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Share Name | Share Symbol | Market | Type |
---|---|---|---|
InterMetro Communications Inc (CE) | USOTC:IMTO | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.000001 | 0.00 | 01:00:00 |
(Mark One)
|
|
|
ý
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the fiscal year ended December 31, 2012 | ||
Commission file number 000-51384
|
Nevada
|
|
88-0476779
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|
(State of
Incorporation)
|
(IRS Employer
Identification No.)
|
Page
|
||
PART I
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||
Item 1.
|
2
|
|
Item 1A.
|
7
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|
Item 1B.
|
19
|
|
Item 2.
|
20
|
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Item 3.
|
20
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Item 4.
|
20
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|
PART II
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||
Item 5.
|
21
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Item 6.
|
23
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Item 7.
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23
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Item 7A.
|
33
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Item 8.
|
33
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Item 9.
|
33
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Item 9A.
|
33
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Item 9B.
|
34
|
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PART III
|
||
Item 10.
|
35
|
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Item 11.
|
39
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Item 12.
|
41
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Item 13.
|
43
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Item 14.
|
44
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PART IV
|
||
Item 15.
|
45
|
|
47
|
|
(a)
|
volatility or decline of our stock price;
|
|
(b)
|
potential fluctuation in quarterly results;
|
|
(c)
|
our failure to earn revenues or profits;
|
|
(d)
|
inadequate capital and barriers to raising capital or to obtaining the financing needed to implement its business plans;
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(e)
|
changes in demand for our products and services;
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(f)
|
rapid and significant changes in markets;
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|
(g)
|
litigation with or legal claims and allegations by outside parties;
|
|
(h)
|
insufficient revenues to cover operating costs;
|
|
(i)
|
the possibility we may be unable to manage our growth;
|
|
(j)
|
extensive competition;
|
|
(k)
|
loss of members of our senior management;
|
|
(l)
|
our dependence on local exchange carriers;
|
|
(m)
|
our need to effectively integrate businesses we acquire;
|
|
(n)
|
risks related to acceptance, changes in, and failure and security of, technology; and
|
|
(o)
|
regulatory interpretations and changes.
|
|
·
|
increasing the margins earned from existing retail voice services or reducing the costs of using voice services;
|
|
·
|
improving customer service through access to real-time information about network performance and billing;
|
|
·
|
reducing the administrative burden for our customers of managing their end users;
|
|
·
|
increasing the investment return on customer owned traditional circuit-based equipment; and
|
|
·
|
enabling the creation of value-added enhanced voice services.
|
|
·
|
providing an alternative to the large traditional network service providers that have influenced price and service levels;
|
|
·
|
increasing margins transparently by reducing direct network costs while maintaining or improving the quality of service received by their end users;
|
|
·
|
providing access to our VoIP infrastructure without altering the physical connection process to a voice network and without any required investment in new equipment or software; and
|
|
·
|
providing new functionality to reduce the cost of customer care and improve fraud detection.
|
|
·
|
allowing for delivery of “ready-to-shelf” customized voice service products tailored specifically to our retail distribution partners’ end user demographics without any outlay for inventory; and
|
|
·
|
providing access to our VoIP network allowing retail customers to use their existing telephones with no requirement to purchase new equipment or software and without the need for broadband access.
|
|
·
|
Broadband MetroFone
. The Broadband MetroFone looks and operates like a traditional phone but will use a customer’s broadband internet connection and our network to complete calls as compared to traditional phone calls which travel over low bandwidth copper line networks.
|
|
·
|
VideoLine MetroFone
. The VideoLine MetroFone operates in the same manner as the Broadband MetroFone but also has the additional capability of sending and receiving real-time television quality video between any of our videophones.
|
|
·
|
DialLine MetroFone
. The DialLine MetroFone is an IP device, which connects between a retail customer’s phone and wall jack to automatically connect a retail customer with our network.
|
|
·
|
State-of-the-art private, proprietary VoIP infrastructure
. We built our cloud-based VoIP infrastructure from advanced IP technology. We are not burdened by some of the constraints commonly faced by traditional telecommunications companies that use circuit-based equipment. Legacy equipment is more difficult to combine with the latest add-on voice services and network transport technology because it typically uses proprietary embedded call control systems. We operate and maintain our VoIP technology with significantly fewer personnel and lower operating costs than switch-based technology while achieving comparable capacity.
|
|
·
|
Cost-efficient IP-based voice services
. We believe our proprietary hardware and software VoIP technology provides significant cost savings due to compression and routing efficiencies combined with reduced server requirements for equivalent capacities. In addition, we save money by using equipment that requires little space and significantly reduced electricity costs versus older circuit-switched equipment. Our management team has extensive experience in negotiating pricing and contract terms for these types of products and services with the largest carriers. We can pass a significant portion of our cost savings on to our customers to help drive sales growth.
|
|
·
|
Experience marketing VoIP services
. Our seasoned management team has significant experience with wireline and wireless telecommunications and experience with IP-based communications. Our in-depth knowledge of the VoIP industry, including familiarity with the hardware, software and vendors, allows us to advise potential customers on how to incorporate the technology to increase profitability and increase customer reach. Members of our management team have marketed VoIP services to a wide range of customers and have been instrumental in developing new products to meet individual customer demands.
|
|
·
|
Product flexibility and speed of deployment
. We believe our private network equipment provides a high level of integration between the installation of voice services and billing and customer care functions. We believe our VoIP technology, specifically developed to facilitate the sharing of data across different systems, allows us to create and deploy new products more quickly than many traditional communications companies. We also utilize our proprietary VoIP infrastructure to tailor retail products to the individual needs of our retail distribution partners.
