SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended June 30, 2000
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 0-13338
INFOAMERICA, INC.
(Exact name of small business issuer as specified in its charter)
COLORADO 84-0853869
(State of other jurisdiction of (I.R.S. Employer)
incorporation or organization) Identification No.)
5 Clover Leaf Court
Tehachapi, California 93561
(Address of principal executive offices)
(661) 821-6018
(Issuer's Telephone Number, Including Area Code)
Not Applicable
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes |X| No
|_|
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: Common Stock, $.025 par value per
share - 21,798,521 shares outstanding as of June 30, 2000.
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INFOAMERICA, INC.
FORM 10-QSB
FOR THE QUARTER ENDED June 30, 2000
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PART I. FINANCIAL INFORMATION PAGE
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Item 1. Financial Statements.
Consolidated Condensed Balance Sheets as of June 30, 2000
and December 31, 1999 3
Consolidated Condensed Statements of Operations for the Six
Months ended June 30, 2000 and June 30, 1999 and the Three
Months ended June 30, 2000 and June 30, 1999 4
Consolidated Condensed Statements of Shareholders' Equity 5
Consolidated Condensed Statements of Cash Flows for the Six
Months ended June 30, 2000 and June 30, 1999. 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities and Use of Proceeds. 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holder 10
Item 5. Other Information. 10
Item 6. Exhibits and Reports on Form 8-K. 10
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INFOAMERICA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
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June 30, December 31,
2000 1999
--------------- -----------------
(unaudited)
ASSETS
CURRENT ASSETS
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Cash and cash equivalents $ 718,042 $ 9,438
Accounts Receivable - net of
allowance for doubtful accounts of $ 5,000 in 2000 and 1999 67,729 69,454
Supplies 31,000 31,000
Prepaid expenses 22,181 -
--------------- -----------------
TOTAL CURRENT ASSETS 838,952 109,892
PROPERTY AND EQUIPMENT - net of accumulated
depreciation 1,537,595 1,637,595
--------------- -----------------
TOTAL $2,376,547 $1,747,487
=============== =================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 190,090 $ 280,991
Revenue billed in advance 53,405 51,125
Franchise fees payable 15,791 96,787
Customer deposits 5,200 5,200
--------------- -----------------
TOTAL CURRENT LIABILITIES 264,486 434,103
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SHAREHOLDERS' EQUITY
Preferred stock, $1 par value; 5,000,000 shares authorized,
none issued
Common stock, $.025 par value; 900,000,000 shares authorized,
21,798,521 and 19,048,521 shares issued and outstanding
in June 30, 2000 and December 31, 1999 544,963 476,213
Additional paid-in capital 2,652,910 1,484,314
Accumulated deficit (1,085,812) (647,143)
--------------- -----------------
Total Shareholders' Equity 2,112,061 1,313,384
--------------- -----------------
TOTAL $2,376,547 $1,747,487
=============== =================
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See accompanying Notes to Condensed Consolidated Financial Statements
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INFOAMERICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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Six Months Ended Three Months Ended
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
------------- -------------- ------------- --------------
(unaudited) (unaudited) (unaudited) (unaudited)
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REVENUES $ 321,943 $ 307,932 $ 167,793 $ 153,198
EXPENSES
Programming content 195,171 55,296 157,220 23,793
Cable operating 119,494 83,691 64,953 45,056
General and administrative 325,947 178,193 135,203 113,766
Depreciation 120,000 120,000 60,000 60,000
------------- -------------- ------------- --------------
TOTAL EXPENSES 760,612 437,180 417,376 242,615
------------- -------------- ------------- --------------
NET LOSS $(438,669) $(129,248) $(249,583) $(89,417)
============= ============== ============= ==============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 20,358,045 19,048,521 21,798,521 19,048,521
============= ============== ============= ==============
BASIC LOSS PER SHARE $ (0.022) $ (0.007) $ (0.011) $ (0.005)
============= ============== ============= ==============
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See accompanying Notes to Condensed Consolidated Financial Statements
