SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
----------
AMENDMENT TO
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31,1997
SIMS COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Commission File Number: 0-25474
Delaware 65-0287558
(State or other jurisdiction of (I.R.S. Employer incorporation or
organization) Identification No.)
17821 Skypark Circle Suite G, Irvine CA 92514
(address of principal executive offices) (Zip Code)
(714) 724-9094
(Registrant's telephone number, including area code)
3333 South Congress Ave., Suite 401 Delray Beach Fl. 33445
(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 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_X___ No____
As of February 3, 1998 the Company had 18,919,932 shares of Common Stock
issued and outstanding.
<PAGE>
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
December 31 1997 and June 30, 1997 3
Consolidated Statements of Operations for the Three and
Six Months Ended December 31, 1997 and 1996. 5
Consolidated Statement of Cash Flows for the
Six Months Ended December 31, 1997 and 1996. 6
Consolidated Statement of Stockholders' Equity
for the Six Months Ended December 31, 1997. 7
Notes to Consolidated Financial Statements. 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. 14
Part 11. Other Information 15
2
<PAGE>
SIMS COMMUNICATIONS INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31, June 30,
1997 1997
(Unaudited) (Audited)
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents ($250,000 restricted) 370,432 $ 295,900
Accounts receivables, less allowance for doubtful
accounts of $27,584 137,460 205,888
Inventories (Note 5) 1,484,489 1,083,199
Prepaid expenses and other current assets 21,787 205,860
Notes receivable, current portion 221,667 215,442
---------- ------------
Total Current Assets 2,235,835 2,006,289
========== ============
PROPERTY AND EQUIPMENT
Property & Equipment 1,161,081 1,161,081
Accumulated depreciation 527,713 424,002
---------- ------------
Net property and equipment 633,368 737,079
OTHER ASSETS
Notes receivables (Less allowance for
$169,000 in Dec. 1997 - Note 5) 551,223 726,448
Patents, net of accumulated amortization 450,731 474,941
Investments (Notes 4 and 5) 200,000 1,510,000
Other 81,021 89,416
---------- ------------
Total Other Assets 1,282,975 2,800,805
---------- ------------
TOTAL ASSETS $4,152,178 $ 5,544,173
========== ============
</TABLE>
3
<PAGE>
SIMS COMMUNICATIONS INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
December 31, June 30,
1997 1997
(Unaudited) (Audited)
CURRENT LIABILITIES
<S> <C> <C>
Accounts Payable and Accrued Expenses $ 954,537 $ 1,295,105
Bank line of credit 250,000 250,000
Current obligations under capital lease (Note 8) 8,377 8,377
Current maturities of long term debt (Note 2) 1,129,738 1,066,985
Franchise deposits and deferred revenue 818,019 944,154
Officer advances payable 0 65,809
----------- ------------
Total Current Liabilities 3,160,671 3,630,430
LONG TERM LIABILITIES
Long term debt (Note 2) 40,000 48,000
Obligations under capital leases (Note 8) 30,898 37,919
----------- ------------
Total Long Term Liabilities 70,898 5,919
----------- ------------
Total Liabilities 3,231,569 3,716,349
----------- ------------
Commitments and contingencies -- --
----------- ------------
STOCKHOLDERS' EQUITY (Notes 6 and 7)
Preferred stock, Series A, $.001 par value, 50,000
shares authorized, 25,250 shares issued and outstanding
(liquidation preference of $505,000) 25 25
Preferred stock, Series B, $.001 par value,
100,000 shares authorized, 100,000 shares issued and
outstanding (liquidation preference of $100,000) 100 100
Common stock $.0001 par value 40,000,000 shares
authorized: shares issued and outstanding 13,981,524
December 1997 and 8,481,995 June 1997 1,417 848
Additional Paid In Capital 17,436,113 15,134,047
Accumulated Deficit (16,517,046) (13,307,196)
----------- ------------
Total Stockholders Equity 920,609 1,827,824
----------- ------------
Total Liabilities and Stockholders' Equity $ 4,152,178 $ 5,544,173
=========== ============
</TABLE>
See notes to consolidated financial statements
4
<PAGE>
SIMS COMMUNICATIONS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Six Months Ended December 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
Dec. 31 Dec. 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenues
Equipment & Other $ 55,013 $ 181,451 $ 81,247 $ 488,907
Activations 201,104 473,107 569,281 1,014,247
Rental 62,881 222,454 198,891 568,700
Calling Card & Long Distance 73,846 158,785 160,909 159,711
----------- ----------- ----------- -----------
Total Revenues 392,844 1,035,797 1,010,328 2,231,565
Cost of Sales 242,853 620,879 647,956 1,508,331
