FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
-------------------------------
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 (IRS Employer
incorporation or organization) Identification No.)
1506 N.E. 162ND STREET
NORTH MIAMI BEACH, FLORIDA 33162
(Address of principal executive offices) (Zip Code)
305-947-3010
(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 August 15, 1997, there were 2,196,212 Shares of Common Stock, $.001
par value per Share, outstanding.
<PAGE>
TEL-COM WIRELESS CABLE TV CORPORATION
Index to Form 10-QSB
For Quarter Ended June 30, 1997
PART I. FINANCIAL INFORMATION PAGE NO.
--------
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets 3
Statements of Operations 4
Statements of Cash Flows 5
Notes to Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 10
PART II. OTHER INFORMATION 12
SIGNATURES 12
2
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<TABLE>
<CAPTION>
ITEM 1. FINANCIAL INFORMATION
TEL-COM WIRELESS CABLE TV CORPORATION
CONSOLIDATED BALANCE SHEETS
ASSETS
JUNE 30, 1997 DECEMBER 31, 1996
(unaudited)
------------ -----------------
<S> <C> <C>
CURRENT ASSETS
Cash and Cash Equivalents $ 17,826 $ 26,618
Restricted Cash 0 346,400
Accounts Receivable - trade 24,302 18,739
Prepaid consulting fees (Note) 494,000 988,000
Prepaid Expenses 3,708 44,552
------------ ------------
TOTAL CURRENT ASSETS 539,836 1,424,309
PROPERTY & EQUIPMENT, net (Note) 1,449,694 1,365,235
LICENSES, net (Note) 5,400,867 5,458,444
OTHER ASSETS (Note) 135,647 127,335
------------ ------------
TOTAL ASSETS $ 7,526,044 $ 8,375,323
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 354,144 $ 153,276
Accrued Liabilities 16,845 16,787
Short Term Loans 19,504 22,711
Notes Due To Stockholders 123,000 2,008,000
Notes Due To Bank 0 361,000
------------ ------------
TOTAL CURRENT LIABILITIES 513,493 2,561,774
License Fees Payable 951,479 951,479
Long-Term Debt 2,000,000 0
------------ ------------
TOTAL LIABILITIES 3,464,972 3,513,253
STOCKHOLDERS' EQUITY
Preferred Stock 3 1
Common Stock 2,196 2,196
Additional Paid-in Capital 7,344,720 7,544,720
Accumulated Deficit (3,285,847) (2,284,847)
------------ ------------
4,061,072 5,262,070
Less: Stock subscription receivable 0 (400,000)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY $ 7,526,044 $ 8,375,323
------------ ------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATMENTS
3
<PAGE>
<TABLE>
<CAPTION>
TEL-COM WIRELESS CABLE TV CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- --------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
REVENUE 262,314 125,232 $ 488,422 $ 208,445
COST OF SALES 31,404 22,806 68,657 37,895
----------- ----------- ----------- -----------
GROSS PROFIT 230,910 102,426 419,765 170,550
EXPENSES
Total General Expenses 667,178 446,622 1,358,673 726,332
----------- ----------- ----------- -----------
OPERATING LOSS (436,268) (344,196) (938,908) (555,782)
Other Income(Expense)
Interest Income 273 39,061 4,342 66,130
Interest Expense (50,682) (41,619) (66,435) (47,619)
----------- ----------- ----------- -----------
Total Other Income(Expense) (50,409) (2,558) (62,093) 18,511
----------- ----------- ----------- -----------
NET LOSS ($ 486,677) ($ 346,754) ($1,001,001) ($ 537,271)
=========== =========== =========== ===========
WEIGHTED NUMBER OF
COMMON SHARES OUTSTANDING 2,196,212 1,996,212 2,196,212 1,971,768
=========== =========== =========== ===========
NET LOSS PER COMMON SHARE ($ 0.22) ($ 0.17) ($ 0.46) ($ 0.27)
=========== =========== =========== ===========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATMENTS
4
<PAGE>
<TABLE>
<CAPTION>
TEL-COM WIRELESS CABLE TV CORPORATION
CONSOLIDATED BALANCE SHEETS
SIX MONTHS ENDED
JUNE 30,
--------------------------
1997 1996
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss ($1,001,001) ($ 537,271)
Adjustments to reconcile net loss to net cash
used in operating activities
Amortization & Depreciation Expense 157,838 53,224
(Decrease)Increase in Accounts Receivable (5,563) 5,461
(Decrease)Increase in Prepaid Expenses 534,848 (29,098)
(Decrease)Increase in Accounts Payable 200,868 (39,493)
(Decrease)Increase in Other Accrued Liabilities 58 (20,793)
----------- -----------
NET CASH USED IN
OPERATING ACTIVITIES (112,952) (567,970)
=========== ===========
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of Equipment (185,786) (548,861)
