UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
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 0-21519
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International Telecommunication Data Systems, Inc.
--------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
Delaware 06-1295986
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<S> <C>
(State or other jurisdiction of incorporation or organization) (I.R.S. employer identification no.)
225 High Ridge Road 06905
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(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code (203) 329-3300
--------------
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 No X
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Class Outstanding at November 22, 1996
- ----------------------------------------- -----------------------------------
<S> <C>
Common Stock, $.01 par value 8,412,504 shares
</TABLE>
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International Telecommunication Data Systems, Inc.
Form 10-Q
Index
<TABLE>
<CAPTION>
Part I. Financial Information Page No.
<S> <C>
Item 1. Financial Statements (unaudited)
Balance sheet--September 30, 1996 and December 31, 1995..............................................................1
Statement of operations--three months and nine months
ended September 30, 1996 and 1995.................................................................................3
Statement of cash flows--nine months ended
September 30, 1996 and 1995.......................................................................................4
Notes to financial statements........................................................................................5
Item 2. Management's Discussion and Analysis of Financial Condition,
Results of Operations, and Certain Factors That May Affect Future Results...............................................7
Part II. Other Information
Item 1. Legal Proceedings.............................................................................................10
Item 2. Changes in Securities.........................................................................................10
Item 3. Defaults Upon Senior Securities...............................................................................10
Item 4. Submission of Matters to a Vote of Security Holders...........................................................10
Item 5. Other Information.............................................................................................11
Item 6. Exhibits and Reports on Form 8-K..............................................................................11
Signatures....................................................................................................12
</TABLE>
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
International Telecommunication Data Systems, Inc.
Balance Sheet
<TABLE>
<CAPTION>
September 30 December 31
1996 1995
---------------------------------------
(Unaudited) (Note)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 625,670 $1,172,692
Short-term investments 344,415 295,069
Accounts receivable 2,704,650 1,348,787
Prepaid expenses, including income taxes in 1996 684,542 279,942
Deferred income taxes 52,000 20,256
---------------------------------------
Total current assets 4,411,277 3,116,746
Property and equipment
Computers, including leased property under capital leases of $2,552,289 and
$1,275,366, respectively 2,960,468 1,642,697
Furniture and fixtures, including leased property under capital leases of $33,119
90,015 90,015
Trade booth 37,809 37,809
Equipment, including leased property under capital leases of $53,508
and $20,882, respectively 62,558 29,933
Leasehold improvements 50,566 27,026
---------------------------------------
3,201,416 1,827,480
Less: accumulated depreciation and amortization 1,207,839 709,911
---------------------------------------
1,993,577 1,117,569
Other assets:
Product development costs-at cost, net of accumulated amortization of $491,112 and
$286,110, respectively 1,171,134 785,005
Other 288,013 185,563
Deferred income taxes 40,000 228,823
---------------------------------------
1,499,147 1,199,391
---------------------------------------
Total assets $7,904,001 $5,433,706
=======================================
Note: The balance sheet at December 31, 1995 has been derived from the
audited financial statements at that date but does not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements.
</TABLE>
See notes to financial statements.
1
<PAGE>
<TABLE>
<CAPTION>
September 30 December 31
1996 1995
---------------------------------------
(Unaudited) (Note)
<S> <C> <C>
Liabilities and stockholders' equity Current liabilities:
Accounts payable $ 354,856 $ 256,001
Accrued expenses 343,084 386,137
Accrued compensation 612,982 693,386
Current portion of accrued rent liability 42,922 26,401
Current maturities of notes payable 18,464 77,198
Current maturities of long-term debt 69,240 69,240
Current maturities of capital lease obligations 722,276 398,261
---------------------------------------
Total current liabilities 2,163,824 1,906,624
Accrued rent liability 49,926 53,293
Long-term debt 2,532,993 1,742,033
Capital lease obligations 1,376,406 695,028
Deferred revenue 160,000 -
Other 405,572 17,694
Commitments and contingencies - -
Redeemable Preferred Stock - Class C
$4,961 par value, cumulative, nonvoting
250 shares authorized, 129 shares outstanding 640,000 640,000
Stockholders' equity
Preferred Stock - Class A (net of issuance costs) $25,000 par value,
noncumulative, nonvoting
50 shares authorized, 18 shares outstanding - 400,400
Preferred Stock - Class B (net of issuance costs)
$250 par value, noncumulative, nonvoting
2,000 shares authorized, 1,500 shares outstanding - 327,600
Preferred Stock, $.01 par value; 2,000,000 shares authorized, none issued - -
Common Stock, $.01 par value; 40,000,000 shares authorized, 5,756,447 shares
issued and outstanding at September 30, 1996 and 5,124,800 shares issued
and 4,875,200
shares outstanding at December 31, 1995 57,564 51,248
Additional paid in capital 10,063,090 -
Retained earnings (deficit) (9,545,374) (184)
Treasury stock - (400,030)
---------------------------------------
Total stockholders' equity 575,280 379,034
---------------------------------------
Total liabilities and stockholders' equity $7,904,001 $5,433,706
=======================================
Note: The balance sheet at December 31, 1995 has been derived from the
audited financial statements at that date but does not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements.
