UNITED STATES
-------------
SECURITIES AND EXCHANGE COMMISSION
----------------------------------
Washington, D.C. 20549
----------------------
FORM 10-Q
(Mark one)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- --- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 1998
-----------------
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 0-2180
TOTAL-TEL USA COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
New Jersey 22-1656895
- -------------------- ---------------
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
150 Clove Road, 8th Floor, Little Falls, NJ 07424
-------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (973) 812-1100
Not applicable
- ---------------------------------------------------------
(Former address of principal executive offices) (Zip Code)
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
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at September 11, 1998
- ---------------------------- ---------------------------------
Common Share, $.05 par value 7,673,154 shares
TOTAL-TEL USA COMMUNICATIONS, INC.
----------------------------------
AND SUBSIDIARIES
----------------
SECOND QUARTER REPORT ON FORM 10-Q
----------------------------------
INDEX
-----
Page No.
PART I. FINANCIAL INFORMATION
Condensed Consolidated Statements of Earnings
Six months ended July 31, 1998 and 1997
(unaudited) and three months ended July
31, 1998 and 1997 (unaudited) 3
Condensed Consolidated Balance Sheets
July 31, 1998 (unaudited), and
January 31, 1998 4-5
Condensed Consolidated Statements of Cash Flows
Six months ended July 31, 1998 and 1997
(unaudited) 6
Notes to Condensed Consolidated Financial
Statements (unaudited) 7-8
Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-12
PART II. OTHER INFORMATION
Items 1-5 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 13
<TABLE>
<CAPTION>
TOTAL-TEL USA COMMUNICATIONS, INC. AND SUBSIDIARIES
---------------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
---------------------------------------------------
(Unaudited)
Six months ended Three months ended
---------------- ------------------
July 31, July 31,
-------- --------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $ 65,438,437 $ 62,484,109 $ 33,556,844 $ 36,151,582
Costs and Expenses
Cost of Sales 51,280,565 50,713,044 26,145,660 30,445,599
Selling, general and administrative 13,379,084 10,242,680 7,043,103 5,225,793
------------ ------------ ------------- ------------
64,659,649 60,955,724 33,188,763 35,671,392
------------ ------------ ------------- ------------
Operating Income 778,788 1,528,385 368,081 480,190
------------ ------------ ------------- ------------
Other (Expense) Income
Interest Income 50,131 50,291 24,245 24,781
Other Income (Expense) 141,000 582 90,419 (4,941)
Interest expense (97,941) (76,271) (49,426) (41,219)
------------ ------------ ------------- ------------
Total Other (Expense) Income 93,190 (25,398) 65,238 (21,379)
------------ ------------ ------------- ------------
Earnings before provision for income taxes 871,978 1,502,987 433,319 458,811
Provision for Income Tax 331,960 621,800 156,520 200,400
------------ ------------ ------------- ------------
NET EARNINGS $540,018 $881,187 $276,799 $258,411
------------ ------------ ------------- ------------
BASIC EARNINGS PER COMMON SHARE .08 .14 .04 .04
------------ ------------ ------------- ------------
DILUTED EARNINGS PER COMMON SHARE .07 .13 .04 .04
------------ ------------ ------------- ------------
Dividends Per Share NONE NONE NONE NONE
------------ ------------ ------------- ------------
See notes to condensed consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
TOTAL-TEL USA COMMUNICATIONS, INC. AND SUBSIDIARIES
---------------------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
JULY 31, JANUARY 31,
1998 1998
----------- -----------
(Unaudited) (Note)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2,661,944 $ 3,416,904
Investments available for sale 568,523 578,293
Accounts receivable 23,905,578 20,346,988
Note receivable 335,533 117,590
Deferred income taxes 151,256 151,256
Prepaid expenses and other current assets 2,598,093 2,497,707
----------- -----------
TOTAL CURRENT ASSETS 30,220,927 27,108,738
----------- -----------
PROPERTY AND EQUIPMENT, LESS ACCUMULATED
DEPRECIATION AND AMORTIZATION 13,665,850 12,405,924
OTHER ASSETS:
Deferred line installation costs, less
accumulated amortization 301,193 298,304
Other assets 585,345 432,275
----------- -----------
886,538 730,579
----------- -----------
$44,773,315 $40,245,241
----------- -----------
NOTE: The balance sheet at January 31, 1998 has been taken from the audited
consolidated financial statements at that date.
