U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended September 30, 1999
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 1-11568
TADEO HOLDINGS, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 95-4228470
(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification No.)
5 HANOVER SQUARE - 24TH Floor
New York, New York 10004
(Address of principal executive offices) (Zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (212) 271-8511
CHECK 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, AND (2) HAS BEEN SUBJECT TO SUCH FILINGS REQUIREMENTS FOR
THE PAST 90 DAYS. YES X No ___
The number of shares outstanding of the issuer's Common Stock, $.0001 par
value, as of November 1, 1999 was 15,848,529.
<PAGE>
TADEO HOLDINGS, INC. AND SUBSIDIARIES
INDEX
PART I - FINANCIAL INFORMATION
Page
NUMBER
ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheet - September 30, 1999
and June 30, 1999 3
Consolidated Statement of Operations - For the three
months ended September 30, 1999 and 1998 4
Consolidated Statement of Cash Flows - For the
three months ended September 30, 1999 and 1998 5
Notes to Consolidated Financial Statements 6 - 8
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION 9 - 12
- -------------------------------------------
PART II - OTHER INFORMATION 12
SIGNATURE 13
<PAGE>
<TABLE>
<CAPTION>
TADEO HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
ASSETS
September 30, June 30,
1999 1999
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash ................................................................$ 6,524,451 $ 7,618,259
Interest receivable ................................................. 20,605 25,521
Accounts receivable ................................................. 99,900 45,750
Prepaid expenses and other assets ................................... 269,722 30,000
Note receivable - other ............................................. 500,000 500,000
----------- -----------
TOTAL CURRENT ASSETS ...................................................... 7,414,678 8,219,530
LONG--TERM NOTE RECEIVABLE ................................................ 1,484,417 1,528,167
INVESTMENTS - Marketable Securities ....................................... 5,348,196 5,533,177
PROPERTY AND EQUIPMENT, net
net of accumulated depreciation of $55,239 and $49,254, respectively 74,026 71,938
CAPITALIZED SOFTWARE COSTS, net ........................................... 1,218,368 1,091,793
DEPOSITS AND OTHER ASSETS ................................................. 43,058 43,058
----------- -----------
$ 15,582,743 $ 16,487,663
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ....................................................$ 226,652 $ 421,178
Accrued expenses .................................................... 164,565 125,000
Income tax payable .................................................. 441,000 628,000
State audit reserves ................................................ 1,400,000 1,400,000
Accrued termination costs, short-term ............................... 264,182 280,209
----------- -----------
TOTAL CURRENT LIABILITIES .................................. 2,496,400 2,854,387
----------- -----------
LONG TERM NOTES PAYABLE, net of current portion ........................... 17,675 17,675
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.0001 par value, 10,000,000 shares authorized .... -- 505,000
Common stock, $.0001 par value, 100,000,000 shares authorized,
15,848,529 and 15,348,528 shares issued and outstanding 1,585 1,535
Additional paid-in capital .......................................... 19,302,332 18,797,382
Unrealized gain on securities ....................................... 1,961,528 2,446,509
Accumulated deficit ................................................. (8,196,778) (8,134,826)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY ................................. 13,068,667 13,615,600
----------- -----------
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ................................$ 15,582,743 $ 16,487,663
=========== ===========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
TADEO HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended September 30,
1999 1998
----------- ----------
<S> <C> <C>
REVENUES ..............................................$ 487,832 $ 363,594
COST OF GOODS SOLD .................................... 209,873 183,854
----------- ----------
GROSS PROFIT .................................... 277,959 179,740
----------- ----------
OPERATING EXPENSES:
Selling, general and administrative ............. 360,872 563,473
Research and development ........................ 135,844 31,248
Depreciation and amortization ................... 5,985 4,190
Settlement of employment contracts, (Non-cash) .. -- 327,501
----------- ----------
TOTAL OPERATING EXPENSES ........................ 502,701 926,412
----------- ----------
LOSS FROM OPERATIONS .................................. (224,742) (746,672)
INTEREST INCOME ....................................... 162,790 258,108
----------- ----------
