<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ___________
Commission file number: 0-23172
NETWORK LONG DISTANCE, INC.
(Exact name of Registrant as specified in its charter)
Delaware 72-1122018
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11817 Canon Blvd., Suite 600
Newport News, Virginia 23606
(Address of principal executive offices) (Zip code)
757-873-1040
(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
There were 13,157,500 shares of the Registrant's $.0001 par value common stock
outstanding as of June 30, 1997.
<PAGE>
NETWORK LONG DISTANCE, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, March 31,
1997 1997
----------- -----------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 850,488 $ 1,962,216
Marketable securities 118,144 788,124
Accounts receivable, net of allowance for doubtful
accounts of $3,682,000 and $2,377,000 at
June 30, 1997 and March 31, 1997 respectively 15,676,336 11,714,585
Other receivables 482,724 360,965
Deferred income tax asset 541,599 157,406
Other current assets 1,533,178 1,042,792
----------- -----------
Total current assets 19,202,469 16,026,088
Property and equipment
Land 75,000 75,000
Building and improvements 598,569 562,620
Telecommunications equipment 5,782,880 4,127,388
Furniture and fixtures 2,632,445 1,782,252
----------- -----------
9,088,894 6,547,260
Less accumulated depreciation 4,051,878 3,704,812
----------- -----------
5,037,016 2,842,448
Customer acquisition costs, net 9,062,123 5,645,730
Goodwill, net 21,266,481 450,020
Other intangibles, net 193,604 264,221
Other assets 1,166,569 1,134,002
----------- -----------
Total assets $55,928,262 $26,362,509
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 2,223,933 $ 507,945
Accrued transmission cost 7,332,524 7,535,055
Accrued merger and other related charges 1,049,953 24,450
Other accrued liabilities 3,039,830 2,786,043
Customer deposits 140,532 128,960
Current maturities of long term debt and capital
lease obligations 1,580,332 1,244,006
----------- -----------
Total current liabilities 15,367,104 12,226,459
Deferred income tax liability 784,004 280,866
Long-term debt and capital lease obligation 6,687,745 2,053,317
Stockholders' equity
Common Stock - $.0001 par value; 20,000,000 shares
authorized; 13,157,500 and 9,837,572 outstanding
at June 30, 1997 and March 31, 1997, respectively 1,316 984
Additional paid-in capital 38,758,327 14,847,728
Retained earnings (5,582,104) (2,942,914)
Treasury stock (92,290) (92,290)
Unrealized holding gain (loss) on marketable
securities 4,160 (11,641)
----------- -----------
Total stockholders' equity 33,089,409 11,801,867
----------- -----------
Total liabilities and stockholders' equity $55,928,262 $26,362,509
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
NETWORK LONG DISTANCE, INC
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended June 30,
-----------------------------------
1997 1996
----------- -----------
<S> <C> <C>
Revenues (including excise taxes of $1,372,000
and $1,060,000 for the three months ended
June 30, 1997 and 1996 respectively) $24,987,890 $21,093,077
Operating expenses:
Transmission costs 15,913,839 14,153,755
Selling, general and administrative 6,790,562 5,527,508
Depreciation and amortization 927,259 505,966
Provision for losses on accounts receivable 646,112 354,810
Merger expenses and other related charges 2,225,067 100,000
Stock compensation related to merger 1,100,000 -
----------- -----------
Total operating expenses 27,602,839 20,642,039
Operating income (loss) (2,614,949) 451,038
Interest (income) expense, net 231,848 82,941
Other (income) expense (19,605) (152)
----------- -----------
Income (loss) before income taxes (2,827,192) 368,249
Provision (benefit) for income taxes (188,000) 143,690
----------- -----------
Net income (loss) applicable to common shareholders (2,639,192) 224,559
Pro forma adjustment:
Income tax provision - 4,700
----------- -----------
Pro forma net income applicable to common shareholders $(2,639,192) $ 219,859
----------- -----------
----------- -----------
Net income (loss) per share $ (0.23) $ 0.03
----------- -----------
----------- -----------
Pro forma net income (loss) per share $ (0.23) $ 0.03
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
NETWORK LONG DISTANCE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended June 30,
-----------------------------------
1997 1996
