U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
(Mark One)
X QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d)
----
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2000.
---- TRANSITION REPORT PURSUANT SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from______to______.
Commission File Number 0-85601
SYMPHONY TELECOM INTERNATIONAL, INC.
--------------------------------------
(Exact name of small business issuer as specified in its charter)
UTAH 87-0378892
------------------------- -----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
347 Bay Street, Suite 502, Toronto, Canada M5H 2R7
-------------------------------------------- -------
(address of principal executive offices) (zip code)
Issuer's telephone number: (416) 366-5221
---------------
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 (@) has been
subject to such filing requirements for the past 90 days. Yes X No__.
The number of shares of Common Stock outstanding as at May 12, 2000 was:
Transitional Small Business Disclosure Format (check one): Yes No X .
--- ---
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The financial statements are included herein.
Item 2. Management's Discussion and Analysis or Plan of Operation.
<PAGE>
SYMPHONY TELECOM INTERNATIONAL INC.
CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
<PAGE>
SYMPHONY TELECOM INTERNATIONAL INC.
MARCH 31, 2000
CONTENTS
Page
Balance Sheets 1
Statements of Operations 2
Statements of Changes in Cash Position 3
Notes to Financial Statements 4-8
<PAGE>
SYMPHONY TELECOM INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
AS AT MARCH 31, 2000
AND JUNE 30, 1999
UNAUDITED
ASSETS
(Note 1) (Note 1)
March 31 June 30
2000 1999
---- ----
CURRENT
Accounts receivable $ 119,950 $ --
Deposits 7,092 --
Inventory (Note 2(b)) 41,196 --
----------- -----------
168,238 --
CAPITAL ASSETS (Note 3) 54,982 --
OTHER ASSETS (Note 4) 339,764 --
----------- -----------
$ 562,984 $ --
=========== ===========
LIABILITIES
CURRENT
Bank indebtedness (Note 5) $ 42,597 $ --
Loans payable (Note 6) 99,221 --
Accounts payable and accrued liabilities 307,699 65,140
----------- -----------
449,517 65,140
PROMISSORY NOTE (Note7) 18,500 --
DIRECTORS' ADVANCES (Note 8) 111,586 --
----------- -----------
579,603 65,140
SHAREHOLDERS' EQUITY
CAPITAL STOCK (Note 9) 95,522 16,278
PAID-IN-CAPITAL 9,076,264 9,076,264
NON-CONTROLLING INTEREST (Note 10) 258 --
TREASURY STOCK, 43,500 (19,035) (19,035)
(DEFICIT) (Note 11) (9,173,121) (9,138,647)
----------- -----------
(20,112) (65,140)
----------- -----------
$ 559,491 $ --
=========== ===========
APPROVED ON BEHALF OF THE BOARD:
_________________________ Director ___________________________ Director
1.
<PAGE>
<TABLE>
<CAPTION>
SYMPHONY TELECOM INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS PERIOD ENDED MARCH 31, 2000
AND FOR THE NINE MONTHS PERIOD ENDED MARCH 31, 1999
UNAUDITED
(Note 1) (Note 1) (Note 1) (Note 1)
Quarter to Year to Quarter to Year to
March 31 March 31 March 31 March 31
2000 2000 1999 1999
---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
SALES $ 44,540 $ 44,540 $ - $ -
COST OF SALES 29,086 29,086 - -
--------------- --------------- --------------- ---------------
GROSS PROFIT 15,454 15,454 - -
--------------- --------------- --------------- ---------------
EXPENSES
Professional fees 11,123 13,752 1,747 5,240
Wages and benefits 6,880 6,880 - -
Interest, long-term 5,591 5,591 - -
General and administrative 5,370 5,370 - -
Consulting fees 4,114 4,114 - -
Automobile 2,514 2,514 - -
Travel 2,174 2,174 - -
Telephone 1,753 1,753 - -
Amortization and depreciation 1,578 1,578 - -
Advertising and marketing 1,476 1,476 - -
Bad debt 1,221 1,221 - -
Rent 1,045 1,045 - -
Delivery 823 823 - -
Foreign exchange loss 665 665 - -
Insurance 329 329 - -
Bank charges and interest 302 302 - -
Conventions 255 255 - -
Repairs and maintenance 86 86 - -
--------------- --------------- --------------- ---------------
47,299 49,928 1,747 5,240
--------------- --------------- --------------- ---------------
NET (LOSS) (31,845) (34,474) (1,747) 5,240
DEFICIT, beginning of period (9,141,276) (9,138,647) (9,133,407) (9,131,660)
--------------- --------------- --------------- ---------------
(DEFICIT) end of period $(9,173,121) $(9,173,121) $(9,136,900) $ (9,136,900)
=============== =============== =============== ==============
</TABLE>
2.