|
|
·
|
Strong engineering team with experience in both voice and data networking
. Our engineering team is comprised of individuals with backgrounds in networking, software development, database administration and telecommunications installations. We believe our engineering team is among the most experienced in understanding VoIP services and the related software applications. Members of our engineering team have successfully deployed leading-edge technology in prior businesses, including the build-outs of both a national web hosting service and a large IP-based voice service network.
|
|
·
|
maintain and expand our current relationships, and develop new relationships, with carrier customers, retail distribution partners, network vendors and equipment providers;
|
|
·
|
continue to grow our revenue and meet anticipated growth targets;
|
|
·
|
manage our expanding operations and implement and improve our operational, financial and management controls;
|
|
·
|
adapt to industry consolidation;
|
|
·
|
continue to grow our sales force and marketing efforts;
|
|
·
|
successfully introduce new, and upgrade our existing, VoIP technologies and services;
|
|
·
|
respond to government regulations and legislation relating to VoIP, traditional telecommunications services, the Internet, IP-based services and other aspects of our business;
|
|
·
|
respond effectively to competition; and
|
|
·
|
attract and retain qualified management and employees.
|
|
·
|
the addition of new carrier customers and retail distribution partners or the loss of existing customers and retail distribution partners;
|
|
·
|
changes in demand and pricing for our VoIP services;
|
|
·
|
the timing of our introduction of new VoIP products and services and the costs we incur to develop these technologies;
|
|
·
|
the timing and amount of sales and marketing expenses incurred to attract new carrier customers and retail distribution partners;
|
|
·
|
changes in the economic prospects of carrier customers or the economy generally, which could alter current or prospective need for voice services, or could increase the time it takes us to close sales with customers;
|
|
·
|
changes in our pricing policies, the pricing policies of our competitors or the pricing of VoIP services or traditional voice services generally;
|
|
·
|
costs related to acquisitions of businesses or technologies; and
|
|
·
|
the use of VoIP as a replacement for traditional voice services is a relatively new occurrence and carrier customers have not settled into consistent spending patterns.
|
|
·
|
greater financial and personnel resources;
|
|
·
|
greater name recognition;
|
|
·
|
established relationships with greater numbers of wholesale carriers;
|
|
·
|
established distribution networks;
|
|
·
|
greater experience in obtaining and maintaining FCC and other regulatory approvals for products and product enhancements and greater experience in developing compliance programs under U.S. federal, state and local laws and regulations;
|
|
·
|
greater experience in lobbying the U.S. Congress and state legislatures for the enactment of legislation favorable to their interests;
|
|
·
|
greater experience in product research and development;
|
|
·
|
greater experience in launching, marketing, distributing and selling products; and
|
|
·
|
broader-based and deeper product lines.
|
|
·
|
diversion of management’s attention and resources from other business concerns;
|
|
·
|
difficulties and expenditures associated with integrating the operations and employees from the acquired company into our organization, and integrating each company’s accounting, management information, human resources and other administrative systems to permit effective management;
|
|
·
|
inability to maintain the key business relationships and the reputations of the acquired businesses;
|
|
·
|
ineffectiveness or incompatibility of acquired technologies or services with our existing technologies and systems;
|
|
·
|
potential loss of key employees of acquired businesses;
|
|
·
|
responsibility for liabilities of acquired businesses;
|
|
·
|
unavailability of favorable financing for future acquisitions;
|
|
·
|
inability to maintain our standards, controls, procedures and policies, which could affect our ability to receive an unqualified attestation from our independent accountants regarding management’s required assessment of the effectiveness of our internal control structure and procedures for financial reporting; and
|
|
·
|
increased fixed costs.
|
|
·
|
recruit, train and retain a sufficient number of highly skilled personnel;
|
|
·
|
maintain our customer service standards;
|
|
·
|
maintain the quality of our VoIP platform;
|
|
·
|
develop and improve our operational, financial and management controls and maintain adequate reporting systems and procedures;
|
|
·
|
successfully scale our VoIP platform, including network, software and other technology, to accommodate a larger business; and
|
|
·
|
maintain carrier and end user satisfaction.
|
|
·
|
educate consumers on the benefits of our products;
|
|
·
|
commit a substantial amount of human and financial resources to secure strategic partnerships and otherwise support the retail and/or carrier distribution of our products;
|
|
·
|
develop our own sales, marketing and support activities to consumers, broadband providers and retailers; and
|
|
·
|
establish a sufficient number of retail locations carrying our products.
|
|
·
|
cease selling, incorporating or using any of our products that incorporates the infringed intellectual property, which would adversely affect our revenue or costs or both;
|
|
·
|
obtain a license from the holder of the infringed intellectual property right, which might be costly or might not be available on reasonable terms, if at all; or
|
|
·
|
redesign our products to make them non-infringing, which could be costly and time-consuming and may not be possible at all.
|
|
·
|
the loss of revenues generated by sales of our services and products;
|
|
·
|
the upfront and ongoing costs associated with expanding and enhancing our VoIP infrastructure;
|
|
·
|
the costs associated with expanding our sales and marketing efforts;
|
|
·
|
the expenses we incur in manufacturing and selling our services and products;
|
|
·
|
the costs of developing new products or technologies;
|
|
·
|
the cost of obtaining and maintaining regulatory approval or clearance of our products and products in development; and
|
|
·
|
the number and timing of acquisitions and other strategic transactions.
|
|
·
|
the issuance of new equity securities pursuant to a future offering or acquisition;
|
|
·
|
changes in interest rates;
|
|
·
|
competitive developments, including announcements by competitors of new products or services or significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments;
|
|
·
|
variations in quarterly operating results;
|
|
·
|
changes in financial estimates by securities analysts;
|
|
·
|
the depth and liquidity of the market for our common stock;
|
|
·
|
investor perceptions of us and the communications industry generally; and
|
|
·
|
general economic and other national conditions.
