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 June 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the transition period from _______ to ___________.
Commission File Number 0-22934
IMATEL HOLDINGS, INC.
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(Exact Name of Small Business Issuer as specified in its Charter)
Washington 91-1268870
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(State or other Jurisdiction of I.R.S. Employer
Incorporation or Organization Identification Number)
14 Quai du Seujet, Geneva, Switzerland CH-1201
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(Address of principal executive offices) (Zip Code)
(011) 4122-9081598
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(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 June 30, 1998
No exhibits included.
1
<PAGE>
IMATEL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
June 30, December 31,
1998 1997
ASSETS -------- ------------
Current assets:
Cash $ 638 $ 8,596
Interest receivable 0 13,275
Other receivable (Note 1&2) 55,342 250,000
Loan Receivable Related Party 281,800 295,862
Marketable Securities (Note 3) 0 371,046
Total current assets 337,780 938,779
INVESTMENTS, Net (Note 1) 4,082,359 4,971,962
PROPERTY & EQUIPMENT, less Accum. Deprec.
$20,815 & $19,360 respectively 23,333 29,414
ORGANIZATION COSTS, less Accum. Amort..
$17,461 & $11,602 respectively 0 5,859
OTHER ASSETS 0 6,967
Total assets $4,443,472 $5,952,981
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Checks excess bank funds (Note 5) $ 643,640 $ 935,572
Accounts payable 39,951 38,412
Accrued payroll taxes 0 459
Other accrued liabilities (Note 7) 365,100 316,000
Deferred Dividend Income (Note 2) 44,165 0
Total Current Liabilities $1,092,856 $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) (133,228) (193,082)
Retained (deficit) (8,772,253) (7,400,477)
Total shareholders' equity 3,348,616 4,660,538
Total Liabilities and Equity $4,443.472 $5,952,981
The accompanying notes are an integral part of these financial statements
2
<PAGE>
IMATEL HOLDINGS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1998 and 1997
<TABLE>
<CAPTION>
Six Months Ended
3 Months June June
4-1/6-30-98 1998 1997
Revenues: ----------- ----------- -----------
<S> <C> <C> <C>
Commissions and consulting fees $ 0 $ 0 $ 0
Dividend Income (Note 2) 34,194 56,427 543
Total revenues $ 34,194 $ 56,427 $ 543
General and administrative expense (Note 6&8) $ 173,743 $ 298,561 $ 483,803
INCOME (LOSS) FROM OPERATIONS $ (139,549) $ (242,134) $ (483,260)
Other income (expense):
Unrealized (loss) marketable securities 0 0 (2,116)
Interest income (1,067) 9,961 24,084
Writedown of Investments (Note 1) (1,139,603) (1,139,603) (2,884,818)
Foreign currency transaction gain (loss) 0 0 (619)
Total Other (Expense) (1,140,670) (1,129,642) (2,863,469)
Gain (loss) from Continuing operations (1,280,219) (1,371,776) (3,346,729)
Gain (loss) from Discontinued operations 0 0 (14,098)
Net income (loss) $(1,280,219) $(1,371,776) $(3,360,827)
Per share information:
Basic (loss) per common share:
Continuing operations $ (.38) $ (.41) $ (.99)
Discontinued operations $ (.00) $ (.00) $ (Nil)
Basic Weighted average number of
common stock shares outstanding 3,370,168 3,370,168 3,394,668
Diluted (loss) per common share:
Continuing operations $ (.36) $ (.38) $ (.93)
Discontinued operations $ (.00) $ (.00) $ (Nil)
Diluted weighted average number of
common stock shares outstanding 3,603,502 3,603,502 3,628,002
</TABLE>
The accompanying notes are an integral part of these financial statements
3
<PAGE>
IMATEL HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Three Month Periods Ended March 31, 1998 and 1997
And the Six Month Periods Ended June 30, 1998 and 1997
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, June 30,
1998 1997 1998 1997
Cash flows from operating activities: ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Net income (loss) $(1,280,219) $ (138,268) $(1,371,775) $(3,360,827)
Transactions not requiring cash:
