UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB/A-1
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended March 31, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ________ to ________
Commission file number: 33-11059-A
TELESERVICES INTERNATIONAL GROUP INC.
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in it charter)
Florida 59-2773602
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
100 Second Avenue South, Suite 1000, St. Petersburg, Florida 33701
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(Address of principal executive offices)
(727) 895-4410
-------------------------------
(issuer's telephone number)
- --------------------------------------------------------------------------------
(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 such shorter
period that the issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the issuer filed all documents and reports required to be filed by
Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities
under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of August 12, 1998, of the
issuer's Common Stock, $.0001 par value, there were 53,377,738 shares
outstanding.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
<PAGE>
EXPLANATORY STATEMENT. The Registrant is filing this Amendment to its Quarterly
Report on Form 10-QSB for the quarter ended March 31, 1998, to correct certain
errors that appeared on the unaudited financial statements.
On the Consolidated Balance Sheets, the only material change is in the
comparative column for the prior quarter (the three months ended March 31,
1997). Specifically, an amount of $41,930 was not entered under the heading
"Capital leases payable, net of current portion", which affected the subsequent
totals (i.e., "total liabilities" and "total liabilities and stockholders'
(deficit)") by that amount.
On the Consolidated Statement of Operations, the only change to the column for
the three months ended March 31, 1998, was that the line items for "Salaries"
and for "Contract Services" were combined. In the comparative column for the
three months ended March 31, 1997, several of the amounts under the heading
"Operating Expenses" were listed incorrectly under the wrong line items,
although "Total Operating Expenses" was not affected.
On the Consolidated Statement of Cash Flows, a line item labeled "(Increase) in
cash collateral" was added under the heading "Cash flows from financing
activities", which resulted in a decrease of $20,000 for the line items "Net
cash provided by financing activities" and "Increase (decrease) in cash" for the
three months ended March 31, 1998. Also, for the three months ended March 31,
1998, "Cash beginning of period" was changed to $-0-, and "Cash, end of period"
was changed to $82,069 -- these line items had previously included $175,000 in
cash that was restricted and should not have been included.
The Registrant is also revising the footnotes to the financial statements and
amending Management's Discussion and Analysis of Financial Condition and Results
of Operations. Further, a restated financial data schedule is being filed
electronically herewith.
INDEX
PART I. FINANCIAL INFORMATION Page
----
Item 1. Financial Statements
Consolidated Balance Sheets 3
March 31, 1998 (Unaudited) and December 31, 1997
Unaudited Consolidated Statements of Operations 4
Three Months ended March 31, 1998 and 1997
Unaudited Consolidated Statements of Cash Flows 5
Three Months ended March 31, 1998 and 1997
Notes to Financial Statements (Unaudited) 6-12
Item 2. Management's Discussion and Analysis of Financial 13
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURE PAGE 15
<PAGE>
TELESERVICES INTERNATIONAL GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31, 1998 Dec. 31, 1997
-------------- ---------------
(Audited)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 82,069 $ -
Cash, restricted (Note 2) 195,000 175,000
Accounts receivable, net of allowance
for doubtful accounts 156,861 162,648
Other Current Assets 51,576 38,886
--------------- ---------------
Total current assets 485,506 376,534
--------------- ---------------
Equipment, net of accumulated depreciation 491,575 649,960
Other assets 59,357 29,440
--------------- ---------------
Total assets $ 1,036,438 $ 1,055,934
=============== ===============
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current liabilities:
