ 428,523 $ 519,331 =============== ==================
Worldwide Wireless Networks, Inc. (Development Stage Company) Consolidated Balance Sheets LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ June 30, 2003 December 31, 2002 --------------- ------------------- (Unaudited) CURRENT LIABILITIES Liabilities from Discontinued Operations 5,752,287 5,726,814 --------------- ------------------- Total Current Liabilities 5,752,287 5,726,814 --------------- ------------------- STOCKHOLDERS' EQUITY Common Stock, 50,000,000 Shares of $.001 Par Value Authorized, 43,555,358 Shares Issued and Outstanding 43,556 43,556 Additional Paid In Capital 6,167,285 6,167,285 Retained Earnings (11,534,605) (11,418,324) --------------- ------------------- Total Stockholders' Equity (5,323,764) (5,207,483) --------------- ------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 428,523 $ 519,331 =============== ===================
Worldwide Wireless Networks, Inc. (Development Stage Company) Consolidated Statements of Operations (Unaudited) From Inception of Development Stage on January 1, Three Months Ended June 30, Six Months Ended June 30, 2003 to --------------------------------- ---------------------------- June 30, 2003 2002 2003 2002 2003 ---------------- --------------- -------------- ------------ ------------ SALES $ - $ - $ - $ - $ - COST OF GOODS SOLD - - - - - ---------------- --------------- -------------- ------------ ------------ GROSS PROFIT - - - - - ---------------- --------------- -------------- ------------ ------------ OPERATING EXPENSES General And Administrative Expenses (23,410) (40,526) (40,526) Sales ---------------- --------------- -------------- ------------ ------------ TOTAL OPERATING EXPENSES (23,410) (40,526) (40,526) ---------------- --------------- -------------- ------------ ------------ OPERATING INCOME (23,410) (40,526) (40,526) ---------------- --------------- -------------- ------------ ------------ OTHER INCOME AND (EXPENSE) Interest Income 1,182 2,440 2,440 ---------------- --------------- -------------- ------------ ------------ TOTAL OTHER INCOME AND (EXPENSE) 1,182 2,440 2,440 ---------------- --------------- -------------- ------------ ------------ DISCOUNTINUED OPERATIONS Gain (Loss) from Discontinued Operations (Net of Income Tax Benefits of $-0-) (438,844} (825,293) Gain (Loss) from Disposal of Discontinued Operations (Net of Income Tax Benefits of $-0-) (47,707) (78,195) (78,195) ---------------- --------------- -------------- ------------ ------------ TOTAL GAIN (LOSS) FROM DISCONTINUED OPERATIONS (47,707) (438,844) (78,195) (852,293) (78,195) ---------------- --------------- -------------- ------------ ------------ NET INCOME (LOSS) ($69,935) (438,844) ($116,281) ($852,293) ($116,281) ================ =============== ============== ============ ============ NET INCOME (LOSS) PER SHARE ($0.00) ($0.01) ($0.00) ($0.01) ($0.00) ================ =============== ============== ============ ============ WEIGHTED AVERAGE NUMBER OF COMMON SHARES 43,555,358 43,555,358 43,555,358 43,555,358 43,555,358 ================ =============== ============== ============ ============
Worldwide Wireless Networks, Inc. (Development Stage Company) Consolidated Statements of Cash Flows For the Six Months Ended June 30, (Unaudited) From Inception of Development Stage on January 1, 2003 to 2003 2002 June 30, 2003 ---------- ----------- --------------- CASH FLOWS FROM OPERATING ACTIVITIES Net Income (Loss) From Continuing Operations ($38,086) ($38,086) Net Income (Loss) From Discontinued Operations (78,195) ($852,293) (78,195) Adjustments to Reconcile Net Income (Loss) to Net Cash Used in Operating Activities: Depreciation and Amortization 247,090 Bad Debt (4,031) Loss on Investment 105,000 Changes in Asset and Liabilities (Increase) Decrease in Current Assets: Accounts Receivable 3,082 34,435 3,082 Inventory 52,155 Prepaid Expenses 18,680 Increase (Decrease) in Current Liabilities: Accounts Payable and Accrued Expenses 25,473 122,755 25,473 Unearned Revenue (6,909) ---------- ----------- --------------- Net Cash Provided (Used) by Operating Activities (87,726) (269,300) (87,726) ---------- ----------- --------------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of Property and Equipment (38,648) Net Cash (to) from Deposits 2,621 ---------- ----------- --------------- Net Cash Provided (Used) by Investing Activities (36,027) ---------- ----------- --------------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from Debt Financing 349,182 Principal Payments on Debt Financing (83,548) Transfer of Assets to inventory Increase (Decrease) in line of Credit (2,929) ---------- ----------- --------------- Net Cash Provided (Used) by Financing Activities 262,705 ---------- ----------- --------------- Net Increase (Decrease) in Cash and Cash Equivalents (87,726) (42,622) (87,726) ---------- ----------- --------------- Cash and Cash Equivalents Beginning 513,734 52,383 513,734 ---------- ----------- --------------- Ending $ 426,008 $ 9,761 $ 426,008 ========== =========== =============== Supplemental Cash Flow Information Cash paid for Interest $ 13,524 Cash paid for Income Taxes $ 800 $ 0 $ 800 Non-cash Financing Transactions: Assets Pledged to Retire Long Term Liabilities $ 45,000
