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: September 30, 2002
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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 X No
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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 November 18, 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 September 30, 2002
TABLE OF CONTENTS
Page No.
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Part I -Financial Information
Item 1. Financial Statements
Condensed Balance Sheet as of September 30, 2002.................1
Condensed Statements of Operations for the three
month periods ended September 30, 2002 and 2001..................2
Condensed Statements of Cash Flows for the
three month periods ended September 30, 2002 and 2001............3
Notes to Condensed Financial Statements ......................4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations................5 - 6
Item 3. Controls and Procedures..........................................6
Part II - Other Information
Item 6. Exhibits and Reports on Form 8 - K...............................7
Signatures and Certifications....................................8
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
INTERCOM SYSTEMS, INC.
CONDENSED BALANCE SHEET
SEPTEMBER 30, 2002
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 27,696
==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 31,925
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STOCKHOLDERS' DEFICIT:
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 (5,208,229)
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TOTAL STOCKHOLDERS' DEFICIT (4,229)
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 27,696
==========
The accompanying notes are an integral
part of these condensed financial statements.
INTERCOM SYSTEMS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
--------------------------------------
September 30, September 30,
2002 2001
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REVENUES:
Interest $ 20 $ 505
-------------- --------------
EXPENSES:
Professional fees 7,451 10,969
Management and administrative fees 1,625 1,575
Corporate transfer agent fees 1,200 1,200
Franchise taxes 600 945
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TOTAL EXPENSES 10,876 14,689
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NET LOSS $ (10,856) $ (14,184)
============== ==============
BASIC AND DILUTED NET LOSS
PER COMMON SHARE $ - $ -
============== ==============
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 8,008,229 8,008,229
============== ==============
The accompanying notes are an integral
part of these condensed financial statements.
INTERCOM SYSTEMS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
---------------------------------
September 30, September 30,
2002 2001
--------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (10,856) $ (14,184)
Adjustments to reconcile net loss to
net cash from operating activities:
Increase (decrease) in:
Accounts payable and accrued expenses 2,811 13,319
------------ -------------
NET CASH USED BY
OPERATING ACTIVITIES (8,045) (865)
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NET DECREASE IN
CASH AND CASH EQUIVALENTS (8,045) (865)
CASH AND CASH EQUIVALENTS - beginning 35,741 86,513
------------ ------------
CASH AND CASH EQUIVALENTS - ending $ 27,696 $ 85,648
============ ============
The accompanying notes are an integral
part of these condensed financial statements.
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 September 30, 2002 and the
unaudited condensed statements of operations and cash flows for the
three-month periods ended September 30, 2002 and 2001 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, 2002, as
filed with the Securities and Exchange Commission on October 14, 2002.
The results of operations for the three-month periods ended September
30, 2002 and 2001 are not necessarily indicative of the results to be
expected for the entire fiscal year or for any other period.
NOTE 2 - 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 periods ended September 30, 2002 and 2001 are contingently
issuable shares that, if included, would have an antidilutive effect.
NOTE 3 - 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 and the treasurer of the Company.
NOTE 4 - 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 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 filed Quarterly
Reports on Forms 10-QSB for each quarter during fiscal 2002 and 2001
and an Annual Report on Form 10-KSB for the years ended June 30, 2002
and June 29, 2001. The Company is current with its reporting
obligations under the Securities Exchange Act of 1934. In November
2002, the NASD has approved trading of the Company's common stock on
the OTC Bulletin Board. Management expects trading to begin in the
near future.
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, we were engaged in the design, manufacture, marketing and sale of
microprocessor-based systems designed to access and test telecommunications
lines. To a lesser extent, we were also engaged in the sale of engineering
services to an affiliated company, TII Industries, Inc.
In October 1989, we sold all of the assets relating to its business
operations to a third party. We have had no active business operations since the
date of that sale.
On June 27, 2000, new investors, including our current management,
purchased an aggregate of 5,484,999 shares from TII Industries, Inc. and TII
International, Inc., who were our two largest stockholders. The shares purchased
by the new investors represented approximately 69 percent of the then issued and
outstanding common stock. The sale of these shares resulted in a change in
control and our management.
Current Business Plan
Our current business plan is primarily to serve as a vehicle for the
acquisition of a target business that we believe will have significant growth
potential. We intend to use our 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.
Management believes that we will be more attractive to a prospective
business partner if our common stock is quoted on the OTC Bulletin Board.
Therefore, took steps to become current with our reporting obligations under the
Securities Exchange Act of 1934, and Intercom is now current with such
obligations. In November 2002, the NASD has approved trading of our common stock
on the OTC Bulletin Board. We expect trading to begin in the near future.
Financial Condition
At September 30, 2002, we had total current assets of $27,696 as compared
to total current assets of $35,741 at June 30, 2002. We had total current
liabilities of $31,925 at September 30, 2002, as compared to total current
liabilities of $29,144 at June 30, 2002. At September 30, 2002, our
stockholders' deficit was $(4,229), as compared to stockholders' equity of
$6,627 at June 30, 2002. The decrease in net worth was the result of the net
loss of $10,856 for the quarter ended September 30, 2002.