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INFOAMERICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
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Common Stock
-------------------------- Additional
Amount Paid in Capital Accumulated
Shares (par value) (net of par value) Deficit Total
------------ --------------------------------------------- ------------
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Balance, December 31, 1999 19,048,521 $476,213 $ 1,484,314 $ (647,143) $1,313,384
Net proceeds from sale of common stock 2,750,000 68,750 1,168,596 1,237,346
Net loss (438,669) (438,669)
------------ ----------- --------------- ------------- ------------
Balance, June 30, 2000 (unaudited) 21,798,521 $544,963 $ 2,652,910 $(1,085,812) $2,112,061
============ =========== =============== ============= ============
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See accompanying Notes to Condensed Consolidated Financial Statements
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<PAGE>
INFOAMERICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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Six Months Ended
June 30, June 30,
2000 1999
-------------- --------------
(unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
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Net loss $(438,669) $(129,248)
Adjustments to reconcile net loss to net cash provided by (used
in) operating activities:
Depreciation 120,000 120,000
Changes in operating assets and liabilities:
Accounts receivable 1,725 (26,639)
Accounts payable and accrued expenses (90,901) (17,915)
Prepaid expenses (22,181) -
Revenue billed in advance 2,280 (2,083)
Franchise fee payable (80,996) -
-------------- --------------
NET CASH PROVIDED BY OPERATING ACTIVITIES (508,742) (55,885)
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (20,000) -
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from issuance of stock 1,237,346 -
-------------- --------------
NET INCREASE IN CASH 708,604 (55,885)
CASH AND CASH EQUIVALENT, BEGINNING OF PERIOD 9,438 4,658
-------------- --------------
CASH AND CASH EQUIVALENT, END OF PERIOD $ 718,042 $(51,227)
============== ==============
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See accompanying Notes to Condensed Consolidated Financial Statements
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<PAGE>
INFOAMERICA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The interim financial statements presented have been prepared by
InfoAmerica, Inc. (the "Company") without audit and, in the opinion of
the management, reflect all adjustments of a normal recurring nature
necessary for a fair statement of (a) the results of operations for the
six and three months ended June 30, 2000 and 1999, (b) the financial
position at June 30, 2000 and December 31, 1999, and (c) the cash flows
for the six months ended June 30, 2000 and 1999. Interim results are
not necessarily indicative of results for a full year.
The balance sheet presented as of December 31, 1999 has been derived
from the financial statements that have been audited by the Company's
independent public accountants. The financial statements and notes are
condensed as permitted by Form 10-QSB and do not contain certain
information included in the annual financial statements and notes of
the Company. The financial statements and notes included herein should
be read in conjunction with the audited financial statements and notes
for the years ended December 31, 1999 and 1998 included in the
Company's Annual Report on Form 10-KSB.
Effective June 8, 1999, pursuant to a Merger Agreement and Plan of
Reorganization (the "Merger Agreement"), InfoAmerica, Inc. acquired DDD
Cablevision Ltd., a limited liability partnership, resulting in the
partners and management of DDD Cablevision Ltd. having actual and
effective control of InfoAmerica, Inc., the surviving corporation. For
accounting purposes, the transaction was treated as an acquisition of
InfoAmerica, Inc. by DDD Cablevision Ltd. and as a recapitalization of
DDD Cablevision Ltd. The historical financial statements prior to the
acquisition became those of DDD Cablevision Ltd. even though they were
labeled as those of InfoAmerica, Inc. In the recapitalization,
historical partners' equity of DDD Cablevision Ltd., prior to the
merger, was retroactively restated for the equivalent number of shares
received in the merger with an offset to paid-in capital. Operations
prior to the merger were those of DDD Cablevision, Ltd. Basic loss per
share prior to the merger were restated to reflect the number of
equivalent shares received by partners of DDD Cablevision Ltd.
