UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended December 31, 1999
Commission file No. 33-17679
NORTH AMERICAN DATACOM, INC.
(Exact name of registrant as specified in its charter)
Delaware 84-1067694
(State of incorporation) (I.R.S. Employer Identification Number)
751 County Road 989 Iuka, MS 38852
(Address of principal executive offices) (Zip Code)
(662) 424-5050
Registrant's telephone number
Pierce International, Inc.
6746 South Revere Parkway, Suite 130, Englewood, CO 80112
(Former name and former address)
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 proceeding 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_ _
On March 31, 2000 the Company had 29,920,000 outstanding shares of common stock
<PAGE>
INDEX
PART I - FINANCIAL INFORMATION:
Item 1.Consolidated and Condensed Financial Statements Page
Balance Sheets 3
Statements of Operations 4
Statements of Changes in Stockholders' Equity 5
Statements of Cash Flows 6
Notes to Financial Statements 7
Item 2.Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
PART II - OTHER INFORMATION AND SIGNATURE
Items 1 through 6 14
Signature 14
<PAGE>
NORTH AMERICAN DATACOM, INC.
BALANCE SHEETS
UNAUDITED
ASSETS
December 31, June 30,
1999 1999*
Current Assets
Cash $ 410,626 $ 722,353
Accounts Receivable 7,263 --
Notes Receivable 85,741 --
Other 154,893 154,033
Total Current Assets 658,523 876,386
Investments (Note 2) 208,462 322,500
------------ ------------
Property and Equipment:
Leasehold Property 5,655 3,758
Computers and Equipment 729,550 38,009
Communications Equipment 271,619 94,016
Other Equipment 12,316 6,617
-------- -------
1,019,140 142,400
Less Accumulated Depreciation
and Amortization (17,570) (5,570)
-------- --------
Net Property and Equipment 1,001,570 136,830
--------- ------------
Goodwill 470,000
Other Assets 702,554 24,446
---------- ------------
Total Assets $3,041,109 $1,360,162
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable and Accrued
Expenses 662,500 25,375
Advances from Related Parties 99,371 16,647
Other 28,023 28,235
--------- ---------
Total Current Liabilities 789,894 70,257
------- ------
Notes Payable 10,000 30,079
--------- ----------
Total Liabilities 799,894 100,336
Commitments (Note 5 and 7)
Stockholders' Equity (Note 9)
Convertible Preferred Stock, No Par
Value; 400,000 Shares Authorized;
80,000 and 51,212 Shares Issued
and Outstanding 20,000 512,120
Common Stock, No Par Value; 30,000,000
Shares Authorized; 29,920,000 and
13,568,9989 (as adjusted) Shares
Issued and Outstanding 2,684,273 694,251
Net Unrealized Gain (Loss) on
Investments, Net of Taxes (Note 3) (41,650) 47,125
Retained Earnings (Accumulated Deficit) ( 421,408) 6,330
--------- ------
Total Stockholders' Equity 2,241,215 1,259,826
--------- ---------
Total Liabilities And Stockholders'
Equity $ 3,041,109 $ 1,360,162
=========== ===========
See accompanying notes to financial statements.
<PAGE>
NORTH AMERICAN DATACOM, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
For the For the Six Inception
Three Months Ended Months Ended September 30,1998
December 31 December 31,1999 to December 31, 1999
1999 1998
Net Service Revenues $74,221 -- $98,210 --
Cost of Services 7,329 -- 7,329 --
-------- ---- --------- -----
Gross Profit 58,207 -- $90,881 --
Selling, General and
Administrative
Expenses 322,144 -- $524,929 --
Operating Loss (255,252) (434,048) --
Other Income
(Expenses), Net 2,437 -- 6,303 --
-------- ------ ------ -----
Net Loss ($252,815) $ 0 ($427,745) $ 0
---------- ------ --------- -----
Other Comprehensive income:
Net Unrealized
Gain (Loss) on
Investments
(Note 2) (41,650) -- (41,650) --
Comprehensive
Loss ($294,465) $ 0 $469,395) $ 0
Basic and Diluted
Loss per Common
Share (Note 1) ($ 0.012) $ -- ($0.19) $ 0
========== ======= ====== =====
Comprehensive Loss
per Common Share
(Note 1) ($ 0.014) $ -- ($0.021) $ --
======== ===== ======== =====
Cash dividends per
common share $ 0 $ 0 $ 0 $ 0
* Company started operations in January 1999. See accompanying notes to
financial statements.