<PAGE>
SYMPHONY TELECOM INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CHANGES IN CASH POSITION
FOR THE NINE MONTHS PERIOD ENDED MARCH 31, 2000
AND FOR THE NINE MONTHS PERIOD ENDED MARCH 31, 1999
UNAUDITED
(Note 1) (Note 1)
March 31 March 31
2000 1999
---- ----
OPERATING ACTIVITIES
Cash used in operations
Net loss $ (34,474) $ (5240)
Add (deduct): charges to income not involving cash
Amortization and depreciation 1,578 --
--------- ---------
(32,896) (5,240)
Net change in non-cash working capital
Accounts receivable (119,950) --
Deposits (7,092)
Inventory (41,196)
Increase in loans payable 99,221
Accounts payable 242,559 5,240
--------- ---------
140,646 --
--------- ---------
FINANCING ACTIVITIES
Directors' advances 111,586 --
Capital stock issuance 79,244 --
Non-controlling interest 258 --
Promissory Note 18,500 --
--------- ---------
209,588 --
--------- ---------
INVESTING ACTIVITIES
Additions to capital assets (56,009) --
Additions to other assets (340,315) --
--------- ---------
(396,324) --
--------- ---------
(DECREASE) INCREASE IN CASH (46,090) --
CASH, beginning of period -- --
--------- ---------
CASH, end of period $ (42,597) $ --
========= ---------
3.
<PAGE>
SYMPHONY TELECOM INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
UNAUDITED
1. ORGANIZATION
The Company was incorporated under the laws of the State of Utah on
January 15, 1982. Pursuant to an Agreement and Plan of Reorganization
dated March 9, 2000, the Company acquired all the issued and
outstanding shares of Symphony Telecom International Inc., a company
incorporated under the laws of the State of Delaware, on a share for
share exchange, see Note 8 below. By a resolution of the Board of
Directors of March 23, 2000, the Company's name was changed from
Mammoth Resources Inc. to Symphony Telecom International Inc. to
reflect its change in business.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements have been prepared in accordance with
generally accepted accounting principles. Outlined below are those
policies considered particularly significant for the Company.
(a) Principles of consolidation
The accompanying consolidated financial statements include the accounts
of its wholly owned subsidiary company Symphony Telecom International
Inc. and its subsidiary companies:
Symphony Telecom Inc.
Communication Solutions Group Ltd.
Canadian Inter-Latin Communications Inc.
Canadian Intercontinental Communications Del Ecuador S.A.
All intercompany balances and transactions have been eliminated on
consolidation.
(b) Inventories
Inventory, comprising purchased parts and systems, is valued at the
lower of cost and net realizable value. Cost is determined
substantially on a first-in, first-out basis.
(c) Capital Assets
Capital assets are recorded at cost. Depreciation is provided annually
at rates calculated to write-off the assets over their estimated useful
lives as follows: Computer - 30% diminishing balance Telephone
Equipment - 25% diminishing balance Furniture - 20% diminishing balance
(d) Other Assets
Other assets are recorded at cost. Amortization is provided annually at
rates calculated to write-off the assets over their estimated useful
lives as follows:
Goodwill - 5% diminishing balance
Intellectual Property - 5% diminishing balance
Deferred Charges - 5% diminishing balance
4.
<PAGE>
<TABLE>
<CAPTION>
SYMPHONY TELECOM INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
UNAUDITED
3. CAPITAL ASSETS
The details of capital assets are as follows:
Net Net
Accumulated March 31 March 31
Cost Depreciation 2000 1999
Computer --------- ------------ --------- ----------
<S> <C> <C> <C> <C>
Telephone equipment $ 4,232 $ 100 $ 4,132 $ -
Furniture and fixtures 47,318 913 46,405 -
4,510 65 4,445 -
--------- ----------- --------- ----------
$ 56,060 $ 1,078 $ 54,982 $ -
========= ========== ========= ==========
4. OTHER ASSETS
The details of other assets are as follows:
Net Net
Accumulated March 31 March 31
Cost Depreciation 2000 1999
--------- ------------ --------- ----------
Goodwill $241,251 $ 149 $241,102 $ -
Deferred Charges 14,369 63 14,306 -
Intellectual Property 84,644 288 84,356 -
--------- ----------- --------- ----------
$340,264 $ 500 $339,764 $ -
========= ========== ========= ==========
</TABLE>
5. BANK INDEBTEDNESS
The bankers of a wholly owned subsidiary company have extended an
unsecured revolving line of credit in the amount of CDN$25,000 (US$17,205) with
interest at the
bank's prime plus 1.50% per annum, personally guaranteed by a director.
