FORM 10-QSBA
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
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 000-26011
INTERNET CABLE CORPORATION
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(Exact name of registrant as specified in its charter)
NEVADA
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(State or other jurisdiction of incorporation or organization)
87-0540291
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(I.R.S. Employer Identification No.)
1463 DUNWOODY DRIVE, WEST CHESTER, PENNSYLVANIA 19380
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(Address of principal executive offices) (Zip Code)
(610) 647-0400
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(Registrant's telephone number, including area code)
263 KING STREET, CHARLESTON, SOUTH CAROLINA 29401
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(Former name, former address and former fiscal year,
if changed since last report)
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 X No
--- ---
ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
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APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of each of the issuer's classes of common
stock, as of May 12, 2000, was 10,237,886 shares, all of one class (common
stock), par value $.001 per share.
Transitional Small Business Disclosure Format (check one);
Yes No X
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<PAGE>
PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
INTERNET CABLE CORPORATION
CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
ASSETS
MARCH 31, DECEMBER 31,
2000 1999
(Unaudited)
----------- -----------
<S> <C> <C>
Current assets
Cash $ 989,264 $ 1,531,708
Notes receivable -- 40,000
Accounts receivable, net of allowance
of $235,000 and $0 1,622,294 2,385
Inventories 131,311 29,200
Unbilled receivables 724,426 --
Deposits on Acquisitions -- 5,652,576
Prepaid expenses and other current assets 181,050 --
------------ ------------
Total current assets 3,666,345 7,255,869
Property and equipment - at cost, less
accumulated depreciation 895,585 52,993
Intangibles, net of accumulated amortization 7,017,219 --
Other assets 5,800 2,000
------------ ------------
$ 11,584,949 $ 7,310,862
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Note payable, stockholder $ 60,000 $ 130,000
Accounts payable and accrued expenses 1,915,612 623,946
Current portion of capital leases 62,683 --
Notes payable, net of unamortized discount -- 249,864
------------ ------------
Total current liabilities 2,038,295 1,003,810
------------ ------------
Long-term liabilities
Long-term capital leases 89,471 --
------------ ------------
Total liabilities 2,127,766 1,003,810
------------ ------------
Stockholders' equity
Common stock, $.001 par value,
50,000,000 shares authorized, 10,212,886 and
9,270,311 shares issued and outstanding 10,213 9,269
Additional paid-in capital 18,055,887 13,693,287
Stock subscription receivable (200,000 (200,000)
Accumulated deficit (8,408,917) (7,195,504)
------------ ------------
Total stockholders' equity 9,457,183 6,307,052
------------ ------------
$ 11,584,949 $ 7,310,862
============ ============
</TABLE>
The accompanying notes are an integral part of these condensed
financial statements
<PAGE>
INTERNET CABLE CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31,
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Revenues
Sales and services $ 2,412,570 $ 15,541
Cost of sales and services 1,604,524 20,248
------------ ------------
Gross operating margin/(loss) 808,046 (4,707)
Costs and expenses
General and administrative 1,341,436 148,089
Depreciation 51,803 5,635
Loss on disposal of assets 52,993 --
Amortization of intangibles 364,064 --
------------ ------------
1,810,296 153,724
------------ ------------
Loss from operations (1,002,250) (158,431)
Interest expense 5,123 2,170
Other expenses/(income) (9,241) 193
------------ ------------
Pretax loss (998,132) (160,794)
Tax benefit 184,855 --
------------ ------------
Net loss before extraordinary item (813,277) (160,794)
Extraordinary item
Charge for early extinguishment of debt 400,136 --
------------ ------------
Net loss (1,213,413) (160,794)
Accumulated deficit, beginning of period (7,195,504) (2,550,269)
------------ ------------
Accumulated deficit, end of period $ (8,408,917) $ (2,711,063)
============ ============
Weighted average common shares
Outstanding 10,047,702 7,639,583
------------ ------------
Basic and diluted loss per share $ (.12) $ (.02)
