10QSB 1 intercom_123100-10qsb.txt 10QSB FOR 12/31/00 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, 2000 ------------------ [ ] 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. ------------------------------------------------- (Exact name of small business issuer as specified in its charter) Delaware 11-2599441 ----------------------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 111 Village Parkway, Building 2, Marietta, Georgia 30067 -------------------------------------------------------- (Address of principal executive offices) (Zip Code) 770-951-0984 --------------------------- (Issuer's telephone number) N/A ------------------------ (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 ----- ------ 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 ------ ----- INTERCOM SYSTEMS, INC. Form 10 - QSB For the Quarterly Period Ended December 31, 2000 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 PART I - FINANCIAL INFORMATION Item 1. Financial Statements INTERCOM SYSTEMS, INC. CONDENSED BALANCE SHEET DECEMBER 31, 2000 (Unaudited)
ASSETS CURRENT ASSETS: Cash and cash equivalents $ 141,288 =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses $ 30,530 ----------- 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 (5,093,242) ------------ TOTAL STOCKHOLDERS' EQUITY 110,758 ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 141,288 ===========
The accompanying notes are an integral part of these condensed financial statements. (1) INTERCOM SYSTEMS, INC. CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
Six Months Ended Three Months Ended ---------------------------- ----------------------------- December 31, December 31, 2000 1999 2000 1999 ----------- ------------- ------------- ----------- REVENUES: Interest $ 3,823 $ 3,364 $ 1,808 $ 1,711 ---------- ---------- ----------- ---------- EXPENSES: Professional fees 16,791 4,500 9,232 1,250 Management fees and bank charges 3,150 - 1,575 - Stockholder relations 3,034 1,400 1,200 700 Franchise taxes 1,510 1,890 755 755 ---------- ----------- ----------- ------------ TOTAL EXPENSES 24,485 7,790 12,762 2,705 ---------- ----------- ----------- ------------ NET LOSS $ (20,662) $ (4,426) $ (10,954) $ (994) ========== =========== =========== ============ 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
Six Months Ended December 31, ---------------------------- 2000 1999 -------------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (20,662) $ (4,426) Adjustments to reconcile net loss to net cash from operating activities: Increase (decrease) in: Accounts payable and accrued expenses (7,973) 5,010 --------- -------- NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (28,635) 584 -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (28,635) 584 CASH AND CASH EQUIVALENTS - beginning 169,923 168,469 -------- -------- CASH AND CASH EQUIVALENTS - ending $ 141,288 $ 169,053 ======== ========
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 December 31, 2000 and the unaudited condensed statements of operations for the three-month and six-month periods ended December 31, 2000 and 1999 and the unaudited condensed statements of cash flows for the six-month periods ended December 31, 2000 and 1999 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 six-month periods ended December 31, 2000 and 1999 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, 2000 is approximately $116,000. 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, 2000 and 1999 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 December 31, 2000 are $3,000 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 ----------------------------------------------------------------------------- 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 December 31, 2000 as compared to the three months ended December 31, 1999: 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, 2000 interest income was $1,808 compared to $1,711 for the comparable period of the prior fiscal year. The increase in interest income was due to higher rates of return on money market funds owned by the Company. General, administrative and other expenses were $12,762 for the three months ended December 31, 2000 compared to $2,705 for the three months ended December 31, 1999. The increase in general, administrative and other expenses was due primarily to an increase in legal fees of approximately $5,200, accounting fees of $2,750, management fees of $1,500 and stockholder relations expenses of $500 for the three months ended December 31, 2000 as compared to the three months ended December 31, 1999. (6) Six months ended December 31, 2000 as compared to the six months ended December 31, 1999: For the six months ended December 31, 2000 interest income was $3,823 compared to $3,364 for the comparable period of the prior fiscal year. The increase in interest income was due to higher rates of return on money market funds owned by the Company. General, administrative and other expenses were $24,485 for the six months ended December 31, 2000 compared to $7,790 for the six months ended December 31, 1999. The increase in general, administrative and other expenses was due primarily to an increase in legal fees of approximately $8,800, accounting fees of $3,500, management fees of $3,000 and stockholder relations expenses of $1,600 for the six months ended December 31, 2000 as compared to the six months ended December 31, 1999. Liquidity and Capital Resources At December 31, 2000, cash and cash equivalents were $141,288. Working capital was $110,758. Money market funds of $116,313 bear an interest rate of 5.6%. (7) Part II Other Information 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)