UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended: March 31, 2001
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[ ] 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 0-10093
Intercom Systems, Inc.
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(Exact name of small business issuer as specified in its charter)
Delaware 11-2599441
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
111 Village Parkway, Building 2, Marietta, Georgia 30067
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(Address of principal executive offices) (Zip Code)
770-951-0984
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(Issuer's telephone number)
N/A
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(Former name, former address and former 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 preceding
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 No X
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State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date: As of May 14, 2001, the issuer
had 8,008,229 shares of common stock, par value $.01 per share, outstanding.
Transitional Small Business Disclosure Format (check one):
Yes No X
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INTERCOM SYSTEMS, INC.
Form 10 - QSB
For the Quarterly Period Ended March 31, 2001
TABLE OF CONTENTS
Page No.
Part I Financial Information
Item 1. Financial Statements
Condensed Balance Sheet 1
Condensed Statements of Operations 2
Condensed Statements of Cash Flows 3
Notes to Condensed Financial Statements 4 - 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6 - 7
Part II Other Information
Item 2. Changes in Securities and Use of Proceeds 8
Item 6. Exhibits and Reports on Form 8 - K 8
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
INTERCOM SYSTEMS, INC.
CONDENSED BALANCE SHEET
MARCH 31, 2001
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 122,836
Prepaid franchise taxes 755
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TOTAL CURRENT ASSETS $ 123,591
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 32,817
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STOCKHOLDERS' EQUITY:
Preferred stock - $100 par value per share,
100,000 shares authorized, none outstanding -
Common stock - $.0005 par value per share,
200,000,000 shares authorized,
8,008,229 shares issued and outstanding 4,000
Additional capital in excess of par value 5,200,000
Accumulated deficit (5,113,226)
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TOTAL STOCKHOLDERS' EQUITY 90,774
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 123,591
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The accompanying notes are an integral
part of these condensed financial statements.
(1)
INTERCOM SYSTEMS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Nine Months Ended Three Months Ended
-------------------------- ----------------------------
March 31, March 31,
2001 2000 2001 2000
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REVENUES:
Interest $ 5,142 $ 5,100 $ 1,319 $ 1,736
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EXPENSES:
Professional fees 34,299 5,750 17,508 1,250
Management fees and bank charges 4,725 - 1,575 -
Stockholder relations 4,234 2,100 1,200 700
Franchise taxes 2,531 2,645 1,021 755
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TOTAL EXPENSES 45,789 10,495 21,304 2,705
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NET LOSS $ (40,647) $ (5,395) $ (19,985) $ (969)
========== =========== =========== ============
BASIC AND DILUTED NET LOSS PER SHARE $ - $ - $ - $ -
========== =========== =========== ============
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 8,008,229 8,008,229 8,008,229 8,008,229
========== =========== =========== ============
The accompanying notes are an integral
part of these condensed financial statements.
(2)
INTERCOM SYSTEMS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
Nine Months Ended
March 31,
--------------------------
2001 2000
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (40,647) $ (5,395)
Adjustments to reconcile net loss to
net cash from operating activities:
(Increase) in prepaid franchise taxes (755) -
Increase (decrease) in accounts payable
and accrued expenses (5,685) 6,515
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NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES (47,087) 1,120
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NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS (47,087) 1,120
CASH AND CASH EQUIVALENTS - beginning 169,923 168,469
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CASH AND CASH EQUIVALENTS - ending $ 122,836 $ 169,589
========= =========
The accompanying notes are an integral
part of these condensed financial statements.
(3)
INTERCOM SYSTEMS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed balance sheet of Intercom
Systems, Inc. (the "Company") as of March 31, 2001 and the unaudited
condensed statements of operations for the three-month and nine-month
periods ended March 31, 2001 and 2000 and the unaudited condensed
statements of cash flows for the nine-month periods ended March 31,
2001 and 2000 reflect all material adjustments which, in the opinion
of management, are necessary for a fair presentation of results for
the interim periods. Certain information and footnote disclosures
required under generally accepted accounting principles have been
condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission, although the Company believes that
the disclosures are adequate to make the information presented not
misleading. These financial statements should be read in conjunction
with the year-end financial statements and notes thereto included in
the Company's Annual Report on Form 10-KSB for the year ended June 30,
2000, as filed with the Securities and Exchange Commission on March 1,
2001.
The results of operations for the three-month and nine-month periods
ended March 31, 2001 and 2000 are not necessarily indicative of the
results to be expected for the entire fiscal year or for any other
period.
NOTE 2 - CONCENTRATION OF CREDIT RISK
The financial instruments subject to credit risk are primarily cash
and cash equivalents. The Company places temporary cash investments in
a money-market fund that invests solely in short-term obligations of
the U.S. Treasury and repurchase agreements fully collateralized by
obligations of the U.S. Treasury. These investments are not insured by
the Federal Deposit Insurance Corporation (FDIC) or any other agency
and are subject to investment risk, including possible loss of
principal. The uninsured cash balance at March 31, 2001 is
approximately $98,000.
NOTE 3 - LOSS PER SHARE
Net loss per common share for each period is computed by dividing the
net loss by the weighted average number of shares outstanding during
the period. Excluded from the net loss per share calculations for the
three-month and nine-month periods ended March 31, 2001 and 2000 are
contingently issuable shares that, if included, would have an
antidilutive effect.
NOTE 4 - RELATED PARTY TRANSACTIONS
Effective July 1, 2000, the Company has incurred management and
administrative fees, for services provided by an officer of the
Company, in the amount of $500 per month. Amounts payable to this
officer as of March 31, 2001 are $4,500 and are included in accounts
payable and accrued expenses.
