<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly Report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 2000
[ ] Transition Report under Section 13 or 15(d) of the Exchange Act
For the transition period from ____________ to ____________.
Commission File Number: 000-22251
BOBBY ALLISON WIRELESS CORPORATION
- --------------------------------------------------------------------------------
(Name of Small Business Issuer in Its Charter)
Florida 65-0674664
----------------------- ------------------------------------
(State of Incorporation (I.R.S. Employer Identification No.)
or Organization)
2055 Lake Avenue, S.E., Suite A, Largo, Florida 33771
- ------------------------------------------------ ----------
(Address of Principal Executive Offices) (Zip Code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $.01 Per Share
Check whether the issuer: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the Company was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes [ ] No [X]
Check whether the issuer has filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.
Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 480,000 shares of Common
Stock, par value $.01 per share, as of May 15, 2000.
<PAGE> 2
BOBBY ALLISON WIRELESS CORPORATION AND SUBSIDIARY
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Consolidated balance sheets -
March 31, 2000 and December 31,1999 3
Consolidated statements of operations-
three months ended March 31, 2000 and March 31, 1999 5
Consolidated statements of cash flows-
three months ended March 31, 2000 and March 31, 1999 6
Notes to consolidated financial statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION. 8
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS. 13
ITEM 2. CHANGES IN SECURITIES. 13
ITEM 3. DEFAULTS UPON SENIOR SECURITIES. 13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. 13
ITEM 5. OTHER INFORMATION. 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. 13
</TABLE>
<PAGE> 3
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
BOBBY ALLISON WIRELESS CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
-------------- -----------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT:
Cash $ 25,000 $ 624,869
Accounts receivable, less allowance for doubtful accounts of
$23,857 and $83,027 3,039,471 2,427,639
Prepaid expenses 57,237 52,546
Inventories 2,077,361 2,606,907
Deferred tax asset 9,000 31,000
---------- ----------
TOTAL CURRENT ASSETS 5,208,069 5,742,961
---------- ----------
LEASEHOLD IMPROVEMENTS AND EQUIPMENT, AT COST: 3,930,298 3,297,603
Less accumulated depreciation 933,482 699,902
---------- ----------
NET LEASEHOLD IMPROVEMENTS AND EQUIPMENT 2,996,816 2,597,701
---------- ----------
OTHER ASSETS:
Goodwill and other intangible assets, net of accumulated
amortization of $175,509 and $166,751 304,142 312,900
Deferred tax asset 86,000 64,000
Deposits 68,212 51,456
---------- ----------
TOTAL OTHER ASSETS 458,354 428,356
---------- ----------
$8,663,239 8,769,018
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
3
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BOBBY ALLISON WIRELESS CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS, CONTINUED
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
-------------- ----------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $2,643,034 $3,521,170
Accrued expense 1,096,469 901,053
Deferred income 298,219 281,691
Current maturities of long-term debt 2,114,359 512,606
---------- ----------
TOTAL CURRENT LIABILITIES 6,152,081 5,216,520
---------- ----------
LONG-TERM LIABILITIES:
Long-term debt, less current maturities 202,718 1,351,786
---------- ----------
TOTAL LIABILITIES 6,354,799 6,568,306
---------- ----------
PREFERRED STOCK:
Series A convertible preferred stock, $1.00 par, shares authorized
20; outstanding 15 375,000 375,000
Series B convertible preferred stock, $1.00 par, shares authorized
50; outstanding 50 1,250,000 1,250,000
---------- ----------
TOTAL PREFERRED STOCK 1,625,000 1,625,000
---------- ----------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par; shares authorized 25 million; 4,800 4,800
outstanding 480,000
Series C convertible preferred stock, $1.00 par, shares authorized 800,000 800,000
250; outstanding 10
Additional paid-in capital 205,365 205,365
Deficit (326,725) (434,453)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY: 683,440 575,712
---------- ----------
$8,663,239 $8,769,018
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
BOBBY ALLISON WIRELESS CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------------
2000 1999
----------- -----------
<S> <C> <C>
REVENUES:
Product sales $ 3,890,641 1,236,835
Activation commissions 2,117,259 730,119
Pager services 398,058 226,816
----------- -----------
Total revenues 6,405,958 2,193,770
