U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2001
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to ____________
Commission File Number 0-30745
INTERCALLNET, INC.
----------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Florida 88-0426807
--------------------------- -----------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization Identification No.)
6340 NW 5th Way
Fort Lauderdale, FL 33309
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(Address of principal executive offices)
(954) 315-3100
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(Issuer's telephone number)
NEVER MISS A CALL, INC. - December 31 (former fiscal year)
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(Former name and former fiscal year if changed since last report)
The number of shares outstanding of the issuer's common stock as of May 18, 2001
was 11,813,851.
Transitional Small Business Disclosure Format (Check One:)
Yes No X
------ ------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
a) Consolidated Balance Sheets as of March 31, 2001
(Unaudited) and June 30, 2000.
b) Consolidated Statements of Operations (Unaudited) for
the nine months and three months ended March 31, 2001
and March 31, 2000.
c) Consolidated Statement of Stockholders' Equity for
the period July 30, 1999 (date of incorporation)
through June 30, 2000 and for the nine months ended
March 31, 2001 (Unaudited).
d) Consolidated Statements of Cash Flows (Unaudited) for
the nine months ended March 31, 2001 and March 31,
2000.
e) Notes to Consolidated Financial Statements
Part I: Financial Information
Item 1. Financial Statements
INTERCALLNET, INC.
(A development stage company)
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2001 (unaudited) AND JUNE 30, 2000
================================================================================
(Unaudited)
March 31 June 30,
2001 2000
----------- -----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,529,815 $ 844,727
Accounts receivable 205,924 115,790
Prepaid expenses and other assets 111,947 48,240
----------- -----------
TOTAL CURRENT ASSETS 1,847,686 1,008,757
PROPERTY AND EQUIPMENT, net 1,222,583 145,930
INTANGIBLE ASSETS, net 671,758 347,478
SECURITY DEPOSITS 53,120 114,288
----------- -----------
TOTAL $ 3,795,147 $ 1,616,453
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 257,192 $ 82,938
Line of credit 100,000 --
Current portion of capital lease 101,064 --
Current portion of note payable 40,008 36,471
----------- -----------
TOTAL CURRENT LIABILITIES 498,264 119,409
----------- -----------
CAPITAL LEASE, less current portion 24,334 --
NOTE PAYABLE, less current portion 52,947 83,529
----------- -----------
TOTAL LIABILITIES 575,545 202,938
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $0.0001 par value; 2,000,000 shares authorized; -- --
zero shares issued and outstanding
Common stock, $0.0001 par value; 50,000,000 shares authorized;
11,792,854 and 4,900,210 shares issued and outstanding, at
March 31, 2001 and June 30, 2000, respectively 1,180 491
Additional paid-in capital 5,613,148 1,935,234
Deficit accumulated during the development stage (2,394,726) (522,210)
----------- -----------
STOCKHOLDERS' EQUITY, NET 3,219,602 1,413,515
----------- -----------
TOTAL $ 3,795,147 $ 1,616,453
=========== ===========
See accompanying notes to consolidated financial statements.
3
INTERCALLNET, INC.
(A development stage company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
FOR THE NINE MONTHS ENDED MARCH 31, 2001 and
FOR THE PERIOD JULY 30, 1999 (date of incorporation) THROUGH MARCH 31, 2000
================================================================================
(Unaudited)
Cumulative
from inception
(Unaudited) (Unaudited) through
March 31, March 31, March 31,
2001 2000 2001
----------- ----------- -----------
REVENUE $ 739,476 $ -- $ 1,008,165
----------- ----------- -----------
EXPENSES:
Payroll and related costs 1,138,420 -- 1,465,290
Start up expenses -- 237,223 202,613
Facilities expenses 393,593 -- 465,774
Professional fees 617,019 -- 715,310
Depreciation and amortization 264,499 -- 282,080
General and administrative 259,228 -- 351,279
----------- ----------- -----------
TOTAL EXPENSES 2,672,759 237,223 3,482,346
----------- ----------- -----------
LOSS FROM OPERATIONS (1,933,283) (237,223) (2,474,181)
OTHER INCOME (EXPENSE):
Interest expense (12,386) -- (12,386)
Interest income 73,153 10,609 91,841
----------- ----------- -----------
OTHER INCOME, net 60,767 10,609 79,455
LOSS BEFORE PROVISION FOR INCOME TAXES (1,872,516) (226,614) (2,394,726)
PROVISION FOR INCOME TAXES -- -- --
----------- ----------- -----------
NET LOSS $(1,872,516) $ (226,614) $(2,394,726)
=========== =========== ===========
PER SHARE AMOUNTS:
Net loss per common share outstanding, basic and diluted $ (0.20) $ (0.21)
=========== ===========
Weighted average number of shares outstanding 9,215,860 1,098,375
=========== ===========
See accompanying notes to consolidated financial statements.
