<PAGE>
FORM 10-Q\A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-27604
PICK Communications Corp.
(Exact name of the registrant as specified in its charter)
NEVADA 75-2107261
(State or other jurisdiction of (I.R.S. employer
Incorporation or Organization) identification no.)
155 Route 46, West, Third Floor
Wayne, NJ 07470
(Address of principal executive (Zip code)
offices)
Registrants Telephone number, including area code: (201) 812-7425
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for 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 .
Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the latest practicable date.
Class Outstanding at June 26, 1996
(Common stock $0.002 par value) 43,192,516
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PICK Communications Corp.
INDEX
Part I Financial Statements Page
Item 1: Financial Statements...................................................3
Consolidated Balance Sheets
as of March 31, 1996 and December 31, 1995.............................F-2
Consolidated Statements of Operations - Three months
ended March 31, 1996 and March 31, 1995................................F-3
Consolidated Statements of Stockholders Equity
as of March 31, 1996...................................................F-4
Consolidated Statements of Cash Flows - Three months ended March 31, 1996
and March 31, 1995.....................................................F-5
Notes to the Consolidated Financial Statements..............................F-6
Item 2: Managements Discussion and Analysis of Financial
Condition and Results of Operations......................................4
Part II Other Information:
Items 1-6 Other Information....................................................7
Signatures.....................................................................9
2
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Part I - Financial Information
Item 1 - Financial Statements:
Financial Information
Financial statements for the quarters ended March 31, 1996 and March 31,
1995 are derived from the consolidation of the PICK Communications Corp., (the
"Company") and its subsidiaries, Public Info/CommKiosk, Inc., ("PICK"), and
P.C.T. Prepaid Telephone, Inc. ("PCT") in accordance with generally accepted
accounting principles. (See Notes to the Financial Statements for accounting
policies.)
On April 16, the Company established PICKNET, Inc., a wholly owned
subsidiary to serve as the operating company for the resale of international
long distance service. Service began for a third party customer in May, 1996.
The Financial Statements for the quarters ended March 31, 1996 and 1995 do not
include the accounts of PICKNET, as PICKNET had not yet been formed. The
Consolidated Financial Statements of the Company are included in the following
pages labeled schedules F-1 through F-11.
3
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INDEX TO FINANCIAL STATEMENTS
Page
Consolidated Balance Sheets ........................................... F-2
Consolidated Statements of Operations ............................... F-3
Consolidated Statement of Stockholders' Equity ...................... F-4
Consolidated Statements of Cash Flows ............................... F-5
Notes to Consolidated Financial Statements .......................... F-6
F-1
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<TABLE>
<CAPTION>
PICK Communications Corp.
Consolidated Balance Sheets
December 31, 1995 and March 31, 1996
ASSETS
<S> <C> <C>
1995 1996
(Unaudited)
CURRENT ASSETS
Cash ........................................................... $ 110,715 27,839
Accounts receivable, net (note 1g) ............................. 824,463 1,029,405
Prepaid telephone card inventory (note 1d) ..................... 167,091 182,865
Prepaid advertising (notes 11, 12) ............................. 0 3,120,000
Prepaid expenses and other current assets ...................... 503,495 121,912
Total Current Assets ........................................ 1,605,764 4,482,021
PROPERTY AND EQUIPMENT
Furniture and equipment, net (note 1e) ......................... 114,135 109,212
Total Property and Equipment ................................ 114,135 109,212
OTHER ASSETS
Pre-paid cellular patent and rights, net (note 8) .............. 712,500 676,875
Investment in marketable equity securities, net (note 6) ....... 16,625 7,755,625
Total Other Assets .......................................... 729,125 8,432,500
Total Assets ....................................................... $ 2,449,024 13,023,733
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable (note 5) ...................................... $ 191,891 625,975
Direct cost telephone time accrual (note 5) .................... 1,084,201 653,679
Pre-paid telephone time liability (note 4) ..................... 378,000 273,000
Accrued expenses and other current payables (note 1h) .......... 145,448 523,967
Advances from stockholders (note 4) ............................ 0 50,000
Deferred revenue ............................................... 805,383 877,628
Current income taxes payable (note 1j) ......................... 0 346,000
Short-term portion of long-term debt ........................... 75,000 100,000
Total Current Liabilities ................................... 2,679,923 3,450,249
LONG-TERM LIABILITIES
Deferred income tax liability (note 1j) ........................ 0 611,000
Due to The Next Edge, Inc. (notes 4 & 8) ....................... 400,000 350,000
Total Long-Term Liabilities ................................. 400,000 961,000
Total Liabilities .................................................. 3,079,923 4,411,249
Minority interest in consolidated subsidiary ....................... 215,508 1,228,416
STOCKHOLDERS' EQUITY
Common stock, no par; Authorized 50,000,000 shares; issued and
outstanding 40,542,516 at December 31, 1995 and 43,192,516 at
March 31, 1996 (note 2) ..................................... 81,085 86,385
Additional paid in capital in excess of par (note 2) ........... 2,018,780 6,238,480
Stock subscription receivable (note 2) ......................... (800,000) (775,000)
Treasury stock (notes 2 & 14a) ................................. 0 (29,500)
Marketable equity securities valuation reserve (note 6) ........ 0 (1,523,000)
Retained earnings (deficit) .................................... (2,146,272) 3,386,703
Total Stockholders' Equity ......................................... (846,407) 7,384,068
Total Liabilities and Stockholders' Equity ......................... $ 2,449,024 13,023,733
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-2
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<TABLE>
<CAPTION>
PICK Communications Corp.