<PAGE>
NORTH AMERICAN DATACOM, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY For the
Period from Inception (September 1, 1998) through December 31, 1999
(Note 9)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Net Unrealized
Preferred Stock Common Stock Accumulated Gain (Loss)on Stockholders'
Shares Amount Shares Amount Deficit Investments Equity
Balances, September 1, 1998 -- -- -- -- -- -- --
Issuance of initial common stock -- -- 500,000 500 -- -- $ 500
Exchange stock for securities -- -- 3,000,000 500,000 -- -- 500,000
Acquisition of Freedom -- -- 50,000 61,251 -- -- 61,251
Exchange of notes for
preferred stock 51,212 $512,120 -- -- -- -- 512,120
Stock issued to employees -- -- 450,000 112,500 -- -- 112,500
Issuance of stock for
services -- -- 10,000 10,000 -- -- 10,000
Sale of common stock -- -- 20,000 10,000 -- -- 10,000
Unrealized gain on Investments -- -- -- -- -- $ 47,125 47,125
Net Loss -- -- -- -- $ 6,330 6,330
-----------------------------------------------------------------------------------------
Balances, June 30, 1999 51,212 512,120 4,030,000 694,251 6,330 47,125 1,259,826
Conversion of preferred shares
to common stock (51,212) (512,120) 2,048,480 512,120 -- -- --
Exchange of notes for common
stock -- -- 164,916 109,348 -- -- 109,348
Issuance of stock for services -- -- 85,000 1,000 -- -- 1,000
Sale of Common Stock -- -- 175,500 227,500 -- -- 227,500
Acquisition of Action
Communication -- -- 150,000 600,000 -- -- 600,000
Acquisition of PRCI 80,000 20,000 23,266,104 440,000 -- -- 460,000
Issue of shares for sevices
rendered. -- -- * 101,276 -- -- 101,276
Net unrealized gain from
investments -- -- -- -- -- (88,175) (88,175)
Net loss for 6 months
ended December 31, 1999 -- -- -- -- (427,738) -- (453,940)
-------------------------------------------------------------------------------------------------
Balances, December 31, 1999 80,000 $20,000 29,920,000 $2,684,273 (421,408) (41,650) $2,241,215
</TABLE>
See accompanying notes to financial statements.
<PAGE>
NORTH AMERICAN DATACOM, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<S> <C> <C>
Inception (September 1,
For the six months ended 1998) through December 31,
December 31, 1999 1998
------------------- -------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($ 427,739) $ 0
------------- -----------
Adjustments to reconcile net loss to
cash provided by operations:
Depreciation and amortization 12,000
Increase in accounts receivable (8,318) (29,449)
Decrease notes receivable (72,415)
Increase in accounts payable
and accrued expenses 654,894 --
Net Cash provided by (used in) operating 158,422 (29,449)
-------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (847,747) (2,801)
Purchase of investments (750,000)
Increase in other assets (228,108) (10,094)
----------- ---------
Net Cash from investing activities (1,075,855) (762,895)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in advances from related
parties 10,000 293,316
Proceeds from sale of common stock 577,903 502,247
Increase in Notes payable 81,915 --
-------- -------
Net Cash provided by financing activities $ 605,706 $ 795,563
----------- ---------
(DECREASE) INCREASE IN CASH ($ 311,727) $3,219
CASH, beginning of period $ 722,353 0
CASH, end of period $ 410,686 $ 3,219
</TABLE>
See accompanying notes to financial statements.
<PAGE>
NORTH AMERICAN DATACOM, INC.
NOTES TO FINANCIAL STATEMENTS
1. Operations and Acquisitions:
In the opinion of the Company, the accompanying unaudited financial
statements contain adjustments (consisting of only normal recurring accruals)
necessary to present fairly its financial position as of December 31, 1999, and
its results of operations for the three- and six-month periods ending December
31, 1999 and 1998, and its cash flows for the six-month period ending December
31, 1999 and 1998. The results of operations for the three- and six-month
periods ending December 31, 1999 and 1998 are not necessary indicative of the
results to be expected for the fiscal year.
