SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 2 TO CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: May 20, 1996.
Tel-Com Wireless Cable TV Corporation
(Exact Name of Registrant as specified in its charter)
Florida 0-25896 59-3175814
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(State of Incorporation) (Commission file No.) (IRS Employer
ID Number)
501 Grandview Avenue, Suite 201, Daytona Beach, FL 32018
(Address of Principal Offices)
Registrant's telephone number: 904-226-9977
This Report amends the Current Report dated February 12, 1996, as amended
by Amendment to Current Report on Form 8-K/A dated February 23, 1996.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Financial statements required by Item 310(a) of Regulation S-B are filed
herewith.
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TEL-COM WIRELESS CABLE TV CORPORATION AND SUBSIDIARY
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements illustrate the effect of the
acquisition ("Pro Forma") on the Company's financial position and results of
operations. The pro forma consolidated balance sheet is based on the historical
balance sheets of the Company and TelePlus, S.A. ("TelePlus") as of December 31,
1995 included elsewhere herein, and assumes the acquisition took place on that
date. The pro forma consolidated statements of operations for the year ended
December 31, 1995 are prepared based on the historical statements of operations
of the Company and Teleplus for year ended December 31, 1995, respectively
presented elsewhere herein. The pro forma consolidated statement of operations
assume the acquisition took place on January 1, 1995.
On February 23, 1996, the Company through its wholly-owned subsidiary TelePlus
completed the acquisition of two companies: (i) Televisor Canal Diecinueve, S.A.
by acquiring all of the outstanding shares of common stock for a total purchase
price of $3 million, $1 million of which was paid at the closing and the balance
is to be paid one year after the closing with interest at the rate of 3.6% per
annum. and (ii) Grupo Masteri, S.A. by acquiring all of the outstanding shares
of common stock for a total purchase price of $1 million paid at the closing in
the form of restricted shares of the Company's common stock.
The accompanying pro forma consolidated financial statements should be read in
connection with the historical financial statements of the Company and TelePlus
included elsewhere herein.
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<TABLE>
Tel-com Wireless Cable TV Corporation and Subsidiary
Unaudited Pro Forma Consolidated Balance Sheet
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<CAPTION>
Historical Pro Forma
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Tel-Com TelePlus
December 31, December 31, Acquisition Elimination
1995 1995 Entries Entries Consolidation
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<S> <C> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 1,767,28 $ - $ (1,000,000) $ - $ 767,285
Investment securities 1,000,625 - - - 1,000,625
Accounts receivable - trade 29,667 7,493 - - 37,160
Prepaid expenses 83,062 - - - 83,062
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Total current assets 2,880,639 7,493 - - 2,888,132
Property and equipment 716,658 - - - 716,658
Investment securities 250,000 - - - 250,000
Investment in subsidiary - - 4,000,000 (4,000,000)
Other assets 431,022 - - 4,027,839 4,458,861
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Total assets $ 4,278,319 $ 7,493 $ 3,000,000 $ 27,839 $ 7,313,651
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Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ 8,000 $ - $ 2,000,000 $ - 2,008,000
Accounts payable 73,054 11,910 - - 84,964
Accrued liabilities 40,981 23,422 - - 64,403
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Total current liabilities 122,035 35,332 2,000,000 - 2,157,367
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Stockholders' equity:
Common stock 1,875 26,224 121 (26,224) 1,996
Additional paid-in capital 5,057,042 - 999,879 - 6,056,921
Accumulated deficit (902,633) (40,471) - 40,471 (902,633)
Losses resulting from foreign currency (13,592) - 13,592 -
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Total stockholders' equity 4,156,284 (27,839) 1,000,000 27,839 5,156,284
Total liabilities and
stockholders' equity $ 4,278,319 $ 7,493 $ 3,000,000 27,839 $ 7,313,651
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See accompanying notes.