Consolidated Statements of Operations
3 months ended March 31,
(UNAUDITED)
<S> <C> <C>
1995 1996
Revenue
Sales - debit cards to related parties (note 5) ............ $ 90,241 49,781
Sales - debit cards to others .............................. 218,505 461,048
Sales - long distance services ............................. 5,173 1,837
Total sales ............................................ 313,919 512,666
Cost of sales - related parties (note 5) ................... 206,375 68,690
Other cost of sales ........................................ 39,731 529,972
Total cost of sales ..................................... 246,106 598,662
Gross profit(loss) ...................................... 67,813 (85,996)
Sales - prepaid cellular licenses (note 10) ................ 0 3,600,000
Operating Expenses
Sales and marketing - related party (note 5) ............... 3,400 0
Sales and marketing - other ................................ 35,954 56,383
Total sales and marketing ............................... 39,354 56,383
General and administrative ................................. 159,251 502,126
Depreciation ............................................... 6,072 8,026
Amortization ............................................... 0 35,625
Bad debt ................................................... 2,652 5,193
Total operating expenses ................................ 207,329 607,353
Income(loss) from operations ............................... (139,516) 2,906,651
Interest expense ........................................... 8,166 10,330
Income(loss) before taxes, minority interest in subsidiary
loss and gain on sale of marketable equity securities . (147,682) 2,896,321
Gain(loss) on sale of marketable equity securities (notes 6) 0 4,784,000
Income(loss) before taxes and minority interest in
subsidiary loss ....................................... (147,682) 7,680,321
Minority interest in subsidiary loss ....................... 0 6,654
Provision for income taxes(benefit) - deferred (note 1j) ... 0 1,808,000
Provision for income taxes(benefit) - current (note 1j) .... 0 346,000
Net income(loss) ........................................... $(147,682) 5,532,975
Primary net income(loss) per share ......................... $ -- 0.13
Weighted average number of shares outstanding .............. -- 42,755,713
Fully diluted net income(loss) per share ................... $ -- 0.12
Weighted average number of shares outstanding .............. -- 45,294,165
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
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<TABLE>
<CAPTION>
PICK Communications Corp.
Consolidated Statement of Stockholders' Equity
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Additional Stock Mkt Sec Retained Total
Common Paid in Subscrip Valuation Treasury Earnings/ Stkholders'
Stock Capital Receivable Reserve Stock (Deficit) Equity
BALANCE, January
1, 1996 ................................. $81,085 2,018,780 (800,000) 0 0 (2,146,272) (846,407)
Capital transactions:
A) ........................ 500 249,500 (125,000) 0 0 0 125,000
B) ........................ 2,300 2,697,700 0 0 0 0 2,700,000
C) ........................ 2,500 1,272,500 0 0 0 0 1,275,000
D) ........................ 0 0 150,000 0 0 0 150,000
F) ........................ 0 0 0 0 (29,500) 0 (29,500)
Marketable equity
securities valuation
reserve - net ............................. 0 0 0 (1,523,000) 0 0 (1,523,000)
Net income(loss) ............................ 0 0 0 0 0 5,532,975 5,532,975
BALANCE, March
31, 1996 ................................. $86,385 6,238,480 (775,000) (1,523,000) (29,500) 3,386,703 7,384,068
<FN>
A) January 1996; 250,000 shares of common stock; $125,000 in cash and $125,000
in stock subscription receivable. (note 2)
B) January 1996; 1,150,000 shares of common stock; $3 million in prepaid
advertising valued on the Companys books at $2,700,000. (notes 2 & 12)
C) January 1996; 1,250,000 shares of common stock; 500,000 shares of
Ultimistics Inc. restricted common stock which had a bid price of $8.50 per
share, discounted 70%. (note 2)
D) First quarter 1996; 0 shares of common stock; stock subscriptions received
in cash.
E) March 1996; 230,000 shares of common stock; agreement to acquire as treasury
stock. (note 2 & 14a)
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
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<TABLE>
<CAPTION>
PICK Communications Corp.
Consolidated Statements of Cash Flows
3 months ended March 31,
(UNAUDITED)
<S> <C> <C>
1995 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income(loss) ........................................................... $(147,682) 5,532,975
Adjustments to reconcile net loss to net cash used for operating activities:
Non-cash revenues - prepaid cellular license revenue ..................... 0 (3,600,000)
Non-cash gain on sale of marketable equity securities .................... 0 (4,784,000)
Compensation expense accrued for treasury stock purchase ................. 0 29,500
Depreciation ............................................................. 6,072 8,026
Amortization ............................................................. 0 35,625
Bad debt expense ......................................................... 2,652 5,193
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable ............................... (57,260) (191,225)
(Increase) decrease in prepaid telephone card inventory .................. 10,877 (15,774)
(Increase) in prepaid and other assets ................................... (1,400) (38,417)
Increase (decrease) in accounts payable (note 5) ......................... 22,780 434,084
Increase (decrease) in direct cost telephone time accrual (note 5) ....... (126,815) (430,522)
Increase (decrease) in deferred revenue .................................. 238,618 72,245
Increase (decrease) in prepaid telephone time liability .................. 0 (105,000)
Increase (decrease) in current income taxes payable ...................... 0 346,000
Increase (decrease) in deferred income taxes payable ..................... 0 1,808,000
Increase (decrease) in accrued expenses (note 1h) ........................ 53,869 378,519
Net cash (used) provided by operating activities ........................... 1,711 (514,771)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets ................................................... 0 (3,105)
Net cash (used) provided by investing activities ........................... 0 (3,105)
CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock issued for cash ............................................... 0 125,000
Common stock issued for cash by subsidiary ................................. 0 135,000
Payments received on stock subscriptions receivable ........................ 0 150,000
Payments on stockholder advances ........................................... (3,035) 0
Payments on third-party debt ............................................... 0 (25,000)
Funds advanced by stockholder .............................................. 0 50,000
Net cash provided (used) by financing activities ........................... (3,035) 435,000
Net increase (decrease) in cash ............................................ (1,324) (82,876)
CASH, beginning of period .................................................. 17,659 110,715
CASH, end of period ........................................................ $ 16,335 27,839
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Noncash financing activities:
Stock issued for investment in marketable equity securities ........... $ 0 2,075,000
Stock issued to acquire prepaid advertising ........................... $ 0 2,700,000
Stock issued for subscription receivable .............................. $ 0 125,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
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PICK Communications Corp.
Notes to Consolidated Financial Statements
(UNAUDITED)
(1) Summary of Significant Accounting Principles
Organization - PICK Communications Corp., (the Company) was incorporated in
the State of Utah on April 30, 1984, as S.T.V., Inc., changing its name to
Adolphus Companies, Inc., in February 1986, and then to Prime International
Products, Inc., in May 1988 and to PICK Communications Corp. in December 1995.
In December 1987, the Company acquired American Italian Food Processing Co.,
Inc. in a stock for stock exchange. All operations ceased in 1990. On September
12, 1995, the Company acquired Public Info/Comm Kiosk, Inc. (PICK) in a stock
for stock exchange and conducts business from its headquarters in Mountain
Lakes, NJ.