4
INTERCALLNET, INC.
(A development stage company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
================================================================================
(Unaudited) (Unaudited)
March 31, March 31,
2001 2000
----------- -----------
REVENUE $ 242,361 $ --
----------- -----------
EXPENSES:
Payroll and related costs 383,658 --
Start up expenses -- 237,223
Facilities expenses 167,954 --
Professional fees 90,856 --
Depreciation and amortization 140,250 --
General and administrative 86,634 --
----------- -----------
TOTAL EXPENSES 869,352 237,223
----------- -----------
LOSS FROM OPERATIONS (626,991) (237,223)
OTHER INCOME (EXPENSE):
Interest expense (3,476) --
Interest income 15,119 10,609
----------- -----------
OTHER INCOME, net 11,643 10,609
LOSS BEFORE PROVISION FOR INCOME TAXES (615,348) (226,614)
PROVISION FOR INCOME TAXES -- --
----------- -----------
NET LOSS $ (615,348) $ (226,614)
=========== ===========
PER SHARE AMOUNTS:
Net loss per common share outstanding, basic and diluted $ (0.07) $ (0.18)
=========== ===========
Weighted average number of shares outstanding 9,381,356 1,262,333
=========== ===========
See accompanying notes to consolidated financial statements.
INTERCALLNET, INC.
(A development stage company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD JULY 30, 1999 (date of incorporation) THROUGH JUNE 30, 2000
AND FOR THE NINE MONTHS ENDED MARCH 31, 2001
================================================================================
Deficit
Accumulated
Common Common Additional During the Total
Stock, Stock, at Paid-in Development Stockholders'
# of Shares par value Capital Stage Equity
-------------- ------------ ------------- -------------- --------------
STOCKHOLDERS' EQUITY, July 30, 1999 -- $ -- $ -- $ -- $ --
Issuance of common stock to founders 3,517,500 352 (251) -- 101
Issuance of common stock for cash,
net of expenses 1,207,710 121 1,685,503 -- 1,685,624
Issuance of common stock for services
and a domain name 175,000 18 249,982 -- 250,000
Net loss for the initial period
ended June 30, 2000 -- -- -- (522,210) (522,210)
----------- ----------- ----------- ----------- -----------
STOCKHOLDERS' EQUITY, June 30, 2000 4,900,210 491 1,935,234 (522,210) 1,413,515
Issuance of common stock for cash,
net of expenses (unaudited) 2,720,025 272 3,840,319 -- 3,840,591
Repurchase common shares (unaudited) (175,000) (18) (199,982) -- (200,000)
Recapitalization as a result of merger
(unaudited) 4,347,619 435 37,577 -- 38,012
Net loss for the nine months ended
March 31, 2001 (unaudited) -- -- -- (1,872,516) (1,872,516)
----------- ----------- ----------- ----------- -----------
STOCKHOLDERS' EQUITY,
March 31, 2001 (unaudited) 11,792,854 $ 1,180 $ 5,613,148 $(2,394,726) $ 3,219,602
=========== =========== =========== =========== ===========
See accompanying notes to consolidated financial statements.
6
INTERCALLNET, INC.
(A development stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE NINE MONTHS ENDED MARCH 31, 2001 and
FOR THE PERIOD JULY 30, 1999 (date of incorporation) THROUGH MARCH 31, 2000
================================================================================
(Unaudited)
Cumulative
from inception
(Unaudited) (Unaudited) through
March 31, March 31, March 31,
2001 2000 2001
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,872,516) $ (226,614) $(2,394,726)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 264,499 -- 282,080
Common stock issued to settle a lease obligation -- 125,000 125,000
Changes in certain current assets and liabilities:
Accounts receivable (90,134) -- (205,924)
Prepaid expenses and other assets (63,707) (100) (111,947)
Accounts payable and accrued expenses 174,254 -- 257,192
----------- ----------- -----------
NET CASH USED IN OPERATING ACTIVITIES (1,587,604) (101,714) (2,048,325)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of intangible assets (455,825) (120,000) (691,775)
Purchase of equipment (1,084,209) (122,350) (1,234,248)
Proceeds from merger 38,012 -- 38,012
Change in security deposits 61,168 (24,000) (53,120)
----------- ----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (1,440,854) (266,350) (1,941,131)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Changes in line of credit 100,000 -- 100,000
Proceeds from note payable -- 120,000 120,000
Payments on note payable (27,045) -- (27,045)
Repurchase of common stock for cash (200,000) -- (200,000)
Sales of common stock for cash 3,840,591 1,070,100 5,526,316
----------- ----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 3,713,546 1,190,100 5,519,271
----------- ----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 685,088 822,036 1,529,815
CASH AND CASH EQUIVALENTS, beginning of period 844,727 -- --
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 1,529,815 $ 822,036 $ 1,529,815
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ -- $ -- $ --
=========== =========== ===========
Cash paid for income taxes $ -- $ -- $ --
=========== =========== ===========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
During the nine months ended March 31, 2001, the Company acquired certain
computer equipment for approximately $125,300 pursuant to a capital lease.
