UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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FORM 10-QSB
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 2003
( ) 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: 033-05384
GTDATA CORPORATION
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(Exact name of small business issuer as specified in its charter)
Nevada 87-0443026
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
625 Cochran St., Simi Valley, California 93065
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(Address of principal executive offices)
(805) 582-3600
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Issuer's telephone number, including area code
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether registrant (1) has filed all reports required to
be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding twelve 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 [ ]
The number of shares outstanding of Registrant's common stock as of April 4,
2003 was: 3,436,209.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
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GT DATA Corporation and Subsidiaries
Condensed Consolidated Balance Sheet
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March 31, 2003
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ASSETS
Current Assets
Cash $ 212,948
Accounts receivable, net 955,597
Inventories, net 1,105,868
Prepaid expenses and other current assets 76,751
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Total current assets 2,351,164
Property and Equipment, net 84,316
Deposits 73,460
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$ 2,508,940
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LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable and accrued expenses $ 1,938,890
Accrued payroll and related expenses 163,080
Line of credit 610,462
Current debt 91,900
Notes payable to related parties 295,766
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Total current liabilities 3,100,098
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Commitments and Contingencies
Stockholders' Deficit
Series A preferred stock, $0.001 par value;
1 share authorized, issued and outstanding -
Series B preferred stock, $0.001 par value;
10,000,000 shares authorized; no shares
issued and outstanding -
Common stock, $0.001 par value;
12,500,000 shares authorized;
3,436,209 shares issued and outstanding 3,436
Additional paid in capital 2,106,034
Accumulated deficit (2,700,628)
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Total stockholders' deficit (591,158)
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$ 2,508,940
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See accompanying notes to these condensed consolidated financial statements
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GT DATA Corporation and Subsidiaries
Condensed Consolidated Statements of Operations
For the Three Month Periods Ended March 31, 2003 and 2002
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March 31, 2003 March 31, 2002
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Net Sales $ 2,403,810 $ 2,420,237
Cost of Sales 1,511,893 1,471,475
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Gross Profit 891,917 948,762
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Operating Expenses
Employee compensation 748,106 587,918
Selling, general and administrative 221,157 211,391
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969,263 799,309
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Operating (Loss) Income (77,346) 149,453
Other Income (Expense)
Interest expense, net (37,427) (42,601)
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Total Other Income (Expense) (37,427) (42,601)
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Net (Loss) Income $ (114,773) $ 106,852
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Net (Loss) Income Available to
Common Stockholders per Share:
Basic: $ (0.03) $ 0.13
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Diluted: $ (0.03) $ 0.13
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Weighted Average Number of Common
Shares Outstanding
Basic: 3,436,209 803,126
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Diluted: 3,436,209 846,062
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See accompanying notes to these condensed consolidated financial statements
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GT DATA Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
For the Three Month Periods Ended March 31, 2003 and 2002
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March 31, 2003 March 31, 2002
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Cash flows from operating activities:
Net (Loss) Income $ (114,773) $ 106,852
Adjustments to reconcile net loss to net cash
provided by operating activities:
Interest income on note receivable -- (8,958)
Depreciation and amortization 1,772 20,910
Amortization of estimated fair market value of
options issued for consulting -- 8,000
Interest accrued on subscriptions receivable -- (6,100)
Allowance for doubtful accounts -- (60,000)
Changes in operating assets and liabilities:
Accounts receivable 174,771 403,477
Inventories (26,272) 147,673
Prepaid expenses and other current assets (53,340) (29,251)
Other assets 32,789 (66,709)
Accounts payable and accrued liabilities 171,611 (173,056)
Accrued payroll and related expenses (71,448) 14,007
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Net cash provided by operating activities 115,110 356,845
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Cash flows from investing activities:
Purchases of property and equipment (4,088) (505)