NET LOSS ..............................................$ (61,952) $ (488,564)
PREFERRED STOCK DIVIDENDS ............................. -- (27,288)
----------- ----------
NET LOSS APPLICABLE TO COMMON SHARE HOLDERS ...........$ (61,952) $ (515,852)
=========== ==========
NET LOSS PER SHARE - basic and diluted ................$ (0.01) $ (0.06)
=========== ==========
WEIGHTED AVERAGE NUMBER OF SHARES USED IN COMPUTATION . 15,767,942 12,694,699
=========== ==========
NET LOSS ..............................................$ (61,952) $ (488,564)
OTHER COMPREHENSIVE LOSS, NET OF TAX
Unrealized loss on available-for-
sale securities ................................$ (484,981) $ --
----------- ----------
COMPREHENSIVE LOSS ....................................$ (546,933) $ (488,564)
=========== ==========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
TADEO HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended September 30,
1999 1998
---------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) .......................................................$ (61,952) $ (488,564)
---------- -----------
Adjustments to reconcile net (loss) to net cash from
operating activities:
Depreciation ........................................... 5,985 5,179
Amortization of deferred finance costs and debt discount -- 19,309
Amortization of capitalized software costs ............. 118,593 158,567
Settlement of employment contracts,
(non-cash) ............................................. -- 327,501
Changes in operating assets and liabilities:
(Increase) in accounts receivable ........................... (54,150) (121,000)
Decrease in interest receivable ............................. 4,916 10,005
Additions to capitalize software costs ...................... -- (943,978)
(Increase) in prepaid expenses .............................. (239,722) --
(Increase) in deferred finance costs ........................ -- (105,000)
Increase in other assets .................................... -- (33,224)
(Decrease) Increase in accounts payable ..................... (194,526) 301,861
Increase in accrued expenses ................................ 39,565 160,990
(Decrease) in income tax payable ............................ (187,000) --
(Decrease) in accrued termination costs ..................... (16,027) (451,719)
---------- -----------
Total adjustments ...................................... (522,366) (671,509)
---------- -----------
NET CASH (USED IN) OPERATING ACTIVITIES .................... (584,318) (1,160,073)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ............................................. (8,240) (2,265)
Redeemed convertible preferred stock ............................. (1,000,000) --
Amortization of Warrants ......................................... (6,250) --
Increase in note receivable ...................................... -- (550,000)
---------- -----------
NET CASH (USED IN) INVESTING ACTIVITIES ..................... (1,014,490) (552,265)
---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
(Decrease) in notes payable ...................................... -- (15,236)
Repayment of related party loans ................................. -- 162,627
Proceeds from debt financing ..................................... -- 542,850
(Repayment of) long-term debt .................................... -- (23,260)
Issunace of Common Stock, net of expenses ........................ 505,000 137,866
Dividends paid on Series A Preferred Stock ....................... -- (27,288)
---------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES ................... 505,000 777,559
---------- -----------
NET (DECREASE) IN CASH ................................................. (1,093,808) (934,779)
CASH AT BEGINNING OF PERIOD ............................................ 7,618,259 2,575,356
---------- -----------
CASH AT END OF PERIOD ..................................................$ 6,524,451 $ 1,640,577
========== ===========
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
TADEO HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - SEPTEMBER 30, 1999
(UNAUDITED)
1. BASIS OF PRESENTATION
Reference is made to the annual report on form 10-K of Tadeo Holdings,
Inc. (the "Company") dated October 13, 1999 for the year ended June 30, 1999.
The accompanying financial statements reflect all adjustments which, in
the opinion of management, are necessary for a fair presentation of financial
position and the results of operations for the interim periods presented. Except
as otherwise disclosed, all such adjustments are of a normal and recurring
nature. The results of operations for any interim period are not necessarily
indicative of the results attainable for a full fiscal year.
2. BASIC LOSS PER SHARE
Loss Per Share is based on the weighted average number of common shares
outstanding during each period. Potential common shares are included in the
computation of diluted per share amounts outstanding during each period.
Potential common shares are not included for loss periods as such inclusion
would be anti-dilutive.