Outstanding checks in excess of amounts
reported by banks $ - $ 142,382
Accounts payable and accrued expenses (Note 5) 6,043,998 5,496,215
Loans payable, stockholders 443,397 59,315
Capital leases payable, current portion 59,838 59,838
Notes payable, current portion 185,957 216,040
--------------- ---------------
Total current liabilities 6,733,190 5,973,790
Notes payable, net of current portion 162,934 234,139
Capital leases payable, net of current portion 13,570 41,930
--------------- ---------------
Total liabilities 6,909,694 6,249,859
--------------- ---------------
Commitments and Contingencies (Notes 1,2,3,5 and 6)
Stockholders' (deficit):
Preferred stock, $.001 par value
None issued and outstanding - -
Common stock, $.0001 par value 3,498 3,016
Additional Paid-In Capital 22,217,015 20,869,442
Accumulated (deficit) (28,093,769) (26,066,383)
---------------- ----------------
Total stockholders' (deficit) ( 5,873,256) ( 5,193,925)
---------------- ----------------
Total liabilities and stockholders' (deficit) $ 1,036,438 $ 1,055,934
================ ================
</TABLE>
See accompaying notes
3
<PAGE>
TELESERVICES INTERNATIONAL GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1998 1997
--------------- --------------
<S> <C> <C>
Total Revenues $ 346,806 $ 591,871
--------------- --------------
Operating Expenses:
Salaries and contract services 1,406,271 1,756,965
Payroll taxes and benefits 61,432 120,121
Rent 88,780 137,890
Telephone 205,797 304,885
Travel and entertainment 21,190 304,341
Advertising and promotion 38,662 336,246
Depreciation and amortization 175,963 234,022
Other expenses 360,376 354,884
--------------- --------------
Total Operating Expenses 2,358,471 3,549,351
--------------- --------------
Net (loss) from operations (2,011,665) (2,957,480)
Other income (expenses):
Interest income 2,515 3,978
Interest (expense) ( 18,236) ( 71,238)
--------------- --------------
Net (loss) $ (2,027,386) $ (3,024,740)
=============== ==============
Net (loss) per share $ (0.06) $ (0.13)
================ ===============
Weighted Average Shares 32,563,714 22,912,531
=============== ==============
Outstanding
</TABLE>
See accompanying notes
4
<PAGE>
TELESERVICES INTERNATIONAL GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
Cash flows from operating activities: 1998 1997
---------------- ---------------
<S> <C> <C>
Net (loss) $ (2,027,386) $ (3,024,740)
Adjustments to reconcile net (loss) to
net cash (used in) operating activities:
Decrease (Increase) in accounts receivable 22,665 ( 166,229)
Depreciation and Amortization 175,963 234,022
Increase (decrease) in accounts payable
and accrued expenses 405,402 765,122
Increase in accrued payroll and taxes - 157,235
Increase in accrued interest to stockholder - 50,684
Other ( 42,607) 18,622
---------------- --------------
Net cash (used in) operating activities (1,465,963) (1,965,284)
---------------- ---------------
Cash flows from investing activities:
Disposal (Acquisition) of equipment ( 17,579) ( 136,189)
(Acquisition) of new business - (1,099,893)
--------------- ---------------
Net cash (used in) investing activities ( 17,579) (1,236,082)
--------------- ---------------
Cash flows from financing activities:
Cash proceeds from loans from stockholders 384,082 1,411,272
Issuance of common stock 1,331,177 1,715,692
Proceeds from (repayment of) leases payable ( 28,360) (13,788)
Proceeds from (repayment of) notes payable ( 101,288) 38,599
(Increase) in cash collateral ( 20,000) -
---------------- --------------
Net cash provided by financing activities 1,565,611 3,151,775
--------------- --------------
Increase (decrease) in cash 82,069 (49,591)
Cash, beginning of period - 119,130
--------------- --------------
Cash, end of period $ 82,069 69,539
=============== ==============
Interest paid $ 18,236 $ -
=============== ==============
Income taxes paid $ - $ -
=============== ==============
</TABLE>
See accompanying notes
5
<PAGE>
TELESERVICES INTERNATIONAL GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1998
(unaudited)
(1) Organization and Operations:
TeleServices International Group Inc. (TSIG), formerly Dynasty Capital
Corporation (Dynasty), was formed under the laws of the State of
Florida on October 1, 1986. TSIG issued common stock for 100% of the
issued and outstanding common stock of Visitors Services, Inc. (VSI).