See notes to condensed consolidated financial statements.
(Continued)
</TABLE>
<TABLE>
<CAPTION>
TOTAL-TEL USA COMMUNICATIONS, INC. AND SUBSIDIARIES
---------------------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
JULY 31, JANUARY 31,
1998 1998
----------- -----------
(Unaudited) (Note)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long term debt $506,068 $487,000
Accounts payable 18,765,587 16,356,427
Other current and accrued liabilities 2,474,505 1,757,375
Salaries and wages payable 884,235 572,112
----------- -----------
TOTAL CURRENT LIABILITIES 22,630,395 19,172,914
----------- -----------
OTHER LONG-TERM LIABILITIES 314,131 331,754
----------- -----------
LONG-TERM DEBT 1,833,614 2,092,201
----------- -----------
DEFERRED INCOME TAXES 47,791 50,491
----------- -----------
SHAREHOLDERS' EQUITY
Common stock 430,358 207,059
Additional paid-in capital 10,235,002 9,656,488
Retained earnings 10,715,802 10,175,784
----------- -----------
21,381,162 20,039,331
Treasury stock (1,547,331) (1,547,331)
Accumulated other comprehensive income 113,553 105,881
----------- -----------
Total shareholders' equity 19,947,384 18,597,881
----------- -----------
$44,773,315 $40,245,241
----------- -----------
NOTE: The balance sheet at January 31, 1998 has been taken from the audited
consolidated financial statements at that date.
See notes to condensed consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
TOTAL TEL USA COMMUNICATIONS, INC. AND SUBSIDIARIES
---------------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(Unaudited)
Six months ended
-----------------------------------
July 31,
--------
1998 1997
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $540,018 $881,187
Adjustment for non-cash charges 1,962,726 1,304,666
Changes in assets and liabilities (1,046,276) (1,498,643)
----------- -----------
Net cash provided by operating activities 1,456,468 687,210
----------- -----------
INVESTING ACTIVITIES:
Maturities of securities available for sale 76,273 88,100
Purchase of securities available for sale (51,273) -
Collection of notes receivable 16,607 16,331
Note receivable (234,550) -
Purchase of property and equipment (2,523,008) (1,388,932)
Additions to deferred line installation costs (57,771) (99,670)
----------- -----------
Net cash used in investing activities (2,773,722) (1,384,171)
----------- -----------
FINANCING ACTIVITIES:
Exercise of stock options 424,313 291,697
Repayments of bank borrowings (239,519) -
Tax benefit of options exercised 377,500 -
----------- -----------
Net cash provided by financing activities 562,294 291,697
----------- -----------
NET DECREASE IN CASH
AND CASH EQUIVALENTS (754,960) (405,264)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 3,416,904 2,589,187
----------- -----------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 2,661,944 $ 2,183,923
----------- -----------
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid during the period for:
Interest $ 97,941 $ 78,859
Income taxes $ 30,000 $ 588,761
See notes to condensed consolidated financial statements.
</TABLE>
TOTAL-TEL USA COMMUNICATIONS, INC. AND SUBSIDIARIES
----------------------------------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
(Unaudited)
-----------
Note A--Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do
not include all information and notes required by generally accepted
accounting principles for complete financial statements. However,
except as disclosed herein, there has been no material change in the
information disclosed in the notes to consolidated financial
statements included in the Annual Report on Form 10-K of Total-Tel USA
Communications, Inc. and Subsidiaries (the "Registrant") for the fiscal
year ended January 31, 1998. In the opinion of Management, all
adjustments (consisting of only normal recurring accruals) considered
necessary for a fair presentation have been included. Operating
results for the six month period ended July 31, 1998 are not
necessarily indicative of the results that may be expected for the year
ending January 31, 1999.