----------- ----------- ----------- -----------
Gross Profit 149,991 414,918 362,372 723,234
Operating Expenses
General & Administrative 413,022 257,130 913,170 613,381
Depreciation and Amortization 66,031 49,996 127,920 107,992
Interest-net 56,325 12,595 81,617 24,923
Selling & Marketing 462,868 247,328 748,384 545,763
Stock Based Compensation/Services 85,230 381,393 768,131 381,393
Research & Development 0 25,571 0 27,068
Provisions for Bad Debt & Contract Termination 933,000 0 933,000 0
----------- ----------- ----------- -----------
Total Expenses 2,016,476 974,013 3,572,222 1,700,520
Income /(Loss) Before Income Taxes $(1,866,485) $ (559,095) $(3,209,850) $(977,286)
----------- ----------- ----------- -----------
Income Tax Expense -- -- -- --
----------- ----------- ----------- -----------
Net Income/(Loss) $(1,866,485) $(559,095) $(3,209,850) $(977,286)
=========== =========== =========== ===========
Net Income/(Loss) Per Common Share $ (.19) $ (.10) $ (.35) $ (0.22)
=========== =========== =========== ===========
Weighted Average Common Shares
Outstanding
9,969,417 5,404,411 9,224,830 4,498,814
=========== =========== =========== ===========
</TABLE>
5
<PAGE>
SIMS COMMUNICATIONS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDING DECEMBER 31, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
December 31,
CASH FLOWS FROM OPERATING ACTIVITIES 1997 1996
<S> <C> <C>
Net (loss) $(3,209,850) $(751,786)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation & Amortization 127,920 107,992
Equity Based Compensation/Services 615,463 155,893
Expenses of Stock issued (180,505)
Provision for Contract Termination 764,000
Changes in assets and liabilities
Inventories (401,290) 283,817
Accounts and other receivables 68,428 (27,847)
Prepaid Expenses and other Current Assets 31,405 (26,000)
Accounts payable and accrued expenses (251,327) 165,416
Franchise and customer deposit & Deferred Revenues (126,135) (46,501)
Deposits 0 (255)
---------- ----------
NET CASH FROM (USED IN) OPERATING ACTIVITIES (2,561,891) (139,271)
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures 0 (33,612)
Net cash received from acquisition (Note 5) 0 2,737
Net cash used for acquisition 0 (35,000)
Notes receivable 481 (377,427)
Change in other assets 8,395 (20,386)
NET CASH (USED IN) INVESTING ACTIVITIES 8,876 (463,688)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of debt 1,460,000 260,000
Payments on debts (69,623) (208,436)
Loans from (repayments to) officers (65,809) 56,832
Proceeds from issuance of common stock 0 451,008
Reduction in investments 1,310,000 0
Payments of obligation under capital lease (7,021) (4,520)
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 2,627,547 554,884
-------- --------
NET INCREASE (DECREASE) IN CASH 74,532 (48,075)
CASH AT BEGINNING OF PERIOD 295,900 322,542
CASH AT END OF PERIOD 370,432 274,467
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Cash paid during the 6 months for interest $ 23,166 $ 32,161
Cash paid during the 6 months for income taxes $ 0 $ 0
See notes to consolidated financial statements
6
</TABLE>
<PAGE>
SIMS COMMUNICATIONS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF
STOCKHOLDER'S EQUITY FOR THE 6 MONTHS ENDING DEC. 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
PREFERRED STOCK
SERIES A SERIES B
NUMBER NUMBER OF
OF SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Balance - June 30, 1997 25,250 $25 10,000 $100
Net loss -6 months ended
Dec. 31, 1997
Common stock issued for the conversion
of incentive stock options net of shares
returned to Company as payment
Issuance of Common Stock to officers
and directors for accrued salaries and
loans at $.55 per share
Issuance of Common Stock for Conversion of
Notes Payable to Foreign Individuals Under
Reg. S. averaging $.34 per share (net of
$162,955 expense)
Issuance of Common Stock
For Services
Issuance of Common Stock
For Conversion of Notes at $.40 Per share
(net of $ 7,550 Expenses)
Balance -December 31, 1997 25,250 $25 10,000 $100
======== ======= ======= =====
7
</TABLE>
<PAGE>
SIMS COMMUNICATIONS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF
STOCKHOLDER'S EQUITY FOR THE 6 MONTHS ENDING DEC. 31, 1997 (UNAUDITED)
(continued)
<TABLE>
<CAPTION>
COMMON ST0CK
ADDITIONAL
NUMBER OF PAID IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
<S> <C> <C> <C> <C> <C>
Balance - June 30, 1997 8,481,995 $848 $15,134,047 ($13,307,196) $1,827,824
Net loss -6 months ended
Dec. 31,1997
(3,209,850) (3,209,850)
Common stock issued for the conversion
of incentive stock options net of shares
returned to Company as payment 200,000 20 (20) 0
Issuance of Common Stock to officers
and directors for accrued salaries and
