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, 1999
GS TELECOM LIMITED
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(Exact name of registrant as specified in its charter)
TELECONFERENCING SYSTEMS INTERNATIONAL, INC.
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(Former name)
Colorado 0-13313 36-3296861
- ----------------- ----------- ------------
(State or other (Commission IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
First Floor, Hampton House, 20 Albert Embankment London SE1 7TJ
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 44-171-587 3687
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
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As of March 31, 1999 there were 17,049,414 shares of common stock, no par value,
outstanding.
<PAGE>
<TABLE>
<CAPTION>
GS TELECOM LIMITED
Unaudited
Condensed Consolidated Balance Sheet March 31 June 30
1999 1998
<S> <C> <C>
$ $
ASSETS
CURRENT ASSETS
Cash 5,126 (1378)
Accounts Receivable 7,329 3,938
Prepaid Value Added Tax 18,525 16,309
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Total Current Assets 30,980 18,869
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PROPERTY AND EQUIPMENT
less accumulated depreciation of $881 1,500 0
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Total Assets 32480 18869
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
$ $
CURRENT LIABILITIES
Convertible and demand notes payable 588,900 588,900
Accounts payable 655,326 695,519
Payable to Affilliates and Related Parties 298,344 288,048
Accrued interest payable 73,767 23,712
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Total current liabilities 1,616,337 1,596,179
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STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, no par value per share;
Authorized 100,000,000 shares;
17,056,414 and 16,828,414 issued 1,380,357 1,137,357
and outstanding respectively
Accumulated deficit (2,995,599) (2,720,177)
Foreign currency translation adjustments 31,385 5,510
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Total stockholders' (deficit) $(1,583,857) $(1,577,310)
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Total Liabilities and Stockholders Equity (Deficit) 32480 18869
===========================================
</TABLE>
See Accompanying Notes
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
GS TELECOM LIMITED Unaudited Unaudited
Condensed Consolidated Statement of Operations Three months ended Nine months ended
March 31, 1999 March 31, 1998 March 31, 1999 March 31, 1998
$ $ $ $
Net Sales 0 37,237 65714
Cost of Sales 0 (8,068) 26840
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Gross Income (Loss) 0 29,169 0 38,874
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Selling, General and Administrative Expenses (141,517) (384,688) (275,422) 633052
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LOSS FROM CONTINUING OPERATIONS (141,517) (355,519) (275,422) (594,178)
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==================================================================================
NET INCOME (LOSS) $ (141,517) $ (355,519) $ (275,422) $ (594,178)
==================================================================================
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BASIC AND DILUTIVE NET INCOME (LOSS) PER SHARE: (.01) (.02) (.02) (.07)
==================================================================================
WEIGHTED AVERAGE SHARES OUTSTANDING 16,854,234 16,828,220 16,866,706 8,492,818
==================================================================================
</TABLE>
See Accompanying Notes
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
GS TELECOM LIMITED
Condensed Consolidated Statement of Cash Flows
CASH FLOWS FROM OPERATING ACTIVITIES Unaudited
Nine months ended
March 31, 1999 March 31, 1998
$ $
Net income (loss) (275,422) (594,178)
PROVIDED BY OPERATING ACTIVITIES
Common Stock Issued for Services 20,500
Depreciation and amortization 881 12,064
Changes in Operating Assets and Liabilities
Receivables (3,391) 30,039
Inventories (26,902)
Prepaid and Other Assets (2,216) 7,958
Accounts Payable (40,193) (78,713)
Accrued Interest Payable 50,055 14,523
Other 857
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Net Cash Flows from (used for) operating activities (270,286) (613,852)
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Equipment (2,381) (7,905)
Purchase of Intangibles (188)
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Net Cash Flows (used for) investing activities (2,381) (8,093)
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CASH FLOWS FROM FINANCING ACTIVITIES
Cash of Subsidiary at date of acquisition 36,173
Advances from (repaid to) affiliates and related parties 10,296 134,083
Issuance of Convertible and other notes payable 587,860
Issuance of shares for cash 243,000
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Net Cash Flows (used for) financing activities 253,296 758,116
===========================================
===========================================
EFFECT OF EXCHANGE RATE CHANGES ON CASH 25,875
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NET INCREASE (DECREASE) IN CASH 6,504 136,171
CASH AT BEGINNING OF PERIOD (1,378) 204
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CASH AT PERIOD END 5126 136375
===========================================
</TABLE>
See Accompanying Notes
<PAGE>
<TABLE>
<CAPTION>
Unaudited
GS TELECOM LIMITED
Condensed Consolidated Statement
of Changes in Stockholder's Equity (Deficit)
<S> <C> <C> <C>
Common Stock Accumulated
Shares Amount Deficit
Balance at July 1, 1998 16,828,414 1,137,357 ($2,720,177)
Stock issued for cash 228,000 243,000
Net Loss for period to date (275,422)
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Balances, March 31, 1999 17,056,414 1,380,357 ($2,995,599)
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</TABLE>
See Accompanying Notes
<PAGE>
GS TELECOM LIMITED
Notes to Condensed Consolidated Financial Statements
at March 31, 1999
(Unaudited)
Note A - Organization and Business
Organization and Nature of Business
GS Telecom Limited formerly Teleconferencing Systems International, Inc.
