11
FORM 10-QSB/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________
[X] AMENDMENT TO QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended March 31, 1996
_______________________________
Commission File Number 0-25896
TEL-COM WIRELESS CABLE TV CORPORATION
(Exact name of registrant as specified in its charter)
Florida 59-3175814
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
501 N. Grandview Avenue, Suite 32118
201 (Zip Code)
Daytona Beach, Florida
(Address of principal executive
offices)
904-226-9977
(Registrant's telephone number, including area code)
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 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___
On March 31, 1996, there were 1,996,212 Shares of Common Stock,
$.001 par value per Share, outstanding.
TEL-COM WIRELESS CABLE TV CORPORATION
Index to Form 10-QSB/A
For Quarter Ended March 31, 1996
PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial
Statements
3
Balance Sheets 4
Statements of Operations 5
Statements of Cash Flows 6
Notes to Financial
Statements 8
Item 2. Management's
Discussion 10
PART II. OTHER INFORMATION 10
10
Item 1. Legal
Proceedings 10
Item 2. Changes in
Securities 10
Item 3. Defaults Upon 10
Senior
Securities 10
Item 4. Submission of
Matters to a Vote
of Security Holders 10
Item 5. Other
Information 11
Item 6. Exhibits and
Reports on
Form 8-K
SIGNATURES
INDEX TO EXHIBITS
2
TEL-COM WIRELESS CABLE TV CORPORATION
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31,1996 December
31, 1995
(Unaudited)
CURRENT ASSETS
Cash and Cash Equivalents $1,307,200 $1,767,285
Investment securities 1,000,625 1,000,625
Accounts Receivable - trade 24,732 29,667
Prepaid Expenses 105,709 83,062
TOTAL CURRENT ASSETS 2,438,266 2,880,639
PROPERTY & EQUIPMENT, NET (Note 3) 857,442 716,658
INVESTMENT SECURITIES 755,000 250,000
OTHER ASSETS (Note 4) 4,431,767 431,022
TOTAL ASSETS $8,482,475 $4,278,319
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $11,402 $73,054
Accrued Liabilities 22,306 40,981
Note to Bank 1,475,000 0
Notes Due to Stockholders 2,008,000 8,000
TOTAL CURRENT LIABILITIES 3,516,708 122,035
STOCKSHOLDERS' EQUITY
Common Stock 1,996 1,875
Additional Paid-in Capital 6,056,921 5,057,042
Accumulated Deficit (1,093,150) (902,633)
TOTAL STOCKSHOLDERS' EQUITY 4,965,767 4,156,284
TOTAL LIABILITIES & STOCKSHOLDERS' $8,482,475 $4,278,319
EQUITY
SEE NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
TEL-COM WIRELESS CABLE TV CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
Three Months
Ended
March 31,
1996 1995
(Unaudited) (Unaudited)
REVENUE $83,213 $20,115
COST OF SALES 15,089 41,955
GROSS PROFIT 68,124 (21,840)
EXPENSES
Total General Expenses 279,710 125,974
OPERATING LOSS (211,586) (147,814)
Other Income(Expense)
Interest Income 27,069 933
Interest Expense (6,000) 0
Total Other Income(Expense) 21,069 933
NET LOSS ($190,517) ($146,881)
WEIGHTED AVG. NO. OF COMMON SHARES 1,923,889 725,000
OUTSTANDING
NET LOSS PER COMMON SHARE ($0.10) ($0.20)
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TEL-COM WIRELESS CABLE TV CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months
Ended
March 31,
1996 1995
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING
ACTIVITIES
Net Loss ($190,517) ($146,881)
Adjustments to reconcile net
loss to net cash
used in operating activities
Amortization & Depreciation 26,612 37,612
expense
Decrease in Accounts 4,935 0
Receivable
Increase in Prepaid Expenses (22,647) 0
(Decrease)Increase in (61,652) 5,100
Accounts Payable
(Decrease)Increase in Other (18,675) 12,329
Accrued Liabilities
(Decrease)Increase in 0 26,499
Accrued Interest
NET CASH USED IN
OPERATING ACTIVITIES (261,944) (65,341)
CASH FLOWS FROM INVESTING
ACTIVITIES
Acquisition of Equipment (164,141) (40,340)
Acquisition of Licenses (1,000,000) 0
Acquisition of Investments (505,000) 0
Increase in Deposits (4,000) 0
NET CASH USED IN
INVESTING ACTIVITIES (1,673,141) (40,340)
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from Bank Financing 1,475,000 0
Deferred Offering Costs 0 (72,521)
NET CASH PROVIDED BY
FINANCING ACTIVITIES 1,475,000 (72,521)
NET DECREASE IN CASH (460,085) (178,202)
CASH AT BEGINNING OF PERIOD 1,767,285 226,644
CASH AT END OF PERIOD $1,307,200 $48,442
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TEL-COM WIRELESS CABLE TV CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 1996
(Unaudited)
NOTE 1 BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited,
consolidated financial statements include all adjustments
necessary for a fair presentation of financial position and
the results of operations and cash flows for the periods
presented. They include statements of all company
affiliates, domestic and foreign. Certain information and
note disclosures normally included in financial statements
prepared according to generally accepted accounting
principles have been condensed or omitted.
