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Previous: FONE AMERICA INC, 8-A12G/A, 1997-04-10 |
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U. S. 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 December 31, 1996
OR
_ TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE EXCHANGE ACT OF 1934.
Commission File Number 33-3746-LA
FONE AMERICA, INC.
(Name of small business issuer in its charter)
NEVADA 91-1355620
-----------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12323 SW 66TH AVENUE PORTLAND, OREGON 97223
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (503) 620-2400
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 __ No X
As of February 18, 1997 there were 14,540,000 shares of Common
Stock ($0.01 par value) outstanding.
page 1
INDEX
PAGE
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets as of 3
December 31, 1996 (Unaudited) and
September 30, 1996
Condensed Statements of Operations 4
(Unaudited) for the Three Months
Ended December 31, 1996 and 1995
Condensed Statements of Cash Flows 5
(unaudited) for the Three Months
Ended December 31, 1996 and 1995
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis 7
of Financial Conditon and
Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 8
Item 2. Changes in Securities 8
Item 3. Defaults Upon Senior Securities 8
Item 4. Submission of Matters to a Vote of 8
Security Holders
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 9
page 2
Fone America, Inc.
Condensed Balance Sheets
December 31, September 30,
1996 1996
Assets (unaudited)
Current Assets:
Cash and cash equivalents $ 543,899 $ 1,652,717
Accounts receivable, net 1,298,775 678,819
Deposits and other 431,265 415,543
Total currents assets 2,273,939 2,747,079
Plant, property and equipment, net 4,340,437 4,735,940
Other assets 92,291 92,291
Total assets $ 6,706,667 $ 7,575,310
Liabilities and shareholders' equity (deficit)
Current liabilities:
Notes payable $ 605,073 $ 579,863
Accounts payable 4,315,164 3,755,963
Other accrued liabilities 1,028,767 1,037,383
Current portion of long-term obligation 501,178 791,019
Total current liabilities 6,450,182 6,164,229
Long-term obligations, net of current porti 4,695,848 4,704,406
Net deferred tax liabilities 428,056 428,056
Shareholders' equity (deficit):
Common stock, $.001 par value, authorized 14,540 14,540
shares; issued and outstanding 14,540,000
Additional paid-in capital 1,042,742 1,042,742
Retained deficit (5,924,701) (4,778,663)
Total shareholders' deficit (4,867,419) (3,721,381)
Total liabilities and shareholders' equit$ 6,706,667 $ 7,575,310
Notes to the financial statements as of September 30, 1996 substantially
apply to the December 31, 1996 interim financial statements and are not
repeated here in their entirety.
page 3
Fone America, Inc.
Condensed Statements of Operations
(Unaudited)
Three months ended December 31,
1996 1995
Revenues $ 2,936,940 $ 5,671,228
Cost of revenues 2,766,506 4,753,651
Gross margin 170,434 917,577
Operating expenses:
Sales, general & administrative 794,834 695,803
Non-recurring contract termination expense 297,000
Income (loss) from continuing operations (921,400) 221,774
Other expense:
Interest expense (197,638) (226,497)
Net loss from continuing operations (1,119,038) (4,723)
Net loss from discontinued operations - (16,634)
Net loss $ (1,119,038) $ (21,357)
Net loss per share ($0.0770) ($0.0014)
Weighted average shares outstanding 14,540,000 15,040,000
Notes to the financial statements as of September 30, 1996 substantially
apply to the December 31, 1996 interim financial statements and are not
repeated here in their entirety.
page 4
FONE AMERICA, INC.
