UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended Sept 30, 1997
OR
____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission file number 33-853963
INTRATEL GROUP, LTD.
--------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 72-1265159
-------- ----------
State or Other Jurisdiction of IRS Employer Identification
Incorporation or Organization Number
28050 US Hwy 19 N - Suite 202, Clearwater, FL 34621
-------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(813)-797-9000
--------------------------------------------------
Registrant's Telephone Number, Including Area Code
Not Applicable
--------------
(Former Name, Former Address, and Formal Fiscal Year, if Changed
Since Last Report.)
Check whether the issuer(1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past
12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No .
------- -------
The number of shares outstanding of each of the issuer's classes of
common shares, as of the latest practicable date:
Class
Preferred Stock, $.0001 Outstanding at Sept. 30, 1997
par value
Common Stock, $.0001 1,527,620
par value -----------------------------
Outstanding Securities
1
<PAGE>
INTRATEL GROUP, LTD.
INDEX TO FORM 10-QSB
INDEX
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Financial Statements:
Condensed Balance Sheets as of Sept 30, 1997 and 1
December 31, 1996
Condensed Statements of Operations for the Three Months 2
Ended Sept 30, 1997 and 1996
Condensed Statement of Stockholders' Equity 3
Condensed Statements of Cash Flows for the Three Months 4
Ended Sept 30, 1997 and 1996
Notes to Condensed Financial Statements 5
Item 2. Management's Discussion and Analysis of 5
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 6
Item 2. Changes in Securities 6
Item 3. Defaults Upon Senior Securities 6
Item 4. Submission of Matters to a Vote of Security-Holders 6
Item 5. Other Information 6
Item 6. Exhibits and Reports on Form 8-K 6
SIGNATURES 7
0
<PAGE>
INTRATEL GROUP, LTD.
CONDENSED BALANCE SHEET
(Unaudited)
SEPT 30, DECEMBER 31,
1997 1996
---------- ----------
ASSETS
------
CURRENT ASSETS:
Cash $ 134,635 $ 188,365
Investments - 1,180
Accounts Receivable 350,550 308,633
Prepaid Expenses 6,723 109
---------- ----------
Total Current Assets 491,908 498,287
FIXED ASSETS:
Equipment and Furniture 86,703 64,529
Accumulated Depreciation (37,681) (27,565)
---------- ----------
Net Cost 49,022 36,964
OTHER ASSETS:
Deposits 45,083
Organization Costs 100,000
Due From Infinet Software, Inc. 2,182,866 10,000
---------- ----------
TOTAL ASSETS $2,868,879 $ 545,251
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 342,708 $ 11,376
Accrued Expenses 212,762 199,491
Note Payable, Shareholder 1,174,155 15,000
Current Deferred Tax Liability 25,800 22,500
---------- ----------
Total Current Liabilities 1,755,425 248,367
---------- ----------
Deferred tax liability 7,300
Long Term Liability 4,118,514 10,000
---------- ----------
Total liabilities 5,881,239 258,367
========== ==========
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.0001 par value; 0 0
25,000,000 shares authorized;
none issued
Common stock, $.0001 par value; 153 153
100,000,000 shares authorized;
1,527,620 and outstanding
Treasury Stock (1,200,000)
Additional paid-in capital 205,943 205,943
Retained Earnings (2,018,456) 80,788
---------- ----------
Total stockholders' equity (3,012,360) 288,884
TOTAL LIABILITIES AND EQUITY $2,868,879 $ 545,251
========== ==========
See accompanying notes to condensed
consolidated financial statements.
1
<PAGE>
Intratel Group, LTD.