6. LOANS PAYABLE
An unsecured loan of CDN$100,000 (US$68,823), in the form of a
promissory note, has been advanced to a subsidiary company which was to
have been repaid on April 12, 1999 with a premium of CDN$20,000
(US$13,764). The subsidiary repaid CDN$10,000 (US$6,882) on April 12,
1999 and the balance of CDN$110,000 (US$75,705) was extended to May 27,
1999 with an additional service fee of CDN$5,000 (US$3,441). The total
balance of CDN$115,000 (US$79,146) bears interest at the rate of 2.50%
monthly, and is due upon demand. The subsidiary company has undertaken
not to encumber the assets of its wholly owned subsidiary, without the
prior written consent of the note holder until such time as the
promissory note has been repaid in full. On February 14, 2000, prior to
its acquisition, Symphony Telecom International Inc. issued 8,500
common shares to reduce accrued interest by CDN$25,000 (US$17,205).
5.
<PAGE>
SYMPHONY TELECOM INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
UNAUDITED
6. LOANS PAYABLE (CONTINUED)
A second private unsecured loan, which resulted from a subsidiary's
purchase of business and trade payables, with a balance due of
CDN$58,325 (US$40,141) has no provision for interest. The loan was
cancelled in exchange for 23,000 common shares of Symphony Telecom
International Inc. on March 3, 2000, plus an option to buy a further
35,000 common shares at US$3.00 per share on or before December 31,
2000.
Other advances to subsidiary companies in the total amount of US$20,075
are non-interest bearing and due upon demand.
7. PROMISSORY NOTE
Convertible corporate promissory note, with simple annual interest rate
of 25.5%, in the amount of $18,500 as issued by Symphony Telecom Inc.
Security for the promissory note is a charge over all the subsidiary
company's assets. Conversion of the promissory note into the Company's
common shares on the basis at half the bid price for its common stock,
as reported at the close of business on the day preceeding the
conversion date, is at the holder's option.
8. DIRECTORS' ADVANCES
Directors' advances are considered long-term as no repayment is
expected within the next year. Advances are non-interest bearing with
no specific terms for repayment.
9. CAPITAL STOCK
9. CAPITAL STOCK
Authorized
Common shares, 50,000,000 as to number with a par value of One Cent
($.01) each, amounting to Five Hundred Thousand Dollars ($500,000).
March 31 March 31
2000 1999
---- ----
Stated capital
14,380,059 Common shares $95,522 $16,278
------- -------
On March 9, 2000 as part of its reorganization, the Company authorized
a one for five reverse stock split of existing issued common shares,
resulting in the number being reduced from 16,278,357 to 3,255,684. On
the same date, and not subject to the reverse stock split, the Company
authorized issuance of 7,924,375 common shares in restricted form being
a one for one exchange of shares on purchase of all the issued and
outstanding shares of Symphony Telecom International Inc. Further, two
directors were issued an additional 1,000,000 common each, and
1,200,000 common shares were issued to consultants for services
rendered in connection with the reorganization.
As a result of a subsidiary's agreement to purchase business assets and
customer listing, an option has been authorized by the board of
directors of the subsidiary company of 35,000 common shares at US$3.00
per share which option expires December 31, 2000. This agreement has
been assumed by the board of directors of the Company on acquisition of
Symphony Telecom International Inc.
6.
<PAGE>
<TABLE>
<CAPTION>
SYMPHONY TELECOM INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
UNAUDITED
10. NON-CONTROLLING INTEREST
The Non-controlling Interest represents twenty-five (25%) per cent
minority shareholders of Canadian Intercontinental Communications Del
Ecuador S.A., a company incorporated in Equador, of which the remaining
seventy-five (75%) per cent of the all the issued and outstanding
shares are held by Canadian Inter-Latin Communications Inc., a
subsidiary of Symphony Telecom International Inc.
11. DEFICIT
The Company has been inactive since June 30, 1994, until its
acquisition of Symphony Telecom International Inc. on March 9, 2000. On
June 30, 1994 the Company had an accumulated deficit of $9,073,507;
since then, deficit accumulated during its development stage totals
$102,243.
March 31 March 31
2000 1999
<S> <C> <C>
Deficit accumulated:
during the development stage $ 102,243 $ 63,393
other 9,073,507 9,073,507
----------- ------------
Total Accumulated Deficit $ 9,173,121 $ 9,136,900
=========== ============
</TABLE>
12. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two
digits rather than four to identify a year. Date-sensitive systems may recognize
the year 2000 as 1900 or some other date, resulting in errors when information
using 2000 dates is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date.