Acquisition of Licenses 0 (1,304,632)
Acquisition of Investments 0 (505,000)
Proceeds from Cashing Government Securities 0 1,000,625
Proceeds from Sale of Investments 346,400 0
(Decrease)Increase in Deposits (697) 60,700
----------- -----------
NET CASH USED IN
INVESTING ACTIVITIES 159,917 (1,297,168)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Bank Loans 0 1,475,000
Proceeds from Officers' Loans 115,000 0
Repayment of Bank Loans (361,000) (1,060,458)
Loan to Stockholder (6,550) (6,550)
Proceeds from Sale of Stock 200,000 0
Repayment of Short Term Loans (3,207) 0
----------- -----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES (55,757) 407,992
----------- -----------
NET DECREASE IN CASH (8,792) (1,457,146)
CASH AT BEGINNING OF PERIOD 26,618 1,767,285
----------- -----------
CASH AT END OF PERIOD $ 17,826 $ 310,139
=========== ===========
</TABLE>
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
5
<PAGE>
TEL-COM WIRELESS CABLE TV CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Six Months Ended June 30, 1997
(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:
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30,__ JUNE 30,__
--------------------- ---------------------
1997 1996 1997 1996
--------------------- ---------------------
<S> <C> <C> <C> <C>
Cash paid during the period:
Interest $ 50,682 41,619 66,435 47,619
NOTE 3 PROPERTY & EQUIPMENT
Property and equipment are summarized as follows:
Leasehold improvements $ 12,667
Furniture, fixtures & office 246,769
Equipment 1,511,603
-----------------
Subtotal 1,771,039
Less accumulated depreciation 321,345
-----------------
Net property & equipment $ 1,449,694
=================
NOTE 4 LICENSES & OTHER ASSETS Other assets are summarized as
follows:
Licensing fees $ 1,560,855
Costa Rican licenses 4,000,000
Deposits 126,698
Organization costs 4,000
Loans to Stockholders 0
-----------------
Subtotal 5,691,553
Less accumulated amortization 161,588
-----------------
Net other assets $ 5,529,965
=================
</TABLE>
6
<PAGE>
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 was 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.
On March 28, 1996, the Federal Communications Commission
completed its auction of authorizations to provide single channel
and Multichannel Multipoint Distribution Service (MMDS) in 493
Basic Trading Areas. The Company won bids in three markets;
Hickory-Lenoir-Morganton, NC; Wausau-Rhinelander, WI; and Stevens
Point-Marshfield-Wisconsin Rapids, WI. The total amount bid for
these licenses, after a 15% small business credit, was
$3,046,212. 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 10% of the down payment for acquisition of these
licenses. On June 28, 1996, the Federal Communications Commission
called for the second 10% of the down payment before the
authorizations were issued. The Company had until July 8, 1996,
to submit a balance of payment of $304,622 to satisfy the initial
down payment total. Under confirmation of receipt of down
payment, the FCC would issue the authorizations. On July 8, 1996,
payment of $118,936 was submitted to the Federal Communications
Commission to cover payment on the two Wisconsin markets of
Stevens Point and Wausau. License fees payable to the FCC of
$951,479 for the two Wisconsin licenses will be made over the
next ten years in quarterly payments. Interest charged for this
installment plan would be based on the rate of the effective
ten-year US Treasury obligation at the time of the issuance of
the authorization plus two and one half (2 1/2) percent.
On September 1, 1996, the unpaid license fee payable of $171,175
for the Hickory, NC, license was defaulted. According to Section
21.959 in the FCC MDA Audit Information Package, a maximum
default payment of three percent of the defaulting bidder's bid
amount would be due to the FCC. This amount, $65,544, was charged
to operations in 1996. The remaining amount, $120,142, of the
deposit submitted to the FCC for Hickory, NC, was recorded as a
refundable deposit at December 31, 1996. In addition, the Company
will be liable to the FCC for the difference between the
Company's winning bid and a lower winning bid received by the FCC
in a subsequent auction of this license. The FCC has not yet
announced plans to re-auction the Hickory, NC, license.