Worldwide Wireless Networks, Inc. (Development Stage Company) Notes to the Consolidated Financial Statements June 30, 2003 GENERAL ------- Worldwide Wireless Networks, Inc. (the Company) has elected to omit substantially all footnotes to the financial statements for the six months ended June 30, 2003 since there have been no material changes (other than indicated in other footnotes) to the information previously reported by the Company in their Annual Report filed on the Form 10-KSB for the year ended December 31, 2002. UNAUDITED INFORMATION ---------------------- The information furnished herein was taken from the books and records of the Company without audit. However, such information reflects all normal and recurring adjustments which are, in the opinion of management, necessary to properly reflect the results of the interim period presented. The information presented is not necessarily indicative of the results from operations expected for the full fiscal year. DISCONTINUED OPERATIONS ------------------------ As of June 30, 2003, the Company is continuing thru the chapter 11 bankruptcy proceedings. A loss has been recognized for discontinued operations for those expenses that are attributable to the bankruptcy.
LIABILITIES FROM DISCONTINUED OPERATIONS ------------------------------------------- June 30, 2003 December 31, 2002 --------------- ------------------ (Unaudited) Accounts Payable $ 1,156,910 $ 1,131,437 Accrued Expenses 1,516,490 1,516,490 Lines of Credit 50,304 50,304 Notes Payable 2,425,053 2,425,053 Convertible Debentures 603,530 603,530 --------------- ------------------ Total Liabilities From Discontinued Operations 5,752,287 5,726,814 =============== ==================
DEVELOPMENT STAGE COMPANY --------------------------- As of January 1, 2003, the Company is in the development stage as defined in Financial Accounting Standards Board Statement Number 7. The Company's management is expending efforts on finding an operating company to merge with in order to generate revenues. Worldwide Wireless Networks, Inc. (Development Stage Company) Notes to the Consolidated Financial Statements June 30, 2003 SUBSEQUENT EVENT ----------------- The Company has been seeking a buyer for the public shell without success. On July 30, 2003, the Company issued a press release and an 8K of its intent to liquidate the public shell as no party was able to provide an offer that was considered viable to the creditor's committee. Until the liquidation plans are approved the Company will continue to evaluate offers for the public shell that may arise. These financial statements do not include any adjustments for the potential liquidation of the Company. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CAUTIONARY STATEMENT REGARDING "FORWARD LOOKING STATEMENTS". Statements contained in this quarterly report that are not based on historical fact, including without limitation statements containing the words "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect" and similar words, constitute "forward-looking statements". These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such forward-looking statements. These factors include, among others, the following: general economic and business conditions, both nationally and in the regions in which we operate; technology changes; the competition we face; changes in our business strategy or development plans; the high leverage of Worldwide; our ability to attract and retain qualified personnel; existing governmental regulations and changes in, or our failure to comply with, governmental regulations; liability and other claims asserted against us; it's our ability or the ability of our third-party suppliers to take corrective action in a timely manner with respect to changing government regulations; and other factors referenced in our filings with the Securities and Exchange Commission. NOTICE OF FILING OF BANKRUPTCY PETITION AND SALE OF OPERATING ASSETS On September 11, 2002, the company filed a petition for protection under Chapter 11 of the United States Bankruptcy code in the US Bankruptcy Court for the Central District of California. This allows Worldwide Wireless Networks, Inc to continue to operate while a plan of reorganization is finalized. On October 16, 2002 a motion was filed with court for an emergency sale of the company's assets to protect their value. The motion was approved on October 16, 2002. The sale was completed on October 18, 2002. On this date the Company sold all of its operating assets. Worldwide Wireless Networks, Inc has also been seeking a buyer for the public shell without success. On July 30, 2003, the Company issued a press release and an 8K of its intent to liquidate the public shell as no party was able to