**U.S. SECURITIES AND EXCHANGECOMMISSION**

**Washington,D.C. 20549**

 

**Form 10-QSB**

 

**Quarterly Report Under Section 13 or 15(d)of the Securities exchange Act of 1934**

 

**For Quarter Ending September 30, 2002**

 

**Commission File Number #33-38119-C**

 

| **Voice and  Wireless Corporation**                           |
|---------------------------------------------------------------|
| (Exact name of registrant as specified in its charter)        |
|                                                          |   |   |
| **Minnesota**                                                 |   | **41-1610632** |
| (State or other jurisdiction of incorporation)                |   | (IRS Employer  Identification No.) |
|                                                          |   |   |
| **Suite  654, 600 South  Highway 169,  Minneapolis, MN** |   | **55426** |
| (Address of principal executive offices)                      |   | (Zip code) |
|                                                          |   |   |
| Registrant’s telephone number,   **(952) 546-2075** |

 

Indicateby Check mark whether the registrant (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or of such shorter period that the registrant was requiredto file such reports), and 2) has been subject to such filing requirements forthe past 90 days.

 

Yes   ý               No   o

 

Indicatethe number of shares outstanding of each of the  issuer’s classes of common stock, as of the latest practicabledate:

 

Issued and outstanding shares of common stock as of November 7, 2002are 11,745,427 common stock at $.001 par value.

 

 

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**CAUTIONARY STATEMENT FOR PURPOSES OF THE “SAFE HARBOR”PROVISIONSOF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995**

 

Statements in this discussion which are not historical facts may beconsidered “forward looking statements” within the meaning of Section 21E ofthe Securities Act of 1934, as amended, including projected sales based uponorders, estimated cost savings and savings that may be generated fromrestructuring. The words “believe”, “expect”, “anticipate”, “estimate”, andsimilar expressions identify forward looking statements. Any forward lookingstatement involves risks and uncertainties that could cause actual events orresults to differ, perhaps materially, from the events described in the forwardlooking statements. Readers are cautioned not to place undue reliance on theseforward looking statements. The Company undertakes no obligation to publiclyupdate or revise any forward looking statement, whether as a result of newinformation, future events or otherwise. The risks associated with theCompany’s forward looking statements include, but are not limited to, risksassociated with the Company’s history of losses and uncertain profitability,reliance on a large customer, risks associated with competition, generaleconomic conditions, reliance on key management and production people, futurecapital needs, dilution, effects of outstanding notes and convertibledebentures, limited public market, low stock price, and lack of liquidity.

 

Thefollowing discussion and analysis should be read in conjunction with theconsolidated financial statements, related notes and other information includedin this quarterly report on Form 10-QSB.

 

 

 

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PartI.   Financial Information

 

Quarter Ended September 30, 2002

 

GENERAL

 

The following consolidated financial information is submitted inresponse to the requirements of Form 10-QSB and is prepared in accordance withgenerally accepted accounting principles in the United States of America.Certain information and footnote disclosures normally included in financialstatements prepared in accordance with generally accepted accounting principlesin the United States of America have been condensed or omitted, although theCompany believes the disclosures that are made are adequate to make theinformation presented not misleading. Further in the opinion of management, theinterim consolidated financial statements reflect fairly the financial positionand results of operations for the period indicated.

 

Theresults of operations for the quarter ended as stated above are not necessarilyindicative of results to be expected for the

 

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entirefiscal year ending December 31st.

 

Item 1.        ConsolidatedFinancial Statements

 

Theconsolidated balance sheet of Voice and Wireless Corporation (the “Company”) asof the quarter ended September 30, 2002 and the related consolidatedstatements of operations and cash flowsthereto are incorporated herein by reference to the Company’s quarterly report.

 