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (2,639,192) $ 224,559
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation 347,115 232,434
Amortization 580,144 273,532
Provision of losses on accounts receivable 646,112 354,810
Provision for deferred income taxes - 364,854
Provision (benefit) for employee stock incentive plan (13,500) 12,688
Compensation expense related to exercise of stock options 1,100,000 -
(Gain) loss on sale of assets (13,560) -
Changes in assets and liabilities, net of effect
of business combinations:
(Increase) decrease in accounts receivable (556,926) 222,436
Decrease in other receivables 81,649 68,997
Increase in other assets (295,534) (570,875)
Increase in accrued merger costs 1,025,503 15,000
Increase (decrease) in accrued transmission costs (2,364,517) 1,012,970
Decrease in accounts payable (206,611) (1,084,609)
Increase (decrease) in accrued liabilities (1,365,657) 292,231
------------ ----------
Net cash provided by (used in) operating activities (3,674,974) 1,419,027
------------ ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (164,102) (325,406)
Sale of short term investments, net 669,980 -
Acquisitions and related costs (2,054,736) (3,713,029)
Decrease in other intangible assets 53,264 35,648
Proceeds from the sale of equipment - 764,363
------------ ----------
Net cash used in investing activities (1,495,594) (3,238,424)
------------ ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (repayments) under line of credit 4,167,040 (971,170)
Principal payments on debt (279,072) (341,259)
Proceeds from issuance of debt - 3,250,000
Decrease in capital lease obligation (77,440) (25,968)
Common stock issued pursuant to employee stock plan 98,312 -
Equity issued pursuant to conversion of stock options 150,000 -
------------ ----------
Net cash provided by financing activities 4,058,840 1,911,603
------------ ----------
Net increase (decrease) in cash and cash equivalents (1,111,728) 92,206
Effect in change in fiscal year-end - 541,589
Cash and cash equivalents at beginning of period 1,962,216 1,460,232
------------ ----------
Cash and cash equivalents at end of period $ 850,488 $ 2,094,027
------------ ----------
------------ ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
NETWORK LONG DISTANCE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - MERGERS
In May 1997, Network Long Distance, Inc. (the "Company") acquired Eastern
Telecom International Corporation ("ETI"), a provider of long distance
telecommunication services, in a transaction accounted for as a purchase. The
merger was consummated with the issuance of 3,633,272 shares of the Company's
common stock and cash payments of $2,055,000. The transaction resulted in an
intangible asset of approximately $24,795,000 of which $3,815,000 and
$20,980,000 have been allocated to customer base and goodwill, respectively.
The Company is amortizing the customer base and goodwill over estimated useful
lives of 6 and 20 years, respectively. The following represents the pro forma
results of operations of the Company and ETI for the three months ended June 30,
1997 and 1996, as if the acquisition had occurred as of the earliest date
presented.
For the three months ended June 30,
1997 1996
----------- -----------
Revenues $27,585,036 $25,697,075
Net (loss) income (3,897,579) 296,728
Net (loss) income per share $ (0.30) $ 0.03
In connection with the merger with ETI, assets acquired and non-cash
consideration issued were as follows:
Fair value of tangible assets acquired $ 7,224,024
Excess of cost over tangible assets acquired 24,794,610
Liabilities assumed (7,401,279)
Common stock issued (22,562,619)
-------------
Cash paid $ 2,054,736
-------------
-------------
The cash paid in connection with acquisition of ETI was obtained
primarily from borrowings under the Company's credit facility.
In May 1997, the Company merged with National Teleservice, Inc. ("NTI"), a
provider of long distance telecommunication services, in a transaction accounted
for as a pooling-of-interests. Accordingly, the financial statements of the
Company for periods prior to the merger have been restated to include the
results of NTI for all periods presented. In exchange for all of the
outstanding common stock of NTI, the Company issued 3,274,188 shares of its
common stock, of which 155,524 shares are held in escrow pending resolution of
purchase price contingencies. Separate and combined results of operations are
as follows.