Note B--Stock Split
On July 15, 1998, the Registrant distributed 3,491,477 shares of
Common Stock $.05 par value, in connection with a 2 for 1 stock split
to record holders as of June 30, 1998. All references in the
accompanying financial statements to the number of Common Shares and
per-share amounts have been restated to reflect the stock split.
<TABLE>
<CAPTION>
Note C -- Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per common share:
Six Months Ended Three Months Ended
July 31,1998 July 31,1997 July 31, 1998 July 31, 1997
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
Numerator:
Income available to Common Shareholders $ 540,018 $ 881,187 $ 276,799 $ 258,411
used in basic and diluted earnings per
Common Share
Denominator:
Weighted-average number of Common 6,929,108 6,110,136 6,973,543 6,125,736
Shares used in basic earnings per
Common Share
Effect of diluted securities:
Common share options 462,332 609,916 437,660 567,592
--------- --------- --------- ---------
Weighted-average number of Common 7,391,440 6,770,052 7,411,203 6,693,328
Shares and diluted potential Common Shares --------- --------- --------- ---------
used in diluted earnings per Common Share
Basic earnings per Common Share $ 0.08 $ 0.14 $ 0.04 $ 0.04
------- ------- ------- -------
Diluted earnings per Common Share $ 0.07 $ 0.13 $ 0.04 $ 0.04
------- ------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
Note D -- Adoption of New Accounting Standard
Effective February 1, 1998, the Registrant adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" ("FAS 130"). This
statement established standards for the reporting and presentation of
comprehensive income and its components. Net unrealized gain on available for
sale securities is the item that is to be added to net earnings to arrive at
comprehensive income. The adoption of FAS 130 had no significant effect on the
Registrant's financial position or net earnings.
The Registrant's comprehensive income is as follows:
Six Months Ended Three Months Ended
July 31,1998 July 31,1997 July 31, 1998 July 31, 1997
------------ ------------ ------------- -------------
<S> <C> <C> <C>
Net earnings $540,018 $881,187 $276,799 $258,411
Unrealized gain (loss) on available
for sale securities 7,672 (3,060) (17,721) 297
------- ------- ------- -------
Comprehensive income 547,690 878,127 259,078 258,708
</TABLE>
The components of accumulated other comprehensive income, net of related taxes
at July 31, 1998 and January 31, 1998 is as follows:
<TABLE>
<CAPTION>
July 31, January 31,
1998 1998
---- ----
<S> <C> <C>
Unrealized gains on available for sale securities $ 113,553 $ 105,881
--------- ---------
Accumulated other comprehensive income $ 113,553 $ 105,881
--------- ---------
</TABLE>
TOTAL-TEL USA COMMUNICATIONS, INC. AND SUBSIDIARIES
---------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
------------------------------------------------------------
AND RESULT OF OPERATIONS
------------------------
Special Note Regarding Forward-Looking Statements
- -------------------------------------------------
Certain matters discussed in this Quarterly Report on Form 10-Q are
"forward-looking statements" intended to qualify for the safe harbors
from liability by the Private Securities Litigation Reform Act of 1995.
These forward-looking statements can generally be identified as such
because the context of the statement will include words such as the
Company "believes", "anticipates", "expects", or words of similar
import. Similarly, statements that describe the Company's future plans,
objectives or goals are also forward-looking statements. Such
forward-looking statements are subject to certain risks and
uncertainties which are described in close proximity to such statements
and which could cause actual results to differ materially from those
anticipated as of the date of this report. Shareholders, potential
investors and other readers are urged to consider these factors in
evaluating the forward-looking statements and are cautioned not to place
undue reliance on such forward-looking statements. The forward-looking
statements included herein are only made as of the date of this report
and the Company undertakes no obligation to publicly update such
forward-looking statements to reflect subsequent events or
circumstances.