----------- -----------
COST OF SALES 2,344,451 823,771
----------- -----------
Gross profit 4,061,507 1,369,999
----------- -----------
OPERATING EXPENSES:
Selling, general and administrative expenses 3,493,616 1,235,905
Depreciation and amortization 242,338 33,826
----------- -----------
Total operating expenses 3,735,954 1,269,731
----------- -----------
Operating income 325,553 100,268
OTHER INCOME (EXPENSE):
Interest expense (76,783) (33,168)
Interest income 3,290 2,238
----------- -----------
Total other income (expense) (73,493) (30,930)
----------- -----------
INCOME BEFORE TAXES ON INCOME 252,060 69,338
INCOME TAX EXPENSE (100,824) (26,000)
----------- -----------
NET INCOME 151,236 43,338
PREFERRED STOCK DIVIDENDS (43,508) (28,664)
----------- -----------
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS 107,728 14,674
=========== ===========
EARNINGS PER COMMON SHARE:
Basic $ 0.22 $ 0.03
=========== ===========
Diluted $ 0.18 $ 0.03
=========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 480,000 480,000
=========== ===========
Diluted 843,146 480,000
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
5
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BOBBY ALLISON WIRELESS CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
March 31, 2000 March 31,1999
------------------ ------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 107,728 $ 43,338
Adjustments to reconcile net income (loss) to net cash provided by (used for)
operating activities:
Depreciation and Amortization to interest expense 242,338 33,826
Debt discount amortization to interest expense 23,310
Cash provided by (used for):
Accounts receivable (611,832) 203,237
Prepaid expenses (4,691) 10,205
Inventories 529,546 31,574
Deferred Tax Assets -- 26,000
Accounts payable (878,136) (94,858)
Deferred Revenue 16,528 172,868
Accrued expenses 195,416 (133,710)
--------- ---------
Net cash provided by (used for) operating activities (379,793) 292,480
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of leasehold improvements and equipment (632,695) (340,040)
Increase in deposits (16,756) (42,834)
--------- ---------
Net cash used for investing activities (649,451) (382,874)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments in long-term debt (70,625) --
Proceeds from issuance of preferred stock -- --
Proceeds from line of credit 500,000 150,200
Repayment of convertible debt -- (125,000)
Cancellation of Treasury Stock -- --
--------- ---------
Net cash provided by financing activities 429,375 25,200
--------- ---------
NET INCREASE (DECREASE) IN CASH: (599,869) (65,194)
CASH, beginning of period 624,869 125,155
========= =========
CASH, end of period $ 25,000 $ 59,961
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $ 53,473 $ 33,168
--------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE> 7
BOBBY ALLISON WIRELESS CORPORATION AND SUBSIDIARY
(Notes to Consolidated Financial Statements)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.
BASIS OF PRESENTATION
The unaudited consolidated financial statements have been prepared in
conformity with instructions to Form 10-QSB and therefore do not include all the
information and footnotes required by generally accepted accounting principals
for complete financial statements. Certain items included in these statements
are based upon management estimates. In the opinion of management, the
accompanying financial statements contain all adjustments (consisting of normal
recurring adjustments) necessary for fair presentation. The results of
operations for the three months ended March 31, 2000 are not necessarily
indicative of the operating results expected for the fiscal year ending December
31, 2000. These financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-KSB for the year ended December 31,1999. See Note 1 to
those financial statements for a discussion of the recapitalization and merger
with Bobby Allison Cellular Systems of Florida, Inc.
Certain items have been reclassified in the 1999 financial statements
to conform to the 2000 presentation.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Bobby
Allison Wireless Corporation and its wholly-owned subsidiary (the "Company").
All significant intercompany accounts and transactions have been eliminated in
consolidation.
NET INCOME (LOSS) PER COMMON SHARE
Basic EPS is calculated by dividing the income (loss) available to
common shareholders by the weighted average number of common shares outstanding
for the period without consideration for potential common shares. Potential
common shares were not included for the three months ended March 31, 1999 since
their effects are antidilutive under the treasury stock method for options and
warrants and if-converted method for convertible preferred stock.