Condensed Statements of Cash Flows
(Unaudited)
Three months ended December 31,
1996 1995
Cash flows from operating activities:
Net loss from continuing operations $(1,146,038) $ (4,724)
Net cash used for discontinued operations - (7,917)
Adjustments to reconcile net loss to net cash
(used for) provided by operating activities:
Depreciation and amortization 399,940 365,328
Amortization of reorganization value - 35,086
Changes in assets and liabilities:
Accounts receivable (619,955) (267,845)
Accounts payable 559,201 133,342
Deposits and other (15,938) (64,686)
Other accrued liabilities (8,617) (101,469)
(831,407) 87,115
Cash flows from investing activities:
Equipment purchases (4,220) (79,355)
Cash flows from financing activities:
Proceeds from notes payable - related party 60,000 -
Repayments of notes payable (34,790) (137,324)
Repayments of long-term debt (8,558) (28,441)
Repayments of capitalized lease obligations (289,843) (385,392)
Proceeds from issuance of common stock - 60,000
(273,191) (491,157)
Decrease in cash and cash equivalents (1,108,818) (483,397)
Cash and cash equivalents at beginning of period 1,652,717 1,959,569
Cash and cash equivalents at end of $ 543,899 $ 1,476,172
Supplemental disclosure of cash flow information:
Cash paid for interest $ 148,160 $ 205,536
Notes to the financial statements as of September 30, 1996 substantially
apply to the December 31, 1996 interim financial statements and are not
repeated here in their entirety.
page 5
ITEM 1. NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Basis of Presentation The accounting and reporting policies of
Fone America, Inc. conform to generally accepted accounting principles.
The condensed consolidated financial statements for the three months ended
December 31, 1996 are unaudited and do not include all information or
footnotes necessary for a complete presentation of financial condition,
results of operations and cash flows. The interim financial statements
include all adjustments, consisting only of normal recurring accruals, which
in the opinion of management are necessary in order to make the financial
statements not misleading. These financial statements should be read in
conjunction with the company's September 30, 1996 audited financial
statements which are included in the Company's Registration Statement on
Form SB-2 dated February 7, 1997. The results of operations for the three
months ended December 31, 1996 are not necessary indicative of the results
to be expected for the entire year ending September 30, 1997.
page 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Forward Looking Statements Certain statements in this report are
not statements of historical fact, and are instead "forward-looking
statements" (as such term is defined in the Private Securities Litigation
Reform Act of 1995). These statements can be identified by the use of
forwarding-looking terms such as "should", "anticipates", "believes", or
"would", or by discussions of strategies or events that have not, by their
nature, occurred yet. Management wishes to caution the reader that these
forward-looking statements, such as the statements concerning the
Company's efforts to raise additional equity capital, are only predictions and
not statements of historical fact. These can be no assurance that the future
results will be achieved, or that actual results will vary materially as a
result of the risks facing the Company, including but not limited to those
risks discussed in the registration statement filed by the Company an declared
effective by the SEC on February 7, 1997.
General The Company's revenue through December 31, 1996 have
primarily been generated from the continuation of the sales of prepaid
telephone calling cards (telecards) and initial revenues from the sale of
prepaid cellular telephones, prepaid pagers and recharge cards for both.
The largest source of telecard revenue was the DriveLine program most of
which was interrupted by the end of the Sales Agency Agreement with a
major sales agent. This agent caused most of the locations involved in the
program to discontinue the DriveLine card in October 1996. The agent's
action is the subject of legal action. See Legal Proceedings in PART II.
The Company began a short term contract to provide wholesale
telecard services to a Washington-based customer and continued to offer its
own Mensajera and FoneBux products to approximately 150 locations. The
Portland test marketing of the prepaid cellular products began in November
and continued through early 1997. When the distribution procedures and
internal processing has been tested, the Company will offer the products to
retail chains and other distributors in the Northwest region.
Results of Operations Revenues for the quarter declined by 48%
from the similar quarter in the prior year as a result of the expiration of
the Sales Agency Agreement. The unusual costs associated with the abrupt
termination of the location contracts caused the cost of revenues to increase
significantly as a percentage of revenue over the prior year. Sales, general,
and administrative expenses increased by $99,031 over the same period in
the prior fiscal year. Approximately $75,000 of this increase was attributed
to new product startup expenses and the remainder in higher legal fees.
These were non-recurring fees of $297,000 associated with the removal of
the vending machines in the three month period just ended. The loss of
revenue and the one-time expenses were the major contributing factors for
the net loss for the quarter of $1,146,038 compared to a loss of $21,357 in
the similar quarter in the previous fiscal year.
Cash declined by $1,108,818 in the three month period just ended
due to the recasting of the currency in machines noted below. Similarly,
accounts receivable increased by $619,956 in the quarter. Accounts payable
increased by $559,201 due to the slowdown in cash collections associated
with the expired Sales Agency Contract.