COSTA RICA LICENSES
-------------------
On February 7, 1996, the Company signed two agreements for the
acquisition from Melvin Rosen (the "Seller") of three 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 three 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
7
<PAGE>
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 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.
The Company operates its wireless cable pay television business
in Costa Rica through another wholly owned subsidiary corporation
known as TelePlus, S.A. ("TelePlus"). The Company acquired
TelePlus from Seller on February 23, 1996, and in consideration
thereof, agreed to pay Seller a lump sum amount equal to $50
times the number of subscribers under contract with TelePlus in
excess of the 1,700 subscribers purchased from Seller at a date
one year after TelePlus has six pay television channels
broadcasting to the public. TelePlus began broadcasting six pay
television channels in October 1996. Currently, TelePlus has
approximately 4,000 subscribers.
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.
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 June 30,
1997, was approximately 230 Colons per 1 US Dollar.
NOTE 7 LOAN RESTRUCTURE
On February 12, 1997, the Company and Seller entered into an
agreement providing for the restructuring of the $2 million note
given by the Company to Seller as payment for the acquisition of
Canal 19. This agreement was amended and restated by a letter
agreement dated February 21, 1997. The agreement, as amended and
restated, provided for the Company to make a payment of $625,000
toward reduction of the principal balance of the note on or
before March 7, 1997. The remaining principal balance, plus
accrued interest thereon, was to be paid on or before February
23, 1998, provided that, with an additional payment of $100,000,
the Company could extend such maturity date for an additional
period of six months. The Company paid Seller a deposit of
$50,000 on February 24, 1997. The $50,000 deposit was to be
applied toward the principal balance of the note provided,
however, that if the $625,000 principal reduction payment was not
timely paid, Seller could retain such deposit. The Company failed
to pay the $625,000 payment, the $50,000 was retained.
On May 19, 1997, the Company entered into a Debt Restructuring
Agreement with the Seller for the restructuring of the $2 million
debt into a convertible debenture to mature in 12 months with
interest to accrue at 12% per annum (7% to be paid monthly and 5%
at maturity). The principal amount of the debenture is $2 million
plus certain expenses owed or reimbursable to Seller at the issue
date of the debenture. At the Company's option, $1 million of
this amount may be extended for an additional period of 12 months
with interest to accrue on such amount at 15% per annum (8% to be
paid monthly in arrears and 7% to be paid at maturity). The
Seller has the option, exercisable within six months of the issue
date of the debenture, to elect or extend the maturity date of
the debenture of an additional 12 months, in which event,
commencing on the first day of the 13th month after the issue
date of the debenture, one-half of the principal amount will
accrue
8
<PAGE>
interest at 12% per annum (7% to be paid monthly in arrears and
5% to be paid at maturity) and one-half of the principal amount
will accrue interest at 15% per annum (8% to be paid monthly in
arrears and 7% to be paid at maturity).
As consideration for this debt restructuring, the Company agreed
to issue to the Seller (i) 180,000 shares of the Company's common
stock with piggy back registration rights, (ii) a warrant to
purchase 500,000 shares at $1.00 per share, and (iii) a warrant
to purchase 500,000 shares at $5.00 per share. Under the
Agreement, the Seller received the right to nominate two members
to the Company's Board of Directors until such time as Seller
exercised the conversion rights under the debenture and received
a release from any liability in connection with the Costa Rica
acquisition.
The debenture is convertible by Seller into the Company's common
stock at any time after the issue date prior to payment of the
debenture on at least 30 days' advance notice to the Company. The
conversion price is equal to the lesser of (1) $.50 per share of
common stock or (2) a price per share of common stock equal to
the average of the closing "bid" for the Company's common stock
as reported on NASDAQ for the five trading days immediately prior
to the conversion date. The Company also will reserve for
issuance upon conversion a sufficient number of shares of common
stock and will register such reserved shares and maintain an
effective registration statement for such shares.
If the Company defaults in its obligations under the debenture,
then Seller will be entitled to a transfer of all stock of Canal
19, Grupo and TelePlus and the right to purchase all capital
assets of the Company in Costa Rica for fair market value. The
capital assets of TelePlus consist primarily of subscriber
contracts, transmission equipment and subscriber reception
equipment necessary for the operation of the Costa Rican wireless
cable television service.
Upon consummation of the debt restructuring, two existing
directors and the Company's President and Chief Executive Officer
resigned from their positions, Seller and his designee were
appointed to the Company's Board of Directors and Seller was
appointed the Company's President and Chief Executive Officer. As
a result, a change in control of the Company is deemed to have
taken place.
