FINANCIAL STATEMENTS
EUROTELECOM COMMUNICATIONS INC AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEETS
---------------------------
SEPTEMBER 30, JUNE 30,
1999 1999
(UNAUDITED) (AUDITED)
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ASSETS
Current Assets:
Cash and cash equivalents $ 10,812 $ -
Accounts receivable, net of provision 1,191,204 901,195
for doubtful debts of $270,330 and
$98,920 as of September 30, 1999 and
June 30, 1999 respectively
Accounts receivable - related party 33,237 56,913
Other receivables 225,527 17,125
Inventories 546,890 357,952
Prepaid expenses 60,614 179,222
Unearned compensation 239,582 -
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TOTAL CURRENT ASSETS $ 2,307,866 $ 1,512,407
============= =============
NON CURRENT ASSETS
Property and equipment, net 292,211 90,718
Intangible assets, net 348,937 381,868
Investments at cost - 43,964
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TOTAL ASSETS $ 2,949,014 $ 2,028,957
============= =============
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EUROTELECOM COMMUNICATIONS INC. AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEETS (CONTINUED)
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<CAPTION>
SEPTEMBER 30, JUNE 30,
1999 1999
(UNAUDITED) (AUDITED)
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<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Bank overdraft $ 744,550 $ 375,261
Current maturities of long-term obligations 52,973 111,252
Accounts payable 1,623,725 743,063
Accounts payable - related party - 9,464
Accrued liabilities 270,350 206,929
Accrued income and other taxes 284,890 311,807
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TOTAL CURRENT LIABILITIES $ 2,976,488 $ 1,757,776
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Long-term liabilities:
Notes payable 185,067 941,865
Less: current maturities of long-term obligations (52,973) (111,252)
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TOTAL LONG-TERM LIABILITIES $ 132,094 $ 830,613
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TOTAL LIABILITIES $ 3,108,582 $ 2,588,389
Stockholders' deficit:
Preferred Stock $0.01 par value. Authorized 10,000,000
shares; none issued
Common Stock, $0.01 par value. Authorized 20,000,000
shares; and 14,798,102 and 8,988,102 shares issued in
September 30, 1999 and June 30, 1999 respectively 147,982 89,882
Additional paid-in capital 24,604,502 23,556,427
Less subscriptions receivable - (131,788)
Accumulated deficit (24,913,755) (24,078,967)
Other comprehensive income 1,703 5,014
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TOTAL STOCKHOLDERS' DEFICIT $ (159,568) $ (559,432)
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 2,949,014 $ 2,028,957
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EUROTELECOM COMMUNICATIONS INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF OPERATIONS
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THREE MONTHS ENDED
SEPTEMBER 30
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1999 1998
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(UNAUDITED) (UNAUDITED)
Revenues $ 1,210,040 $ 16,000
Cost of revenues 1,049,525 -
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GROSS PROFIT $ 160,515 $ 16,000
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General and administrative expenses 876,620 169,197
Depreciation 9,507 5,586
Amortization of intangible assets 32,931 -
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OPERATING LOSS $ (758,543) $ (158,783)
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Other Income/(expense):
Investment writedowns (43,964) -
Interest expense (32,281) (16,756)
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LOSS FROM OPERATIONS $ (834,788) $ (175,539)
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Basic loss per share (0.070) (0.034)
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Weighted average number of common shares - basic 11,882,102 5,217,103
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Basic and diluted loss per share are the same due to any effect of warrants
outstanding being anti-dilutive.