|
|
·
|
authorize the issuance of “blank check” preferred stock that our board of directors could issue to increase the number of outstanding shares to discourage a takeover attempt;
|
|
·
|
allow shareholders to request that we call a special meeting of our shareholders only if the requesting shareholders hold of record at least a majority of the outstanding shares of common stock;
|
|
·
|
provide that the board of directors is expressly authorized to make, alter, amend or repeal our bylaws; and
|
|
·
|
provide that business to be conducted at any special meeting of shareholders be limited to matters relating to the purposes stated in the applicable notice of meeting.
|
Year
|
Quarter
|
High
|
Low
|
|||||||
2013
|
First (thru March 15, 2013)
|
$
|
0.14
|
$
|
0.08
|
|||||
2012
|
Fourth
|
0.12
|
0.07
|
|||||||
Third
|
0.08
|
0.07
|
||||||||
Second
|
0.10
|
0.03
|
||||||||
First
|
0.05
|
0.03
|
||||||||
2011
|
Fourth
|
0.06
|
0.04
|
|||||||
Third
|
0.05
|
0.04
|
||||||||
Second
|
0.05
|
0.01
|
||||||||
First
|
0.06
|
0.03
|
Plan Category
|
Number of
Securities to be Issued
Upon Exercise of
Outstanding Stock Options
|
Weighted-Average
Exercise Price of
Outstanding Stock
Options
|
Number of
Securities
Remaining
Available for
Future Issuance
Under Equity
Compensation
Plans
|
|||||||||
Equity Compensation plans approved by security holders:
|
||||||||||||
2004 Stock Option Plan
|
3,221,081 | $ | 0.01 | - 0- | ||||||||
2007 Omnibus Stock and Incentive Plan
|
15,950,000 | $ | 0.07 | 10,149,040 |
·
|
Changes in the average rate per minute that we charge our customers.
|
·
|
Increasing the net number of customers utilizing our VoIP services.
|
·
|
Increasing the average revenue we generate per customer.
|
·
|
Acquisitions.
|
·
|
SS-7 based interconnection costs.
|
·
|
Competitive local exchange carrier costs.
|
·
|
Other fixed costs.
|
·
|
Off-net costs.
|
·
|
SS-7 based interconnections with local carriers.
|
·
|
Efficient utilization of fixed-cost network components.
|
·
|
Strategic purchase of fixed-cost network components.
|
·
|
Fluctuations in per minute rates of off-net service providers.
|
·
|
Sales mix of our VoIP infrastructure capacity versus off-net services.
|
·
|
Acquisitions of telecommunications businesses.
|
Year Ended December 31,
|
||||||||
2012
|
2011
|
|||||||
|
|
|||||||
Net revenues
|
100 | % | 100 | % | ||||
Network costs
|
77 | 77 | ||||||
Gross profit
|
23 | 23 | ||||||
Operating expenses:
|
||||||||
Sales and marketing
|
3 | 4 | ||||||
General and administrative
|
17 | 17 | ||||||
Impairment of goodwill
|
— | 2 | ||||||
Total operating expenses
|
20 | 23 | ||||||
Operating income (loss)
|
3 | 0 | ||||||
Interest expense
|
(6 | ) | (6 | ) | ||||
Gain on conversion of debt to common stock
|
2 | — | ||||||
Accounts payable write off and gain on forgiveness of debt
|
4 | 23 | ||||||
Net income
|
3 | % | 17 | % |
|
·
Significant underperformance relative to expected historical or projected future operating results;
|
|
·
Significant changes in the manner of use of the acquired assets or the strategy for our overall business; and
|
|
·
Significant negative industry or economic trends.
|
Payments Due by Period
(Dollars in Thousands)
|
||||||||||||||||||||
Contractual Obligations
|
Total
|
Less Than
1 Year
|
1-3 Years
|
3-5 Years
|
More Than
5 Years
|
|||||||||||||||
Operating lease obligations
|
$ | 210 | $ | 168 | $ | 42 | $ | — | $ | — | ||||||||||
Total
|
$ | 210 | $ | 168 | $ | 42 | $ | — | $ | — |
·
|
While we have implemented control procedures for reviewing all material financial reporting items, certain of our control procedures are not sufficient to prevent the risk that a potential material misstatement of the financial statements would occur without being prevented or detected, specifically with regards to dispute reserves for accounts payable, accruals for third party charges and certain equity accounts. In each case, the Company does not have adequate staffing to ensure that the monitoring processes mitigate risks that external information used is correct and, in the case of equity accounts, that the Company has personnel with adequate understanding of the applicability of accounting principles.
|
|
·
|
We have not maintained sufficient evidence to support that certain of our internal controls over financial reporting activities were performed on a timely basis, specifically related to confirmation testing of disputes of information received from our vendors, variance analysis, accounts receivable analyses and equity accounts.
|
·
|
Due to the small size of our Company, we have not adequately divided, or compensated for, functions among personnel to reduce the risk that a potential material misstatement of the financial statements would occur without being prevented or detected with regards to certain of our equity accounts. Specifically, with regards to equity awards, at times information used in our financial reporting is not able to be given to additional competent staff to mitigate the risk of erroneous or inappropriate actions.
|
Name
|
Age
|
Position
|
||
|
||||
Charles Rice
|
49 |
President, Chief Executive Officer and Chairman of the Board
|
||
David Olert
|
59 |
Chief Financial Officer
|
||
Jon deOng
|
39 |
Chief Information Officer, Director
|
||
Christopher Fogel
|
39 |
Chief Technology Officer
|
||
Eric Fuchs
|
45 |
Chief Sales Officer
|
||
Joshua Touber
|
50 |
Director
|
||
Robert Grden(1)
|
49 |
Director
|
||
Douglas Benson(1)
|
80 |
Director
|
·
|
any breach of their duty of loyalty to the corporation or its shareholders;
|
·
|
acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
|
·
|
unlawful payments of dividends or unlawful stock repurchases or redemptions; or
|
·
|
any transaction from which the director derived an improper personal benefit.
