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INTERACTIVE TELESIS INC
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter ended October 31, 1999
Commission file number 000-28215
INTERACTIVE TELESIS INC
- --------------------------------------------------------------------------------
Delaware 33-0649915
--------------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
535 Encinitas Boulevard, Suite 116
Encinitas, California 92024
- ------------------------------------------ -------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number,
including area code: (760) 632-1700
-------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ ] No [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of a recent date: 30,651,138 shares of common stock,
$0.001 par value, as of November 30, 1999.
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INTERACTIVE TELESIS, INC.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTERACTIVE TELESIS, INC.
BALANCE SHEETS
OCTOBER 31, 1999 AND JULY 31, 1999
<TABLE>
<CAPTION>
ASSETS
OCT 31, 1999 JUL 31,1999
(UNAUDITED) (AUDITED)
------------ ------------
<S> <C> <C>
Current Assets:
Cash $ 779,794 $ 490,152
Accounts receivable 667,617 682,815
Deposits 7,730 7,730
----------- -----------
Total current assets 1,455,141 1,180,697
----------- -----------
Property and equipment, net 814,835 762,508
----------- -----------
Total assets $ 2,269,976 $ 1,943,205
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 158,764 $ 111,469
Current portion of capital lease obligations 152,323 205,044
----------- -----------
Total current liabilities 311,087 316,513
----------- -----------
Capital lease obligations, net of current portion 284,496 292,229
----------- -----------
Total liabilities 595,583 608,742
----------- -----------
Commitments and contingencies
Shareholders' equity:
Common stock, $.001 par value, 50,000,000 shares
authorized; 30,651,138 and 30,599,888 shares issued
and outstanding at Oct 31, 1999 and Jul 31,1999,
respectively 30,651 30,600
Additional paid in capital 9,659,640 9,639,691
Accumulated deficit (8,015,898) (8,335,828)
----------- -----------
Total shareholders' equity 1,674,393 1,334,463
----------- -----------
Total liabilities and shareholders' equity $ 2,269,976 $ 1,943,205
=========== ===========
</TABLE>
See accompanying notes to financial statements.
2
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INTERACTIVE TELESIS, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED OCTOBER 31, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED OCTOBER 31,
1999 1998
------------ ------------
<S> <C> <C>
Revenues $ 1,200,935 $ 463,983
Costs and expenses:
Cost of revenues 99,458 62,193
Salaries and wages 398,985 220,695
General and administrative 262,204 175,825
Sales and marketing 51,076 80,779
Depreciation and amortization 58,413 27,046
------------ ------------
Total costs and expenses 870,136 566,538
------------ ------------
Operating income (loss) 330,799 (102,555)
Other expenses:
Interest expense 10,869 4,370
------------ ------------
Total other expenses 10,869 4,370
------------ ------------
Income (loss) before income taxes 319,930 (106,925)
Provision for income taxes (Note E) -- --
------------ ------------
Net income (loss) $ 319,930 $ (106,925)
============ ============
Basic net income per share $ 0.01 $ (0.004)
============ ============
Shares used to compute basic net income per share 30,625,513 29,231,945
============ ============
Diluted net income per share $ 0.01 $ (0.004)
============ ============
Shares used to compute diluted net income per share 31,947,914 29,231,945
============ ============
</TABLE>
See accompanying notes to financial statements.
3
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INTERACTIVE TELESIS, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the three months ended October 31, 1999
<TABLE>
<CAPTION>
Additional Total
Common Stock Paid In Accumulated Shareholders'
Shares Amount Capital Deficit Equity(Deficit)
------ ------ ---------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Balance, July 31, 1999 30,599,888 $30,600 $ 9,639,691 $ (8,335,828) $ 1,334,463
Issue of common stock for
cash (see note 1 - below) 1,250 1 (1) 0
Exercise of stock options-directors,
consultants & employees
50,000 50 19,950 20,000
Net income 319,930 319,930
Balance, Oct 31, 1999 30,651,138 $30,651 $ 9,659,640 $ (8,015,898) $ 1,674,393
(Unaudited)
</TABLE>
Note 1:
On 10/08/99, 1,250 Shares of Common Stock were issued at $0.001
par value to a Shareholder who had purchased the shares at $0.42 on 2/14/98, but
the shares had never been issued to the shareholder. The accounting for the
receipt of cash and credit to additional paid in capital was made on 2/14/98.