This transaction was accounted for as a reverse acquisition since the
former controlling shareholders of VSI control TSIG after the business
combination. Prior to the transaction TSIG was an inactive public shell
corporation with no net assets. Since Dynasty had no net monetary
assets at the time of the business combination, par value of these
shares was transferred from additional paid-in capital to common stock.
VSI was formed under the laws of the State of Florida in November 1992
to provide automated reservations and information services specifically
designed to support the special needs of convention and visitors
bureaus and other organizations.
American International Travel Agency, Inc. was acquired from Phoenix
Information Systems Corp. (Phoenix), and related party on December 6,
1996 in exchange for 31,579 shares of Phoenix Systems and related
party. The Company had a cost basis of $15,829 in the shares of
Phoenix. The market value of the shares was $90,000 at the time of the
transaction, resulting in a gain of $74,171 to the Company.
The transaction was accounted for as a purchase.
(2) Summary of Significant Accounting Policies
(a) Concentration of Credit Risk
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of temporary
cash investments and trade accounts receivable. The Company
grants credit to various business and entities, in the U.S.A.
The Company does not require collateral for its accounts
receivable. The Company maintains its cash balance in one
financial institution located in Florida. The balances are
insured by the Federal Deposit Insurance Corporation up to
$100,000.
(b) Income Tax
The Company has net operating loss carryovers totaling
approximately $26,000,000 at December 31, 1997 which expire in
various years through 2012. The Company has deferred tax
assets of approximately $1,300,000 at December 31, 1997
related to loss carryovers but due to the uncertainty of the
<PAGE>
Company's ability to utilize these carryovers, a valuation
allowance of the total $1,300,000 has been provided.
Therefore, as of December 31, 1997 the Company's financial
statements do not include any provision for deferred tax
assets. A change in ownership of more than 50% of the Company
could reduce or eliminate the Company's ability to utilize
these loss carryovers.
(c) Equipment - Equipment is carried at cost, net of accumulated
depreciation. Depreciation is computed using the straight-line
method over the estimated useful lives of the assets ranging
from 3 to 5 years.
(d) Per Share Information
The per share information is computed based upon the weighted
average shares outstanding.
(e) Use of Estimates in the Preparation of Financial Statements
Preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenue and expenses during the
reporting periods. Significant assumptions in the accompanying
financial statements relate to the Company's ability to
continue as a going concern as described in note 3 and
estimated useful lives of equipment as disclosed in note 2(c).
The ultimate resolution of the reasonableness of the related
assumptions cannot presently be determined. Actual results
could differ from the Company's estimates.
(f) Bad Debts
An allowance for uncollectible accounts has been provided
based on the Company's past collection history.
(g) Advertising and Promotion Costs
Advertising and promotion costs are expensed as incurred.
(h) Geographic Area of Operations
The Company provides services to customers in the U.S.A. The
potential for severe financial impact can result from negative
effects of economic conditions within the market or geographic
area. Since the Company's business is principally in one area
and in one industry, this concentration of operations results
in an associated risk and uncertainty.
(i) Stock Split
Effective January 16, 1996 the Company effected a 1.065 to 1
forward stock split. All shares and per share amounts referred
to have been adjusted retroactively.
<PAGE>
(j) Restricted Cash
Included in cash on March 31, 1998 is $195,000 being held in
separate certificates of deposit as collateral for notes
payable.
(3) Basis of Presentation - Going Concern
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplates
continuation of the Company as a going concern. However, the Company
has sustained recurring operating losses since its inception and has
working capital deficit. Management is attempting to raise additional
capital and attempting to complete a business combination.
In view of these matters, realization of certain assets in the
accompanying balance sheet is dependent upon continued operations of
the Company, which in turn is dependent upon the Company's ability to
meet its financial requirements, raise additional capital, and the
success of its future operations. Management believes that its ability
to raise additional capital provides the opportunity for the Company to
continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
(4) Preferred Stock
The Company is authorized to issue 10,000,000 shares of preferred
stock, having a par value of $.001 each. The preferred stock may be
issued in a series from time to time with such designation, rights,
preferences and limitations as the Board of Directors of the Company
may determine by resolution.
