U.S. 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 June 30, 1999
( ) Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from _________________ to ____________________.
Commission file number 333-18439
Mobile Area Networks, Inc.
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(Exact Name of Small Business User as Specified in its Charter)
Florida 59-3482752
------------------------------- -------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization Identification No.)
1275 Lake Heathrow Lane, Suite 115, Heathrow, Florida 32746
- ----------------------------------------------------- -----------
(Address of Principal Executive Offices) (Zip Code)
407-333-2350
- -----------------------------------------------
(Issuer's telephone Number, including area code)
Check whether the issuer: (1) 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 registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
--------- ---------
Shares of Common Stock outstanding at June 30, 1999 - 33,408,177
<PAGE>
MOBILE AREA NETWORKS, INC.
INDEX
PAGE
NUMBER
------
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets
June 30, 1999 (Unaudited)
and December 31, 1998 3-4
Statements of Operations
Three and six months ended
June 30, 1999 (Unaudited) and
June 30, 1998 (Unaudited)
Period from May 23, 1996 through
June 30, 1999 (unaudited) 5
Statements of Cash Flows
Six months ended
June 30, 1999 (Unaudited) and
June 30, 1998 (Unaudited)
Period from May 23, 1996 through
June 30, 1999 (unaudited) 6
Notes to Financial Statements (Unaudited) 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-9
PART II. OTHER INFORMATION 10
<PAGE>
MOBILE AREA NETWORKS, INC.
(A Development Stage Company)
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
JUNE 30,
DECEMBER 31, 1999
1998 (UNAUDITED)
------------- -----------
<S> <C> <C>
Current assets:
Cash $ 54,971 127,491
Inventory 20,944 22,251
Other current assets 9,337 13,479
----------- -----------
Total current assets 85,252 163,221
----------- -----------
Property and equipment, net 134,200 165,558
Intangible assets, net of accumulated amortization of $6,100
and $6,862 9,158 7,633
----------- -----------
$ 228,610 336,412
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 71,353 20,517
Accrued expenses 198,000 241,218
Advances from stockholder 20,000 --
----------- -----------
Total current liabilities 289,353 261,735
----------- -----------
Stockholders' equity:
Common stock, no par value, authorized 50,000,000 shares,
issued and outstanding 33,023,130 and 33,408,177 shares 982,422 1,382,735
Deficit accumulated during the development stage (1,043,165) (1,308,058)
----------- -----------
Total stockholders' equity (60,743) 74,677
----------- -----------
$ 228,610 336,412
=========== ===========
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
MOBILE AREA NETWORKS, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
Six and three months ended June 30, 1999 and 1998 and the
cumulative period from May 23, 1996 (date of inception) through June 30, 1999
(unaudited)
<TABLE>
<CAPTION>
THE PERIOD
THREE MONTHS THREE MONTH S SIX MONTHS SIX MONTHS FROM MAY 23,
ENDED ENDED ENDED ENDED 1996 THROUGH
JUNE 30, 1999 JUNE 30, 1998 JUNE 30, 1999 JUNE 30, 1998 JUNE 30, 1999
------------- -------------- -------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Revenues $ 8,253 1,545 20,661 10,033 101,945
------------ ------------ ------------ ------------ ------------
Cost and expenses:
Product development and marketing 87,947 84,125 158,273 184,529 786,966
General and administrative 69,723 81,458 127,281 148,395 641,647
------------ ------------ ------------ ------------ ------------
Total costs and expenses 157,670 165,583 285,554 332,924 1,428,613
------------ ------------ ------------ ------------ ------------
Interest income -- 1,596 -- 4,298 18,610
------------ ------------ ------------ ------------ ------------
Net loss (149,417) (162,442) (264,893) (318,593) (1,308,058)
============ ============ ============ ============ ============
Weighted average shares outstanding 33,242,509 31,347,130 33,164,302 31,315,280 29,329,181
============ ============ ============ ============ ============
Net loss per share $ 0.004 0.005 0.008 0.010 0.040
============ ============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
MOBILE AREA NETWORKS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1999 and 1998 and the
cumulative period from May 23, 1996 (date of inception) through June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
CUMULATIVE PERIOD
SIX MONTHS SIX MONTHS FROM MAY 23, 1996
ENDED ENDED THROUGH
JUNE 30, 1999 JUNE 30, 1998 JUNE 30, 1999
------------- ------------- ---------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (264,893) (318,593) $(1,308,058)
Adjustments to reconcile net loss to net cash used
Depreciation and amortization 9,812 7,526 45,571
Change in operating assets and liabilities:
Accounts payable (50,837) (23,416) 20,516
Accrued expenses 43,218 36,000 241,218
Inventory (1,307) (7,590) (22,251)
Other current assets (4,142) (5,789) (13,479)
----------- -------- -----------
Net cash used in operating activities (268,149) (311,862) (1,036,483)
----------- -------- -----------
Cash flows from investing activities:
Purchase of property and equipment (39,645) (27,431) (203,503)
Patent acquisition costs -- -- (15,258)
----------- -------- -----------
Net cash used in investing activities (39,645) (27,431) (218,761)
----------- -------- -----------
Cash flows from financing activities:
Proceeds from issuance of common stock 388,830 139,550 1,386,935
Stock issuance cost (8,516) (137) (24,200)
Proceeds from issuance of note payable -- -- 20,000
----------- -------- -----------
Net cash provided by financing activities 380,314 139,413 1,382,735
----------- -------- -----------
Net increase (decrease) in cash 72,520 (199,880) 127,491
Cash at beginning of period 54,971 279,482 --
----------- -------- -----------
Cash at end of period $ 127,491 79,602 127,491
=========== ========= ===========
Supplemental disclosure of cash flow information
Cash paid for:
Taxes $ -- $ -- $ --
=========== ========= ===========
Interest $ -- $ -- $ --
=========== ========= ===========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
MOBILE AREA NETWORKS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(1) PRESENTATION OF UNAUDITED FINANCIAL STATEMENTS
The unaudited financial statements have been prepared in accordance
with rules of the Securities and Exchange Commission and, therefore,
do not include all information and footnotes necessary for a fair
presentation of financial position, results of operations and cash
flows, in conformity with generally accepted accounting principles.
