----

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**U.S. SECURITIES AND EXCHANGE COMMISSION****Washington, D.C. 20549**

**Form 10-QSB**

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

**For Quarter Ending June 30, 2001**

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

**Voice and Wireless Corporation**(Exact name of registrantas 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)                         |
|                                                              |                               |
| **(952) 546-2075******                                            |
| Registrant's  telephone number                                    |

 

Indicate by Check mark whether the registrant (1) hasfiled all reports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or of such shorter periodthat the registrant was required to file such reports), and 2) has been subjectto such filing requirements for the past 90 days. Yes   ý       No    o  

Indicate the number of shares outstanding of each ofthe  issuer's classes of common stock,as of the latest practicable date:

Outstanding shares are 8,938,760 of common stock no parvalue.

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**VOICEAND WIRELESS CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEET**

|                                       | **June 30,**                               |       | **December 31,** |       |
|--------------------------------------------|--------------------------------------------|------------|------------------|------------|
|                                       | **2001**                                   |       | **2000**         |       |
|                                       | ****                                       |       | ****             |       |
|                                       | **(Unaudited)**                            |       |             |       |
|                                       |                                       |       |             |       |
| **ASSETS**                                 |                                       |       |             |       |
| **Current assets:**                        |                                       |       |             |       |
|                                       | Cash  and cash equivalents                 | $          | 7,949            |       | $ | 486,901 |   |
|                                       | Accounts  receivable, net                  | 270,439    |             | 167,171    |   |
|                                       | Inventories                                | 296,495    |             | 271,746    |   |
|                                       | Other  current assets                      | 56,586     |             | 27,080     |   |
|                                       |                                       |            |             |            |   |
|                                       | Total  current assets                      | $          | 631,469          |       | $ | 952,898 |   |
|                                       |                                       |            |             |            |   |
|                                       |                                       |       |             |       |
| **Other assets:**                          |                                       |       |             |       |
|                                       | Note  receivable, net                      | $          | 55,000           |       | $ | 55,000 |   |
|                                       | Investment  in oil and gas properties, net | 60,297     |             | 61,796     |   |
|                                       | Property  and equipment, net               | 287,519    |             | 291,648    |   |
|                                       | Intangibles,  net                          | 847,057    |             | 849,350    |   |
|                                       | Investment  in unconsolidated corporations | 50,000     |             | 50,000     |   |
|                                       |                                       |            |             |            |   |
|                                       | Total  other assets                        | $          | 1,299,873        |       | $ | 1,307,794 |   |
|                                       |                                       |            |             |            |   |
|                                       |                                       |       |             |       |
|                                       | $                                          | 1,931,342  |             | $          | 2,260,692 |   |
|                                       |                                            |       |                  |       |
|                                       |                                       |       |             |       |
| **LIABILITIES AND STOCKHOLDERS' EQUITY**   |
|                                       |                                       |       |             |       |
| **Current liabilities:**                   |                                       |       |             |       |
|                                       | Current  portion of long-term debt         | $          | 8,070            |       | $ | 8,070 |   |
|                                       | Line  of Credit                            | 25,000     |             | 0          |   |
|                                       | Accounts  payable                          | 70,633     |             | 30,446     |   |
|                                       | Accrued  expenses                          | 31,608     |             | 26,951     |   |
|                                       |                                       |            |             |            |   |
|                                       | Total  current liabilities                 | $          | 135,311          |       | $ | 65,467 |   |
|                                       |                                       |       |             |       |
| **Long-term debt, net of current portion** | 382,532                                    |       | 336,257          |       |
|                                       |                                            |       |                  |       |
|                                       | Total  liabilities                         | $          | 517,843          |       | $ | 401,724 |   |
|                                       |                                       |            |             |            |   |
|                                       |                                       |       |             |       |
| **Stockholders' equity:**                  |                                       |       |             |       |
|                                       | Common  stock                              | $          | 7,221,196        |       | $ | 7,221,511 |   |
|                                       | Accumulated  deficit                       | (5,807,697 | )                | (5,362,543 | ) |
|                                       |                                       |            |             |            |   |
|                                       | Total  stockholders' equity                | $          | 1,413,499        |       | $ | 1,858,968 |   |
|                                       |                                       |            |             |            |   |
|                                       |                                       |       |             |       |
|                                       | $                                          | 1,931,342  |             | $          | 2,260,692 |   |
|                                       |                                            |       |                  |       |
|                                            |                                            |            |                  |            |  |  |  |  |