</TABLE>
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<TABLE>
Tel-com Wireless Cable TV Corporation and Subsidiary
Unaudited Pro Forma Consolidated Statement of Operations
<CAPTION>
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Historical Pro Forma
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Tel-Com TelePlus
Year End Year End
December 31, December 31,
1995 1995 Adjusments Consolidated
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<S> <C> <C> <C> <C>
Revenue $ 155,399 $ 190,593 $ - $ 345,992
Cost of sales 38,244 - 38,244
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Gross profit (loss) 117,155 190,593 - 307,748
Operating expenses 777,725 214,248 100,000 1,091,973
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Operating loss (660,570) (23,655) (100,000) (784,225)
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Other income (expense):
Interest income 116,958 - - 116,958
Interest expense (43,900) - - (43,900)
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73,058 - - 73,058
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Loss before extraordinary loss (587,512) (23,655) (100,000) (711,167)
Extraordinary loss on early
extinguishment of debt (164,447) - - (164,447)
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Net loss $ (751,959) $ (23,655) $ (100,000) $ (875,614)
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Weighted average number of
shares outstanding 1,460,274 - 121,212 1,581,486
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Loss before extraordinary loss
per common share $ (0.40) $ (0.45)
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Extraordinary loss on early extinguishment
of debt per common share $ (0.11) $ (0.10)
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Loss per share per common share $ (0.51) $ (0.55)
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</TABLE>
See accompanying notes.
<PAGE>
TEL-COM WIRELESS CABLE TV CORPORATION AND SUBSIDIARY
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
1. Introduction On February 23, 1996 Tel-Com Wireless Cable TV
Corporation ("Tel-Com" or the "Company") through its wholly
owned subsidiary TelePlus, S.A. ("TelePlus") completed the
acquisition of two companies: (i) Televisor Canal
Diecinueve, S.A. by acquiring all of the outstanding shares
of common stock for a total purchase price of $3 million, $1
million of which was paid at the closing and the balance is
to be paid one year after the closing with interest at the
rate of 3.6% per annum. and (ii) Grupo Masteri, S.A. by
acquiring all of the outstanding shares of common stock for
a total purchase price of $1 million paid at the closing in
the form of 121,212 restricted shares of the Company's
common stock at a price of $8.25 per share. This acquisition
was accounted for as a purchase.
The accompanying pro forma consolidated balance sheet as of
December 31, 1995 gives effect to the TelePlus acquisition as
if it had occurred on that date. The accompanying pro forma
consolidated statement of operations for the year ended
December 31, 1995 gives effect to the transaction as if it
had occurred on January 1, 1995.
2. Pro Forma Proforma adjustments for the year ended December 31, 1995
Adjustments are presented to reflect the Adjustments amortization of
broadcast licenses acquired from TelePlus over 40 years.
Weighted average number of shares outstanding includes a pro
forma adjustment to reflect the 121,212 shares of Tel-Com's
common stock issued in connection with the acquisition of
TelePlus (See Note 1)
<PAGE>
OPERATIONS ACQUIRED FROM MELVIN ROSEN,
GRUPO MASTERI, S.A. AND
TELEVISORA CANAL DIECINUEVE, S.A.
FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
(INDEPENDENT AUDITORS' REPORT)
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INDEPENDENT AUDITORS' REPORT
To The Board of Directors and Shareholders
Tel-Com Wireless Cable TV Corporation
We have audited the accompanying balance sheet of the operations acquired from
Melvin Rosen, Grupo Masteri, S.A. and Televisora Canal Diecinueve, S.A. as of
December 31, 1995, and the related statements of operations and cash flows for
the years ended December 31, 1995 and 1994. These financial statements are the
responsibility of Mr. Rosen and of the management of the entities mentioned
above. Our responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the operations acquired from
Melvin Rosen, Grupo Masteri, S.A. and Televisora Canal Diecinueve, S.A. as of
December 31, 1995, and the results of its operations and its cash flows for the
years ended December 31, 1995 and 1994 in conformity with generally accepted
accounting principles.
/s/ MADRIGAL LEON & ASSOCIATES
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March 13, 1996
<PAGE>
Operations Acquired from Melvin Rosen, Grupo Masteri, S.A. and
Televisora Canal Diecinueve, S.A.
