TELS just filed there 10-Q.
TELS Corporation
----------------
The Company reported a consolidated net loss from continuing operations
for the first quarter of 1997 of $83,431, or $.02 per share. This is a slight
decrease when compared to the first quarter net loss of $67,675, or $.02 per
share for the same period in 1996. Management of the Company believes that
profitability will improve in the second quarter as a result of reductions in
expenses, increased sales from telecommunication products, and improved gross
profit margins.
Liquidity and Capital Resources
As of March 31, 1997, the Company reported current assets of $1,956,853
and current liabilities of $1,505,697, resulting in net working capital of
$451,166. This is a decrease of $56,501 when compared to net working capital of
$507,667 at December 31, 1996. Working capital provided by financing activities
was used to purchase equipment of $13,814, for capitalized software development
costs of $31,175, and to reduce accounts payable of $146,113. The Company
utilized its line of credit which increased by $130,765. These borrowings were
used to fund working capital needs and to reduce long term debt by $21,865. The
Company is in violation of certain debt covenants under the terms of its loan
agreements. Though the Company has obtained waivers of these violations, the
Company will not pursue the appropriate waivers for expected violations
subsequent to March 31, 1997, from the lending institution because the Company
has been notified that this line of credit will not be renewed in May, 1997. The
Company expects to refinance this line of credit by entering into a new line of
credit with similar terms with a different lender. If the Company is unable to
obtain a new line of credit with another lender, it would not be able to
continue to operate at its current level. The Company has entered into
negotiations with lending institutions to replace this line of credit and is
considering various alternatives, including the refinancing of real property to
raise additional funds. The Company is continuing its efforts to find additional
financing through investment equity which may be needed to fund operations,
future acquisitions and final development and marketing of new products under
consideration. The Company is evaluating its existing system for compliance with
the year 2000 and has not determined the modifications, if any, that will be
required. The telecommunications industry is experiencing drastic changes which
could limit the Company's ability to meet sales projections in this industry and
there can be no assurance that the Company will be able to generate a profitable
level of sales. |
