U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________________ to ______________
Commission file number 1-13272
Specialty Teleconstructors, Inc.
(Exact name of small business issuer as specified in its charter)
Nevada 85-0421409
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
12001 State Hwy 14 North, Cedar Crest, NM 87008
(Address of principal executive offices) (Zip Code)
(505) 281-2197
(Registrant's telephone number)
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 ____
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 4,092,308
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
SPECIALTY TELECONSTRUCTORS, INC.
Consolidated Balance Sheet
March 31, 1995 and 1996
(Unaudited)
Assets
1995 1996
Current assets:
Cash and cash equivalents $ 5,194,013 $ 3,873,566
Contracts receivable 1,109,160 3,083,877
Inventory - 20,209
Prepaids - 266,948
Costs and estimated earnings in
excess of billings on
uncompleted contracts 116,303 715,000
----------- -----------
Total current assets 6,419,476 7,959,600
Property and equipment, net 594,078 1,542,399
Other assets - 220,103
----------- -----------
$7,013,554 9,722,102
========== =========
Liabilities and Stockholders' Equity
Current liabilities:
Short-term notes payable $ - $ 600,000
Current installments of notes
payable to banks 51,528 53,648
Trade accounts payable 296,533 1,020,450
Billings in excess of costs and
estimated earnings on
uncompleted contracts 213,985 218,000
Accrued expenses 199,567 620,411
Current income taxes 279,868 402,000
Deferred income taxes 250,360 583,426
----------- -----------
Total current liabilities 1,291,841 3,497,935
Notes payable to banks, excluding
current installments 71,873 160,944
Total liabilities 1,363,714 3,658,879
----------- -----------
Stockholders' equity:
Common Stock, $0.01 par value.
Authorized 7,500,000 shares;
Issued 4,092,308 40,923 40,923
Additional paid-in-capital 4,148,487 4,166,359
Retained earnings 1,460,430 1,855,941
----------- -----------
Total stockholders' equity 5,649,840 6,063,223
----------- -----------
7,013,554 9,722,102
========== =========
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
SPECIALTY TELECONSTRUCTORS, INC.
Consolidated Statements of Earnings
March 31, 1995 and 1996
(Unaudited)
For the three months ended March 31, 1995 and 1996
For the nine months ended March 31, 1995 and 1996
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
March 31, 1995 March 31, 1996 March 31, 1995 March 31, 1996
Contract revenues
earned $ 1,315,276 $ 3,157,081 $ 5,663,934 $ 9,644,803
Cost of revenues
earned 1,345,153 2,928,143 4,672,823 8,055,676
--------- --------- --------- ----------
Gross profit (29,877) 228,938 991,111 1,589,127
Selling, general
and administrative
expenses 194,518 385,568 652,463 1,166,964
--------- --------- --------- ----------
Earnings from
operations (224,395) (156,630) 338,648 422,163
============= =========== =========== ============
Other income (deductions):
Gain (loss) on sale of
equipment - - 14,925 (12,000)
Interest income 67,516 55,905 105,208 172,695
Interest expense (2,170) (20,362) (9,012) (56,374)
Other, net - 10,510 1,620 12,896
--------- --------- --------- --------
65,346 46,053 112,741 117,217
--------- --------- --------- -------
Earnings before
income taxes (159,049) (110,577) 451,389 539,330
Income taxes (53,912) (40,909) 166,938 199,573
--------- --------- --------- --------
Net earnings $ (105,137) (69,668) 284,451 339,807
============= ======== ======== ========
Earnings per common share and common equivalent shares:
Net earnings $ (0.03) (0.02) 0.08 0.08
============= ============ ============ ===========
Weighted average common shares
outstanding 3,578,407 4,104,257 3,578,407 4,104,257
============= ============ ============ ===========
The accompanying notes are an integral part of these consolidated financial
statements.<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
SPECIALTY TELECONSTRUCTORS, INC.