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EUROTELECOM COMMUNICATIONS INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF CASH FLOWS
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3 MONTHS 3 MONTHS
-------- --------
ENDED ENDED
----- -----
SEPTEMBER 30, SEPTEMBER 30,
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1999 1998
---- ----
(UNAUDITED) (UNAUDITED)
----------- -----------
Cashflows from operating activities:
Net loss $ (834,788) $ (175,539)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET
CASH USED IN OPERATING ACTIVITIES;
Non-cash items:
Depreciation and amortization 42,438 5,586
Investment Writedown 43,964 -
Write-off subscriptions receivable 131,788 -
Stock issued for services - 117,500
Amortization of unearned compensation 10,417 -
CHANGES IN CURRENT ASSETS AND LIABILITIES
Receivables (266,333) -
Inventories (188,938) -
Other current assets (89,794) (12,130)
Accrued expenses 63,421 19,929
Accounts payable 621,198 (245,573)
Other liabilities 69,083 -
------------- -------------
Net cash used in operating activities $ (397,544) $ (290,227)
============= =============
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (167,172) -
Sale of fixed assets - 11,434
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Net cash (used in) provided by investing
activities $ (167,172) $ 11,434
============= =============
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from line of credit 369,289 10,704
Proceeds from issuance of common stock 306,175 -
Repayment of debt (96,625) -
Proceeds from issuance of debt - 268,089
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Net cash provided by financing activities $ 578,839 $ 278,793
============= =============
Effect of exchange rate changes on cash (3,311) -
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INCREASE IN CASH 10,812 -
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Cash and cash equivalents at beginning of period - -
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Cash and cash equivalents at end of period 10,812 -
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NON-CASH FINANCING AND INVESTING ACTIVITY:
Debt converted to equity $ 800,000 -
Interest expense (32,281) (16,756)
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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
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FROM JULY 1, 1999 THROUGH SEPTEMBER 30, 1999.
---------------------------------------------
COMMON STOCK
------------
<CAPTION>
ACCUMULATED
-----------
OTHER
-----
SHARES PAID IN ACCUMULATED COMPREHENSIVE
------ ------- ----------- -------------
(NUMBER) AMOUNT CAPITAL DEFICIT INCOME
-------- ------ ------- ------- ------
<S> <C> <C> <C> <C> <C>
Balance at July 1, 1999 8,988,102 $ 89,882 $ 23,556,427 $(24,078,967) $ 5,014
Shares issued during 1999:
Loan stock conversion 5,500,000 55,000 745,000 - -
Cash 310,000 3,100 303,075 - -
Net loss for period ended
September 30, 1999 - - - (834,788) -
Currency translation
differences on foreign
currency net investments - - - - (3,311)
---------------------------------------------------------------- -------------
14,798,102 147,982 24,604,502 (24,913,755) 1,703
================================================================ =============
The Company has elected to omit substantially all footnotes to the financial statements for the three months
ended September 30, 1999 since there have been no material changes (other than indicated in other footnotes) to
the information previously reported by the company in their Annual Report filed on Form 10SB for the fiscal year
ended June 30, 1999.
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NOTE 1 - BASIS OF PREPARATION
The accompanying unaudited consolidated financial statements have been prepared
in conformity with generally accepted accounting principles for interim
financial information and with the instructions for Form 10-QSB and Item 310 of
Regulation S-B. Accordingly, they do not include all the information and
footnotes required by generally accepted accounting principles for complete
consolidated financial statements. In the opinion of management, the statements
contain all adjustments (consisting only of normal recurring accruals) necessary
to present fairly the financial position as of September 30, 1999, the results
of operations for the three months ended September 30, 1999 and 1998 and changes
in cash flows for the three months ended September 30, 1999 and 1998. The
results of operations for the three months ended September 30, 1999 and 1998 are
not necessarily indicative of the results to be expected for the full year.
The June 30, 1999 balance sheet has been derived from the audited consolidated
financial statements as of that date. These unaudited consolidated financial
statements should be read in conjunction with the audited consolidated financial
statements and notes thereto included in the Company's Annual Report of Form
10-SB.
NOTE 2 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as going concern. The Company has incurred operating
losses for the periods ended June 30, 1999 and September 30, 1999 and in earlier
years and is dependent upon financing to continue operations. Management is
hopeful that the Company's operations will result in positive cash flow during
the year 2000. The Company's management is in discussions with a lender to
increase a line of credit. Additional sources of capital to support growth are
being investigated. The Company is currently in the process of raising
additional capital through a placement of shares on the Alternative Investment
Market of the London Stock Exchange. The financial statements do not include any
adjustments relating to recoverability and classification of reported asset
amounts or the amounts and classification of liabilities that might result from
the outcome of the uncertainty.
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