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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended - February 29, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _______________ to _______________
Commission File Number: 000-27773
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CALLMATE TELECOM INTERNATIONAL, INC.
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(Exact name of small business issuer as specified in its charter)
Florida 59-313-4518
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1 Wilton Street, Bradford, BD5 OAX, United Kingdom
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(Address of principal executive offices)
011 44 1274 301 500
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(Issuer's telephone number)
ZEE, INC.
---------
(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
12, 13 or 15 (d) of the Exchange Act during the past 12 months (or 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 ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes ______ No ______
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of April 17, 2000: 14,200,000 ordinary shares, $ .001 par value.
Transitional Small Business Disclosure Format (check one) Yes ____ No X
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FORM 10-QSB
CALLMATE TELECOM INTERNATIONAL, INC.
TABLE OF CONTENTS
PAGE
PART I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheet as of February 29, 2000 (Unaudited)...... 2
Consolidated Statements of Operations for the Three and Six Months
Ended February 29, 2000 and February 28, 1999 (Unaudited)....... 3
Consolidated Statement of Changes in Stockholders' Deficit for
the Six Months Ended February 29, 2000 (Unaudited).............. 4
Consolidated Statement of Cash Flows for the Six Months Ended
February 29, 2000 and February 28, 1999 (Unaudited)............. 5
Notes to Consolidated Financial Statements.......................... 6
Item 2 Management's Discussion and Analysis
or Plan of Operation................................................ 7
PART II. Other Information.......................................... 12
Item 1. Legal Proceedings.
Item 6. Exhibits and Reports on Form 8-K
Signatures........................................................... 13
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PART I
Item 1. Financial Statements
Callmate Telecom International, Inc.
Consolidated Financial Statements
Six Months Ended February 29, 2000
and February 28, 1999 (Unaudited)
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<PAGE>
Callmate Telecom International, Inc.
Consolidated Balance Sheet
February 29, 2000
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 1,468,405
Cash held in trust accounts 944,743
Restricted cash and cash equivalents 157,800
Accounts receivable, trade 590,752
Accounts receivable, related parties 9,694
Prepaid expenses and other current assets 961,569
-----------
Total current assets 4,132,963
Property and equipment, net of accumulated depreciation 1,497,163
-----------
Other assets
Investments 195,000
Other 511,855
-----------
Total Other Assets 706,855
-----------
$ 6,336,981
===========
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable $ 5,304,082
Accounts payable, related party 396,004
Advances from stockholders 803,610
Accrued expenses 29,077
Deferred revenue 505,076
-----------
Total current liabilities 7,037,849
-----------
Stockholders' deficit:
Common stock; $.001 par value; 50,000,000
shares authorized; 14,200,000 shares issued and
outstanding 14,200
Additional paid-in capital 846,800
Accumulated deficit (1,575,217)
Accumulated other comprehensive income 13,349
-----------
Total stockholders' deficit (700,868)
-----------
$ 6,336,981
===========
The accompanying notes are an integral part of
the consolidated financial statements.
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Callmate Telecom International, Inc.
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
February 29, February 28, February 29, February 28
---------------------------------------------------------------
<S> <C> <C> <C> <C>
2000 1999 2000 1999
---------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues $ 4,032,982 $3,931,227 $6,534,992 $8,355,333
Cost of revenues 3,850,344 3,215,271 5,527,643 6,835,518
----------- ----------- ----------- -----------
182,638 715,956 1,007,349 1,519,815
Selling, general and administrative
expense 617,097 784,471 1,311,606 1,281,726
----------- ----------- ----------- -----------
Loss from operations (434,459) (68,515) (304,257) 238,089
----------- ----------- ----------- -----------
Other income:
Other 5,941 23,167
----------- ----------- ----------- -----------
Net (loss) income $ (428,518) $ (68,515) $ (281,091) $ 238,089
=========== =========== =========== ===========
Basic and diluted earnings (loss)
per share $(.03) $(.01) $(.02) $ .02
=========== =========== =========== ===========
Weighted average number of
common shares used in basic
and diluted earnings (loss) per
share computation 14,200,000 12,558,025 14,200,000 11,907,305
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of
the consolidated financial statements.
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Callmate Telecom International, Inc.