provide an offer that was considered viable to the creditor's committee. Until the liquidation plans are approved the Company will continue to evaluate offers for the public shell that may arise. Whether the public shell is sold or not, management does not believe that any funds will be available for distribution to stockholders after all approved bankruptcy administration expenses have been paid and distributions have been made to the company's creditors whose claims of approximately $5,725,000 appear to exceed the company's potential resources from the sale of it's operating assets and public shell. If a buyer for the public shell is not negotiated within the near future, creditors may force a liquidation of the Company, thereby extinguishing any value for shareholders. In addition, even if a buyer for the shell is negotiated the outcome for current shareholders may still eliminate their continuing equity interest. All discussions regarding the financial condition and results of operations should be read in conjunction with this notice of sale of the operating assets on October 18, 2002. GIVEN THESE UNCERTAINTIES, READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON FORWARD-LOOKING STATEMENTS. Other than as required by law, we disclaim any obligation to update information concerning the factors mentioned above or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future results, events or developments. CERTAIN DISCUSSIONS FOLLOWING REGARDING THE DESCRIPTION OF THE BUSINESS REFER TO THE OPERATING BUSINESS PRIOR TO BEING DISCONTINUED DUE TO THE SALE OF ALL THE OPERATIONAL ASSETS TO NEXTWEB, INC. ON OCTOBER 18, 2002. Overview. Worldwide Wireless was a networking solutions company that provided -------- high speed Internet access using our own wireless network. We also provided direct service links, which are connections of a customer's computer network to the Internet via our wireless network, frame relay connections, which are wired connections between a customer's computer network and a router which sends data to the desired end connections, data center services and network consulting. We serviced all sizes of commercial business. Large scale commercial operations began in April 1999. As of June 30, 2003, the company had no continuing operations; as of June 30, 2002, we provided high-speed wireless services to approximately 251 commercial customers and 41 wired frame customers. On October 18, 2002, the date of the sale of operations to NextWeb, Inc. our primary market was Orange County, California, where we operated our high-speed wireless network, which serves approximately 85% of the county. Since our inception, we operated at a net loss, due primarily to our investment in expanding our network coverage and customer acquisition costs. . On September 11, 2002, the company filed a petition with the U.S. Bankruptcy Court for the Central District of California under Chapter 11 seeking protection while a plan of reorganization is formulated. On September 17, 2002, the company signed a definitive agreement with NextWeb, Inc. of Fremont, California for NextWeb to acquire the operating assets of the company and certain liabilities; and filed a motion with the Court for an emergency sale of assets. On October 16, 2002, the Court affirmed the sale to NextWeb, Inc. for $550,000. On October 18, 2002, the Company and NextWeb, Inc. executed all necessary documents to complete the sale with NextWeb, Inc. assuming control at the close of business on October 18, 2002. Revenues. We generated revenues primarily through the sale of annuity-like -------- service contracts with customers, the sale of equipment and installation of wireless networks, and network consulting. We recognized revenues when services were completed. The company did not have any revenues from operations for the six months ended June 30, 2003. Our revenues for the six months ended June 30, 2002 were $930,026. Sales of wireless services were $625,080 for the six months ending June 30, 2002, while wired circuit revenue was $211,655 for the six months ended June 30, 2002. Cost of Sales. Our cost of sales consisted of third-party network usage and --------------- other outsourced service costs; the cost of roof rights; and the cost of equipment sold. Third-party network costs were expensed in the period when services were rendered and were generally proportional to the number of customers. Three were no cost of sales for the six months ended June 30, 2003. Our total cost of sales for goods and services sold for the six months ended June 30, 2002 was $265,815. Gross Profit as a percentage of sales was approximately 71% for the six months ended June 30, 2002. Sales and Marketing. Sales and marketing expenses included salaries, sales --------------------- commissions, employee benefits, travel and related expenses for our direct sales force, fees paid to third-party sales agents, marketing and sales support functions. There were no sales and marketing expenses for the six months