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: December 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 February 15, 2002, 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 December 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 6 Exhibits and Reports on Form 8 - K 8
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
INTERCOM SYSTEMS, INC.
CONDENSED BALANCE SHEET
DECEMBER 31, 2001
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 61,844
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 19,505
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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 (5,161,661)
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TOTAL STOCKHOLDERS' EQUITY 42,339
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 61,844
============
The accompanying notes are an integral
part of these condensed financial statements.
(1)
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<Table>
<Caption>
INTERCOM SYSTEMS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Six Months Ended Three Months Ended
---------------------------------------------------------------- -
December 31, December 31,
---------------------------------- -------------------------------
2001 2000 2001 2000
-------------- -------------- -------------- -----------
REVENUES:
Interest $ 733 $ 3,823 $ 229 $ 1,808
----------- ---------- ---------- ----------
EXPENSES:
Professional fees 25,954 16,791 14,984 9,232
Management fees and contract labor 4,495 3,150 2,725 1,575
Stockholder relations 2,415 3,034 1,215 1,200
Franchise taxes 1,500 1,510 750 755
----------- ----------- ------------ -------------
TOTAL EXPENSES 34,364 24,485 19,674 12,762
----------- ------------ ----------- ------------
NET LOSS $ (33,631) $ (20,662) $ (19,445) $ (10,954)
========== ========== ========== ==========
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
========== ========= ========== =========
</Table>
The accompanying notes are an integral
part of these condensed financial statements.
(2)
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INTERCOM SYSTEMS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
December 31,
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2001 2000
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (33,631) $ (20,662)
Adjustments to reconcile net loss to
net cash from operating activities:
Increase in:
Accounts payable and accrued expenses (8,961) ( 7,973)
----------- -----------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES (24,670) (28,635)
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NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS (24,670) (28,635)
CASH AND CASH EQUIVALENTS - beginning 86,513 169,923
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CASH AND CASH EQUIVALENTS - ending $ 61,843 $169,053
========= ========
The accompanying notes are an integral
part of these condensed financial statements.
(3)
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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 December 31, 2001 and the
unaudited condensed statements of operations for the three-month and
six-month periods ended December 31, 2001 and 2000 and the unaudited
condensed statements of cash flows for the six-month periods ended
December 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 29, 2001, as filed with the Securities and
Exchange Commission on October 11, 2001.
The results of operations for the three-month and six-month periods
ended December 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 December 31, 2001 is
approximately $62,000.
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 six-month periods ended December 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 in the amount of $500 per month under an
office-sharing agreement that provides administrative and
bookkeeping assistance, and for the use of offices, fixtures,
furniture and equipment. These fees are paid to a corporation whose
chief financial officer is a director, vice president and the
treasurer of the Company.
(4)
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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. From January 1991
until March 2001, the Company did not file any further reports under
the Securities Exchange Act of 1934. On May 31, 2001, the Company
filed a Form 8-A with the Securities and Exchange Commission
registering the common stock under the Securities Exchange Act of
1934. 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. The Company plans to amend the Form 10-KSB, which
was originally filed for the period ended June 30, 2000, to include
balance sheets as of June 25, 1999 and June 26, 1998 that were
omitted when this Form 10-KSB was originally filed.
The Company filed Quarterly Reports on Forms 10-QSB for each quarter
during fiscal 2001 and an Annual Report on Form 10-KSB for the year
ended June 29, 2001. The Company has continued to file quarterly
reports on Form 10-QSB in a timely manner during fiscal 2002.
Management believes, that once the Company files the balance sheets
that were omitted from the June 30, 2000 Form 10-KSB, the Company
will be current with its reporting obligations under the Securities
Exchange Act of 1934. The Company then intends to become listed on
the OTC Bulletin Board, although there is no assurance that it will
be successful in doing so.
(5)
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Item 2. - Management's Discussion and Analysis of Financial Condition
and Results of Operations
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 reporting obligations
under the Securities Exchange Act of 1934 and intends to become listed on the
OTC Bulletin Board, although there is no assurance that we will be successful in
doing so (see Note 5 to the Condensed Financial Statements).
Results of Operations
Three months ended December 31, 2001 as compared to the three months ended
December 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 December 31, 2001 interest income was
$229 compared to $1,808 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 December 31, 2001 as compared to the
three months ended December 31, 2000 and interest rates on invested funds
declined from approximately 5.6% as of December 31, 2000 to approximately 1.36%
as of December 31, 2001.
General, administrative and other expenses were $19,674 for the three
months ended December 31, 2001 compared to $12,762 for the three months ended
December 31, 2000. The increase in general, administrative and other expenses
was due primarily to approximate increases in legal fees of $3,400, accounting
fees of $2,400 and contract labor of $1,100 for the three months ended December
31, 2001 as compared to the three months ended December 31, 2000.
(6)
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Six months ended December 31, 2001 as compared to the six months ended December
31, 2000:
For the six months ended December 31, 2001 interest income was $733
compared to $3,823 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 December 31, 2001 as compared to the three
months ended December 31, 2000 and interest rates on invested funds declined
from approximately 5.6% as of December 31, 2000 to approximately 1.36% as of
December 31, 2001.
General, administrative and other expenses were $34,364 for the six
months ended December 31, 2001 compared to $24,485 for the six months ended
December 31, 2000. The increase in general, administrative and other expenses
was due primarily to an increase in legal fees of approximately $4,500,
accounting fees of $4,700 and contract labor of $1,100 for the six months ended
December 31, 2001 as compared to the six months ended December 31, 2000.
Liquidity and Capital Resources
At December 31, 2001, cash and cash equivalents were $61,844;
working capital was $42,339 and money market funds were $41,159, bearing an
interest rate of 1.36%.
(7)
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Part II Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
None.
(8)
<Page>
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant
caused this Form 10-QSB to be signed on its behalf by the undersigned, thereunto
duly authorized.
INTERCOM SYSTEMS, INC.
Dated: February 14, 2002 By: /s/ Robert H. Donehew
--------------------------------
Robert H. Donehew
Vice President and Treasurer
(Principal Financial and
Accounting Officer)
(9)