(4)
INTERCOM SYSTEMS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 5 - FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION
In January 1991, the Company filed a Form 15 with the Securities and
Exchange Commission to deregister the Company's common stock under the
Securities Exchange Act of 1934, as amended. On March 1, 2001, the
Company filed its Annual Report on Form 10-KSB that included the
Company's balance sheet as of June 30, 2000 and the related statements
of operations, stockholders' equity and cash flows for the fiscal
years ended June 30, 2000, June 25, 1999 and June 26, 1998. Prior to
the March 1, 2001 filing, the last Annual Report on Form 10-K that was
filed was for the fiscal year ended June 29, 1990, and the last
Quarterly Report on Form 10-Q that was filed was for the fiscal
quarter ended September 28, 1990.
However, the warrants the Company issued in its initial public
offering in 1983 remained registered as a separate class of securities
under the Exchange Act. Consequently, the Company's obligation to file
periodic reports under the Exchange Act did not cease with the filing
of the Form 15 in 1991. The warrants expired on August 31, 2000.
(5)
Item 2. - Management's Discussion and Analysis of Financial Condition and
Results of Operations
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This Form 10-QSB contains forward-looking statements that may involve
known and unknown risks, uncertainties and other factors that may cause the
Company's actual results and performance in future periods to be materially
different from any future periods or performance suggested by these statements.
Overview
Intercom Systems, Inc. was incorporated in Delaware in 1982. Until
October 1989, the Company was engaged in the design, manufacture, marketing and
sale of microprocessor-based systems designed to access and test
telecommunications lines. To a lesser extent, the Company was also engaged in
the sale of engineering services to an affiliated company, TII Industries, Inc.
In October 1989, the Company sold all of the assets relating to its
business operations to a third party. The Company has had no active business
operations since the date of that sale.
On June 27, 2000, new investors, including the Company's current
management, purchased an aggregate of 5,484,999 shares from TII Industries, Inc.
and TII International, Inc., who were the Company's two largest stockholders.
The shares purchased by the new investors represented approximately 69 percent
of the Company's then issued and outstanding common stock. The sale of these
shares resulted in a change in control and management of the Company.
Current Business Plan
The Company's current business plan is primarily to serve as a
vehicle for the acquisition of a target business that the Company believes will
have significant growth potential. The Company intends to use the Company's
available cash, capital stock, debt or a combination of these to effect a
business combination. A business combination may involve the acquisition of, or
merger with, a financially stable, mature company that desires to establish a
public trading market for its securities while avoiding what it may deem to be
adverse consequences of undertaking a public offering itself, such as time
delays, significant expense, loss of voting control and other burdens (including
significant professional fees) related to compliance with various federal and
state securities laws. In the alternative, a business combination may involve a
company that may be financially unstable or in its early stages of development
or growth.
The Company intends to become current with its filings under the
Securities Exchange Act of 1934 and then to become listed on the OTC Bulletin
Board (see Note 5 to the Condensed Financial Statements).
Results of Operations
Three months ended March 31, 2001 as compared to the three months ended March
31, 2000:
We have had no significant revenues since 1989 and will not achieve
any significant revenues until, at the earliest, the completion of a business
combination. For the three months ended March 31, 2001 interest income was
$1,319 compared to $1,736 for the comparable period of the prior fiscal year.
Interest income declined because the Company had less money invested in money
market funds during the three months ended March 31, 2001 as compared to the
three months ended March 31, 2000.
General, administrative and other expenses were $21,304 for the three
months ended March 31, 2001 compared to $2,705 for the three months ended March
31, 2000. The increase in general, administrative and other expenses was due
primarily to an increase in accounting fees of approximately $9,400, legal fees
of $6,900, management fees of $1,500 and stockholder relations expenses of $500
for the three months ended March 31, 2001 as compared to the three months ended
March 31, 2000.
(6)
Nine months ended March 31, 2001 as compared to the nine months ended March 31,
2000:
For the nine months ended March 31, 2001 interest income was $5,142
compared to $5,100 for the comparable period of the prior fiscal year. The
slight increase in interest income was the net effect of higher rates of return
earned on money market funds, offset by a reduction in the amount of money
market funds owned by the Company.
General, administrative and other expenses were $45,789 for the nine
months ended March 31, 2001 compared to $10,495 for the nine months ended March
31, 2000. The increase in general, administrative and other expenses was due
primarily to an increase in legal fees of approximately $15,600, accounting fees
of $12,900, management fees of $4,500 and stockholder relations expenses of
$2,100 for the nine months ended March 31, 2001 as compared to the nine months
ended March 31, 2000.
Liquidity and Capital Resources
At March 31, 2001, cash and cash equivalents were $122,836. Working capital was
$90,774. Money market funds of $97,861 bear an interest rate of 4.5%.
(7)
PART II - OTHER INFORMATION
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Item 2. - Changes in Securities and Use of Proceeds
(c) Recent Sale of Unregistered Securities
During the quarter ended March 31, 2001, we made the following sales
of unregistered securities.
Consideration received
and description of If option, warrant
Underwriting or other or convertible
discounts to market Exemption from security terms of
Title of price offered to registration exercise or
Date of Sale Security Number Sold Purchasers claimed conversions
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3/15/01 Option to 280,000 No cash consideration 4(2) Exercisable in
purchase common received until exercise full upon grant
stock issued to for five years
directors from the date of
grant at an
exercise price of
$.02 per share
Item 6. - Exhibits and Reports on Form 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
None.
(8)
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant
caused this amendment to be signed on its behalf by the undersigned, thereunto
duly authorized.
INTERCOM SYSTEMS, INC.
/s/ Robert H. Donehew
Dated: May 14, 2001 By: ___________________________
Robert H. Donehew
Vice President and Treasurer
(Principal Financial and
Accounting Officer)