The effects of the Year 2000 Issue may be experienced before, on or
after January 1, 2000 and , if not addressed, the impact on operations and
financial reporting may range from minor errors to significant systems failure
which could affect an entity's ability to conduct normal business operations.
Although the Company's computerized systems are working normally, it is not
possible to be certain that all aspects of the Year 2000 Issue affecting the
entity, including those related to the efforts of customers, suppliers, or other
third parties, has been fully resolved.
7.
<PAGE>
SYMPHONY TELECOM INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
UNAUDITED
13. CONTINGENT LIABILITIES
A wholly owned subsidiary company has sued one of its customers to
collect an amount of CDN$15,000 (US$10,323) owing resulting from
telephone services rendered. The customer has counter-sued for an
amount of CDN$500,000 (US$344,115) claiming the subsidiary company was
not entitled to invoice for telephone services as it was only an agent
for the telephone carrier. It is management's position the counter
claim will be set aside. As it is uncertain whether management's
collection efforts will be successful, the full amount receivable has
been provided for by a charge against subsidiary's income.
A claim in the amount of CDN$34,624 (US$23,829) plus interest and costs
has been made against a subsidiary company by a former consultant for
non-payment of amounts due under a management contract. The subsidiary
company is contesting the claim on the basis that the consultant failed
and refused to perform the duties and responsibilities according to the
management contract, and therefore was in breach of same. Management
believes the case will be withdrawn against it without significant
cost.
14. INCOME TAXES
The Company has accumulated net operating losses, which can be used to
offset future earnings. Accordingly, no provision for income taxes is
recorded in the financial statements. A deferred tax asset of
approximately $3,000,000 or the future benefits of net operating losses
is offset by a 100% valuation allowance, or approximately $3,000,000
due to uncertainty of the Company's ability to utilize the losses. As
of March 31, 2000, the Company has net operating loss carry forwards
available as follows:
Year End Amount Year Expires
-------- ------------- ------------
1999 $6,987 2014
1998 $6,987 2013
1997 $6,987 2012
1996 $6,987 2011
1995 $6,987 2010
1994 $6,987 2009
1993 $6,987 2008
1992 $7,457,320 2007
1989 $86,724 2004
1988 $111,925 2003
1987 $304,116 2002
1986 $102,109 2001
1985 $1,384,570 2000
8.
<PAGE>
SYMPHONY TELECOM INTERNATIONAL INC.
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
<PAGE>
SYMPHONY TELECOM INTERNATIONAL INC.
MARCH 31, 2000
CONTENTS
Page
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Balance Sheet 1
Statements of Operations 2
Notes to Financial Statements 3-8
<PAGE>
SYMPHONY TELECOM INTERNATIONAL INC.
PRO FORMA CONSOLIDATED BALANCE SHEETS
AS AT MARCH 31, 2000
AND MARCH 31, 1999
ASSETS
(Note 2) (Note 2)
March 31 March 31
2000 1999
---- ----
CURRENT
Accounts receivable $ 119,950 $ 82,375
Deposits 7,092 8,951
Inventory (Note 2(b)) 41,196 41,733
----------- -----------
168,238 133,059
CAPITAL ASSETS (Note 3) 54,982 66,530
OTHER ASSETS (Note 4) 150,100 378,051
----------- -----------
$ 373,320 $ 577,640
LIABILITIES
CURRENT
Bank indebtedness (Note 5) $ 46,090 $ 34,066
Loans payable (Note 6) 99,221 88,540
Accounts payable and accrued liabilities 307,699 244,369
Income taxes payable 1,093 --
----------- -----------
453,010 368,068
PROMISSORY NOTE (Note7) 18,500 18,500
DIRECTORS' ADVANCES (Note 8) 111,586 124,337
583,096 510,905
SHAREHOLDERS' EQUITY
CAPITAL STOCK (Note 9) 14,380 14,380
PAID-IN-CAPITAL (Note 9) 9,157,406 9,157,406
NON-CONTROLLING INTEREST (Note 10) 258 258
TREASURY STOCK, 43,500 (19,035) (19,035)
(DEFICIT) (Note 11) (9,362,785) (9,086,274)
----------- -----------
(209,776) 66,735
$ 373,320 $ 577,640
=========== ===========
APPROVED ON BEHALF OF THE BOARD:
___________________________ Director ___________________________ Director
1.
