UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

Form 10-Q/A

                          (Mark one)

[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended: March 31, 2001

 

[    ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to _____________

 

Commission file number: 33-17679

 

North American DataCom, Inc.

(Exact name of small business issuer as specified in its charter)

 

Delaware

84-1067694

(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)

751 County Road 989, Building 1000, Iuka, MS

38852

(Address of principal executive offices)

(Zip Code)

662-424-5050

(Issuer’s telephone number)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such report (s)), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ]

APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:
Common Stock, $.0001 par value, 98,656,448 shares outstanding as of May 10, 2001.

 

 

 

 

 

 

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

Page

    
Item 1. Financial Statements (Unaudited). 2
Item 2. Management’s Discussion and Analysis. 11
Item 3. Quantitative and Qualitative Disclosures About Market Risk. 19
 

PART II. OTHER INFORMATION

    
Item 1. Legal Proceedings. 19
Item 2. Changes in Securities and Use of Proceeds. 19
Item 3. Default Upon Senior Securities. 20
Item 4. Submission of Matters to a Vote of Security Holders. 20
Item 5. Other Information. 20
Item 6. Exhibits and Reports on Form 8-K. 21

 

PART I  FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Financial Information (Unaudited) Page
   Condensed Consolidated Balance Sheets 2
   Condensed Consolidated Statements of Operation 4
   Condensed Consolidated Statements of Comprehensive Operations 4
   Condensed Consolidated Statements of Changes in Stockholders' Equity 4
   Condensed Consolidated Statements of Cash Flows 5
   Notes to Condensed Consolidated Financial Statements 6

 

NORTH AMERICAN DATACOM, INC.

Consolidated Balance Sheets as of March 31, 2001 (Unaudited) and June 30, 2000

   

ASSETS

March 31, 2001

June 30, 2000

Current Assets
   Cash and Cash Equivalents

$

78,868 $ 20,948
   Accounts Receivable, Net of Allowance of $2,400 for March 31, 2001
     and June 30, 2000 134,916 37,848
   Notes Receivable, Net of Long-term Maturities - 2,920
   Inventories 5,728 438
   Employee Advances 2,555 102,555
Total Current Assets 222,067

164,709

 
Investments (Note 3) - 90,000
Property and Equipment
   Conduit and Optic Fiber 14,524,203 14,396,891
   Computers and Equipment 727,233 717,416
   Communications Equipment and Wireless Towers 626,169 371,688
   Software 351,124 -
   Other Equipment 65,215 77,278
   Vehicle 34,201 -
   Leasehold Improvements 15,960 15,880
   Office Furniture 3,681 3,231
     Total Property and Equipment 16,347,786 15,582,384
        Less Accumulated Depreciation and Amortization (87,287) (35,945)
   Net Property and Equipment 16,260,499 15,546,439
Advance to Affiliate (Note 5) 200,000 -
Other Assets (Note 6) 470,480 449,832
 
TOTAL ASSETS

$

17,153,046

$

16,250,980

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 
Current Liabilities:
   Trade Note Payable, Net of Unamortized Discount (Note 4)

$

15,118,000 $ 15,152,173
   Accounts Payable 1,104,249 24,034
   Accrued Expenses and Other Liabilities (Note 8) 364,282 275,552
   Convertible Notes Payable 33,541 -
     Total Current Liabilities 16,620,072 15,451,759
Payable to Director - 23,917
TOTAL LIABILITIES

$

16,620,072

$

15,475,676

 

Commitments and Contingencies

- -

 

Stockholders' Equity

   Convertible Preferred Stock, No Par Value; 400,000 Shares Authorized

- -

   Series B Convertible Preferred Stock, $.0001 Par Value;

     6% Cumulative; 500,000 Shares Authorized; 1,504 and 300 Shares

     Issued and Outstanding as of March 31, 2001 and June 30, 2000

1,503,641 300,000

   Common Stock, $.0001 Par Value 150,000,000 Shares Authorized,      98,656,448 Shares Issued and Outstanding as March 31, 2001and      97,992,758 Shares Issued and Outstanding at June 30, 2000

 

9,865

 

9,798

   Additional Paid-In Capital

3,880,963

2,667,567

   Other Accumulated Comprehensive Income

(189,200) (99,200)

   Retained Earnings (Accumulated Deficit)

(4,672,295)

(2,102,861)

 
TOTAL STOCKHOLDERS' EQUITY 532,974

775,304

 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

17,153,046

$

16,250,980

See Accompanying Notes to Condensed Consolidated Financial Statements

 

NORTH AMERICAN DATACOM, INC.