Public Info/Comm Kiosk, Inc. (PICK) was incorporated in the state of New
Jersey on August 6, 1992. It was inactive from incorporation until January 1993,
when the founder began the operations of the Company. PICK operated in 1993, as
an agent for the sale of long distance services. In August 1994, PICK began
selling its own brand of prepaid calling card. PICKs target market is primarily
Hispanics located in New York, New Jersey, South Florida and Texas. Pick
expanded into California in 1995.
The financial statements have been prepared in conformity with generally
accepted accounting principles. In preparing the financial statements,
management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities as of the dates of the statements of
financial condition and revenues and expenses for the years then ended. The
financial statements for the three months ended March 31, 1995 and 1996 include
all adjustments which in the opinion of management are necessary for fair
presentation. The following summarize the more significant accounting and
reporting policies and practices of the Company:
a) Basis of presentation - The financial statements reflect the financial
position and results of operations of PICK, Inc., prior to the acquisition by
the Company, and on a consolidated basis subsequent to the acquisition. The
acquisition has been accounted for as a recapitalization by PICK, Inc.
b) Basis of consolidation - The consolidated financial statements include
the accounts of the Company and its subsidiaries. Minority interest represents
minority shareholders proportionate share of the equity and earnings/loss of
PCT Prepaid Telephone, Inc. Intercompany transactions have been eliminated.
c) Revenue recognition - For debit card sales the Company recognizes revenue
at the time it provides the telephone services associated with its cards. It
defers revenues until then, based on customer patterns of usage, and recognizes
the cost of the carrier telephone traffic based on the minutes used, which are
also recognized in revenues. All other direct costs, (non-traffic costs
representing design royalty, printing, fulfillment, shipping, sales commissions,
etc.), are recognized as up-front costs when the initial sales are made to
the distributors. The Company anticipates that substantially all the telephone
time associated with the debit cards will be used by its customers. The Company
does not have a written returns policy, but considers sales returns on a case by
case basis.
d) Prepaid telephone card inventory - Card inventory is composed of costs
to provide unactivated cards to the fullfillment company, which include printing
and freight, and is valued at the lower of cost or market. Inventory is
relieved, and charged to cost of sales, when activated cards are shipped from
the fullfillment company to the wholesale purchaser.
e) Fixed assets - Fixed assets, principally telephone equipment, are stated at
cost. Depreciation is computed using the straight-line method over the estimated
useful lives of the assets, generally 3, 5 and 7 years. Depreciation expense was
$6,072 and $8,026 for the three months ended March 31, 1995 and 1996.
F-6
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PICK Communications Corp.
Notes to Consolidated Financial Statements
(1) Summary of significant accounting principles, continued
f) Concentration of credit risk - Four customers accounted for
approximately 33.5%, 22.3%, 20.7% and 15.9% of net sales for the quarter then
ended and approximately 6.7%, 8.5%, 1.7% and 2.8% of accounts receivable at
March 31, 1995. Three customers accounted for approximately 65%, 11.5% and 9.2%
of net sales for the quarter then ended and approximately 69.1%, 0% and 7.5% of
accounts receivable at March 31, 1996. The Company performs periodic credit
evaluations of its customers, but generally does not require collateral.
g) Accounts receivable - The Company provides credit for open accounts in
the normal course of business. As of the dates of these statements, the Company
has established a reserve for doubtful accounts at a rate of approximately 3.5%
of outstanding accounts receivable or 7.4% of sales. The reserve amounts at
March 31, 1995 and 1996 were $0 and $37,871. Bad debt expense was $2,652 and
$5,193 for the three months ended March 31, 1995 and 1996 respectively.
h) Accrued compensation - Accrued compensation of $122,053 and $145,448 at
March 31, 1995 and 1996 is composed of compensation accrued, but not yet paid to
the President of the Company.
i) Valuation of intangibles - Intangible assets are valued at cost and
amortized over their estimated remaining useful lives. The Company is amortizing
the prepaid cellular asset over the initial 60 month term of the contract.
Amortization expense was $0 and $35,625 for the three months ended March 31,
1995 and 1996.
j) Income taxes - Deferred income taxes are provided on elements of income
that are recognized for income tax purposes in periods different than such items
are recognized for financial accounting purposes. In February 1992, the
Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting number 109 (SFAS 109) relating to the method of accounting for income
taxes. SFAS 109 requires companies to take into account changes in tax rates
when valuing the deferred income tax amounts carried on their Balance Sheets
(the "Liability Method"). The Company adopted SFAS 109 effective with the
conversion from Sub-S status, August 1, 1994. The Company had a deferred tax
liability of $0 and $611,000 and a current tax liability of $0 and $346,000 at
March 31, 1995 and 1996. The deferred tax liability is composed of the tax
effects resulting from the exchange of the Foxwedge shares and Firenze shares
the Company held for shares of Ultimistics Inc. At the dates of these exchanges,
the Company recorded gains for book purposes totalling $4,784,000 with deferred
income tax effects of $1,674,400 for federal and $430,600 for state. At March
31, 1996, the current market value of all the shares of Ultimistics received
during the period, net of discount, would reflect a loss of $2,720,000, with
deferred tax asset effects of $952,000 for federal and $244,800 for state. At
March 31, 1996, the Company has established a valuation allowance of its
deferred tax liability for this combined difference of $1,197,000, giving a net
deferred tax liability at March 31, 1996, of $486,000 federal and $125,000
state, for a total of $611,000. The valuation allowance reduced the marketable
equity securities valuation reserve, as reflected in the Stockholders Equity
section of the consolidated balance sheet at March 31, 1996. The current income
tax liability is adjusted by the benefit of net operating loss carryforwards
totaling $2,110,496 at December 31, 1995. The tax benefit was comprised of
approximately $717,600 in federal tax benefit and $126,400 in state tax benefit
at December 31, 1995. The net current income tax liability is composed of
$275,000 federal and $71,000 for state. Any income tax benefits related to the
differences between methods of depreciation is de minimus.
k) Net income(loss) per share - Primary income(loss) per share is computed
by dividing the net income(loss) by the weighted average number of common shares
outstanding during the period. Fully-diluted income(loss) per share is computed
by dividing the net income(loss) by the weighted average number of common shares
and common share equivalents, assuming the equivalents had been shares
outstanding, during the period.