<PAGE>
SYMPHONY TELECOM INTERNATIONAL INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS PERIOD ENDED MARCH 31, 2000
AND FOR THE NINE MONTHS PERIOD ENDED MARCH 31, 1999
(Note 2) (Note 2)
March 31 March 31
2000 1999
---- ----
SALES $ 394,044 $ 513,171
COST OF SALES 264,295 316,149
----------- -----------
GROSS PROFIT 129,749 197,022
EXPENSES
Interest, long-term 65,655 3,898
Wages and benefits 64,038 73,575
Professional fees 41,697 15,360
Consulting fees 27,515 26,400
General and administrative 25,081 14,076
Automobile 24,854 29,261
Rent 23,022 23,415
Travel 20,983 13,684
Amortization and depreciation 18,941 3,221
Bad debt (recovered) 13,744 (1,241)
Telephone 11,872 18,830
Promotion, advertising and marketing 11,707 1,883
Delivery 7,361 11,006
Insurance 3,531 2,858
Conventions 2,856 47
Bank charges and interest 2,589 3,041
Foreign exchange loss 1,975 1,072
Repairs and maintenance 1,031 96
----------- -----------
Equipment rental
368,452 250,482
INCOME (LOSS) (238,703) (53,460)
Gain (loss) on sale of shares -- 98,846
----------- -----------
NET (LOSS) INCOME (238,703) 45,386
DEFICIT, beginning of period (9,124,082) (9,131,660)
----------- -----------
(DEFICIT), end of period $(9,362,785) $(9,086,274)
=========== ===========
2.
<PAGE>
SYMPHONY TELECOM INTERNATIONAL INC.
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS PERIOD ENDED MARCH 31, 2000
AND THE NINE MONTHS PERIOD ENDED MARCH 31, 1999
1. ORGANIZATION
The Company was incorporated under the laws of the State of Utah on
January 15, 1982. Pursuant to an Agreement and Plan of Reorganization
dated March 9, 2000, the Company acquired all the issued and
outstanding shares of Symphony Telecom International Inc., a company
incorporated under the laws of the State of Delaware, on a share for
share exchange, see Note 9 below. By a resolution of the Board of
Directors of March 23, 2000, the Company's name was changed from
Mammoth Resources Inc. to Symphony Telecom International Inc. to
reflect its change in business.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Principles of pro forma consolidation
The accompanying pro forma consolidated financial statements include
the accounts of its wholly owned subsidiary company Symphony Telecom
International Inc., a company incorporated in the State of Delaware,
and its subsidiary companies:
Symphony Telecom Inc.
Communication Solutions Group Ltd.
Canadian Inter-Latin Communications Inc.
Canadian Intercontinental Communications Del Ecuador S.A.
All intercompany balances and transactions have been eliminated on
consolidation.
These pro forma financial statements have been prepared by management
to show the effect of of consolidating operations as if the Company had
control during the nine month periods ended March 31, 1999 and 2000.
(b) Change in Control and Acquisition of Symphony Telecom International,
Inc., a corporation incorporated in the state of Delaware.
The Company acquired all the issued and outstanding shares of Symphony
Telecom International Inc. as a reverse acquisition on March 9, 2000 on
which date management has valued the company and its subsidiary
companies as $218,040, comprising:
All issued and outstanding shares $ 458,876
Less: incorporation expenses ( 546)
pre-acquisition deficit ( 240,290)
-----------
Net Value $ 218,040
-----------
The purchase price was satisfied by issuing 7,924,375 common shares
from treasury on a one for one exchange. This provided a premium on
purchase of $138,796.
However, in consolidating operations prior to purchase date of March 9,
2000, pre-acquisition retained earnings/deficits have been adjusted
back to July 1, 1998, at which time value is calculated as:
All issued and outstanding shares $ 197,354
Less: pre-acquisition deficit ( 50,626)
-----------
Net Value $ 146,728
-----------
The difference in value, being substantially issue of shares from
treasury since July 1998, has been reflected in the pro forma balance
sheet by reducing goodwill in amount of $260,976 ($458,876 less$197,354
= $261,522 less incorporation expenses $546 = $260,976).
3.
<PAGE>
SYMPHONY TELECOM INTERNATIONAL INC.
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS PERIOD ENDED MARCH 31, 2000
AND THE NINE MONTHS PERIOD ENDED MARCH 31, 1999
(c) Subsidiary Company's Acquisition
On February 28, 1999, Symphony Telecom Inc., a company incorporated in
the province of Ontario, Canada acquired all the issued and outstanding
shares of Communication Solutions Group Ltd. On that date, the value of
the company was calculated as follows:
All issued and outstanding shares $ 1
Less: pre-acquisition deficit ( 1,028)
-----------
Net Value $( 1,027)
-----------
The purchase price was $296,090 (Cdn$440,000 less closing adjustments
of Cdn$6,047) which provided goodwill on consolidation of $297,108.
