SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB/A
QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31,1996
SIMS COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware 65-0287558
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3333 South Congress Avenue, Suite 401, Delray Beach, FL 33445
(address of principal executive offices) (Zip
Code) (407) 265-3601 (Registrant's telephone number,
including area code)
N/A
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) or the
Securities Exchange Act of 1934 during thepreceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes_X___
No____
As of May 20, the Company had 3,685,451 of Common
Stock issued and outstanding.
Page 1 of 12 Pages
PART I. FINANCIAL INFORMATION
Part 1. Financial Information
Item 1. Index to Financial Statements
SIMS COMMUNICATIONS, INC.
CONSOLIDATED FINANCIAL STATEMENTS
Page
Consolidated Balance Sheets at
March 31, 1996 and June 30,
1995...................3
Consolidated Statements of Income for the
Nine Months Ended March 31, 1996 and 1995..
4
Consolidated Statement of Cash Flows for the
Nine Months Ended March 31, 1996.and 1995...
5
Consolidated Statement of Stockholders' Equity
for the Nine Months Ended March 31, 1996.....
6
Notes to Consolidated Financial Statements... 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations... 11
Part 11. Other Information 12
SIMS COMMUNICATIONS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 1 - Organization and Significant Accounting Policies
Organization
Sims Communications Inc. and Subsidiaries (the Company) was
incorporated in the State of Delaware on August 1, 1991.
The company was in the development state since its
formation until fiscal year ending June 30, 1994 when the
Company began earning significant revenue from their
planned principal operations. The Company was formed as a
communication company.
Basis of Presentation
The accompanying unaudited consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial
information. 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 nine month period ended March 31,
1996 are not necessarily indicative of the results that may
be expected for the year ended June 30, 1996. For further
information, refer to the consolidated financial statements
and footnotes included in the Company's annual Filing
Statement on form 10-KSB.
Principles of Consolidation
The consolidated financial statements includes the accounts
of Sims Communications Inc. and its wholly owned
subsidiaries Sims Franchise Group, Inc., Cellex
Communications, Inc., and Sims Communications
International, Inc. All intercompany balances and
transactions have been eliminated in consolidation.
Cash and Cash Equivalents
The Company considers all highly liquid instruments
purchased with a maturity date of three months or less to
be cash equivalents.
Inventories
Inventories consists primarily of automated cellular
distribution centers (ACDC's), cellular phones and other
communication equipment and are recorded at the lower of
cost or market determined by the first-in, first out
method.
Property and Equipment
Property and equipment are recorded and depreciated over
their estimated useful lives (5-7 years), utilizing the
straight-line method. Expenditures for maintenance and
repairs are charged to expense as incurred.
Organization Costs
Organization costs have been capitalized and are being
amortized using the straight-line method over a five
year period.
Net Loss Per Common Share
Net loss per common share is based on the weighted average
number of common shares outstanding during each of the
respective periods. Common shares issuable upon exercise of the
convertible notes and common stock equivalents are excluded
from the weighted average number of shares since the effect is
antidilutive.
Deferred Offering Costs
Deferred offering costs relate to the February 1995 initial
public offering. The costs were offset against the proceeds of
the offering.
Deferred Location Costs
Deferred location costs relate to expenses associated with the
buyback of certain franchises. These costs are amortized over
five years.
Revenue Recognition
Franchise fees are recognized as revenue, on a straight line
basis, once an agreed upon location has been identified for the
placement of the Automated Cellular Distribution Center (ACDC)
and the location is under contract. Revenue from the sale of
the actual ACDC unit is recognized upon shipment of the unit to
the franchise location. Cash collected by the Company before
all material services and conditions are substantially
performed is recorded as deferred income and retained as
customer deposits. Incremental development costs are deferred,
but not in excess of the deferred revenue and estimated costs
to establish and open the Automated Cellular Distribution
Centers and are expensed when the revenue is recognized.
Royalty Fees
Royalties as allowed by the franchise agreement are accrued on
a percentage of gross sales, as defined, as reported by
franchisees.
Research and Development
Research and development costs consist primarily of costs
related to the conceptional formation, design, tooling and
development of prototypes and are expensed as incurred.