Liquidity and Capital Resources
The only asset we possess is cash and cash equivalents in the amount of
$27,696 at September 30, 2002, of which $2,696 was held in a money-market fund,
bearing interest at 1.03%. This money-market fund invests exclusively in
short-term obligations of the U.S. Treasury and repurchase agreements fully
collateralized obligations of the U.S. Treasury.
Over the next 12 months, we plan to continue to utilize these funds to
maintain our corporate status and to attempt to seek out a suitable business
combination. We have not chosen the particular business in which we will engage
and have not conducted any market studies with respect to any business or
industry. As a result of our limited assets and the potential for other
presently unforeseen obstacles, we cannot assure you that we will be successful
in this effort.
As shown in the accompanying financial statements, the Company incurred a
net loss of $10,856 during the quarter ended September 30, 2002, and as of that
date, the Company's working capital was insufficient to satisfy projected
expenses for the next fiscal year. Those factors, as well as the Company's lack
of operating revenue, create an uncertainty about the Company's ability to
continue as a going concern. Management of the Company is developing a plan to
reduce its liabilities and increase its working capital by issuing additional
stock or obtaining debt financing. The ability of the Company to continue as a
going concern is dependent on the plan's success.
We anticipate that our cash reserves will last us approximately three (3)
months. We do not have any present commitment that is likely to result in our
liquidity increasing or decreasing in any material way, other than the expenses
we expect to incur in continuing to file reports with the Securities and
Exchange Commission to remain current and for seeking a business combination. We
know of no trend, additional demand, event or uncertainty that will result in,
or that is reasonably likely to result in, any material increase or decrease in
our liquidity.
We have no material commitments for capital expenditures. We know of no
material trends, favorable or unfavorable, in our capital resources. We have no
outstanding credit lines or credit commitments in place and have no current need
for financial credit.
Results of Operations
We have not had any material operations since 1989. We only had interest
revenue of $20 and $505 for the three-month periods ended September 30, 2002 and
September 30, 2001, respectively. Interest revenue declined due to the
consumption of invested funds to pay operating expenses and a reduction of the
interest rate yield from 3.41% to 1.03% during the twelve months ended September
30, 2002.
General, administrative and other expenses, including accounting, legal,
corporate transfer agent, management and administrative fees, franchise taxes
and bank service charges, were $10,876 for the three months ended September 30,
2002, as compared to $14,689 for the three months ended September 30, 2001. The
decrease in general, administrative and other expenses was due primarily to
decreases in professional fees of $3,500 and taxes of $300.
Item 3. - Controls and Procedures
Within the 90-day period prior to the filing of this report, an evaluation of
the effectiveness of our disclosure controls and procedures was made under the
supervision and with the participation of our management, including the chief
executive officer and chief financial officer. Based on that evaluation, the CEO
and CFO concluded that our disclosure controls and procedures are effective to
ensure that information required to be disclosed by us in reports that it files
or submits under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in Securities and
Exchange Commission rules and forms. Subsequent to the date of their evaluation,
there were no significant changes in our internal controls or in other factors
that could significantly affect these controls, including any corrective actions
with regard to significant deficiencies and material weaknesses.
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
None.
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.
(Registrant)
Dated: November 18, 2002
By: /s/ Robert H. Donehew
-------------------------------------
Robert H. Donehew
Vice President and Treasurer
(Principal Financial and Accounting Officer)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Intercom Systems, Inc.. (the
"Company") on Form 10-QSB for the period ended September 30, 2002 as filed with
the Securities and Exchange Commission (the "Report"), each of the undersigned,
in the capacities and on the dates indicated below, hereby certifies pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
1. the Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2. the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operation of the Company.
Dated: November 18, 2002 /s/ Frederick A. Huttner
-----------------------------
Frederick A. Huttner
President and Chairman
(Principal Executive Officer)
Dated: November 18, 2002 /s/ Robert H. Donehew
-----------------------------
Robert H. Donehew
Vice President, Treasurer and Director
(Principal Financial Officer)
CERTIFICATION
PURSUANT TO RULE 13a-14 AND 15d-14 UNDER
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Frederick A. Huttner, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Intercom Systems,
Inc.;
2. based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. the registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days of the filing date of this
quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and to the audit
committee of the registrant's board of directors (or persons performing the
equivalent functions):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. the registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Dated: November 18, 2002 /s/ Frederick A. Huttner
----------------------------
Frederick A. Huttner
President and Chairman
(Principal Executive Officer)
CERTIFICATION
PURSUANT TO RULE 13a-14 AND 15d-14 UNDER
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Robert H. Donehew, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Intercom Systems,
Inc.;
2. based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. the registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days of the filing date of this
quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and to the audit
committee of the registrant's board of directors (or persons performing the
equivalent functions):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. the registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Dated: November 18, 2002 /s/ Robert H. Donehew
-----------------------------
Robert H. Donehew
Vice President, Treasurer and Director
(Principal Financial Officer)