<PAGE> 1
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDING MARCH 31, 1996 COMMISSION FILE NO. 0-26294
INTEGRATED COMMUNICATION NETWORK, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 65-0348857
(STATE OF OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NUMBER)
444 BRICKELL AVENUE, SUITE 900
MIAMI, FLORIDA 33131
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(305) 530-0200
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS 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 FILING REQUIREMENTS
FOR THE PAST 90 DAYS.
YES X NO___
---
AS OF MAY 10, 1996 THE REGISTRANT HAD 2,372,500 SHARES OF COMMON STOCK, ISSUED
AND OUTSTANDING.
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT: YES____ NO X
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________________________
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENT
Attached
2
<PAGE> 3
PART I - FINANCIAL STATEMENTS
ITEM I - FINANCIAL STATEMENTS
INTEGRATED COMMUNICATION NETWORK, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
----------- ------------
(Unaudited)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 142,430 $1,317,609
Accounts receivable, less allowance for doubtful accounts of
approximately $527,000 at March 31, 1996 and $891,500
at December 31, 1995, respectively 486,260 799,039
Inventory 94,355 94,355
Prepaid media costs 57,554 119,807
Income tax receivable 370,264 243,420
Other receivable 37,600 40,600
Prepaid royalties and fees 62,719 33,738
---------- ----------
Total current assets 1,251,182 2,648,568
Furniture, fixtures and equipment, net of accumulated depreciation
of $28,780 at March 31, 1996 and $24,130 at December 31, 1995,
respectively 100,915 103,455
Other assets
Deferred production costs, net 150,782 122,854
Deposits 377,821 863,256
Other assets 33,477 -
---------- ----------
Total assets $1,914,177 $3,738,133
========== =========
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<S> <C> <C>
Current liabilities
Bank overdraft $ 255,756 $ 461,821
Accounts payable 651,263 582,698
Accrued expenses 446,938 685,450
Notes payable - service provider 472,671 740,844
Notes payable - other 13,888 15,556
---------- ----------
Total current liabilities 1,840,516 2,486,369
Commitments - -
Stockholders' equity
Preferred stock - $.01 par value, 1,000,000 shares
authorized, no shares issued and outstanding - -
Common stock - $.01 par value, 10,000,000 shares
authorized, 2,355,000 shares and 2,350,000 shares
issued and outstanding at March 31, 1996 and
December 31, 1995, respectively 23,550 23,500
Additional paid-in capital 5,601,928 5,596,978
Retained deficit (5,551,817) (4,368,714)
---------- ----------
Total stockholders' equity 73,661 1,251,764
---------- ----------
Total liabilities and stockholders' equity $1,914,177 $3,738,133
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 4
INTEGRATED COMMUNICATION NETWORK, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1996 1995
---------- ----------
<S> <C> <C>
Revenue - net $ 2,784,127 $6,055,648
Operating costs and expenses
Cost of sales 3,165,058 4,614,274
General and administrative 919,793 987,499
----------- ----------
Total operating costs and expenses 4,084,851 5,601,773
----------- ----------
Earnings (loss) from operations (1,300,724) 453,875
----------- ----------
Other income (expense)
Interest income 7,692 -
Interest expense (21,071) (94,241)
Other income - 4,660
----------- ----------
Total other expense (13,379) (89,581)
----------- ----------
Earnings (loss) before provision
for income taxes (1,314,103) 364,294
Provision (benefit) for income taxes (131,000) 158,114
----------- ----------
Net earnings (loss) $ (1,183,103) $ 206,180
============ ==========
Earnings (loss) per share - primary $ (.50) $ .17
============ ==========
Earnings (loss) per share - fully diluted $ (.50) $ .13
============ ==========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