|
·
|
Class I is comprised of Messrs. Joshua Touber and Douglas Benson;
|
·
|
Class II is comprised of Mr. Robert Grden;
|
·
|
Class III is comprised of Messrs. Charles Rice and Jon deOng.
|
·
|
meeting with our management periodically to consider the adequacy of our internal controls and the objectivity of our financial reporting;
|
·
|
engaging and pre-approving audit and non-audit services to be rendered by our independent auditors;
|
·
|
recommending to our Board of Directors the engagement of our independent auditors and oversight of the work of our independent auditors;
|
·
|
reviewing our financial statements and periodic reports and discussing the statements and reports with our management, including any significant adjustments, management judgments and estimates, new accounting policies and disagreements with management;
|
·
|
establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls and auditing matters;
|
·
|
administering and discussing with management and our independent auditors our code of ethics; and reviewing and approving all related-party transactions in accordance with applicable listing exchange rules.
|
Name and
Principal
Position
|
Year
|
Salary
|
Bonus
|
Option
Awards
|
Non-Equity
Incentive Plan
Compensation
|
Non-Qualified
Deferred
Compensation
Earnings
|
All Other
Compensation(1)
|
Total
|
|||||||||||||||||||||||
Charles Rice
Chief Executive Officer and President
|
2012
2011
2010
|
$
|
274,053
268,328
171,452
|
$
|
0
0
0
|
$
|
0
0
0
|
$
|
0
0
0
|
$
|
0
0
0
|
$
|
11,932
11,805
14,679
|
$
|
285,985
280,133
186,131
|
||||||||||||||||
David Olert
Chief Financial Officer
|
2012
2011
2010
|
$
|
154,522
148,537
148,459
|
0
|
0
|
0
|
0
|
$
|
9,103
8,834
8,960
|
$
|
163,925
157,371
157,419
|
||||||||||||||||||||
Jon deOng
Chief Information Officer
|
2012
2011
2010
|
$
|
127,077
126,505
126,505
|
0
0
0
|
0
0
0
|
0
0
0
|
0
0
0
|
$
|
14,619
15,220
17,066
|
$
|
141,696
141,725
143,571
|
(1)
|
Amounts primarily represent medical insurance premiums and reimbursements for automobile and electronic communication device expenses.
|
Name
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable(1)
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable(1)
|
Option
Exercise
Price
|
Option
Expiration
Date
|
|||||||||
Charles Rice
|
3,000,000 | 375,000 | $ | 0.044 |
3/22/17
|
||||||||
Chairman, Chief Executive Officer, and President
|
|||||||||||||
David Olert
|
1,000,000 | 125,000 | $ | 0.04 |
3/22/17
|
||||||||
Chief Financial Officer
|
|||||||||||||
Jon deOng
|
500,000 | 62,500 | $ | 0.04 |
3/22/17
|
||||||||
Chief Information Officer
|
(1)
|
Stock options were granted under our 2007 Stock Plan and vested 50% on the date of grant and 1/4 of the balance each quarter thereafter until the remaining stock options were vested.
|
Name
|
Fees
Earned or
Paid in
Cash
|
Stock
Awards
|
Option
Awards
|
Non-Equity
Incentive Plan
Compensation
|
Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings
|
All Other
Compensation(1)
|
Total
|
|||||||||||||||||||||
|
||||||||||||||||||||||||||||
Joshua Touber, Director
|
0 | 0 | 0 | 0 | 0 | $ | 180,000 | $ | 180,000 | |||||||||||||||||||
Robert Grden, Director
|
0 | 0 | 0 | 0 | 0 | 0 | $ | 0 | ||||||||||||||||||||
Douglas Benson, Director
|
0 | 0 | 0 | 0 | 0 | 0 | $ | 0 |
Name and Title of Beneficial Owner
|
|
Number of
Shares Beneficially
Owned(1)
|
|
Percentage
Ownership
|
||||
|
|
|
||||||
Charles Rice
|
58,158,307
|
(2)
|
|
54.5
|
%
|
|||
Chairman, President,
|
||||||||
Chief Executive Officer
|
||||||||
Eric Fuchs
|
2,750,000
|
(3)
|
3.3
|
%
|
||||
Chief Sales Officer
|
||||||||
Jon deOng
|
3,130,662
|
(4)
|
3.8
|
%
|
||||
Chief Information Officer
|
||||||||
Chris Fogel
|
2,232,688
|
(5)
|
2.7
|
%
|
||||
Chief Technology Officer
|
||||||||
David Olert
|
1,275,000
|
(6)
|
1.5
|
%
|
||||
Chief Financial Officer
|
||||||||
Joshua Touber
|
10,464,231
|
(7)
|
12.1
|
%
|
||||
Director
|
||||||||
Robert Grden
|
622,348
|
(8)
|
*
|
|||||
Director, Corporate Secretary
|
||||||||
Douglas Benson
|
4,050,591
|
(9)
|
4.9
|
%
|
||||
Director
|
||||||||
Directors and executive officers
|
68,854,046
|
62.4
|
%
|
|||||
as a group (8 persons)
|
||||||||
David Marshall
|
8,996,994
|
(10)
|
10.9
|
%
|
||||
11845 Olympic Blvd., Ste. 1125 W, Los Angeles CA 90069
|
||||||||
SPM Investment Group, Ltd
|
4,975,284
|
(11)
|
6.0
|
%
|
||||
c/o Industrie-und Finanzkonior Etabl.,
|
||||||||
Herrengasse 21, FL-9490 Vaduz, Principality of Liechtenstein
|
||||||||
Moriah Capital Management
|
4,290,253
|
(12)
|
4.9
|
%
|
||||
444 Madison Avenue, Suite 201, New York, NY 10022
|
* Indicates beneficial ownership of less than one percent.