============ ============
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
<PAGE>
INTERNET CABLE CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities $(1,217,703) $ (291,873)
Cash flows from investing activities
Notes receivable 40,000 --
Release of deposits on acquisitions 5,652,576 --
Acquisition of property and equipment (165,703) (9,371)
Loans receivable, employee (22,941) --
Business acquisitions, net of cash
balances acquired (5,469,414) --
Loans receivable, shareholder -- (19,000)
----------- -----------
Net cash used in investing activities 34,518 (28,371)
Cash flows from financing activities
Notes payable stockholder (70,000) (9,000)
Notes payable (650,000) --
Issuance of common stock 1,530,000 --
Stock offering costs (153,000) --
Stock subscription receivable -- 109,983
Capital lease payments (16,259) --
----------- -----------
Net cash provided by financing activities 640,741 100,983
----------- -----------
Net increase (decrease) in cash (542,444) (219,261)
Cash, beginning of period 1,531,708 257,906
----------- -----------
Cash, end of period $ 989,264 $ 38,645
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
<PAGE>
Notes to Financial Statements
NOTE 1 - Basis of Presentation. The financial statements for 2000 have been
consolidated based on the combined activities of the acquired companies, as
discussed below. The 1999 financial statements reflect the operations of
Internet Cable Corporation (the "Company") without regard to the activities of
the acquired companies. The financial statements have been prepared by the
Company pursuant to the rules and regulations of the Securities and Exchange
Commission ("SEC") and, in the opinion of management, include all adjustments,
consisting of normal recurring adjustments, necessary to present fairly the
financial position and results of operations. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with the generally accepted accounting principals have been condensed or omitted
pursuant to such SEC rules and regulations. It is suggested that these financial
statements are read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1999.
Due to the inherent seasonal nature of the businesses, quarterly operating
results may not be indicative of the actual operating results for the full year.
Subsequent to the acquisitions, the Company manages its business as one segment.
The Company is in the process of reviewing its internal reporting structure.
On January 4, 2000, Internet Cable Corp. acquired Cable TSI, a privately-held
Canadian company. In the first and second quarters, as originally filed on Forms
10Q with the SEC, the company recognized revenue based on contractually
permitted billings. In the third quarter, management adopted the policy of
recognizing revenue using either a unit of measure (based on feet) or
contractually permitted hourly fees. This policy has been adopted retroactively
to the acquisition date. In addition to the change in revenue recognition
accounting policy, management reassessed the related opening balance sheet
accounts. As a result, amounts recorded as work-in-process as of January 4, 2000
were revised by $528,055 to reflect unbilled receivables on a fair value basis,
in accordance with APB 16, Accounting for Business Combinations, and the related
revenue recognition policy. As a result of the change in unbilled receivables
and related tax impact recorded in the opening balance sheet, purchased goodwill
was reduced by $343,200, thereby reducing goodwill amortization by $17,160 and
$16,286 in the first and second quarters, respectively. Additionally, given that
the company generated a loss in the first quarter, a related tax benefit in the
amount of $184,855 has been recognized.
As a result of these changes, revenue decreased by $12,003 for the three months
ended March 31, 2000 and increased by $182,243 for the three months ended June
30, 2000. The effect of these changes on net margins for the same periods was a
decrease of $8,357 and an increase of $127,571, respectively. In addition, the
amounts related to unbilled receivables increased by $519,698 and $647,269 at
March 31, 2000 and June 30, 2000 respectively. The full impact of these changes
on the previously reported net losses are a reduction in the net losses of
$193,658 and $143,856 for the three months ended March 31, 2000 and June 30,
2000, respectively.
Due to above changes, the Company has filed this amended Form 10QSBA with the
Securities and Exchange Commission for the three month periods ending March 30,
2000.