4
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INTERACTIVE TELESIS, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED OCTOBER 31, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED OCTOBER 31,
1999 1998
------------ ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 319,930 $(106,925)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 58,413 27,046
Interest on capital leases and
long-term debt 10,869 4,370
Changes in operating assets and liabilities:
Decrease in accounts receivable 15,198 131,801
Increase in prepaid expenses and deposits -- (2,920)
Increase/(decrease) in accounts
Pay/accrued liabilities 47,295 (18,330)
(Decrease) in deferred revenue -- (12,500)
--------- ---------
Net cash flows provided by operating activities 451,705 22,542
--------- ---------
Cash flows from investing activities:
Purchase of property and equipment (110,740) (177,898)
--------- ---------
Net cash flows used in investing activities (110,740) (177,898)
--------- ---------
Cash flows from financing activities:
Proceeds on issuance of common stock 20,000 6,475
Repayments on capital leases (71,323) (22,524)
Proceeds from borrowing on capital leases -- 154,739
--------- ---------
Net cash flows (used in) provided by
financing activities (51,323) 138,690
--------- ---------
Net increase (decrease) in cash 289,642 (29,776)
Cash at beginning of period 490,152 406,090
--------- ---------
Cash at end of period $ 779,794 $ 376,314
========= =========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 6
INTERACTIVE TELESIS, INC.
NOTES TO FINANCIAL STATEMENTS
A. BASIS OF PRESENTATION:
The balance sheets as of October 31, 1999, the statements of
operations for the three-month periods ended October 31, 1999, and 1998,
respectively, and the statements of cash flows for the three-month
periods ended October 31, 1999, and 1998, respectively, have been
prepared by the Company without audit. In the opinion of management, all
adjustments necessary to present fairly the financial position, results
of operations and changes in cash flows have been made.
Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these financial statements be read in conjunction with the
financial statements and notes thereto included with the Form 10SB
submission made to the Securities and Exchange Commission (SEC) on
November 19, 1999. The results of operations for the quarter ended
October 31, 1999, are not necessarily indicative of the operating
results expected for the full fiscal year or for any future period.
B. RECLASSIFICATION:
None.
C. STOCK SPLIT:
None
D. SUBSEQUENT EVENTS:
The negotiations for the sale of InvestorREACH (TM) referenced in
Note 8 to the financial statements, submitted with From 10SB to the SEC on
November 19, 1999, have been terminated. The Company continues to explore the
possible disposition of this service line.
E. INCOME TAXES:
Income taxes have not been provided for in the accompanying
financial statements due to the net operating loss carry forwards generated in
prior years that are available for carry forward against current year income.
6
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INTERACTIVE TELESIS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
RESULTS OF OPERATIONS:
Net revenues for the three-months ended October 31, 1999 were
$1,200,935, an increase of $736,952, (159%) over net revenues for the three
months ended October 31, 1998. The increase is due to an increase in revenue of
approximately $155,000, or 33%, of one existing customer and 126%, or $582,000
is a result of adding new customers to the Digital Record & Replay and Automated
Survey services during the period compared to the same period in the prior year.
The cost of revenues for the quarter ended October 31, 1999 was $99,458
compared to $62,193 for the same period in 1998. Cost of Revenues as a
percentage of net revenue decreased to 8.3% from 13.4% for the quarter ended
October 31, 1999 when compared with the same period in 1998. This decrease is
due to increased revenue from the higher margin Digital Record & Replay
services.
Salaries and wages increased from $220,695 to $398,985, or 81%, for the
three-month period ended October 31, 1999 compared with the same period in 1998.
The increase is a result of adding staff to provide the Information Technology
and Systems skills and experience needed to meet and support the requirements of
the new customers, which enabled the Company's revenue growth during the period.
General and administrative expense increased from $175,825 to $262,204,
or 49%, for the three-month period ended October 31, 1999 compared with the same
period in 1998. The increase is primarily a result of increased legal,
accounting and consulting fees during the period.
Sales and marketing expense decreased from $80,779 to $51,076, or 37%,
for the three-month period ended October 31, 1999 compared with the same period
in 1998. The three-month decrease is primarily a result of reducing Investor
Relations costs and reducing Conferences and Trade Show costs during the period.
Depreciation and amortization expense increased from $27,046 to $58,413,
or 115% for the three-month period ended October 31, 1999 compared with the same
period in 1998. The increase is a result of adding computer and related
equipment during the period and during the fiscal year 1999.
7
<PAGE> 8
Net income for the quarter ended October 31, 1999 was $319,930 as
compared to a net loss of $(106,925), for the quarter ended October 31, 1998.