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Net cash used in operating activities (4,088) (505)
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Cash flows from financing activities:
Net borrowings (repayments) under the line of credit (93,615) (288,246)
Principal repayments on long-term debt (39,000) (97,235)
Principal repayments on notes payable to related parties (13,000) --
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Net cash used in financing activities (145,615) (385,481)
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Net decrease in cash (34,593) (29,141)
Cash at beginning of period 247,541 177,317
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Cash at end of period $ 212,948 $ 148,176
============== ==============
Supplemental disclosure of cash flow information -
Cash paid during the period for:
Interest $ 37,554 $ 46,883
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Income taxes $ 1,600 $ --
============== ==============
See accompanying notes to these condensed consolidated financial statements
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPALS
Basis of Presentation
- ---------------------
The management of GTDATA Corporation ("GTDATA" or the "Company"), and its
wholly owned subsidiaries, Technical Services & Logistics Inc. ("TSLi) and
GTDATA Delaware, without audit, has prepared the condensed consolidated
financial statements for the three months ended March 31, 2003 and 2002. Certain
information and note disclosures normally included in the financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America have been omitted. These financial statements and notes
hereto should be read in conjunction with the audited financial statements and
notes thereto, which are included in GTDATA Form 10-KSB filed April 14, 2003. In
the opinion of management, the financial statements contain all adjustments,
consisting of normal recurring adjustments necessary to present fairly the
financial position of GTDATA for the period presented. The interim operating
results may not be indicative of operating results for the full year or for any
other interim periods.
Principles of Consolidation
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The condensed consolidated financial statements include the accounts of the
Company, GTDATA Corporation, and TSLi and GTDATA Delaware, which are wholly
owned subsidiaries of GTDATA. All significant intercompany balances and
transactions have been eliminated in consolidation.
Going Concern
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The accompanying condensed consolidated financial statements have been
prepared assuming the Company will continue as a going concern, which
contemplates, among other things, the realization of assets and satisfaction of
liabilities in the normal course of business. The Company has negative working
capital of $748,934, a stockholders' deficit of $591,158, and a lack of
operational history, among others, that raise substantial doubt about its
ability to continue as a going concern. The Company hopes to increase earnings
from additional revenue services and other cost-cutting measures. In the absence
of significant revenues and profits, the Company intends to fund operations
through additional debt and equity financing arrangements which management
believes may be insufficient to fund its capital expenditures, working capital,
and other cash requirements for the fiscal year ending December 31, 2003.
Therefore, the Company may be required to seek additional funds to finance its
long-term operations. The successful outcome of future activities cannot be
determined at this time and there are no assurances that if achieved, the
Company will have sufficient funds to execute its intended business plan or
generate positive results.
These circumstances raise substantial doubt about the Company's ability to
continue as a going concern. The accompanying consolidated financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
Stock Split
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Effective February 17, 2003, the Company authorized a 1 for 20 reverse
stock split. All references throughout these condensed consolidated financial
statements and notes to number of shares, per share amounts, stock options and
warrants and market prices of the Company's common stock have been retroactively
restated to reflect the reverse stock split.
Concentration Risk
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Five customers accounted for approximately 87% of total revenues for the
three months ending March 31, 2003. During the same period last year, the
Company's five largest customers accounted for 74% of total revenues. The loss
of any of these customers may have a material impact on the Company's financial
statements and results of operations.
Revenue Recognition
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The Company records sales when goods are shipped to the customer or upon
the completion of the service. In accordance to SFAS 48, "Revenue Recognition
when Right of Return Exists," revenue is recorded net of estimates of markdowns,
price concessions and warranty costs. Such costs are based on management's
evaluation of historical experience, current industry trends, and estimated
costs.
The Securities and Exchange Commission ("SEC") issued Staff Accounting
Bulletin 101 ("SAB 101"), as amended, "Revenue Recognition," which outlines the
basic criteria that must be met to recognize revenue and provides guidance for
presentation of revenue and for disclosures related to revenue recognition
policies in financial statements filed with the SEC. Management of the Company
believes that its revenue recognition policy conforms to SAB 101.