**VOICE AND WIRELESS CORPORATION AND SUBSIDIARIES**

**CONSOLIDATED BALANCE SHEET**

 
|                                                                                                                                            |   | **September 30,  2002** |       | **December 31,  2001** |       |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|------------|------------------------|------------|
|                                                                                                                                            |   | **(Unaudited)**         |       | **(Audited)**          |       |
| **ASSETS**                                                                                                                                      |   |                    | ** ** |                   | ** ** |
| **Current  assets:**                                                                                                                            |   |                    |       |                   |       |
| Cash                                                                                                                                            |   | $                       | 77,914     |                   | $          | 9,709 |   |
| Accounts  receivable, net                                                                                                                       |   | 266,160                 |       | 411,162                |       |
| Notes  receivable, net                                                                                                                          |   | 55,000                  |       | 70,000                 |       |
| Inventories                                                                                                                                     |   | 297,108                 |       | 249,398                |       |
| Other current  assets                                                                                                                           |   | 27,695                  |       | 301,927                |       |
| Total current  assets                                                                                                                           |   | 723,877                 |       | 1,042,196              |       |
|                                                                                                                                            |   |                    |       |                   |       |
| **Other  assets:**                                                                                                                              |   |                    |       |                   |       |
| Property and  equipment, net                                                                                                                    |   | 250,330                 |       | 288,232                |       |
| Investment in  unconsolidated corporations                                                                                                      |   | 40,000                  |       | 40,000                 |       |
| Goodwill                                                                                                                                        |   | 193,265                 |       | 0                      |       |
| Intangible  assets, net                                                                                                                         |   | 239,457                 |       | 221,055                |       |
| Total other  assets                                                                                                                             |   | 723,052                 |       | 549,287                |       |
|                                                                                                                                            |   |                    |       |                   |       |
| **TOTAL  ASSETS**                                                                                                                               |   | $                       | 1,446,929  |                   | $          | 1,591,483 |   |
|                                                                                                                                            |   |                    |       |                   |       |
| **LIABILITIES AND STOCKHOLDERS’  EQUITY**                                                                                                  |   |                    | ** ** |                   | ** ** |
|                                                                                                                                            |   |                    |       |                   |       |
| **Current  liabilities:**                                                                                                                       |   |                    |       |                   |       |
| Checks written  in excess of cash in bank                                                                                                       |   | $                       | 0          |                   | $          | 69,105 |   |
| Current portion  of long-term debt                                                                                                              |   | 23,796                  |       | 22,932                 |       |
| Revolving credit  facility                                                                                                                      |   | 165,000                 |       | 0                      |       |
| Note  Payable-Officers                                                                                                                          |   | 18,666                  |       | 0                      |       |
| Accounts payable                                                                                                                                |   | 339,821                 |       | 248,546                |       |
| Accrued  consulting fees                                                                                                                        |   | 0                       |       | 25,685                 |       |
| Accrued expenses                                                                                                                                |   | 182,349                 |       | 55,504                 |       |
| Total current  liabilities                                                                                                                      |   | 729,632                 |       | 421,772                |       |
|                                                                                                                                            |   |                    |       |                   |       |
| **Long-Term  Liabilities**                                                                                                                      |   |                    |       |                   |       |
| Revolving credit  facility                                                                                                                      |   | 0                       |       | 203,500                |       |
| Long-term debt,  net                                                                                                                            |   | 456,117                 |       | 395,554                |       |
| Total  liabilities                                                                                                                              |   | 1,185,749               |       | 1,020,826              |       |
|                                                                                                                                            |   |                    |       |                   |       |
| **Stockholders’  equity:**                                                                                                                 |   |                    |       |                   |       |
| Capital stock,  no par value, 50,000,000 shares authorized:                                                                                     |   |                    |       |                   |       |
| Common  stock, no par value, 40,000,000 shares authorized, 11,745,427 and 8,938,760  shares isuued; 11,588,260 and 8,938,760 shares outstanding |   | 7,606,496               |       | 7,221,511              |       |
| Warrants                                                                                                                                        |   | 633,085                 |       | 628,085                |       |
| Accumulated  deficit                                                                                                                            |   | (7,978,401              | )          | (7,278,939             | )          |
| Total  stockholders’ equity                                                                                                                |   | 261,180                 |       | 570,657                |       |
|                                                                                                                                            |   |                    |       |                   |       |
| **TOTAL  LIABILITIES AND STOCKHOLDERS’ EQUITY**                                                                                            |   | $                       | 1,446,929  |                   | $          | 1,591,483 |   |

 

**Seeaccompanying notes to the financial statements**

 