Effective December 21, 1999, North American Software Associates, Limited
(NAS) merged into Pierce International, Inc. ("PRCI") in exchange for 76,801,017
shares of the PRCI's common stock. The merger was accounted for as a reverse
acquisition, whereby NAS was treated as the acquirer and PRCI as the acquired
because the former shareholders of NAS owned a controlling interest in the
Company at the date of the merger. Purchase accounting was performed on PRCI
based upon its fair market value at the date of acquisition. The fair value of
PRCI was based upon the average share price of PRCI near the date the merger
agreement was consummated. The valuation of PRCI, including transaction costs,
approximated $400,000; substantially all of which has been allocated to
goodwill.
The Company was incorporated in September 1998 to provide a variety of
telecommunications services. The offices of the Company are located in a
state-of-the-art 170,000 square foot office building, located in Iuka,
Mississippi. This facility was originally constructed for the National
Aeronautics and Space Administration in 1993 to support the advanced solid
rocket motor project. When completed, the facility housed a fully functional $20
million computer and network operations center, and provided information
processing and on-line data storage with a high level of security. Budget cuts
for the space shuttle caused the closure of this facility in 1996. In January,
1999, the Company entered into a 10-year lease for use of the facility at an
annual rent of approximately $87,500. The Company believes that this facility,
with its existing infrastructure and security features, is ideally suited for
the Company's current and future needs.
The Company is engaged, or plans to engage, in the following lines of
business:
Internet Access
Remote Data Storage
Consulting
Telecommunication Projects
Fiber Optic and Broadband Wireless Network
On April 1, 1999, the Company acquired all the assets of Freedom 2000, a
local Internet service provider (ISP), in exchange for 577,123 shares of the
restricted common stock of the Company.
On December 3, 1999 the Company acquired all the common stock of Action
Communications, Inc. for approximately 1,731,339 shares of the restricted common
stock of the Company. Action provides digital and alpha numeric paging to nine
southeastern states, and is currently expanding its coverage area to include
portions of the eastern and southwestern United States. Action is also a
specialized mobile radio carrier providing dispatch, telephone and Global
Position System services. This transaction is currently being treated for
accounting purposes as a purchase of assets and liabilities. Revenues and
expenses are consolidated as of December 3, 1999, but not prior to this date.
From July 1, 1999 to December 3, 1999 Action had approximate revenues of $85,000
and net operating income before taxes of approximately $40,000.
<PAGE>
NORTH AMERICAN DATACOM, INC.
NOTES TO FINANCIAL STATEMENTS
1. Operations and Acquisitions: (continued)
As of December 31, 1999, the Company had 16 full-time employees, and plans
to hire additional employees as may be required by the level of its operations.
2. Summary of Significant Accounting Policies:
Investments are classified as available-for-sale and are reported at
estimated fair value, with unrealized gains and losses, net of taxes, reported
as a separate component of stockholders' equity. Realized gains and losses, and
declines in value judged to be other than temporary, are included in other
income. The cost of securities sold is based on the specific identification
method and interest earned is included in other income.
Basic and diluted loss per share of common stock have been computed based
upon the weighted average number of shares outstanding during the three- and
six-month periods ending December 31, 1999, and 1998. Common stock equivalents
were not considered, as their effect would be antidilutive.
Continuing Operations -- The accompanying unaudited financial statements have
been prepared on a going concern basis, which contemplates continuity of
operations and realization of assets and satisfaction of liabilities in the
normal course of business. The continuation of the Company as a going concern is
dependent upon the Company raising additional capital, and attaining and
maintaining profitable operations.