loans at $.55 per share 671,267 67 369,130 369,197
Issuance of Common Stock for Conversion of
Notes Payable to Foreign Individuals Under
Reg. S. averaging $.34 per share (net of
$162,955 expense) 2,945,762 294 836,750 837,044
Issuance of Common Stock
For Services 535,000 53 615,409 615,462
Issuance of Common Stock
For Conversion of Notes at $.40 Per share
Balance (net of $ 7,550 Expenses) 1,147,500 135 480,797 480,932
Balance -December 31, 1997 13,981,524 $1417 $17,436,113 ($16,517,046) $920,609
========== ===== =========== ============= =========
(Note 6)
</TABLE>
<PAGE>
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 15, 1991. The company was formed as a communication
equipment company and has expanded its focus to include telecommunication
services, cellular telephone activations and rentals, long distance, prepaid
calling cards, inbound 800 service and international operator services. New
products include Point of Sales (POS) debit / credit payment processing units
(Debit Link) and scrip terminals Its customers are located throughout the United
States.
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 six month period ended December 31,
1997 are not necessarily indicative of the results that may be expected for the
year ended June 30, 1998. 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., Sims Communications International, Inc. and
Link Technologies Inc. (and its wholly owned subsidiaries New View Technologies,
Inc., Link Dispensing Systems and Southeast Phone Card, Inc.). All intercompany
balances and transactions have been eliminated in consolidation. The 10%
minority investment in Smartphone is accounted for under the cost method.
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, other communication equipment and Link Technologies'
debit and calling card vending machines and equipment and point of sales (POS)
materials. This is 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.
8
<PAGE>
Organization Costs
Organization costs have been capitalized and are being amortized using the
straight-line method over a five year period.
Net Gain / (Loss) Per Common Share
Gain/(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 preferred stock and common stock equivalents
are excluded from the weighted average number of shares since the effect is
dilutive.
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
Rental revenue is recognized upon the completion of the customer phone rental.
Activation revenue is recognized upon the activation of the customers cellular
account with the appropriate carrier. Revenues from the sale of the Automated
Cellular Distribution Center (ACDC) and other equipment are recognized upon
title passing.
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.
Patents
The patents acquired by the Link acquisition are amortized based on the expected
useful life over a ten year period.
9
<PAGE>
Note 2- Notes and Loans Payable
During the quarter ended December 31, 1997, the company issued $ 176,000 of
8%-10% convertible debt maturing January through May 1998. The debt is
convertible into Common Stock at $.40 per share (revised from $1.25-$2.50) and
common stock options at $2.00 per share (options expire through 2002) were
issued as additional benefits.
A detail listing of debt follows:
Dec. 31, 1997
Promissory note payable at 10% interest payable
monthly, commencing Sept. 15, 1995. Balance of
principal is payable in full on January 31, 1998.
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 11% interest payable in
monthly installments of $541 through June 14, 1998.
Collateralized by equipment. 2,890
Notes payable to former officers, $ 6,006 payable
monthly (inclusive of 10% interest) payable through
June 1999. 100,000
Notes payable to foreign investors under Reg S, 8%
interest, due November, 1999. Debt includes conversion
rights equal to 72% of average closing price for
preceding 5 days prior to conversion. 100,000
8%-10% Convertible notes payable, principal due at
maturity dates ranging from January through April 1998.
Debt includes conversion to common stock feature with
conversion rates of $ .40 per share. Additionally each
note holder has issued options to purchase shares of the
Company stock 558,500 Note payable - $5,000 principal
plus interest (prime +1%) payable monthly through
October 1998. 50,000
Note payable - principal (non interest bearing) payable in
monthly installments of $1,500 through June 2000. 48,000
----------
1,169,738
Less: Current Maturities (1,129,738)
==========
Total Long Term $ 40,000
Note 3 - Continuing Operations and Subsequent Financing
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 years ending June 1995,
1996 and 1997 and continuing through the six months ended Dec.