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**VOICE AND WIRELESS CORPORATION AND SUBSIDIARIES**

**CONSOLIDATED STATEMENT OF OPERATIONS**

 
|                                                                |   | **Quarter Ended**       |     | **Nine Months Ended**   |   |
|---------------------------------------------------------------------|--------|-------------------------|----------|-------------------------|--------|
|                                                                |   | **September 30,  2002** |     | **September 30,  2001** |   | **September 30,  2002** |   | **September 30,  2001** |   |
|                                                                |   | **(Unaudited)**         |     | **(Unaudited)**         |   | **(Unaudited)** |   | **(Unaudited)** |   |
|                                                                |   |                    |     |                    |   |   |   |   |   |
| **Revenues**                                                        |   | $                       | 500,078  |                    | $      | 427,799 |   | $ | 1,801,906 |   | $ | 1,650,518 |   |
|                                                                |   |                    |     |                    |   |   |   |   |   |
| **Cost  of sales**                                                  |   | 313,310                 |     | 349,283                 |   | 1,253,166 |   | 1,224,264 |   |
|                                                                |   |                    |     |                    |   |   |   |   |   |
| **Gross  profit**                                                   |   | 186,768                 |     | 78,516                  |   | 548,740 |   | 426,254 |   |
|                                                                |   |                    |     |                    |   |   |   |   |   |
| **Operating  expenses**                                             |   | 334,589                 |     | 403,786                 |   | 1,165,394 |   | 1,183,481 |   |
|                                                                |   |                    |     |                    |   |   |   |   |   |
| **Loss  from operations**                                           |   | (147,821                | )        | (325,270                | )      | (616,654 | ) | (757,227 | ) |
|                                                                |   |                    |     |                    |   |   |   |   |   |
| **Other  income (expense):**                                        |   |                    |     |                    |   |   |   |   |   |
| Interest income                                                     |   | 0                       |     | 673                     |   | 0 |   | 5,674 |   |
| Interest expense                                                    |   | (20,551                 | )        | (12,805                 | )      | (70,195 | ) | (31,001 | ) |
| Loss on the sale  of property and equipment                         |   | 0                       |     | 0                       |   | (15,725 | ) | 0 |   |
| Total other  income (expense)                                       |   | (20,551                 | )        | (12,132                 | )      | (85,920 | ) | (25,327 | ) |
|                                                                |   |                    |     |                    |   |   |   |   |   |
| Loss before  income taxes                                           |   | (168,372                | )        | (337,402                | )      | (702,574 | ) | (782,554 | ) |
|                                                                |   |                    |     |                    |   |   |   |   |   |
| Provision for  income taxes                                         |   | 0                       |     | 0                       |   | 0 |   | 0 |   |
|                                                                |   |                    |     |                    |   |   |   |   |   |
| **Net  loss**                                                       |   | $                       | (168,372 | )                       | $      | (337,402 | ) | $ | (702,574 | ) | $ | (782,554 | ) |
|                                                                |   |                    |     |                    |   |   |   |   |   |
| **Basic  and diluted net loss per common share**                    |   | $                       | (0.01    | )                       | $      | (0.04 | ) | $ | (0.06 | ) | $ | (0.09 | ) |
|                                                                |   |                    |     |                    |   |   |   |   |   |
| **Weighted average common shares outstanding - basic and  diluted** |   | 11,545,408              |     | 8,938,760               |   | 11,545,408 |   | 8,938,760 |   |

 

**Seeaccompanying notes to the financial statements**

 

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**VOICE AND WIRELESS CORPORATION AND SUBSIDIARIES**

**CONSOLIDATED STATEMENT OF CASH FLOWS**

 
|                                                                           |   | **Nine Months Ended**   |     |
|--------------------------------------------------------------------------------|--------|-------------------------|----------|
|                                                                           |   | **September 30,  2002** |     | **September 30,  2001** |   |
|                                                                           |   | **(Unaudited)**         |     | **(Unaudited)** |   |
| **Cash  flows from operating activities:**                                     |   |                    |     |   |   |
| Net loss                                                                       |   | $                       | (702,574 | ) | $ | (782,554 | ) |
| Adjustments  to reconcile net loss to cash flows from operating activities:    |   |                    |     |   |   |
| Depreciation and  amortization                                                 |   | 103,803                 |     | 90,093 |   |
| Amortization of  prepaid consulting fees                                       |   | 276,152                 |     | 0 |   |
| Amortization of  original issue discount                                       |   | 24,831                  |     | 0 |   |
| Loss on the  disposal of fixed assets                                          |   | 15,725                  |     | 0 |   |
| Common stock  issued for consulting services                                   |   | 56,700                  |     | 0 |   |
| Changes in  operating assets and liabilities:                                  |   |                    |     |   |   |
| Accounts  receivable                                                           |   | 145,002                 |     | (153,331 | ) |
| Inventories                                                                    |   | (17,000                 | )        | (29,846 | ) |
| Other current  assets                                                          |   | 4,804                   |     | (16,651 | ) |
| Checks written  in excess of cash in bank                                      |   | (69,105                 | )        | 0 |   |
| Accounts payable                                                               |   | 91,275                  |     | 173,142 |   |
| Accrued expenses                                                               |   | 109,555                 |     | 21,825 |   |
| Cash flows from  operating activities                                          |   | 39,168                  |     | (697,322 | ) |
|                                                                           |   |                    |     |   |   |
| **Cash  flows from investing activities:**                                     |   |                    |     |   |   |
| Purchases of  property and equipment                                           |   | (12,288                 | )        | (106,401 | ) |
| Proceed from the  sale of property and equipment                               |   | 1,000                   |     | 0 |   |
| Collection on  note receivable                                                 |   | 15,000                  |     | 0 |   |
| Proceeds from  the sale of common stock                                        |   | 2,100                   |     | 0 |   |
| Cash flows from  investing activities                                          |   | 5,812                   |     | (106,401 | ) |
|                                                                           |   |                    |     |   |   |
| **Cash  flows from financing activities:**                                     |   |                    |     |   |   |
| Net repayment on  revolving credit facility                                    |   | (38,500                 | )        | (95,000 | ) |
| Proceeds from  notes payable-officers                                          |   | 18,666                  |     | 0 |   |
| Payment on  long-term debt                                                     |   | (6,541                  | )        | (1,838 | ) |
| Proceeds from  long-term debt and warrants issues                              |   | 49,600                  |     | 228,774 |   |
| Cash flows from  financing activities                                          |   | 23,225                  |     | 321,936 |   |
|                                                                           |   |                    |     |   |   |
| **Increase/Decrease  in cash**                                                 |   | 68,205                  |     | (481,787 | ) |
|                                                                           |   |                    |     |   |   |
| **Cash,  beginning of period**                                                 |   | 9,709                   |     | 486,901 |   |
|                                                                           |   |                    |     |   |   |
| **Cash  , end of period**                                                      |   | $                       | 77,914   |   | $ | 5,114 |   |
|                                                                           |   |                    |     |   |   |
| **Supplemental  cash flow information:**                                       |   |                    |     |   |   |
| Cash paid for  interest                                                        |   | $                       | 70,195   |   | $ | 31,001 |   |
| **Noncash  investing and financing activities:**                               |   |                    |     |   |   |
| Issuance  of common stock in exchange of common stock of Econowatt Corporation |   | $                       | 238,000  |   | $ | — |   |
| Issuance  of common stock in exchange of common stock of EMTI Corporation      |   | $                       | 62,500   |   | $ | — |   |
| Issuance of  common stock for accrued consulting services                      |   | $                       | 25,685   |   | $ | — |   |