NOTE 2 - Recent Accounting Pronouncements. On April 3, 2000 the Financial
Accounting Standards Board issued FIN 44, "Accounting for Certain Transactions
Involving Stock Compensation - an Interpretation of APB 25" which clarifies,
among other issues, (a) the definition of employee for purposes of applying APB
25, (b) the criteria for determining whether a plan qualifies as a
noncompensatory plan, (c) the accounting consequence of various modifications to
the terms of a previously fixed stock option or award, and (d) the accounting
for exchange of stock compensation awards in a business combination. FIN 44 is
effective July 1, 2000, but certain conclusions in the Interpretation cover
specific events that occur after December 15, 1998. To the extent that the
Interpretation covers events occurring during the period after December 15,
1998, but before the effective date of July 1, 2000, the effects of applying the
Interpretation are recognized on a prospective basis from July 1, 2000.
Management is currently evaluating the impact, if any, the Interpretation will
have on the Company's financial position or results of operations.
On March 24, 2000, the SEC issued Staff Accounting Bulletin (SAB) No. 101A which
amends the implementation date of SAB 101, "Revenue Recognition" to the three
month period ending June 30, 2000. SAB 101 provides guidance on the recognition,
presentation, and disclosure of revenue in financial statements. Management is
currently evaluating the impact, if any, the SAB will have on the Company's
financial position or results of operations.
NOTE 3 - Loss Per Share. Basic loss per share is computed by dividing the net
loss by the weighted average number of shares of common stock outstanding during
the period. Stock options and warrants have been excluded from diluted loss per
share and have not been presented because their effect would have been
antidilutive.
NOTE 4 - Acquisitions. On January 4, 2000, the Company completed the acquisition
of Cable Systems Technical Services Inc., a corporation formed under the laws of
the Province of Ontario ("Cable TSI") which resulted in Cable TSI becoming a
wholly owned subsidiary of the Company. The Company purchased one hundred
percent (100%) of the issued and outstanding common stock of Cable TSI and its
approximate 78% interest in Cable Systems Technical Services, Inc. Delaware
("TSI Delaware"), a Delaware corporation in consideration of: (i) Three Million
Nine Hundred Thousand dollars ($3,900,000) in cash; (ii) warrants to purchase
one hundred thousand (100,000) shares of the Company's common stock at a price
of Two dollars and Fifty Cents ($2.50) per share for a period of two (2) years,
said warrants have a recorded value of Three Hundred Eighty-Six Thousand One
Hundred Twenty-Six dollars ($386,126); and (iii) the Company exercised its
option to extend the Closing Date by payment of an option fee which increased
the purchase price by One Hundred Twenty Thousand dollars ($120,000). Further,
the Company issued a total of one hundred twenty thousand (120,000) shares of
its common stock, with a fair value of Six Hundred Thousand dollars ($600,000),
to the minority shareholders of TSI Delaware for all of the remaining
outstanding shares of TSI Delaware. In addition, the Company: (i) satisfied an
outstanding loan to a shareholder of Cable TSI in the amount of Three Hundred
Ninety Six Thousand Seven Hundred Eighty Five dollars ($396,785); (ii) redeemed
all of its issued and outstanding shares of Series A Preferred Stock; and (iii)
caused the discharge of all personal guarantees of debts and other obligations
of Cable TSI, its subsidiaries and its shareholders made to vendors and lending
institutions.
Cable TSI provides sophisticated engineering, testing, maintenance and
other services to the cable television industry throughout the United States and
Canada. Cable TSI maintains offices in Jacksonville, Florida and Richmond,
Virginia, in the United States and in the cities of Toronto, London and
Cambridge in Ontario, Canada.
On January 11, 2000, the Company completed the acquisition of CAD
Consultants, Inc. ("CAD"), a New Jersey corporation. The acquisition was
completed by a merger of ICC Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of the Company, into CAD, with CAD, being the surviving
entity. As consideration for the merger, the Company: (i) issued four hundred
fifty thousand (450,000) shares of its common stock, with a fair value of Two
Million Two Hundred Fifty Thousand dollars ($2,250,000), to Craig Lerman, the
sole shareholder of CAD; and (ii) paid to Mr. Lerman Seven Hundred Thirty Two
Thousand Three Hundred Seventy Three dollars ($732,373) in cash to satisfy
certain liabilities and debts incurred by Mr. Lerman on behalf of CAD.