Liquidity and Capital Resources During the three months ended
December 31, 1996 the Company used net cash of $831,407 in operating
activities due primarily to the net loss of $1,146,038. Investing activities
required $4,220 since no additional vending machines were placed in
service. Net cash used by financing activities was $273,191 with most of
this being a result of the paydown in leases on vending machines. As a
result of the above, the net cash used for the quarter was $1,108,818 while
working capital declined by $759,093.
page 7
Historically the first quarter is the lowest level of activity in the
Company's operating cycle due to the slowdown in business travel and the
onset of inclement weather. This normal downturn was made worse by the
end of the DriveLine Sales Agency contract and the uncertainties related to
it. While the Company historically recorded the currency in vending
machines as "cash", the majority of these amounts were shown as "accounts
receivable" for the 3 month period just ended. This approach was deemed
prudent due to the uncertainty of the Company recovering these funds due
to losses in transit as vending machines are relocated and returned.
The Company is not now operating at a high enough level to
support its overhead and staffing and management is making every effort to
build the new product revenue quickly to replace the lost telecard revenue.
There is no assurance that management will be successful in these efforts.
The issuance of the Prospectus in February 1997 should result in an
inflow of funds to the Company as the old interest holders convert to the
New Stock at $.10 per share. The first funds were received in mid-February
and the Company believes that this inflow will peak in April 1997 before the
options and warrants expire. In anticipation the Company continues to
renegotiate existing obligations to defer payments until it can recover.
It is also the Company's intention to ask the shareholders to approve
an increase in the number of shares of stock authorized after the conversion
period is completed. This would result in the Company having additional
shares which might be used to secure outside capital. There is no assurance
that a market for such additional shares will exist in the future.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to the Prospectus (Form SB-2) dated February 7,
1997 for a complete discussion of its legal proceedings. In addition the
Company was involved in a series of temporary restraining orders caused by
the end of the Sales Agency contract and the discontinuation of the Cash
Deposit Trust Agreement. The orders expired and were released in January
by the court. In February 1997, an out-of-court settlement of the legal
proceeding against a debtor was reached with the debtor paying $50,000
and signing a note for all amounts due to the Company.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
In connection with the annual shareholders meeting held February
11, 1997 a proxy was sent to all shareholders soliciting their votes for a
slate of directors and for the naming of an outside auditor. The
management recommendations were passed in both matters. At the meeting
an additional motion making minor modifications to the By-Laws was also
passed. A complete copy of the By-Laws is attached as an Exhibit and
incorporated by reference.
page 8
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit
3.2.3 By-laws
page 9
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, as
amended, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FONE AMERICA, INC.
Date: February 28, 1997
James L. Forney
_____________________________________________
James L. Forney
As Chief Financial Officer on behalf of
Registrant, and as Registrant's Principal
Financial & Accounting Officer
BY-LAWS
OF
FONE AMERICA, INC.
AS REVISED APRIL 14 , 1994
ARTICLE I. NAME, SEAL AND OFFICES, ETC.
SECTION 1. FONE AMERICA, INC.
The name of the corporation is Fone America, Inc.
SECTION 2. SEAL
The seal of the corporation shall be in such form as
the Board of Directors shall from time to time prescribe.
SECTION 3. OFFICES
The street address of the office of the corporation is
12323 SW 66th Avenue, Portland, Oregon 97223. The
corporation may have offices at such other places as the officers
may determine.
SECTION 4. BOOKS OF BY-LAWS
These By-Laws shall be recorded in a book kept in
the registered office of the corporation, to be known as the book
of By-Laws, and no By-Laws, or repeal or amendment thereof,
shall take effect unto so recorded. Said book may be inspected
at said office by any shareholder during office hours of each day
except holidays.
ARTICLE II. SHAREHOLDERS
SECTION 1. ANNUAL MEETINGS OF SHAREHOLDERS
The annual meeting of the shareholders for the
election of directors and for such business as may be laid before
such meeting shall be held in the registered office of the
corporation, or at such other place within or without the state of
incorporation, as the Board of Directors may from time to time
appoint, on a date set by the Board of Directors. Any corporate
business may be transacted at such meeting.
