TELESERVICES INTERNET GROUP INC (TSIG.OB)
Quarterly Report (SEC form 10QSB)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Total revenues from continuing operations for the three months ended March 31, 2000, were $51,108 compared to $102,302 in the same period last year, as the Company's primary focus was to complete its restructuring, acquisitions and financing. The Company reduced expenses considerably during the quarter, but as a result of non-cash expenses required by accounting rules, reported that operating expenses increased from $1,483,286 in the first quarter of 1999 to $5,087,733 in the first quarter of
2000, resulting in a net loss of $5,036,625 for the reporting period, compared to a net loss of $1,380,984 for the first three months of last year. It should be noted that most of the increase in operating expenses resulted from non-cash consideration from the exercise of stock options held by employees and consultants under the TSIG.com Incentive Stock Option Plan, because accounting rules require that the Company report as an expense the difference in value between the aggregate option exercise price and the market price on the date of exercise.
Operating Plan
The Company continues the aggressive restructuring that was announced in the Form 10-KSB for the year ended December 31, 1999. In March and April, 2000, the Company announced that it had entered into letters of intent to make three acquisitions: General Search.Com, Inc., an Internet portal and search engine; The Affinity Group LLC, an affinity marketing company, with 1999 revenues of approximately $22 million (unaudited) and pro-forma, pre-tax profits of $4 million (and projected 2000 revenues of $30 million, with profits targeted to reach $6 million); and American Teleswitch Corporation, a manufacturer and marketer of several telephony-based products in Europe and the Far East, with 1999 revenues of $3 million and pre-tax earnings of $400,000 (unaudited). To finance these acquisitions, and to take advantage of the anticipated synergies therefrom, the Company entered into a letter agreement with its investment bank to increase its private placement financing to up to $125 million (see below). Closing of these acquisitions is subject to final documentation, and there can be no assurances at this time that these acquisition will be successfully completed.
Upon successful closing of these acquisitions, the Company plans to fully implement its myCard affinity marketing programs with national corporations, non-profits and other organizations. These customized affinity marketing programs are designed to acquire Internet customers at a very low cost, to provide recurring revenues to the Company and its partners, to help develop strong brand loyalty and awareness within target communities, and to drive customers to GeneralSearch.com and the other Web sites of the Company and its partners. The Company enhances its myCard programs by providing customer service and support with its Web-based call center and related services. The Company's Web sites at www.tsig.com and www.mymusiccard.com.
Limited Working Capital; Financial Instability
As of March 31, 2000, the Company had a negative stockholder's equity of $1,925,262 (an improvement of $2,141,016 from December 31, 1999), an accumulated deficit of $51,541,739, and a working capital deficit $1,909,080.
Various factors affecting the Company's operations raise doubt as to the Company's ability to continue as a going concern. There can be no assurance that the Company will be able to continue as a going concern or achieve material revenues or profitable operations. The Company requires additional financing. On February 29, 2000, the Company announced that it had entered into a letter agreement engaging a prominent New York based investment banking firm as its exclusive agent for a private placement financing of up to $40 million, and on April 26, 2000, the letter agreement was amended to provide for a financing of up to $125 million. However, no assurances can be given that such financing will be available in the amount required or, if available, that it can be on terms satisfactory to the Company.
The financial statements include all adjustments which in the opinion of and to the best of management's knowledge are necessary to make the financial statements not misleading.
In connection with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, readers of this document and any document incorporated by reference herein, are advised that this document and documents incorporated by reference into this document contain both statements of historical facts and forward looking statements. Forward looking statements are subject to certain risks and uncertainties, which could cause actual results to differ materially for those indicated
by the forward looking statements. Examples of forward looking statements include, but are not limited to (i) projections of revenues, income or loss, earning or loss per share, capital expenditures, dividends, capital structure and other financial items, (ii) statements of the plans and objectives of the Company or its management of Board of Directors, including the introduction of new products, or estimates or predictions of actions by customers, suppliers, competitors or regulatory authorities, (iii) statements of future economic performance, and (iv) statements of assumptions underlying other statements and statements about the Company or its business. Forward looking statements are beyond the ability of the Company to control and in many cases the Company cannot predict what factors would cause results to differ materially from those indicated by the forward looking statements.
Recent filings: May 17, 1999 (Qtrly Rpt) | Aug 13, 1999 (Qtrly Rpt) | Nov 12, 1999 (Qtrly Rpt) | Apr 14, 2000 (Annual Rpt) | May 22, 2000 (Qtrly
Rpt)
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