</TABLE>
See notes to financial statements.
2
<PAGE>
International Telecommunication Data Systems, Inc.
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30 September 30
1996 1995 1996 1995
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<S> <C> <C> <C> <C>
Revenue $4,139,061 $2,958,089 $12,003,702 $7,843,859
Costs and expenses:
Operating expenses 1,227,419 809,271 3,075,137 2,003,151
General, administrative and selling expenses 2,327,144 1,245,581 5,010,163 3,315,799
Depreciation and amortization 304,934 174,797 742,642 449,905
Systems development and programming costs 552,172 327,956 1,516,562 780,717
------------------------------------------------------------------
Total costs and expenses 4,411,669 2,557,605 10,344,504 6,549,572
------------------------------------------------------------------
Operating income (loss) (272,608) 400,484 1,659,198 1,294,287
Other income 9,160 14,160 21,975 36,965
Interest expense (118,169) (77,401) (336,585) (313,307)
------------------------------------------------------------------
Income (loss) before income tax expense (381,617) 337,243 1,344,588 1,017,945
Income tax expense (benefit) (141,838) 106,058 590,162 320,144
------------------------------------------------------------------
Income (loss) before extraordinary item (239,779) 231,185 754,426 697,801
Extraordinary loss (net of $158,038 tax benefit) - - - (223,696)
------------------------------------------------------------------
Net income (loss) $ (239,779) $ 231,185 $ 754,426 $ 474,105
==================================================================
Income per common share:
Income before extraordinary item $(.04) $.04 $.12 $ .11
Extraordinary loss - - - (.03)
------------------------------------------------------------------
Net income $(.04) $.04 $.12 $ .08
==================================================================
Shares used in computing income
per common share 6,194,171 6,194,171 6,194,171 6,194,171
==================================================================
</TABLE>
See notes to financial statements.
3
<PAGE>
International Telecommunication Data Systems, Inc.
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended September 30
1996 1995
-----------------------------------
<S> <C> <C>
Operating activities
Net income before extraordinary loss $ 754,426 $ 697,801
Adjustments to reconcile net income before extraordinary loss to net cash provided by
operating activities:
Depreciation and amortization 742,642 449,905
Gain on equipment disposal (400) -
Deferred taxes 157,079 154,938
Stock plan compensation expense 634,548 -
Change in operating assets and liabilities:
Accounts receivable (1,355,862) (651,514)
Prepaid expenses (404,599) (85,221)
Deferred revenue 160,000 -
Accounts payable, accrued expenses and accrued compensation (24,603) 447,306
Other assets and liabilities, net (63,070) (144,855)
-----------------------------------
Net cash provided by operating activities 600,161 868,360
Investing activities
Capital expenditures (64,388) (15,736)
Proceeds from sale of equipment 400 -
Purchase of investments (349,347) (291,552)
Proceeds from maturities of investments 300,000 149,286
Product development costs (600,920) (322,892)
-----------------------------------
Net cash used for investing activities (714,255) (480,894)
Financing activities
Principal payments on long-term debt and notes payable (92,773) (308,192)
Principal payments on capital lease obligations (304,155) (172,190)
Dividends paid (36,000) (11,2520)
-----------------------------------
Net cash used for financing activities (432,928) (491,632)
Net decrease in cash and cash equivalents (547,022) (104,166)
Cash and cash equivalents at beginning of period 1,172,692 412,250
===================================
Cash and cash equivalents at end of period $ 625,670 $ 308,084
===================================
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $ 336,585 $ 313,307
Cash paid during the period for taxes 825,882 319,700
Supplemental disclosure of noncash financing activities:
Capital lease obligations totaling $1,309,549 and $539,108 in the nine months
ended September 30, 1996 and 1995, respectively, were incurred for the
acquisition of new equipment.