(2) Stockholders' equity - The Company has authorized 50,000,000 shares of
$0.002 par value common stock. In August 1995, the Company had 277,516 shares
outstanding. In August 1995, the Company completed a
F-7
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PICK Communications Corp.
Notes to Consolidated Financial Statements
(2) Stockholders' equity, continued - Regulation D Rule 504 private
offering in which the Company issued 8,000,000 shares in exchange for $232,650
in cash, net of offering expenses of $7,350.
PICK had authorized 1,000,000 shares of no par common stock. In January
1993, PICK issued 100,000 shares in exchange for $1,000. At the end of 1993, the
President of PICK contributed his compensation to PICK, by way of waiving the
compensation accrued. During 1994, the President had loaned $161,000 to PICK,
which he exchanged for 623,000 shares of common stock. In August 1994, PICK
issued 20,000 shares to a then unrelated third-party in exchange for a telephone
switch and the tariffs required to operate the switch, valued at $100,000. From
January through July 1995, PICK issued shares to various parties for services
provided, valued at $0.01 per share, for a total value of $2,420. These shares
were valued at this level because at the time of issuance, there was no
assurance that PICK would be able to stay in business and it had negative book
value. In June 1995, PICK sold 25,000 shares to an independent consultant for
$250 in cash.
On September 12, 1995, the Company completed the acquisition of PICK, (see
note 1a). Pursuant to the agreement to effect this transaction, the Company
issued 3,000,000 shares in exchange for 1,000,000 shares of Foxwedge, Inc.,
4,500,000 shares in exchange for $250,000 in cash with a formerly unrelated
party, which subsequently became related through a common director, 500,000
shares in exchange for an outstanding note payable of $250,000, 1,500,000 shares
in exchange for an $82,500 subscription receivable and 16,665,000 shares in
exchange for 100% of the issued and outstanding shares of PICK. In October 1995,
the Company issued 100,000 shares in partial exchange for co-ownership of the
prepaid cellular patent and exclusive commercialization rights, valued at
$425,000. In October 1995, the Company issued 5,000,000 shares in exchange for
5,000,000 shares of Firenze, Ltd. common stock, valued at $10,000. On November
21, 1995, the Company issued to an unrelated third party 1,000,000 shares in
exchange for $200,000 cash and a note receivable for $800,000 to be paid during
1996.
In January 1996, the Company entered into an agreement to sell 250,000
shares of its common stock to an unrelated third party for $250,000 in cash.
Also in January 1996, the Company entered into an agreement with International
Executive Services, (IES), a barter exchange company, to exchange 1,000,000
shares to IES and 150,000 shares to Richard Maranon, a director of the Company,
of the Companys common stock for $3,000,000 of prepaid advertising. The Company
has recorded these shares at $2,700,000, or $2.35 per share. The advertising to
be provided is to be composed of print, television, radio and outdoor media. The
original agreement calls for the Company to use this advertising within two
years, however the Company has received oral approval for a three year
extension. In January 1996, the Company exchanged 1,250,000 shares of its common
stock for 500,000 shares of Ultimistics Inc. common stock with an unrelated
third party stockholder of Ultimistics. The Company recorded this transaction at
$1,275,000, which was a 70% discount from the then current market value of
$4,250,000 for the Ultimistics stock.
In early 1996, the Company began negotiating to settle a dispute with a
former officer. This former officer has the right to exchange the individuals
20,000 shares of PICK, Inc. into 330,000 shares of the Company and also owns a
warrant for 5,000 shares of PICK, Inc. with an exercise price of $5 per share,
which the board of directors has amended to a warrant for 82,500 shares of the
Company with an exercise price of $0.30 per share. These shares were part of the
reorganization discussed in note 2 above. The Company has been orally informed
that this party has agreed to sell 230,000 of the 330,000 shares and the warrant
back to the Company for total compensation of $29,500 in cash.
In 1994, PICK issued warrants for common stock to three persons. The merger
agreement recognizes these PICK warrants and exchanges them for warrants for
common stock of the Company. Each of the warrants was for 5,000 shares of PICK
common stock at an exercise price of $5 per share, converted to 82,500 shares
per warrant, totalling 247,500 shares, at an exercise price of $0.30 per share
expiring on December 31, 1996.
F-8
<PAGE>
PICK Communications Corp.
Notes to Consolidated Financial Statements
(2) Stockholders' equity, continued - In January 1996, the Company issued
stock options to seven officers and directors of the Company. Each of these
options was for 500,000 shares, for a total of 3,500,000 shares, at an exercise
price of $2.75 per share and expire on January 25, 1999. The exercise price was
10% above the market price of the shares on the date of the grant. The Company
has reserved an additional 1,500,000 shares for potential future use in granting
options for valued employees.
(3) Commitments - The Company entered into an operating lease with a one
year term for the Companys facilities beginning in May 1995. Future minimum
lease payments under this operating lease in effect at March 31, 1996 are $1,285
per month, or $1,285 for the remaining lease term. Rent expense for the three
months ended March 31, 1995 and 1996 was $0 and $3,855, respectively.
(4) Notes payable - Short-term debt was made up entirely of advances to
PICK by the principal stockholder, which were not collateralized. These advances
carried no interest nor a stated maturity. The advances totalled $0 and $50,000
in 1995 and 1996. PICK repaid $3,035 in 1995 and $0 in 1996. In 1995, the
Company acquired co-ownership of the prepaid cellular patent and exclusive
commercialization rights for stock and a $500,000 note payable to The Next Edge,
Inc. This note is to be paid at a rate of $25,000 per quarter for five years.
The Company made the January 1, 1996, payment in December 1995, and the April 1,
1996, payment in March 1996. This note is not collateralized nor does it carry
interest. The Company cannot impute a discount for this note until such time as
it obtains the collateral required to secure this note, therefore the Company
did not recognize any interest expense in the three months ended March 31, 1996.
The Company will impute an appropriate discount rate upon supplying acceptable
collateral for the note payable, which the Company expects to acquire in the
near future.
