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COMMISSION FILE NUMBER 33-99998
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FORM 10-QSB/A
FOR THE QUARTERLY PERIOD ENDED JULY 31, 1996
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GROUP LONG DISTANCE, INC.
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
FLORIDA 65-0213198
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
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1451 WEST CYPRESS CREEK ROAD SUITE 200
FORT LAUDERDALE, FLORIDA 33309
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
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(954) 771-9696
(ISSUER'S TELEPHONE NUMBER)
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Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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 July 31, 1996, the Registrant had 2,257,348 shares of Common Stock,
no par value.
Transition Small Business Disclosure Format (check one) Yes / / No /x/
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GROUP LONG DISTANCE, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
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<S> <C>
PART I. FINANCIAL INFORMATION................................................... 3
Item 1. Financial Statement............................................... 3
Consolidated Balance Sheets...................................... 4
Statement of Earnings............................................ 5
Statement of Stockholders' Equity................................ 6
Statement of Cash Flows.......................................... 7
Notes to Financial Statements.................................... 8-9
Item 2. Management's Discussion and Analysis or Plan of Operation......... 10-12
PART II. OTHER INFORMATION..................................................... 12
Item 1. Legal Proceedings................................................. 12
Item 5. Other Information................................................. 12
Item 6. Exhibits and Reports on Form 8-K
Reports on Form 8-K.............................................. 12
Exhibit 27--Financial Data Schedule.............................. 14
SIGNATURES...................................................................... 13
</TABLE>
2
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statement
GROUP LONG DISTANCE, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
JULY 31, APRIL 30,
1996 1996
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(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets
Cash............................................................................... $ 35,804 $ 78,767
Accounts receivable less allowance for doubtful accounts of $512,000 and $358,000
at July 31, 1996 and at April 30, 1996, respectively............................. 2,960,402 1,201,710
Note receivable--related party..................................................... 125,739 96,956
Deferred tax assets................................................................ 176,291 147,900
Prepaid expenses and other current assets.......................................... 443,840 76,638
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3,742,076 1,601,971
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Note receivable--related party, net of current portion............................... 49,531 85,094
Property and equipment net of accumulated depreciation of $49,279 and $29,647
at July 31, 1996 and April 30, 1996, respectively.................................. 349,414 77,276
Customer acquisition costs, net of accumulated amortization of $493,532 and $134,602
at July 31, 1996 and April 30, 1996, respectively ................................. 6,570,478 886,917
Deferred offering costs.............................................................. 136,570 73,478
Other assets......................................................................... 2,800 15,675
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Total assets.................................................................... $10,850,869 $2,740,411
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Line of credit..................................................................... $ 87,836 $ 47,920
Accounts payable................................................................... 1,750,583 1,543,718
Accrued expenses and other liabilities............................................. 430,566 245,138
Current portion of long-term debt.................................................. 6,723,536 609,811
Current portion of long-term debt--related party................................... -- --
Current portion of capital lease obligations....................................... 14,989 6,456
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9,007,510 2,453,043
Long-term debt, net of current portion............................................... 157,564 83,159
Capital lease obligations, net of current portion.................................... 31,589 15,568
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Total liabilities............................................................... $ 9,196,663 $2,551,770
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Commitments and contingencies........................................................ $ -- $ --
Stockholders' equity (deficit)
Preferred stock, no par value, 1,000,000 shares authorized;
no shares issued and outstanding................................................ -- --
Common stock, no par value, 5,000,000 shares authorized; 2,257,348 and 2,057,348
shares issued and outstanding, as of July 31, 1996 and April 30, 1996,
respectively.................................................................... -- --
Additional paid-in capital......................................................... 1,668,364 268,364
Accumulated deficit................................................................ (14,158) (79,723)
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Total stockholders' equity (deficit)............................................ 1,654,206 188,641
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Total liabilities and stockholders' equity...................................... $10,850,869 $2,740,411
------------ ----------
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The accompanying notes are an integral part of these statements.
3
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GROUP LONG DISTANCE, INC.