Consolidated Statements of Changes in Stockholders' Deficit
Six Months Ended February 29, 2000 (Unaudited)
<TABLE>
<CAPTION>
Accumulated
Additional Other
Common Stock Paid-In Accumulated Comprehensive
Shares Amount Capital Deficit Income
------ ------ ------- ------- ------
<S> <C> <C> <C> <C> <C>
Balance, August 31, 1999 14,200,000 $ 14,200 $ 846,800 $ (1,294,127) $ 30,960
Foreign currency
translation adjustment
(unaudited) (17,611)
Net loss for the period
(unaudited) (281,090)
---------
Balance, February 29,
2000 (unaudited) 14,200,000 $ 14,200 $ 846,800 $ (1,575,217) $ 13,349
========== ======== ========= ============= ========
</TABLE>
The accompanying notes are an integral part of
the consolidated financial statements.
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Callmate Telecom International, Inc.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Six Months Ended
----------------------------
February 29, February 28,
------------- -------------
<S> <C> <C>
2000 1999
---------- ------------
(Unaudited) (Unaudited)
Operating activities
Net (loss) income $ (281,090) $ 238,089
---------- ------------
Adjustments to reconcile net (loss) income to net cash
used by operating activities:
Depreciation 137,288 47,759
Foreign currency translation adjustment (17,611) 15,591
Increase in:
Cash held in trust 938,143
Accounts receivable 343,942 (1,476,835)
Other receivables, related parties 54,358 38,420
Other assets (89,460) (267,255)
Increase (decrease) in:
Accounts payable (583,380) 2,813,344
Accounts payable, related parties 396,004 (23,706)
Accrued expenses (45,353) (191,905)
Deferred income (250,198) (336,438)
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Total adjustments 883,733 618,975
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Net cash provided by operating activities 602,643 857,064
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Investing activities
Change in restricted cash 3,066 3,220
Deposit on stock purchase and exchange agreement (500,000)
Purchase of investments (195,000)
Acquisition of property and equipment (357,171) (396,283)
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Net cash used by investing activities (1,049,105) (393,063)
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Financing activities
Proceeds from stockholder advances 1,249,875
Repayments on stockholder advances (1,500,000)
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Net cash used by financing activities (250,125)
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Net (decrease) increase in cash (696,587) 464,001
Cash, beginning of period 2,164,992 1,013,506
---------- ----------
Cash, end of period $1,468,405 $ 1,447,507
========== ============
</TABLE>
The accompanying notes are an integral part of
the consolidated financial statements.
Supplemental disclosure of non-cash financing activities:
In November 1998, the company issued 1,500,000 shares of common stock
valued at $150,000 for offering costs in connection with a private
placement offering.
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Callmate Telecom International, Inc.
Notes to Consolidated Financial Statements
Six Months Ended February 29, 2000 and February 28, 1999 (Unaudited)
1. Financial Statements
In the opinion of management, all adjustments consisting only of normal
recurring adjustments necessary for a fair statement of (a) the results of
operations for the three- and six-month periods ended February 29, 2000 and
February 28, 1999, (b) the financial position at February 29, 2000, and (c) cash
flows for the six-month periods ended February 29, 2000 and February 28, 1999,
have been made.
The unaudited consolidated financial statements and notes are presented as
permitted by Form 10-QSB. Accordingly, certain information and note disclosures
normally included in consolidated financial statements prepared in accordance
with generally accepted accounting principles have been omitted. The
accompanying consolidated financial statements should be read in conjunction
with the audited consolidated financial statements of the Company for the fiscal
year ended August 31, 1999. The results of operations for the three- and six-
month periods ended February 29, 2000 and February 28, 1999 are not necessarily
indicative of those to be expected for the entire year.
2. Correction of Errors
Certain errors resulting in an overstatement of $1,347,000 of previously
reported cash and stockholder advances as of February 29, 2000 were discovered
by management of the Company during the current year. The $1,347,000 decrease
to cash and stockholder advances are properly reflected in the accompanying
consolidated financial statements. In addition, minority interest was stated at
$25,573 as of February 29, 2000. A correction to reduce minority interest to
zero effectively increased net loss to $428,518 for the period ended February
29, 2000. Investments at February 29, 2000 were understated by $195,000 for a
25 percent investment in Infonet Systems and a 50 percent investment in Telenet
Communications Limited. The effect to increase investments and reduce cash is
properly reflected. There was no impact to the earnings per share numbers
previously reported. Accordingly, the February 29, 2000 consolidated financial
statements have been restated to correct the errors.