Earnings Per Share
- ------------------
The Company has adopted Statement of Financial Accounting Standards No. 128
("SFAS 128"), "Earnings Per Share." Under SFAS 128, basic earnings per share is
computed by dividing income available to common shareholders by the weighted
average number of shares assumed to be outstanding during the period of
computation. Diluted earnings per share is computed similar to basic earnings
per share except that the denominator is increased to include the number of
additional common shares that would have been outstanding if the potential
common shares had been issued and if the additional common shares were dilutive
(none and 42,936 shares as of March 31, 2003 and 2002, respectively). Because
the Company has incurred a net loss in the three month period ending March 31,
2003, basic and diluted loss per share are the same as additional potential
common shares would be anti-dilutive.
Employee Stock-Based Compensation
- ---------------------------------
At March 31, 2003, the Company had two stock-based employee compensation
plans. The Company accounts for those plans under the recognition and
measurement principles of Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees", and related interpretations. No
stock-based employee compensation cost is reflected in net loss, as all options
granted under those plans had an exercise price equal to the market value of the
underlying stock on the date of grant. The following table illustrates the
effect on net income and earnings per share if the Company had applied the fair
market value recognition provisions of Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation", to stock-based
employee compensation.
For the Three Months
Ended March 31,
2003 2002
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Net Gain (Loss)
As reported $(114,773) $106,852
Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all awards - -
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Pro forma $(114,773) $106,852
========== =========
Net loss per share:
As reported
Basic: $(0.03) $0.13
Diluted $(0.03) $0.13
Pro forma
Basic: $(0.03) $0.13
Diluted $(0.03) $0.13
Inventories
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A summary of inventories as of March 31, 2003 follows:
Raw Materials $211,560
Work-in-Process 356,897
Finished Goods 537,411
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$1,105,868
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Recent Accounting Standards
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Recent accounting pronouncements discussed in the notes to the December 31,
2002 and 2001 audited financial statements, filed previously with the Securities
and Exchange Commission in form 10-KSB, that were required to be adopted during
the year ending December 31, 2003 did not have a significant impact on the
Company's financial statements.
NOTE 2 - ISSUANCE OF STOCK OPTIONS
On February 13, 2003, the Company's Board of Directors and majority
shareholders approved an increase in the Company's 2001 Stock Option plan from
10,000,000 shares to 45,000,000 shares. On March 3, 2003, the Company issued
options to its employees, pursuant to the 2001 Stock Option Plan, to purchase
1,597,050 shares of the Company's common stock at an exercise price of $0.60
(estimated to be the fair market value on the date of grant). The options vest
over a three-year period from the date of grant and are exercisable through
February 2013.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
Overview
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This report on Form 10-QSB contains, in addition to historical information,
forward-looking statements that involve substantial risks and uncertainties. Our
actual results could differ materially from the results anticipated by us and
discussed in the forward-looking statements. Factors that could cause or
contribute to such differences are discussed in the section entitled "factors
that may affect our business, operating results and financial condition" in the
Company's 10-KSB, for the year ended December 31, 2002.
GTDATA Corporation (the "Company" or "GTDATA") is a Nevada based
corporation that operates its wholly-owned subsidiaries, Technical Services &
Logistics, Inc. (TSLi) and GTDATA Delaware (GTDATA Delaware is merely a legal
entity; it has no assets or operations of any nature). TSLi specializes in the
repair and remarketing of mass storage products such as hard drives, tape
drives, tape libraries, CD Roms, and optical drives. TSLi also provides
logistics support for its customers through its Vendor Managed Inventory
programs that deliver refurbished, working drives to the customer within 24
hours. TSLi's primary customers are the major OEMs, although TSLi also provides
its products and services to other, smaller companies.
The following analysis of the Company's operations refers primarily to
those of TSLi, which constitute the majority of the Company's business
activities. GTDATA is primarily a holding company, with only one employee and no
offices or tangible assets. The structure of the Company is such that all legal
and professional fees, including, but not limited to, audits, taxes, legal, and
fund-raising fees are allocated to GTDATA, while TSLi records expenses incurred
in the normal course of it's operations. Expenses incurred by GTDATA are
primarily wages and legal and professional fees.