(5) Related party transactions - The Company purchased advertising services
of $3,400 and $0 in 1995 and 1996, from an entity controlled by a person who is
a stockholder of the Company and a member of the Board of Directors. This person
also received 150,000 shares of the Companys common stock, (see notes 2 and
12), for his and his staffs efforts to develop and oversee the implementation
of the advertising/marketing programs to be instituted by the Company to use the
$5,000,000 in prepaid advertising. The Company purchased substantially all of
its telephone network services in 1995, from a vendor which also owns
approximately 1% of the Companys common stock. The Company had sales of $90,241
in 1995, to 2 stockholders and $49,781 in 1996, to 3 stockholders.
(6) Investment in marketable equity securities - The Company exchanged
1,000,000 shares of common stock of Foxwedge, Inc. it held for 500,000 shares of
Ultimistics Inc. common stock with a stockholder of Ultimistics in January 1996.
The Company recorded a $1,194,000 gain as a result of this transaction. The
market value of the Ultimistics stock received was $4,000,000 at the date of the
transaction, which the Company discounted by 70% to $1,200,000, based on the
size of the Companys holdings of Ultimistics and the restrictions on resale. In
January 1996, the Company entered into two transactions with Yakimoto Ltd.
whereby the Company sold the prepaid cellular marketing rights for South America
to Yakimoto for 1,000,000 shares of Ultimistics stock, and the rights to Asia,
Australia, Africa and most of Europe to Yakimoto for 500,000 shares of
Ultimistics. The current market value of the Ultimistics stock at the time of
the transactions was $12,000,000 total, which the Company discounted by 70% to
$3,600,000, based on the size of the Companys holdings of Ultimistics and
the restrictions on resale. The Company recorded licensing revenue for these
transactions.
In March 1996, the Company exchanged 5,000,000 shares of common stock of
Firenze, Ltd. it held for 2,000,000 shares of Ultimistics Inc. common stock with
a stockholder of Ultimistics. The Company recorded a $3,590,000 gain as a result
of this transaction. The market value of the Ultimistics stock received was
$12,000,000 at the date of the transaction, which the Company discounted by 70%
to $3,600,000, based on the size of the Companys holdings of Ultimistics and
the restrictions on resale. In January 1996, P.C.T. Prepaid Telephone, Inc.
(PCT), a consolidated subsidiary of the Company, entered into an agreement with
F-9
<PAGE>
PICK Communications Corp.
Notes to Consolidated Financial Statements
(6) Investment in marketable equity securities, continued - several
unrelated persons to issue 10,000,000 shares of PCT common stock to the
unrelated parties and 10,000,000 shares to the Company in exchange for 200,000
shares of Ultimistics common stock, valued by PCT at $480,000.
In May 1993, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting number 115 (SFAS 115) relating to the method
of accounting for certain investments in debt and equity securities. Although
SFAS 115 does not apply to the investments held by the Company, as they are all
restricted by Rule 144 of the Securities Act of 1933, as amended, the Company
has decided to incorporate the disclosure requirements of SFAS 115. At March 31,
1996, the Company holds 4,700,000 shares of Ultimistics with a current market
value of $25,825,000, which when discounted 70% equals $7,755,000. The Company
has established a valuation reserve of $2,720,000 for this investment. The
valuation reserve as reflected in the Stockholders Equity section of the
consolidated balance sheet is net of the $1,197,000 deferred income tax effects,
giving a net of $1,523,000. The Company believes that the decline in market
value of the Ultimistics stock is temporary in nature.
(7) Statement of Financial Accounting Standards not yet evaluated - In
March 1995, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standard (SFAS) No. 121, Accounting for the impairment of
long-lived assets and for long-lived assets to be disposed of. The Company has
adopted SFAS 121 effective January 1, 1996. The provisions will require the
Company to review long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. If it is determined that an impairment loss has occurred based on
expected future cash flows, then the loss should be recognized in the income
statement and certain disclosures regarding the impairment should be made in the
financial statements. The Company has not yet had sufficient time to evaluate
the impact, if any, of the provisions of SFAS 121.
In October 1995, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard (SFAS) No. 123, Accounting for stock
based compensation. The Company has adopted SFAS 123 effective January 1, 1996.
The Company has not yet had sufficient time to evaluate the impact, if any, of
the provisions of SFAS 123.
(8) Debit cellular telephone technology agreement - In October 1995, the
Company entered into an agreement with The Next Edge, Inc. (TNE), whereby the
Company acquired the worldwide rights to market, distribute, sell and
manufacture TNEs Smart Tracker System (a debit cellular telephone system, with
a patent pending). This agreement has a term of five years with an option, at
the Companys sole discretion, for five additional five year periods.The
agreement requires the Company to pay TNE a total of $500,000, payable at a rate
of $25,000 quarterly over five years beginning on January 1, 1996. These
payments are to be secured by an Irrevocable Letter of Credit. The Company is
also required to issue a total of 100,000 shares of its restricted common stock
to TNE at the rate of 20,000 shares each year for five years beginning January
1, 1996. The agreement also requires the Company to purchase the circuit chips
for the system from TNE, at TNEs cost. The agreement stipulates that the
Company will be recorded as co- owner of the final US patent relating to this
technology. The agreement requires the Company to implement the international
patent applications. The Company has valued this purchase ageement at $712,500.
The valuation is comprised of the $500,000 cash plus the 100,000 shares of
common stock valued at $212,500, based on the bid quote of the Companys stock,
less a 50% discount. The letter of credit has not yet been issued, (see note 4).
(9) Firenze, Ltd. licensing agreement - On October 24, 1995, the Company
granted Firenze Ltd., (FRNZ), an exclusive license for marketing and sales of
the debit cellular telephone technology (see note 8) in Europe, Asia, Australia
and Africa. This agreement called for the Company and FRNZ to exchange 5,000,000
shares of common stock between the companies. The agreement requires FNRZ to
purchase the microchip, cellular equipment and software from the Company at the
Companys cost plus 10%. The agreement calls for FNRZ
F-10
<PAGE>
PICK Communications Corp.
Notes to Consolidated Financial Statements
(9) Firenze, Ltd. licensing agreement, continued - to pay the Company
monthly a 5% royalty on FNRZs gross revenue from the technology under license.
FRNZ had not yet begun to commercialize this license at March 31, 1996,
therefore no royalties were received by the Company. As a direct result of
Firenze not being able to consummate its planned acquisition of Fonlem
Industries, the Company believed that Firenze would not be able to fully
commercialize its license. Accordingly, in January 1996, the Company and
Firenze, Ltd. modified this agreement to limit FNRZ's license to certain
European countries.