INTEGRATED COMMUNICATION NETWORK, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------
1996 1995
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $(1,183,103) $ 206,180
Adjustments to reconciled net earnings (loss) to net cash
used in operating activities:
Depreciation and amortization 127,166 202,902
Provision for bad debts (364,500) 221,777
Provision for deferred taxes - (85,733)
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable 677,279 (494,905)
(Increase) in prepaid expenses (28,981) (61,922)
(Increase) in deferred production costs (150,444) (143,292)
Decrease (increase) in prepaid media costs 62,253 (315,558)
(Increase) in income tax receivable (126,844) -
Decrease in other receivable 3,000 -
(Increase) in security deposits - (5,643)
Increase (decrease) in accounts payable 68,565 (315,462)
(Decrease) in accrued expenses (238,512) (54,489)
Increase in income taxes payable - 243,847
----------- ---------
Net cash used in operating activities (1,154,121) (602,298)
Cash used in investing activities:
Purchase of joint venture interest (33,477) -
Purchase of furniture, fixtures and equipment (2,110) (15,938)
----------- ---------
Net cash used in investing activities (35,587) (15,938)
Cash flows from financing activities:
Reduction in bank overdrafts (206,065) -
Deferred financing and offering costs - (173,145)
Deposit with lender 485,435 (534,417)
(Repayment) proceeds of loan - service provider - net (268,173) 283,461
Repayment of loans - other (1,668) (52,304)
Proceeds from issuance of subordinated debentures - 1,125,000
Proceeds from issuance of common stock 5,000 -
Stock subscriptions received - 100
----------- ---------
Net cash provided by financing activities 14,529 648,695
----------- ---------
Net change in cash (1,175,179) 30,459
Cash - beginning of period 1,317,609 -
----------- ---------
Cash - end of period $ 142,430 $ 30,459
=========== =========
Supplemental disclosures of cash flow information:
Cash paid for interest $ 21,071 $ 68,305
=========== =========
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 6
INTEGRATED COMMUNICATION NETWORK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. THE COMPANY
Organization
Integrated Communication Network, Inc. (ICNI), a Delaware corporation
incorporated on January 21, 1992 and based in Miami, Florida, is a direct
response marketing company, which was capitalized and commenced operations in
December 1993 and produces infomercial and short form commercials designed to
motivate television viewers to place telephone orders. Business is conducted
through several wholly-owned subsidiaries and one affiliated company.
Integrated Communication Network, Inc. and its Subsidiaries are defined herein
as the "Company."
Principles of Consolidation
The consolidated financial statements include the accounts of Integrated
Communication Network, Inc. and its wholly-owned subsidiaries: Ormazd, Inc.,
900 International Network Direct, Inc., Telemedia, Inc., Bellesse
International, Inc., SynerVision Productions, Inc., ICNI Management Corp., The
Romance Network, Inc., Psychic Value Network, Inc., Universal Psychic Network,
Inc., and Global Music Network, Inc. All significant intercompany transactions
have been eliminated in the consolidated financial statements.
Consolidated Financial Statements
The quarterly consolidated financial statements herein have been prepared
by the Company without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission and in accordance with the requirement of
Regulation S-B. Certain information and footnote disclosures which would be
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. Although the Company's management believes the disclosures are
adequate to make the information not misleading, it is suggested that these
quarterly consolidated financial statements be read in conjunction with the
Company's audited annual consolidated financial statement and footnotes thereto
contained in its December 31, 1995 10KSB.
