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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the Quarter ended June 30, 1998 Commission File No.
Utilicore Corporation
(Exact name of registrant as specified in its charter)
Delaware 65-0766749
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification Number)
1549 State St., Sarasota, FL 34236
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, (941) 363-9300
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 report), and (2) has been subject to such
filing requirements for the past 90 days.
Yes: X No:
Transitional Small Business Disclosure Format:
Yes: X No:
The number of shares outstanding of each of the registrant's classes of common
stock as of June 30, 1998 is 20,000,000 shares all of one class of $.0005 par
value common stock.
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FINANCIAL STATEMENTS
UTILICORE CORPORATION
BALANCE SHEET
JUNE 30, 1998
(unaudited)
ASSETS
Current assets
Cash $ 381,198
Loan receivable 18,000
Prepaid rent 8,889
Equipment on operating lease, net
of accumulated depreciation of $1,918 10,868
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Total current assets 418,955
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Fixed assets, less accumulated
depreciation of $2,882 53,161
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Other assets
Rent deposits 9,895
Deposit on equipment under operating lease 13,707
Deposits for telephone network services 270,000
------------
293,602
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$ 765,718
============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL
STATEMENTS
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UTILICORE CORPORATION
BALANCE SHEET
JUNE 30, 1998
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ 5,475
Accounts payable 20,338
Accrued expenses 10,693
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Total current liabilities 36,506
------------
Long-term debt, less current maturities 521,390
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Other liabilities
Customer deposit 2,285
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Stockholders' equity
Common stock, $.0005 par value,
50,000,000 shares authorized,
20,000,000 shares issued and
outstanding, 10,000
Additional paid-in capital 979,617
Deficit (784,080)
------------
Total stockholders' equity 205,537
------------
$ 765,718
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL
STATEMENTS
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UTILICORE CORPORATION
STATEMENT OF OPERATIONS AND DEFICIT
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(unaudited)
Revenues $ 46,614
General and administrative expenses 800,312
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Loss from operations (753,698)
---------
Other income (expense)
Interest income 2,144
Interest expense (12,137)
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(9,993)
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Net loss ($763,691)
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Net loss per share ($.04)
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Based on 20,000,000 shares outstanding throughout the period
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL
STATEMENTS
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UTILICORE CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30,1998
(unaudited)
Capital stock
------------------------- Additional
(000's) paid-in
Shares $ capital Deficit
--------- --------- --------- ---------
Balance,
December 31,
1997 3 $ 30 $ 107 ($ 20,389)
Effect of
20 for 1
stock split 57 -
Sale of
founders'
stock 18,960 9,480
Sales thru
private
placement 980 490 979,510
Net loss
for
period (763,691)
--------- --------- --------- ---------
Balance,
June 30,
1998 20,000 $ 10,000 $ 979,617 ($784,080)
========= ========= ========= =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL
STATEMENTS
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UTILICORE CORPORATION
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(unaudited)
OPERATING ACTIVITIES
Net loss ($ 763,691)
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation 3,161
Increase in accounts and loans receivable (16,550)
Increase in prepayments (8,889)
Increase in security deposits (293,602)
Increase in accounts payable 20,338
Increase in accrued expenses 10,193
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Net cash used for operating activities ($1,049,040)
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INVESTING ACTIVITIES
Purchase of fixed assets (56,043)
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Net cash used for investing activities (56,043)
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FINANCING ACTIVITIES
Sale of common stock 989,480
Loan from stockholder (2,500)
Increase in notes payable 498,140
-----------
Net cash provided by financing activities 1,485,120
-----------
Increase in cash 380,037
Cash, beginning of year 161
-----------
Cash, June 30, 1998 $ 381,198
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Supplemental information:
There were no monies paid for either interest or income taxes
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL
STATEMENTS
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UTILICORE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
- --------
Utilicore Corporation (the Company) was incorporated in the State of Delaware
on March 6, 1997. The Company's objective is to develop a private telephone
company to provide both local and long distance telephone service to the
residential, multiple dwelling unit market. The Company also installs,
operates and provides private cable TV service at various locations under
long-term contractual agreements.
On February 4, 1998, the Board of directors voted to amend the Company's
Certificate of Incorporation. As a result, the Company is authorized to issue
up to 50,000,000 shares of common stock and up to 2,000,000 shares of
preferred stock. In conjunction therewith they split the existing stock held
by the Company's founder at a rate or 20 shares for each share held and
changed the par value from $.01 to $.0005.
Use of Accounting Estimates
- ---------------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect certain reported amounts and disclosures. Actual results could
differ from those estimates.
Revenue Recognition
- -------------------
The Company recognizes revenues when earned. Under the contractual agreement
referred to above, the revenues are recorded on the first day of the month.
Fixed Assets
- ------------
Fixed assets are stated at cost. Depreciation is computed using a straight
line method, ranging between 3 and 10 years.
Concentrated Revenue
- --------------------
The Company's income is derived under one contract with a hospital facility
and from sales and installation of satellite and broadcast receive systems.
Note 2: EQUIPMENT ON OPERATING LEASE
The equipment was purchased for the sole purpose of fulfilling a contract with
a hospital facility located in Hollywood, Florida. The equipment under this
operating lease is recorded at cost, net of accumulated depreciation, which is
computed based on the equipment's estimated useful life which is five years.