**VOICEAND WIRELESS CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENT OF OPERATIONS**

|                                           |                                     |     |                 |    |               |    |               |      |
|------------------------------------------------|------------------------------------------|----------|----------------------|---------|--------------------|---------|--------------------|-----------|
|                                           | **Quarter Ended**                        |     | **Six Months Ended** |    |
|                                           | ****                                     |     | ****                 |    |
|                                           | **June 30,  2001**                       |     | **June 30,  2000**   |    | **June 30,  2001** |    | **June 30,  2000** |      |
|                                           | ****                                     |     | ****                 |    | ****               |    | ****               |      |
|                                           | **(Unaudited)**                          |     | **(Unaudited)**      |    | **(Unaudited)**    |    | **(Unaudited)**    |      |
|                                           |                                     |     |                 |    |               |    |               |      |
|                                           |                                     |     |                 |    |               |    |               |      |
| **Revenues**                                   | $                                        | 422,814  |                 | $       | 859,383            |    | $                  | 1,222,719 |   | $ | 1,958,066 |   |
|                                           |                                     |     |                 |    |               |    |               |      |
| **Cost of sales**                              | 323,244                                  |     | 528,944              |    | 874,981            |    | 1,272,342          |      |
|                                           |                                          |     |                      |    |                    |    |                    |      |
|                                           |                                     |     |                 |    |               |    |               |      |
| **Gross profit**                               | 99,570                                   |     | 330,439              |    | 347,738            |    | 685,724            |      |
|                                           |                                     |     |                 |    |               |    |               |      |
| **Operating expenses**                         | 360,494                                  |     | 517,174              |    | 779,695            |    | 1,158,431          |      |
|                                           |                                          |     |                      |    |                    |    |                    |      |
|                                           |                                     |     |                 |    |               |    |               |      |
| **Income (loss) from operations**              | (260,924                                 | )        | (186,735             | )       | (431,957           | )       | (472,707           | )         |
|                                           |                                     |     |                 |    |               |    |               |      |
| **Other income (expense):**                    |                                     |     |                 |    |               |    |               |      |
|                                           | Interest income                          | 1,688    |                 | (3,966  | )                  | 5,001   |               | 40,333    |   |
|                                           | Interest expense                         | (9,171   | )                    | (23,704 | )                  | (18,196 | )                  | (56,174   | ) |
|                                           | Other income                             | 0        |                 | 2,174   |               | 0       |               | 2,174     |   |
|                                           | Minority interest  in loss of subsidiary | 0        |                 | 21,429  |               | 0       |               | 141,763   |   |
|                                           |                                     |          |                 |         |               |         |               |           |   |
|                                           | Total other  income (expense)            | (7,483   | )                    | (4,067  | )                  | (13,195 | )                  | 128,096   |   |
|                                           |                                          |     |                      |    |                    |    |                    |      |
|                                           |                                     |     |                 |    |               |    |               |      |
| Income (loss) before  income taxes             | (268,407                                 | )        | (190,802             | )       | (445,152           | )       | (344,611           | )         |
|                                           |                                     |     |                 |    |               |    |               |      |
| Provision for income  taxes                    | 0                                        |     | 0                    |    | 0                  |    | 0                  |      |
|                                           |                                     |     |                 |    |               |    |               |      |
| **Net income (loss)**                          | $                                        | (268,407 | )                    | $       | (190,802           | )       | $                  | (445,152  | ) | $ | (344,611 | ) |
|                                           |                                          |     |                      |    |                    |    |                    |      |
|                                           |                                     |     |                 |    |               |    |               |      |
|                                           |                                     |     |                 |    |               |    |               |      |
| **Basic net income (loss) per common share**   | $                                        | (0.03    | )                    | $       | (0.02              | )       | $                  | (0.05     | ) | $ | (0.04 | ) |
|                                           |                                          |     |                      |    |                    |    |                    |      |
|                                           |                                     |     |                 |    |               |    |               |      |
| **Weighted average common shares outstanding** | 8,938,760                                |     | 8,679,114            |    | 8,938,760          |    | 7,773,323          |      |
|                                           |                                          |     |                      |    |                    |    |                    |      |
|                                           |                                     |     |                 |    |               |    |               |      |
|                                                |                                          |          |                      |         |                    |         |                    |           |  |  |  |  |  |  |

 