For the three months ended June 30,
1997 1996
------------ ------------
Revenues:
Network $ 17,868,877 $ 14,697,482
NTI 7,119,013 6,395,595
------------ ------------
Combined $ 24,987,890 $ 21,093,077
------------ ------------
------------ ------------
Net income (loss):
Network $ (1,702,280) $ 65,605
NTI (936,892) 158,954
------------ ------------
Combined $ (2,639,172) $ 224,559
------------ ------------
------------ ------------
NOTE 2 - MERGER EXPENSES AND OTHER RELATED CHARGES
The Company incurred merger expenses and other related charges of
$2,225,000 during the quarter ended June 30, 1997. This amount consisted
of $505,000 related to severance payments to former officers and various
other employees of the Company, $330,000 related to integration,
relocation and facilities related charges, $350,000 related to certain
legal and regulatory matters and contingencies, $1,040,000 related to
financial advisory, legal, accounting and other professional services
fees incurred in connection with consummating the NTI merger.
Additionally, the Company incurred $1,100,000 in non-cash compensation
expense incurred in connection with the exercise of stock options
related to the NTI merger.
5
<PAGE>
NOTE 3 - BASIS OF PRESENTATION
The financial statements included herein are unaudited and have been prepared in
accordance with generally accepted accounting principles for interim financial
reporting and Securities and Exchange Commission regulations. Certain
reclassifications have been made to the balance sheet dated March 31, 1997 in
order to conform to the balance sheet presentation at June 30, 1997. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. In the opinion of
management, the financial statements reflect all adjustments (of a normal and
recurring nature) which are necessary to present fairly the financial position,
results of operations and cash flows for the interim periods. These financial
statements should be read in conjunction with the Annual report of the Company
on Form 10-K for the year ended March 31, 1997. The results for the three
months ended June 30, 1997, are not necessarily indicative of the results that
may be expected for the year ending March 31, 1998.
NOTE 4 - NET INCOME (LOSS) PER SHARE
Net income (loss) per share was calculated based on the following number of
common and common equivalent shares outstanding: 11,486,670 and 7,123,762 for
three months ended June 30, 1997 and 1996, respectively.
In February 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 128, "Earnings per Share." This statement establishes accounting
standards for computing and presenting earnings per share and applies to
entities with publicly held common stock. This statement is effective for
periods ending after December 15, 1997, including interim periods.
Early application of SFAS No. 128 is not permitted, however, upon adoption,
all prior periods must be restated. Based on the standards to be adopted,
basic earnings (loss) per share would be $(0.23) and $0.03 for the quarters
ended June 30, 1997 and 1996, respectively, and diluted earnings per share
would be $(0.23) and $0.03, respectively.
NOTE 5 - SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
For the three months ended June 30, 1997 and 1996, interest paid amounted to
$246,507 and $117,565, respectively. Income taxes paid by the Company during
the three months ended June 30, 1997 and 1996, was $313,596 and $169,816,
respectively.
During the quarter ended June 30, 1997, the Company incurred $1,100,000 in
non-cash compensation charges related to options exercised in connection with
the NTI merger.
NOTE 6 - CONTINGENCIES
On February 8, 1996, President Clinton signed the Telecommunications Act of 1996
(the "Telecom Act"), which permits, without limitation, the Regional Bell
Operating Companies (RBOCs) to provide domestic and international long distance
services to customers located outside of the RBOCs home regions; permits a
petitioning RBOC to provide domestic and international long distance service to
customers within its home regions upon a finding by the Federal Communications
Commission (the "FCC") that a petitioning RBOC has satisfied certain criteria
for opening up its local exchange network to competition and that its provision
of long distance services would further the public interest; and remove existing
barriers to entry into local service markets. Additionally, there are
significant changes in the manner in which carrier-to-carrier arrangements are
regulated at the federal and state level; procedures to revise universal service
standards; and, penalties for unauthorized switching of customers. The FCC has
instituted proceedings addressing the implementation of this legislation.