|
2012
|
2011
|
|||||||
|
|
|
||||||
Audit Fees (1)
|
$ | 135 | $ | 135 | ||||
All other fees
|
- | - | ||||||
$ | 135 | $ | 125 |
(1)
|
Audit Fees paid to Gumbiner Savett consist of fees for the audit of our financial statements and review of the interim financial statements included in our quarterly reports.
|
(1)
|
Incorporated by reference to Exhibits A, B and C of the Schedule 14C Information Statement filed with the Securities and Exchange Commission on March 9, 2007.
|
(2)
|
Incorporated by reference to Exhibit 3.1 of the Form 8-K filed with the Securities and Exchange Commission on July 3, 2007.
|
(3)
|
Incorporated by reference to Exhibits 4.5, 4.6, 4.11, 10.1, 10.2, 10.4, 10.5, 10.6, 10.7, 10.8 and 10.9 of the Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on February 9, 2007.
|
(4)
|
Incorporated by reference to Exhibits 99.1, 99.2, 99.4.1, 99.4.2, 99.6.1, 99.6.2, 99.3 and 99.7 of the Form 8-K filed with the Securities and Exchange Commission on January 9, 2007.
|
(5)
|
Incorporated by reference to Exhibits 4.1 and 10.1 of the Quarterly Report o Form 10-Q for the Quarter ended September 30, 2010 as filed with the Securities and Exchange Commission
|
(6)
|
Incorporated by reference to Exhibit 4.12.1 of the Form 10-K for the fiscal year ended December 31, 2010 as filed with the Securities and Exchange Commission.
|
(7)
|
Incorporated by reference to Exhibits 10.12 and 10.13 of the Form 10-KSB for the fiscal year ended December 31, 2007 as filed with the Securities and Exchange Commission.
|
(8)
|
Incorporated by reference to Exhibits 4.13, 4.14 and 4.15 of Form 10Q for the period ending September 30, 2012 as filed with the Securities and Exchange Commission.
|
(9)
|
Incorporated by reference to Exhibit 4.16 of Form 10Q for the period ending September 30, 2012 as filed with the Securities and Exchange Commission.
|
(10)
|
Incorporated by reference to Form 8K filed with the Securities and Exchange Commission on October 17, 2012.
|
(11)
|
Incorporated by reference to Exhibit 9.3 of Form 10Q for the period ending September 30, 2012 as filed with the Securities and Exchange Commission.
|
(12)
|
Incorporated by reference to Exhibits 10.16, 10.17, 10.18 and 10.19 of Form 10Q for the period ending September 30, 2012 as filed with the Securities and Exchange Commission.
|
(13)
|
Incorporated by reference to Exhibits 10.20 and 10.21 of Form 10Q for the period ending September 30, 2012 as filed with the Securities and Exchange Commission.
|
(14)
|
Incorporated by reference to Exhibits 10.22, 10.23, 10.24 and 10.25 of Form 10Q for the period ending September 30, 2012 as filed with the Securities and Exchange Commission.
|
(15)
|
Incorporated by reference to Exhibit 10.26 of Form 10Q for the period ending September 30, 2012 as filed with the Securities and Exchange Commission.
|
+
|
Filed herewith
|
*
|
Management contract or compensatory plan or arrangement
|
†
|
Confidential treatment has been requested for portions of this Exhibit which have been filed separately with the Securities and Exchange Commission pursuant to Rule 406 promulgated under the Securities Act.
|
INTERMETRO COMMUNICATIONS, INC.
|
||
Dated: April 1, 2013
|
By:
|
/s/ Charles Rice
|
Charles Rice, Chairman of the Board,
|
||
Chief Executive Officer, and President
|
Principal Executive Officer
|
|||
By:
|
/s/ Charles Rice
|
|
Dated: April 1, 2013
|
Charles Rice, Chairman of the Board,
|
|||
Chief Executive Officer, and President
|
|||
Principal Financial Officer
|
|||
By:
|
/s/ David Olert
|
Dated: April 1, 2013
|
|
David Olert
|
|||
Chief Financial Officer
|
|||
By:
|
/s/ Jon deOng
|
Dated: April 1, 2013
|
|
Jon deOng
|
|||
Chief Information Officer and Director
|
|||
By:
|
/s/ Joshua Touber
|
Dated: April 1, 2013
|
|
Joshua Touber
|
|||
Director
|
|||
By:
|
/s/ Robert Grden
|
Dated: April 1, 2013
|
|
Robert Grden
|
|||
Director
|
|||
By:
|
/s/ Douglas Benson
|
Dated: April 1, 2013
|
|
Douglas Benson
|
|||
Director
|
Page
|
||
|
F-2
|
|
F-3
|
||
F-4
|
||
F-5
|
||
F-6
|
||
F-7
|
December 31,
|
||||||||
2012
|
2011
|
|||||||
ASSETS
|
||||||||
Cash
|
$ | 388 | $ | 390 | ||||
Accounts receivable, net of allowance for doubtful accounts of $150 and $401 at
December 31, 2012 and 2011, respectively
|
1,959 | 1,637 | ||||||
Deposits
|
47 | 46 | ||||||
Prepayments and other current assets
|
101 | 234 | ||||||
Total current assets
|
2,495 | 2,307 | ||||||
Property and equipment, net
|
120 | 118 | ||||||
Software development in progress
|
149 | 104 | ||||||
Goodwill
|
450 | 450 | ||||||
Other assets
|
4 | 4 | ||||||
Total Assets
|
