UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ________________ to _______________
000-29743
(Commission file number)
TEL-VOICE COMMUNICATIONS, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 88-0409143
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
7373 East Doubletree Ranch Road, Suite 200,
Scottsdale, AZ 85258
(Address of principal executive offices)
(480) 368-8080
(Issuer's telephone number)
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 December 7, 2000 - 5,507,895 shares of Common Stock
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>
TEL-VOICE COMMUNICATIONS, INC.
Index
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed Consolidated Balance Sheet as of September 30, 2000 2
Condensed Consolidated Statements of Operations for
the three months ended September 30, 2000 and 1999 3
Condensed Consolidated Statements of Operations for
the nine months ended September 30, 2000 and 1999 4
Condensed Consolidated Statements of Cash Flows for
the nine months ended September 30, 2000 and 1999 5-6
Notes to Condensed Consolidated Financial Statements 7-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-10
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Change in Securities and Use of Proceeds 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
Part III. EXHIBITS
1
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
TEL-VOICE COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2000
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 2,513
---------------
Total current assets $ 2,513
===============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 43,564
Shareholder advances 119,466
Notes payable 20,000
---------------
Total current liabilities 183,030
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIENCY
Common Stock, $.001 par value, 75,000,000 shares
authorized, 5,507,895 shares issued and outstanding 5,508
Additional paid-in capital 251,742
Accumulated deficit (437,767)
----------------
Total stockholders' deficiency (180,517)
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIENCY $ 2,513
===============
See the accompanying notes to the consolidated financial statements
2
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TEL-VOICE COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
2000 1999
--------------- ---------------
2000 1999
--------------- ---------------
REVENUE $ 45,000 $ 16,000
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 102,176 68,518
--------------- ---------------
INCOME FROM OPERATIONS (57,176) (52,518)
INTEREST EXPENSE 1,033 -
--------------- ---------------
INCOME BEFORE INCOME TAXES (56,143) (52,518)
INCOME TAXES - -
--------------- ---------------
NET LOSS $ (56,143) $ (52,518)
================ ================
BASIC AND DILUTED LOSS PER SHARE $ (0.01) $ (0.01)
=============== ===============
WEIGHTED AVERAGE SHARES
OUTSTANDING - BASIC AND DILUTED 5,504,199 4,000,000
=============== ===============
See the accompanying notes to the consolidated financial statements
3
<PAGE>
TEL-VOICE COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
2000 1999
--------------- ----------------
REVENUE $ 135,000 $ 66,000
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 320,095 272,409
--------------- ----------------
LOSS FROM OPERATIONS (185,095) (206,409)
INTEREST EXPENSE 1,486 -
--------------- ----------------
LOSS BEFORE INCOME TAXES (186,581) (206,409)
INCOME TAXES - -
--------------- ----------------
NET LOSS $ (186,581) $ (206,409)
================ ================
BASIC AND DILUTED LOSS PER SHARE $ (0.04) $ (0.05)
=============== ================
WEIGHTED AVERAGE SHARES
OUTSTANDING - BASIC AND DILUTED 4,894,786 4,000,000
=============== ================
See the accompanying notes to the consolidated financial statements
4
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<TABLE>
<CAPTION>
TEL-VOICE COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
2000 1999
--------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (186,581) $ (206,409)
Adjustments to reconcile net loss
to net cash used in operating activities:
Stock issued for services rendered 58,250 -
(Increase) decrease in:
Accounts receivable - 61,200
Prepaid assets - -
Increase (decrease) in:
Accounts payable and accrued expenses 34,560 (6,281)
--------------- -----------------
Net cash used in operating activities (93,771) (151,490)
---------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of public shell (150,000) -
---------------- ----------------
Net cash used in investing activities (150,000) -
---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances from stockholder, net (81,140) 151,490
Proceeds from notes payable 27,500 -
Repayment of notes payable (7,500) -
Proceeds from sale of common stock 305,000 -
--------------- ----------------
Net cash provided by financing activities 243,860 151,490
--------------- ----------------
NET INCREASE IN CASH
AND CASH EQUIVALENTS 89 -
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD 2,424 -
--------------- ---------------
CASH AND CASH EQUIVALENTS -
END OF PERIOD $ 2,513 $ -
=============== ================
</TABLE>
See the accompanying notes to the consolidated financial statements
5
<PAGE>
TEL-VOICE COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
During the nine months ended September 30, 2000 and 1999, the Company paid no
income taxes and $304 in interest.