</TABLE>
See notes to financial statements.
4
<PAGE>
International Telecommunication Data Systems, Inc.
Notes to Financial Statements
(Unaudited)
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulations S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three- and nine-month periods ended
September 30, 1996 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1996. For further information, refer to
the consolidated financial statements and footnotes thereto included in the
International Telecommunication Data Systems, Inc. (the "Company" or "ITDS")
Registration Statement on Form S-1 (Registration No. 333-11045) declared
effective by the Securities and Exchange Commission ("SEC") on October 24, 1996.
2. Initial Public Offering
The Company completed an initial public offering ("IPO") of its common stock in
October 1996. The Company sold 2 million shares at an initial public offering
price of $16 per share, resulting in proceeds to the Company of approximately
$29.8 million, after deducting underwriting commissions and discounts. In
addition, on November 18, 1996 the Company received approximately $3.0 million,
net of underwriting commissions and discounts, upon the exercise of the
underwriters' over-allotment option to purchase 200,000 shares of Common Stock
from the Company in connection with the IPO.
In connection with the IPO, the Company's Certificate of Incorporation
authorized the issuance of up to 40,000,000 shares of Common Stock, $.01 par
value per share and the issuance of up to 2,000,000 shares of Preferred Stock,
$.01 par value per share. Pursuant to a recapitalization the Company was
reincorporated in the State of Delaware and an 800-for-1 split of its Common
Stock was effected.
A portion of the proceeds from the sale of the Company's Common Stock sold in
the IPO was used to retire substantially all of the Company's outstanding debt.
In addition, the Company's Class A and B Preferred Stock was retired and the
holders of such shares were issued an aggregate of 852,812 post-split shares of
the Company's Common Stock and paid an aggregate amount of $825,000. The
distribution of the 852,812 shares of the Company's Common Stock valued at $12
per share, for an aggregate of $10,233,744, resulted in a one-time, noncash
charge to retained earnings and a corresponding increase to additional
paid-in-capital. Further, immediately prior to the IPO, Connecticut Innovations
Incorporated ("CII") exercised outstanding warrants to purchase 334,524
post-split shares of the Company's Common Stock at an aggregate purchase price
of $822,959. In addition, upon the closing of the IPO all of the outstanding
shares of Series C Preferred Stock of the Company (all of which were held by
CII) converted into an aggregate of 103,200 shares of Common Stock.
During the quarter ended September 30, 1996, a total of 1,200,000 shares of
Common Stock were authorized for issuance under the Company's 1996 Stock
Incentive Plan and 1996 Employee Stock Purchase Plan.
3. Income Tax
Income tax provisions for interim periods are based on estimated effective
annual income tax rates. The Company recognizes deferred tax assets and
liabilities for the expected future tax consequences of temporary differences
between tax bases and financial reporting bases of assets and liabilities.
The differences between the effective tax rate and the federal statutory rate is
primarily a result of state income taxes.
5
<PAGE>
International Telecommunication Data Systems, Inc.
Notes to Financial Statements (continued)
4. Earnings Per Share
Earnings per share are based on the weighted average number of shares
outstanding and common stock equivalents during the respective periods,
including the assumed net shares issuable upon exercise of stock options when
dilutive. Common and common equivalent shares issued during the twelve month
period prior to the IPO at prices below the IPO price are included in the
calculations, using the treasury stock method, as if they were outstanding for
all periods presented.
The weighted average shares for the three and nine months ended September 30,
1995 were based on the equivalent weighted average shares as though the
recapitalization discussed in Note 2 occurred prior to that date.
5. Subsequent Event
On November 1, 1996, J. Juliano joined the Company as Executive Vice President,
pursuant to his agreement he was awarded 24,000 shares of restricted Common
Stock which vests over a four year period.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition, Results of
Operations, and Certain Factors that May Affect Future Results
ITDS provides comprehensive transactional billing and management information
solutions to providers of wireless, long distance and satellite
telecommunications services. The Company, founded in 1990, uses its robust and
flexible proprietary software technology to develop billing solutions which
address customer requirements as they evolve, regardless of the market segment,
geographic area or mix of network features and billing options. The Company
provides its services to customers under exclusive contracts with terms
typically ranging from three to four years and bills customers monthly,
typically on a per-subscriber basis. As a result, substantially all of the
Company's revenue is recurring in nature, and increases as a provider's
subscriber base grows.