3. Contingencies
The Company is currently the plaintiff in a lawsuit filed against a former
employee. The lawsuit, entitled Callmate Telecom International, Inc. vs. Selwyn
Wilson, filed by the Company with the County Court Circular, alleges that the
former employee embezzled an unspecified amount from the Company in March
through May 1999. The trial date is scheduled for May 22, 2000. The outcome of
the lawsuit is uncertain.
4. Acquisition of Investments
During the six-month period ended February 29, 2000, the Company purchased
a 25 percent investment in Infonet Financials. The Company also acquired a 50
percent investment in Telenet Communications Limited. These investments are
being accounted for under the equity method of accounting.
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Item 2. Management's Discussion and Analysis or Plan of Operation
The following discussion contains forward-looking statements and projections.
Because these forward-looking statements and projections are based on a number
of assumptions and are subject to significant uncertainties and contingencies,
many of which are beyond the Callmate's control, there is no assurance that they
will be realized, and actual results may vary significantly from those shown.
Callmate Telecom International, Inc. cautions readers that in addition to
important factors described elsewhere, the following important facts, among
others, sometimes have affected, and in the future could affect, the Company's
actual results, and could cause the Company's actual results during 2000 and
beyond, to differ materially from those expressed in any forward-looking
statements made by, or on behalf of, Callmate Telecom International, Inc.
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<PAGE>
INCOME STATEMENT DATA
Three Months Ended Six Months Ended
--------------------------- ---------------------------
February 29, February 28, February 29, February 28,
2000 1999 2000 1999
--------------------------- ---------------------------
Total revenue $ 4,032,982 $ 3,391,227 $ 6,534,992 $ 8,355,333
=========================== ===========================
Net (loss) income $ (428,518) $ (68,515) $ (281,090) $ 238,089
=========================== ===========================
(Loss) earnings per
common share -
basic and diluted $(.03) $(.01) $(.02) $.02
=========================== ===========================
Shares used in per
share computation 14,200,000 12,558,025 14,200,000 11,907,305
=========================== ===========================
BALANCE SHEET DATA
February 29,
2000
------------
Total assets $ 6,336,981
============
Working capital $(2,904,886)
============
Long-term debt $ 0
============
Stockholders' deficit $ (700,868)
============
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<PAGE>
RESULTS OF OPERATIONS
Revenues
--------
Revenues for the three-month period ended February 29, 2000 totaled $4,032,982,
an increase of three percent from the $3,931,227 of revenues for the comparable
period in 1999. This increase is attributable to a reduced pricing policy on
airtime sold.
Revenues for the six-month period ended February 29, 2000 totaled $6,534,992, a
22 percent decrease over the $8,355,333 of revenues for the comparable period in
1999. Much of this decrease is attributable to a wider variety of products for
sale in the comparable period. These included home use, cards, and wholesale.
Currently, the majority of sales are home use.
Cost of Sales
-------------
For the three months ended February 29, 2000, the cost of sales increased to
$3,850,344 from the $3,215,271 of costs for the three months ended February 28,
1999. This increase is mainly due to the reduced pricing policy over the
three-month period, which resulted in increased revenues at a lower margin.
Gross profit margin decreased 13 percent for the three months ended February 29,
2000 to a gross profit margin of five percent from an overall gross profit
margin of 18 percent for the three months ended February 28, 1999. This is
principally attributable to the pricing policy for the three months to February
2000. The low margin policy reduced home account margins in the period. In
conjunction with this effect in the previous period, cards and wholesale
products were a greater proportion of the sales mix. Both cards and wholesale
products operate at a higher margin.
For the six months ended February 29, 2000, the costs of sales decreased to
$5,527,643 from the $6,835,518 of costs for the six months ended February 28,
1999. This decrease is mainly due to the reduction in the volume of certain sale
products offered. Sales have been geared toward home accounts in the period and
the availability of cards and wholesale products has been restricted. This
policy has reduced the related costs of sales since sales have reduced.
Operating Expense
-----------------
Operating expenses for the three months ended February 29, 2000 were $617,097 as
compared to $784,741 for the similar period last year. This 21 percent reduction
of operating expenses is principally attributable to advertising and printing
expenses in excess of $150,000 incurred in the comparable prior period when the
Company undertook a large advertising campaign.
Operating expenses for the six months ended February 29, 2000 were $1,311,606,
or 20 percent of net sales. For the comparable period in 1999, operating costs
amounted to $1,281,726, or 15 percent of net sales. The five percent increase is
due to the advertising campaign undertaken during the period.