$ | 3,218 | $ | 2,983 | ||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
||||||||
Accounts payable, trade, net of dispute reserve of $61 at December 31, 2012 and 2011
|
$ | 2,066 | $ | 2,833 | ||||
Accrued expenses
|
4,033 | 4,561 | ||||||
Deferred revenues and customer deposits
|
281 | 195 | ||||||
Borrowings under line of credit facilities net of debt discount of $0 and $5 at December 31, 2012 and 2011, respectively
|
1,675 | 2,167 | ||||||
Current portion of amount due to former ATI shareholder
|
40 | 30 | ||||||
Current portion of vendor settlements
|
1,676 | 2,204 | ||||||
Current portion of secured promissory notes, including $879 and $875 from related parties and net of debt discount of $246 and $4 at December 31, 2012 and 2011, respectively
|
184 | 2,380 | ||||||
Liability for warrant put feature
|
— | 737 | ||||||
Total current liabilities
|
9,955 | 15,107 | ||||||
Long-term portion of note payable to former ATI shareholder
|
127 | 170 | ||||||
Long-term vendor settlements
|
872 | 980 | ||||||
Long-term secured promissory notes
|
2,956 | — | ||||||
Total liabilities
|
13,910 | 16,257 | ||||||
Commitments and contingencies (Note 12)
|
||||||||
Stockholders’ Deficit
|
||||||||
Preferred stock — $0.001 par value; 10,000,000 shares authorized; 222,103 and 25,000 shares issued and outstanding at December 31, 2012 and 2011, respectively
|
1 | — | ||||||
Common stock — $0.001 par value;150,000,000 shares authorized; 81,689,238 and 74,352,728 shares issued and outstanding at December 31, 2012 and 2011, respectively
|
82 | 74 | ||||||
Additional paid-in capital
|
30,963 | 29,089 | ||||||
Accumulated deficit
|
(41,738 | ) | (42,437 | ) | ||||
Total stockholders’ deficit
|
(10,692 | ) | (13,274 | ) | ||||
Total Liabilities and Stockholders’ Deficit
|
$ | 3,218 | $ | 2,983 |
Year Ended December 31, | ||||||||
|
2012
|
|
2011
|
|||||
Net revenues
|
$
|
20,061
|
$
|
21,307
|
||||
Network costs
|
15,431
|
16,365
|
||||||
Gross profit
|
4,630
|
4,942
|
||||||
Operating expenses
|
||||||||
Sales and marketing
|
647
|
809
|
||||||
General and administrative (includes stock based compensation expense of $249 and $0 in 2012 and 2011, respectively)
|
3,339
|
3,709
|
||||||
Impairment of goodwill
|
—
|
450
|
||||||
Total operating expenses
|
3,986
|
4,968
|
||||||
Operating (loss) income
|
644
|
(26
|
)
|
|||||
Interest expense, net (includes amortization of debt discount of $45 and $257 for the years ended December 31, 2012 and 2011, respectively)
|
1,122
|
1,198
|
||||||
Accounts payable write-off
|
(322
|
)
|
(1,767
|
)
|
||||
Gain on forgiveness of debt
|
(383
|
)
|
(3,074
|
)
|
||||
Gain on conversion of debt to stock
|
(472
|
)
|
—
|
|||||
Net income
|
$
|
699
|
$
|
3,617
|
||||
Basic net income per common share
|
$
|
0.01
|
$
|
0.05
|
||||
Diluted net income per common share
|
$
|
0.01
|
$
|
0.04
|
||||
Shares used to calculate basic net income per common share
|
73,373
|
74,067
|
||||||
Shares used to calculate diluted net income per common share
|
97,588
|
88,443
|
Preferred Stock
|
Common Stock
|
Additional
Paid-In
|
Accumulated
|
Total
Stockholders’
|
||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Deficit
|
||||||||||||||||||||||
Balance at December 31, 2010
|
25,000 | — | 72,975,423 | 73 | 29,145 | (46,054 | ) | (16,836 | ) | |||||||||||||||||||
Warrants exercised
|
— | — | 1,232,305 | 1 | 9 | — | 10 | |||||||||||||||||||||
Stock issued for debt
|
— | — | 145,000 | — | 6 | — | 6 | |||||||||||||||||||||
Common stock to be cancelled on settlement of lawsuit
|
— | — | — | — | (125 | ) | — | (125 | ) | |||||||||||||||||||
Warrants issued in connection with line of credit financing
|
— | — | — | — | 52 | — | 52 | |||||||||||||||||||||
Warrants issued for debt
|
— | — | — | — | 2 | — | 2 | |||||||||||||||||||||
Net income for the year ended December 31, 2011
|
— | — | — | — | — | 3,617 | 3,617 | |||||||||||||||||||||
Balance at December 31, 2011
|
25,000 | $ | — | 74,352,728 | $ | 74 | $ | 29,089 | $ | (42,437 | ) | $ | (13,274 | ) | ||||||||||||||
Amortization of stock based compensation
|
— | — | — | — | 249 | — | 249 | |||||||||||||||||||||
Warrants exercised
|
— | — | 614,917 | 1 | 5 | — | 6 | |||||||||||||||||||||
Issuance of Series A2 preferred stock
|
297,103 | 1 | — | — | 291 | — | 292 | |||||||||||||||||||||
Value of warrants issued in connection with Series A2 preferred stock
|
— | — | — | — | 5 | — | 5 | |||||||||||||||||||||
Common stock cancelled on settlement of lawsuit
|
— | — | (4,089,930 | ) | (4 | ) | 4 | — | — | |||||||||||||||||||
Conversion of secured notes to common stock