During the initial period ended June 30, 2000, the Company acquired a domain
name by issuing common stock valued at $125,000.
See accompanying notes to consolidated financial statements.
7
INDEPENDENT ACCOUNTANTS' REPORT
-------------------------------
To the Board of Directors of
Intercallnet, Inc.
We have reviewed the accompanying consolidated balance sheet of Intercallnet,
Inc. and its subsidiary (the "Company") as of March 31, 2001, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the three month and nine month periods then ended. These financial statements
are the responsibility of the management of the Company.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
/s/ Ahearn, Jasco + Company, P.A.
AHEARN, JASCO + COMPANY, P.A.
Certified Public Accountants
Pompano Beach, Florida
May 14, 2001
8
INTERCALLNET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION
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Organization
------------
Intercallnet, Inc. (together with its wholly-owned subsidiary,
Inter-Call-Net Teleservices, Inc., the "Company") is the result
of a merger between Never Miss A Call, Inc., a Nevada Corporation
("NMC") into a newly formed, wholly-owned subsidiary,
Intercallnet, Inc., incorporated in the State of Florida on April
19, 2001.
Inter-Call-Net Teleservices, Inc., d/b/a Helpmenow ("ICN") was
incorporated in the State of Florida on July 30, 1999. On
December 21, 2000, ICN entered into a Plan of Reorganization and
Merger Agreement ("Merger Agreement") with NMC and NMC
Acquisition Corp, a Nevada corporation and a wholly-owned
subsidiary of NMC. Pursuant to the terms of the Merger Agreement,
the closing of which occurred on January 26, 2001, NMC, through
the subsidiary, merged with ICN and the issued and outstanding
securities of ICN were canceled. NMC issued 1.25 shares of its
common stock for each share of ICN's common stock to the former
shareholders of ICN. Outstanding warrants of ICN became warrants
to purchase shares of NMC's common stock on the same conversion
basis. Post-closing, the former shareholders of ICN owned
approximately 79.5% of the issued and outstanding shares of NMC
(excluding shares of stock underlying warrants).
Although NMC is the legal surviving entity, for accounting
purposes, the merger between ICN and NMC is treated as a purchase
business acquisition of NMC by ICN (a reverse merger) and a
re-capitalization of ICN. For accounting purposes, ICN is the
acquirer because the former stockholders' of ICN received the
larger portion of the common stockholder interests and voting
rights in the combined enterprise when compared to the common
stockholder interests and voting rights retained by the
pre-merger stockholders of NMC. As a result, ICN will be
re-capitalized to reflect the authorized stock of the legal
surviving entity. Since ICN is the acquirer, for accounting
purposes, NMC's fiscal year end of December 31st has been changed
to ICN's fiscal year end June 30th. All significant intercompany
balances and transactions are eliminated in consolidation.
The Company is a development stage enterprise, and provides
telephone based (and planned interactive Internet) customer and
marketing support services on an outsourced basis to various
businesses. Prospective customers include various businesses that
require help in the areas of acquisition, retention, and
servicing their customers on an outsourced basis.
Interim Information
-------------------
The financial statements of the Company for the three month and
nine month periods ended March 31, 2001 have been prepared in
accordance with generally accepted accounting principles for
interim financial information and the applicable regulations of
the Securities and Exchange Commission ("SEC") for interim
financial information. Accordingly, they do not include all of
the information and footnotes required by generally accepted
accounting principles for complete financial statements. The
financial statements as of and for the period ended March 31,
2001 are unaudited. In the opinion of the management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. The March
31, 2001 financial statements have been reviewed by an
independent public accountant pursuant to Item 310(b) of SEC
Regulation S-B and following applicable standards for conducting
such reviews, and the report of the accountant is included as
part of this document. The results of operations for the interim
period are not necessarily indicative of the results of
operations for the fiscal year.