SECTION 2. SPECIAL MEETINGS OF SHAREHOLDERS
Special meetings of the Shareholders may be called
at any time by the Board of Directors, and the Shareholders may
meet at any convenient place, within or without the state of
incorporation, designated in the call for such meeting. If more
than eighteen months are allowed to elapse without the annual
Shareholders' meeting being held, any Shareholder may call such
meeting to be held at the registered office of the corporation. At
any time, upon written request of any director, or any
Shareholder or Shareholders holding in the aggregate one-fifth of
the voting power of all Shareholders, it shall be the duty of
Secretary to call a special meeting of Shareholders to be held at
the registered office of the corporation at such time as the
Secretary may fix, nor less than fifteen nor more than thirty-five
days after the receipt of said request, and if the Secretary shall
neglect or refuse to issue such call, the director or Shareholder
or Shareholders making the request may do so.
SECTION 3. ADJOURNED MEETINGS
Any adjournment or adjournments of any annual
meeting may be taken without a new notice being given.
SECTION 4. NOTICE OF MEETINGS
A written notice of the time, place and purpose, of
meetings, including annual meetings, shall be given by the
Secretary or other person authorized so to do, to all
Shareholders entitled to vote at such meeting, at least ten days
prior to the day named for the meeting. If such written notice is
placed in the United States mail, postage prepaid, addressed to a
Shareholder at his last known post office address, notice shall be
deemed to have been given him.
SECTION 5. WAIVER OF NOTICE
Notice of time, place and purpose of any meeting of
Shareholders may be waived by the written assent of a
Shareholder entitled to notice, filed with or entered upon the
records of the meeting before or after the holding thereof.
SECTION 6. ACTION WITHOUT FORMAL MEETING
Any action which, under any provision of the laws
of the State of Nevada or the Articles or By-Laws, may be taken
at a meeting of Shareholder, may be taken without a meeting if
authorized by a writing signed by all of the holders of shares
who would be entitled to notice of meeting for such purpose.
SECTION 7. WAIVER OF INVALID CALL OR NOTICE
When all the Shareholders of this corporation are
present at any meeting, however called or notified, and sign a
written consent thereto on the record of such meeting, the doings
of such meeting are as valid as if had a meeting legally called
and notified.
SECTION 8. VOTING
Every Shareholder shall have the right at every
Shareholders' meeting to one vote for every share of stock
standing in his or her name on the books of the corporation on
the record date fixed as hereinafter provided, or, if no such date
has been fixed, ten days prior to the time of the meeting. There
shall be no cumulative voting for directors of the corporation.
The Board of Directors may fix a time not more than forty days
prior to the date of any meeting of the Shareholders as the record
date as of which Shareholders entitled to notice of and to vote at
such meeting shall be determined.
At each meeting of the Shareholders, a full, true and complete
list, in alphabetical order, of all the Shareholders entitled to vote
at such meeting, and indicating the number of shares held by
each, certified by the Secretary or transfer agent, shall be
furnished, which list shall be open to the inspection of the
Shareholders.
Shareholders may vote at all meetings, either in person or by
proxy appointed by instrument in writing, subscribed by the
Shareholder or by his duly authorized attorney-in-fact, executed
and filed with the Secretary not less than one day before the
meeting which shall be named therein. Shareholders may also
be represented at all meetings by persons holding general power
of attorney.
Powers of attorney or proxies may be submitted for examination
at any meeting up until the time the subject matter of the power
of attorney or proxy is to be voted upon. The certificate of the
Secretary as to the regularity of such powers of attorney or
proxies and as to the number of shares held by the persons or
severally and respectively executed such powers of attorney or
proxies shall be received as prima facie evidence of the number
of shares held by the holder of such powers of attorney or
proxies for the purpose of establishing the presence of a quorum
at such meeting and for organizing the same, and for all other
purposes.
SECTION 9. QUORUM
Except as otherwise provided in the Articles of
Incorporation, at any meeting of the Shareholders, the presence,
in person or by proxy, of the holders of a majority of the voting
power of all Shareholders shall constitute a quorum. The
Shareholders present at a duly organized meeting can continue to
do business until adjournment, notwithstanding the withdrawal
of enough Shareholders to leave less than a quorum. If a
Shareholders' meeting cannot be organized because a quorum
has not attended, those Shareholders present may adjourn the
meeting to such time and place as they may determine, but in
case of any meeting called for the election of directors, those
who attend the second of such adjourned meetings, although less
than a majority of the voting power of all Shareholders, shall,
nevertheless, constitute a quorum for the purpose of electing
directors.