|
— | — | 10,145,523 | 10 | 833 | — | 843 | |||||||||||||||||||||
Value of warrants issued in connection with restructuring of 2008 and 2009 secured notes
|
— | — | — | — | 101 | — | 101 | |||||||||||||||||||||
Gain on conversion of related parties 2008 and 2009 secured notes
|
— | — | — | — | 106 | — | 106 | |||||||||||||||||||||
Warrants issued in connection with debt
|
— | — | — | — | 281 | — | 281 | |||||||||||||||||||||
Conversion of preferred stock to common
|
(100,000 | ) | — | 666,000 | 1 | (1 | ) | — | — | |||||||||||||||||||
Net income for the year ended December 31, 2012
|
— | — | — | 699 | 699 | |||||||||||||||||||||||
Balance at December 31, 2012
|
222,103 | $ | 1 | 81,689,238 | $ | 82 | $ | 30,963 | $ | (41,738 | ) | $ | (10,692 | ) |
Year Ended December 31, | ||||||||
2012
|
2011
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$ | 699 | $ | 3,617 | ||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
36 | 40 | ||||||
Stock based compensation
|
249 | — | ||||||
Amortization of debt discount
|
45 | 257 | ||||||
Provision for bad debts
|
— | 72 | ||||||
Impairment of goodwill
|
— | 450 | ||||||
Gain on conversion of debt to common stock
|
(472 | ) | — | |||||
Accounts payable write-off
|
(322 | ) | (1,767 | ) | ||||
Gain on forgiveness of debt
|
(383 | ) | (3,074 | ) | ||||
(Increase) decrease in operating assets:
|
||||||||
Accounts receivable
|
(323 | ) | 1,081 | |||||
Deposits and other current assets
|
133 | 84 | ||||||
Increase (decrease) in operating liabilities:
|
||||||||
Accounts payable, trade
|
(140 | ) | (192 | ) | ||||
Accrued expenses
|
1,356 | 862 | ||||||
Vendor settlements
|
(809 | ) | (1,084 | ) | ||||
Deferred revenues and customer deposits
|
86 | (128 | ) | |||||
Net cash provided by operating activities
|
155 | 218 | ||||||
Cash flows from investing activities:
|
||||||||
Purchase of equipment
|
(38 | ) | (42 | ) | ||||
Software development in progress
|
(45 | ) | (104 | ) | ||||
Net cash used in investing activities
|
(83 | ) | (146 | ) | ||||
Cash flows from financing activities:
|
||||||||
Principal payments of lines of credit
|
(1,961 | ) | (20 | ) | ||||
Payment for put stock repurchase
|
— | (100 | ) | |||||
Proceeds from line of credit
|
1,664 | — | ||||||
Proceeds from issuance of Series A2 preferred stock
|
250 | — | ||||||
Proceeds from exercise of warrants
|
6 | 10 | ||||||
Principal payments on note payable to former shareholder
|
(33 | ) | — | |||||
Net cash used in financing activities
|
(74 | ) | (110 | ) | ||||
Net (decrease) increase in cash
|
(2 | ) | (38 | ) | ||||
Cash at beginning of year
|
390 | 428 | ||||||
Cash at end of year
|
$ | 388 | $ | 390 |
·
|
significant underperformance relative to historical or projected future operating results;
|
·
|
significant changes in the manner of use of the acquired assets or the strategy for the Company’s overall business; and
|
·
|
significant negative industry or economic trends.
|
December 31,
|
||||||||
|
2012
|
2011
|
||||||
|
|
|||||||
Employee advances
|
$ | 69 | $ | 69 | ||||
Deferred loan costs
|
— | 72 | ||||||
Prepaid expenses
|
32 | 93 | ||||||
Other current assets
|
$ | 101 | $ | 234 |
December 31,
|
||||||||
|
2012
|
2011
|
||||||
|
|
|||||||
Telecommunications equipment
|
$ | 3,378 | $ | 3,340 | ||||
Computer equipment
|
203 | 203 | ||||||
Telecommunications software
|
107 | 107 | ||||||
Leasehold improvements, office equipment and furniture
|
86 | 86 | ||||||
Total property and equipment
|
3,774 | 3,736 | ||||||
Less: accumulated depreciation and amortization
|
(3,654 | ) | (3,618 | ) | ||||
Property and equipment, net
|
$ | 120 | $ | 118 |
December 31,
|
||||||||
2012
|
2011
|
|||||||
Commissions, network costs and other general accruals
|
$ | 1,994 | $ | 1,374 | ||||
Accrued USF and Sales Tax
|
1,235 | 878 | ||||||
Deferred payroll and other payroll related liabilities
|
544 | 554 | ||||||
Interest due on convertible promissory notes and other debt
|
90 | 1,243 | ||||||
Payments due to third party providers
|
170 | 512 | ||||||
Accrued expenses
|
$ | 4,033 | $ | 4,561 |
December 31
,
2012
|
December 31
,
2011
|
|||||||
Vendor settlements
|
$ | 2,548 | $ | 3,184 | ||||
Secured promissory notes
|
3,140 | 2,380 | ||||||
Note payable to former shareholder
|
167 | 200 | ||||||
Less: Current portion of long-term debt
|
(1,900 | ) | (4,614 | ) | ||||
Long-term debt
|
$ | 3,955 | $ | 1,150 |
2013
|
$ | 1,900 | ||
2014
|
3,354 | |||
2015
|
318 | |||
2016
|
276 | |||
2017
|
7 | |||
$ | 5,855 |
Number
of
Shares
|
Price
per
Share
|
Weighted
Average
Exercise
Price
|
Weighted Average Remaining Contractual Term