NON CASH INVESTING AND FINANCING TRANSCATIONS:
During the three months ended September 30, 2000, the Company issued 233,000
shares of common stock in consideration for consulting services of $58,250.
See the accompanying notes to the consolidated financial statements
6
<PAGE>
TEL-VOICE COMMUNICATIONS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The unaudited Condensed Consolidated Financial Statements have been prepared by
Tel-Voice Communications, Inc. (the "Company"), pursuant to the rules and
regulations of the Securities and Exchange Commission. The information furnished
herein reflects all adjustments (consisting of normal recurring accruals and
adjustments) which are, in the opinion of management, necessary to fairly
present the operating results for the respective periods. Certain information
and footnote disclosures normally present in annual consolidated financial
statements prepared in accordance with generally accepted accounting principles
have been omitted pursuant to such rules and regulations. The results of the
nine months ended September 30, 2000 are not necessarily indicative of the
results to be expected for the full year ending December 31, 2000.
On June 30, 2000 the Company entered into a Stock Purchase Agreement and Plan of
Reorganization with Smartdotcom, Inc. ("SDC"), a Nevada corporation whereby the
Company acquired 100% of the issued and outstanding share of common stock of
SDC. This transaction was approved by the unanimous consent of the Board of
Directors of the Company. For accounting purposes this transaction is being
accounted for as a reverse merger as the stockholders of SDC own a majority of
issued and outstanding shares of common stock of the Company and the management
team of SDC will hold a majority of the management positions of the Company and
will appoint a majority of Board of Directors. The historical financial
information presented in this Form 10QSB are those of SDC.
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of the
Company as a going concern. However, the Company has no established source of
revenue. This factor raises substantial doubt about the Company's ability to
continue as a going concern. Without realization of additional capital, it would
be unlikely for the Company to continue as a going concern. The financial
statements do not include any adjustments relating to the recoverability and
classification of recorded asset amount, or amounts and classification of
liabilities that might be necessary should the Company be unable to continue in
existence. It is management's objective to seek additional capital through a
private placement offering.
7
<PAGE>
TEL-VOICE COMMUNICATIONS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 2 - EARNINGS PER SHARE
In 1997, the Financial Accounting Standard Board ("FASB") issued Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share." SFAS No.
128 replaced the previously reported primary and fully diluted earnings per
share with basic and diluted earnings per share. Unlike primary earnings per
share, basic earnings per share excludes any dilutive effects of options,
warrants, and convertible securities. Diluted earnings per share is very similar
to the previously reported fully diluted earnings per share. Basic earnings per
share is computed using the weighted-average number of common shares outstanding
during the period. Common equivalent shares are excluded from the computation if
their effect is anti-dilutive. There are no common stock equivalents.
NOTE 3 - STOCKHOLDERS EQUITY
In June 2000, the Company issued three unsecured notes payable totaling $27,500
that bear interest at 18% per annum of which $7,500 was repaid in August 2000.
The notes are callable on demand. In connection with these notes the Company
issued 11,000 warrants to purchase the Company's common stock at $0.75 per
share.
NOTE 4 - STOCKHOLDERS EQUITY
During the nine months ended September 30, 2000, the Company sold 720,000 shares
of its common stock for gross proceeds of $300,000. In addition the Company
issued 233,000 of its common stock for services rendered valued at $58,250 and
issued 374,895 shares of its common stock in connection with the reverse merger
discussed in Note 1.
The Company adopted an employee stock option program to attract and retain key
employees. The stock option plan contains 1,000,000 shares of which 433,000 have
been issued.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Overview
--------
We are the first all-inclusive telecom, video, Internet, entertainment and
security provider. We are in the business of enhancing the lives of our
subscribers, who benefit from the added value of high-quality services and a
fully integrated system made available by a single company. Subscribers are
afforded the luxury of accessing these services using state-of-the-art
technology that includes hardware, software and network connectivity.