Consolidated Statement of Cash Flows
March 31, 1995 and 1996
(Unaudited)
For the three months ended March 31, 1995 and 1996
For the nine months ended March 31, 1995 and 1996
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
March 31, 1995 March 31, 1996 March 31, 1995 March 31, 1996
Cash flows from operating
activities:
Net earnings $ 105,137) (69,668) 284,451 339,807
Adjustments to reconcile
net earnings to net cash
provided by operating
activities:
Depreciation of property
and equipment 38,907 111,639 101,871 236,573
Amortization of goodwill - 24,845 - 48,287
Gain(loss) on sale of
equipment - - (14,925) 12,000
Noncash compensation 18,000 - 33,015
Changes in certain assets
and liabilities:
Contracts receivable 522,110 76,731 243,525 (532,966)
Inventory - (2,209) - (20,209)
Prepaid expenses 26,985 (466,948) 26,985 (244,445)
Costs and estimated
earnings in excess
of billings on
uncompleted contracts 67,649 (258,350) 79,297 (536,400)
Other assets - 89,218 - 8,967
Trade accounts payable (183,018) 430,717 249,626 802,669
Billings in excess of
costs and estimated
earnings on uncompleted
contracts 49,063 (23,193) 197,185 (31,000)
Accrued expenses (24,333) 53,761 12,263 295,754
Current income taxes (54,462) 274,874 270,068 393,963
Deferred income taxes (157,983) (101,320) (296,676) (202,428)
-------- --------- -------- ---------
Net cash provided by
operating activities 197,780 140,097 1,186,685 570,572
-------- --------- -------- ---------
Cash flows from investing
activities:
Proceeds from sales of
property and
equipment 6,776 12,500 15,976 14,000
Purchases of property
and equipment (61,029) (318,327) (220,773) (745,719)
-------- --------- -------- ---------
Net cash used in
investing activities (54,253) (305,827) (204,797) (731,719)
-------- --------- -------- ---------
Cash flows from financing
activities:
Proceeds from advances
on line of credit - - - 600,000
Payments on line of credit - - - (600,000)
Principal payments on
notes payable to banks (10,978) (6,013) (35,600) (52,804)
Proceeds from sale of
common stock and
common stock warrants - - 5,062,500 -
Costs from initial
public offering - - (844,166) -
-------- --------- -------- ---------
Net cash used in
financing activities (10,978) (6,013) 4,182,734 (52,804)
-------- --------- -------- ---------
Net decrease in cash
and cash equivalents 132,549 (171,743) 5,164,622 (213,951)
Cash and cash equivalents
at beginning of period 5,061,464 4,045,309 29,391 4,087,517
--------- --------- -------- ---------
Cash and cash equivalents
at end of period $5,194,013 $3,873,566 $5,194,013 $3,873,566
========= ========= ========= =========
Supplemental disclosure
of cash flow information:
Interest paid $2,170 16,849 9,012 56,374
========= ========= ========= =========
Taxes paid $10,000 - 177,785 9,060
========= ========= ========= =========
Noncash transactions -
acquisition of vehicles
in exchange for debt $38,000 178,455 39,000 241,455
========= ========= ========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
SPECIALTY TELECONSTRUCTORS,INC.
Consolidated Statements of Changes in Stockholders' Equity
(Unaudited)
For the three months ended March 31, 1995 and 1996
Common Stock
----------------- Additional Retained
Shares Amount Paid-in-capital earnings Total
--------- ------- --------------- -------- ----------
Balances as of
December 31, 1994 4,092,308 $40,923 4,130,487 $1,565,567 $5,736,977
Noncash compensation 18,000 18,000
Net earnings - - - (105,137) (105,137)
--------- -------- ---------- ---------- ----------
Balances as of
March 31, 1995 4,092,308 $40,923 $4,148,487 $1,460,430 $5,649,840
========= ======= ========= ========= ==========
Balances as of
December 31, 1995 4,092,308 $40,923 $4,166,359 $1,925,609 $6,132,891
Net earnings - - - $(69,668) $(69,668)
--------- -------- ---------- ---------- ----------
Balances as of
March 31, 1996 4,092,308 $40,923 4,166,359 $1,855,941 $6,063,223
========= ======= ========= ========= ==========
For the nine months ended March 31, 1995 and 1996
Common Stock
------------------- Additional Retained
Shares Amount Paid-in-capital earnings Total
--------- ------- --------------- --------- ----------
Balances as of
June 30, 1994 3,000,000 $30,000 - $1,187,052 $1,217,052
Issuance of common
stock and warrants
to acquire common
stock 1,000,000 10,000 4,091,472 - 4,101,472
Adjustment for ST
Combined Resources,
Inc. pooling of
interests 92,308 923 24,000 (11,073) 13,850
Noncash compensation 33,015 - 33,015
Net earnings - - - 284,451 284,451
--------- -------- ---------- ---------- ----------
Balances as of
March 31, 1995 4,092,308 $40,923 $4,148,487 $1,460,430 $5,649,840
========= ======= ========= ========= ==========
Balances as of
June 30, 1995 4,092,308 $40,923 $4,166,359 $1,536,134 $5,723,416
Net earnings - - - 339,807 339,807
--------- -------- ---------- ---------- ----------
Balances as of
March 31, 1996 4,092,308 $40,923 $4,166,359 $1,855,941 $6,063,223
========= ======= ========= ========= ==========
The accompanying notes are an integral part of these consolidated financial
statements.