CAD is a wireless design and installation company that provides data and
voice communication systems solutions to universities, hospitals and office
buildings. CAD's solutions are unique in that CAD allows its customers to
control their LAN through wireless connections enabling the users to avoid using
outside telephone lines resulting in lower Internet access fees. CAD currently
provides services to such companies as Lucent, ATT, Exxon and Mercedes Benz.
These two acquisitions were accounted for using the purchase method. The
allocation of the purchase price resulted in intangibles, primarily goodwill, of
$7,381,283, which are being amortized on a straight-line basis over 5 years. The
allocation of the purchase price was prepared on a preliminary basis pending
completion of a valuation.
The unaudited results of operations for the acquired entities is as
follows:
<TABLE>
<CAPTION>
3 Months Ended March 31, 2000
-----------------------------
Cable TSI CAD
---------- ----------
<S> <C> <C>
Net sales $2,048,923 $ 332,257
Gross operating margin 723,804 116,762
Net income/(loss) 186,279 (54,353)
</TABLE>
The pro forma unaudited consolidated results of operations as though both
Cable TSI and CAD had been acquired as of the beginning of Fiscal 1999 is as
follows:
<TABLE>
<CAPTION>
3 Months
Ended
March 31, 1999
--------------
<S> <C>
Net sales $ 1,363,747
Gross operating margin 501,771
Loss from continuing operations (341,675)
Net loss (357,506)
Loss per share (.05)
</TABLE>
Pro forma data does not purport to be indicative of the results that would
have been obtained had these events actually occurred at the beginning of the
period presented and is not intended to be a projection of future results.
NOTE 5 - Securities Offering. The Company completed an Offering of its
securities, in January 2000, realizing approximately $9,080,000 in gross
proceeds during 1999 and the first quarter of 2000 through the sale of stock at
$5.00 per share plus warrants for 1/2 share for each share purchased. These
warrants are exercisable over a 5-year term with a strike price of $10.00 per
share. The Company had received $7,550,000 of the gross proceeds during 1999.
NOTE 6 - Extraordinary Item. From May through November 1999 the Company sold
$650,000 of 10% two-year promissory notes. Investors in these notes also
received warrants entitling the holders to purchase an aggregate of 325,000
shares of Company stock at Three ($3.00) dollars per share. These warrants were
redeemable upon issuance and expire in 2004. No warrants have been redeemed to
date. The Company valued the warrants at $496,250, which were recorded as a debt
discount, to be amortized over the life of the notes. On January 4, 2000, the
Company retired these promissory notes and recorded a charge for the unamortized
discount as an extraordinary item.
NOTE 7 - Commitments and Contingencies. The Company is engaged in legal actions
arising in the ordinary course of its business. The Company believes that the
ultimate outcome of all such matters will not have a material adverse effect on
the Company's consolidated financial position. The significance of these matters
on the Company's future operating results and cash flows depends on the level of
future results of operations and cash flows as well as on the timing and
amounts, if any, of the ultimate outcome.
ITEM 2. MANAGEMENT' DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS FISCAL FIRST QUARTER ENDED MARCH 31, 2000
("FISCAL Q1 2000") AND THE PRO FORMA FIRST QUARTER ENDED 1999
("FISCAL Q1 1999")
ACQUISITIONS. On January 4, 2000, Internet Cable Corporation (the
"Company") completed the acquisition of Cable Systems Technical Services Inc., a
corporation formed under the laws of the Province of Ontario ("Cable TSI") which
resulted in Cable TSI becoming a wholly owned subsidiary of the Company. (See
Note 4 of the March 31, 2000 Financial Statements.) Cable TSI provides
sophisticated engineering, testing, maintenance and other services to the cable
television industry throughout the United States and Canada. Cable TSI maintains
offices in Jacksonville, Florida and Richmond, Virginia, in the United States
and in the cities of Toronto, London and Cambridge in Ontario, Canada.
