UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
Commission File No.: 33-55254-47
TECHNICAL MAINTENANCE CORPORATION
- ---------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
NEVADA 87-0485304
- ------------------------------ --------------------------------
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or organization) Number)
1800 E. SAHARA, SUITE 107
LAS VEGAS, NEVADA 89104
- ----------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code (702)-734-7557
Registrant's facsimile number, including area code (702)-734-7500
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 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. (x) Yes ( ) No
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date.
Class Outstanding as of May 13, 1997
- ------------------------------------------- --------------------------------
$.001 PAR VALUE CLASS A COMMON STOCK 12,909,000 SHARES
$.001 PAR VALUE SERIES A PREFERRED STOCK 100 SHARES<PAGE>
PART I - FINANCIAL INFORMATION
Item 1.Financial Statements
The accompanying unaudited financial statements, included as Exhibit I, have
been prepared in accordance with the instructions to Form 10-Q and, therefore,
do not include all information and footnotes necessary for a complete
presentation of financial position, results of operations, cash flows and
stockholders' equity in conformity with generally accepted accounting
principles. In the opinion of management, all adjustments considered necessary
for a fair presentation of the results of operations and financial position
have been included and all such adjustments are of a normal recurring nature.
Operating results for the quarter ended March 31, 1997 are not necessarily
indicative of the results that can be expected for the year ending December 31,
1997.
Item 2.Management's Discussion and Analysis of Financial Condition and Results
of Operations
The Company's ongoing development of the Digital Jukebox and its other
intellectual property acquisitions provide it with several future opportunities
for financial success. To date, the Company's financial resources have been
used to fund this development as well as professional costs relating to patent
applications in connection with the Digital Jukebox and other fees. The
Company has generated no revenue to date and none is expected until it
concludes the start-up phase for the Digital Jukebox, which is anticipated in
approximately one year.
PART II - OTHER INFORMATION
Item 6.Exhibits
Annexed as Exhibit I are the Interim Financial Statements of the Registrant for
the Quarter ended March 31, 1997.
Exhibit 27 - Financial Data Schedule<PAGE>
NOTICE TO READER
We have compiled the interim balance sheet of Technical Maintenance Corporation
(A Development Stage Company) as at March 31, 1997 and the interim statements
of stockholders' deficiency and loss for the quarter then ended from
information provided by management. We have not audited, reviewed or otherwise
attempted to verify the accuracy or completeness of such information. Readers
are cautioned that these statements may not be appropriate for their purposes.
PTACK SCHNARCH BASEVITZ
Chartered Accountants
Montreal, Canada, May 12, 1997
- 1 -<PAGE>
<TABLE>
<CAPTION>
TECHNICAL MAINTENANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
INTERIM BALANCE SHEET
AS AT MARCH 31, 1997
(Unaudited - See Notice to Reader)
<S> <C>
$
- ------------------------------------------------------------ --------------
ASSETS
Computer equipment, net (note 2) 15,747
Software development costs, net (note 2) 204,000
Intangibles, net (note 2) 1,505,189
Investment in affiliated company (note 3) 583
- ------------------------------------------------------------ --------------
Total assets 1,725,519
- ------------------------------------------------------------ --------------
LIABILITIES
Current
Accounts payable 1,130,577
Advances from stockholders 899,168
Advances from affiliated company 446,123
- ------------------------------------------------------------ --------------
Total liabilities 2,475,868
- ------------------------------------------------------------ --------------
STOCKHOLDERS' DEFICIENCY
Capital stock (note 4) 12,909
Additional paid-in capital 1,430,170
Accumulated deficit (2,193,428)
- ------------------------------------------------------------ --------------
Total stockholders' deficiency (750,349)
- ------------------------------------------------------------ --------------
Total liabilities and stockholders' deficiency 1,725,519
- ------------------------------------------------------------ --------------
</TABLE>
See notes to interim financial statements
- 2 -<PAGE>
<TABLE>
<CAPTION>
TECHNICAL MAINTENANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
INTERIM STATEMENT OF STOCKHOLDERS' DEFICIENCY
FOR THE QUARTER ENDED MARCH 31, 1997
(Unaudited - See Notice to Reader)
<S> <C> <C> <C> <C> <C> <C> <C>
Class A Series A Class A Series A Additional Accumulated Total
Common Preferred Common Preferred Paid-in Deficit
Stock Stock Stock Stock Capital
Issued Issued
$ $ $ $ $
- --------------------------------------- ----------- ---------- ----------- ---------- ----------- ------------ ------------
Balances, January 1, 1997 12,909,000 - 12,909 - 1,430,020 (1,778,033) (335,104)
Issuance of shares (note 4 (c)) - 100 - - 150 - 150
Net loss - - - - - (415,395) (415,395)
- --------------------------------------- ----------- ---------- ----------- ---------- ----------- ------------ ------------
Balances, March 31, 1997 12,909,000 100 12,909 - 1,430,170 (2,193,428) (750,349)
- --------------------------------------- ----------- ---------- ----------- ---------- ----------- ------------ ------------
</TABLE>
See notes to interim financial statements
- 3 -<PAGE>
<TABLE>
<CAPTION>
TECHNICAL MAINTENANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
INTERIM STATEMENT OF LOSS
FOR THE QUARTER ENDED MARCH 31, 1997
(Unaudited - See Notice to Reader)
<S> <C>
$
- ------------------------------------------------------------- -----------
Expenses
Research and development costs 74,033
Professional fees 155,698
Management fees 14,078
Rent 6,147
Travel and transportation 28,640
Selling and promotional 18,526
Office 18,430
Amortization - computer equipment 1,430
Amortization - software development costs 18,000
Amortization - patents 30,413
Amortization - non-competition agreements 50,000
- ------------------------------------------------------------- -----------
Net loss 415,395
- ------------------------------------------------------------- -----------
</TABLE>
See notes to interim financial statements
- 4 -<PAGE>
TECHNICAL MAINTENANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO INTERIM FINANCIAL STATEMENTS
MARCH 31, 1997
(Unaudited - See Notice to Reader)
Note 1 - Organization and Background
Technical Maintenance Corporation (the Company) is a development
stage company formed in 1990 which has not generated any
revenue. The development of commercial products will require
additional funds. There is no assurance that commercially
successful products will be developed or that the Company will
achieve profitable operations.
