UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
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
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(Exact name of Registrant as specified in its charter)
NEVADA 87-0485304
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(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or organization) Number)
1800 E. SAHARA, SUITE 107
LAS VEGAS, NEVADA 89104
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(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>
<TABLE>
<CAPTION>
TECHNICAL MAINTENANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
INTERIM BALANCE SHEET
AS AT MARCH 31, 1997
(Unaudited - See Notice to Reader)
<S> <C>
$
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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
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Total assets 1,725,519
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LIABILITIES
Current
Accounts payable 1,130,577
Advances from stockholders 899,168
Advances from affiliated company 446,123
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Total liabilities 2,475,868
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STOCKHOLDERS' DEFICIENCY
Capital stock (note 4) 12,909
Additional paid-in capital 1,430,170
Accumulated deficit (2,193,428)
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Total stockholders' deficiency (750,349)
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Total liabilities and stockholders' deficiency 1,725,519
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</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>
$
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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
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Net loss 415,395
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Net loss per share (note 6) (.03)
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Number of shares used to compute net loss per share 12,909,000
</TABLE>
See notes to interim financial statements
- 4 -<PAGE>
TECHNICAL MAINTENANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
INTERIM STATEMENT OF CASH FLOWS
FOR THE QUARTER ENDED MARCH 31, 1997
$
- -------------------------------------------------------- ----------
Cash flows from operating activities:
Net loss (415,395)
Adjustment to reconcile net loss to net cash
used by operating activities:
Amortization 99,843
Changes in assets and liabilities:
Prepaid expenses 21,306
Accounts payable (9,768)
Advances from affiliated company 433,769
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Net cash provided by operations 129,755
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Cash flows from investing activities:
Increase in costs of intangibles (131,909)
Acquisition of investment in affiliated company (583)
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Net cash used by investing activities (132,492)
Cash flows from financing activities:
Advances from stockholders 2,491
Proceeds from sale of preferred stock 150
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Net cash provided by financing activities 2,641
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Net decrease in cash (96)
Cash at begining of period 96
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Cash at end of period -
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See notes to interim financial statements
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TECHNICAL MAINTENANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO INTERIM FINANCIAL STATEMENTS
MARCH 31, 1997
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.
- 7 -<PAGE>
TECHNICAL MAINTENANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO INTERIM FINANCIAL STATEMENTS
MARCH 31, 1997
Note 2 - Summary of Significant Accounting Policies - cont'd
c) Intangibles
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., ("Touchtunes"), a Canadian Corporation. Touchtunes was
incorporated on February 7, 1997 and commenced operations on March 7,
1997. The Company controls 50% of the votes of Touchtunes and has the
ability to elect 50% of the board of directors.
Touchtunes' revenues are derived solely from development services
provided to the Company.
This investment will be accounted for on the equity basis. For the
month ended March 31, 1997 the results of operations for Touchtunes were
as follows (in U.S. dollars):
$
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Development fees 27,281
Expenses 25,937
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Earnings from operations 1,344
Income taxes 260
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Net earnings 1,084
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Equity in net earnings of investee 542
Less: profit on intercompany transactions 542
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Net equity in earnings of investee -
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Pursuant to a stockholders' agreement, the stockholders exercising
control over the remaining 50% of Touchtunes may convert their
stockholdings into shares of the Company at which time Touchtunes would
become a wholly-owned subsidiary.
- 8 -<PAGE>
TECHNICAL MAINTENANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO INTERIM FINANCIAL STATEMENTS
MARCH 31, 1997
Note 3 -Investment in Affiliated Company - cont'd.
Should Touchtunes became a wholly-owned subsidiary, prior to
consolidation, its balance sheet accounts would be translated using
current exchange rates in effect at the balance sheet date and for
revenues and expense accounts using an average exchange rate during the
period. The gains or losses resulting from translation will be included
in stockholders' equity.
Per agreement with the remaining 50% stockholders of Touchtunes, the
outside investors are to provide a total capitalization of $4,000,000
Canadian. Of this amount, $600,000 was received as of March 31, 1997.
Subsequent to the quarters' end, Touchtunes received an additional
$3,400,000 Canadian.
Note 4 -Capital Stock
a) The capital stock of the Company is comprised of the following:
$
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Class A Common Stock, $.001 par value
Authorized: 35,000,000 shares
Issued: 12,909,000 shares 12,909
Series A Preferred Stock, $.001 par value
Authorized: 10,000,000 shares
Issued: 100 shares (note 4(c)) -
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12,909
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b) During the quarter, the Company amended its articles of incorporation
to revise its authorized share structure for the creation of 10
million Series A Preferred Stock and to increase the authorized
amount of Class A Common Stock from 25 million to 35 million shares.
The Series A Preferred Stock each have a par value of one tenth of
one cent ($.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.
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TECHNICAL MAINTENANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO INTERIM FINANCIAL STATEMENTS
MARCH 31, 1997
Note 4 -Capital Stock - cont'd
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
a) Touchtunes Digital Jukebox Inc., an affiliated company as described
in note 3, charged $27,000 for research and development and operating
expense reimbursements. Included in the reimbursements were
management fees paid to Touchtunes Digital Jukebox Inc. of
approximately $1,000.
b) Touchtunes Juke Box Inc., a corporate shareholder, charged the
company apporximately $269,000 for research and development and
operating expense reimbursements. Included in the reimbursements
were management fees paid to Touchtunes Juke Box Inc. of
approximately $13,000.
- 10 -<PAGE>
TECHNICAL MAINTENANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO INTERIM FINANCIAL STATEMENTS
MARCH 31, 1997
Note 6 - Proforma Information
a) Proforma loss per share
Based on the stock reserved in note 4(f), the proforma loss per share
for the quarter ended March 31, 1997 would be approximately .03 using
14,909,000 as the number of shares issued.
b) Proforma Capital Stock
The proforma capital stock would appear as follows based on the
shares reserved in note 4(f):
$
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Class A Common Stock, $.001 par value
Authorized: 35,000,000 shares
Issued: 14,584,707 12,909
Series A Preferred Stock, $.001 par value
Authorized: 10,000,000 shares
Issued: 2,000,100 shares 14,909
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4,428,170
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Additional paid-in capital 6,364,662
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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: September 11, 1997 Per: /s/Tony Mastronardi
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Tony Mastronardi,
Chief Executive and Chief Financial Officer<PAGE>