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<PAGE> 7
2. INCOME TAXES
The Company estimates that its foreign tax losses will be approximately
$330,000 for the year ended December 31, 1996. This loss will be carried back
to an earlier year resulting in a tax benefit of approximately $131,000.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three Months Ended March 31,1996 compared to the Three Months Ended March 31,
1995
Total revenues consist of revenues, net of chargebacks processed and to be
processed by the long distance carrier. Total net revenues for the three months
ended March 31, 1996 decreased by $3,271,521, or approximately 54%, to
$2,784,127 from $6,055,648 for the three months ended March 31, 1995. This
decrease is attributable to discontinuation of business in Puerto Rico in
September 1995, the decreased revenues of the Exitos and the JoJo infomercials,
and the lower than expected results of the Stallone show. Puerto Rico accounted
for approximately $1,500,000 of net revenues for the 1995 period. The decreased
revenue of the Exitos show was due to predictable declines associated with aging
(the show has been aired for over one year) and the reduction of media buys due
to unfavorable rates. The Company has produced a new version of Exitos entitled
"En Pos del Milenio", which began airing around March 17, 1996. The JoJo
infomercial was also aged (about 10 months) and has been reworked as a new show
entitled "On the Verge of the Millennium" (both French and English versions),
which began airing on April 1, 1996. The Company stopped airing the Stallone
show on March 31, 1996 due to its poor performance. For the three months ended
March 31, 1996, the Exitos infomercial generated net revenues of $763,789 (27%),
the Jojo infomercial generated net revenues of $1,374,865 (50%), and the
Stallone show generated net revenues of $623,179 (23%). Chargebacks for the
three months ended March 31, 1996 and 1995 amounted to $511,061 and $917,476,
respectively. The decrease in chargebacks results primarily from the decrease
in revenues and the increase, as a percentage of sales, relates to the Stallone
Show which airs in the United States where chargebacks have historically been
higher than in Canada. To date, the Company has experienced a significantly
lower chargeback rate on Canadian revenue than on revenues derived from shows
airing in the United States.
Cost of sales decreased by $1,449,216 or 31% for the three months ended
on March 31, 1996 to $3,165,058 from $4,614,274 for the three months ended
March 31, 1995 and as a percentage of sales increased to 114% for the three
months ended March 31, 1996 from 76% for the three months ended March 31, 1995.
The dollar decrease was primarily due to reduced revenues. The percentage
increase resulted from the decrease in revenues relative to media costs which
remained relatively constant for both the Exitos and JoJo shows. In addition
the media, telephone transport, and service bureau costs were significantly
higher on the Stallone show as a percentage of sales. These higher than
anticipated costs as a percentage of revenues were the main reason for
termination of the Stallone show. General and administrative expenses were
$919,793 and $987,499 for the three months ended March 31, 1996 and 1995,
respectively, a decrease of $67,706 or 7% in the 1996 period. General and
administrative expenses as a percentage of sales increased to 33% for the three
months ended March 31, 1996 from 16% for the nine months ended March 31, 1995.
The increase in general and administrative expenses as a percentage of sales
was due primarily to relatively constant fixed costs spread over lower net
revenue compared to the prior period.
8
<PAGE> 9
Interest expense was $21,071 and $94,241 for the three months ended March 31,
1996 and 1995, respectively, reflecting the decrease in outstanding balances of
loans from West Interactive Corporation ("West"), the Company's service
provider, and others and the issuance and repayment of the Debentures in
January 1995 and in June 1995.
The net loss for the three months ended March 31, 1996 was $1,183,103 as
compared to a net profit of $206,180 for the three months ended March 31, 1995,
a decrease of $1,389,283 or 674%. Net losses for the three months ended March
31, 1996 were attributable to the poor performance of the Stallone show, lower
sales revenues from the Jojo infomercial prior to the replacement show ("On The
Verge of the Millennium"), the loss of revenue from discontinuing the airing
of the Exitos show in Puerto Rico, and lower sales revenues from the Exitos
show prior to the replacement show ("En Pos del Milenio").
LIQUIDITY AND CAPITAL RESOURCES
During the three months ended March 31, 1996, net cash used in operating
activities was $1,154,121, which resulted primarily from the net loss of
$1,183,103. Net cash used in operating activities for the three months ended
March 31, 1995 was $602,298, which resulted primarily from an increase in
accounts receivable of $494,905, an increase in prepaid media of $315,558, an
increase in deferred production costs of $143,292 and a decrease in accounts
payable/bank overdrafts of $315,462, partially offset by net earnings of
$206,180, an increase in the provision for debts of $221,777, and an increase in
the provision for income taxes of $243,847.