During the three months ending March 31, 2003, the Company completed
cost-cutting measures that included the laying-off of ten (10) employees, which
equates to a 10% workforce reduction, and a mandatory 15% wage reduction for all
employees. The cost-cutting measures included the termination of TSLi's
President and the hiring of a new Director of Operations. The cost-cutting
measures were intended to lower costs and improve the Company's bottom-line
results while also increasing both quality and customer satisfaction. Due to the
fact that the wage reductions were effective the week beginning March 3, 2003,
their impact during the current quarter was minimal.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2003 COMPARED TO
MARCH 31, 2002.
Revenue
- -------
Revenue for the three months ending March 31, 2003 was $2,403,810, a
decrease of $16,427, or less than 1%, from the $2,420,237 from the same period
last year. Repair revenue was $1,638,248 (68.2% of total revenue) for the
current period, down $231,419 (12.4%) from the $1,869,667 (77.3% of total
revenue) for the same period in fiscal year 2002. Revenue from the Company's
resale operations increased $214,992 (39.0%) for the current period, with
revenue from the resale operations totaling $765,562 (31.8% of total revenue)
for the current quarter and $550,570 (22.7% of total revenue) for the same
period last year.
Revenue from resale operations benefited from several significant orders
from one of the Company's core customers. As of this filing, the Company had one
remaining unfilled order from this customer totaling approximately $75,000. The
Company hopes to fill this order in the second quarter of fiscal 2003, but
financial constraints and the lack of available product may prevent the Company
from doing so.
Gross Profit
- ------------
For the three months ending March 31, 2003, gross profit totaled $891,917,
or 37.1% of total revenue, compared to $948,762, or 39.2% of total revenue for
the same period last year. Material costs for the current period increased by
approximately $173,800 from the same period last year, due primarily to the
$214,992 increase in revenue from the Company's resale operations. The increased
volume from the resale operations resulted in more product being sold, which
resulted in higher direct material costs. In addition, the Company increased its
inventory reserve by $5,000 per month to provide additional protection from
obsolescence of its inventory. Higher freight and overhead costs also had an
adverse affect on gross profit.
The above-mentioned cost increases were partially offset by a $149,110
decrease in direct labor, which was the result of both headcount reductions and
a significant reduction in overtime.
Operating Expenses
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During the three months ending March 31, 2003, operating expenses totaled
$969,263 (40.3% of revenue), an increase of $169,954 (21.3%) from the $799,309
(33% of revenue) incurred during the same period last year. The increase in
operating expenses was due primarily to: (1) a $90,000 charge for liabilities
arising from the termination of TSLi's former President; (2) an increase of
approximately $24,000 in R&D expenses due to the hiring of engineer; and (3) an
increase in Workers Compensation insurance of approximately $18,000. These
increases were partially offset by the $37,721 decrease in legal and
professional fees, which totaled $73,397 in the current period versus $111,118
in the same period last year.
Normal costs incurred during the course of operations accounted for the
remaining increase in operating expenses.
Income from Operations
- ----------------------
As a result of the above, the Company had an operating loss of $77,346
compared to operating income of $149,453 for the same period last year.
Interest Expense
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For the three months ending March 31, 2003, net interest expense was
$37,427, with total interest expense of $37,454 and interest income of $27. In
the same quarter last year, net interest expense was $42,601, with total
interest expense of $52,792 and interest income of $10,191. Interest expense
decreased due to the reduction in related party debt during the end of fiscal
2002.
Assets and Liabilities
- ----------------------
At March 31, 2003, the Company had total assets of $2,508,940 compared to
total assets of $2,669,165 at December 31, 2002. Cash was $212,948 as of March
31, 2003, down $34,593 from the $247,541 cash on hand as of December 31, 2002.
Cash from operations was $115,110, cash used in investing was $4,088, and cash
used in financing activities was $145,615, with net cash used during the current
period being $34,593.