STATEMENTS OF OPERATIONS
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JULY 31,
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1996 1995
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(UNAUDITED)
<S> <C> <C>
Sales.................................................................................... $5,712,188 $3,190,144
Cost of sales............................................................................ 4,033,142 2,395,125
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Gross profit........................................................................... 1,679,046 795,019
Selling, general and administrative expenses............................................. 1,094,972 688,768
Depreciation and amortization............................................................ 375,290 8,480
Interest expense, net.................................................................... 81,226 2,895
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Earnings before income taxes........................................................... 127,558 94,876
Income tax expense....................................................................... 61,993 34,000
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Net earnings........................................................................... $ 65,565 $ 60,876
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Earnings per common and common equivalent share.......................................... $ .03 $ .03
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</TABLE>
The accompanying notes are an integral part of these statements.
4
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GROUP LONG DISTANCE, INC.
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
THREE MONTHS ENDED JULY 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL
SHARES OF ADDITIONAL STOCKHOLDERS'
COMMON COMMON PAID-IN ACCUMULATED EQUITY
STOCK STOCK CAPITAL DEFICIT (DEFICIT)
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<S> <C> <C> <C> <C> <C>
Balance, April 30, 1996....................... 2,057,348 -- 268,364 (79,723) 188,641
Issuance of common stock...................... 200,000 -- 1,400,000 -- 1,400,000
Net earnings for the period (unaudited)....... -- -- -- 65,565 65,565
Balance, July 31, 1996 (unaudited)............ $2,257,348 $-- $1,668,364 $ (14,158) $1,654,206
</TABLE>
The accompanying notes are an integral part of this statement.
5
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GROUP LONG DISTANCE, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JULY 31,
--------------------------
1996 1995
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(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Cash flows from operating activities
Net earnings......................................................................... $ 65,565 $ 60,876
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation and amortization..................................................... 375,290 8,480
Provision for bad debts........................................................... 184,930 79,000
Changes in assets and liabilities
(Increase) decrease in accounts receivable...................................... (1,643,622) (239,414)
(Increase) decrease in notes receivable......................................... 6,780 --
(Increase) decrease in deferred tax asset....................................... (28,391) --
(Increase) decrease in prepaid expenses and other current assets................ 45,673 (288)
Increase (decrease) in accounts payable......................................... 1,023,865 265,846
Increase (decrease) in accrued expenses and other liabilities................... 185,428 151,879
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Net cash provided by operating activities.................................... 215,518 326,379
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Cash flows from investing activities
Acquisitions of property and equipment............................................... (113,498) (7,020)
Acquisitions of customer bases....................................................... (5,517,491) (163,111)
Increase in other assets............................................................. -- --
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Net cash used in investing activities........................................ (5,630,989) (170,131)
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Cash flows from financing activities
Net borrowings under line of credit agreement........................................ 50,000 --
Proceeds from loan originations...................................................... 5,478,619 --
Principal repayments of long-term debt............................................... (90,044) (41,932)
Principal repayments of capital lease obligations.................................... (2,975) --
Proceeds from the sale of common stock............................................... --
Offering costs incurred.............................................................. (63,092) --
Common stock repurchased and retired................................................. -- --
----------- -----------
Net cash (used in) provided by financing activities.......................... 5,372,508 (41,932)
Net increase (decrease) in cash........................................................ $ (42,963) $ 114,316
Cash at beginning of year.............................................................. 78,767 123,051
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Cash at end of year.................................................................... $ 35,804 $ 237,367
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Noncash investing and financing activity:
The Company acquired a customer base partially with common stock with a value of
$1,400,000 during the three month period ended July 31, 1996.
</TABLE>
The accompanying notes are an integral part of these statements.
6
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GROUP LONG DISTANCE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1
A summary of the significant accounting policies consistently applied in
the preparation of the accompanying financial statements follows.
Principles of Consolidation
The financial statements at July 31, 1996 and for the three months period
ended July 31, 1995 represents the consolidated results of the Company and its
wholly-owned subsidiaries Gulf Communication Services, Inc., and
Adventures-in-Telecom, Inc., which were acquired in May and July 1996,
respectively (see Note O). All intercompany balances have been eliminated in
consolidation. The financial statements as of April 30, 1996 and for the
years then ended only included the operations of the Company without any
subsidiaries.
Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of
three months or less, when purchased, to be cash equivalents.
Property and Equipment
Additions and major renewals to property and equipment are recorded at
cost. Maintenance and repairs are charged to expense when incurred. The cost and
accumulated depreciation of assets sold or retired are removed from the
respective accounts and any resulting gain or loss is reflected in income. The
Company provides for depreciation using the straight-line method over an
estimated useful life of five years for office equipment, furniture and fixtures
and leasehold improvements.