10
<PAGE>
1997, the Company continued to suffer recurring losses from operations. During
the fiscal year ended June 30, 1995, the Company completed an initial public
offering for $5.2 million. Currently, management has sold, at private placements
or had debt and obligations converted into, 4,764,559 shares of common stock for
$ 1,828,000 from October 1997 through December 1997. In January 1998, the
company sold 2,605,000 shares of common stock for $525,000 and converted
$175,000 of debt and obligations into common stock. However, cash flows from
operations may not be sufficient to meet future obligations of the company.
Note 4-Investment in Non Consolidated Subsidiary
In September 1996, the company acquired a 10% minority investment in Smartphone,
Inc. (a company that sells a debit cellular telephone) from Sims management at
their original cost basis. This was effected by the issuance of 400,000 shares
of common stock. This investment is recorded under the cost method.
Note 5- Provisions for Bad Debt and Contract Termination During the year ended
June 1997 the Company received 1,807,800 shares of Cancall Cellular
Communications, Inc. Class A preferred stock with a recorded value of $1,310,000
from the sales of licensing rights and equipment. During the current quarter,
this agreement was mutually terminated as management of both companies did not
desire to go forward together in cellular telephone rentals. Accordingly, the
equipment was returned to the company, the Preferred Stock was returned to
Cancall and a loss provision for $ 764,000 was provided, which represented the
full profit on the agreement previously recorded.
The company sold 30 ACDC units to a master licensee from June through September
1996. A majority of these units were installed at Los Angeles Airport terminals
with the remaining units anticipated to be installed in the San Francisco bay
area. The airport terminals were briefly functional but Airport management and
licensee management requested a secession of operations until contract
provisions could be renegotiated. The company has not received payment for the
units and a loss provision of $169,000 (the profit on the units sold) was
recorded for uncollected receivables. The receivable was personally guaranteed
by the owner/president of the master licensee company, and Management believes
that the sold units will be returned to the company, and ultimately, the company
will participate in the airport cellular rental operations.
Note 6-Stockholders Equity
During the quarter ended September 30, 1997, the company issued 165,000 shares
of common stock to officers, a director and employees for services at prices
ranging between $0.65-$1.39 per share. For the 6 months ended December 1997 the
company issued 535,000 shares to consultants for services valued at $615,462.
11
<PAGE>
The company issued 200,000 shares of common stock to two officers for the
conversion of incentive stock options values at $ 1.00 per share, net of options
for common stock returned to the company, then valued at $1.50 per share.
The company sold in October and November 1997, $1,100,000 of convertible notes
to four foreign investors. The notes bear interest at 8% per year and are due
and payable in November 1999. All or part of the notes are convertible into
shares of the Company's common stock at 72% of the average closing price of the
stock for the 5 days prior to conversion. In December, $1,000,000 of the notes
were converted to 2,945,762 common shares.
Notes sold for $459,000 (between February and October 1997) were converted to
1,147,500 shares of common stock.
$369,000 of amounts due former officers and directors of the company were
converted in December 1997 to 671,267 shares of common stock at $.55 per share.
Note 7-Stock Options
The Company has adopted the disclosure-only provisions of Statement of Financial
Accounting Standards No 123 "Accounting for Stock-based Compensation" (SFAS No.
123). Accordingly, no compensation cost has been recognized for stock options
and warrants granted. Consistent with the disclosure-only provisions of SFAS No.
123, the Company must provide pro forma net earnings and pro forma earnings per
share disclosures for employee stock option grants made in 1995 and future years
as if the fair value based method defined in SFAS No. 123 had been applied.
The Company uses one of the most widely used option pricing models, the
Black-Scholes model (the Model), for purposes of valuing in stock option grants.
The Model was developed for use in estimating the fair value of traded options
which have no vesting restrictions and are fully transferable. In addition, it
requires the input of highly subjective assumptions including the expected stock
price volatility, expected dividend yields, the risk free interest rate and the
expected life. Because the Company's stock options have characteristics
significantly different from those of traded options, and because changes in
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the value determined by the Model is not necessarily
indicative of the ultimate value of the granted options.
Note 8 - Capital Leases
The Company leases various office equipment which is accounted for as capital
leases. The current liability for the leases is $8,377 and the long term portion
is $30,898 payable through the year 2002.
