Quarterly Report (SEC form 10-Q)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL of Operations
General
The following discussion should be used in conjunction with the company's audited financial statements, including the footnotes for the year ended December 31, 2000 and included in Form 10-K filed with the Securities and Exchange Commission on March 30, 2001.
Description of Business
Mycom Group, Inc. ("Mycom") is principally an e-business enterprise communications and information management company providing such services as technology consulting, applications development, multimedia design and marketing,web design and training for businesses headquartered in the United States. The Company changed its name from Myca Group, Inc. to Mycom.com, Inc. on March 28, 2000, and then changed its name to Mycom Group, Inc. on August 1, 2000. The Company's principal office is located in Cincinnati, Ohio.
Three Months Ended March 31, 2001 Compared to Three Months Ended March 31, 2000
Result of Operations
Revenue declined $155,929 or 11% from $1,376,802 in 2000 to $1,220,873 in 2001. This decrease was mainly the result of a decrease in printed materials sold to customers. This trend is expected as more companies depend less on paper and more on electronic documentation and training resources.
Operating expenses declined $158,704 or 10% from $1,539709 in 2000 to $1,381,005 in 2000. This decline was mainly attributable to lower printed material costs associated with the revenue item mentioned above and cost cutting measures of administrative expenses.
Losses before provision for deferred income tax credit were comparable due to the lower operating expenses offsetting the 11% decline in revenue. The deferred income tax credit shown in 2000 was later reversed in the fourth quarter of 2000 due to uncertainty in the realization of this deferred tax benefit. The company will re-assess the potential of realizing future tax benefits in subsequent periods.
Liquidity and Capital Resources
The company improved its liquidity and capital resources on April 17, 2001 with the merger referred to in footnote 4 of this Form 10-Q. The company's credit line was increased from $600,000 to $1,000,000, and the interest rate was reduced from two percentage points over the bank's prime rate of interest to one percent over prime. In addition, the historical results of Broughton have been profitable, and management anticipates improved operating results in 2001.
The company had a working capital deficit at December 31, 2000 of $344,000, and this deficit was slightly larger at March 31, 2001 at $369,000. The company's losses from operations were funded by increased borrowings from the company's line of credit and the issuance of common shares for services rendered to consultants. These services were expensed to operations, and payment of stock was made in lieu of cash.
The company believes it has adequate capital resources to fund anticipated operations for fiscal 2001.