In recent years, the telecommunications services industry has experienced rapid
growth and dramatic change, ranging from the introduction of such new
technologies as cellular, PCS and satellite communications, to new features and
services, in a wide variety of combinations and at a great diversity of prices.
The Company's systems are designed to respond to the dynamic requirements of
this market for cost-effective transactional billing solutions by drawing on the
Company's core technology, which does not require significant reconfiguration or
customization to be applied across market segments, geographic areas and
customer types. The Company's software currently supports both of the two
predominant cellular telecommunications protocols, Advanced Mobil Phone Systems
("AMPS"), an analog service predominant in the U.S., and the Global System for
Mobile Communications ("GSM"), an international digital service, as well as
other emerging digital standards.
The Company's advanced billing and management information system, ITDS 10X,
forms the foundation for its integrated suite of applications that provide not
only subscriber billing and service support, but also the means to automate
subscriber activation, remittance processing, collections, data retrieval and
reporting, electronic funds transfer, credit management, inventory management
and data archiving. Its modular system architecture permits providers to draw on
those features and functions most appropriate to their specific requirements in
a fully-integrated software solution. The Company's software and services allow
its customers to address the demands of a rapidly evolving marketplace by
enabling them to develop and support innovative rate and feature offerings
without the delay and cost associated with reconfiguring their billing and
information systems; to identify and respond to subscriber demands through
analysis of billing and subscriber databases; to reduce costs with accurate and
timely receivables information; and to manage the subscriber relationship in a
comprehensive and cost-effective manner.
Revenue. Revenue increased by 40% to $4,139,061 in the third quarter of 1996
from $2,958,089 in the third quarter of 1995. For the nine months ended
September 30, 1996 revenue increased by 53% to $12,003,702 from $7,843,859 in
the comparable period in 1995. The increases were due primarily to the addition
of new customers and the growth of continued revenue from existing customers.
Operating Expenses. Operating expenses increased 51.7% from $809,271 in the
third quarter of 1995 to $1,227,419 for the three months ended September 30,
1996, respectively. Operating expenses increased 53.5% from $2,003,151 to
$3,075,137 for the September year to date periods of 1995 and 1996. These
increases were primarily due to the growth in revenue.
General, Administrative and Selling Expenses. General, administrative and
selling expenses increased 86.8% from $1,245,581 to $2,327,144 in the third
quarters of 1995 and 1996, respectively. This increase was primarily due to a
one time change for compensation to two newly hired employees of $909,548. Other
increases in expenses were due to a $97,000 lawsuit settlement, increased office
expenses of $46,700, additional rent expense of $30,100 and other administrative
expenses resulting from the growth of the Company. These expenses were partially
offset by decreases in salaries and bonuses paid to senior management of
approximately $167,500.
7
<PAGE>
During the first nine months of 1996, general, administrative and selling
expenses increased 51.1% or $1,694,364 from $3,315,799 to $5,010,163 over the
comparable period in 1995. The increase included a one time charge for
compensation to two employees of $909,548. Other increases were in employee
compensation and benefits, including employment agency fees and relocation costs
of $601,169, rent expense of $106,159, lawsuit settlement of $97,000 and other
administrative expenses resulting from the growth of the Company. These expenses
were partially offset by decreases in salaries and bonuses paid to senior
management of approximately $173,000.
The Company expects that its general, administrative and selling expenses will
increase as it continues to expand its direct sales force and its marketing
activities.
Depreciation and Amortization. Depreciation and amortization increased 74.5%
from $174,797 in the third quarter of 1995 to $304,934 in the third quarter of
1996. For the nine month period of 1996 depreciation and amortization increased
65.1% over the comparable period in 1995. This increase was primarily due to the
purchase of computer equipment and the increased spending on research and
development related to the enhancement of the Company's ITDS 10X system to
support Unix based file servers and the further development of its integrated
billing and management information system.
Systems Development and Programming Costs. Systems development and programming
costs increased 68.4% from $327,956 for the three months ended September 30,
1995 to $552,172 in the respective 1996 period, and 94.3% for the first nine
months of 1995 from $780,717 to $1,516,562 for the same period in 1996, due
primarily to increased programming support required by customers and additional
software features offered on the Company's integrated system. As a percentage of
revenue, systems development and programming costs increased from 11.09% for the
three months ended September 30, 1995 to 13.34% for the same period in 1996, on
a year to date basis the percentage increased from 9.95% to 12.63% for
comparable periods. These increases were due to additional software features
offered and under development by the Company.