STORE PROPERTY AND DEVELOPMENT COSTS
Costs incurred prior to the opening of a store and certain costs
related to the implementation of corporate sales programs are capitalized and
amortized over a period of twelve months starting with the month of commencement
of such programs and new stores.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS 122,
"Accounting for Derivative Instruments and Hedging Activities" (SFAS 133). SFAS
133 requires companies to recognize all derivatives contracts as either assets
or liabilities in the balance sheet and to measure them at fair value. If
certain conditions are met, a derivative may be specifically designated as a
hedge, the objective of which is to match the timing of gain or loss recognition
on the hedging derivative with the recognized income in the period of change.
Historically, the Company has not entered into derivatives contracts either to
hedge existing risks or for speculative purposes. Accordingly, the Company does
not expect adoption of the new standard on January 1, 2001 to affect its
financial statements.
7
<PAGE> 8
DEFERRED INCOME
During 1998, the Company negotiated an agreement with a supplier
whereby the supplier agreed to forgive a note payable with an outstanding
balance of $262,022. Under the terms of the agreement, the forgiveness is
cancelable if certain events occur, including the termination of a related
agreement with cause. The Company has deferred the recognition of debt
forgiveness income until the risk of repayment no longer exists and recognized
50% of the deferred income on November 30, 1999 and is expected to recognize
the balance on November 30, 2000, provided the agreement is still in effect on
that date. The agreement also provides for $200,000 of supplier marketing
development funds received in January 1999 to be deferred over two years and
recognized using the same percentages. Deferred income also includes billed but
unearned beeper service revenue.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
GENERAL
The Company, headquartered in Largo, Florida, is an enclosed regional
mall-based specialty retailer of wireless communications products and services
for the individual and small business customer which, as of May 10, 2000, had 70
sales locations including 36 in-line stores, 31 kiosks, and 3 retail
merchandising units or RMU's (like kiosks, but smaller). The Company's products
cover a broad assortment of over 600 stock-keeping units. The Company also
offers a wide range of service plans offered by five service providers, AT&T
Wireless Services, AirTouch, Nextel, Powertel, SunCom and two paging carriers.
In 1999, the Company expanded its operation beyond the State of Florida
into Georgia, South Carolina, North Carolina, Virginia and Tennessee. In 2000,
the Company has and plans to continue to expand in these states as well as
expand into the States of Alabama and Maryland and the District of Columbia. The
Company's expansion plans are dependent upon, among other things, obtaining
additional capital whether in the form of debt or equity. The Company has not
currently obtained the necessary financing but is currently seeking such
financing. However, there is no assurance that the Company will be able to
obtain the necessary financing, or if available, that such financing will be on
terms acceptable to the Company. As a result, the Company may be unable to
complete its expansion plans or such plans may be substantially delayed.
SOURCES OF REVENUE
The Company's revenues are generated principally from three sources in
one business segment:
PRODUCT RETAIL SALES. Product retail sales involve the sale through the
Company's sales locations and e-commerce web-site of cellular, and pager
wireless products such as phones and pagers and related accessories such as
batteries, chargers, carrying cases and hands-free kits. For the quarter ended
March 31, 2000, retail sales represented approximately 66.2% of the Company's
revenues and 49% of the Company's gross profit. As the customer makes payment
at the cash register or by credit card on the e-commerce web site, retail sales
do not produce any accounts receivables. The e-commerce web site was not
launched until January 2000; therefore, its sales to date have been immaterial.
At this time, the Company is unable to determine how much, if any, contribution
the e-commerce web site will have on the Company's financial results.
WIRELESS TELEPHONE ACTIVATION INCOME. Wireless telephone activation
income consists of activation commissions when a customer initially subscribes
for such carrier's services as well as other payments to the Company by its
wireless carriers including primarily market development funds. The amount of
the activation commission and market development funds paid by carriers is based
upon various service plans offered by and agreements with each carrier. New
subscription activation commissions are fully refundable if the subscriber
cancels its subscription prior to completion of a minimum period of continuous
active service (generally 90 days). Customers generally sign a service agreement
with the Company that the customer will reimburse the Company for lost
activation commissions in the event of the early cancellation of service. The
Company accrues for estimated deactivation losses, net of cancellation fees, by
creating a reserve against
8
<PAGE> 9
carrier accounts receivable. The reserve is reflective of the historical
cancellation experience.