Income Taxes
------------
Due to the Company's history of operating losses, management has established a
valuation allowance in the full amount of the deferred tax assets arising from
these losses because management believes it is more likely than not that the
Company will not generate sufficient taxable income within the appropriate
period to offset these operating loss carryforwards.
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<PAGE>
Net Income
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Net loss for the three months ended February 29, 2000 is $428,518 as compared to
a net loss of $68,515 for the three months ended February 28, 1999. This
increase in the net loss is principally attributable to the reduced pricing
policy in respect to airtime charges on home accounts during the period, which
resulted in a lower margin.
Net loss for the six months ended February 29, 2000 amounted to $281,090, as
compared to net income of $238,089 for the comparable period in 1999. The
decrease in income is primarily a result of a reduction in turnover to
concentrate on the home account sales and a low margin pricing policy in the
six months to February 29, 2000.
Earnings Per Share
------------------
For the three months ended February 29, 2000, basic and diluted loss per share
amounted to $(.03). For the comparable period in 1999, basic and diluted
loss per share amounted to $(.01). The increase in loss per share is due
principally to the increase in net loss of $360,003.
For the six months ended February 29, 2000, basic and diluted loss per share
amounted to $(.02). For the comparable period in 1999, basic and diluted
earnings per share amounted to $.02. This turnaround is due to the decrease in
income to a loss of $281,090 for the six months ended February 29, 2000 from
income of $238,089 for the six months ended February 28, 1999.
LIQUIDITY AND CAPITAL RESOURCES
Operating Activities
--------------------
For the six months ended February 29, 2000, net cash provided by operating
activities amounted to approximately $602,643, a decrease from the net cash
provided by operating activities of $857,064 for the comparable period in 1999.
The decrease in cash provided is primarily a result of a reduction in margins
and turnover in comparison to the comparable period.
Investment Activities
---------------------
The Company's investment activities include equipment purchases, deposits for
stock purchases, and net changes in restricted cash.
Net cash used by investing activities for the six months ended February 29, 2000
was approximately $1,649,105 as compared to net cash used by investing
activities of approximately $393,063 for the comparable period in 1999. The
increase in cash expended for investing activities is due primarily to a deposit
of $500,000 for an exchange and stock purchase agreement in October 1999 along
with acquisition of investments of $195,000 during the six months ended February
29, 2000.
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Financing Activities
--------------------
The Company's financing activities include proceeds from stockholder advances.
Net cash of $250,125 was used by financing activities for the six months ended
February 29, 2000, as compared to no net cash provided by financing activities
for the six months ended February 28, 1999. The increase in cash used by
financing activities results from repayments on stockholder advances.
CAPITAL RESOURCES
At February 29, 2000, the Company does not have any material commitments for
capital expenditures other than for those expenditures incurred in the ordinary
course of business.
The Company believes that its current operations and cash balances will be
sufficient to satisfy its currently anticipated cash requirements for the next
12 months. However, additional capital could be required in excess of the
Company's liquidity, requiring it to raise additional capital through an equity
offering, secured or unsecured debt financing. The availability of additional
capital resources will depend on prevailing market conditions, interest rates,
and the existing financial position and results of operations of the Company.
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PART II. OTHER INFORMATION
Item 2. Legal Proceedings.
The Company is currently the plaintiff in a lawsuit filed against a
former employee. The lawsuit, entitled Callmate Telecom International,
Inc. vs. Selwyn Wilson, filed by the Company with the County Court
Circular, alleges that the former employee embezzled an unspecified
amount from the Company in March through June 1999. The trial date is
scheduled for May 22, 2000. The outcome of the lawsuit is uncertain.
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
Exhibit Description
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27 Financial Data Schedule
B. Reports on Form 8-K
1. March 31, 2000, Current Report of Registrant reporting a
change in control. No financial statements were filed as
part of this report.
2. April 5, 2000, Current Report of Registrant reporting
parent/subsidiary merger of Zee, Inc. with and into
Callmate Telecom International, Inc. Audited financial
statements of Callmate for the fiscal years ended August
31, 1998 and 1999 and the unaudited interim period ended
November 1999 were filed as part of this report. In
addition, pro forma financial statements reflecting the
combined financial statements of Callmate and Zee, Inc.
at November 1999 were also filed as part of this report.
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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.
CALLMATE TELECOM INTERNATIONAL. INC.
By: /s/ Mahmoud Hashmi
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Mahmoud Hashmi
Chief Executive Officer
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