Balance Sheet
December 31, 1995
(Amounts Expressed in United States Dollars)
ASSETS
Accounts Receivable from Subscribers (Note 4) US$ 7,493
Transmission and Other Equipment (Note 6) -
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TOTAL ASSETS US$ 7,493
==========
LIABILITIES AND DEFICIT
LIABILITIES
Accrued Labor Benefits (Note 5a) US$ 17,703
Deferred Subscription Income (Note 4) 5,719
Accounts Payable to Related Parties (Note 8) 11,910
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TOTAL LIABILITIES $ 35,332
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Contingencies (Note 9)
DEFICIT
Losses Resulting from Foreign Currency
Translation (Note 3) $(13,592)
Common Stock of Grupo Masteri, S.A.,
100 shares outstanding, with nominal value
of 10,000 colones each 17,483
Common Stock of Televisora Canal Diecinueve, S.A.,
100 shares outstanding, with nominal value
of 5,000 colones each 8,741
Accumulated Deficit from Operations
Acquired from Melvin Rosen, Grupo
Masteri, S.A. and Televisora Canal Diecinueve, S.A. (40,471)
-----------
TOTAL DEFICIT $(27,839)
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TOTAL LIABILITIES AND DEFICIT US$ 7,493
===========
The accompanying notes are an integral part of the financial statements
<PAGE>
Operations Acquired from Melvin Rosen, Grupo Masteri, S.A. and
Televisora Canal Diecinueve, S.A.
Statements of Operations
For the Years Ended December 31, 1995 and 1994
(Amounts Expressed in United States Dollars)
1995 1994
REVENUES
Revenues from Operations (Note 4) US$ 190,593 82,591
=========== ======
OPERATIONAL EXPENSES
Salaries and commissions 77,488 32,691
Labor benefits (Note 5a) 31,568 12,638
Utilities (Note 5b) 15,012 5,978
Rent (Note 5c) 19,200 19,200
Transmission rights (Note 5d) 38,926 16,885
Depreciation (Note 6) - -
Connection expenses 13,464 5,079
Equipment and vehicle maintenance 6,824 3,522
Other 11,766 3,414
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TOTAL OPERATIONAL EXPENSES 214,248 99,407
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NET LOSS (Note 7) US$ (23,655) (16,816)
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The accompanying notes are an integral part of the financial statements
<PAGE>
Operations Acquired from Melvin Rosen, Grupo Masteri, S.A. and
Televisora Canal Diecinueve, S.A.
Statements of Cash Flows
For the Years Ended December 31, 1995 and 1994
(Amounts Expressed in United States Dollars)
1995 1994
Cash Flow Used in Operating Activities:
Net Loss US$ (23,655) (16,816)
Changes in Operating Assets and
Liabilities:
Accounts Receivable (7,493) -
Accounts Payable to Related Parties 5,057 16,923
Liability for Labor Benefits 17,703 -
Decreasxe (Increase) in Losses from Foreign
Currency Translation 2,669 (107)
Deferred Subscription Income 5,719 -
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Net Cash Used in Operating Activities - -
Cash Flow from Investing Activities - -
Cash Flow from Financing Activities - -
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Net Increase in Cash - -
Cash at the Beginning of the Year - -
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Cash at the End of the Year US$ - -
============ =======
The accompanying notes are an integral part of the financial statements
<PAGE>
Operations Acquired from Melvin Rosen, Grupo Masteri, S.A. and
Televisora Canal Diecinueve, S.A.
Notes to Financial Statements
For the Years Ended December 31, 1995 and 1994
(1) ORGANIZATION AND OPERATIONS
The accompanying financial statements are the result of transmitting cable
television in Costa Rica through operations acquired from Melvin Rosen, Grupo
Masteri, S.A. (GM) and Televisora Canal Diecinueve, S.A. (CD). The shares of
stock of GM and CD were acquired, although none of their liabilities were
assumed. Such operations did not have any significant activity before 1994.
(2) FINANCIAL STATEMENT PRESENTATION
The results of operations present the assets, liabilities, deficit, revenues
and expenses associated with the activity of transmitting cable television in
Costa Rica through the operations mentioned above, which required estimations,
allocations and proforma adjustments in quantifying certain expenses.