(the "Company") was incorporated in Colorado on December 19, 1983.
Activities of the Company from June 30, 1995 until November 15, 1997 were
primarily liquidation of operating assets and settlement of obligations owed
creditors and employees as previously reported. On November 15, 1997, the
Company acquired an Isle of Man Company, also named GS Telecom Limited, (later
changed to GST Limited ("GST") by issuance of a $150,000 convertible note
payable.
GST, the acquired subsidiary, had net liabilities of $544,268. The $150,000 note
payable was subsequently converted into 14,500,000 shares of common stock and
issued to the acquired company stockholders.
The assets of the GST subsidiary, included two wholly owned subsidiaries and
Associated Power Industries Limited ("API"), an UK designer and manufacturer of
energy savings systems. GST owns 50% of API with an option to acquire the
remaining 50% ownership interest for three years. All operations of the wholly
owned subsidiaries were effectively ceased on June 30, 1998.
At the date of this report there remains the obligation to discharge the
accounts payable and other payables of GST and the two wholly owned
subsidiaries, which it is planned, will be done through funds raised by new
share subscriptions.
Subsequent Events
Agreements with other parties for the acquisition of technology for the software
related business sectors were quarter end being finalized. After quarter end,
several contracts were completed which are disclosed in an 8-K being filed
concurrently herewith.
Note B - Basic Earnings (Loss) Per Share
Basic 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, 1999 compared
to same period ended March 31, 1998
As a result of the discontinuance of trading operations in the UK, the Company
had no sales revenues and no gross profits. For the same period in 1998, the net
sales were $37,237 with a gross profit of $29,169.
In quarter ended March 31, 1999, the Company incurred selling, general and
administrative expenses of $141,517 resulting in an operating loss of
($141,517).
For the same period in 1998 the company incurred $384,688 of such costs which
resulted in an operating loss of ($355,519).
The Company lost ($.01) per share in the three month period compared to a loss
of ($0.02) per share in the same period in 1998.
Results of Operations for the nine month period ended March 31, 1999 compared to
same period ended March 31, 1998
As a result of the discontinuance of trading operations in the UK, the Company
had no sales revenues and no gross profits. For the same period in 1998, the net
sales were $65,714 with a gross profit of $26,840.
For the nine months ended March 31, 1999, the Company incurred selling, general
and administrative expenses of $275,422 resulting in an operating loss of
($275,422). For the same period in 1998 the company incurred $633,052 of such
costs which resulted in an operating loss of ($594,178).
The Company lost ($.02) per share in the nine month period compared to a loss of
($0.07) per share in the same period in 1998.
Liquidity and Capital Resources
At period end, the Company had $5,126 cash capital and current and total assets
of $28,980. The Company had $1,616,337 in current liabilities at period end. In
light of the deficit ($1,587,357) 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 and its debt
repayment program, as above. 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 - A lawsuit was filed by GST Telecommunications, Inc.
alleging trademark infringement against the Company. The Case was settled by
stipulation to include a disclaimer in all published materials.
Item 2. Changes in securities - None.
Item 3.
Item 4. Submission of matters to a vote of security holders - None.
Item 5. Other information - In September 1998, the Company entered into a
contract (amended on December 16, 1998 and finalized on April 1, 1999) to
acquire from Masstech Inc., for common stock of the Company, all of its assets,
consisting of significant Intellectual Property Rights resulting from the
creation of special effects in certain special effects movie studios. In
addition, a 15% ownership was acquired by the Company in Manex Studios, LLC,
Manex Visual Effects, LLC, Manex Entertainment, LLC, and Mass Illusion, LLC.
The number of shares to be issued was agreed on April 1, 1999 which is the
effective date of issue.
Since that date a wholly owned Company in California, Universal Syntropy
Corporation is being used to commercialise and develop the IPR into its
constituent commercial parts including Procedural Animation, Motion Analysis,
Reality Capture, Digital Film Applications, Digital Image Processing and
Compositing and Media Asset management. Mr Roger Davis is the Chief Executive
Officer and Mr Michael van Himbergen the Chief Operations Officer. Both have now
been appointed as Advisory Board members of GS Telecom Limited.
Item 6. Exhibits and Reports on Form 8 - K
<PAGE>
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
<PAGE>
Reports on Form 8-K filed during the three months ended March
31, 1999 (incorporated by reference): None
<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.
Dated: May 6, 1999
GS Telecom Limited
/s/ Gary Botha
- --------------------------
Gary Botha, Director
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> MAR-31-1999
<CASH> 5,126
<SECURITIES> 0
<RECEIVABLES> 7,329
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 30,980
<PP&E> 1,500
<DEPRECIATION> 0
<TOTAL-ASSETS> 32,480
<CURRENT-LIABILITIES> 1,616,337
<BONDS> 0
0
0
<COMMON> 1,380,357
<OTHER-SE> (2,995,599)
<TOTAL-LIABILITY-AND-EQUITY> 32,480
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 275,422
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (275,422)
<INCOME-TAX> 0
<INCOME-CONTINUING> (275,422)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (275,422)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