**VOICEAND WIRELESS CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENT OF CASH FLOWS**

|                                                 | **Six Months Ended**                                                                 |     |
|------------------------------------------------------|--------------------------------------------------------------------------------------|----------|
|                                                 | ****                                                                                 |     |
|                                                 | **June 30,**                                                                         |     | **June 30,** |   |
|                                                 | **2001**                                                                             |     | **2000** | ** ** |
|                                                 | ****                                                                                 |     | **** |   |
|                                                 | **(Unaudited)**                                                                      |     | **(Unaudited)** |   |
| **Cash flows from operating activities:**            |                                                                                 |     |   |   |
|                                                 | Net  income (loss)                                                                   | $        | (445,003 | ) | $ | (344,611 | ) |
|                                                 |                                                                                 |     |   |   |
|                                                 | Adjustments  to reconcile net income (loss) to cash flows from operating activities: |     |   |   |   |
|                                                 | Depreciation,  depletion and amortization                                            | 56,879   |   | 61,307 |   |
|                                                 | Minority  interest in loss of subsidiary                                             | 0        |   | (141,763 | ) |
|                                                 | Changes  in operating assets and liabilities:                                        |     |   |   |   |
|                                                 | Accounts  receivable                                                                 | (103,268 | ) | 44,561 |   |
|                                                 | Inventories                                                                          | (24,749  | ) | 19,000 |   |
|                                                 | Other  current assets                                                                | (29,506  | ) | (30,624 | ) |
|                                                 | Accounts  payable                                                                    | 40,187   |   | (4,867 | ) |
|                                                 | Accrued  expenses                                                                    | 4,657    |   | (87,578 | ) |
|                                                 |                                                                                 |          |   |  |   |
|                                                 | Cash  flows from operating activities                                                | (500,803 | ) | (484,575 | ) |
|                                                 |                                                                                 |          |   |  |   |
|                                                 |                                                                                 |     |   |   |
| **Cash flows from investing activities:**            |                                                                                 |     |   |   |
|                                                 | Advances  on note receivable                                                         | 0        |   | (175,000 | ) |
|                                                 | Purchases  of property and equipment                                                 | (51,360  | ) | (78,302 | ) |
|                                                 | Investments  in unconsolidated corporations                                          | 0        |   | (75,741 | ) |
|                                                 |                                                                                      |     |  |   |
|                                                 | Cash  flows from investing activities                                                | (51,360  | ) | (329,043 | ) |
|                                                 |                                                                                 |          |   |  |   |
|                                                 |                                                                                 |     |   |   |
| **Cash flows from financing activities:**            |                                                                                 |     |   |   |
|                                                 | Increase  (Decrease) in line of credit                                               | 25,000   |   | 0 |   |
|                                                 | Increase  (Decrease) in long-term debt                                               | 48,211   |   | (68,611 | ) |
|                                                 | Payments  on capital lease obligations                                               | 0        |   | (4,382 | ) |
|                                                 | Net  proceeds from sale of common stock                                              | 0        |   | 798,025 |   |
|                                                 | Proceeds  from exercise of stock options and warrants                                | 0        |   | 118,767 |   |
|                                                 | Collection  on stock subscriptions receivable                                        | 0        |   | 62,797 |   |
|                                                 |                                                                                      |     |  |   |
|                                                 | Cash  flows from financing activities                                                | 73,211   |   | 906,596 |   |
|                                                 |                                                                                      |     |  |   |
|                                                 |                                                                                 |     |   |   |
| **Increase (decrease) in cash and cash equivalents** | (478,952                                                                             | )        | 92,978 |   |
|                                                 |                                                                                 |     |   |   |
| **Cash and cash equivalents, beginning of period**   | 486,901                                                                              |     | 1,026,036 |   |
|                                                 |                                                                                      |     |  |   |
|                                                 |                                                                                 |     |   |   |
| **Cash and cash equivalents, end of period**         | $                                                                                    | 7,949    |   | $ | 1,119,014 |   |
|                                                 |                                                                                      |     |  |   |
|                                                 |                                                                                 |     |   |   |
| **Noncash investing and financing activities:**      |                                                                                 |     |   |   |
|                                                 | Debt  converted to common stock                                                      | $        |   |   | $ | 282,076 |   |
|                                                 | Issuance  of common stock for Mail Call stock                                        | $        |   |   | $ | 1,000,000 |   |
|                                                      |                                                                                      |          |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

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

Statements in this discussion which arenot historical facts may be considered “forward looking statements” within themeaning of Section 21E of the Securities Act of 1934, as amended, includingprojected sales based upon orders, estimated cost savings and savings that maybe generated from restructuring. The words “believe”, “expect”, “anticipate”,“estimate”, and similar expressions identify forward looking statements. Anyforward looking statement involves risks and uncertainties that could causeactual events or results to differ, perhaps materially, from the eventsdescribed in the forward looking statements. Readers are cautioned not to placeundue reliance on these forward looking statements. The Company undertakes noobligation to publicly update or revise any forward looking statement, whetheras a result of new information, future events or otherwise. The risksassociated with the Company’s forward looking statements include, but are notlimited to, risks associated with the Company’s history of losses and uncertainprofitability, reliance on a large customer, risks associated with competition,general economic conditions, reliance on key management and production people,future capital needs, dilution, effects of outstanding notes and convertibledebentures, limited public market, low stock price, and lack of liquidity.

