SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the quarterly period ended: March 31, 1998
GS TELECOM LIMITED
(Exact name of registrant as specified in its charter)
TELECONFERENCING SYSTEMS INTERNATIONAL, INC.
(Former name)
Colorado 0-13313 36-3296861
(State or other (Commission IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
33 Great James Street, London, England WC1N 3HB
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 44-171-404-9442
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 the filing
requirements for at least the past 90 days.
Yes X No ____
As of March 31, 1998, there were 14,778,220 shares of common
stock, no par value, outstanding.
<PAGE>
GS TELECOM LIMITED
Condensed Consolidated Balance Sheet
March 31,1998 June 30, 1997
(Unaudited)
ASSETS
CURRENT ASSETS
Cash $136,375 $204
Accounts Receivable 43,352 -
Inventories 34,303 -
Prepaid Value Added Tax 15,190 -
Total Current Assets 229,220 204
PROPERTY AND EQUIPMENT, less of 37,900 -
accumulated depreciation of $11,089
OTHER ASSETS -
Goodwill, less accumulated
amortization of $6,530 687,738 -
Other 10,356 -
698,094 -
$965,214 $204
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $781,774 -
Convertible notes payable 587,860 -
Accrued interest payable 14,523 -
Total current liabilities 1,384,157 -
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, no par value per share;
authorized 100,000,000 shares; issued
and outstanding 14,778,220 and 278,220
shares, respectively
Additional paid-in capital 1,116,857 966,857
Common stock issuable, 2,050,000 shares 20,500 -
Accumulated deficit (1,560,831) (966,653)
Foreign currency translation adjustments 4,531 -
Total stockholders' (deficit) (418,943) 204
$965,214 $204
See Accompanying Notes
<PAGE>
[CAPTION]
<TABLE>
GS TELECOM LIMITED
Condensed Consolidated Statement of Operations
(Unaudited)
<S> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
March 31 March 31
1998 1997 1998 1997
NET SALES $37,237 $- $65,714 $5,779
COST OF SALES 8,068 - 26,840 -
GROSS PROFIT 29,169 - 38,874 5,779
SELLING, GENERAL AND 384,688 4,279 633,052 14,550
ADMINISTRATIVE
OPERATING LOSS (355,519) (4,279) (594,178) (8,771)
OTHER INCOME (EXPENSE) - - - -
LOSS BEFORE EXTRAORDINARY (355,519) (4,279) (594,178) (8,771)
ITEM
EXTRAORDINARY ITEM - - - - 1,930
SETTLEMENT AND
EXTINGUISHMENT OF TRADE
PAYABLES
NET LOSS $(355,519) (4,279) $(594,178) $(6,841)
BASIC AND DILUTIVE NET LOSS
PER COMMON SHARE:
BEFORE EXTRAORDINARY ITEM $(.02) $(.02) $(.07) $(.03)
EXTRAORDINARY ITEM - - - .01
NET INCOME (LOSS) $(.02) $(.02) $(.07) $(.02)
WEIGHTED AVERAGE SHARES 16,828,220 278,220 8,492,818 278,220
</TABLE>
See Accompanying Notes
<PAGE>
GS TELECOM LIMITED
Condensed Consolidated Statement of Cash Flows
(Unaudited)
Nine Months Nine Months
Ended Ended
March 31, March 31,
1998 1997
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income (loss) $(594,178) $(6,841)
Adjustments to reconcile net
income (loss) to net cash
provided by operating activities:
Common stock issuable for 20,500 -
services
Depreciation and amortization 12,064 -
Changes in operating assets and
liabilities:
Receivables 30,039 531
Inventories (26,902) 1,604
Prepaid value added tax 7,958 -
Accounts payable (78,713) (7,799)
Payable to related parties 134,083 11,796
Accrued interest payable 14,523 -
Other 857 117
(479,769) (592)
CASH FLOWS FROM INVESTING
ACTIVITIES
Cash of subsidiary at date of 36,173 -
business acquisition
Purchase of equipment (7,905) -
Purchase of intangibles (188) -
28,080 -
CASH FLOWS FROM FINANCING
ACTIVITIES
Issuance of convertible notes 587,860 -
payable
587,860 -
NET INCREASE (DECREASE) IN CASH 136,171 (592)
CASH - BEGINNING OF PERIOD 204 840
CASH - END OF PERIOD $136,375 $248
See accompanying notes.