 

**Seeaccompanying notes to the financial statements**

 

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**VOICEAND WIRELESS CORPARATION AND SUBSIDIARIES**

NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS

September 30, 2002 and2001

 

**Note 1 – Significant AccountingPolicies**

 

Revenue Recognition

 

The Company recognizes revenue from sales at the time that ownershiptransfer to the customer, principally at shipment of the product.

 

Goodwill

 

Goodwill represents the excess of acquisition costs over the fairmarket value of identifiable net assets acquired and is being amortized on astraight-line basis over seven years. The carrying value of goodwill is reviewed if the facts andcircumstances suggest that it may be impaired. If the review indicates that goodwill will not be recoverable, than thecarrying value of goodwill will be reduced by the amount not recoverable.

 

Net Loss per Common Share

 

Basic net loss per common share is computed by dividing the net loss bythe weighted average number of common shares outstanding for the reportingperiod.  Diluted net loss per share iscomputed by dividing the net loss by the sum of the weighted average number ofcommon shares outstanding plus all additional common stock that would have beenoutstanding if potentially dilutive common shares related to common  share equivalents (stock options and stockwarrants) had been issued.  All optionsand warrants outstanding during the period were anti-dilutive.

 

**Note 2 –Merger with Econowatt Corporation**

 

On March 6, 2002, the Company completed the exchange of stock withEconowatt Corporation, a Nevada corporation (Econowatt).  In exchange for 10,000 (100%) of the issuedcommon shares of Econowatt’s total 25,000,000 authorized shares, the Companyissued 1,400,000 shares of its common stock for a total value of$238,000.00.  Statement of FinancialAccounting Standards (SFAS) No. 141 “Business Combinations” requires that allbusiness combinations after June 30, 2001 be accounted for under the purchasemethod of accounting.  Therefore, theexchange of stock with Econowatt was accounted for under the purchase method ofaccounting.  As part of the acquisitionthe Company recorded goodwill in the amount of $193,265. Econowatt Corporationhas the exclusive right to market the STABILUXTM energy management systems(www.stabilux.com) in the United States from its manufacturer IREM S.p.A. inItaly.

 

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**Note 3 – Purchase of EnergyManagement Technology Incorporated**

 

On June 21, 2002, the Company completed the exchange of stock withEnergy Management Technology Incorporated, a Florida corporation (EMTI) thusadding EMTI as a wholly owned subsidiary of the Company. In exchange for 1,000(100%) of the issued common shares of EMTI’s total 1,000,000 authorized sharesand the license agreement to sell software, the Company issued 625,000 sharesof its common stock for a total value of $62,500. Statement of FinancialAccounting Standards (SFAS) No. 141 “Business Combinations” requires that allbusiness combinations after June 30, 2001 be accounted for under the purchasemethod of accounting.  Therefore, theexchange of stock with EMTI was accounted for under the purchase method ofaccounting. EMTI has the exclusive right to market the FEDS energy managementprogram (www.pnl.gov/FEDS) in the State of California for Pacific NorthwestNational Laboratory, which is operated by Battelle (www.battelle.org) for theU. S. Department of Energy under Contract No.DE-AC06-76RLO1830. In the exchangeBattelle was issued 306,250 shares of the Company’s 144 stock and UTEKCorporation (www.utekcorp.com) was issued 318,750 shares of the Company’s 144stock. The Company also agreed to pay a royalty percentage based upon grossreceipts as defined in the agreement.