ended June 30, 2003. For the six months ended June 30, 2002, our sales and marketing expense equaled $85,676. General and Administrative. General and administrative expenses included ---------------------------- salaries, employee benefits and expenses for our executive, finance, human resources, and technical staff; repairs, maintenance, and depreciation of network equipment; legal, professional, and other services; and occupancy costs for business premises. Investment in network equipment was related primarily to geographic network expansion and incremental customer installations, which resulted in depreciation expense in future periods. The company did not incur any depreciation expense during the six months ended June30, 2003 as all property, plant, and equipment was sold to NextWeb, inc. on October 18, 2002 as described below. In addition, general and administrative expenses included fees for professional services and occupancy costs. Our general and administrative expenses were $40,526 attributable to development stage activities and $78,195 attributable to discontinued operations for total expenses of $118,721 for the six months ended June 30, 2003 compared with $1,114,165 for the six months ended June 30, 2002. This represents a decrease of $995,444, or 89%, for the six months ended June 30, 2003. The decrease in general and administrative expense for the six months ended June 30, 2003 is attributable to the sale of the operating assets and transferring all employees but one to NextWeb, Inc. on October 18, 2002. As part of the sales agreement, the company is using limited office space at its former administrative offices without charge until completion of the bankruptcy proceedings. The company's sole remaining employee is its Chief Executive Officer who is working on the sale of the company shell and concluding activities regarding the bankruptcy. The company expects to finalize the bankruptcy proceedings within nine months. General and administrative expenses are expected to remain relatively constant for the near term. Interest Expense. Interest expense consists primarily of interest accrued for ----------------- notes payable. The company did not incur any interest expense for the six months ended June30, 2003 as all liabilities are subject to the Bankruptcy proceeding and no interest past September 11, 2002 (the date of the filing of the chapter 11 petition) is being accrued. Interest expanse was $213,765 for the six months ended June 30, 2002. Loss on Investment. We entered into an agreement with Bridge Technology, Inc. on ------------------ June 28, 2000. Under this Agreement, we issued 300,000 shares of restricted common stock for 150,000 restricted shares of Bridge Technology common stock. The shares were issued as restricted in accordance with the Securities and Exchange Commission Regulation 144. During the second quarter ended June 30, 2001, we were notified by Bridge Technology that they unilaterally cancelled the 150,000-share stock certificate issued to us without our consent. We view this as an illegal and fraudulent action. We had taken an other-than-temporary loss of $1,155,000 on our original investment in Bridge Technology of $1,200,000, of which $105,000 was recorded on our financial statements for the six months ended June 30, 2002During 2002 the stock representing this investment was pledged to and control surrendered to a note payable holder. The transaction was recorded as an exchange of a note payable of $45,000 (the current value) for the company's investment in bridge Technology. LIQUIDITY AND CAPITAL RESOURCES. Since Worldwide Wireless Networks, Inc.'s inception, we financed our operations primarily through the private placement of equity securities, loans, leasing arrangements and cash-flow from operations. As of June 30, 2003, cash reserves totaled $426,008 and is classified as restricted because it can only be used for purposes approved by the U.S. Bankruptcy Trustee. The Company does not have any other current assets. All Accounts Receivable have either been collected or classified as uncollectable. As of June 30, 2002, cash reserves totaled $9,761 and total current assets totaled $95,480 of which $27,053 were Accounts Receivable. Our current liabilities as of June 30, 2003 were $5,752,287 of which $3,028,583 accounted for the current portions of our long-term liabilities, and $58,742 is attributable to current (post bankruptcy) accounts payable. Additional accounts payable of $1,110,289 were incurred before filing the chapter 11 bankruptcy proceeding and are subject to the reorganization plan. As of June 30, 2002, total current liabilities were $5,739,752 of which $3,025,621 accounted for the current portion of our long-term liabilities, and $1,097,614 is attributable to current accounts payable. All long-term liabilities are in default. As of June 30, 2003, the company did not have any commitments for office, roof-rights payments, or equipment leases. All lease obligations were either