United States
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB/A
(Amendment No. 1)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from ______________ to ________________
Commission File Number: 0-27067
COMMUNITRONICS OF AMERICA, INC.
(Exact name of small business issuer as
specified in its charter)
Utah 87-0285684
------ ------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
27955 Hwy. 98, Suite WW, Daphne, Alabama 36526
------------------------------------------------
(Address of principal executive offices)
(334) 625-6426
----------------
(Issuer's telephone number)
Not Applicable
----------------
(Former name, former address and former
fiscal year, if changed since last report)
Check whether the issuer: (1) Filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past
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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the last practicable date: 7,922,936 shares.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>
COMMUNITRONICS OF AMERICA, INC.
and Subsidiaries
Table of Contents
Consolidated Balance Sheets 3
Consolidated Statements of Operations 4
Consolidated Statements of Cash Flows 5
Consolidated Statements of Stockholders' Equity 6
Part I
Item 1. Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis or
Plan of Operations 7-11
Part II - Other Information 11
Signature 12
Exhibit 27 13
<PAGE>
COMMUNITRONICS OF AMERICA, INC.
and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31 December 31
2000 1999
(Unaudited) (Audited)
------------- -------------
<S> <C> <C>
Assets
Current assets
Cash $ 3,829 $ 4,943
Accounts receivable - trade 67,125 71,210
Inventory 11,875 40,502
Due from stockholder 5,574 5,574
------------- -------------
Total current assets 88,403 122,229
Property and equipment, at cost, net of
accumulated depreciation 720,509 748,875
Investment in network 336,305 336,305
Prepaid expenses 303,750 303,750
Deposits 4,054 4,054
------------- -------------
$ 1,453,021 $ 1,515,213
============= =============
Liabilities and Stockholders' Equity
Current liabilities
Current maturities of long-term debt $ 100,234 $ 91,083
Accounts payable - trade 265,933 208,659
Payroll and sales taxes payable 8,288 10,383
------------- -------------
Total current liabilities 374,455 310,125
Long-term debt, less current maturities 225,227 226,358
Note payable to stockholder 295,883 296,386
------------- -------------
Total liabilities 895,565 832,869
------------- -------------
Commitments and contingencies
Stockholders' equity
Common stock, $.01 par value; 50,000,000 shares
authorized, 7,922,936 shares issued and outstanding 79,229 79,229
Additional paid-in capital 1,463,562 1,463,562
Accumulated deficit (985,335) (860,447)
------------- -------------
Total stockholders' equity 557,456 682,344
------------- -------------
$ 1,453,021 $ 1,515,213
============= =============
</TABLE>
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<PAGE>
COMMUNITRONICS OF AMERICA, INC.
and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31
2000 1999
------------- -------------
<S> <C> <C>
Revenues $ 213,691 $ 332,391
Less cost of revenues 140,673 165,186
------------- -------------
Gross Profit 73,018 167,205
------------- -------------
Operating expenses
General and administrative 162,139 118,785
Non-recurring expenses - 31,887
Depreciation 29,799 19,378
------------- -------------
Total operating expenses 191,938 170,050
------------- -------------
Operating loss (118,920) 2,845
------------- -------------
Other expenses
Interest 5,968 2,479
------------- -------------
Total other expenses 5,968 34,366
------------- -------------
Net loss $ (124,888) $ (5,324)
============= =============
Net loss per share $ (0.02) $ (0.001)
============= =============
</TABLE>
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<PAGE>
COMMUNITRONICS OF AMERICA, INC.
and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31
2000 1999
------------- -------------
<S> <C> <C>
Operating activities
Net loss $ (124,888) $ (5,324)
------------- -------------
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities
Depreciation 29,799 19,378
Issuance of common stock for services - 303,750
(Increase) decrease in
Accounts receivable 4,085 26,743
Inventory 28,627 (53,780)
Prepaid expenses - (303,750)
Increase (decrease) in
Accounts payable 57,274 80,199
Accrued expenses (2,095) (6,152)
------------- -------------
Total adjustments 117,690 66,388
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Net cash provided by (used in) operating activities (7,198) 61,064
------------- -------------
Investing activities
Purchase of property and equipment (1,433) (147,476)
Acquisition liability - (15,000)
Investment in network - (336,305)
Repayments (loans) of stockholder loans - 40,283
------------- -------------
Net cash used in investing activities (1,433) (458,498)
------------- -------------
Financing activities
Proceeds (repayments) from stockholder loans (503) 218,723
Borrowing of long-term debt 13,800 200,000
Repayments of long-term debt (5,780) (10,283)
------------- -------------
Net cash provided by financing activities 7,517 408,440
------------- -------------
Increase (decrease) in cash (1,114) 11,006
Cash
Beginning of period 4,943 31,865
------------- -------------
End of period $ 3,829 $ 42,871
============= =============
</TABLE>
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<PAGE>
COMMUNITRONICS OF AMERICA, INC.