3. Investments:
The Company's investments are classified as available-for-sale. The
amortized cost, gross unrealized gains (losses) and estimated fair value of
these investments were as follows at December 31, 1999, and June 30, 1999:
<TABLE>
<S> <C> <C> <C>
Amortized Gross Unrealized Estimated
December 31, 1999 Cost Gains (Losses) Fair Value
- ------------------------------------------------------------------------------------------
New York Regional Rail Options $250,000 ($41,650) $208,350
Totals
June 30, 1999
New York Regional Rail Options $250,000 $72,500 $322,500
Totals
</TABLE>
The Company held assigned common stock interests in New York Regional Rail
Corporation that were sold in May, 1999, with a realized gain of $200,000. Cash
received was invested in money market instruments. The above represents options
to acquire 500,000 shares of NY Regional Rail Corp common stock for $.12 per
share.
The Company is the manager and controlling entity of North American
InfoTech (NAIT). This venture is developing a fiber optic network to provide
access for the Company's vertically integrated information technology businesses
to service Tier 2 communities in the Southeast, and eventually throughout the
country. NAIT is a Delaware Limited Liability Corporation (or "LLC"). The
Company plans to have future members of NAIT provide funds, rights-of-way,
engineering, and services in exchange for their equity interests.
<PAGE>
NORTH AMERICAN DATACOM, INC.
NOTES TO FINANCIAL STATEMENTS
4. Long-term debt:
During 1999, long term debt obligations of $350,000 held by shareholders
were converted into Shares of Series A Preferred Stock. In November 1999 the
Preferred shares were converted into 1,567,500 pre merger common shares of the
Company. The Preferred share holders and certain note holders also held options,
expiring in 2000 and 2001, to acquire approximately 1,263,750 pre merger common
shares for $563,750. (See Note 9 and 10)
5. Commitments:
The Company currently leases 25,000 square feet at the former NASA
facility from the State of Mississippi. The lease expires in December 2008.
Total rentals under this lease for the year ending December 2000 will be
$87,500, for the year ending December 2001 are $100,000, and for years ending
December 2002-08 are $125,000 per year.
6. Non cash investing and financing activities:
In September, 1998, the Company agreed with Robert Crawford, a Director
and President of the Company, to exchange 1,500,000 shares of common stock for
the assignment of 250,000 shares of New York Regional Rail Corporation (NYRR)
common shares. In addition, the company exchanged a $250,000 Note for 250,000
additional NYRR common shares. In May 1999, the Company exercised its assignment
at a guaranteed $1 per share, sold the 500,000 shares for a premium of a $1.40
per share and received $500,000, plus an additional $200,000 of income. See
Notes 2 and 5.
In October, 1998, the Company entered into an agreement with W. James
White, a Director and Vice President of the Company, to exchange 1,500,000 of
its common stock for a 25% equity interest in the Belize Interests Group (BIG)
valued at $250,000. In June 1999, the Company exchanged the equity interest in
BIG for the assignment of an option to acquire 500,000 common shares of NYRR for
$0.12 cents per share. The options expire in December 2001.
In May 1999, the Company entered into a subscription agreement for the
sale of 300,000 shares of its common stock for $300,000. This subscription was
terminated in July 1999 when the balance of $290,000 remained unfunded. The
subscription was replaced with a stock purchase option.
7. Litigation:
As of December 31, 1999, the Company was not a party to any litigation.
8. Related Party Payable and Related Party Transactions:
In addition to those items discussed in Note 6, on November 30, 1999, the
Company agreed to exchange options to acquire 85,000 and 105,000 shares of its
pre merger restricted common stock to James White and Robert Crawford, for
services each respectively provided to the Company in 1999. 1 1
9. Stockholders' Equity:
The Company was incorporated on September 1, 1998, and 500,000 shares of
restricted common stock were issued to its sole incorporator. In September,
1998, the Company agreed to exchange 1.5 million shares for the assignment of
250,000 shares of restricted common stock of NYRR. The Company also exchanged a
$250,000 convertible note for additional 250,000 shares of NYRR common stock.
<PAGE>
NORTH AMERICAN DATACOM, INC.
FINANCIAL NOTES TO STATEMENTS
9. Shareholders' Equity: (continued)
In November, 1998, and January, 1999, the Company entered into employment
agreements with five initial employees to issue pre merger 450,000 restricted
common shares, based on a vesting formula, in exchange for $112,500.
In February 1999, the Company exchanged 10,000 shares of its pre-merger
common stock for services rendered.