The information furnished, in the opinion of management, reflects all
adjustments (consisting only of normal recurring accruals) necessary
to present fairly the financial position as of June 30, 1999 and
results of operations and cash flows for three and six month periods
ended June 30, 1999 and 1998 and for the cumulative period from May
23, 1996 (date of inception) through June 30, 1999. The results of
operations are not necessarily indicative of results which may be
expected for any other interim period, or for the year as a whole.
(2) REVENUE RECOGNITION
The Company recognizes revenue upon shipment of product and upon
provision of related consulting and installation services.
(3) INVENTORIES
Inventories at June 30, 1999 and December 31, 1998 consist of finished
products and equipment.
(4) REGISTRATION OF SECURITIES
On February 16, 1999 the Company's registration statement covering the
registration of 5,000,000 shares of common stock was declared
effective by the United States Securities and Exchange Commission.
Provisions of the registration statement include a maximum offering
price of $6.00 per unit resulting in maximum gross proceeds of
$30,000,000.
The Securities are being sold on a best efforts, no minimum amount
basis. The offering will expire nine months after the effective date
unless updated or terminated sooner. The proceeds from the offering
will be used primarily to fund the deployment of its communications
network infrastructure.
(5). YEAR 2000 ISSUE
The Company has addressed its state of readiness to deal with the
problem commonly known as the Year 2000 Issue. With respect to its own
information systems, the Company is year 2000 compliant. The costs to
achieve year 2000 compliance have not been material to the Company's
operations.
5
<PAGE>
MOBILE AREA NETWORKS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(5). YEAR 2000 ISSUE - (CONTINUED)
The Company has informally discussed year 2000 preparedness with its
most significant suppliers and has obtained assurances that such
suppliers do not expect any disruption in their ability to fulfill
customer needs as of a result of year 2000 issues. The Company is
preparing to request written confirmation of year 2000 preparedness
from each of such suppliers. To date, the Company has not undertaken
to assess the year 2000 preparedness of its customers. Management
expects to initiate discussions with its most significant customers
concerning their year 2000 preparedness during the fourth quarter of
1999, but does not believe that customer's lack of preparedness would
have a material adverse effect on the Company's sales or results of
operations.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Working capital amounted to ($98,514) at June 30, 1999 as compared to ($204,101)
at December 31, 1998. Cash amounted to $127,491 at June 30, 1999, as compared to
$54,791 at December 31, 1998. As more fully described under the Company's
statements of cash flows in the accompanying financial statements, net cash used
in operating activities for the six months ended June 30, 1999 and 1998 was
($268,149) and ($311,862), respectively, primarily as a result of the Company's
net loss and decreases in accounts payable. For the six months ended June 30,
1999 and 1998, cash was provided primarily by additional stock issuances. During
the three and six months ended June 30, 1999 and 1998, cash was used in
investing activities to acquire additional property and equipment.
As indicated herein, the Company's short term liquidity needs have been
satisfied primarily from the continuing sale of Company stock.
RESULTS OF OPERATIONS
The Company's operations to date have been devoted primarily to product
development and marketing, raising capital and administrative activities.
Revenues through June 30, 1999 have been minimal but are expected to increase at
a steady pace throughout the remainder of fiscal 1999. For the six months ended
June 30, 1999, product development and marketing expenses decreased
approximately 14% over the corresponding period of the prior year as the initial
product development phase has been substantially completed. Management's primary
goal for the remainder of 1999 is to focus on providing increased consulting
services and consummating product sales and service agreements with the
Company's customer base.
Operations for the six months ended June 30, 1999 resulted in a net loss of
$264,893 as compared to a net loss of $318,593 for the corresponding period of
the prior year. The net loss since inception amounted to $1,308,058 through June
30, 1999. Since inception, the Company has incurred research and development
costs equal to approximately 60% of total product development and marketing
costs.
7
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS: None
Item 2. CHANGES IN SECURITIES: None
Item 3. DEFAULTS UPON SENIOR SECURITIES: None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS: None
Item 5. OTHER INFORMATION: None
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits: None
(b) During the quarter ended June 30, 1999 no report on Form 8-K
was filed or required to be filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
MOBILE AREA NETWORKS INC.
/s/ GEORGE WIMBISH
- ---------------------------------- ---------------------------------------
Date George Wimbish
Director, Chairman and President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> APR-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 127,491
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 22,251
<CURRENT-ASSETS> 163,221
<PP&E> 203,505
<DEPRECIATION> 37,947
<TOTAL-ASSETS> 336,412
<CURRENT-LIABILITIES> 261,735
<BONDS> 0
0
0
<COMMON> 1,382,735
<OTHER-SE> (1,308,058)
<TOTAL-LIABILITY-AND-EQUITY> 336,412
<SALES> 20,661
<TOTAL-REVENUES> 20,661
<CGS> 0
<TOTAL-COSTS> 285,554
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (264,893)
<INCOME-TAX> 0
<INCOME-CONTINUING> (264,893)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (264,893)
<EPS-BASIC> 0.008
<EPS-DILUTED> 0.008
</TABLE>
