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 June 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)
16133 Ventura Boulevard, Suite 635, Encino, CA 91436
(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 August 14, 2000 - 5,497,895 shares of Common Stock
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>
TEL-VOICE COMMUNICATIONS, INC.
(A Development Stage Company)
Index
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheet as of June 30, 2000 2
Condensed Consolidated Statements of Operations for
the three months ended June 30, 2000 and 1999 3
Condensed Consolidated Statements of Operations for
the six months ended June 30, 2000 and 1999 and from
inception (April 19, 1999) to June 30, 2000 4
Condensed Consolidated Statements of Cash Flows for the
six months ended June 30, 2000 and 1999 and from
inception (April 19, 1999) to June 30, 2000 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 10
Item 2. Change in Securities and Use of Proceeds 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
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
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
JUNE 30, 2000
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 15,360
Stock subscription receivable 15,000
Prepaid expenses 49,123
---------------
Total current assets $ 79,483
===============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 16,623
Accrued expenses 1,505
Shareholder advances 103,208
Notes payable 27,500
---------------
Total current liabilities 148,836
---------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT
Common Stock, $.001 par value, 75,000,000 shares
authorized, 5,497,895 shares issued and outstanding 5,498
Additional paid-in capital 421,476
Deficit accumulated during development stage (496,327)
----------------
Total stockholders' deficit (69,353)
----------------
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIT $ 79,483
===============
See the accompanying notes to the consolidated financial statements
2
<PAGE>
TEL-VOICE COMMUNICATIONS, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND 1999
(Unaudited)
2000 1999
--------------- ---------------
REVENUE $ - $ -
COST OF REVENUE - -
--------------- ---------------
GROSS PROFIT - -
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 95,864 182,732
--------------- ---------------
LOSS FROM OPERATIONS (95,864) (182,732)
INTEREST EXPENSE 1,809 -
--------------- ---------------
LOSS BEFORE INCOME TAXES (97,673) (182,732)
INCOME TAXES - -
--------------- ---------------
NET LOSS $ (97,673) $ (182,732)
================ ================
BASIC AND DILUTED LOSS PER SHARE $ (0.02) $ (0.05)
=============== ================
WEIGHTED AVERAGE SHARES
OUTSTANDING - BASIC AND DILUTED 4,787,307 4,000,000
=============== ================
See the accompanying notes to the consolidated financial statements
3
<PAGE>
<TABLE>
<CAPTION>
TEL-VOICE COMMUNICATIONS, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
AND FROM INCEPTION (APRIL 19, 2000) TO JUNE 30, 2000
(Unaudited)
Inception to Six Months Ended June 30,
June 30 ----------------------------
2000 2000 1999
-------------- ------------- --------------
<S> <C> <C> <C>
REVENUE $ - $ - $ -
COST OF REVENUE - - -
-------------- ------------- --------------
GROSS PROFIT - - -
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 494,518 127,510 182,732
-------------- ------------- --------------
LOSS FROM OPERATIONS (494,518) (127,510) (182,732)
INTEREST EXPENSE 1,809 1,809 -
-------------- ------------- --------------
LOSS BEFORE INCOME TAXES (496,327) (129,319) (182,732)
INCOME TAXES - - -
------------- ------------- --------------
NET LOSS $ (496,327) $ (129,319) $ (182,732)
=============== ============== ===============
BASIC AND DILUTED LOSS PER SHARE $ (0.12) $ (0.03) $ (0.05)
============= ============= ===============
WEIGHTED AVERAGE SHARES
OUTSTANDING - BASIC AND DILUTED 4,262,865 4,586,730 4,000,000
============== ============= ==============
</TABLE>
See the accompanying notes to the consolidated financial statements
4
<PAGE>
<TABLE>
<CAPTION>
TEL-VOICE COMMUNICATIONS, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
AND FROM INCEPTION (APRIL 19, 2000) TO JUNE 30, 2000
(Unaudited)
Inception to
June 30, Six Months Ended June 30,
------------- --------------------------
2000 2000 1999
------------ ----------- ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (496,327) $ (129,319) $ (182,732)
Adjustments to reconcile net loss
to net cash used in operating activities:
Stock issued for services rendered 239,474 58,250 181,224
(Increase) decrease in:
Prepaid assets (49,123) (49,123) -
Increase (decrease) in:
Accounts payable and accrued expenses 18,128 18,128 -
------------ ----------- ------------
Net cash used in operating activities (287,848) (102,064) (1,508)
------------ ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of public shell (150,000) (150,000) -
------------ ----------- ------------
Net cash used in investing activities (150,000) (150,000) -
------------ ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances from stockholder, net 103,208 (45,000) 1,508
Proceeds from notes payable 27,500 27,500 -
Proceeds from sale of common stock 322,500 282,500 -
------------ ----------- ------------
Net cash provided by financing activities 453,208 265,000 1,508
------------ ----------- ------------
NET INCREASE IN CASH
AND CASH EQUIVALENTS - 12,936 -
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD 15,360 2,424 -
------------ ----------- ------------
CASH AND CASH EQUIVALENTS -
END OF PERIOD $ 15,360 $ 15,360 $ -
============ =========== ============
</TABLE>
See the accompanying notes to the consolidated financial statements
5
<PAGE>
TEL-VOICE COMMUNICATIONS, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
AND FROM INCEPTION (APRIL 19, 2000) TO JUNE 30, 2000 (continued)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
During the six months ended June 30, 2000 and 1999, the Company paid no income
taxes and $304 in interest.
NON CASH INVESTING AND FINANCING TRANSCATIONS:
Upon its formation, the Company issued 4,000,000 shares of its common stock to a
founding stockholder of the Company. The shares were valued at $181,224, which
relates to the stockholder's actual out-of-pocket costs to develop the Company's
business plan.
In conjunction with a private placement of common stock in June 2000, the
Company issued 20,000 shares with an aggregate value of $15,000 on subscription,
which was received in July 2000.
During the three months ended June 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
(A Development Stage Company)
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 six
months ended June 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 Company is currently a development stage company under the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 7. Management has
developed a business plan, which incorporates the Company to provide private
electronic networks for labor unions and integrated communities, both of which
include subscribers of the unions and communities. The Company will provide the
hardware, software and technical support required to setup and maintain the
networks.
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.
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, continued
(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. 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 six months ended the Company sold 710,000 shares of its common stock
for gross proceeds of $292,500, of which $15,000 was received in July 2000. 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 $496,327. 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 have not yet generated any revenues and are still considered in the
development stage. 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.
9
<PAGE>
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.
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.
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
10
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 - Financial Data Schedule
(b) Reports on Form 8-K
On July 12, 2000, the Company filed a Current Report on Form 8-K
announcing that 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.
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.
/s/ Jay Budd
By ----------------------------------
Jay Budd
Chief Executive Officer
Date: August 21, 2000
12