Consequently, we provide market penetration and incremental revenue for our
alliance partners. Multinational Fortune 500 companies, in conjunction with a
select project management team, provide our operations and on-site service. Our
door-to-door service and warrantee repair will be unsurpassed by any other
companies offering similar services. Our financial model is predicated on
transaction revenue and subscriber fees. In fact, only minimal cash flow is
actually generated through consumer-direct equipment sales.
We, since its inception, have incurred net losses of $437,767. We may be unable
to continue in existence unless we are able to arrange additional financing to
supplement our recent sale of common stock. We still continue to incur costs
associated with the development of our technology and implementation of our
business plan.
Plan of Operation
-----------------
Our management team includes experts in the fields of telecommunications,
technology, Internet protocols, interactive programming, marketing, and finance.
Our senior executives are experienced in managing virtual companies, and have
many successes to their collective credit. One of our goals is to keep our staff
count to a minimum by using contract labor and consultants. We believe that our
structure positively influences performance and nurtures the strengths of our
management team and support staff.
Our offering to our subscribers will include voice and video services that are
unparalleled in today's marketplace. In keeping with the philosophies that serve
as our foundation, telephone and television offerings will be consolidated.
Without compromising simple dial tone and cable access, one company with one
vision can deliver all the telephony and video capabilities a home or office
would need on an easy-to-use, yet high-tech, platform. This vision will be
carried out via the SmartFone and SmartCable services. We feature satellite
quality and content using a standard cable connection. "Open" channels can be
used to offer special education and craft-related content to our subscribers,
and no reception dish is needed. We are the "cable company". As such, we can
introduce content that is friendly to our markets, and revenue generating for
our partners and us. With the near limitless capabilities of the SmartFone, Our
telecommunications offerings can be as varied as the particular market demands.
Our future is based on our inventory of intellectual property, and the ability
to implement the tangible end products. The patent and copyright processes that
establish our designs as proprietary are continuously factored into our
financial projections and cash flow summary. There are no licenses required.
9
<PAGE>
Results of Operations
---------------------
Three months ended September 30, 2000 vs. September 30, 1999
Revenue for the three months ended September 30, 2000 increased by $29,000 from
$16,000 for the three months ended September 30, 1999 to $45,000 for the same
period in 2000. The revenue represents consulting fees received from a project
in La Jolla, CA where we are implementing our intranet technology.
Selling general and administrative expenses for the three months ended September
30, 2000 increased by $33,658 from $68,518 for the three months ended September
30, 1999 to $102,176 for the same period in 2000. The increase is principally
due to an increase in salary expense and cost associated with being a public
company.
Nine months ended September 30, 2000 vs. September 30, 1999
Revenue for the nine months ended September 30, 2000 increased by $69,000 from
$66,000 for the nine months ended September 30, 1999 to $135,000 for the same
period in 2000. The revenue represents consulting fees received from a project
in La Jolla, CA where we are implementing our intranet technology.
Selling general and administrative expenses for the nine months ended September
30, 2000 increased by $47,686 from $272,409 for the nine months ended September
30, 1999 to $320,095 for the same period in 2000. The increase is principally
due to $58,250 in consulting fees related to stock given to a consultant for
services.
Forward looking statements
This report contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Stockholders are cautioned that all
forward-looking statements involve risks and uncertainty, including without
limitation, the ability of us develop our technology and execute our business
plan. Although we believe the assumptions underlying the forward-looking
statements contained herein are reasonable, any of the assumptions could be
inaccurate, and therefore, there can be no assurance that the forward-looking
statements contained in the report will prove to be accurate.
10
<PAGE>
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Change 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
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 - Financial Data Schedule
(b) Reports on Form 8-K
None
11
<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.
TEL-VOICE COMMUNICATIONS, INC.
By: /s/ Jay Budd
--------------------------
Jay Budd
Chief Executive Officer
Date: December 11, 2000
12