Note 2 - Summary of Significant Accounting Policies
a) Computer Equipment
The computer equipment is recorded at cost and is amortized
on the straight-line basis over its estimated economic life
of 5 years.
b) Software Development Costs
Costs related to the conceptual formation and design of
internally developed software are expensed as research and
development as incurred. It is the Company's policy that
certain internal software development costs incurred after
technical feasibility has been demonstrated and which meet
recoverability tests are capitalized and amortized over the
economic life of the product. The establishment of
technological feasibility and the ongoing assessment of
recoverability of those costs requires judgment by management
with respect to certain external factors including, but not
limited to, anticipated future gross revenue, estimated
economic life and changes in technology.
Software development costs capitalized to date are being
amortized on the straight-line basis over their estimated
economic life of five years.
c) Intangibles
i) Patents
Patents consist primarily of processes and systems related to
the operation of a digital jukebox and the interactive
program distribution for telebroadcasting.
The patents and the related intellectual property are
amortized on a straight-line basis over their estimated
economic lives of 5 years.
- 5 -<PAGE>
TECHNICAL MAINTENANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO INTERIM FINANCIAL STATEMENTS
MARCH 31, 1997
(Unaudited - See Notice to Reader)
c) Intangibles - cont'd.
ii) Non-Competition Agreements
The Company has non-competition agreements with the provider
of computer systems and several system programmers who
assisted in the development of the system. The cost of these
agreements will be amortized over the five year term of the
contract.
d) Currency of Measurement
The currency of measurement used in the preparation of these
financial statements is the U.S. dollar.
Note 3 - Investment in Affiliated Company
This amount represents a non-controlling interest in Touchtunes
Digital Jukebox Inc., a Canadian Corporation.
Note 4 - Stockholders' Equity
a) The capital stock of the Company is comprised of the
following:
$
-------------------------------------------------------------- --------
Class A Common Stock, $.001 par value
Authorized: 35,000,000 shares
Issued: 12,909,000 shares 12,909
Series A Preferred Stock, $.001 par value
Authorized: 10,000,000 shares
Issued: 100 shares (note 4(c)) -
-------------------------------------------------------------- --------
12,909
-------------------------------------------------------------- --------
- 6 -<PAGE>
TECHNICAL MAINTENANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO INTERIM FINANCIAL STATEMENTS
MARCH 31, 1997
(Unaudited - See Notice to Reader)
Note 4 - Stockholders' Equity - cont'd.
b) During the quarter, the Company amended its articles of
incorporation to revise its authorized share structure for
the creation of 10 million Series A Preferred Stock and to
increase the authorized amount of Class A Common Stock from
25 million to 35 million shares.
The Series A Preferred Stock each have a par value of one
tenth of one cent ($.001), are voting, participating and are
convertible into Class A Common Stock as specified in the
revised articles of incorporation.
The Class A Common Stock remains voting, having a par value
of one tenth of one cent ($.001).
Both classes of authorized shares are entitled to receive
dividends on a share per share basis, without having any
distinction as to classes. For the purposes of dividend
distributions, the Series A Preferred Stock are to be
calculated on an as-if-converted to Class A Common Stock
basis.
c) The Company issued 100 Series A Preferred Stock for a total
consideration of $150.
As a result of this share issuance and pursuant to the
Company's articles of incorporation, the Company must reserve
an equivalent amount of Class A Common Stock in treasury in
order to meet any conversion requirements (as described
above) of the issued Series A Preferred Stock.
d) The Company has reserved for issuance 575,000 Class A Common
Stock in order to repay accounts payable totalling
$1,040,000.
e) The Company has reserved for issuance 1,100,707 Class A
Common Stock in order to repay advances from stockholders
totalling $898,168.
f) The Company has restricted 2,000,000 shares of the authorized
Class A common stock for issuance to third-party investors
upon the occurrence of certain events.
Note 5 - Related Party Transactions
Touchtunes Digital Jukebox Inc. charged the Company
approximately $296,000 for research and development and
operating expense reimbursements. Included in the
reimbursements were management fees paid to Touchtunes Digital
Jukebox Inc. of approximately $14,000.
Note 6 - Statement of Cash Flows
Statement of cash flows has not been presented as it would not
provide any additional meaningful information not already
disclosed in the interim financial statements.
- 7 -<PAGE>
SIGNATURES
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 its
behalf by the undersigned, hereunto duly authorized.
TECHNICAL MAINTENANCE CORPORATION
Date: May 13, 1997 Per: /s/Tony Mastronardi
------------------------------------------
Tony Mastronardi,
Chief Executive and Chief Financial Officer<PAGE>
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