Net accounts receivable were $955,597 at March 31, 2003, a decrease of
$174,771 (15.5%) from the $1,130,368 at December 31, 2002. Tighter, more
efficient, cash collection procedures and the use of more cash-on-delivery (COD)
terms were the primary reasons for the decrease in net accounts receivable. Net
inventories increased $26,272 (2.4%), to $1,105,868, from the $1,079,596 at
December 31, 2002. The increase in net inventories is attributable to normal
business operations, such as the purchasing of product for the Company's resale
activities.
Net fixed assets totaled $84,316 at March 31, 2003 compared to $82,000 at
December 31, 2002. Purchases of fixed assets totaled $4,088 during the current
period, while depreciation and amortization totaled $1,772, resulting in a net
increase in fixed assets of $2,316.
Total liabilities at March 31, 2003 were $3,100,098, a decrease of $45,452
(1.4%) from the $3,145,550 at December 31, 2002. Accounts payable and accrued
expenses were $1,938,890 at March 31, 2003, an increase of $171,611 (9.7%) from
the $1,767,279 at December 31, 2002. The majority of the increase in accounts
payable and accrued expenses was the result of the $90,000 for liabilities
arising from the termination of TSLi's former President and an increase in
accounts payable resulting from the delaying of payments to our vendors.
Significant items included in accounts payable and accrued expenses are: (1)
accounts payable of $1,203,960, of which approximately $430,000 is for legal and
professional fees; (2) $230,339 of liabilities of TSLi UK, a former subsidiary
of TSLi US that was shut down as of year-end 1999; (3) a $150,000 reserve for
missing customer owned component inventory; and (4) interest payable of
$209,044, of which approximately $136,000 is owed to Robert Genesi, the
Company's Chairman and CEO, and Tony Giraudo, a founder of the Company. The
remaining balance of $145,547 includes a $67,000 liability for fines imposed on
the Company by the US Department of Labor relating to the Company's 401K plan, a
$40,000 warranty reserve, and normal expenses incurred during the course of
operations.
Accrued payroll totaled $163,080 at March 31, 2003, compared to $234,528 at
December 31, 2002. Accrued payroll decreased due to the payment of accrued
vacation and sick time to the employees who were layed-off on January 13, 2003
as part of the Company's restructuring. At March 31, 2003, all of the accrued
wages were attributable to TSLi and consisted of accrued vacation and sick pay
as well as normal month-end wage accruals.
Liquidity and Capital Resources
- -------------------------------
At March 31, 2003, the Company had negative working capital of $748,934 as
compared to negative working capital of $664,634 as of December 31, 2002. Cash
on hand and net accounts receivable were $212,948 and $955,597, respectively, as
of March 31, 2003. Fixed assets, net of depreciation, were $84,316.
The accounts receivable are considered by management to have a high
probability of collection, as a majority of the receivables are from large OEMs.
Inventories consist primarily of hard drives and tapes drives and are very
marketable, although by nature their value tends to decrease over time as newer,
more advanced products are brought to market. As a result, the Company carries a
$315,000 inventory reserve to help minimize inventory obsolescence. Fixed assets
consist primarily of computers, office furniture and equipment, software, and
test equipment.
During the period ended March 31, 2003, the Company generated $115,110 from
operations, as compared to cash from operations of $356,845 in the same period
last year. Cash used in investing activities was $4,088 versus $505 for the same
period in fiscal 2002. Cash used in financing activities was $145,615 during the
current period as compared to cash used of $385,481 in the same period last
year. Net cash used during the first three months of fiscal 2003 was $34,593
while net cash used in the same period last year totaled $29,141. Cash from
accounts receivable and the delaying of payment to vendors generated
approximately $346,000, which was partially offset by debt payments of $145,615,
accrued liability payments of $71,448, inventory purchases of $26,272, and the
payment of other current assets totaling $53,340.
The Company had negative working capital of $748,934 at March 31, 2003. The
Company expects its operations to continue using net cash through the remainder
of fiscal year 2003 as it continues to invest in new business opportunities and
repay debt obligations. Thus, the Company's success, including its ability to
fund future operations, depends largely on its ability to secure additional
funding. There can be no assurance that the Company will be able to consummate
debt or equity financings in a timely manner, on a basis favorable to the
Company, or at all.