 

**Note 4- Adoption of New AccountingStandards**

 

In June 2001, the Financial Accounting Standards Board issued Statementof Financial Accounting Standards (SFAS)No. 141, “Business Combinations”,effective for acquisitions initiated on or after July 1,2001, and No.142,“Goodwill and Other Intangible Assets”, effective for fiscal years beginningafter December 15, 2001. SFAS No.141 requires that the purchase method ofaccounting be used for all business combinations initiated after June 30,2001,and includes guidance on the initial recognition and measurement of goodwilland other intangible assets arising from business combinations. SFAS No.142indicates that goodwill (and intangible assets deemed to have indefinite lives)will no longer be amortized but will be subject to annual impairment tests.Other intangible assets will continue to be amortized over their useful lives.We adopted these new rules effective January 1, 2002. We will perform therequired goodwill impairment test at the close of the quarter ended September30, 2002 based upon the carrying amount as of January 1, 2002. If it isdetermined there is impairment to goodwill, we will record an adjustment atthat time.

 

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Components of intangible assets are as follows:

 
|                                        |   | **September  30, 2002**     |    | **December  31,2001**         |   |
|---------------------------------------------|--------|-----------------------------|---------|-------------------------------|--------|
|                                        |   | **Gross  Carrying  Amount** |    | **Accumulated  Amortization** |   | **Gross  Carrying  Amount** |   | **Accumulated  Amortization** |   |
| Intangible assets  subject to Amortization  |   |                        |    |                          |   |   |   |   |   |
|                                        |   |                        |    |                          |   |   |   |   |   |
| Patents                                     |   | $                           | 40,023  |                          | $      | 8,990 |   | $ | 40,023 |   | $ | 194 |   |
| License                                     |   | $                           | 62,500  |                          | $      | 4,167 |   | 0 |   | 0 |   |
| Product  development costs                  |   | $                           | 206,341 |                          | $      | 112,440 |   | $ | 206,341 |   | $ | 90,778 |   |
| Debt issuance  costs                        |   | $                           | 46,984  |                          | $      | 12,528 |   | $ | 46,984 |   | $ | 5,481 |   |
| Loan costs                                  |   | $                           | 32,361  |                          | $      | 14,859 |   | $ | 32,361 |   | $ | 12,458 |   |
| Trademark                                   |   | $                           | 5,322   |                          | $      | 1,065 |   | $ | 5,322 |   | $ | 1,065 |   |
|                                        |   |                        |    |                          |   |   |   |   |   |
| Intangible assets not  subject Amortization |   |                        |    |                          |   |   |   |   |   |
| Goodwill                                    |   | $                           | 193,265 |                          | $      | 0 |   | $ | 0 |   | $ | 0 |   |

 

Amortization of intangible assets was $ 14,388 and $ 7,235  for the three months ended September 30,2002 and 2001, respectively, and $40,428 and $18,979 for the nine months endedSeptember 30, 2002 and 2001, respectively. Amortization expense is expected tobe approximately $16,595 for the remainder of 2002 (a total of approximately $59,230for 2002). Estimated amortization expense of intangible assets for the yearsending December 31, 2002, 2003, 2004, 2005, 2006 and thereafter is $55,063,$67,880, $67,880, $49,877 and $16,568

 

**Note 5 – Stockholders’ Equity**

 

During the quarter ended June 30, 2002, the Company issued 135,000shares of restricted common stock for consulting services, valued at $21,600,completed in 2002. For the 3rd quarter ended, September 30, 2002,the Company issued 90,000 shares of restricted common stock for consultingservices, valued at $10,800. The Company terminated the consulting agreementeffective August 31, 2002. The Company issued 75,000 shares of restrictedcommon stock, valued at $9,000, to an individual for consulting servicesrendered through June 30,2002 and authorized the issuing of 156,667 shares ofrestricted common stock to another individual for consulting services. Inaddition, the Company sold 35,000 shares of restricted common stock. valued at$2,100, to an individual.

 

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**Note 6- Notes Payable-Related Parties**

 

During the quarter ended June 30, 2002, the Company received $18,666from related parties. These notes are unsecured, non-interest bearing and aredue December 31,2002.

 

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Item 2.                         Management’s Discussion and Analysis of FinancialCondition and Results of Operations

 

# Results of Operations 

**(In 000’s except per share data)**

 

Highlights:

 

|           |   | **Three months****ended September 30,** |   |     |   |
|----------------|--------|----------------------------------------------|--------|----------|--------|
|           |   | **2002**                                     |   | **2001** |   | **% Change** |   |
|           |   |                                         |   |     |   |   |   |
| Revenue        |   | $                                            | 500    |     | $      | 428 |   | 16.8 | % |
| Gross Profit   |   | 187                                          |   | 79       |   | 136.7 | % |
| Net Loss       |   | (168                                         | )      | (337     | )      | 50.1 | % |
|           |   |                                         |   |     |   |   |   |
| Loss per share |   | $                                            | (.01   | )        | $      | (.04 | ) |   |   |

 