assumed by NextWeb, Inc. as part of the sale of assets on October 18, 2002 or are included in the bankruptcy proceeding. Net cash used to fund our operating activities for the six months ended June 30, 2003 was $87,726, compared to $269,300 in funds utilized by operating activities for the six months ended June 30, 2002. Net cash used for operating activities consisted primarily of expenses related to the bankruptcy proceeding of $78,195 and other general and administrative expenses related to primarily maintaining the public status in good standing to enhance its value to potential purchasers. The company did not generate any cash from financing activities during the six months ended June 30, 2003. Net cash provided by our financing activities was $262,702 for the six months ended June 30, 2002. Net cash provided by financing activities for the first quarter of 2002 was attributable to issuing notes for certain accounts payable. Our net loss for the six months ended June 30, 2003 totaled $116,281 or $0.00 per share, compared to $852,293 or $0.01 per share for the six months ended June 30, 2002. MANAGEMENT PLAN. ---------------- On September 11, 2002, the company filed a petition with the U.S. Bankruptcy Court for the Central District of California under Chapter 11 seeking protection while a plan of reorganization is formulated. On September 17, 2002, the company signed a definitive agreement with NextWeb, Inc. of Fremont, California for NextWeb to acquire the operating assets of the company and certain liabilities; and filed a motion with the Court for an emergency sale of assets. On October 16, 2002, the Court affirmed the sale to NextWeb, Inc. for $550,000. On October 18, 2002, the Company and NextWeb, Inc. executed all necessary documents to complete the sale with NextWeb, Inc. assuming control at the close of business on October 18, 2002. The company plans has been pursuing collection of its remaining accounts receivable and attempting to sell the publicly registered entity known as Worldwide Wireless Networks, Inc. to maximize value for creditors and stockholders. On July 30, 2003, the Company issued a press release and an 8K of its intent to liquidate the public shell as no party was able to provide an offer that was considered viable to the creditor's committee. Until the liquidation plans are approved the Company will continue to evaluate offers for the public shell that may arise. Whether the public shell is sold or not, management does not believe that any funds will be available for distribution to stockholders after all approved bankruptcy administration expenses have been paid and distributions have been made to the company's creditors whose claims of approximately $5,725,000 appear to exceed the company's potential resources from the sale of it's operating assets and public shell. In addition, even if a buyer for the shell is negotiated the outcome for current shareholders may still eliminate their continuing equity interest. . We currently do not generate sufficient cash flows to support our current requirements. From the proceeds of the sale to NextWeb, Inc., the company originally invested $440,000 in a short term money market rate account with an FDIC insured commercial bank. The interest earned and the collection of any previously written-off accounts receivable represents the only continuing sources of cash flow available to the company. All cash is restricted to uses approved by the U.S. Bankruptcy Trustee. The only remaining non-cash assets of the company are the publicly registered entity and rights to collect receivables existing as of October 18, 2002, the date of sale to NextWeb, Inc. which are primarilly accounts previously charged off as uncollectible and placed for legal action RECENT DEVELOPMENTS -------------------- Eyson Corporation ------------------ On January 1, 2002 Worldwide Wireless Networks went into default on a series of secured promissory notes with Esyon Corporation. Beginning on December 28, 2000 through April 2, 2001 Esyon Corporation loaned us a cumulative total of $487,000 under a series of secured promissory notes bearing interest at 10% per annum. The promissory notes became due on January 1, 2002. As of January 1, 2002, we are in default on the principal and interest in the amount of $531,820, which indebtedness exceeds 5% of our total assets. On April 30, 2002, Esyon filed suit in Superior Court of Los Angeles County, California, seeking damages of $525,000 plus interest for breach of promissory note. We filed an answer to the complaint and filed a cross-complaint on August 1, 2002, seeking damages of $475,000 for breach of contract. As of the date of this filing, a trial date has not been set. Further action has been stayed by the U.S. Bankruptcy court. Feldhake, August & Roquemore LLP ------------------------------------ On December 28, 2001, the company's attorneys terminated their retainer agreement due to issues related to fees and non-payment by Worldwide Wireless. As of January 