(d) Inventories
Inventory, comprising purchased parts and systems, is valued at the
lower of cost and net realizable value. Cost is determined
substantially on a first-in, first-out basis.
(e) Capital Assets
Capital assets are recorded at cost. Depreciation is provided annually
at rates calculated to write-off the assets over their estimated useful
lives as follows:
Computer - 30% diminishing balance
Telephone Equipment - 25% diminishing balance
Furniture - 20% diminishing balance
(f) Other Assets
Other assets are recorded at cost. Amortization is provided annually at
rates calculated to write-off the assets over their estimated useful
lives as follows:
Goodwill - 5% diminishing balance
Intellectual Property - 5% diminishing balance
Deferred Charges - 5% diminishing balance
(g) Foreign Currencies
Assets and liabilities in foreign currencies have been translated into
US dollars at rates effective at each year end. Revenues and expenses
have been translated into US dollars based generally on rates
prevailing during each year. Gains and losses resulting from
translation of foreign currencies to Canadian dollars are credited or
charged to income on a current basis.
4.
<PAGE>
<TABLE>
<CAPTION>
SYMPHONY TELECOM INTERNATIONAL INC.
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS PERIOD ENDED MARCH 31, 2000
AND THE NINE MONTHS PERIOD ENDED MARCH 31, 1999
3. CAPITAL ASSETS
The details of capital assets are as follows: Net Net
Accumulated March 31 March 31
Cost Depreciation 2000 1999
---- ------------ ---- ----
<S> <C> <C> <C> <C>
Computer $12,928 $ 8,796 $ 4,132 $ 5,224
Telephone equipment 70,363 23,958 46,405 56,183
Furniture and fixtures 11,406 6,961 4,445 5,123
------- -------- -------- -------
$94,697 $ 39,715 $ 54,982 $66,530
======= ======== ======== =======
4. OTHER ASSETS
The details of other assets are as follows:
Net Net
Accumulated March 31 March 31
Cost Amortization 2000 1999
------ ------------ ---- ----
Goodwill $ 56,722 $ 5,284 $ 51,438 $ 272,969
Deferred Charges 15,059 753 14,306 19,045
Intellectual Property 103,234 18,878 84,356 86,037
--------- --------- --------- ---------
$ 175,015 $ 24,915 $ 150,100 $ 378,051
========= ======== ========= =========
</TABLE>
5. BANK INDEBTEDNESS
The bankers of a wholly owned subsidiary company have extended an
unsecured revolving line of credit in the amount of CDN$25,000
(US$17,205) with interest at the
bank's prime plus 1.50% per annum, personally guaranteed by a director.
6. LOANS PAYABLE
An unsecured loan of CDN$100,000 (US$68,823), in the form of a
promissory note, has been advanced to a subsidiary company which was to
have been repaid on April 12, 1999 with a premium of CDN$20,000
(US$13,764). The subsidiary repaid CDN$10,000 (US$6,882) on April 12,
1999 and the balance of CDN$110,000 (US$75,705) was extended to May 27,
1999 with an additional service fee of CDN$5,000 (US$3,441). The total
balance of CDN$115,000 (US$79,146) bears interest at the rate of 2.50%
monthly, and is due upon demand. The subsidiary company has undertaken
not to encumber the assets of its wholly owned subsidiary, without the
prior written consent of the note holder until such time as the
promissory note has been repaid in full. On February 14, 2000, prior to
its acquisition, Symphony Telecom International Inc. issued 8,500
common shares to reduce accrued interest by CDN$25,000 (US$17,205).
A second private unsecured loan, which resulted from a subsidiary's
purchase of business and trade payables, with a balance due of
CDN$58,325 (US$40,141) has no provision for interest. The loan was
cancelled in exchange for 23,000 common shares of Symphony Telecom
International Inc. on March 3, 2000, plus an option to buy a further
35,000 common shares at US$3.00 per share on or before December 31,
2000.
Other advances to subsidiary companies in the total amount of US$20,075
are non-interest bearing and due upon demand.
5.
<PAGE>
SYMPHONY TELECOM INTERNATIONAL INC.
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS PERIOD ENDED MARCH 31, 2000
AND THE NINE MONTHS PERIOD ENDED MARCH 31, 1999
7. PROMISSORY NOTE
Convertible corporate promissory note, with simple annual interest rate
of 25.5%, in the amount of $18,500 as issued by Symphony Telecom Inc.
Security for the promissory note is a charge over all the subsidiary
company's assets. Conversion of the promissory note into the Company's
common shares on the basis at half the bid price for its common stock,
as reported at the close of business on the day preceeding the
conversion date, is at the holder's option.