3. MARKETABLE SECURITIES
On June 30, 1999, Tadeo E entered into an agreement with Business Talk
Radio.Net, Inc. ("Business Talk") under which, an aggregate payment of $250,000
was made in July and August 1999, Tadeo E obtained an assignable credit for the
purchase of advertising time on radio programs operated by Business Talk having
a value of $1,200,000, and 564,056 shares of Series C Preferred Stock, par value
$.0001 per share, convertible into 5% of the current outstanding capital stock
of Business Talk. Each share of Class C Preferred Stock shall have a liquidation
preference of $.4432 until January 1, 2000, at which time the Class C Preferred
Stock preference shall become $.2217. As part of the transaction, Tadeo E
obtained an option to acquire an equivalent number of shares of Business Talk
capital stock for an exercise price of $250,000, as well as the right to
"stream" the content of Business Talk programming on its and its affiliates web
sites during the course of a three-year period without an additional payment to
Business Talk. Business Talk creates and distributes the content of its
business-oriented radio programming for broadcasting on third party operated
radio stations in a variety of markets throughout the United States.
6
<PAGE>
On September 1, 1999, Astratek entered into a consulting and
professional service agreement with 4TH Peripheral Technologies, Inc.("4TH
Peripheral"), pursuant to which Astratek is engaged to provide executive
advisory consulting services, as requested, and on a fee schedule to be
negotiated at the time and assignment is made, intended to increase 4TH
Peripheral's value and strategic position in connection with its business as a
developer of cyber extension technology to provvide remote access to data from
handheld devices. The company purchased in a private placement of securities
25,000 shares of 4TH Peripheral Common Stock, par value $.001 per share, for
$250,000.
The aforementioned marketable securities have been classified as
available for sale securities at September 30, 1999 and accordingly, the
unrealized gain resulting from valuing such securities at market value is
reflected as a component of stockholders' equity.
4. NOTE RECEIVABLE- OTHER
The Company provided a cosmetic manufacturing and marketing company
with $1,528,167 in loan financing through the issuance of one note bearing
interest at 8% due in May 2001, and $500,000 for web development funds through
the issuance of a note bearing interest at 20.8% due in August 1999. The
$500,000 note was later amended on August 12, 1999 to (i) extend the due date to
June 2000, (ii) reduce the interest rate to 10%, and (iii) increase the
principal of the note from $500,000 to $550,000 for accrued interest of $26,580
and a premium of $23,420 for lowering the interest rate. In addition, the
Company received warrants to acquire 500,000 shares of common stock of such
company at an exercise price of $1.50 per share.
5. COMMITMENTS, CONTINGENCIES, AND OTHER AGREEMENTS
Department of Health Services - One of the Company's discontinued
wholly-owned subsidiaries underwent an audit by the California State
Controller's Office, Division of Audits, for the purpose of determining
compliance with guidelines of the California Department of Health Services
("Medi-Cal") and the California State Board of Equalization. The Controller's
Office issued a report to the effect that the subsidiary owed, and issued a
Letter of Demand for, $1.3 million, contending that for the period July 1, 1990
to June 30, 1993, the subsidiary practiced unfair pricing to its customers.
Additionally, accrued interest on the amount demanded is also sought by the
Controller's Office. On January 20, 1999, the Superior Court recommended that
the overpayment determination be upheld. The subsidiary has a pending appeal to
overturn the ruling, which has been upheld. In March 1999, the Company's
wholly-owned subsidiary filed an appeal to the Superior Court's decision with
the California Court of Appeals. The appeal to the California Court of Appeals
is pending. The Company has provided a reserve of $1,400,000 for such matter.
There is no other material litigation against Tadeo or its subsidiaries.
7
<PAGE>
On May 28, 1999, as amended by agreements dated as of June 1, 1999,
Tadeo E entered into a Web Design and Consulting Agreement with Azurel, Ltd.
("Azurel"), a public company engaged in the business of manufacturing and
distributing cosmetics and other related products (the "Azurel Web Agreement").