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
SPECIALTY TELECONSTRUCTORS, INC.
Notes to Consolidated Financial Statements
Note : Basis of Presentation
The notes to the consolidated financial statements do not present all
disclosures required under generally accepted accounting principles but
instead, as permitted by Securities and Exchange Commission regulations,
presume that users of the interim financial statements have read or have
access to the June 30, 1995 audited consolidated financial statements
and that the adequacy of additional disclosure needed for a fair presentation
may be determined in that context.
The financial information included herein reflects all adjustments
(consisting of normal recurring adjustments) which are, in the opinion of
management, necessary to a fair presentation of the results for interim
periods. The results of operations for the nine month period ended March 31,
1995 and 1996, respectively, are not necessarily indicative of the results
to be expected for the full year.
<PAGE>
PART 1 FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis or Plan of Operation
For the Nine Months Ended March 31, 1996, Results of Operations
The Company's revenues for the nine months ended March 31, 1996,
increased to $9,644,803 as compared to $5,663,934 for the same nine month
period in the prior year, an increase of approximately 70%. Management
believes the increase is, in part, related to the beginning of the roll out
for Personal Communications Services (PCS) in the month of March for those
customers that purchased the right to provide new wireless services from
the Federal Government in the first quarter of 1995. In addition the Company
has increased its ability to provide more resources and services over a broader
geographic area to the wireless industry. The Federal government completed
the auction of the A and B block licenses on March 13, 1995, cumulatively
totaling $7.034 billion. The FCC completed the auction of the C block
licenses on May 15, 1996, in excess of $10 billion for a cumulative total
for the A, B and C block licenses in excess of $17 billion. The FCC has
additional auctions for the D and E block licenses tentatively scheduled for
later this year.
Gross profit increased by approximately 60% as compared to the same nine
month period last year. Net income increased by approximately 19% for the nine
months ended March 31, 1996, compared to the nine months ended March 31, 1995.
For the Three Months Ended March 31, 1996, Results of Operations
The Company recorded third quarter revenues of $3,157,081 which is a
record third quarter as compared to previous third quarters. Management
believes this increase is attributable to the Company's increasing ability to
provide more resources and services over a broader geographic area to the
wireless industry as previously reported as well as the very beginning of the
implementation of the A and B block PCS networks. Gross profit increased to
$228,938 for the three months ended March 31, 1996 compared to a loss of
$29,877 for the three months ended March 31, 1995. Management believes this
increase is attributable to economies of scale derived from increased revenues.
Selling, general and administrative expenses for the three months ended
March 31, 1996, increased to $385,568 from $194,518 for the three months ended
March 31, 1995. Management believes this increase is attributable to
implementation of new accounting and internal tracking software necessary to
provide for an efficient and more timely stream of information to accommodate
the growth of the Company, with expenses incurred in connection with
negotiations concerning a potential acquisition, which negotiations have
subsequently been terminated, as well as costs associated with promotions and
trade shows, and extensive manager training during the period as well as
increased staffing and amortization and depreciation associated with
acquisitions and capital expenditures.
The Company lost $69,668 in the three months ending March 31, 1996,
compared to a loss of $105,137 in the three months ending March 31, 1995. The
third quarter of the current fiscal year was difficult as in previous fiscal
years, showing decreased revenues in January and February offset a strong March,
creating a net loss for the quarter.
Liquidity and Capital Resources
The Company successfully completed its initial public offering in
November, 1994 receiving approximately $4.3 million in proceeds. The Company
has invested the proceeds in short-term interest bearing securities and
continues to use internally generated funds to finance operations, while
pursuing acquisition candidates as set forth in the Registration Statement.
<PAGE>
PART II - OTHER INFORMATION
NONE
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Specialty Teleconstructors, Inc.
May 20, 1996 /s/ Michael R. Budagher
Michael R. Budagher, President and
Principal Financial Officer