On April 1, 1999, the Company acquired the business and all the assets of
Freedom 2000, a local internet service provider (ISP), in exchange for 50,000
shares on the pre merger restricted common stock of the Company.
During the period from April, 1999, to December 3, 1999, the Company sold
195,500 shares of pre merger restricted common stock for a total of $237,500 at
prices varying from $0.50 to $5.00 per share.
In June, 1999, the Company exchanged 51,212 shares of convertible
preferred stock for notes totaling $512,120. These preferred shares were
converted into 2,125,396 shares of pre merger restricted common stock of the
Company in November 1999.
Notes issued by the Company between January and November 1999 were
converted into pre merger restricted common stock of the Company in December,
1999.
On December 3, 1999, the Company acquired all the equity of Action
Communications, Inc. in exchange for 150,000 of the Company's pre merger
restricted common stock.
On December 21, 1999, the Company agreed to merge with PRCI. (See Note 1)
On December 31, 1999, 22,300,000 shares of the 76,801,017 were issued and
outstanding. The balance will be issued when the authorized shares are increased
by vote of the shareholders (See Note 11). These shares are all restricted
pursuant to S.E.C. Rule 144.
Of the 7,515,705 shares outstanding prior to December 21, 1999, 3,356,950
shares were free trading stock as of December 31, 1999. Of the balance of the
shares outstanding, all have been held a minimum of one year, except for 485,000
shares issued in the past 12 months that could be sold pursuant to Rule 144.
The Company issued 80,000 shares of convertible Series I preferred stock.
The stock was issued in conjunction with a private placement conducted by PRCI.
The Series I Convertible Preferred Stock holders are entitled to dividends when
and as declared by the Company's Board of Directors from funds which are legally
available. The Series I Preferred Stock is convertible at any time into an
identical number of shares of the Company's Common Stock.
Holders of the Series I Convertible Preferred Stock are entitled to one
vote per share on all matters submitted to a vote of the Company's shareholders.
Series I Convertible Preferred Stock do not have preemptive rights, and it is
not redeemable.
10. Stock Options Plan:
As a result of the PRCI Merger, the Company has common stock options
outstanding totaling 28,315,670 shares. Of these options, 26,416,744 were
granted to former NAS shareholders. As part of the December 20, 1999, PRCI-NAS
merger, an agreement was reached granting shareholders options to
<PAGE>
NORTH AMERICAN DATACOM, INC.
NOTES TO FINANCIAL STATEMENTS
10. Stock Options Plan: (continued)
purchase 1,898,926 common shares for 25 cents per share, as of December 20,
1999. These options are exercisable in the period July 1, 2000 to December 31,
2001. Documentation on these options will be provided to the shareholders.
On August 10, 1987, the PRCI had adopted an Incentive Stock Option Plan
(the Plan) whereunder options granted are intended to qualify as "incentive
stock options" under Section 422A of the Internal Revenue code of 1954, as
amended (the "Code"). Pursuant to the Plan, options to purchase up to 400,000
shares of the Company's Common Stock may be granted to employees of the Company.
This Plan is administered by the Board of Directors and will be reviewed by the
Board to determine is future applicability As of the date of this report, no
options have been granted under this Plan.
11. Subsequent Events
On March 10, 2000, the Company held a shareholders' meeting, and three
items were approved. The first item approved was the amendment of the Company's
Articles of Incorporation, such that the authorized capitalization of the
Company will be increased to 150,000,000 shares of common stock, $0.01 par
value, and 10,000,000 shares of preferred stock, no par value.
The second item of business approved was to change the name of the Company
to North American DataCom, Inc. The last item of business approved was the
merger of the Company and Pierce International, Inc. (a Delaware corporation).
The terms of the merger were provided in the proxy statement for the meeting,
which was sent to all of the Company's shareholders of record February 4, 2000.
The Company's common stock currently trades on the Over-the-Counter
Bulletin Board (OTCBB) under the trading symbol "PRCI." The Company received
notice from OTCBB that, as of March 16, 2000, the Company was not in compliance
with the National Association of Security Dealers, Inc. (NASD(R)) filing
requirements. The letter "E" was appended by the OTCBB to the trading symbol of
the Company, and the Company was advised that trading of the Company's common
stock may be suspended on the OTCBB. If this occurs, the Company's shares would
likely be traded on the "Pink Sheets," which could significantly reduce the
ability of the Company's shareholders to readily trade it common stock.