NOTE 8 FINANCING - STOCK PURCHASE
On November 25, 1996, the Company accepted a Subscription
Agreement for a total of 500 shares of its Series A Convertible
Preferred Stock at a price of $1,000 per share (the "Preferred
Shares"), 250 to Amber Capital Corporation and 250 to Investor
Resource Services, Inc. (the "Buyers") for a total Subscription
price of $500,000. Each Buyer delivered $50,000 at closing
($100,000 total), and a promissory note for $200,000. Each buyer
paid an addition $50,000 ($100,000 total) against the Note on
January 8, 1997. The balance of the Note, which was due on
January 31, 1997, was not paid, and the Company and the Buyers
have agreed to terminate the balance of the Subscription
Agreements and cancel the Notes.
On March 14, 1997, Aurora Capital purchased a total of 100 shares
of the Company's Series B Convertible Preferred Stock for a total
price of $100,000.
9
<PAGE>
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company operates wireless cable television systems in
LaCrosse Wisconsin (the "LaCrosse System") and in the Central American country
of Costa Rica (the "Costa Rican System"). Since beginning its initial wireless
cable television system in LaCrosse in September 1994, the Company has reached a
level of programming services delivered to approximately 1,300 subscribers as of
June 30, 1997. On February 23, 1996, the Company began providing services for
approximately 1,712 subscribers in its newly acquired Costa Rican company
TelePlus, S.A. It relaunched a newly defined system on September 15, 1996.
Installation of new subscribers into the system began after all existing
subscribers who desired continuing services were upgraded. As of June 30, 1997,
the Costa Rican System had approximately 4,000 subscribers. On March 28, 1996,
the Company successfully bid for authorizations to 3 markets;
Hickory-Lenoir-Morganton, NC; Wausau-Rhinelander, WI; and Stevens
Point-Marshfield-Wisconsin Rapids, WI. The areas in Wisconsin are designated as
future wireless cable television systems. The NC market has been abandoned.
RESULTS OF OPERATIONS
THREE MONTHS ENDING JUNE 30, 1997
---------------------------------
The Company had revenues of $262,314 for the three months ended
June 30, 1997, compared to $125,232 during the same period in 1996. Revenues
were primarily generated from subscription fees, installation charges and
subscriber cable equipment sales. The Costa Rican System generated approximately
58% of the revenue during the 1997 period, while the LaCrosse System generated
approximately 42%.
Cost of sales for both the Costa Rica System and the LaCrosse
System for the three months ended June 30, 1997, were $31,404, reflecting
expanded operations in Costa Rica. During the comparable period of 1996, the
Company had a cost of sales of $22,806.
Expenses for the three months ended June 30, 1997, consisted
primarily of broadcast costs, general and administrative expenses, and interest
expense. The Costa Rican System, the LaCrosse System and corporate office had
total operating expenses of $667,178 for the three month period. During the
comparable period of 1996, the Company had operating expenses of $446,622. This
increase in operating expenses reflects the increase of costs relative to cable
hardware accessories necessary to accommodate the increase in subscriber
services and the additional expense of the Costa Rican System in comparison to
the previous year. It also reflects the inherent costs associated with
expansion.
The Company had a net loss of $486,677 for the three months ended
on June 30, 1997, in comparison to $346,754 during the same period in 1996. This
increase in net loss reflects the continued build-up of operations in Costa
Rica, the operation of the LaCrosse System, and the professional services
necessary to assure compliance with FCC, SEC, and Costa Rican regulation.
SIX MONTHS ENDING JUNE 30, 1997
--------------------------------
The Company had revenues of $488,422 for the six months ended
June 30, 1997, compared to $208,445 during the same period in 1996. Revenues
were primarily generated from subscription fees, installation charges and
subscriber cable equipment sales. The Costa Rican System generated approximately
56% of this revenue during the 1997 period, while the LaCrosse System generated
approximately 44%.
Cost of sales for both the Costa Rica System and the LaCrosse
System for the six months ended June 30, 1997, were $68,657, reflecting expanded
operations in Costa Rica. During the comparable period of 1996, the Company had
a cost of sales of $37,895.
10
<PAGE>
Expenses for the six months ended June 30, 1997, consisted
primarily of broadcast costs, general and administrative expenses, and interest
expense. The Costa Rican System, the LaCrosse System and corporate office had
total operating expenses of $1,358,673 for the six month period. During the
comparable period of 1996, the Company had operating expenses of $726,332. This
increase in operating expenses reflects the increase of costs relative to cable
hardware accessories necessary to accommodate the increase in subscriber
services and the additional expense of the Costa Rican System in comparison to
the previous year and reflects expansion costs.