Cash flow used in investing activities, which was the result of investing
in other assets and purchases of furniture, fixtures, and equipment, was $35,587
for the three months ended March 31, 1996. Cash used in investing activities
during the three months ended March 31, 1995 was $15,938 which was the results
of purchases of furniture, fixtures and equipment.
Cash provided by financing activities for the three months ended March 31,
1996 was $14,529. This consisted principally of the decrease in the deposit
with West of $485,435. This was partially offset by reductions in bank
overdrafts of $206,065 and repayment of loan to service provider of $268,173.
Cash provided by financing activities for the three months ended March 31, 1995
was $648,695. This consisted principally of the proceeds from the issuance of
the debentures in the amount of $1,125,000 in a private placement in January
1995. This was partially offset by the increase in the deposit with West of
$534,417.
The Company's cash balance at March 31, 1996 was $142,430, working capital
was ($589,334), and the ratio of current assets to current liabilities was .68
as compared to $1,317,609, $162,199, and 1.07, respectively, at December 31,
1995. The ratio of current assets to current liabilities is an indication of
the Company's ability to pay its liabilities when due. The decrease in each
item from December 31, 1995 to March 31, 1996 was substantially due to the
losses incurred in the quarter ended March 31, 1996.
The Company, through its subsidiaries, maintains one-year agreements with
West for advances against accounts receivable collections, currently through
five separate agreements providing for an aggregate credit amount up to
$9,000,000 ($3,000,000 of which relates to facilities for new programs which
are not currently in use) at an interest rate of prime plus 3%. These
agreements are generally renewed annually upon the same terms, except that the
available credit amount may vary. Two of these agreements (as to $4,000,000)
expired in February 1996
9
<PAGE> 10
and one (as to $3,000,000) expired in March 1996. All agreements were renewed
upon the same terms. The remaining agreement, for the balance of $2,000,000,
expires in June 1996. Advances are made at the discretion of the service
provider and range from 75% to 80% of qualified receivables. Amounts advanced
are due upon demand and are collateralized by the accounts receivable
collections and by a guaranty of the Company's president who is also the
Company's principal stockholder. As of December 31, 1995 and March 31, 1996 the
Company's account receivable due from West was $799,039 and $486,260,
respectively. Total amount of advances payable to West as of December 31, 1995
and March 31, 1996 totaled $740,844 and $472,671, respectively. West also
withholds deposits determined at its discretion, which at December 31, 1995 and
March 31, 1996 were in amounts of $863,256 and $377,827, respectively. It is
anticipated that the Company, for cash flow purposes, will seek to continue this
accounts receivable financing for existing and new programs which feature
pay-per-call services, because collections may take up to 60 days from the date
that the revenues are generated. To date, the Company has experienced
collection of revenues from West within 60 days, subject to withholding for
chargebacks. Chargebacks may vary by program, based principally on the nature
of the service offered, the target audience, and the market in which they are
aired. Chargebacks may occur well beyond the 60-day settlement cycle for 900
number receivables and West typically withholds some of the settled receivable
for chargebacks beyond such 60-day period.
Management of the Company anticipates that existing capital, accounts
receivable financing, and anticipated cash flow from operations will be
insufficient to fund the ongoing production of infomercials, as well as the
planned expansion of the Company. Such insufficiency is due to extraordinary
chargebacks in Puerto Rico and the less than anticipated revenues generated
from the Stallone Show. However, the Company has taken steps to reduce
overhead and to find joint venture partners and equity and/or debt investors to
continue to fund production of new infomercials. It has cut back general
spending, including travel, has deferred payment of part of the scheduled
January 1, 1996 rent increase under its Florida office lease until July 1996,
and is currently working with its landlord to find another tenant to sublet
some of its space. The Company has also terminated its lease in California as
of March 31, 1996, has cut back salaries by reducing its staff by six employees
and reduced the salaries of its remaining employees to half-pay for a four week
period ending May 10, 1996. The Company will continue to look for ways to
reduce or eliminate overhead. The Company has obtained a $500,000 loan from
West, its service bureau, collateralized by its 1995 Federal Tax refund. The
loan is comprised of two $250,000 notes of which $400,000 has been received to
date. The Company currently has no firm commitments whereby it may obtain any
additional external funding. However, the Company is currently in negotiations
to obtain additional external funding, which will include marketing funds for
the joint venture in Mexico.