The following discussion and analysis should be read inconjunction with the consolidated financial statements, related notes and otherinformation included in this quarterly report on Form 10-QSB.

Part I.   FinancialInformation

QuarterEnded June 30, 2001

GENERAL

             Thefollowing consolidated financial information is submitted in response to therequirements of Form 10-QSB and is prepared in accordance with generallyaccepted accounting principles. Certain information and footnote disclosuresnormally included in financial statements prepared in accordance with generallyaccepted accounting principles 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 entire fiscal year ending December31st.

Item 1.   ConsolidatedFinancial Statements

The consolidated balance sheet of Voice and WirelessCorporation (the "Company") as of the quarter ended June 30,2001 and the related consolidated statements of operations and cash flows thereto are incorporated herein by referenceto the Company's quarterly report.

Item 2.   Management'sDiscussion and Analysis of Financial Condition and Results of Operations

Resultsof Operations **(In 000’s except per share data)**

|      | **Quarter ended June 30,**      |
|-----------|---------------------------------|
|      | **2001**                        |   | **2000** |   | **% Change** |   |
|      | ****                            |   | **** |   |  |   |
| Highlight |                            |   |   |   |   |   |
|      |                            |   |   |   |   |   |
|      | Revenue                         | $ | 423 |   | $ | 859 |   | (50.8)% |   |
|      | Gross Profit                    | 100 |   | 330 |   | (70.0)% |   |
|      | Net Loss                        | (268 | ) | (191 | ) | (40.3)% |   |
|      |                            |   |   |   |   |   |
|      | Loss per share                  | $ | (0.03 | ) | $ | (.02 | ) |   |   |
|      |                            |   |   |   |   |   |
|      |                            |   |   |   |   |   |
|      | **Year to Date ended June 30,** |
|      | **2001**                        | ** ** | **2000** |   | **% Change** |
|      | ****                            |   | **** |   |  |   |
|      | Revenue                         | $ | 1,223 |   | $ | 1,958 |   | (37.5)% |   |
|      | Gross Profit                    | 348 |   | 686 |   | (49.3)% |   |
|      | Net Loss                        | (445 | ) | (345 | ) | (29.0)% |   |
|      |                            |   |   |   |   |   |
|      | Loss per share                  | (.05 | ) | (.04 | ) |   |   |
|           |                                 |  |  |  |  |  |  |  |  |  |  |

Revenues for the quarter totaled $423k ascompared to $859k for the same quarter in 2000. We have continued to see a slowdown in the rate of customer orders due to various reasons. The slowing of theeconomy has resulted in fewer projects being started. With fewer projects beingbid, competitors are cutting prices, which has had a negative impact on grossmargins. Revenues for Mail Call, Inc. (Mail Call) were minimal. The delays inthe introduction of the Company’s earbud also caused revenues to be lower thanexpected.

Gross profit for the quarter endedtotaled $100k compared to $330k for the same quarter of 2000. The decrease ingross profit percentage is directly related to lower revenues.
Operating expenses for the quartertotaled $360k as compared to $517k for the same quarter of 2000. The variancein operating expenses is related to the lower volume of sales experienced in2001. Expenses incurred in the development of the wireless ear bud totaledapproximately $15k during the quarter.

During the period the Company issued$50,000 in 5 year convertible debentures to three individuals. These debenturesbear interest at a rate of 8% per year and can be converted to the Company’scommon stock by the holder at a conversion price of $1.25 per share after July31,2002. Interest is paid monthly.

Inflation

             Therate of inflation can have a significant impact on the Company's operationsbecause of increase in wood product costs. The Company bids most projects andcan not pass all of the cost increases to our customers.

Part II  OtherInformation
Item 1.Legal Proceedings - NoneItem 2.Changes in Securities -  NoneItem 3.Defaults upon Senior  Securities – NoneItem 4.Submission of Matters to  a Vote of Security Holders - NoneItem 5.Other Information - None  Item 6.Exhibit 10.A Amendment  to Ron Schnell Employment Agreement.   Exhibits and Reports  that have been filed since 1994 on Forms 8-KSB, 10-KSB, and 10-QSB, DEF 14A  and the October 18, 1995 S-8 filing as described in Item 2 herein.
 

 

SIGNATURES

Pursuant to the requirements of the Securities andExchange Act of 1934, the Registrant has duly caused this report to be signedon its behalf by the undersigned, thereunto duly authorized.
**Voice and Wireless Corporation**   /s/ Mark Haggerty   Mark Haggerty  Chief Executive Officer   /s/ Jeff Etten   Jeff Etten, C.F.O.   Dated:August 14, 2001   Minneapolis, Minnesota