 

|           |   | **Nine months ended September 30**, |   |     |   |
|----------------|--------|-------------------------------------|--------|----------|--------|
|           |   | **2002**                            |   | **2001** |   | **% Change** |   |
|           |   |                                |   |     |   |   |   |
| Revenue        |   | $                                   | 1,802  |     | $      | 1,651 |   | 9.1 | % |
| Gross Profit   |   | 549                                 |   | 426      |   | 28.9 | % |
| Net Loss       |   | (703                                | )      | (783     | )      | (12.1 | )% |
|           |   |                                |   |     |   |   |   |
| Loss per share |   | $                                   | (.06   | )        | $      | (.09 | ) |   |   |

 

Fixture revenue for the quarter totaled $500k as compared to $428k forthe same quarter in 2001. We are seeing an increase in the amount of projectsbeing bid and it appears that the next 2 quarters should be strong, providedthe economy holds. Gross margins continue to be pressured by competitivepricing. For the quarter we did not record any revenues from either the Stabilux,FEDS software, Proprietary Microwave Network (contract was signed for aninstallation) or Earbud products.

 

Gross profit for the quarter ended totaled $549k compared to $426k forthe same quarter of 2001. This increase is due to the higher volume of revenuesand change in the mix of revenue toward a higher volume of installationrevenue.

 

Operating expenses for the quarter totaled $335k as compared to $404kfor the same quarter of 2001 representing a 17% reduction.

 

The Company is continuing to seek additional working capital

 

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through the sale of convertible debentures. During July, 2002 theCompany sold $34,400.00 of these debentures. During the quarter ended September30, 2002, the Company proposed to sell 35,000 shares of restricted common stockvalued at $2,100 to an individual investor pursuant to an isolated salesexemption. The sale is in the process of being rescinded and the stock wasnever issued.

 

During July 2002, the Company acquired the exclusive rights to aproprietary microwave video networking technology, which allows video images tobe transmitted, in real time, wirelessly over long distances. The agreement forthe acquisition of this technology calls for the issuance of up to 600,000shares of restricted stock and the funding of operational expenses for thetechnology. On July 31, 2002, the Waccamaw Regional Transportation Authority(WRTA), a public corporation and subdivision of the Counties of Horry andGeorgetown and the State of South Carolina, Board of Directors unanimouslyapproved a proposed contract with Voice & Wireless Corporation for theinstallation of its “Proprietary Microwave Network”(PMN) on its municipalbuses. The contract was signed on August 12, 2002. The contract calls for a90-day demonstration to be installed after the first of the year and ifsuccessful, other buses would be installed with the PMN system. The PMNconsists of installing a wireless GPS locator on each bus along with a securitycamera that transmits a real time video back to headquarters, wirelessly. Ifthe demonstration is successful, the WRTA contract could become one of theCompany’s biggest contracts in its 14-year history.

 

On September 18, 2002 the Company responded to an RFP from a United Statescommercial airline company to install its PMN system in four of its planes forFAA certification. The issuer of the RFP has not responded. More informationabout the PMN technology may be found at www.ultimate-wireless.biz.

 

The first STABILUXTM product was installed in Boston during the summerof 2002 for demonstration purposes. The Company did not charge for thisinstallation. STABILUXTM is a voltage regulator that stabilizes voltage andmanages lighting for various applications. STABILUXTM is a proven technology,developed by the Italian manufacturer IREM S.p.A., and is in use through outEurope and Asia. IREM has manufactured and installed more than 550,000 voltageregulators in Europe and Asia since 1965 but has never before marketed theSTABILUXTM products in the USA. STABILUXTM is ETL and FCC certified and IREM isboth ISO 9001 and ISO 14001 certified. The product has been shown to reducelighting energy costs by as much as 50% in European applications such asgrocery stores, parking ramps, large retail stores, and similar facilities.STABILUXTM can be used with all existing or new lamps, ballasts or energymanagement systems found in commercial, industrial and governmental facilities.EconoWatt Corporation DBA GreenView Energy, is a wholly owned subsidiary ofVoice & Wireless Corporation and is the exclusive distributor of STABILUXTMproducts

 

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in the United States. More information about STABILUXTM may be found atwww.greenviewenergy.com.

 

Voice and Wireless Corporation has the exclusive right to market thenew windows-based Facility Energy Decision System 5.0 software (FEDS) in theState of California for Pacific Northwest National Laboratory(www.pnl.gov/FEDS), which does work for the U. S. Department of Energy underContract No.DE-AC06-76RLO1830. The new FEDS 5.0 software program will analyzeevery aspect of energy consumption in a building, or buildings, and thenrecommend energy saving solutions. Over 2,000 federal agencies have used thesoftware and now it is available to the private sector through Voice &Wireless Corporation.

 

The Company does not have the capital to resolve production problemsfor the wireless Earbud at this time.