On January 11, 2000, the Company completed the acquisition of CAD
Consultants, Inc., a New Jersey corporation ("CAD"). (See Note 4 of the March
31, 2000 Financial Statements.) CAD is a wireless design and installation
company that provides data and voice communication systems solutions to
universities, hospitals and office buildings. CAD's solutions are unique in that
CAD allows its customers to control their LAN through wireless connections
enabling the users to avoid using outside telephone lines resulting in lower
Internet access fees. CAD currently provides services to such companies as
Lucent, ATT, Exxon and Daimler Chrysler.
The actual operations of the Company for quarter ended March 31, 1999
have little bearing on the current operations of the Company. The Company has
focused its efforts during Fiscal Q1 2000 on consolidating the acquired
companies and developing the businesses of these operations. Management believes
that any discussion of the actual operations of fiscal Q1 1999 does not reflect
the current operations and will devote this discussion to a pro forma comparison
as if the acquisitions had been completed as of January 1, 1999.
The 1999 pro forma statement of operations (below) combines the
Company's unaudited statement of operations for the three months ended March 31,
1999 with the annual historical unaudited statements of operations of Cable TSI
and CAD for the three months ended March 31, 1999 as if both acquisitions had
occurred on January 1, 1999. The pro forma financial data is not necessarily
indicative of the actual operating results that would have occurred or the
future operating results that will occur as a consequence of such transactions.
PROFORMA CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
<S> <C>
Revenues
Sales and services $ 1,363,747
Costs and expenses
Cost of revenues 861,976
General and administrative 443,188
Depreciation 36,194
Amortization of intangibles 364,064
-----------
1,705,422
-----------
Loss from operations (341,675)
Interest expense 16,143
Other income 312
-----------
Net loss $ (357,506)
===========
</TABLE>
SALES. Sales for the Fiscal Q1 2000 were $2,412,570 as compared to pro
forma sales for Fiscal Q1 1999 of $1,363,747. The increase in sales of
$1,048,823 or 77% was a result of increased demands by our customers to provide
expanded services on various projects.
COST OF SALES. Cost of sales for the Fiscal Q1 2000 were $1,604,524 as
compared to $861,976 for the pro forma Fiscal Q1 1999. The increase in cost of
sales of $742,548 was a primarily a result of the increased workforce necessary
meet the increased service demands of our customers.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses for Fiscal Q1 2000 were $1,341,436 as compared to $443,188 for pro
forma Fiscal Q1 1999. The increase in general and administrative expenses of
$898,248 or 203% was largely the result of increased wages and benefits to
compensate the new management team put in place to manage the affairs of the
Company.
DEPRECIATION. Consolidated depreciation expense for Fiscal Q1
2000 was approximately $51,803 as compared to $36,194 for the
comparable pro forma quarter of Fiscal 1999.
AMORTIZATION OF INTANGIBLES. Intangible amortization expense for Fiscal
Q1 2000 and pro forma Fiscal Q1 1999 was $364,064. Intangibles, primarily
goodwill, of $7,381,283 has been recorded based on the purchase price paid for
the stock of Cable TSI and CAD and the value of the assets acquired during
January 2000. The final accounting to be attributed to these acquisitions is
being held open as of the date of this report to allow for the valuation of the
underlying assets and inclusion of any additional expenses attributable to these
transactions.
LOSS ON DISPOSAL OF ASSETS. The Company transferred its headquarters
operations as of the end of Fiscal Q1 2000. The office equipment and leasehold
improvements at the old facility were written off and a charge of $52,993 was
recorded. There was no disposition of assets recorded during the pro forma
Fiscal Q1 1999.
INTEREST. Interest expense for Fiscal Q1 2000 approximately $5,123 as
compared to $16,143 for pro forma Fiscal Q1 1999. The decrease was due to the
retirement of the debt of Cable TSI and CAD as part of the acquisition of these
companies.
NET LOSS BEFORE EXTRAORDINARY ITEM. The net loss before extraordinary
item for the Fiscal Q1 2000 was $813,277 compared to the net loss of $357,506
for pro forma Fiscal Q1 1999. The increase in net loss was primarily due to
increased general and administrative expenses.