If the Company is unable to generate significant revenues from its two new
infomercials and is unable to otherwise obtain additional external funding, the
Company anticipates that cash on hand plus revenues from its current
infomercials will be sufficient to sustain operations at is reduced overhead
levels until July 31, 1996. Based on the limited results to date, the Company
believes its two new infomercials ("On The Verge of the Millennium" and "En Pos
del Milenio") will generate sufficient cash flow to sustain the Company's
operations for up to five months without additional capital investment. The
Company might also have sufficient revenues to produce short forms. Significant
new program development, however, would require additional capital. The Company
has no significant commitments for capital expenditures or other major expense
items, except for the Company's anticipated joint venture in Mexico.
10
<PAGE> 11
TRENDS
During fiscal year 1995, revenues were generated from the Exitos shows
during the eight-month period in which the shows were aired in Puerto Rico,
while no revenues from Puerto Rico will be generated in fiscal year 1996.
Therefore, it is possible that if the new programs are not successful, revenues
for the fiscal year 1996 will be lower than fiscal year 1995. Moreover, there
can be no assurance that profit margins will not decrease as such new programs
are added. New programs may also involve the sale of products, which
management anticipates will mean higher cost and inventory carrying costs.
The combination of the loss for the fiscal year ended December 31, 1995
with the loss for the first quarter ended March 31, 1996 has caused the
Company's auditors to express doubt as to the Company's ability to continue as
a going concern. The Company has addressed this situation with severe
reductions in overhead described above, continuing efforts to reduce or
eliminate certain overhead expenses, and efforts to obtain external equity debt
or joint venture funding. Furthermore, with the introduction of the new
Spanish infomercial, "En Pos del Milenio" and the new JoJo infomercial, "On The
Verge of the Millennium", the Company feels it can recover in the fiscal year
1996.
Because the Stallone Show did not perform to the anticipated standards of
profitability, the Company has reduced its staff from 23 employees to 18
employees effective April 5, 1996. General and administrative expenses will
increase if additional personnel needs to be hired to implement new programs.
FORWARD LOOKING STATEMENTS
Except for the historical information set forth in this management
discussion, the matters discussed herein are forward looking statements
based on current expectations. Actual results may differ materially based on
the relative success or failure of current programs, the outcome of pending
litigation described in Item 1 of Part II of this Form 10QSB, and the Company's
success or failure in obtaining external funding.
11
<PAGE> 12
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On July 28, 1995, suit was filed in Baltimore County Circuit Court. The
Plaintiffs are Jacqueline Stallone and Universal Psychic Network, Inc.
("UPNI"), a subsidiary of Integrated Communication Network, Inc. The
defendants are JTK Technologies, Inc., L.J. Marketing, Inc., Jeffrey Augen and
Joel Katz. UPNI has an exclusive contract with Jacqueline Stallone for
advertising, publishing, and promotion purposes with respect to providing
astrological services to the public on 800 and 900 telephone lines. UPNI
became aware of JTK Technologies wrongfully using the name, image, and likeness
of Jacqueline Stallone by advertising a Jacqueline Stallone Club and using 800
and 900 telephone lines. L.J. Marketing is a sister company of JTK
Technologies and participated in the wrongful use of Jacqueline Stallone's
name, image, and likeness. Augen and Katz are officers, directors, and owners
of JTK Technologies, Inc. and L.J. Marketing, Inc. and participated in the
misappropriation. The suit is for an injunction restraining any further use of
Jacqueline Stallone's name, likeness, or image, for damages, misappropriation
of name, likeness and image and unfair competition. Defendants agreed to an
injunction and an order granting the injunction was entered on/or about October
12, 1995 and remains in effect. The court has ordered claims for damages to be
arbitrated and UPNI has appealed the ruling.