 

Liquidity and Capital Resources

 

Due to the losses sustained by the Company, there has been asignificant reduction in working capital. As noted above, the Company iscontinuing to seek additional capital through the sale of convertibledebentures. Two Company directors have been advancing credit and cash to theCompany for several months in order to cover expenses not covered by revenues.In addition, Company officers have taken substantially reduced salaries andhave not been reimbursed for substantial credit and expense advances to theCompany. However, there is no guarantee that these alternative sources of cashand credit will be enough to compensate for lower revenues if the Company doesnot see significant revenues from its’ Stabilux, Ear-Bud, FEDS software, orProprietary Microwave Network technology. This liquidity problem makes itdifficult for the Company to properly market its products and services andplaces in question the Company’s ability to continue as a going concern.

 

Inflation

 

The rate of inflation can have a significant impact on the Company’soperations because of increase in wood product costs. The Company bids mostprojects and can not pass all of the cost increases to our customers.

 

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**Critical Accounting Policies andEstimates**

The Company believes the following represent its critical accountingpolicies and estimates:

 

Impairment of Goodwill and other intangibles

 

We periodically evaluate acquired businesses for potential impairmentindicators.  Our judgements regardingthe existence of impairment indicators are based on legal factors, marketconditions and operational performance of our acquired businesses.  Future events could cause us to concludethat impairment indicators exist and that goodwill and other intangiblesassociated with our acquired businesses are impaired.  During the period ended September 30, 2002 and 2001, the Companydid not record any impairment losses related to other intangibles related toacquired businesses.

 

Revenue Recognition

 

We recognize revenue when products are shipped to customers the priceis fixed and determinable and collection is considered probable.  The Securities and Exchange Commission’sStaff Accounting Bulletin (SAB) No. 101, “Revenue Recognition” providesguidance on the application of accounting policies generally accepted in theUnited States of America to selected revenue recognition issues. We haveconcluded that our revenue recognition policy is appropriate and in accordancewith accounting principles generally accepted in the United States of America andSAB No. 101.

 

Recently Issued Accounting Pronouncements

 

In April 2002, the Financial Accounting Standards Board (FASB) issuedStatement of Financial Accounting Standards (SFAS) No. 145, “Rescission of FASBStatements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and TechnicalCorrections.” The Company believes the adoption of SFAS No. 145 will not have amaterial effect on the Company’s consolidated financial position or results ofoperations.

 

In June 2002, FASB issued SFAS No. 146, “Accounting for CostsAssociated with Exit or Disposal Activities.” SFAS No. 146 requires recognitionof a liability for a cost associated with an exit or disposal activity when theliability is incurred versus the date the Company commits to an exit plan. Inaddition, SFAS No. 146 states the liability should be initially measured atfair value. The requirements of SFAS No. 146 are effective for exit or disposalactivities that are initiated after December 31, 2002. The Company believes theadoption of SFAS No. 146 will not have a material effect on the Company’sconsolidated financial position or results of operations.

 

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**SPECIAL NOTE REGARDINGFORWARD-LOOKING STATEMENTS**

The Private Securities Litigation Reform Act of 1995 provides a “safeharbor” for forward-looking statements. Certain information included in this Form 10-QSB and other materialsfiled or to be filed with the Securities and Exchange Commission (as well asinformation included in oral statements or other written statements made or tobe made by us) contain statements that are forward-looking.  A number of important factors could,individually or in the aggregate, cause actual results to differ materiallyfrom those expressed or implied in any forward-looking statements.  Such factors include, but are not limitedto, the following:  our ability expandinto new markets; our ability to execute our expansion strategy; changes in businessstrategy or development plans; availability and terms of capital; competition.  For further information regarding these andother factors, see our Annual Report on Form 10-KSB for the fiscal year endedDecember 31, 2001.

 

PartII  Other Information

 

Item1.   Legal Proceedings – None

 

Item2.   Changes in Securities

 

On July 23, 2002 the Company’s Board authorized, but has not issued,156,667 shares of 144 stock to a consulting salesperson for past and futureservices. At the same Board meeting, the Board authorized the cancellation of225,000 shares of stock that had been returned to the Company. The Boarddiscussed the fact that the Board members had been making cash advances andloans to the Company and that some of them had been converted into non-interestbearing notes. The CEO is still making credit and cash advances to the Companyin order to cover operational expenses not covered by revenues.

 

Item 3.   Defaults uponSenior Securities – None

 

Item4.   Submission of Matters to a Voteof Security Holders – None

 

Item5.   Other Information – None

 

Item6.   Exhibits and Reports that have beenfiled since 1994 on Forms 8-KSB, 10-KSB, and 10-QSB, DEF 14A and the October18, 1995 S-8 filing as described in Item 2 herein. Exhibit 9.9 is thecertification of the CEO and the CFO as required under Section 906 of theSarbanes-Oxley Act of 2002 (Corporate Fraud Bill), which was signed into law onJuly 30, 2002 by President George Bush. Exhibit 9.91 is the certificationrequired under Section 302 of the Sarbanes-Oxley Act of 2002 and Exhibit 9.92is the Disclosure required under Item 4 by Section 307 of Regulation S-K.