(10) Yakimoto Investment, Ltd. licensing agreements - In January and
February 1996, the Company entered into two licensings agreement with Yakimoto
Investment, Ltd. (Yakimoto). The first granted Yakimoto an exclusive license for
marketing and sales of the debit cellular telephone technology (see note 8) in
South America. This agreement requires Yakimoto to pay the Company 1,000,000
shares of common stock of Ultimistics, Inc. as consideration for this license.
These shares bear a restrictive legend under Rule 144 of the Securities Act of
1933, as amended. At the time this agreement was entered into, Ultimistics was
$8.50 bid, which values these shares at $8,500,000. The Company then determined
that it should discount the fair market value of the transaction by
approximately 70%. As a result this investment was recorded at $2,550,000.
Yakimoto is also required to provide the Company with a $475,000 declining
balance Irrevocable Letter of Credit, which the Company will use to secure the
agreement discussed in note 8 above. This letter of credit has not yet been
issued. The agreement also requires Yakimoto to purchase the microchip, cellular
equipment and software from the Company at the Companys cost plus 10%. The
agreement calls for Yakimoto to pay the Company monthly a 5% royalty on
Yakimotos gross revenue from the technology under license. The second agreement
transfers the bulk of the Firenze license (see note 9) to Yakimoto in exchange
for 500,000 shares of Ultimistics stock. At the time this agreement was entered
into, Ultimistics was $7.00 bid. This values these shares at $3,500,000. The
Company then determined that it should discount the fair market value of the
transaction by approximately 70%. As a result this investment was recorded at
$1,050,000.
(11) Telephone time exchange for prepaid advertising - In November 1995,
the Company acquired telephone time to be provided by World Tel Saver. In
January 1996, the Company entered into an agreement with International Executive
Services (IES), an unrelated party to the Company, although it is a related
party with respect to World Tel Saver, to exchange all of its prepaid telephone
time, (consisting of 5,137,930 minutes), for $2,000,000 of prepaid advertising.
The advertising to be provided is to be composed of print, television, radio and
outdoor media. The original agreement calls for the Company to use this
advertising within two years, however the Company has received verbal approval
for a three year extension. The Company will record a $1,580,000 gain on this
exchange, which the Company expects to amortize into income as the advertising
is used. None of the advertising had been used at March 31, 1996.
(12) Prepaid advertising - In January 1996, the Company entered into an
agreement with IES to issue 1,000,000 shares to IES and 150,000 shares to
Richard Maranon, a director of the Company, of the Companys restricted common
stock in exchange for $3,000,000 of prepaid advertising. The advertising to be
provided is to be composed of print, television, radio and outdoor media. The
original agreement calls for the Company to use this advertising within two
years, however, the Company has received verbal approval for a three year
extension. The Company valued this transaction at $2.35 per share, or
$2,700,000, allowing for a 10% discount for any advertising usage availability
the Company may not use. None of the advertising had been used at March 31,
1996.
(13) Working capital deficiency - The accompanying consolidated financial
statements have been prepared assuming that the Company will continue as a going
concern which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As shown in the previously filed
consolidated financial statements, the Company incurred net losses for the years
ended December 31, 1993, 1994 and 1995. For the three months ended March 31,
1996, the Company recorded $5,532,975 in net income. This profit was generated
principally as a result of non-cash revenue and gains. The Company has a working
capital excess of $1,031,772 at March 31, 1996.
F-11
<PAGE>
PICK Communications Corp.
Notes to Consolidated Financial Statements
(13) Working capital deficiency, continued - During the three months ended
March 31, 1996, the Company raised $435,000 in cash from financing activities.
This amount plus its cash on hand at the beginning of the period exceeded its
cash flows used by operations and investing activities by $27,839, which
resulted in and reflects a decrease of cash of $82,876. At March 31, 1996, the
Company has two notes receivable, accounted for as stock subscriptions
receivable, in the amount of $775,000, to be paid over the remainder of 1996.
The Companys plans also include controlling its cash expenses, such that this
inflow of capital may continue to cover a cash shortfall over the next twelve
months.
Substantially all of the assets received relating to the profits generated
include common stock of Ultimistics Inc. (see notes 6, 9 and 10). The Company
believes that it is in the its best interest to hold this asset for the
forseeable future, in the hope for capital appreciation over the value recorded
at March 31, 1996, and increased liquidity over time.
In January 1996, the Company entered into agreements to exchange the
prepaid telephone time it owned and common stock of the Company for a total of
$5,000,000 of prepaid advertising, (see notes 11 and 12). The Company entered
into these transactions because advertising expenditures are at the beginning of
the Companys revenue generating process. The Company believes it can generate a
significant increase in cash flow, whether revenue is recognized or deferred, by
increasing its advertising presence in select target markets. The Company
believes that to increase its advertising without a concurrent cash expenditure,
will be beneficial to its cash flows from operations. The Company had not
utilized any of this advertising during the three months ended March 31, 1996,
as it needed to prepare its suppliers and delivery systems for the additional
cards and telephone time usage increases this advertising would bring. Time was
also needed to develop the advertising/ marketing program to most effectively
utilize the prepaid advertising.
The Company also has negotiated lower telephone time rates in conjunction
with higher usage volumes. The higher usage volumes are expected to occur when
the advertising/marketing programs now under development are instituted.
The Company is also seeking to raise additional funds, either through the
use of debt or equity, or a combination of both. Any funds raised would be
employed to further increase its prepaid telephone card business, and to develop
its prepaid cellular telephone business. There are no assurances that the
Company will be able to sucessfully raise additional funds in this manner.
The Company believes that these plans will enable it to continue as a going
concern. However, there can be no assurances that the Company will be able to
successfully implement such plans. If such plans are not sucessfully
implemented, the Company could be required to seek additional financing from
sources not currently anticipated.
(14) Subsequent events
a) Former officer settlement - In June 1996, the former officer signed the
settlement agreement as discussed in note 2 above. This settlement finalized the
September 1995, recapitalization of the Company.
b) Commitments - In June 1996, the Company entered into a 63 month lease
for office space in Wayne, New Jersey, to replace its former location. This
lease provided for three months of free rent, and a minimum annual payment of
$103,441, including fixed utilities, thereafter. The lease provides a renewal
option for an additional five year period.