On April 7, 2000 the Company's OTCBB trading symbol was changed to
"NADAE." The management of the Company believes that it will soon be in
compliance with NASD(R) filing requirements, after which the symbol can be
listed as "NADA."
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The following is management's discussion and analysis of certain
significant factors that have affected the Company's financial condition and
results of operations during the periods included in the accompanying unaudited
balance sheets and statements of operations.
SAFE HARBOR STATEMENT UNDER PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This Quarterly Report on Form 10-Q and other reports and statements issued
on behalf of the Company may include forward looking statements in reliance on
the safe harbor provided by the Private Securities Litigation Reform Act of
1995. These forward looking statements are subject to substantial risks and
uncertainties, including those discussed below, and actual results may differ
materially from those contained in any such forward-looking statement. The
review of factors pursuant to the Private Securities Litigation Reform Act of
1995 should not be construed as exhaustive. Further, the Company undertakes no
obligation to update or revise any such forward-looking statements to reflect
subsequent events or circumstances.
NORTH AMERICAN SOFTWARE ASSOCIATES, LIMITED MERGER WITH PIERCE INTERNATIONAL
Effective December 21, 1999, NAS merged into Pierce International, Inc. in
exchange for 76,801,017 shares of common stock. The merger was accounted for as
a reverse acquisition since the former shareholders of NAS now own a controlling
interest in the Company. In connection with this transaction, the management of
the Company resigned and was replaced by the management of NAS.
NAS was incorporated in September, 1998, to provide a variety of
telecommunications services. The offices of NAS are located in a
state-of-the-art 170,000 square foot office building, located in Iuka,
Mississippi. This facility was originally constructed for the National
Aeronautics and Space Administration in 1993 to support the advanced solid
rocket motor project. When completed, the facility housed a fully functional $20
million computer and network operations center and provided information
processing and on-line data storage with a high level of security. Budget cuts
for the space shuttle caused the closure of this facility in 1996. In January,
1999, the Company entered into a 10-year lease for an initial 25,000 square foot
segment of this facility at annual rent of approximately $90,000. The Company
has options to lease additional segments totaling 100,000. The Company believes
that this facility, with its existing infrastructure and security features, is
ideally suited for the Company's present and proposed business.
As of December 31, 1999, the Company had 16 full time employees. The
Company plans to hire additional employees as may be required by the level of
its operations.
The Company is engaged, or plans to engage, in the following lines of
business:
Internet Access. Since April, 1999, the Company has provided Internet
service to approximately 850 customers in Mississippi, Tennessee and Alabama.
Internet services provided by the Company include basic dial-up access to the
Internet through standard computer modems, high speed Internet access, and the
design and hosting of websites for customers.
Remote Data Storage. The Company recently took delivery of equipment
having a cost of approximately $700,000 that will allow third parties to store
and access data stored in digital form on computer systems maintained and
operated by the Company in its facility in Iuka, Mississippi. As of December 31,
1999, the Company did not have any agreements with any third parties regarding
the storage of computer data.
Consulting. The Company plans to assist corporations, government agencies,
and institutions in upgrading their computer systems to function more
effectively with current economic, technical and commercial conditions.
<PAGE>
Telecommunication Projects. The Company, through expansion of its Action
Communication business, plans to assist corporations, government agencies and
institutions in the design and installation of their own internal
telecommunications networks. The Company plans to use state-of-the-art
technology, which will enable its clients to transfer and receive large amounts
of data at high speed between both internal and external sources.
Fiber Optic and Broadband Wireless Network. The Company plans to build a
fiber optic and broadband wireless communications network, which will allow for
the high-speed transmission of large amounts of data. It is expected that
businesses, government agencies and institutions will use the Company network as
a preferred alternative to existing telephone and satellite data transmission
systems.