Basic earnings per share increased to $0.01 for the quarter ended October 31,
1999 as compared to $(0.004) per share for the same period ended October 31,
1998.
Income taxes have not been provided for in the accompanying financial
statements due to the net operating loss carry forwards generated in prior years
that are available for carry forward against current year income.
LIQUIDITY AND CAPITAL RESOURCES:
The Company has no material commitments for capital expenditures.
Working capital was $1,144,054 at October 31, 1999, an increase of
$279,800 from July 31, 1999. The increase is a resulting from positive operating
results and positive cash flows for the three-month period ended October 31,
1999.
Based on current cash flow projections management expects that the
Company can complete expected operations for the current year without the need
for infusions of additional cash.
YEAR 2000 IMPLICATIONS:
To date, the Company has incurred approximately $6,000 in Year 2000
remediation costs, which was funded from working capital. The Company expects to
incur an additional $3,000 by December 15, 1999, to upgrade voice mail and phone
systems at some of the Company's offices. The Company has designated the
Director of Operations as manager of all Year 2000 efforts. These efforts
include continued product testing and contingency planning. The Company
anticipates spending approximately $10,000 for this effort over the remainder of
1999 and the first half of 2000. These fees will be expensed as incurred.
The Company has contacted its major customers and vendors to assess
their status as to Year 2000 compliance. There is no assurance that service
interruptions will not occur from vendors, suppliers or service providers,
including financial institutions or governments. The Company believes that
alternative suppliers exist and, therefore, if services are interrupted from
suppliers, the situation should be temporary.
IMPACT OF INFLATION:
The Company does not believe inflation has had a significant effect on
its operations.
8
<PAGE> 9
INTERACTIVE TELESIS, INC.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is a defendant in a lawsuit brought in the Superior Court of
California in January, 1999, by Dieter Sauer, a former consultant, claiming
wrongful termination by the Company. The consultant alleges special, general and
punitive damages in excess of $400,000.
The Company is a defendant in a lawsuit brought in the District Court of
Nevada in November, 1997, by Scott Madison, a stockholder. The stockholder is
claiming that the Company, an Officer of the Company, and individuals associated
with a fiscal agent who assisted the Company in raising equity capital in 1996,
made misrepresentations to the plaintiff in the sale of shares of the Company's
Common Stock. The plaintiff alleges special, general and punitive damages in
excess of $1,000,000. Although the Company intends to vigorously defend the
action, counsel for the Company believes it is probable the Company will be
required to pay some damages. A reserve of $80,000 has been provided for in the
Company's financial statements.
ITEM 2. CHANGES IN SECURITIES
The Company made the following changes in securities: On 10/04/99,
50,000 Stock Options were exercised, by a former consultant, at $0.25 per share
for a total of $12,500, the options were originally granted at $0.40 per share
for a total of $20,000. On 10/08/99, 1,250 Shares of Common Stock were issued to
a Shareholder who had purchased the shares at $0.42 on 2/14/98, but the shares
had never been issued to the shareholder.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
The negotiations for the sale of InvestorREACH (TM) referenced in Note 8
to the financial statements, submitted with From 10SB to the SEC on November 19,
1999, have been terminated. The Company continues to explore the possible
disposition of this service line.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS 27 - Financial Data Schedule
B. REPORTS ON FORM 8-K
None
9
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INTERACTIVE TELESIS, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTERACTIVE TELESIS, INC.
(A Delaware Corporation)
(Registrant)
By: /s/ Donald E. Cameron
-------------------------
Donald E. Cameron
President & CEO
Date: December 8, 1999
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-END> OCT-31-1999
<CASH> 779,794
<SECURITIES> 0
<RECEIVABLES> 667,617
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,455,141
<PP&E> 1,150,808
<DEPRECIATION> 335,973
<TOTAL-ASSETS> 2,269,976
<CURRENT-LIABILITIES> 311,087
<BONDS> 0
0
0
<COMMON> 30,651
<OTHER-SE> 1,643,743
<TOTAL-LIABILITY-AND-EQUITY> 2,269,976
<SALES> 1,200,935
<TOTAL-REVENUES> 1,200,935
<CGS> 99,458
<TOTAL-COSTS> 870,136
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,869
<INCOME-PRETAX> 319,930
<INCOME-TAX> 0
<INCOME-CONTINUING> 319,930
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 319,930
<EPS-BASIC> .01
<EPS-DILUTED> .01
</TABLE>