Inflation
- ---------
Management believes that inflation has not had a material effect on the
Company's results of operations.
CRITICAL ACCOUNTING POLICIES
The preparation of financial statements and related disclosures in
conformity with accounting principles generally accepted in the United States of
America requires management to make judgements, assumptions, and estimates that
affect the amounts reported in the Company's consolidated financial statements
and the accompanying notes. The amounts of assets and liabilities reported on
our balance sheet and the amounts of revenues and expenses reported for each of
our fiscal periods are affected by estimates and assumptions, which are used
for, but not limited to, the accounting for revenue recognition, accounts
receivable, doubtful accounts, and inventories. Actual results could differ from
these estimates. The following critical accounting policies are significantly
affected by judgements, assumptions, and estimates used in the preparation of
the financial statements:
Risks and Uncertainties
- -----------------------
The Company grants credit to customers within the United States of America
and does not require collateral. The Company's ability to collect receivables is
affected by economic fluctuations in the geographic areas served by the Company.
Reserves for uncollectable amounts are provided, based on past experience and a
specific analysis of the accounts, which management believes are sufficient.
Although the Company expects to collect amounts due, actual collections may
differ from the estimated amounts.
Inventories
- -----------
Inventories are stated at the lower of standard cost or market. Cost is
determined on a weighted average basis that approximates the first-in, first-out
basis. Market is determined by comparison with recent purchases or net
realizable value.
Such net realizable value is based on management's forecast for sales of
the Company's products or services in the ensuing years. The industry in which
the Company operates is characterized by technological advancement and change.
Should demand for the Company's products prove to be significantly less than
anticipated, the ultimate realizable value of the Company's inventories could be
substantially less than the amount shown in the accompanying consolidated
balance sheet.
Revenue Recognition
- -------------------
The Company records sales when goods are shipped to the customer or upon
the completion of the service. In accordance to SFAS 48, "Revenue Recognition
when Right of Return Exists," revenue is recorded net of estimates of markdowns,
price concessions and warranty costs. Such costs are based on management's
evaluation of historical experience, current industry trends, and estimated
costs.
The Securities and Exchange Commission ("SEC") issued Staff Accounting
Bulletin 101 ("SAB 101"), as amended, "Revenue Recognition," which outlines the
basic criteria that must be met to recognize revenue and provides guidance for
presentation of revenue and for disclosures related to revenue recognition
policies in financial statements filed with the SEC. Management of the Company
believes that its revenue recognition policy conforms to SAB 101.
Going Concern
- -------------
The Company's independent certified public accountants have stated in their
reports included in the Company's Form 10-KSB dated April 14, 2003 that the
Company has negative working capital, lack of operations history, and an
accumulated deficit. These conditions, among others, raise substantial doubt
about the Company's ability to continue as a going concern.
Contingencies
- -------------
We currently have a number of obligations that we are unable to meet
without generating additional revenues or raising additional capital. If we
cannot generate additional revenues or raise additional capital in the near
future, we may become insolvent and our stock would become illiquid or
worthless.
As of March 31, 2003, our cash balance was approximately $212,948, our
outstanding accounts payable and accrued expenses totaled $1,938,890, our line
of credit totaled approximately $610,462, and our short-term debt totaled
$387,666. If we do not receive sufficient financing we may (i) liquidate assets,
(ii) seek or be forced into bankruptcy and/or (iii) continue operations, but
incur material harm to our business, operations, or financial condition. These
measures could have a material adverse affect on our ability to continue as a
going concern. Additionally, because of our financial condition, our Board of
Directors have a duty to our creditors that may conflict with the interests of
our stockholders. When a Nevada corporation is operating in the vicinity of
insolvency, the Nevada courts have imposed upon the corporation's directors a
fiduciary duty to the corporation's creditors. If we cannot obtain additional
capital and become unable to pay our debts as they become due, our Board of
Directors may be required to make decisions that favor the interests of
creditors at the expense of our stockholders to fulfill its fiduciary duty. For
instance, we may be required to preserve our assets to maximize the repayment of
debts versus employing the assets to further grow our business and increase
shareholder value.