(5) Litigation
The Company is a party to numerous litigation and threatened litigation
matters related to alleged nonperformance of contracts and nonpayment
of various obligations. Contingencies exist with respect to these
matters. The ultimate costs, if any, related to these matters cannot
presently be determined. The financial statements as of March 31, 1998
include a $1,277,250 provision for estimated potential costs related to
these matters.
(6) Creditor Delinquencies
The Company is materially delinquent on payment of various creditor
obligations including various obligations to the Internal Revenue
Service. Failure to pay these balances due could result in the
inability of the Company to continue in business.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Total revenues for the three months ended March 31, 1998 were $346,806,
a 41% decrease from revenues for the three months ended March 31, 1997.
Operating expenses for the same period also decreased, from $3,549,351 to
$2,358,471, a 33% decrease. These decreases were exhibited in most expense
categories, particularly salaries, contract services, travel and entertainment,
and advertising and promotion. This was the result of cutbacks in these areas.
For the period, the Company sustained a net loss of $2,027,386, compared to a
net loss of $3,024,740 for the same period last year. This decrease in the loss
was primarily the result of the reductions in operating spending, partially
offset by decreases in revenues. These losses are expected to continue for the
foreseeable future.
Sales And Revenues
The Registrant's sales and revenues are derived from VSI and its
subsidiary American International Travel Agency, Inc. ("AIT"). Revenues are
derived from commissions earned on the sale of airline tickets, booking fees and
commissions paid by hotels or lodging properties, car rental agencies and tour
operators for each made and used reservation VSI provides. Additionally, VSI
receives per-call fees for visitor guide requests, transaction fees for
information services and ticket sales to attractions and events and subscription
fees for property representation.
Limited Working Capital; Financial Instability
As of March 31, 1998, the Registrant had a negative stockholder's
equity of ($5,873,256), an accumulated deficit of ($28,093,769), and a working
capital deficit of ($6,247,684).
Various factors effecting the Registrant's operations raise doubt as to
the Registrant's ability to continue as a going concern. There can be no
assurance that the Registrant will be able to continue as a going concern, or
achieve material revenues and profitable operations. The Registrant's operations
have not and are not expected to provide sufficient cash flows and, as such, the
Registrant requires additional financing. No assurances can be given that
financing will be available to the Registrant in the amounts required, or that,
if available, the financing will be available on terms satisfactory to the
Registrant.
The financial statements include all adjustments which in the opinion
of and to the best of management's knowledge are necessary to make the financial
statements not misleading.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits
Exhibit No. Description
27.1 Restated Financial Data Schedule. (Filed herewith.)
(b) Reports on Form 8-K.
No current reports on Form 8-K were filed during the quarter ended
March 31, 1998.
<PAGE>
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.
TELESERVICES INTERNATIONAL GROUP INC.
Dated: August 13, 1998 /s/ Robert P. Gordon
--------------------
Robert P. Gordon Chairman and
Interim Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
27.1 Restated Financial Data Schedule. (Filed herewith).
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 10-QSB/A-1
FOR THE QUARTER ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FORM 10-QSB/A-1.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 277,069
<SECURITIES> 0
<RECEIVABLES> 961,999
<ALLOWANCES> (805,138)
<INVENTORY> 0
<CURRENT-ASSETS> 485,506
<PP&E> 2,294,655
<DEPRECIATION> (1,803,080)
<TOTAL-ASSETS> 1,036,438
<CURRENT-LIABILITIES> 6,733,190
<BONDS> 0
0
0
<COMMON> 3,498
<OTHER-SE> (5,876,754)
<TOTAL-LIABILITY-AND-EQUITY> 1,036,438
<SALES> 0
<TOTAL-REVENUES> 346,806
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,358,471
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,027,386)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,027,386)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,027,386)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
