EXHIBIT 99.3
SMARTEL COMMUNICATIONS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
ASSETS
March 31, December 31,
1997 1996
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Current Assets:
Cash and cash equivalents $ 394,448 $1,763,473
Accounts receivable, net of allowance for doubtful accounts of $125,000 and
$15,000 at March 31, 1997 and 1996, respectively 827,539 785,146
Inventories 27,353 26,798
Other current assets 163,904 132,745
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Total current assets 1,413,244 2,708,162
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Property and Equipment:
Computer and office equipment 196,692 189,523
Printing equipment 29,788 29,788
Leasehold improvements 63,153 63,153
Furniture and fixtures 13,918 13,046
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303,551 295,510
Less--Accumulated depreciation and amortization 114,722 101,511
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188,829 193,999
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Other Assets:
Note receivable from stockholder 80,314 79,180
Intangible assets, net of accumulated amortization 43,100 46,524
Organization costs, net of accumulated amortization 36,703 40,162
Other assets 50,677 50,677
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$1,812,867 $3,118,704
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Subordinated notes payable to stockholders, current portion $ 157,500 $157,500
Capital lease obligation, current portion 13,390 12,459
Equipment line of credit, current portion 16,798 16,798
Accounts payable 628,313 1,764,543
Accrued expenses 608,732 282,068
Deferred revenue 1,596,109 1,327,550
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Total current liabilities 3,020,842 3,560,918
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Capital Lease Obligations, net of current portion 2,737 --
---------- ----------
Equipment Line of Credit, net of current portion -- 33,597
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Subordinated Notes Payable to Stockholders 29,397 --
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Minority Interest--Preferred Stock 30,000 30,000
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Redeemable Preferred Stock:
Authorized-- 4,002 shares
Issued and outstanding--3,909 shares (liquidation preference of $4,190,336
and $4,161,019 at March 31, 1997 and December 31, 1996, respectively) 4,051,715 3,796,190
Stockholders' Equity (Deficit):
Common stock, $.001 par-
Authorized--10,000,000 shares
Issued and outstanding--2,434,035 shares 2,434 2,434
Additional paid-in capital 1,507,004 1,507,004
Accumulated deficit (6,831,262) (5,811,439)
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Total stockholders' deficit (5,321,824) (4,302,001)
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$1,812,867 $ 3,118,704
========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
SMARTEL COMMUNICATIONS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
Three Months Ended March 31,
------------------------------------
1997 1996
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Revenues $ 789,579 $ 991,628
Cost of Revenues 524,224 636,809
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Gross profit 265,355 354,819
Selling, General and Administrative Expenses 1,030,105 936,120
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Loss from operations (764,750) (581,301)
Interest Income, net 452 1,605
Other Income (Expense), net -- (739)
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Net loss (764,298) (580,435)
----------- ----------
Accretion of Redeemable Preferred Stock Dividends and
Discount (255,525) --
----------- ----------
Net Loss Attributable to Common Stockholders $(1,019,823) $ (580,435)
=========== ==========
Net Loss per Common Share $(0.42) $(0.24)
====== ======
Weighted Average Number of Common
Shares Outstanding 2,434,035 2,434,035
=========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
SMARTEL COMMUNICATIONS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended March 31,
----------------------------
1997 1996
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Cash Flows from Operating Activities:
Net loss $ (764,298) $ (580,435)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities-
Depreciation and amortization 20,092 23,820
Changes in assets and liabilities-
Accounts receivable (42,391) 7,128
Inventories (555) (10,000)
Other current assets (31,159) (67,398)
Accounts payable (1,136,230) 134,721
Accrued expenses 268,559 47,986
Deferred revenue 326,664 (28,712)
----------- -----------
Net cash used in operating activities (1,359,318) (472,890)
----------- -----------
Cash Flows from Investing Activities:
Note receivable from stockholder - (75,000)
Purchases of property and equipment (8,041) (60,395)
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Net cash used in investing activities (8,041) (135,395)
----------- -----------
Cash Flows from Financing Activities:
Proceeds from note receivable interest (1,134) -
Proceeds from capital lease obligations 3,668 -
Payments on borrowings on equipment line of credit (4,200) (3,852)
----------- -----------
Net cash used in financing activities (1,666) (3,852)
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Net (Decrease) Increase in Cash and Cash Equivalents (1,369,025) (612,137)
Cash and Cash Equivalents, beginning of year 1,763,473 1,869,686
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Cash and Cash Equivalents, end of year $ 394,448 $ 1,257,549
=========== ===========
Supplemental Disclosure of Noncash Investing and Financing Activities:
Accretion of preferred stock dividends $ 30,008 $ 29,318
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Accretion of preferred stock discount $ 225,517 $ 239,369
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SMARTEL COMMUNICATIONS, INC. AND SUBSIDIARIES
(Unaudited)
1. Basis of Presentation
The interim consolidated financial statements reflect all adjustments,
consisting of normal recurring adjustments, which are, in the opinion of
management, necessary for a fair presentation of the results for the interim
periods. These interim consolidated financial statements should be read in
conjunction with the financial statements and notes thereto included herein
for the year ended December 31, 1996. The interim results of operations are
not necessarily indicative of the results for the entire year ending December
31, 1997.