Yves-Alain Duranleau and Richard Bernier sued Empowergenics, Inc., Ormazd,
Inc., Integrated Communication Network, Inc., David Greenberg and Bell Canada.
The action was instituted in the Superior Court for the Province of Quebec,
District of Montreal, Canada, in the Case No. 96-04-18 (16:51). The case was
filed April 16, 1996. The underlying facts are that Empowergenics, Inc., a
Delaware corporation, a one hundred percent owned subsidiary of Integrated
Communication Network, Inc. entered into two agreements with Yves-Alain
Duranleau, one, an Infomercial Agreement and the other a Publishing Agreement,
both dated October 18, 1995. Under the Infomercial Agreement, Empowergenics
intended to develop and produce a marketing campaign to promote the sale of a
book entitled "La vie le Rappelle a la Vie", one or more audio tapes featuring
Mr. Duranleau and other products to be developed in the future including video
tapes featuring Mr. Duranleau, seminars hosted by Mr. Duranleau and possibly
other products. The Publishing Agreement gave Empowergenics the right to the
book, "La vie le Rappelle a la Vie." The Infomercial Agreement contained a "Pay
or Play" provision which required the Company only to pay Mr. Duranleau the
amounts set forth in the Agreements if it did not wish to use Mr. Duranleau's
service or develop the project. Mr. Bernier, under the Agreement, was entitled
to 30% of the sums to be paid to Mr. Duranleau, but the Company had no
obligation to pay Mr. Bernier directly. The lawsuit alleges that Empowergenics
breached the contract with Mr. Duranleau by not going forward with the project
thereby causing Mr. Duranleau and Mr. Bernier to suffer CN$413,000 worth of
damages of various sorts. ICNI and David Greenberg are included in the lawsuit
because the plaintiffs alleged that they were induced to enter into the
Agreements by representations of Mr. Greenberg that they would be joining the
ICNI Group of which Ormazd, Inc., a wholly owned subsidiary of ICNI, is a part.
Ormazd, Inc. was included in the lawsuit because the plaintiffs alleged that
Ormazd, Inc, is directed by ICNI and was held up as a successful project of the
ICNI Group, thereby inducing the plaintiffs to enter into the Agreements. The
relief that has been sought was, first, an immediate pre-judgment seizure of
funds belonging to any of the defendants in the possession of Bell Canada in
order to secure payment of any judgment entered against the defendants, and
second, damages in the amouns of CN$289,100 for Yves-Alain Duranleau and
CN$123,900 for Richard Bernier. The Company is vigorously defending this
lawsuit and believes that this claim is without merit and will not have material
impact on the Company.
12
<PAGE> 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.22 West Interactive Corporation - Demand Note
11.2 Statement re: computation of per share earnings
27 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K
None
13
<PAGE> 14
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
has caused this amendment to report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: May 13, 1996
INTEGRATED COMMUNICATION NETWORK, INC.
By /s/ Donald F. Mann
----------------------------
Donald F. Mann
Chief Financial Officer
14
<PAGE> 1
EXHIBIT 10.22
WEST INTERACTIVE CORPORATION
DEMAND NOTE
15
<PAGE> 2
[LOGO]
INTERACTIVE CORPORATION 402/573-1000 800/232-1800
- - -------------------------------------------------------------------------------
9223 Bedford Avenue - Omaha, NE 68134-4725
DEMAND NOTE
$250,000.00 OMAHA, NEBRASKA
- - ----------- APRIL 11, 1995
FOR VALUE RECEIVED, the undersigned promises to pay to the order of West
Interactive Corporation on demand the sum of Two Hundred and Fifty Thousand
Dollars and No/100 Cents ($250,000.00).