The Company had a net loss of $1,001,001 for the six months ended
June 30, 1997, in comparison to $537,271 during the same period in 1996. This
increase in net loss reflects the continued build-up of operations in Costa
Rica, the operation of the LaCrosse System, and the professional services
necessary to assure compliance with FCC, SEC, and Costa Rican regulation.
LIQUIDITY
- - - ---------
On June 30, 1997, the Company had property and transmission
equipment valued at a cost of $1,449,694 net of adjusted depreciation as
compared to $1,218,805 at June 30, 1996, and $1,365,235 at December 31, 1996.
This increase in property over the past year primarily reflects the
capitalization of the Costa Rican System.
During the six months ended June 30, 1997, the Company used cash
primarily to fund operating losses, purchase transmission equipment and for
costs accompanying its capitalization of the Costa Rican System. Cash decreased
from $26,618 on December 31, 1996, to $17,826 on June 30, 1997 primarily due to
the payment of accounts receivable during this period.
See Note 8 to the Notes to the Consolidated Financial Statements
included in Part I, Item 1 of this Report, with respect to a debt restructuring
and contemporaneous change in control which occurred in May 1997.
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 eight employees domestically and twenty-three
employees in Costa Rica. There are additional plans to increase employees and
expand operations in Costa Rica.
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 sufficient 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
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. The Company is currently exploring
various sources of additional financing, but has no commitments in this regard.
There can no assurance that additional financing, if required, will be available
on terms acceptable to the Company, if at all. Failure to secure additional
financing might have a material adverse effect on the Company.
11
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ITEMS 2. CHANGES IN SECURITIES
PART II OTHER INFORMATION
See Note 8 to the Notes to Consolidated Financial Statements included
in Part I, Item 1 of this Report with respect to shares of Common Stock,
Warrants and a Convertible Debenture issued in connection with a May 1997 debt
restructuring.
As of July 11, 1997, the Company entered into a two-year Consulting
Agreement with an investment banking firm (the "Consultant"), under which the
Consultant will provide investment banking services to the Company. As
consideration for such services, the Company agreed to grant to the Consultant
an aggregate of 500,000 one-year warrants exercisable at $1.00 per share,
200,000 one-year warrants exercisable at $2.50 per share and 100,000 three-year
warrants exercisable at $2.50 per share, together with demand and piggy-back
registration rights.
The foregoing securities were all issued without registration under the
Securities Act of 1933, as amended, by reason of the exemption from registration
afforded by the provisions of Section 4(2) thereof, as transactions by an issuer
not involving a public offering, each recipient of securities having delivered
appropriate investment representations to the Company with respect thereto and
having consented to the imposition of restrictive legends upon the certificates
evidencing such securities. No fees or commissions were paid in connection with
the issuance of the securities.
ITEM 6 EXHBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS: FINANCIAL DATA SCHEDULE (FOR SEC USE ONLY)
(b) REPORTS ON FORM 8-K: The Company filed the following
Current Reports on Form 8-K during the second quarter of 1997:
In June 1997, the Company filed an amendment to its current
Report on Form 8-K to disclose a debt restructuring and contemporaneous change
in control.
In accordance with the requirements of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
TEL-COM WIRELESS CABLE TV CORPORATION
Date: August 19, 1997 By: /S/ SAMUEL H. SIMKIN
--------------------
Samuel H. Simkin, Vice President
and Principal Financial Officer
12
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- - - ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1997
<CASH> 17,826
<SECURITIES> 0
<RECEIVABLES> 24,302
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 538,836
<PP&E> 1,771,039
<DEPRECIATION> 321,345
<TOTAL-ASSETS> 7,526,044
<CURRENT-LIABILITIES> 513,493
<BONDS> 2,000,000
0
3
<COMMON> 2,196
<OTHER-SE> 4,061,072
<TOTAL-LIABILITY-AND-EQUITY> 7,526,044
<SALES> 488,422
<TOTAL-REVENUES> 488,422
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<TOTAL-COSTS> 68,657
<OTHER-EXPENSES> 1,358,673
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<INTEREST-EXPENSE> 62,093
<INCOME-PRETAX> (1,001,001)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,001,001)
<EPS-PRIMARY> (.46)
<EPS-DILUTED> (.46)
</TABLE>