9
INTERCALLNET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
--------------------------------------------------------------------------------
NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION (continued)
--------------------------------------------------------------------------------
Going Concern Considerations
----------------------------
The Company's financial statements have been prepared on a going
concern basis that contemplates the realization of assets and the
settlement of liabilities and commitments in the normal course of
business. The Company is in its development stage. Management
recognizes that the Company must generate capital and revenue
resources to enable it to achieve profitable operations.
Management is planning to obtain additional capital from revenue
generated from operations and through the sale of equity and/or
debt securities. The realization of assets and satisfaction of
liabilities in the normal course of business is dependent upon
the Company obtaining additional revenues and equity capital and
ultimately achieving profitable operations. However, no
assurances can be given that the Company will be successful in
these activities. Should any of these events not occur, the
accompanying financial statements will be materially affected.
Basis of Presentation
---------------------
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
The financial statements and notes are the representation of the
Company's management, which is responsible for their integrity
and objectivity. The accounting policies of the Company are in
accordance with generally accepted accounting principles and
conform to the standards applicable to development stage
companies.
--------------------------------------------------------------------------------
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------------------
Revenue Recognition and Concentrations
--------------------------------------
Revenue is recognized at the time the services are provided.
Accounts receivable at March 31, 2001 and June 30, 2000, and all
revenue for the periods then ended, is from a single customer. As
such, the Company believes that it presently has an abnormal
concentration of credit risk.
Property and Equipment
----------------------
Property and equipment is recorded at acquisition cost and
depreciated using the straight-line method over the estimated
useful lives of the assets. Useful lives range from five to seven
years for office equipment and furniture and fixtures. Leasehold
improvements are depreciated over the life of the lease.
Expenditures for routine maintenance and repairs are charged to
expense as incurred.
Organization Costs and Start-up Expenses
----------------------------------------
In accordance with SOP 98-5, "Reporting on the Costs of Start-up
Activities," organization costs and start-up expenditures were
expensed as incurred.
Fair Value of Financial Instruments
-----------------------------------
Cash, accounts receivable and accounts payable are reflected in
the financial statements at cost, which approximates fair market
value because of the short-term maturity of those instruments.
The fair value of the Company's debt obligation is approximately
the same as the recorded value as interest rates and terms are
similar to current market rates and terms.
10
INTERCALLNET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
--------------------------------------------------------------------------------
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
--------------------------------------------------------------------------------
Intangible Assets
-----------------
Intangible assets are being amortized on the straight-line method
over their estimated useful lives. The licensing agreement has a
life of three years, the cost of acquiring the domain name is
being amortized over 15 years, and the web design costs over
three years. The web site costs are being capitalized pursuant to
SOP 98-1, "Accounting for Costs of Computer Software Developed or
Obtained for Internal Use," and amortization began in October
2000 when the web site was placed in service. The Company has
implemented Statement of Financial Accounting Standards ("SFAS")
No. 121, which prescribes the accounting for impairment losses on
certain long-lived assets, including intangibles. No impairment
losses have been recognized.
Income Taxes
------------
The Company accounts for income taxes in accordance with the SFAS
No. 109, "Accounting for Income Taxes." Deferred taxes are
provided on a liability method whereby deferred tax assets are
recognized for deductible temporary differences, operating loss
carryforwards, and tax credit carryforwards, and deferred tax
liabilities are recognized for taxable temporary differences.
Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax bases. Deferred
tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some
portion or all of the deferred tax assets will not be realized.
Deferred tax assets and liabilities are adjusted for the effects
of changes in tax laws and rates on the date of enactment. State
minimum taxes are expensed as paid.
Net Loss per Share
------------------
The Company follows the provisions of SFAS No. 128, "Earnings per
Share," which requires companies with complex capital structures
or common stock equivalents to present both basic and diluted
earnings per share ("EPS") on the face of the income statement.
Basic EPS is calculated as income available to common
stockholders divided by the weighted average number of common
shares outstanding during the period. Diluted EPS is calculated
using the "if converted" method for convertible securities and
the treasury stock method for options and warrants as previously
prescribed by Accounting Principles Board of Opinion No. 15,
"Earnings per Share."