Whenever all Shareholders entitled to vote at any meeting
consent either by writing on the records of the meeting or filed
with the Secretary of the corporation or by presence at such
meeting, an oral consent entered on the minutes, or by taking
part in the deliberations at such meeting without objection, the
doings of such meeting without objection, the doings of such
meeting shall be as valid as if had at a meeting regularly called
and noticed and at such meeting any business may be transacted
which is not excepted from the written consent or to the
consideration of which no objection from want of notice is made
at the time, and if any meeting be irregular for want of notice or
of such consent provided a quorum was present at such meeting,
the proceedings of said meeting may be ratified and approved
and tendered likewise valid and the irregularity or defect therein
waived by a writing signed by all the Shareholders having the
right to vote at such meeting and such consent or approval of
Shareholders may be by proxy or power of attorney in writing.
ARTICLE III. DIRECTORS
SECTION 1. NUMBER AND ELECTION
The business of the corporation shall be managed
by a Board of at least three directors or of such other number as
may be determined from time to time by the Board of Directors.
A director shall hold office for the term for which he was named
or elected and until his successor is elected and qualified, except
as hereinafter otherwise provided. Directors shall be chosen by
ballot.
SECTION 2. ANNUAL MEETINGS
The Board of Directors may hold its first annual
meeting and all subsequent annual meetings after its election by
the Shareholders, without notice and at such place within or
without the state of incorporation for the purpose of
organization, the election of officers, and the transaction of other
business. At such meetings the Board shall elect a Chairman, a
President, a Secretary, and a Treasurer, and may elect or confirm
one or more Vice-Presidents and such officers as may be
required to conduct the business affairs of the company.
SECTION 3. SPECIAL MEETINGS
Special meetings of the Board of Directors may be
called by the Chairman, by the President or by any two members
of the Board of Directors.
SECTION 4. NOTICE OF MEETINGS
Notice of all directors' meetings, except as herein
otherwise provided, shall be given either by mail, facsimile, or
personal service or notice, oral or written, at such time or times
as the person or persons calling the meeting may deem
reasonable but in no event upon less than one day's notice.
Special meetings of the Board may be held at such place within
or without the state incorporation, as the Board of Directors may
from time to time appoint. Notice of any meeting may be
waived by any director entitled to notice before or after the
holding thereof by his written or oral assent and the presence of
any director at any meeting, even though without any notice,
shall constitute a waiver of notice. Unless otherwise indicated in
the notice thereof any and all business may be transacted at any
directors' meeting.
SECTION 5. QUORUM
At all meetings of the Board a majority of the
directors shall be necessary and sufficient to constitute a quorum
for the transaction of business, and the acts of a majority of the
directors present at any meeting at which a quorum is present
shall be the acts of the Board of Directors, except as many be
otherwise specifically provided for herein or by law.
If at any meeting there is less than a quorum present, a majority
of those present may adjourn the meeting from time to time
without further notice to any absent director.
SECTION 6. REMOVAL
A director may be removed either with or without
cause, by two-thirds of the vote of the Shareholders at a special
meeting called for that purpose.
SECTION 7. VACANCIES
Any vacancy in the Board of Directors occurring
during the year may be filled for the unexpired portion of the
term and until a successor is elected and qualified, either,
(a) At the next annual meeting of Shareholders
or at any special meeting of Shareholders duly called for
that purpose and held prior thereto, or
(b) By a majority of the remaining members of
the Board, provided there is at least one remaining
member qualified to act.
SECTION 8. POWERS
All the corporate powers, except such as are
otherwise provided for in the Articles of Incorporation, in these
By-Laws and by the laws of the state of incorporation, shall be
and hereby vested in and shall be exercised by the Board of
Directors.
SECTION 9. EXECUTIVE COMMITTEE
The Board of Directors may, by resolution passed
by a majority of the whole Board, designate two or more of their
number to constitute an Executive Committee to serve during the
pleasure of the Board, which Committee shall have and exercise
the authority of the Board in the management of the business of
the corporation to the extent authorized by said resolution. All
actions taken by the Executive Committee shall be reported to
the Board of Directors at its meeting next succeeding such
action, and shall be subject to revision or alteration by the
Board; providing, however, that no rights or acts of third parties
shall be affected by any such revision or alteration.