8. DIRECTORS' ADVANCES
Directors' advances are considered long-term as no repayment is
expected within the next year. Advances are non-interest bearing with
no specific terms for repayment.
9. CAPITAL STOCK
Authorized
Common shares, 50,000,000 as to number with a par value of one tenth of
One Cent ($.001) each, amounting to Fifty Thousand Dollars ($50,000).
March 31 March 31
2000 1999
---- ----
Stated capital
14,380,059 Common shares $ 14,380 $ 14,380
----------- -----------
Paid-in Capital $ 9,157,406 $ 9,157,406
----------- -----------
On March 9, 2000 as part of its corporate reorganization, the Company
authorized a one for five reverse stock split of existing issued common
shares, resulting in the number being reduced from 16,278,357 to
3,255,684. On the same date, and not subject to the reverse stock
split, the Company authorized issuance of 7,924,375 common shares in
restricted form being a one for one exchange of shares on purchase of
all the issued and outstanding shares of Symphony Telecom International
Inc. Further, two directors were issued an additional 1,000,000 common
each and 1,200,000 shares were issued to consultants for services
rendered with the reorganization. These transactions are being shown in
these pro forma financial statements as if the reorganization took
place July 1, 1998.
Prior to the corporate reorganization, Paid-in Capital was $9,076,264.
The 5-for-one reverse stock split reduced capital stock by $13,023 on
March 9, 2000, which was transferred to Paid-in Capital. The issuance
of 11,124,375 common shares were recorded at par of $.001 per share or
$11,124, increasing Paid-in Capital to $9,157,406.
6.
<PAGE>
SYMPHONY TELECOM INTERNATIONAL INC.
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS PERIOD ENDED MARCH 31, 2000
AND THE NINE MONTHS PERIOD ENDED MARCH 31, 1999
As a result of a subsidiary's agreement to purchase business assets and
customer listing, an option has been authorized by the board of
directors of the subsidiary company of 35, 000 common shares at US$3.00
per share which option expires December 31, 2000. This agreement has
been assumed by the board of directors of the Company on its
acquisition of Symphony Telecom International Inc.
10. NON-CONTROLLING INTEREST
The Non-controlling Interest represents twenty-five (25%) per cent
minority shareholders of Canadian Intercontinental Communicationds Del
Ecuador S.A., a company incorporated in Equador, of which the remaining
seventy-five (75%) per cent of the all the issued and outstanding
shares are held by Canadian Inter-Latin Communications Inc., a
subsidiary of Symphony Telecom International Inc.
11. DEFICIT
The Company has been inactive since June 30, 1994, until its
acquisition of Symphony Telecom International Inc. on March 9, 2000. On
June 30, 1994 the Company had an accumulated deficit of $9,073,507;
since then, deficit accumulated during its development stage totals
$102,243.
March 31 March 31
2000 1999
---- ----
Deficit accumulated:
during the development stage $ 102,243 $ 63,393
other 9,073,507 9,073,507
Consolidation of subsidiary companies 187,035 ( 50,626)
---------- ----------
Total Accumulated Deficit $9,362,785 $9,086,274
---------- ----------
12. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two
digits rather than four to identify a year. Date-sensitive systems may
recognize the year 2000 as 1900 or some other date, resulting in errors
when information using 2000 dates is processed. In addition, similar
problems may arise in some systems which use certain dates in 1999 to
represent something other than a date.
The effects of the Year 2000 Issue may be experienced before, on or
after January 1, 2000 and , if not addressed, the impact on operations
and financial reporting may range from minor errors to significant
systems failure which could affect an entity's ability to conduct
normal business operations. Although the Company's computerized systems
are working normally, it is not possible to be certain that all aspects
of the Year 2000 Issue affecting the entity, including those related to
the efforts of customers, suppliers, or other third parties, has been
fully resolved.
7.
SYMPHONY TELECOM INTERNATIONAL INC.
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS PERIOD ENDED MARCH 31, 2000
AND THE NINE MONTHS PERIOD ENDED MARCH 31, 1999
13. CONTINGENT LIABILITIES
A wholly owned subsidiary company has sued one of its customers to
collect an amount of CDN$15,000 (US$10,323) owing resulting from
telephone services rendered. The customer has counter-sued for an
amount of CDN$500,000 (US$344,115) claiming the subsidiary company was
not entitled to invoice for telephone services as it was only an agent
for the telephone carrier. It is management's position the counter
claim will be set aside. As it is uncertain whether management's
collection efforts will be successful, the full amount receivable has
been provided for by a charge against subsidiary's income.
A claim in the amount of CDN$34,624 plus interest and costs has been
made against a subsidiary company by a former consultant for
non-payment of amounts due under a management contract. The subsidiary
company is contesting the claim on the basis that the consultant failed
and refused to perform the duties and responsibilities according to the
management contract, and therefore was in breach of same. Management
believes the case will be withdrawn against it without significant
cost.