On August 8, 1996, the FCC released its First Report and Order in the Matter of
Implementation of the Local Competition Provisions in the Telecom Act (the "FCC
Interconnect Order"). In the FCC Interconnect Order, the FCC established
nationwide rules designed to encourage new entrants to participate in the local
service markets through interconnection with the incumbent local exchange
carriers ("ILEC"), resale of the ILECs retail services and unbundled network
elements. These rules set the groundwork for the statutory criteria governing
RBOC entry into the long distance market. The Company cannot predict the effect
such legislation or the implementing regulations will have on the Company or the
industry. Motions to stay implementation of the FCC Interconnect Order have
been filed with the FCC and federal courts of appeal. Appeals challenging,
among other things, the validity of the FCC Interconnect Order have been filed
in several federal courts of appeal and assigned to the Eighth Circuit Court of
Appeals for disposition. The Eighth Circuit Court of Appeals has stayed the
pricing provisions of the FCC Interconnect Order. The United States Supreme
Court has declined to review the propriety of the stay. The Company cannot
predict either the outcome of these challenges and appeals or the eventual
effect on its business or the industry in general.
On December 24, 1996, the FCC released a Notice of Proposed Rulemaking
seeking to reform the FCC's current access charge policies and practices to
comport with a competitive or potentially competitive local access service
market. On May 7, 1997, the FCC announced that it will issue a series of
orders that reform Universal Services Subsidy allocations, adopt various
reforms to the existing rate structure for interstate access that are
designed to reduce access charges, over time, to more economically efficient
levels and rate structures. In particular, the FCC adopted changes to its
rate structures for Common Line, Local Switching and Local Transport rate
elements. The FCC generally removed from minute-of-use access charges costs
that are not incurred on a per-minute-of-use basis, with such costs being
recovered through flat rate charges. Additional charges and details of the
FCC's actions are to be addressed when Orders are released within the near
future. Access charges are a principal component of the Company's
transmission costs. The Company cannot predict whether or not the result of
these proceedings will have a material impact upon its financial position or
results of operations.
6
<PAGE>
On May 21, 1997, the former Chief Executive Officer of the Company initiated
litigation against the Company in an effort to obtain the release of shares
subject to a common stock escrow agreement, or to be otherwise compensated.
Based on the fair market value of freely tradable common shares of the
Company, the fair market value of the shares subject to litigation at June
30, 1997 was approximately $2,938,000. The outcome of this litigation, which
the Company is vigorously defending, is uncertain. However, if any of the
escrowed shares of common stock are released, earnings (loss) per common
share would be reduced. The fair value of any shares released from escrow or
any cash payment made to the former officer in connection with the litigation
would be charged to expense.
The Company is involved in legal proceedings generally incidental to its
business. While the results of these various legal matters contain an element
of uncertainty, the Company believes that the probable outcome of any of these
matters, or all of them combined, should not have a material adverse effect on
the Company's consolidated results of operations or financial position.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
The following is a discussion of the consolidated financial condition and
results of operations of the Company for the three months ended June 30, 1997
and 1996, after giving effect to merger with NTI, which was accounted for as a
pooling-of-interests. The information should be read in conjunction with the
Company's Consolidated Financial Statements and the Notes thereto.
Certain statements set forth in Management's Discussion and Analysis of
Financial Condition and Results of Operation, which are not historical facts,
are forward-looking statements under the Private Securities Litigation Reform
Act of 1995 that are subject to risks and uncertainties that could cause actual
results to differ materially from those set forth in the forward-looking
statements. Among the factors that could cause actual future results to differ
materially are competitive pressures, the timing and technique used in marketing
by third-party distributors and the market acceptance of certain services.
Results of Operations
For the quarter ended June 30, 1997, revenues, inclusive of excise taxes were
$24,987,890, compared to $21,093,077 for the quarter ended June 30, 1996, an
increase of 18.5%. Approximately 95.3% of the increase was associated with the
acquisition of ETI which was closed on May 7, 1997. The remainder is attributed
to the on-going internal sales and marketing programs of the Company.
Transmission costs for the quarter ended June 30, 1997 were $15,913,839 or 63.7%
of revenues. This compared to $14,153,755 or 67.1% of revenues for the quarter
ended June 30, 1996. The reduction in transmission costs as a percent of
revenues is a result of the ETI and NTI mergers. Combined transmission costs
for ETI and NTI as a percent of combined revenues for ETI and NTI were 57.8% for
the quarter ended June 30, 1997. Combined revenues for ETI and NTI represented
43.3% of total revenues for the Company during the quarter ended June 30, 1997.