Interest Expense. Interest expense increased 52.7% from $77,401 for the third
quarter of 1995 to $118,169 in the third quarter of 1996. This increase was the
result of additional equipment leases needed to support revenue growth. The
increase in interest expense on a year to date basis of 7.4% from $313,307 in
1995 to $336,585 in 1996 was due to additional equipment leases offset by
interest cost reductions resulting from the restructuring of debt.
Income Tax Expense. The effective tax rate increased to 37.2% for the three
months ended September 30, 1996 from 31.4% for the comparable period in 1995.
This increase was due primarily to debt consolidation expense benefits occurring
in 1995 which did not recur in 1996.
The effective tax rate increased to 43.9% from 31.5% in 1995. This increase in
the effective tax rate was also due primarily to debt consolidation in 1995.
Extraordinary Loss. On June 30, 1995, the Company refinanced existing debt with
CII and recorded an extraordinary loss of $223,696, net of $158,038 in tax
benefits. Such extraordinary loss was due to a negotiated premium for the
acceleration of payments in connection with the early termination of a debt
agreement.
Liquidity and Capital Resources
The Company has financed its operations to date primarily through private
placements of debt and equity securities, cash generated from operations,
equipment financing leases and the receipt of the proceeds from the IPO.
In October 1996, the Company utilized the proceeds from the IPO of $29,760,000
to reduce debt as described below. On November 18, 1996 an additional $2,976,000
was received as a result of the exercise of the underwriters over-allotment to
purchase 200,000 shares of common stock.
8
<PAGE>
As of September 30, 1996, the Company had $625,670 of cash and cash equivalents,
$344,415 in short-term investments, $2,704,650 in net trade accounts receivable,
and $2,247,453 of working capital.
Net cash decreased by $547,022 and $104,166 for the nine months ended September
30, 1996 and 1995, respectively. This decrease is principally a result of an
increase in accounts receivable and prepaid expenses, product development costs
and principal payments on capital lease obligations. Offsetting these uses of
funds were increases in depreciation and amortization, deferred revenues and
proceeds from the maturities of investments.
With the net proceeds from the IPO, the Company has retired substantially all
long-term debt and a significant portion of capital lease obligations.
The Company has an available line of credit, dated September 19, 1996, from
First Union Bank in the amount of $250,000, no amounts are currently outstanding
under this line. In conjunction with such line of credit, the Company has
granted to First Union a security interest in substantially all of its assets
other than intellectual property.
The Company believes that its existing capital resources, as well as a line of
credit and a letter of credit issued in conjunction with the Company's lease for
its principle office space, are adequate to meet its cash requirements for the
foreseeable future. There can be no assurance, however, that changes in the
Company's plans or other events affecting the Company's operations will not
result in accelerated or unexpected expenditures.
The Company may seek additional funding through public or private financing.
There can be no assurance, however, that additional financing will be available
from any of these sources or will be available on terms acceptable to the
Company.
To date, inflation has not had a significant impact on the Company's operations.
Certain Factors That May Affect Future Results
This quarterly report contains forward-looking statements that involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. A number of uncertainties
exist that could affect the Company's future operating results, including,
without limitation, changes in the telecommunication market, the Company's
ability to retain existing customers and attract new customers, the Company's
continuing ability to develop products that are responsive to the evolving needs
of its customers, increased competition, changes in operating expenses, changes
in government regulation of the Company's clients and general economic factors.
The Company's quarterly operating results may fluctuate from quarter to quarter
depending on various factors, including the impact of significant start-up costs
associated with initiating the delivery of contracted services to new clients,
the hiring of additional staff, new product development and other expenses,
introduction of new products by competitors, pricing pressures, the evolving and
unpredictable nature of the markets in which the Company's products and services
are sold and general economic conditions.
The market for the Company's products and services is highly competitive, and
competition is increasing as additional market opportunities arise.
Reference is made to the more detailed discussion of the risks associated with
the Company's business contained under the heading "Risk Factors" in the
Company's Registration Statement on Form S-1 (Registration No. 333-11045)
declared effective by the SEC on October 24, 1996.
9
<PAGE>
Part II: Other Information
Item 1.
Legal Proceedings
The Company is not a party to any material legal proceedings.
Item 2.
Changes in Securities
On September 27, 1996, ITDS, a Connecticut Corporation was reincorporated as a
Delaware Corporation via a merger with and into ITDS, a Delaware Corporation.