(3) FOREIGN CURRENCY TRANSLATION
The accounting records are maintained in the local currency, the Costa Rican
colon, and these financial statements are stated in US dollars. For the
conversion of the assets and liabilities, the current purchase and sales
exchange rates, respectively, were used (194.52 per US$ for purchases of US
dollars and 195.19 per US$ for sales of US dollars). Revenues and expenses were
translated at the weighted average purchase exchange rates for each year. The
shares of common stok of GM and of CD were translated at their historical
values as of October 1986.
(4) REVENUES FROM OPERATIONS
The revenues from operations relate to subscription fees and to revenues from
the installation of equipment and the sale of antennas. Subscription fee income
ceases to be recognized when the subscriber is more than four months in arrears.
The amount of such unrecognized income in 1995 was $17,234. Prepaid
subscriptions are recognized as income in the months that the services are
rendered, and the portion not earned is shown as deferred subscription income
in the balance sheet.
(5) OPERATIONAL EXPENSES
Operational expenses include all the expenses and commitments incurred during
the years ended December 31, 1995 and 1994 identified by the administrators
are being related to the cable television activities for the operations
acquired.
1
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a) LABOR BENEFITS
The accrued labor benefits, mandated by law, are: year-end bonus, vacations,
severance and social security, and are calculated using the percentages
established by the labor laws of Costa Rica (8.33%, 4.16%, 8.33% and 22%
respectively) applied to salaries, commissions and other remuneration associated
with the cable television operations.
b) UTILITIES
The expenses for utilities shown in the financial statements comprise telephone,
electricity and water expenses estimated by the administrators based on the
estimated proportional usage of the cable television operations in relation to
the rest of the activities carried on by the entities from which the operations
presented in these financial statements were acquired.
c) RENT
The physical installations used by the cable television operations are owned
by one of the related parties from which the operations were acquired, who
provided them free of rent. However, in the financial statements a monthly
rental cost of US$ 1,600 was used in order to record the pro forma rent expense.
d) TRANSMISSION RIGHTS
The cost of the rights to transmit three existing cable channels, FOX, Cine
Canal and Cartoon, were calculated and included in the financial statements
based on information supplied by the administrators as to the number of
subscribers and the rates for the transmission rights applicable, which were
as follows:
Cine Canal (used in 1995 only) : US$ 2.00 per subscriber per month, with a
minimum monthly cost of US$ 2,000.
FOX (began in November 1995) : US$0.40 per subscriber per month, with a
minimum of 1,000 subscribers per month.
Cartoon (both 1994 and 1995) : US$0.60 per subscriber per month, with a
minimum of 2,000 subscribers per month.
ABC (only in 1994) : US$ 250 per month.
For the year ended December 31, 1994 the cost of the rights of transmission
were estimated by applying the same relative proportion of these costs to
revenues as in 1995.
(6) TRANSMISSION AND OTHER EQUIPMENT
The transmission and other equipment used by the cable television operations
was acquired at no cost from related parties from which the operations presented
in these financial statements were acquired. Therefore, the results of
operations do not include any cost related to the depreciation of such
equipment, nor to its
2
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insurance.
(7) PROFORMA INCOME TAXES
The proforma income taxes (which do not apply, because there are losses),
would have been calculated based on the tax rates applicable to corporate
taxpayers for each of the years presented, which range from 10% to 30%
depending on a company's revenue level.
(8) ACCOUNTS PAYABLE TO RELATED PARTIES
These accounts payable correspond to the net cost of operations which were
not paid for by resources provided by the cable operations, and were assumed
by related parties. These liabilities are not being assumed by Tel-Com
Wireless Cable TV Corporation.
(9) CONTINGENCIES
The income tax returns of Grupo Masteri, S.A. and Televisora Canal Diecinueve,
S.A. for the years ended September 30, 1991 through 1995 inclusive, are subject
to review by the tax authorities of Costa Rica. However, such audits have not
taken place.
<PAGE>
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 hereunto duly authorized.
Tel-Com Wireless Cable TV Corporation
Date: May 20, 1996 By: /s/ Dennis J. Devlin
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Vice President