<PAGE>
[CAPTION]
<TABLE>
GS TELECOM LIMITED
Condensed Consolidated Statement of Changes in Stockholder's Equity
(Deficit)
Common Common Additional Common Accumulated Other
Stock Stock Paid-in Stock Defict
Shares Amount Capital Issuable
<S> <C> <C> <C> <C> <C> <C>
Balances, 278,220 - $966,857 - $(966,653) $-
July 1, 1997
Conversion of 14,500,000 - 150,000 - - -
note payable
issued to
stockholders
of acquired
subsidiary
Stock issuable - - - 20,500 - -
for services
(2,050,000
shares)
Currency - - - - - 4,531
translation
adjustments
Net loss - - - - (594,178) -
(unaudited)
Balances, March 14,778,220 $- $1,116,857 $20,500 $(1,560,831) $4,531
31, 1998
(Unaudited)
</TABLE>
See accompanying notes
<PAGE>
GS TELECOM LIMITED
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note A - General
GS Telecom Limited, formerly Teleconferencing Systems
International, Inc. (the "Company") was incorporated in
Colorado on December 19, 1983.
Activities of the company since June 30, 1995 until November
15, 1997, were primarily liquidation of operating assets and
settlement of obligations to creditors and employees as
previously reported. On November 15, 1997, the Company
acquired an Isle of Man Company, also named GS Telecom
Limited, by issuance of a $150,000 convertible note payable.
The acquired subsidiary had net liabilities of $544,268.
The note payable was subsequently converted to 14,500,000
shares of common stock, which was issued to the acquired
company stockholders. The subsidiary's business is to
design and market energy saving and home management systems.
The assets of the subsidiary also includes Associated Power
Industries Limited ("API"), a designer and manufacturer of
energy savings systems. The subsidiary owns 50% of API and
has an option to acquire the remaining 50% ownership
interest for three years. Substantially all intercompany
transactions have been eliminated in the accompanying
consolidated financial statements.
On January 6, 1998, the board of directors changed the
corporations name to GS Telecom Limited and approved a 150-
to one reverse split of the issued and outstanding common
shares of the Company. All share and per share amounts have
been retroactively restated in the accompanying financial
statements to reflect the effect of the reverse stock split.
The accompanying unaudited condensed financial statements
have been prepared in accordance with the instructions to
Form 10-QSB and do not include all of the information and
notes required by generally accepted accounting principles
for complete financial statements. In the opinion of
management, all material adjustments, consisting of only
normal recurring adjustments considered necessary for a fair
presentation, have been included. These statements should
be read in conjunction with the financial statements and
notes thereto included in the Company's Form 10-KSB for the
year ended June 30, 1997.
The results of operations for the nine months ended March
31, 1998, are not necessarily indicative of the results for
the remainder of fiscal 1998.
Note B - Earnings (Loss) Per Share
Earnings (loss) per share of common stock are computed using
the weighted average number of shares outstanding during
each period. All share information and per share data have
been retroactively restated for all periods presented to
reflect reverse stock splits.
<PAGE>
ITEM 2.
Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations for the three month period ended March 31,
1998 compared to same period ended March 31, 1997
For the quarter ended March 31, 1998, the Company had
revenues of $37,237, and gross profit of $29,169. For the same
period in 1997, the net sales were $0 with no cost of sales for a
gross profit of $0.
The principal reasons for the increases in operations for
the three months ended March 31, 1998, over 1997 are due to the
operations of the newly acquired subsidiary GS Telecom, an Isle
of Man company which sells computerized energy saving heating
controls in Great Britain.
In quarter ended March 31, 1998, the Company incurred
selling, general and administrative expenses of $384,688
resulting in an operating loss of ($355,519). For the same
period in 1997 the company incurred $4,279 of such costs which
resulted in an operating loss of ($4,279).
The Company lost ($.02) per share in the three month period
compared to a nominal loss per share in the same period in 1997.
RESULTS OF OPERATIONS FOR NINE MONTH PERIOD ENDED MARCH 31,
1998 TO SAME PERIOD IN 1997.
Nine months ended March 31, 1998 compared to same period in 1997.