12
<PAGE>
Note 9- Subsequent Acquisition
Effective January 1998, the Company issued 2,200,000 shares of its common stock
to the shareholders of Moviebar, Inc. and Vectorvision Inc. in consideration for
the acquisition of a business known as "Movie Vision". Movie Vision rents video
cassettes, primarily containing motion pictures, through automated dispensing
units in hotels. Movie Vision currently has video cassette dispensing machines
in approximately 140 hotels in the United States. For financial statement
purposes, the acquisition of Movie Vision was valued at $1,100,000 based on a
$0.50 market price of the Company's stock (the market value of the assets
acquired were in excess of the value to the Sims stock issued).
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operation-Three Months and Six Ending December 31, 1997
During the three month and six month periods ended December 31,1997, total
revenues decreased versus the comparable periods of last year due to: maturing
and competitive pressures in the cellular telephone activation market and to
culmination of the programs servicing AAA Florida , Mississippi and Louisiana
for phone rentals, cellular activations, long distance and calling cards. Also,
the on site renting of cellular telephones at Alamo Rent A Car has ceased until
more profitable venues can be established. Total revenues for the three-month
period were $ 392,844 as compared to 1996 revenues of $1,035,797. Revenues for
the 1997 six months were $1,010,328 versus $ 2,231,565 for the prior year.
Ongoing calling card operations look favorable as volumes from current
established automated dispensing units are higher. The evolving sales focus of
the Company, including distribution of Debit Link Point of Sales (POS) and scrip
terminals, has continued as new Link terminals have been installed in major fast
food chains such as Taco Bell, Subway , McDonalds and Burger King. Revenues are
projected to increase not only from additional unit sales, but from recurring
royalties and fees on established units.,
The acquisition of the Movie Bar video cassette rental business will yield
improved representations and synergistic cost savings at locations such as
hotels, for the Company's vended calling card and cellular telephone rental
business.
Cost of sales for the three and six months ending December 31, 1997 were lower
due to decreases in the Company's total rental operations, cellular telephone
activations and reduced level equipment sales. Profit margins are high on the
calling card and long distance business since revenues are largely commission
based.
Selling, marketing and general and administrative expenses are higher for the
three and six months reflective of support for the Link acquisition, startup of
a new production facility and changes in management. Stock based compensation
and services increased for the six months to conserve cash. Cost controls and
employee and concurrent facility downsizing have been affected and are projected
to significantly help the bottom line.
The four founders and former officers of the Company have resigned . The new
President and Vice President have been chosen from the Link Technologies
operation / acquisition in a move to strengthen development and posturing of
operations in that direction.
Liquidity and Sources of Capital
During the six months ended December 31, 1997, the Company's cash requirement
(net loss adjusted for non cash provisions) was primarily funded by $ 1,460,000
in proceeds from debt which has largely been converted to common stock. Stock
based compensation valued at $ $615,462 was also used to conserve cash.
The $ 487,901 operating cash shortfall for the comparable 1996 period was funded
by proceeds from common stock. The increase in accounts receivable and reduction
in inventories reflects ACDC unit and equipment sales.
Link Technologies Inc. was acquired at Dec. 31, 1996 for the issuance of
674,157 shares of common stock.
14
<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.
SIMS COMMUNICATIONS, INC.
By:/s/ Mark Bennett
--------------------------
Mark Bennett
President
/s/ Bruce S. Schames
--------------------------
Bruce S. Schames
Chief Financial Officer
Date: Feb. 12, 1998
15
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000907127
<NAME> SIMS COMMUNICATIONS, INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> DEC-31-1997
<CASH> 370,432
<SECURITIES> 0
<RECEIVABLES> 165,044
<ALLOWANCES> 27,584
<INVENTORY> 1,484,489
<CURRENT-ASSETS> 2,235,835
<PP&E> 1,161,081
<DEPRECIATION> 527,713
<TOTAL-ASSETS> 4,152,178
<CURRENT-LIABILITIES> 3,160,671
<BONDS> 0
0
125
<COMMON> 1,417
<OTHER-SE> 919,067
<TOTAL-LIABILITY-AND-EQUITY> 4,152,178
<SALES> 1,010,328
<TOTAL-REVENUES> 1,010,328
<CGS> 647,956
<TOTAL-COSTS> 3,572,222
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,209,850)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,209,850)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,209,850)
<EPS-PRIMARY> (0.35)
<EPS-DILUTED> (0.35)
</TABLE>