The Company expects to achieve additional reductions in transmission costs as it
is in the process of consolidating its various underlying carrier agreements and
migrating switchless traffic to its own network.
Selling, general and administrative expenses (S,G&A) for the quarter ended
June 30, 1997 were $6,790,562 or 27.2% of revenues, compared to $5,527,508 or
26.2% of revenues for the quarter ended June 30, 1996. The increase in SG&A
is primarily associated with increases in personnel costs, commissions, and
professional fees associated with the Company's continued growth.
Depreciation and amortization for the quarter ended June 30, 1997 was $927,259
or 3.7% of revenues, compared to $505,966 or 2.4% of revenues for the quarter
ended June 30, 1996. The increase is related to the increase in overall
property, plant, and equipment associated with the acquisition of ETI and the
amortization of intangibles related to ETI and previously acquired customer
bases.
Provision for losses on accounts receivable for the quarter ended June 30, 1997
was $646,112 or 2.6% of revenues, compared to $354,810 or 1.7% of revenues for
the quarter ended June 30, 1996. The increase in the provision for losses on
accounts receivable is primarily associated with the acquisition of ETI and the
application of the Company's policies to the ETI customer base.
Merger expenses and other related charges for the quarter ended June 30, 1997
were $2,225,067 or 8.9% of revenues, compared to $100,000, which represents a
negligible portion of revenues for the quarter ended June 30, 1996. For the
quarter ended June 30, 1997, these charges consisted of $505,000 related to
severance payments to former officers and various other employees of the
Company, $330,000 related to integration, relocation and facilities related
charges, $350,000 related to certain legal and regulatory matters and
contingencies, $1,040,000 related to financial advisory, legal, accounting
and other professional services fees incurred in connection with consummating
the NTI merger.
Stock compensation related to the NTI merger was $1,100,000 or 4.4% of
revenues for the quarter ended June 30, 1997. This was a non-cash charge
related to the exercise of stock options by an officer of NTI.
7
<PAGE>
Net loss for the three months ended June 30, 1997 was $(2,639,192) compared
to net income of $224,559 for the same period in 1996. The change in net
income is primarily associated with the merger expenses and other related
charges taken during the quarter ended June 30, 1997.
Accounts receivable net of allowance for doubtful accounts at June 30, 1997
was $15,676,336 as compared to $11,714,585 at March 31, 1997, an increase of
34.6%. This increase is primarily related to the acquisition of ETI.
Customer acquisition costs, net and goodwill, net were $9,062,123 and
$21,266,481 at June 30, 1997, respectively. This compared to customer
aquisition costs, net of $5,645,730 and goodwill, net of $450,020 at March
31, 1997. This increase is related to the acquisition of ETI. The merger
resulted in an intangible asset of approximately $24,795,000 of which
$3,815,000 and $20,980,000 have been allocated to customer base and goodwill,
respectively.
Long term debt and capital lease obligation increase to $6,687,745 at June
30, 1997 from $2,053,317 at March 31, 1997. This increase is due to the cash
paid of $2,054,736 in connection with the merger with ETI and the merger
expenses and other related charges incurred in connection with the mergers
with both ETI and NTI.
Liquidity and Capital Resources
For the three months ended June 30, 1997, the Company's cash flow used in
operating activities was $3,674,974 compared to cash flow provided by
operating activities of $1,419,027 for three months ended June 30, 1996.
This change is primarily related to incurred merger expenses and other
related charges and stock compensation related to the NTI merger during the
quarter ended June 30, 1997. Cash used in investing activities during the
three months ended June 30, 1997 was $1,495,594 compared to $3,238,424 for
the three months ended June 30, 1997. The primary use of cash associated
with investing activities is related to the Company's merger and acquisition
activities. These out flows were partially offset by proceeds of $669,980
received from the sale of short term investments during the three months
ended June 30, 1997. Cash provided by financing activities during the three
months ended June 30, 1997 and June 30, 1996 were $4,058,840 and $1,911,603,
respectively. The increase is associated with the increase in borrowings
under the line of credit to pay the cash portion of the purchase of ETI and
certain merger related costs.