Cash and Cash Equivalents
-------------------------
Cash and cash equivalents, if any, include all highly liquid debt
instruments with an original maturity of three months or less at
the date of purchase. The Company periodically maintains cash
balances at financial institutions in excess of the federally
insured limit.
Statement of Comprehensive Income
---------------------------------
In accordance with SFAS No. 130, "Reporting Comprehensive
Income," the Company is required to report its comprehensive
income. Other comprehensive income refers to revenue, expenses,
and gains and losses that under generally accepted accounting
principles are included in comprehensive income but are excluded
from net income, as these amounts are recorded directly as an
adjustment to stockholders' equity. A statement of comprehensive
income is not presented since the Company has no items of other
comprehensive income. Comprehensive income is the same as net
income for the periods presented herein.
11
INTERCALLNET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
--------------------------------------------------------------------------------
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
--------------------------------------------------------------------------------
New Accounting Pronouncements
-----------------------------
In June 1998, the Financial Accounting Standards Board issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended by SFAS No. 138. Among other provisions,
it requires that entities recognize all derivatives as either
assets or liabilities in the statement of financial position and
measure those instruments at fair value. Gains and losses
resulting from changes in fair values of those derivatives would
be accounted for depending on the use of the derivative and
whether it qualifies for hedge accounting. The effective date of
this standard was delayed to fiscal years beginning after June
15, 2000 via the issuance of SFAS No. 137. The Company adopted
this standard for its fiscal year beginning July 1, 2000. The
adoption of this standard did not have a material impact on
results of operations, financial position or cash flows.
Reclassifications
-----------------
Certain June 30, 2000 financial statement amounts were
reclassified to conform to the March 31, 2001 presentation.
--------------------------------------------------------------------------------
NOTE 3. DEBT OBLIGATIONS
--------------------------------------------------------------------------------
Line of Credit
--------------
During the nine months ended March 31, 2001, the Company entered
into a line of credit with a financial institution. This
agreement provides for a maximum revolving line of credit of
$500,000. The amount outstanding under this line of credit was
$100,000 at March 31, 2001 with a corresponding interest rate of
7.5%.
Capital Lease
-------------
During the nine months ended March 31, 2001, the Company acquired
certain office equipment under the provisions of a long-term
lease and has capitalized the minimum lease payments. The lease
is for a period of two years and the leased property has a
recorded cost of approximately $125,300.
--------------------------------------------------------------------------------
NOTE 4. CAPITAL STOCK
--------------------------------------------------------------------------------
Preferred Stock
---------------
The Company has authorized "blank check" preferred stock of
2,000,000 shares with a $0.0001 par value. The preferred stock
may be created and issued from time to time in one or more series
and with such designations, rights, preferences, conversion
rights cumulative, relative, participating, optional or other
rights, including voting rights, qualifications, limitations or
restrictions thereof as shall be stated and expressed in the
resolution or resolutions as authorized by the Board of Directors
of the Company. As of March 31, 2001, the Board of Directors
has not designated any shares of the preferred stock.
Common Stock
------------
The Company has authorized common stock of 50,000,000 shares with
a $0.0001 par value. In connection with the merger, as described
in note 1, the Company issued 4,347,619 shares of common stock to
existing shareholders of ICN, net of the 3,500,000 shares
held by the two directors of NMC which were canceled.
12
INTERCALLNET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
--------------------------------------------------------------------------------
NOTE 4. CAPITAL STOCK (continued)
--------------------------------------------------------------------------------
Private Placement of Common Stock
---------------------------------
From July 2000 through March 2001, the Company issued 2,720,025
shares of common stock pursuant to a private placement memorandum
that resulted in net proceeds to the Company of $3,840,591. In
July 2000, the Company amended the terms of its private placement
memorandum to provide current and prospective investors who
invest an aggregate of $250,000 or more warrants to purchase
shares of the Company's common stock. From July 2000 through
March 2001, the Company issued warrants to purchase an aggregate
of 1,185,625 shares of the Company's common stock at $0.571428
per share, exercisable for a period of three years.
Repurchase of Common Stock
--------------------------
On February 16, 2001, the Company repurchased 175,000 shares from
a shareholder for a total of $200,000. Such shareholder retained
the associated warrants to purchase 437,500 shares of the
Company's common stock.
Stock Split
-----------
On April 3, 2001, the Company completed a 3.5 to 1 forward split
of the common stock. The issued shares of the Company, as well as
all other share and per share amounts presented in the financial
statements have been adjusted accordingly.
