SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the transition period from __________________
to
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Commission File Number 0-22934
IMATEL HOLDINGS, INC.
(Exact Name of Small Business Issuer as specified in its Charter)
Washington 91-1268870
(State or other Jurisdiction of I.R.S. Employer
Incorporation or Organization Identification Number)
14 Quai du Seujet, Geneva, Switzerland CH-1201
(Address of principal executive offices) (Zip Code)
(011) 4122-9081598
(Issuer's telephone number)
Check whether the Issuer (1) 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 (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
Indicate the number of shares outstanding of each of the issuer's
classes of Common Equity, as of the latest practicable date.
Common Stock, no par value 3,370,108
Title of Class Number of Shares outstanding
at March 31, 1998
No exhibits included.
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<CAPTION>
IMATEL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
March 31, December 31,
1998 1997
ASSETS
Current assets:
<S> <C> <C>
Cash $ 3,059 $ 8,596
Interest receivable 1,067 13,275
Other receivable (Note 2) 317,500 250,000
Loan Receivable Related Party 295,862 295,862
Marketable Securities (Note 3) 974 371,046
Total current assets 618,462 938,779
INVESTMENTS, Net (Note 1) 4,971,962 4,971,962
PROPERTY & EQUIPMENT, less Accum. Deprec.
$21,760 & $19,360 respectively 23,994 29,414
ORGANIZATION COSTS, less Accum. Deprec.
$12,502 & $11,602 respectively 4,959 5,859
OTHER ASSETS 6,967 6,967
Total assets $ 5,626,344 $ 5,952,981
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Checks drawn excess of bank funds (Note 5) $ 564,279 $ 935,572
Accounts payable 27,412 38,412
Accrued payroll taxes 3,205 459
Other accrued liabilities (Note 7) 352,539 316,000
Deferred Dividend Income (Note 2) 45,267 0
Total Current Liabilities $ 992,702 $ 1,290,443
MINORITY INTEREST 2,000 2,000
Shareholders' equity:
Preferred Stock, no par value; 1,000,000
shares authorized, 1,500 shares issued
and outstanding 1,500 1,500
Common Stock, no par value; 50,000,000
shares authorized; 3,370,168 shares
issued and outstanding (both periods) 12,252,597 12,252,597
Cumulative translation adjustment (Note 4) (130,421) (193,082)
Retained (deficit) (7,492,034) (7,400,477)
Total shareholders' equity 4,633,642 4,660,538
Total Liabilities and Equity $ 5,626,344 $ 5,952,981
The accompanying notes are an integral part of these financial statements
2
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<TABLE>
<CAPTION>
IMATEL HOLDINGS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 1998 and 1997
Three Months Ended
March 31,
1998 1997
Revenues:
<S> <C> <C>
Commissions and consulting fees $ -- $ --
Dividend Income (Note 2) 22,233 --
Total revenues $ 22,233 $ --
General and administrative expense (Note 8) $ 97,471 $ 312,788
INCOME (LOSS) FROM OPERATIONS (75,238) (312,788)
Other income (expense):
Unrealized (loss) marketable securities -- (2,116)
Interest income 11,028 13,980
Interest Expense (Note 6) (27,347) (22,100)
Writedown of Investments (Note 1) -- (2,884,818)
Foreign currency transaction gain (loss) -- (619)
Total Other (Expense) (16,319) (2,895,673)
Gain (loss) from Continuing operations (91,557) (3,208,461)
Gain (loss) from Discontinued operations 0 (14,098)
Net income (loss) $ (91,557) $ (3,222,559)
Per share information:
Basic (loss) per common share:
Continuing operations $ (.27) $ (.95)
Discontinued operations $ (.00) $ (Nil)
Basic Weighted average number of
common stock shares outstanding 3,370,168 3,394,668
Diluted (loss) per common share:
Continuing operations $ (.25) $ (.94)
Discontinued operations $ (.00) $ (Nil)
Diluted weighted average number of
common stock shares outstanding 3,603,502 3,628,002
The accompanying notes are an integral part of these financial statements
3
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<TABLE>
<CAPTION>
IMATEL HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Three Month Periods Ended March 31, 1998 and 1997
Three Months Ended
March 31,
1998 1997
Cash flows from operating activities:
<S> <C> <C>
Net income (loss) $ (91,557) $ (3,222,559)
Transactions not requiring cash:
Depreciation and amortization 3,300 1,800
Unrealized (gain) loss/marketable securities -- 2,116
Foreign currency transaction (gain) loss -- 619
Writedown Pemp/Gestion Guychar, Inc.
investments (Note 1) -- 2,884,818
Writedown Marketable Securities -- 109,381
Changes in current assets and current liabilities:
Receivable, marketable securities and other
current assets (Increases)/Decreases (Note 3) 314,780 (11,152)
Check drawn excess bank funds, accounts payable,
accrued liabilities, other current liabilities
(Decreases)/Increases (297,741) 280,574
NET CASH (USED) PROVIDED BY
OPERATING ACTIVITIES (71,218) 45,597
INVESTING ACTIVITIES
Changes in loan and contract receivable
related party, net -- --
Sale (purchase) of property and equipment 3,020 --
NET CASH (USED) PROVIDED IN
INVESTING ACTIVITIES 3,020 --
FINANCING ACTIVITIES
Proceeds from issuance of common stock -- --
TRANSLATION (INCREASE) ADJUSTMENT
CHANGES TO CASH (Note 4) 62,661 (75,835)
INCREASE (DECREASE) IN CASH (5,537) (30,238)
CASH, BEGINNING OF PERIOD 8,596 34,139
CASH, END OF YEAR $ 3,059 $ 3,901
The accompanying notes are an integral part of these financial statements
4
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IMATEL HOLDINGS, INC.