A majority of the Executive Committee present at a meeting
thereof shall constitute a quorum. Vacancies in the Executive
Committee shall be filled by the Board of Directors. The
Executive Committee shall fix its own rules of procedure
including the time and place of and method or manner of calling
meetings thereof.
ARTICLE IV. OFFICERS
SECTION 1. OFFICERS
The officers of the corporation shall be a President,
Secretary and Treasurer and at the discretion of the Board of
Directors, one or more Vice-Presidents and any other such
officers as the Board may deem necessary, each of whom shall
be elected at a meeting of and by the Board of Directors.
Any officer may resign by mailing a notice of resignation to the
registered office of the corporation or such other office as may
be designated by the Board of Directors. To the extent
permitted by law, the resignation shall become effective at the
time designated in the notice of resignation, but in no event
earlier than its receipt by the Secretary or Assistant Secretary of
the corporation.
In case of a vacancy of any of said offices for any reason, the
Board of Directors shall at any regular or special meeting, elect a
successor who shall hold for the unexpired term of his
predecessor.
The office of Secretary and Treasurer may be held by the same
person. The office of Vice-President may be combined in one
person with any one of the following: Secretary, Treasurer,
Assistant Secretary or Assistant Treasurer.
The Board of Directors may appoint such other officers and
agents as may be necessary for the business of the corporation.
Any officer or agent may be removed by the Board of Directors
whenever in their judgment the interest of the corporation may
be served thereby; such removal, however, shall be without
prejudice to the contract rights of the person so removed.
SECTION 2. PRESIDENT
The President shall preside at all meetings of the
Shareholders and Directors. He shall see that all orders and
resolutions of the Board are carried into effect, shall execute all
deeds, mortgages, bonds or documents authorized by the Board
of Directors, and shall sign as President all certificates of stock,
all contracts, and other instruments, in writing, excepting only
those which are specifically provided to be signed by others. He
shall from time to time, as requested, report to the Board all of
the matters within his knowledge of interest to the corporation,
and shall also perform such duties as may be required by the
state of incorporation, these By-Laws, and by order of the Board
of Directors.
SECTION 3. VICE-PRESIDENT
The Vice-President or other officer as designated
by the Board shall be vested with all the powers and shall
perform all the duties of the President in the absence or disability
of the latter, except as noted elsewhere in the By-laws.
SECTION 4. TREASURER
The Treasurer shall be custodian of the
corporation's moneys and securities, and shall deposit and
withdraw the same in the corporation's name as directed by the
Board of Directors; he shall keep a record of his accounts and
report to the Board of Directors as requested.
SECTION 5. SECRETARY
The Secretary shall keep a record of the meetings
of the Shareholders and the Board of Directors. He shall keep
the books of certificates of stock, fill out and sign all certificates
of stock issued, and make corresponding entries on the margin
or stub of such book. He shall keep a debit and credit form,
showing the number of shares issued to and transferred by the
Shareholders, and the dates thereof. He shall keep the
corporate seal and shall affix same to certificates of stock and
other corporate instruments, and shall make such
acknowledgments as may be required on behalf of the
corporation. He shall perform duties as may be prescribed by
the Board of Directors. The Secretary shall give or cause to be
given, notice of all meetings of Shareholders and Board of
Directors, and all other notices required by law of the state of
incorporation, or by these By-Laws.
SECTION 6. CHAIRMAN
The Chairman shall chair Board of Directors'
meeting in the absence of the President or shall name another
director to perform such duties.
SECTION 7. SALARY
The salaries of all officers shall be fixed by the
Board of Directors and the fact that any officer is a director shall
not preclude him from receiving a salary or from voting on the
resolutions providing for the same.
ARTICLE V. STOCK
SECTION 1. CERTIFICATES OF STOCK
Each Shareholder shall be entitled to a certificate of
stock signed by the President and the Secretary, or by such other
officers as are authorized by these By-Laws or by the Board of
Directors. When any certificate of stock is signed by a transfer
agent or registrar, the signature of any such corporate officers
and the corporate seal upon such certification may be a
facsimile, engraved or printed.