Year 2000 Issues:
- ----------------
The Registrant is in the process of conducting a complete Year 2000
compliance assessment. This assessment covers the Registrant's
electronic data processing equipment, including all switches, digital
cross connects and other data sensitive processor controlled equipment
associated with the Registrant's telecommunications network, back office
and billing and collection systems, and all other support systems. The
result of the assessment indicates that existing systems were in
compliance, or that software upgrades will be required in certain
instances. These upgrades have been ordered and installation and
testing is scheduled for completion by the end of 1998. The total cost
for these upgrades and management overhead and expense is estimated to
be approximately $200,000. The risk associated with the Year 2000 issue
is incorrect call detail records during the Year 2000 transition period,
or issues associated with other networks that the Registrant is
interconnected with. All material, customers and supplies are currently
being surveyed as to their current state of Year 2000 compliance.
It is anticipated that this survey will be completed by December 31, 1998.
None of these potential events should have a material effect on
the Registrant's ability to operate, its liquidity, or financial
condition. The Registrant has plans to assess and correct any data
discrepancies that result from Year 2000 issues. Network operations
personnel will be available at our control center to intervene any
potential network disruption.
Results of Operations
- ---------------------
Net sales were approximately $65,438,000 for the first six months of the
current fiscal year, an increase of approximately $2,954,000 or 4.7% as
compared to the first six months of the prior fiscal year. Net sales
for the second quarter of the current fiscal year were approximately
$33,557,000, a decrease of approximately $2,595,000 or 7.2% compared to
the second quarter of the prior fiscal year. The increase in net sales
for the six months is attributable to the planned efforts in expanding
the commercial sales force, which resulted in an approximate increase of
$5,289,000 in retail sales. This increase was offset by a reduction in
carrier sales of $2,335,000. The reduced net sales in the second
quarter, compared to the second quarter of fiscal 1998 is attributable
to reduced carrier sales of approximately $4,577,000, offset by an
increase in retail sales of approximately $1,982,000. Given the
competitive climate in the long distance telephone industry, there can
be no assurance that the retail sales growth will continue throughout
the remainder of fiscal year 1999.
For the current fiscal six months, the telephone service billed
approximately 493,538,000 minutes of calling as compared to
approximately 425,583,000 minutes of calling for the comparable six
months of the prior year, resulting in an increase of approximately
67,955,000 minutes or 16.0%. For the second quarter of the current
fiscal year, the Registrant billed approximately 244,870,000 minutes
of calling as compared to approximately 231,097,000 minutes of calling
for the second quarter of the prior fiscal year, an increase of
13,773,000 minutes or 6.0%. The average revenue per minute increased
slightly in the current fiscal six month period and second quarter of
the current fiscal year as compared to the prior fiscal year's six month
period and prior fiscal year's second quarter, and was primarily
attributable to an increase in international calling minutes, from
carrier sales. Retail revenues per minute remained relatively stable.
Cost of sales increased approximately $568,000 or 1.1% to approximately
$51,281,000 for the current six months and decreased approximately
$4,300,000 or 14.1% to approximately $26,146,000 for the second quarter
of the current fiscal year. These changes were favorable in relation to
the 4.7% increase in the sales volume for the six month period and the
7.2% decrease in the second quarter. The gross margin for the current
six months increased to approximately 21.6% as compared to approximately
18.8% for the first six months of the prior fiscal year, and increased
to 22.1% from 15.8% for the second quarter of the current fiscal year as
compared to the second quarter of the prior fiscal year. These increases
in the gross margins are reflective of the reduced cost per minute
incurred by the Registrant which was approximately $.01 per minute lower
for the first six months and $.02 per minute lower for the second quarter
of the current fiscal year as compared to the respective periods of the
prior fiscal year. This is attributable to a different mix of the
carrier services (primarily international calls), access reform and
continued improvements to the Registrant's network.