--------------------------------------------------------------------------------
NOTE 5. COMMTMENTS AND CONTINGENCIES
--------------------------------------------------------------------------------
Lease Obligations - Equipment
-----------------------------
The Company entered into an operating lease agreement for certain
office equipment during the nine months ended March 31, 2001. The
lease is for three years with payments of approximately $726 per
month. In connection with the lease the Company provided an
irrevocable letter of credit totaling approximately $23,000.
Royalty Payments
----------------
The Company is obligated to make monthly payments to the former
owner of its domain name, in an amount ranging from $500 to
$1,000 per month, depending on the Company's gross revenues.
These payments continue indefinitely, and began in August 2000.
Litigation, Claims, and Assessments
-----------------------------------
In the ordinary course of business, the Company is exposed to
various claims, threats, and legal proceedings. In management's
opinion, the outcome of such matters, if any, will not have a
material impact upon the Company's financial position and results
of operations.
13
Item 2. Plan of Operation
FORWARD LOOKING STATEMENTS
This report on Form 10-QSB contains forward-looking statements which
are made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 and which are subject to risks and uncertainties
which could cause actual results to differ materially from those discussed in
the forward-looking statements and from historical results of operations.
Forward-looking statements generally are accompanied by words such as
"anticipate," "believe," "estimate," "expect," "intend," "plan," "project,"
"potential" or similar statements. Although we believe that the expectations
reflected in such forward-looking statements are reasonable, no assurance can be
given that such expectations will prove correct. Any forward-looking statements
speak only as of the date on which such statement is made, are not guarantees of
future performance and involve certain risks, uncertainties and assumptions that
are difficult to predict. Therefore, actual outcomes and results may differ
materially from what is expressed or forecast in such forward-looking
statements. We do not undertake any obligation to update publicly any
forward-looking statements, whether as a result of new information, future
events or otherwise. Factors that could cause our results to differ materially
from the results discussed in such forward-looking statements include economic
and market factors affecting the Company and/or its customers, the impact of
competitive services and pricing, customer demand and market acceptance,
possible reliance on a limited number of large customers and significant
suppliers, our ability to obtain additional working capital from operations
and/or other sources as required or otherwise desired, and our ability to manage
growth and implement our business strategy, which includes possible acquisitions
and their integration into our operations. Many of such risk factors are beyond
our control. New factors emerge from time to time and it is not possible for
management to predict all of such factors, nor can it assess the impact of each
such factor on the business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in
any forward-looking statements. In light of these risks and uncertainties, there
can be no assurance that the results anticipated in these forward-looking
statements contained in this report will in fact occur. All forward-looking
statements are expressly qualified in their entirety by the cautionary
statements in this section.
ORGANIZATION AND OPERATIONS
Intercallnet, Inc. (together with our wholly-owned subsidiary,
Inter-Call-Net Teleservices, Inc., the "Company") is the result of a merger
between Never Miss A Call, Inc., a Nevada corporation ("NMC") into a
newly-formed, wholly-owned Florida subsidiary, Intercallnet, Inc. ("ICN")
pursuant to a Plan and Agreement of Merger, a copy of which was filed as an
exhibit to a definitive information statement filed with the U.S. Securities and
Exchange Commission ("SEC" or "Commission") on March 14, 2001. Simultaneous,
with such change of domicile merger and reincorporation, the Company's name was
changed to Intercallnet, Inc. (OTCBB symbol: ICLN).
We are an interactive customer relationship provider ("ICRP") of
telephone-based (and planned inter-active Internet) customer and marketing
support services on an outsourced basis to various businesses. We intend to
pursue a growth strategy which will entail, among other things, the possible
acquisition of existing companies involved in segments of the telephone-based
and inter-active Internet customer and marketing support services complimentary
to that of the Company and to acquire additional experienced industry personnel.
We have no current understandings or arrangements with respect to any
prospective acquisitions.
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RESULTS OF OPERATIONS
Nine Months Ended March 31, 2001as compared to the Nine Months Ended
March 31, 2000:
For the nine months ended March 31, 2001, the Company had a net loss of
$1,872,516 or $0.20 per share, basic and diluted as compared to the nine months
ended March 31, 2000 whereas the Company had a net loss of $226,614 or $0.21 per
share, basic and diluted.
The increase in net loss of $1,645,902 is a result of the following:
Revenue for the nine months ended March 31, 2001 was $739,476. The
Company did not generate revenue during the nine months ended March 31, 2000, as
the first customer did not come under contract until May 2000.