2. SHAREHOLDERS' EQUITY
As described under Basis of Presentation in Note 1, the historical
partners' equity of DDD Cablevision Ltd., prior to the merger, was
retroactively restated for the equivalent number of shares received in
the merger as a credit to common stock and the remaining balance of
partners' equity as a credit to paid-in capital. At the time of merger,
DDD Cablevision's partners received an aggregate of 13,834,000
unregistered "restricted" shares with par value of $.025 per share.
Prior to the merger, InfoAmerica, Inc. had 5,214,521 shares of common
stock outstanding. Total issued and outstanding shares of common stock
immediately after the merger was 19,048,521.
3. SUBSEQUENT EVENTS
In July, the Company received proceeds of approximately $2,500,000 from
the private placement of 1,923,077 restricted shares of the Company's
$.025 par value common stock at $1.30 per share. These shares have not
yet been issued.
4. STOCK PURCHASE AGREEMENT
The Company executed a Stock Purchase Agreement on June 1, 2000, with
Cable California S.A. de C.V. ("Cable California"), a corporation
formed under the Republic of Mexico, and Dick Clark International Cable
Ventures, Ltd. and Carlos Bustamante, Sr. (the "Shareholders") of Cable
California. Pursuant to the terms of the agreement, the Company will be
the record and beneficial owner of 100% of the voting and non-voting
stock of Cable California. 51% of the voting stock of Cable California
will be held in a trust account with a Mexican bank for the benefit of
the Company as is required under Mexican law. Upon consummation of the
transaction, the Company will issue 2,000,225 shares of common stock to
each of the Shareholders of Cable California.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
------------
The Company was incorporated under the laws of the state of Colorado on
June 8, 1991 and is the surviving corporation of a merger on June 8, 1999
between it and DDD Cablevision, Inc., a Delaware corporation.
The Company, through its wholly-owned subsidiary DDD Cablevision, Inc.
d/b/a Country Cable ("Country Cable") operates a cable television system in Kern
County, California. Country Cable serves approximately 2,000 cable television
subscribers in the unincorporated areas of Kern County, California. The Company
was issued a fifteen (15) year Cable Television Franchise License in 1991 by the
County of Kern, California. To date, the Company has installed approximately 175
miles of coaxial and feeder cable throughout the Kern County area. The Company
transmits its programming with a spectrum energy of 450 megahertz (MHz).
The Company maintains an existing cable telecommunications
infrastructure of a three stage microwave satellite receiver and transmit system
which interconnects into areas of the 175 miles of cable plants. The Company has
been issued a second cable franchise in the City of Tehachapi, California. It is
the intention of the Company, subject to securing sufficient financing, to
upgrade its present cable infrastructure and construct an additional 135 miles
of cable and plant facilities, all of which will be in the form of fibre optical
cable. This would allow the Company to have the availability to serve a
potential market of over 12,000 homes, which includes the present 2,000
subscribers. The result would be a communications network providing 120 channels
of programming, business to business carriage data network and high speed
Internet access to its subscribers.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
At June 30, 2000, the Company's cash and cash equivalents amounted to
$718,042. This was an increase of $708,604 from $9,438 for the six months then
ended. Operating activities used net cash in the amount $508,742 to fund the
Company's cash loss from operations of $318,669 (net of non-cash expense of
$120,000 for depreciation). Net cash of $190,073 was used by changes in
operating assets and liabilities primarily to fund the payment of accounts
payable and accrued expenses in the amount of $72,986 and the payment of
franchise fees payable in the amount of $80,996. The Company experienced a
decrease in accounts receivable of $28,364. Financing activities provided net
proceeds in the amount of $1,237,346 from the issuance of stock in a private
placement in March. The Company believes that its present cash and cash flow
generated from operations, as well as additional future financing from outside
sources, will be sufficient to meet its operational needs.