The reincorporation, effected a change in the Company domicile from Connecticut
to Delaware, thereby modifying the rights, preferences and privileges of the
Company's outstanding securities.
Item 3.
Defaults Upon Senior Securities
None.
Item 4.
Submission of Matters to a Vote of Security Holders
Actions of Stockholders of ITDS by written consents in lieu of meetings dated
September, 1996:
I. Merger. The Stockholders unanimously approved the merger of ITDS, a
Connecticut corporation, ("ITDS (Connecticut)") into ITDS, a Delaware
Corporation ("ITDS (Delaware)"), wherein each share of Common
Stock of ITDS (Connecticut) was converted to 800 shares of Common
Stock of ITDS (Delaware), each share of ITDS (Connecticut) Class A
Preferred Stock was converted into 29,156 shares of ITDS (Delaware)
Common Stock, each share of ITDS (Connecticut) Class B Preferred
Stock was converted into 218.67 shares of ITDS (Delaware) Common
Stock and each share of ITDS (Connecticut) Series C Preferred Stock
was converted into 1 share of ITDS (Delaware) Series C Preferred
Stock.
II. Amended to the Certificate of Incorporation. The Stockholders
unanimously approved amendments to the Certificate of Incorporation
providing that:
(A) No adjustment in the number of shares of Common Stock into
which the Series C Convertible Preferred Stock is convertible
shall be made, by adjustment in the Applicable Conversion
Price of the Series C Convertible Preferred Stock in respect
of the issuance of Additional Shares of Common Stock or
otherwise, (a) unless the consideration per share for an
Additional Share of Common Stock issued or deemed to be issued
by the Corporation is less than the Applicable Conversion
Price in effect on the date of, and immediately before, the
issue of such Additional Share of Common Stock, or (b) if
prior to such issuance, the Corporation receives written
notice from the holders of at least 75% of the then
outstanding shares of Series C Preferred Stock agreeing that
no such adjustment shall be made as the result of the issuance
of Additional Shares of Common Stock.
10
<PAGE>
(B) "The holders of the Series C Preferred Stock shall have
preemptive rights to purchase shares of Series C Preferred
Stock hereinafter issued or any securities exchangeable for or
convertible into shares of the same Series C Preferred Stock
or any warrants or other instruments evidencing rights or
options to subscribe for, purchase, or otherwise acquire
shares of the same Series C Preferred Stock."
III. 1996 Stock Incentive Plan. The Stockholders unanimously approved the
1996 Stock Incentive Plan.
IV. Employee Stock Purchase Plan. The Stockholders unanimously approved
the 1996 Employee Stock Option Plan.
Item 5.
Other Information
None.
Item 6.
Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27.01 Financial Data Schedule
(b) Reports on Form 8-K
None.
11
<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.
International Telecommunications
Data Systems, Inc.
--------------------------------------------
(Registrant)
By /s/ Mark D. Spitzer
--------------------------------------------
Mark D. Spitzer
Executive Vice President
(Chief Financial Officer)
12
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> U.S.
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-START> JUL-01-1996 JAN-01-1996
<PERIOD-END> SEP-30-1996 SEP-30-1996
<EXCHANGE-RATE> 1 1
<CASH> 625,670 625,670
<SECURITIES> 344,415 344,415
<RECEIVABLES> 2,704,650 2,704,650
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 4,411,277 4,411,277
<PP&E> 3,201,416 3,201,416
<DEPRECIATION> 1,207,839 1,207,839
<TOTAL-ASSETS> 7,904,001 7,904,001
<CURRENT-LIABILITIES> 2,163,824 2,163,824
<BONDS> 0 0
0 0
640,000 640,000
<COMMON> 57,564 57,564
<OTHER-SE> 517,716 517,716
<TOTAL-LIABILITY-AND-EQUITY> 7,904,001 7,904,001
<SALES> 0 0
<TOTAL-REVENUES> 4,139,061 12,003,702
<CGS> 0 0
<TOTAL-COSTS> 1,227,419 3,075,137
<OTHER-EXPENSES> 3,184,250 7,269,367
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 118,169 336,585
<INCOME-PRETAX> (381,617) 1,344,588
<INCOME-TAX> (141,838) 590,162
<INCOME-CONTINUING> (239,779) 754,426
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (239,779) 754,426
<EPS-PRIMARY> (.04) .12
<EPS-DILUTED> (.04) .12
</TABLE>