Expenses for the nine months ended March 31, 2001 were $2,672,759 as
compared to $237,223 for the nine months ended March 31, 2000. The increase in
overall expenses of $2,435,536 is due primarily to (i) an increase in payroll
and related costs due to hiring employees and establishing facilities to service
the customers that are under contract and (ii) an increase in professional fees
associated with legal and accounting services as a result of the merger with
NMC, as previously discussed, and (iii) an increase in depreciation and
amortization expense as a result of the purchase of equipment and intangible
assets.
The expenses for the nine months ended March 31, 2000 of $237,223
represent start up expenditures.
Three Months Ended March 31, 2001 as compared to the Three Months Ended
March 31, 2000:
For the three months ended March 31, 2001, the Company had a net loss
of $615,348 or $0.07 per share, basic and diluted as compared to the three
months ended March 31, 2000 whereas the Company had a net loss of $226,614 or
$0.18 per share, basic and diluted.
The increase in net loss of $388,734 is a result of the following:
Revenue for the three months ended March 31, 2001 was $242,361. The
Company did not generate revenue during the three months ended March 31, 2000,
as the first customer did not come under contract until May 2000.
Expenses for the three months ended March 31, 2001 were $869,352 as
compared to $237,223 for the three months ended March 31, 2000. The increase in
overall expenses of $632,129 is due primarily to (i) an increase in payroll and
related costs due to hiring employees and establishing facilities to service the
customers that are under contract and (ii) an increase in professional fees
associated with legal and accounting services as a result of the merger with
NMC, as previously discussed, and (iii) an increase in depreciation and
amortization expense as a result of the purchase of equipment and intangible
assets.
The expenses for the three months ended March 31, 2000 of $237,223
represent start up expenditures.
LIQUIDITY AND CAPITAL RESOURCES
As previously discussed in Note 1 to our consolidated financial
statements, our consolidated financial statements have been prepared on a going
concern basis that contemplates the realization of assets and the settlement of
liabilities and commitments in the normal course of business. To the extent that
we are unable to obtain additional working capital from operations and/or other
sources as required or otherwise desired, our consolidated financial statements
will be materially affected.
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At March 31, 2001, we had stockholders' equity of $3,219,602 and
working capital of $1,349,422. Since our inception, we have incurred losses of
approximately $2,394,726. Our operations and growth have been funded by the sale
of common stock with net cash proceeds of approximately $5,526,000, and
borrowings, further discussed below, of approximately $318,000. These funds have
been used for working capital and capital expenditures.
We believe our current sources of credit and liquidity, including
our credit line and our cash on hand will provide sufficient liquidity to meet
our cash requirements to sustain existing operations for approximately the next
twelve months. No assurances are given, however, that we are correct in our
belief as our current revenues are limited and the slowing U.S. economy may have
the effect of causing prospective customers with whom we are presently in
discussions, as well as other prospective customers, to limit, reduce and/or
eliminate their planned expenditures for outsourced customer service and
marketing activities. In such event, we may be required, or otherwise in our
discretion, seek to raise additional capital from time to time over such period
for additional working capital and related corporate purposes. As discussed
below, additional funding will be required for the Company to increase staff and
grow operations.
In order to grow our operations, we will need to increase our staff to
support such growth. To increase our staff, we will require additional funding
to attract, hire and train such personnel. We may seek additional funding in the
form of equity and/or debt financing. There are no current commitments in place
for such funding and no assurances are given that such funding will be
available, or if available, on terms satisfactory to the Company.
An element of our growth strategy is the possible acquisition of
additional telemarketing companies. We believe we may be able to acquire such
companies or select assets through the issuance of our shares of common stock.
It is possible, however, that certain acquisition candidates may also require
cash to be acquired. In such event, we may require additional funding to finance
such acquisitions. Such financing, if available, may be in the form of equity
and/or debt. We have no current understandings or arrangements with respect to
any prospective acquisitions or commitments for funding in connection therewith.
Our primary objectives over approximately the next twelve months from
the date hereof and following the merger described elsewhere herein, include the
continued servicing of our existing and new customer accounts, hiring and
training additional in-house tele-service representatives (whom we refer to as
"Tele-Service Representatives" ("TSRs"))and interactive service representatives
(whom we refer to as "Net Service Representatives" ("NSRs")) and additional
related supervisory personnel, and engaging in sales and marketing efforts to
attract additional clientele. To a lesser extent, we may also seek to engage in
select acquisitions of similar businesses for cash and/or securities as a
further method to also increase our client base, as discussed above.