Note 2- Notes and Loans Payable
Mar 31,1996
Promissory note payable at 10% interest payable monthly,
commencing Sept. 15, 1995. Balance of principal is payable in
full on September 15, 1996. As additional consideration, the
Company agrees to pay the note holder 15.5% of all profits
received through the Company's agreements with Commonwealth
Group International.
$310,348
Note payable - principal and interest payable in monthly
installments of $541 through June 14, 1998. Collateralized
by equipment.13,320
Note payable - $5,500 principal plus interest
payable monthly through April 1997. Collateralized by
receivables. 67,000
Note payable - principal and interest payable in monthly
installments of $3,194 through Jan. 28,
1997. 30,580
421,248
Less: Current Maturities
(103,073)
Total
$318,175
Note 3 - Continued Operations.
The accompanying financial statements have been prepared on a
going concern basis which contemplates the realization of assets
and liquidation of liabilities in the ordinary course of
business. In prior years, the Company had been in the
development state and did not begin earning significant revenues
until the middle of fiscal year ended 1994. During the year
ending June
1995 and continuing through the nine months ended March 1996, the
Company continued to suffer recurring losses from operations.
During the fiscal year ended June 30, 1995, the Company completed
an initial public offering, However, cash flows from operations
may not be sufficient to meet future obligations of the Company.
Management is in the process of effecting a private placement of
the Company's common stock. The funds thus generated are
anticipated to provide liquidity for at least twelve to eighteen
months.
Note 4 - Deferrals
In recognition of the liquidity concerns of the company, all
compensation, benefits and bonus provisions, as provided under
the employment agreements between the company and four officers
has been deferred, effective October 1995.
Note 5- Reverse Stock Split
In February 1996, the Board of Directors declared a 1 for 10
stock split. This reverse split was effective on March 7, 1996,
and has been retroactively reflected on the enclosed financials.
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.
SIMS COMMUNICATIONS, INC.
By James J. Caprio
Secretary, VP Finance
Date: May 20, 1996
SIMS COMMUNICATIONS INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31 JUNE
30,
1996 1995
ASSETS (Unaudited)
CURRENT ASSETS
Cash and cash equivalents $306,879
$1,160,085
Franchise receivables 24,789 106,031
Other receivables 209,047 9,603
Inventories 1,316,845 1,318,298
Prepaid expenses 133,345
63,053
Total Current Assets 1,990,905 2,657,070
PROPERTY AND EQUIPMENT,
Property & Equipment 1,259,874 808,089
Less Accumulated Depreciation 244,346 116,224
Net Property & Equipment 1,015,528 691,865
OTHER ASSETS
Note receivable 150,000 150,000
Deferred location costs 84,325 94,150
Deposits 18,160 15,691
Organization Costs -net 5,084 8,017
Total Other Assets 257,569 267,858
Total Assets $3,264,002 $3,616,793
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $539,351 $150,518
Bank line of credit 250,000 250,000
Current obligations under capital lease 7,155 7,155
Current maturities of long term debt 103,073 4,923
Stockholders loans 45,462 -
Franchise deposits and customer
deposits 979,862 1,026,049
Total Current Liabilities 1,924,903 1,438,645
LONG TERM LIABILITIES
Long term debt 318,175 161,563
Obligations under capital leases 3,280 8,611
Total Long Term Liabilities 321,455 170,174
Total Liabilities 2,246,358 1,608,819
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock $.001 par value,
300,000 shares authorized, no shares
issued or outstanding.
Preferred stock Series A
24,250 shares, subscribed 245,000
245,000
June 1995 issued December 1995
Preferred stock Series B $.001
par value, 100,000 shares, 100,000
issued and outstanding March 31,
1996 Common stock $.0001 par value
40,000,000 2,204 2,018 shares
authorized, issued and outstanding.
2,205,451 shares (March 1996)
and 2,018,710
shares (June 1995)
Additional Paid In Capital 8,930,864
8,547,550
Accumulated Deficit (8,260,424)
(6,786,594)
Total Stockholders Equity 1,017,644
2,007,974 Total Liabilities and Stockholders'
Equity $3,264,002
$3,616,793
See notes to consolidated financial statements
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345,000
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