To secure payment of this Note, Integrated Communication Network, Inc.
hereby pledges to West Interactive Corporation and grants to West Interactive
Corporation a security interest in Integrated Communication Network, Inc.'s 1995
Federal Tax Refund, as evidenced by the attached Universal Commercial Code
Financing Statement. The security interest granted herein is given in addition
to, and not in limitation or modification of, any other security interest now or
hereafter given by Integrated Communication Network, Inc., Inc. or any party in
connection with the indebtedness evidenced hereby or any other indebtedness of
Integrated Communication Network, Inc. to West Interactive Corporation.
The undersigned waives presentment, demand notice of dishonor, protest,
and all other notices whatsoever, and agrees that the holder hereof may, from
time to time, extend or renew this Note for any period and grant any releases,
compromises, or indulgences with respect to this Note or any extension or
renewal thereof, or any security therefore, or to any party liable thereunder
or hereunder, all without notice to or consent of the undersigned, and without
affecting the liability of the undersigned hereunder.
The undersigned reserves the right to prepay both principal and interest
without penalty.
Integrated Communication Network, Inc.
By: /s/ David Greenberg
---------------------------------------
David Greenberg, CEO
Witness: /s/ Donald Mann Date: /s/ 4/25/96
----------------------------------- ----------------------------
Address: /s/ 444 Brickell Avenue, Miami, FL 33131
-----------------------------------------------------------------------
<PAGE> 1
EXHIBIT 11.2
INTEGRATED COMMUNICATION NETWORK, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
1996 1995
------------ ----------
Computation for Statement of Operations
<S> <C> <C>
Primary earnings (loss) per share:
Net earnings (loss) $(1,183,103) $ 206,180
=========== ==========
Shares
Weighted average number of common
shares outstanding 2,355,000 1,300,000
Less: Contingent shares not considered
outstanding because conditions for their
issuance have not been met(*) - (330,000)
Add: Dilutive effect of options and war-
rants (as determined by the application
of the treasury stock method) - 255,000
----------- ----------
Weighted average common and common
equivalent shares 2,355,000 1,225,000
=========== ==========
Earnings (loss) per common and common
equivalent shares $ (.50) $ .17
=========== ==========
Fully diluted earnings (loss) per share:
Net earnings (loss) as per primary
calculation above $(1,183,103) $ 206,180
=========== ==========
Weighted average number of shares
outstanding per primary computation
above 2,355,000 1,225,000
Additional dilutive effect of contingent
shares** - 330,000
------------ ----------
Weighted average number of shares
outstanding, as adjusted 2,355,000 1,555,000
============ ==========
Fully diluted (loss) earnings per share(**) $ (.50) $ .13
============ ==========
</TABLE>
(*) In accordance APB15 Interpretations #88 and #91 the conditions necessary
for the release of the performance shares have not been met and therefore
these shares are excluded from the computation of primary earnings per
share. The performance shares were retired effective December 31, 1995.
(**) Under Interpretations #88 and #91, the calculation of fully diluted
Earnings Per Share assumes the attainment of the required earnings level
and this calculation is dilutive for the three months ended
March 31, 1995.
16
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 142,430
<SECURITIES> 0
<RECEIVABLES> 486,260
<ALLOWANCES> 0
<INVENTORY> 94,355
<CURRENT-ASSETS> 1,251,182
<PP&E> 129,695
<DEPRECIATION> 28,780
<TOTAL-ASSETS> 1,914,177
<CURRENT-LIABILITIES> 1,840,516
<BONDS> 0
0
0
<COMMON> 23,550
<OTHER-SE> 50,111
<TOTAL-LIABILITY-AND-EQUITY> 1,914,177
<SALES> 2,784,127
<TOTAL-REVENUES> 2,784,127
<CGS> 3,165,058
<TOTAL-COSTS> 4,084,851
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,071
<INCOME-PRETAX> (1,314,103)
<INCOME-TAX> (131,000)
<INCOME-CONTINUING> (1,183,103)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,183,103)
<EPS-PRIMARY> (.50)
<EPS-DILUTED> (.50)
</TABLE>