1, 2002, the company owed approximately $287,000 in past sue fees. In February 2002, the company signed a promissory note in the amount of $286,972 which requires monthly installments commencing at $1,000 in February 2002 and increasing each January thereafter. The company defaulted on the first payment due in March 2002. Massachusetts Mutual Life Insurance Company ----------------------------------------------- As part of its restructuring plan, the company vacated certain office space at its Orange County headquarters and attempted to sub-lease the space. The company ceased paying rent in April 2001 and by December 31, 2001 had accrued $63,665 in liability. In March 2002, the company reached a settlement and executed a promissory note for $62,210 payable monthly beginning in March 2002 at $1,500 per month with increases every six months The Company was current on this note until the bankruptcy filing discussed above. Bankruptcy Filing ------------------ On September 11, 2002, the company filed a petition for protection under Chapter 11 of the United States Bankruptcy code in the US Bankruptcy Court for the Central District of California. This allows Worldwide Wireless Networks, Inc to continue to operate while a plan of reorganization is finalized. On October 16, 2002 a motion was filed with court for an emergency sale of the company's assets to protect their value. The motion was approved on October 16, 2002. The sale was completed on October 18, 2002. On this date the Company sold all of its operating assets. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS CERTAIN DISCUSSIONS FOLLOWING REGARDING THE DESCRIPTION OF THE BUSINESS REFER TO THE OPERATING BUSINESS PRIOR TO BEING DISCONTINUED DUE TO THE SALE OF ALL THE OPERATIONAL ASSETS TO NEXTWEB, INC. ON OCTOBER 18, 2002. Except as disclosed below, we were not involved in any material pending legal proceedings, other than routine litigation incidental to our business, to which we were a party or of which any of our property was subject: Pacific Industrial Partners ----------------------------- On July 12, 2000, a lawsuit was filed in Orange County Superior Court against us and some of our officers, directors and shareholders by Pacific Industrial Partners, LLC and its affiliates (collectively, "PIP") for breach of contract, breach of the implied covenant of good faith and fair dealing, promissory estoppel and intentional interference with existing contract. The dispute arose out of a convertible debt note we signed dated January 6, 2000, as amended, in which PIP proposed to finance up to $2.5 million dollars through the purchase of convertible notes at eight percent interest (with an option to purchase up to $3 million dollars in additional notes). On April 17, 2001, we resolved the dispute through settlement negotiations. In exchange for dismissal of the pending litigation and releases of all claims against all parties, we have agreed to the following: (a) cash payment of $115,000, of which $70,000 was paid by check from persons other than us to PIP and its affiliates, and the remaining balance of $45,000 is payable from us by installments under a promissory note, which is secured by a Stipulated Entry of Judgment for that amount; (b) 400,000 shares of common stock of WWWN to be transferred to PIP and its affiliates; and (c) 1,000,000 warrants for the purchase of 1,000,000 shares of free-trading stock. With respect to the warrants, we were registering for resale only the shares underlying the warrants. As of December 31, 2001, we had issued warrants for the purchase of 750,000 shares of which none have been exercised. As of March 28, 2002, the company had paid $15,000 of the balance due with respect to the Stipulated Entry of Judgment. The balance of the Stipulated Judgment is included in the chapter 11 Bankruptcy proceeding. Sean Loftis and 1st Universe -------------------------------- We entered into an agreement with Mr. Loftis whereby we would provide wireless internet services to customers located by Mr. Loftis, and with whom Mr. Loftis would enter into contracts to provide wireless internet services. Mr. Loftis received a profit to the extent that the fees charged by him to his customers exceeded the fees charged to him by us. On January 30, 2001, we terminated the agreement, and we were subsequently sued by 1st Universe and Mr. Loftis for breach of contract, breach of the implied covenant of good faith, and interference with contract, among other things. 