Customer Acquisition Costs
Customer acquisition costs represent the cost of purchased customer
accounts which are amortized over five years utilizing an accelerated method.
The Company's amortization method and life are based on estimated attrition
rates and attempt to match these costs with the corresponding revenues.
Income Taxes
Deferred income taxes have been provided for elements of income and expense
which are recognized for financial reporting purposes in periods different than
such items are recognized for income tax purposes. The Company accounts for
deferred taxes utilizing the liability method, which applies the enacted
statutory rates in effect at the balance sheet date to differences between the
book and tax basis of assets and liabilities. The resulting deferred tax
liabilities and assets are adjusted to reflect changes in tax laws.
Earnings Per Share
Earnings per share are based upon the weighted average number of common
and common equivalent shares outstanding during each year. The total number of
such weighted average shares were 2,018,474 for the year ended April 30, 1996,
and 2,122,487 for the three months ended July 31, 1996. Stock options and
warrants are considered common stock equivalents unless their inclusion would be
antidilutive.
Use of Estimates
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
7
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NOTE 1--(CONTINUED)
Fair Value of Financial Instruments
Statement of Financial Accounting Standards No. 107, 'Disclosures About
Fair Value of Financial Instruments,' requires disclosure of estimated fair
values of financial instruments. These estimated fair values are to be disclosed
whether or not they are recognized in the balance sheet, provided it is
practical to estimate such values. The Company estimates that the fair value of
its financial instruments approximates the carrying value of its financial
instruments at the end of the respective periods presented.
Accounting For Impairment of Long-Lived Assets
Statement of Financial Accounting Standards No. 121, 'Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,'
requires that long-lived assets and certain intangibles held and used by an
entity be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. This
statement had no impact on the Company's results of operations or financial
position upon adoption in May 1996.
Stock Options
Options granted under the Company's Stock Option Plan are accounted for
under APB 25, 'Accounting for Stock Issued to Employees,' and related
interpretations. In October 1995, the Financial Accounting Standards Board
issued Statement 123, 'Accounting for Stock-Based Compensation,' which will
require additional proforma disclosures for companies that will continue to
account for employee stock options under the intrinsic value method specified in
APB 25. The Company plans to continue to apply APB 25 and the only effect of
adopting Statement 123 in May 1996 will be the new disclosure requirement.
Interim Financial Information
The financial statements at July 31, 1996 and for the three month periods
ended July 31, 1995 and 1996 are unaudited and prepared on the same basis as the
audited consolidated financial statements included herein.
In the opinion of management, such interim financial statements include all
adjustments (consisting of normal recurring adjustments) necessary to present
fairly the results for such periods. The results of operations for the three
months ended July 31, 1996 are not necessarily indicative of the results to be
expected for the full year or any other interim period.
Reclassifications
Certain reclassifications have been made to the prior year's financial
statements to conform with the current year presentation.
NOTE 2
In November 1995, the Financial Accounting Standards Board issued FASB No.
123 'Accounting for Stock-Based Compensation.' This standard encourages, but
does not require, recognition of compensation expense based on the fair value of
equity instruments granted to employees. The Company does not plan to adopt the
recognition provisions of this standard. The disclosures required by this
standard will be included in a note to the Company's financial statements for
the year ending April 30, 1997.
NOTE 3--SUBSEQUENT EVENTS
Acquisitions
In May 1996, the Company purchased, for $207,000, the stock and assets,
including the customer base, of Gulf Communications Service, Inc. ('Gulf') in
consideration of $25,000 in cash and the assumption of a promissory note in the
principal amount of $182,000. Gulf has switching equipment which allows it to
act as an international call back and call through provider. The promissory note
of $182,000 is payable monthly installments of $10,000 through February 1, 1998.
8
<PAGE>
NOTE 3--SUBSEQUENT EVENTS--(CONTINUED)
In July 1996, the Company entered into a Purchase Agreement and Plan of
Exchange with Adventures-in-Telecom, Inc. ('AIT') whereby the Company purchased
100% of the common stock of AIT. AIT is a non-facilities based reseller of long
distance communication services. The purchase price was comprised of $5,271,230
in cash and 200,000 restricted shares of common stock of the Company (of which
25% are subject to certain holdback provisions for a six month period from the
date of closing in connection with certain indemnity provisions in favor of the
Company).