RESULTS OF OPERATIONS
---------------------
Revenue increased by $14,011 from $307,932 for the six month period
ended June 30, 1999 to $321,943 for the six months ended June 30, 2000. Revenues
increased by $14,595 from $153,198 for the three months ended June 30, 1999 to
$167,793 for the three months ended June 30, 2000. The increase in revenue is
the result of increased cable television subscriptions and cable television
installations.
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<PAGE>
Programming content expenses increased by $139,875 from $55,296 for the
six months ended June 30, 1999 as compared to $195,171 for the six months ended
June 30, 2000. Programming content expenses increased by $133,427 from $23,793
for the three months ended June 30, 1999 to $157,220 for the three months ended
June 30, 2000. The increase in these expenses is the result of payments made by
the Company with respect to fees previously owed to content providers for the
use of their programming.
Cable operating expenses increased by $35,803 from $83,691 for the six
months ended June 30, 1999 to $119,494 for the six months ended June 30, 2000.
Cable operating costs increased by $19,897 from $45,056 for the three months
ended June 30, 1999 to $64,953 for the three months ended June 30, 2000. The
increase in cable operating expenses is the result of current and outstanding
field costs, such as: tech salaries, cable materials, pole fees, headend
equipment, system maintenance, utilities, vehicle leases, fuel costs, vehicle
repairs and maintenance, headend rentals radios and pagers.
General and administrative expenses increased by $147,754 from $178,193
for the six months ended June 30, 1999 to $325,947 for the six months ended June
30, 2000. General and administrative expenses increased by $21,437 from
$113,766, for the three months ended June 30, 1999, to $135,203 for the three
months ended June 30, 2000. The increase in these fees is the result of an
increase in legal fees in connection with the day to day operations of the
Company and the consummation of the transaction with Cable California S.A. de
C.V. as more fully discussed in Item 5.
The Company's net loss of $438,669 for the six months ended June 30,
2000 was an increase of $309,421 from the net loss of $129,248 for the six
months ended June 30, 1999. The Company's net loss of $249,583 for the three
months ended June 30, 2000 was an increase of $160,166 from the net loss of
$89,417 for the three months ended June 30, 1999. The increase in net loss for
the six months ended June 30, 2000 and the three months ended June 30, 2000 can
be attributed to the factors as discussed above.
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<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
------------------
None.
Item 2. Changes in Securities and Use of Proceeds.
------------------------------------------
None.
Item 3. Defaults Upon Senior Securities.
--------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
None.
Item 5. Other Information.
------------------
The Company executed a Stock Purchase Agreement on June 1, 2000, with
Cable California S.A. de C.V. ("Cable California"), a corporation formed under
the Republic of Mexico, and Dick Clark International Cable Ventures, Ltd. and
Carlos Bustamante, Sr. (the "Shareholders") of Cable California. Pursuant to the
terms of the agreement, the Company will be the record and beneficial owner of
100% of the voting and non-voting stock of Cable California. 51% of the voting
stock of Cable California will be held in a trust account with a Mexican bank
for the benefit of the Company as is required under Mexican law. Upon
consummation of the transaction, the Company will issue 2,000,225 shares of
common stock to each of the Shareholders of Cable California.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
10.1 Stock Purchase Agreement dated June 1, 2000
by and among the Company, Cable California
S.A. de C.V., Dick Clark International Cable
Ventures, Ltd. and Carlos Bustamante, Sr.
27. Financial Data Schedule
(b) Reports on Form 8-K
On June 20, 2000, the Company filed an amended report
under Item 4, Changes in Registrant's Certifying
Accountant. No financial statements were filed during
the quarter.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Date: August 21, 2000 InfoAmerica, Inc.
/s/ Richard G. Lubic
----------------------------------
By: Richard G. Lubic
President and Chief Executive
Officer
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
10 Stock Purchase Agreement dated June 1, 2000 by and among the
Company, Cable California S.A. de C.V., Dick Clark International
Cable Ventures, Ltd. and Carlos Bustamante, Sr.
27 Financial Data Schedule