NOTE 2 SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental disclosure of cash flow information:
Three Months
Ended March 31,
1996 1995
Cash paid during the period:
Interest 6,00 0
0
On February 7, 1996, the company acquired two broadcasting
companies in Costa Rica together with related equipment and
contracts for a total of $4 million.
The non cash components of these transactions are as follows:
Three Months
Ended March 31,
1996 1995
Common Stock issued in
exchange for common stock
of Grupo Masteri, S.A. 1,000,0 0
00
Note Payable issued to Stockholder
in exchange for common stock
of Televisora Canal Diecinueve 2,000, 0
000
NOTE 3 PROPERTY AND EQUIPMENT
Property and equipment are summarized as follows:
Leasehold improvements $ 9,185
Furniture, fixtures & 58,953
office
Equipment 881,533
Less accumulated 92,229
depreciation
Net property & equipment $ 857,442
NOTE 4 OTHER ASSETS
Other assets are summarized as follows:
Licensing fees $ 371,493
Costa Rica licenses 4,000,000
Deposits 70,560
Organization costs 4,000
Less accumulated 14,286
amortization
Net other assets $ 4,431,767
NOTE 5 COMMITMENTS
Licenses
During 1993, the Company entered into agreements for the
lease and purchase of certain channel licenses and for the
lease and purchase of transmitting equipment and tower site
usage in LaCrosse, Wisconsin.
Pursuant to the agreements, the Company has incurred $366,535
of costs related to the channel licenses. The cost of the
channel licenses is amortized on a straight-line basis over
40 years beginning when the Company commenced operations.
The Company has satisfied its lease requirements to the
lessors, and the lessors transferred ownership of licenses
and assigned the tower rights to the Company for $100. The
transfer of ownership of the licenses is subject to approval
by the Federal Communications Commission (FCC). On March 4,
1996, the FCC approved the transfer of ownership of licenses
to the Company. The leases terminated upon the FCC's
approval of the transfers. An offer of the Company has a
minority interest (less than 1%) in the entity leasing the
licenses to the Company.
Costa Rica Licenses
On February 7, 1996, the Company signed two agreements for
the acquisition of two companies that together hold 18
frequency licenses for broadcast of pay television (or
"wireless cable") services in Costa Rica together with
related equipment and contracts with subscribers for pay
television services. These agreements were amended and
restated on February 22, 1996. The closing of the two
acquisitions was consummated on February 23, 1996.
In the first acquisition, the Company, through Fepeca
deTournon, S.A. ("FdT"), a new, wholly owned Costa Rican
subsidiary corporation of the Company, acquired all of the
outstanding shares of common stock of Televisora Canal
Diecinueve, S.A., a Costa Rican corporation ("Canal 19"), for
a total purchase price of $3 million; $1 million of which was
paid at the closing and the balance OF $2 million in the form
of a note due to be paid one year after the closing with
interest at the rate of 3.6% per annum. The payment of this
deferred amount is secured by all of the acquired shares of
stock of Canal 19 and of Grupo Masteri, discussed below.
In the second acquisition, the Company, through FdT, acquired
all of the outstanding shares of common stock of Grupo
Masteri, S.A., a Costa Rican corporation ("Grupo"), for a
total purchase price of $1 million paid at the closing in the
form of restricted shares of the Company's common stock
representing approximately six (6) percent of the company's
total outstanding shares. The Company has agreed to provide
the seller certain registration rights with respect to these
shares. As of March 31, 1996, these shares have not been
registered.
The cost of the channel licenses is amortized on a straight-
line basis over 40 years beginning when the acquisition of
the licenses was consummated.