We have a history of losses, may never generate positive cash flow from
future operations, and may have to further reduce our costs by curtailing future
operations.
ITEM 3. CONTROLS AND PROCEDURES.
Bob Genesi and John Genesi, the Company's Chief Executive Officer ("CEO")
and Chief Financial Officer ("CFO"), respectively, have evaluated the
effectiveness of the Company's disclosure controls and procedures (as defined in
Rule 13a-14(C) under the Securities Exchange Act of (1934) as of a date within
90 days of the filing of this report. Based on that evaluation, both the CEO and
CFO have concluded that the Company's disclosure controls and procedures are
adequate and effective. There have been no significant changes in the Company's
internal controls or in other factors that could significantly affect internal
controls subsequent to the date that Robert and John Genesi completed their
evaluation.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company may, from time to time, be involved in various claims, lawsuits
or disputes with third parties, actions including discrimination or breach of
contract or actions incidental to the operations of its business.
On January 23, 2003, the Company received a letter from the attorney
representing TSLi's former President, threatening legal action if a severance
agreement could not be negotiated by February 10, 2003. The Company originally
attempted to negotiate a settlement, but has since decided not to pursue a
settlement. On March 31, 2003, the Company received a Notice of Claim and
Conference from the Labor Commissioner of the State of California regarding a
claim for unpaid commissions totaling $20,000. A hearing to discuss this matter
has been set for Tuesday, May 27, 2003.
The Company is not currently a party to any legal proceedings, the adverse
outcome of which, individually or in the aggregate would have a material adverse
effect on its financial position or results of operations.
ITEM 2. CHANGES IN SECURITIES.
On February 17, 2003, the Company effected a 1 for 20 reverse stock split.
Post-split, the Company had 12,500,000 shares of common stock authorized and
3,436,209 issued and outstanding. All references throughout these condensed
consolidated financial statements and notes to number of shares, per share
amounts, stock options and warrants and market prices of the Company's common
stock have been retroactively restated to reflect the reverse stock split.
There were no other changes in securities during the three months ending
March 31, 2003.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On February 10, 2003, a majority of the Company's shareholders approved a 1
for 20 reverse stock split via a Shareholder Action by Written Consent. There
were 3,436,209 shares of the Company's common stock (post-split) issued and
outstanding as of February 10, 2003, and 2,561,674 shares were cast in favor of
the reverse split. The reverse split was effective February 17, 2003.
On February 13, 2003, a majority of the Company's shareholders approved an
increase in the Company's 2001 Stock Option plan from 10,000,000 shares to
45,000,000 shares via a Shareholder Action by Written Consent. There were
3,436,209 shares of the Company's common stock (post-split) issued and
outstanding as of February 13, 2003, and 2,561,674 shares were cast in favor of
the increase in the option pool. The effective date of the increase was February
13, 2003.
ITEM 5. OTHER INFORMATION.
On January 13, 2003, the Company terminated Robert Mullaney, Executive Vice
President of Sales at GTDATA and President of TSLi as part of a corporate
restructuring. On January 23, 2003, the Company received a letter from the
attorney representing Mr. Mullaney, threatening legal action if a severance
agreement could not be negotiated by February 10, 2003. The Company originally
attempted to negotiate a settlement, but has since decided not to pursue a
settlement. On March 31, 2003, the Company received a Notice of Claim and
Conference from the Labor Commissioner of the State of California regarding a
claim for unpaid commissions totaling $20,000. A hearing to discuss this matter
has been set for Tuesday, May 27, 2003. In January 2003, the Company accrued
$90,000 related to the termination of Mr. Mullaney.