Condensed Consolidated Statements of Operation

(Unaudited)

For the Three Months Ended March 31, 2001

For the Three Months Ended March 31, 2000

For the Nine Months Ended March 31, 2001

For the Nine Months Ended March 31, 2000

Net Service Revenues

$

201,999 $ 69,787

$

358,372

$

167,997
Cost of Services 60,434 22,420 156,660 29,742
  Gross Profit 141,565 47,367 201,712 138,255
Expenses:
  Selling, General and Administrative 731,719 326,568 2,245,673 1,009,792
Operating Loss (590,154) (279,201) (2,043,961) (871,537)
  Other Income (Expense), Net (176,410) (70) (525,473) 6,233
Loss Before Income Tax Expense (Benefit) (766,564) (279,271) (2,569,434) (865,304)
   Income Tax Expense (Benefit)

-

-

-

-

Net Loss

$

(766,564)

$

(279,271)

$

(2,569,434)

$

(865,304)
Basic and Diluted Loss Per
Common Share (Note 1)

$

(0.01)

$

(0.003)

$

(0.03)

$

(0.02)
Weighted Average Number of Common Shares Outstanding
   Basic and Diluted (Note 1) 98,656,448 4,106,655 98,546,362 41,837,863

See Accompanying Notes to Condensed Consolidated Financial Statements

 

NORTH AMERICAN DATACOM, INC.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

 

For the Three Months Ended March 31, 2001

For the Three Months Ended March 31, 2000

For the Nine Months Ended March 31, 2001

For the Nine Months Ended March 31, 2000

Net loss

$

(766,565) $ (279,271)

$

(2,569,434)

$

(865,304)
Net change in unrealized loss
  on investments (Note 3) - (41,650) (90,000) (41,650)
Comprehensive loss

$

(766,565)

$

(320,921)

$

(2,659,434) $ (906,954)

See Accompanying Notes to Condensed Consolidated Financial Statements

 

NORTH AMERICAN DATACOM, INC.

Condensed Consolidated Statements of Changes in Stockholders Equity

(Unaudited)

Net

Series B Preferred

Common Stock

Additional

Unrealized

Stock

Par

Paid-In

Accumulated

Loss on

Stockholders'

Shares

Amount

Shares

Value

Capital

Deficit

Investments

Equity

Balance, June 30, 2000 300 $300,000 97,992,758 $9,798 $2,667,567 $(2,102,861) $(99,200) $775,304
Issuance of Series B preferred stock 500 500,000 - - - - - 500,000
Sale of common Stock - - 317,500 32 634,968 - - 635,000
Sale of common Stock - - 150,000 15 442,110 - - 442,125
Exercise of stock options to acquire
  common stock - - 11,542 1 9,999 - - 10,000
Exercise of stock options to acquire
  common stock - - 115,423 12 9,988 - - 10,000
Issuance of shares for services - - 1,000 - 2,000 - - 2,000
Net unrealized loss from investments - - - - - - (30,000) (30,000)
Net loss for the period
  ended September 30, 2000 - - - - - (869,086) - (869,086)
Balance, September 30, 2000 800 $800,000 98,588,223 $9,858 $3,766,632 $(2,971,947) $(129,200) $1,475,343
Issuance of shares for services - - 20,225 2 44,188 - - 44,190
Issuance of shares for financial services
  rendered - - 30,000 3 59,997 - - 60,000
Issuance of shares for financial services
  rendered - - 3,000 1 8,842 - - 8,843
Exercise of stock options to acquire
  common stock - - 15,000 1 1,304 - - 1,305
Issuance of Series B preferred stock 326 325,904 - - - - - 325,904
Net change in unrealized loss
  from investments - - - - - - (60,000) (60,000)
Net loss for the period
  ended December 31, 2000 - - - - - (933,784) - (933,784)
Balance, December 31, 2000 1,126 $1,125,904 98,656,448 $9,865 $3,880,963 $(3,905,731) $(189,200) $921,801
Issuance of Series B preferred stock 378 $377,737 - - - - - 377,738
Net change in unrealized loss
  from investments - - - - - - - -
Net loss for the period
  ended March 31, 2001 - - - - - (766,564) - (766,565)
Balance, March 31, 2001 1,504 $1,503,641 98,656,448 $9,865 $3,880,963 $(4,672,295) $(189,200) $532,974
See Accompanying Notes to Condensed Consolidated Financial Statements