F-12
<PAGE>
Item 2 - Management's Discussion and Analysis of Operations:
Results of Operations:
General:
The Company generates revenues from the sale of telecommunications
services. Net income was $5,532,975 for the quarter ended March 31, 1996,
compared to a loss of $147,682 for the quarter ended March 31, 1995, an
improvement of $5,680,657. The 1996 profits were primarily the result of selling
prepaid cellular telephone licenses throughout the world and a gain on the sale
of marketable equity securities, while the 1995 loss was primarily attributable
to prepaid telephone cards ("Debit Card") activities in the start-up phase and
expenses incurred in developing and promoting the Company's products.
The Company's primary costs of sales are the cost of telephone service -
for both Debit Cards and for the resale of international long distance service.
In addition the cost of sales includes the production of Debit Cards, their
printing, fulfillment and distribution, and fixed costs associated with
international long distance switching and communications.
For Debit Card sales, the Company recognizes revenues at the time it
provides the telephone services associated with its cards. It defers revenues
until then, based on customer patterns of usage, and recognizes the cost of the
carrier telephone traffic based on the minutes used, which are also recognized
in revenues. All other direct costs, (non-traffic costs representing design
royalties, printing, fulfillment, shipping, sales commissions, etc.), are
recognized as up-front costs when the initial sales are made to distributors.
The Company anticipates that substantially all of the telephone time associated
with the Debit Cards will be used by its customers. For the resale of
international long distance, the Company anticipates recognizing revenues as the
traffic is used by its customers, although no such revenues were earned in the
first quarter of 1996. For the sale of prepaid cellular telephone licenses, the
Company recognizes revenues as the licenses are sold, based on the value it
received for them. In this connection, the Company received substantially all of
its consideration for those licenses in the form of restricted Ultimistics Inc.
("Ultimistics") common stock. The revenues were recognized based on discounted
values of the shares as of the dates of the transactions.
Three Months Ended March 31, 1996 and March 31, 1995:
The Company sold territory licenses to market and distribute prepaid
cellular telephones for the majority of the world's area to Yakimoto Investment
LTD. ("Yakimoto") in exchange for 1,500,000 shares of Ultimistics Inc. common
stock, which the Company has valued on its books at $3,600,000. This significant
profit will not recur, instead, the Company expects to develop its cellular
system and generate revenues from the sale of the prepaid cellular telephones
and the air time associated with their use over the next few years. In addition,
the Company generated $512,666 in revenues from the sale of telecommunications
services, (primarily Debit Card sales), for the quarter ended March 31, 1996,
compared to $313,919 for the quarter ended March 31, 1995. This represents an
increase of $198,747 or 63.3% This significant increase reflects the general
development of the customer base and the continued general acceptance of Debit
Cards in the United States. Although revenues have
4
<PAGE>
increased, expenses have exceeded those revenues for the telecommunications
segments of the Company's business, resulting in a negative gross margin of
$85,996 in 1996, compared to a gross profit of $67,813 in 1995, an unfavorable
variance of $153,809 (or 227%). The Company continues to build the
infrastructure necessary to support growth in both Debit Cards and the resale of
international long distance traffic segments of its business. The loss results
from the Company not yet achieving sufficient revenue volume in these businesses
to off-set fixed costs necessary to build capacity and produce operating
profits. No long distance revenues were earned during the first quarter;
however, the fixed costs related to establishing communications are included in
the cost of sales.
Selling and marketing expenses were $56,383 for the quarter ended March 31,
1996, compared to $39,354 for the quarter ended March 31, 1995, reflecting an
increase of $17,029 or 43.3%. This increase is primarily attributable to an
increase in sales commissions as a result of increased sales, and additional
costs incurred to promote the Company's products, including advertising,
attendance at trade shows, and production of marketing brochures.
General and administrative expenses were $544,001 for the quarter ended
March 31, 1996, compared to $159,251 for the quarter ended March 31, 1995,
reflecting an increase of $384,750 or 241.6%. This increase is primarily
attributable to salaries for additional personnel hired to support the Company's
growth and an increase in general office expenses attributable to the increase
in personnel.
Amortization of $35,625 was attributable to the pre-paid cellular telephone
technology license which is being expensed over five years. Depreciation is
based upon lives of 3, 5 or 7 years, depending on the asset classification.
Interest expense of $10,330 is attributable to the outstanding balance due to a
vendor.
The provision for current income tax expense of $346,000 takes into account
amounts expected to be owed for estimated state and federal liabilities, based
on current earnings, off-set by the aggregate tax loss carry-forwards. The
provision for deferred income taxes takes into account the deferral of taxation
of the profit on the exchange of marketable securities. The deferred tax
liability will not have to be paid until the time the securities are sold.
For the reasons listed above, the Company realized a net profit of
$5,532,975, (or $.13 per share primary and $.12 on a fully diluted basis), for
the quarter ended March 31, 1996, compared to a net loss of $147,682 for same
quarter of the prior year, an improvement of $5,680,657.
Liquidity and Capital Resources:
The Company had a working capital excess of $1,031,772 as of March 31,
1996, compared to a deficit of $1,074,159 as of December 31, 1995, and a deficit
of $1,269,200 as of March 31, 1995. On this basis, the working capital ratio was
1.299:1 at March 31, 1996 compared to .599:1 at December 31, 1995 and .168:1 at
March 31, 1995.
5
<PAGE>
Net cash used in operating activities for the three months ended March 31,
1996 of $514,771 primarily reflects uses of $3,600,000 for non-cash revenues
relating to the sale of prepaid cellular licenses and $4,784,000 for the
non-cash gain on the sale of marketable securities. These uses were off-set by
the net profit generated from operations of $5,532,975 and the increase in tax
liabilities (current of $346,000, and deferred of $1,808,000). The remaining
increase of $749,525 reflects net increases of current liabilities (accruals and
deferred revenues), which exceed increases in receivables and prepaid expenses,
all of which are necessary to support the increase in operating activities.
Increases in accounts receivable, card inventory, accounts payable and accrued
expenses are the result of increased volume. Accounts receivable are primarily
generated from sales to distributors which are obliged to pay for the cards
within thirty days of receipt. The increase in deferred revenues results from
cards sold to distributors for which revenues have not yet been recognized. The
Company expects to recognize this revenue in future periods, as customers use
the Debit Cards, or as the cards expire.