OTHER INCOME. The Company had Other Income of $9,241 for Fiscal Q1
2000, which is primarily interest income. For the same period during the pro
forma Fiscal Q1 1999, other income was $312.
EXTRAORDINARY ITEM. From May through November 1999 the Company sold
$650,000 of 10% two-year promissory notes. Investors in these notes also
received warrants entitling the holders to purchase an aggregate of 325,000
shares of Company stock at three ($3.00) dollars per share. These warrants were
redeemable upon issuance and expire in 2004. No warrants have been redeemed to
date. The Company valued the warrants at $496,250, which were recorded as a debt
discount, to be amortized over the life of the notes. On January 4, 2000, the
Company retired these promissory notes and recorded a charge of $400,136 for the
unamortized discount as an extraordinary item.
LIQUIDITY AND CAPITAL RESOURCES. Historically, the Company has financed
its operations primarily through a combination of private sales of equity
securities and loans from the Company's executive officers and private
investors. At March 31, 2000 the Company had cash of approximately $989,264. The
Company incurred development stage losses of $3,792,149 from inception through
June 30, 1999. While no longer considered a development stage company at
December 31, 1999, the Company's accumulated deficit as of this date was
$7,195,504. Current assets exceed current liabilities by $1,628,050 at March 31,
2000. In January 2000, the Company completed an offering of its securities,
which commenced during 1999. The Company raised approximately $9,080,000 in
gross proceeds through the sale of stock at $5.00 per share plus warrants for
1/2 share for each share purchased. Of the total raised during this offering,
approximately $7,550,000 was raised and recorded as of December 31, 1999. These
warrants are exercisable over a 5-year term with a strike price of $10.00 per
share. The Company completed a Rule 504 Offering in December of 1998 and raised
approximately $847,000 in gross proceeds through the sale of the Company's
common stock at $2.00 per share. From May through November 1999, the Company
engaged an outside agent to sell up to $700,000 of 10% two-year promissory notes
in anticipation of completing an offering of its securities. These notes were
pre-payable out of any public or private financing resulting in gross proceeds
of at least $5,000,000, or if the Company merged with another company with at
least $5,000,000 in cash. The Company raised a total of $650,000 in gross
proceeds before closing the private placement. Investors in the promissory notes
also received warrants entitling the holder to purchase an aggregate of 325,000
shares of common stock at $3.00 per share. These warrants have a five year life.
The Company repaid the promissory notes from the proceeds of the private
offering completed in January 2000.
The Company's capital requirements primarily relate to acquisitions of
Cable TSI and CAD, working capital and investments in network computer and cable
equipment. In addition, the Company is seeking capital to help facilitate
strategic alliances. For acquisition purposes and for supplemental strategies,
the Company foresees its cash requirements for operations over the next 12
months to be approximately $3,000,000 to $5,000,000. The Company expects to
satisfy this need through proceeds of a debt placement and additional security
placements, if necessary, within the next 6 months. The Company plans to finance
its capital equipment expenditures from a variety of sources, including direct
vendor leasing programs, third party commercial leasing arrangements and bank
financing. The Company is meeting with various sources of capital to satisfy its
capital requirements. However, there can be no assurance that the Company will
be able to obtain such financing on terms acceptable to the Company. The Company
believes if it is able to obtain at least $3,000,000 in financing, it will have
the financial resources necessary to meet its presently anticipated business
requirements for the next 12 months. Nonetheless, depending on the market
conditions, the Company may seek to sell additional equity or debt securities or
obtain alternative credit facilities. The sale of additional equity or debt
securities may result in significant dilution to the existing shareholders.
There is no assurance that the Company will be able to raise such capital on
terms acceptable to the Company, if at all.
YEAR 2000. As of the date of this report, the Company has not
experienced any Year 2000 related problems. The Company had a comprehensive
program (the "Program") to address Year 2000 readiness in its systems and with
its customers' and suppliers' systems. The costs incurred related to the Program
have not been material. The total cost estimate did not include potential costs
related to any customer or other claims or the costs of internal software or
hardware replaced in the normal course of business.