AT&T Wireless Services is the Company's largest carrier with which the
Company has a generally exclusive relationship in the Central and South Florida
markets pursuant to an agreement which, unless both AT&T Wireless Services and
the Company agree to an extension, expires on December 1, 2000. As the Company
has maintained a good relationship with AT&T Wireless Services since 1993, the
Company believes that it is likely that the agreement will be extended but not
necessarily on the same terms. Outside of Central and South Florida, however,
the Company has non-exclusive carrier contracts with one or more of either AT&T
Wireless Services, AirTouch, Nextel, Powertel or SunCom. For the quarter ended
March 31, 2000, activation income represented approximately 33.0% of the
Company's revenues, approximately 51% of the Company's gross profits and
approximately 71.7% of the Company's accounts receivables (AT&T Wireless
Services accounted for approximately 47.5%).
The Company does not receive any residual commissions or income under
any of its contracts for wireless activations and such residual commissions are
generally uncommon today. However, the Company does currently sell prepaid PCS
service for Powertel and is negotiating to sell prepaid services for other
carriers. Prepaid service involves not only the sale of a telephone and its
activation as with regular service but also includes the sale of a phone card
representing a specific allotment of minutes. The prepaid service is
particularly attractive to those persons who have poor credit and are unable to
receive approval for a service contract as well as for parents purchasing
service for their children and wish to control their usage. Once the prepaid
minutes expire, the phone will not operate until the card is renewed or, if
lost, a new card is purchased. The Company receives a commission each time a
prepaid card is renewed or a new card is purchased. As a consequence, although
not a traditional residual commission, prepaid service creates an opportunity
for the Company to have a recurring revenue stream with respect to each prepaid
user. Based on the Company's research of prepaid service, the Company believes
that, on average, each prepaid customer renews or purchases a phone card every 8
days.
The Company also records income received from carriers related to
market development activities as activation income when all provisions in the
related agreements have been fulfilled and the right to retain amounts received
have vested with the Company.
PAGER SERVICES. Pager services include activation commissions as well
as residual payments on pagers. Pager residual payments are received for the
pager air time that the Company buys wholesale from paging carriers and then
resells to individuals and small businesses. The Company sells pager services
for two pager carriers. For the quarter ended March 31, 2000, pager services
represented approximately 6.2% of the Company's revenues and 4.3% of the
Company's gross profit.
The cost of wireless products has gradually decreased over time. With
such lower cost, the Company typically has offered lower prices to attract more
subscribers, which has increased its total activation commissions and
contributed to gross profit improvements. Consequently, the Company believes
that, as prices of wireless products decrease, they become more affordable to
consumers thereby expanding the wireless communications market and creating an
opportunity to attract new subscribers and increase activation commissions.
In the Company's Annual Reports on Form 10-KSB for the years ended
December 31, 1998 and 1999 and interim Forms 10-QSB, the Company explained the
effects on its revenues and costs of goods sold of the change in sales and
commission policies at AT&T Wireless Services which commenced in October of 1998
and affected the comparison of revenues and costs of goods sold for such
periods. However, since each of the quarters ended March 31, 2000 and March 31,
1999 occurred after these changes were implemented, they do not affect the
period to period comparisons contained in this report and will not affect such
comparisons in the Company's future reports on Forms 10-QSB and Form 10-KSB.
9
<PAGE> 10
RESULTS OF OPERATIONS
The following table sets forth certain selected income statement data
of the Company expressed as a percentage of net sales:
<TABLE>
<CAPTION>
For the Three Months For the Three Months
Ended March 31, 2000 Ended March 31, 1999
-------------------- --------------------
<S> <C> <C>
Total Revenue 100.0 % 100.0 %
Cost of Sales 36.6 % 36.7 %
Gross Profit 63.4 % 62.5 %
Selling, General and Administrative Expenses 55.6 % 56.3 %
(Excluding Depreciation)
Depreciation and Amortization 2.7 % 1.5 %
Operating Income 5.1 % 4.6 %
Interest Expense (1.2)% (2.3)%
Income Tax Expense (1.6)% (1.2)%
Net Income 2.4 % 2.0 %
</TABLE>
COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2000 TO THE THREE MONTHS ENDED
MARCH 31, 1999
TOTAL REVENUE. Total Revenue was $6,405,958 for the three months ended
March 31, 2000 as compared to $2,193,770 for the three months ended March 31,
1999 or an increase of $4,212,188 or 192.0%. This increase reflects the increase
in sales location count from 23 to 64 sales locations. Comparable sales location
sales for the three months ended March 31, 2000 increased by $331,331 or
approximately 16.2% as compared to the three months ended March 31, 1999. As
stated above, comparable stores sales include only sales locations owned and
operated by the Company for at least 12 full months. The Company operated 64
stores at March 31, 2000, 23 of which had then been owned and operated for at
least 12 months. See "-Sources of Revenue."