Cash used for investing activities for the three months ended March 31,
1996 of $3,105 reflects capital expenditures. The Company has no material
commitments for capital expenditures as of March 31, 1996. There were no capital
expenditures in the first quarter of 1995.
During the quarter the Company directly acquired 4,500,000 shares of
Ultimistics Inc., ("Ultimistics"), and an additional 200,000 shares through its
ownership of PCT, representing approximately 16.5% of Ultimistics' outstanding
stock. Ultimistics is a commercial/residential real estate company with holdings
and operations in France. As of March 29, 1996 the bid price was $5.50 and the
ask price was $6.75. As of June 28, 1996 the bid price was $4.125 and the ask
price was $5.125.
The Company has discounted these restricted shares by 70% in recording the
transactions by which it acquired shares in Ultimistics. These transactions
include:
a. The exchange of 1,000,000 shares of Foxwedge, Inc., (valued at $6,000),
for 500,000 shares of Ultimistics as of January 12, 1996. The Ultimistics shares
had a bid price of $8.00 on that date, and were discounted to a value of
$1,200,000 resulting in a profit of $1,194,000.
b. The exchange of 1,250,000 shares of the Company's Common Stock for
500,000 shares of Ultimistics as a contribution of capital as of January 25,
1996. The Ultimistics shares had a bid price of $8.50 on that date, and were
discounted to a value of $1,275,000, resulting in the recognition of additional
paid in capital of $1,272,500.
c. The sale of licenses to market and distribute the prepaid cellular
telephone technology in various countries in South America to Yakimoto
Investment, Ltd., in exchange for 1,000,000 shares of Ultimistics as of January
25, 1996. The Ultimistics shares had a bid price of $8.50 on that date, and were
discounted to a value of $2,550,000, resulting in a sale valued at $2,550,000.
d. The transfer of licenses to market and distribute the prepaid cellular
telephone technology in Asia, Africa, Australia and various countries in Europe
to Yakimoto Investment, Ltd., in
6
<PAGE>
exchange for 500,000 shares of Ultimistics as of February 28, 1996. The
Ultimistics shares had a bid price of $7.00 on that date, and were discounted to
a value of $1,050,000 resulting in a sale valued at $1,050,000.
e. The exchange of 5,000,000 shares of Firenze Ltd., (valued at $10,000),
for 2,000,000 shares of Ultimistics as of March 22, 1996. The Ultimistics shares
had a bid price of $6.00 on that date, and were discounted to a value of
$3,600,000, resulting in a profit of $3,590,000.
Cash generated from financing activities for the three months ended March
31, 1996, amounted to $435,000, primarily reflecting the receipt of cash against
stock sales and stock subscriptions receivable, compared to a negative $3,035
for the three months ended March 31, 1995, which reflected the payment of a
stockholder advance.
At March 31, 1996, the Company has cash and cash equivalents amounting to
$27,839, compared to $110,715 at December 31, 1995, and $16,335 at March 31,
1995.
On February 26, 1996, the Company entered into a three-year agreement with
AT&T Corp., for the purchase of domestic long distance services. The Company is
currently negotiating with AT&T to expand services under this agreement and
expects to process substantially all of its domestic long distance and 800
number service under this agreement. The Company anticipates that as a result of
this agreement, it will be able to provide upgraded services to its customers,
without increasing its costs.
In June 1996, the Company entered into a 63 month lease for office space in
Wayne, New Jersey, to replace the existing lease for its Mountain Lakes, New
Jersey location, which expired on April 30, 1996. This lease provides for the
first three months rent to be free and thereafter requires a minimum annual
payment of $103,441, including fixed utilities. The lease provides for a renewal
option for an additional five year period.
The Company anticipates, based on its current plans and assumptions
relating to its operations, that its cash balances, together with projected cash
flows from operations and stock subscriptions receivable, will be sufficient to
satisfy the Company's contemplated cash requirements for the next 12 months. In
the event that the Company's plans change, its assumptions change or prove to be
inaccurate, or cash flows otherwise prove to be insufficient to fund operations,
the Company may be required to search for additional financing or curtail its
proposed growth. The Company currently has no arrangements in place with respect
to additional financing.
Part II - Other Information
Item 1 - Legal Proceedings:
None to report
Item 2 - Changes in Securities:
None to report
Item 3 - Defaults upon senior securities:
None to report
Item 4 - Submission of matters to a vote of security holders:
None to report
7
<PAGE>
Item 6 - Exhibits and reports on Form 8-K:
27. Financial Data Schedule
Item 6: Financial Data Schedule:
Schedule of Operations Data:
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS OF PICK COMMUNICATIONS CORP. FOR MARCH 31, 1996,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 27,839
<SECURITIES> 7,755,625
<RECEIVABLES> 1,029,405
<ALLOWANCES> 37,871
<INVENTORY> 182,865
<CURRENT-ASSETS> 4,482,021
<PP&E> 109,212
<DEPRECIATION> 52,137
<TOTAL-ASSETS> 13,023,733
<CURRENT-LIABILITIES> 3,450,249
<BONDS> 0
0
0
<COMMON> 86,385
<OTHER-SE> 7,297,683
<TOTAL-LIABILITY-AND-EQUITY> 13,023,733
<SALES> 512,666
<TOTAL-REVENUES> 4,112,666
<CGS> 598,662
<TOTAL-COSTS> 1,209,691
<OTHER-EXPENSES> 607,353
<LOSS-PROVISION> 5,193
<INTEREST-EXPENSE> 10,330
<INCOME-PRETAX> 7,680,321
<INCOME-TAX> 2,154,000
<INCOME-CONTINUING> 2,896,321
<DISCONTINUED> 0
<EXTRAORDINARY> 4,784,000
<CHANGES> 0
<NET-INCOME> 5,532,975
<EPS-PRIMARY> 0.13
<EPS-DILUTED> 0.12
<PAGE>
Signatures:
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PICK Communications Corp.
Date: July 15, 1996 By: /s/ Diego Leiva
Diego Leiva
President and Chief Executive
Officer
Date: July 15, 1996 By: /s/ Karl R. Petersson
Karl R. Petersson
Vice President and Chief
Financial Officer
(Principal Accounting Officer)
9
</TABLE>