|
Aggregate Intrinsic Value
|
||||||||||||||||||
Options outstanding at December 31, 2010
|
6,600,688 | $ | — | $ | 0.12 | 5.16 | $ | 182,534 | ||||||||||||||
Granted
|
— | — | — | |||||||||||||||||||
Exercised
|
— | — | — | |||||||||||||||||||
Forfeited/expired
|
— | — | — | |||||||||||||||||||
Options outstanding at December 31, 2011
|
6,600,688 | 0.12 | 4.16 | $ | 146,028 | |||||||||||||||||
Granted
|
14,050,000 | 0.04 | to |
0.08
|
0.04 | |||||||||||||||||
Exercised
|
— | — | — | |||||||||||||||||||
Forfeited/expired
|
(1,479,607 | ) | — | 0.18 | ||||||||||||||||||
Options outstanding at December 31, 2012
|
19,171,081 | $ | 0.06 | 3.80 | $ | 1,112,897 | ||||||||||||||||
Options exercisable at December 31, 2012
|
17,161,706 | $ | 0.06 | 3.82 | $ | 1,003,897 |
Options Outstanding
|
Options Exercisable
|
|||||||||||||||||||||
Exercise Prices
|
Number
of Shares
|
Average
Remaining
Contractual
Life
(in Years)
|
Weighted
Average
Exercise
Price
|
Number
of Shares
|
Weighted
Average
Exercise Price
|
|||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||
$ | 0.01 | 1,049,141 | 1.00 | $ | 0.01 | 1,049,141 | $ | 0.01 | ||||||||||||||
0.01 | 154,039 | 1.25 | 0.01 | 154,039 | 0.01 | |||||||||||||||||
0.01 | 431,307 | 1.50 | 0.01 | 431,307 | 0.01 | |||||||||||||||||
0.01 | 123,231 | 2.00 | 0.01 | 123,231 | 0.01 | |||||||||||||||||
0.01 | 277,269 | 2.75 | 0.01 | 277,269 | 0.01 | |||||||||||||||||
0.25 | 1,900,000 | 4.75 | 0.25 | 1,900,000 | 0.25 | |||||||||||||||||
0.04 | 13,500,000 | 4.25 | 0.04 | 11,812,500 | 0.04 | |||||||||||||||||
0.07 | 200,000 | 4.50 | 0.07 | 68,750 | 0.07 | |||||||||||||||||
0.08 | 350,000 | 4.75 | 0.08 | 159,375 | 0.08 | |||||||||||||||||
0.01 | 338,884 | 2.75 | 0.01 | 338,884 | 0.01 | |||||||||||||||||
0.01 | 643,880 | 3.00 | 0.01 | 643,880 | 0.01 | |||||||||||||||||
0.01 | 110,907 | 3.00 | 0.01 | 110,907 | 0.01 | |||||||||||||||||
0.01 | 92,423 | 3.25 | 0.01 | 92,423 | 0.01 | |||||||||||||||||
19,171,081 | 17,161,706 |
December 31, 2012
|
December 31, 2011
|
|||||||||
Risk-free interest rate
|
0.34% | to | 0.51 | % | 0.4% | to | 2.7 | % | ||
Expected lives (in years) | 2.3 | to | 3.5 years | 3.2 | to | 4.5 years | ||||
Dividend yield | 0 | % | 0 | % | ||||||
Expected volatility | 82.0 | % | 82.0 | % | ||||||
Forfeiture rate | 0 | % | 0 | % |
December 31,
|
||||||||
2012
|
2011
|
|||||||
Current assets and liabilities:
|
||||||||
Deferred revenue
|
$ | 11 | $ | 78 | ||||
Allowance for doubtful accounts
|
60 | 160 | ||||||
Accrued expenses
|
263 | 668 | ||||||
Stock based compensation
|
99 | — | ||||||
433 | 906 | |||||||
Valuation allowance
|
(433 | ) | (906 | ) | ||||
Net current deferred tax asset
|
$ | — | $ | — | ||||
Non-current assets and liabilities:
|
||||||||
Depreciation and amortization
|
$ | 127 | $ | 127 | ||||
Net operating loss carryforward
|
15,715 | 15,956 | ||||||
15,842 | 16,083 | |||||||
Valuation allowance
|
(15,842 | ) | (16,083 | ) | ||||
Net non-current deferred tax asset
|
$ | — | $ | — |
|
For the Year Ended
December 31,
|
|||||||
2012
|
2011
|
|||||||
|
|
|||||||
Federal statutory tax rate
|
(34 | )% | (34 | )% | ||||
State and local taxes
|
(6 | ) | (6 | ) | ||||
Valuation reserve for income taxes
|
40 | 40 | ||||||
Effective tax rate
|
— | % | — | % |
Year Ended December 31,
|
||||||||
2012
|
2011
|
|||||||
Cash paid:
|
||||||||
Interest
|
$ | 552 | $ | 544 | ||||
Non-cash information:
|
||||||||
Common stock, warrants issued and gain on conversion for debt
|
$ | 1,050 | $ | 60 | ||||
Series A2 preferred stock issued for accounts payable
|
$ | 47 | $ | — | ||||
Fair value of warrants issued in connection with debt
|
$ | 281 | $ | — | ||||
Note payable due to former stockholder
|
$ | — | $ | 125 | ||||
Liability for warrant put feature and line of credit converted to secured promissory note
|
$ | 988 | $ | — | ||||
Liability for warrant and shares put feature
|
$ | — | $ | 120 |
First Quarter
|
Second Quarter
|
Third Quarter
|
Fourth Quarter
|
|||||||||||||
For the Year Ended December 31, 2012
|
|
|
|
|
||||||||||||
Net revenues
|
$ | 4,391 | $ | 4,947 | $ | 5,524 | $ | 5,199 | ||||||||
Operating income (loss)
|
(33 | ) | 200 | 347 | 130 | |||||||||||
Net income
|
(195 | ) | 191 | 271 | 432 | |||||||||||
Basic earnings per share
|
$ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.01 | ||||||||
Diluted earnings per share
|
$ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.01 |
1 Year InterMetro Communications (CE) Chart |
1 Month InterMetro Communications (CE) Chart |
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