GROSS PROFIT. Gross profit was $4,061,507 for the three months ended
March 31, 2000 as compared to $1,369,999 for the three months ended March 31,
1999 or an increase of $2,691,508 or 197% largely reflecting the increase in
stores operated during the three months ended March 31, 1999. Gross profit as a
percentage of net sales increased from 62.5% in the three months ended March 31,
1999 to 63.4% in the three months ended March 31, 2000.
In December 1998, a major carrier converted $262,062 owed by the
Company to a market development funds payment. In January 1999, the Company
received additional market development funds of $200,000 from this carrier under
the same agreement. The Company recorded the market development funds as
deferred income because the Company would have had to repay all $462,062 if the
Company had terminated its relationship with such carrier before December of
1999 and will have to repay one-half or $231,031 if the Company terminates its
relationship with such carrier before December of 2000. Consequently, the
Company recognized $231,031 as activation income on November 30, 1999 and
expects to recognize the remaining $231,031 as activation income on November 30,
2000. In the quarter ended March 31, 2000, the Company also accrued $280,000 in
market development funds due from a carrier which will be used to fund the
Company's continued expansion into Georgia, North Carolina and South Carolina.
No comparable income was received in the quarter ended March 31, 1999.
10
<PAGE> 11
OPERATING EXPENSES. Selling, general and administrative expense was
$3,564,526 for the three months ended March 31, 2000 as compared to $1,235,905
for the three months ended March 31, 1999 or an increase of $2,328,621 or
approximately 188.4%, largely as a result of the Company's store expansion.
Corporate headquarter's expenses, included therein, increased due primarily to
increased costs necessitated by the Company's growth and anticipated future
growth including, but not limited to, support and training, advertising and
marketing and merchandising and allocation/distribution.
NET INTEREST EXPENSE. Net interest expense was $73,493 for the three
months ended March 31, 2000 as compared to $30,930 for the three months ended
March 31, 1999 or a increase of $42,563 or 138% due to higher average
borrowings outstanding during 2000 versus 1999. The higher average borrowings in
2000 resulted from the increase in borrowings from commercial banks by
$1,000,000 in November 1999 and $500,000 in February 2000.
NET INCOME/LOSS. The Company had net income of $151,236 for the three
months ended March 31, 2000 as compared to net income of $43,338 for the year
ended March 31, 1999 or an increase of $107,898 or 249%, primarily as a result
of the Company's store expansion and receipt of market development funds. Market
development funds represented approximately $339,500 of such increase but there
is no assurance that these payments will recur.
LIQUIDITY AND CAPITAL RESOURCES
The Company had a $858,012 working capital deficit at March 31, 2000
compared to working capital of $526,441 at December 31, 1999. This decrease in
working capital was due primarily to the reclassification of the Company's $1.5
million line of credit to a current liability as it now matures within 12
months.
In February 24, 1999, the Company consummated (i) a term loan from
SouthTrust Bank in the amount of $350,000 and (ii) a line of credit with
SouthTrust Bank by which the Company may borrow up to a maximum of $500,000 for
working capital. The term loan is amortized over 3 years at a rate of 8.5% per
annum. The line of credit has revolving payment terms, is due upon demand and
bears interest at prime plus 1% (10% as of March 31, 2000). Both the term loan
and the line of credit are secured by a first position on substantially all of
the Company's assets, primarily inventory and accounts receivables.