14. INCOME TAXES
The Company has accumulated net operating losses, which can be used to
offset future earnings. Accordingly, no provision for income taxes is
recorded in the financial statements. A deferred tax asset of
approximately $3,000,000 or the future benefits of net operating losses
is offset by a 100% valuation allowance, or approximately $3,000,000
due to uncertainty of the Company's ability to utilize the losses. As
of March 31, 2000, the Company has net operating loss carry forwards
available as follows:
Year End Amount Year Expires
-------- ------ ------------
1999 $6,987 2014
1998 $6,987 2013
1997 $6,987 2012
1996 $6,987 2011
1995 $6,987 2010
1994 $6,987 2009
1993 $6,987 2008
1992 $7,457,320 2007
1989 $86,724 2004
1988 $111,925 2003
1987 $304,116 2002
1986 $102,109 2001
1985 $1,384,570 2000
8.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion should be read in conjunction with the Financial
Statements and Notes thereto contained elsewhere herein. Please note that no
assurance exists as to the actual future outcome of Management's plans,
assumptions or estimates.
On March 9,2000 the company (Mammoth Resources Inc.), having determined that the
business plan of the Company should focus on Internet and telecommunication
pursuits acquired 100% of the outstanding shares of Symphony Telecom
International, Inc. a Delaware corporation with telecommunications operations,
primarily in Canada, and plans to expand into the United States and elsewhere.
Since the primary operating business asset of the company is now Symphony
Telecom International Inc, to avoid confusion and create market recognition,
management also moved, in March 2000, to change the name of the company to
Symphony Telecom International Inc.
The revenues and other financial results reported in the current quarter reflect
the operations of the company in sales of telecommunications services and
telephone systems to residential customers and small and medium sized
businesses. The results are compared to the previous year quarter at which time
the company had no operations. Management have also adopted a plan to migrate
the business of the company into the new age telecommunications technology by
focussing it's growth on Internet Protocol based systems and services. To this
end the company is investing in developing the technology and resources to
successfully compete in this market place. This investment has resulted in
certain operating losses, however the company is expecting to achieve
profitability within the next fiscal year.
PLAN OF OPERATION
The Company's plan of operation for the next twelve-month period is to focus
upon the development of it's direct sales force. The company has been hiring
experienced telecommunications and internet sales people and is planning to
build it's direct sales force to more than 30 within the next quarter.
Engineering and support staff to support this growth are also being hired and
trained. The company is also investing in expanding its back- office support
systems and software to ensure that it will continue to provide it's customers
with superior service.
The network services plans for the company include the provision of a variety of
IP based services, both voice and data, which require that the company deploy
strategic network IP services nodes. Management is currently pursuing the
availability of vendor financing with major telecommunications equipment
vendors. There is no assurance that the company will be able to obtain such
financing.
9.
<PAGE>
FORWARD STATEMENTS
Certain statements herein constitute forward-looking statements. These
statements involve known and unknown risks, uncertainties and other factors that
may cause actual results, levels of activity, performance, or achievements to be
materially different from any future results, levels of activity, In some cases,
you can identify forward-looking statements by terminology such as "may,"
"will," "should," "could," "expects," "plans," "anticipates," "believes,"
"estimates," "predicts," "potential," or "continue" or the negative of such
terms or other comparable terminology. Although expectations reflected in the
forward-looking statements are believed to be reasonable, there is no guarantee
of future results, levels of activity, performance, or achievements. Moreover,
neither we nor any other person assumes responsibility for the accuracy and
completeness of such statements. The Company does not undertake to update any of
the forward-looking statements herein.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits Index - Form 10-QSB:
3 (i) Articles of Incorporation (*)
(ii) Bylaws (*)
99.1 Articles of Amendment(**)
(*) Incorporated by reference to the Issuer Commission File, Form S-18 filing
with the Commission, as amended, including the attached amendment to the
Articles of Incorporation recently effected.
(**) Filed herewith.
(b) Reports on Form 8-K.
No reports were filed on Form 8-K for the period covered by this Report except
for a Report for March 9, 2000, which disclosed a stock for stock exchange
transaction between the Company and Symphony Telecom International, Inc., a
Canadian telecommunications concern, and the Company subsequently changed its
name to Symphony Telecom International, Inc., from Mammoth Resources, Inc.
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.
SYMPHONY TELECOM INTERNATIONAL, INC.
/s/ Gilles Trahan, C.E.O.
--------------------------
(principal executive and financial officer)
Date: May 15, 2000