 

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SIGNATURES

 

Pursuantto the requirements of the Securities and Exchange Act of 1934, the Registranthas duly caused this report to be signed on its behalf by the undersigned,thereunto duly authorized.

 
| **Voice and Wireless Corporation** |
|------------------------------------|
|                               |
|                               | /s/  Mark Haggerty |   | Dated:  November 11, 2002 |
|                               | Mark  Haggerty, Chief Executive Officer |   |
|                               |   |   |
|                               | /s/Jeff  Etten |   | Dated:  November 11, 2002 |
|                               | Jeff  Etten, CFO |   |   |

 

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CERTIFICATION PURSUANT TO

 

18 U.S.C. §1350

 

 UNDER SECTION 302 OF THE SARBANES-OXLEY ACTOF 2002

 

I, Mark Haggerty, certify that:

 

1.             I have reviewedthis quarterly report on Form 10-QSB of Voice & Wireless Corporation,the  registrant;

 

2.             Based on myknowledge, this quarterly report does not contain any untrue statement of amaterial fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, notmisleading with respect to the period covered by this quarterly report;

 

3.             Based on myknowledge, the financial statements, and other financial information includedin this quarterly report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, andfor, the periods presented in this quarterly report;

 

4.             I , along with theCFO, am responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for theregistrant and have:

 

a)  designedsuch disclosure controls and procedures to ensure that material informationrelating to the registrant, including its consolidated subsidiaries, is madeknown to us by others within those entities, particularly during the period inwhich this quarterly report is being prepared;

 

b)  evaluatedthe effectiveness of the registrant’s disclosure controls and procedures as ofa date within 90 days prior to the filing date of this quarterly report (the“Evaluation Date”); and

 

c)  presentedin this quarterly report our conclusions about the effectiveness of thedisclosure controls and procedures based on our evaluation as of the EvaluationDate;

 

5.             I have disclosed,based on our most recent evaluation, to the registrant’s auditors and the auditcommittee of registrant’s board of directors (or persons performing theequivalent functions):

 

a)  allsignificant deficiencies in the design or operation of internal controls whichcould adversely affect the registrant’s ability to record, process, summarizeand report financial data and have identified for the registrant’s auditors anymaterial weaknesses in internal controls; and

 

b)  any fraud,whether or not material, that involves management or other employees who have asignificant role in the registrant’s internal controls; and

 

6.             I have indicated inthis quarterly report whether or not there were significant changes in internalcontrols or in other factors that could significantly affect internal controlssubsequent to the date of our most recent evaluation, including any correctiveactions with regard to significant deficiencies and material weaknesses.

 
| Date: November 11, 2002 |   |   |   | /s/ Mark Haggerty                 |   |
|-------------------------|--------|--------|--------|-----------------------------------|--------|
|                    |   |   |   | Mark Haggerty, Chairman & CEO |

 

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CERTIFICATION PURSUANT TO

 

18 U.S.C. §1350

 

UNDER SECTION 302 OF THESARBANES-OXLEY ACT OF 2002

 

I, Jeff Etten, certify that:

 

1.             I have reviewedthis quarterly report on Form 10-QSB of Voice & Wireless Corporation, theregistrant;

 

2.             Based on myknowledge, this quarterly report does not contain any untrue statement of amaterial fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, notmisleading with respect to the period covered by this quarterly report;

 

3.             Based on myknowledge, the financial statements, and other financial information includedin this quarterly report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, andfor, the periods presented in this quarterly report;

 

4.             I , along with theCEO, am responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for theregistrant and have:

 

a)  designedsuch disclosure controls and procedures to ensure that material informationrelating to the registrant, including its consolidated subsidiaries, is madeknown to us by others within those entities, particularly during the period inwhich this quarterly report is being prepared;

 

b)  evaluatedthe effectiveness of the registrant’s disclosure controls and procedures as ofa date within 90 days prior to the filing date of this quarterly report (the“Evaluation Date”); and

 

c)  presentedin this quarterly report our conclusions about the effectiveness of thedisclosure controls and procedures based on our evaluation as of the EvaluationDate;

 

5.             I have disclosed,based on our most recent evaluation, to the registrant’s auditors and the auditcommittee of registrant’s board of directors (or persons performing theequivalent functions):

 

a)  allsignificant deficiencies in the design or operation of internal controls whichcould adversely affect the registrant’s ability to record, process, summarizeand report financial data and have identified for the registrant’s auditors anymaterial weaknesses in internal controls; and

 

b)  any fraud,whether or not material, that involves management or other employees who have asignificant role in the registrant’s internal controls; and

 

6.             I have indicated inthis quarterly report whether or not there were significant changes in internalcontrols or in other factors that could significantly affect internal controlssubsequent to the date of our most recent evaluation, including any correctiveactions with regard to significant deficiencies and material weaknesses.

 
| Date: November 11, 2002 |   |   | /s/ Jeff Etten  |   |   |
|-------------------------|--------|--------|-----------------|--------|--------|
|                    |   |   | Jeff Etten, CFO |   |   |

 

 

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