The Company expects that the first phase of the network will cost
approximately $120,000,000 and will link the following metropolitan regions:
New Orleans, Louisiana
Birmingham, Alabama
Atlanta, Georgia
Huntsville, Alabama
Chattanooga, Tennessee
Memphis, Tennessee
The Company plans to fund the cost of its planned network through joint
venture arrangements with third parties. The Company plans to provide initial
capital to this venture. The Company's third party members in the venture will
provide right-of-way access, equipment and engineering and other technical
services. The Company plans to raise the initial capital funds for the venture
through private placement sale of Company securities.
As of December 31, 1999, the Company had entered into several preliminary
agreements with third parties relating to this network.
Pierce International, Inc., the Former Company and Business
The former Company, Pierce International, Inc. (PRCI), was incorporated
under the laws of the State of Colorado on July 22, 1987, for the purpose of
obtaining capital to pursue various business opportunities.
In October, 1999, PRCI entered into an Exchange Agreement with Pierce
Enterprises, Inc., by which PRCI agreed to transfer all of its assets to Pierce
Enterprises, Inc. in exchange for the assumption by Pierce Enterprises, Inc. of
all of PRCI's outstanding debt obligations. These include $156,462 due Piece D.
Parker, officer and director, or his company, Parker Consulting Services, and a
$200,000 accrued consulting fee obligation due Pierce D. Parker. Pierce
Enterprises, Inc. also agreed to indemnify PRCI against any future liabilities
related directly or indirectly to any of the assets being transferred. On
November 4, 1999, all the assets and liabilities of the Company were transferred
to Pierce Enterprises, Inc. Pierce Enterprises, Inc. is wholly owned by Pierce
D. Parker, and was formed solely for the purpose of assuming the liabilities of
the Company in exchange for the transfer of its assets. The Exchange Agreement
was approved by the shareholders of the Company at a special meeting held on
November 5, 1999. See Form 8-K, dated November 5, 1999. With this exchange, all
the businesses of PRCI were discontinued.
As of December 20, 1999, PRCI had 7,515,705 outstanding shares of common
stock and 80,000 outstanding shares of preferred stock. Each share of preferred
stock is convertible into one share of common stock.
Effective December 21, 1999, PRCI acquired all of the issued and
outstanding shares of NAS in exchange for 76,801,017 shares of PRCI's common
stock. The former shareholders of NAS became owners of a controlling interest in
PRCI. In connection with this transaction, the former management of PRCI
resigned and was replaced by the management of NAS.
<PAGE>
Liquidity
Working capital at December 31, 1999, was negative $140,202. The Company
plans to continue to rely heavily on its current shareholders and option holders
to fund operations for the foreseeable future.
Results of Operations
During the quarter ended December 31, 1999, the Company had net loss from
its current operations of $252,815. For the six-month period ending December 31,
1999, the Company had a net loss of $427,745. The Company started operations in
January, 1999, and did not have operations in 1998. These losses are due to the
incipient nature of the Company's operations and will likely continue for the
foreseeable future as the Company continues to expand its operations.
Revenues are currently derived from local Internet service (31%), local
pager and communication services (63%) and investment income (6%). Both these
business segments currently have positive operating margins. Management plans to
significantly expand its ISP and its communication and pager services along the
fiber optic network it plans. In addition, as of December 31, 1999, the Company
invested approximately $700,000 in its Remote Data and Storage business and
$58,325 for planning and engineering in its fiber optic venture affiliate, North
American InfoTech. Neither of these business are expected to have revenues until
the July-September quarter and are not planned to have for positive cash flows
until Spring 2001.
The Company has a computer programming staff that is currently providing
programming assistance to the other business segments. The Computer Program
Business Segment is negotiating contracts
PART II - OTHER INFORMATION
ITEMS 1 through 6 (a) - Form 8-K, dated December 20, 1999, provides responses
required.
ITEM 6 (b) - Form 8-K, dated December 20, 1999, disclosing the merger of the
Company with North American Software Associates, Ltd. was filed on January 3,
2000.
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 hereunto duly authorized.
NORTH AMERICAN DATACOM, INC.
Formerly PIERCE INTERNATIONAL, INC.
By /s/ Robert R.Crawford
Robert R. Crawford
Chief Executive Officer
DATE: April 7, 2000
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