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 June 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 June 30, 1997
par value
Common Stock, $.0001 1,527,620 .
par value ----------------------
Outstanding Securities
1
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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 June 30, 1997
and December 31, 1996 1
Condensed Statements of Operations
for the Three Months Ended
June 30, 1997 and 1996 2
Condensed Statement of Stockholders' Equity. 3
Condensed Statements of Cash Flows
for the Three Months Ended
June 30, 1997 and 1996 4
Notes to Condensed Financial Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 5
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>
INTELICOM CORPORATION, INC.
CONDENSED BALANCE SHEET
(Unaudited)
June 30, December 31,
1997 1996
---------- ----------
ASSETS
------
CURRENT ASSETS:
Cash $ 181,850 $ 188,365
Investments 1,180 1,180
Accounts Receivable 257,626 308,633
Prepaid Expenses 7,908 109
---------- ----------
Total Current Assets 448,564 498,287
FIXED ASSETS:
Equipment and Furniture 80,703 64,529
Accumulated Depreciation (33,976) (27,565)
---------- ----------
Net Cost 46,727 36,964
OTHER ASSETS:
Deposits 10,000
Organization Costs 100,000
Due From Infinet Software, Inc. 888,866 10,000
---------- ----------
TOTAL ASSETS $1,494,157 $ 545,251
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 345,997 $ 11,376
Accrued Expenses 91,187 199,491
Note Payable, Shareholder 1,100,000 15,000
Current Deferred Tax Liability 25,800 22,500
---------- ----------
Total Current Liabilities 1,562,984 248,367
---------- ----------
Deferred tax liability 7,300
Long Term Liability 2,081,014 10,000
---------- ----------
Total liabilities 3,651,298 258,367
========== ==========
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.0001 par value;
25,000,000 shares authorized;
none issued 0 0
Common stock, $.0001 par value;
100,000,000 shares authorized;
1,527,620 and outstanding 153 153
Treasury Stock (1,200,000)
Additional paid-in capital 205,943 205,973
Retained Earnings (1,163,237) 80,788
---------- ----------
Total stockholders' equity (2,157,141) 288,884
TOTAL LIABILITIES AND EQUITY $1,494,157 $ 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 June 30, 1997 and 1996
1997 1996
---------- ----------
Revenues:
Commissions 386,915 340,249
Long Distance 124,143 11,813
Fees 1,707 49,982
---------- ----------
Total Revenues 512,765 402,044
---------- ----------
Cost of Sales:
Commission expense 236,720 235,346
Reseller and other costs 107,404 11,420
---------- ----------
Total cost of sales 344,124 246,766
---------- ----------
Gross profit 168,641 155,278
---------- ----------
Operating Expenses:
Selling and marketing 12,090 10,691
General and administrative 1,405,425 136,904
---------- ----------
Total operating expenses 1,417,515 147,595
---------- ----------
Income from operations (1,248,874) 7,683
---------- ----------
Other Income:
Interest Income 2,309 1,628
---------- ----------
Total other income 2,309 1,628
---------- ----------
Income before income taxes (1,246,565) 9,311
Income tax provision 850 4,005
---------- ----------
Net income (1,247,415) 5,306
========== ==========
Net Income per share (0.00) 0.00
========== ==========
Average common shares outstanding 1,527,620 1,420,687
========== ==========
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 six Months
Ended June 30, 1997 0 0 0 (1,244,873)
---------- ---------- ---------- --------- ----------
Balance, June 30, 1997 1,527,620 $ 153 (1,163,237) $(2,157,141) $(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 June 30, 1997 and 1996
1997 1996
---------- ----------
Cash flows from operating activities:
Net income (loss) (1,247,415) 9,310
Adjustment to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation 3,455 2,955
Deferred tax liability - (1,095)
Decrease (increase) in accounts
receivable 5,435 159,295
Decrease (increase) in prepaid
expenses 4,158 (1,880)
Decrease in accounts payable and
accrued liabilities 121,063 (94,839)
(Decrease) increase in income
tax payable - 5,100
Net cash (used in) provided by
operating activities (1,113,304) 78,846
---------- ----------
Cash flows from investing activities:
Funds from merger with Intratel 2,206,789 0
---------- ----------
Net cash provided from
investing activities 2,206,789 0
---------- ----------
Cash flows from financing activities:
Increase in notes payable -
shareholders (1,100,000) 0
Payment on note payable 0 0
---------- ----------
Net cash used in financing
activities (1,100,000) 0
---------- ----------
Net (decrease) increase in cash 1,260,554 78,846
---------- ----------
Cash, beginning of year 188,365 43,639
---------- ----------
Cash, end of year $ 181,850 $ 122,485
========== ==========
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 June 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 June 30, 1997 compared to the quarter ended
- -----------------------------------------------------------------
June 30, 1996
- -------------
Revenue from operations for the quarter ended June 30, 1997 ("1997") was
approximately $513,000, compared to approximately $402,000 for the quarter
ended June 30, 1996 ("1996"). This represents an increase 28% or
approximately $111,000 from 1996. This increase 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 $12,000 for the second
quarter of 1997 as compared to approximately $11,000 for the second quarter
of 1996, for an increase of 9%. This increase was mainly due to the
release of major changes to the independent agent program.
General and administrative expenses were approximately $1,405,000 for 1997
compared to approximately $137,000 in 1996, an increase of approximately
1000%. 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 $2309 for 1997 with
approximately $1628 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 second quarter 1997 was $(1,247,415) as compared
to $9,310 for the second 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 June 30, 1997 was approximately $182,000 as
compared to $188,000 at December 31, 1996. The Company had net working
capital of approximately $258,000 at June 30, 1997.
The Company believes that available cash, together with funds generated
from operations, 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
---------------------------------------------------
During June 30, 1997 the shareholders voted and
approved the business combination described in Note 2
of the financial statements contained in this report.
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 June 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: August 15, 1997
--------------------------------------------
Charles R. Brink
President
By: /s/ DAVID SPEZZA . Date August 15, 1997
--------------------------------------------
David Spezza
Vice President
7
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 181,850
<SECURITIES> 1,180
<RECEIVABLES> 1,264,400
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,447,430
<PP&E> 80,703
<DEPRECIATION> (33,976)
<TOTAL-ASSETS> 1,494,157
<CURRENT-LIABILITIES> 3,651,298
<BONDS> 0
0
0
<COMMON> 153
<OTHER-SE> (2,157,294)
<TOTAL-LIABILITY-AND-EQUITY> 1,494,157
<SALES> 0
<TOTAL-REVENUES> 512,765
<CGS> 0
<TOTAL-COSTS> 168,641
<OTHER-EXPENSES> 1,417,515
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,246,565)
<INCOME-TAX> 850
<INCOME-CONTINUING> (1,247,415)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,247,415)
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