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UTILICORE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 3: DEPOSITS FOR TELEPHONE AIR TIME
The Company has deposited, with major telephone companies, funds to support
the local and long distance network services that the Company will resell to
its customers. These deposits act as a guaranty for the payment of these
services by the Company, thereby making the major companies not subject to the
collectibility of the charges by the Company.
NOTE 3: LONG-TERM DEBT
The Company borrowed $30,000 from an independent third party. The note bears
interest at the rate of 18% and is payable in the amount of $761.81 per month.
The equipment located at the hospital facility in Hollywood, Florida is
collateral for this note and a financing statement under the Uniform
Commercial Code has been filed with the appropriate agency.
On January 20, 1998, the Company issued promissory notes in the aggregate
amount of $487,500 to shareholders of the Company. These notes bear interest
at 8% and are due on January 20, 2000.
The Company also is financing the automobile that purchased over a 48 month
period. The rate of interest on this loan was .9% and the total amount of
interest over the four year period is $373. The monthly payment is $428.
Annual payments, over the next five years, under the terms of these notes are
as follows:
1998 $ 3,852
1999 11,305
2000 500,012
2001 10,839
2002 857
Total 526,865
Less amount due currently 5,475
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Long-term debt $ 521,390
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UTILICORE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 4: LEASES
Office and warehouse
The Company leases office space in Sarasota, Florida under a one year lease
agreement which runs through May 31, 1998 and which is payable at a monthly
rate of $2,068.75 plus tax plus all ad valorem taxes which are due during the
lease period.
The Company has entered into a agreement with an employee leasing company,
whereby the payroll, payroll taxes and benefits packages are paid directly to
the leasing company. This agreement is for a period of one year and the charge
is 1.52% of the gross payroll.
The company has entered into two additional leases during the current period;
both an office and a warehouse facility. The office lease is a five year lease
beginning effectively October 1998 and running until August 31, 2003. The
warehouse lease is for a one year period beginning on May 1, 1998.
Minimum annual rentals under these leases, over the next five years and eight
months is as follows:
1998 $ 31,810
1999 100,260
2000 100,840
2001 104,870
2002 109,065
2003 84,230
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Total $ 499,265
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Rent expense for the period ended April 30, 1998 was $20,311.
Equipment
The Company entered into an operating lease for certain office computers and
equipment. The lease is for a three year period, at $1,895 per month, after
which the Company must return the equipment to the lessor.
The Company was required to place a $13,707 security deposit on this
equipment.
Minimum annual lease payments under this lease is as follows:
1998 $ 15,160
1999 22,740
2000 22,740
2001 7,580
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Total $ 68,220
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UTILICORE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 5: FIXED ASSETS
The Company's fixed assets are comprised of the following:
Automobile $ 22,672
Furniture and fixtures 33,371
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Total $ 56,043
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NOTE 6: PRIVATE PLACEMENT
The Company also offered 980,000 shares of its stock to the public in a
private placement in order to raise $980,000. As of June 30, 1998 all of the
issue was sold out.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Until recently, the Company generated no substantial revenues from
operations and, thus, must be considered a development stage company. Since
the Company has not generated revenues and has not been in a profitable
position, it operates with minimal overhead. As of the date hereof, the
Company had 20,000,000 shares of common stock outstanding. The Company's
offerings have only raised sufficient capital to finance start-up operations.
The Company will require substantial additional capital to continue
operations.
However, during the second quarter of 1998, the Company began the
transition from a developmental stage company to an operating entity.
Management expects this transition to continue during the third quarter.
During the second quarter, the Company signed telephone service contracts to
provide access to 45 projects, consisting of 10,066 dwelling units. These
contracted projects consist of rental apartment properties, condominiums and
one mobile home park located throughout Florida. As a result, recently the
Company began to receive revenues on a limited basis. During the sixth month
period ending June 30, 1998, revenues amounted to $46,614 while general and
administrative expenses amounted to $800,312, yielding a loss from operations
of $753,898. Overall the Company had a total loss of $763,691 or $0.04 per
share. As the Company was only incorporated on March 6, 1997 and did not
commence development of its business plan until February 1998 meaningful
comparative information is not available for the year ended December 31, 1997.
Additionally, during the second quarter, the Company signed a letter
of intent with the Telephone Company of Central Florida (TCCF) to provide Long
Distance Services to approximately 25,000 of its accounts via the Company's
carrier agreement with Sprint. The Company
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became TCCF's carrier when GE Capital Corp., TCCF's former long distance
provider, threatened to terminate service to TCCF's customers. Although TCCF
is currently seeking protection under Chapter 11 of the Bankruptcy Code, the
Company has submitted a contract to TCCF, which has yet to be signed or
approved by the Bankruptcy Court.
Over the long term, there are a variety of factors which may affect
the Company's liquidity, net sales, or revenues including: (1) the speed with
which the Company's competitors arrive in the marketplace; (2) the degree of
decreased regulation for ILEC's; (3) the outcome of all of the pending
legislation; (4) the ability of the current market to remain stable and
robust; and (5) continued growth in pent-up demand for new technologies and
services.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
NONE
Item 2. Changes in Securities
NONE
Item 3. Defaults Upon Senior Securities
NONE
Item 4. Submission of Matters to a Vote of Security Holders
NONE
Item 5. Other Information
NONE
Item 6. Exhibits and Reports on Form 8-K
NONE
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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.
UTILICORE CORPORATION
Dated: By: /S/
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David Bednarsh, CEO