Under the terms of the Azurel Web Agreement, based upon the fee schedule to be
included in that agreement, Tadeo E agreed to provide all necessary consulting
and development services to design, maintain and enhance Azurel's electronic
commerce Internet sites and other related electronic commerce marketing
vehicles. Tadeo E paid Azurel $500,000 for Azurel's provision of content and
marketing consulting services in connection with assistance provided to Tadeo
E's electronic commerce development activities for Azurel and other clients. At
the same time, to enhance the strategic relationship between Azurel, Tadeo and
Tadeo E, Tadeo E lent to Azurel an aggregate of $1,528,167 under the terms of a
Credit Agreement, as amended, dated as of June 1, 1999 (with part of the
aggregate principal reflecting the restructuring of a March 31, 1999 short-term
$500,000 promissory note), with interest payable at the rate of 8% per annum,
payable monthly, and with all principal and accrued interest due on May 28, 2001
(the "Credit Agreement"). Repayment of amounts outstanding under the Credit
Agreement is secured by a pledge of approximately 66.66% of the outstanding
shares of certain Azurel operating subsidiaries, under the terms of a Pledge
Security Agreement, as amended, by and between Azurel, Tadeo and Tadeo E. In
further consideration for its advances to Azurel under the Credit Agreement,
Tadeo E received from Azurel warrants to acquire 200,000 shares of Azurel common
stock, exercisable at $1.50 per share, with the shares acquired upon exercise of
such Warrants being subject to registration rights provided under the terms of a
Registration Rights Agreement, as amended, dated as of June 1, 1999.
Under agreements dated as of June 30, 1999, Tadeo E entered into both a
Web Design and Consulting Agreement and an Online Hosting Agreement with
StyleSite Marketing, Inc. ("Style", formerly Diplomat Direct Marketing
Corporation), a public company engaged in the business of distributing women's
and children's fashion apparel and related accessories through catalogue sales,
including the Lew Magam and Brownstone studios catalogues, and over the Internet
("Style Web Agreements"). Under the terms of the Style Web Agreements, based
upon the fee schedules provided in those agreements, Tadeo E is providing all
necessary consulting and development services to design, maintain and enhance
Style's electronic commerce Internet sites and other related electronic commerce
marketing vehicles, as well as to host those sites on behalf of Style. Tadeo E
paid Style $500,000 for Style's provision of content and marketing consulting
services in connection with assistance provided to Tadeo E's electronic commerce
development activities for Style and other clients. In addition to payments by
Style for the services provided under the Style Web Agreements, in further
consideration for its services to Style under the Web Agreements Tadeo E will
receive royalties from Style based upon Style's ongoing electronic commerce
businesses (the "Royalties"). The Royalties are equal to 5% of Style's
electronic commerce revenues, until $500,000 has been paid to Tadeo E, and
thereafter 20% of certain Style electronic commerce net income in perpetuity.
Tadeo E recently entered into an agreement with Business Talk
Radio.Net, Inc. ("Business Talk") under which, for a payment of $250,000, Tadeo
E obtained an assignable credit for the purchase of advertising time on radio
programs operated by Business Talk having a value of $1,200,000, and shares of
Series C Preferred Stock convertible into 5% of the currently outstanding
capital stock of Business Talk. As part of the transaction, Tadeo E obtained an
option to acquire an equivalent number of shares of Business Talk capital stock
for an exercise price of $250,000, as well as the right to "stream" the content
of Business Talk programming on its and its affiliates web sites during the
course of a three-year period without an additional payment to Business Talk.
Business Talk creates and distributes the content of its business-oriented radio
programming for broadcasting on third party operated radio stations in a variety
of markets throughout the United States.
Astratek recently entered into a consulting and professional service
agreement with 4TH Peripheral Technologies, Inc. ("4TH Peripheral"), pursuant to
which Astratek is engaged to provide executive advisory consulting services, as
requested, and on a fee schedule to be negotiated at the time an assignment is
made, intended to increase 4TH Peripheral's value and strategic position in
connection with its business as a developer of cyber extension technology to
provide remote access to data from handheld devices. In an effort to stregethen
Astratek's strategic relationships with 4TH Peripheral, the company purchased in
a private placement of securities 250,000 shares of 4TH Peripheral Common Stock
for $250,000.
TERMINATION AGREEMENTS
The Company entered into the following contract subsequent to the
disposal of its business:
A. With a former operating officer commencing March 1998, aggregating
$485,000, payable in monthly installments of $7,633 through March 2003.
The Company has recorded the present value of this contract at
$359,265, with the balance being $264,182 at September 30, 1999. With the
prepayment of the Note from Gainer, the termination agreement calls for the
prepayment of the termination contract. Therefore, the balance is being carried
as short term.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITIONS AND RESULTS OF OPERATION
YEAR 2000
Over the course of the last half of the fiscal year ended June 30, 1999,
the Company has been evaluating various acquisitions. This effort has
incorporated an analysis of the Year 2000 issues, and that appropriate and
timely action will be taken to minimize the negative impact of year 2000 issues
on acquisitions by the Company. The year 2000 issue results from the inability
of many computer systems and applications to recognize the year 2000 as the year
following 1999. This could cause systems to process critical information
incorrectly. Currently, the Company is not materially affected by year 2000
issues. The Company plans to implement new systems and technology solutions to
these issues in connection with any future acquisitions of operating businesses.