Depreciation and amortization 9,250 1,800 12,550 3,600
Unrealized (gain) loss/marketable securities 0 0 0 0
Foreign currency transaction (gain) loss 0 0 0 0
Writedown Pemp/Gestion Guychar, Inc.& IMA
Purchase Technology Investments (Note 1) 1,139,603 0 1,139,603 2,884,818
Changes in current assets and current liabilities:
Receivable, marketable securities and other
current assets (Increases)/Decreases (Note 3) 34,590 214,547 327,310 205,038
Check drawn excess bank funds, accounts payable,
accrued liabilities, other current liabilities
(Decreases)/Increases 100,154 (62,531) (512,190) 326,192
NET CASH (USED) PROVIDED BY
OPERATING ACTIVITIES 3,378 15,548 (404,502) 58,821
INVESTING ACTIVITIES
Changes in loan and contract receivable
related party, net
0 0 0 0
Net sale/disposal (purchase) property & equipment (2,992) 0 22,087 0
NET CASH (USED) PROVIDED IN
INVESTING ACTIVITIES (2,992) 0 22,087 0
FINANCING ACTIVITIES
Proceeds from issuance of common stock 0 0 0 0
TRANSLATION (INCREASE) ADJUSTMENT
CHANGES TO CASH (Note 4) (2,807) (16,928) 59,854 (90,439)
INCREASE (DECREASE) IN CASH (2,421) (1,380) (322,561) (31,618)
CASH, BEGINNING OF PERIOD 3,059 3,901 323,199 34,139
CASH, END OF YEAR $ 638 $ 2,521 $ 638 $ 2,521
</TABLE>
The accompanying notes are an integral part of these financial statements
4
<PAGE>
IMATEL HOLDINGS, INC.
CONSOLIDATED FINANCIAL NOTES
PERIOD ENDING SIX MONTHS JUNE 30, 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's management believes that
the disclosures are adequate to make the information presented not misleading.
The condensed financial statements for the six months ended June 30 1998 and 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 June 30, 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). During the quarter ending June 30, 1998 the
$889,603 balance of the Pemp/Gention Guychar Inc. Investment was written off and
so was the $250, 000 balance of the IMA purchase of technology.
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)
Note 4 - The Balance Sheet Cumulative Translation/Remeasurement Account
reflected a 2nd quarter 98 increase of $2,807.
Note 5 - Checks drawn in excess of bank funds (overdraft on foreign bank
accounts at the Imatel Geneva Operations) was increased by $79,361 during the
2nd quarter of 1998.
Note 6 - Interest expense (for both 1998 and 1997 2nd quarter) is
attributable to the Bank Service Charges (Interest and Fees) on the foreign bank
accounts overdraft at Geneva.
Note 7 - Other accrued liabilities increased by approximately $20,000;
quarterly accrual of Officers/Directors salary for $30,000 and $4,000 for fiscal
1998 year end audit fees, offset by the final payment of the 1997 year end audit
fees.
Note 8. Six months 1998 year to date G& A expenses are lower than prior six
months 1997 by $185,242 due to lower coporate salaries and overall downsizing
expense reductions at the US 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.
5
<PAGE>
PART II. OTHER INFORMATION
Not Applicable.
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: August 15, 1998 By:/s/ Dempsey K. Mork
-----------------------------------------
Dempsey K. Mork
(Chief accounting and financial officer
and duly authorized officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with legend, if applicable)
</LEGEND>
<CIK> 0000915337
<NAME> IMATEL HOLDINGS, INC.
<MULTIPLIER> 1
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 638
<SECURITIES> 4,082,359
<RECEIVABLES> 337,142
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,420,139
<PP&E> 44,148
<DEPRECIATION> (20815)
<TOTAL-ASSETS> 4,443,472
<CURRENT-LIABILITIES> 1,092,856
<BONDS> 0
0
1,500
<COMMON> 12,252,597
<OTHER-SE> (8,903,481)
<TOTAL-LIABILITY-AND-EQUITY> 4,443,472
<SALES> 0
<TOTAL-REVENUES> 34,194
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,314,413
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,280,219)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,280,219)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,280,219)
<EPS-PRIMARY> (0.38)
<EPS-DILUTED> (0.36)
</TABLE>