Selling, general and administrative expense for the current six months
were approximately $13,379,000, an increase of approximately $3,136,000
or 30.6% as compared to the first six months of the prior fiscal year
and approximately $7,043,000 for the second quarter of the current
fiscal year, an increase of approximately $1,817,000 or 34.8% as
compared to the second quarter of the prior fiscal year. These increases
for the six months ended July 31, 1998 as compared to the first six
months of the prior year are due primarily to increases in legal
and consulting fees, approximately $1,250,000, the most substantial
portion of which was incurred in connection with the Gold and
Appel/Anderson litigation; increased salaries, wages and fringe benefits
of approximately $358,000 resulting from the build up of the sales force
and administrative infrastructure; increased rent expense due to
expansion of the home office and additional sales office sites of
approximately $264,000; increased sales commissions due to higher retail
sales volume of approximately $362,000; increase in the reserve for bad
debt of $340,000; increased depreciation expense relating to the buildup
of the LAN/WAN of approximately $100,000; increased advertising and
promotion expense of approximately $200,000; increased cost of billing
services of $50,000; and the balance of the additional expense is made
up of increases in travel and related expense, recruiting costs for new
employees and the additional costs relating to growth of the
organization. The increase for the second quarter of the current
fiscal year as compared to the second quarter of the prior fiscal year
is due primarily to the same reasons, and approximately in the same
proportion, as the six month period ending July 31, l998. The increase
came primarily from increased legal and consulting fees, approximately
$919,000, the most substantial portion of which was incurred in
connection with the Gold & Appel/Anderson litigation; increased
salaries, wages and fringe benefit costs of approximately $82,000 which
is due to the increase in the sales force and administration
infrastructure; increased rent expense of approximately $104,000 for new
sales offices and the expansion of the home office; increased sales
commissions of approximately $362,000; and an increase in the bad debt
reserve of approximately $340,000.
Other income of approximately $141,000 for the six months ended July 31,
l998 and approximately $90,000 for the three months ending July 31, l998
represents the expiration of prepaid debit cards.
Diluted earnings per share decreased to $.07 per share for the current
six months as compared to $.13 per share for the six months ended July
31, 1997, and were constant at $.04 per share for the second quarter of
the current fiscal year as compared to the quarter ended July 31, l997.
Liquidity and Capital Resources
- -------------------------------
At July 31, 1998, the Registrant had working capital of $7,591,000, a
decrease of $345,000 or 4.5% as compared to January 31, 1998. The ratio
of current assets to current liabilities at July 31, 1998 was 1.3:1, as
compared to a current ratio of 1.4:1 at January 31, 1998. The decrease
in working capital at July 31, 1998 was primarily attributable to an
increase in accounts payable of approximately $2,409,000, an increase in
other current and accrued liabilities of approximately $717,000, a
decrease in cash of approximately $755,000, offset by an increase in
accounts receivable of approximately $3,559,000, an increase in salaries
and wages payable of approximately $312,000, an increase in prepaid
expenses and other current assets of approximately $100,000, a net
increase in notes receivable of approximately $218,000, and a decrease
in investments available for sale of approximately $10,000.
The Registrant has continued to maintain a strong liquidity position.
The decrease in cash of approximately $755,000 was the result primarily
of the purchase of property, plant and equipment for approximately
$2,523,000; an increase in accounts receivable and other current assets
of approximately $3,912,000; an increase in other assets of
approximately $153,000; an increase in notes receivable of approximately
$235,000; additions to line installation costs of approximately $58,000;
and the repayment of bank borrowing of approximately $240,000. This was
partially offset by net earnings for the period of approximately
$540,000; non-cash charges (including depreciation and amortization) of
approximately $1,963,000; a decrease in accounts payable and accrued
expenses of approximately $3,126,000; the exercise of stock options of
approximately $424,000; and the tax benefit from the exercise of stock
options of approximately $378,000.