The Company plans to work with its future customers, suppliers and third party
service providers to identify external weaknesses and to provide solutions which
will prevent the disruption of business activities following future acquisitions
of operating businesses. The Company does not expect the cost of implementation
to have a material adverse effect on its future results of operations, liquidity
or capital resources.
FORWARD-LOOKING STATEMENTS
When used in the Form 10-Q and in future filings by the Company with the
Securities and Exchange Commission, the words or phrases "will likely result"
and "the Company expects," "will continue," "is anticipated," "estimated,"
"project," or "outlook" or similar expressions are intended to identify
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. The Company wishes to caution readers not to
place undue reliance on any such forward-looking statements, each of which
speaks only as of the date made. Such statements are subject to certain risks
and uncertainties that could cause actual results to differ materially from
historical earnings and those presently anticipated or projected, such as demand
for our products, size and timing of significant orders and their fulfillment,
the Company's ability to develop and upgrade its technology, the Company's
ability to compete in a highly competitive market and undetected software errors
and other product quality problems. the company has no obligation to publicly
release the results of any revisions which may be made to any forward-looking
statements to reflect anticipated or unanticipated events or circumstances
occurring after the date of such statements.
GENERAL
On October 27, 1998, the Company completed the acquisition of Astratek,
Inc., a New York corporation ("Astratek"). The Company acquired Astratek
pursuant to a merger (the "Merger") of Astratek Acquisition Corp. ("AAC"), a
wholly-owned subsidiary of the Company, with and into Astratek, with Astratek
becoming the wholly-owned subsidiary of the Company, as the surviving
corporation of the Merger. The Merger was effected in accordance with the
Agreement and Plan of Merger (the "Merger Agreement"), dated as of October 23,
1998, among the Company, AAC, Astratek, and the shareholders of Astratek.
Astratek develops software tools and related products for Internet and intranet
technology and provides consulting and professional services for several major
companies. As the Merger Consideration delivered to Astratek shareholders, the
Company issued 2,294,900 shares of the Company's common stock in exchange for
cancellation of all the issued and outstanding shares of the capital stock of
Astratek prior to the Merger and the issuance of 100 shares of Astratek common
stock to the Company post-Merger.
9
<PAGE>
As a result of the Astratek acquisition being accounted for as a
pooling of interest business combination, the historical pre-acquisition
financial results of Astratek are compared below with the Company's results of
operations for the three month periods ended September 30, 1999.
RESULTS OF OPERATIONS
The three months ended September 30, 1999 (the "1999 three month
period") as compared to the three months ended September 30, 1998 (the "1998
three month period")
Revenues for the 1999 Three Month Period were $487,832, an increase of
$126,238, or 25%, from the 1998 Three Month Period. Several factors contributed
to this increase. Revenue associated with the Visual Audit product that is
distributed by Viasoft on behalf of the Company increased by $43,000 for the
1999 Three Month Period, a 43% increase over the 1998 Three Month Period, and
revenue associated with professional services provided to various clients
increased by $10,000 for the 1999 Three Month Period, or a 3% increase over the
1998 Three Month Period. Revenue for the 1999 Three Month Period associated with
Tadeo E - Commerce Inc., a newly created wholly-owned subsidiary as of May 25,
1999, was $72,000.
Total cost of goods sold for the 1999 Three Month Period were $209,873,
representing costs of approximately 43% of revenues for the period, while total
cost of goods sold for the 1998 Three Month Period were $183,854 or
approximately 50% of revenue. This 7% favorable variance as a percentage of
revenue is in part the result of increased revenue as mention above and the
reduction of outside consultants in completing time sensitive, single occurrence
professional services projects.
Selling, general and administrative expenses for the 1999 Three Month
Period decreased by 16%, or $96,210, from the 1998 Three Month Period. Astratek,
Inc. is performing the services requested by various contracts with Tadeo E
Commerce without increasing staffing levels. Cost avoidance of approximately
$63,000 in expenses have been realized.