CONSOLIDATED FINANCIAL NOTES
PERIOD ENDING THREE MONTHS MARCH 31, 1998
General
The condensed consolidated financial statements of Imatel Holdings,
Inc., (formerly Development Bancorp, Ltd.) included herein, have been prepared
without audit pursuant to the rules and regulations of the Securities and
Exchange Commission. Although certain information normally included in financial
statements prepared in accordance with generally accepted accounting principles
has been condensed or omitted, Imatel Holdings, Inc., believes that the
disclosures are adequate to make the information presented not misleading. The
condensed financial statements for the three months ended March 31, 1998 should
be read in conjunction with the financial statements and notes thereto included
in this report and Imatel Holdings, Inc.'s annual report on Form 10-KSB for the
fiscal year ended December 31, 1997.
The condensed consolidated financial statements included herein reflect
all normal recurring adjustments that, in the opinion of management, are
necessary for a fair presentation. The results for the interim period are not
necessarily indicative of trends or of results to be expected for a full year.
Note 1 - Prior year quarter ending March 31, 1997 has been restated to
incorporate the Pemp/Gestion Guychar, Inc. writedown of $2,884,818 which was
adjusted at the fiscal year end December 31, 1997 audit to $2,816,335,
reflecting a net investment amount of $889,603 at December 31, 1997, and
$4,082,359 in SFP Bank Stocks (recorded at cost).
Note 2 - The applicable accounts include an accrual of a 100,000 (Canadian
Dollars) Dividend Receivable from Pemp/Guychar, Inc. for the period ending
October 1, 1998 which has been converted to $67,500 (US Dollars) based on the
March 31, 1998 foreign currency rates. The $67,500 will be taken into income
over the first 3 quarters of 1998 at $22,233 per quarter.
Note 3 - Marketable (Debt) Securities consisting of Foreign Bonds held by
Imatel's Geneva Operations were sold during the 1st quarter of 1998 amounting to
$370,072 (U.S. Dollars). The remaining portion in this category represents a
$974 balance left in a Money Market Account at Imatel's U.S. Operations. There
is no P&L financial impact other than a $30,000 reduction in the Balance Sheet
Cumulative Translation Account.
Note 4 - The Balance Sheet Cumulative Translation/Remeasurement Account
reflected a 1st quarter total reduction of approximately $63,000 (US Dollars),
$30,000 of which has been covered in Note 3 (above). The other major item was a
$16,000 reduction covering the sale (at maturity) of a 380,000 (Australian
Dollars) Fiduciary Investment (Money Market). The remaining $17,000 reduction
was due to the decline in the Swiss Franc.
Note 5 - Checks drawn in excess of bank funds (overdraft on foreign bank
accounts at the Imatel Geneva Operations) was reduced by $371,293 due to the
liquidation/sale of Marketable Securities (Note 3).
Note 6 - Interest expense (for both 1998 and 1997 1st quarter) is attributable
to the Bank Service Charges (Interest and Fees) on the foreign bank accounts
overdraft at Geneva.
The accompanying selected information is an integral part of
the financial statements.
5
<PAGE>
Note 7 - Other accrued liabilities increased by approximately $37,000; quarterly
accrual of Officers/Directors salary for $30,000 and $4,000 for fiscal 1998 year
end audit fees.
Note 8 - 1st quarter 1997 G&A expenses of $313,000 included $168,000 prior year
1996 expenses (1996 Officers/Directors salary accrual of $120,000; and $48,000
for the 1996 Year end Audit Fees). Adjusted 1997 1st quarter G&A Expenses are
$145,000. The 1998 1st quarter G&A expenses of $97,000 are $48,000 lower than
the prior year, due primarily to lower Corporate Salaries of $30,000. The
remaining $18,000 is attributable to continuing downsizing and expense
reductions at the Indian Wells Corporate Offices.
ITEM 2. Management's Discussion and Analysis
See Notes to financial statements for a discussion of factors in
changes in operating line items.
The accompanying selected information is an integral part of
the financial statements.
6
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PART II. OTHER INFORMATION
Note Applicable.
7
<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.
Date: _____________, 1998 By:
Dempsey K. Mork
(Chief accounting and financial officer
and duly authorized officer)
8
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000915337
<NAME> IMATEL HOLDINGS, INC.
<MULTIPLIER> 1
<CURRENCY> US dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-01-1998
<PERIOD-END> Mar-31-1998
<EXCHANGE-RATE> 1
<CASH> 3,059
<SECURITIES> 974
<RECEIVABLES> 614,429
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 618,462
<PP&E> 23,994
<DEPRECIATION> 21,760
<TOTAL-ASSETS> 5,626,344
<CURRENT-LIABILITIES> 992,702
<BONDS> 0
0
1,500
<COMMON> 12,252,597
<OTHER-SE> (7,622,455)
<TOTAL-LIABILITY-AND-EQUITY> 5,626,344
<SALES> 0
<TOTAL-REVENUES> 22,233
<CGS> 0
<TOTAL-COSTS> 97,471
<OTHER-EXPENSES> (16,319)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (27,347)
<INCOME-PRETAX> (91,557)
<INCOME-TAX> 0
<INCOME-CONTINUING> (91,557)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 91,557
<EPS-PRIMARY> (.27)
<EPS-DILUTED> (.25)
</TABLE>
