Comments anyone? This is taken from TVCP's just released 10KSB:
RESULTS OF OPERATIONS
Fiscal Year Ended December 31, 1999, compared to Fiscal Year Ended December 31, 1998
The Company's predecessor, Videocall, was in development stage during all of 1998 and until August 24, 1999. Therefore, revenue from operations only commenced in the fourth quarter of 1999.
Sales of $8,147 in services and $79,393 in equipment represent the commencement of the Company's core business activity - that of selling videocalling and telephony service and equipment. The majority of the equipment sales were to joint venture partners, some of which share common management with the Company and therefore are considered related parties.
The initial investment in real estate property occurred in October of 1998. The increase in real estate revenues of $846,355 results from a full year of ownership of the Sacramento property and the addition in February 1999 of the Toronto property. The Toronto property is 20% of the revenue and the Sacramento property is 80% of rental receipts.
Software development costs incurred prior to the Merger totaled $1,487,018 and accumulated amortization prior to the current year aggregated $1,105,325 for a net asset value of $381,693. Management has reviewed the value of the development costs and determined that it was necessary to reduce the value by $206,694 to reflect the net realizable value of the asset. The Company currently has a contract for sale of the software asset for the amount of the adjusted net realizable value.
Telecommunication and retail operation expenses represent the costs of initial store openings and operating expenses for the retail stores. The major elements of the total expense of $442,710 are comprised of the following:
Advertising $ 64,956
Rents 22,704
Tech Support 104,539
Store Salaries 150,064
Telecom costs 46,933
Supplies, Utilities, Misc. 53,514
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Total $442,710
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Research and development costs decreased $197,609, from $270,376 in 1998 to $72,767 in 1999. This decrease represented the reduction in expenditures as a result of completion of the development of the web based reservation system for videocalling and the software for retail store operations.
Real estate operations expense for the year ended December 31, 1998, included a one time charge to bad debt for $150,959. This amount was for funds transferred by the seller of the Sacramento property to it's related entities that were never repaid. Actual general and administrative costs for the rental operations totaled $50,774 for the short period of ownership in 1998 and $292,610 for both properties for the year ended December 31, 1999.
General, administrative and marketing expenses are comprised of the following
1999 1998
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Salaries and benefits $ 719,943 $260,391
Travel 295,286 85,219
Office, computer and maintenance 372,927 90,140
Rents, licenses and other expenses 304,344 66,642
Consultants 1,652,453 48,827
Legal and other professional 1,178,418 205,260
Marketing and public relations 459,782 51,607
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Total $4,983,153 $808,086
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Of the total $4,983,153 expense in 1999, $2,441,568 was paid in common stock; actual cash payments totaled $2,541,585. For the year ended December 31, 1998, of the total expense of $808,086, $223,000 was paid in common stock and the balance of $585,086 was paid in cash. Consultants, legal and other professional expenses totaling $2,830,871 for the year ended December 31, 1999, included $2,296,629 paid in common stock, leaving actual cash payments to those professionals in the amount of $534,242. Management anticipates that the majority of these expenses are one time, as they result from identifying, developing and cultivating business relations for deployment of the videocalling network and with respect to the legal expense, resolution of issues arising from the Merger and deployment of videocalling services.
Interest expense of $663,964 for the year ended December 31, 1999, increased over the year ended December 31, 1998 in the amount of $557,196, primarily from the full year ownership of the Sacramento and Ontario properties in 1999.
Dividends paid on the Preferred stock in 1999 result from the issuance of the Series 1999-A Convertible Preferred stock for the acquisition of the Toronto property. On December 1, 1999, the holder of the Preferred stock notified the Company of its intention to convert the Preferred stock to common stock under the terms of the conversion privilege contained in the Certificate of Designation of the Series 1999-A Convertible Preferred Stock issue. No further dividends will be due as a result of the election to convert.
As of December 31, 1999, the Company had federal and state net operating loss carry-forwards of approximately $12,215,000 and $6,552,000, respectively, available to offset taxable income through the year 2019. The Company's net deferred tax assets consisted primarily of net operating losses. The Company has established a valuation allowance equal to the net deferred tax asset for each period, as the Company could not conclude, based upon prior recurring operating losses, that it was more likely than not that the Company will generate sufficient taxable income before 2013 to utilize all of the Company's deferred tax assets. |