Acquisition Financing
The Company, to finance the AIT acquisition, issued a note payable to
Tel-Save in July 1996 for $5,521,230. This note bears interest at 6.5% per annum
and matures in July 1997. Included in the face of the note are amounts due to
the lending corporation at April 30, 1996 that aggregate $250,000. These amounts
are reflected in accounts payable--carrier at April 30, 1996. To induce Tel-Save
to provide the financing needed to purchase AIT, the Company issued a warrant to
purchase 300,000 shares of common stock of the Company at $5.75 per share and a
warrant to purchase 50,000 shares of common stock of the Company at $5.00 per
share. Both warrants are exercisable through July 2001 and subject to certain
registration rights.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION OR PLAN OF OPERATION
RESULTS OF OPERATIONS
This report on Form-10QSB/A contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Actual results could differ materially from
those projected in the forward-looking statements as a result of the risk
related factors included in the Company's registration statement filed in
December 1996 and Form 10-KSB for the fiscal year ended April 30, 1996.
Sales. The Company's sales for the three months ended July 31, 1996 were
$5,712,188 compared to $3,190,144 for the three months ended July 31, 1995, an
increase of $2,522,044, or 79%. The increase in sales
9
<PAGE>
resulted from the AIT Acquisition which was effective June 1, 1996 and accounted
for $2,705,683 of revenues for the three months ended July 31, 1996.
Cost of Sales. Cost of sales for the three months ended July 31, 1996 was
$4,033,142 compared to $2,395,125 for the three months ended July 31, 1995, an
increase of $1,638,017, or 68%. The increase in cost of sales resulted from an
increase in sales due to the AIT Acquisition and the Gulf Acquisition. Cost of
sales as percentage of total sales was 71% for the three months ended July 31,
1996 compared to 75% for the three months ended July 31, 1995. The decrease in
cost of sales as a percentage of total sales was primarily attributable to
increased operating efficiencies from a larger customer base.
Gross Profit. Gross profit for the three months ended July 31, 1996 was
$1,679,046 compared to $795,019 for the three months ended July 31, 1995, an
increase of $884,027, or 111%. The increase in gross profit was the result of an
increase in sales due to the AIT Acquisition and the Gulf Acquisition. Gross
profit as a percentage of total sales was 29% for the three months ended July
31, 1996 compared to 25% for the three months ended July 31, 1995. The increase
in gross profit as a percentage of sales was primarily attributable to increased
operating efficiencies from a larger customer base.
Selling, General and Administrative Expense. Selling, general and
administrative expenses ('SG&A') were $1,094,972 for the three months ended July
31, 1996 compared to $688,768 for the three months ended July 31, 1995, an
increase of $406,204, or 59%. This increase in SG&A was due primarily to
increases in commissions paid to agents and distributors in connection with the
AIT customer base and payroll costs resulting from the employment of additional
customer service, collections and provisioning staff to handle the increased
business. SG&A as a percentage of total sales was 19% for the three months ended
July 31, 1996 compared to 22% for the three months ended July 31, 1995. This
decrease in SG&A as a percentage of total sales was primarily attributable to
increased operating efficiencies from a larger customer base.
Depreciation and Amortization Expense. Depreciation and amortization
expense was $375,290 for the three months ended July 31, 1996 compared to $8,480
for the three months ended July 31, 1995, an increase of $366,810. As a
percentage of total sales, depreciation and amortization was 7% for the three
months ended July 31, 1996 compared to less than 1% for the three months ended
July 31, 1995. The increase in depreciation and amortization expense both in
absolute dollars and as a percentage of sales was attributable to the
acquisition of the AIT customer base.
Interest Expense, Net. Interest expense, net was $81,226 for the three
months ended July 31, 1996 compared to $2,895 for the three months ended July
31, 1995, representing an increase of $78,331. This increase in interest
expenses was attributable to interest payments made in connection with the
Acquisition Loan. In addition, imputed interest in accordance with APB 16 of
$37,866 was included in the three months ended July 31, 1996.
Income Taxes. Income tax expense was $61,993 for the three months ended
July 31, 1996 compared to $34,000 for the three months ended July 31, 1995, an
increase of $27,993, or 82%. The increase was attributable to the increase in
revenue from the larger customer base.
Net Earnings. Net earnings were $65,565 for the three months ended July
31, 1996 compared to $60,876 for the three months ended July 31, 1995, an
increase of $4,689, or 8%. This change is attributable to the increase in
revenues, primarily a result of the acquisition of the AIT customer base.