Sales for the nine months ended March 31, 1998, increased to
$65,714 over the $5,779 recorded during the nine months ended
March 31, 1997. The principal reason for the increase was the
acquisition of GS Telecom Limited as an operating subsidiary.
In the nine month period in 1998, GS Telecom Limited's cost of
sales, selling, general and administrative expenses were $633,052
for a net operating loss of ($594,178) compared to similar
expenses of $14,550 in 1997 which resulted in a net operating
loss of ($6,841).
Liquidity and Capital Resources
At period end, the Company had $136,375 cash capital and
current assets of $92,845 and total assets (including goodwill of
$687,738) of $965,214. The Company had $1,384,157 in current
liabilities at period end. In light of the deficit ($877,461) in
current assets and operating capital, the Company will be forced
to either borrow against or sell assets or make private
placements of stock or debt in order to fund continued
operations. No assurance exists as to the ability to make
private placements of stock or borrow funds.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings - None.
Item 2. Changes in securities - None.
Item 3. Defaults upon senior securities - None.
Item 4. Submission of matters to a vote of security holders -
Reverse Split
Pursuant to an Information Statement and Notice of Special
Meeting of Shareholders on January 5, 1998, the shareholders
approved up to a 150 to 1 reverse split of the issued and
outstanding common shares.
Name Change
Further, the shareholders approved the change of name of the
corporation to GS Telecom Limited.
GS Telecom Limited, formerly Teleconferencing Systems
International Inc. announce that their first Private Placement of
8% Convertible Loan Notes, due September 30, 2000, was closed in
December 1997. The sum raised was $376,500 which was subject to
Finder's Fees and Sales Commission of 10%. An additional $63,500
has been subscribed but not paid. The transaction was
accomplished to foreign investors pursuant to Regulation S.
The Holders of these Notes shall have the option to convert
one hundred percent (100%) of the original principal amount of
the Note issued to the Holder at any time after the 120th day
following the date of issue, into shares of the Company's Common
Stock at a conversion price equal to the lower of $2 per share or
at twenty five percent (25%) less than the average closing bid
price of the Company's Common Stock for the five (5) consecutive
trading days ending on the trading day immediately preceding the
date thereof. Notwithstanding the foregoing, if, after the
effectiveness of the Registration Statement or if an exemption is
available from registration, the closing bid price of the
Company's Common Stock reaches four dollars for the five (5)
consecutive trading days ending on the trading day immediately
preceding the date thereof, the Company shall have the option of
forcing conversion up to Fifty Percent (50%) of the original
principal amount of the Notes originally issued to the Holder,
and if, after such effectiveness, the closing bid price of the
Company's Common Stock reaches eight dollars, the Company shall
thereafter have the option of forcing conversion up to One
Hundred Percent (100%) of the original principal amount of the
Notes issued to the Holder.
Item 5. Other information - None.
<PAGE>
Item 6. Exhibits and reports on Form 8-K
(a) The following are filed as Exhibits to
this Quarterly Report. The numbers refer to the
Exhibit Table of Item 601 of Regulation S-K: None.
(b) Reports on Form 8-K filed during the
three months ended March 31, 1998. (incorporated
by reference):
January 15, 1998
January 24, 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 of the undersigned thereunto duly authorized.
Dated: May 13, 1998
GS TELECOM LIMITED
by:/s/David Innes
David Innes, President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> MAR-31-1998
<CASH> 136,375
<SECURITIES> 0
<RECEIVABLES> 43,352
<ALLOWANCES> 0
<INVENTORY> 34,303
<CURRENT-ASSETS> 229,220
<PP&E> 37,900
<DEPRECIATION> 0
<TOTAL-ASSETS> 965,214
<CURRENT-LIABILITIES> 1,384,157
<BONDS> 0
0
0
<COMMON> 1,116,857
<OTHER-SE> 1,560,831
<TOTAL-LIABILITY-AND-EQUITY> (418,943)
<SALES> 0
<TOTAL-REVENUES> 65,714
<CGS> 26,840
<TOTAL-COSTS> 26,840
<OTHER-EXPENSES> 633,052
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (594,178)
<INCOME-TAX> 0
<INCOME-CONTINUING> (594,178)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (594,178)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> (.07)
</TABLE>