 

NORTH AMERICAN DATACOM, INC.

Condensed Consolidated Statement of Cash Flows

(Unaudited)

  

For the Nine Months Ended March 31, 2001

For the Nine Months ended March 31, 2000

CASH FLOW FROM OPERATING ACTIVITIES:
Net Loss

$

(2,569,434)

$

(865,304)
Adjustment to reconcile net loss to net cash used in Operating Activities:
   Depreciation and amortization (Note 4) 646,615 30,374
Changes in operating assets and liabilities, net of acquisitions::
   (Increase) Decrease in accounts receivable (97,068) (16,001)
   (Increase) Decrease in notes receivable 2,920 (129,105)
   (Increase) Decrease in inventory (5,290) -
   Increase (Decrease) in other assets and employee advances 60,851 (38,037)
   Increase (Decrease) in accounts payable and accrued expenses 1,283,977 (146,448)
NET CASH USED IN OPERATING ACTIVITIES (677,429) (1,164,521)
 
CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of property and equipment (801,347) (179,529)
   Purchase of investments - (52,851)
   Advance to affiliate (Note 5) (200,000) -
NET CASH USED IN INVESTING ACTIVITIES (1,001,347) (232,380)
 
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from sale of common stock (Note 7) 1,098,431 979,971
   Payments on trade note payable (575,000) -
   Proceeds from sale of preferred stock (Note 7) 1,203,641 -
   Net borrowings under notes payable (23,917) (54,112)
   Proceeds from issuance of convertible notes payable 33,541 81,915
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,736,696 1,007,774
 
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS: 57,920 (389,127)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 20,948 722,353
CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

78,868

$

333,226
 
Supplemental schedule of non-cash operating activities:
   Issuance of common stock for payment of accounts payable

$

115,032

$

-

See Accompanying Notes to Condensed Consolidated Financial Statements

 

NORTH AMERICAN DATACOM, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of North American DataCom, Inc. (the "Company") have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of March 31, 2001 and the results of its operations and its cash flows for the three-and nine-month periods ended March 31, 2001 and 2000. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements as of June 30, 2000 including notes thereto, included in the Company’s 1999 Annual Report on Form 10-K for fiscal year ended June 30, 2000.

NATURE OF BUSINESS

The Company intends to provide communications and information technology services with an emphasis on broadband fiber optic and wireless telecommunications services that support enterprise data storage solutions, primary for customers in southern United States.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All material intercompany accounts and transactions are eliminated.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United State of America 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. Estimates also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Certain estimates used by management are particularly susceptible to significant changes in the economic environment. These include estimates of the realization of long-lived assets and deferred tax assets. Each of these estimates, as well as the related amounts reported in the financial statements, are sensitive to near term changes in the factors used to determine them. A significant change in any one of those factors could result in the determination of amounts different from those reported in the consolidated financial statements and the effect of such differences could be material.

INVESTMENTS

Investments are classified as available-for-sale and are reported at estimated fair value, with unrealized gains and losses, net of taxes, reported as a separate component of stockholders' equity. Realized gains and losses, and declines in value judged to be other than temporary, are included in other income. The cost of securities sold is based on the specific identification method and interest earned is included in other income.

REVENUE RECOGNITION