Earnings per share were $.03 in the three months ended July 31, 1996 and for the
three months ended July 31, 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary cash requirements have been to fund the acquisition
of customer bases and increased levels of accounts receivable, which have
required substantial working capital. The Company has historically satisfied its
working capital requirements principally through cash flow from operations and
borrowings.
At July 31, 1996, the Company had a working capital deficit of $5,265,434,
as compared to working capital deficit of $851,072 at April 30, 1996. The
decrease in working capital was primarily attributable to the AIT Acquisition.
Net cash provided by operating activities was $215,518 for the three months
ended July 31, 1996, as compared to net cash provided by operating activities of
$326,379 for the three months ended July 31, 1995. The decrease in cash provided
by operating activities is primarily attributable to increases in accounts
receivable. Net
10
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cash used in investing activities was $5,630,989 for the three months ended July
31, 1996, as compared to $170,131 for the three months ended July 31, 1995. The
significant increase is attributable to the acquisition of the AIT customer base
in July 1996. Net cash provided by financing activities was $5,372,508 for the
three months ended July 31, 1996, as compared to net cash used in financing
activities of $41,932 for the three months ended July 31, 1995. The increase in
cash provided by financing activities is primarily attributable to the proceeds
of the Acquisition Loan. At July 31, 1996, the Company had cash of $35,804.
In June 1993, the Company entered into a Release and Settlement Agreement
with AT&T pursuant to which AT&T agreed to accept $1,200,000 from the Company
(which was further reduced to $1,042,500) in full satisfaction of the Company's
then outstanding accounts payable to AT&T of $1,548,642. The agreement obligated
the Company to pay AT&T in varying monthly installments until April 3, 1995. The
Company paid AT&T $165,000 during Fiscal 1995 and $10,000 during Fiscal 1996.
The Company is in default under its payment obligations to AT&T and, at July
31, 1996, the Company owed AT&T approximately $548,000.
In connection with the AIT acquisition in July 1996, the Company entered
into an agreement with Tel-Save pursuant to which it borrowed an aggregate of
$5,521,230 primarily to finance the purchase price of the acquisition. All of
the Company's assets (including the capital stock of AIT) are pledged to
Tel-Save as collateral for the Acquisition Loan and the Company is prohibited
from creating liens or security interests in the Company's assets, which could
limit the Company's ability to secure future financing. Gerald M. Dunne, Jr.,
President and Chief Executive Officer of the Company, has personally pledged all
of the Common Stock of the Company owned by him to secure the repayment of the
Company's Acquisition Loan. In connection with the Acquisition Loan, the Company
issued a five-year warrant to TS Investment, Inc. ('TS'), an affiliate of Tel-
Save, to purchase 300,000 shares of Common Stock at an exercise price of $5.75
per share.
In May 1996, the Company entered into an agreement with Gateway American
Bank of Florida ('Gateway') pursuant to which it borrowed $50,000, of which
$45,833 was outstanding at July 31, 1996. The loan bears interest at the
prime rate plus 2% and matures on May 2, 1997. In December 1995, the Company
entered into an agreement with Gateway which provides for a line of credit of up
to $50,000. The line of credit bears interest at the prime rate plus 1% and
matures on August 1, 1996. Repayment of the loan and the line of credit is
secured by all of the Company's equipment, machinery, furniture and general
intangibles and is personally guaranteed by Gerald M. Dunne, Jr., President and
Chief Executive Officer of the Company.
In September 1995, the Company issued a promissory note to John L.
Tomlinson, a director of the Company, and Phillip C. Cezeaux, an unaffiliated
third-party, in the aggregate principal amount of $100,000. The interest rate on
the promissory note adjusts semi-annually based on the prime rate plus 2% and
principal and interest are payable in equal monthly installments of $2,600 until
September 1997. At July 31, 1996, approximately $84,000 was outstanding under
such note. As an inducement for the loan, the Company issued options to Messrs.
Tomlinson and Cezeaux to purchase 47,635 shares of Common Stock at a price of
$3.15 per share. These options expire on September 30, 1997.
In June 1996, the Company converted certain accounts payable to WorldCom
into a promissory note in the principal amount of $566,917 bearing interest a
rate of 15% per annum. The promissory note provides for the Company to make
equal monthly payments of $51,169 to WorldCom until June 6, 1997. At July 31,
1996, approximately $523,000 was outstanding under such note. In connection
with the issuance of such promissory note, the Company entered into an agreement
with WorldCom which grants WorldCom a security interest in certain assets of
Company, including accounts receivable, customer lists, contractual rights and
records relating to a services agreement entered into by the Company and
WorldCom in February 1994.