In May 1996, the Company entered into a $14,250,000 credit facility with a
bank which includes a revolving credit facility and term facility.
Borrowings under the revolving credit facility may not exceed the lessor of
$11,000,000 minus any reserves the lender may deem eligible or 75% of
eligible receivables. Borrowings under the revolving facility bear interest
at the prime rate plus 0.75%. Borrowings and unpaid interest on the revolver
are repayable in full at maturity on June 1, 1999. The Company was allowed
to borrow $3,250,000 under the term facility. The term facility is repayable
in 36 equal monthly installment of $90,278 plus accrued interest. The term
loan bears interest at the prime rate plus 3%. Substantially all of the
assets of the Company are pledged as collateral under the credit facility.
At June 30, 1997 there was $4,205,193 outstanding on the revolver with
$1,900,406 available and $2,166,664 outstanding on the term loan.
The credit facility requires compliance with certain financial and operating
covenants. During the quarter ended June 30, 1997, the Company negotiated
certain amendments to the facility to reflect changes in financial position, and
anticipated changes in business strategies and operating results associated with
such transactions. At June 30, 1997, the Company was in compliance with the
applicable financial and operating covenants.
8
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On May 21, 1997, the Company was notified that a Director/Shareholder of the
Company has brought suit against the Company. The suit is related to a certain
escrow agreement previously entered into with two major shareholders of the
Company. The suit seeks the release of common stock in the Company which was
placed into escrow by the Director in relation to the Company's public offering
completed in February of 1994. The number of shares in dispute is 313,344. The
outcome of the suit and its impact on the operations and financial condition of
the Company cannot be determined at this time. However, the Company believes
that the specific criteria under which the common stock was to be released were
not met and therefore believes that the shares should be returned to the Company
and cancelled according to the provisions of the escrow agreement.
The Company is involved in other legal proceedings generally incidental to its
business. While results of these various legal matters contain an element of
uncertainty, the Company believes that the probable outcome of any of these
matters, or all of them combined, should not have a material adverse effect on
the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 11 - Computation of Net Income (Loss) per Common Share
(b) Current reports on Form 8-K
During the quarter ended June 30, 1997, the Company filed the
following reports on Form 8-K.
Form 8-K dated May 7, 1997 and filed on May 9, 1997, reporting
under Item 2 Acquisition or Disposition of Assets.
Form 8-K dated May 8, 1997 and filed on May 12, 1997, reporting
under Item 2 Acquisition or Disposition of Assets.
Form 8-K/A dated June 26, 1997 and filed on June 26, 1997,
reporting under Item 7 Financial Statements.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Network Long Distance, Inc.
Dated: August 13, 1997 By: /s/ Thomas G. Keefe
----------------------------------
Thomas G. Keefe
Chief Financial Officer
10
<PAGE>
EXHIBIT 11
Network Long Distance, Inc.
Computation of Net Income (Loss) per Common Share
<TABLE>
<CAPTION>
Three months ended June 30,
1997 1996
----------- ----------
<S> <C> <C>
Computation of net income (loss) per common
and equivalent share:
Net income (loss) attributable to common stock $(2,639,192) $ 224,579
=========== ==========
Weighted average number of common shares outstanding 11,486,670 6,821,111
Additional shares assuming conversion of stock options (A) - 302,651
----------- ----------
Weighted average shares for primary and fully diluted
net income (loss) per share (B) 11,486,670 7,123,762
=========== ==========
Primary and fully diluted net income (loss) per common
and equivalent share $ (0.23) $ 0.03
=========== ==========
</TABLE>
(A) For the three months ended June 30, 1997, additional shares assuming
conversion of stock options are not considered because their effects would
be anti-dilutive.
(B) For the three months ended June 30, 1996, incremental shares issuable
using quarter-end market price are not considered because their effects
would be anti-dilutive.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 850,488
<SECURITIES> 118,144
<RECEIVABLES> 15,676,336
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0
0
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