and Subsidiaries
Consolidated Statements of Stockholders' Equity
For the Three Months Ended March 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
Additional
Common Paid-in Accum. Stockholders'
Stock Capital (Deficit) Equity
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Balance, December 31, 1999 $ 79,229 $ 1,463,562 $ (860,447) $ 682,344
Net loss - - (124,888) (124,888)
------------- ------------- ------------- -------------
Balance, March 31, 2000 $ 79,229 $ 1,463,562 $ (985,335) $ 557,456
------------- ------------- ------------- -------------
</TABLE>
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<PAGE>
Item 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Basis of Presentation:
In the opinion of management, the accompanying financial statements contain
all adjustments (which include only normal recurring adjustments) necessary to
present fairly the balance sheets of Communitronics of America, Inc. and
subsidiaries as of March 31, 2000, and the results of their operations and
their cash flows for the three months ended March 31, 2000 and 1999,
respectively. The financial statements are consolidated to include the
accounts of Communitronics of America, Inc. and its subsidiary companies
(together "the Company").
The accounting policies followed by the Company are set forth in Note 1 to the
Company's consolidated financial statements as stated in its Form 10-KSB for
the year ended December 31, 1999.
Note 2. Income (Loss) Per Common Share:
Income (loss) per common share is based on the weighted average number of
common shares are outstanding during the period.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
You should read the following discussion and analysis of financial condition
and results of operations of Communitronics together with the financial
statements and the notes to the financial statements which appear elsewhere in
this quarterly report and Communitronics's Form 10-KSB for the year ended
December 31, 1999.
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-QSB includes forward-looking statements. We
have based these forward-looking statements on our current expectations and
projections about future events. These forward-looking statements are subject
to risks, uncertainties and assumptions, which include, among other things:
- our need for substantial capital;
- our ability to service debt;
- our history of net operating losses;
- our ability to integrate our various acquisitions;
- the risks associated with our ability to implement our business
strategies;
- the impact of competition and technological developments;
- subscriber turnover;
- litigation and regulatory changes;
- dependence on key suppliers; and
- reliance on key personnel.
Other matters set forth in this Quarterly Report on Form 10-QSB may also cause
actual results to differ materially from those described in the
forward-looking statements. We undertake no obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
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<PAGE>
In light of these risks, uncertainties and assumptions, the forward-looking
events discussed in this Quarterly Report on Form 10-QSB may not occur.
OVERVIEW
The Company is a provider of wireless message paging and information delivery
services. Wireless message paging is comprised of numeric paging that permits
a pager to register the telephone number of the caller to the customer.
Information delivery systems is comprised of both numeric paging and text
messaging services.
The Company has a network of 14 radio towers (one tower is owned by the
Company and 13 towers are leased) to deliver wireless messaging services in
the coastal regions of Alabama, Louisiana, Mississippi and the Florida
panhandle. The Company owns seven Certificates of Public Convenience and
Necessity issued by the Alabama Public Service Commission and 34 frequencies
licensed by the Federal Communications Commission. These certificates and
licenses allow the Company to provide wireless messaging services in these
geographic areas.
The Company supports its operations from its executive offices in Daphne,
Alabama, and from its operation offices located in Foley, Alabama; Metairie,
Louisiana; Gulfport, Mississippi; and Pascagoula, Mississippi.
The geographic areas served by the Company covers approximately 10,000,000
persons. In its markets, the Company presently serves approximately 4,500
subscribers to its message paging and information delivery services at March
31, 2000.