Net interest income decreased for the 1999 Three Month Period to $162,790
from $258,108 for the 1998 Three Month Period. This decrease is primarily due to
the absence of quarterly interest from the Gainor convertible subordinated
promissory note (the "Note") in the 1999 Three Month Period. The Note bore
interest at a simple rate of 7% per annum through December 31, 1998 and 8%
thereafter. Prior to the Note's maturity, in April 1999 the Note was prepaid by
Gainor for a cash payment of $9,300,000.
10
<PAGE>
Net loss decreased by $453,900 for the 1999 Three Month Period.
Contributing to the decrease is 1) increased revenues, 2) reduction of
administrative expenses, 3) the settlement of employment contracts, (non-cash)
of $327,501 in the 1998 Three Month Period, and 4) absence of preferred stock
dividends payments in the 1999 Three Month Period.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1999 the Company had working capital of $4,918,278,
compared to working capital of $5,365,143 at June 30, 1999. This decrease in
working capital during the 1999 Three Month Period is primarily due to a
combination of payment of trade accounts payable of $194,256 and income tax
payable of $187,000.
The Company currently receives on average $24,916 a month in interest
from its various money market and certificate of deposit accounts. Additionally,
Tadeo E Commerce lent to Azurel, Ltd. an aggregate of $1,528,166.67 under the
terms of a Credit Agreement, as amended, dated as of June 1, 1999 (with part of
the aggregate principal reflecting the restructuring of a March 31, 1999
short-term $500,000 promissory note), with interest payable at the rate of 8%
per annum, payable monthly, and with all principal and accrued interest due on
May 28, 2001 (the "Credit Agreement"). Interest received on the amount
outstanding under this Credit Agreement for the 1999 Three Month Period was
$31,243. Additionally, the restructured Note of $500,000, see Note 4. "Note
Receivable", for information regarding Note increase to $550,000, accrued
interest during the 1999 Three Month Period was $29, 465.
For information concerning the company's recent agreements with Azurel,
Ltd. ("Azurel"), Stylesite Marketing, Inc. ("Style", formerly Diplomat Direct
Marketing Corporation), business talk radio.net, Inc. ("Business Talk"), and 4TH
Periphperal Technologies, Inc. ("4TH Peripheral") (collectively the
"Agreements"), see Note's 3. "Marketable Securities" and 5 ."Commitments,
Contingencies, and other Agreements", to the Company's unaudited financial
statements for the period ended September 30, 1999 included in Part 1., Item 1.,
Financial Statements. These Agreements with strategic partners have not improved
the Company's liquidity position.
Cash proceeds from the sale of the Company's operating assets and the
stock of its two former principal operating subsidiaries, Diabetes Self Care,
Inc. ("Diabetes") and USCI Healthcare Management Solutions, Inc. ("HMS"), to
Gainor Medical Management, LLC, a privately held Georgia company ("Gainor"),
along with the proceeds from the $9,300,000 prepayment in April 1999 of the Note
has been partially used in operations and for the investment in and loans to the
strategic partners described above. In connection with these Agreements, as part
of the Company's provisions of professional services to strategic partners, the
Company has either made loans to or equity investments in these strategic
partners. The resulting financial transactions have reduced the Company's cash
reserves and reduced the Company's monthly interest received on those reserves.
11
<PAGE>
The Company's material ongoing fixed expenses are as follows:
1) monthly rent expense net of sublease of approximately $17,000, 2) $ 7,633 a
month to Mr. Buchholz's under his employment termination agreement, an aggregate
of $ 264,182 remaining as of September 30,1999, and 3) approximately $30,000
monthly for employee salaries and benefits.
PART II - OTHER INFORMATION
ITEM. 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.0 Financial data schedule.
(The remainder of this page has been intentionally left blank)
12
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
it's behalf by the undersigned, thereunto duly authorized.
TADEO HOLDINGS, INC.
BY:/S/MICHAEL F. NILES
MICHAEL F. NILES
SECRETARY
Date: November 15, 1999
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000879465
<NAME> TADEO HOLDINGS, INC.
<MULTIPLIER> 1
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1
<CASH> 6,524,451
<SECURITIES> 5,348,196
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0
0
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</TABLE>