While no assurances are given, we do not anticipate purchasing, leasing
or selling any plant or significant equipment during approximately the next
twelve months as we believe we have purchased and or leased substantially all of
the hardware/software currently deemed necessary to conduct our current and
prospective business operations over such period. It is expected that our
current number of employees, approximately 135 (including leased employees), may
significantly increase, from time-to-time, during the course of the year as
additional and existing client campaigns may be undertaken to meet the staffing
requirements associated therewith. Such employees are expected to include a
combination of full-time, part-time and leased personnel.
We do not generally believe our business is seasonal.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
(a) Our reincorporation from Nevada to Florida was accomplished by
merging the Company with and into a newly-formed, wholly-owned Florida
subsidiary, Intercallnet, Inc. ("ICN"), whose articles of incorporation,
provided, among other matters, for 50,000,000 authorized shares of common stock,
$.0001 par value per share (representing an increase of 25,000,000 shares from
the Company's prior certificate of incorporation which provides for 25,000,000
shares and a change in the par value) and 2,000,000 shares of "blank check"
preferred stock, $.0001 par value per share (the Company's prior certificate of
incorporation did not provide for preferred stock);
(b) On April 3, 2001, the Company effected a 3.5:1 forward stock split,
as previously discussed in a definitive information statement mailed to
shareholders and filed with the SEC on March 14, 2001 (for purposes of the
Over-the-Counter Bulletin Board, reflected as of April 24, 2001).
(c) During the past fiscal quarter, the Company issued the following
securities pursuant to Section 4 (2) of the Securities Act of 1933, as amended
(reflects the 3.5:1 forward stock split described above): 17,500 shares of
common stock to Kenneth E. Thompson on March 13, 2001; 3,500 shares of common
stock to Gordon Esses on March 13, 2001; and 8,750 shares of common stock to
Stanley Harris on March 2, 2001.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
On April 19, 2001, the Company effected a reincorporation from Nevada
to Florida (the "Reincorporation"). Such Reincorporation was accomplished by
merging Never Miss A Call, Inc., a Nevada corporation and the Company's
predecessor ("NMC"), with and into ICN pursuant to a Plan and Agreement of
Merger, a copy of which was filed as an exhibit to a definitive information
statement filed with the SEC on March 14, 2001. Simultaneous, with such
Reincorporation, the Company's name was changed to Intercallnet, Inc. (OTCBB
symbol: ICLN).
The Plan and Agreement of Merger was authorized, ratified and approved
on February 28, 2001 by a written consent of the holders of 3,408,387 shares of
the common stock of NMC, representing approximately 52% of the then issued and
outstanding shares of the common stock of NMC, in accordance with applicable
Nevada law which requires the approval of more than 50% of the issued and
outstanding common stock of the subject Nevada corporation.
The Plan and Agreement of Merger was authorized, ratified and approved
on February 28, 2001 by a written consent of the holder of 100% of the issued
and outstanding shares of the common stock of Intercallnet, Inc., in accordance
with applicable Florida law which requires the approval of more than 50% of the
issued and outstanding common stock of the subject Florida corporation.
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Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) The following documents are filed as part of this report:
Exhibit Number Description
2.1 Plan and Agreement of Merger dated April 16, 2001 between the
Company and NMC
2.2 Articles of Merger filed with Nevada Secretary of State
2.3 Articles of Merger filed with Florida Secretary of State
3.1 Articles of Incorporation
3.2 Bylaws
4.1 Form of Intercallnet, Inc. Common Stock Certificate
4.2 Form of Intercallnet, Inc. Common Stock Purchase Warrant
10.10 Agreement dated April 25, 2001 by and between Americomm Direct
Marketing and Intercallnet, Inc.
10.11 Telemarketing Service Agreement dated as of February 28, 2001
by and between Alarm Communication Technologies LLC and
Inter-Call-Net Teleservices, Inc.*
10.12 Telemarketing Service Agreement dated as of March 23, 2001 by
and between Summer Rain and Intercallnet, Inc.*
(b) On April 23, 2001, we filed a Form 8-K which discussed the
reincorporation of the Company from Nevada to Florida, the Company's
name change and the 3.5 for 1 forward stock split effected by the
Company.
*Portions of the exhibit have been omitted pursuant to a request for
confidential treatment.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant had duly
caused this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: May 18, 2001 By: /s/ Scott Gershon
------------------------------------------
Scott Gershon, Chief Executive Officer,
President, Principal Financial and Accounting Officer
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