On February 28, 2003, Jerry DeCiccio resigned from the Company's Board of
Directors and Audit Committee. Mr. DeCiccio was originally nominated to the
Company's Board of Directors and Audit Committee in December 2002. At the time
of his resignation, Mr. DeCiccio did not own, nor have options to purchase, any
shares of the Company's common stock. At the time of his resignation, Mr.
DeCiccio was owed $8,000 by the Company, which, as of this filing, remains
unpaid. The Company anticipates paying Mr. DeCiccio, in full, over the next
several months.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
3.1 Articles of Incorporation filed March 17, 1986, which is
incorporated herein by reference to Exhibit 3.1 to the Registrant's Statement on
Form SB-2, Registration No. 333-35766, as amended (Registrant's Statement on
Form SB-2)
3.2 Articles of Amendment filed September 5, 1996, which is
incorporated herein by reference to Exhibit 3.1 to the Registrant's Statement on
Form SB-2.
3.3 Certificate Pursuant to section 78.207(4) of the Nevada Revised
Statues filed October 11, 1996, which is incorporated herein by reference to
Exhibit 3.1 to the Registrant's Statement on Form SB-2.
3.4 Certificate Pursuant to section 78.207(4) of the Nevada Revised
Statues filed October 24, 1996, which is incorporated herein by reference to
Exhibit 3.1 to the Registrant's Statement on Form SB-2.
3.5 Certificate of Amendment filed March 30, 1998, which is
incorporated herein by reference to Exhibit 3.1 to the Registrant's Statement on
Form SB-2.
3.6 Certificate of Amendment filed August 31, 1998, which is
incorporated herein by reference to Exhibit 3.1 to the Registrant's Statement on
Form SB-2.
3.7 Certificate Pursuant to Section 78.207(4) of the Nevada Revised
Statutes filed March 16, 2001.
3.8 Amended Bylaws of World Internetworks, Inc.
3.9 Certificate of Amendment filed November 30, 2001.
10.1 Agreement and Plan of Reorganization and Merger dated February 27,
2001 between GTDATA, Inc., GTD Acquisition, Inc. and GTData Corporation, which
is incorporated herein by reference to Exhibit 2.1 to the Registrant's Statement
on Form 8-K dated March 22, 2001.
21.1 Subsidiaries of Registrant.
99.1 Certifications
(b) Reports on Form 8-K
None
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
GTDATA Corporation
Date: May 14, 2003 /s/ Robert Genesi
------------------
Robert Genesi, President and
Chief Executive Officer
Date: May 14, 2003 /s/ John Genesi
------------------
John Genesi, Chief
Financial Officer
I, Robert Genesi, certify that:
1. I have reviewed this report on Form 10-QSB of GTDATA Corporation;
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
prior to 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 the audit committee of
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.
Date: May 14, 2003
/s/ Robert Genesi
- --------------------------------
Robert Genesi, Chief Executive
Officer and President
I, John Genesi, certify that:
1. I have reviewed this report on Form 10-QSB of GTDATA Corporation;
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
prior to 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 the audit committee of
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.
Date: May 14, 2003
/s/ John Genesi
- -----------------------------
John Genesi, Chief Financial
Officer
EXHIBIT 99.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of GTDATA Corporation (the
"Company") on Form 10-QSB for the period ended March 31, 2003, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), the
undersigned, in the capacity 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 to the best of his knowledge:
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 operations of the
Company.
A signed original of this written statement as required by section 906
has been prepared by GTDATA Corporation and will be retained by GTDATA
Corporation and furnished to the Securities and Exchange Commission or its staff
upon request.
/s/ Robert Genesi
------------------------------
Robert Genesi, President and May 14, 2003
Chief Executive Officer
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of GTDATA Corporation (the
"Company") on Form 10-QSB for the period ended March 31, 2003, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), the
undersigned, in the capacity 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 to the best of his knowledge:
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 operations of the
Company.
A signed original of this written statement as required by section 906
has been prepared by GTDATA Corporation and will be retained by GTDATA
Corporation and furnished to the Securities and Exchange Commission or its staff
upon request.
/s/ John Genesi
----------------------------
John Genesi, Chief Financial May 14, 2003
Officer