EXHIBIT 99.3
GTI Telecom, Inc.
Balance Sheets
(Unaudited)
March 31, December 31,
1997 1996
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ASSETS
Current Assets:
Cash and cash equivalents $ 2,686,764 $ 600,614
Accounts receivable, net of allowance for doubtful accounts 2,109,088 1,602,180
Inventories 707,512 733,838
Note Receivable from shareholder 1,291,983 1,279,483
Other current assets 1,422,511 1,619,773
Prepaid Expenses 78,312 16,033
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Total current assets 8,296,170 5,851,921
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Property and equipment, net 2,078,567 1,829,159
Intangible assets, net of accumulated amortization 293,261 202,423
Deposits 27,360 27,360
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$ 10,695,358 $ 7,910,863
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LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable $ 1,879,037 $ 6,940,820
Accrued expenses 2,182,925 1,061,329
Deferred revenue 5,524,379 5,671,907
Customer deposits 4,490,240 2,180,075
Excise and sales tax payable -- 2,302,226
Notes payable - Worldcom 5,158,485 --
Treasury stock repurchase debt 732,150 1,319,688
Current portion of capital leases payable 147,324 187,481
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Total current liabilities 20,114,540 19,663,526
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Treasury stock repurchase debt and notes payable 244,203 244,203
Capital leases payable 417,866 417,866
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Total liabilities 20,776,609 20,325,595
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Stockholder's Deficit:
Preferred Stock:
Authorized-- 5,000,000 shares,
No shares issued and outstanding 3,500,000 --
Common stock, $.001 par-
Authorized--10,000,000 shares
Issued and outstanding--1,000 shares 1 1
Additional paid-in capital 83,707 83,707
Accumulated deficit (11,054,647) (9,888,128)
Treasury stock--500 common shares in treasury, at cost (2,610,312) (2,610,312)
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Total stockholder's deficit (10,081,251) (12,414,732)
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Commitments, contingencies and subsequent events $ 10,695,358 $ 7,910,863
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The accompanying notes are an integral part of these unaudited financial
statements.
GTI TELECOM, INC.
Statements of Operations
(Unaudited)
Three Months Ended March 31,
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1997 1996
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Revenues $ 6,124,597 $ 4,456,579
Cost of Revenues 4,906,033 3,197,302
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Gross profit 1,218,564 1,259,277
Selling, General and Administrative Expenses 2,202,509 1,754,094
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Loss from operations (983,945) (494,817)
Other Income (Expense):
Interest Expense (222,973) (29,874)
Other Income, net 40,399 39,642
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(182,574) 9,768
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Net loss $(1,166,519) $ (485,049)
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Net Loss per Common Share $ (2,333.04) $ (970.10)
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Weighted Average Number of Common
Shares Outstanding 500 500
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The accompanying notes are an integral part of these unaudited financial
statements.
GTI TELECOM, INC.
Statements of Cash Flows
(Unaudited)
Three Months Ended March 31,
----------------------------
1997 1996
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Cash Flows from Operating Activities:
Net loss $(1,166,519) $ (485,048)
Adjustments to reconcile net loss to net cash used in
operating activities-
Depreciation and amortization 207,657 149,547
Changes in assets and liabilities-
Accounts receivable (506,908) (740,828)
Inventories 26,326 30,152
Other current assets 197,262 (507,867)
Prepaid expenses (62,279) (16,033)
Accounts payable (5,061,783) 1,372,380
Accrued expenses 1,121,596 54,183
Deferred revenue (147,528) (474,101)
Customer Deposits 2,310,165 (302,051)
Excise & Sales Tax Payable (2,302,226) 94,593
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Net cash used in operating activities (5,384,237) (825,073)
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Cash Flows from Investing Activities:
Note receivable from stockholder (12,500) (218,016)
Purchases of property and equipment (404,918) --
Proceeds from sale of property and equipment -- 16,595
(Increase) decrease in intangible assets (142,985) 13,578
Deposits -- (101,751)
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Net cash used in investing activities (560,403) (289,594)
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Cash Flows from Financing Activities:
Proceeds from Worldcom note payable 5,158,485 --
Proceeds from sale of preferred stock 3,500,000 --
Payments on treasury stock repurchase (587,538) (450,000)
Payments on capital lease obligation (40,157) (85,127)
Payments on other long-term liabilities -- (155,828)
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Net cash provided by (used in) financing activities 8,030,790 (690,955)
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Net (Decrease) Increase in Cash and Cash Equivalents 2,086,150 (1,805,622)
Cash and Cash Equivalents, beginning of period 600,614 1,814,568
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Cash and Cash Equivalents, end of period $ 2,686,764 $ 8,946
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GTI TELECOM, INC.
(Unaudited)
1. Basis of Presentation
The interim 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 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.