The Company derives the majority of its revenues from fixed, periodic (usually
monthly) fees, generally not dependent on usage, charged to subscribers for
paging services. While a subscriber continues to use the Company's services,
operating results benefit from this recurring revenue stream with minimal
requirements for incremental selling expenses or other fixed costs.
RESULTS OF OPERATIONS
The following table sets forth certain operating information regarding the
Company:
Three Months Ended
March 31
------------ ------------
2000 1999
------------ ------------
(unaudited)
Revenues . . . . . . . . . . . . . . . . . . . . $ 213,691 $ 332,391
Cost of goods sold . . . . . . . . . . . . . . . 140,673 165,186
General and administrative expenses. . . . . . . 162,139 150,672
Depreciation . . . . . . . . . . . . . . . . . . 29,799 19,378
Interest . . . . . . . . . . . . . . . . . . . . 5,968 2,479
------------ ------------
Net loss . . . . . . . . . . . . . . . . . . . . $ (124,888) $ (5,324)
============ ============
Net income (loss) per share. . . . . . . . . . . $ (.02) $ (.001)
The definitions below will be helpful in understanding the discussion of the
Company's results of operations.
- Service, rent and maintenance revenues include primarily monthly,
quarterly, semi-annually and
-8-
<PAGE>
annually billed recurring revenue, not generally dependent on
usage, charged to subscribers for paging and related services such
as voice mail and pager repair and replacement.
- Net revenues include service, rent and maintenance revenues and
sales of pagers less cost of products sold.
- Service, rent and maintenance expenses include costs related to
the management, operation and maintenance of the Company's network
systems and customer support centers.
- General and administrative expenses include executive management,
accounting, office telephone, repairs and maintenance, management
information systems, salaries and employee benefits.
THREE MONTHS ENDED MARCH 31, 2000 COMPARED WITH 1999
Revenues decreased approximately $119,000, or approximately 35.7%, from
$332,000 for the three Total revenues decreased approximately $119,000, or
approximately 35.7%, from the three months ended March 31, 2000 ("2000").
The decrease in revenues was primarily the result of a lack of inventory.
The total number of subscribers decreased by 500 since March 31, 1999. This
decrease was due to normal attrition which was not offset with new pager
sales due to a lack of inventory in 2000 and management's efforts were
concentrated on new filing requirements imposed by the SEC and acquisition
opportunities at that time.
Cost of revenues, which consist of primarily of cost of pagers and service,
rent and maintenance expenses, deceased approximately $24,000, or
approximately 14.8%, from $165,000 in 1999 to $141,000 in 2000. This decrease
was attributable to a reduction in cost of pager sold and telecommunications
expenses. Pagers are classified as inventory when purchased and the cost is
included in cost of product sales when the unit is sold. The Company expects
its service, rent and maintenance expenses to decrease as a percentage of
revenues and per subscriber unit in future periods as it continues to
renegotiate certain of its telecommunications and third party services
contracts and decommissions redundant transmitter and tower sites. The Company
expects such expense savings to be partially offset by an increase in rental
costs for other transmitter and tower sites as the Company enhances its
presence in the Southeastern United States.
General and administrative expenses increased approximately $11,000 from
$151,000 in 1999 to $162,000 in 2000, and increased as a percentage of net
revenues from 55.8% in 1999 to 105.2% in 2000. The increase in general and
administrative expenses is attributable to additional professional and
consulting fees associated with SEC reporting requirements. The increase as a
percentage of net revenues is due to the decrease in revenues for the three
months ended March 31, 2000 due to a decrease in number of customers as
discussed previously.
Depreciation expense increased approximately $10,000 from $20,000 in 1999 to
$30,000 in 2000. The increase in depreciation expense resulted primarily from
depreciation expense on subscriber equipment and other capitalized assets
acquired in 2000 through financing.
Interest expense increased approximately $3,000 from $3,000 in 1999 to $6,000
in 2000. Interest expense increased due to higher average debt balances
outstanding during 2000. Average debt balances were $162,000 greater in 2000
than in 1999 as a result of debt incurred related to capital expenditures and
working capital requirements.
The Company's net loss increased approximately $120,000 from $5000 in 1999 to
$125,000 in 2000. The increase in net loss was primarily the result of the
decrease in subscribers as discussed above and the increase in costs
associated with pursuing and consummating these acquisitions and additional
reporting requirements incurred. The Company expects net losses to decrease
in future periods.