Loans
On February 15, 1996, the Company entered into agreement with
Norwest Bank in LaCrosse, Wisconsin, for two commercial
notes. The larger note is for $1 million to cover the
initial payment for the acquisition of Canal 19. This note
holds an annual interest rate equal to .50% in excess of the
prime rate as established by Norwest Bank Minnesota. The due
date of the loan is 360 days. Interest is payable quarterly
commencing May 15, 1996, and continues on the same day of
each succeeding quarter and on the due date. This loan is
secured by the $1 million US Government obligation held by
the Company at Norwest Investment Services.
The second note, also dated February 15, 1996, is for the sum
of $475,000, and is slated to be used for improvements to the
Costa Rican operation. It carries an annual rate of 7.48%
and interest is payable quarterly commencing May 15, 1996.
It is secured by the Savings account held by the Company at
Norwest Bank in LaCrosse, Wisconsin.
NOTE 6 COSTA RICAN REVENUES AND EXPENSES
Costa Rican revenues and expenses were calculated monthly
using the currency exchange rate for Costa Rican Colons into
United States Dollars determined at the close of the business
day on the last day of each applicable month. The exchange
rate on March 29, 1996, was 201.23 Colons per 1 US Dollar.
NOTE 7 SUBSEQUENT EVENTS
On March 28, 1996, the Federal Communications Commission
completed its auction of authorizations to provide single
channel and multichannel Multipoint Distribution Service
(MDS) in 493 Basic Trading Areas. The Company won bids in 3
markets; Hickory-Lenoir-Morganton, NC; Wausau-Rhinelander,
WI; and Stevens Point-Marshfield-Wisconsin Rapids, WI. On
April 5, 1996, the Company submitted a payment of $239,502,
that, coupled with its initial deposit of $65,120, made up
the initial down payment for acquisition of these licenses.
Balances of payments will be made over the next ten years.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Since the Company started operations in its initial wireless
cable television system in LaCrosse, Wisconsin (the "LaCrosse System")
in September 1994, the Company reached a level of programming services
delivered to approximately 1,032 subscribers by March 31, 1996. On
February 23, 1996, the Company began providing services for
approximately 1,712 subscribers in its newly acquired Costa Rican
company TelePlus, S.A. (the "Costa Rican System").
Three Months Ended 1996 versus 1995
The Company had revenues of $83,213 for the three months
ended March 31, 1996, comparable to $20,115 during the same period in
1995. Revenues were primarily generated from subscription fees,
installation charges and subscriber cable equipment sales. During the
35 days of operations of the Costa Rican System, the Company released
revenues from this existing system of $15,281. The LaCrosse System had
revenues of $67,932, related to subscription services. This increase
of 70.38% is attributable to an increased subscriber base in the
System. The Company had $27,069 from its various security investments.
Expenses for the three months ended March 31, 1996, consisted
primarily of broadcast costs, general and administrative expenses and
interest expense. During the 35 days of operations of the Costa Rican
System, the Company realized operating expenses of $10,101 and cost of
sales of $211. The LaCrosse System and Corporate office had operating
expenses of $269,610 and the LaCrosse System had a cost of sales of
$15,089. During the comparable period of 1995, the Company had
operating expenses of $125,974 and cost of sales of $41,955. This
increase of 53.27% in operating expenses reflects the increase of costs
relative to programming and cable hardware necessary to accommodate the
increase in subscriber services. It also reflects the inherent costs
associated with expansion. The reduction in cost of sales during this
period in 1996 reflects the decrease in initial marketing and
promotional costs incurred during the same period in 1995. The Company
had a net loss of $190,517 at the end of March 31, 1996, in comparison
to $146,881 during the same period in 1995. This increase in loss
reflects the commencement of operations in Costa Rica and the continued
growth of the LaCrosse System.
Unused net operating losses for income tax purposes, expiring
in 2010, of approximately $1,093,000, are available at March 31, 1996,
for carry forward against future years' taxable income. The tax
benefit of these losses of approximately $372,000 has been offset by a
valuation allowance due to it being more likely than not that the
deferred tax assets will not be realized.
Liquidity
At the end of March 31, 1996, the Company had property and
transmission equipment valued at a cost of $857,442 net of adjusted
depreciation as compared to $400,485 at March 31, 1995, and $716,658 at
December 31, 1995. This increase in property reflects the
capitalization of the Costa Rican System and the attending costs of
subscriber growth in the LaCrosse System. Property acquisition will
continue as the launch date of June 15, 1996, for the Costa Rican
System approaches.