1st Universe and Mr. Loftis filed the suit on February 6, 2001, in the Superior Court of Orange County, California, seeking compensatory and punitive damages. Mr. Loftis alleges that we breached the agreement by terminating internet access services on short notice and entering into new contracts with his customers. On July 9, 2002 a verdict for $336,236 was entered against Worldwide Wireless Networks, Inc., additionally, Worldwide Wireless Networks, Inc. received a verdict for $1,897 against 1st Universe. Worldwide Wireless Networks, Inc. filed an objection to the proposed judgment on July 29, 2002 with the Superior Court of Orange County, California. As of the date of this filing, a date to hear the objection has not been set. Further action has been stayed by the bankruptcy court. Esyon Corporation ------------------ On April 30, 2002, Esyon Corporation filed a lawsuit in the Superior Court of Los Angeles County, California, seeking damages of $525,000 plus interest for breach of promissory note. We filed an answer to the complaint and filed a cross-complaint on August 1, 2002, seeking damages of $475,000 for breach of contract. As of the date of this filing, a trial date has not been set. Further action has been stayed by the U.S. Bankruptcy court. Haseko Corporation ------------------- On May 24, 2002, Haseko Corporation filed a lawsuit in the Superior Court of Los Angeles County, California, seeking damages of $32,137 for a breach of lease. We filed an answer to the complaint denying all allegations. As of the date of this filing, a trial date has not been set. Further action has been stayed by the U.S. Bankruptcy court Bankruptcy Filing and Sale of Assets. ----------------------------------------- On September 11, 2002, the company filed a petition for protection under Chapter 11 of the United States Bankruptcy code in the US Bankruptcy Court for the Central District of California, case number SA 02-17020 JB. This allows Worldwide Wireless Networks, Inc to continue to operate while a plan of reorganization is finalized. Liabilities subject to the bankruptcy proceeding include approximately $1,131,000 of accounts payable, approximately $1,516,000 of accrued liabilities and approximately $3,078,000 of notes payable including lines of credit. These totals are subject to revision through the Proof of Claim process and further proceedings of the Bankruptcy Court. The company is under the general supervision of the Office of the United States Trustee for the Central District of California. The Trustee must approve any transactions outside the ordinary course of business. The day to day operations of the company are under the control of the officer of the company as the Debtor in Possession. Monthly operating and cash flow reports must be submitted to the U.S. Trustee. On October 16, 2002 a motion was filed with court for an emergency sale of the company's assets to protect their value. The motion was approved on October 16, 2002. The sale was completed on October 18, 2002. On this date the Company sold all of its operating assets. Worldwide Wireless Networks, Inc has also been seeking a buyer for the public shell without success. On July 30, 2003, the Company issued a press release and an 8K of its intent to liquidate the public shell as no party was able to provide an offer that was considered viable to the creditor's committee. Until the liquidation plans are approved the Company will continue to evaluate offers for the public shell that may arise. Whether the public shell is sold or not, management does not believe that any funds will be available for distribution to stockholders after all approved bankruptcy administration expenses have been paid and distributions have been made to the company's creditors whose claims of approximately $5,725,000 appear to exceed the company's potential resources from the sale of it's operating assets and public shell. In addition, even if a buyer for the shell is negotiated the outcome for current shareholders may still eliminate their continuing equity interest. ITEM 2 - CHANGES IN SECURITIES None ITEM 3 (A) - DEFAULTS UPON SENIOR SECURITIES PHI Mutual Ventures, LC -------------------------- On March 15, 2000 PHI Mutual Ventures, LC loaned us $1,000,000 under a secured promissory note bearing interest at 11% per annum. The promissory note became due on March 15, 2001, and began to accrue a late interest rate of 18% per annum. As of the date of this filing, we are in default on the principal and interest in the amount of $1,355,103, which indebtedness exceeds 5% of our total assets. On May 1, 2000 PHI Mutual Ventures, LC loaned us $100,000 under a secured promissory note bearing interest at 12% per annum. The promissory note became due on June 30, 2000, and began to accrue a late interest rate of 18% per annum. As of the date of this filing, we are in default on the principal and interest in the amount of $141,608, which indebtedness exceeds 5% of our total assets. As discussed above, the company filed a petition for protection under Chapter 11 of the U.S Bankruptcy Code on September 11, 2002. This filing suspended all collections efforts by creditors including all promissory note holders. The company is formulating its reorganization plan. Mutual Ventures Corporation ----------------------------- On October 24, 2000 Mutual Ventures Corporation loaned us $200,000 under a secured promissory note bearing interest at 12% per annum. The promissory note became due on January 24, 2001, and began to accrue a late