In July 1996, Global Telecom Network ('GTN'), a company controlled by
Gerald M. Dunne, Sr., the father of Gerald M. Dunne, Jr., President and Chief
Executive Officer of the Company, converted accounts payable to the Company for
long distance services provided into a promissory note in the principal amount
of $182,050 bearing interest at a rate of 15% per annum. The outstanding
principal amount of and accrued interest on the note is payable monthly and
matures on June 15, 1997. Gerald M. Dunne, Sr. has pledged 50,000 shares of the
Company's Common Stock owned by him to secure repayment of such promissory note.
11
<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Nortel, Inc. ('Nortel') and Accutel Communications, Inc. ('Accutel') have
filed combined suits against the Company alleging causes of action for
anticipatory breach of contract and breach of contract arising from the
termination by the Company of service under a service contract and independent
marketing distributor agreement with each party. The Company terminated the
telephone services of Nortel and terminated the distributor relationship with
Accutel for breaches of contract, including the failure to comply with the
payment terms of their contracts. Nortel and Accutel claim that the Company
anticipatorily and wrongfully terminated their contracts, and Accutel claims
that the Company owes it $89,663 in unpaid commissions. Nortel sued for an
injunction against the Company's termination of telephone services and was
awarded an ex-parte temporary injunction, but at a hearing for dissolution of
the order the Court immediately ordered the dissolution of the prior injunction
and ordered all parties to attend mediation. The Company believes it was
justified in terminating service in accordance with the contracts and intends to
vigorously defend its position. However, there can be no assurance as to the
possible outcome of this action.
Between October 1991 and June 1991, the Company borrowed an aggregate of
approximately $125,000 from Mr. Harold L. Sutton, a stockholder of the Company.
As of April 30, 1996, the Company owed Mr. Sutton approximately $17,069. In
connection with such borrowings the Company at various times pledged securities
to secure its obligations. The Company and Mr. Sutton currently are in dispute
with respect to the ownership of 100,000 shares of Common Stock originally
pledged to secure the Company's borrowings from Mr. Sutton. While neither the
Company nor Mr. Sutton has commenced legal proceedings in connection with this
matter, there can be no assurance as to the outcome of such dispute.
The Company is from time to time the subject of complaints or litigation in
the ordinary course of its business. The Company believes that the lawsuits,
claims and other legal matters to which it has become subject are not material
to the Company's financial condition or results of operations, but an existing
or future lawsuit or claim resulting in an adverse decision against the Company
could have a material adverse effect on the Company's financial condition and
results of operations.
12
Item 5. Other Information
None
Item 6.
Exhibits and Reports on Form 8-K
(a)Exhibit 27 Financial Data Schedule
(b)Reports of Form 8-K
None.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the registrant caused this Amendment No. 1 to this report on Form
10-QSB to be signed on its behalf by the undersigned thereunto duly authorized.
Group Long Distance, Inc.
(Registrant)
Dated: As of December 19, 1996 BY: /s/ Gerald M. Dunne, Jr.
-------------------------
Gerald M. Dunne, Jr.
Chief Executive Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
GROUP LONG DISTRANCE, INC. FINANCIAL STATEMENTS ENDED JULY 31, 1996
AND IS QUALIFIED IN ITS EXTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-END> JUL-31-1996
<CASH> 35,804
<SECURITIES> 0
<RECEIVABLES> 3,472,402
<ALLOWANCES> (512,000)
<INVENTORY> 0
<CURRENT-ASSETS> 3,742,076
<PP&E> 398,693
<DEPRECIATION> (49,279)
<TOTAL-ASSETS> 10,850,869
<CURRENT-LIABILITIES> 9,007,510
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,654,206
<TOTAL-LIABILITY-AND-EQUITY> 10,850,869
<SALES> 0
<TOTAL-REVENUES> 5,712,188
<CGS> 4,033,142
<TOTAL-COSTS> 4,033,142
<OTHER-EXPENSES> 1,285,332
<LOSS-PROVISION> 184,930
<INTEREST-EXPENSE> 81,226
<INCOME-PRETAX> 127,558
<INCOME-TAX> 61,993
<INCOME-CONTINUING> 65,565
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 65,565
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.03
</TABLE>