During the three months ended March 31, 1996, the Company
used cash primarily to fund operating losses, purchase transmission
equipment and for costs accompanying its acquisition of the Costa Rican
System. Cash decreased from $1,767,285 on December 31, 1995, to
$1,307,200 on March 31, 1996, primarily due to the use of cash for
operations in the amount of $261,944 and the acquisition of equipment
in the amount of $164,141. The company financed the Costa Rican System
acquisition by bank loans of $1,475,000.
The Company projects an official launch date of the upgraded
Costa Rican System on June 15, 1996. During the next twelve months,
the Company intends to continue expanding both subscriber bases in
Costa Rica and LaCrosse, Wisconsin.
Although incremental equipment and labor installation costs
per subscriber are incurred after a subscriber signs up for the
Company's wireless cable service, such costs are incurred by the
Company before it receives fees from the subscribers and are only
partially offset by installation charges. To sustain subscriber growth
beyond its initial base in the LaCrosse System and the Costa Rican
System, the Company will need to generate enough operating revenues to
enable it to continue to invest in subscriber reception equipment and
installation or raise additional debt or equity capital. In addition,
to further develop and launch additional wireless cable systems, the
Company will need to raise additional capital. There can be no
assurance that operating revenues will be sufficient to sustain
subscriber growth or that additional financing, if required, will be
available on terms acceptable to the Company, if at all.
Profitability will be determined by the Company's ability to
maximize revenue from subscribers while maintaining variable expenses.
Significant increases in revenues will generally come from subscriber
growth. Currently, the Company has thirteen employers domestically and
nineteen employees in Costa Rica. There are no plans to increase
employees in either location.
PART II OTHER INFORMATION
ITEM 1 Legal Proceedings: None
ITEM 2 Changes in Securities: None
ITEM 3 Defaults Upon Senior Securities: None
ITEM 4 Submission of Matters to a Vote of Security Holders:
None
ITEM 5 Other Information: None
ITEM 6 Exhibits and Reports on Form 8-K: Exhibits and disclosure of
Reports on Form 8-K were inadvertently omitted from the prior
report and are set forth below.
(a) Exhibits. See Index to Exhibits for a list of those
Exhibits filed as part of this Report.
(b) Reports on Form 8-K. During the quarter ended March 31,
1996, Tel-Com Wireless Cable TV Corporation (the
"Company") filed a Current Report on Form 8-K dated
February 12, 1996, to report the acquisition of two
Costa Rican companies under Item 2 - Acquisition or
Disposition of Assets. The Current Report was amended
by an Amendment to Current Report on Form 8-K/A dated
February 23, 1996, to report amendments to the
agreements for the acquisition of the two companies and
the closing of the acquisitions under Item 2 -
Acquisition or Disposition of Assets. Financial
statements were filed with Amendment No.2 to Current
Report on Form 8-K/A dated May 20, 1996.
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.
TEL-COM WIRELESS CABLE TV CORPORATION
Date: July 8, 1996 By: /s/ FERNAND L. DUQUETTE
Fernand L. Duquette, President
and Principal Financial Officer
INDEX TO EXHIBITS
Exhibit 2 Plans of Acquisition
2.1 Agreement for Purchase and Sale of Stock dated February
7, 1996, among the Company and Televisora Canal
Diecinueve, S.A., and Melvin Rosen, was filed as Exhibit
2.1 to the Current Report on Form 8-K dated February 12,
1996, and is incorporated herein by reference.
2.2 Amended and Restated Agreement for Purchase and Sale of
Stock dated February 22, 1996, among the Company and
Televisora Canal Diecinueve, S.A., and Melvin Rosen, was
filed as Exhibit 2.1 to Amendment to Current Report on
form 8-K/A dated February 23, 1996, and is incorporated
herein by reference.
2.3 Agreement for Purchase and Sale of Stock dated February
7, 1996, among the Company and Grupo Masteri, S.A., and
Melvin Rosen, was filed as Exhibit 2.2 to the Current
Report on form 8-K dated February 12, 1996, and is
incorporated herein by reference.
2.4 Amended and restated Agreement for Purchase and Sale of
Stock dated February 22, 1996, among the Company and
Grupo Masteri, S.A., and Melvin Rosen was filed as
Exhibit 2.2 to the Amendment to Current Report Form 8-
K/A dated February 23, 1996, and is incorporated herein
by reference.