Condensed Consolidated Statements of Income
for the three months ended Sept 30, 1997 and 1996
1997 1996
---------- ----------
Revenues:
Commissions 367,154 685,155
Long Distance 171,210 -
Fees 553 -
---------- ----------
Total Revenues 538,917 685,155
---------- ----------
Cost of Sales:
Commission expense 233,843 400,000
Reseller and other costs 152,676 -
----------
Total cost of sales 386,519 -
---------- ----------
Gross profit 152,398 285,155
---------- ----------
Operating Expenses:
Selling and marketing 11,180 11,000
General and administrative 998,472 186,921
---------- ----------
Total operating expenses 1,009,652 197,921
---------- ----------
Income from operations (857,254) 87,234
---------- ----------
Other Income:
Interest Income 2,034 -
---------- ----------
Total other income 2,034 -
---------- ----------
Income before income taxes (855,220) 87,234
Income tax provision 0 0
---------- ----------
Net income (855,220) 87,234
========== ==========
Net Income per share (0.00) 0.06
========== ==========
Average common shares outstanding 1,527,620 1,527,620
========== ==========
The accompanying notes are an integral part of these condensed
consolidated financial statements.
2
<PAGE>
Intratel Group, LTD.
Condensed Consolidated Statement of Stockholders' Equity
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
---------------------- PAID-IN RETAINED TREASURY
SHARES AMOUNT CAPITAL EARNINGS STOCK
-------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996 1,527,620 $ 153 $(1,163,237) $ (912,268) (1,200,000)
Net Income for the nine
Months Ended Sept 30, 1997 0 0 0 (2,100,092)
---------- ---------- ---------- ----------- -----------
Balance, Sept 30, 1997 1,527,620 $ 153 (1,163,237) $(3,012,360) $(1,200,000)
========== ========== ========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
3
<PAGE>
Intratel Group, Ltd.
Condensed Consolidated Statements of Cash Flows
for the three months ended Sept 30, 1997 and 1996
1997 1996
---- ----
Cash flows from operating activities:
Net income (loss) (855,220) 87,234
Adjustment to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation 3,705 542
Deferred tax liability - -
Decrease (increase) in accounts
receivable (92,924) -
Decrease (increase) in prepaid expenses 1,185 -
Decrease in accounts payable and
accrued liabilities 119,466 (47,000)
(Decrease) increase in income
tax payable - -
Net cash (used in) provided by
operating activities (823,787) 134,776
---------- ----------
Cash flows from investing activities:
Due from Infinet and other (1,335,082) 0
---------- ----------
Net cash provided from
investing activities (1,335,082) 0
---------- ----------
Cash flows from financing activities:
Increase in notes payable - shareholders 74,155 0
Other Financing Activities 2,037,500 122,071
---------- ----------
Net cash from (used) in financing
activities 2,111,655 0
---------- ----------
Net (decrease) increase in cash (47,215) 256,847
----------
Cash, beginning of year 181,850 395
---------- ----------
Cash, end of year $ 134,635 $ 234,708
========== ==========
The accompanying notes are in integral part of these condensed
consolidated financial statements.
4
<PAGE>
Intratel Group, Ltd.
Notes to Condensed Consolidated Financial Statements
For the Three Month Periods Ended Sept 30, 1997 and 1996
1. Basis of Presentation:
In the opinion of the Company, the accompanying unaudited financial
statements contain all adjustments, consisting only of normal
recurring accruals, necessary to present fairly the Company's
financial position, results of operations and cash flows for the
periods presented. The results of operations for the interim periods
presented are not necessarily indicative of the results to be expected
for the full year.
The condensed financial statements should be read in conjunction with
the financial statements and the related disclosures contained in the
Company's Form 10-KSB dated May 14, 1997, filed with the Securities
and Exchange Commission.
2. Subsequent Event:
None
Item 2. Management's Discussion and Analysis of Plan of Operation
----------------------------------------------------------
The following discussion and analysis should be read in conjunction with
the Financial Statements and Notes thereto appearing elsewhere in this
report.
The following discussion contains certain forward -looking statements,
within the meaning of the "safe-harbor" provisions of the Private
Securities Litigation Reform Act of 1995, the attainment of which involve
various risks and uncertainties. Forward-looking statements may be
identified by the use of forward-looking terminology such as "may", "will",
"expect", "believe", "estimate", "anticipate", "continue", or similar
terms, variations of those terms or the negative of those terms. The
Company's actual results may differ materially from those described in
these forward-looking statements due to, among other factors, competition
in each of the Company's product areas, dependence on suppliers, the
Company's limited manufacturing experience and the evolving nature of the
Company's fiber optic technology.