PART II--OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Currently, the Company is not a party to any material Legal Proceedings.
The Company has been served with a complaint from a vendor filed on April 18,
2000 in the Court of Common Pleas, Richland County, South Carolina. The
complaint which demands approximately $18,000 in past due amounts for alleged
services. The Company disputes any services were provided, is investigating the
complaint and has filed a counterclaim. The Company will vigorously pursue its
defense against this claim and its counterclaim.
ITEM 2. CHANGES IN SECURITIES.
During the three-month period ended March 31, 2000, there was no
modification of any instruments defining the rights of holders of the Company's
common stock and no limitation or qualification of the rights evidenced by the
Company's common stock as a result of the issuance of any other class of
securities or the modification thereof.
The Company completed an offering of its securities pursuant to Rule 506
of Regulation D promulgated under the Securities Act of 1933, as amended, to
accredited investors on January 31, 2000. The Company sold 1,816,000 shares of
its common stock at a purchase price of $5.00 per share. The Company realized
net proceeds of $8,172,000. The offering was completed through an underwriter
who was paid a fee of $908,000 representing commission and expenses.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
During the three month period ended March 31, 2000, the Company was not in
default on any senior securities, including long-term debt instruments.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
An annual meeting of the shareholders of the Company was held on January
25, 2000. 5,339,248 shares of the Company's common stock were represented at the
meeting in person or by proxy. The actions taken at that meeting were as
follows:
a) 1999 STOCK OPTION PLAN. The Company's shareholders approved the
Company's 1999 Stock Option Plan by vote taken during the annual meeting of the
shareholders. Votes cast were as follows: 5,339,248 voted in favor of the Plan;
no votes were cast against the Plan; no votes abstained.
b) ELECTION OF DIRECTORS. The Company's shareholders elected three
directors to hold office until the next meeting of the shareholders, or until
their successors have been duly elected and qualified, by vote taken during the
annual meeting of the shareholders. Votes cast were as follows:
<TABLE>
<CAPTION>
For Against Abstained
--------------------------------
<S> <C> <C> <C>
Mark A. Kearney, Esq. 5,339,248 - -
Joseph M. Melanson 5,339,248 - -
Michael F. Mulholland 5,339,248 - -
</TABLE>
c) RATIFICATION AND APPOINTMENT OF INDEPENDENT ACCOUNTANTS.
The Company's shareholders ratified the appointment of Friedman, Alpren
& Green, LLP ("FAG") as the Company's independent accountants. Votes
cast for ratification of FAG were as follows: 5,339,248 voted in favor;
no votes were cast; no votes abstained.
ITEM 5. OTHER INFORMATION
The Company does not have any other material information to report with
respect to the three-month period ended March 31, 2000.
ITEM 6. Exhibits and Reports on Form 8-K
3.1 Articles of Incorporation, as amended*
3.2 Bylaws*
2.0 Sale and Purchase Agreement Cable Systems, TSI**
2.1 Sale and Purchase Agreement CAD Consultants, INC**
8.0 Change in Fiscal Year***
4.0 Change in Registrant's Certifying Accountant****
27. Financial data schedule****
* Incorporated by reference to the Company's Form 10G, filed with the
commission on June 8, 1999.
** Incorporated by reference to the Company's current report on Form 8K as
amended filed with the SEC on January 19, 2000.
*** Incorporated by reference to the Company's current report on Form 8K as
filed with the SEC on February 7, 2000.
**** Incorporated by reference to the Company's current report on Form 8K as
amended filed with the SEC on May 1, 2000.
***** Filed herewith.
<PAGE>
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.
Internet Cable Corporation
(Registrant)
Date: November 20, 2000
/s/ Michael F. Mulholland
--------------------------
Michael F. Mulholland, Chief Executive Officer
Date: November 20, 2000
/s/ William F. Walsh
---------------------
William F. Walsh, Chief Financial Officer