EBITDA means earnings before interest, taxes, depreciation and amortization.
While not a measure under
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<PAGE>
generally accepted accounting principles (GAAP), EBITDA is a standard measure
of financial performance in the paging industry. EBITDA may not be comparable
to similarly titled measures reported by other companies since all companies
do not calculate EBITDA in the same manner. EBITDA should not be considered
in isolation or as an alternative to net income (loss), income (loss) from
operations, cash flows from operating activities, or any other measure of
performance under GAAP. EBITDA as defined by the Company is used in its
acquisition efforts. EBITDA decreased approximately $105,000 from $16,000 in
1999 to $(89,000) in 2000. As a percentage of net revenues, EBITDA decreased
from 6.1% in 1999 to 0.0% in 2000.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
The following summary table (unaudited) presents comparative cash flows of the
Company for the periods indicated.
Three Months Ended
March 31
------------ ------------
2000 1999
------------ ------------
(unaudited)
Net cash provided by (used in)
operating activities $ (7,198) $ 61,064
Net cash used in investing activities (1,433) (458,498)
Net cash provided by financing activities 7,517 408,440
For the three months ended March 31, 2000, the Company's cash used in
operating activities increased by approximately $68,000 from $(61,000) for the
three months ended March 31, 1999 to $7,000 for the three months ended March
31, 2000. The increase in cash used by operating activities was primarily the
result of a net decrease in accounts payable and inventory as of March 31,
2000 compared to March 31, 1999, which net increase was a result of higher
operating expenses between periods.
Net cash used in investing activities decreased approximately $457,00 from
$458,000 for the three months ended March 31, 1999 to $1,000 for the three
months ended March 31, 2000. The decrease in net cash used for investing
activities was primarily the result of a decrease in purchases of property and
equipment and investment in network. Capital expenditures were approximately
$147,000 and $1,000 for the three months ended March 31, 1999 and 2000,
respectively. Capital expenditures for the three months ended March 31, 1999
included approximately $130,000 for transmitter and switch equipment. The
balance of capital expenditures was primarily for network construction and
development and information systems and computer related equipment.
Net cash provided by financing activities decreased approximately $400,000
from $408,000 for the three months ended March 31, 1999 to $8,000 for the
three months ended March 31, 2000. The decrease was primarily the result of no
long-term debt or stockholder loans acquired in 2000.
Long-Term Debt
Borrowings and repayments from banks. During the three months ended March 31,
1999, the Company increased its borrowings from banks by $200,000 from March
31, 1998. However, the Company only increased the amount of borrowings from
banks in the three months ended March 31, 2000 by $13,800. The borrowings
were used to purchase equipment. At March 31, 2000, $325,000 was outstanding
to various banks.
Stockholder note. During the three months ended March 31, 2000, the Company
received a stockholder note
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<PAGE>
totaling $19,500 which bears interest at 8.00%. There is also a stockholder
note outstanding from the three months ended March 31, 1999 which requires a
monthly payment of $1,609 through November 2003 and a final balloon payment of
outstanding principal due in December 2003. Additional principal payments will
be made as cash flow becomes available. At March 31, 2000, there was $296,000
outstanding on stockholder notes.
Access to Future Capital
The Company's ability to access borrowings and generate investments in the
company and to meet its debt service and other obligations will be dependent
upon its future performance and its cash flows from operations, which will be
subject to financial, business and other factors, certain of which are beyond
the Company's control, such as prevailing economic conditions. The Company
cannot assure you that, in the event it was to require additional financing,
such additional financing would be available on terms permitted by agreements
relating to existing indebtedness or otherwise satisfactory to it. The Company
believes that funds generated by its operations, together with those available
under its credit facility, will be sufficient to finance estimated capital
expenditure requirements and to fund its existing operations for the
foreseeable future.
PART II - OTHER INFORMATION
Item l. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of the security holders of the Company
during its quarter ended March 31, 2000.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits Required by Item 601 of Regulation S-K.
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
--------- ---------------------
27 Financial data schedule.
(b) Reports on Form 8-K
None
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Amendment to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: Communitronics of America, Inc.
December 12, 2000 By: /s/ David R. Pressler
-------------------- ---------------------------
David R. Pressler
President, Chief Executive Officer and
Principal Financial Officer
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