Results of Operations
- ---------------------
For the quarter ended Sept 30, 1997 compared to the quarter ended
- ------------------------------------------------------------------
Sept 30, 1996
- -------------
Revenue from operations for the quarter ended Sept 30, 1997 ("1997") was
approximately $538,917, compared to approximately $685,155 for the quarter
ended Sept 30, 1996 ("1996"). This represents a 21% decrease or
approximately $146,238 from 1996. This decrease in revenues was mainly
attributable to conversion of accounts from marketing agreements to
accounts being directly billed by Intratel.
The gross margin remained constant at approximately 32.9% and 38.6% in 1997
and 1996, respectively. Management believes the gross margin may continue
to decrease due to conversion of business currently on marketing agreements
to being directly billed by Intratel.
Selling and Marketing Expenses were approximately $11,000 for the third
quarter of 1997 as compared to approximately $11,000 for the third quarter
of 1996.
General and administrative expenses were approximately $1,009,700 for 1997
compared to approximately $187,000 in 1996, an increase of approximately
539%. Increases in general and administrative expenses were mainly due to
the merger between Intratel and Intelicom International Corporation.
General and administrative costs are expected to remain high as planned
acquisitions in 1997 and 1998 continue to take place.
The Company had net other income of approximately $2034 for 1997 with
approximately $0 for 1996. The 1997 amounts were favorably impacted due to
additional interest earned on higher cash balances maintained during 1997
in interest bearing accounts.
Net income (loss) for the third quarter 1997 was $(855,220) as compared to
$87,234 for the third quarter of 1996. The decrease in net income was
attributable to additional costs associated with upcoming acquisitions and
increased administrative costs associated with a major change in the
independent contractor program and the associated marketing effort to
launch it.
Liquidity and Capital Resources
- -------------------------------
Intelicom's cash position at Sept 30, 1997 was approximately $134,635 as
compared to $188,000 at December 31, 1996. The Company had net working
capital of approximately $491,908 at Sept 30, 1997.
The Company believes that available cash, together with funds generated
from operations and it's ongoing funding process, will be sufficient to
finance the Company's working capital requirements as well as planned
capital additions.
5
<PAGE>
PART II
Item 1. Legal Proceedings
-----------------
Not Applicable
Item 2. Changes in Securities
---------------------
Not Applicable
Item 3. Defaults Upon Senior Securities
-------------------------------
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Not Applicable
Item 5. Other Information
-----------------
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) None
(b) No reports on Form 8-K were filed during the three
months ended Sept 30, 1997.
6
<PAGE>
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the
undersigned, thereunder duly authorized.
INTRATEL GROUP, LTD.
By: /s/ CHARLES R. BRINK . Date: October 8, 1997
-------------------------------------
Charles R. Brink
President
By: /s/ DAVID SPEZZA . Date: October 8, 1997
-------------------------------------
David Spezza
Vice President
7
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 134,635
<SECURITIES> 0
<RECEIVABLES> 2,685,222
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,819,857
<PP&E> 86,703
<DEPRECIATION> 37,681
<TOTAL-ASSETS> 2,868,879
<CURRENT-LIABILITIES> 1,755,425
<BONDS> 4,125,814
0
0
<COMMON> 153
<OTHER-SE> (3,012,207)
<TOTAL-LIABILITY-AND-EQUITY> 2,868,879
<SALES> 0
<TOTAL-REVENUES> 538,917
<CGS> 0
<TOTAL-COSTS> 386,519
<OTHER-EXPENSES> 1,009,652
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (2,034)
<INCOME-PRETAX> (855,220)
<INCOME-TAX> 0
<INCOME-CONTINUING> (855,220)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (855,220)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