On November 19, 1999, the Company secured a revolving note loan from
Colonial Bank by which the Company may borrow up to $1 million and which was
extended to $1,500,000 on February 23, 2000. The note is due January 31, 2001
and bears interest at the Colonial Bank Base Rate as determined from time to
time. The note is secured by a second position on the Company's assets and, up
to $1 million, by the guarantees of certain shareholders.
The Company's net cash used by operating activities for the three
months ended March 31, 2000 was $379,793 as compared to net cash used by
operating activities of $292,480 for the three months ended March 31, 1999 or
change in cash used by operating activities of $87,313. This increase was
primarily due to an increase in net income. The net cash used in investing
activities totaled $649,451 for the three months ended March 31, 2000 related
primarily to the purchase of leasehold improvements and equipment required to
support new store growth. The net cash provided by financing activities totaled
$429,375 for the three months ended March 31, 2000 and related primarily to the
additional borrowings under the Company's $1.5 million line of credit.
The Company believes it can satisfy its cash demands during the next 12
months out of internally generated cash flow. However, in order to proceed with
the Company's proposed growth plans, the Company will need to raise substantial
additional capital through the issuance of securities and/or the procurement of
additional bank or other debt. There is no assurance that the Company will be
able to find a purchaser for its securities or, if a purchaser is found, that an
adequate price for the Company's securities can be obtained or that the
Company's shareholders will not be diluted by any such issuance. Furthermore,
there is no assurance that the Company will be able to procure any additional
debt financing, or if available, that such debt will be on terms acceptable to
the Company.
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<PAGE> 12
NET OPERATING LOSS CARRY-FORWARDS AND DEFERRED TAX ASSETS
At December 31, 1999, the Company had no net operating loss carry
forward for federal income tax purposes. As of March 31, 2000, the Company had a
total deferred tax asset of $95,000 consisting of $86,000 from leasehold
improvements and $9,000 from accounts receivables.
IMPACT OF INFLATION
General inflation has had only a minor effect on the operations of the
Company and its internal and external sources for liquidity and working capital.
SEASONALITY
The Company historically has experienced and expects to continue to
experience significant seasonal fluctuations in its net sales and net income.
The Company generally experiences its strongest sales during the Spring and
early vacation season and the Christmas holiday season. The Company generally
experiences its weakest sales during late Summer and early Fall.
YEAR 2000 READINESS DISCLOSURE
The Company has updated its computer systems, particularly its
point-of-sale systems and had no Year 2000 issues upon the system roll-over to
January 2000. Consequently, the Company believes that the Year 2000 issue will
not pose significant operations problems for the Company's computer systems and
the Company does not expect to incur any significant additional costs regarding
the Year 2000 issue. The Company has not and does not plan to develop a
contingency plan for the failure of the equipment or systems. The Company will
resort to manual operations in the event of a failure. The Company's cost of
updating its computer system was less than $50,000.
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<PAGE> 13
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not applicable
ITEM 2. CHANGES IN SECURITIES.
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS.
Not applicable
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(1) Exhibits:
None.
(1) Reports on Form 8-K:
None.
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized
Date: May 15, 2000 BOBBY ALLISON WIRELESS CORPORATION
/s/ Robert L. McGinnis
---------------------------------
Name: Robert L. McGinnis
Title: Chairman of the Board and
Chief Executive Officer
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FORM 10-QSB AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 25,000
<SECURITIES> 0
<RECEIVABLES> 3,039,471
<ALLOWANCES> 23,857
<INVENTORY> 2,077,361
<CURRENT-ASSETS> 5,208,069
<PP&E> 3,930,298
<DEPRECIATION> 933,482
<TOTAL-ASSETS> 8,663,239
<CURRENT-LIABILITIES> 6,152,081
<BONDS> 0
1,625,000
800,000
<COMMON> 4,800
<OTHER-SE> 205,365
<TOTAL-LIABILITY-AND-EQUITY> 8,663,239
<SALES> 6,405,958
<TOTAL-REVENUES> 6,405,958
<CGS> 2,344,451
<TOTAL-COSTS> 3,735,954
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 73,493
<INCOME-PRETAX> 252,060
<INCOME-TAX> 100,824
<INCOME-CONTINUING> 151,236
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 151,236
<EPS-BASIC> 0.22
<EPS-DILUTED> 0.18
</TABLE>