Capital expenditures during the first six months of fiscal year 1999
were approximately $2,523,000 and were financed from funds provided by
operations. Approximately $1,523,000 of these expenditures were
applicable to the purchase and installation of the new switch in Miami,
Florida. Other additions were capital purchases for enhanced switching
equipment at the Newark, New Jersey facility of approximately $100,000
and to the New York City facility of approximately $300,000, and
approximately $600,000 for additional data processing equipment to
enhance the current LAN/WAN network.
Capital expenditures for fiscal 1999 were initially estimated at
approximately $15,000,000. For the balance of this fiscal year capital
expenditures are planned to include the installation of a switch in
London (4th quarter: $3,000,000), a new billing system ($3,000,000),
LAN/WAN software and hardware upgrades ($500,000), installation of
switch equipment to enter the local market ($2,255,000), various
improvements to current switch operations ($400,000), and the purchase
of an IRU to London. In May 1998, the Company adopted a business
plan, which calls for heavy investment in state-of-the-art
infrastructure technology, including new switch sites in Los Angeles,
Chicago, Dallas and Atlanta, which would increase capital expenditures
significantly. These expenditures are planned to be initially financed
with funds provided from the Company's bank line of credit, existing
working capital; vendor financing, and cash derived from operations.
The Company is currently exploring additional sources of financing,
including the possible sale of equity or debt securities.
As of July 31, 1998, the Registrant had an Equipment Facility and
Revolving Credit Agreement (the "Facility") with a major New Jersey
bank. This Facility provides the Registrant with an unsecured line of
credit of $8,000,000 and $5,000,000 for the purchase of machinery and
equipment, primarily switching equipment, and is secured by the
Registrant's machinery and equipment. In addition the Registrant had
previously drawn down $2,339,672 of a prior loan commitment at an
interest rate of 7.71% payable over five years.
TOTAL-TEL USA COMMUNICATIONS, INC. AND SUBSIDIARIES
---------------------------------------------------
PART II - OTHER INFORMATION
---------------------------
SIX MONTHS ENDED JULY 31, 1998
------------------------------
ITEMS 1 - 5 Not applicable
ITEM 6 Exhibits and reports on Form 8-K
(a) Exhibits - 27 - Financial Data Schedule
(b) There were no reports on Form 8-K filed for the three
months ended July 31, 1998.
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.
TOTAL-TEL USA COMMUNICATIONS, INC.
---------------------------------
(Registrant)
Date September 11, 1998 By /S/ Warren H. Feldman
------------------- -----------------------
Warren H. Feldman, Esq., Chairman,
President and Chief Executive
Officer
Date September 11, 1998 By /S/ Thomas P. Gunning
------------------- -----------------------
Thomas P. Gunning
Chief Financial Officer,
Secretary, Treasurer and Principal
Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
TOTAL-TEL USA COMMUNICATIONS, INC.
Exhibit 27 - FINANCIAL DATA SCHEDULE
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AS OF
JULY 31, 1998 AND THE CONSOLIDATED STATEMENT OF
OPERATIONS FOR SIX MONTHS ENDED JULY 31, 1998
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-END> JUL-31-1998
<CASH> 2,661,944
<SECURITIES> 568,523
<RECEIVABLES> 25,360,532
<ALLOWANCES> 1,119,421
<INVENTORY> 0
<CURRENT-ASSETS> 30,220,927
<PP&E> 20,887,969
<DEPRECIATION> (7,222,119)
<TOTAL-ASSETS> 44,773,315
<CURRENT-LIABILITIES> 22,630,395
<BONDS> 1,833,614
<COMMON> 430,358
0
0
<OTHER-SE> 19,517,026
<TOTAL-LIABILITY-AND-EQUITY> 44,773,315
<SALES> 65,438,437
<TOTAL-REVENUES> 65,438,437
<CGS> 51,280,565
<TOTAL-COSTS> 51,280,565
<OTHER-EXPENSES> 12,966,872
<LOSS-PROVISION> 412,212
<INTEREST-EXPENSE> 97,941
<INCOME-PRETAX> 871,978
<INCOME-TAX> 331,960
<INCOME-CONTINUING> 540,018
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 540,018
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.07
</TABLE>