interest rate of 18% per annum. As of the date of this filing, we are in default on the principal and interest in the amount of $246,400, which indebtedness exceeds 5% of our total assets. As discussed above, the company filed a petition for protection under Chapter 11 of the U.S Bankruptcy Code on September 11, 2002. This filing suspended all collections efforts by creditors including all promissory note holders. The company is formulating its reorganization plan. Eyson Corporation ------------------ On January 1, 2002 Worldwide Wireless Networks went into default on a series of secured promissory notes with Esyon Corporation. Beginning on December 28, 2000 through April 2, 2001 Esyon Corporation loaned us a cumulative total of $487,000 under a series of secured promissory notes bearing interest at 10% per annum. The promissory notes became due on January 1, 2002. As of the date of this filing, we are in default on the principal and interest in the amount of $544,459, which indebtedness exceeds 5% of our total assets. As discussed above, the company filed a petition for protection under Chapter 11 of the U.S Bankruptcy Code on September 11, 2002. This filing suspended all collections efforts by creditors including all promissory note holders. The company is formulating its reorganization plan. Schneider Rucinski Enterprises -------------------------------- On September 28, 2000 Schneider Rucinski Enterprises loaned Worldwide Wireless Networks $150,000 under a secured promissory note which required 12 payments of $16,667 including principal and interest. The note became due on September 28, 2001. As of the date of this filing, we are in default on the principal and interest in the amount of $50,220, which indebtedness exceeds 5% of our total assets. As discussed above, the company filed a petition for protection under Chapter 11 of the U.S Bankruptcy Code on September 11, 2002. This filing suspended all collections efforts by creditors including all promissory note holders. The company is formulating its reorganization plan. Feldhake, August & Roquemore, LLP ------------------------------------- On February 8, 2002, Worldwide Wireless Networks agreed to settle outstanding legal fees due Feldhake, August & Roquemore, LLP by issuing a promissory note in the amount of $286,972 bearing interest at 12% per annum. The note requires payments of $3,500 per month adjusted each succeeding January until paid. The company failed to make the May 2002 payments and went into default at that time. The note provides that all principal and interest becomes due upon default. As of the date of this filing, we are in default on the principal and interest in the amount of $299,328, which indebtedness exceeds 5% of our total assets. As discussed above, the company filed a petition for protection under Chapter 11 of the U.S Bankruptcy Code on September 11, 2002. This filing suspended all collections efforts by creditors including all promissory note holders. The company is formulating its reorganization plan. ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5 - OTHER INFORMATION None ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K EXHIBIT NUMBER DESCRIPTION ------ ----------- 4.3(3) Form of Promissory Note with Esyon Corporation 10.15(1) Settlement Agreement, dated January 25, 2001, between Worldwide Wireless and Sinclair Davis Trading Corporation. 10.16(2) Share Purchase Agreement, dated March 30, 2001, between Worldwide Wireless and Universal Business Insurance, Inc. 10.17(2) Settlement Agreement, dated April 17, 2001, between Worldwide Wireless and Pacific Industrial Partners 10.18(2) Share Purchase Agreement, dated April 23, 2001, between Worldwide Wireless and Feldhake, August & Roquemore LLP 10.19(3) Letter of Intent, dated December 28, 2000, between Esyon Corporation and Worldwide Wireless 23.1* Consent of Independent Public Accountants dated August 13, 2003 for quarterly financial statements ended June30, 2003 31.1* Certification of Chief Executive Officer and Chief Financial 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 Executive Officer and Chief Financial Officer Pursuant to 15 U.S.C. Section 78m(a) or 78o(d), As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 1 Previously filed with Form SB-2/A dated March 16, 2001 2 Previously filed with Form SB-2/A dated April 24, 2001 3 Previously filed with Form SB-2/A dated May 7, 2001 * Filed herewith Reports on Form 8-K. ---------------------- Form 8-K filed November 12, 2002 reporting the filing of a Chapter 11 Bankruptcy petition in the U.S. bankruptcy Court for the Central District of California Form 8-K filed November 12, 2002 reporting the sale of substantially all the operating assets of the company Form 8-K filed July 31, 2003 reporting the Company's intent to file for liquidation. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. WORLDWIDE WIRELESS NETWORKS, INC. Date: August 14, 2003 /s/ ---------------------------- Jerry Collazo President and Chief Executive Officer