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 September 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.
---------------------------------------------------------------
(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 September 30, 1999 - 33,440,470
<PAGE>
MOBILE AREA NETWORKS, INC.
INDEX
PAGE
NUMBER
------
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets
September 30, 1999 (Unaudited)
and December 31, 1998 2
Statements of Operations
Three and nine months ended
September 30, 1999 (Unaudited) and
September 30, 1998 (Unaudited)
Period from May 23, 1996 through
September 30, 1999 (unaudited) 3
Statements of Cash Flows
Nine months ended
September 30, 1999 (Unaudited) and
September 30, 1998 (Unaudited)
Period from May 23, 1996 through
September 30, 1999 (unaudited) 4
Notes to Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II. OTHER INFORMATION 8
<PAGE>
MOBILE AREA NETWORKS, INC.
(A Development Stage Company)
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
------
SEPTEMBER 30,
DECEMBER 31, 1999
1998 (UNAUDITED)
------------ --------------
<S> <C> <C>
Current assets:
Cash $ 54,971 144,891
Inventory 20,944 23,548
Other current assets 9,337 3,121
----------- -----------
Total current assets 85,252 171,560
----------- -----------
Property and equipment, net 134,200 157,656
Intangible assets, net of accumulated amortization of $6,100
and $6,862 9,158 6,871
----------- -----------
$ 228,610 336,087
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 71,353 20,559
Accrued expenses 198,000 249,861
Advances from stockholder 20,000 --
----------- -----------
Total current liabilities 289,353 270,420
----------- -----------
Stockholders' equity:
Common stock, no par value, authorized 50,000,000 shares,
issued and outstanding 33,023,130 and 33,440,470 shares 982,422 1,541,485
Deficit accumulated during the development stage (1,043,165) (1,475,818)
----------- -----------
Total stockholders' equity (60,743) 65,667
----------- -----------
$ 228,610 336,087
=========== ===========
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
MOBILE AREA NETWORKS, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
Nine and three months ended September 30, 1999
and 1998 and the cumulative period from May 23, 1996
(date of inception) through September 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
THE PERIOD
THREE MONTHS THREE MONTHS NINE MONTHS NINE MONTHS FROM MAY 23,
ENDED ENDED ENDED ENDED 1996 THROUGH
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999 1998 1999
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Revenues $ 6,069 6,817 26,730 16,850 108,014
------------ ------------ ------------ ------------ ------------
Cost and expenses:
Product development
and marketing 96,347 86,881 254,620 271,409 883,313
General and administrative 77,482 69,869 204,763 218,265 719,129
------------ ------------ ------------ ------------ ------------
Total costs and expenses 173,829 156,750 459,383 489,674 1,602,442
------------ ------------ ------------ ------------ ------------
Interest income -- 334 -- 4,632 18,610
------------ ------------ ------------ ------------ ------------
Net loss $ (167,760) (149,599) (432,653) (468,192) (1,475,818)
============ ============ ============ ============ ============
Weighted average shares
outstanding 33,416,112 31,502,380 33,240,639 31,403,455 29,628,419
============ ============ ============ ============ ============
Net loss per share $ 0.005 0.005 0.013 0.015 0.050
============ ============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
MOBILE AREA NETWORKS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1999 and 1998
and the cumulative period from May 23, 1996 (date of inception)
through September 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
CUMULATIVE PERIOD
NINE MONTHS NINE MONTHS FROM MAY 23, 1996
ENDED ENDED THROUGH
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999
------------- ------------- -----------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (432,653) (468,192) $(1,475,818)
Adjustments to reconcile net loss to net cash used
Depreciation and amortization 18,475 16,289 54,235
Change in operating assets and liabilities:
Accounts payable (50,794) (13,296) 20,559
Accrued expenses 51,861 48,000 249,861
Inventory (2,604) (10,881) (23,548)
Other current assets 6,216 (11,558) (3,121)
----------- ----------- -----------
Net cash used in operating activities (409,499) (439,638) (1,177,832)
----------- ----------- -----------
Cash flows from investing activities:
Purchase of property and equipment (39,644) (40,172) (203,504)
Patent acquisition costs -- -- (15,258)
----------- ----------- -----------
Net cash used in investing activities (39,644) (40,172) (218,762)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from issuance of common stock 568,598 257,550 1,566,704
Stock issuance cost (9,535) (137) (25,219)
Repayment of note payable (20,000) -- --
----------- ----------- -----------
Net cash provided by financing activities 539,063 257,413 1,541,485
----------- ----------- -----------
Net increase (decrease) in cash 89,920 (222,397) 144,891
Cash at beginning of period 54,971 279,482 --
----------- ----------- -----------
Cash at end of period $ 144,891 57,085 144,891
=========== =========== ===========
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 September 30, 1999 and results of operations and cash flows
for three and nine month periods ended September 30, 1999 and 1998 and for
the cumulative period from May 23, 1996 (date of inception) through
September 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 September 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 proceeds from the offering will be used primarily to fund the marketing
and 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 customers' 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 $(98,860) at September 30, 1999 as compared to
$(204,101) at December 31, 1998. Cash amounted to $144,891 at September 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 nine months ended September 30,
1999 and 1998 was $(409,499) and $(439,638), respectively, primarily as a result
of the Company's net loss and decreases in accounts payable. For the nine months
ended September 30, 1999 and 1998, cash was provided primarily by additional
stock issuances. During the nine months ended September 30, 1999 and 1998, cash
was used in investing activities to acquire additional property and equipment,
and for marketing expenses.
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 September 30, 1999 have been minimal but are expected to
increase during the remainder of fiscal 1999 and 2000. For the nine months ended
September 30, 1999, product development and marketing expenses decreased
approximately 6% 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 increased marketing efforts and
consummating service agreements with the Company's customer base.
Operations for the nine months ended September 30, 1999 resulted in a net loss
of $432,653 as compared to a net loss of $468,192 for the corresponding period
of the prior year. The net loss since inception amounted to $1,475,818 through
September 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 September 30, 1999 no report
on Form 8-K was filed or required to be filed.
8
<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.
NOVEMBER 11, 1999 /s/ GEORGE WIMBISH
- --------------------------- ------------------
Date George Wimbish
Director, Chairman and President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 144,891
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 23,548
<CURRENT-ASSETS> 171,560
<PP&E> 203,504
<DEPRECIATION> 45,848
<TOTAL-ASSETS> 336,087
<CURRENT-LIABILITIES> 270,420
<BONDS> 0
0
0
<COMMON> 1,541,485
<OTHER-SE> (1,475,818)
<TOTAL-LIABILITY-AND-EQUITY> 336,087
<SALES> 6,069
<TOTAL-REVENUES> 6,069
<CGS> 0
<TOTAL-COSTS> 173,829
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (167,760)
<INCOME-TAX> 0
<INCOME-CONTINUING> (167,760)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (167,760)
<EPS-BASIC> (0.005)
<EPS-DILUTED> (0.005)
</TABLE>