Certificates of stock shall be numbered in the order of issuance
thereof and, except insofar as prescribed by law, shall be in such
form as the Board of Directors may determine.
SECTION 2. TRANSFER OF SHARES
Transfer of shares of stock shall be made on the
books of the corporation only by the holder in person or by
written power of attorney duly executed and witnessed and upon
surrender of the certificates of such shares.
SECTION 3. TRANSFER AGENT AND REGISTRAR
The Board of Directors may appoint either a
transfer agent or registrar, or both of them.
SECTION 4. STOCK TRANSFER BOOKS
Stock transfer books may be closed for not
exceeding forty days next preceding the meeting of Shareholders
and for the payment of dividends during such periods as may be
fixed from time to time by the Board of Directors. During such
periods no stock shall be transferable.
SECTION 5. LOST OR DESTROYED CERTIFICATES
In the case of loss or destruction of a certificate of
stock of this corporation, another certificate may be issued in its
place upon proof of such loss or destruction and the giving of a
bond of indemnity or other security satisfactory to the Secretary.
ARTICLE VI. REPEAL OR AMENDMENT OF BY-
LAWS
SECTION 1. BY THE SHAREHOLDERS
The power to make, amend, or repeal By-Laws
shall be in the Shareholders, and By-Laws may be repealed or
amended or new By-Laws may be adopted at any annual
Shareholder's meeting, or at any special meeting of the
Shareholders called for that purpose, by a vote representing a
majority of the allotted shares, or by the written consent duly
acknowledged in the same manner as conveyances of real estate
required by law to be acknowledged of the holders of a majority
of the allotted shares, which written consent may be in one or
more instruments.
SECTION 2. BY THE DIRECTORS
Subject to the power of the Shareholders to make,
amend or repeal By-Laws made by the Board of Directors, a
majority of the whole Board of Directors at any meeting thereof
shall have the power to repeal and amend these By-Laws and to
adopt new By-Laws.
ARTICLE VII. INDEMNIFICATION
SECTION 1. RIGHT TO
Any person made a party to any civil or criminal
action, suit or proceeding by reason of the fact that he, his
testator or intestate, is or was a director, officer or employee of
this corporation or of any corporation which he served as such at
the request of this corporation, shall be indemnified by the
corporation against the reasonable expenses, including, without
limitation, attorneys' fees and amounts paid in satisfaction of
judgment or in settlement other than amounts paid to the
corporation by him, actually and necessarily incurred by
imposed upon him in connection with, or resulting from the
defense of such civil or criminal action, suit or proceeding, or in
connection with or resulting from any appeal therein, except in
relation to matters as to which it shall be adjudged in such civil
or criminal action, suit or proceeding, that such officer, director
or employee is liable for negligence or misconduct in the
performance of his duties.
SECTION 2. CRIMINAL CASES
In the case of a criminal action, suit or proceeding,
a conviction (whether based on a plea of guilty or nolo
contendere or its equivalent, or after trial) shall not of itself be
deemed an adjudication that such officer, director or employee is
liable for negligence or misconduct in the performance of his
duties to the corporation.
SECTION 3. PAYMENT
Any amount payable pursuant to this article may be
determined and paid, at the option of the person to be
indemnified, pursuant to procedure set forth from time to time in
the By-Laws or by any of the following procedures:
(a) Order of the court having jurisdiction of any
such civil or criminal action , suit or proceeding:
(b) Resolution adopted by a majority of a
quorum of the Board of Directors of the corporation
without counting in such majority or quorum any
interested directors;
(c) Resolution adopted by the holders of record
of a majority of the outstanding shares of capital stock of
the corporation having voting power; or
(d) Order of any court having jurisdiction over
the corporation.
SECTION 4. OTHER RIGHTS
Right of indemnification shall not be exclusive of
any other right which such officers, directors and employees of
the corporation, and the other persons above mentioned, may
have or hereafter acquire, and, without limiting the generality of
such statement, they shall be entitled to their respective rights of
indemnification under any By-Law, agreement, vote of
shareholders, provisions of law, or otherwise, as well as their
rights under this SECTION.
ARTICLE VIII. TRANSACTIONS WITH MANAGEMENT
This corporation may enter into contracts and otherwise transact
business as vendor, purchaser, or otherwise, with its directors,
officers and shareholders and with corporations, associations,
firms and entities in which they are or may be or become
interested as directors, officers, shareholders, members or
otherwise, as freely as though such adverse interest did not exist,
even though the vote, actions, or presence of such director,
officer, or shareholder may be necessary to obligate the
corporation or transactions and in the absence of fraud, no such
contract or transactions shall be avoided and no such director,
officer, or shareholder shall be held liable to account to the
corporation, by reason of such adverse interests, or by reason of
any fiduciary relationship, to the corporation arising out of such
office or stock ownership, for any profit or benefit realized by
him through any such contract or transaction; provided that in
the case of directors and officers of the corporation (but not in
the case of shareholders who are not directors or officers) the
nature of the interest of such director or officer, though not
necessarily the details or extent thereof, be disclosed or known
to the Board of Directors of this corporation, at the meeting
thereof at which such contract or transaction is authorized or
confirmed. A general notice that a director or officer of the
corporation is interested in any corporation, association, firm or
entity shall be sufficient disclosure as to such director or officer
with respect to all contracts and transactions.
FONE AMERICA, INC. CORPORATE BY-LAWS REVISION 2/97 PAGE 1
OF 13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AUDITED
FINANCIAL STATEMENTS FOR THE YEAR(S) ENDED 09/30/95 AND 09/30/96 AND COMPANY
PREPARED FINANCIAL STATEMENTS FOR THE PERIODS ENDED 12/31/95 AND 12/31/96 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<CIK> 0000809928
<NAME> FONE AMERICA, INC.
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS 12-MOS 12-MOS
<FISCAL-YEAR-END> SEP-30-1997 SEP-30-1996 SEP-30-1996 SEP-30-1995
<PERIOD-END> DEC-31-1996 DEC-31-1995 SEP-30-1996 SEP-30-1995
<CASH> 543,899 1,476,172 1,652,717 1,959,569
<SECURITIES> 0 0 0 0
<RECEIVABLES> 1,298,775 1,100,419 678,819 832,574
<ALLOWANCES> 0 0 0 0
<INVENTORY> 0 0 0 0
<CURRENT-ASSETS> 2,273,939 3,122,800 2,747,079 3,339,173
<PP&E> 8,000,411 7,627,596 7,995,975 7,449,238
<DEPRECIATION> 3,659,975 2,024,312 3,260,035 1,628,372
<TOTAL-ASSETS> 6,706,666 12,440,827 7,575,310 12,853,078
<CURRENT-LIABILITIES> 6,450,182 5,556,106 6,164,227 6,318,793
<BONDS> 4,695,848 5,275,469 4,704,407 4,963,675
0 0 0 0
0 0 0 0
<COMMON> 14,540 15,040 14,540 14,040
<OTHER-SE> (4,881,959) 1,594,212 (3,735,920) 1,556,570
<TOTAL-LIABILITY-AND-EQUITY> 6,706,666 12,440,827 7,575,310 12,853,078
<SALES> 2,936,940 5,671,228 18,562,162 18,552,711
<TOTAL-REVENUES> 2,936,940 5,671,228 18,562,162 18,552,711
<CGS> 2,766,506 4,753,651 15,395,035 15,011,915
<TOTAL-COSTS> 3,858,340 4,975,425 21,838,671 17,008,343
<OTHER-EXPENSES> 0 0 (63,448) 70,670
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 197,638 226,497 1,277,603 510,584
<INCOME-PRETAX> (1,119,038) (4,723) (4,490,664) 963,114
<INCOME-TAX> 0 0 767,089 (65,494)
<INCOME-CONTINUING> (1,119,038) (4,723) (5,257,753) 1,028,608
<DISCONTINUED> 0 (16,634) (94,237) (439,604)
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> (1,119,038) (21,357) (5,351,990) 589,004
<EPS-PRIMARY> (.077) (.001) (.362) .045
<EPS-DILUTED> (.077) (.001) (.362) .027
<F1>
<FN>
<F1>Notes to the financial statements as of September 30, 1996 substantially
apply to the December 31, 1996 interim financial statements and are not
repeated here in their entirety.
</FN>
</TABLE>
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